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.

The GAO said the Air Force forced the depots to hold prices artificially low during that time, in part, to help ensure that "customers would be able to get the needed work done with the amount of funds provided them through the budget process."

It added, "To help recoup the losses, the activity group billed and collected more than $1 billion from customers outside the pricing structure." So, if those surcharges had been counted, the "effective prices" paid in earlier years would be closer to what is charged now.

The Air Force also had the depots make surcharges to build up their cash reserve, which the GAO said was unneeded.

Other problems came because true costs were not always tracked. For example, when two other depot air bases in Texas and California were closed in the late 1990s, much of their stockpiled materials were transferred to the other depots. But much of that stockpile was never entered into official inventories there on computer.

So workshops would use that material but "did not record an expense in their financial records. This caused their reported material expenses to be understated," the GAO said.

"Since most of the the transferred material has now been consumed, they now have to record the new material as being purchased as expenses in their financial records. Consequently, part of what appears to be higher material costs is a more accurate reflection of actual costs," the GAO said.

Still, price increases from such problems were relatively small compared to increases coming from higher costs of materials used — which GAO said brought 67 percent of the price hikes.

It said the Air Force said those increases came in part because of the need to replace component parts more frequently because of safety concerns and the aging of aircraft, and in part from higher prices that depots must pay suppliers for parts.

But the GAO complained, "While Air Force depot maintenance officials can provide anecdotal evidence on why the activity group's overall material costs have increased, they have yet to complete an effective and comprehensive analysis to determine why material costs have increased."

GAO praised some efforts to hold down costs. That included an effort at Hill that has shortened the time and reduced the amount of labor needed to repair brakes, gearboxes, pylons, struts, actuators and wheels.

Still it said, "Although several promising improvement initiatives are under way at the three centers, these efforts are stove piped (with depots not sharing data with each other) and management has been unable to clearly show that the benefits of the initiatives exceed their costs."

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