Depot Maintenance Transformation

In 2000, it was determined that the three Air Logistics Centers were underfunded compared to commercial industry. Specifically, the depots were not funded enough to allow reinvestment into capital assets. This determination was based on the fact that commercial industry reinvests 6% of its profits into capital programs while the Air Force depots reinvest only 3%. To keep the three Air Logistics Centers competitive, Congress injected $900M into the depots over a six year period, beginning in 2003. This Depot Maintenance Transformation (DMT) strategy was implemented so that the depots would increase profits over each of the six years to a point that would allow them to reinvest a sustained 6% (organically) at the end of year 6 in order to stay on par with the private sector. As the DMT program nears completion, the urgency to identify the aggregate benefits of the DMT program is increasing. However, this is not an easy task because many of the projects have intangible benefits that are hard to capture by quantifiable means. Additionally, of the tangible benefits associated with the DMT projects, 21% are reported to have negative projected savings in the out-years beyond initial investment. This makes the task of identifying the aggregate benefits that much more difficult to do. So, six years later, the question still remains: how well is the $900M DMT program performing ... but more strategically, what are the important considerations when making capital investment decisions? This Graduate Research Project addresses this important question.

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