One of the more contentious issues that the Defense Department and Congress
regularly debate is the operation of maintenance and repair depots.
With just a few exceptions, the discussions in recent years have remained the
same. Congress has legislatively declared its position on the need to retain
an “organic” source of maintenance and repair nearly every year
for the past 15 years.
The Department of Defense does not necessarily disagree with this legislative
mandate, but has argued for a number of years that it needs more flexibility
to manage its repair and maintenance requirements. Disagreements generally have
centered on just how these facilities should be managed.
To better understand the issues involved, it may be useful to review some history.
After World War II and the Korean wars, the depot maintenance capabilities of
the Department of Defense expanded dramatically. At the height of the Cold War,
the depots had the capacity to surge, if needed, to a three shift, 24 hour a
day operation. Although never required to surge, the United States paid for
this excess capacity as a justifiable cost of preparedness.
At the end of the Cold War, with a significant reduction in force structure
and new weapon systems orders, the U.S. defense industry also found itself with
a significant unused plant capacity.
As the inevitable downsizing of excess capacity began, Congress began to be
concerned that those efforts could go too far and, ultimately, could undermine
U.S. military readiness and capabilities. This was not a collective concern,
but rather, a priority of several members of Congress who had defense depots
in their districts. They formed what is known today as the Congressional Depot
Caucus.
As a result of the last three Base Realignment and Closure actions, the Defense
Department has closed 97 major military facilities and over 200 smaller installations.
Included in these closings were six aviation depots, two shipyards and several
combat vehicle maintenance facilities.
Today, the government’s industrial capability includes seven aviation
depots, (three Air Force, three Navy/Marine Corps, one Army), four Navy shipyards,
four Army combat systems depots, two Marine Corps maintenance depots, two manufacturing
arsenals, two government-owned and operated ammunition manufacturing plants
and approximately five other various repair facilities—with a combined
civilian workforce of approximately 77,000 employees, a 56 percent reduction
from 163,000 in 1987. The 2003 Defense Department budget for depot activities
was $9.1 billion.
Despite the cutbacks, there still remains excess capacity in the depots. Industry,
meanwhile, has closed many facilities and lost much of its highly trained and
skilled workforce.
One of the most effective laws that Congress has enacted to ensure that the
Defense Department retains sufficient depot maintenance capabilities is the
“50-50 rule”. It requires that no more the 50 percent of the depot
maintenance funds provided to a military service be expended for work done by
the private sector. The Pentagon has argued for many years that the 50-50 rule
is a hindrance to making best value decisions and taking advantage of industry’s
current capabilities.
In recent years, the military services have had difficulty complying with the
50-50 rule and have sought waivers from Congress based on national security
needs. From the congressional point of view, the 50-50 rule is an “insurance
policy” that protects the depots.
Another law requires that, within four years of initial operational capability
of a new weapon system, the Defense Department be able to provide depot maintenance
for that system. This does not necessarily mean that every new weapon system
will be maintained in government depots. The legislation requires only that
the repair capability be established. For example, when the C-17 aircraft became
operational, the Air Force stated that it already had the capability to repair
large transport aircraft and therefore, no C-17 specific depot maintenance was
required. Members of Congress have consistently argued that if new weapon systems
are not maintained by organic depots, eventually they will be forced to close.
Design improvements in weapon systems are also working against the organic
depots. In the case of the C-17, it was designed so it would require much less
maintenance than the C-141 aircraft that it was replacing. The C-17 engines
are a commercial derivative, so there was no need to establish an organic repair
depot.
Another reality that may be working against the depots is that, under the terms
in many new weapons systems contracts, the manufacturer becomes the maintenance
provider. The Defense Department believes that arrangement saves money—it
does not have to pay the manufacturer for the technical data packages required
for future organic maintenance nor fund depots to re-tool and re-train their
workforce. Congress continues to be concerned that these arrangements will cause
the organic depots to die on the vine.”
Over the years, some members of Congress have come to believe that industry
wants to take over all depot maintenance work. This is an unrealistic view,
as industry has little capability to maintain many of the current legacy systems.
The perceived rivalry between government depots and private contractors has
had somewhat of a chilling effect on what appears to be the most sensible course
of action—partnering.
Recently, Congress passed several provisions designed to encourage partnering.
These provisions allow the private sector to lease unneeded excess facilities
and equipment to work on government-related projects or to work with government
employees on military equipment repair projects.
Partnering could help ensure the long-term viability of depot maintenance capabilities.
It not only takes advantage (and pays for) excess capacity at government facilities,
but also helps the government workforce retain and learn new technology skills.
This concept is attractive to industry, because it lowers the cost of establishing
new facilities.
It is unclear what the future holds. In light of an inconsistent Defense Department
depot maintenance road map, yearly depot modernization under-funding and several
attempts by the Pentagon to dramatically change depot policy, Congress has enacted
protectionist laws that usually are reactionary, based on the latest Defense
Department reform proposal.
Unfortunately, these actions have led many members of Congress to conclude
that the Department of Defense is not committed to retaining its depot capabilities.
The fact that industry cannot take over all the depot maintenance requirements
appears at times to be lost in the contentious rhetoric.
A fresh approach is needed, one that addresses the concerns of the Defense
Department, Congress and industry, and ensures the long-term health of military
depots.
Peter M. Steffes is vice president of government policy at the National Defense
Industrial Association.