Defense Logistics: Air Force Report on Contractor Support Is Narrowly
Focused (Letter Report, 04/20/2000, GAO/NSIAD-00-115).

Pursuant to a legislative requirement, GAO reviewed the Department of
Defense's report to Congress on its contractor support, focusing on the
extent to which the report: (1) identified programs or systems using or
planning to use contractor support arrangements; (2) supported the Air
Force's view that the contractor support provides equal or superior
warfighting capabilities; (3) identified the impact of such support
arrangements on the government's logistics depots and core government
logistics management skills; and (4) identified processes and criteria
followed in determining whether government employees or the private
sector can perform logistics management functions more cost-effectively.

GAO noted that: (1) although the Air Force was required to identify all
of its programs that are using or planning to use such support
arrangements, the definitions used resulted in the identification of
eight programs or systems as using or planning to use such support
arrangements; (2) given the lack of definitions for Total System
Performance Responsibility and similar programs in section 344 of the
National Defense Authorization Act for Fiscal Year 2000, GAO does not
question the legal propriety of the definitions the Air Force used in
its report; (3) however, a more complete picture of the Air Force's use
of multifunction, long-term contractor support would include many other
systems and subsystems; (4) the Air Force could have included at least
75 systems that are using or planning to use such support arrangements;
(5) although the Air Force was required to report on how these
contractor support arrangements are expected to support readiness and
warfighting capability, it provided a limited analysis for its
conclusion; (6) while the report generally links the use of such support
arrangements to equal or better weapon system availability and
readiness, the impact of such support arrangements on readiness is
uncertain because other factors that affect these areas were not
addressed; (7) while the report was expected to address the impact of
these contractor support arrangements on the government's logistics
depots and on core government logistics management skills, the report
provided only cursory comments on the process the Air Force used to make
workload allocation decisions for depot maintenance; (8) it did not
discuss the impact of contractor support on government depot maintenance
capabilities or address other logistics management skills that may need
to be maintained in-house; (9) thus, the report did not provide a clear
picture of the impact of contractor support on core government logistics
management skills, including that required for the military depots; (10)
in responding to the requirement to identify the processes and criteria
followed in determining whether government employees or the private
sector can perform logistics management functions more cost-effectively,
the report states that a business case analysis or a cost comparison is
performed to determine the best value solution; and (11) however, GAO's
work shows that this process is not always followed.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  NSIAD-00-115
     TITLE:  Defense Logistics: Air Force Report on Contractor Support
	     Is Narrowly Focused
      DATE:  04/20/2000
   SUBJECT:  Cost effectiveness analysis
	     Equipment maintenance
	     Privatization
	     Weapons systems
	     Logistics
	     Department of Defense contractors
	     Reporting requirements
	     Air Force procurement
	     Procurement planning
IDENTIFIER:  KC-10 Aircraft
	     Air Force Total System Performance Responsibility Program
	     U-2 Aircraft
	     Joint Surveillance Target Attack Radar System
	     B-2 Aircraft
	     F-117 Aircraft
	     C-17 Aircraft
	     F-15 Aircraft
	     F-16 Aircraft
	     KC-135 Aircraft
	     C-5 Aircraft
	     C-141 Aircraft

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GAO/NSIAD-00-115

Appendix I: Our Analysis of Support Strategies for Air Force
Materiel Command Systems and Subsystems as of
March 2000

22

30

Table 1: GAO Analysis of Systems Using or Planning to Use Various
Types of Support Arrangements as of March 2000 10

DOD Department of Defense

National Security and
International Affairs Division

B-284930

April 20, 2000

Congressional Committees

For many years, the Air Force has relied on contractors for most of the
required logistics support for aircraft that are similar to commercially
available aircraft.1 Examples of aircraft using this kind of support include
the C-9 aeromedical evacuation aircraft and the KC-10 tanker/airlift
aircraft. Also, some high-cost, classified systems that are produced in
small quantities, such as the U-2 reconnaissance aircraft, use this type of
support arrangement. Using such an arrangement for systems similar to those
used in the private sector can result in savings because it is possible to
share common parts supply and other support structure costs, such as
maintenance facilities and personnel, with other public and private sector
users. Since the mid-1990s, the Department of Defense (DOD) and the services
have initiated actions to expand the use of such contractor logistics
support to other military programs. The Air Force is the service with the
most extensive use of this logistics support strategy.

Section 344 of the National Defense Authorization Act for Fiscal Year 2000
required the Secretary of the Air Force to provide a report to the Congress
by February 1, 2000, identifying all Air Force programs that are currently
using or planning to use a program the Air Force refers to as Total System
Performance Responsibility or similar contractor support programs.2 For
these contractor-supported programs, the report was to include an evaluation
of how the programs support warfighting readiness and how the programs
complement the support provided by the government's logistics depots and
affect core government logistics management skills. The evaluation was also
to address the process and criteria used by the Air Force to determine
whether government employees or the private sector can perform logistics
management functions more cost-effectively.

By a letter dated February 11, 2000, the Air Force submitted the Total
System Performance Responsibility report to the Congress. The report is
3 pages long, with a 2-page attachment providing a definition of Total
System Performance Responsibility and a listing of eight programs--four
current programs, two planned programs and two similar programs. The body of
the report listed the mandated requirements and gave a one-paragraph
discussion on two issues and a five-paragraph discussion on the third issue.

Section 344 also required us to evaluate the Air Force's report and report
to the Congress. Accordingly, this report addresses the extent to which the
Air Force's report provides a comprehensive treatment of issues required by
section 344 and gives a complete picture concerning the Air Force's reliance
on Total System Performance Responsibility and similar programs.
Specifically, we address the extent to which the report (1) identified
programs or systems3 using or planning to use contractor support
arrangements, (2) supported the Air Force's view that the contractor support
provides equal or superior warfighting capabilities; (3) identified the
impact of such support arrangements on the government's logistics depots and
core government logistics management skills; and (4) identified processes
and criteria followed in determining whether government employees or the
private sector can perform logistics management functions more
cost-effectively.

Overall, the Air Force's report, through use of a narrow definition of
terms, does not provide as complete a picture as it might have concerning
the Air Force's reliance on Total System Performance Responsibility and
similar programs. Further, the report provides only limited responses to
specific questions contained in section 344. Specifically:

ï¿½ Although the Air Force was required to identify all of its programs that
are using or planning to use such support arrangements, the definitions used
resulted in the identification of eight programs or systems as using or
planning to use such support arrangements.4 Given the lack of definitions
for Total System Performance Responsibility and similar programs in section
344, we do not question the legal propriety of the definitions the Air Force
used in its report. However, a more complete picture of the Air Force's use
of multifunction, long-term contractor support would include many other
systems and subsystems, including those using interim contractor support
arrangements involving multiple logistics functions that usually extend for
long periods of time. The Air Force could have included at least 75 systems
that are using or planning to use such support arrangements.5

ï¿½ Although the Air Force was required to report on how these contractor
support arrangements are expected to support readiness and warfighting
capability, it provided a limited analysis for its conclusion. While the
report generally links the use of such support arrangements to equal or
better weapon system availability and readiness, the impact of such support
arrangements on readiness is uncertain because other factors that affect
these areas are not addressed. For example, while the aircraft systems with
such support arrangements have higher mission capable rates compared to
other systems, they also have advantages that have contributed to this
success. Contributing factors are that aircraft receiving this contractor
support are relatively new and have a small fleet size, which contribute to
fewer maintenance problems and a less complex supply chain.

ï¿½ While the report was expected to address the impact of these contractor
support arrangements on the government's logistics depots and on core
government logistics management skills, the report provided only cursory
comments on the process the Air Force used to make workload allocation
decisions for depot maintenance. It did not discuss the impact of contractor
support on government depot maintenance capabilities or address other
logistics management skills that may need to be maintained in-house. Thus,
the report did not provide a clear picture of the impact of contractor
support on core government logistics management skills, including that
required for the military depots.

ï¿½ In responding to the requirement to identify the processes and criteria
followed in determining whether government employees or the private sector
can perform logistics management functions more
cost-effectively, the report states that a business case analysis6 or a cost
comparison is performed to determine the best value solution. However, our
work shows that this process is not always followed. For example, the Air
Force decided on a future support strategy for the Joint Surveillance Target
Attack Radar System without performing a business case analysis or a cost
comparison. Additionally, when a business case analysis is performed, the
analysis is sometimes limited.

The Air Force has for many years used the term contractor logistics support
to describe its strategy of using contractors to provide long-term logistics
support in such functional areas as supply management, engineering, and
depot maintenance. The term "interim contractor support" is used when the
support capability is expected to be transitioned eventually from the
contractor to the government. For some programs, such as missile or
electronic systems, warranties have been included in contracts with
equipment manufacturers that, in essence, may result in long-term contractor
support.7 Terms such as flexible sustainment and Total System Performance
Responsibility have been used more recently for long-term contractor support
arrangements that have given contractors greater responsibilities and
control for support of military systems and equipment. While no formal
definition of Total System Performance Responsibility has been established,
Air Force officials state generally that the difference between Total System
Performance Responsibility and contractor logistics support is that for the
former category, the contractor, rather than the government, is the
integrator of all the support functions. Under other forms of contractor
logistics support, the government is the integrator of the support
functions.

Regardless of definitions, the extent of contracting for logistics support
has often been a source of concern and debate between DOD and the Congress
and has led to various legislative provisions affecting DOD's ability to
contract with the private sector for logistics support services. One such
provision is 10 U.S.C. 2466, which provides that not more than 50 percent of
the funds made available in a fiscal year to a military department or a
defense agency for depot-level maintenance and repair can be used to
contract for private sector performance. Another provision is 10 U.S.C.
2464, which provides for core logistics capability that is to be identified
by the Secretary of Defense and to be owned and operated by the government.8

We have issued reports in recent years addressing the allocation of depot
maintenance work between the public and private sectors. In March 2000, we
provided testimony before the Subcommittee on Readiness and Management
Support, Senate Committee on Armed Services, on the Secretary of the Air
Force's waiver of the 50-percent limitation on the use of contractor
maintenance.9 With the percentage of such private sector support to the Air
Force growing closer to the 50-percent ceiling in recent years, Members of
Congress have expressed concern about increased reliance on contractor
support. A list of related products is included at the end of this letter.

Responsibility or Similar Programs

While it was required to identify all Air Force programs that are currently
using or planning to use Total System Performance Responsibility or similar
programs, the Air Force used a narrow definition of terms. Given the absence
of definitions in the legislation, the Air Force has broad discretion in
defining terms for reporting purposes. Nevertheless, our analysis shows that
the Air Force is using or planning to use long-term multifunction contractor
support arrangements for many other systems in addition to the eight
identified in the report.

Section 344 mandated that the Air Force report to the Congress, identifying
all programs using or planning to use Total System Performance
Responsibility or similar programs. The report focuses only on eight weapon
system platforms. For purposes of its report, the Air Force defined Total
System Performance Responsibility as "a product support strategy for major
weapon system platforms whereby one or a limited number of contractors are
responsible for system modifications, integration tasks and sustainment
tasks to meet warfighter requirements.10 The government remains accountable
for program execution." The Air Force defined "similar programs" as those
programs where contractors perform some or all of the logistics functions in
support of major weapon system platforms.

The report identifies four systems that currently use Total System
Performance Responsibility--the B-2 bomber, the F-117 fighter, the C-17
cargo aircraft, and the Intercontinental Ballistic Missile. The report also
lists two systems planning to use Total System Performance
Responsibility--the U-2 reconnaissance aircraft and the Joint Surveillance
and Target Attack System. It also identifies two systems using similar
support programs--the KC-10 tanker/airlift and the E-4 command and control
aircraft. While the report also states there are 27 weapon systems and many
other simulator or equipment items using contractor logistics support, only
2 of these are major weapon system platforms--the KC-10 tanker aircraft and
the E-4 command and control aircraft. Thus, only those two were reported as
similar programs.

Given the lack of definitions for Total System Performance Responsibility
and similar programs in section 344, we do not question the legal propriety
of the definitions the Air Force used in its report. However, a more
complete picture of the Air Force's use of multifunction, long-term
contractor support would include many other systems and subsystems,
including those using interim contractor support arrangements involving
multiple logistics functions that usually extend for long periods of time.
It would also include contractor warranties, which involve multiple
functions provided under long-term contracts.11

In discussions with Air Force program managers, we identified 127 systems
and subsystems that managers are currently managing and obtained information
on the type of support arrangements used or being planned. Using the more
complete set of factors noted above, we identified 67 additional
systems--for a total of 75 that are using or planning to use various forms
of multifunction, long-term contractor support. Of those remaining, 39
systems are using other logistics support strategies--10 using government
support and 29 using or planning to use a combination of public and private
sector support; the type of support to be used for 13 systems had not yet
been determined at the time of our review. These are summarized in appendix
I.

A breakdown of the 127 systems included in our analysis is shown in
table 1.

Table 1: GAO Analysis of Systems Using or Planning to Use Various Types of
Support Arrangements as of March 2000

                                   Type of
 Type program                      support        Type of support    Total
                                   in use         planned
 Multifunctional long-term contractor support
 Total System Performance
 Responsibility                    4              5
 Contractor logistics support      33             13
 Contractor warranty               7              11
 Interim contractor support        0              2
 Subtotal                          44             31                 75
 Other
 Government supported              10             0
 Mixed public/private              26             3
 Not yet determined                None           13
 Subtotal                          36             16                 52
 Total                             80             47                 127

Source: GAO analysis of Air Force data.

An example of a system that could have been included in the Air Force's
report is the Space Based Infrared System. This system shows that programs
other than weapon system platforms may be large and costly, and their
inclusion could be important to providing a more complete picture of planned
use of long-term multifunctional contractor support. The system is a
replacement for the Defense Support Program, which provides early detection
and warning of missile and space launches. It has an expected acquisition
cost of $1.5 billion, and it is to be supported under a contractor support
arrangement. The Air Force plans for a contractor to provide most support
activities --including provisioning, spare parts management, and depot
maintenance. This new system is expected to replace the old system on an
incremental basis beginning in fiscal year 2000, and the government
infrastructure that supports the old system will be phased out.

Equal to or Better Than Other Support Arrangements

Although the Air Force was required to report on how Total System
Performance Responsibility and similar contractor support programs are
expected to support readiness and warfighting capability, the Air Force
provided limited support to the conclusion it reached. While the report
generally links the use of this type of contractor support arrangement to
increased weapon system availability and readiness, it does not provide a
sufficient basis for reaching that conclusion.

The report states that in fiscal year 1999 mission capable rates12 were
higher for aircraft systems with Total System Performance Responsibility
support (F-117, KC-10, and C-17) than for other systems not supported by
this type of support strategy. The report also states that, while direct
comparisons are difficult, in general, logistics support provided by
contractors had been equal to or better than support provided by government
sources such as government depots. However, based on the report, it is not
possible to determine whether contractor-provided support is equal or
superior.

Several factors that were not addressed in the report can affect mission
capable rates, leaving unclear to what extent contractor-provided logistics
support was the major source of improved logistics support. For example,
while the aircraft systems with contractor support arrangements have higher
mission capable rates compared to the other systems, they also have
advantages that may have contributed to this success. One key factor is that
aircraft receiving contractor support are relatively new and have smaller
fleet sizes, which can result in fewer maintenance problems and a less
complex supply chain. Conversely, the traditionally supported aircraft noted
by the Air Force (F-15, F-16, KC-135, C-5, and C-141) tend to be older and
have larger fleet size, leading to more maintenance needs and a more complex
supply chain. For example, the average number of deployed aircraft for the
systems identified in the Air Force report as using Total System Performance
Responsibility was 59, while the average size of the five reported aircraft
that were traditionally supported was 586. The contractor-supported aircraft
were deployed during the 1980s and 1990s compared to deployment dates in the
1960s and 1970s for the traditionally supported aircraft.

Funding support for readiness is also a critical element that can influence
mission capable rates. For example, the Air Force has to prioritize
requirements and determine at what level various requirements can be funded.
According to Air Force officials at operating commands, funding that is
designated for and restricted by specific programs, such as Total System
Performance Responsibility, becomes obligations that are often characterized
as "must-pay" bills and they have funding priority over other programs.
While this funding commitment helps the programs that have contractor
support, they can create greater funding pressures on other programs that
sometimes have to absorb the impact of unanticipated requirements that
emerge during the year. For example, in November 1999, Air Force Space
Command officials who are responsible for funding certain requirements for
the Intercontinental Ballistic Missile total support contract expressed
concerns that contract cost growth was reducing the Command's operation and
support flexibility in other areas.

Management Skills Are Not Fully Discussed

While the Air Force's report was expected to address the impact of Total
System Performance Responsibility and similar programs on logistics depots
and core government logistics management skills,13 the report provided only
cursory comments on the use of their decision process to make workload
allocation decisions for depot maintenance. It does not discuss the impact
of contractor support on government depot maintenance capabilities, as
required by section 344. Additionally, it does not address other logistics
management skills that may need to be maintained in-house. Thus, the report
does not provide a clear picture of the impact of long-term contractor
logistics support on core government logistics management skills, including
the military depots.

Although the report indicates that the Air Force routinely evaluates the
impact on core capabilities prior to a decision to contract out depot
maintenance, this is not always done. Available information indicates that
the Air Force has contracted out workloads in the past without reevaluating
the impact on core. For example:

ï¿½ In 1996, the Air Force privatized in place aircraft and missile inertial
guidance and navigation systems work previously performed at the Aerospace
Guidance and Metrology Center in Newark, Ohio. Prior to the closure of this
depot, the workload in this facility had been identified as 100 percent
core. About 900,000 hours of depot maintenance workload was involved.

ï¿½ In 1997, the Air Force contracted out support for a new radar system after
having earlier determined that this was core work.

ï¿½ In 1998, the Air Force contracted for total contractor support of the
F100-229 engine, although that work had been previously identified as core
work.

According to key officials at the Air Force Materiel Command, the
maintenance depots are not getting work involving new, advanced technology
weapon systems that they would need to have if they are to establish and
maintain core capabilities in these areas. This view was discussed in a
February 9, 2000, memorandum from the Ogden Air Logistics Center to
Headquarters, Air Force Materiel Command that stated:

"Infusion of new technology workloads from new weapon systems is essential
to maintain core. Therefore the future of the [air logistics center] is
contingent upon acquiring workloads in each technical repair center that
will continue to provide a viable organic source of repair for the using
commands. If an [air logistics center] is determined core or best value in a
particular technology, then any new weapon system acquired that has the
associated technology should have the respective core allocation from day
one of the sustainment life cycle. The core determination is weighted
heavily towards older high surge workloads. Depots are provided new
workloads often only after the original equipment manufacturer loses
interest."

In addition to concerns about depot maintenance core capabilities, various
logistics center personnel have also raised concerns about the need to
retain in-house technical and management capabilities in related functional
areas. These could include such functions as supply management and
engineering. As responsibilities for integration and support of a system are
consolidated with individual contractors, the government may no longer have
a requirement to perform certain of these functions. However, since the Air
Force does not have a formal process for evaluating core requirements in
this area, it is not clear whether the Air Force has evaluated these
functional areas of logistics to determine how much, if any, capability or
expertise should nonetheless be retained within the government to assure
continued performance. The Air Force is currently considering contracting
out many of these positions.

Decisions Are Not Always Being Followed

In responding to the requirement to identify the processes and criteria
followed in making contractor support decisions, the Air Force states that
it bases these decisions on a business case analysis; our work, however,
shows that this process is not always being followed. Additionally, when a
business case analysis is performed, the analysis is often limited.

The Air Force's report indicates that, to determine the best value solution
for the Air Force's logistics support needs, a business case analysis or a
cost comparison is performed, which includes consideration of total system
costs and performance factors. It also indicates that the extent and timing
of the assessments may vary depending on individual program circumstances
and, if applicable, Office of Management and Budget Circular A-76 cost
comparison procedures are used to support portions of these decisions.
However, our prior14 and ongoing reviews of the processes used by the Air
Force Materiel Command to make its determinations concerning contractor
support arrangements showed that they were often implemented or planned as
long-range sole-source relationships with prime contractors without
performing a detailed business case analysis. In some cases, where such
analyses were done, the analysis was limited. Further, we found that the Air
Force had often concluded that A-76 procedures did not apply.

For example, without a supporting analysis, in November 1999 the Air Force
approved acquisition plans that call for a transfer of the responsibility
for system support for the Joint Surveillance Target Attack Radar System
from the government to a contractor. The Air Force expects to reduce support
costs and improve system availability by awarding a multimillion dollar,
5-year, sole-source contract in July 2000. The contractor is to assume
support responsibility that includes the air vehicle, ground support
systems, operational and maintenance trainers, supply chain and spares
management, systems engineering, and technical data. According to program
office officials, an A-76 cost comparison is not applicable to any part of
the initiative because this future support arrangement is viewed as
reengineering the function rather than simply transferring work to

the private sector. They also pointed out that a cost model will be
developed and that source-of-repair assignment decisions15 will be made as
necessary. However, as of March 2000, the program office had not performed a
cost-benefit analysis of this future support arrangement. In commenting on
our draft report, Air Force officials stated that the program office intends
to do a business case analysis when cost data becomes available from the
contractor.

Our ongoing review of contracting out in the Air Force Materiel Command also
shows that in those instances where cost comparisons or business case
analyses were completed or are being planned, the analyses often were, or
are expected to be, limited to (1) a comparison of current and projected
program operating costs using existing strategy to contractors' cost
estimates without consideration of whether the Air Force-managed program
could be improved or (2) only the depot maintenance activity. For example,
in December 1997, the program office awarded a competitive,
15-year contract for support for the Intercontinental Ballistic Missile
System. The contract provides that the contractor is responsible for system
support integration and for system support, major modifications, and
subcontractor management. A program office analysis reported that the total
support contract would save $1.2 billion over the contract period--the
difference between the estimated costs of the current strategy and the
proposed contractor costs. However, we found that the estimated savings
could be inflated because the program office (1) did not identify whether
internal improvements to current performance were feasible to reduce program
costs in the out years and (2) made the assumption that actual program
funding in future years will be the same as the funding requested (which
generally proves not to be the case).

We requested comments on a draft copy of this report from the Department of
Defense. On April 13, 2000, the Assistant Deputy Under Secretary of Defense
(Maintenance Policy, Programs, and Resources) and the Deputy Division Chief
for Maintenance Management, in the Office of the Deputy Chief of Staff
Installations and Logistics, Headquarters, U.S. Air Force, and
representatives from other Air Force Headquarters offices, including
Acquisition and General Counsel, provided oral comments. They generally
agreed with the facts presented but expressed some concerns about our
observations in these areas: (1) the scope of systems included in our
definition of Total System Performance Responsibility and similar programs,
(2) our discussion of core logistics management skills, and (3) a statement
that the depots are not getting new advanced technologies. They also made
several technical comments for clarification. Where appropriate, the body of
the report has been changed to reflect these comments.

Air Force officials stated that our definition of Total Systems Performance
Responsibility and similar programs went broader than they believe the
Congress intended. They also said they believe that warranties and interim
contractor support should not be considered as Total Systems Performance
Responsibility systems because the contractor does not function as the
integrator as it does for Total Systems Performance Responsibility systems.
We do not question the legal propriety of the definitions of Total Systems
Performance Responsibility and similar programs used in the Air Force
report. However, since the Air Force's definition, which limited the report
to eight major weapon system platforms, included systems using contractor
logistics support--a long-term, multifunction contractor support strategy
where the government, rather than the contractor, is the integrator--we
considered it appropriate to reflect other systems that also use this
long-term multifunction contract strategy. Regarding the question of whether
warranty and interim contractor support programs should have been identified
as similar programs, since they also provide long-term, multifunction
contractor support, we also consider it appropriate to identify systems
using these support strategies.

Air Force officials also disagreed with our observation that the Air Force
does not have a process for determining core logistics management skills.
They said it has a process for evaluating depot maintenance core (the
equipment, personnel, and services needed to repair or maintain weapon
systems to ensure an effective and timely response to a mobilization or
other national emergency), and in their view, core logistics management
skills are those skills necessary to manage core depot maintenance
workloads. Our draft report distinguished between core logistics management
skills, which includes various logistics management skills necessary to
fulfill the Department's logistics mission responsibilities, and those core
skills that only represent one logistics function--depot maintenance.
However, we added a definition of core logistics skills to further clarify
the distinction made in our report.

Finally, Air Force officials disagreed with a statement in our report that
the maintenance depots are not getting work that involves incorporating new
advanced technologies on new weapon systems and components--work that is
needed to establish core capability for these systems. They said that the
Air Force considers the technological needs of its depots through the depot
maintenance core assessment methodology, which includes an analysis of
technology requirements for depots. However, according to information
provided us by officials at Air Force logistics centers, the Air Force's
current core assessments are limited to evaluating the technological needs
only for the current year's requirements, not
longer-term requirements to support new system technologies. Additionally,
the core analysis process tends to drive older technology systems into the
depots, rather than newer ones, since the private sector is often no longer
interested in the repair of older technology systems and components. Thus,
the core process would not generally provide for the infusion of technology
capabilities needed to support newer systems. For example, as the C-141
cargo aircraft is being phased out of the inventory, the Air Force's core
methodology does not provide for acquiring the capabilities for technologies
needed to support the replacement aircraft, the C-17, as it is phasing into
the inventory.

In analyzing the Air Force's report, we relied heavily upon our prior work
and our ongoing work regarding the Department of Defense's and the services'
contracting out plans. We interviewed officials responsible for preparing
the Air Force's report but did not attempt to verify the data provided in
the Air Force's report.

To address the extent to which the report identified programs or systems
using or planning to use Total System Performance Responsibility and similar
programs, we used information being compiled from an ongoing assignment
concerning contracting out plans for the Air Force Materiel Command. We
visited system program offices at the Aeronautical Systems Center,
Wright-Patterson Air Force Base, Ohio; the Air Armament Center, Elgin Air
Force Base, Florida; the Electronic Systems Center, Hanscom Air Force Base,
Massachusetts; and the Space and Missile Systems Center, Los Angeles Air
Force Base, California. We also visited program offices at the Ogden Air
Logistics Center, Hill Air Force Base, Utah; the Warner Robins Air Logistics
Center, Robins Air Force Base, Georgia; the Sacramento Air Logistics Center,
McClellan Air Force Base, California; the Oklahoma City Air Logistics
Center, Tinker Air Force Base, Oklahoma; and the San Antonio Air Logistics
Center, Kelly Air Force Base, Texas.

At each program office, we examined proposals, acquisition strategy plans,
and related Air Force evaluations to identify the current support strategy
or planned strategy for the systems and subsystems managed by the program
office. We also discussed the use or planned use of Total System Performance
Responsibility and similar contractor support strategies with officials
responsible for program management.

In evaluating whether the Air Force supported its view that contractor
support provides equal or superior warfighting capabilities, we examined the
trend in mission capable rates for the eight systems for the 5-year period,
fiscal years 1995 through 1999. We also obtained from the program offices
information on factors that contributed to high or low rates.

To determine whether the Air Force's report adequately addressed the impact
of contract support arrangements on the government's logistics depots and
core government logistics management skills, we examined the statutory
requirements regarding contracting for depot maintenance and for the
retention of an in-house core logistics capability. We identified prior
examples where the Air Force had determined that workload previously
determined to be core was subsequently contracted out. We also discussed the
impact of contractor logistics support with officials at Air Force air
logistics centers and system program offices.

To determine whether the Air Force report provided a comprehensive treatment
of the process and criteria followed in determining whether government or
the private sector can perform logistics management functions more
cost-effectively, we reviewed applicable Air Force regulations and
instructions regarding the requirements for analyzing
cost-effectiveness of support strategies. We also examined cost analyses
done by the system program offices to identify the factors and elements that
were considered in such analyses. Finally, we discussed
cost-effectiveness of support strategies in use or planned with officials in
the system program offices.

We conducted our review from February through March 2000 in accordance with
generally accepted government audit standards.

We are sending copies of this report to the Honorable William S. Cohen,
Secretary of Defense; the Honorable F. Whitten Peters, Secretary of the Air
Force, and the Honorable Jacob J. Lew, Director of Office of Management and
Budget; and to interested congressional committees. We will also make copies
available to others on request.

Please contact me or Julia Denman at (202) 512-8412, if you or your staff
have any questions concerning this report. Key contributors to this
assignment were Bobby Worrell, Bonnie Carter, Fredrick Naas, Kimberly Seay,
and John Brosnan.

David R. Warren, Director
Defense Management Issues

List of Congressional Committees

The Honorable John Warner
Chairman
The Honorable Carl Levin
Ranking Minority Member
Committee on Armed Services
United States Senate

The Honorable Ted Stevens
Chairman
The Honorable Daniel Inouye
Ranking Minority Member
Subcommittee on Defense
Committee on Appropriations
United States Senate

The Honorable Floyd Spence
Chairman
The Honorable Ike Skelton
Ranking Minority Member
Committee on Armed Services
House of Representatives

The Honorable Jerry Lewis
Chairman
The Honorable John Murtha
Ranking Minority Member
Subcommittee on Defense
Committee on Appropriations
House of Representatives

Our Analysis of Support Strategies for Air Force Materiel Command Systems
and Subsystems as of March 2000

Continued

       System           Type of support       Planned support    Estimated cost
                        strategy in use          strategy         information
 Missiles, Munitions
 & Support Equipment
                                                                 Life-cycle
                                                                 acquisition
 (1) Joint Direct                                                cost estimate
 Attack Munition                                                 is
 (JDAM)                                    Contractor warranty   $4 billion
                                                                 based on fiscal
                                                                 year 1996
                                                                 President's
                                                                 budget.
                                                                 Life-cycle
                                                                 acquisition
 (2) Joint                                 Contractor warranty   cost estimate
 Air-to-Surface                            with total system     is
 Standoff Attack                           performance           $2.1 billion
 Munition (JASSM)                          responsibility        based on fiscal
                                                                 years 1996-1999
                                                                 actual budget
                                                                 authority.
                                                                 Life-cycle
                                                                 acquisition
                                                                 cost estimate
 (3) Joint Standoff                                              is
 Weapon (JSOW)                             Contractor warranty   $1.7 billion
                                                                 based on fiscal
                                                                 year 1999
                                                                 President's
                                                                 budget.
                                                                 Life-cycle
                                           Contractor warranty   acquisition
 (4) BRU-57 Smart                          with total system     cost estimate
 Rack                                      performance           is
                                           responsibility        $35.3 million
                                                                 for production
                                                                 Life-cycle
                                                                 acquisition
                                                                 cost estimate
 (5) Sensor Fuzed                                                is
 Weapon (SFW)                              Contractor warranty   $2 .0 billion
                                                                 based on fiscal
                                                                 year 2000
                                                                 President's
                                                                 budget.
                                                                 Estimated
                                                                 acquisition
                                                                 cost for fiscal
 (6) Wind Corrected                                              years 1995-2006
 Munitions Dispenser                       Contractor warranty   is $652.2
 (WCMD)                                                          million based
                                                                 on fiscal year
                                                                 1999
                                                                 President's
                                                                 budget.
                                                                 Operation and
 (7) Advanced Medium Contractor warranty                         maintenance
 Range Air to Air    with total system                           costs for
 Missile (AMRAAM)    performance                                 fiscal year
                     responsibility                              1999 totaled
                                                                 $760,370.
                                                                 Operation and
 (8) Upgrade to                                                  maintenance
 Maverick                                                        costs for
 Air-to-Ground       Contractor warranty                         fiscal year
 Missile (AGM-65H/K)                                             1999 totaled
                                                                 $12,301,840.
                                                                 Operation and
 (9) Air-to-Ground                                               maintenance
 Missile-130 Surface,                                            costs for
 Attack Guided       Contractor warranty                         fiscal year
 Munitions (AGM-130)                                             1999 totaled
                                                                 $3,178,434.
 (10) Guided Bomb    Government/contractor                       Included in
 (GBU-15)            logistics support                           AGM-130 above.
                                                                 Operation and
 (11) Air-to-Ground                                              maintenance
 Missile (AGM-142)   Contractor warranty                         costs for
 HAVE NAP                                                        fiscal year
                                                                 1999 totaled
                                                                 $4,736,092.
                                                                 Operation and
 (12)                                                            maintenance
 Inter-Continental   Contractor total                            costs for
 Ballistic Missile   system performance                          fiscal year
 (ICBM) Program      responsibility                              1999 totaled
                                                                 $314,155,875.
                                                                 Operation and
                                                                 maintenance
 (13) Advanced CruiseGovernment/contractor                       costs for
 Missile (AGM-129)   logistics support                           fiscal year
                                                                 1999 totaled
                                                                 $22,939,730.
                                                                 Operation and
 (14) Air Launch                                                 maintenance
 Cruise Missile      Government support                          costs for
 (AGM-86)                                                        fiscal year
                                                                 1999 totaled
                                                                 $22,069,857.
                                                                 Operation and
 (15) Conventional                                               maintenance
 Cruise Missile      Government/interim                          costs for
 (AGM-86C)           contractor support                          fiscal year
                                                                 1999 totaled
                                                                 $4,782,100.
                                                                 Operation and
                                                                 maintenance
 (16) HARM Missile   Government/contractor                       costs for
 (AGM-88)            logistics support                           fiscal year
                                                                 1999 totaled
                                                                 $9,051,809.
 Aircraft
                                                                 Estimated
 (17) F-22                                 Interim contractor    acquisition
                                           support               cost is $58.6
                                                                 billion.
                                                                 Estimated
 (18) Joint Strike                                               development
 Fighter                                   Not determined        cost is $19
                                                                 billion.

 (19) Joint Primary                                              Estimated
 Aircraft Training                         Contractor logistics  acquisition
 System (JPATS)                            support               cost is $4
                                                                 billion.
                                                                 Operation and
                                                                 maintenance
 (20) F-117A (except Contractor total                            costs for
 for engine)         system performance                          fiscal year
                     responsibility
                                                                 1999 totaled
                                                                 $255,561,338.
                                                                 Estimated
 (21) T-38C −                        Contractor logistics  acquisition
 Avionics Upgrade                          support               cost is
                                                                 $855.5 million.
                                                                 Operation and
 Commercial                                                      maintenance
 Derivative Aircraft                                             costs for the
 (17 weapon systems)                                             following
                                                                 systems for
 (22) C-9 (2 models)                                             fiscal year
 (23) C-12 (4 models)                                            1999 totaled:
 (24) C-20 (4 models)
 (25) C-21                                                       $35,819,279
 (26) C-22                                                       $15,944,032
 (27) C-26 (2 models)                                            $31,342,243
 (28) C-38           Contractor logistics                        $443,520,747
 (29) C-137 (2       support                                     $4,806,795
 models)                                                         $7,808,059
 (30) CT-43                                                      $3,731,441
 (31) E-4                                                        $12,140,406
 (32) E-9                                                        $1,457,662
 (33) EC-18 (2                                                   $105,166,845
 models)                                                         $8,265,364
 (34) KC-10                                                      $1,656,309
 (35) T-3                                                        $317,105,416
 (36) T-43                                                       $10,998,075
 (37) TC-18                                                      $40,694,128
 (38) VC-25                                                      $9,555,999
                                                                 $41,271,477
                                                                 Operation and
                                                                 maintenance
                                                                 costs for
 (39) C/KC-135 (3    Government/contractor                       fiscal year
 models)             logistics support                           1999 totaled

                                                                 $1,328,224,524.
 (40) PACER CRAG     Warranty
                                                                 Total estimated
                                                                 program cost is
                                                                 $479 million.
                                                                 Operation and
                                                                 maintenance
 (41) B-52 Aircraft  Government/contractor                       costs for
 (2 models)          logistics support                           fiscal year
                                                                 1999 totaled
                                                                 $312,392,949.
                                                                 Operation and
                                                                 maintenance
 (42) C-5 (3 models) Government/contractor                       costs for
                     logistics support                           fiscal year
                                                                 1999 totaled
                                                                 $1,029,532,135.
                                                                 Operation and
                                                                 maintenance
 (43) C-141 (2       Government/contractor                       costs for
 models)             logistics support                           fiscal year
                                                                 1999 totaled
                                                                 $689,122,516.
 (44) F-15
                     Government/contractor
 (45) Avionics       logistics support
 Upgrade
                     Contractor logistics
 (46) Low Altitude   support                                     Operation and
 Navigation &                                                    maintenance
 Targeting for Night Government/contractor                       costs for
 (LANTRIN)           logistics support                           fiscal year
                                                                 1999 totaled
 (47) Operational    Contractor logistics                        $1,503,762,717.
 Flight Program (OFP)support
 Software Development

 (48) APG-63(V)1     Contractor logistics
 Radar Support       support
 (49) F-229 engine                                               Estimated
 (for                                      Contractor logistics  production cost
 F-15E aircraft and                        support               is $1.2
 newer F-16s)                                                    billion.
 (50) F-119 engine
 (for                                                            Included in the
 F-22 and Joint      Interim contractor    Contractor logistics  costs of the
 Strike Fighter      support               support               F-22.
 aircraft)
 (51) C-130 (Four
 Models)
                                                                 Operation and
 (52) C-130 Avionics Contractor logistics                        maintenance
 Modernization       support                                     costs for
 Program                                                         fiscal year
                     Contractor logistics
                                                                 1999 totaled
 (53) AC-130U        support               Contractor total      $1,155,542,640.
 (Special Operations                       system performance
 aircraft)                                 responsibility

                     Contractor total                            Operation and
                     system performance                          maintenance
 (54) C-17           responsibility                              costs for
                     (Flexible                                   fiscal year
                     Sustainment)                                1999 totaled
                                                                 $308,179,789.
                                                                 Operation and
                                           Contractor total      maintenance
 (55) U-2 (2 models) Contractor logistics  system performance    costs for
                     support                                     fiscal year
                                           responsibility
                                                                 1999 totaled
                                                                 $20,627,347.
                                                                 Operation and
                                                                 maintenance
 (56) T-1            Contractor logistics                        costs for
                     support                                     fiscal year
                                                                 1999 totaled
                                                                 $83,010,499.
                                                                 Operation and
                                                                 maintenance
 (57) A-10           Government support                          costs for
                                                                 fiscal year
                                                                 1999 totaled
                                                                 $469,371,422.
                                                                 Operation and
                                                                 maintenance
                                                                 costs for
 (58) F-16                                                       fiscal year
                     Government/contractor Government/contractor 1999 totaled
 (59) Avionics       logistics support     logistics support     $1,857,115,600.
 upgrade
                                                                 Estimated
                                                                 acquisition
                                                                 cost is $1.6
                                                                 billion.
                                                                 Operation and
                                                                 maintenance
 (60) B-1B           Government/contractor                       costs for
                     logistics support                           fiscal year
                                                                 1999 totaled
                                                                 $529,283,969.
                                                                 Operation and
                     Contractor total                            maintenance
 (61) B-2            system performance                          costs for
                     responsibility                              fiscal year
                                                                 1999 totaled
                                                                 $208,164,283.
                                                                 Operation and
                                                                 maintenance
 (62) H-1            Government/contractor                       costs for
                     logistics support                           fiscal year
                                                                 1999 totaled
                                                                 $58,511,963.
                                                                 Operation and
                                                                 maintenance
 (63) H-60           Government/contractor                       costs for
                     logistics support                           fiscal year
                                                                 1999 totaled
                                                                 $116,936,155.
                                                                 Operation and
                                                                 maintenance
 (64) H-53           Government/contractor                       costs for
                     logistics support                           fiscal year
                                                                 1999 totaled
                                                                 $736,000.
 Aircraft Subsystems
 (65) Common Low                                                 Estimated
 Observables                                                     acquisition
 Verification System                       Not determined        cost is $30
 (CLOVerS)                                                       million.
 (66) Joint Service                                              Estimated
 Electronic Combat                                               acquisition
 Systems Tester                            Not determined        cost is
 (JSECST)                                                        $115.6 million.
 (67) Common                                                     Estimated
 Organizational Level                                            acquisition
 Aircraft System                           Not determined        cost is $7.82
 Tester (COAST)                                                  million.
 (68) Common                                                     Estimated
 Munitions BIT                                                   acquisition
 Reprogramming                             Contractor warranty   cost is $37.1
 Equipment (CMBRE)                                               million.
                                                                 Operation and
                                                                 maintenance
 (69) JOVIAL softwareContractor logistics                        cost for fiscal
 maintenance tools   support                                     year 1999
                                                                 totaled
                                                                 $878,000.
 (70) Embedded Global                                            Estimated
 Positioning System                                              acquisition
 Inertial Navigation                       Contractor warranty   cost is
 System (EGI)                                                    $415.0 million.
                                                                 Operation and
                                                                 maintenance
 (71) Towed Decoy    Government/contractor                       cost for fiscal
 (An/ALE-50)         logistics support                           year
                                                                 1999totaled
                                                                 $724,000.

 (72) Joint Helmet                                               Estimated
 Mounted Cueing                            Not determined        development
 System (JHMCS)                                                  cost is
                                                                 $89.1 million.
 Space and Missile Systems

 (73) Space Based                          Contractor total      Estimated
 Infrared System                           system performance    acquisition
 (SBIRS)                                   responsibility        cost is $1.5
                                                                 billion.
                                                                 Estimate for
                                                                 development and
                                                                 purchase of
 (74) Evolved                              Not determined        launch services
 Expendable Launch                         (program office is    is $2.7 billion
 Vehicle (EELV)                            buying a new launch   for fiscal
 System                                    service capability)   years 1998-2003
                                                                 based on fiscal
                                                                 year 1998
                                                                 President's
                                                                 budget.
                                                                 Estimated
                                                                 acquisition
                                                                 cost is $9.5
 (75) MILSTAR                                                    billion through
 Satellite                                 Government/contractor fiscal year
 Communications                            logistics support     2005 based on
 System                                                          fiscal year
                                                                 2001
                                                                 President's
                                                                 budget.
                                                                 Estimated
                                                                 acquisition
                                                                 cost is $1
 (76) Global                                                     billion for
 Broadcast Service                         Contractor logistics  fiscal years
 (GBS)                                     support               1996-2003 based
                                                                 on fiscal year
                                                                 1998
                                                                 President's
                                                                 budget.
                                                                 Estimated
                                                                 acquisition
 (77) Advanced                                                   cost is $2.9
 Extremely High                                                  billion for
 Frequency Military                        Contractor logistics  fiscal years
 Satellite                                 support               2000-2005 based
 Communications                                                  on fiscal year
 System (AEHF)                                                   2000
                                                                 President's
                                                                 budget
                                                                 Estimated
                                                                 acquisition
                                                                 cost is $872.2
 (78) Wideband                                                   million through
 Gapfiller Satellites                      Not determined        fiscal year
 (WGS)                                                           2005 based on
                                                                 fiscal year
                                                                 2001
                                                                 President's
                                                                 budget.
                                                                 Estimated
                                                                 acquisition
                                                                 cost is $292.1
 (79) Advanced                                                   million through
 Wideband System                           Not determined        fiscal year
 (AWS)                                                           2005 based on
                                                                 fiscal year
                                                                 2001
                                                                 President's
                                                                 budget.
 (80) Ultra High
 Frequency Demand
 Assigned Multiple                                               Estimated
 Access Satellite                                                acquisition
 Communications                            Contractor warranty   cost is
 Airborne Integrated                                             $244.7 million.
 Terminal Group
 (DAMA-AITG)
                                                                 Operation and
 (81) NAVSTAR Global                                             maintenance
 Positioning System  Government/contractor                       costs for
 (GPS)               logistics support                           fiscal year
                                                                 1999 totaled
                                                                 $27,422,061.
                                                                 Operation and
 (82) Satellite                                                  maintenance
 Control Network     Government/contractor                       costs for
 (SCN)               logistics support                           fiscal year
                                                                 1999 totaled
                                                                 $216,060,650.
 (83) Spacelift RangeContractor logistics                        Information not
 System              support                                     available
                                                                 Operation and
 (84) Defense                                                    maintenance
 Satellite           Government/contractor                       costs for
 Communication Systemlogistics support                           fiscal year
 (DSCS)                                                          1999 totaled
                                                                 $3,076,000.
 Electronics Systems
                                                                 Estimated
                                                                 acquisition
                                                                 cost is $2.1
 (85) Global Air                                                 billion for
 Traffic Management                        Contractor warranty   fiscal years
 (GATM) System                                                   1999-2005 based
                                                                 on fiscal year
                                                                 1999
                                                                 President's
                                                                 budget.
                                                                 Life-cycle
                                                                 acquisition
                                                                 cost estimate
 (86) Precision                                                  is
 Landing Systems                           Interim contractor    $47.8 million
 Receiver (PLSR)                           support               based on fiscal
                                                                 year 2002
                                                                 program
                                                                 objective
                                                                 memorandum.
                                                                 Estimated
                                                                 acquisition
                                                                 cost is $116.0
 (87) Joint Precision                                            million for
 Approach and Landing                      Not determined        fiscal years
 System (JPALS)                                                  1999-2005 based
                                                                 on fiscal year
                                                                 1999
                                                                 President's
                                                                 budget.
                                                                 Life-cycle
 (88) Mobile Approach                                            acquisition
 Control System                            Not determined        cost estimate
 (MACS)                                                          is $246.7
                                                                 million as of
                                                                 October 1999.
                                                                 Life-cycle
                                                                 acquisition
 (89) Air Force                                                  cost estimate
 Terminal Instrument                                             is
 Procedures −                        Not determined        $17.8 million
 Replacement                                                     based on fiscal
 (AFTERPS-R)                                                     year 2002
                                                                 program
                                                                 objective
                                                                 memorandum.

 (90) Region/ Sector                                             Estimated
 Air Operations                                                  acquisition
 Center (R/SAOC)                           Not determined        cost is $86.9
 Modernization                                                   million for
 Program                                                         fiscal years
                                                                 1997-2003.
                                                                 Life-cycle
                                                                 acquisition
                                                                 cost estimate
 (91) Integrated                                                 is $111.8
 Broadcast Service                         Contractor logistics  million based
 (IBS)                                     support               on fiscal year
                                                                 2000
                                                                 President's
                                                                 budget.
 (92) Intelligence                                               Funding
 Training Systems                          Government/contractor information is
 (ITS)                                     logistics support     classified.
                                                                 Life-cycle
                                                                 acquisition
                                                                 cost estimate
 (93) Distributed                                                is $225.6
 Common Ground System                      Contractor logistics  million based
 (DCGS)                                    support               on fiscal year
                                                                 2000
                                                                 President's
                                                                 budget.
                                                                 Life-cycle
                                                                 acquisition
                                                                 cost estimate
 (94) Tactical                                                   is
 Exploitation Group                        Contractor logistics  $90.4 million
 (TEG)                                     support               based on fiscal
                                                                 year 2000
                                                                 President's
                                                                 budget.
                                                                 Life-cycle
                                                                 acquisition
                                                                 cost estimate
                                                                 is
 (95) Eagle Vision                         Contractor logistics  $29.7 million
                                           support
                                                                 based on fiscal
                                                                 year 2000
                                                                 President's
                                                                 budget.
                                                                 Life-cycle
                                                                 acquisition
                                                                 cost estimate
 (96) Airborne                                                   is
 Broadcast                                 Contractor logistics  $33.2 million
 Intelligence (ABI)                        support               based on fiscal
                                                                 year 2000
                                                                 President's
                                                                 budget.
                                                                 Operation and
 (97) Airborne                                                   maintenance
 Warning And Control Government/interim                          costs for
 System (AWACS) - E-3contractor support                          fiscal year
 Sentry                                                          1999 totaled
                                                                 $202,851,007.
                                                                 Operation and
                                                                 maintenance
 (98) Cheyenne       Contractor logistics  Contractor total      costs for
 Mountain Complex    support               system performance    fiscal year
                                           responsibility
                                                                 1999 totaled
                                                                 $102,190,559.
                                                                 Estimated
                                                                 acquisition
                                                                 cost is $135
 (99) High Frequency                                             million for
 (HF) Global                               Contractor logistics  fiscal years
 Communications                            support               1995-2005 based
 System                                                          on fiscal year
                                                                 2000 program.
                                                                 objective
                                                                 memorandum
                                                                 Operation and
                                                                 maintenance
                                                                 funds are
                                                                 budgeted and
 (100) TeleinfomaticsGovernment support                          managed at the
                                                                 base level thus
                                                                 there is no
                                                                 source for a
                                                                 cumulative
                                                                 value.
                                                                 Operation and
                                                                 maintenance
                                                                 funds are
                                                                 budgeted and
                                                                 managed at the
 (101) Integrated                                                base level thus
 Digital                                                         there is no
 Telecom-munications Contractor warranty                         source for a
 System (IDTS)                                                   cumulative
                                                                 value.

                                                                 Operation and
                                                                 maintenance
                                                                 funds are
 (102) Command and                                               budgeted and
 Control Switching   Contractor logistics                        managed at the
 System (CCSS)       support                                     base level thus
                                                                 there is no
                                                                 source for a
                                                                 cumulative
                                                                 value.
                                                                 Operation and
 (103) Joint                                                     maintenance
 Surveillance &      Government/contractor Contractor total      costs for
 Target Attack Radar logistics support     system performance    fiscal year
 System (JSTARS)                           responsibility        1999 totaled
                                                                 $62,416,000.
                                                                 Estimated
 (104) PACER SPEAK   Government/contractor                       acquisition
                     logistics support                           cost is $40.7
                                                                 million.
 (105) Single Channel                                            Estimated
 Ground & Airborne                                               acquisition
 Radio System        Contractor warranty                         cost is $38.8
 (SINCGARS)                                                      million.
                                                                 Estimated
 (106) HAVE QUICK    Government/contractor                       acquisition
                     logistics support                           cost is $3.1
                                                                 million.
                                                                 Estimated
 (107) Scope Shield  Government/contractor                       acquisition
 (SS)                logistics support                           cost is $99.5
                                                                 million.

 (108) Multi-Mission                                             Estimated
 Advanced Tactical   Contractor logistics                        acquisition
 Terminal (MATT)     support                                     cost is $56.2
                                                                 million.
 (109) Joint Tactical                                            Estimated
 Information         Government/contractor                       production cost
 Distribution System logistics support                           is
 (JTIDS)                                                         $322.7 million.
                                                                 Estimated
 (110) Litening II                         Contractor logistics  acquisition
 Targeting System                          support               cost is $301
                                                                 million.
                                                                 Estimated
 (111) Joint Tactical                                            acquisition
 Radio System (JTRS)                       Not determined        cost is $2.4
                                                                 million.

 (112) Air                                                       Operation and
 Battlefield                                                     maintenance
 Communication and   Government support                          costs for
 Control Center                                                  fiscal year
 Capsules (ABCCC)                                                1999 totaled
                                                                 $360,000.
                                                                 Operation and
 (113)Atmospheric                                                maintenance
 Early Warning SystemGovernment support                          costs for
 (AEWS)                                                          fiscal year
                                                                 1999 totaled
                                                                 $1,377,000.
                                                                 Operation and
 (114) Air Force                                                 maintenance
 Mission Support     Government support                          costs for
 System (AFMSS)                                                  fiscal year
                                                                 1999 totaled
                                                                 $14,085,000.
                                                                 Operation and
 (115) Counter-Drug                                              maintenance
 Surveillance &      Contractor logistics                        costs for
 Control System      support                                     fiscal year
 (CSCS)                                                          1999 totaled
                                                                 $2,857,000.
 (116) Deliberate &                                              No operation
 Crisis Action                                                   and maintenance
 Planning and        Contractor logistics                        funding prior
 Execution Segments  support                                     to fiscal year
 (DCAPES)                                                        1999.
                                                                 No operation
 (117) Ground Theatre                                            and maintenance
 Air Control System  Government support                          funding prior
 (GTACS)                                                         to fiscal year
                                                                 2000.
 (118) Joint Tactical                                            Included in
 Terminal (JTT)                            Contractor warranty   MATT above.
                                                                 Operation and
                                                                 maintenance
 (119) SHELTERS      Government support                          costs for
                                                                 fiscal year
                                                                 1999 totaled
                                                                 $178,000.
                                                                 Operation and
 (120) Theatre Battle                                            maintenance
 Management Core     Contractor logistics                        costs for
 Systems (TBMCS)     support                                     fiscal year
                                                                 1999 totaled
                                                                 $12,982,000.
                                                                 Operation and
                                                                 maintenance
 (121) Weather       Contractor logistics                        costs for
 Systems             support                                     fiscal year
                                                                 1999 totaled
                                                                 $3,300,000.
                                                                 Operation and
 (122) Tactical                                                  maintenance
 Automated Security  Contractor logistics                        costs for
 System (TASS)       support                                     fiscal year
                                                                 1999 totaled
                                                                 $725,000.
                                                                 Operation and
 (123) Base and                                                  maintenance
 Installation        Government/contractor                       costs for
 Security System     logistics support                           fiscal year
 (BISS)                                                          1999 totaled
                                                                 $1,895,000.
                                                                 Operation and
 (124) Weapons                                                   maintenance
 Storage Security    Government support                          costs for
 System (WS3)                                                    fiscal year
                                                                 1999 totaled
                                                                 $81,719.
 Training systems
                                                                 Operation and
 (125) Training                                                  maintenance
 systems and         Contractor logistics                        costs for
 simulators          support                                     fiscal year
                                                                 1999 totaled
                                                                 $57,609,000.
                                                                 Operation and
                                                                 maintenance
                                                                 funds are
 (126) Air Combat                                                budgeted and
 Training System     Government/contractor                       managed at the
 (ACTS)⋅        logistics support                           base level thus
                                                                 there is no
                                                                 source for a
                                                                 cumulative
                                                                 value.
                                                                 Operation and
                                                                 maintenance
 (127) Range Threat                                              costs for
 Systems             Government support                          fiscal year
                                                                 1999 totaled
                                                                 $8,357,000.

Related GAO Products

Depot Maintenance: Air Force Faces Challenges in Managing to 50-50 Ceiling
(GAO/T-NSIAD-00-112 , Mar. 3, 2000).

Depot Maintenance: Future Year Estimates of Public and Private Workloads Are
Likely to Change (GAO/NSIAD-00-69 , Mar.1, 2000).

Depot Maintenance: Workload Allocation Reporting Improved, But Lingering
Problems Remain (GAO/NSIAD-99-154 , July 13, 1999).

Navy Ship Maintenance: Allocation of Ship Maintenance Work in the Norfolk,
Virginia Area (GAO/NSIAD-99-54 , Feb. 24, 1999).

Defense Depot Maintenance: Public and Private Sector Workload Distribution
Reporting Can Be Further Improved (GAO/NSIAD-98-41 ,
July 23, 1998).

Defense Depot Maintenance: DOD Shifting More Workload for New Weapon Systems
to the Private Sector (GAO/NSIAD-98-8 , Mar. 31, 1998).

Defense Depot Maintenance: Information on Public and Private Sector Workload
Allocations (GAO/NSIAD-98-41 , Jan. 20, 1998).

Defense Depot Maintenance: Uncertainties and Challenges DOD Faces in
Restructuring Its Depot Maintenance Program (GAO/T-NSIAD-97-111 ,
Mar. 18, 1997, and GAO/T-NSIAD-97-112 , May 1, 1997).

Defense Depot Maintenance: DOD's Policy Report Leaves Future Role of Depot
System Uncertain (GAO/NSIAD-96-165 , May 21, 1996).

Defense Depot Maintenance: More Comprehensive and Consistent Workload Data
Needed for Decisionmakers (GAO/NSIAD-96-166 , May 21, 1996).

Defense Depot Maintenance: Privatization and the Debate Over the
Public-Private Mix (GAO/T-NSIAD-96-146 , Apr. 16, 1996, and
GAO/T-NSIAD-96-148 , Apr. 17, 1996).

Depot Maintenance: Issues in Allocating Workload Between the Public and
Private Sectors (GAO/T-NSIAD-94-161 , Apr. 12, 1994.)

(709438, 709482)

Table 1: GAO Analysis of Systems Using or Planning to Use Various
Types of Support Arrangements as of March 2000 10
  

1. Contractor logistics support includes such functions as determining
requirements for spare and repair parts, engineering services, and
maintenance and is usually provided on a long-term basis.

2. Though there is not an established definition, the term "Total System
Performance Responsibility " has generally been used to describe forms of
long-term contractor logistics support under which a contractor, rather than
the government, is responsible for the integration of logistics support
functions such as providing engineering support, identifying requirements
for spare and repair parts, and performing maintenance on weapon systems.
Section 344 does not contain either a definition or a description of Total
System Performance Responsibility.

3. In responding to the section 344 requirement to report on programs, the
Air Force was system specific in its reporting. Accordingly, we also provide
information on a system basis.

4. The report also acknowledges that the Air Force currently manages 27
major weapon systems and many other simulator or equipment items through
contractor logistics support but does not cite them specifically or include
them in its analysis.

5. As used in this report, the term "system" refers to systems such as
aircraft, missiles, radar, and ground communications systems and to
subsystems such as engines and avionics.

6. A business case analysis is a review or an assessment of business-related
issues regarding a specific action or recommended change. This process
involves the identification of time, resources, management, cost, timing and
quantification of savings and other tangible results.

7. Under a warranty, a contractor provides whatever support activities are
necessary to assure that the system is available whenever needed and the
cost of this service is generally included in the contract price. Some of
the more recent warranties were for as much as 10 to 20 years.

8. Core capability is the equipment, personnel, and services needed to
repair or maintain weapon systems or other military equipment to ensure an
effective and timely response to a mobilization, national defense
contingencies or other emergencies.

9. Depot Maintenance: Air Force Faces Challenges in Managing to 50-50
Ceiling
(GAO/T-NSIAD-00-112 , Mar. 3, 2000).

10. While the report does not define the term "platform," Air Force
officials told us that the term refers to systems that deliver a weapon such
as bomber and fighter aircraft.

11. Interim contractor support or warranties for individual components were
not part of this analysis unless they were included in systems that were
described as having mixed support strategies.

12. Mission capable rates represent the percentage of time that an aircraft
is partially or fully mission capable.

13. As used in this report, the term "core logistics management skills"
includes management and technical capabilities necessary to fulfill the
agencies' logistics mission responsibilities. It goes beyond the traditional
use of the term "core" which, under 10 U.S.C. 2464, generally relates to
depot maintenance functions.

14. Defense Depot Maintenance: Contracting Approaches Should Address
Workload Characteristics (GAO/NSIAD-98-130 , June 15, 1998).

15. Source-of-repair analysis is the process the Air Force uses to determine
whether a government activity or a contractor will provide depot
maintenance. The process results in an assignment decision to a government
depot or to the private sector.
*** End of document. ***