Depot Maintenance Statute - Title 10 USC 2474
DAU GLOSSARY DEFINITION
Title 10 USC 2474 includes the following provisions:
- It requires the designation of DoD depot-level maintenance activities and military arsenal facilities as Centers of Industrial and Technical Excellence (CITE)
- It authorizes the establishment of Public-Private Partnerships* (PPP) between the CITEs and private industries or other entities outside the DoD
- It provides relief from inclusion of contract depot maintenance workload performed at a CITE pursuant to a PPP in the calculation required by 10 USC 2466 to determine compliance with the maximum limitation of 50 percent annual contract workload
* Also known as Public-Private Partnering
Title 10 USC 2474: Centers of Industrial and Technical Excellence: designation; public-private partnerships
This purpose of 10 USC 2474 is to foster the excellence of DoD depot-level maintenance activities and military arsenal facilities by requiring their designation as CITEs, by promoting the use of best practices at the CITEs, and by optimizing the efficient and effective operation of the CITEs through their collaboration with commercial firms in PPPs. Specific CITE enhancements envisioned in CITE/commercial PPPs include:
- Maximizing CITE utilization
- Reducing/eliminating CITE ownership, operation and environmental restoration costs
- Reducing the costs of products repaired at the CITEs
- Leveraging commercial investment in the CITE plant/equipment recapitalization
- Promoting the undertaking of commercial ventures at the CITES
Additionally, the statute seeks to foster cooperation between the armed forces and private industry, thereby capitalizing on the best capabilities of each sector in providing best value to the war fighter and the tax payer.
Key aspects of the statute are:
- The Secretaries of the Military Departments (MILDEP) and, in the case of Defense Agencies, the Secretary of Defense (SECDEF), must designate each of the DoD depot-level maintenance activities and military arsenal facilities as CITEs in their core competencies. The SECDEF is required to encourage the adoption of best practices and process re-engineering at the CITEs in order to enhance their recognition as leaders in their core competencies. Specific CITE designations may be found at the Office of the Assistant Secretary of Defense for Sustainment (OASD(Sustainment)) Materiel Readiness web page.
- The SECDEF is authorized to encourage the establishment of PPPs between the CITEs and private industries or other entities outside the DoD in order to provide for:
- Performance of core competency work at the CITEs, including work performed by DoD employees, as well by employees of non-DoD CITE partners, and/or
- Use of CITEs’ facilities/equipment by their non-DoD partners, when such facilities are not fully utilized for a MILDEP’s own production or maintenance requirements. However, such facilities/equipment may only be made available to a partner when:
- The partner’s use of the facilities/equipment will not have significant adverse effect on the readiness of US armed forces,
- The partner agrees:
- To reimburse the DoD for costs attributable for the partner’s use of the facilities/equipment, and
- To hold the US harmless for damages/injury arising from use of, or suspension of use of, CITE facilities/equipment (with the exception of government willful misconduct, gross negligence or failure to comply with contractual cost/performance/schedule requirements).
- PPPs established under this statute must support one or more of the following objectives:
- Maximize utilization of CITE capacity
- Reduce cost of CITE ownership in the areas of operations and maintenance as well as environmental remediation
- To leverage private sector investment in CITE plant/equipment recapitalization, as well as the promotion of commercial business ventures at the CITE
- Cash amounts received for work performed by CITE DoD employees pursuant to a PPP will be credited to the appropriation or fund (e.g., Working Capital Fund (WCF)) that incurred the cost of the work. Cash received for rental of CITE property/facilities may be used for the CITE’s operations and maintenance, as well as for environmental restoration.
- Amounts expended for workload performed at a CITE by non-Federal government personnel pursuant to a PPP are to be excluded from the calculation to apply the percentage limitation of 10 USC 2466: Limitations on the performance of depot-level maintenance of materiel. That statute mandates that not more than 50% of the funds made available to a MILDEP or Defense Agency for depot maintenance during a fiscal year may be used to contract for the performance of depot maintenance by non-Federal Government personnel. When applying this 10 USC 2474 provision, however, the cost of workload performed at a CITE by non-government CITE partner personnel is excluded from the numerator when calculating the percentage of workload performed for a MILDEP or Defense Agency by non-Federal Government personnel in any particular fiscal year. (In effect, a MILDEP or Defense Agency may spend more that 50 percent of its funds on contract depot maintenance, as long as the contract work not performed at a CITE pursuant to a PPP does not exceed 50 percent of the total depot maintenance expenditures.)
The PPP authority provided by this statute can be leveraged in Performance Based Logistics (PBL) Product Support Arrangements (PSA) where the DoD has contracted with a commercial Product Support Integrator (PSI) to provide depot maintenance support. In these instances, the commercial firm (either the PSI or its subordinate commercial Product Support Provider (PSP)) "sub-contracts" with the DoD depot for depot maintenance support. Such arrangements, by providing for organically-performed depot maintenance, enable compliance with both the depot-level core capability requirements of 10 USC 2464, as well as the limitation of contract depot maintenance stipulated by 10 USC 2466.
There are various additional statutory and regulatory authorities that may be cited by organic maintenance depots when entering into a PPP. Examples include 10 USC 2563, Articles and Services of Industrial Facilities: Sales to Persons Outside the Department of Defense, and 10 USC 2208, WCFs. A comprehensive resource on PPPs is the Public-Private Partnering for Product Support Guidebook.