2 REPORT ON THE AUDIT OF THE DOD AIRCRAFT ENGINE OVERHAUL PROGRAM SUMMARY We performed the audit to determine the status of the implementation of Secretary of Defense guidance on reliabilitycentered maintenance and the effectiveness of the Army and the Air Force in extending, when practical, maximum operating time standards for jet engines. We also evaluated Army and Air Force policies and practices which were used to determine whether to overhaul or repair individual jet engines. In a 1976 report, the Naval Audit Service had covered most of the matters which we audited and the Navy had been responsive to suggested corrective actions. With respect to jet engines, the reliability-centered maintenance program directed by the Secretary of Defense was not implemented by the Army and was not aggressively pursued by the Air Force. Based on the experience of commercial carriers, we estimated that the Army could save about $9 million annually and the Air Force about $35 million annually by fully implementing the directed program for engine maintenance (page 5). Until the reliability-centered maintenance concept is fully implemented, the Services will continue to base jet engine overhaul decisions primarily on maximum operating time standards. The audit showed that, for the engines reviewed, these standards should be extended substantially, with consequent major reductions in the frequency of costly jet engine overhauls (page 11). The cost and time required to perform a complete engine overhaul were substantially more than for engine repair work. The Air Force overhauled 93 to 96 percent of its jet engines returned to the depot for rework, while the Navy overhauled only 35 percent. We attributed this condition in the Air Force to a less demanding economic decision criteria and failure to disassemble engines for inspection prior to overhaul/repair decisions (page 15). The Army had not established overall economic-based criteria for overhaul versus repair decisions. Lacking such a criteria, the Army repair depot at Corpus Christi used a policy which resulted in more overhauls than necessary. Also, a separate Army policy resulted in serviceable engines being returned to the depot for overhaul because the aircraft from which We they were taken were being transferred to another unit. concluded that these policies contributed in large measure to the high and increasing percentage of engines being overhauled rather than being repaired (page 20). A draft of this report was issued on January 26, 1978, for review and comment. The Departments of the Army, Navy, and Air Force provided comments on the results of the audit and recommendations. Their comments were considered in preparing this report. REPORT ON THE AUDIT OF THE DOD AIRCRAFT ENGINE OVERHAUL PROGRAM INTRODUCTION Background As of April 1977, the DOD had about 60,000 installed and spare jet engines, valued at about $11.4 billion, to support about 25,000 jet engine aircraft (Exhibit I). The responsibility for maintaining these engines was divided among organizational, intermediate, and depot maintenance echelons in each of the Services. Maintenance at the depot level involved either making only necessary repairs or performing complete overhauls. In FY 1976, the Services repaired or overhauled about 13,200 engines at the depot level at a cost of approximately $266.4 million (Exhibits II and III). Depot maintenance of these engines was accomplished at the following sites: Army Corpus Christi Army Depot, Texas Navy Naval Air Rework Facility, North Island, CA Naval Air Rework Facility, Norfolk, VA Naval Air Rework Facility, Cherry Point, NC Air Force Oklahoma City Air Logistics Center San Antonio Air Logistics Center In addition, many engines were reworked by contractors. Prior to 1963, the Services and the commercial airlines used maximum operating time standards as a basis for determining the frequency of complete overhaul. In an attempt to cut maintenance costs, larger commercial air carriers developed a different concept of maintenance in the mid-1960s, based on findings that only certain components required periodic overhauls at predictable intervals. The carriers also concluded that the overhaul of entire engines was rarely warranted. The alternative concept adopted was termed "oncondition maintenance." The concept was approved by the Federal Aviation Administration, and application of the system resulted in: elimination of engine overhauls at prescribed operating intervals; - virtual elimination of complete engine overhauls; reduction of about 33 percent in spare engines required to support the logistics process; and a reduction of engine maintenance costs by about 25 percent. Because of the proven advantages of such a system, the Secretary of Defense directed, for 5 consecutive years (FYs 1976 through 1980) in the Planning and Programing and Consolidated Guidance Documents, that the Military Departments apply this type of maintenance concept to all equipment. DOD, and in this report, the concept used was termed "reliability-centered maintenance." In The General Accounting Office (GAO) addressed Service implementation of the reliability-centered maintenance concept within the DOD in its report "Management Action ¡leeded in the Department of Defense to Realize Benefits from a New System of Aircraft Maintenance, November 10, 1976. This report emphasized the potential for savings from applying the concept throughout the DOD. Two of GAO's 4 recommendations concerned the importance of having well-defined and quantified goals and adequate provisions for monitoring project implementation, to include specific reporting on each concept application. At the time of our audit, these recommendations had not been fully implemented by the Air Force and the Army. Scope of Audit We reviewed Army and Air Force management of jet engines which had been in service use for extended periods of time. These engines were termed "mature" engines. We made onsite reviews and evaluations at Army, Navy, and Air Force activities and obtained information from the Federal Aviation Administration and engine manufacturers during the period March through July 1977. Our reviews of Navy operations were limited since the areas of our audit interest were well covered in Naval Audit Service Audit Report No. C35115 "Review of the Management of Aircraft Engines (V COG Material)," March 25, 1976. The Navy's positive responses to the report and subsequent management actions were noteworthy. The aircraft jet engines included in our audit of the Army and the Air Force are shown in Appendix A. The organizations contacted during our review are shown in Appendix B. |