Financial Management: Issues to Be Considered by DOD in Developing
Guidance for Disclosing Deferred Maintenance on Ships (Letter Report,
02/06/98, GAO/AIMD-98-46).
GAO reviewed the Department of Defense's (DOD) implementation of the
requirement for valuable information related to deferred maintenance on
mission assets, focusing on Navy ships, including submarines.
GAO noted that: (1) the development of DOD and Navy policy and
implementing guidance for deferred maintenance is essential to ensure
consistent reporting among the military services and to facilitate the
preparation of accurate DOD-wide financial statements, particularly
since the new accounting standard provides extensive management
flexibility in implementing the disclosure requirement; (2) Navy
officials stated that they were reluctant to develop procedures to
implement the required accounting standard until DOD issues overall
policy guidance; (3) DOD and Navy officials have expressed numerous
views as to how to apply the deferred maintenance standard to ships; (4)
this makes it even more important for clear guidance to be developed;
(5) the opinions ranged from including only unfunded ship overhauls to
including cost estimates of repairing all problems identified in each
ship's maintenance log; (6) in formulating the DOD and Navy guidance,
key issues need to be resolved to allow for meaningful and consistent
reporting within the Navy and from year to year including: (a) what
maintenance is required to keep the ships in an acceptable operating
condition; and (b) when to recognize as deferred needed maintenance
which has not been done on a ship; and (7) in addition, DOD needs to
address in its implementing guidance whether the: (a) deferred
maintenance standard should be applied to all or only certain groups of
assets, such as ships being deactivated in the near future; and (b)
reported deferred maintenance should differentiate between critical and
noncritical and, if so, what constitutes control.
--------------------------- Indexing Terms -----------------------------
REPORTNUM: AIMD-98-46
TITLE: Financial Management: Issues to Be Considered by DOD in
Developing Guidance for Disclosing Deferred
Maintenance on Ships
DATE: 02/06/98
SUBJECT: Submarines
Military vessels
Financial statements
Maintenance standards
Maintenance costs
Reporting requirements
Accounting procedures
Federal agency accounting systems
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Cover
================================================================ COVER
Report to Agency Officials
February 1998
FINANCIAL MANAGEMENT - ISSUES TO
BE CONSIDERED BY DOD IN DEVELOPING
GUIDANCE FOR DISCLOSING DEFERRED
MAINTENANCE ON SHIPS
GAO/AIMD-98-46
Ships Deferred Maintenance Guidance
(918924)
Abbreviations
=============================================================== ABBREV
CFO - Chief Financial Officer
CNO - Chief of Naval Operations
DOD - Department of Defense
FASAB - Federal Accounting Standards Advisory Board
GMRA - Government Management Reform Act of 1994
GPRA - Government Performance and Results Act
IMA - Intermediate Maintenance Activity
LMI - Logistics Management Institute
OMB - Office of Management and Budget
SFFAS - Statement of Federal Financial Accounting Standard
Letter
=============================================================== LETTER
B-278809
February 6, 1998
The Honorable William J. Lynn III
The Under Secretary of Defense (Comptroller)
The Honorable Deborah P. Christie
The Assistant Secretary of the Navy
(Financial Management and Comptroller)
Recent laws have enhanced the legislative requirements to provide
policymakers and agency program managers with more reliable financial
information to formulate budgets, manage government programs, and
help make difficult policy choices.\1 Recognizing the extent of
incomplete and unreliable information on the cost and consequences of
government programs and activities, these laws have made implementing
new accounting standards and audited federal financial statements a
priority. New federal financial accounting standards have been
adopted to enhance federal financial statements by requiring that
government agencies show the financial results of all their
operations and provide relevant information on their financial
status.
This report discusses one such requirement for valuable information
related to deferred maintenance on mission assets.\2 The third in a
series of reports\3 on the Department of Defense's (DOD)
implementation of this requirement, this letter focuses on Navy
ships, including submarines. We are not making recommendations in
this report. Rather, we are identifying issues that need to be
considered in carrying out the basic recommendation in our September
30, 1997, letter to expedite plans to implement the deferred
maintenance standard. We continue to be concerned that while DOD
agreed that such action was necessary, it has not established
milestones for key tasks, as intended by our recommendation, to
ensure that it has time to incorporate into the implementing policy
the results of a study being conducted,\4 and to publish that policy
no later than March 1998.
Accurate reporting of deferred maintenance is important for key
decisionmakers such as the Congress, DOD, and Navy managers.
Further, deferred maintenance applicable to mission assets, if
reliably quantified and reported, can be an important performance
indicator of mission asset condition which is a key readiness factor.
While the existence of deferred maintenance may indicate a need for
additional resources for maintenance, such resources may already be
available within the current funding of the military services.
--------------------
\1 The Chief Financial Officers Act (CFO) of 1990, the Government
Performance and Results Act (GPRA) of 1993, the Government Management
Reform Act (GMRA) of 1994, and the Federal Financial Management
Improvement Act of 1996.
\2 Statement of Federal Financial Accounting Standard (SFFAS) No. 6,
Accounting for Property, Plant, and Equipment, dated November 30,
1995, defines federal mission property, plant, and equipment as
possessing certain characteristics related to (1) their use, such as
having no expected nongovernmental uses, and (2) their useful lives,
such as a very high risk of being destroyed in use or premature
obsolescence.
\3 See our previous reports, Financial Management: DOD Needs to
Expedite Plans to Implement Deferred Maintenance Accounting Standard
(GAO/AIMD-97-159R, September 30, 1997) and Financial Management:
Issues To Be Considered by DOD in Developing Guidance for Disclosing
Deferred Maintenance on Aircraft (GAO/AIMD-98-25, December 30, 1997).
\4 In October 1997, Office of the Under Secretary of Defense
(Acquisition and Technology) maintenance policy officials engaged a
nonprofit organization, the Logistics Management Institute (LMI), to
identify and evaluate alternative reporting approaches for deferred
maintenance, recommend the best solution from the Chief Financial
Officer (CFO) and maintenance community perspective, and recommend
the necessary policy and reporting protocols.
BACKGROUND
------------------------------------------------------------ Letter :1
In October 1990, the Federal Accounting Standards Advisory Board
(FASAB) was established by the Secretary of the Treasury, the
Director of the Office of Management and Budget (OMB), and the
Comptroller General of the United States to consider and recommend
accounting standards to address the financial and budgetary
information needs of the Congress, executive agencies, and other
users of federal financial information. Using a due process and
consensus building approach, the nine-member Board, which has since
its formation included a member of DOD, recommends accounting
standards for the federal government. Once FASAB recommends
accounting standards, the Secretary of the Treasury, the Director of
OMB, and the Comptroller General decide whether to adopt the
recommended standards. If they are adopted, the standards are
published as Statements of Federal Financial Accounting Standards
(SFFAS) by OMB and GAO. In addition, the Federal Financial
Management Improvement Act of 1996 requires federal agencies to
implement and maintain financial management systems that will permit
the preparation of financial statements that substantially comply
with applicable federal accounting standards. Also, the Federal
Managers' Financial Integrity Act of 1982 requires agency heads to
evaluate and report annually whether their financial management
systems conform to federal accounting standards.
Issued on November 30, 1995, and effective for the fiscal years
beginning after September 30, 1997, SFFAS No. 6, Accounting for
Property, Plant, and Equipment, requires the disclosure of deferred
maintenance in agencies' financial statements. SFFAS No. 6 defines
deferred maintenance as "maintenance that was not performed when it
should have been or was scheduled to be and which, therefore, is put
off or delayed for a future period." It includes preventive
maintenance and normal repairs, but excludes modifications or
upgrades that are intended to expand the capacity of an asset. The
deferred maintenance standard applies to all property, plant, and
equipment, including mission assets--which will be disclosed on the
supplementary stewardship report.\5 For the Department of Defense
(DOD), mission assets, such as submarines, ships, aircraft, and
combat vehicles, is a major category of property, plant, and
equipment. In fiscal year 1996, DOD reported over $590 billion in
this asset category, of which over $297 billion belonged to the Navy,
including 338 active battle force ships such as aircraft carriers,
submarines, surface combatants, amphibious ships, combat logistics
ships, and support/mine warfare ships. The Navy spent a little over
$2 billion on ship depot maintenance for its active fleet in fiscal
year 1996.
SFFAS No. 6 recognizes that there are many variables in estimating
deferred maintenance amounts. For example, the standard acknowledges
that determining the condition of the asset is a management function
because different conditions might be considered acceptable by
different entities or for different items of property, plant, and
equipment held by the same entity. Amounts disclosed for deferred
maintenance may be measured using condition assessment surveys\6 or
life-cycle cost forecasts.\7 Therefore, SFFAS No. 6 provides
flexibility for agencies' management to (1) determine the level of
service and condition of the asset that are acceptable, (2) disclose
deferred maintenance by major classes of assets, and (3) establish
methods to estimate and disclose any material amounts of deferred
maintenance.
SFFAS No. 6 also has an optional disclosure for distinguishing
between critical and noncritical amounts of maintenance needed to
return each major class of asset to its acceptable operating
condition. If management elects to disclose critical and noncritical
amounts, the disclosure must include management's definition of these
categories.
--------------------
\5 Statement of Federal Financial Accounting Standards No. 8,
Supplementary Stewardship Reporting, requires the reporting of
federal mission property, plant, and equipment on the supplementary
stewardship report for fiscal years beginning after September 30,
1997. Prior to this standard, these assets were reported on the
statement of financial position.
\6 Condition assessment surveys are periodic inspections of property,
plant, and equipment to determine their current condition and
estimated cost to correct any deficiencies.
\7 Life-cycle costing is an acquisition or procurement technique that
considers operating, maintenance, and other costs in addition to the
acquisition cost of assets. Since it results in a forecast of
maintenance expense, these forecasts may serve as a basis against
which to compare actual maintenance expense and estimate deferred
maintenance.
RESULTS IN BRIEF
------------------------------------------------------------ Letter :2
The development of DOD and Navy policy and implementing guidance for
deferred maintenance is essential to ensure consistent reporting
among the military services and to facilitate the preparation of
accurate DOD-wide financial statements, particularly since the new
accounting standard provides extensive management flexibility in
implementing the disclosure requirement. Navy officials stated that
they were reluctant to develop procedures to implement the required
accounting standard until DOD issues overall policy guidance. Our
September 30, 1997, letter points out the need for DOD to issue this
overall guidance to the military services by March 1998.
DOD and Navy officials have expressed numerous views as to how to
apply the deferred maintenance standard to ships. We believe this
makes it even more important for clear guidance to be developed. The
opinions ranged from including only unfunded ship overhauls to
including cost estimates of repairing all problems identified in each
ship's maintenance log. In formulating the DOD and Navy guidance, we
believe key issues need to be resolved to allow for meaningful and
consistent reporting within the Navy and from year to year including
(1) what maintenance is required to keep the ships in an acceptable
operating condition and (2) when to recognize as deferred needed
maintenance which has not been done on a ship. In addition, DOD
needs to address in its implementing guidance (1) whether the
deferred maintenance standard should be applied to all or only
certain groups of assets, such as ships being deactivated in the near
future and (2) whether the reported deferred maintenance should
differentiate between critical and noncritical and, if so, what
constitutes critical.
OBJECTIVE, SCOPE, AND
METHODOLOGY
------------------------------------------------------------ Letter :3
The objective of our work was to identify information on specific
issues to be considered in developing implementing guidance for
disclosing deferred maintenance on ships. We reviewed financial and
operational regulations and documentation related to managing and
reporting on the ship maintenance process. The documentation we
reviewed included fleet spreadsheets used to track depot-level
maintenance requirements and execution by specific ship. We also
reviewed Navy Comptroller budget documents. We discussed this
information with officials at DOD and Navy headquarters and at
various organizational levels within the Department of the Navy.
While the deferred maintenance standard applies to all levels of
maintenance, this report addresses ship depot-level maintenance
because it is the most complicated and expensive. (See the following
section for a discussion of the Navy ship maintenance process,
including the levels of maintenance.) The amounts for deferred depot
level maintenance presented in this report were developed using
information provided by Navy managers. We did not independently
verify the accuracy and completeness of the data.
We conducted our review from July 1996 through November 1997 in
accordance with generally accepted government auditing standards. We
requested written comments on a draft of this report from the
Secretary of Defense or his designee. The Under Secretary of Defense
(Comptroller) provided us with written comments, which are discussed
in the "Agency Comments" section and are reprinted in appendix I.
NAVY SHIP MAINTENANCE PROCESS
------------------------------------------------------------ Letter :4
The Navy accomplishes maintenance on its ships (including submarines)
at three levels: organizational, intermediate, and depot.
Organizational-level maintenance includes all maintenance actions
which can be accomplished by a ship's crew. For example, the ship's
crew may replace or fix a cracked gasket or leaks around a hatch or
doorway aboard ship. Intermediate-level maintenance is accomplished
by Navy Intermediate Maintenance Activities (IMAs) for work that is
beyond the capability or capacity of a ship's crew. For example, an
IMA performs calibration or testing of selected ship systems for
which the ship's crew may not have the equipment or capability to
perform. Depot-level maintenance includes all maintenance actions
that require skills or facilities beyond those of the organizational
and intermediate levels. As such, depot-level maintenance is
performed by shipyards with extensive shop facilities, specialized
equipment, and highly skilled personnel to accomplish major repairs,
overhauls, and modifications.
The Navy determines what depot-level maintenance is needed for its
ships through a requirements process that builds from broad
maintenance concepts outlined in Navy policy and culminates with the
execution of an approved schedule. There are three types of
maintenance requirements that are executed: (1) time-directed
requirements, (2) condition-based requirements, or (3) modernization
requirements. Time-directed requirements are derived from technical
directives and include those that are periodic in nature and are
based on elapsed time or recurrent operations. Condition-based
requirements are based on the documented physical condition of the
ship as found by the ship's crew or an independent inspection team.
Lastly, modernization requirements include ship alterations, field
changes, and service changes that either add new capability or
improve reliability and maintainability of existing systems through
design improvements or replacements.
Initial depot-level maintenance requirements are determined and a
proposed maintenance schedule is developed and approved based on
overall ship maintenance policy, specific maintenance tasks,
operational requirements, force structure needs, and fielding
schedules. These approved maintenance schedules undergo numerous
changes as new requirements are identified, others are completed or
canceled, operational priorities change, and budgets fluctuate.
Thus, these factors result in many deviations from the plan once
actual maintenance is executed and complicate the measurement of
exactly what maintenance should be considered deferred. Less
flexibility in scheduling is permissible with submarines than surface
ships because prescribed maintenance must be done on submarines
periodically for them to be certified to dive. If the specified
maintenance is not done by the time required, the submarine is not to
be operated until the maintenance is accomplished.
IMPLEMENTING GUIDANCE NEEDED TO
ENSURE CONSISTENT AND TIMELY
REPORTING OF DEFERRED
MAINTENANCE
------------------------------------------------------------ Letter :5
Neither DOD nor the Navy has developed implementing guidance for
determining and disclosing deferred maintenance on financial
statements. Navy officials said that they are reluctant to develop
their procedures until DOD issues its guidance. As we reported to
DOD in our September 30, 1997, letter, DOD guidance is important to
ensure consistency among the military services and to facilitate the
preparation of DOD-wide financial statements. We also stated that
the guidance needs to be available as close to the beginning of
fiscal year 1998 as possible so that the military services have time
to develop implementing procedures and accumulate the necessary data
to ensure consistent DOD-wide implementation for fiscal year 1998.
We found that operations and comptroller officials from both DOD and
the Navy have varying opinions concerning the nature of unperformed
maintenance that should be reported as "deferred." The differences in
opinions arise from various interpretations of how to apply the
standard to the maintenance process. The views on how to apply the
deferred maintenance standard to the ship maintenance process ranged
from including only unfunded ship overhauls to estimating the cost of
repairing all problems identified in each ship's maintenance log.
Brief descriptions of various views of how SFFAS No. 6 could be
applied to disclosing deferred depot-level maintenance for ships
follow. The descriptions explain what would be considered deferred
maintenance for ships and the rationale for each option.
DISCLOSING ONLY UNFUNDED
SHIP OVERHAULS
---------------------------------------------------------- Letter :5.1
In its budget justification documents, the Navy reports deferred
depot-level maintenance for unfunded ship overhauls. The Navy
Comptroller officials' rationale for excluding other types of
depot-level maintenance not done is that overhauls represent the
Navy's top priority for accomplishing ship depot-level maintenance
and, therefore, should be highlighted for the Congress when a lack of
funds prevents them from occurring when needed. While overhauls
consumed most of the depot-level maintenance funding in past years,
the Navy is performing fewer overhauls as it moves toward a more
incremental approach of doing smaller amounts of depot-level work
more frequently. Consequently, overhauls now represent a relatively
small part of the Navy's ship depot-level maintenance budget. In
fiscal year 1996, over 80 percent of the Navy's ship depot-level
maintenance budget was spent on work other than ship overhauls.
Specifically, the Navy reported spending almost
$1.7 billion for other ship depot-level maintenance and $367.8
million for ship overhauls.
The Navy officials' rationale for disclosing only unfunded overhauls
as deferred depot-level maintenance in financial statements is that
the data are readily available and are consistent with what is being
reported in budget justification documents. However, this view omits
all other types of scheduled depot-level maintenance not done and
clearly does not meet the intent of SFFAS No. 6. FASAB addressed
the deferred maintenance issue because of widespread concern over the
deteriorating condition of government-owned equipment. FASAB
reported that the consequences of underfunding maintenance (increased
safety hazards, poor service to the public, higher costs in the
future, and inefficient operations) are often not immediately
reported and that the cost of the deferred maintenance is important
to users of financial statements and key decisionmakers. Using this
option, the amount disclosed for fiscal year 1996 (the most recent
fiscal year data available) would have been $0.
DISCLOSING AMOUNTS IN FLEET
BACKLOG REPORTS
---------------------------------------------------------- Letter :5.2
Both Atlantic and Pacific fleet officials monitor deferred ship
depot-level maintenance and report these backlog amounts to the Navy
Comptroller although these amounts are not reported in the Navy's
budget justification documents. These fleet backlog reports quantify
the ship depot-level maintenance work that should have been performed
by the end of the fiscal year according to the Chief of Naval
Operations (CNO)\8 but was not done and was not rescheduled. The
rationale for using the amounts on the fleet backlog reports for
financial statement reporting is that the data are readily available,
and it is a more realistic representation of deferred maintenance
than just the unfunded ship overhauls. Using this option, the amount
disclosed in the Navy's financial statements for fiscal year 1996
would have been about $117.5 million.
However, the fleet backlog reports do not include any depot-level
work rescheduled to future years. Under one approach, the estimated
value of work rescheduled beyond the ship's approved maintenance
schedule time frames, as established by the CNO, would also be
disclosed. The rationale for adding the estimated value of work
rescheduled beyond these time frames is that the CNO Notice provides
the Navy's established requirements for accomplishing ship
depot-level maintenance; therefore, any work rescheduled beyond the
specified time frames should be considered deferred. For example,
maintenance work on two Pacific Fleet destroyers was rescheduled
beyond the CNO-specified time frames of June and July 1996,
respectively, to October 1996. On the other hand, maintenance on two
Atlantic Fleet submarines was rescheduled from the end of one fiscal
year to early the next fiscal year but still within CNO-specified
time frames. Under this option, the estimated value of the
maintenance work rescheduled to the next fiscal year on the
destroyers would be recognized as deferred maintenance at the end of
the fiscal year. However, the value of the rescheduled work on the
submarines would not be recognized because it was still to be
performed within the CNO-specified time frames. Under this option,
using Navy data, the amount disclosed for fiscal year 1996 would have
been about $15.1 million greater or $132.6 million.
Another option discussed with Navy officials would be to modify the
fleet backlog reports to include the estimated value of any scheduled
maintenance work not accomplished during the fiscal year, regardless
of the CNO-specified time frames. Under this approach, the estimated
value of work on the two submarines discussed above would also be
recognized as deferred maintenance. The rationale for this option is
that any scheduled work moved to the next fiscal year should be
disclosed as deferred maintenance at the end of the fiscal year when
the scheduled maintenance was to be performed. Under this option,
using Navy data, the amount disclosed for fiscal year 1996 would have
been about $188.5 million.
--------------------
\8 The Chief of Naval Operations (CNO) Notice (OPNAVNOTE 4700)
establishes the Navy's planned maintenance cycles for depot-level
maintenance for all Navy ships, except those assigned to the Military
Sealift Command. Each maintenance cycle consists of a standard
operating interval with an allowable deviation and a standard
duration for accomplishing the scheduled depot maintenance.
DISCLOSING THE COST OF
REPAIRING ALL PROBLEMS
IDENTIFIED IN EACH SHIP'S
MAINTENANCE LOG
---------------------------------------------------------- Letter :5.3
Another view discussed with Navy officials for disclosing deferred
ship maintenance is to report the costs to perform the needed work on
all items listed on each ship's maintenance log at the end of the
fiscal year. The rationale for using this source is that the log may
more completely capture all levels of maintenance needed on each
ship. Depending on the size and condition of the ship, the
maintenance log could contain only a few items or many thousands.
However, the Navy does not routinely determine the cost of items that
appear on a ship's maintenance log. Further, although these logs are
supposed to be up-to-date and routinely checked for accuracy and
completeness, Navy fleet officials stated that estimating the cost to
repair the items on each ship's log would be very time-consuming and
costly because maintenance tasks that are accomplished are not
routinely deleted from the log, and the time estimates contained in
the logs may be inaccurate. Nevertheless, officials said that using
the estimated value of all items listed on each ship's maintenance
log would exceed any of the above estimates due to the sheer volume
of items included.
KEY ISSUES TO BE RESOLVED
------------------------------------------------------------ Letter :6
As discussed in our earlier report, implementing guidance is needed
so that all military services consistently apply the deferred
maintenance standard. As a result of the variations in the way the
deferred maintenance standard can be applied to ships (including
submarines), DOD and the Navy need to consider a number of issues,
including the following.
-- Acceptable asset condition - SFFAS No. 6 allows agencies to
decide what "acceptable condition" means and what maintenance
needs to be done to keep assets in that condition. Determining
acceptable operating condition could be in terms of whether (1)
the ship can perform all or only part of its mission, (2) the
most important components of the ship function as intended, (3)
the ship meets specified readiness indicators, or (4) the ship
and/or its major components meets some other relevant criteria
determined by management. The determination may also be
influenced by whether the ship is currently deployed or
scheduled to be deployed in the near future.
An example of the acceptable operating condition issue is as follows.
Each ship is composed of many systems, and those systems critical to
the ship's ability to meet its operational commitments and achieve
high readiness scores (such as the weapons systems) rarely have
maintenance deferred. On the other hand, maintenance on the ship's
distributive systems (such as the ship's pipes and hulls) are more
likely to be deferred since this has little direct impact on the
ship's readiness indicators. Therefore, the question is whether
needed maintenance not performed on the distributive systems, should
be disclosed as deferred maintenance since it has little impact on
the ship's readiness scores but could affect the ship's long-term
viability.
-- Timing of deferred maintenance recognition - Each ship class has
standard operating intervals between visits to the depot;
however, changes to this plan may take place as the scheduled
maintenance approaches (except for certain maintenance
requirements for the submarines and aircraft carriers which have
mandated maintenance intervals to meet safety requirements) due
to operational considerations, funds available, and
condition-based inspections. To ensure that meaningful,
consistent data are provided, DOD and the military services will
need to decide which one of the many possible alternatives will
be used to determine when maintenance needed but not performed
is considered deferred. The timing issue involves what needed
maintenance should be recognized as deferred as of the end of
the fiscal year--the date specified in the CNO Notice, the date
the maintenance needs were identified, or the date the
maintenance was scheduled.
-- Applicability of the reporting requirements - DOD and the
military services will need to determine whether deferred
maintenance should be reported for assets that are not needed
for current requirements. For example, should maintenance
deferred on ships being considered for decommissioning or not
scheduled for deployment for a significant period be recognized
on DOD's and the Navy's financial statements? Reporting the
maintenance not done as deferred would more accurately reflect
how much it would cost to have all reported assets in an
acceptable operating condition; however, it would also be
reporting maintenance which is not really needed at this time
and which may never be needed or done.
-- Critical and noncritical deferred maintenance - If critical
versus noncritical deferred maintenance is to be disclosed, such
a disclosure must be consistent among the services, and critical
must be defined. For example, different kinds of maintenance
needed--from preventive to urgent for continued operation--may
be used to differentiate between critical and noncritical.
Also, if DOD chooses to disclose deferred maintenance for all
reported assets, including maintenance on assets not needed for
current requirements, identifying the types of assets included
in the deferred maintenance disclosure may be another way to
differentiate between critical and noncritical.
Although our work focused on the depot level, the deferred
maintenance standard applies to all maintenance that should have been
done, regardless of where the maintenance should have taken place.
Therefore, in addressing the issues in this report and others
regarding deferred maintenance, all levels of maintenance must be
considered.
AGENCY COMMENTS
------------------------------------------------------------ Letter :7
In comments on a draft of this report (see appendix I), the
Department of Defense agreed that it must consider the key issues
identified in this report as it implements deferred maintenance
reporting requirements.
---------------------------------------------------------- Letter :7.1
We are sending copies of this letter to the Chairmen and Ranking
Minority Members of the Senate Committee on Appropriations, the House
Committee on Appropriations, the Senate Committee on Armed Services,
the House Committee on National Security, the Senate Committee on
Governmental Affairs, and the House Committee on Government Reform
and Oversight. We are also sending copies to the Director of the
Office of Management and Budget, the Secretary of Defense, the
Assistant Secretaries for Financial Management of the Air Force and
Army, and the Acting Director of the Defense Finance and Accounting
Service. Copies will be made available to others upon request.
Please contact me at (202) 512-9095 if you or your staffs have any
questions concerning this letter. Cleggett Funkhouser, Merle
Courtney, Chris Rice, Rebecca Beale, and John Wren were major
contributors to this report.
Lisa G. Jacobson
Director, Defense Audits
(See figure in printed edition.)Appendix I
COMMENTS FROM THE DEPARTMENT OF
DEFENSE
============================================================== Letter
*** End of document. ***