NAVY AIRCRAFT DEPOT MAINTENANCE HOUSE OF REPRESENTATIVES, COMMITTEE ON ARMED SERVICES, READINESS SUBCOMMITTEE, Washington, DC, Wednesday, March 22, 1989. The subcommittee met, pursuant to notice, at 9:32 p.m., in room 2212, Rayburn House Office Building, Hon. Earl Hutto (chairman of the subcommittee) presiding. STATEMENT OF HON. EARL HUTTO, A REPRESENTATIVE FROM FLORIDA, CHAIRMAN, READINESS SUBCOMMITTEE Mr. HUTTO. The subcommittee on readiness will come to order. This morning the subcommittee will continue its consideration of the fiscal year 1990-1991 Department of Defense operation request with testimony from the Navy witness on the Naval Aviation Depot Maintenance program. I want to assure the members of the fact that the Navy's finest naval aviation depot in my district is not the only reason for this hearing. There are a number of major issues associated with the Naval Aviation Depot Maintenance program that deserve careful consideration by the Readiness Subcommittee. Foremost among them is the growth in Naval Aviation Depot Maintenance backlogs. Since fiscal year 1987 Naval Aviation Depot Maintenance backlogs have grown from virtually zero to over 150 million or three times the size backlogs we found unacceptable in fiscal year 1981. According to the General Accounting Office Data, the fiscal year 1990 Naval Aviation Depot Maintenance funded program assumes backlogs of twenty-one airframes, 312 engines and over $100 million in modifications. Navy projections for fiscal year 1991 reflect little reduction in the size of these backlogs, and it is no secret that Naval Aviation Depot Maintenance backlogs are likely to get worse as a result of President Bush's revision of the Reagan DOD Budget request. Under the circumstances, it is vital that we understand the impact of these growing backlogs on Navy readiness and operational capabilities. We also want to know the impact on the six Naval Aviation Depots in terms of work loads and employment levels. Another major issue is the questions raised by the public/private competition for Naval aviation maintenance and modernization workload. Is this competition really saving money and how are these savings validated? Are these competitions fair and realistic? How can we conduct these competitions in a way that protects the core capabilities at the various Naval Aviation Depots? (1291) Another issue related to the competitiveness of the Naval Aviation Depots involves the acquisition of new capital equipment and facilities to keep abreast of new technology. If the Naval Aviation Depots are going to compete with the private sector, they have to be given the means to improve productivity and stay on the cutting edge of new technology. I recognize that there have been some significant problems in the Navy's management of the Asset Capitalization program in recent years and we want to correct those problems. On the other hand, we do not want to see workloads leaving the depots by default because the Navy could not provide the capital improvements to be competitive with private contractors. What we need is a blend of better management and adequate resources to get the job done. A final issue is the challenge facing Naval Aviation Depots to comply with increasingly stringent environmental regulatory requirements. The importance of meeting this challenge has become painfully apparent in recent months in Pensacola, Cherry Point and Alameda Naval Aviation Depots. Environmental issues are going to have to be given more attention by the Navy leadership in the coming years, in order to fashion a compliant strategy that is both effective and recognizes the national security missions of the Naval Aviation Depots. I would like to insert in to the record a statement by Mr. Kasich, the subcommittee's ranking minority member. PREPARED STATEMENT OF HON. JOHN R. Kasich, A REPRESENTATIVE FROM OHIO, RANKING MINORITY MEMBER, READINESS SUBCOMMITTEE I want to associate myself with the chairman's remarks and his concerns about naval aviation depot maintenance trends. I am especially concerned about the impact of growing depot maintenance backlogs on Navy aircraft readiness. Time and again we are hearing about "Manageable Depot Maintenance Backlogs" and how they look worse than they really are. How the services are able to protect readiness requirements even though unfunded backlogs are growing at an alarming rate. I must say that I am just not convinced by these assurances. The main reason for my skepticism where naval aviation is concerned is the fact that the Navy aircraft inventory is getting pretty long in the tooth. The A-6 intruder and the Lockheed P-3 aircraft date back to the 1960's. The S-3 Viking and F-14 Tomcat were both introduced in the early 1970's. They have all served the fleet well, but they are getting older and progressively more difficult to maintain. In addition, the extension of the time between scheduled depot level maintenance for naval aircraft seems to be driving up the scope of work and cost for those overhauls. Finally, as Admiral DeMayo points out in his statement, the depots are going to have to provide increasing support for older systems that private industry is either unable or unwilling to perform. Under the circumstances, I am inclined to believe that the Navy's aircraft depot maintenance backlog is significantly understated. At the same time the depots are contending with the problems of an aging aircraft inventory, they are going to have to try to come to grips with requirements generated by new weapon systems. Modernization will mean that new technologies will have to be introduced into the depots if they are to repair new weapons systems and remain competitive with the private sector. In sum, trying to meet these challenges with a level budget over the next few years represents a pretty tall order for the naval aviation depots. I look forward to the testimony this morning and hope that the witness can address my concerns about the adequacy of naval aviation depot maintenance funding request in meeting fleet readiness requirements. Mr. HUTTO. We are very pleased to have with us today again Rear Adm. Pete DeMayo. Admiral DeMayo is Deputy Assistant Commander for Naval Aviation Depots, Naval Air Systems Com mand. Admiral DeMayo, it is a pleasure to see you again and to have you and your people with us today. STATEMENT OF REAR ADM. PETER DEMAYO, U.S. NAVY, DEPUTY Admiral DEMAYO. Thank you, Mr. Chairman. Admiral DEMAYO. Good morning, Mr. Chairman. It is a pleasure for me to be here. I am accompanied by Mr. Michael Cocchiola, who is my deputy at NAVAIR. I have been at NAVAIR since 1979 and was most recently the Assistant Commander for Contracts at NAVAIR. I am very pleased to appear before you today and address an area of logistics which is critically important to readiness and that is naval aviation depot maintenance. I have prepared and submitted a statement on naval aviation depot maintenance. With your permission, I would like to furnish that full statement for the record, and then just make some comments. Mr. HUTTO. Yes, sir, without objection. That would be entered into the record. Admiral DEMAYO. Thank you, Mr. Chairman. Our organization is composed of 23,000 employees, six strategically located naval aviation depots, and the Naval Aviation Depot Operations Center at Patuxent River, Maryland. Corporately, we furnish over $2 billion worth of aviation maintenance and support for the United States Navy. Our mission in naval aviation depot maintenance is to provide world-wide logistics, maintenance and engineering support to our naval air forces in peacetime and during periods of national emergency. Our mobilization role is critical, yet we are ever mindful that we must operate our depots in a most business-like manner. We have concentrated our efforts recently to provide the highest quality products and services, improve our productivity and reduce our costs. I would like to make two points. First, our naval aviation depots have undergone significant and rapid change, emerging as a disciplined, competitive, and quality oriented corporation, focused on operating in a cost-effective and business-like manner. Our six naval aviation depots have common goals and objectives. They are bound together by a corporate strategic business plan, which I brought along with me, supported by execution plans at each depot, and other corporate-level plans such as the corporate capital plan. Second, we have proven that we are a competitive force in the market place. Our customers are our focus, and our goal is that our customers all brag about us, and we are working toward that goal. Our entry in the public/private competition was an unqualified success. Both the F-14 and P-3 competitions were won by the organic depots, and the Navy achieved a cost-reduction of approximately 20 percent of previously experienced costs. We learned a lot: how to decrease costs; adopt new business principles; and yet provide a higher quality product. Our Naval Industrial Improvement Program initiatives have been put into operational use. We have exceeded our cost reduction goals: specifically our fiscal 1988 costs, have been reduced approximately 13 percent over a 2-year period. This has resulted in savings of over $240 million relative to the $1.9 billion of annual product and service we provide. Along with these savings, we've increased quality and customer satisfaction. Our Asset Capitalization Program is another example of how we have changed and improved. Taking seriously the findings of last years General Accounting Office report, we mounted a very intensive improvement program, which has developed a disciplined and professional capital asset planning and execution process. I firmly believe our Asset Capitalization Program can serve as a model for other industrial funded activities within the Department of Defense. We have significant challenges in the years ahead. Total quality management is a long-term, never-ceasing way of life. We have adopted this program, but we must have the management resolve, and dedicate the resources necessary to continue our efforts to constantly improve the performance of our depots. New weapons systems will be introduced into our inventory, bringing with them new technologies that require new skills and capital investment. We are making business decisions from a financial as well as a strategic perspective with regard to the types of maintenance and manufacturing support our depots will provide. We face major challenges in our efforts to protect the environment. This has top management priority within the Naval Air Systems Command. We are assessing our maintenance operations carefully to develop detailed plans of action so that we can minimize, and if possible, eliminate the use of hazardous materials. Investment in capital equipment, military construction, and management information systems, will be critical to successfully meeting these challenges. We need your support for a viable Asset Capitalization Program. In conclusion, the naval aviation depots have undergone significant and rapid change. Emerging as a disciplined, competitive, and quality-oriented corporation, they are focused on operating cost-effectively, and utilizing proven business-based principles. We are proactively pursuing solutions to long term problems such as environmental compliance. We face significant challenges in the years ahead. Mr. Chairman, this concludes my opening remarks. I very much appreciate the opportunity to appear before you today, and will be happy to answer any questions you may have, sir. |