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  2. Depot Maintenance Statute - Title 10 USC 2466

Depot Maintenance Statute - Title 10 USC 2466

DAU GLOSSARY DEFINITION

Alternate Definition

Title 10 USC 2466 is a statute that mandates a 50% ceiling, measured in dollars, on the amount of depot maintenance workload that may be performed by contract for a military department or Defense Agency during a fiscal year.

Alternate Definition Source

Title 10 USC 2466Limitations on the performance of depot-level maintenance of materiel

General Information

Key aspects of the statute include the following:

  • Not more than 50% of the funds made available to a military department or Defense Agency for depot maintenance during a fiscal year may be used to contract for the performance of depot maintenance (as defined by Title 10 USC 2460Definition of depot-level maintenance and repair) by non-Federal Government personnel. Funds not used for contract depot maintenance must be used for depot maintenance performed by DoD employees.
  • The Secretary of Defense (SECDEF) is required to submit an annual report to Congress detailing depot maintenance expenditures in the public and private sectors for each of the armed forces (excluding the Coast Guard) and Defense Agencies. The report, which is due within 90 days of submission of the President's budget, addresses actual expenditures for the previous year and projected expenditures for the current year and one out year. Since the 50% contract ceiling requirement applies to military departments rather than Services, for purposes of determining compliance with this statute, Marine Corps data is included within the Department of the Navy's data. However, since the reporting requirement applies to the armed services, Marine Corps data is also reported separately from Navy data.
  • The annual report must also separately identify expenditures covered by 10 USC 2474Centers of Industrial and Technical Excellence: designation; public-private partnerships. That statute provides that funds expended for performance of contract depot maintenance workload at an organic Center of Industrial and Technical Excellence (CITE) pursuant to a Public-Private Partnership (PPP) (also known as Public-Private Partnering) are not to be included in the calculation of compliance with the percentage limitation. In practice, these “excluded”  funds, although expended for contract work, are not included in the numerator when calculating the percentage of funds that a military department or defense agency has expended (or is projected to expend) on contract depot maintenance. 
    • Note: Title 10 USC 4544Army industrial facilities:  cooperative activities with non-Army entities, contains a similar exclusion for depot maintenance workload performed at an Army industrial facility by non-Federal government personnel pursuant to a cooperative arrangement entered into under the provisions of that statute.
  • The SECDEF may waive the 50% contract ceiling requirement for a military department or Defense Agency, providing the Secretary determines the waiver is necessary for reasons of national defense and notifies Congress of the waiver and the reasons for it.
  • This statute is commonly referred to as the"50-50" statute, but that is somewhat of a misnomer, since any distribution of contract/organic depot maintenance workload is acceptable as long as non-excluded contract workload does not exceed 50% of the total. For example, a distribution of 75% organic and 25% non-excluded contract for a military department would be in compliance with the statute.
  • Although 10 USC 2466 is commonly associated with the core logistics statute (Title 10 USC 2464, Core logistics capabilities), there are some significant differences:
    • The core requirement is levied on the SECDEF, while the 50-50 requirement is levied on the individual military departments and Defense Agencies.
    • Core is commonly measured in direct labor hours (DLH), while compliance with 50-50 is measured in dollars.
    • The calculation of core is deterministic, in that it is driven by certain real-world factors stipulated in DoD Instruction (DoDI) 4151.20, Depot Maintenance Core Capabilities Requirements. 50-50, on the other hand, establishes an arbitrary contract ceiling.
    • Core is determined on a weapon system/item basis, based on whether or not the item is "tasked" in a Joint Chiefs of Staff (JCS) contingency scenario. 50-50, on the other hand, is calculated at the military department/Defense Agency level. Which weapon systems are repaired in which sector (public or private) is not necessarily a consideration for 50-50, as long as the contract ceiling is not breached. However, weapon systems that are primarily depot-maintained via contract may potentially need to be "compensated" for by organic workload of other weapon systems to prevent a contract ceiling breach.
    • While core capability requirements are driven by individual weapon system characteristics, which provides some level of certainty in core capability planning for individual programs, 50-50 compliance is managed at the military department level, and its applicability to individual programs may not be as easily discernable, thus potentially introducing a higher level of uncertainty for individual programs in 50-50 compliance planning. Circumstances entirely outside a Program Manager’s (PM) control may drive organic depot maintenance assignment, even when the weapon system does not require core capability, and the business case analysis (BCA) has led to establishment of contract depot maintenance. For such weapon systems, at any point in time, it might become necessary to arbitrarily reassign contract depot workload to an organic source in order to ensure 50-50 compliance.
    • Core workload performed organically contributes to 50-50 compliance, but, in and of itself, does not necessarily ensure 50-50 compliance. Additional “non-core” workload may need to be assigned to organic sources to ensure that the contract ceiling is not breached.
  • The original contract ceiling was set at 40% by the FY 1993 National Defense Authorization Act (NDAA). The statute was subsequently revised by the FY 1998 NDAA to set the contract ceiling at 50%.
  • The original statute also provided for waivers to be issued at the military department level. In both FYs 2000/2001, The Air Force breached the 50% contract ceiling, and the Secretary of the Air Force waived the statutory requirement. Subsequently, the FY 2002 NDAA revised the statute to limit waiver authority to the SECDEF. The Air Force FY 2000/2001 breaches are the only times the statutory contract ceiling has been exceeded.