DOD Should Improve Pandemic Plans and Publish Working Capital Fund Policy (GAO-21-103)
Summary
A GAO report to congressional committees, GAO-21-103, dated April 2021, on depot maintenance at the Department of Defense (DOD). It finds that the COVID-19 pandemic exacerbated productivity challenges that Marine Corps, Navy and Air Force depots already faced, such as not having enough personnel to perform maintenance. At half of the eight depots GAO reviewed, productivity was lower than planned every month during fiscal year 2020, and revenue at one Air Force depot was about 10 to 30 percent less than planned. Its title states that DOD should improve pandemic plans and publish working capital fund policy.
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United States Government Accountability Office
Report to Congressional Committees
DEPOT
April 2021
MAINTENANCE
DOD Should Improve
Pandemic Plans and
Publish Working
Capital Fund Policy
GAO-21-103
April 2021
DEPOT MAINTENANCE
DOD Should Improve Pandemic Plans and Publish
Working Capital Fund Policy
Highlights of GAO-21-103, a report to
congressional committees
Why GAO Did This Study What GAO Found
Pandemics such as COVID-19 can The Coronavirus Disease 2019 (COVID-19) pandemic exacerbated productivity
impact the productivity of critical DOD challenges Marine Corps, Navy, and Air Force depots already faced, such as not
depots that maintain weapon systems having enough personnel to perform maintenance. At half of the eight depots
if essential personnel are unable to GAO reviewed, productivity was lower than planned every month during fiscal
report for work. Navy and Air Force year 2020. For example, revenue at one Air Force depot was about 10 to 30
WCFs must also maintain cash percent less than planned throughout fiscal year 2020. Prior to COVID-19, depot
balances sufficient for the activities revenue was decreased due to fewer orders than planned at Marine Corps and
they support, including the eight depots Navy depots, and fewer flying hours than planned at Air Force depots, according
operated by the Marine Corps, Navy,
to officials. After the onset of COVID-19, all eight depots reported that some of
and Air Force, to sustain readiness.
the challenges they were already facing worsened, such as personnel shortages.
GAO was asked to assess the effects
of COVID-19 on WCF and depot
Marine Corps, Navy, and Air Force management supported their workforce
operations as part of its CARES Act during COVID-19, but had challenges continuing operations and improving crisis
oversight. This report (1) describes response, according to GAO analysis. Depots supported the workforce by
how COVID-19 impacted Marine considering local conditions, adjusting operating schedules, and using remote
Corps, Navy, and Air Force depot work. However, depots did not consistently address key practices for continuing
productivity; (2) examines the extent to operations. Depot officials said that adapting existing contingency plans for
which depot actions in response to natural disasters to COVID-19 added to confusion among mission-essential
COVID-19 addressed key practices to personnel early in the pandemic. Additionally, depots did not consistently
support the workforce, continue document lessons learned. Improving guidance to depots, updating contingency
operations, and improve crisis plans to address a long-term crisis impacting the depot workforce, and using
response; and (3) examines the extent lessons learned from the COVID-19 pandemic to develop exercises, will help the
to which WCF cash management depots protect the workforce and maintain productivity during a future crisis.
policy ensured financial solvency and
reflected current guidance. GAO Congress and the Department of Defense (DOD) took steps to ensure the Navy
reviewed DOD guidance, depot and Air Force Working Capital Funds (WCFs) were solvent at the end of fiscal
revenue data for fiscal year 2020, and year 2020, but DOD’s cash management policy is not reflected in current
documents related to the impact of guidance. In March 2020, Congress provided the Navy and Air Force WCFs
COVID-19 on productivity and WCF $475 million each through the CARES Act. In addition, DOD, Navy, and Air Force
solvency; and interviewed depot and officials used a cash management policy in draft since July 2015 to raise cash
financial management officials. balances above the lower cash requirement by the end of fiscal year 2020.
However, DOD’s cash management policy is not reflected in published DOD
What GAO Recommends Financial Management Regulation. Publishing the guidance would improve
GAO is making nine recommendations, transparency and the ability of Congress to oversee DOD WCFs.
including that DOD develop guidance
and a communication plan for mission- Fiscal Year 2020 Working Capital Fund Cash Balances
essential depot personnel; update
contingency plans and exercises;
record lessons learned from COVID-
19; and publish WCF cash
management policy. DOD concurred
with GAO’s recommendations.
View GAO-21-103. For more information,
contact Diana Maurer at (202) 512-9627 or
MaurerD@gao.gov or Asif A. Khan at (202)
512-9869 or KhanA@gao.gov.
United States Government Accountability Office
Contents
Letter 1
Background 5
COVID-19 Exacerbated Preexisting Challenges to Depot
Productivity 9
Marine Corps, Navy, and Air Force Actions Supported the Depot
Workforce during COVID-19, but Did Not Fully Reflect Key
Practices for Continuing Operations and Informing Future
Crises 15
Congress, Navy, and Air Force Actions Ensured the Working
Capital Funds Remained Solvent, but DOD’s Cash
Management Policy Is Not in Published Regulations 26
Conclusions 33
Recommendations for Executive Action 34
Agency Comments 36
Appendix I Objectives, Scope, and Methodology 39
Appendix II DOD Working Capital Funds Support of Depot Maintenance
Activities and Applicable Cash Management Policy 46
Appendix III Comments from the Department of Defense 49
Appendix IV GAO Contacts and Staff Acknowledgments 53
Related GAO Products 54
Page i GAO-21-103 Depot Maintenance
Figures
Figure 1: Key Practices to Support the Workforce, Continue
Operations, and Improve Crisis Response during a
Pandemic 3
Figure 2: Depots Operated Using Navy and Air Force Working
Capital Funds to Sustain Weapon Systems 6
Figure 3: Key DOD, Marine Corps, Navy, and Air Force
Organizations Related to Depot Management 7
Figure 4: Overview of Navy and Air Force Working Capital Fund
Operations 8
Figure 5: Marine Corps, Navy, and Air Force Actual Monthly
Revenue by Depot as a Percentage of Planned Monthly
Revenue Goals during Fiscal Year 2020 10
Figure 6: Challenges to Depot Productivity Exacerbated by
COVID-19 12
Figure 7: GAO’s Assessment of Depot Actions Related to Key
Practices to Support the Workforce in Response to the
COVID-19 Pandemic 15
Figure 8: GAO’s Assessment of Depot Actions Related to Key
Practices to Continue Operations in Response to the
COVID-19 Pandemic 18
Figure 9: GAO’s Assessment of Depot Actions Related to Key
Practices to Improve Crisis Response during and after
the COVID-19 Pandemic 22
Figure 10: Navy and Air Force Working Capital Fund Monthly
Cash Balances for Fiscal Year 2020 28
Figure 11: Key Practices to Support the Workforce, Continue
Operations, and Improve Crisis Response during a
Pandemic 41
Page ii GAO-21-103 Depot Maintenance
Abbreviations
ALC Air Logistics Complex
COVID-19 Coronavirus Disease 2019
COOP Continuity of Operations Plan
DOD Department of Defense
FMR Financial Management Regulation
FRC Fleet Readiness Center
WCF Working Capital Fund
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Page iii GAO-21-103 Depot Maintenance
Letter
441 G St. N.W.
Washington, DC 20548
April 6, 2021
Congressional Committees
Pandemics such as Coronavirus Disease 2019 (COVID-19) can damage
global security and diminish military readiness if essential personnel who
repair and maintain complex weapon systems and equipment at
Department of Defense (DOD) depots are physically away from the
workplace for weeks or months. The Marine Corps, Navy, and Air Force
operate eight depots that are crucial to sustaining military readiness by
ensuring that critical weapon systems are maintained and returned for
use in training and operations.
The Navy and Air Force use working capital funds (WCF) to finance the
provision of goods and services, parts and supplies, transportation,
research and development, and depot maintenance by their respective
depots. 1 The Navy WCF finances work performed at two Marine Corps
Production Plants and three Navy Fleet Readiness Centers (FRC). The
Air Force WCF finances work performed at three Air Force Air Logistics
Complexes (ALC). 2 In June 2020, we reported that DOD officials stated
that COVID-19 stay-at-home requirements for DOD personnel who
support and maintain weapon systems will reduce productivity—i.e., the
amount of work and parts ordered, reducing the ability of depots to
generate revenue. 3
You asked that we provide an assessment of the effects and implications
of the COVID-19 pandemic on WCFs and depot operations as part of our
effort to provide oversight of the federal response to COVID-19. 4 This
1Both the Navy and Air Force Working Capital Funds received $475 million each through
CARES Act appropriations. Coronavirus Aid, Relief, and Economic Security (CARES) Act,
Pub. L. No. 116-136, div. B, title III, 134 Stat. 281, 520 (March 27, 2020).
2The Marine Corps Production Plants, Navy FRCs, and Air Force ALCs are all referred to
as depots in this report. This review does not include Navy public shipyards, which are not
operated using the Navy Working Capital Fund. Similarly, our review does not include the
Army Working Capital Fund, which did not receive specific appropriations through the
CARES Act.
3GAO, COVID-19: Opportunities to Improve Federal Response and Recovery Efforts,
GAO-20-625 (Washington, D.C.: June 25, 2020).
4We are conducting this work based on your request, as well as oversight authority
provided to GAO in section 19010 of the CARES Act, Pub. L. No. 116-136, 134 Stat. 281,
580 (March 27, 2020).
Page 1 GAO-21-103 Depot Maintenance
report (1) describes how the COVID-19 pandemic impacted Marine
Corps, Navy, and Air Force depots’ productivity; (2) examines the extent
to which depots took action in response to the COVID-19 pandemic that
reflected key practices to support the workforce, continue operations, and
improve crisis response; and (3) examines the extent to which Navy and
Air Force WCF cash management policy ensured financial solvency and
reflected current guidance.
For our first objective, we analyzed information on measures of depot
productivity, such as planned and actual revenues for fiscal year 2020.
We also analyzed information on other measures that can impact depot
productivity, such as the number of hours of leave depot personnel took
during fiscal year 2020. We then discussed this information with Marine
Corps, Navy, and Air Force officials. During our discussions we focused
on understanding whether and how COVID-19 exacerbated challenges to
depot productivity that we identified in our prior reports and what other
factors, if any, may have also impacted depot productivity. 5
For our second objective, we compared actions taken by depots against
seven key practices and 30 supporting practices we identified as relevant
to depot responses to COVID-19. To identify the key and supporting
practices, we reviewed guidance to executive branch agencies, DOD
instructions and memorandums, our prior reports, and Standards for
Internal Control in the Federal Government. 6 We summarized the seven
key practices into three areas: support the workforce, continue
operations, and improve crisis response, as shown in figure 1 below.
5The Related GAO Products page at the end of this report includes our prior reports
related to DOD depot maintenance.
6We identified seven key practices applicable to DOD depot response to the COVID-19
pandemic from prior GAO products such as GAO, Federal Workforce: Key Considerations
for Agencies Returning Employees to Workplaces during Pandemics, GAO-20-650T
(Washington, D.C.: June 25, 2020); GAO, Military Depots: DOD Can Benefit from Further
Sharing of Best Practices and Lessons Learned, GAO-20-116 (Washington, D.C.: Jan. 30,
2020); and GAO, Standards for Internal Control in the Federal Government,
GAO-14-704G (Washington, D.C.: Sept. 10, 2014). We then reviewed guidance to
executive branch agencies and our prior products to identify 30 specific supporting
practices; these documents included the Office of Management and Budget
Memorandum, Updated Guidance on Telework Flexibilities in Response to Coronavirus
(March 12, 2020); DOD documents, including DOD Instruction 6200.03, Public Health
Emergency Management (PHEM) Within The DOD (March 28, 2019); DOD Instruction
1100.22, Policies and Procedures for Determining Workforce Mix (Apr. 12, 2010)
(Incorporating Change 1 Dec.1, 2017); and DOD Instruction 3020.42, Defense Continuity
Plan Development (Feb. 17, 2006) (Certified current as of Apr. 27, 2011).
Page 2 GAO-21-103 Depot Maintenance
Figure 1: Key Practices to Support the Workforce, Continue Operations, and Improve Crisis Response during a Pandemic
We evaluated how Marine Corps, Navy, and Air Force depots responded
to COVID-19 by comparing depot management actions to 30 supporting
practices we identified. Specifically, we used a scorecard methodology to
determine the extent to which each of the depots addressed, partially
addressed, or did not address the seven key practices based on the
extent to which the depots took actions to address the 30 supporting
practices. 7 To identify the actions, we reviewed documents related to
depot responses to COVID-19, and interviewed Marine Corps, Navy, and
7Each of the seven key practices was scored based on the evidence available at the time
of our site visits according to the following criteria: “Addressed” was defined as having
addressed most, but not necessarily all of the supporting practices; “Partially addressed”
was defined as having addressed some but not more than half of the supporting practices;
and “Not addressed” was defined as not having addressed any of the supporting
practices.
Page 3 GAO-21-103 Depot Maintenance
Air Force depot officials during site visits conducted in August and
September 2020. We reviewed the results of our analysis with the military
services and incorporated technical comments as appropriate.
For our third objective, we compared Navy WCF and Air Force WCF
monthly cash balances for fiscal year 2020 to the respective Navy and Air
Force cash requirements. 8 In addition, we discussed congressional and
management actions taken to ensure the WCFs remained solvent in fiscal
year 2020 with DOD, Navy, and Air Force officials responsible for WCF
cash management. We also reviewed documentation on and discussed
with these officials the potential solvency of the Navy WCF and Air Force
WCF for fiscal year 2021. We reviewed relevant DOD guidance, including
DOD’s Financial Management Regulation, to determine DOD’s cash
management policy from December 2014 through September 2020. We
also reviewed Standards for Internal Controls in the Federal Government
to identify guidance for documenting DOD policies. 9 We determined that
the control activities component of internal control was significant to this
objective, along with the related principle that management should
implement control activities through policies. We compared DOD cash
management policy included in DOD’s Financial Management Regulation
from December 2014 through September 2020 to selected DOD guidance
and relevant internal control standards.
We conducted data reliability assessments on the data provided by the
Marine Corps, Navy, and Air Force, including depot productivity data,
depot maintenance data, and data related to DOD WCF cash balances.
To determine whether depot productivity data was reliable, we reviewed
revenue and labor data provided by the depots, and interviewed officials
about the completeness and accuracy of their data. To determine whether
Navy WCF and Air Force WCF cash balance data were sufficiently
reliable, we reviewed our prior reports to determine if any material
weaknesses were reported. We also reviewed recent, relevant data
reliability assessments prepared for our prior work related to depot
8DOD’s Financial Management Regulation requires all DOD working capital funds to
determine upper and lower cash requirements based on budgeted assumptions and
historical trends in order to maintain cash balances necessary to meet both operational
requirements and disbursement requirements. DOD 7000.14-R, Financial Management
Regulation, vol. 2B, chap. 9, § 090103(A)(1) (July 2017 Draft).
9GAO-14-704G.
Page 4 GAO-21-103 Depot Maintenance
maintenance. 10 Based on these efforts, we determined that the data were
sufficiently reliable for the purposes of our objectives. A more detailed
explanation of our scope and methodology can be found in appendix I.
We conducted this performance audit from June 2020 through April 2021
in accordance with generally accepted government auditing standards.
Those standards require that we plan and perform the audit to obtain
sufficient, appropriate evidence to provide a reasonable basis for our
findings and conclusions based on our audit objectives. We believe that
the evidence obtained provides a reasonable basis for our findings and
conclusions based on our audit objectives.
The Marine Corps, Navy, and Air Force operate eight depots using Navy
Background and Air Force WCF, respectively, that are crucial to sustaining military
readiness (see figure 2).
10GAO, Military Depots: The Navy Needs Improved Planning to Address Persistent
Aircraft Maintenance Delays While Air Force Maintenance Has Generally Been Timely,
GAO-20-390 (Washington, D.C.: June 23, 2020); and GAO, Depot Maintenance: DOD
Should Adopt a Metric That Provides Quality Information on Funded Unfinished Work,
GAO-19-452 (Washington, D.C.: July 26, 2019).
Page 5 GAO-21-103 Depot Maintenance
Figure 2: Depots Operated Using Navy and Air Force Working Capital Funds to Sustain Weapon Systems
Depots are government-owned, government-operated industrial
installations that maintain, overhaul, and repair a multitude of complex
military weapon systems and equipment for DOD. The Navy WCF
finances operations at two Marine Corps Production Plants and three
Navy FRCs. The Air Force WCF finances operations at three Air Force
ALCs. During fiscal year 2020, these 8 depots employed about 40,000
civilians, and completed work valued at about $10 billion, according to our
analysis of DOD data.
Page 6 GAO-21-103 Depot Maintenance
Roles and Responsibilities The depots are part of a larger, DOD-wide logistics enterprise that
of Depots and Related involves different organizations, as shown in figure 3.
DOD Organizations
Figure 3: Key DOD, Marine Corps, Navy, and Air Force Organizations Related to
Depot Management
Note: This review does not include Navy public shipyards, which are not financed using the Navy
Working Capital Fund.
The Under Secretary of Defense for Acquisition and Sustainment.
This office is responsible for, among other things, ensuring the defense
industrial base, including depots, is robust, secure, resilient, and
innovative.
The Assistant Secretary of Defense for Sustainment. This office
serves as the principal assistant and advisor to the Under Secretary of
Defense for Acquisition and Sustainment on material readiness. Among
other responsibilities, the Assistant Secretary of Defense for Sustainment
prescribes policies and procedures on maintenance, materiel readiness,
and sustainment support.
The Deputy Assistant Secretary of Defense for Materiel Readiness.
This office is responsible for establishing and updating policies and
programs to maintain the desired levels of weapon systems and military
equipment readiness to accomplish the Department’s missions.
Overview of Navy and Air The Navy and Air Force use WCFs to finance the provision of goods and
Force Working Capital services such as depot maintenance. The Navy and Air Force WCFs are
revolving fund accounts established with an initial appropriation to control
Fund Operations
Page 7 GAO-21-103 Depot Maintenance
and account for the cost of programs and work performed by DOD. 11
WCFs are used by the depots to provide goods and services (depot
maintenance, supply parts, transportation, research and development) to
a variety of customers, including the Marine Corps, Navy, Air Force,
Army, non-DOD agencies, and foreign countries. Unlike businesses,
working capital funds are intended to operate on a break-even basis,
neither incurring gains nor losses over time. Ongoing WCF activities are
financed through customer payments for goods or services provided.
Marine Corps, Navy, and Air Force depots finance customer orders
through their WCFs. Customers then reimburse the depots, primarily
using appropriated amounts. The flow of funding between depot
customers and the Navy and Air Force WCFs is illustrated in figure 4.
Figure 4: Overview of Navy and Air Force Working Capital Fund Operations
Note: This review does not include Navy public shipyards, which are not financed using the Navy
Working Capital Fund.
DOD’s cash management policy requires the WCFs to maintain a positive
cash balance necessary to meet operating, capital investment, and other
requirements throughout the year and to support requirements into the
subsequent year. 12 Higher-than-expected costs or lower-than-expected
sales can result in lower cash balances. Similarly, lower-than-expected
costs or higher-than-expected customer sales during the fiscal year may
11To control and account more effectively for the cost of programs and work performed,
pursuant authorization from 10 U.S.C. § 2208, the Secretary of Defense may establish
working capital funds to finance inventories of designated supplies and to provide working
capital for industrial- and commercial-type activities that provide common services within
or among DOD components.
12DOD 7000.14-R, Financial Management Regulation, vol. 2B, chap. 9, § 090103(A)(1)
(July 2017 Draft).
Page 8 GAO-21-103 Depot Maintenance
generate excessive cash gains. 13 Basically, WCFs should maintain
minimum cash balances sufficient to pay bills. If balances are projected to
drop below DOD’s lower cash requirement, DOD regulations provide
options to generate cash by using, for example, out-of-cycle rate
adjustments, surcharges, and reprogramming actions. For more
information on DOD Working Capital Funds see appendix II.
COVID-19
Exacerbated
Preexisting
Challenges to Depot
Productivity
Depot Productivity Was Marine Corps, Navy, and Air Force depot productivity was lower than
Lower than Planned planned throughout fiscal year 2020, and the situation was exacerbated
after the onset of the COVID-19 pandemic. Specifically, our analysis of
Throughout Fiscal Year
planned and actual monthly revenues shows that most of the eight depots
2020 in our review did not meet planned monthly revenue goals prior to the
onset of COVID-19 or by the end of fiscal year 2020, as shown in figure 5.
13Each WCF establishes upper and lower cash requirements to manage a range of
operations. WCF cash requirements are developed based on four primary elements: 1)
the rate of disbursements; 2) the range of operations; 3) risk mitigation; and 4) reserves.
The range of operation is the difference between the highest and lowest expected cash
level based on budget assumptions and past experience.
Page 9 GAO-21-103 Depot Maintenance
Figure 5: Marine Corps, Navy, and Air Force Actual Monthly Revenue by Depot as a Percentage of Planned Monthly Revenue
Goals during Fiscal Year 2020
Note: Planned and actual revenue excludes any unbudgeted price increases (known as surcharges)
the services processed during the year.
Marine Corps, Navy, and Air Force officials told us that prior to and
following the onset of COVID-19, their respective depots faced various
challenges meeting their monthly productivity goals for fiscal year 2020.
For example:
• Marine Corps officials told us that when they began fiscal year 2020,
the actual monthly revenues of their production plants were lower than
planned because of reduced demand for maintenance from the other
military services. Officials stated some of the depot workload is
performed by contract labor. Prior to the onset of COVID-19, the
Marine Corps decided not to renew a contract set to expire in the
spring in response to reduced demand. After the onset of COVID-19,
actual revenues remained below planned monthly revenue goals at
Page 10 GAO-21-103 Depot Maintenance
both Marine Corps production plants through the end of fiscal year
2020, in part due to the impact of COVID-19, according to officials.
• Navy officials at both FRC Southeast and FRC Southwest told us that
due to continuing resolutions during the first quarter of fiscal year
2020, they received fewer orders than planned prior to the onset of
COVID-19, and as a result, demand for work was lower than
expected. 14 After the onset of COVID-19, actual revenues remained
below planned monthly revenue goals at FRC Southeast, in part due
to issues affecting the F-18 program. For example, FRC Southeast
officials told us they were on track to meet certain production goals for
the F-18 program by the end of fiscal year 2020, but experienced
production delays because they had a number of employees go out
on leave due to COVID-19. However, FRC East was able to meet its
monthly revenue goals throughout most of fiscal year 2020. FRC
Southwest was able to meet its monthly revenue goals as well by the
end of fiscal year 2020. According to officials, FRC East and FRC
Southwest met revenue goals by coordinating their respective
responses to COVID-19 with their employee unions and by using
various mitigation strategies, such as reassigning personnel,
implementing shift changes, and increasing their use of overtime.
• Air Force officials said a number of factors impacted productivity of
their ALCs during fiscal year 2020. These included reductions to the
Air Force flying hour program for fiscal year 2020, which reduced
demand for the repair of spare parts and in turn revenue levels at the
ALCs, and other issues affecting specific weapon systems. For
example, Air Force officials said that unforeseen corrosion and
structural issues impacted the F-16 program, and parts shortages
impacted both the A-10 and Minute Man III programs. In both cases,
repairs took longer than expected, which impacted depot productivity.
As another example, officials at Warner Robins ALC told us they
began the fiscal year completing repairs on several C-5 aircraft that
were not finished during fiscal year 2019, but did not result in revenue
during fiscal year 2020. In addition, officials at Warner Robins ALC
stated that issues associated with F-15 fuselages impacted
productivity prior to the onset of COVID-19. After the onset of COVID-
19, actual revenues remained below planned monthly revenue goals
14During fiscal year 2020, DOD operated under a series of continuing resolutions, a type
of appropriation, until passage of the Consolidated Appropriations Act, 2020, Pub. L. No.
116-93 (Dec. 20, 2019). When action on regular appropriation bills is not completed before
the beginning of the fiscal year, a continuing resolution may be enacted in a bill or joint
resolution to provide funding for the affected agencies for the full year, up to a specified
date, or until their regular appropriations are enacted.
Page 11 GAO-21-103 Depot Maintenance
at all three ALCs for the remainder of fiscal year 2020. Air Force
officials attributed difficulty meeting revenue goals in fiscal year 2020
to the impact of COVID-19.
COVID-19 Exacerbated We have previously reported that a variety of challenges can affect depot
Challenges the Eight productivity or performance. These challenges included not having
personnel with the right skills, not having the right facilities or equipment
Depots Were Already
to perform depot maintenance, and not having adequate information
Facing to Their technology, among other things. 15 At the time of our site visits in August
Productivity and September 2020, officials at all eight depots told us they were facing
a number of challenges to their productivity at the onset of COVID-19,
and we found that COVID-19 exacerbated some of those challenges, as
shown in figure 6.
Figure 6: Challenges to Depot Productivity Exacerbated by COVID-19
At all eight of the depots, COVID-19 exacerbated productivity challenges
the depots were already facing with workforce and parts and materials,
according to our analysis. In addition, at half of the depots we found that
15See, for example, GAO-20-116 and GAO, Military Depots: Actions Needed to Improve
Poor Conditions of Facilities and Equipment that Affect Maintenance Timeliness and
Efficiency, GAO-19-242 (Washington, D.C.: Apr. 29, 2019). The Related GAO Products
page at the end of this report includes other reports related to DOD depot maintenance.
Page 12 GAO-21-103 Depot Maintenance
COVID-19 exacerbated challenges they were already facing with
unplanned work and information technology issues. The following are
examples of what Marine Corps, Navy, and Air Force officials told us
regarding these issues:
• Workforce. Officials from all eight depots told us COVID-19
exacerbated challenges they were already facing with their workforce
when the pandemic began, such as personnel shortages or not
having personnel with the right skills to perform work. Marine Corps,
Navy, and Air Force officials told us that, in order to protect personnel
with certain medical conditions or at higher risk of developing a severe
illness due to COVID-19, they sent personnel home or placed them on
weather and safety leave at the onset of COVID-19. 16 In some cases,
such actions affected a significant percentage of a depot’s workforce.
For example, Marine Corps officials told us that, in order to protect
their workforce, they shut down their production plant in Albany,
Georgia for 8 weeks and substantially reduced operations at their
production plant in Barstow, California for 6 weeks. Similarly, officials
at both Oklahoma City ALC and Warner Robins ALC told us they sent
about half their workforce home on weather and safety leave in March
2020, and did not return to normal levels until May.
Additionally, a number of other issues contributed to the availability of
staff at the depots to perform work. Navy and Air Force officials told
us that personnel were subject to state requirements limiting how far
they could travel for official government business without having to
self-quarantine, sometimes for up to 2 weeks. According to Air Force
officials, such requirements, in addition to the closure of schools,
daycares, and other businesses that affected the communities where
the depots are located, also contributed to personnel taking more
leave than planned or being absent. Navy and Air Force officials also
told us that personnel were sometimes sent home or placed on leave
due to various state or local stay-at-home requirements. Such
requirements contributed to the loss of almost 600,000 production
hours at Warner Robins ALC during fiscal year 2020. According to our
analysis, personnel at the eight depots in our review took more than 3
million hours of leave—almost 80 hours per employee—during fiscal
16Weather and safety leave is a type of paid administrative leave available to federal
civilian employees at an agency’s discretion. When an agency determines that employees
cannot safely travel to and from, or perform work at their normal worksite or other
approved location due to emergency situations, weather and safety leave is permitted. 5
U.S.C. § 6329c(b).
Page 13 GAO-21-103 Depot Maintenance
year 2020 that the Marine Corps, Navy, and Air Force officials
attributed to COVID-19.
• Parts and materials. Officials said that COVID-19 also exacerbated
challenges all eight depots were already facing with parts and
materials when the pandemic began, such as not being able to find
the right spare parts or materials or facing delays obtaining parts or
materials. Specifically, Marine Corps, Navy, and Air Force officials told
us that following the onset of COVID-19, depots experienced
disruptions to their respective supply chains. For example, Marine
Corps officials told us they experienced delays obtaining certain parts
for Amphibious Assault Vehicles. Navy officials also told us they
experienced delays, which were sometimes only minor, obtaining
deliveries from contractors. In the case of the Air Force, officials
described a range of issues, from difficulty obtaining certain materials
or spare parts, to difficulty gaining access to military bases for delivery
drivers. For example, officials told us parts suppliers for the KC-135
program shut down and that they experienced delays obtaining
certain raw materials for parts from Mexico due to border closures.
• Unplanned work and information technology infrastructure.
Officials from four of the eight depots also told us COVID-19 either
exacerbated challenges they were already facing responding to
unplanned work, such as receiving new requirements, or with their
information technology infrastructure. For example, Air Force officials
told us they needed to respond to unplanned work, such as diverting
personnel to clean workspaces during the pandemic, and had to
reschedule depot repairs for a number of weapon systems as a result.
As another example, FRC Southeast officials told us that following the
onset of COVID-19 they had to develop new software applications,
such as a SharePoint site, to help personnel communicate and share
information while teleworking. 17
17SharePoint is a Microsoft web-based tool designed to store, organize, share, and
access information.
Page 14 GAO-21-103 Depot Maintenance
We found that depot management actions related to supporting the
Marine Corps, Navy, workforce at the eight depots in our review generally addressed key
and Air Force Actions practices to consider local conditions and balance work duties and
personal needs, and partially addressed key practices for providing
Supported the Depot sufficient information technology. However, we found that Marine Corps,
Workforce during Navy, and Air Force depots differed in their approach related to
continuing operations and the key practices of identifying mission-
COVID-19, but Did essential personnel and maintaining standards to ensure performance. In
Not Fully Reflect Key addition, the depots were not consistent in their approach related to
informing future crises and the key practices of improving the ongoing
Practices for crisis response or recording lessons learned during the COVID-19
Continuing pandemic.
Operations and
Informing Future
Crises
Marine Corps, Navy, and Marine Corps, Navy, and Air Force depot management generally
Air Force Depot supported their respective workforce in response to COVID-19 by taking
actions to consider local conditions, balance work duties and personal
Management Generally
needs, and provide sufficient information technology to support remote
Supported Their work to the extent possible, according to our analysis. These actions
Respective Workforce in generally addressed key practices to consider local conditions and
Response to COVID-19 balance work duties and personal needs, and partially addressed key
practices for providing sufficient information technology, as shown in
figure 7.
Figure 7: GAO’s Assessment of Depot Actions Related to Key Practices to Support the Workforce in Response to the COVID-
19 Pandemic
Page 15 GAO-21-103 Depot Maintenance
Consider local conditions. Every depot we met with considered local
conditions in its response to COVID-19, and Marine Corps, Navy, and Air
Force depot management stated they had the authority they needed to
respond to local conditions. Depot management officials stated they
adjusted operating schedules and work processes to protect personnel.
For example, according to Marine Corps officials, Dougherty County,
Georgia, had the third highest rate of COVID-19 per capita in the United
States during March and April 2020, and Marine Corps depot
management decided to close the production plant in Albany, Georgia, for
8 weeks to protect depot personnel. Marine Corps depot management
officials also decided to substantially reduce operations at the production
plant in Barstow, California for 6 weeks as they had begun to see cases
there, and the full extent of survivability and lethality of COVID-19 was
unknown. Marine Corps officials said that in hindsight depot personnel
seemed to be safer reporting to work than the general population, and
reductions to depot productions may have an adverse effect on
readiness. Marine Corps officials gradually returned their depots to full
operational capacity by the end of May 2020. Navy and Air Force officials
stated that production was slowed due to COVID-19, but stated that they
could not estimate COVID-19’s impact on readiness.
Balance work duties and personal needs. Depot management
adjusted operating schedules in response to COVID-19. For example, the
three Navy FRCs and the three Air Force ALCs shifted operating
schedules for many personnel to allow social distancing and minimize
exposure for high risk personnel. This was typically done using staggered
shifts or rotational schedules among the personnel to balance personnel
work duties at the depots with their personal responsibilities. For
example, according to officials at Navy FRC Southwest, their personnel
collaborated to adjust schedules for people with school age children or
other competing priorities.
To provide a safe environment for onsite personnel, depot management
adjusted facilities and work processes to address guidelines for social
distancing and used their own personnel to enhance safety, according to
officials. Specifically, depot personnel installed transparent acrylic
sheeting and work station dividers; marked safe social distances between
work stations; and kept common areas clean. In addition, depot
management often adapted their own processes to manufacture personal
protective equipment and sanitizing liquids. Moreover, some depot
management required additional training to address COVID-19. For
example, officials at Warner Robins ALC stated they created training for
safety technicians so they would know their roles and responsibilities
Page 16 GAO-21-103 Depot Maintenance
during COVID-19. Depots generally erred on the side of caution with
respect to considering the long-term effects on personnel and the
operating environment. For example, Marine Corps officials stated that
their decisions were made out of an abundance of caution to protect the
workforce. Similarly, Oklahoma City ALC officials stated that in hindsight,
they sent a larger portion of the workforce home early in their response to
COVID-19 than may have been necessary to protect personnel.
Provide sufficient information technology. After the national onset of
the COVID-19 pandemic in March 2020, all eight depots in our review
expanded the use of telework and adapted to overcome information
technology challenges to the extent possible, such as shortages of
laptops, virtual private network bandwidth, and lack of guidance for
teleworking. 18
However, network connectivity, hardware, and security problems were
common among all eight depots we reviewed, which affected their
respective transitions to the remote environment, according to officials.
For example:
• During the initial transition to telework, many personnel were unable
to log onto the Air Force Network or access the Virtual Private
Network, which diminished overall productivity for several weeks.
• Ogden ALC sent a notice encouraging supervisors to maximize the
utilization of telework, but this was a challenge for the depot because
the bandwidth and internet connectivity was not robust enough to
support remote telework.
• FRC Southwest was not prepared to support maximum telework
during the onset of COVID-19 because they did not have laptops for
about 40 percent of staff working remotely. FRC Southwest adjusted
processes during the first several weeks of the pandemic to allow
personnel to connect remotely using desktop or personal computers.
• Marine Corps, Navy, and Air Force depot officials worked, to the best
of their ability, to provide hardware and address security concerns for
telework eligible personnel as the response to COVID-19 proceeded,
according to depot officials.
18According to depot officials, the depot process often includes hands-on work that cannot
be completed remotely. Personnel that could not work remotely adjusted schedules,
breaks, and work processes to minimize risk and to limit the transmission of COVID-19.
Page 17 GAO-21-103 Depot Maintenance
In June 2020, we testified that agencies should consider the extent to
which their information technology, including technical support and
security, is adequate to support increased remote work during a
pandemic, and whether procedures and standards are in place that
ensure telework does not diminish organizational and employee
performance. 19 In addition, the DOD Inspector General announced a
review of DOD Information Technology and communications during
COVID-19 on June 15, 2020.
Marine Corps, Navy, and We found that Marine Corps, Navy, and Air Force depot management did
Air Force Depot not consistently take actions that addressed key practices for continuing
operations during COVID-19, as shown in figure 8. For example, officials
Management Did Not
told us that all depot personnel were identified as mission-essential.
Consistently Address Key However, in response to COVID-19, Marine Corps, Navy, and Air Force
Practices for Continuing depot management did not always ensure that personnel were aware of
Operations during COVID- their mission-essential status, that roles and responsibilities were clear, or
19 that organizational and employee performance was maintained.
Figure 8: GAO’s Assessment of Depot Actions Related to Key Practices to Continue Operations in Response to the COVID-19
Pandemic
Identify mission-essential personnel. The roles and responsibilities of
depot personnel as mission-essential personnel was sometimes unclear
to depot leadership and personnel. According to DOD, defense industrial
base personnel such as those employed at DOD depots are mission-
essential and expected to maintain normal work schedules. The Under
Secretary of Defense (Acquisition and Sustainment) issued a
memorandum on March 20, 2020 notifying the Defense Industrial Base,
19For more information see GAO, Federal Workforce: Key Considerations for Agencies
Returning Employees to Workplaces during Pandemics, GAO-20-650T (Washington,
D.C.: June 25, 2020).
Page 18 GAO-21-103 Depot Maintenance
which includes DOD depots, that they were identified as a critical
infrastructure sector by the Department of Homeland Security and
pursuant to guidelines established by the President, the Defense
Industrial Base workforce had a special responsibility to maintain their
normal work schedules. 20 However, Marine Corps, Navy, and Air Force
officials at all eight depots we reviewed characterized guidance during
COVID-19 as coming from multiple sources, rapidly changing, or
inconsistently applied. For example:
• Marine Corps, Navy, and Air Force officials said that depot-specific
guidance was provided later than they would have liked to inform their
response to a long-term crisis affecting the entire depot workforce,
such as the COVID-19 pandemic. For example, Marine Corps depot
leadership stated they were aware of the Under Secretary of Defense
(Acquisition and Sustainment) memorandum of March 20, 2020 and
distributed the memo to Marine Corps depot leadership on March 23,
2020—the same day Marine Corps depots reduced or paused
operations to protect the workforce.
• Officials at FRC East and FRC Southeast told us many of their
personnel were confused by guidance or unaware they were
considered mission-essential. Some Navy and Air Force officials were
aware of the March 20, 2020, memorandum, but interpreted it to
protect the workforce, and adjusted work schedules to achieve
scheduled maintenance as needed.
Depot officials at more than half the depots we reviewed stated civilian
depot personnel did not initially understand the distinction between
emergency-essential personnel expected to respond during natural
disasters, and mission-essential personnel expected to continue to work
during a public health emergency, such as COVID-19. During a natural
disaster or adverse weather events all non-emergency essential/mission-
critical personnel are often expected to remain away from the workplace.
For example, Oklahoma City ALC and FRC East officials were familiar
with recovering from short-term disruptions to operations, such as
closures, due to having either guidance on responding to snow storms,
tornadoes, or hurricanes. Officials also stated that personnel are
accustomed to using Office of Personnel Management dismissal and
20Under Secretary of Defense (Acquisition and Sustainment) Memorandum, Defense
Industrial Base Essential Critical Infrastructure Workforce (March 20, 2020).
Page 19 GAO-21-103 Depot Maintenance
closure announcements for such short-term events. 21 However, officials
stated many depot personnel were not aware they were expected to
report to work in response to COVID-19. For example, officials stated that
civilian personnel at the Navy’s FRC East were confused by guidance
tailored to uniformed Marine Corps personnel and the use of an adapted
hurricane response plan during the initial weeks of COVID-19. 22
Depot leadership made efforts to resolve confusion among personnel by
consolidating information from multiple sources, leveraging social media,
and using new and existing platforms to clarify authoritative guidance and
reinforce personnel responsibilities, according to officials. Officials stated
daily depot leadership meetings began by mid-March 2020, and some
depots established new coordination forums to deconflict guidance
coming from multiple sources, including DOD, the Centers for Disease
Control and Prevention, health officials, and state and local government.
To assist management with this effort, some depots formed COVID-19
response teams that included depot leadership, according to officials. For
example, FRC East established a Response Management Center by the
end of March 2020 to serve as a guidance clearinghouse and to respond
to questions from employees. In addition, depot leadership made daily
efforts to clarify guidance to resolve confusion during the first several
weeks after the effects of COVID-19 began to affect depot operations in
March 2020. For example, FRC Southeast officials stated that they
shifted to weekly, bi-weekly, or as-needed updates as their response to
the COVID-19 pandemic stabilized.
Maintain standards to ensure performance. We have previously
reported on the need to improve performance measures and planning at
21The United States Office of Personnel Management provides agencies guidance on how
to continue their important mission during emergency situations. Weather and Safety
Leave, 5 C.F.R., pt. 630.
22Specifically, FRC East is a Navy FRC located on a Marine Corps installation and
employing mostly civilian personnel and officials stated that Navy guidance is tailored to
uniformed military personnel. In addition, according to officials, the use of an adapted
hurricane response plan confused personnel because the plan for natural disasters often
requires personnel to stay away from work. As a result, some depot personnel did not
understand the distinction between emergency-essential personnel, and their own status
as mission-essential personnel.
Page 20 GAO-21-103 Depot Maintenance
DOD depots. 23 During reduced operations at Marine Corps depots in
March and April of 2020, officials stated performance could not be
evaluated for employees if they were not reporting for work. Otherwise,
depot officials at Marine Corps, Navy, and Air Force depots stated they
tracked their organizational performance using existing performance
measures.
In order to ensure that organizational goals were communicated and
employee performance was not diminished, depot management stated
they changed the way expectations were communicated with supervisors
and personnel depending on whether people were physically present or
working remotely. In addition, depots took extra steps to prevent abuse of
leave policies during COVID-19. For example, Oklahoma City ALC
developed requirements to have their personnel stay in touch with their
supervisor while on leave. The requirement was that personnel had to call
their supervisor every Tuesday and Thursday to check in. At FRC
Southwest, to meet productivity goals, depot officials stated that they
postponed or cancelled classroom training, travel, and meetings for
personnel to focus on direct operations. Supervisors at FRC Southeast
stated they met twice weekly to monitor production and to ensure
productivity.
According to DOD guidance, risk-reduction planning undertaken by DOD
components and activities should include a detailed capability
assessment to identify resources and capabilities to plan for, respond to,
recover from, and mitigate the effects of hazardous or threatening
incidents. 24 Further, DOD materiel maintenance programs should adopt
business practices and quality management processes to continuously
improve maintenance operations and production. 25 Emergency
management plans should include clearly defined functional roles,
responsibilities, and lines of authority for all personnel, organizations, and
23See GAO, Military Depots: Army and Marine Corps Need to Improve Efforts to Address
Challenges in Measuring Performance and Planning Maintenance Work, GAO-20-401
(Washington, D.C.: July 16, 2020), and GAO, Military Depots: The Navy Needs Improved
Planning to Address Persistent Aircraft Maintenance Delays While Air Force Maintenance
Has Generally Been Timely, GAO-20-390 (Washington, D.C.: June 23, 2020).
24DOD Instruction 6055.17, DOD Emergency Management (EM) Program (Feb. 13, 2017)
(incorporating Change 3, June 12, 2019).
25DOD Directive 4151.18, Maintenance of Military Materiel (Mar. 31, 2004) (incorporating
Change 1, Aug. 31, 2018).
Page 21 GAO-21-103 Depot Maintenance
agencies, as well as a communication plan through all phases of an
emergency.
However, DOD has not developed guidance or a communication plan to
ensure that depot management and civilian personnel are aware of their
mission-essential status and the need to support readiness during a long-
term crisis affecting the depot workforce prior to the COVID-19 pandemic.
As a result, depot management improvised to support the workforce and
continue operations, which resulted in some depots pausing or reducing
operations, and others shifting schedules, rather than maintaining normal
work schedules. Officials at more than half of the depots we visited
agreed that having clear guidance in place, and communicating that
guidance before the crisis occurred would have helped them continue
operations and minimize confusion among the workforce. Unless
sufficient guidance suitable to a long-term crisis impacting the depot
workforce is developed and paired with a communication plan in advance
of the crisis, the military services may be at risk of diminishing readiness
during future crises impacting the depot workforce.
Marine Corps, Navy, and Marine Corps, Navy, and Air Force depots we reviewed did not
Air Force Depots Did Not consistently share information or record lessons learned during COVID-
19 to inform future crisis response, as shown in figure 9. The depots
Consistently Share
generally shared information within their own peer community, and
Information or Record sometimes developed innovative solutions to support operations, but the
Lessons Learned during degree to which depots shared best practices during the response to
COVID-19 to Inform COVID-19 was not consistent.
Future Crisis Response
Figure 9: GAO’s Assessment of Depot Actions Related to Key Practices to Improve Crisis Response during and after the
COVID-19 Pandemic
Page 22 GAO-21-103 Depot Maintenance
Improve ongoing crisis response. We previously reported that the
unprecedented outbreak of COVID-19 quickly spread around the globe. 26
Depot officials responded by adapting existing contingency plans to
COVID-19. For example, Oklahoma City ALC and FRC East officials
stated they were familiar with plans to recover from disruptions to
operations or closures from severe weather events, and adapted those
plans and exercises to COVID-19 to some extent. However, according to
depot officials, existing contingency plans—including continuity of
operations plans (COOPs)—and exercises for natural disasters were
geared to short-term events and not well-suited to the COVID-19
pandemic. For example:
• Officials at FRC East stated many of their personnel were confused
by the amount of guidance being issued from multiple sources at the
beginning of their response to the COVID-19 pandemic.
• Officials at FRC Southeast told us that many of their personnel were
accustomed to COOPs that required emergency-essential personnel
to report to work, but required other personnel to remain at home. In
addition, the COOPs and exercises were generally geared to
hurricanes.
• Oklahoma City ALC officials conducted tabletop pandemic exercises
and considered adapting existing pandemic response plans to
COVID-19. Specifically, officials stated prior exercises did not involve
all depot personnel and was not suited to COVID-19 as it required
gathering all depot personnel together in one location at the same
time to get vaccinated. This would prevent social distancing for
COVID-19, which did not have a vaccination available during fiscal
year 2020.
• Navy and Air Force depots told us pandemic exercises on bases that
host depots generally involved only medical personnel, and focused
on containment and mitigation for short-term crises involving chemical
and biological hazards. As such, officials stated the exercises were
not sufficient to prevent confusion regarding actions to be taken by
personnel during a continuing pandemic.
We previously reported that depots share best practices and lessons
learned through informal networking, such as personal contacts. 27 This
continued to be true during COVID-19. We found that depot officials
26GAO-20-625.
27GAO-20-116.
Page 23 GAO-21-103 Depot Maintenance
shared information to improve the response to COVID-19 by contacting
peers in working groups and using existing coordination mechanisms. For
example:
• FRC Southeast tracked information on what they were doing on a
weekly basis and coordinated aspects of their work with other FRCs.
• FRC Southeast worked with FRC Southwest to develop a tool to
capture information on COVID-19 impacts and used a committee
structure to make decisions and implement necessary changes.
According to officials at Navy FRC Southeast, the changes supported
by the new tool and meetings across FRCs to focus on changes to
benefit the workforce helped minimize any adverse impact on
production lines from COVID-19.
• Air Force officials stated that maintenance groups at the three Air
Force ALC’s did not have a formal forum for sharing COVID-19 best
practices, but noted that some information was shared between the
groups in their usual production meetings.
According to depot officials, they did not share best practices across
depots being managed by other military services during the first few
months of COVID-19. Depot officials said they reached out to other
military services’ depot officials to some extent later in the pandemic. For
example, Navy officials at FRC Southeast told us that they contacted
Corpus Christi Army Depot to discuss mitigation efforts for COVID-19
after restrictions related to COVID-19 were eased in the summer of 2020.
Despite their lack of plans and exercises to prepare for a long-term crisis
affecting the depot workforce, depot officials stated they collaborated with
medical personnel to cultivate an understanding of what was required to
respond to COVID-19 cases at their locations and how to minimize the
spread of COVID-19 through the use of contact tracing and contamination
containment. According to officials, the changes they made to operations
provided benefits with respect to personnel safety, and additional
improvements to operations discovered during the response to COVID-19
may benefit routine operations moving forward. For example, the use of
flexible schedules such as variable shifts and telework increased depot
productivity for some systems or prevented further reductions to
productivity from the COVID-19 pandemic.
Use lessons learned to inform future responses. Officials stated that
they realized they needed to modify pandemic plans and contingency
plans to incorporate what they had learned from responding to COVID-19.
Page 24 GAO-21-103 Depot Maintenance
While officials at all of the depots we reviewed have informally compiled
lessons learned to some extent, they have not formally documented
lessons learned, or revised existing contingency plans and crisis
response exercises. For example:
• Marine Corps officials stated they documented some lessons learned,
and know that incorporating them in planning documents would be
beneficial to them.
• Navy FRC officials stated they discussed lessons learned during
coordination forums across depots, but have not received guidance to
record them formally and have not done so.
• Air Force ALC officials also informally noted lessons learned from
COVID-19, and acknowledged they would like to adjust their COOP
and pandemic response plans, and pandemic exercises, but have not
yet done so.
• Marine Corps, Navy, and Air Force officials stated that new exercises
suited to a crisis affecting the entire depot workforce would be useful.
We have previously reported that DOD depots can benefit from sharing
best practices and lessons learned. 28 DOD and service-level guidance
establishes policies for the collection, validation, and dissemination of
lessons learned to support sustainment, among other goals. 29 DOD and
military service instructions also support documenting lessons learned to
inform crisis response. 30 For example, Navy and Air Force require
lessons learned from COOP exercises to be documented and distributed
as appropriate to allow modifications and updates to COOP plans. COOP
planning should enable operational capability to continue with limited or
no impact to mission execution, should an event or other disruption occur.
In addition, COOP plans that reflect a large percentage of the workforce
28GAO-20-116.
29Chairman of the Joint Chiefs of Staff Instruction 3150.25G, Joint Lessons Learned
Program (Jan. 31, 2018); Office of the Chief of Naval Operations (OPNAV) Instruction,
3500.37D, Navy Lessons Learned Program (June 20, 2018); Marine Corps Order 3504.1,
Marine Corps Lessons Learned Program (MCLLP) and the Marine Corps Center for
Lessons Learned (MCCLL) (July 31, 2006); Air Force Instruction 10-1302, Air Force
Lessons Learned Program (July 30, 2019).
30DOD, Civilian Human Capital Guide for Pandemic Planning (September 2007); OPNAV
Instruction 3030.5C, Navy Continuity of Operations Program and Policy (Apr. 22, 2019);
and Air Force Instruction 10-208/Air Force Materiel Command Supplement, Continuity of
Operations (COOP) Program (Feb. 21, 2020).
Page 25 GAO-21-103 Depot Maintenance
geographically dispersed and working remotely must be developed and
exercised.
Despite these requirements, DOD has not ensured that lessons learned
from COVID-19 impacting depot maintenance are recorded. In addition,
the Marine Corps, Navy, and Air Force have not updated contingency
plans specific to depots and developed exercises to support productivity
during long-term crises that affect the depot workforce. Marine Corps,
Navy, and Air Force depot leadership agree that incorporating lessons
learned from the COVID-19 pandemic in depot-specific contingency plans
would be helpful. Recording the lessons learned from COVID-19, and
updating and exercising contingency plans incorporating those lessons
learned, will help the depots be more capable of protecting the workforce
and maintaining depot productivity.
Congress, Navy, and
Air Force Actions
Ensured the Working
Capital Funds
Remained Solvent,
but DOD’s Cash
Management Policy
Is Not in Published
Regulations
Congressional and Congress, DOD, Navy, and Air Force actions ensured the respective
Management Actions Navy and Air Force WCFs remained solvent for fiscal year 2020. 31 For
Ensured the Navy and Air example, Congress passed the CARES Act in March 2020, which
appropriated $475 million to the Navy WCF and $475 million to the Air
Force Working Capital Force WCF to prevent, position, prepare for, and respond to
Funds Remained Solvent coronavirus. 32 According to Navy and Air Force officials this helped to
for Fiscal Year 2020 address WCF cash shortfalls.
31The Marine Corps Production Plants and Navy FRCs are operated using the Navy
Working Capital Fund.
32Pub. L. No. 116-136, div. B, title III, 134 Stat. 281, 520 (March 27, 2020).
Page 26 GAO-21-103 Depot Maintenance
DOD also implemented management actions to ensure that the WCFs
cash balances would be above the minimum, or lower cash requirement.
For example, in September 2020, DOD transferred a total of about a
billion dollars into the Navy and Air Force WCFs from other DOD
accounts. 33 The Navy and the Air Force also implemented other
management actions discussed below to increase their respective
monthly cash balances.
As a result of these actions, the Navy and Air Force WCFs monthly cash
balances for the end of fiscal year 2020 increased above the lower cash
requirement. These Navy and Air Force management actions also helped
reduce the risk that the respective Navy and Air Force WCFs would
become insolvent during fiscal year 2021. See figure 10 for details.
33A transfer is the shifting of all or part of the budget authority in one appropriation account
to another. Agencies may transfer budget authority only as specifically authorized by law.
Pursuant to authority provided in the Consolidated Appropriations Act, 2020, $1,334
million was transferred into the Air Force, Navy and Army WCFs from the following
accounts: Defense Foreign Currency Fluctuations; Defense-wide WCF; Defense Health
Program; and Army Reserve Operations and Maintenance. Pub. L. No. 116-93, division A,
title VIII, § 8008 (Dec. 20, 2019).
Page 27 GAO-21-103 Depot Maintenance
Figure 10: Navy and Air Force Working Capital Fund Monthly Cash Balances for Fiscal Year 2020
Note: DOD 7000.14-R, Financial Management Regulation, vol.2B, chap. 9 (July 2017 Draft) defines
the minimum cash balance—known as the lower cash requirement—as the balance necessary to
meet operating, capital investment, and other justified requirements throughout the year and to
support continuing requirements into the subsequent year.
Navy Working Capital Fund The Navy WCF monthly cash balances were below the lower cash
Cash Balances for Fiscal Year requirement 10 out of 12 months during fiscal year 2020—from November
2020 2019 through August 2020, according to our analysis. In November 2019,
the Navy WCF fell below the lower cash balance requirement for various
reasons according to Navy officials and documentation. For example:
Page 28 GAO-21-103 Depot Maintenance
• The Navy set prices too low to pay for $937 million in unbudgeted
costs in fiscal year 2020, such as cost of living increases. 34
• Navy officials stated that an additional pay period in November 2019
reduced the monthly WCF cash balance by $430 million.
In March 2020, the Navy WCF monthly cash balance increased after
Congress passed the CARES Act which appropriated $475 million to the
Navy WCF to prevent, position, prepare for, and respond to COVID-19. 35
However, the balance remained below the lower monthly cash
requirement through August 2020, in part, because the Navy performed
less work than anticipated during COVID-19, resulting in decreased cash
collections, according to Navy and depot officials. In addition, the Navy
incurred unplanned expenses during COVID-19 such as personal
protective equipment and additional computers to support increased use
of telework, according to Navy and depot officials.
Navy WCF monthly cash balances improved during the last quarter of
fiscal year 2020 as a result of about $2.4 billion in management actions,
and increased above the lower cash requirement in September 2020.
Management actions included allowing WCFs to apply unbudgeted price
increases (known as surcharges) requiring customers to pay about $844
million to allow WCFs to recoup losses from work performed at depots
and other Navy WCF activities. 36 According to Navy officials, this allowed
them to bill Navy WCF customers at a higher rate for work completed to
pay for unbudgeted costs in fiscal year 2020, such as cost of living
increases. DOD also transferred $731 million from other DOD accounts
into the Navy WCF in September 2020 to increase cash balances.
34Navy officials stated that Navy unplanned costs for fiscal year 2020 included
approximately: (1) $415 million for fiscal years 2019 and 2020 civilian pay increases for
Navy WCF activities that were initially budgeted at zero percent increase per DOD
direction; (2) $167 million for increases in Federal Employees Retirement System costs;
(3) $27 million to accelerate the implementation of the Navy Enterprise Resource Planning
system in fiscal year 2020; and (4) $328 million to pay for unplanned costs associated with
the transfer of the Facilities Engineering Command from the Navy WCF to mission
funding.
35Pub. L. No. 116-136, div. B, title III, 134 Stat. 281, 520 (March 27, 2020).
36In March 2020, the Office of the Under Secretary of Defense (Comptroller) authorized
the Navy Working Capital Fund activities to implement rate surcharges not to exceed $877
million. See DOD, Office of the Under Secretary of Defense (Comptroller), Request to
Implement Fiscal Year (FY) 2020 Rate Surcharges (March 12, 2020).
Page 29 GAO-21-103 Depot Maintenance
Navy officials stated that the Navy WCF cash flow position will remain a
challenge in fiscal year 2021 due to the continued COVID-19 pandemic
and other unbudgeted costs, such as cost of living increases that were
not identified in time to increase fiscal year 2021 customer prices to pay
for these costs. To address these challenges, Navy officials stated the
Navy took several actions before the end of October 2020, including:
• Developing plans to reduce the overhead costs for Navy WCF
activities by 2 percent during fiscal year 2021.
• Establishing a quarterly process for senior leaders to meet and to
review how well depots and other working capital fund activities are
completing work to generate revenue and implement mitigation
strategies and cost reductions as necessary. 37
Even with these actions, the Navy WCF monthly cash balance fell below
the lower cash requirement in December 2020.
Air Force Working Capital The Air Force WCF monthly cash balances were below the lower cash
Fund Cash Balances for Fiscal requirement from October 2019 through February 2020—5 out of 12
Year 2020 months during fiscal year 2020. In March 2020, the CARES Act
appropriated $475 million to the Air Force WCF to prevent, position,
prepare for, and respond to COVID-19. 38 The Air Force WCF cash
balances are affected by Air Force depot and supply operations, as well
as U.S. Transportation Command activities. 39
According to Air Force and U.S. Transportation Command officials and
documentation, the Air Force WCF monthly cash balances were below
the lower cash requirement during fiscal year 2020 for several reasons.
For example:
37Navy officials stated that the WCF Governance Board will be comprised of senior
leaders from the Budget Submitting Offices and chaired by the Director, Department of
Navy Budget/Fiscal Management Division.
38Pub. L. No. 116-136, div. B, title III, 134 Stat. 281, 520 (March 27, 2020).
39The Transportation WCF supports U.S. Transportation Command’s mission to provide
air, land, and sea transportation for DOD in times of peace and war, with a primary focus
on wartime readiness. The Transportation WCF is also used to finance Air Force and joint
training requirements. Although the Transportation WCF is managed on a day-to-day
basis by U.S. Transportation Command, it is part of the Air Force WCF for cash
management purposes.
Page 30 GAO-21-103 Depot Maintenance
• The Air Force overestimated flying hours. This adversely affected Air
Force WCF monthly cash balances because rates charged customers
were inadvertently set too low to cover the costs of overhead, parts,
and material to perform maintenance on customer aircraft in fiscal
years 2019 and 2020. 40
• The Air Force ordered more parts than needed to perform
maintenance on customer aircraft as a result of the overestimation of
flying hours.
• U.S. Transportation Command was not able to support cash
collections from customers for transportation services because
system upgrades in the first half of fiscal year 2020 resulted in two
financial systems not being operational for several months.
The COVID-19 pandemic reduced revenue of the Air Force WCF
beginning in March 2020, according to Air Force officials. Officials also
stated that the COVID-19 pandemic reduced flying hours and revenue
while simultaneously increasing costs for some non-revenue generating
activities, such as additional cleaning and personal protective equipment
at the depots. However, the Air Force WCF monthly cash balances
remained above the lower cash requirements from March through
September 2020 because of CARES Act funding and management
actions to increase cash balances.
Air Force officials stated that they processed approximately $355 million
in rate surcharges at Air Force WCF depot maintenance and supply
activities in fiscal year 2020 to cover losses. These surcharges were paid
for by customers to cover the costs not factored into the rates formulated
prior to the beginning of fiscal year 2020. Furthermore, Air Force officials
stated that the Air Force took action to reduce the amount of money it
expects to spend for parts by over $1.4 billion in fiscal years 2020 and
2021. In September 2020, the Air Force WCF received about $281 million
transferred from other DOD accounts to address the cash shortfall
according to Air Force documentation.
40Air Force supply activities and U.S. Transportation Command develop rates for activities
used to conduct programmed flying training, which generally includes a required number
of sorties, flying hours, and aircrew training to support readiness. Rates are generally
developed approximately 18 months before they go into effect. For more on U.S.
Transportation Command’s management of rates see GAO, Defense Logistics: DOD
Needs to Improve Budget Estimates and Accuracy of Forecasts for Airlift Services,
GAO-18-557 (Washington, D.C.: Sept. 4, 2018).
Page 31 GAO-21-103 Depot Maintenance
Air Force officials stated that the financial condition of the Air Force WCF
should improve in fiscal year 2021 because the Air Force increased
prices supporting its depot maintenance and supply activities for fiscal
year 2021. For example, the Air Force increased the rates it charges its
customers based on planned flying hours by an average of between 15 to
28 percent to cover costs for overhead, parts, and supplies. 41 As a result,
Air Force officials stated that they expect the monthly cash balance for
fiscal year 2021 to remain above the lower cash requirement for the entire
year.
The Navy and Air Force According to the Office of the Under Secretary of Defense (Comptroller)
Use a DOD Working officials, DOD has been managing WCF cash balances in accordance
with the cash management policy in a draft DOD Financial Management
Capital Fund Cash Regulation (FMR) chapter since July 2015. 42 However, DOD has not yet
Management Policy That codified changes to the policy into the officially published chapter of the
Is Not Included in FMR. Specifically:
Published DOD Financial
Management Regulation • DOD WCF cash management policy is included in the FMR volume
2B, chapter 9. This chapter was last formally amended in December
2014. At that time, DOD’s cash management policy stated DOD
WCFs will maintain the minimum cash necessary to meet both
operational requirements and disbursement requirements in support
of a working capital program.
• In July 2015, DOD updated its WCF cash management policy and
revised volume 2B, chapter 9. The revised chapter, however,
remained in draft form and was not formally published in the FMR. 43
According to DOD officials, the draft policy was adopted for use by
WCF managers. The July 2015 draft policy instructed WCFs to
41To develop prices, the Air Force estimated labor, materials, overhead, and other costs
based on anticipated demand for work as projected by customers. Air Force officials
stated that maintenance costs per flying hour have increased since the onset of COVID-
19.
42DOD’s Financial Management Regulation directs statutory and regulatory financial
management requirements, systems, and functions for all appropriated and
nonappropriated, working capital, revolving, and trust fund activities. It is comprised of 20
volumes, each of which contains multiple chapters. Generally, chapters are revised as
necessary rather than whole volumes.
43DOD revised its cash management policy in response to our recommendation that DOD
update the FMR to include guidance on maintaining sufficient cash balances on a daily
basis to avoid a potential Antideficiency Act violation. See GAO, Air Force Working Capital
Fund: Actions Needed to Manage Cash Balances to Required Levels, GAO-14-480
(Washington, D.C.: July 31, 2014).
Page 32 GAO-21-103 Depot Maintenance
maintain at least the minimum cash balance necessary to meet
operating, capital investment, and other justified requirements
throughout the year and to support continuing requirements into the
subsequent year.
• In 2016 and 2017, DOD further revised the cash management policy
as well as chapter 9. However, those changes also remained in draft
form and were not published.
DOD Instruction 5025.01 states that DOD policies should be regularly
maintained, reviewed annually, and revised, changed, or cancelled as
appropriate. 44 The Standards for Internal Controls in the Federal
Government states that management should implement control activities
through policies. 45 Furthermore, management periodically reviews
policies, procedures, and related control activities for continued relevance
and effectiveness in achieving the entity’s objectives or addressing
related risks. However, the Office of the Under Secretary of Defense
(Comptroller) has not published the most recent DOD Working Capital
Fund cash management policy in the DOD Financial Management
Regulation.
According to DOD officials, DOD has not published FMR updates to the
cash management policy since December 2014 due to turnover among
Office of the Under Secretary of Defense (Comptroller) staff, vacancies in
the position responsible for the working capital fund cash management
policy, and delays processing changes through the DOD Office of
General Counsel. However, DOD has had several opportunities to update
the formal policy for WCF cash balances, and has published revisions to
the FMR since 2014. For example, DOD updated and published various
sections of the FMR every month in 2020, with changes affecting many
separate volumes and chapters, according to our analysis. Publishing
guidance enhances transparency regarding DOD WCF cash
management to support Congressional and departmental oversight.
Without published guidance, WCF managers may inconsistently apply
DOD’s cash management policy.
Pandemics like COVID-19 can threaten military readiness, especially if
Conclusions personnel are unable to access DOD depot facilities for weeks or months
to repair and to maintain complex weapon systems and equipment. Prior
44DOD Instruction 5025.01, DOD Issuances Program (Aug. 1, 2016) (incorporating
Change 3, effective May 22, 2019).
45GAO-14-704G.
Page 33 GAO-21-103 Depot Maintenance
to COVID-19, the Navy, Marine Corps, and Air Force faced challenges
maintaining productivity. Depot officials stated that the COVID-19
pandemic exacerbated these challenges including the availability of the
workforce, and parts and materials.
Depot management and personnel at the eight depots in our review
adapted work processes and policies in response to COVID-19,
particularly in supporting the workforce at the depots. However, these
depots struggled to maintain consistent operations—particularly during
the first several weeks of their response to COVID-19. This was partially
due to unclear communication about the status of mission-essential
personnel and the need to support readiness during a long-term crisis. In
addition, contingency and pandemic exercises in place prior to COVID-19
were not sufficient to prepare depots for a long-term crisis affecting the
entire depot workforce. Further, while depots have begun some informal
collection of lessons learned from COVID-19, they have not formally
documented those lessons. Developing guidance and a communications
plan to address long-term crises impacting the depot workforce before it
occurs, formally documenting lessons learned from the current pandemic,
and using lessons learned to develop exercises will better position the
Marine Corps, Navy, and Air Force to protect the depot workforce and
maintain depot productivity during a future pandemic or other crisis.
The COVID-19 pandemic also exacerbated pre-existing low cash
balances in the Navy and Air Force WCFs. Congressional appropriations
and DOD management actions helped address the low cash balances by
the end of fiscal year 2020. However, DOD continues to manage these
WCFs based, in part, on a draft cash management policy that is not
formally documented. Publishing guidance enhances transparency
regarding DOD WCF cash management to support congressional and
departmental oversight, and increases the likelihood that WCF managers
consistently apply DOD’s cash management policy.
We are making nine recommendations, including three to the Secretary of
Recommendations for Defense, two to the Commandant of the Marine Corps, two to the
Executive Action Secretary of the Navy, and two to the Secretary of the Air Force.
The Secretary of Defense should ensure that the Under Secretary of
Defense for Acquisition and Sustainment develop guidance to ensure that
depot management and civilian personnel are aware of their mission-
essential status and the need to support readiness during a long-term
crisis affecting the DOD depot workforce. (Recommendation 1)
Page 34 GAO-21-103 Depot Maintenance
The Secretary of Defense should ensure that the Under Secretary of
Defense for Acquisition and Sustainment develop a communications plan
to ensure that depot management and civilian personnel are aware of
their mission-essential status and the need to support readiness during a
long-term crisis affecting the depot workforce. (Recommendation 2)
The Commandant of the Marine Corps should ensure that the Marine
Corps Maintenance Command formally record lessons learned in
response to the COVID-19 pandemic, and use lessons learned to update
depot-specific contingency plans. (Recommendation 3)
The Commandant of the Marine Corps should ensure that the Marine
Corps Maintenance Command develop exercises for Marine Corps
Production Plants to support productivity during any long-term crisis
affecting the depot workforce. (Recommendation 4)
The Secretary of the Navy should ensure that Naval Air Systems
Command and the Commander, Fleet Readiness Centers formally record
lessons learned in response to the COVID-19 pandemic, and use lessons
learned to update depot-specific contingency plans. (Recommendation 5)
The Secretary of the Navy should ensure that Naval Air Systems
Command and the Commander, Fleet Readiness Centers develop
exercises to support productivity during any long-term crisis affecting the
depot workforce. (Recommendation 6)
The Secretary of the Air Force should ensure that Air Force Material
Command and the Air Force Sustainment Center formally record lessons
learned in response to the COVID-19 pandemic, and use lessons learned
to update depot-specific contingency plans. (Recommendation 7)
The Secretary of the Air Force should ensure that Air Force Material
Command and the Air Force Sustainment Center develop exercises to
support productivity during any long-term crisis affecting the depot
workforce. (Recommendation 8)
The Secretary of Defense should ensure that the Under Secretary of
Defense (Comptroller) publish the most recent DOD Working Capital
Fund cash management policy in the DOD Financial Management
Regulation. (Recommendation 9)
Page 35 GAO-21-103 Depot Maintenance
We provided a draft of this report to DOD for review and comment. In its
Agency Comments written comments, reproduced in appendix III, DOD concurred with our
recommendations and identified actions that it was taking or planned to
take in response. DOD also provided technical comments, which we
incorporated as appropriate.
We are sending copies of this report to the appropriate congressional
committees, the Secretary of Defense, the Commandant of the Marine
Corps, the Acting Secretary of the Navy, and the Acting Secretary of the
Air Force. In addition, the report is available at no charge on the GAO
website at http://www.gao.gov.
If you or your staff has any questions about this report, please contact
Diana Maurer at (202) 512-9627 or maurerd@gao.gov, or Asif A. Khan at
(202) 512-9869, or khana@gao.gov. Contact points for our Offices of
Congressional Relations and Public Affairs may be found on the last page
of this report. GAO staff that made key contributions to this report are
listed in appendix IV.
Diana Maurer
Director, Defense Capabilities and Management
Asif A. Khan
Director, Financial Management and Assurance
Page 36 GAO-21-103 Depot Maintenance
Congressional Committees
The Honorable Patrick Leahy
Chairman
The Honorable Richard Shelby
Vice Chairman
Committee on Appropriations
United States Senate
The Honorable Ron Wyden
Chairman
The Honorable Michael Crapo
Ranking Member
Committee on Finance
United States Senate
The Honorable Patty Murray
Chair
The Honorable Richard Burr
Ranking Member
Committee on Health, Education, Labor, and Pensions
United States Senate
The Honorable Gary C. Peters
Chair
The Honorable Rob Portman
Ranking Member
Committee on Homeland Security and Governmental Affairs
United States Senate
The Honorable Rosa L. DeLauro
Chairwoman
The Honorable Kay Granger
Ranking Member
Committee on Appropriations
House of Representatives
The Honorable Frank Pallone, Jr.
Chair
The Honorable Cathy McMorris Rodgers
Republican Leader
Committee on Energy and Commerce
House of Representatives
Page 37 GAO-21-103 Depot Maintenance
The Honorable Bennie G. Thompson
Chair
The Honorable John Katko
Ranking Member
Committee on Homeland Security
House of Representatives
The Honorable Carolyn B. Maloney
Chairwoman
The Honorable James Comer
Ranking Member
Committee on Oversight and Reform
House of Representatives
The Honorable Richard Neal
Chair
The Honorable Kevin Brady
Republican Leader
Committee on Ways and Means
House of Representatives
The Honorable John Garamendi
Chairman
The Honorable Doug Lamborn
Ranking Member
Subcommittee on Readiness
Committee on Armed Services
House of Representatives
Page 38 GAO-21-103 Depot Maintenance
Appendix I: Objectives, Scope, and
Appendix I: Objectives, Scope, and
Methodology
Methodology
Our objectives were to (1) describe how the Coronavirus Disease 2019
(COVID-19) pandemic impacted Marine Corps, Navy, and Air Force
depots’ productivity; (2) examine the extent to which depot actions in
response to COVID-19 reflected key practices to support the workforce,
continue operations, and improve crisis response; and (3) examine the
extent to which Navy and Air Force Working Capital Fund (WCF) cash
management policy ensured financial solvency and reflected current
guidance.
In conducting this review, we focused on the eight depots that had
operations financed through either the Navy or Air Force WCFs. In March
2020, both WCFs were appropriated $475 million each through the
CARES Act. 1 The depots are the Marine Corps’ Production Plant Albany
and Production Plant Barstow; the Navy’s Fleet Readiness Center East,
Fleet Readiness Center Southeast, and Fleet Readiness Center
Southwest; the Air Force’s Ogden Air Logistics Complex, Oklahoma City
Air Logistics Complex, and Warner Robins Air Logistics Complex.
To describe how COVID-19 impacted Marine Corps, Navy, and Air Force
depots’ productivity, we obtained and analyzed information on measures
of depot productivity, such as planned and actual revenues for fiscal year
2020, and information on other measures that can impact depot
productivity, such as the number of hours of leave employees took during
the fiscal year. We then discussed this information with Marine Corps,
Navy, and Air Force officials. During our discussions we also focused on
understanding how COVID-19 impacted depot productivity during fiscal
year 2020 and what other factors, if any, may have also impacted depot
productivity.
To examine the extent to which depot actions in response to COVID-19
reflected key practices to support the workforce, continue operations, and
improve crisis response, we compared actions taken by depots against
seven key practices and 30 supporting practices we identified as relevant
to depot responses to COVID-19. To identify the key and supporting
practices, we reviewed guidance to executive branch agencies, DOD
instructions and memorandums, our prior reports, and Standards for
1The Coronavirus Aid, Relief, and Economic Security (CARES) Act, Pub. L. No. 116-136,
div. B, title III, 134 Stat. 281, 520 (March 27, 2020).
Page 39 GAO-21-103 Depot Maintenance
Appendix I: Objectives, Scope, and
Methodology
Internal Control in the Federal Government. 2 We summarized the seven
key practices into three areas: support the workforce, continue
operations, and improve crisis response, as shown in figure 11 below.
2We identified seven key practices applicable to DOD depot response to the COVID-19
pandemic from prior GAO products such as GAO, Federal Workforce: Key Considerations
for Agencies Returning Employees to Workplaces during Pandemics, GAO-20-650T
(Washington, D.C.: June 25, 2020); GAO, Military Depots: DOD Can Benefit from Further
Sharing of Best Practices and Lessons Learned, GAO-20-116 (Washington, D.C.: Jan. 30,
2020); and GAO, Standards for Internal Control in the Federal Government,
GAO-14-704G (Washington, D.C.: Sept. 10, 2014). We then reviewed guidance to
executive branch agencies and our prior products to identify 30 specific supporting
practices; these documents included the Office of Management and Budget
Memorandum, Updated Guidance on Telework Flexibilities in Response to Coronavirus
(March 12, 2020); DOD documents, including DOD Instruction 6200.03, Public Health
Emergency Management (PHEM) Within The DOD (March 28, 2019); DOD Instruction
1100.22, Policies and Procedures for Determining Workforce Mix (Apr. 12, 2010)
(Incorporating Change 1 Dec.1, 2017); and DOD Instruction 3020.42, Defense Continuity
Plan Development (Feb. 17, 2006) (Certified current as of Apr. 27, 2011). We used the
following seven principles from the Standards for Internal Control in the Federal
Government as applicable: (1) Establish Structure, Responsibility, and Authority; (2)
Demonstrate Commitment to Competence; (3) Identify, Analyze, and Respond to Risk; (4)
Identify, Analyze, and Respond to Change; (5) Design Control Activity; (6) Design
Activities for the Information System; and (7) Evaluate Issues and Remediate
Deficiencies.
Page 40 GAO-21-103 Depot Maintenance
Appendix I: Objectives, Scope, and
Methodology
Figure 11: Key Practices to Support the Workforce, Continue Operations, and Improve Crisis Response during a Pandemic
We evaluated how Marine Corps, Navy, and Air Force depots responded
to COVID-19 by comparing depot management actions to the 30
supporting practices we identified. We reviewed documents related to
depot responses to COVID-19, and interviewed Marine Corps, Navy, and
Air Force depot officials. Specifically, we used a scorecard methodology
to determine the extent to which each of the depots addressed, partially
addressed, or did not address the seven key practices based on the
extent to which the depots took actions to address the 30 supporting
practices. 3 To identify the actions, we reviewed documents related to
3Each of the seven key practices was scored based on the evidence available at the time
of our site visits according to the following criteria: “Addressed” was defined as having
addressed most, but not necessarily all of the supporting practices; “Partially addressed”
was defined as having addressed some but not more than half of the supporting practices;
and “Not addressed” was defined as not having addressed any of the supporting
practices.
Page 41 GAO-21-103 Depot Maintenance
Appendix I: Objectives, Scope, and
Methodology
depot responses to COVID-19, and interviewed Marine Corps, Navy, and
Air Force depot officials during site visits conducted in August and
September 2020. Independent analysts reviewed interviews and
documents and assigned a score of partially addressed if the depot being
evaluated generally addressed some—but not all—aspects of respective
supporting practice with consideration of both testimonial and
documentary evidence. Each analyst independently conducted their
analysis and scored accordingly. Analysts then met to review their
findings and scores and agreed upon a final score based on their
collective efforts. A third analyst resolved any disagreements. We also
asked Marine Corps, Navy, and Air Force officials about their responses
and requested additional documentation and clarification as appropriate.
The results of our analysis were based on an assessment of information
provided during the course of our review, with an emphasis on depot
actions in the earlier weeks of the pandemic. While not generalizable to
all DOD depots, working capital fund activities, or federal agencies, the
information we obtained from Marine Corps, Navy, and Air Force depots
provided insight about the actions taken in response to COVID-19. We
reviewed the results of our analysis with the military services and
incorporated technical comments as appropriate.
To examine the extent to which Navy and Air Force Working Capital Fund
cash management ensured financial solvency and reflected current policy
in guidance, we compared Navy and Air Force Working Capital Fund
monthly cash balances for fiscal year 2020 to the respective Navy and Air
Force cash requirements. More specifically, we (1) obtained Navy and Air
Force Working Capital Fund monthly cash balances for fiscal year 2020
from the official month-end cash balances recorded at the Department of
Treasury; (2) obtained Navy and Air Force Working Capital Fund lower
cash requirements for fiscal year 2020 from the respective Navy and Air
Force budget materials; and (3) compared the lower cash requirements to
the Navy and Air Force Working Capital Fund month-end cash balances.
If the cash balances were below the lower cash requirement amounts, we
met with Navy, Air Force, and Transportation Command officials and
reviewed Navy and Air Force Working Capital Fund budgets and other
documentation to ascertain the reasons. Further, we met with these
officials and reviewed documentation on congressional and management
actions taken to ensure that the Navy and Air Force Working Capital Fund
monthly cash balances remained solvent in fiscal year 2020. In addition,
we discussed and reviewed documentation on the potential solvency of
the Navy and Air Force Working Capital Fund for fiscal year 2021 based
on the congressional and management actions taken in fiscal year 2020.
We also reviewed guidance contained in DOD’s Financial Management
Page 42 GAO-21-103 Depot Maintenance
Appendix I: Objectives, Scope, and
Methodology
Regulation to determine DOD’s cash management policy from December
2014 through September 2020. 4 If DOD made changes to DOD’s cash
management policy that were not included in the published guidance, we
met with DOD officials and reviewed documentation to determine the
reasons and whether these types of changes were documented in DOD’s
Financial Management Regulation on a routine basis.
We also reviewed DOD instructions, and Standards for Internal Controls
in the Federal Government to identify guidance for documenting its
policies. 5 We determined that the control activities component of internal
control was significant to this objective, along with the related principle
that management should implement control activities through policies. We
compared DOD cash management policy included in DOD’s Financial
Management Regulation to selected DOD guidance and relevant internal
control standards. Specifically, we determined whether DOD’s cash
management policy contained in DOD’s Financial Management
Regulation from December 2014 through September 2020 were regularly
maintained, reviewed annually, and revised, changed, or cancelled as
appropriate. 6 We also assessed whether these policies complied with
Standards for Internal Controls in the Federal Government that states
management should implement control activities through policies. 7
We conducted data reliability assessments on the data provided by each
of the military services to address our objectives including depot
productivity data, depot maintenance data, and Navy WCF and Air Force
WCF cash balance data. To determine whether depot productivity data
was reliable, we reviewed planned and actual revenue and labor data
provided by the depots and interviewed Marine Corps, Navy, and Air
Force depots about the completeness and accuracy of their data, any
known limitations, and whether there are any purposes for which their
data should not be used. To determine whether Navy WCF and Air Force
WCF cash balance data were sufficiently reliable, we reviewed our prior
4DOD 7000.14-R, Financial Management Regulation, vol. 2B, chap. 9, §090103(A) (Dec.
2014).
5See, for example, DOD Instruction 5025.01, DOD Issuances Program (Aug. 1, 2016)
(incorporating Change 3, May 22, 2019). GAO, Standards for Internal Control in the
Federal Government, GAO-14-704G (Washington, D.C.: Sept. 10, 2014).
6DOD Instruction 5025.01, DOD Issuances Program (Aug. 1, 2016) (incorporating Change
3, effective May 22, 2019).
7GAO-14-704G.
Page 43 GAO-21-103 Depot Maintenance
Appendix I: Objectives, Scope, and
Methodology
related reports and DOD Inspector General reports, if any, to determine if
any material weaknesses were reported for Navy WCF and Air Force
WCF monthly cash balances; interviewed knowledgeable Navy and Air
Force officials; and compared cash balance information reported by the
military services with official Treasury records. Because the information
provided for our review was limited to fiscal year 2020, we also reviewed
recent, relevant data reliability assessments prepared for our prior reports
related to depot maintenance. 8 Based on these efforts, we determined
that the data were sufficiently reliable for the purposes described above.
To support our analysis on each of our objectives, we interviewed officials
from the following organizations:
Office of the Secretary of Defense
• Office of the Under Secretary of Defense for Acquisition and
Sustainment
• Office of the Under Secretary of Defense (Comptroller)
• Office of the Deputy Assistant Secretary of Defense for Materiel
Readiness
Marine Corps
• Marine Corps Logistics Command
• Marine Depot Maintenance Command
• Marine Corps Logistics Base Albany
• Marine Corps Production Plant Albany
• Marine Corps Logistics Base Barstow
• Marine Corps Production Plant Barstow
8GAO, Military Depots: The Navy Needs Improved Planning to Address Persistent Aircraft
Maintenance Delays While Air Force Maintenance Has Generally Been Timely,
GAO-20-390 (Washington, D.C.: June 23, 2020); and GAO, Depot Maintenance: DOD
Should Adopt a Metric That Provides Quality Information on Funded Unfinished Work,
GAO-19-452 (Washington, D.C.: July 26, 2019).
Page 44 GAO-21-103 Depot Maintenance
Appendix I: Objectives, Scope, and
Methodology
Navy
• Headquarters, Department of the Navy
• Command, Fleet Readiness Centers
• Naval Air Systems Command
• Fleet Readiness Center East
• Fleet Readiness Center Southeast
• Fleet Readiness Center Southwest
Air Force
• Headquarters, Department of the Air Force
• Air Force Materiel Command
• Air Force Sustainment Center
• Air Force Air Logistics Complex Ogden
• Air Force Air Logistics Complex Oklahoma City
• Air Force Air Logistics Complex Warner Robins
United States Transportation Command
• Headquarters, United States Transportation Command
We conducted this performance audit from June 2020 through April 2021
in accordance with generally accepted government auditing standards.
Those standards require that we plan and perform the audit to obtain
sufficient, appropriate evidence to provide a reasonable basis for our
findings and conclusions based on our audit objectives. We believe that
the evidence obtained provides a reasonable basis for our findings and
conclusions based on our audit objectives.
Page 45 GAO-21-103 Depot Maintenance
Appendix II: DOD Working Capital Funds
Appendix II: DOD Working Capital Funds
Support of Depot Maintenance Activities and
Applicable Cash Management Policy
Support of Depot Maintenance Activities and
Applicable Cash Management Policy
Navy and Air Force Department of Defense (DOD) uses working capital funds to procure and
Working Capital Funds provide certain materiel and commercial products and services to its
forces. A working capital fund (WCF) is a type of revolving fund account
Used for Depot
that finances the operations of self-supporting entities (the depots)
Maintenance Activities conducting a regular cycle of businesslike activities, such as acquiring
parts and supplies, equipment maintenance, weapon system
sustainment, transporting personnel and equipment, research and
development and natural disaster relief. To control and account more
effectively for the cost of programs and work performed, the Secretary of
Defense may establish working capital funds to finance inventories of
designated supplies and provide working capital for industrial- and
commercial-type activities that provide common services within or among
DOD components. DOD WCFs are authorized under 10 U.S.C. § 2208
and their amounts are generally available until expended.
The Marine Corps Production Plants and Navy and Air Force aviation
depots, operate through the Navy and Air Force WCFs. 1 Depot customers
are charged for the full cost of goods and services provided. Unlike
businesses, WCFs are intended to operate on a break-even basis, neither
incurring gains nor losses over time although they may realize gains or
losses within each fiscal year. DOD’s current cash management policy
requires the WCFs to maintain a positive cash balance necessary to meet
operating, capital investment, and other justified requirements throughout
the fiscal year and to support continuing requirements into the
subsequent fiscal year. The ability of WCF-supported activities to
maintain WCF cash flow consistent with DOD’s cash management policy
depends on accurately (1) projecting workload, (2) estimating costs, and
(3) setting rates to recover the full costs of provided goods and services,
which include costs associated with materials, overhead, and operations.
Budget formulation for a particular fiscal year begins approximately 18
months prior to the beginning of that fiscal year. As part of the annual
budget submission for each upcoming fiscal year, depot maintenance
rates are required to be established at levels estimated to recover the
budgeted costs of goods and services, including all general and
1The Navy and Air Force working capital funds contribute to readiness through the depots’
ability to sustain the Marine Corps, Navy, and Air Force’s organically maintained weapon
systems and manage critical assets within the supply chain. In support of the Marine
Corps, Navy, and Air Force’s core functions, the Navy and Air Force working capital funds
provide the maintenance divisions of the Marine Corps’ production plants and Navy and
Air Force’s depots with continuous base-support services, utilities, and the in-house
industrial capability to repair and overhaul a wide range of weapon systems (e.g., aircraft)
and military equipment.
Page 46 GAO-21-103 Depot Maintenance
Appendix II: DOD Working Capital Funds
Support of Depot Maintenance Activities and
Applicable Cash Management Policy
administrative overhead costs, prior period gains and losses, and
applicable surcharges. 2 Predetermined or “stabilized” rates developed
during the budget process are applied to orders received from customers
during the fiscal year. Stabilized prices provide depot customers with
protection during the fiscal year from prices greater than those assumed
as part of their own budget formulation process. Because both WCF-
supported depot activities and their DOD customers concurrently
formulate their fiscal year budgets, the same cost and rate assumptions
are used by both.
Title 10, Section 2464 of the United States Code requires DOD to
maintain a critical logistics capability that is government-owned and
operated to support an effective and timely response for mobilization,
national defense contingency situations, and other emergency
requirements. Maintaining this capability provides a ready and controlled
source of technical competence and resources to enable effective and
timely response to mobilizations, contingencies, or other emergencies.
Additionally, DOD must assign these government-owned and operated
industrial installations/facilities (the depots) sufficient workload to ensure
cost efficiency and technical competence during peacetime, while
preserving the surge capacity and reconstitution capabilities necessary to
fully support the strategic and contingency plans prepared by the
Chairman of the Joint Chiefs of Staff. 3
DOD Working Capital DOD’s cash management policy requires the WCFs to maintain a positive
Fund Cash Management cash balance necessary to meet operating, capital investment, and other
justified requirements throughout the year and to support continuing
Policy requirements into the subsequent year. 4 In setting upper and lower cash
requirements, DOD officials responsible for managing WCFs are to
consider the following four elements:
• Rate of disbursement. The average amount disbursed between
collection cycles calculated by dividing the total planned
2In March 2018, the Office of the Under Secretary of Defense (Comptroller) provided
budget development guidance to military service WCF managers for fiscal years 2020
through 2024. The Office of the Under Secretary of Defense (Comptroller) also provided
updated guidance to military service WCF managers for their respective fiscal year 2019
budgets, the development of which was nearly complete.
3DOD Instruction 4151.20, Depot Maintenance Core Capabilities Determination Process
(May 4, 2018).
4DOD 7000.14-R, Financial Management Regulation, vol.2B, chap. 9, § 090103(A)(1)
(July 2017 Draft).
Page 47 GAO-21-103 Depot Maintenance
Appendix II: DOD Working Capital Funds
Support of Depot Maintenance Activities and
Applicable Cash Management Policy
disbursements planned by the number of collection cycles planned for
the year to determine the average amount of cash needed.
• Range of operation. The difference between the highest and lowest
expected cash levels based on assumptions and past experience.
Cash balance volatility can result from annual, quarterly, and more
frequent seasonal trends and significant onetime events.
• Risk mitigation. Additional cash may be required to mitigate the
inherent risk of unplanned and uncontrollable events, including budget
estimation errors, commodity price fluctuations, and crisis response.
• Reserves. Cash reserves are funds held for known future
requirements to provide for specific requirements that are not
expected to disburse until subsequent fiscal years.
Higher-than-expected costs or lower-than-expected customer sales can
result in lower cash balances. If projections of cash disbursements and
collections indicate that cash balances will drop below the lower cash
requirement, the WCF may need to generate additional cash. DOD
regulations provide cash managers with options to generate cash such as
out-of-cycle rate adjustments, surcharges, and reprogramming actions.
Page 48 GAO-21-103 Depot Maintenance
Appendix III: Comments from the
Appendix III: Comments from the Department
of Defense
Department of Defense
Page 49 GAO-21-103 Depot Maintenance
Appendix III: Comments from the Department
of Defense
Page 50 GAO-21-103 Depot Maintenance
Appendix III: Comments from the Department
of Defense
Page 51 GAO-21-103 Depot Maintenance
Appendix III: Comments from the Department
of Defense
Page 52 GAO-21-103 Depot Maintenance
Appendix IV: GAO Contacts and Staff
Appendix IV: GAO Contacts and Staff
Acknowledgments
Acknowledgments
Diana Maurer, (202) 512-9627 or maurerd@gao.gov, or Asif A. Khan,
GAO Contacts (202) 512-9869, or khana@gao.gov.
In addition to the contacts named above, Patricia Lentini (Assistant
Staff Director), Roger Stoltz (Assistant Director), John E. “Jet” Trubey (Analyst
Acknowledgments In Charge), John Craig, Wesley A. Johnson, David Jones, Felicia Lopez,
Lashai McCullough, Keith E. McDaniel, Clarice Ransom, and Terry
Richardson made key contributions to this report.
Page 53 GAO-21-103 Depot Maintenance
Related GAO Products
Related GAO Products
COVID-19: Opportunities to Improve Federal Response and Recovery
Efforts. GAO-20-625. Washington, D.C.: June 25, 2020.
Federal Workforce: Key Considerations for Agencies Returning
Employees to Workplaces during Pandemics. GAO-20-650T.
Washington, D.C.: June 25, 2020.
Military Depots: Army and Marine Corps Need to Improve Efforts to
Address Challenges in Measuring Performance and Planning
Maintenance Work. GAO-20-401. Washington, D.C.: July 16, 2020.
Military Depots: The Navy Needs Improved Planning to Address
Persistent Aircraft Maintenance Delays While Air Force Maintenance Has
Generally Been Timely. GAO-20-390. Washington, D.C.: June 23, 2020.
Military Depots: DOD Can Benefit from Further Sharing of Best Practices
and Lessons Learned. GAO-20-116. Washington, D.C.: January 30,
2020.
Depot Maintenance: DOD Should Adopt a Metric That Provides Quality
Information on Funded Unfinished Work. GAO-19-452. Washington, D.C.:
July 26, 2019.
Military Depots: Actions Needed to Improve Poor Conditions of Facilities
and Equipment that Affect Maintenance Timeliness and Efficiency.
GAO-19-242. Washington, D.C.: April 29, 2019.
DOD Depot Workforce: Services Need to Assess the Effectiveness of
Their Initiatives to Maintain Critical Skills. GAO-19-51. Washington, D.C.:
December 14, 2018.
Weapon System Sustainment: Selected Air Force and Navy Aircraft
Generally Have Not Met Availability Goals, and DOD and Navy Guidance
Need to Be Clarified. GAO-18-678. Washington, D.C.: September 10,
2018.
Defense Logistics: DOD Needs to Improve Budget Estimates and
Accuracy of Forecasts for Airlift Services. GAO-18-557. Washington,
D.C.: September 4, 2018.
Disaster Recovery: Additional Actions Would Improve Data Quality and
Timeliness of FEMA’s Public Assistance Appeals Processing.
GAO-18-143. Washington, D.C.: December 15, 2017.
Page 54 GAO-21-103 Depot Maintenance
Related GAO Products
Defense-Wide Working Capital Fund: Action Needed to Maintain Cash
Balances within Required Levels. GAO-17-465. Washington, D.C.: June
30, 2017.
Defense Civil Support: DOD, HHS, and DHS Should Use Existing
Coordination Mechanisms to Improve Their Pandemic Preparedness.
GAO-17-150. Washington, D.C.: February 10, 2017.
Defense Infrastructure: Improvements in DOD Reporting and
Cybersecurity Implementation Needed to Enhance Utility Resilience
Planning. GAO-15-749. Washington, D.C.: July 23, 2015.
Air Force Working Capital Fund: Actions Needed to Manage Cash
Balances to Required Levels. GAO-14-480. Washington, D.C.: July 31,
2014.
Influenza Pandemic: Lessons from the H1N1 Pandemic Should Be
Incorporated into Future Planning. GAO-11-632. Washington, D.C.: June
27, 2011.
Influenza Pandemic: DOD Has Taken Important Actions to Prepare, but
Accountability, Funding, and Communications Need to be Clearer and
Focused Departmentwide. GAO-06-1042. Washington, D.C.: September
21, 2006.
(104408)
Page 55 GAO-21-103 Depot Maintenance
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