Watchdog Finds High Carryover at Navy Depots

The Navy operates three Fleet Readiness Centers in Cherry Point, North Carolina, Jacksonville, Florida and San Diego, California, which are supported by the Navy Working Capital Fund. The facilities repair aircraft, engines and components, and manufacture parts and assemblies.

“Work completed at the FRCs ensures that deployed and next-to-deploy units have the battle-ready items needed to train and fight in current and future military operations,” the GAO said in a June report to Congress titled, “Budgeting for Carryover at Readiness Centers Could Be Improved.”

Budget carryover occurs when FRC work has been ordered and funded by military customers but has not been completed by the end of the fiscal year in which the work was slated to be performed. The Defense Department has a formula based on new orders received from customers that sets the amount of carryover allowed.

“The congressional defense committees have recognized that some carryover is appropriate to facilitate a smooth flow of work during the transition from one fiscal year to the next,” GAO said in the report.

In a recent study, GAO found that carryover exceeded allowable amounts in 10 of 11 fiscal years between 2004 and 2014, with total carryover growing to more than $1 billion by the end of last year. Work delays exceeded six months at the end of fiscal year 2014.

Navy officials told the watchdog group that the high carryover was the result of uncertainty in overseas contingency operations orders and changing customer requirements after budget preparations.

GAO warned “the excessive amounts of carryover may result in future appropriations or budget requests being subject to reductions by DoD and the congressional defense committees during the budget review process.”

The Navy is taking steps to remedy the problem, including hiring more engineers and artisans, GAO said.

The watchdog group recommended that the Defense Department improve the budgeting for carryover by reporting the purpose and amount of waivers in FRC budgets and requiring the Navy to analyze trend data on actual orders when developing budget estimates.

Topics: Defense Department, DOD Budget