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Air Force Depot Maintenance: Privatization-in-Place Plans Are Costly While Excess Capacity Exists (Letter Report, 12/31/96, GAO/NSIAD-97-13).

The report reviews the Defense Department's (DOD) decision to pursue
privatization-in-place at two major Air Force maintenance depots slated
for closure as part of the 1995 base realignment and closure process.
Specifically, GAO reviews the Air Force's plans to privatize-in-place
depot maintenance workloads at the Sacramento and San Antonio air
logistics centers. GAO discusses (1) the impact on excess depot capacity
and operating costs at the remaining defense depots; (2) the
cost-effectiveness of the planned privatization initiatives, including
the impact of delaying base closures until 2001; and (3) compliance with
statutory requirements.

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

 REPORTNUM:  NSIAD-97-13
     TITLE:  Air Force Depot Maintenance: Privatization-in-Place Plans 
             Are Costly While Excess Capacity Exists
      DATE:  12/31/96
   SUBJECT:  Privatization
             Base closures
             Base realignments
             Cost effectiveness analysis
             Logistics
             Military downsizing
             Military cost control
             Equipment maintenance
             Aircraft maintenance
             Competitive procurement
IDENTIFIER:  C-5 Aircraft
             501K Engine
             A-10 Aircraft
             KC-135 Aircraft
             T-56 Engine
             T-700 Engine
             
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Cover
================================================================ COVER


Report to Congressional Requesters

December 1996

AIR FORCE DEPOT MAINTENANCE -
PRIVATIZATION-IN-PLACE PLANS ARE
COSTLY WHILE EXCESS CAPACITY
EXISTS

GAO/NSIAD-97-13

Air Force Depot Maintenance

(709186)


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

  DOD - Department of Defense
  BRAC - base realignment and closure
  USC - United States Code

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


B-272658

December 31, 1996

The Honorable Floyd Spence
Chairman, Committee on National Security
House of Representatives

The Honorable Don Nickles
United States Senate

As requested, we reviewed the Department of Defense's (DOD) decision
to pursue privatization-in-place initiatives at two major Air Force
maintenance depots recommended for closure during the 1995 base
realignment and closure (BRAC) process.  Specifically, we reviewed
the Air Force's plans to privatize-in-place depot maintenance
workloads at the Sacramento and San Antonio air logistics centers and
determined (1) the impact on excess depot capacity and operating
costs at the remaining defense depots; (2) the cost-effectiveness of
planned privatization initiatives, including the impact of delaying
base closures until the year 2001; and (3) compliance with statutory
requirements. 


   RESULTS IN BRIEF
------------------------------------------------------------ Letter :1

As we stated in our April 1996 testimony on depot maintenance before
the Subcommittees on Readiness, House Committee on National Security
and Senate Committee on Armed Services, deciding the future of DOD's
depot system is difficult.  Depot maintenance privatization should be
approached carefully, allowing for evaluation of the economic,
readiness, and statutory requirements that surround individual
workloads.  Privatizing depot maintenance activities, if not
effectively managed, including the downsizing of remaining DOD depot
infrastructure, could exacerbate existing excess capacity problems
and the inefficiencies inherent in underused depot maintenance
capacity.  Privatizing workloads in place at two closing Air Force
depots does not reduce the excess capacity in the remaining depots or
the private sector and consequently is not a cost-effective approach
to reducing depot infrastructure.\1

Privatizing-in-place rather than closing and transferring the depot
maintenance workloads at the Sacramento and San Antonio air logistics
centers will leave a costly excess capacity situation at remaining
Air Force depots that a workload consolidation would have mitigated. 
Private industry representatives generally agree that
privatization-in-place does not solve the excess capacity problem in
the public and private sectors and is not the most cost-effective
closure option. 

Although the Air Force's privatization initiative for the Sacramento
and San Antonio depots has not progressed far enough for us to
estimate precisely costs and savings, consolidating depot maintenance
workloads at remaining underused depots could result in a net savings
in 2 years or less.  Our work shows that transferring the depot
maintenance workloads to other depots could yield additional economy
and efficiency savings of over $200 million annually.  These savings
are in addition to the $268 million annual savings the BRAC
Commission estimated could be achieved by eliminating the McClellan
and Kelly infrastructures and downsizing nonmaintenance personnel. 
Moreover, if the workload consolidation does not occur, the remaining
Air Force depots are likely to become more inefficient and more
costly, unless other workloads are added, costly excess capacity is
eliminated, or other efficiency and economy initiatives are
successfully implemented. 

Plans to delay many closure-related actions until 2001 will
substantially reduce future savings envisioned by the BRAC
Commission.  Specifically, our analysis shows that the delay could
result in a net loss of $644.4 million between 1997 and 2001 for the
Air Force and $24 million for the Army. 

DOD stated that it will structure the San Antonio and Sacramento
privatizations to comply with existing statutory restrictions,
including the 10 U.S.C.  2469 requirement that privatizing workloads
valued at not less than $3 million be done using competitive
procedures that include both public and private entities.  Because
the Department's privatization plans are still evolving, sufficient
information is not available for us to assess whether the conversion
plans will comply with the existing law. 


--------------------
\1 Defense Depot Maintenance:  Privatization and the Debate Over the
Public-Private Mix (GAO/T-NSIAD-96-146, Apr.  16, 1996) and
(GAO/T-NSIAD-96-148, Apr.  17, 1996). 


   BACKGROUND
------------------------------------------------------------ Letter :2

DOD annually spends about $15 billion--or about 6 percent of its $243
billion fiscal year 1996 budget--on depot maintenance work that
involves the repair, overhaul, modification, and upgrading of
aircraft, ships, ground vehicles, and other equipment.  Over $4
billion is spent on Air Force systems and equipment.  Most of the Air
Force's depot maintenance work is performed at five depots that are
located at its five air logistics centers. 

Since the early 1970s, we and others have reported on the
redundancies and excess capacity that exist in DOD depots and the
need to downsize and improve the operational efficiency of these
depots.  These problems have been exacerbated in recent years by
reductions in military force structure and related weapon system
procurement; changes in military operational requirements due to the
end of the Cold War; increased reliability, maintainability, and
durability of military systems; increased maintenance performed in
operational units; and increased privatization of depot maintenance
workloads. 

Beginning in the late 1980s, DOD--primarily through the BRAC
process--reduced some of its excess capacity by closing a number of
depots and transferring most workloads to remaining depots and some
to the private sector.  Altogether, the first three BRAC rounds
(1988, 1991, and 1993) resulted in recommendations to close nine Army
and Navy depots and the Air Force's Aerospace Guidance and Metrology
Center.\2 Despite major force structure reductions and significant
excess capacity in the Air Force depot maintenance system, none of
the Air Force's five air logistics centers or the large,
multi-commodity depots contained within them were recommended for
closure during the first three BRAC rounds.  As shown in table 1, for
fiscal year 1996, the five centers reported approximately 57.2
million direct labor hours of depot maintenance capacity and
accomplished about 31.5 million hours of work--leaving about 25.8
million hours of excess capacity, or about 45 percent. 



                                Table 1
                
                Projected Fiscal Year 1996 Workload and
                 Excess Capacity at the Five Air Force
                                 Depots

                 (Workload and capacity in direct labor
                                 hours)

                                                   Excess capacity
                                                ----------------------
                                        Fiscal
                           Maximum   year 1996
Depot                     capacity    workload       Hours     Percent
----------------------  ----------  ----------  ----------  ----------
Oklahoma City           12,863,153   7,058,083   5,805,070          45
Ogden                    9,004,515   5,146,999   3,857,516          43
San Antonio             15,219,752   6,372,607   8,847,145          58
Sacramento              10,226,981   5,509,051   4,717,930          46
Warner Robins            9,912,789   7,375,889   2,536,900          26
======================================================================
Total                   57,227,190  31,462,629  25,764,561          45
----------------------------------------------------------------------
Note:  Capacity and workload data was reported by the military
services and certified during the 1995 BRAC process. 


--------------------
\2 Our report, Closing Depots:  Savings, Workload, and Redistribution
Issues (GAO/NSIAD-96-29, Mar.  4, 1996) contains information on the
10 depots recommended for closure during the first three BRAC rounds
and provides an overview of DOD's depot maintenance system.  Our
report, Aerospace Guidance and Metrology Center:  Cost Growth and
Other Factors Affect Closure and Privatization (GAO/NSIAD-95-60, Dec. 
9, 1994), addressed closure and privatization issues for that
facility. 


      1995 BRAC PROCESS DECISIONS
---------------------------------------------------------- Letter :2.1

DOD's February 1995 report to the BRAC Commission recommended
reducing excess Air Force depot maintenance capacity and costs by
downsizing all five air logistics centers, including their depots. 
DOD estimated that this downsizing would require one-time costs of
$183 million and would result in net savings of $138.7 million during
the 6-year implementation period.  The downsizing was to be
accomplished through consolidating similar workloads, mothballing or
disposing of plant equipment, and tearing down buildings.  The
Commission also estimated that annual savings would be $89 million
after the implementation period and that the net present value of all
costs and savings over a 20-year period would be $991.2 million. 

The 1995 BRAC Commission concluded that DOD's downsizing approach
would not adequately reduce infrastructure and overhead costs.  It
recommended closing the Sacramento and San Antonio centers and
transferring their workloads to the remaining depots or private
sector commercial activities.  In making its closure and workload
transfer recommendations, the Commission considered the effects on
the local communities, workload transfer costs, and potential effects
on readiness.  It concluded that the savings and benefits outweighed
the potential drawbacks.  The Commission's report noted that given
the significant amount of excess depot capacity and limited DOD
resources, closure is a necessity.  Further, closing these activities
would improve the use of the remaining centers and substantially
reduce DOD operating costs.  The specific Commission recommendations
were as follows: 

  -- Realign Kelly Air Force Base, including the air logistics
     center; disestablish the defense distribution depot; consolidate
     the workloads to other DOD depots or to private sector
     commercial activities as determined by the Defense Depot
     Maintenance Council;\3 and move the required equipment and
     personnel to the receiving locations. 

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

The Commission estimated that these recommendations would require
one-time implementation costs of $822.6 million but would yield net
savings of $151.2 million during the 6-year implementation period. 
Further, they would yield annual savings of $338.2 million after the
implementation period, about $70 million of which represented depot
maintenance savings.  The projected depot maintenance savings were
developed by assuming that the number of depot maintenance personnel
could be reduced by 15 percent.  The Commission estimated that the
net present value of savings over 20 years, including the 6-year
implementation period, would be $3.5 billion.  The Commission's
savings projections did not include savings from moving workloads to
depots with lower labor rates, consolidating workloads in underused
facilities and reducing excess capacity, increasing efficiency, and
reducing the overhead rates at receiving depots. 

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

McClellan has about 2,600 personnel and San Antonio has about
3,100 personnel assigned to organizations whose mission is to provide
various base support services (such as security; maintenance of
buildings, roads, and grounds; and medical clinic services) to the
logistics center and all tenants.  Depot maintenance employees
comprise 66 percent of the Sacramento center personnel and 47 percent
of the San Antonio center personnel.  The centers' maintenance depots
perform about $1.65 billion of depot maintenance work annually, about
$400 million of which belongs to the other services and is done
through interservicing.  They also perform other logistics functions
such as engineering support and weapon system and item management. 
Kelly Air Force Base had about 19,500 employees at the time of the
1995 BRAC process--of which 12,850 were air logistics center
personnel, including 6,000 involved in depot maintenance.  In
addition to the air logistics center, Kelly has several other tenant
activities, including the Air Intelligence Agency, Defense
Information Systems Agency, Defense Distribution Depot, and guard and
reserve units.  McClellan Air Force Base employed about 14,000
people--of which 7,314 were center employees, including 4,853 depot
maintenance personnel.  In addition to the air logistics center,
McClellan has a defense distribution depot, Coast Guard air station,
and reserve units. 


--------------------
\3 The Defense Depot Maintenance Council is a senior-level council
established to advise the Deputy Under Secretary of Defense for
Logistics on depot maintenance within DOD. 


      STATUTES INFLUENCING THE MIX
      OF DEPOT MAINTENANCE
      WORKLOADS BETWEEN THE PUBLIC
      AND PRIVATE SECTORS
---------------------------------------------------------- Letter :2.2

Several statutes influence the allocation of depot maintenance
workloads between the public and private sectors.  According to 10
U.S.C.  2464, a "core logistics capability" is to be identified by
the Secretary of Defense and maintained by DOD, unless the Secretary
waives DOD performance as not required for national defense. 
Further, 10 U.S.C.  2466 and 2469 limit the extent to which
depot-level workloads can be converted to private sector performance. 
Section 2466 specifies that not more than 40 percent of the funds
allocated in a fiscal year for depot-level maintenance or repair can
be spent on private sector performance--the so-called "60/40" rule. 
Section 2469 prohibits DOD from transferring in-house maintenance and
repair workloads valued at not less than $3 million to another DOD
activity without using "merit-based selection procedures for
competitions" among all DOD depots or to contractor performance
without the use of "competitive procedures for competitions among
private and public sector entities."


   PRIVATIZING-IN-PLACE IS NOT THE
   MOST COST-EFFECTIVE APPROACH
   BECAUSE EXCESS CAPACITY STILL
   EXISTS
------------------------------------------------------------ Letter :3

Privatizing defense depot activities in place could yield cost
savings if other public and private activities were more fully
utilizing their maintenance repair capacity.  Because substantial
excess capacity exists in both the public and private sectors,
privatizing Sacramento and San Antonio workloads in place will result
in missed opportunities to reduce the overall cost of Air Force depot
maintenance operations. 


      EXCESS CAPACITY IS COSTLY
---------------------------------------------------------- Letter :3.1

In recent years, depot maintenance rates have increased sharply.  One
of the major reasons for this increase is that as requirements have
declined, the large fixed overhead costs for both the depots and the
bases on which they are located must be allocated to a smaller depot
maintenance workload base.  As we noted previously, about 3,100
military and civilian personnel are involved in base support
operations at Kelly Air Force Base and 2,600 at McClellan Air Force
Base.  These operations support center activities, including the
depots, as well as other base tenant activities.  It is estimated
that a military depot with several thousand employees incurs fixed
overhead costs of from $50 million to $100 million annually.  By
closing bases, DOD can eliminate base support and depot maintenance
infrastructure and achieve substantial future savings.  Additionally,
consolidating workloads from closing depots with workloads of
underused Air Force depots could yield additional savings at the
receiving depots by increasing their efficiency, spreading their
fixed overhead costs over a larger workload base, and lowering their
average costs. 

Privatizing-in-place does not substantially reduce infrastructure and
excess capacity.  It just moves some of it to the private sector. 
Private sector manufacturing and repair facilities also have
extensive excess capacity.  The privatization-in-place of the
Sacramento and San Antonio depots will not reduce the large amount of
excess capacity in the Air Force depot system and the private sector
or their associated costs, unless additional facilities are closed or
other cost-reduction means are successfully implemented. 


      CONSOLIDATING WORKLOADS
      COULD PRODUCE SUBSTANTIAL
      SAVINGS
---------------------------------------------------------- Letter :3.2

The Air Force's planning has not progressed far enough to compare
precisely the cost of privatizing depot workloads in place with the
cost of transferring the work to other underused depots.  However,
because privatization-in-place will have little effect on excess
capacity at the remaining depots, it is unlikely that any savings
would offset the cost of maintaining excess depot capacity. 

The Navy's experience closing naval aviation depots and consolidating
workloads at remaining Navy facilities provides useful insights
regarding the benefits of this closure option.  According to Navy
officials, consolidating workloads from three closing naval aviation
depots and quickly moving most of this workload to the three
remaining depots was projected to reduce excess capacity and decrease
the overhead rates at remaining naval aviation depots.  Capacity
utilization was projected to increase 35 percent as a result of this
consolidation.  The utilization rate for each depot varies depending
on the specific workload transfers and other variables, such as the
rate of decline of their pre-consolidation workload base.  Overall,
the economy and efficiency improvements were projected to decrease
the overhead rates by 18 percent between fiscal years 1994 and 1997. 
Based on a 10-million hour workload program, the consolidation could
save an additional $100 million annually.  Navy officials stated that
because of the continuous decline in depot maintenance workloads and
other factors, anticipated savings cannot be measured precisely. 
However, they noted that closing naval aviation depots and
consolidating workloads in the Navy's remaining three depots has
clearly improved efficiency and lowered the cost of the Navy depot
maintenance program. 

Our analysis of BRAC Commission estimates indicates that the closure
of the depots at the San Antonio and Sacramento logistics centers
were expected to save about $70 million annually.  Based on our
analysis of Air Force data, the actual savings could be as much as
$206 million annually, if the closing depots' work is transferred to
the remaining military depots.  The Commission's estimate assumed
that about 15 percent of the maintenance personnel at the closing
centers could be eliminated.  This evaluation did not attempt to
measure economy and efficiency improvements that resulted from
workload consolidation.  However, our analysis indicates that
transferring about 8.2 million hours of work from the closing Air
Force depots to the three remaining depots\4 would (1) reduce these
three depots' excess capacity from about 46 percent to about 8
percent, (2) lower the hourly rates by an average of $6.00 at
receiving locations, and (3) save as much as $182 million annually as
a result of economies of scale and other efficiencies.\5 This
estimate was based on a workload redistribution plan that would only
relocate
78 percent of the available hours to Air Force depots.  This
reallocation plan was developed by the Joint Depot Cross Service
Group during the BRAC 1995 process.  If our analysis had included a
plan for redistributing all 10.5 million available hours of work,
then our projected annual recurring savings would have been higher. 
Similarly, the Army estimates that the Commission-mandated transfer
of about 1.2 million hours of ground communications workload from the
Sacramento depot to the Tobyhanna Army Depot will save an additional
$24 million. 

According to financial management officials at the three remaining
centers, it will cost about $475 million to absorb all of the 10.5
million direct labor hours of the Sacramento and San Antonio depot
work currently available for reallocation.  Comparing this cost
estimate to our $206 million projected annual savings indicates that
net savings would occur within 2-1/2 years of the consolidation. 
Transition costs for moving only 78 percent of that workload would be
less; therefore, net savings would occur in even less time if all of
the 10.5 million direct labor hours available for redistribution to
Air Force depots were moved.  Moreover, $318 million of the projected
$475 million are associated with the release or movement of depot
maintenance personnel, and the costs are about the same for either
option.  DOD will incur these costs regardless of whether the
workload is moved to other military depots or privatized-in-place. 
It could recoup the remaining $157 million in less than 1 year if the
workloads were consolidated at other Air Force depots.  Additionally,
over $110 million of the remaining $157 million cost is required to
support the movement of the C-5 aircraft workload.  A decision to
privatize the C-5 workload in place or at a contractor facility would
reduce transition costs to between $50 million and $100 million,
including the additional costs estimated to be required for the
privatization.  Thus, the cost of moving all but the C-5 is estimated
to have a payback period of less than 8 months.  Finally, the
potential $200 million annual savings that could result from the
consolidation is in addition to the BRAC Commission's $268-million
savings estimate for eliminating base support operations and
non-depot maintenance personnel at the McClellan and Kelly Air Force
Bases. 

On the other hand, if the remaining depots do not receive additional
workload, they are likely to continue to operate with significant
excess capacity and become more inefficient and expensive as
workloads dwindle due to downsizing and privatization initiatives. 
If a depot is not closed, excess capacity and costs could still be
reduced by downsizing-in-place and implementing various economy and
efficiency initiatives.  However, the amount of the reduction could
be minimal without further workload consolidations and depot
closures.  Additionally, the remaining Air Force depots are located
on large multi-functional bases that support other missions and
optimum savings could not be achieved unless the entire base is
closed. 

Subsequent to our analysis, the Air Force Materiel Command analyzed
potential savings from workload consolidation, including how
increasing the efficiency of underused military depots would lower
fixed overhead rates.  This analysis showed that annual savings of
$367 million can be achieved through consolidation of workloads in
remaining DOD depots.  Further, an additional $322 million could also
be saved by relocating workload to depots that already have lower
hourly rates.  Based on the Air Force analysis, payback of the
projected $476 million workload relocation cost would occur in less
than 1 year. 


--------------------
\4 The Sacramento and San Antonio depots' projected workload for
fiscal year 1999 is 10.5 million hours; however, to follow the
workload allocation scheme developed for BRAC 1995 by the Joint Cross
Service Group for Depot Maintenance, we assumed that 2.3 million
hours of work, or about
21.9 percent of the total, would be transferred to Army and Navy
depots. 

\5 Because of numerous uncertainties, it is impossible to precisely
estimate the potential savings.  For example, we assumed that the C-5
workload would be moved from San Antonio to another depot, and was
included in the estimated $110 million cost for establishing C-5
capability at another military depot, even though
privatization--either in-place or at contractor facilities--would
likely be the most cost-effective alternative. 


      PRIVATIZATION-IN-PLACE
      AGGRAVATES EXCESS CAPACITY
      PROBLEM IN THE PRIVATE
      SECTOR
---------------------------------------------------------- Letter :3.3

Excess capacity in the private sector is particularly acute for
fixed-winged aircraft; communications, electronics, and avionics
equipment; and engines.  For example, in March 1996, we reported that
private sector contractors indicate they have enough excess capacity
to accomplish all of the projected depot workloads for six military
engines:  TF39, TF33, T63, F108/CFM56, 501K, and LM2500.\6 These
contractors also said they have enough capacity to perform 75 percent
of the military's T56 engine workload and 73 percent of its T700
engine workload. 

According to industry representatives, the private sector has been
reducing its excess capacity through mergers, closures, and
consolidations, but DOD has not made comparable reductions in its
infrastructure.  A recent Defense Science Board study team concluded
that privatization-in-place should be avoided, since it tends to
preserve excess capacity.  A privatization task force comprised of
top executives from the aerospace industry that was formed by the
governor of California in early 1996 concluded that
privatization-in-place: 

     "inhibits the realization of cost savings intended from base
     closures and the performance goal improvements that
     privatization is intended to achieve.  Privatization-in-place,
     therefore, does not solve the excess capacity problem within
     either the public or the private sector of the defense
     industrial base."

According to industry representatives, this approach to downsizing
will not achieve the intended objectives and is likely to be the most
costly option of all. 


--------------------
\6 Depot Maintenance:  Opportunities to Privatize Repair of Military
Engines (GAO/NSIAD-96-33,
Mar.  5, 1996). 


   WORKLOAD REDISTRIBUTION
   STRATEGY IS STILL EVOLVING
------------------------------------------------------------ Letter :4

In August 1996, the Air Force announced its most recent strategy for
allocating the depot workloads at Sacramento and San Antonio, but
details are still evolving.  The strategy indicates the workloads
will be competed and that one of the remaining public depots will be
allowed to compete with the private sector for each of the three
large workload packages that are being developed.  However, this
strategy may limit public and private activities' ability to compete
and favor privatizing the workloads in place. 


      INITIAL ACQUISITION STRATEGY
---------------------------------------------------------- Letter :4.1

On August 16, 1996, the Air Force announced that it was revising its
strategy for allocating the workloads at Sacramento and San Antonio. 
The Air Force's plans initially focused on privatizing five prototype
workloads--three at Sacramento and two at San Antonio.  The BRAC
Commission report specified that the Defense Depot Maintenance
Council should determine where depot maintenance workloads from the
closing Air Force depots should be moved.  The Council approved the
Air Force's plan for the five prototype workloads on February 1,
1996.  Table 2 shows the proposed prototype program, including the
estimated annual value of the workloads and the number of workers
involved. 



                                Table 2
                
                Privatization-in-Place Prototype Program
                                Overview

                         (Dollars in millions)

Center                     Workload        Annual value        Workers
-------------------------  -------------  -------------  -------------
Sacramento                 Hydraulics              $ 43            328
Sacramento                 Electric                  38            212
                            accessories
Sacramento                 Software                  30            343
San Antonio                C-5 paint/                20            143
                            depaint
San Antonio                Fuel                      73            440
                            accessories
======================================================================
Total                                              $204          1,466
----------------------------------------------------------------------
The prototype workloads involved about 11 percent of the San Antonio
depot's maintenance personnel and about 27 percent of the Sacramento
depot's personnel.  Request for proposals were to be issued during
the third quarter of fiscal year 1996 for the software and C-5
paint/depaint workloads and during the fourth quarter of fiscal year
1996 for the hydraulics, electrical accessories, and fuel
accessories.  Contract awards were projected for the first quarter of
fiscal year 1997 for the hydraulics, software, C-5 paint/depaint, and
fuel accessories workloads, and the second quarter of fiscal year
1997 for electronic accessories. 

Shortly after the Defense Depot Maintenance Council approved the
prototype program, DOD began to question the appropriateness of the
concept.  Community and industry groups expressed an interest in
having larger packages, and DOD officials were concerned about the
cost of administering a large number of smaller contracts. 
Additionally, a March 4, 1996, privatization task force created by
the Governor of California concluded that: 

     while privatization is desirable and will deliver more for the
     defense dollar, the more restrictive Privatization-in-Place is
     counterintuitive.  The Department of Defense is expecting the
     private sector, which already carries significant excess
     capacity due to defense downsizing, to be willing to take on
     workload to be performed at a closing base.  Success is only
     possible if offerings are structured as viable business
     opportunities with ongoing potential and if the opportunities
     are strongly supported by the communities involved.\7


--------------------
\7 Pathway to Privatization--An Industry Perspective, Report of the
California Chief Executive Officers' Defense Privatization Task Force
to Governor Pete Wilson (Mar.  4, 1996). 


      REVISED ACQUISITION STRATEGY
---------------------------------------------------------- Letter :4.2

Implementation of the prototype concept was put on hold in May 1996
as the Air Force considered various options.  Shortly thereafter, Air
Force planners began to focus on a concept that would involve several
large consolidated work packages, essentially one at Sacramento and
two at San Antonio (one for the C-5 aircraft and one for engines). 
The Defense Depot Maintenance Council approved the revised
acquisition strategy in August 1996.  However, the 10 U.S.C.  2466
provision that limits private sector depot maintenance performance to
no more than 40 percent--the 60/40 rule--constrains the Air Force's
ability to privatize depot maintenance workloads.  DOD has requested
that Congress repeal this provision and other statutes affecting the
allocation of depot maintenance workloads between the public and
private sectors. 

Air Force planners project that about $600 million of the two depots'
$1.65 billion workload will be available to transfer to the private
sector.  If the 60/40 provision is not repealed in the future, the
remaining
$1.05 billion workload will be transferred to other military depots. 
This will substantially increase the use of these depots and reduce
their labor hour rates for all workloads.  If the 60/40 provision is
repealed, DOD will need to eliminate substantial excess capacity at
the military depots to reduce the cost impact of further
privatization.  In addition to the 60/40 provision, Air Force
officials stated that they intend to comply with the 10 U.S.C.  2469
provision requiring public/private competitions before transferring
depot-level workloads valued at not less than $3 million to the
private sector. 

Under the revised strategy, one request for proposals will be issued
for all Sacramento workloads that are proposed to be
privatized-in-place, including A-10 and KC-135 aircraft, hydraulics,
instruments and electronic accessories, and software.  Air Force
planners estimated the value of the Sacramento workload to be about
$220 million annually, with a projected 2,200 workers involved. 
According to Air Force officials, the Sacramento work package can be
privatized without breaching the 60/40 provision.  The Air Force is
following a three-phased approach for competing the Sacramento
workload.  The first phase began on November 8, 1996, with the
issuance of a request for proposals for a study to analyze the
Sacramento depot workload, explore approaches for process
improvement, and make recommendations for the maintenance contract
solicitation.  The Air Force anticipates awarding study contracts to
one or two offerors for about $750,000 in January 1997.  The second
phase, the contract study, is scheduled to run until September 1997,
although the Air Force plans to issue a request for proposals for the
maintenance contract in July 1997.  The final phase, the award of the
maintenance contract, is expected in January 1998. 

A two-pronged acquisition strategy has been proposed for San Antonio. 
One request for proposals is for the C-5 aircraft business area,
which has an annual value of $155 million and involves about 1,200
workers.  The Air Force issued a draft request for proposals for the
C-5 workload in November 1996.  The strategy for San Antonio's engine
business area is uncertain, largely because of the 60/40 provision. 
According to Air Force officials, since the 60/40 provision has not
been repealed, only a portion of the $700 million San Antonio engine
workload can be privatized along with the other proposed packages. 
Air Force planners estimated that about $240 million of San Antonio's
engine workload could be privatized without breaching the 60/40
threshold.  This limitation would likely allow privatization of only
one, or portions of all three, of San Antonio's three large engine
workloads. 

Because of the 60/40 provision, preliminary Air Force plans provide
for some workloads to be transferred to the three remaining Air Force
depots.  These transfers would include electrical components,
automatic test equipment hardware, F-15 workload and gas turbine
engines, and engine workloads over the 60/40 limitation.  San Antonio
and Sacramento local manufacturing workloads would also be
transferred to one of the three remaining Air Force depots in 2001. 
Personnel associated with the weapon system and item management
functions at the closing centers are also scheduled to be transferred
in 2001 to one of the three remaining air logistics centers or to one
of the Air Force product centers that manage the acquisition of Air
Force systems and equipment.  Further, the Air Force microelectronics
facility located at the Sacramento depot will transfer to the Defense
Logistics Agency.  This approximately 140-person operation will
continue to function in its current location, with the Defense
Logistics Agency likely to assume ownership of the depot plant
equipment and lease the building from the local reuse authority. 


      STRATEGY MAY LIMIT PUBLIC
      AND PRIVATE COMPETITION AND
      FAVORS PRIVATIZING-IN-PLACE
---------------------------------------------------------- Letter :4.3

The Air Force's revised strategy of competing large consolidated
workloads may limit competition from military depots.  According to
Air Force officials, the solicitation requires that all the work be
performed at a single location, does not allow military depots to
jointly compete for the work, and only allows one depot to compete
for each of the three large workload packages.  The competing Air
Force depot will not be allowed to subcontract work to a private
contractor or to propose maintaining any of the workloads in place. 
Since no single military depot can currently perform all the work for
two of the consolidated packages, the ability of the military depots
to compete may be limited.  The single location requirement also
prohibits contractors from moving individual workloads to multiple
underused private sector facilities.  Also, the plan to privatize the
Defense Logistics Agency supply depots at the Sacramento and San
Antonio locations provides an incentive to perform the work at the
same location. 


   CORE CAPABILITY REQUIREMENTS
   MAY AFFECT PRIVATIZATION PLANS
------------------------------------------------------------ Letter :5

According to 10 U.S.C 2464, DOD activities must maintain a core
logistics capability, including personnel, equipment, and facilities
sufficient to provide the technical competence and resources
necessary for effective and timely response to a mobilization or
other national defense emergency.  DOD facilities are to retain core
capability unless the Secretary waives DOD performance as not being
required for national defense.  Air Force data developed and
certified during the 1995 BRAC process indicated that about 77
percent of Sacramento's and 70 percent of San Antonio's projected
fiscal year 1996 depot maintenance workload represented core
capability.  As a result, the Air Force cannot fully implement
privatization-in-place plans for Sacramento and San Antonio without
executing a waiver and reporting to Congress. 

In April 1996, DOD provided Congress a depot maintenance policy
report that included a new process for evaluating core.  The report
said that the military services would conduct a risk assessment
before privatizing mission-essential workloads, which previously
would have been identified as core.\8 As we reported on May 21, 1996,
DOD's policy report described a model for making these assessments,
but did not provide criteria for evaluating private sector
capabilities, establishing risk thresholds, and making best value
determinations.\9 Additionally, we noted that (1) such criteria is
critical to both implementing the model and determining whether
mission-essential workloads previously determined to be core
capability and performed in military depots can be outsourced at
acceptable levels of risk and (2) until this guidance and criteria
are established and implemented, the core requirements that will
result from the new policy cannot be predicted with any precision. 
Also, DOD has not yet developed a standardized process for assessing
core capability, including a documented risk assessment that
evaluates private sector repair capability.  As a result, each
military service was independently planning and developing its own
risk assessment process. 

While the Air Force is developing a process for reassessing core
requirements, evaluations of the Sacramento and San Antonio depot
maintenance workloads proposed for privatization have not yet been
completed.  It is uncertain to what extent the Air Force will
determine that mission-essential workloads previously defined as core
should be privatized.  However, the Air Force has issued draft
request for proposals involving workloads previously identified as
core without obtaining waivers or redefining the workload as noncore. 


--------------------
\8 Report on Policy Regarding Performance of Depot-Level Maintenance
and Repair, Department of Defense (Apr.  4, 1996). 

\9 Defense Depot Maintenance:  DOD's Policy Report Leaves Future Role
of Depot System Uncertain (GAO/NSIAD-96-165, May 21, 1996). 


   DELAYING CLOSURE AND
   REALIGNMENT WILL BE COSTLY
------------------------------------------------------------ Letter :6

To reduce the closures' effect on the Sacramento and San Antonio
communities, DOD plans to delay closing McClellan Air Force Base and
parts of the Kelly Air Force Base until 2001, thereby retaining 8,700
jobs at McClellan and 16,000 jobs at Kelly.  This delay will
eliminate much of the $973.8 million savings estimated by the BRAC
Commission to result from reduced personnel and operating costs
beginning in 1997.  These savings were to offset one-time closure
costs of $822.6 million. 


      BRAC COMMISSION COST AND
      SAVINGS ESTIMATES
---------------------------------------------------------- Letter :6.1

As shown in table 3, the BRAC Commission projected a net savings of
$151.2 million during the 6-year implementation period after
projected implementation costs of $822.6 million are deducted from
the projected total savings.  The savings were to be achieved by
reducing personnel requirements and operating costs.  However, these
savings were expected to be partially offset by one-time
implementation costs for such things as the transfer of personnel and
equipment to new sources of repair. 



                                     Table 3
                     
                        BRAC Commission's Cost and Savings
                      Estimates for McClellan and Kelly Air
                                   Force Bases

                              (Dollars in millions)

                                   Fiscal year
            ----------------------------------------------------------
                1996      1997      1998      1999      2000      2001     Total
----------  --------  --------  --------  --------  --------  --------  ========
Total              0     $36.1    $112.1    $199.3    $286.1    $340.3    $973.8
 savings
Implementa      $8.8     202.9     225.3     184.3     201.2               822.6
 tion
 costs
Net           ($8.8)  ($166.9)  ($113.2)     $15.0     $84.8    $340.3    $151.2
 savings/
 (costs)
--------------------------------------------------------------------------------
Note:  Costs and savings were calculated in fiscal year 1996 dollars. 
Totals may not add due to rounding. 


      IMPLEMENTATION DELAYS WOULD
      REDUCE SAVINGS
---------------------------------------------------------- Letter :6.2

The cost impact of the decision to delay the closures depends on how
long they are delayed.  For example, a 1-year delay would reduce the
BRAC Commission's projected savings by about $90 million, whereas a
4-year delay would reduce savings by about $796 million.\10

The BRAC Commission expected $845.6 million, or 86.8 percent, of the
$973.8 million implementation period savings to be achieved through
personnel reductions.  It expected that closing the Sacramento and
San Antonio centers would eliminate 6,316 military and civilian
positions.  The personnel reductions were to start in fiscal year
1997 and be completed by the end of fiscal year 2000. 

The financial benefit of eliminating positions as early as possible
becomes readily apparent when the impact is tracked into subsequent
years.  For example, the BRAC Commission projected that 1,378
positions would be eliminated in fiscal year 1997, which would save
$31.8 million during the first year and $63.5 million every year
thereafter.\11 Eliminating these positions was expected to save
$285.8 million during the implementation period.  Table 4 shows how
the estimated savings will be affected. 



                                     Table 4
                     
                     Impact on Savings Caused by Delaying the
                          Elimination of 1,378 Positions

                              (Dollars in millions)

              Savings achieved during fiscal year
     -----------------------------------------------------
Fis
cal
yea
r
of
per
son
nel
red
uct                                                             Total  Change in
ion       1997       1998       1999       2000       2001    savings    savings
---  ---------  ---------  ---------  ---------  ---------  =========  ---------
199      $31.8      $63.5      $63.5      $63.5      $63.5     $285.8          0
 7
199                  31.8       63.5       63.5       63.5      222.3    ($63.5)
 8
199                             31.8       63.5       63.5      158.8    (127.0)
 9
200                                        31.8       63.5       95.3    (190.6)
 0
200                                                   31.8       31.8    (254.1)
 1
--------------------------------------------------------------------------------
Note:  Savings were calculated in fiscal year 1996 dollars.  Totals
may not add due to rounding. 

Table 5 shows the impact that implementation delays will have on the
Commission's net savings estimates, assuming that all costs and
savings remain the same and are simply delayed. 



                                Table 5
                
                Impact of Closure Delays on Net Savings
                 or Costs for Fiscal Years 1996 to 2001

                         (Dollars in millions)

                                            Net savings      Change in
Length of delay                                 (costs)        savings
----------------------------------------  -------------  -------------
No delay (savings start in 1997)                 $151.2              0
1-year delay (savings start in 1998)               60.6        ($90.6)
2-year delay (savings start in 1999)             (93.2)        (244.5)
3-year delay (savings start in 2000)            (333.7)        (484.9)
4-year delay (savings start in 2001)            (644.4)        (795.6)
----------------------------------------------------------------------
Note:  Costs and savings were calculated in fiscal year 1996 dollars. 
Totals may not add due to rounding. 


--------------------
\10 A 4-year delay costs significantly more per year than a 1-year
delay because it pushes back the time period when savings will exceed
costs (as shown in table 4).  These are one-time costs for extending
operations at the centers. 

\11 The Commission assumed that the position eliminations would be
spread evenly throughout the year and that first-year savings would,
therefore, be half the annual recurring savings. 


      TRANSFER OF WORKLOADS TO
      TOBYHANNA ARMY DEPOT DELAYED
      UNTIL 2001
---------------------------------------------------------- Letter :6.3

The BRAC Commission's recommendation to transfer common-use ground
communication-electronics workload from the Sacramento depot--about
1.2 million direct labor hours of work--to the Tobyhanna Army Depot
would increase Tobyhanna's capacity utilization from 49 percent to
65 percent, reduce Tobyhanna's hourly labor rate by $6 (from $64 to
$58), and save about $24 million annually.  This workload includes
repairing and overhauling such items as radar, radio communications,
electronic warfare, navigational aids, electro-optic and night-vision
devices, satellite sensors, and cryptographic security equipment. 

The Air Force, with the approval of the Defense Depot Maintenance
Council, is delaying the transfer of this workload to Tobyhanna until
2001 to support personnel retention goals in the Sacramento area.  As
we recently reported, this delay will decrease savings and result in
interim personnel reductions at Tobyhanna.\12 According to Army
officials, delaying all of the workload transfers to Tobyhanna until
2001 could require the depot to undergo a reduction-in-force,
followed by a costly rehiring and retraining situation when it does
eventually receive the Air Force workloads.  Because its workload has
been declining, Tobyhanna has already voluntarily separated about 250
of its personnel during 1996.  Army officials said that about 800
personnel may be involuntarily separated in fiscal years 1997 or 1998
if no additional workloads are transferred to Tobyhanna.  This
reduction would include the loss of personnel having critical skills
and competencies needed to work on the ground communications
workload. 


--------------------
\12 Army Depot Maintenance:  Privatization Without Further Downsizing
Increases Costly Excess Capacity (GAO/NSIAD-96-201, Sept.  18, 1996). 


   STATUTES AFFECT EFFORTS TO
   PRIVATIZE WORKLOADS
------------------------------------------------------------ Letter :7

As we previously reported, various statutory restrictions may affect
how much of the depot-level workloads can be transferred to the
private sector--through privatization-in-place or otherwise.  They
include 10 U.S.C.  2464, 10 U.S.C.  2466, and 10 U.S.C.  2469.  While
each of these statutes has some affect on the allocation of DOD's
depot-level workload, 10 U.S.C.  2469 constitutes the primary
impediment to privatization in the absence of a public-private
competition. 

Competition requirements of 10 U.S.C.  2469 have broad application to
all changes to the depot-level workload valued at not less than $3
million that is currently performed at DOD installations, which
include Kelly and McClellan.  They require DOD to give other public
depots the opportunity to compete for the closing depots' workloads. 
The statute does not provide any exemptions from its competition
requirements and, unlike most of the other laws governing depot
maintenance, does not contain a waiver provision.  Further, there is
nothing in the Defense Base Closure and Realignment Act of 1990--the
authority for the BRAC recommendations--that, in our view, would
permit the implementation of a recommendation involving privatization
outside of the competition requirements of 10 U.S.C.  2469. 

The determination of whether any single conversion to private sector
performance conforms to the requirements of 10 U.S.C.  2469 depends
upon the facts applicable to the particular conversion.  While DOD
has stated that it will structure these conversions to comply with
existing statutory restrictions, details of its privatization plans
for Kelly and McClellan are still evolving.  Sufficient information
regarding the detailed procedures for conducting the competitions for
the Sacramento and San Antonio workloads is not available for us to
assess whether the planned conversions will comply with the
requirements of existing law.  Further, the planned privatizations at
Sacramento and San Antonio are now the subject of litigation.  In
March 1996, the American Federation of Government Employees filed a
lawsuit challenging these privatization initiatives, contending that
they violate the public-private competition requirements of 10 U.S.C. 
2469 and other depot maintenance statutes.\13


--------------------
\13 American Federation of Government Employees v.  Clinton, No.  C2
(96-0283 (S.D.  Ohio 1996)). 


   RECOMMENDATIONS
------------------------------------------------------------ Letter :8

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

  -- Develop required capability in military depots to sustain core
     depot repair and maintenance capability for Air Force systems
     and conduct and adequately document a risk assessment for
     mission-essential workloads being considered for privatization
     at the San Antonio and Sacramento depots. 

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

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

  -- Reconsider plans to delay (1) the transfer of the ground
     communications and electronics workload from the Sacramento
     Depot to Tobyhanna and (2) other delays in transferring workload
     to the public or private sector that are reducing savings
     estimated by the BRAC Commission to be achieved from closure and
     consolidation. 


   AGENCY COMMENTS AND OUR
   EVALUATION
------------------------------------------------------------ Letter :9

DOD provided oral comments on our draft report.  It concurred with
each of our recommendations and made several technical comments that
have been incorporated where appropriate.  DOD also noted several
actions it is taking to respond to our recommendations. 
Specifically: 

  -- DOD and the Secretary of the Air Force will develop the required
     capability in military depots to sustain core depot repair and
     maintenance capabilities for Air Force systems.  Furthermore,
     the Air Force is in the process of conducting and documenting a
     risk assessment of the capability for those workloads being
     considered for public-private competition at the San Antonio and
     Sacramento depots. 

  -- DOD agreed to consider potential savings from consolidating the
     San Antonio and Sacramento depot maintenance workloads at other
     DOD depots as a part of its planned evaluation of the
     public-private competitions for these workloads. 

  -- DOD plans to use public-private competitions for determining the
     most cost-effective source of repair for depot workloads at
     Sacramento and San Antonio. 

  -- DOD and the Air Force are working closely to finalize plans for
     transferring the ground and electronics workload from the
     Sacramento Depot to Tobyhanna.  DOD's response did not address
     its position regarding delays in transferring other Sacramento
     and San Antonio workloads not expected to be included in the
     public-private competitions.  Air Force officials stated that
     they are considering various options for these workloads that
     include both private and public sector sources. 


   SCOPE AND METHODOLOGY
----------------------------------------------------------- Letter :10

We obtained information from and interviewed officials at the Office
of the Secretary of Defense; Air Force Headquarters, Washington,
D.C.; Air Force Materiel Command Headquarters, Wright-Paterson Air
Force Base, Ohio; the Sacramento Air Logistics Center, McClellan Air
Force Base, California; the San Antonio Air Logistics Center, Kelly
Air Force Base, Texas; the Warner Robins Air Logistics Center, Robins
Air Force Base, Georgia; the Ogden Air Logistics Center, Hill Air
Force Base, Utah; the Oklahoma City Air Logistics Center, Tinker Air
Force Base, Oklahoma; the Aerospace Guidance and Metrology Center and
Defense Contract Management Office, Newark Air Force Base, Ohio; the
Joint Depot Maintenance Analysis Group, Gentile Station, Dayton,
Ohio; the Army Industrial Operations Command, Rock Island, Illinois;
the Naval Air Systems Command, Washington, D.C.; and the Naval
Aviation Depot Operations Center, Naval Air Station, Patuxent River,
Maryland.  We also discussed privatization-in-place issues with
Sacramento and San Antonio community leaders and the Defense Contract
Audit Agency.  This work was part of a broad-based review of depot
maintenance requirements, capability, and workload distribution
issues.  A list of related products is provided at the end of this
report. 

To evaluate DOD's rationale for (1) delaying the closure of McClellan
Air Force Base and the realignment of Kelly Air Force Base and (2)
privatizing the Sacramento and San Antonio air logistics centers'
depot maintenance workloads, we reviewed various documents, including
the Secretary of Defense's July 13, 1995, letter to the President and
a July 13, 1995, White House press release.  We then discussed this
rationale with DOD, Air Force Material Command, and air logistics
center officials. 

Because Air Force officials have not yet determined how or when
privatization-in-place will be implemented at the two closing depots,
neither we nor the Air Force can develop precise costs and savings
estimates.  As a result, we (1) reviewed the BRAC Commission's cost
and savings estimates and (2) estimated the "economy of scale"
savings that could be achieved by using the closing depots' workloads
to reduce excess capacity in the remaining depots. 

To estimate the potential from transferring the closing depots'
workloads to the remaining depots, we allocated 8.2 million hours of
work, or about 78 percent of the projected fiscal year 1999 workload,
to the three remaining centers.  We used a scheme developed for BRAC
1995 by the Joint Cross Service Group for Depot Maintenance, but
modified it slightly.  Based on input from Air Force Materiel Command
and Center officials, we assumed that the C-5 workload would be
transferred to the Warner Robins Air Logistics Center rather than the
Oklahoma City Air Logistics Center.  We provided each center with a
breakout of the transferring workload they would receive by commodity
group.  We then asked center personnel to estimate how additional
workloads would affect their hourly rates by analyzing fixed- and
variable-cost categories, excluding material, which we assumed would
not change.  The three centers used the approach and assumptions
developed by executive business planners from all five centers to
develop the downsize-in-place Air Force proposal developed during the
1995 BRAC round as an alternative to closing depots. 

We discussed the methodology with workload and privatization
officials at the Air Force Materiel Command.  They agreed that our
approach was sound for assessing the impact of additional workload on
a depot's rate structure.  We also provided the closing centers with
an opportunity to comment on our methodology.  San Antonio center
officials agreed with the general approach, but commented that
increases in variable costs were subjective.  Sacramento center
officials chose not to comment. 

To determine whether Air Force plans for privatizing the closing
depots is consistent with (1) laws relating to the allocation of
depot maintenance workloads to the private sector and (2) the BRAC
Commission's recommendations, we identified the applicable
requirements and determined their impact on DOD's plans to privatize
depot-level maintenance workloads. 

We conducted our review between October 1995 and October 1996 in
accordance with generally accepted government auditing standards. 


--------------------------------------------------------- Letter :10.1

We are sending copies of this report to the Secretary of Defense; the
Secretary of the Air Force; the Director, Office of Management and
Budget; and interested congressional committees.  Copies will be made
available to others upon request.  If you have any questions, please
contact me at (202) 512-8412.  Major contributors to this report are
listed in appendix I. 

David R.  Warren, Director
Defense Management Issues


MAJOR CONTRIBUTORS TO THIS REPORT
=========================================================== Appendix I


   NATIONAL SECURITY AND
   INTERNATIONAL AFFAIRS DIVISION,
   WASHINGTON, D.C. 
--------------------------------------------------------- Appendix I:1

James F.  Wiggins, Associate Director
Julia C.  Denman, Assistant Director
M.  Glenn Knoepfle, Senior Evaluator


   OFFICE OF GENERAL COUNSEL
--------------------------------------------------------- Appendix I:2

John G.  Brosnan, Assistant General Counsel


   SAN FRANCISCO FIELD OFFICE
--------------------------------------------------------- Appendix I:3

Karl J.  Gustafson, Evaluator-in-Charge
John M.  Schaefer, Senior Evaluator
Eddie W.  Uyekawa, Senior Evaluator
Jonathan M.  Silverman, Writer-Editor


   DALLAS FIELD OFFICE
--------------------------------------------------------- Appendix I:4

Larry J.  Junek, Evaluator-in-Charge
John D.  Strong, Senior Evaluator




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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Navy Maintenance:  Public/Private Competition for F-14 Aircraft
Maintenance (GAO/NSIAD-92-143, May 20, 1992). 

Military Bases:  Information on Air Logistics Centers
(GAO/NSIAD-90-287FS, Sept.  10, 1990). 




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