Plane repair costs shock Congress

WASHINGTON — Congress is in sticker shock over the prices that Hill Air Force Base and its two sister repair-and-maintenance depots are charging for aircraft work.

Prices have doubled in four years, from an average $120 an hour for labor and materials in 2000 to $238 an hour now charged by Hill's Ogden Air Logistics Center, the Oklahoma City Air Logistics Center and Warner Robins Air Logistics Center, Ga.

Because Air Force wings expect to request 20.8 million hours of in-house work this fiscal year, "customers will have to pay about $4.9 billion for work that they would have paid about $2.5 billion in fiscal year 2000," according to a new report by the U.S. General Accounting Office, a research arm of Congress.

As it faces a couple billion dollars in higher costs for such aircraft work, the House Appropriations Subcommittee on Defense asked the GAO to look independently into why prices are spiraling upward.

The GAO reports that it found that two-thirds of the increase come from higher costs the depots are paying for materials. It also gave the damning conclusion that the depots have been unable "to effectively identify the cause and take corrective actions, as appropriate, on (their) continuously upward spiraling material costs."

Also, about 10 percent of the price hikes are estimated to come from higher labor costs from higher wages and health benefits, and most of the remaining quarter or so of increased costs were blamed on non-businesslike operations that until recently had masked the true cost of work, forcing an apparent spike in charges.

The GAO said the depots and Air Force have tried some steps to control the costs, but "management has been unable to clearly show that the benefits of the initiatives exceed their costs."

In response to the report, the Defense Department wrote that the Air Force is improving its cost accounting systems and is reviewing data to see if more corrective action is needed — and will brief the secretary of defense quarterly on updates.

The three air logistics centers rely on sales, instead of direct congressional appropriations, to finance their operations. They are supposed to charge customer Air Force wings exactly what it costs them to repair and overhaul aircraft, missiles and component parts. They are supposed to break even financially over time.

The GAO complained the Air Force did not always follow that directive, which has caused some of the recent problems.

From 2000 to 2003, "Prices that the depot maintenance activity group charged customers were not set high enough to recover the group's reported costs of performing the work," resulting in a loss over that time of $1.1 billion, the report said.