Air Force Depot Maintenance: Management Changes Would Improve
Implementation of Reform Initiatives (Chapter Report, 06/25/1999,
GAO/NSIAD-99-63).
The Air Force is launching three depot maintenance initiatives to better
manage its depot maintenance programs, including the management of spare
and repair parts. The Air Force spends about $4 billion each year on its
depot maintenance programs. This report reviews the status of the three
initiatives and related management issues.
--------------------------- Indexing Terms -----------------------------
REPORTNUM: NSIAD-99-63
TITLE: Air Force Depot Maintenance: Management Changes Would
Improve Implementation of Reform Initiatives
DATE: 06/25/1999
SUBJECT: Logistics
Equipment repairs
Reengineering (management)
Strategic planning
Spare parts
Military cost control
Air Force supplies
Aircraft maintenance
Performance measures
IDENTIFIER: Air Force Agile Logistics Program
DOD Quadrennial Defense Review
Defense Reform Initiative
Air Force Depot Maintenance Reform Initiatives
Air Force Lean Logistics Program
Air Force Baseline Agile Logistics Master Plan and Road
Map
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United States General Accounting Office GAO Report
to Congressional Requesters June 1999 AIR FORCE DEPOT
MAINTENANCE Management Changes Would Improve Implementation of
Reform Initiatives GAO/NSIAD-99-63 United States General
Accounting Office
National Security and Washington, D.C. 20548
International Affairs Division B-282640
Letter June 25, 1999 The Honorable James M. Inhofe Chairman The
Honorable Charles S. Robb Ranking Minority Member Subcommittee on
Readiness and Management Support Committee on Armed Services
United States Senate As you requested, we assessed the progress of
the Air Force's depot maintenance reform initiatives. These
initiatives are part of the Department of Defense's programs to
improve the efficiency and responsiveness of its industrial
operations. We make recommendations to the Secretary of Defense to
require the Secretary of the Air Force to take a number of actions
that should improve the initiatives and better ensure their
success. We are sending copies of this report to Senator Ted
Stevens, Chairman, and Senator Robert Byrd, Ranking Minority
Member, Senate Committee on Appropriations; Senator John W.
Warner, Chairman, and Senator Carl Levin, Ranking Minority Member,
Senate Committee on Armed Services; Representative C. W. Bill
Young, Chairman, and Representative David Obey, Ranking Minority
Member, House Committee on Appropriations; Representative Floyd
Spence, Chairman, and Representative Ike Skelton, Ranking Minority
Member, House Committee on Armed Services; the Honorable William
S. Cohen, Secretary of Defense; the Honorable F. Whitten Peters,
Acting Secretary of the Air Force; and the Honorable Jacob J. Lew,
Director, Office of Management and Budget. We will make copies
available to others on request. If you have questions regarding
this report, please contact me at (202) 512-8412. Other points of
contact and key contributors are listed in appendix III. David R.
Warren, Director Defense Management Issues Letter Executive
Summary Purpose The Air Force is implementing
three depot maintenance initiatives designed to better manage its
depot maintenance programs, including the management of spare and
repair parts. The Air Force spends approximately $4 billion on its
depot maintenance programs annually. At the request of the
Chairman and Ranking Minority Member of the Senate Armed Services
Committee, GAO reviewed the status of the three initiatives and
management issues related to the initiatives. Background
The Air Force Materiel Command (AFMC), which includes five Air
Logistics Centers,1 provides supply and maintenance support to the
Air Combat Command, Air Mobility Command, Air Education and
Training Command, Air Force Reserves, Air National Guard, and
other major Air Force customers as well as to some Army, Navy, and
foreign military sales customers. The Air Force's complex,
integrated support structure determines which weapon systems and
components must be repaired or purchased and manages supply and
maintenance processes and the repair and overhaul of weapon
systems and components. The Department of Defense (DOD) has
recognized in recent years that its logistics activities,
including depot maintenance performed in both the public and
private sectors, need to become more efficient. Accordingly, it
has initiated efforts to improve logistics activities by
incorporating many best business practices that commercial
companies have used to become more efficient and effective. For
its part, the Air Force began to reengineer its supply and
maintenance operations. Its plan, broadly stated, called for steps
to be taken to reduce the time required to repair components and
aircraft, reduce the amount and costs of supply inventories, match
the repair of items with the demand from customers, prioritize
repairs when multiple priorities exist, and rapidly move
components and spare parts to and from customers. This effort,
known as Agile Logistics, focuses on three principal initiatives.
More specifically, * The depot enhancement initiative applies to
the repair of reparable spare parts such as aircraft landing
gears, wheels, and avionics, and is aimed at limiting repairs to
those items that customers need and have 1The Air Force is now
closing the Sacramento and San Antonio Air Logistics Centers based
on recommendations of the 1995 Base Realignment and Closure
Commission. Letter Page 2
GAO/NSIAD-99-63 Air Force Depot Maintenance Executive Summary
requisitioned, and meeting customers' needs faster by prioritizing
repairs daily. * The aircraft enhancement initiative applies to
performance of scheduled maintenance to keep aircraft operational
or upgrade their capabilities and is designed to reduce repair
turnaround times and costs through improved teamwork and
communication. * The contract enhancement initiative applies to
depot reparable workloads performed by contractors and is designed
to reduce repair turnaround times and reduce costs. In the past,
GAO has reported on inefficiencies in DOD's logistics systems and
processes and pointed out the need for them to be more efficient,
less costly, and more responsive to customer needs. GAO has
supported the application of best practices in this area. The Air
Force's three enhancement initiatives represent an effort to
achieve these ends. Results in Brief The Air Force is now
implementing all three enhancement initiatives at its logistics
centers, but the extent of implementation has varied. The Air
Force's plans established broad goals of increased operational
efficiency and reduced costs, as well as an approach to
implementing the initiatives. However, the plans did not include
specific criteria for determining that the initiatives are
successfully achieving stated goals. Likewise, AFMC did not
establish clear and consistent measures to facilitate tracking
progress and assessing the initiatives' success. Therefore,
limited data are available to quantify the initiatives' success in
achieving desired goals such as expediting repairs and reducing
costs. To the extent data were available, they indicated mixed
results. GAO identified a number of management changes that would
better support implementation of the initiatives and provide more
accurate and complete data for evaluating the implementation.
These changes include * developing an implementation plan that
establishes standard measures for assessing whether process
improvement initiatives are achieving desired goals and results, *
assessing progress toward implementing standard organizational
structures and processes, * addressing weaknesses in information
management systems used to manage the process and assess activity
performance, consistent with the Clinger/Cohen Act and Year 2000
requirements, Letter Page 3
GAO/NSIAD-99-63 Air Force Depot Maintenance Executive Summary *
identifying costs of fully implementing the initiatives and
avoiding premature budget reductions in anticipation of savings,
and * developing effective working agreements with other defense
logistics activities that are key to timely access to needed
repair parts and successful implementation of logistics reforms.
GAO makes recommendations to the Secretaries of Defense and the
Air Force that will enhance implementation of the three depot
maintenance initiatives. Principal Findings Implementation Varies
The three enhancement initiatives vary in the extent to which they
have Among Initiatives been implemented at AFMC centers.
AFMC did not establish consistent measures by which to assess each
initiative's success in achieving Agile Logistics objectives, such
as reducing repair time and costs. However, based on available
data, GAO provides information on the status of the initiatives: *
The depot reparable initiative has been applied to about 31
percent of the Air Force's depot reparable items with mixed
results in such areas as improving repair times and mission
capability rates. AFMC officials continue to assess the extent to
which other items should be brought under the initiative, or
whether some items originally included were the right candidates.
* The aircraft enhancement initiative has been applied to an
estimated 65 percent of the 10 aircraft systems that receive
periodic programmed depot maintenance. AFMC officials report that
turnaround times for periodic overhauls and repairs of aircraft
have been reduced, but cost reductions have not been determined
because the Air Force has no system for tracking such costs.
Officials are still considering whether the initiative should be
applied to all aircraft in the depot maintenance program. * The
contract enhancement initiative has been implemented to varying
degrees at each AFMC center, and in varying degrees within
individual contracts. While AFMC officials believe the program has
been useful in reducing repair time and costs, these officials
have no data on actual reductions in turnaround times and costs
that are specifically related to the initiative. At the same time,
these officials believed that contract costs could increase if
contractors are required to stock supply parts in advance of need
to meet the initiative's new requirements. Page 4
GAO/NSIAD-99-63 Air Force Depot Maintenance Executive Summary
Management Changes Can All three Air Force initiatives
could be more effectively implemented Improve Implementation of
through management changes that would help in achieving program
Initiatives objectives. Also, the Air Force
has adopted a new vision statement for logistics management.
However, it is not clear how well the new vision will be
integrated with or address these issues because the Air Force has
not developed a detailed plan for implementing the vision.
Standard Organizational One objective of the Agile
Logistics program is to improve the effectiveness Structures and
Processes Not and efficiency of depot operations through the
use of standard Fully Implemented organizational
structures and processes. However, AFMC centers have implemented
only parts of the standardized process and structure. Thus, AFMC
does not yet have the more streamlined and standardized
organization originally envisioned to improve personnel and
equipment efficiency. Greater Organizational Support
Implementation of each of the reengineering initiatives could
benefit from Would Facilitate Effective greater support
from managers and workers to ensure the acceptance of Initiative
Implementation change and to facilitate greater worker
flexibility. One of the greatest challenges to the success of the
initiatives, according to AFMC officials, is convincing
supervisors and workers at the centers to accept the new way of
doing business. Increased and sustained emphasis by top-level
command officials is a best management practice for encouraging
commitment to new initiatives at lower levels. Developing a multi-
skilled workforce is equally important and equally challenging.
Having the flexibility to move maintenance workers from one shop
to another, depending on shifting work priorities, is critical to
the success of the initiatives. Standard Measures Could Help
AFMC headquarters developed some initial measures to assess the
Assess Initiative Impact and performance of its depot
enhancement prototype initiative, but dropped Effectiveness
them as the initiative was expanded AFMC-wide. AFMC headquarters
and the centers have not since agreed upon standard measures to
assess individual and collective performance of the initiatives.
Improved Information Systems Continuing system weaknesses
have made it difficult for AFMC to Are Needed to Fully Implement
implement and assess the effectiveness of its enhancement
initiatives.2 Initiatives and Assess Success Much of the data
used to manage the Agile Logistics prototype initiative 2In Best
Management Practices: Reengineering the Air Force's Logistics
System Can Yield Substantial Savings (GAO/NSIAD-96-5, Feb. 21,
1996), GAO reported that information system deficiencies were an
obstacle to the Air Force's reengineering of its logistics system.
Page 5 GAO/NSIAD-99-63
Air Force Depot Maintenance Executive Summary were collected
manually-a task that project leaders said would be impossible
under an Air Force-wide program. After years of minimal progress
in trying to develop DOD-wide logistics information systems, DOD
recently returned responsibility for logistics information systems
to the services. It is unclear what impact this will have on the
development of essential system improvements critical to the
successful implementation of the Agile Logistics program. However,
it will be important for the Air Force to ensure that future
system changes are made in accordance with relevant legislative
and departmental policy guidance, including the Clinger/Cohen Act
of 1996, which requires federal agencies to have processes and
information in place to help ensure that information technology
projects (1) are implemented at acceptable costs, within
reasonable and expected time frames and (2) are contributing to
tangible, observable improvements in mission performance. These
actions need to be done in concert with DOD's actions to remediate
the Year 2000 problem. Greater Attention to Cost and AFMC
headquarters' planning for the new initiatives did not include a
Savings Issues Needed to Avoid means of adequately identifying
or tracking costs of implementing them or Premature Budget
Reductions for evaluating the resulting savings. Without
this information, decisionmakers made premature budget reductions
based on anticipated savings estimates. However, operation and
maintenance funding reductions of $386 million in fiscal year
1997, $289 million in fiscal year 1998, and $323 million in fiscal
year 1999 resulted in critical shortages of repair parts and spare
parts. AFMC headquarters officials subsequently requested
additional funding and no longer plan to reduce future budgets in
anticipation of cost savings. According to AFMC headquarters
officials, achieving cost savings will require reductions in
inventories of major and secondary items and faster logistics
response time. Reductions in aircraft inventories, based upon
faster turnaround times, will also be key to achieving future
savings. Unless inventories are reduced, the three initiatives
might end up costing more than the current system because of the
costs to implement the program. Improved Supply Support
Improving the efficiency and cost-effectiveness of depot
maintenance Needed depends on the
timely availability of repair parts. Unavailability of parts has
been a long-standing problem. AFMC headquarters officials believed
that their parts suppliers must improve the timely availability of
parts to effectively support the new initiatives. Without
resolution of continued problems, it will be difficult for the
AFMC to achieve the objectives of its initiatives. GAO supports
the use of best inventory management practices, Page 6
GAO/NSIAD-99-63 Air Force Depot Maintenance Executive Summary such
as prime vendor support,3 where there is potential to reduce costs
and provide improved service. Although DOD has made limited use of
prime vendor support for hardware items such as spare and repair
parts, the Air Force may have greater opportunities in this area
to improve supply support for its enhancement initiatives. New
Vision In January 1998, the AFMC Commander announced a new
vision for logistics management, outlining a number of goals for
changing logistics management policies and practices. Among the
vision's goals were matching repair to demand and setting and
filling appropriate inventory levels. These and other goals build
on the enhancement initiatives. However, AFMC has not developed a
detailed implementation plan with criteria for measuring
achievement of its goals and objectives. Thus, it is not clear
whether planned improvement initiatives from this effort would
address specific problems identified in this report.
Recommendations Chapter 3 includes several GAO recommendations
intended to help the Air Force effectively implement its three
depot maintenance initiatives. Agency Comments GAO requested
comments on a draft of this report from the Secretary of Defense.
Air Force officials provided oral comments on behalf of DOD
stating that the Department agreed with GAO's findings and with
the intent of its recommendations. In acknowledging that measures
were needed to better ensure success of its reform initiatives,
the Air Force offered a general description on a number of actions
that it had taken or planned to take to improve the reengineering
of its industrial operations. However, the Air Force's responses
were too general to determine to what extent GAO's concerns would
be addressed. GAO, in evaluating the Air Force's comments,
outlined additional information that would be needed for a
complete evaluation of the Air Force's cited actions. DOD's
comments and GAO's evaluation with additional amplification of
suggested actions are more fully discussed at the end of chapter 3
and in appendix II. 3Prime vendors are contractors that buy
inventory items from a variety of suppliers, store them in
commercial warehouses, and ship them to customers as needed. Page
7 GAO/NSIAD-99-63 Air
Force Depot Maintenance Contents Letter
1 Executive Summary
2 Chapter 1 DOD Recognizes the Need to
Improve Its Logistics Activities 10 Introduction
Structure of Air Force Depot Maintenance Operations
11 Air Force Efforts to Reform Its Depot Operations
13 Previous GAO Observation on Air Force Agile Logistics
Initiatives 15 Recent Air Force Analyses
16 Objectives, Scope, and Methodology
16 Chapter 2 Depot Repair Enhancement
Initiative 18 Status of
Aircraft Repair Enhancement Initiative
22 Contract Repair Enhancement Initiative
24 Implementation of Conclusions
27 the Enhancement Initiatives Chapter 3
Standard Organizational Structures and Process
28 Management Issues Not Fully Organized Greater
Organization Support Would Enhance
30 Needing Attention to Initiative Implementation Aid
Implementation of Standard Set of Measures Could Help In
Measuring Program Impact 32 Reform Initiatives
Improved Management Information Systems Would Aid in
33 Implementing and Assessing Initiatives Greater Attention to
Cost and Savings Issues Could Help 36 Avoid
Premature Budget Reductions Improved Supply Support Needed for
Effective Implementation 37 of the Initiatives New
Vision for Logistics Management
42 Conclusions
43 Recommendations
44 Agency Comments and Our Evaluation
44 Page 8 GAO/NSIAD-99-63 Air Force
Depot Maintenance Contents Appendixes Appendix I:
Recent Air Force Studies on Agile Logistics
46 Appendix II: GAO Evaluation of Air Force Comments
50 Appendix III: GAO Contacts and Staff Acknowledgments
52 Related GAO Products
56 Tables Table 2.1: Stock-Numbered Reparable
Items Reported Under the 19 Depot
Enhancement Initiative as of September 30, 1998 Table 2.2: Number
of Contracts Incorporating Selected Aspects of
26 the Contract Enhancement Initiative as of September 30, 1998
Abbreviations AFMC Air Force Materiel Command DLA
Defense Logistics Agency DOD Department of Defense DRI
Defense Reform Initiative EXPRESS Execution and Prioritization of
Repair Support System IG Inspector General QDR
Quadrennial Defense Review Page 9
GAO/NSIAD-99-63 Air Force Depot Maintenance Chapter 1 Introduction
Chapter 1 Annually, the Department of Defense (DOD) spends a
reported $14 billion for depot-level maintenance programs and
activities. DOD has recognized the importance of ensuring that all
its logistics support activities, including depot maintenance, are
run as efficiently and cost-effectively as possible, given the
changed threat environment and declining budgets. In 1994, the
Department began efforts to streamline logistics operations
through the use of best commercial business practices. For its
part in improving depot maintenance activities, the Air Force has
three primary initiatives designed to provide better service to
its customers by reducing repair turnaround times, reducing supply
inventories and costs, prioritizing repairs appropriately, and
providing spare parts rapidly. As we have noted in previous
reports, the use of best commercial practices can result in
improvements in the Air Force's reengineering of logistics
operations. DOD Recognizes the DOD has recognized that the
changing threat environment and declining Need to Improve Its
budgets require that the military services seek ways to improve
the efficiency and cost-effectiveness of all of their logistics
support activities, Logistics Activities including depot
maintenance. Thus, in 1994, DOD initiated efforts to incorporate
best commercial business practices into its logistics activities.
These initiatives were later reflected in DOD's May 1997
Quadrennial Defense Review report and November 1997 Defense Reform
Initiative report.1 The waste and inefficiency in DOD's logistics
activities, including the management of its depot maintenance
program, are key reasons we previously identified DOD's
infrastructure activities as 1 of 24 high-risk areas in the
federal government.2 DOD components are now implementing a number
of initiatives to improve operations and enhance the effectiveness
and efficiency of their logistics support activities. These
initiatives include competitive sourcing and privatization,
acquisition reform, organization streamlining and consolidations,
base realignment and closures, personnel reductions, inventory
reduction, and management process reengineering. 1DOD undertook
the Quadrennial Defense Review to comprehensively examine the
national security threats, risks, and opportunities the United
States faces from 1997 to 2015. The Defense Reform Initiative
addressed DOD's corporate vision for reforming its management
techniques and business practices. 2In 1990 we began a special
effort to review and report on federal program areas we identified
as high risk because of vulnerabilities to waste, fraud, abuse,
and mismanagement. For our most recent report on high risk
associated with DOD's support infrastructure, see High Risk
Series: Defense Infrastructure (GAO/HR-97-7, Feb. 1997). Page 10
GAO/NSIAD-99-63 Air Force Depot Maintenance Chapter 1 Introduction
Legislative requirements also play a role in the management of
DOD's logistics activities and reengineering programs. For
example, 10 U.S.C. section 2464 requires the Secretary of Defense
to identify and maintain a "core"3 logistics capability unless he
waives this requirement for national defense reasons. The
legislation states that not more than 50 percent of funds for
depot maintenance activities may be used for the performance of
depot maintenance by nonfederal personnel. It also states that
DOD-performed depot maintenance and repair workloads valued at $3
million or more cannot be changed to contractor performance
without the use of competing the work among public and private
sector entities. The requirement for in-house capabilities
reinforces the need to ensure they are efficient and cost
effective. Structure of Air Force Depot maintenance is a key part
of the total DOD logistics system. The Air Depot Maintenance
Force Materiel Command (AFMC) and its five air logistics centers
manage the Air Force's wholesale logistics system and perform
depot-level Operations maintenance, repair,
overhaul, and modification on an array of aircraft, systems,
weapons, and components. At Air Force bases around the world, base
maintenance personnel make minor repairs, using replacement parts
ordered from the centers. Broken reparable parts are sent to the
centers as are entire aircraft and weapon systems if overhaul and
modifications are required. Work may be done there by the military
depots or contracted out to private sector firms. Parts used in
overhaul and maintenance operations are manufactured almost
exclusively by the private sector. The Defense Logistics Agency
(DLA) handles warehousing and distribution of repair parts at each
of the five centers.4 DLA manages about 93 percent of the
consumable items that the Air Force uses. In general, new and
repaired parts are stored at each center in DLA warehouses until
they are needed. DLA also stores broken items until the centers'
repair shops are ready to fix them. Depending on the provisions of
the contract, contractors may receive items for repair from DLA or
directly from Air Force customers as government-furnished items,
and they may purchase parts for 3Core is the capability, including
personnel, equipment, and facilities, to ensure a timely response
to a mobilization, national contingency, or other emergency
requirement. 4DLA is a combat support agency that provides
material and supplies to the military services and supports their
acquisition and maintenance of weapon systems and other equipment.
Page 11 GAO/NSIAD-99-63
Air Force Depot Maintenance Chapter 1 Introduction use in repair
operations from DLA or private-sector vendors. Once a repair is
completed, contractors can ship the items to DLA for storage and
distribution or ship them directly to Air Force customers.
Financial management is a key aspect of the Air Force's logistics
operations. Logistics activities, including depot maintenance, are
financed through working capital funds. Under the working capital
fund concept, activities sustain their operations by charging
their customers for goods and services based on predetermined
rates designed to recover the costs of operations.5 For the Air
Force, the working capital fund has two primary groups-the Supply
Management Activity Group and Depot Maintenance Activity Group.
The Supply Group supports its customers, such as Air Force depots,
by procuring critical material and making repair parts available
to the appropriate activities.6 The Supply Group also manages some
Air Force- unique consumable items and almost all reparable items-
those identified as being economical to repair at Air Force bases
or at the depot level by Air Force-owned depots or contractors.
Material is procured from vendors and stored until needed. The
reported value of the Supply Group-managed items is about $2.4
billion for consumable items and about $25 billion for reparable
items. From the Supply Group, the Depot Maintenance Group finances
the purchase of supplies and services that are used for depot
maintenance in-house and contracted for. We have reported that the
Air Force's working capital funds have had long-standing financial
management weaknesses impairing the Air Force's ability to (1)
ensure that customers can purchase inventory items when needed and
(2) achieve the goals of the working capital funds, which are to
focus management attention on the full costs of carrying out
operations and to manage those costs effectively.7 5Separate
working capital funds exist for the Army, Navy, Air Force, and
Defense-wide activities. 6The Supply Group is responsible for
about two million items, including weapon system spare parts,
fuels, food, medical-dental supplies, equipment, and uniforms.
7Air Force Supply Management: Analysis of Activity Group's
Financial Reports, Prices, and Cash Management (GAO/AIMD/NSIAD-98-
118, June 8, 1998). Page 12
GAO/NSIAD-99-63 Air Force Depot Maintenance Chapter 1 Introduction
Air Force Efforts to The Air Force recognized that it
had inefficiencies in its depot maintenance Reform Its Depot
operations. As a result of previous practices, its depots incurred
net operating losses during fiscal years 1993-97. In 1996, the Air
Force began Operations testing initiatives
that incorporated best commercial practices designed to improve
its depot operations, and it is now implementing those
initiatives. Past Practices Resulted in While having
weaknesses and limitations in precision, data systems that
Inefficiencies the Air Force uses to analyze its
depots' operations' cost and productivity provide a general
indication of inefficiencies in the current operating environment.
On the basis of these data, the Air Force reported that for fiscal
years 1993-97, its depots incurred a net operating loss of $216.7
million. For the same time, reported worker productivity remained
relatively constant. Although the Air Force has not formally
analyzed why this situation has not improved, it has observed
several contributors. Among these have been difficulties in
forecasting future workloads, setting appropriate rates to recover
costs, and underutilizing depot industrial repair and overhaul
facilities. Underuse of these facilities increases costs of
operations because the depot infrastructure is larger than needed
to accomplish identified maintenance workloads. Using current and
future workload estimates, AFMC headquarters officials projected
that, for fiscal year 1999, its depots have about 18 percent
excess capacity in facilities and equipment.8 However, we reported
that using criteria established during the 1995 base realignment
and closure process, excess capacity in the five Air Force depots
was closer to 65 percent in 1999.9 The impending closure of two of
the five depots should reduce some of this excess. Air Force Plans
for Under an umbrella concept initially called Lean
Logistics but later renamed Reengineering Logistics Agile
Logistics, the Air Force began exploring ways to adopt concepts
and Activities practices used in the private
sector commercial firms to reengineer costly 8DOD's estimates are
determined by dividing projected workload of about 22 million
hours for fiscal year 1999 by the amount of available capacity
estimated at 27 million hours. DOD normally measures capacity by
an analysis that constrains facility and equipment capacity
availability by the availability of trained personnel and the
organization of work stations, assuming an 8-hour work day and a
5-day-a-week operation. During the 1995 base realignment and
closure process, DOD used a measure called maximum potential
capability that was intended to capture the potential capacity of
industrial facilities and equipment unconstrained by the number of
trained personnel currently assigned to these facilities. 9Defense
Depot Maintenance: Uncertainties and Challenges DOD Faces in
Restructuring Its Depot Maintenance Program (GAO/T-NSIAD-97-111,
Mar. 18, 1997). Page 13
GAO/NSIAD-99-63 Air Force Depot Maintenance Chapter 1 Introduction
and inefficient logistics activities. Using the Agile Logistics
program as the cornerstone for improving its logistics activities,
the Air Force began to consider ways to * expedite the repair of
components and aircraft, * reduce the amount and costs of supply
inventories, * match the repair of items with the demand from
customers, * prioritize repairs when multiple priorities exist, *
rapidly move components and spare parts to and from customers, and
* improve contracting for logistics support. The Air Force's
efforts to implement Agile Logistics ultimately focused on three
specific initiatives for reforming current logistics activities-
the depot repair enhancement initiative, the aircraft repair
enhancement initiative, and the contract repair enhancement
initiative. These initiatives are targeted at specific areas of
maintenance noted above, but they are intended to address all
logistics activities necessary for effective support of the
warfighter. Depot Enhancement Initiative The depot
enhancement initiative affects the repair of reparable spare parts
such as aircraft landing gears, wheels, and avionics. This
initiative seeks to reengineer the old "batch processing" approach
by repairing only the items for which customers have an immediate
need. The initiative also seeks to improve support to depot
customers by meeting their needs for components on a faster basis-
reducing the requirement to store additional inventory in
anticipation of need. Under the depot enhancement initiative,
depots prioritize repairs on a daily basis, using automated
systems that establish the next day's repair requirements and
distribution priorities. Also, the Air Force expected to change
the depots' organizational structures by placing key supply and
maintenance personnel under a single manager, rather than having
them reporting to several managers. This new approach was to be
more conducive to effective teamwork and communication for
reparable item management. Aircraft Enhancement Initiative The
aircraft enhancement initiative is for aircraft that are
periodically scheduled or programmed for extensive maintenance at
Air Force depots to keep them operational or to upgrade their
capabilities. The initiative was designed to improve repair
turnaround times for these aircraft. This was to be accomplished
by reengineering the existing repair process to improve teamwork
and communication for more effective management of supply Page 14
GAO/NSIAD-99-63 Air Force Depot Maintenance Chapter 1 Introduction
and maintenance during the programmed maintenance process. The
concept of matching repair with demand did not apply to the
aircraft initiative since aircraft are prescheduled for this
extensive maintenance. Contract Enhancement Initiative The
contract enhancement initiative applies to depot reparable
workloads performed by contractors. Like the depot initiative,
this initiative also called for improving operational performance
by reducing repair turnaround times and doing repairs on demand.
The Air Force's logistics centers were to apply the new initiative
to terms of existing and future contracts whenever possible.
Previous GAO We have previously recommended
that the Air Force reengineer its Observation on Air
logistics activities, and we identified additional best commercial
practices that could result in further improvements. In our
February 1996 report on Force Agile Logistics the Air
Force reengineering efforts,10 we generally supported the Air
Initiatives Force's reengineering efforts.
Noting that some of the results to date were promising, we
concluded that the Air Force efforts should be supported and
expanded. We also noted that the success of the Air Force in
achieving a "quantum leap" in system improvements hinged on its
ability to address and overcome certain barriers, such as inherent
organizational resistance to change. In agreeing with our previous
recommendations to build on the existing Air Force reengineering
efforts, DOD stated that the Air Force's logistics reform strategy
should receive top-level DOD support in achieving its goals. DOD
also agreed that the Air Force should consider adding other
leading-edge logistics concepts into its reengineering efforts,
for example, installing commercially available management
information systems to track inventory amounts, location,
condition, and requirements and reorganizing depot workshops to
reduce the time it takes to repair components. The Air Force
enhancement initiatives represent efforts to deal with these
issues. 10Best Management Practices: Reengineering the Air Force's
Logistics System Can Yield Substantial Savings (GAO/NSIAD-96-5,
Feb. 21, 1996). Page 15
GAO/NSIAD-99-63 Air Force Depot Maintenance Chapter 1 Introduction
Recent Air Force Two recent Air Force studies-an Air
Force Inspector General report (Dec. Analyses
1997) on the implementation and maturity of Agile Logistics and
the effect of the initiatives on combat readiness and an Air Force
board report (Mar. 1998) on the management of reparable spares-
identify weaknesses in the Air Force's implementation of its
enhancement initiatives. They also show that the Air Force has a
number of significant issues to address if it is to succeed in its
reengineering efforts. Appendix I provides additional details from
these reports. Objectives, Scope, and As requested by the
Chairman and Ranking Minority Member, Methodology
Subcommittee on Readiness, Senate Armed Services Committee, we
reviewed the status of the Air Force's three depot maintenance
enhancement initiatives and management issues related to the
initiatives. Although the Air Force's management data and
accounting systems have many problems that can affect their
reliability, Air Force officials use them to manage and track
their logistics and other programs. They provide the best
available trend information on depot maintenance effectiveness and
efficiency. We used this data in analyzing the Air Force's
reported financial and productivity measures for fiscal years
1993-97. We did not independently test the accuracy of this data
or any data on logistics operations AFMC headquarters or its
centers provided. We also reviewed AFMC and center business plans
for the Air Force working capital funds to identify program budget
issues and costs of operations. To determine the status of the
enhancement initiatives' implementation, we analyzed AFMC and
center (1) program management plans, (2) analyses of costs and
benefits of the depot initiative prototype demonstration, (3)
performance indicator reports that were used for maintenance shops
participating in the prototype demonstration, and (4) reports on
initiative implementation and results being achieved. We examined
AFMC and center analyses of automated system requirements, reports
of problems encountered during initiative implementation, and the
status of corrective actions planned or taken. We also interviewed
logistics managers and depot mangers at AFMC and three air
logistics centers to obtain their views on the logistics
enhancement initiatives, the impact the program was having or
expected to have on depot maintenance operations, and other
related logistics issues. In addition, we interviewed DLA
headquarters officials to discuss DLA's role in the Air Force's
reengineering initiatives and specific issues related to DLA
supply support at the Air Force centers. Page 16
GAO/NSIAD-99-63 Air Force Depot Maintenance Chapter 1 Introduction
We made extensive use of our prior work in identifying and
evaluating issues that challenge the Air Force's success in
implementing the Agile Logistics initiatives. We also reviewed
recent studies of the Agile Logistics Program by the Air Force
Inspector General and a group of active and retired military
representatives and private industry representatives appointed by
the AFMC Commander to evaluate AFMC's management of reparable
items. We performed work at AFMC, Wright-Patterson Air Force Base,
Dayton, Ohio; Warner Robins Air Logistics Center, Warner Robins,
Georgia; Ogden Air Logistics Center, Hill Air Force Base, Ogden,
Utah; and Oklahoma City Air Logistics Center, Tinker Air Force
Base, Oklahoma City, Oklahoma. We did not visit the two remaining
centers-Sacramento Air Logistics Center, McClellan Air Force Base,
Sacramento, California, and San Antonio Air Logistics Center,
Kelly Air Force Base, Texas-because of their impending closure. We
conducted our review from October 1997 to March 1999 in accordance
with generally accepted government auditing standards. Page 17
GAO/NSIAD-99-63 Air Force Depot Maintenance Chapter 2 Status of
Implementation of the Enhancement Initiatives
Chapter 2 The Air Force's plans for implementing its enhancement
initiatives were largely focused on broad concepts and principles
to implement the initiatives and achieve the intended
improvements. Included in the approach to implementation was use
of standard organizational structures and employee position
descriptions, a description of the new process, and an assessment
of required automated system support. Currently, the Air Force is
in the process of implementing the three initiatives. In its plans
for implementation, the Air Force did not establish clear and
consistent measures to facilitate tracking progress and measuring
the success of the initiatives. Thus, it cannot conclusively
determine whether the goals of the Agile Logistics program, that
is, increased operational efficiency and reduced costs, are being
achieved. However, limited information indicates that the
initiatives have been implemented piecemeal and have had mixed
results. As discussed in chapter 3, key management changes,
including the addition of measures for determining the achievement
of initiative goals, could facilitate implementation of the
initiatives and provide for a clearer evaluation of the
implementation. Depot Repair Implementation
status: Partial implementation. Enhancement Initiative Reported
results: Some improvement in supply status; mixed results in
maintenance activities. As noted, the depot enhancement initiative
pertained to the repair of reparable spare parts such as aircraft
landing gears, wheels, and avionics, with an emphasis on meeting
customer needs for components on a faster basis. This initiative
has been applied to about one-third of the Air Force's stock-
numbered depot reparable items. AFMC officials continue to assess
the extent to which other items should be brought under the
initiative. Implementation History The depot enhancement
initiative began as an AFMC headquarters- sponsored prototype
effort from June 1996 to June 1997 and afterward was expanded
AFMC-wide. For the prototype effort, AFMC selected 10 depot shops,
2 at each of the 5 centers. The prototype effort included a
workload of less than 1 percent of the Air Force's inventory of
reparable items. AFMC required the five centers to collect and
report data in four areas: customer impact, responsiveness to the
customer, repair depot efficiency, and Page 18
GAO/NSIAD-99-63 Air Force Depot Maintenance Chapter 2 Status of
Implementation of the Enhancement Initiatives operating costs.
AFMC used this data to conduct a cost/benefit analysis of the
prototype program and to determine whether the initiative should
be expanded Air Force-wide. AFMC expanded the initiative AFMC-wide
beginning in June 1997. As of September 30, 1998, the three AFMC
centers we visited reported that they had applied the depot
initiative to about 31 percent of the stock-numbered reparable
items they managed, representing about 68 percent of the items'
total dollar value. Table 2.1 provides details regarding the
extent to which the three centers applied the depot enhancement
initiative to their reparable stock-numbered items. Table 2.1:
Stock-Numbered Reparable Items Reported Under the Depot
Enhancement Initiative as of September 30, 1998 Dollars in
millions Items under the Reparable items enhancement
managed initiative Percent
Initiative Value of Total Total Total Total
items to initiative items Center number
value number value total to total Ogden
23,391 $4,227.6 3,057 $300.4 13
7 Ok. City 14,833 226.1 2,509
85.9 17 38 Warner Robins 39,443
11,220.0 18,335 10,325.0 46 92
Total 77,667 $15,674.7 23,901 $10,711.3
31 68 Source: Data provided by each center. Officials at
the centers we visited identified several types of items that are
not yet included in the depot enhancement initiative. For example,
they have not included items with low or infrequent demands, items
that have dual sources of repair, and items that are on aircraft
undergoing programmed depot maintenance. Center officials said
that they recognized many additional items should be added to the
initiative and they were trying to identify those items. AFMC has
not made final decisions as to whether some of the items included
in the initiative were not good candidates. AFMC officials said
that unique considerations such as long lead times, repair
complexities, or the routine size of the daily repair schedule
suggest that repair forecasting may in some cases be more cost
effective than daily demand schedules called for by the
initiative. Page 19
GAO/NSIAD-99-63 Air Force Depot Maintenance Chapter 2 Status of
Implementation of the Enhancement Initiatives Supply Availability
Available data collected during the prototype period (June 1996 to
June 1997) showed that the number of components awaiting repair
due to the lack of spare parts decreased 25 percent. This data
essentially indicated that more repair parts were available to
complete needed component repairs-a measurement of improvement in
the supply function. Change in Maintenance Implementation of a
repair-on-demand concept was a significant change Processes
from the previous Air Force process. Under the old system, repair
levels were negotiated quarterly based on projections of what
items would fail or require scheduled repair. The new system
requires daily changes in maintenance processes in response to the
latest assessment of the most urgent requirements. According to
maintenance officials at the three centers, this change initially
disrupted the maintenance process throughout the shops
participating in the pilot effort. Available data collected during
the prototype period showed that the average repair time increased
in 6 of the 10 shops; 2 of the 6 shops' repair times increased
over 100 percent. In its October 1997 report, an AFMC analysis
group found that after the year-long depot enhancement prototype
initiative, performance indicators showed negative trends for some
maintenance shops. For example, the total number of aircraft that
were reported as mission incapable was 50 percent higher than
before the initiative, and the total number of hours these
aircraft remained mission incapable increased by 77 percent.
However, this performance could have been partly the result of an
Air Force-wide problem in fiscal year 1997 involving underfunding
of inventory requirements. This issue is addressed more fully in a
separate report on the Air Force's Supply Management Group.1
Overall, AFMC's analysis of the prototype effort showed that
conditions related to shop performance and cost outcomes generally
worsened during the prototype period, even though the depots were
operating under enhanced conditions that were not representative
of the normal repair environment. For instance, some shops were
allowed to add additional workers, others were fully funded for
repair work, and some shops had piece parts required for component
repair already in place to avoid delays due to awaiting parts.
These conditions would not exist once the initiative was expanded
AFMC-wide. 1Air Force Supply: Management Actions Create Spare
Shortages and Operational Problems (GAO/NSIAD/AIMD-99-77, Apr. 29,
1999). Page 20 GAO/NSIAD-99-
63 Air Force Depot Maintenance Chapter 2 Status of Implementation
of the Enhancement Initiatives We observed that because of the
enhanced conditions, such as fully funding the repair work and
having piece parts already in place, one shop at the Warner Robins
Center was able to reduce the frequency that aircraft were
reported as mission incapable2 due to maintenance problems. After
the prototype demonstration ended and the special conditions were
eliminated, the number of hours that aircraft were mission
incapable increased, though not to as high a level as when the
prototype period began. For example, when the shop began the
prototype initiative, the number of mission incapable hours
reported was about 2,700. This number fluctuated during the 12-
month prototype period, but at the end of the period in June 1997,
the total number of mission incapable hours reported was 324.
After the prototype period ended, the mission incapable hours
began increasing, and for the 5-month period August to December
1997 averaged 1,938 hours. Results of Initiative Since In
analyzing project data as of September 30, 1998, we found that
results the Prototype achieved at various AFMC
centers continues to be mixed. For instance: * Officials in the
Ogden center's depot avionics shop reported that between October
1997 and September 1998, the depot reduced by 45 and 38 percent,
respectively, the number of times and hours that aircraft were
reported as mission incapable because the shop did not provide a
reparable item in a timely manner. For the same period of time,
the shop had little or no improvement in other areas such as
repair times. * Officials at the Oklahoma City center reported
that between March 1998 and September 1998, the availability of
reparable components to base- level customers increased by 22
percent. For the same time period, the number of times that
aircraft were reported as mission incapable decreased by 8
percent, but the number of hours during which they were incapable
increased by 28 percent. * Officials at the Warner Robins center
reported that the number of aircraft that were mission incapable
fluctuated throughout the year, but increased 10 percent overall
for the period October 1997 to September 2The Air Force measures
the availability of aircraft through the use of mission-capable
rates that represent the reported percent of unit aircraft that
are capable of performing at least one of their assigned missions.
Aircraft that are not capable of accomplishing any of the missions
are classified as (1) "not mission capable supply" if they cannot
accomplish the missions because of parts shortages, (2) "not
mission capable maintenance" if they cannot accomplish the
missions because of required base-level maintenance, or (3) "not
mission capable both" if both parts problems and required base-
level maintenance are preventing the aircraft from accomplishing
the missions. Page 21
GAO/NSIAD-99-63 Air Force Depot Maintenance Chapter 2 Status of
Implementation of the Enhancement Initiatives 1998; the number of
hours incapable increased 12 percent. Other depot performance
measures did not show significant improvement. According to AFMC
officials, difficulties in obtaining repair parts when needed were
a key factor in the maintenance depots' inabilities to reduce
repair times. Aircraft Repair Implementation status:
Partial implementation. Enhancement Initiative Reported results:
Reduced programmed aircraft maintenance time. As noted, the
aircraft repair enhancement initiative affects aircraft that are
periodically scheduled or programmed for extensive maintenance at
Air Force depots, and emphasized faster turnaround times for this
maintenance. Implementation of this initiative has been piecemeal
and incomplete, largely because of resource constraints. Officials
at the three centers believed that the initiative was having a
positive impact on improving the time and costs of periodic
programmed maintenance of aircraft. Due to a lack of data,
however, it is unclear to what extent the initiative has resulted
in these improvements or what cost savings may have resulted. The
Air Force has not decided whether this initiative should be
applied to all aircraft. Implementation History The
aircraft enhancement initiative began as a joint effort by the
Oklahoma City and Warner Robins centers in March 1996. AFMC
headquarters later assumed leadership of this initiative in August
1998. Because AFMC made the depot enhancement initiative a higher
priority, resources for implementing the aircraft enhancement
initiative were constrained. Therefore, rather than reengineer the
entire process for programmed depot maintenance, the centers
emphasized identifying the most immediate problems that could be
corrected and applying quick fixes that could be executed with
available resources. They repeated this cycle for the next most
pressing issues. Officials at the three centers estimated that as
of October 1, 1998, the date that AFMC directed them to formally
implement the program, the initiative had been used on an average
of 65 percent of the 10 aircraft systems that received periodic
programmed depot maintenance. Page 22
GAO/NSIAD-99-63 Air Force Depot Maintenance Chapter 2 Status of
Implementation of the Enhancement Initiatives Results of the
Initiative Officials at the three AFMC centers believed that,
due to the aircraft initiative, they have reduced the time needed
to complete tasks during programmed depot maintenance for some
aircraft. For example: * Officials at the Ogden depot reported
that the aircraft initiative facilitated innovative approaches in
work on C-130 aircraft that reduced the aircraft stripping and
painting time by 200 hours. * Officials at the Oklahoma City depot
noted that their workload for the E-3 aircraft increased 100
percent over the last 3 fiscal years because of the need for
modifications, upgrades, and more extensive repairs aging aircraft
need. Although they anticipated a corresponding increase in repair
times, under the initiative they accomplished the increased
workload more efficiently with an actual increase in repair time
of only 46 percent. * Officials at the Warner Robins Center
reported that they had reduced programmed depot maintenance time
for the F-15 about 42 percent, from 154 to 89 days. They also
reported that using the aircraft initiative's principles helped
them to win a public-private competition for maintenance on the C-
5 aircraft. For fiscal year 1997, center officials reported that
quicker turnaround times allowed them to reduce the number of
other aircraft at the center awaiting or undergoing programmed
depot maintenance, thus freeing up depot maintenance capacity to
accommodate the C-5 work. In analyzing the reported initiative
results, we observed that none of the three centers had calculated
the amount of cost reductions that could be attributed to use of
the aircraft enhancement initiative. Officials at all three
centers told us that they do not yet have sufficient systems in
place to track actual reductions in costs. They anticipated that
these systems would be in place during fiscal year 1999. However,
they believed that the centers can achieve reductions in aircraft
repair times by using principles of the aircraft enhancement
initiative without adding costs. Issues Associated With The
Air Force factors depot maintenance time into aircraft fleet
Future Application of the requirements to ensure that
sufficient aircraft are available to meet mission Initiative
requirements while providing adequate time to provide needed
maintenance. Consequently, while not a goal of the initiative, the
Air Force may be able to reduce its aircraft inventory through the
use of the initiative, since accomplishing maintenance more
quickly could reduce the number of aircraft required to meet
mission needs. Further, a smaller inventory of aircraft should
allow the Air Force to reduce the costs of holding and Page 23
GAO/NSIAD-99-63 Air Force Depot Maintenance Chapter 2 Status of
Implementation of the Enhancement Initiatives maintaining
aircraft. Whether reductions in turnaround time will ultimately
allow the Air Force to reduce its inventory of aircraft is
unclear. Also, according to an AFMC headquarters official, the Air
Force and AFMC headquarters have not determined whether the
initiative should be applied to all programmed depot maintenance
aircraft or the extent to which aircraft inventories should be
reduced as a result of faster repairs. AFMC officials stated that,
when evaluating whether to implement proposed maintenance time
reduction activities, it is important to evaluate the cost-
effectiveness of the time reduction activities, determining
whether additional costs are involved in achieving reductions in
repair times. Another consequence of reduced repair turnaround
times is an expansion of excess depot capacity. Action could be
needed to deal with current and additional future excess capacity
to minimize overhead costs. The Air Force believes that the
reduction from five to three depots would eliminate any potential
excess capacity related to aircraft hangar space. Contract Repair
Implementation status: Partial implementation. Enhancement
Initiative Reported results: Reduced costs and repair times. As
noted, the contract repair enhancement initiative applies to depot
reparable workloads performed by contractors and emphasizes
reducing repair turnaround times. Application of this initiative
involves contract restructuring or modifications as necessary, or
incorporating applicable provisions in new contracts.
Implementation of this initiative has varied at each AFMC center,
with most use being made by the Warner Robins center. Although
officials report improvements in contract costs and turnaround
times, the Air Force has no system for tracking whether reported
results are actually being achieved. Also, the issue of whether
the initiative should be applied to all contracts has not been
decided. Implementation History The contract enhancement
initiative was officially adopted in January 1997 after having
been applied to a small number of contracts at each of the centers
beginning in May 1996. During the pilot effort, the five centers
applied aspects of the contract initiative to 14 contracts-1 at
the Ogden center, 4 at the Oklahoma City center, 5 at the San
Antonio center, 1 at the Sacramento center, and 3 at the Warner
Robins center. Although the Page 24
GAO/NSIAD-99-63 Air Force Depot Maintenance Chapter 2 Status of
Implementation of the Enhancement Initiatives centers did not
prepare cost/benefit analyses, they concluded that the initiative
could be useful in reducing repair times and costs. AFMC
headquarters' implementation approach was to identify and
prioritize assets for repair, similar to the depot enhancement
initiative. Under the contract initiative, AFMC centers hoped to
reduce repair turnaround times by enhancing contractor performance
whenever possible by (1) establishing priorities for the release
of parts to the repair line to support the repair of items with
the highest need, (2) encouraging contractors to obtain repair
parts in advance to help minimize the time that components await
parts, (3) using parts from less critical components to repair
more critical ones, and (4) allowing contractors to reclaim usable
parts from condemned components, thus reducing costs and returning
assets to operational units in a shorter period of time.
Additionally, AFMC headquarters and the centers identified several
actions to be taken when contracting for the repair of reparable
items with the overall goal of reducing repair times, contract
repair costs, and eliminating excess inventory. These actions
included allowing contractors to become more involved in the
planning process such as helping develop the scope of work; using
incentives to increase contractor performance; and negotiating
longer-term performance periods. Application of the Contract As
of September 30, 1998, the three centers reported that they had
applied Initiative some aspects of the
enhancement initiative to 258 maintenance contracts- about 61
percent of 421 contracts that were in effect at that time. As
shown in table 2.2, the Warner Robins center, which was the first
center to use this initiative, has applied the initiative to more
contracts than the other two. Most contracts focused on the goals
of reducing repair time and fast transportation of the components
needing repair from and to the customers. Page 25
GAO/NSIAD-99-63 Air Force Depot Maintenance Chapter 2 Status of
Implementation of the Enhancement Initiatives Table 2.2:
Contracts Including Selected Goals of the Contract Enhancement
Initiative as of September 30, 1998 Contracts Contracts at
Contracts at Goals at Ogden Oklahoma
City Warner Robins Total Reduce repair time
18 22 85 125 Reduce
inventories 1 2
10 13 Reduce repair costs 1
7 40 48 Repair on demand
3 2 81 86 Fast
transportation 2 53
94 149 Note: Individual aspects of the initiative were applied
to more than one contract. Source: Data provided by each center.
Like the depot repair enhancement initiative, the contract repair
enhancement initiative was originally intended to use a daily
forecast for repairs on demand. However, none of the centers had
implemented the concept of daily repair on demand. AFMC
headquarters allowed the centers to adopt a longer forecast period
because automated data systems were not yet adequate to support
contract repair-on-demand. The Warner Robins center was the only
center using a prototype planning tool for automating the
identification and prioritization of work to be done under
contract. However, the prototype allows use of a 30-day forecast
for repair contractors, while the Air Force depots were expected
to respond to daily forecast changes. Oklahoma City and Ogden
officials said they did not believe it was practicable to adjust
contract workloads frequently. They said that depot maintenance
contractors want to know in advance what the workload will be so
that they can stabilize their workforce and ensure they have
required parts available. Results of Initiative Officials at
the three centers reported to AFMC headquarters their estimated
impact of the contract repair initiative in reducing repair time,
maintenance costs, and inventories of reparable items. However, it
is difficult to assess these reported estimates of success because
the centers had no system for tracking actual results. An AFMC
program official said that AFMC headquarters was evaluating the
interfaces needed between automated systems to be able to measure
outcomes such as turnaround time reductions. Page 26
GAO/NSIAD-99-63 Air Force Depot Maintenance Chapter 2 Status of
Implementation of the Enhancement Initiatives Although no overall
quantifiable data readily exists, center officials cited examples
they believed showed that the application of the initiative
allowed them to reduce contract costs and repair turnaround times.
For example, the Warner Robins center reported that it reduced
costs on a contract for the F-15 aircraft's radar system by
$450,000 and avoided costs of about $1.4 million for the C-130
aircraft due to overall improvements in the repair process. An
Ogden center official told us that use of the initiative had
benefited the center through improved teamwork, greater contractor
involvement in the process, and reduced time spent processing
paperwork. Issues Associated With An important issue
associated with future use of the initiative is the extent Future
Application of the to which contractors can be encouraged to
accept and implement the Initiative initiative
objectives. According to a Warner Robins official responsible for
overseeing the initiative's implementation, the repair-on-demand
concept could be disruptive for contractors because fluctuations
in the workload require them to accept more flexible and
potentially more costly working arrangements than they currently
use. Also, he said that the Air Force would likely face
difficulties in obtaining contractors' voluntary acceptance of
some major changes, such as the use of contractor funds for
obtaining repair parts in advance to reduce turnaround times, and
taking other actions necessary to improve the efficiency of their
operations. Such changes could require contract modifications,
which could result in increased costs. Conclusions
Each of the three initiatives are in various stages of
implementation. However, only broad goals were established for the
initiatives and the Air Force did not establish tracking measures
to assess whether the three depot enhancement initiatives were
achieving the desired results. While there are indications of some
positive outcomes, the initiatives have not yet achieved the
desired goals of increased operational efficiency and reduced
costs. Chapter 3 discusses issues that must be addressed to
facilitate implementation of the initiatives and provide a clearer
basis for assessing results. Page 27
GAO/NSIAD-99-63 Air Force Depot Maintenance Chapter 3 Management
Issues Need Attention to Aid Implementation of Reform Initiatives
Chapter 3 The implementation of the three initiatives could be
enhanced if the Air Force took management action to (1) set up
organizational structures and processes as originally planned, (2)
support initiative implementation, (3) develop standard measures
to assess performance, (4) improve automated management
information systems, (5) avoid premature budget reductions, and
(6) improve supply management support. Addressing these issues is
vital to the success of AFMC headquarters' vision for
reengineering its logistics activities. AFMC headquarters has
recently adopted a new vision for logistics management but has not
yet made clear how this new vision will be integrated with or
address the management issues associated with the three ongoing
reengineering initiatives. Standard Our
prior assessments of Defense reform initiatives have noted the
Organizational difficulties of implementing
reforms when corrective actions require the development and use of
common systems and processes across Structures and Process
organizational boundaries.1 An objective of the enhancement
initiatives Not Fully Implemented was to improve the effectiveness
and efficiency of depot operations through the use of standard
organizational structures and processes. This objective has not
been fully achieved because the centers have not fully
incorporated standardization requirements into their maintenance
and supply organizations. Lack of standardization among the
centers for the aircraft enhancement initiative program is partly
due to the fact that the initiative was originally center-
sponsored and only came under direct AFMC oversight in August
1998. AFMC has expressed interest in closer integration of the
programs, which could facilitate greater standardization.
Advantages of Standard According to an AFMC official,
implementing the enhancement initiatives Structures and Processes
with standardized organizational structures and processes would
allow depot workers to be moved within and among the depots
without the costs and time delays for training or for learning a
new process or management structure. Standardization also would
help (1) provide managers and workers a common understanding of
program objectives and (2) simplify program management and
oversight by having standard operating procedures that allow AFMC-
wide refinements without the added costs and time to tailor such
actions to individual operations at the Air Force depots.
Officials also said that a waiver of the standardization
requirements would be approved if the impact of a center's request
did not significantly change the standard requirements. 1Defense
Reform Initiative: Organization, Status, and Challenges
(GAO/NSIAD-99-87, Apr. 21, 1999). Page 28
GAO/NSIAD-99-63 Air Force Depot Maintenance Chapter 3 Management
Issues Need Attention to Aid Implementation of Reform Initiatives
While the depot enhancement prototype initiative was under way,
AFMC began developing an implementation plan that provided broad
direction on the use of a standard process and organizational
structure for AFMC depot facilities, as well as position
descriptions, for converting depot shops to the new process. For
example, the new organizational structure called for collocation
of supply managers, item managers, and other key players with a
single manager over both supply and maintenance operations. The
new structure placed accountability and authority with a single
manager to remove impediments and constraints to the repair of
items. The two centers that sponsored the aircraft enhancement
initiative did not develop a detailed plan for implementing it,
but they did prepare a manual in July 1996 that described the
initiative's management structure. This structure, referred to as
the weapons system support center, called for collocation of key
individuals in planning, supply, contracting, and engineering
support. The centers expected that, as the focal point for parts,
tools, and equipment, this management structure would improve
teamwork and communication for more effective management of supply
and maintenance issues during the programmed depot maintenance
process. AFMC Has Identified Need Although program
officials at AFMC said that standardization is necessary for
Greater Efforts in This for the Air Force to have an effective
depot enhancement initiative, the Area
centers were ultimately responsible for determining how they would
implement the initiative. The centers implemented the following
structures with the following variations: * Officials at the Ogden
depot established two shop service centers rather than one
standard center because the maintenance workload was not housed in
a single location and they believed that repair processes should
be tailored to the depot's unique work requirements. As of
December 1998, the depot had made six requests to deviate from the
standardization process: AFMC approved one, and five were pending.
* Officials at the Oklahoma City depot decided that their service
center chief would report to a material manager instead of the
standard repair manager position because they believed the
material manager was in the best position to be a problem solver.
In April 1998, AFMC headquarters denied the depot's request to
make this change, and as of December 1998, the depot was
implementing the standard structure. * Officials at the Warner
Robins depot changed some standard position requirements by using
nonstandard positions such as supply technicians and material
handlers. In their opinion, their structure recognized the Page 29
GAO/NSIAD-99-63 Air Force Depot Maintenance Chapter 3 Management
Issues Need Attention to Aid Implementation of Reform Initiatives
need to use less costly positions to support standardization
requirements. As of December 1998, AFMC headquarters had not
approved the depot's request to add these nonstandard positions.
In September 1998, after AFMC assumed management control of the
aircraft enhancement initiative, it directed the centers to follow
a standard organizational structure with standard personnel
descriptions for the support center. In early 1999, AFMC
headquarters officials evaluated the extent to which the three
centers had implemented the standard and found mixed results. They
found that implementation of objective standardized structures at
Warner Robins, Ogden, and Oklahoma City was about 70 percent, 30
percent, and 5-10 percent complete, respectively. AFMC officials
told us that they expected to further evaluate progress in this
area next year. AFMC headquarters officials have stated that they
want closer integration of the three initiatives in the future.
Management and oversight for both depot and contractor repair
options could be enhanced to the extent that both sources of
repair can use the same system tools, be monitored by the same
measures, and make repairs to the items using the same logic
rules. While recognizing this, AFMC headquarters has not yet
outlined how or when they expect to better integrate management of
the three initiatives. Greater Organization Our prior work
examining Defense reform initiatives has also noted the Support
Would importance of top management commitment and
sustained support for reform initiatives, and overcoming cultural
barriers and resistance to Enhance Initiative change. The
Air Force has recognized that its corporate culture is an
Implementation important factor in whether it achieves
its reengineering goals. AFMC believes that changing the mindset
of the current workforce will be a challenge because (1) its
organizations have often found change threatening and have been
unwilling to modify behavior until proposed ideas are proven, (2)
the enhancement initiatives call for organizational and process
changes and many personnel have difficulty understanding how they
will be affected and are reluctant to embrace the initiatives, and
(3) essential employee groups have not yet fully supported the
implementation of the new initiatives. Particularly important is
management emphasis on workers becoming skilled in multiple areas
and greater worker flexibility in work assignments. Also, as we
stated in our February 1996 report on the Air Force's
reengineering efforts, top-level management has not always
provided the support necessary for successful implementation of
the reengineering initiatives. Page 30
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A key need, according to AFMC's plan for implementing the depot
initiative, is for workers to be multiskilled. Our prior work has
shown that multiskilling can be an important concept in fostering
improved worker productivity.2 A multiskilled workforce gives
depot managers the flexibility to shift workers among different
skill areas and offers better opportunities to effectively move
workers to areas with increased workloads. According to depot
officials, the ability to shift workers among various tasks allows
them to adjust to unanticipated work stoppages due to parts
shortages, technical problems, temporary labor imbalances, or
changes in work priorities. Without a multiskilled staff, AFMC
officials believe it will be difficult to efficiently manage a
repair-on-demand logistics system where workload instability is
likely to increase. However, the centers do not yet have many
workers trained to perform multiple tasks. Officials at the three
centers we visited estimated that only about 10 percent of their
workers were multiskilled because employee bargaining agreements
between Air Force management and worker unions generally have not
supported this concept. Currently, depot workers are trained in
specific technical areas and perform work within their specific
specialization, and labor agreements usually require that workers
only perform work in their specialized area. Therefore, depot
managers have limited ability to move workers to other areas when
there are unanticipated changes in work priorities. According to
an AFMC headquarters official, the Command has made progress by
negotiating an agreement on training the workforce to perform
multiple tasks. However, officials at the centers we visited said
that they had made little progress in training workers because of
the cost and time involved. In a previous report, we noted that
the Navy adopted a program to improve its cost-effectiveness and
responsiveness through multiskilling at an intermediate repair
activity in Pearl Harbor, Hawaii.3 When the Navy transferred
civilians from the shipyard to an intermediate activity at the
same location, it implemented a program to train workers in a
second complementary skill area, allowing them to perform multiple
tasks. Maintenance facility managers said under this program, they
used a limited number of workers more cost-effectively and were
more responsive to 2Army Industrial Facilities: Workforce
Requirements and Related Issues Affecting Depots and Arsenals
(GAO/NSIAD-99-31, Nov. 30, 1998). 3Army Industrial Facilities:
Workforce Requirements and Related Issues Affecting Depots and
Arsenals (GAO/NSIAD-99-31, Nov. 30, 1998). Page 31
GAO/NSIAD-99-63 Air Force Depot Maintenance Chapter 3 Management
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emerging requirements. The shipyard and intermediate repair
activity at Pearl Harbor is attempting to expand on the program to
improve productivity and reduce costs. We are evaluating this
effort as a part of a separate review. Standard Set of
Our prior reporting on Defense reform initiatives has also shown
the Measures Could Help importance of clear results
oriented goals and performance measures. The Air Force's Baseline
Agile Logistics Master Plan and Road Map cited the in Measuring
Program need for performance measures to provide management with
information Impact that will "identify
problems, suggest solutions, lead to changes in behavior, and set
or reset correct incentives at all levels of operations." While
some initial steps were taken to develop such measures for the
depot enhancement initiative, they were not completed, nor were
measures developed for the other initiatives. While AFMC
headquarters developed some initial measures to assess the
performance of its depot enhancement prototype initiative, they
were used in a limited way initially and were later dropped as the
initiative was expanded AFMC-wide. AFMC headquarters and its
centers were unable to agree on appropriate measures of
performance associated with the initiatives. AFMC has collected
some measures that provide partial information on the three
enhancement initiatives, but it lacks standard measures that would
provide a comprehensive perspective on the initiatives'
performance and their impact on the overall logistics system.
Available measures developed by the individual centers offer
limited insight into the collective performance impact of the
depot, aircraft, and contract enhancement initiatives. AFMC
headquarters and the centers collect data on a number of measures
for evaluating performance aspects of the overall supply and
maintenance functions, but not specifically for the enhancement
initiatives. In the absence of initiative specific measures and
because the enhancement initiatives have been only partially
implemented, available metrics developed by the centers offer
limited insight into the collective performance impact of the
three enhancement initiatives. Page 32
GAO/NSIAD-99-63 Air Force Depot Maintenance Chapter 3 Management
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Improved Management AFMC headquarters recognized that effective
automated data systems Information Systems support was
fundamental to successful implementation of its three enhancement
initiatives. However, its decision to develop new systems Would
Aid in concurrently with upgrading legacy
systems impaired its ability to track Implementing and
implementation of the initiatives. Although AFMC headquarters and
the Assessing Initiatives centers have made progress in
identifying and correcting deficiencies in automated data systems
support, system weaknesses have made it difficult for AFMC to
implement and assess the effectiveness of its enhancement
initiatives. Long-standing System The Air Force's
problems with automated systems support are not new. For Problems
example, we reported in February 1996 that existing systems were
an obstacle to the Air Force's reengineering of its logistics
system.4 In that report, we noted that, according to AFMC's Deputy
Chief of Staff for Logistics, AFMC headquarters was working with
systems that have not been significantly improved in 15 years. As
a result, much of the data used to support the enhancement
initiatives has been collected manually, a task that project
leaders said would be impossible under an Air Force-wide program.
Also, we noted that required management actions and funding
decisions related to systems improvement were outside the
responsibility of managers of the enhancement initiatives and the
entire Air Force. This report noted that improvements to existing
systems would not be fully deployed throughout the Air Force for 5
to 10 years. Until recently, the Joint Logistics Systems Center
had responsibility for improving existing systems by standardizing
data systems across DOD. However, in September 1998, DOD disbanded
the Joint Logistics Systems Center and returned responsibility for
automated system improvements to each service. Enhancement
Initiatives' AFMC headquarters and its centers recognized
that to support the Information System enhancement
initiatives, existing automated management information Approach
systems must be upgraded as new systems were being developed.
According to AFMC headquarters program plans, the depot
enhancement initiative required significant upgrades to 15 legacy
systems and the development of 3 new systems-changes and upgrades
that are now in 4Best Management Practices: Reengineering the Air
Force's Logistics System Can Yield Substantial Savings (GAO/NSIAD-
96-5, Feb. 21, 1996). Page 33
GAO/NSIAD-99-63 Air Force Depot Maintenance Chapter 3 Management
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process. The aircraft enhancement initiative required one new
system to support reengineering of the programmed depot
maintenance process, and the contract initiative required changes
to two existing systems that interface between the centers' and
contractors' systems. Our analysis of the status of AFMC
headquarters' systems improvement showed that, as of October 1998,
work was completed on 73 proposals for system changes to correct
problems with existing or new systems. AFMC headquarters reported
that as of October 1998, it had 43 pending changes, most of which
related to its prototype EXPRESS5 software that was used to
prioritize customer needs. Officials reported that these changes
could take up to 4 or 5 years to complete. Also, after the latest
changes were incorporated in October 1998, AFMC headquarters
planned to change EXPRESS from a prototype system to a production
system with new computer servers and other hardware added to
support EXPRESS. A different but time-consuming approach to deal
with AFMC's system information needs would have been for AFMC to
use the depot prototype initiative to identify key system
requirements, develop and test those requirements, and have
critical system support in place prior to AFMC- wide
implementation. AFMC did not use this approach because of the long
lead time this approach would have required. Instead, the Air
Force directed its efforts at improving data systems as the
enhancement initiatives were being implemented. This resulted in
implementation problems and a lack of data to track and assess the
success of the initiatives. According to logistics managers,
inadequate data systems support was the primary limitation on
evaluating the impact of the enhancement initiatives on logistics
operations. Information Systems Problems with automated
data systems emerged as implementation of the Implementation
Problems enhancement initiative progressed. Information systems
were unable to provide data on critical issues, such as whether
data being generated on current operations was reliable for
decision-making purposes and whether concepts such as repair on
demand were producing desired results. Inadequate automated system
support was a key concern for full implementation of the depot
enhancement initiative because the centers recognized that EXPRESS
was not working as anticipated. For example, (1) items with high
repair costs and long repair times were not identified 5EXPRESS
stands for execution and prioritization of repair support system.
Page 34 GAO/NSIAD-99-63
Air Force Depot Maintenance Chapter 3 Management Issues Need
Attention to Aid Implementation of Reform Initiatives for repair,
(2) inaccurate data was fed from AFMC's central stock leveling
system that sets base peacetime operating stocks of repair parts,
(3) repairs were delayed because some items were erroneously shown
to be awaiting parts, and (4) items with configurations similar to
the original items were not identified for potential use in
filling customer requisitions. Similarly, problems occurred in
linking legacy and new automated data systems to achieve total
integration of the aircraft schedule, bill of materials, and
resource allocation. Center program officials considered these
linkages crucial to the success of the aircraft enhancement
initiative in reducing repair times and costs. Interfaces have
been established for some systems, but interfaces involving four
key legacy systems are pending funds for design and development.
Logistics managers told us they resorted to less optimal and time-
consuming manual intervention to enhance data integrity and used
temporary fixes to link some systems. Future Directions AFMC
must ensure that decisionmakers have timely, accurate, and
complete information to help them resolve overall logistics
problems. At the same time, the Air Force must ensure that it has
explored alternatives for addressing information system needs
within the bounds of relevant legislative and departmental policy
guidance, including * the Clinger/Cohen Act of 1996, which
requires federal agencies to have processes and information in
place to help ensure that information technology projects (1) are
implemented at acceptable costs, within reasonable and expected
time frames, and (2) are contributing to tangible, observable
improvements in mission performance and * DOD requirements to
ensure that systems are economically justified and comply with DOD
technical and data standards-which are intended to help pave the
way toward an interoperable systems environment. Additionally,
AFMC efforts to improve its information systems capabilities must
be in concert with departmental efforts to remediate the Year 2000
problem. The Year 2000 problem is rooted in the way dates are
recorded, computed, and transmitted in automated information
systems. With the typical two-digit format for recording dates,
the year 2000, for example, is indistinguishable from 1900.
Efforts are required and under way to correct this problem;
failure to do so could cause DOD mission-critical operations to be
degraded or disrupted. Page 35
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Greater Attention to We have previously reported concerns
about the abilities of DOD and the Cost and Savings
services to fully account for the costs associated with
implementing various reform initiatives and concerns about
premature reductions in Issues Could Help operating budgets
in anticipation of projected savings. Because AFMC Avoid Premature
headquarters did not adequately identify or track the upfront
costs of Budget Reductions implementing the new
initiatives, budget reductions based on anticipated savings from
them may have been premature. AFMC headquarters has identified the
need for additional implementation funding and is undertaking an
analysis to determine whether the initiatives are achieving
anticipated savings. AFMC headquarters and center officials told
us that they do not know how much it has cost to implement the
depot, contract, and aircraft enhancement initiatives, but they
estimated that millions of dollars were being spent and additional
funds were required. They pointed out that AFMC's June 1997
deployment plan for the depot initiative forecasted an
implementation cost of about $18.6 million. In addition, AFMC's
Depot Maintenance Activity Group business plan for fiscal years
1998 and 1999 showed that the depot initiative needed funding of
$9 million for each year for spare parts procurement. This amount
was unfunded because the funds had been taken from the budget in
anticipation of cost reductions based on repair times being
reduced. Notwithstanding a lack of complete information on
implementation costs, the Air Force anticipated savings from the
three initiatives. On the basis of this assumption, it reduced the
working capital fund $336 million in fiscal year 1997, $289
million in fiscal year 1998, and $323 million in fiscal year 1999.
However, AFMC headquarters officials determined that it had not
achieved this level of savings and the resulting funding shortfall
was adversely affecting support to its customers.6 Although these
officials believed that they were achieving savings from the
initiatives, the exact savings cannot be determined because the
Air Force does not have a system for tracking savings. Because of
the funding shortfall in maintenance and operations, AFMC
headquarters has requested that the Air Force provide additional
funding and no longer plans to reduce future budgets in
anticipation of cost savings from the new initiatives. 6Air Force
Supply: Management Actions Create Spare Shortages and Operational
Problems (GAO/NSIAD/AIMD-99-77, Apr. 29, 1999). Page 36
GAO/NSIAD-99-63 Air Force Depot Maintenance Chapter 3 Management
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According to AFMC headquarters, achieving actual cost savings will
require reductions in inventories of major and secondary items and
faster maintenance response times. For example, if the aircraft
initiative achieves its goal of moving aircraft through the repair
process and returning them to the customer on an accelerated
schedule, the Air Force should eventually be able to reduce the
number of aircraft that are in the inventory. However, if excess
aircraft are not retired from inventory or fewer aircraft are
acquired in the future, the Air Force may not achieve the
significant savings the initiatives anticipated. Ogden Center
officials said that the primary means to achieve cost savings from
the depot initiative is reducing the amount of supply inventory.
By repairing and returning secondary items to the customers
faster, the centers can reduce the number of secondary items they
maintain to support longer repair schedules-known as the
maintenance float. Without reductions in the number of items
dedicated to maintenance float or airplanes in the inventory to
offset the increased cost of the depot initiative, overall costs
could increase because of additional costs for improvements.
Improved Supply Our prior reporting has emphasized
the need for DOD to apply best Support Needed for
practices in order to obtain more efficient and effective supply
support at less cost.7 Effective supply support is critical to
achieving the enhancement Effective
initiatives' objectives. To accomplish repairs on demand and
reduce Implementation of the turnaround times, the Air Force
depots must have obtained or be able to Initiatives
obtain in a timely manner the parts and reparable components that
are required to accomplish the overhaul and repair of reparable
items. Air Force data indicate that parts and components required
from both the Air Force Supply Group and DLA are sometimes
unavailable, and according to AFMC headquarters officials, these
supply activities do not provide acceptable support to their
enhancement initiatives. Parts availability is a key measure of
the ability of the supply system to satisfy requests in a timely
way.8 According to AFMC headquarters 7Inventory Management:
Greater Use of Best Practices Could Reduce DOD's Logistics Costs
(GAO/T-NSIAD-97-214, July 24, 1997). 8Parts availability measures
how often the supply system had a part or component in stock to
meet an Air Force customer's requirement. If the customer's
requirement could not be filled when requested, the supply system
generally backordered the part or component. Page 37
GAO/NSIAD-99-63 Air Force Depot Maintenance Chapter 3 Management
Issues Need Attention to Aid Implementation of Reform Initiatives
personnel, parts availability at 90 percent or above could be
required to support the Agile Logistics initiatives. However, the
Air Force Supply Group averaged 50 percent overall in parts
availability for April through September 1998. For the same
period, DLA averaged 77 percent in availability of repair parts.
We have reported in recent years that implementing best inventory
management practices such as prime vendor support may be a
feasible option for improving customer responsiveness and reducing
inventory costs. However, DOD has made little progress in
expanding the use of prime vendors for parts and components, and
it is unclear to what extent this option will prove to be cost-
effective for military-unique items. Air Force Supply
Air Force customers, including maintenance depots, obtain parts
and Management Group Support components that are used in
accomplishing maintenance tasks from the Air Force Supply
Management Group. The Supply Group-managed reparable items are
unique to Air Force weapon systems and are not readily available
in the commercial sector. These items are often of high-dollar
value and require lengthy lead times to procure if they are not in
stock or on order. Air Force data show that the Supply Group's
performance in providing items has declined steadily in recent
years.9 Key indicators also show that support to AFMC depot
maintenance customers is generally less effective than that to
other Air Force customers such as operational fighting units. For
instance, the Supply Group's parts availability for AFMC between
April to September 1998 ranked sixth out of the nine Air Force
commands the Group served. For example, the percent of
availability averaged 50 percent, ranging from a low of 46 percent
to a high of 53 percent. Officials at the three centers we visited
said that inadequate supply support contributed to extended
overhaul and repair times for some items. They noted that a
critical factor in implementing the repair-on-demand concept is
that required parts and components be available in a timely manner
to accommodate repair schedules. 9In a separate ongoing assignment
we are assessing overall Air Force Supply Group effectiveness. We
are also finalizing the results of a separate review of the Supply
Management Activity Group and its impact on the ability of its
customers to obtain aircraft spare parts when needed. Since the
early 1990s, Air Force data have shown increased instances of
aircraft that were not mission capable due to spare parts
shortages. We found that shortages of inventory items were due, at
least in part, because the Air Force did not achieve the reduced
pipeline processing time goals that are the cornerstone of its
reform initiatives. Page 38
GAO/NSIAD-99-63 Air Force Depot Maintenance Chapter 3 Management
Issues Need Attention to Aid Implementation of Reform Initiatives
The Supply Group's inability to support its customers meant that
too many items were in the supply pipeline (items in transit from
bases to depots and items being repaired) and not enough usable
items were available at bases. Two major causes of the problem
were (1) a lack of accurate data and effective procedures for
monitoring pipeline processing times and taking timely and
appropriate corrective action, when necessary and (2) the depot
maintenance activities' inability to repair items because of
shortages of parts, repair shop personnel, and testing
equipment.10 The Supply Group's strategic plan for fiscal years
1999 to 2005 does not address what measures, if any, it plans to
take to increase parts availability. However, the plan does
include strategies to improve stockage effectiveness-another
measure of supply support effectiveness.11 Additionally, the
Supply Group intends to have memorandums of agreement with each
supplying depot maintenance manager to help reduce repair times,
ensure time-definite delivery, and ensure parts support for items
being repaired in depot shops. Also, AFMC headquarters depot
maintenance officials said that they were working with officials
in the Supply Group to identify additional actions to improve
supply support. DLA Support DLA is the primary supplier of
parts the AFMC centers need for depot maintenance repairs and
operates all depot supply distribution functions. However,
unavailability of repair parts at depots has been a chronic
problem.12 The impact of these problems was severe under the old
approach, but it is even more critical for successful
implementation of the repair-on-demand approach. This makes
updating AFMC's previous support agreement with DLA imperative.
AFMC headquarters data on parts availability for March through
September 1998 showed that DLA generally met the Air Force's goal
of 75 percent availability, averaging 77 percent for the period.
However, in an AFMC 10See Air Force Supply: Management Actions
Create Spare Shortages and Operational Problems (GAO/NSIAD/AIMD-
99-77, Apr. 29, 1999) and Defense Inventory: Continuing Challenges
in Managing Inventories and Avoiding Adverse Operational Effects
(GAO/T-NSIAD-99-83, Feb. 25, 1999). 11Stockage effectiveness
measures the percentage of time the supply system satisfies a
requisition for items that have an authorized stockage level,
whereas parts availability measures how often the supply system
satisfies a requisition for any item-regardless of whether or not
it has an authorized stock level. 12Air Force Supply: Management
Actions Create Spare Shortages and Operational Problems
(GAO/NSIAD/AIMD-99-77, Apr. 29, 1999). Page 39
GAO/NSIAD-99-63 Air Force Depot Maintenance Chapter 3 Management
Issues Need Attention to Aid Implementation of Reform Initiatives
official's view, this rate is not adequate to support the new
initiatives that require a 90 percent or more availability rate.
According to AFMC headquarters logistics personnel, the extent to
which items critical to repairs are provided on a timely basis
cannot be easily evaluated with current data, but the answer is
key to the success of the new initiatives. The new initiatives
have increased the need for significant changes in business
relationships between AFMC and DLA. As AFMC implemented the
enhancement initiatives, it sought accelerated deliveries of
repair parts and transportation of items to and from the
customers. Negotiations have taken place between DLA and AFMC to
develop an updated support agreement to ensure that parts are made
available on an expedited basis, as needed, to support the new
initiatives. However, AFMC headquarters and DLA have not been able
to agree on the details of the new agreement. According to an AFMC
headquarters official, progress in negotiating an agreement for
DLA support of the enhancement initiatives has been slow and
difficult, with little progress since early 1998. Neither AFMC
headquarters nor DLA officials were optimistic about when an
agreement would be reached. AFMC headquarters officials said that
they want an agreement that specifies support arrangements and
contains measures that will be used for evaluating DLA supply
support performance. On the other hand, DLA officials want an
agreement that contains broader, more general language to allow
flexibility in support arrangements. Also, in contrast to AFMC
headquarters, which wants each center to receive individual
attention, DLA wants only one operating agreement covering both
AFMC headquarters and its centers. Aside from negotiations over
the interagency agreement, AFMC headquarters officials expressed
concern over specific aspects of their working relationship with
DLA that were often rooted in problems associated with their
management information systems. According to headquarters
officials, AFMC's working relationship with DLA could be improved
in areas such as supply quantity and ownership data, visibility of
orders and location of parts, questionable cost charges, and
reconciliation of discrepancies between the two organizations'
databases. AFMC headquarters officials said that these issues have
caused the centers and DLA to take time-consuming and costly
actions to manually intervene and work around problems. For
example, AFMC's systems, in Page 40
GAO/NSIAD-99-63 Air Force Depot Maintenance Chapter 3 Management
Issues Need Attention to Aid Implementation of Reform Initiatives
particular the requisitioning for inventory system,13 do not
interface with DLA's new automated system for inventory
management. The new system includes the tracking and reporting of
stock transactions between the two organizations. Manual
intervention is required to match item numbers, quantities, and
ownership information. AFMC headquarters and the centers have
identified numerous discrepancies between their records and DLA's
since DLA brought its new system on line at the three centers
between August 1997 and January 1998. The three centers reported
progress in resolving these discrepancies. For example, since the
new DLA system was implemented, the three centers reported making
inventory record adjustments totaling $4 billion to reconcile
records, stock orders, and requisition returns between the
centers' records and DLA records. DLA officials said that in
addition to the new systems, the Air Force has a number of legacy
systems that do not interface effectively with DLA's automated
supply systems. This lack of effective interface is causing some
problems at the center level with timely receipt of orders. Also,
DLA and the Air Force have not yet settled on what performance
indicators to use and how they will be tracked to evaluate
problems existing in supply and transportation support. However,
DLA officials said that DLA fully supports the Air Force's
initiatives and is working with the centers to improve supply
support. Opportunities to Increase In recent years we have
recommended that DOD consider the use of prime Use of Best
Inventory vendors14 and other best management practices to
improve supply support Management Practices
responsiveness and reduce the cost of DOD's logistics system. The
services and DLA have pursued a number of initiatives to improve
supply support of weapon system parts and components, including
limited use of prime vendors, but significant supply support
weaknesses remain. 13This system is called the DO35. It is the Air
Force's Stock Control and Distribution System. This system tracks
depot supply stocks and their distribution and provides
information on backorders, supply balances, daily transactions,
and floating stock balances. 14A prime vendor is a single vendor
that buys inventory from a variety of suppliers and stores the
inventory in its warehouses until ordered by the customers. The
prime vendor then ships the inventory to the DOD activity as
ordered. This process is intended to improve support to the
customer by reducing delivery time and reducing costs for
maintaining, warehousing, and distributing inventory. Page 41
GAO/NSIAD-99-63 Air Force Depot Maintenance Chapter 3 Management
Issues Need Attention to Aid Implementation of Reform Initiatives
Starting in 1993, DOD began prime vendor initiatives for the
procurement of items readily available in the commercial sector,
such as medicines and food products. DOD has reported benefits
such as inventory reduction; reduced response time; and reduced
purchase, storage, and distribution costs. We have recommended
that DOD expand its prime vendor initiatives to other areas,
including the supply of parts and components required in the depot
maintenance process.15 To date DOD has made limited progress in
this area. Recently, the Congress enacted legislation requiring
DLA and the military services to develop and submit schedules for
implementing best commercial practices in their acquisition and
distribution of inventory items.16 The legislation calls for the
implementation of best practice initiatives to be completed within
the next 3 years in the case of DLA and 5 years for the services.
We are currently reviewing the implementation of these
initiatives. DOD officials have observed difficulties in
effectively using prime vendors to provide spare and repair parts
for several weapon system programs. They noted that military-
unique items with low or infrequent demand do not lend themselves
to the new management concepts embodied in the commercial sector's
prime vendor programs. Thus, it is uncertain how cost- effective
this concept will be in supplying military-unique items with
uncertain requirements and only one customer. On the other hand,
it remains a viable option that merits further consideration as
the Department continues to strive to improve its spare and repair
parts supply support responsiveness. New Vision for
In January 1998, the Air Force announced a new vision for its
logistics Logistics Management management that builds on its
current initiatives. However, it is not clear from the new vision
statement how the Air Force is going to deal with the specific
problems identified in this report related to the initiatives
already under way. In response to two recent Air Force studies
addressing implementation of Agile Logistics, the Air Force
established a new vision for its logistics management program.
More specifically, in January 1998, the AFMC 15Inventory
Management: Greater Use of Best Practices Could Reduce DOD's
Logistics Costs (GAO/T-NSIAD-97-214, July 24, 1997). 16 Section
347 of the Strom Thurmond National Defense Authorization Act for
Fiscal Year 1999 (P.L. 105-261). Page 42
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Issues Need Attention to Aid Implementation of Reform Initiatives
Commander presented five major goals for changing logistics
management policies and practices. These goals were to * set
appropriate inventory levels and fill them; * match repair to
demand; * develop better cost estimates and use them to cost-
effectively execute inventory actions and the concept of repairs
on demand; * quickly identify and react cost-effectively to
surprises; and * continuously reduce total costs, improve cost
estimation, and reduce cycle times. Although these goals appear to
be consistent with its enhancement initiatives, AFMC headquarters
has not yet provided a detailed plan for implementation of this
vision. An effective implementation plan should provide details
regarding how to achieve these goals. Further, such a plan should
identify whether, and to what extent, the command will address
needed improvements in the implementation and management of the
depot, contract, and aircraft enhancement initiatives. Conclusions
Progress in implementing the initiatives is difficult to measure
because only broad goals of increased operational efficiency and
reduced costs were established, along with an approach to
implementing the initiatives. No agreed upon metrics were
established for measuring progress in implementing the
initiatives. Moreover, available data indicates only limited
progress has been made in implementing the initiatives, and
decisions are yet to be made regarding the extent to which the
initiatives should be applied to all reparable items and aircraft.
Also, implementation of the initiatives has been affected by
various management problems, including limited implementation of
standard organizational structures and processes, lack of a
multiskilled workforce training plan, lack of standard measures to
assess performance, inadequate automated management information
systems to support analysis and decision-making, and lack of
reliable information on investment costs and expected savings.
Progress has also been hampered by incomplete action on reaching
agreements that are essential for achieving program goals (such as
identifying ways to improve supply support from the Air Force
Supply Group and updating AFMC's support agreement with DLA). To
what extent other options, such as prime vendor, offer a viable
alternative to mitigate supply support weaknesses remains to be
determined. AFMC has recently set forth a new vision for logistics
reform that appears to be consistent with the goals for its three
enhancement initiatives. Page 43
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Although over a year has passed since the vision and goals were
announced, the Air Force has not yet provided details on how these
goals will be achieved. Precisely how AFMC headquarters plans
address implementation and management problems we identified is
unclear. Without a detailed implementation plan, it is unclear
whether or to what extent the new vision may further the Air
Force's objective of improving the economy and efficiency of its
logistics system. Recommendations We recommend that the
Secretary of Defense direct the Secretary of the Air Force to
require the Air Force Materiel Command to refine and improve its
implementation and management of the three reengineering
initiatives by taking the following actions: * Develop an
implementation plan that details the specific criteria for
determining if the initiatives are successfully achieving stated
goals and desired results. * Determine the extent to which the
enhancement initiatives should be applied to all reparable items
to ensure optimum benefits. * Assess progress in implementing the
standardized organizational structures and processes and the
extent to which they are achieving the objectives of better
teamwork. * Develop and implement a transition plan to ensure
sufficient numbers of trained multiskilled personnel are available
to meet requirements and produce needed operational efficiencies.
* Upgrade automated management information systems needed to
support the initiatives in keeping with DOD and Clinger/Cohen Act
requirements associated with acquiring information systems support
and ensuring Year 2000 compliance. * Develop and implement
improved strategies for providing more effective supply support to
depot maintenance customers, including the exploration of prime
vendor or other best inventory management practices and agreements
with the Air Force Supply Group and DLA. * Reassess the extent to
which costs have been fully identified and budgeted to avoid
funding shortfalls and to ensure that operating funds are not
prematurely reduced in anticipation of savings from the
initiatives. Page 44
GAO/NSIAD-99-63 Air Force Depot Maintenance Chapter 3 Management
Issues Need Attention to Aid Implementation of Reform Initiatives
Agency Comments and We requested comments on a draft of this
report from the Secretary of Our Evaluation
Defense. Air Force officials provided oral comments, stating that
the Department agreed with our findings and with the intent of our
recommendations. In acknowledging that measures were needed to
better ensure success of its reform initiatives, the Air Force
offered a general description of actions it had taken or planned
to take to improve the reengineering of its industrial operations.
However, given the general nature of the comments, it is uncertain
to what extent the Air Force will address the concerns we have
raised. For example, the Air Force said it would address the need
for an initiative implementation plan through a DOD-wide planning
effort. We reviewed a draft of the DOD-wide plan and could not
determine how the Air Force's initiatives were addressed. We had
similar type questions regarding other points made by the Air
Force and they are presented in appendix II. Page 45
GAO/NSIAD-99-63 Air Force Depot Maintenance Appendix I Recent Air
Force Studies on Agile Logistics Appendix I Two recent Air Force
studies on the Air Force's Agile Logistics initiatives provide
additional insight into problems experienced with implementation
of Agile Logistics: (1) a December 1997 report by the Air Force
Inspector General (IG) on the implementation and maturity of Agile
Logistics and the effect on combat readiness and (2) a March 1998
report by a Reparable Spares Management Board. The Board consisted
of a group of active and retired military representatives and
private industry representatives appointed by the Commander of Air
Force Materiel Command (AFMC) to identify management changes that
the Air Force could implement within the next 12 to 24 months to
help reverse negative performance and financial trends associated
with reparable spares management. Air Force Inspector Key
findings of the Inspector General's December 1997 report included
General Audit Report * Three special factors skewed the
results of the prototype depot initiative that were difficult to
duplicate for subsequent shops: additional resources, high
priority handling and movement of assets destined to the shops
throughout all segments of the logistics pipeline, and a funding
anomaly. * The Air Force needed usable, meaningful measures that
are deployed and used throughout the logistics community because,
overall, the current Agile Logistics measures process was not
effective. The IG found that AFMC and the centers had jointly
developed measures, but only two centers knew of specific measures
and no center used the AFMC developed package as the measures
baseline. Selective measures were being used but few personnel
knew of these measures, how to track them, or the source of the
data. * The centers used temporary arrangements to reorganize
their workforce. Long-term support of the depot initiative
requires movement of workers from one organizational area to
another (matrixing) and having some workers qualified to perform
additional duties (multiskilling). However, reclassification
actions were not accomplished to formally allow matrixing and
multiskilling. * The centers implemented the depot initiative in
spite of system deficiencies. System limitations and inaccurate
data were the largest barrier to success. Erroneous data entry,
time disconnects, and software errors corrupted the information
generated by existing computer systems. The depots did not have an
operational network to fully implement the depot initiative and
without the benefit of an approved network layout, had some
network infrastructure in place, had acquired some, and had other
purchases planned. Funding was not available for Page 46
GAO/NSIAD-99-63 Air Force Depot Maintenance Appendix I Recent Air
Force Studies on Agile Logistics all network requirements and
funding requirements had not been identified for personal computer
upgrades. * The Defense Logistics Agency (DLA) was critical to the
success of Agile Logistics and the duties and responsibilities for
both DLA and the Air Force must be clearly defined and achievable.
The scope of DLA responsibilities to support agile logistics was
not clearly defined and the significant ramifications and costs of
these changes were not sufficiently addressed to ensure DLA could
respond to Air Force needs. * People across the board showed
dedication, flexibility, and adaptability as their logistics world
fundamentally changed. However, the level of buy-in varied widely
at the commands and few knew the overall flow or were aware of
long term changes due to Agile Logistics. Also, Agile Logistics
was poorly understood at the field level due to the lack of
adequate policy and guidance, which also hindered the long-term
success of Agile Logistics. The IG's report noted corrective
action underway by AFMC. For example, AFMC had taken action to
adopt a more realistic schedule to develop and test automated
system changes, to scrub information sources and data bases and
correct erroneous data, and awarded a contract to correct problems
with EXPRESS. The report also made a number of recommendations
addressing each of its findings. For instance, the report
recommended that AFMC (1) specify DLA requirements to support
Agile Logistics implementation, (2) jointly, with DLA, determine
the cost for DLA to meet Air Force requirements, and (3) negotiate
and formalize coverage of Agile Logistics in the agreement between
the Air Force and DLA. Although AFMC did not provide a formal
written response to each of the IG's findings, conclusions and
recommendations, it stated that corrective action would be taken
as implementation of Agile Logistics matured. Reparable Spares
In December 1997, the Commander of AFMC appointed the Board to
focus Management Board Report on ways to improve AFMC's (1)
financial management process that plans, programs, budgets for,
and executes supply chain management activities, (2) performance
measures, and (3) accountability in the supply chain. The Board's
final report dated March 30, 1998, proposed a number of actions
that the Air Force could initiate to improve the management of
reparable spares. Overall, the Board concluded that the Air Force
now faces the following problems that must be resolved quickly:
(1) the requirements process, which defines what the Air Force
should buy and repair, is broken and must be rebuilt; (2) the
budgeting processes underestimate support costs and, as a result,
fail to execute support budgets properly; Page 47
GAO/NSIAD-99-63 Air Force Depot Maintenance Appendix I Recent Air
Force Studies on Agile Logistics (3) obligation authority for
logistics services is not executed cost- effectively; (4) new
information systems under development will not support the
seamless logistics system needed for the new environment; (5)
despite all the changes, the Air Force has not reengineered any
single process in its entirety to reflect the new environment; and
(6) the basic management culture in AFMC resists change. Some of
the report's key findings were: * Air Force logistics has changed
fundamentally during the past 15 years, provoking many changes in
logistics policy and practice. Although each change felt like a
major adjustment at the time, the Air Force did not develop a
system-wide vision to coordinate the changes. As a result, changes
from the late 1980s and 1990s had only incremental effects and
often unintended negative consequences. * Changes resulting from
Agile Logistics initiatives did not provide the cost savings
necessary to meet budget reductions because "the Air Force often
used unrealistic expectations about future performance, failed to
anticipate implementation and transition costs, or double- counted
cost savings." With anticipated costs and savings overstated, the
Air Force cut its support budget more than it cut support costs.
Because the Air Force did not develop a system-wide vision,
logistics managers cut support for discretionary activities faster
than depot repair activities, delayed sending assets for depot
repair as long as possible, and, where possible, postponed work
from one fiscal year to the next. * Individual organizations
within the Air Force implemented the initiatives without the
benefit of a coordinated, Air Force-wide look at how the required
changes would fit together. Such initiatives required new forms of
material management discipline that material managers were not
prepared to provide. Thus, a set of uncoordinated changes, each
producing unforeseen problems did not achieve all of the
anticipated benefits. * The Air Force had measures, but would
benefit from a better understanding of how the commercial sector
used measures to drive improvement in a supply chain. * For the
mid-term, EXPRESS can help the Air Force implement the repair on
demand concept, but this concept required adequate capability to
be available for a repair action to occur when a demand occurs.
The Air Force needed a planning process that can anticipate future
customer demands and mobilize all relevant processes to prepare
for that demand. Such a concept is likely to work only if
providers and Page 48
GAO/NSIAD-99-63 Air Force Depot Maintenance Appendix I Recent Air
Force Studies on Agile Logistics customers communicate with one
another more effectively than today and have access to better
analytic tools to support joint planning. Current Air Force plans
for integrating its logistics information systems would not lead
to complete integration. * The Air Force cannot achieve a seamless
logistics information management system as envisioned under Agile
Logistics until it specifies which databases are to be shared and
identifies common applications for base and depot-level
maintenance and material management. * In contrast to the
experience of successful commercial firms, the Air Force
initiatives will not succeed unless the leadership is committed to
a program of long-term, strategic, system-wide change and, without
this leadership, the planned logistics changes will become a few
more incremental adjustments with little effect. The Board made no
specific recommendations for AFMC but suggested several actions
that AFMC could consider for improving the management of reparable
spares. Among these suggestions were that the Air Force leadership
needed (1) clear top-down information on corporate goals, guidance
on who is accountable for meeting these goals, and sufficient
resources for achieving them, (2) training and other arrangements
to ensure that communication and teamwork help link segments of
the supply chain, and (3) a formal process to design changes to
the logistics process and then implement, monitor, evaluate, and
correct changes for system improvement. The Board suggested that
the Air Force should (1) integrate its logistics information
systems to allow all players in the logistics pipeline access to
accurate and timely cost, schedule, and performance data and (2)
improve discipline during data entry to significantly improve the
accuracy of data produced by automated systems. Also, the Air
Force should use a small number of system measures to define and
potentially quantify the broad goals of the organization as a
whole, motivational measures for specific teams or managers to
apply to particular situations, and diagnostic measures to help
decisionmakers track particular processes in order to diagnose and
overcome problems with pursuing motivational measures. The Board
noted that the Commander of AFMC was initiating a new management
approach that, if properly implemented, should allow AFMC to
address the problems noted by its report. AFMC made no formal
written response to the Board's findings and suggested actions.
Page 49 GAO/NSIAD-99-63 Air
Force Depot Maintenance Appendix II GAO Evaluation of Air Force
Comments
Appendix I I Presented below is our evaluation of the specific
oral comments provided on a draft of this report. 1. Concerning
our recommendation to develop a detailed implementation plan, the
Air Force stated that it has begun implementing the three
enhancement initiatives as outlined in DOD's report Product
Support for the 21st Century, which covers current and future
logistics reform initiatives. We examined the Air Force's input to
a March 1999 draft of this report because no final report had been
issued. Information in that draft provided some general
information on the overall objectives and goals of the Air Force's
Agile Logistics program. However, this input did not relate what
plans the Air Force had to better manage the implementation and
execution of either the existing enhancement initiatives or those
being planned for the future. With only this information, we
cannot determine to what extent the Air Force intends to address
the specific problems discussed in our report. 2. Regarding our
recommendation that a determination be made concerning whether the
enhancement initiatives should be applied to all reparable items,
the Air Force said it is making such an assessment. While the Air
Force officials stated that all aircraft would be included in the
aircraft initiative, the Air Force did not identify the criteria
it used in making that determination. 3. Regarding our
recommendation concerning the use of standardized organizational
structures and processes to help achieve the objectives of the
enhancement initiatives, the Air Force agreed that greater
standardization might improve the effectiveness and efficiency of
depot operations. However, it noted that process flexibility may
be needed in some instances to ensure readiness. The Air Force did
not indicate whether it would require its depots to comply with
standard processes and organizational structures or the basis on
which the depots would be allowed to deviate from standard
requirements. 4. Regarding our recommendation for the development
and implementation of a transition plan to ensure sufficient
numbers of trained multiskilled personnel, Air Force officials
said they recognized the importance of a multiskilled workforce to
enhance operational efficiencies. However, they did not identify a
plan for developing a multiskilled workforce or say when this
training would be completed, what worker classifications were
needed to be multiskilled, or how the training would be
accomplished. We would expect a multiskilling plan to have these
types of details. Page 50
GAO/NSIAD-99-63 Air Force Depot Maintenance Appendix II GAO
Evaluation of Air Force Comments 5. Regarding our recommendation
to develop standard measures to evaluate the three enhancement
initiatives, Air Force officials stated that they were developing
such measures. However, they did not indicate how they plan to
resolve the long-standing impasse between AFMC and its centers on
the appropriate criteria for measuring the effectiveness of the
initiatives. Also, they did not indicate either a time frame for
developing and implementing the measures or features of the
initiatives that would be monitored and evaluated. In finalizing
our report we combined this recommendation with our first
recommendation to address goals and results. 6. Regarding our
recommendation to upgrade automated management information systems
needed to support the reengineering alternatives, Air Force
officials said they were now developing new logistics systems that
will communicate together, share data, and have common
applications. They said that these new systems will be consistent
with the Clinger/Cohen Act and be Year 2000 compliant. They did
not specifically address the automated system weaknesses
identified in our report or indicate how the new systems
correspond to the Air Force's actions taken or planned to improve
automated systems support for the three enhancement initiatives.
7. Regarding our recommendation to develop and implement improved
strategies for providing more effective supply support to depot
maintenance customers, Air Force officials stated that AFMC is
already engaged with DLA on prime vendor initiatives. However, it
is not clear how current initiatives would address specific
problems identified in this report. Also, the officials did not
address how or when it planned to improve the support from its
supply management group. 8. Finally, regarding our recommendation
to reassess the extent to which costs for the enhancement
initiatives have been fully identified, Air Force officials did
not comment on any reassessment of funding requirements. At the
same time, they said they did not have a system for tracking
savings by individual initiatives. They also stated that in a
resource-constrained environment, the Air Force has no alternative
to taking savings based on the best estimates known at the time to
fund high-priority requirements. However, the resource-constrained
environment the officials described makes it important to avoid
reducing operating accounts in anticipation of savings that may
not be realized. Page 51
GAO/NSIAD-99-63 Air Force Depot Maintenance Appendix III GAO
Contacts and Staff Acknowledgments
Append IIix I GAO Contacts: Julia Denman (202) 512-4290
Acknowledgments In addition to those named above, Bobby
Worrell, Terry Wyatt, Bruce Fairbairn, and Frederick Naas made key
contributions to this report. Page 52
GAO/NSIAD-99-63 Air Force Depot Maintenance Page 53 GAO/NSIAD-
99-63 Air Force Depot Maintenance Page 54 GAO/NSIAD-99-63 Air
Force Depot Maintenance Page 55 GAO/NSIAD-99-63 Air Force Depot
Maintenance Related GAO Products Army Industrial Facilities:
Workforce Requirements and Related Issues Affecting Depots and
Arsenals (GAO/NSIAD-99-31, Nov. 30, 1998). Air Force Supply
Management: Analysis of Activity Group's Financial Reports,
Prices, and Cash Management (GAO/AIMD/NSIAD-98-118, June 8, 1998).
Outsourcing DOD Logistics: Savings Achievable but Defense Science
Board's Projections Are Overstated (GAO/NSIAD-98-48, Dec. 8,
1997). Defense Depot Maintenance: Challenges Facing DOD in
Managing Working Capital Funds (GAO/T-NSIAD/AIMD-97-152, May 7,
1997). Defense Depot Maintenance: Uncertainties and Challenges DOD
Faces in Restructuring Its Depot Maintenance Program (GAO/T-NSIAD-
97-112, May 1,1997) and (GAO/T-NSIAD-97-111, Mar. 18, 1997). Best
Management Practices: Reengineering the Air Force's Logistics
System Can Yield Substantial Savings (GAO/NSIAD-96-5, Feb. 21,
1996). (709315) Letter Page 56
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