Public-Private Competitions: Processes Used for C-5 Aircraft Award Appear
Reasonable (Letter Report, 01/20/98, GAO/NSIAD-98-72).

Pursuant to a legislative requirement, GAO reviewed the Air Force's
solicitation and selection of a source for C-5 aircraft depot
maintenance, focusing on whether the: (1) procedures used to conduct the
C-5 competition provided substantially equal opportunity for the public
and private offerors to compete for the workload without regard to work
performance location; (2) procedures complied with the requirements of
all applicable provisions of law and the Federal Acquisition Regulation
(FAR); and (3) C-5 award results in the lowest total cost to the
Department of Defense for performance of the workload.

GAO noted that its assessment to the issues required under the 1998
Defense Authorization Act relating to the C-5 aircraft competition
concluded that: (a) the C-5 competition procedures provided an equal
opportunity for public and private offerors to compete without regard to
where work could be performed; (b) the procedures did not appear to
deviate in any material respect from the applicable laws or the FAR; and
(c) based on Air Force assumptions and conditions at the time of award,
the award resulted in the lowest total cost to the government.

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

 REPORTNUM:  NSIAD-98-72
     TITLE:  Public-Private Competitions: Processes Used for C-5 
             Aircraft Award Appear Reasonable
      DATE:  01/20/98
   SUBJECT:  Military cost control
             Air Force procurement
             Base closures
             Procurement procedures
             Aircraft maintenance
             Privatization
             Military aircraft
IDENTIFIER:  C-5 Aircraft
             
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Cover
================================================================ COVER


Report to Congressional Committees

January 1998

PUBLIC-PRIVATE COMPETITIONS -
PROCESSES USED FOR C-5 AIRCRAFT
AWARD APPEAR REASONABLE

GAO/NSIAD-98-72

Public-Private Depot Competition

(709305)


Abbreviations
=============================================================== ABBREV

  BEQ - Best Estimated Quantity
  BRAC - Base Realignment and Closure Commission
  CCH - Cost Comparability Handbook
  CPD - Comptroller General Procurement Decision
  DCAA - Defense Contract Audit Agency
  DOD - Department of Defense
  FAR - Federal Acquisition Regulation
  GKDC - Greater Kelly Development Corporation
  PDM - Programmed Depot Maintenance
  RFP - request for proposal
  SSA - Source Selection Authority
  SSAC - Source Selection Authority Council
  SSEB - Source Selection Evaluation Board

Letter
=============================================================== LETTER


B-278991

January 20, 1998

The Honorable Strom Thurmond
Chairman
The Honorable Carl Levin
Ranking Minority Member
Committee on Armed Services
United States Senate

The Honorable Floyd Spence
Chairman
The Honorable Ronald Dellums
Ranking Minority Member
Committee on National Security
House of Representatives

This report responds to one of several reporting requirements
contained in the National Defense Authorization Act for Fiscal Year
1998, relating to depot maintenance activities.  Appendix I lists the
depot maintenance reporting requirements contained in the act.  As
required, we reviewed the Air Force's solicitation and selection of a
source for C-5 aircraft depot maintenance being performed at the
closing San Antonio Air Logistics Center.  This report provides our
assessment of whether the (1) procedures used to conduct the C-5
competition provided substantially equal opportunity for the public
and private offerors to compete for the workload without regard to
work performance location, (2) procedures complied with the
requirements of all applicable provisions of law and the Federal
Acquisition Regulation (FAR), and (3) C-5 award results in the lowest
total cost to the Department of Defense (DOD) for performance of the
workload. 


   BACKGROUND
------------------------------------------------------------ Letter :1

As a result of a 1995 Base Realignment and Closure (BRAC) Act
decision, the San Antonio and Sacramento Air Logistics Centers,
including their maintenance depots, are to close by the year 2001. 
To mitigate the impact of the closings on the local communities and
employees, the administration announced its intention to maintain
employment levels by privatizing the depots' workloads in place.  The
Air Force followed by announcing a strategy to privatize-in-place
five prototype depot maintenance workloads at the two closing
centers.  Since then, there has been a continuing debate between
Congress and DOD over where and by whom the workloads at the closing
depots would be performed.  Central to this debate are concerns about
the excess facility capacity that exists at the Air Force's three
remaining depots and the legislative requirement that workloads
exceeding $3 million dollars in value be subject to a public-private
competition before being moved to the private sector.  Appendix II
provides a more detailed description of the closure history for the
two logistics centers. 

In response to congressional concerns regarding the appropriateness
of its privatization-in-place plans, the Air Force revised its
strategy to allow the public depots to participate in public-private
competitions for the closing depot workloads.  Congress included
provisions in the fiscal year 1998 Authorization Act that require us
to review and report on the process, procedures, and results of these
competitions.  The C-5 aircraft depot maintenance workload was the
first of such competitions. 

On February 11, 1997, the Air Force, Aircraft Directorate at Kelly
Air Force Base issued a request for proposals for the purpose of
conducting a public-private competition for the C-5 aircraft business
area workload being performed at the closing San Antonio Air
Logistics Center.  The Air Force received proposals from private
sector offerors and from one public offeror--the Air Force's Warner
Robins Air Logistics Center.  Following technical and cost
evaluations, the Air Force selected Warner Robins to perform the C-5
workload on the basis that its proposal represented the lowest total
evaluated cost to the government. 


   RESULTS IN BRIEF
------------------------------------------------------------ Letter :2

Our assessment of the issues required under the 1998 Defense
Authorization Act relating to the C-5 aircraft competition concluded
that (1) the C-5 competition procedures provided an equal opportunity
for public and private offerors to compete without regard to where
work could be performed; (2) the procedures did not appear to deviate
in any material respect from the applicable laws or the FAR; and (3)
based on Air Force assumptions and conditions at the time of award,
the award resulted in the lowest total cost to the government.  A
discussion of these conclusions follows, with a detailed description
and assessment of the competition in appendix III. 


   C-5 COMPETITION PLACED NO
   LIMITATION ON PERFORMANCE
   LOCATION
------------------------------------------------------------ Letter :3

The Air Force's procedures provided an equal opportunity for public
and private offerors to compete for the C-5 workload without regard
to where the work could be performed.  Both public and private
offerors acknowledged that the solicitation contained no limitations
on location of performance.  Since the San Antonio facilities were
designed to support C-5 depot maintenance, the private offerors
stated that the site had a natural advantage that they found
attractive in competing for the workload.  Therefore, the private
offerors stated they proposed performing the C-5 workload at San
Antonio.  Because the competition placed no limitation on the
location, the Warner Robins depot--the public offeror--was able to
propose the use of its facilities. 


   COMPETITION PROCEDURES COMPLIED
   WITH APPLICABLE LAWS AND
   ACQUISITION REGULATIONS
------------------------------------------------------------ Letter :4

In assessing the C-5 competition's compliance with applicable laws
and regulations, we reviewed the solicitation, proposal evaluation,
and award in the context of applicable laws and regulations.  This
review included examining documents, reviewing processes and
procedures, and conducting discussions with cognizant Air Force and
DOD officials.  We also assessed several specific concerns raised by
the participants.  We found no reason to conclude that the procedures
used in selecting the successful offeror deviated in a material way
from applicable laws or relevant provisions of the FAR. 


      COMPETITION PROCEDURES
---------------------------------------------------------- Letter :4.1

The Air Force issued a competitive solicitation that provided for the
participation of a public sector depot.  Pursuant to its Depot
Competition Procedures, the Air Force issued the solicitation in
accordance with FAR part 12, which prescribes the policies and
procedures for the acquisition of commercial items, and FAR part 15,
which sets forth the source selection procedures for competitively
negotiated acquisitions.  The solicitation called for proposals from
public and private sector sources for the C-5 business area workload
currently being performed at the closing San Antonio Air Logistics
Center at Kelly Air Force Base.  The solicitation provided for award
to the public sector source if its proposal conformed to the
solicitation requirements, showed it had the necessary technical
capabilities, and represented the lowest total evaluated cost over
the life of the requirement.  Proposals were evaluated in accordance
with management criteria, a risk assessment, cost criteria, and other
general considerations. 


      APPLICABLE LAWS AND
      REGULATIONS
---------------------------------------------------------- Letter :4.2

Several statutes govern the use of public-private competitions for
the performance of depot workloads.  In particular, 10 U.S.C.  2469
provides for the use of "competitive procedures for competitions
among private and public sector entities" whenever DOD contemplates
changing the performance of public depot workloads of $3 million or
more to contractor performance. 

Neither 10 U.S.C.  2469 nor the other statutes governing
public-private competitions for depot workloads prescribe the
specific elements that constitute a competition.  Because the Air
Force's Depot Competition Procedures use the competitive acquisition
system, the standards in chapter 137 of title 10 of the United States
Code (governing DOD acquisitions) and the FAR apply to the extent
they are consistent with the basic public-private competition
statutes.\1 Among other things, these standards require that the
requirements in a solicitation be stated clearly and unambiguously
and that restrictive provisions be included only to the extent
necessary to satisfy an agency's needs.  Further, under these
standards, an agency must follow the criteria announced in the
solicitation and exercise its judgment in a reasonable manner in
determining which of the competing offers is to be selected. 


--------------------
\1 GAO bid protest decision Newport News Shipbuilding and Dry Dock
Company, B-221888, July 2, 1986, 86-2 CPD 23. 


      REVIEW RESULTS
---------------------------------------------------------- Letter :4.3

Based on our review of the C-5 competition, we found no basis to
conclude that procedures used in selecting the successful offeror
deviated in any material respect from the applicable laws or relevant
provisions of the FAR.  The Air Force issued a solicitation providing
for the participation of a public sector depot consistent with the
requirement for public-private competition, and the solicitation was
issued competitively in accordance with the FAR.  Overall, the
evaluation appeared to be reasonable, fair, and consistent with the
solicitation and the Air Force's Depot Competition Procedures. 


      PRIVATE SECTOR CONCERNS
---------------------------------------------------------- Letter :4.4

The private sector offerors raised several concerns about the conduct
of the C-5 competition.  A summary of their concerns and our
conclusions follows. 


         PUBLIC-PRIVATE COST
         COMPARISON
-------------------------------------------------------- Letter :4.4.1

Private sector sources believe there is an inherent inequity in
public-private depot competitions that is created by the solicitation
of offers on a fixed-price basis because the government often pays
for any cost overruns incurred by a public sector source from public
funds.  Because public and private sector entities are fundamentally
different in this regard, agencies conducting public-private
competitions are required to make a reasoned judgment as to the
actual cost the government will incur if work is to be performed by a
public depot.  We believe that the procedures used in the C-5
competition reasonably addressed the issue of public sector cost
accountability.  Among other things, the solicitation required the
public depot to certify that its offer represented the full costs of
performance, and the Air Force conducted an extensive realism
analysis of Warner Robins' cost proposal.  The Defense Contract Audit
Agency reviewed Warner Robins' cost proposal and its accounting and
estimating systems, as required by the Air Force's Depot Competition
Procedures. 


         CREDIT FOR OVERHEAD
         SAVINGS
-------------------------------------------------------- Letter :4.4.2

Private sector participants in the C-5 competition believe that
Warner Robins was unfairly advantaged when it was given a
$153-million cost credit to reflect expected savings in overhead
costs.  We found that, although the amount was large and became the
primary determining factor in the selection of Warner Robins, it was
properly used in the Air Force evaluation.  The overhead savings
evaluation was provided for in the solicitation and the Depot
Competition Procedures, and we found that the Air Force followed the
evaluation scheme in calculating the savings proposed by Warner
Robins. 


         EVALUATION OF RISKS
-------------------------------------------------------- Letter :4.4.3

Private sector participants were concerned that the selection did not
account for, or put a dollar value on, certain identified risks or
weaknesses, in the respective proposals.  The solicitation provided
that the calculation of an offeror's total evaluated cost would
include the dollar impact of significant discriminators based on
identified proposal strengths, weaknesses, and risks.  The evaluation
record shows that, for the highest priority management factors,
transition and production operations, the lowest cost private sector
offeror received a low-risk rating while the public offeror approach
was rated as a moderate risk.  Overall, the private sector offeror
was credited with more strengths under the management factors than
was the public sector offeror.  In the final selection decision, the
source selection authority did not quantify the risk differences or
all the strengths or weaknesses but only included adjustments
representing discriminators based on reduction of flow days and a
lack of capacity at one of Warner Robins' proposed facilities. 

Under the applicable legal standards, a procuring agency has broad
discretion to decide whether it will include any particular feature
of a proposal in its cost calculations.  In our view, the dollar
valuation approach the Air Force adopted represented a reasonable
exercise of its discretion under the solicitation.  The solicitation
did not explain in any detail how dollar values were to be assigned,
but left it to the Air Force to determine an appropriate approach. 
Further, our review of the evaluation record did not disclose that
the Air Force's approach was uneven or unfair. 


      PUBLIC SECTOR CONCERN
---------------------------------------------------------- Letter :4.5

Warner Robins officials stated that they were not permitted to
include private sector firms as part of their proposed effort to
perform the workload.  Although Warner Robins won the competition,
depot officials believe that the use of private sector support would
have enhanced their competitiveness by providing a better way to
perform the paint and depaint operations on the C-5 aircraft. 
According to Air Force officials, significant use of private sector
support as part of the public offeror's proposal would have been
inherently inconsistent with a public-private competition. 
Consequently, Warner Robins developed an alternative approach to
perform the C-5 aircraft paint and depaint workload at its depot
facilities. 

This matter had no impact on the outcome of the C-5 competition, and
it has been resolved for any future public-private competitions for
workloads at the closing San Antonio and Sacramento depots by the
1998 Defense Authorization Act.  The act added section 2469a to title
10, United States Code, which provides for special procedures for
public-private competitions for the workloads at the two closing
depots.  The new section allows public sector offerors to use private
sector firms as part of their proposed effort. 


   CONTRACT AWARD RESULTED IN THE
   LOWEST TOTAL COST TO THE
   GOVERNMENT
------------------------------------------------------------ Letter :5

The Warner Robins proposal after cost comparability adjustments, as
provided for in the solicitation and the depot maintenance cost
comparability handbook, was determined by the source selection
authority to offer the lowest total evaluated cost to the government. 
Before the cost comparability adjustments, the Warner Robins proposal
was higher than the lowest private sector proposal and was determined
to represent a higher risk under the two most important management
evaluation factors.  Both the public and private competitors raised
questions about the proposal's cost evaluation and adjustments.  As
stated above, our review of these adjustments in the context of
compliance with applicable laws and regulations found them to be
consistent with the solicitation and reasonable.  We further examined
the accuracy and soundness of the data and assumptions supporting a
number of these adjustments.  Except for a large adjustment for
overhead savings, the adjustments we reviewed would not have affected
the selection decision. 

To determine whether adjustments made in the source selection
evaluation were accurate and supported, we (1) discussed the
selection process with cognizant Air Force and DOD officials, as well
as the offerors; (2) reviewed the calculation methods for the various
cost element estimates used in the cost evaluation; (3) compared the
cost elements among offerors to test for reasonableness; (4)
discussed the rational for cost element treatment in the evaluation
with the evaluation team members; and (5) discussed each offeror's
assessment of cost element treatment in the evaluation and followed
up on issues or concerns raised.  Since several of these adjustments
were presented to us as concerns, we briefly address each of these
below. 


      REVIEW RESULTS
---------------------------------------------------------- Letter :5.1

Our review of the proposal cost evaluation and adjustments showed
that the award resulted in the lowest cost to the government given
Air Force assumptions and conditions at the time of award. 


         ADJUSTMENT FOR OVERHEAD
         SAVINGS
-------------------------------------------------------- Letter :5.1.1

Warner Robins' total evaluated cost--after adjustments--for the
7-year period was $746,519,392.  This amount included a $153-million
downward evaluation adjustment to reflect expected savings in
overhead costs.  This adjustment made Warner Robins' total evaluated
cost about $42 million less than the lowest private sector offeror's
cost.  Accordingly, the $153-million overhead adjustment became the
primary determining factor of the competition.  The adjustment was
large because the evaluation showed that Warner Robins, due to its
excess capacity, could absorb the additional C-5 workload with no
significant increase in total overhead costs and that the overhead
was primarily a fixed-cost that would be incurred with or without the
additional workload for the 7-year period.  The savings were
determined by calculating the reduced overhead charges to existing
workloads resulting from adding the C-5 workload over the 7-year
period. 

Industry officials questioned Warner Robins' ability to achieve these
savings.  According to one private sector offeror, the Air Force did
not clearly explain how the public offeror could achieve such large
savings relative to the proposed cost for performing the workload.\2

Additionally, while stating that some savings may be achievable,
contractors said the overhead savings estimate in the Air Force's
cost evaluation was too high.  Further, they considered this
adjustment a reward for maintaining existing depot inefficiency.  One
private sector offeror characterized the overhead savings adjustment
as the one factor that most favored the public depots, and said that
unless this factor is changed, they may not participate in future
public-private competitions. 

The evaluation records show that the cost evaluators questioned the
overhead savings initially proposed by Warner Robins and made
downward adjustments to that amount.  For example, the evaluators
deleted workload hours included in the Warner Robins' savings
calculations for work on the KC-135 aircraft because that requirement
had not been committed to the Warner Robins facility.  After
extensive discussions with the offeror concerning the proposed
overhead savings, the evaluators calculated that $153,935,160 in
savings could be attributed to the other workloads to be performed at
the public facility during the performance of the C-5 requirement. 
These savings were primarily due to the more efficient use of the
existing workforce and facilities, which before the addition of the
C-5 workload had been underused. 

We have reported that Air Force depots have significant excess
capacity and that significant savings could be achieved by reducing
this excess capacity.  The excess capacity consists of both people
and facilities.  In addition to downsizing and streamlining depot
operations, excess capacity can be reduced by bringing in additional
workloads to achieve savings by spreading personnel and facility
costs over a larger workload base.  We also have reported that over
$200 million in overhead savings could be achieved annually by
consolidating the closing San Antonio and Sacramento depots'
workloads into remaining DOD depots.\3

In calculating the overhead savings, the Air Force assumed that the
excess capacity and overhead cost condition at Warner Robins would
not otherwise be significantly reduced over the 7-year period.  We
did not explore the cost effectiveness of other potential measures
and opportunities to reduce Warner Robins' excess capacity.  As a
result, given the Air Force's assumption and the excess capacity
condition at the time of award, the projected overhead savings appear
reasonable. 


--------------------
\2 Prior to making cost adjustments, the evaluators determined each
offeror's "customer cost"--in essence, its proposed price for
performing the requirement, excluding material.  Warner Robins'
customer cost was $434,378,781. 

\3 Air Force Depot Maintenance:  Privatization-in-Place Plans Are
Costly While Excess Capacity Exists (GAO/NSIAD-97-13, Dec.  31,
1996). 


      COST OF FACILITIES CAPITAL
      ADJUSTMENT
---------------------------------------------------------- Letter :5.2

Private sector offerors questioned a $4.25-million upward adjustment
made to their proposals.  The adjustment was based on a $104-million
interest free mortgage grant to the Greater Kelly Development
Corporation by the federal government.  According to the Air Force,
the interest free mortgage enabled the Corporation to subsidize the
private offerors' lease below market levels.  The private sector
offeror stated that the lease costs charged by the local
redevelopment authority were higher than those at comparable
commercial locations.  Further, the offeror stated that the high cost
of operating at the privatized facility created a competitive
disadvantage.  Our review of the subsidy and the private sector
offeror's lease cost data found that the Air Force's adjustment
relating to the interest free loan was reasonable. 


      PRIVATE INDUSTRY QUESTIONS
      GOVERNMENT DEPOTS' ABILITY
      TO CONTROL COSTS
---------------------------------------------------------- Letter :5.3

Private industry raised concerns about the public depot's ability to
accurately control costs for the C-5 workload.  According to industry
aircraft maintenance officials, if an Air Force depot overruns its
proposed costs, the Air Force recovers the cost overruns by charging
higher rates to other depot customers.  According to these officials,
this means a higher cost to DOD and eventually the taxpayer pays. 

Documentation prepared by the Warner Robins Center as a part of its
C-5 proposal indicated that private sector concerns about the Warner
Robins depot not being able to accurately control costs for the C-5
workload were not supported by the depot's performance in earlier
public-private competitions.  Warner Robins officials note that they
demonstrated cost control for the $64 million C-141 Center Wing Box
Replacement Program, which was won in a public-private competition,
by performing within
2 percent of the proposal cost.  The Air Force considered this
evidence as a part of its proposal evaluation. 

The Air Force plans to ensure that Warner Robins performs at its
proposed cost, and that the anticipated savings are achieved.  For
example, the Air Force plans to involve the Defense Contract Audit
Agency and Defense Contract Management Command in ensuring the cost
performance of the C-5 depot maintenance workload and to develop
special tracking procedures to monitor and report cost, schedule, and
performance data. 


      DISPUTED COST ADJUSTMENT TO
      PUBLIC PROPOSAL
---------------------------------------------------------- Letter :5.4

Warner Robins questioned the Air Force's treatment of a $20-million
downward adjustment to its overhead costs.  Warner Robins officials
believe the adjustment may limit the Air Force's ability to
accurately measure its cost performance.  The Air Force concluded
that the adjustment was necessary based on its evaluation of the
proposal.  However, Warner Robins officials state that the Air Force
misinterpreted the proposal. 

In its initial proposal, Warner Robins noted the existence of
overhead savings on the C-5 workload.  The contracting officer
questioned whether the overhead savings were already included in
Warner Robins' proposed overhead rate.  To preclude double counting
the savings, the contracting officer requested that Warner Robins
clarify its treatment of C-5 overhead savings.  According to Air
Force officials, Warner Robins' response did not adequately explain
whether the C-5 overhead savings were included in its proposed rate. 
Consequently, the Air Force included a downward adjustment for the
savings in its cost evaluation.  Warner Robins officials maintained
that they clearly communicated that all C-5 overhead savings had been
included in its proposed overhead rate. 

The Air Force maintains that the C-5 contracting officer made a sound
decision at the time given the information provided by Warner Robins
during the selection process.  The adjustment, had it not been made,
would not have affected the selection decision.  If a corresponding
post award adjustment is finalized, Warner Robins could have problems
meeting its cost objectives in performing the workload.  The Air
Force has not made a final determination as to how to resolve this
dispute. 


      PUBLIC SECTOR QUESTIONS
      CAPITAL DEPRECIATION METHOD
      USED
---------------------------------------------------------- Letter :5.5

Warner Robins officials stated that the Air Force required them to
use a depreciation method that resulted in a higher charge than
depreciation methods the private sector was permitted to use.  The
Air Force required the public depots to depreciate proposed capital
expenditures over the contract period, rather than the longer
depreciation periods allowed the private sector offerors.  According
to Air Logistics Center officials, the depreciation requirement
created a disadvantage for their offer.  Ultimately, the Warner
Robins' proposal did not include large capital expenditures and
consequently, the impact of the Air Force's depreciation policy was
not material to the selection. 

This matter was included in the special procedures for future
public-private competitions added by the 1998 Defense Authorization
Act for workloads at the closing San Antonio and Sacramento depots. 
The procedures at 10 U.S.C.  2469a provide that to the maximum extent
practicable, the cost standards used to determine depreciation of
facilities and equipment should provide for identical treatment to
public and private offerors. 


   AGENCY AND CONTRACTOR COMMENTS
   AND OUR EVALUATION
------------------------------------------------------------ Letter :6

Air Force and Defense Contract Audit Agency officials reviewed a
draft of this report and provided oral comments.  They generally
agreed with the report.  The Air Force spokesperson stated that the
report accurately characterized and reflects the process and
procedures the Air Force used in conducting the C-5 aircraft depot
workload competition.  The spokesperson specifically noted agreement
with our statement that the Air Force could have taken a more
expansive approach to dollarization.  The Air Force spokesman added
that due to the lessons learned from the C-5 aircraft competition,
and legislative changes resulting from the fiscal
year 1998 Defense Authorization Act, the processes and procedures
that the Air Force will use in upcoming public-private depot
competitions will be different.  Both the Air Force and Audit Agency
spokespersons suggested several technical changes for clarity and
accuracy.  We agreed on specific wording changes and incorporated
them in the final report. 

We also provided a copy of the draft report to relevant public and
private sector participants in the C-5 competition.  Warner Robins,
the public sector participant, said that the report accurately
reflected their concerns with the competition.  However, they noted
that while the report said the competition placed no limitation on
the location, they were not able to propose accomplishing the 7-year
contract using the depot facilities at the closing San Antonio Air
Logistics Center beyond the July 2001 date when the Kelly realignment
will be completed.  We believe this does not reflect a limitation on
the competition, but does reflect the fact that the public depot at
San Antonio is closing pursuant to the BRAC. 

Warner Robins also noted that despite their proposal being evaluated
as moderate risk for transition and production, their C-5 transition
and production operations are on schedule. 

Private sector officials stated that given our reporting schedule,
they did not have time to review and comment on the draft report. 


   SCOPE AND METHODOLOGY
------------------------------------------------------------ Letter :7

In conducting our work, we obtained information from and interviewed
officials at Air Force Headquarters, Washington, D.C.; Headquarters,
Air Force Materiel Command, Wright-Patterson Air Force Base, Ohio;
the San Antonio Air Logistics Center, Kelly Air Force Base, Texas;
and the Warner Robins Air Logistics Center, Robins Air Force Base,
Georgia.  We also discussed C-5 contracting issues with the two
unsuccessful private sector offerors as well as Defense Contract
Audit Agency officials. 

To analyze the Air Force's decision to award the C-5 aircraft's
programmed depot maintenance to the Warner Robins Air Logistics
Center, we interviewed officials and collected relevant documents
from Headquarters, Department of the Air Force; Headquarters, Air
Force Materiel Command; and Air Force source selection team members,
representatives from the three competing offerors, and the Defense
Contract Audit Agency.  To verify compliance of the C-5 competition
and award with applicable laws and regulations, we reviewed the
solicitation, proposed evaluation, and award in the context of
applicable laws and regulations.  To determine whether cost elements
considered in the source selection evaluation were complete and
reasonable, we discussed the selection structure with cognizant Air
Force and DOD officials, as well as the offerors determined to be
within the competitive range.  We also reviewed the calculation
methods for the various cost element estimates used in the award
evaluation for reasonableness, and compared the cost elements between
offerors to identify material drivers and to further test for
reasonableness.  We discussed with the evaluation team members their
rational for cost element treatment in the evaluation.  We discussed
with each competitive range offeror, their assessment of cost element
treatment in the evaluation and followed up on issues or concerns
raised.  A listing of our related reports we have issued is provided
at the end of this report. 

We performed our review between October 1997 and January 1998 in
accordance with generally accepted government auditing standards. 


---------------------------------------------------------- Letter :7.1

Please contact me at (202) 512-8412 if you or your staff have
questions concerning this report.  The major contributors to this
report are listed in appendix IV. 

David R.  Warren, Director
Defense Management Issues


SUMMARY OF OUR DEPOT REPORTING
REQUIREMENTS CONTAINED IN THE
NATIONAL DEFENSE AUTHORIZATION ACT
FOR FISCAL YEAR 1998
=========================================================== Appendix I

The National Defense Authorization Act for Fiscal Year 1998 includes
the following depot-related reporting requirements for our office. 

I.  Report on DOD's Compliance With 50-Percent Limitation (section
358)

The act amends 10 U.S.C.  2466(a) by increasing the amount of
depot-level maintenance and repair workload funds that the Department
of Defense (DOD) can use for contractor performance from 40 to 50
percent and revises 10 U.S.C.  2466(e) by requiring the Secretary of
Defense to submit a report to Congress identifying the percentage of
funds expended for contractor performance by February 1 of each year. 

Within 90 days of DOD's annual report to Congress, we must review the
report and submit our views to Congress on whether DOD has complied
with the 50-percent limitation. 

II.  Reports Concerning Public-Private Competitions for the Depot
Maintenance Workloads at the Closing San Antonio and Sacramento
Depots (section 359)

The act adds section 2469a to title 10 of the United States Code,
which provides for special public-private competition for workloads
at these two closing depots.  It also requires us to issue reports in
four areas. 

First, the Secretary of Defense is required to submit a determination
to Congress if DOD finds it necessary to consolidate workloads into a
single solicitation.  We must report our views on the DOD
determination within
30 days. 

Second, we are required to review all DOD solicitations for the
workloads at the San Antonio and Sacramento centers and report to
Congress within 45 days of the solicitations' issuance regarding
whether the solicitations provide "substantially equal" opportunity
to compete without regard to performance location and is otherwise in
compliance with applicable laws and regulations. 

Third, we must review all DOD awards for the workloads at the two
closing Air Logistics Centers and report to Congress within 45 days
of the contract award on whether (1) the procedures used complied
with applicable laws and regulations and provided a "substantially
equal" opportunity to compete without regard to performance location;
(2) "appropriate consideration was given to factors other than cost"
in the selection; and (3) the selection resulted in the lowest total
cost to DOD for performance of the workload. 

Fourth, within 60 days of its enactment, the 1998 Defense
Authorization Act requires us to review the C-5 aircraft workload
competition and subsequent award to the Warner Robins Air Logistics
Center and report to Congress on whether (1) the procedures used
provided an equal opportunity for offerors to compete without regard
to performance location, (2) are in compliance with applicable law
and the Federal Acquisition Regulation (FAR), and (3) whether the
award results in the lowest total cost to DOD. 

III.  Report on the Navy's Practice of Using Temporary Duty
Assignments for Ship Maintenance and Repair (section 366)

The act requires us to report by May 1, 1998, on the Navy's use of
temporary duty workers to perform ship maintenance and repair at
homeports not having shipyards. 


SAN ANTONIO AND SACRAMENTO AIR
LOGISTICS CENTERS' CLOSURE HISTORY
========================================================== Appendix II

The 1995 Base Realignment and Closure (BRAC) Commission recommended
closing the Sacramento and San Antonio Air Logistics Centers and
transferring their workloads to the remaining depots or private
sector commercial activities.  In making these recommendations, the
Commission considered the effects on the local communities, workload
transfer costs, and potential effects on readiness and concluded that
the savings and benefits outweighed the drawbacks.  The Commission's
report noted that given the significant amount of excess depot
capacity and limited DOD resources, closure is a necessity.  Further,
closing these activities would improve the use of the remaining
centers and substantially reduce DOD operating costs.  The specific
Commission recommendations were as follows: 

  -- Realign Kelly Air Force Base, including the air logistics
     center; disestablish the defense distribution depot; consolidate
     the workloads to other DOD depots or to private sector
     commercial activities as determined by the Defense Depot
     Maintenance Council;\1 and move the required equipment and
     personnel to the receiving locations. 

  -- Close McClellan Air Force Base, including the air logistics
     center; disestablish the defense distribution depot; move the
     common-use ground communication electronics to Tobyhanna Army
     Depot, Pennsylvania; retain the radiation center and make it
     available for dual use and/or research, or close as appropriate;
     consolidate the remaining workloads with other DOD depots or
     private sector commercial activities as determined by the
     Council; and move the required equipment and any required
     personnel to receiving locations.  All other activities and
     facilities at the base will close. 

In considering the BRAC recommendations to close the two centers, the
President and the Secretary of Defense expressed concerns about the
near-term costs and potential effects on local communities and Air
Force readiness.  In response to these concerns, the administration,
in forwarding the Commission's recommendations to Congress, indicated
that the air logistics centers' work should be privatized-in-place or
in the local communities.  He also directed the Secretary of Defense
to retain
8,700 jobs at McClellan Air Force Base, which had been recommended
for closure, and 16,000 jobs at Kelly Air Force Base, which had been
recommended for realignment, until 2001 to further mitigate the
closures' impact on the local communities.  Additionally, the size of
the workforce remaining in the Sacramento and San Antonio areas
through 2004 was expected to remain above 4,350 and 11,000,
respectively. 

The Air Force initially focused on privatizing five prototype
workloads--three at Sacramento (for hydraulics, electric accessories,
and software) and two at San Antonio (for C-5 aircraft paint/depaint
and fuel accessories).  The Defense Depot Maintenance Council
approved the Air Force's plans for the five prototype workloads on
February 1, 1996.  The prototype workloads involved about 11 percent
of the San Antonio depot's maintenance personnel and about 27 percent
of the Sacramento's personnel.\2

Shortly after the Council approved the prototype program, the
appropriateness of the concept began to be questioned.  Community and
industry groups expressed an interest in having larger packages, and
DOD officials were concerned about the cost of administering a large
number of smaller contracts. 

Implementation of the prototype concept was put on hold in May 1996
as the Air Force considered various options.  Further, in April 1996,
we testified that privatizing depot maintenance activities, if not
effectively managed, including the downsizing of remaining DOD depot
infrastructure, could exacerbate existing excess capacity problems
and the inefficiencies inherent in underused depot maintenance
capacity.  Privatizing workloads in place at two closing Air Force
depots does not reduce the excess capacity in the remaining depots or
the private sector and consequently, is not a cost-effective approach
to reducing depot infrastructure.\3 Later that year, we reported that
privatizing-in-place, rather than closing and transferring the depot
maintenance workloads at the Sacramento and San Antonio air logistics
centers, would leave a costly excess capacity situation at remaining
Air Force depots that a workload consolidation would have
mitigated.\4 Our analysis showed that transferring the depot
maintenance workloads to other depots could yield additional economy
and efficiency savings of over $200 million annually. 

We recommended that the Secretary of Defense require the Secretary of
the Air Force to take the following actions: 

  -- Before privatizing any Sacramento or San Antonio workloads,
     complete a cost analysis that considers the savings potential of
     consolidating the Sacramento and San Antonio depot maintenance
     workloads at other DOD depots, including savings that can be
     achieved for existing workloads by reducing overhead rates
     through more efficient capacity utilization and reduction of
     fixed overhead that is applied to each production unit at
     underused military depots that could receive this workload. 

  -- Use competitive procedures, where applicable, for determining
     the most cost-effective source of repair for workloads at the
     closing Air Force depots. 

In August 1996, the Air Force announced a revised strategy for
allocating the depot workloads at the Sacramento and San Antonio
centers, which involved several large consolidated work packages,
essentially one at Sacramento and two at San Antonio (one for the C-5
aircraft and one for engines).  In December 1996, the Air Force
issued procedures to conduct public-private competitions for the
workloads and to allow one of the remaining public depots to compete
with the private sector for each of the three workload packages.  The
Air Force's procedures included an evaluation adjustment to public
and private sector proposals for overhead savings to other government
workloads. 

In February 1997, the Air Force issued a request for proposals for
the C-5 aircraft depot maintenance workload.  In September 1997, the
Air Force awarded the C-5 workload to the Warner Robins Air Logistics
Center based on lowest total evaluated cost. 


--------------------
\1 The Defense Depot Maintenance Council is a senior-level council
established to advise the Deputy Under Secretary of Defense for
Logistics on depot maintenance within DOD. 

\2 The BRAC report specified that the Council should determine where
depot maintenance workloads from closing Air Force depots should be
moved. 

\3 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). 

\4 Air Force Depot Maintenance:  Privatization-in-Place Plans Are
Costly While Excess Capacity Exists (GAO/NSIAD-97-13, Dec.  31,
1996). 


LEGAL REVIEW OF COMPETITION FOR
THE C-5 AIRCRAFT WORKLOAD
========================================================= Appendix III

On February 11, 1997, the Air Force, Aircraft Directorate at Kelly
Air Force Base, issued a request for proposal (RFP) for the purpose
of conducting a public-private competition for the C-5 aircraft
business area workload being performed at the closing San Antonio Air
Logistics Center at Kelly.  The Air Force received proposals from
private sector offerors and from one public offeror--the Air Force's
Warner Robins Air Logistics Center.  Following technical and cost
evaluations, the Air Force selected Warner Robins to perform the C-5
workload on the basis that its proposal represented the lowest total
evaluated cost to the government. 

Section 359 of the National Defense Authorization Act for Fiscal Year
1998, Public Law 105-85, requires that we, among other things,
determine whether the procedures used to conduct the competition for
the C-5 aircraft workload were in compliance with applicable laws and
the FAR.  Based on our review of the procedures the Air Force used to
conduct the C-5 competition in the context of concerns that were
raised by the private sector, we found no basis to conclude that the
procedures used in selecting the successful offeror deviated in any
material respect from the applicable laws or relevant provisions of
the FAR. 

The following sections describe the legal standards applicable to the
C-5 competition, relevant aspects of the solicitation and evaluation
procedures used by the Air Force, and our analysis of those
procedures under the applicable legal standards. 


   APPLICABLE LEGAL STANDARDS
------------------------------------------------------- Appendix III:1

The basic authority for the C-5 competition is 10 U.S.C.  2469, which
provides for the use of "competitive procedures for competitions
among private and public sector entities" when DOD contemplates
changing the performance of a depot workload, valued at $3 million or
more, to contractor performance.  In addition, section 8041 of the
Department of Defense Appropriations Act for Fiscal Year 1997, Public
Law 104-208, authorizes public-private competitions for depot
workloads as long as the "successful bids" are certified to "include
comparable estimates of all direct and indirect costs for both public
and private bids." Both provisions state that Office of Management
and Budget Circular A-76 is not to apply to the competitions.  Other
than the reference in section 8041 of the act to the use of
comparable estimates of all costs, neither provision prescribes the
elements that constitute a competition.  Further, 10 U.S.C.  2470
provides that DOD depot-level activities are eligible to compete for
depot workloads.\1

The Air Force implements these authorities through the Air Force
Materiel Command, Procedures for Depot Level Public-Private
Competition, December 20, 1996 (Depot Competition Procedures).  Among
other things, the procedures provide for issuing a solicitation
calling for offers from public and private sector sources and they
establish the criteria for deciding how the Air Force will select a
source for the performance of depot workloads from the private or
public sector.  According to these procedures, a competitive
solicitation is to be issued in accordance with the applicable
provisions of the FAR.  The FAR sets forth uniform policies and
procedures for the competitive acquisition system used by all
executive agencies and implements the provisions of chapter 137 of
title 10 of the United States Code, which govern DOD acquisitions. 

This use of the competitive acquisition system subjects a depot
workload competition to the applicable provisions of chapter 137 and
the FAR to the extent that they do not conflict with the
public-private competition statutes cited above.  (Newport News
Shipbuilding and Dry Dock Company, B-221888, July 2, 1986, 86-2 CPD
23.) Further, aspects of a competition that fall outside the
competitive acquisition system's parameters as defined by chapter 137
and the FAR, such as the selection of the public depot offeror to
participate in the competition, are governed by the statutes
applicable to public-private depot competitions as implemented by the
Depot Competition Procedures. 

In general, the standards in chapter 137 and the FAR (1) require that
a solicitation clearly and unambiguously state what is required so
that all offerors can compete on an equal basis and (2) allow
restrictive provisions to be included only to the extent necessary to
satisfy an agency's needs.  Further, under these standards, an agency
must follow the criteria announced in the solicitation and exercise
its judgment in a reasonable manner in determining which of the
competing offers is to be selected.  (Dimensions International/QSOFT,
Inc.  , B-270966.2, May 28, 1996, 96-1
CPD 257.)


--------------------
\1 There are other provisions that apply, generally, to conversions
of DOD functions to private sector performance.  For example, section
8015 of the 1997 DOD Appropriations Act requires that DOD certify its
in-house estimate to congressional committees before converting any
activity performed by more than 10 civilian employees to contractor
performance; 10 U.S.C.  2461 requires cost studies and congressional
notification for certain conversions.  The competition in this case
did not result in a conversion to private sector performance.  In
addition, 10 U.S.C.  2462 generally requires DOD to contract with the
private sector if a source can provide the supply or service at a
lower cost than DOD can and to ensure that all costs considered in a
cost comparison are realistic and fair.  The competition here
resulted in the conclusion that the public sector source was less
costly than the private sector sources. 


   SOLICITATION
------------------------------------------------------- Appendix III:2

The RFP for the C-5 workload contemplated the award of a fixed-price
requirements type contract, with economic price adjustment and award
fee, for a 7-year term.  The contract was to include a transition
period; an assumption of work in process that had been begun by the
government at Kelly Air Force Base; and the scheduled workload for
fiscal years 1998 through 2004, including any "over and above"
work.\2 According to the solicitation, the public-private competition
was to be conducted pursuant to FAR part 12, which prescribes the
policies and procedures for the acquisition of commercial items, and
FAR part 15, which sets forth the source selection procedures for
competitive negotiated acquisitions.  Further, the solicitation
provided that the selection would be governed in part by the Defense
Depot Maintenance Cost Comparability Handbook (CCH), dated August 10,
1993, and its interim amendments dated December 21, 1995, and
December 4, 1996, as well as by the Depot Competition Procedures. 

The RFP stated that the award would be made to the public offeror if
its proposal conformed to the RFP, showed that it had the necessary
technical capabilities, and represented the lowest total evaluated
cost over the life of the requirement.  On the other hand, if one of
the private offerors' proposals represented the lowest evaluated cost
and had these same technical characteristics then that offeror would
receive the award.  Finally, if two or more private offerors'
proposals were acceptable and each represented a lower cost than the
public offeror's proposal, the award would be made to the private
offeror judged to represent the best value to the government based
upon a combined assessment of cost and other technical factors not
considered discriminators (distinguishing factors) in the initial
evaluation, as well as certain other factors. 

The RFP evaluation criteria that were to be used for the selection
consisted of management criteria, which relate to program
characteristics; a risk assessment; cost criteria, which relate to
the proposed cost; and general considerations.  Management criteria
were made up of five factors:  transition, production operations,
corporate operations, logistics support, and source of repair
qualification.  The risk assessment consisted of two parts:  proposal
risk and performance risk.  Proposal risk was to measure the risk
associated with an offeror's proposed approach to accomplishing the
solicitation requirements relating to each of the five management
factors.  Performance risk was to assess, based on an offeror's
present and past performance, the probability of the offeror
successfully accomplishing its proposed effort.  General
considerations were to relate to matters such as the results of
preaward surveys. 

Cost was to be evaluated by first conducting realism and
reasonableness assessments of the cost proposals.\3 Then each
offeror's total alternative cost was to be developed by applying
numerous adjustments made to the proposals in accordance with the CCH
and the RFP.  Next, each offer's total evaluated cost was to be
determined by adjusting the total alternative cost to reflect the
evaluators' quantification or "dollarization"\4 of the significant
discriminators among the proposals based upon strengths, weaknesses,
and risks identified in the proposals in accordance with the RFP
evaluation criteria.  Under the RFP evaluation scheme, in order for
the technical merits or risks associated with an offeror, or an
offeror's particular approach to performing the workload, to affect
whether a public or private source is to be selected--assuming the
minimum standards were met by both--the merits or risks were to be
"dollarized" or quantified and included in the calculation of the
offeror's total evaluated cost. 

The proposals were evaluated in the first instance by specialized
teams, which reported to a Source Selection Evaluation Board (SSEB),
which in turn reported its conclusions to a Source Selection Advisory
Council (SSAC).  The SSAC then advised the Source Selection Authority
(SSA), who made the final selection decision on the merits of the
proposals. 


--------------------
\2 "Over and above" work consists of work items that are not included
in the scope of the line item requirements in the solicitation but
are within the overall scope of the proposed contract and may be
ordered by the agency on an hourly basis. 

\3 According to the RFP, realism was to be evaluated by assessing the
compatibility of proposal costs with the offeror's proposed scope and
effort.  Reasonableness was to be assessed through an analysis of
either the cost elements or of the overall price. 

\4 Dollarization, as we understand it, is the process of assigning an
estimated dollar value to the evaluator's assessments of the benefit
or detriment to the Air Force that would result from aspects of the
offeror's technical proposal for the purpose of calculating an
offeror's total evaluated cost. 


   EVALUATION OF PROPOSALS
------------------------------------------------------- Appendix III:3

Four offerors submitted proposals in response to the solicitation. 
Warner Robins Air Logistics Center, the public depot chosen by the
Air Force to submit the public sector offer, proposed to perform the
work at Robins Air Force Base, Georgia.  The three private sector
offerors all proposed to perform the work at the facilities at the
closing Air Logistics Center at Kelly Air Force Base, where the C-5
workload is currently being performed by government employees. 

Initially, the four proposals were evaluated to determine which was
to be included in the competitive range in accordance with FAR 15.609
and considered for award.\5 One of the proposals from the private
sector was eliminated from the competitive range and not considered
further because, in the SSA's view, it failed to adequately address
the solicitation requirements.\6

Discussions were held with the three offerors remaining within the
competitive range.  As a result of the discussions, each offeror
revised its proposal and submitted a best and final offer, which was
the subject of the Air Force's final cost adjustments and evaluation. 
Based on the results of the evaluations and cost adjustments, the
advice of the SSAC, and the SSA's own analysis in the context of the
RFP evaluation criteria, the SSA decided that the Warner Robins Air
Logistics Center's proposal met all of the RFP requirements and
represented the lowest total evaluated cost at $746,519,392 \7 for
the 7-year requirement.  Consequently, the SSA selected Warner Robins
to perform the C-5 workload.  Of the three offerors within the
competitive range, two of them, the winning public sector
offeror--Warner Robins--and one of the private sector offerors
(offeror A), had evaluated costs that were reasonably close.  The
other private sector offeror (offeror B) had considerably higher
evaluated costs.\8


--------------------
\5 FAR 15.609 provides that the contracting officer shall determine
which proposals are in the competitive range for the purpose of
conducting written or oral discussions. 

\6 The firm, whose proposal was excluded from the competitive range,
filed an action in the U.S.  Court of Federal Claims contending that
its proposal was improperly eliminated from the competition.  The
court dismissed the action, concluding that the Air Force's action in
eliminating the proposal from the competitive range had not been
shown to be improper.  Aero Corp., S.A.  v United States, 38 Fed.Cl. 
739 (1997). 

\7 The SSAC report cited the total evaluated cost as $746,518,032. 
We understand that the $746,519,392 figure cited by SSA is the
correct cost.  The figure used by SSAC was the result of a
calculation error.  The error had no impact on the selection, so we
will use the corrected cost. 

\8 While we have carefully reviewed the Air Force's evaluation of all
of the offerors, our description of the evaluation results focuses
principally on the two most competitive offerors. 


      TECHNICAL EVALUATION
----------------------------------------------------- Appendix III:3.1

As noted previously, the solicitation stated that five factors would
be used to evaluate the offerors' management approach.  The priority
of these factors--except for corporate operations and logistics
support, which were co-equal--was (1) transition, (2) production
operations, (3) corporate operations, (4) logistics support, and (5)
source of repair qualifications.  The SSA rated the proposals under
each of the five factors. 

The first factor, transition, was to measure the offeror's approach
to transferring program responsibility and accountability from Kelly
Air Force Base to the new operation, including such tasks as manpower
build-up, material procurement, and production ramp-up.  Under this
factor, the SSA concluded that offeror B had the best approach to
transferring performance of the workload to its proposed facility,
with an exceptional technical rating and low proposal risk.  Offeror
A was next, with an acceptable technical rating and a low proposal
risk.  Warner Robins followed with an acceptable rating and a
moderate risk.  The SSA noted that while Warner Robins' approach
posed a moderate risk, it did meet the minimum standard and, in fact,
offered a strength in the availability of skilled workers.  Overall,
the SSA concluded that the strengths of the approaches of offerors A
and B increased the chances of success but did not offer a specific
cost impact that could be "dollarized" and, thus, have a positive
impact on their total evaluated costs.  On the other hand, according
to the SSA, the cost impact of Warner Robins' weaknesses could be
ameliorated with close monitoring.  Consequently, the SSA decided not
to include this as a matter for dollarization. 

Under the production operations factor, an offeror was to provide its
plan to perform the work, including the proposed sequence for all
major tasks and the identification of facilities and shops to be
used.  The SSA concluded that offeror A "far exceeded" the RFP
minimum standard and merited an exceptional rating by proposing a
significant reduction in the "flow days" (i.e.  , time required to
perform the work) needed to maintain the aircraft over the life of
the requirement.  In addition, the SSA assigned the offeror a
low-risk rating for its approach to the performance of the workload. 
Offeror B received an acceptable rating with low risk for its
approach.  The SSA assigned Warner Robins a marginal rating with
moderate risk.  The SSA was concerned that while Warner Robins
proposed to reduce flow days, two of its facilities, the "programmed
depot maintenance (PDM) facility" and the "paint/depaint facility,"
might not have the capacity to handle the workload within the
proposed time frame.  The SSA concluded that while close monitoring
could overcome these difficulties, the production schedule could be
disrupted.  Accordingly, the SSA determined that the potential for
problems in the paint/depaint facility should be reflected or
dollarized as an added cost in the evaluation.  The cost associated
with the potential problems related to the PDM facility was,
according to the SSA, already reflected in Warner Robins' cost
proposal, and thus, was not added as a "dollarized" cost in the
evaluation.  In sum, the SSA concluded that the reduced flow days
proposed by both offeror A and Warner Robins were significant
discriminators and merited a downward dollarization cost adjustment
in the determination of total evaluated cost.  The evaluation of
Warner Robins' cost was, in addition, to include an estimated cost
increase for the potential paint/depaint problems in its
dollarization evaluation.  Offeror B's proposal did not merit a
dollarization cost adjustment in either direction. 

Under the third factor (corporate operations), the SSA concluded that
all offerors had extensive relevant experience and assigned each a
rating of exceptional with a low proposal risk.  Since all were
equally rated, there was no discriminator and consequently no
dollarization. 

All of the offerors were rated by the SSA as acceptable and low risk
under the logistics support factor.  Again, there was no
discriminator or corresponding dollarization adjustment. 

Under the final factor (source of repair qualification), the SSA
rated offerors A and B as exceptional with low risk.  Warner Robins
met the minimum standard and was assigned a rating of acceptable with
low risk.  There was, according to the SSA, no discriminator or
dollarization. 

As for the more general category of performance risk, all three
proposals were determined to represent low risk in the management and
cost areas, with no discriminators. 


      COST EVALUATION
----------------------------------------------------- Appendix III:3.2

As noted previously, the cost evaluation consisted of (1) an
assessment of the realism and reasonableness of the cost proposals;
(2) a determination of the "total alternative cost" of each proposal,
calculated through adjustments required by the CCH and RFP; and (3) a
determination of the total evaluated cost of each proposal,
calculated by taking the total alternative cost and adjusting it to
reflect the dollarization of significant discriminators among the
proposals.  The evaluation results for each of these analyses are
summarized below. 


         REALISM AND
         REASONABLENESS EVALUATION
--------------------------------------------------- Appendix III:3.2.1

The cost team evaluators initially reviewed each offeror's cost
proposal to determine its completeness, realism, and reasonableness. 
As a result of this review, the evaluators ultimately were satisfied
that each cost proposal met these standards.  In accordance with the
Depot Competition Procedures, the Defense Contract Audit Agency
(DCAA) audited the Warner Robins' cost proposal and reviewed the
public offeror's disclosure statement\9 and accounting and estimating
systems.  The disclosure statement was in the first instance found to
be adequate.  After discussions with Warner Robins and some
adjustments to the cost proposal, the proposal was determined to be
realistic. 

DCAA also reviewed Warner Robins' accounting and estimating systems
and found them deficient in certain respects.  In an August 1, 1997,
memorandum, DCAA noted that the deficiencies would not significantly
affect Warner Robbins' cost proposal.  In a subsequent audit
report--issued on November 26, 1997, after the selection of Warner
Robins--DCAA stated that although most of the deficiencies in Warner
Robins' accounting and estimating systems had been corrected, all of
them had not been fully addressed.  While Warner Robins had not met
all the correction milestones at the time of its selection, the
deficiencies remaining at that time, were not significant enough to
preclude its selection. 


--------------------
\9 The Air Force Depot Competition Procedures require that public
offerors provide a disclosure statement of their cost accounting
practices. 


         DETERMINATION OF TOTAL
         ALTERNATIVE COST
--------------------------------------------------- Appendix III:3.2.2

The cost evaluators determined each offeror's total alternative cost
by first calculating the offeror's "customer cost"--in essence, its
proposed price for performing the requirement, excluding
material--and then making upward and downward adjustments to this
cost in accordance with the RFP and the CCH.  Offeror A's customer
cost was calculated to be $409,042,577. 

Warner Robins' customer cost was $434,378,781.\10 Offeror B's cost
was considerably higher than either of these. 

Using the customer cost for each offeror as a base, the evaluators
made the depot maintenance comparability adjustments called for in
the CCH and the RFP.  Two sets of adjustments were made to the public
and the private sector offers.  The first set, required by form
number 1 of the CCH, encompassed adjustments to the public sector
offer; and the second set, required by form number 2 of the CCH,
governed adjustments applicable to the public and private sector
proposals.  The comparability adjustments were identified either in
the RFP directly or in the CCH. 

The CCH form number 1 adjustments made to the Warner Robins' proposal
included upward and downward changes in a number of categories.\11
The most significant were upward adjustments of $19,887,441 for
unfunded civilian retirement, $18,872,571 for base operating support,
and $12,467,409 for employee casualty insurance.  The net result of
the upward and downward adjustments was an upward adjustment to the
public depot's proposal of $57,812,033.  This resulted in an adjusted
cost of $492,189,454 for Warner Robins. 

The CCH form number 2 adjustments were made to the private and public
sector proposals.\12 Some adjustments were made to both types of
proposals.  For example, upward adjustments were made to both types
for contract administration, additional overhead costs due to the new
workload, reduction-in-force costs, and costs associated with the
transition of government personnel (i.e., costs of retaining current
C-5 workforce at Kelly that will be subject to a reduction in force
and not be rehired by the new source after the workload is
transitioned pending their separation).  Most of these adjustments
were similar in size for both proposals.  The largest difference was
in the transition of government personnel, resulting in an
$10,956,997 increase to Warner Robins' cost and an $5,663,324
increase for offeror A.\13

Other form number 2 adjustments applied solely to the private sector
proposals.  For example, a downward adjustment of $12,271,277 was
made to offeror A's proposal to represent the amount the firm would
have to pay in income taxes on the contract proceeds.  An upward
adjustment of $4,251,429 was made to reflect the firm's planned use
of the facilities transferred by the Air Force to the Greater Kelly
Development Corp.  (GKDC).  The transfer was under terms that were
considered by the Air Force to result in a subsidy to GKDC, which it
passed on through advantageous lease rates to private firms, such as
offeror A, proposing to perform work at the Kelly location. 

The most significant of all of the adjustments made was a downward
adjustment to Warner Robins' proposal of $153,935,160.  This
represented the evaluators' estimate of the overhead savings that
would be attributable to the other workloads performed by Warner
Robins as a result of the addition of the C-5 workload to its
currently underutilized facilities. 

The net result of the form number 2 comparability analysis was a
downward adjustment of $57,229,727 to Warner Robins' proposal and a
final upward adjustment of $81,890,194 to offeror A's proposal.  A
cost of $312,474,994 was added to each that represented the cost of
material.  This final cost adjustment resulted in a total alternative
cost for Warner Robins of $747,434,721 and for offeror A, a cost of
$803,407,765.  The most significant single element contributing to
the more than $55,000,000 cost advantage for Warner Robins was the
cost reduction made to reflect the depot's overhead cost savings. 


--------------------
\10 The calculation of Warner Robins' customer cost included a
downward adjustment of $20,302,485, which in the evaluators' view,
represented overhead cost savings attributed by Warner Robins to the
C-5 workload.  The question of whether these savings were captured in
the overhead rates in Warner Robins' proposal was the subject of a
clarification request from the evaluators.  Based on Warner Robins'
response, the evaluators concluded that it was not, and consequently
made the adjustment in calculating the depot's customer cost. 
Subsequently, after the selection, the Air Force concluded that the
$20,302,485 "savings" was, in fact, included in the rates to be
charged for the work.  This had no impact on the selection of Warner
Robins because after the final cost calculations were made, the
difference between the two lowest offerors was considerably larger
than the evaluation credit. 

\11 Upward adjustments were made for state unemployment payments,
unfunded civilian retirement, depreciation for military construction
program facilities, casualty insurance, other recurring costs
consisting of impact aid, retiree health benefits, base operating
support, and other nonrecurring costs.  Downward adjustments were
made for military nondepot costs (time military members of depot
staff spend on non-depot military duties) and for aircraft test
flights imbedded in Warner Robins' rates. 

\12 In view of the cost disparity between offeror B and the other two
offerors, we will not detail the adjustments to offeror B's proposal. 

\13 In addition, there were significant differences in adjustments
made for the purpose of establishing a common evaluation base for
each offeror's proposal for work in process during the transition
period.  One of these--the so called "best estimated quantity (BEQ)"
adjustment--resulted in an upward adjustment of $5,697,020 to Warner
Robbins' proposal and a downward change of $4,407,697 in offeror A's
proposal.  In the related area of government transition of work in
process, an upward adjustment of $11,514,409 was made in offeror A's
proposal, while an upward adjustment of $5,503,497 was applied to
Warner Robins' proposal. 


         DETERMINATION OF TOTAL
         EVALUATED COST
--------------------------------------------------- Appendix III:3.2.3

To arrive at the total evaluated cost of each proposal, the
evaluators took the total alternative cost, as determined above, and
applied the dollarization adjustments that were identified during the
technical evaluation.  The dollarization adjustments reflected the
evaluators' assessments of the benefit or detriment to the Air Force
that would result from aspects of the proposed performance considered
to be discriminators among the proposals. 

The one aspect of offeror A's proposal that was considered to be a
significant discriminator suitable for quantification was its offer
to significantly reduce the flow days to complete the work under the
production operations evaluation factor.  This resulted in a downward
adjustment of $14,560,019 in the evaluation of its total cost. 
Similarly, the evaluators concluded that Warner Robins' proposal to
reduce flow days merited dollarization.  The downward adjustment was
tempered, however, by the evaluators' belief that the risk associated
with the lack of capacity at Warner Robins' paint/depaint facility
also qualified as a significant discriminator and, thus, a
dollarization candidate:  this time, for an upward adjustment.  As a
result of an upward adjustment of $1,838,767 to represent the risk
associated with the paint/depaint facility and a downward adjustment
of $2,755,456 representing the benefit to the Air Force of the
reduced flow days proposed, Warner Robins' total cost was reduced by
$916,689.  The total evaluated costs for the two lowest offerors were
$746,519,392 for Warner Robins and $788,847,746 for offeror A.\14


--------------------
\14 A dollarization adjustment was also made in offeror B's proposal. 
This was a downward adjustment reflecting the perceived benefit from
offeror B's proposal of an additional warranty. 


   AWARD
------------------------------------------------------- Appendix III:4

Based on the evaluation results, the SSA concluded that all of the
offers were technically acceptable and that all three offerors were
responsible.  The SSA found the prices proposed by each, as adjusted
through the cost analysis, to be reasonable and realistic.\15 The SSA
selected Warner Robins to perform the C-5 workload on the basis that
its proposal represented the lowest total evaluated cost over the
life of the requirement. 


--------------------
\15 In considering the cost evaluation results, the SSA made a final
adjustment that did not change the order of the proposals. 
Specifically, the SSA requested an analysis of the possible impact of
declining labor efficiencies at Kelly on each offeror's probable cost
to complete the work already in process there.  The analysis resulted
in an upward adjustment of $11,031,843 to Warner Robins' total
evaluated cost, bringing it to $757,551,235, and a corresponding
increase of $12,090,870 to offeror A's cost, for a new total of
$800,938,616. 


   ANALYSIS OF EVALUATION AND
   AWARD
------------------------------------------------------- Appendix III:5

As discussed previously, several statutes govern the use of
public-private competitions for the performance of depot workloads. 
In particular,
10 U.S.C.  2469 provides for the use of "competitive procedures for
competitions among private and public sector entities" whenever DOD
contemplates changing the performance of depot workloads of $3
million or more to contractor performance.  Neither 10 U.S.C.  2469
nor the other statutes governing public-private competitions for
depot workloads prescribe the specific elements that constitute a
competition.  Because, however, the Air Force's Depot Competition
Procedures use the competitive acquisition system, the standards in
chapter 137 of title 10 of the United States Code and the FAR apply
to the extent they are consistent with the basic public- private
competition statutes.  (See Newport News Shipbuilding and Dry Dock
Co., cited above.)

Reviewing the C-5 competition in this context, we found no basis to
conclude that the procedures used in selecting the successful offeror
deviated in any material respect from the applicable laws or relevant
provisions of the FAR.  The Air Force issued a competitive
solicitation in accordance with FAR parts 12 and 15, which provided
for the participation of a public sector depot.  Overall, the
evaluation process appeared to be reasonable, fair, and consistent
with the evaluation scheme in the solicitation, the Depot Competition
Procedures, and the CCH. 

The private sector has raised several specific concerns about the
conduct of the C-5 competition.  The concerns are that (1) there is
an inherent inequity in public-private depot competitions created by
the solicitation of offers on a fixed-price basis, since the
government often pays for any cost overruns incurred by a public
sector source from public funds; (2) Warner Robins was unfairly
advantaged during the cost evaluation by the large cost credit
representing projected overhead savings in its other workloads; and
(3) the selection did not account for, or dollarize, identified risks
and weaknesses in the proposals. 


      PUBLIC-PRIVATE COST
      COMPARISON
----------------------------------------------------- Appendix III:5.1

Private sector representatives stated that the Air Force's
solicitation of offers on a fixed-price basis revealed the inequity
inherent in the procedures used in the C-5 public-private
competition.  According to industry representatives, the fixed-price
concept is only relevant to private sector offerors who must assume
the risk that their costs will be less than the price offered or they
will incur losses.  On the other hand, public sector offerors are
subject to no contractually enforceable cost risk, as any overruns
will simply be paid for by the government from public funds. 

Public and private sector entities are fundamentally different;
therefore, it is unlikely that a completely equal comparison of the
projected costs of public and private sector performance of a
particular function could be achieved.  However, the cost comparison
aspect of a public-private competition needs to be conducted in as
fair a manner as practicable.  To this end, our decisions involving
public-private competitions have held that, to ascertain whether a
public depot's costs are fairly stated and reasonable, an agency must
make a reasoned judgment of the actual cost the government will incur
if work is to be performed by the depot.  (See Department of the Air
Force; DCAA; Canadian Commercial Corporation/Heroux, Inc., B-253278,
Apr.  7, 1994, 94-1 CPD 247.) Recognizing the concerns now being
raised in the context of the C-5 competition, we have observed that,
because a public source's cost overruns are paid for by the
government, its arrangement to perform work is more closely analogous
to a cost reimbursement type contract than to the fixed-price
contract a private sector offeror is bound to perform.  As a result,
we have stated that in a solicitation for a fixed-price type
contract, an agency must treat the public sector offer as if it were
one for a cost type contract and subject it to a cost realism
analysis in accordance with FAR 15.805-3.  (See Newport News
Shipbuilding and Dry Dock Co., cited above.)

In our view, the procedures used in the C-5 competition reasonably
addressed the issue of public sector accountability for costs.  Both
the solicitation and the Depot Competition Procedures contained a
number of provisions designed to ensure that Warner Robins' full
costs were disclosed and supported.  For example, the solicitation
required the public sector offeror to certify that its offer
represented the full cost of performance, subject to criminal
penalties for false statements.  Warner Robins included this
certification in its proposal. 

Also, under the Depot Competition Procedures, DCAA is required to
provide an opinion that a public depot's proposal complies with the
CCH, is not materially understated, and is acceptable for evaluation. 
These requirements are not applicable to private sector offers.  In
fact, the procedures state that proposals "submitted by private firms
will generally not require auditing."\16 In addition, the procedures
mandate that proposals from both public and private offerors be
supported by systems and procedures maintained by the offeror that
are in accord with generally accepted accounting principles. 

The evaluation record for the C-5 competition shows that the Air
Force conducted an extensive realism analysis of the Warner Robins
proposal, consistent with FAR 15.805-3 and the previously cited
decisions.  In this connection, the Air Force developed a
pre-solicitation estimate of what it would cost to perform the
requirement.  The evaluators compared this figure with the overall
cost proposed by the depot and reviewed individual cost elements.  In
addition, DCAA reviewed Warner Robins' disclosure statement and the
depot's accounting and estimating systems.\17

After extensive discussions, including a site visit, and a number of
revisions to both the public offeror's proposal--including a number
of upward adjustments--and its accounting and estimating systems, the
SSA concluded that Warner Robins' proposal was realistic and
reasonable.  As required by section 8041 of the Department of Defense
Appropriations Act for Fiscal Year 1997, Public Law 104-208, the SSA
certified that the proposal included estimates of direct and indirect
costs that were comparable to those in the other proposals. 


--------------------
\16 The Depot Competition Procedures also contain provisions that are
intended to ensure that public depots that are awarded workloads
perform in accordance with the terms of the award.  For example,
there is a requirement for monitoring the depot's cost and schedule
performance.  According to the procedures, potential consequences for
poor performance include a "show cause" procedure, which "could
result in termination of the award and recompetition with the
terminated depot being barred from the recompetition." An analysis of
the process established in this competition to ensure the performance
of the depot is discussed previously in this report. 

\17 As discussed earlier, DCAA reported that while most of the
deficiencies found in Warner Robins' accounting system had been
remedied at the time of the selection, some remained.  According to
DCAA, the deficiencies did not have a significant impact on the
Warner Robins' cost proposal and the few problems remaining at the
time of the selection were not of sufficient magnitude to bar the
selection. 


      CREDIT FOR OVERHEAD SAVINGS
----------------------------------------------------- Appendix III:5.2

Private sector sources expressed concern about the large
amount--$153,935,160--of projected overhead savings attributable to
the public depot's other existing workloads.  Although the amount was
large and became the primary determining factor in the selection of
Warner Robins, it was properly used in the evaluation by the Air
Force. 

The concept of assessing and evaluating the overhead savings
attributable to an offeror's other government workloads resulting
from the addition of the C-5 workload was spelled out in the
solicitation and the Depot Competition Procedures.  Specifically,
both sources provided for an adjustment to be made to a public or
private sector proposal for "identified and reasonable" overhead
savings to other government workloads performed by the offeror that
would be realized during the 7-year period. 

The evaluation records show that the cost evaluators questioned the
overhead savings initially proposed by Warner Robins and made
downward adjustments in the amount originally proposed.  For example,
the evaluators deleted workload hours included in the Warner Robins'
savings calculations for work on the KC-135 aircraft because that
requirement had not been committed to the Warner Robins facility. 
After extensive discussions with the offeror concerning the proposed
overhead savings, the evaluators calculated that $153,935,160 could
be attributed to the other workloads to be performed at the public
facility during the performance of the C-5 requirement.  These
savings were primarily due to the more efficient use of the existing
workforce and facilities, which before the addition of the C-5
workload had been underused. 

The overhead savings credit was provided for in the solicitation and
the Depot Competition Procedures, and the Air Force followed the
evaluation scheme in calculating the savings proposed by Warner
Robins.  The size of the savings and their significance in Warner
Robins' selection were due to the excess capacity that existed in
Warner Robins' facilities and the underutilization of the existing
workforce, to the fact that the savings were to be applied to a
7-year performance period, and to the fact that offeror A did not
propose any similar overhead savings. 


      DOLLARIZATION OF EVALUATED
      RISKS
----------------------------------------------------- Appendix III:5.3

Private sector firms raised concerns about the Air Force's failure to
consider some of the evaluated risks in the respective proposals in
its final selection decision. 

The evaluation records show that under the two highest priority
management factors, transition and production operations, offeror A
received a low-risk rating while the public offeror's approach was
rated as representing a moderate risk.  Overall, offeror A was
credited with more strengths under the management factors than was
the public offeror.  In the final selection decision, the SSA did not
dollarize or quantify the risk differences or all the strengths or
weaknesses but only included adjustments that represented
discriminators based upon reduction of flow days and a lack of
capacity at one of Warner Robins' proposed facilities.  The result
was that all of the superior risk or strength ratings given offeror A
did not enter into the calculation of its total evaluated cost and
were not a factor in the final selection. 

The RFP provided that the calculation of an offeror's total evaluated
cost would include "the dollarized impact of significant
discriminators based on identified proposal strengths, weaknesses and
risks." Since the RFP stated that these elements would be considered
for inclusion in the dollarization, the Air Force had to do so. 
However, an agency has discretion to decide whether any particular
feature of an individual proposal should or should not enter into
cost calculations, and such decisions generally will not be
questioned as long as they are fair, reasonable, and consistent with
the solicitation.  (See Universal Shipping Co., Inc., B-223905.2,
Apr.  20, 1987, 87-1 CPD 424.) In our view, the dollarization
approach adopted by the Air Force represented a reasonable exercise
of its discretion under the RFP. 

As noted previously, some evaluated risks for the two highest
priority management factors were dollarized and reflected in the
final selection decision, and some were not.  Under the transition
factor, the SSA noted that Warner Robins met the minimum standard,
but that its approach of operating dual locations--Kelly and Robins
Air Force Bases--for work performed during the transition period
posed a moderate risk because of the close monitoring that would be
required to avoid schedule disruption and performance degradation. 
On the other hand, the SSA stated that offeror A merited a low-risk
rating because it had experience managing the type of transition it
proposed.  The SSA noted that the strength of offeror A's approach
increased confidence that the transition would be successful, but did
not offer "specific cost impacts or savings." The SSA expressed
concern regarding Warner Robins' approach but concluded that close
monitoring should ameliorate any cost impact.  The SSA determined
that while offeror A's approach involved less risk than Warner
Robins' plan, the difference would not have an impact on the cost of
performance. 

Under the production operations factor, the SSA concluded that
offeror A far exceeded the minimum standard by proposing a low-risk
approach that would significantly reduce the flow days needed to
perform the work on the aircraft.  The SSA considered this approach
to be a significant discriminator offering a cost benefit to the Air
Force.  Thus, the offeror was given a dollarized cost credit in the
evaluation.  Similarly, Warner Robins was given an estimated cost
reduction in the dollarization evaluation for its proposal to reduce
flow days in processing the aircraft.  This was tempered by a
corresponding dollarization because the SSA concluded that the public
offeror's moderately risky approach could in one respect--potential
schedule conflicts in the use of its paint/depaint facility--result
in a negative cost impact during performance.  A similar problem
involving potential schedule conflicts in the use of another Warner
Robins' facility was not dollarized because the SSA concluded that
the potential cost impact was already reflected in the proposed
costs. 

As these facts demonstrate, the Air Force evaluators took a
conservative approach in implementing the dollarization concept
announced in the RFP.  The evaluation record indicates that they
included only those elements that were judged to be discriminators
among the proposals and would offer "specific cost impacts or
savings." For example, if a proposal offered a plan to reduce a
specific number of flow days, a feature that could be readily
quantified, it was dollarized.  On the other hand, more subjective
elements of the evaluation, such as the overall risk of a particular
approach, were not as susceptible to quantification and were not
dollarized. 

In our view, while the Air Force could have taken a more expansive
approach to dollarization, it was within its discretion under the RFP
to take the approach that it did.  The RFP did not explain in any
detail how dollarization was to be accomplished; the determination of
an appropriate approach was left to the Air Force.  Further, our
review of the evaluation record disclosed nothing to suggest that the
Air Force applied the dollarization approach it selected unevenly or
unfairly.  For example, both offeror A and Warner Robins were given
dollarization credit for their plans to reduce the flow days needed
to maintain the aircraft.  Considering the subjective nature of such
evaluation judgments and the discretion procuring agencies have in
this area, we believe that the Air Force's approach to dollarization
was consistent with the solicitation and reasonable.  (See URS
Consultants, B-275068.2, Jan.  21, 1997, 97-1
CPD 100.)


MAJOR CONTRIBUTORS TO THIS REPORT
========================================================== Appendix IV

NATIONAL SECURITY AND
INTERNATIONAL AFFAIRS DIVISION,
WASHINGTON, D.C. 

James Wiggins, Associate Director
Julia Denman, Assistant Director

OFFICE OF GENERAL COUNSEL

John Brosnan, Assistant General Counsel

DALLAS FIELD OFFICE

John Strong, Evaluator-in-Charge
Larry Junek, Senior Evaluator





RELATED GAO PRODUCTS
============================================================ Chapter 0

Public-Private Competitions:  DOD's Determination to Combine Depot
Workloads Is Not Adequately Supported (GAO/NSIAD-98-76, Jan.  20,
1998). 

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

Air Force Privatization-in-Place:  Analysis of Aircraft and Missile
System Depot Repair Costs (GAO/NSIAD-98-35, Dec.  22,1997). 

Outsourcing DOD Logistics:  Savings Achievable But Defense Science
Board's Projections Are Overstated (GAO/NSIAD-98-48, Dec.  8, 1997). 

Air Force Depot Maintenance:  Information on the Cost Effectiveness
of B-1B and B-52 Support Options (GAO/NSIAD-97-210BR, Sept.  12,
1997). 

Navy Depot Maintenance:  Privatizing the Louisville Operations in
Place Is Not Cost Effective (GAO/NSIAD-97-52, July 31, 1997). 

Defense Depot Maintenance:  Challenges Facing DOD in Managing Working
Capital Funds (GAO/T-NSIAD/AIMD-97-152, May 7, 1997). 

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-112, Apr.  10,1997). 

Defense Outsourcing:  Challenges Facing DOD As It Attempts to Save
Billions in Infrastructure Costs (GAO/T-NSIAD-97-110, Mar.  12,
1997). 

Navy Ordnance:  Analysis of Business Area Price Increases and
Financial Losses (GAO/AIMD/NSIAD-97-74, Mar.  14,1997). 

High-Risk Series:  Defense Infrastructure (GAO/HR-97-7, Feb.  1997). 

Air Force Depot Maintenance:  Privatization-in-Place Plans Are Costly
While Excess Capacity Exists (GAO/NSIAD-97-13, Dec.  31, 1996). 

Army Depot Maintenance:  Privatization Without Further Downsizing
Increases Costly Excess Capacity (GAO/NSIAD-96-201, Sept.  18, 1996). 

Navy Depot Maintenance:  Cost and Savings Issues Related to
Privatizing-in-Place the Louisville, Kentucky Depot
(GAO/NSIAD-96-202,
Sept.  18, 1996). 

Defense Depot Maintenance:  Commission on Roles and Mission's
Privatization Assumptions Are Questionable (GAO/NSIAD-96-161, July
15, 1996). 

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). 

Military Bases:  Closure and Realignment Savings Are Significant, but
Not Easily Quantified (GAO/NSIAD-96-67, Apr.  8, 1996). 

Depot Maintenance:  Opportunities to Privatize Repair of Military
Engines (GAO/NSIAD-96-33, Mar.  5, 1996). 

Closing Maintenance Depots:  Savings, Personnel, and Workload
Redistribution Issues (GAO/NSIAD-96-29, Mar.  4, 1996). 

Navy Maintenance:  Assessment of the Public-Private Competition
Program for Aviation Maintenance (GAO/NSIAD-96-30, Jan.  22, 1996). 

Depot Maintenance:  The Navy's Decision to Stop F/A-18 Repairs at
Ogden Air Logistics Center (GAO/NSIAD-96-31, Dec.  15, 1995). 

Military Bases:  Case Studies on Selected Bases Closed in 1988 and
1991 (GAO/NSIAD-95-139, Aug.  15, 1995). 

Military Base Closure:  Analysis of DOD's Process and Recommendations
for 1995 (GAO/T-NSIAD-95-132, Apr.  17, 1995). 

Military Bases:  Analysis of DOD's 1995 Process and Recommendations
for Closure and Realignment (GAO/NSIAD-95-133, Apr.  14, 1995). 

Aerospace Guidance and Metrology Center:  Cost Growth and Other
Factors Affect Closure and Privatization (GAO/NSIAD-95-60, Dec.  9,
1994). 

Navy Maintenance:  Assessment of the Public and Private Shipyard
Competition Program (GAO/NSIAD-94-184, May 25, 1994). 

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

Depot Maintenance (GAO/NSIAD-93-292R, Sept.  30, 1993). 

Depot Maintenance:  Issues in Management and Restructuring to Support
a Downsized Military (GAO/T-NSIAD-93-13, May 6, 1993). 

Air Logistics Center Indicators (GAO/NSIAD-93-146R, Feb.  25, 1993). 

Defense Force Management:  Challenges Facing DOD as It Continues to
Downsize Its Civilian Workforce (GAO/NSIAD-93-123, Feb.  12, 1993). 

*** End of document. ***