Background Determining and  Reporting on Core  Capability Requirements DOD Instruction 4151.20, Depot Maintenance Core Capabilities  Determination Process, requires the military services to apply a  methodology to determine their core capability requirements—that is, to  identify what core capabilities are required and what workload would be  necessary to enable them to sustain these core capabilities at the depots.  DOD’s instruction also requires the military services to determine the  estimated cost of workloads to sustain the core capability requirement. The instruction describes a series of mathematical computations and  adjustments that the military services are required to use to compute their  core capability requirements, and to identify the projected workload  needed to support these requirements. Specifically, the instruction  requires that the military services identify the weapon systems required to  execute the Chairman of the Joint Chiefs of Staff’s strategic and  contingency plans, which, among other things, guide the use and  employment of the military forces across all geographic regions and  sustain military efforts over different durations of time. After the systems  are identified, the military services compute annual depot maintenance  capability requirements for peacetime, in direct labor hours, to represent  the amount of time they will regularly take to execute required  maintenance. A military service may adjust calculated direct labor hours  to address redundant capability requirements that are so similar to one  another that they share common base repair processes. DOD tracks core capability requirements using the following two metrics: direct labor hours, each of which represents 1 hour of effort directly  allocated to a category of work; and work breakdown structure categories, which bundle types of work  according to weapon systems and equipment. DOD uses work breakdown structure categories to organize data on its  various core capability requirements and workloads, as well as to manage  and report on its core capabilities. There are 10 first-level work  breakdown structure categories, and these in turn are broken down into  second-level subcategories, which are the major elements that make up  the system or equipment in the first-level category. Figure 1 shows the 10  first-level categories of DOD’s work breakdown structure. For the full work  breakdown structure, see appendix IV. Finally, the instruction requires the military services to provide a reason  for all projected shortfalls, strategies to mitigate the effects of each  projected shortfall, and actions taken by the services to rectify any  projected workload or capability shortfall. A projected shortfall exists if a  military service does not expect to have sufficient workload to sustain the  required level of capability that has been identified. For example, an  armed service may have identified 10,000 direct labor hours of core  capability requirements for ground vehicles, but have only 4,000 hours of  projected depot maintenance work for ground vehicles—resulting in a  projected workload shortfall of 6,000 hours. DOD’s Biennial Core  Reports and Our Prior  Reviews In 2012 DOD submitted its first biennial core report to Congress, and we  found that DOD did not provide sufficient explanations when reporting on  the military services’ shortfalls in core capability requirements. In 2014  DOD submitted its second biennial core report to Congress, and we found  that DOD did not have accurate and complete data in the report. In 2016  DOD submitted its third biennial core report to Congress, and we found  (1) data errors; (2) inaccurate inter-service workload across the military  services due to lack of coordination in reporting this information; (3)  inconsistent calculations or display of workload shortfalls across the  military services; and (4) inconsistent calculations of the estimated cost of  planned workload across the military services. We made  recommendations to address each issue. Further, we identified  additional information that could increase the report’s transparency, and  we suggested that Congress consider amending section 2464 to include  additional elements to increase the transparency of future biennial core  reports. Consistent with our recommendations, Congress amended  section 2464 and added additional reporting requirements. We discuss  DOD’s actions to address our specific recommendations to improve the  completeness of its 2018 Biennial Core Report later in this report. DOD Addressed Eight  of the Ten Reporting  Elements and Plans  to Address the  Remaining Two in the  2020 Biennial Report In the 2018 Biennial Core Report, DOD and the military services  addressed 8 of 10 required reporting elements, as shown in table 1 and  discussed in more detail below. According to department officials, the  department did not address two of the elements because changes to its  guidance and processes for developing the 2018 report resulted in the  2016 and 2018 reports not being directly comparable. DOD officials  stated that they plan to address these two elements in the 2020 Biennial  Core Report. Military Services Identified  Core Capability  Requirements and  Projected Workloads To address reporting elements 1 and 2, the military services presented  their respective requirements and projected workloads in direct labor  hours and associated costs, using the work breakdown structure. Table 2  shows DOD’s reported direct labor hours for the depots’ core  requirements, as well as projected maintenance workloads and costs of  workloads to sustain core requirements by military service. Military Services Identified  Key Information by Work  Breakdown Structure The military services presented core requirements and workloads, down  to the second-level subcategories, to address reporting element 7. This  structure represents all of the sub-specialties required to maintain core  depot-level capabilities across the 10 categories of the work breakdown  structure. For example, the aircraft category is broken down into 7  second-level subcategories: rotary, vertical/short take-off and landing,  cargo/tanker, fighter/attack, bomber, unmanned systems, and aircraft  engines. The Army, Navy, and Air Force also identified the items they placed into  the “Other” category to address reporting element 9. The Marine Corps  did not place any core requirements in the “Other” category in the 2018  Biennial Core Report and therefore was not required to address this  reporting element. Specifically: The Army identified requirements associated with items such as air  conditioners, food service hygiene equipment, chemical defense  equipment, and water purification; The Navy identified requirements associated with specialty aircraft  and aircraft components that are common across multiple platforms;  and The Air Force identified requirements associated with specialty items  such as surveillance aircraft, missile components, and  communications/electronic equipment that do not fall under other  distinct work breakdown structure subcategories. Military Services Identified  Projected Shortfalls and  Mitigation Plans The military services each identified projected shortfalls at the first- and  second-levels of the work breakdown structure (elements 3 and 4),  reasons for those shortfalls (element 3), and mitigation plans for the  projected shortfalls (element 3). This includes—in some cases— leveraging excess core capabilities in one workload category to mitigate  projected shortfalls in another category (elements 5 and 8). Specifically:  Army: The Army reported a total projected shortfall of about 2.9 million  direct labor hours, as shown in table 3. It identified projected shortfalls in  5 of the 10 first-level work breakdown structure categories, and in 13 of  the 33 second-level categories. The Army identified a number of reasons for these projected shortfalls.  Army officials stated that these reasons generally contributed to shortfalls  across the various work breakdown categories. They also noted the  challenge of calculating shortfalls based on comparing current workloads  with predicted workloads that were based on potential future Army  strategies. The Army identified the following specific reasons for  shortfalls: DOD’s updated defense planning scenarios increased the Army’s  equipment requirements. These additional requirements resulted in a  greater total core depot requirement for the Army, which in turn  contributed to projected shortfalls. The Army noted that DOD’s most recent Future Years Defense  Program lacked sufficient depot maintenance funding (that is, money  to pay for direct labor hours) to meet core capability requirements. The Army cited newly established software depot maintenance  requirements as one of the reasons for its shortfall. Specifically, DOD  updated requirements for reporting depot resources associated with  upgrading and maintaining software in weapon systems. According to  the Army’s 2018 core report submission, the Army previously  determined this requirement based on the number of people assigned  to the Army’s software sustainment activities. However, the Army  revised its methodology for calculating its software sustainment  workload to reflect actual workload, not just the number of people  conducting the work. After identifying projected shortfalls, officials used that information to  determine how best to close gaps and mitigate risks in future  implementation. Specifically, the Army is currently working to move  software-related direct labor hours from contractor to military sources,  which will help the Army mitigate—that is, shrink—its projected shortfall  by fiscal year 2020. The Army reported that it plans to mitigate many of its  projected core shortfalls by using skill sets similar to those required for maintaining a core capability in repairing equipment for foreign militaries.  Officials stated that the Army plans to hire and train maintenance  personnel to conduct maintenance work associated with the foreign  military sales program. This workload will also assist the Army in meeting  its core capability requirements for Army systems, increasing the total  projected workload, and decreasing estimated shortfalls. Additionally, the  Army identified mitigations for specific shortfalls—for example, replacing  old generators with a new system by fiscal year 2025 will mitigate its  shortfall in support equipment. Navy: The Navy reported that it did not project an overall shortfall, nor did  it project any shortfalls at the first- or second-level of the work breakdown  structure, and therefore it did not provide mitigation plans. Navy and OSD  officials noted that the Navy and the department differ regarding the  definition of software sustainment. Specifically, a Navy official stated that  the service views software sustainment as an engineering function, not a  depot maintenance function. This official observed that while the Navy  believes software sustainment to be critical to maintaining its weapon  systems, it believes that managing software sustainment as depot  maintenance is not the most effective approach for the Navy. As a result,  the Navy did not report any software core capability requirement or  projected workload for fiscal year 2019. OSD defined software  maintenance and reporting requirements in its guidance requesting data  from the military services for the biennial core report. In spite of differing  perspectives between OSD and the Navy, OSD accepted the Navy’s core  report submission, in which the Navy reported no core software  maintenance capability requirements. Marine Corps: The Marine Corps reported that it did not project a total  shortfall, but did project a shortfall of 82,971 direct labor hours in one  second-level subcategory—that is, construction equipment—that falls in  the ground vehicle first-level category. The Marine Corps identified a  rationale and mitigation plan for its projected shortfall in construction  equipment. The Marine Corps reported that general factors affecting  maintenance workload and funding contributed to the shortfall, including:  (1) After drawdowns from Iraq and Afghanistan, the Marine Corps  repaired equipment to a desired level of combat effectiveness in line with  current mission requirements and available resources. This led to fewer  current maintenance needs and therefore reduced core maintenance  workloads, creating projected shortfalls in some skill sets; and (2) The  Marine Corps made changes to its force structure, which led to having  more equipment in inventory, less equipment in use, and therefore less  required maintenance. This created a shortfall in the skill set for  construction equipment. To address this shortfall, the Marine Corps plans  to use the excess workload in amphibious vehicles to mitigate the  projected shortfall in construction equipment. Marine Corps officials  stated that these second-level subcategories involve similar, tracked  vehicles, which can be maintained using the same skill set. Air Force: The Air Force reported that it did not project a total shortfall, but  did project shortfalls within the work breakdown structure, as shown in  table 4. The Air Force identified projected overall shortfalls in 1 of the 10  first-level work breakdown structure categories, and in 7 of the 33  second-level work breakdown structure categories. The Air Force identified reasons and provided detailed explanations, as  well as mitigation plans, for each projected shortfall. For example, it  projected a shortfall in rotary workload according to Air Force officials  because of staffing and supply issues with HH-60 Pave Hawk  maintenance at Corpus Christi Army Depot. According to these officials,  these maintenance issues have resulted in the Air Force’s using more  contracted depot maintenance work on the HH-60 Pave Hawk in order to  meet demand. As a result of the more extensive contracting of  maintenance, planned workload at Corpus Christi Army Depot has been  reduced, thereby creating a projected shortfall. The Air Force, Army, and  Navy formed a team to address this projected shortfall. Air Force officials  stated that contracts are being reduced and that they expect to resolve  the maintenance issues before the 2020 Biennial Core Report. To  address its projected shortfall in tactical missiles, the Air Force plans to  identify Letterkenny Army Depot as the Technology Repair Center for this  requirement, as the workloads are small in volume and the Letterkenny  Army Depot can meet this requirement. In addition, the Air Force  projected an overage of about 176,000 direct labor hours in strategic  missiles. The Air Force believes that its projected workload in strategic  missiles will allow it to maintain capability to repair tactical missiles—an  area in which it projects a shortfall of about 42,000 direct labor hours.  According to Air Force officials, the electronics on these two types of  missiles are very similar and require the same skill set. DOD Did Not Address the  Two Elements Concerning  Progress in Implementing  Mitigation Plans and  Executing Reported  Workloads DOD in the 2018 Biennial Core Report did not address progress made in  implementing mitigation plans from the prior core report (element 6), nor  did they address the degree to which projected workload reported in the  prior core report was executed (element 10). According to Office of the  Assistant Secretary of Defense for Logistics and Materiel Readiness  (OASD L&MR) officials, they did not address these elements because the  elements require DOD to compare information in the 2018 Biennial Core  Report with information in the 2016 Biennial Core Report. Since DOD  updated its guidance and processes for developing the 2018 Biennial  Depot Core Report—in response to new statutory requirements and our  prior recommendations—a meaningful comparison was not possible in  the 2018 Biennial Core Report, according to OSD and military service  officials. Additionally, DOD did not fully provide mitigation plans in its  2016 Biennial Core Report, as we reported in 2016. Therefore, DOD  was unable to provide progress reports on 2016 mitigation plans. DOD officials told us that they plan to use the 2018 Biennial Core Report  as a baseline for future biennial core reports, which will allow them to  address elements 6 and 10. Specifically, they stated that they plan to  provide progress reports on the mitigation plans they identified in the  2018 Biennial Core Report. Additionally, officials stated their intent to  provide a comparison of the fiscal year 2019 projected workload reported  in the 2018 Biennial Core Report with the actual workload for fiscal year  2019 contained in the 2020 Biennial Core Report. DOD’s 2018 Biennial  Core Report Is  Generally Complete DOD’s 2018 Biennial Core Report is generally complete in that it lacks  any obvious errors and aligns with supporting information provided by the  military services. Specifically, unlike previous biennial core reports, data  submissions provided to DOD by the military services are identical to the  data in the 2018 Biennial Core Report, and there are no transposition  errors. Further, based on our review of the services’ submissions to  OSD, data and other information provided by the military services were  accurately and appropriately included in DOD’s 2018 Biennial Core  Report. Finally, our analysis of the report and the military services’  submissions did not identify errors in the summation of the data. DOD’s focused efforts in 2017 and 2018 to develop better guidance and  procedures assisted in improving the completeness of DOD’s 2018  Biennial Core Report—in part, according to DOD officials, due to our prior  recommendations. Specifically, in 2017 the OASD L&MR began drafting  new guidance to identify required depot maintenance core capabilities  and the associated workloads needed to sustain those capabilities. This  guidance was finalized and issued by the Office of the Under Secretary of  Defense for Acquisition and Sustainment in May 2018. Officials from  OASD L&MR and the military services told us that they used the  methodology in this new guidance to complete the 2018 Biennial Core  Report in late 2017 and early 2018. Officials told us that our prior recommendations, based on our reviews of  the 2012, 2014, and 2016 biennial core reports, served to guide DOD’s  update of its guidance and procedures. The changes made by Congress  to section 2464 were also incorporated into DOD’s new guidance to  ensure compliance with the 10 reporting elements, as we previously  discussed. During the course of our review, we found that DOD had  addressed all of the recommendations from our prior reports on the 2012,  2014, and 2016 Biennial Core Reports. First, in our review of the 2012 Biennial Core Report, we found that DOD  did not include explanations for each identified projected shortfall. We  recommended that DOD include in its biennial core report to Congress  detailed explanations for why the military services did not have the  workloads to meet core maintenance requirements for each projected  shortfall identified in the report. Officials with OASD L&MR said that the  May 2018 updated version of DOD Instruction 4151.20 was revised to  require the submission of a detailed rationale for any and all shortfalls,  and a plan to either correct or mitigate the effects of the shortfalls. The  instruction states further that the detailed rationale and plan will identify  the reason for the shortfall; contain a strategy to mitigate the effects of the  shortfall (for example, specific transferrable workload, transfer of private- sector workload); and include actions to rectify any capability or workload  shortfalls, including a description of planned capital investment, timing,  and planned workarounds until the new capabilities or workloads are  available. DOD’s 2018 Biennial Core Report as previously discussed  provided rationales for shortfalls. Second, in our review of the 2014 Biennial Core Report, we found that  some data were incomplete. We recommended that DOD review its  processes and implement needed improvements to help ensure accuracy  and completeness. In response to this and our other prior  recommendations, DOD updated DOD Instruction 4151.20 to include  additional steps and more controls that ensure more complete and  accurate data submissions. According to OSD officials, changes to the  guidance included deleting data fields unrelated to core requirements;  streamlining and clarifying reporting instructions; ensuring that service  submissions be reviewed and approved by general, flag, or senior  executive service officials; determining the weapon systems or other platforms that are in the Chairman of the Joint Chiefs of Staff strategic  and contingency plans; addressing inter-service workloads; having the  worksheet automatically calculate shortfalls; and defining “software” and  “software maintenance.” Most recently, in our review of the 2016 Biennial Core Report, we found  (1) data errors; (2) inconsistent capture of inter-service workloads across  the military services; (3) inconsistent calculations or transpositions of  projected workload shortfalls across the military services; and (4)  inconsistent calculations of the estimated cost of projected workloads  across the military services. We recommended that DOD update its  guidance—in particular DOD Instruction 4151.20—to require future  biennial core reports to include instructions to the reporting agencies on  how to (1) report additional depot workloads performed that have not  been identified as core requirements; (2) accurately capture inter-service  workloads; (3) calculate projected shortfalls; and (4) estimate the cost of  projected workloads. DOD took steps to address each of these issues.  Specifically, DOD did the following:  Issued guidance stating that the total adjusted core capability  requirements and the total projected public-sector depot maintenance  workloads both reflect core workloads, as well as workloads that have  not been identified as sustaining core. Developed and provided to each of the military services a worksheet  on which to submit their projected inter-service workloads. OSD also  held a meeting with all of the military services to resolve any  discrepancies between their respective submissions. Created worksheets with formulas to automatically calculate the  projected shortfalls at the subcategory level of the work breakdown  structure for each service. Issued updated guidance to indicate that the estimated costs of the  projected workloads to sustain the core capability requirements were  to be included. According to OSD officials, these estimates are  developed in accordance with financial management regulations and  then applied to the estimated core sustaining workloads for each work  breakdown structure, thereby providing a common baseline and  process. In meetings with OSD and the military services, officials offered ideas for  possible changes in future reports, such as including additional  information on inter-service workloads to increase congressional visibility  regarding coordination on depot maintenance across the military services.  Additionally, OSD officials noted that they were considering the inclusion  of additional information in future reports on how costs of projected  workloads are calculated. Information on this is provided in DOD  Instruction 4151.20, but not in its biennial core report. According to OSD  officials, the department plans to consider these and other proposed  changes from the military services and other stakeholders to its biennial  core reporting process and supporting guidance. Given that DOD has  made considerable progress by improving both the completeness of the  2018 Biennial Core Report and its guidance on the development of the  report, we are not making recommendations at this time. Agency Comments We provided a draft of this report to DOD for comment. DOD provided  technical comments, which we included as appropriate. We are sending copies of this report to appropriate congressional  committees, the Secretary of Defense, and the Secretaries of the Military  Departments. In addition, the report is available at no charge on the GAO  website at http://www.gao.gov. If you or your staff have any questions about this report, please contact  Diana Maurer at (202) 512-9627 or maurerd@gao.gov. Contact points for  our Office of Congressional Relations and Public Affairs may be found on  the last page of this report. GAO staff who made key contributions to this  report are listed in appendix V. Appendix I: Complete Text of 10 U.S.C. §  2464(d) Appendix I: Complete Text of 10 U.S.C. §  2464(d) (d) Biennial core report. Not later than April 1 of each even-numbered  year, the Secretary of Defense shall submit to Congress a report  identifying, for each of the armed forces (except for the Coast Guard), for  the fiscal year after the fiscal year during which the report is submitted,  each of the following:  1.  The core depot-level maintenance and repair capability requirements  and sustaining workloads, organized by work breakdown structure,  expressed in direct labor hours.  2.  The corresponding workloads necessary to sustain core depot-level  maintenance and repair capability requirements, expressed in direct  labor hours and cost.  3.  In any case where core depot-level maintenance and repair capability  requirements exceed or are expected to exceed sustaining workloads,  a detailed rationale for any and all shortfalls and a plan either to  correct or mitigate the effects of the shortfalls.  4.  Any workload shortfalls at any work breakdown structure category  designated as a lower-level category pursuant to Department of  Defense Instruction 4151.20, or any successor instruction.  5.  A description of any workload executed at a category designated as a  first-level category pursuant to such Instruction, or any successor  instruction, that could be used to mitigate shortfalls in similar  categories.  6.  A description of any progress made on implementing mitigation plans  developed pursuant to paragraph (3).  7.  A description of core capability requirements and corresponding  workloads at the first level category.  8.  In the case of any shortfall that is identified, a description of the  shortfall and an identification of the subcategory of the work  breakdown structure in which the shortfall occurred.  9.  In the case of any work breakdown structure category designated as a  special interest item or other pursuant to such Instruction, or any  successor instruction, an explanation for such designation.  10. Whether the core depot-level maintenance and repair capability  requirements described in the report submitted under this subsection  for the preceding fiscal year have been executed. Appendix II: Timeline of 10 U.S.C. § 2464  and Related GAO Reports In 1984 Congress passed legislation limiting the private contracting of  certain core logistics functions. This law required the Department of  Defense (DOD) to maintain a logistics capability to ensure a ready and  controlled source of technical competence and resources. In 1988  Congress codified this law, as amended, at section 2464 of title 10 of the  U.S. Code. While section 2464 has been amended multiple times since  then, the requirement for DOD to maintain a core logistics capability that  is government-owned and government-operated has persisted. In 2011  Congress added a requirement for DOD to provide a biennial core report.  Most recently, in fiscal year 2018 Congress added additional elements  that DOD is required to address in its biennial core reports. Among other  things, changes to the statute are illustrated in figure 2 below. Appendix III: Scope and Methodology Section 2464(d) of Title 10 of the United States Code requires the  Department of Defense (DOD), among other things, to submit to  Congress a biennial report providing information on its core depot-level  maintenance and repair capability requirements and workload.  Specifically, section 2464(d) identifies 10 elements that DOD must  address for each of the armed services (except for the Coast Guard) in its  biennial report concerning depot-maintenance requirements and  workload. Section 2464 also requires us to review DOD’s report for  compliance with section 2464 and assess the completeness of the  report. DOD submitted its most recent biennial core report to Congress  on May 23, 2018. To determine the extent to which the DOD 2018 Biennial Core Report  complies with section 2464(d), we analyzed the text of the report and  obtained supporting information on DOD’s process to determine its core  maintenance capability for fiscal year 2019. Two GAO analysts  independently reviewed DOD’s report to determine the extent to which it  addressed each element required by the statute. All initial disagreements  between the two GAO analysts were discussed and resolved through  consensus. For the military services, when the report explicitly included  all parts of the required reporting element, we determined that DOD  “addressed” the element. When the report did not explicitly include any  part of the element, we determined that DOD “did not address” the  element. If the report included some aspects of an element, but not all,  then we determined that DOD “partially addressed” the element. We  compared the types of information and data provided by each of the  military services with the data that the Office of the Secretary of Defense  (OSD) included in the 2018 Biennial Core Report, to assess consistency.  We also discussed our preliminary analyses with OSD and military  service officials to gain additional insight into their analysis and efforts to  address the statutory requirements. To assess the report’s completeness, we obtained and analyzed the fiscal  year 2019 data used in compiling DOD’s 2018 Biennial Core Report,  including core capability requirements and projected sustaining workload  expressed in direct labor hours and cost and other information, such as  workload shortfall explanations. We compared the reporting agencies’  submissions with the reporting template in DOD Instruction 4151.20 in  order to determine the extent to which the reporting agencies submitted  the information required by DOD’s instruction, and we identified any  inconsistencies or errors. In order to determine whether these data and  information were complete, we performed a number of data check steps  to identify transposition inconsistencies or errors, and we discussed our  analyses with OSD and military service officials. These steps included (1)  reviewing each military service’s submission to verify that it had  consistently calculated and reported the direct labor hours identified as  the total adjusted requirements and the workload needed to sustain depot  maintenance core capability requirements; and (2) reconciling the  information in the report against each military service’s submission, for  accuracy. However, as in the past reviews of DOD’s biennial core reports,  we did not assess the reliability of the underlying data provided by the  military services for the 2018 DOD Biennial Core Report. The team also  met with OSD and reporting agency officials responsible for overseeing  the data collection and preparing the data submissions, to obtain  clarification and understanding of the content of the submissions, as well  as to discuss the department’s guidance and processes used to collect  the data for the report. Lastly, we reviewed DOD’s actions to address our  prior recommendations that were targeted at improving the completeness  of DOD’s biennial report. We conducted this performance audit from May 2018 to November 2018  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. Appendix IV: Category Levels from the  Department of Defense’s (DOD) Depot  Maintenance Core Capability Worksheet Appendix IV: Category Levels from the  Department of Defense’s (DOD) Depot  Maintenance Core Capability Worksheet Work Breakdown Structure Category  1.  Aircraft  1.2 Vertical/Short Takeoff and Landing  2. Appendix V: GAO Contacts and Staff  Acknowledgments GAO Contacts Diana Maurer, (202) 512-9627 or maurerd@gao.gov. Staff  Acknowledgments In addition to the named contact above, John Bumgarner, Assistant  Director; Thomas Gosling, Assistant Director; Pat Donahue, Amie Lesser,  Shahrzad Nikoo, Bethann E. Ritter Snyder, Walter Vance, Cheryl  Weissman, and Melissa Wohlgemuth contributed to this report.
DOD uses both military depots and contractors to maintain its complex weapon systems and equipment. Recognizing the depots' key role and the risk of overreliance on contractors, section 2464 of title 10 of the U.S. Code requires DOD to maintain a core logistics capability that is government-owned and operated, involving a combination of personnel, facilities, equipment, processes, and technology. Section 2464 requires DOD to provide a Biennial Core Report to Congress that addresses 10 reporting elements, including information on its core capability requirements and projected workload for the next fiscal year. Section 2464 includes a provision that GAO review DOD's Biennial Core Reports for compliance and completeness. In reviewing the 2018 Biennial Core Report, GAO assessed the extent to which DOD's report (1) addressed the 10 reporting elements required by section 2464(d), and (2) is complete. GAO reviewed and analyzed relevant legislation, DOD guidance, and the 2018 Biennial Core Report, and met with DOD and military service officials to discuss the processes used to develop the information in DOD's 2018 Biennial Core Report. In its 2018 Biennial Core Report, the Department of Defense (DOD) addressed 8 of 10 reporting elements. Specifically, DOD reported, by military service, its: depot maintenance workload required to sustain core maintenance capability requirements, based on contingency planning scenarios; projected fiscal year 2019 depot maintenance workloads; and projected fiscal year 2019 shortfalls (i.e., insufficient workload to sustain the required level of capability) and rationales and mitigations for those shortfalls. The Army reported a projected workload for fiscal year 2019 that would meet about 84 percent of its identified core capability—a shortfall of 2.9 million direct labor hours (see figure). The Army identified numerous reasons—such as newly established software depot maintenance requirements—for its shortfalls. Furthermore, the Army presented mitigation plans for its shortfalls, such as moving software-related work from contractor to military sources. The other services did not report overall shortfalls, but some services reported shortfalls associated with specific types of work. For example, the Air Force reported a shortage associated with the repair of tactical missiles. As a mitigation plan, the Air Force stated that it plans to use workload associated with repairing strategic missiles to maintain this capability, since the electronics on the two types of missiles are very similar and require the same maintenance skill set. DOD did not address two required reporting elements—progress in implementing mitigation plans from the 2016 biennial core report, and the degree to which projected workload reported in the 2016 biennial core report was executed. According to DOD officials, changes in its guidance and processes for developing the 2018 report resulted in the 2016 and 2018 reports not being directly comparable. However, DOD officials stated that they plan to address these two elements in the 2020 Biennial Core Report. DOD's 2018 Biennial Core Report is generally complete, in that it lacks obvious errors and aligns with supporting information provided by the services. DOD's concerted efforts to implement better guidance and procedures—in part, according to DOD officials, by implementing GAO's prior recommendations from 2012, 2014, and 2016—assisted in improving the completeness of the report.