Air Force Working Capital Fund: Budgeting and Management of Carryover Work and Funding Could Be Improved
GAO-11-539
Published: Jul 07, 2011. Publicly Released: Jul 07, 2011.
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Highlights
Three Air Force depots support combat readiness by providing repair services to keep Air Force units operating worldwide. To the extent that the depots do not complete work at year end, the work and related funding will be carried into the next fiscal year. Carryover is the reported dollar value of work that has been ordered and funded by customers but not completed at the end of the fiscal year. GAO was asked to determine the extent to which: (1) budget information on depot maintenance carryover approximated actual results from fiscal years 2006 through 2010 and, if not, any needed actions to improve budgeting for carryover; (2) depot maintenance carryover exceeded the allowable amount and any adjustments were made to the allowable amount; and (3) there was growth in carryover at the depots and the reasons for the growth. To address these objectives, GAO (1) reviewed relevant carryover guidance, (2) obtained and analyzed reported carryover and related data at the Air Logistics Centers (ALC), and (3) interviewed DOD and Air Force officials.
Recommendations
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Department of Defense | To improve the budgeting and management of carryover, the Secretary of Defense should direct the Under Secretary of Defense (Comptroller) to clarify the existing guidance in the DOD Financial Management Regulation that allows Army ordnance activities to use multiyear appropriations in the calculation of allowable carryover to ensure that other working capital fund activities do not use this provision as a basis for their calculation of allowable carryover. |
DOD issued a revised Volume 2B Chapter 9 of the Financial Management Regulation (FMR) in April 2012 in draft to clarify this provision. Further, even though changes to the FMR were not finalized as of February 2013, DOD directed its working capital fund activities to use the current draft of the FMR Volume 2B Chapter 9 for the fiscal year 2015 budget submission. With the clarified FMR provision, Congress and DOD decision makers should have more reliable carryover information for budget decisions.
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| Department of Defense | To improve the budgeting and management of carryover, the Secretary of Defense should direct the Under Secretary of Defense (Comptroller) to take actions to ensure that requests for exemption from the carryover policy are made in writing and approved by the Director for Revolving Funds as required by the DOD Financial Management Regulation. |
The Air Force issued a memorandum directing the Air Force Materiel Command to comply with DOD regulation on May 27, 2011. An increased emphasis on correctly applying criteria in the DOD Financial Management Regulation for determining the allowable carryover amounts should help increase the reliability of such estimates.
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| Department of Defense | To improve the budgeting and management of carryover, the Secretary of Defense should direct the Under Secretary of Defense (Comptroller) to require Air Force headquarters and Air Force Materiel Command to routinely compare budgeted carryover that is over or under the allowable amount to the actual amount to identify the differences and reasons for the differences, and consider these trends in developing future budget estimates on carryover. |
The Air Force issued a memorandum directing AFMC to perform the recommended carryover analysis on May 27, 2011. For the fiscal year 2013 budget cycle, AFMC performed a budgeted to actual carryover analysis and determined the reasons for deviation between budgeted to actual carryover for fiscal years 2006 through 2011. Based on the analysis, the Air Force implemented several actions to improve the budgeted carryover information included in the fiscal year 2013 AFWCF budget and beyond such as (1) providing guidance to the Air Force depots on identifying unplanned future workload and (2) fully utilizing DOD outlay rates in the carryover calculations. Improved carryover information in AFWCF budgets should better inform Congress when reviewing and making decisions on the AFWCF budget.
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| Department of Defense | To improve the budgeting and management of carryover, the Secretary of Defense should direct the Under Secretary of Defense (Comptroller) to require Air Force headquarters and Air Force Materiel Command to routinely compare budgeted orders to actual orders to identify the differences and reasons for the differences, and consider them in developing future years' budget estimates on new orders to be received from customers. |
The Air Force issued a memorandum directing AFMC to perform the recommended new order analysis on May 27, 2011. For the fiscal year 2013 budget cycle, AFMC performed a budgeted to actual new order analysis and determined the reasons for deviation between budgeted to actual new orders for fiscal years 2006 through 2011. Based on the analysis, the Air Force implemented several actions to improve the budgeted new order information included in the fiscal year 2013 AFWCF budget and beyond such as (1) including overseas contingency operation funds in the budget process and (2) accepting orders from customers monthly instead of quarterly as was the case under the old process. In future years, the requirement for this analysis will be included in the annual Working Capital Fund Budget Guidance provided by Air Force headquarters. Improved customer order information should better enable Congress to make well-informed decisions on AFWCF budgets.
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| Department of Defense | To improve the budgeting and management of carryover, the Secretary of Defense should direct the Under Secretary of Defense (Comptroller) to require Air Force headquarters and Air Force Materiel Command to routinely compare the forecasted workload requirements on the number of hours of depot maintenance work to be performed to the actual number and consider these trends in developing future years' depot maintenance workload requirements. |
The Air Force issued a memorandum directing AFMC to perform the recommended workload requirements analysis on May 27, 2011. For the fiscal year 2013 budget cycle, AFMC performed a budgeted to actual workload requirements analysis and determined the reasons for deviation between budgeted to actual results for fiscal years 2006 through 2011. Based on the analysis, the Air Force issued guidance to its air logistics centers and Air Force program offices to include unplanned workload in future years' workload requirements based on past performance. Improved workload requirements information should better ensure that needed facilities and support equipment, personnel, and spare parts are available to support the planned workload to keep the Air Force air logistics centers operating efficiently and, in turn, reduce the amount of carryover.
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Air Force procurementAircraft componentsAircraft maintenanceAppropriated fundsBudget functionsBudget outlaysBudgetingEmployeesFacility maintenanceFinancial managementFuture budget projectionsLogisticsMilitary appropriationsSpare parts