That's still to be decided. The Air Force depots are operating at about 50 percent, so we're probably well positioned to protect the depot now.
— Lt. Gen. Harry Blot, USMC (Ret.), on the prospects for the Marine Corps aircraft depot at Cherry Point, in Sue Book "Officials: F-35B Will Make the Cut," New Bern Sun Journal, 8 January 2012
At a conference at Quantico two years ago, a SETA contractor for the USMC asserted to me that we'd never see another Base Realignment and Closure (BRAC) process in our lifetimes, because "Donald Rumsfeld used up all the available political capital for that in 2005." I nearly told him that smoking crack was not good for his health, and that he should really stop. To wit, let me reiterate the general's point:
operating at about fifty percent capacity... [Cue ominous music.]
I haven't toured any of the USAF's three Air Logistics Centers recently—at Hill AFB (Utah), Tinker AFB (Oklahoma), and Robbins AFB (Georgia)—so I cannot corroborate the assertion physically. But I did check the books, which are available through the Pentagon Comptroller's website. The depots, along with the USAF's supply stocks and transportation functions, are funded through the Air Force Working Capital Fund (AFWCF). Like all WCFs, the AFWCF is a revolving account whose monies do not expire at the end of the fiscal year, and which is supposed to aim to break even. It's rather a business enterprise within the government—an attempt by the feds to provide transparency in intergovernmental pricing. And what's clear is that, according to the comptroller, the AFWCF has fun a significant "net cost of operations" in almost every year in the last decade or so.
FY Costs Net cost Margin
2011 13,099 (1,246) (10%)
2010 11,822 (1,494) (13%)
2009 10,534 (154) (1%)
2008 10,727 57 1%
2007 10,735 (303) (3%)
2006 8,671 (2,111) (24%)
2005 10,514 (900) (9%)
2004 5,399 (1,294) (24%)
2003 5,448 38 1%
2002 4,864 984 20%
2001 6,667 (4,298) (64%)
2000 6,093 (1,801) (30%)
1999 6,560 (527) (8%)
It's important to note what is meant by "net cost of operations". In business, we'd call that a loss. In most years, a billion dollar loss. And that's not good, even if the USAF's accounting is off a bit, because a billion is usually what accountants term "material".
I can't explain the fillip in 2001 and 2002, as the USAF's management notes are pretty opaque, but the whole thing just doesn't look good. And as aggregated as federal financial reports often are, it's really hard to tell whether it's the depots, the supply system, or Air Mobility Command that's losing the money. Moreover, in one sense, we could call all of this an accounting fiction. If the Air Force's depots are breaking even, it's because they're correctly charging their (mostly USAF) customers a lot of money, so the Air Force is paying. If they're losing money, they're not, so the Air Force is paying. But consistently getting the business estimates wrong at the beginning of the year is bad news. One can lose money with a full factory, but it's more likely with a half-empty one. Consistent losses, that is, suggest overcapacity—idle workers and equipment who must be paid for, but who aren't bringing in the coin they should.
It hasn't uniformly been that way. After a big operating loss in 2006, as the GAO reported last year, the USAF's depot system sacked about 2,000 staff. During the subsequent increase in workload, the depots experienced considerable labor shortages in some fields. But they're again losing big bucks on operations, which suggests that General Blot may be right about this one.
What does this mean for the future? First, as the US federal government tries to keep its financial hemorrhage from drifting towards the proportions of a truly Greek tragedy, everything is on the table. So word to the Congressional Depot Caucus: that means you too. The figures suggest that the workload at these three bases has increased considerably with the war in Iraq. American involvement in that war is now over. If the depots are running at about half capacity now, that workload will not be increasing. It's true that USAF's aircraft are rather old and maintenance-intensive, but the administration pledged late last week to continue the process of deleting the so-called Cold War assets from the force structure. This really must happen, as maintenance costs are pretty much eating the military's lunch these days. Word has already been passed to Capitol Hill that the Pentagon will ask for a 2013 BRAC, and in the given fiscal environment, that will be even harder to resist that the past five rounds. So the USAF will be losing at least one depot.
Second, this closure naturally will be ex ante of great interest to the aircraft maintenance industry. Boeing, for example, would be delighted to assume Tinker's transport aircraft workload at its facilities in Oklahoma City and San Antonio. A host of others will line up, from traditional defense contractors to commercial specialists—note how, in Australia, Qantas has the contract to maintain the RAAF's Airbus tanker-transports.
So for commercial enterprises of all sorts, 2012 will be a good year to start planning for how one's business could thrive in the aftermath of a good BRAC round. For the management, staff, and other interested parties at the depots, it will be a good year to show how your enterprise is the least ugly of the three, and for various reasons, the one that absolutely must be spared. All around, it's going to get interesting.
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