Depot Maintenance Provisions In NDAA Still A Work In Progress

In Washington, many of the really important fights over laws, budgets, government policies and regulations take place out of public view. The joke around town is this is because, as in the case of the prohibition on seeing how sausage is made, no one who uses the end product should see how it is created lest they lose all desire to consume it. In truth, the main reason that there is often little public attention devoted to how laws are made and implemented is because the process is so arcane and the results so confusing. Remember former House Speaker Nancy Pelosi’s line that House members had to pass Obamacare in order to find out what was in the 2500 plus page bill? Since then, we have found out that there were too many taxes in it and not enough cost containment. The process may be arcane but the consequences are very real and often involve billions, even trillions of dollars of government spending and impact many lives.

An example of this arcane but very consequential process is the ongoing effort by Congress to craft new provisions in the National Defense Authorization Act (NDAA) on the subject of depot level maintenance. Sounds boring already, doesn’t it? Would you still be bored if I told you that these particular provisions of the law come with an overall price tag of up to $30 billion and impact the lives of thousands of government and private sector workers? Even relatively small changes in these provisions can mean that billions of dollars change hands. Oh by the way, these changes can also mean the difference between life and death for our men and women in combat.

For the past two years there has been an intensifying fight over two particular provisions of the NDAA that deal with depot maintenance of military hardware. Depot maintenance is the military’s equivalent of taking your car to the dealer for a major overhaul. It includes such activities as inspection, repair, overhaul, retrofit, modification, upgrade, or rebuild of end items, components, assemblies, or subassemblies, and parts. Depot maintenance is done by both private companies and the public or organic defense industrial base. It has been a long-standing part of national policy that a certain amount of depot maintenance, known as core workload, was to be performed only by the organic base and that not less than half of all the Pentagon’s depot maintenance dollars (the “50/50” rule) was to be spent in the public sector facilities.

Beginning with the FY2012 NDAA, Congress began to play around with the definitions of both depot maintenance and core workload. Simply put, it expanded the definitions of depot maintenance and core workload. For example, the 2012 law expanded the definition of depot maintenance to include major modifications and upgrades, activities which had previously been done almost exclusively in the private sector. It appeared to include all software associated with a weapons system. In addition, the new language seemed to call for major additional investments in the capabilities of the public sector in order to allow it to perform work “that requires extensive industrial facilities, specialized tools and equipment or uniquely experienced and trained personnel.” For the first time the law allowed the public sector to compete for a variety of unusual maintenance activities such as the refueling of nuclear-powered aircraft carriers and support of special access programs.

The changes made in the FY2012 NDAA had the potential to massively expand the amount of work that the public sector could claim as its exclusive “turf.” Seeing the possibility that it could lose billions of dollars a year in work private sector groups such as the Aerospace Industries Association and the National Defense Industrial Association took the unusual step of publicly calling for the repeal of the changes in the FY2012 law.

Responding to unprecedented criticism of the new law, the House Armed Services Committee, in consultation with the Office of the Secretary of Defense has proposed further modification of these same provisions as part of the FY2013 NDAA. The new language would go back to the pre-2012 language with respect to major modifications and upgrades, narrow the scope of public sector work on software, and exclude aircraft carrier refueling and special access programs (SAPs) from the definition of core. These are all positive steps and make a great deal of sense.

However, these changes do not go far enough. They still significantly expand the scope and scale of work that the public sector can claim as its own. It does not exclude SAPs from the definition of work under the 50/50 rule. Since it is unlikely that the public sector has the capabilities to do this kind of maintenance work, the Pentagon will have to give it a larger share of depot maintenance on non-SAP programs in order to achieve the required balance.

One of the worst parts of the FY2012 changes to the law is the requirement to establish core depot-level maintenance and repair capabilities and capacity including the facilities, equipment, associated logistics capabilities, technical data, and trained personnel not later than four years after a weapon system or item of military equipment achieves initial operational capability (IOC) or is fielded in support of operations. This means that the Pentagon will have to invest billions of dollars in the organic industrial base to replicate the capabilities that industry has because at IOC plus 4 years most weapons systems are barely reaching full rate production. As the Department of Defense looks down the barrel of between $500 billion and a trillion dollars in spending cuts, the requirement to duplicate the investment it has already paid industry to build is just stupid. Congress needs to go back and work on the revised NDAA language some more.