oversight

Naval Aviation: The Flying Hour Program's Budget and Execution

Published by the Government Accountability Office on 1989-07-07.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                                                                 .,~
                 ,   .e.                                                       -’   ““a.      .-   %.                1.
                           ^ .,,   +   2,.   ^   ,--   1



                                                       United   States   General           Accounting   Office   ’
                                                       Report to Congressional Requesters




Jadg 1B89
                                                       NAVAL AVIATION
                                                       The Flying Hour
                                                       Program’s Budget and
                                                       Execution




GAO/lYSIAIMHO8
National Security and
International Affairs Division

B-234337

July 7, 1989

The Honorable John P. Murtha
Chairman, Subcommittee on Defense
Committee on Appropriations
House of Representatives

The Honorable Daniel K. Inouye
Chairman, Subcommittee on Defense
Committee on Appropriations
United States Senate

This report presents the results of our examination of the Navy’s flying hour program. The
Navy’s fiscal year 1987 flying hour budget was $3 billion and funded 2.2 million flying hours
for training, support, operations, and administration. Nearly all the program’s hours were
budgeted for training. The average monthly flight time required for each aircrew was
derived using formulas that consider forecasts of aircraft inventory and number of aircrews
and military judgment.

We found that the Navy’s management controls ensure that hours flown and dollars spent do
not exceed those allocated. But, neither the Navy’s budget nor its management information
system link requirements determination and resource expenditures to any measure of
program achievement. The Navy has recently initiated several efforts to develop measures
that will demonstrate the benefits derived from various levels of flying.

We are sending copies of this report to the Director, Office of Management and Budget, and
the Secretaries of Defense and the Navy, as well as other interested parties.

GAO staff members who made major contributions    to this report are listed in appendix IV.




Donna M. Heivilin
Associate Director, Navy Issues
Executive Summaxy


                   The ability of the Navy to perform its missions effectively is critical to
Purpose            the defense of the nation and its success in wartime. To that end, it is
                   essential that the Navy’s tactical air forces, which strike naval and land
                   targets, be flown by crews proficient in their military flying tasks. These
                   tasks, and related ship-based take-offs and landings, are difficult and
                   dangerous, requiring highly developed skills. The Navy’s primary means
                   of developing and maintaining these skills is hands-on training through
                   its flying hour program, which funds the number of hours naval aircraft
                   can be flown.

                   Because of the importance of maintaining aircrew proficiency, the for-
                   mer Chairmen, Subcommittees on Defense, House and Senate Commit-
                   tees on Appropriations, asked GAO to review how flying hour
                   requirements are determined and the validity of the determinations. GAO
                   was also asked to report budget execution trends and determine
                   whether the Navy’s flying matched its justification in the budget
                   request.



                   funded 2.2 million flying hours for training, support, operations, and
                   administration. Nearly all the program’s hours (85 percent) were budg-
                   eted for training, using different formulas based on forecasts of aircraft
                   inventory and aircrews and military judgment as to the average
                   monthly flight time needed for each aircrew.

                   To obtain a detailed understanding of the program, GAO reviewed the
                   budgeting and execution of the Navy’s tactical air and antisubmarine
                   warfare flying hours budget. This is about 62 percent of the Navy’s fly-
                   ing budget. GAO also examined, in detail, the Navy’s flying hour budget-
                   ing and execution for the F-14A, a tactical fighter plane.


                   Formulas used to estimate flying hour requirements for the Navy’s air-
Results in Brief   craft operation budget are based on standards supported by expert judg-
                   ment that have not yet been validated in any other way. The Navy
                   currently has two extensive studies underway that are examining the
                   relationship between various flying skills and the hours of training a
                   pilot receives. At this point, the program has not established specific
                   mission-related performance goals that can be linked to how require-
                   ments are determined or resources used. Overall, the hours flown and
                   costs incurred generally correlate with the total amounts estimated in
                   the Navy’s budget justification; however, there are variations between


                   Page 2                                            GAO/NSIAD439-108Flying Hours
                            Executive Summary




                            the flying hours budgeted and those actually flown by the aircraft
                            types. Even when these variances appear significant, Navy reports do
                            not identify the reasons for the variances.



Principal Findings

Program Lacks Object ,ive   The Navy’s budget estimates for aircraft operations are based on flying
Budget Estimates and        hour requirements computed from formulas that quantify hours and
                            funds to satisfy the operating tempo the Navy expects to achieve. The
Performance Goals           formulas employ standards that have not yet been objectively tested or
                            demonstrated as valid by the Navy. For example, the 25-hour monthly
                            standard to maintain F-14A aircrew proficiency, which the Navy has
                            used to compute F-14A flying hour requirements since the aircraft
                            became operational, is the same standard the Navy used for its F-4, an
                            earlier fighter.

                            Current management controls insure that hours flown and dollars spent
                            do not exceed those allocated by the Navy Comptroller. However,
                            neither the Navy’s budget nor its management information system link
                            requirements determination and resource expenditures to any measure
                            of program achievement. In fact, the Navy has not adopted mission-
                            related performance objectives describing what the program is expected
                            to achieve (e.g., number of combat ready aircrews trained) and there-
                            fore cannot measure whether estimated requirements and requested
                            resources are valid.


Variances in Program Not    The flying hour program is a part of the Navy’s operations and mainte-
Analyzed                    nance appropriation, and the Navy has flexibility to reallocate resources
                            among various aircraft to meet unforeseen emergencies. For fiscal years
                            1983 to 1987, the Navy’s actual flying hours under the program ranged
                            from 2 million to 2.2 million, representing at least 94 percent of the
                            hours requested in the Navy’s budget. Over the period, the Navy spent
                            at least 90 percent of the $1.8 to $3.0 billion requested each year.
                            Although the overall data show that program execution parallels the
                            request, individual aircraft statistics show wide variances in flying
                            hours and funds allocated and used. For example, for fiscal years 1984
                            through 1987, actual F-14A flying hours used varied from 4.6 percent
                            less to 17.2 percent more than requested.



                            Page 3                                          GAO/NSIAD-89-108Plylug Hours
                        Jkzcutlve Summary




                        Although variances in program budget and execution appear significant,
                        Navy reports do not identify the reasons for the variances, and manage-
                        ment does not evaluate the effect on program operations or the Navy’s
                        ability to carry out its missions. For example, during fiscal years 1984 to
                        1987, the Navy database showed that deployed Atlantic Fleet and Naval
                        Reserve F-14A aircrews flew 23,296 hours more than estimated, costing
                        $56.2 million more than was justified by flying hour formulas. However,
                        the Navy does not have a way of knowing how the increased flying
                        hours affected F-14A pilot proficiency or its ability to conduct tactical
                        air missions.


Department of Defense   Acting on the results of GAO'S work, the House Committee on Armed Ser-
                        vices, on April 5, 1988, in House Report 100-563, directed the Navy to
and Navy Actions        provide budget justifications in the future that include measurable
                        mission-related goals and the resources needed to meet each goal, a
                        method for measuring the degree to which the goals are met, and an
                        explanation of the variances between goals and actual results.

                        While the Navy cannot, at this point, relate the resources it expends to
                        the operational capabilities attained, the Navy and the Department of
                        Defense (DOD) are undertaking a number of studies that are designed to
                        identify this relationship. GAO recognizes that it is frequently not an
                        easy task to identify and determine which measures portray the results
                        of a program accurately and clearly. Devising the best way to demon-
                        strate the application of resources and resulting operational effective-
                        ness is difficult and is likely to be an evolutionary process.


                        Because of the efforts that DOD and the Navy have underway, GAO is
Recommendations         making no recommendations.


                        DOD generally concurred with GAO'S report.
Agency Comments and
GAO’s Evaluation        DoD disagreed that Navy management did not routinely      identify and
                        evaluate variances in budgeted and actual flying hours and costs. DOD
                        stated that variances were reviewed at the carrier air wing level but not
                        evaluated by specific type of aircraft. DOD said it was essential that the
                        carrier air wing commander be able to use the various types of aircraft
                        in a wing in a flexible way and to modify training plans in response to
                        specific threats as scenarios change during deployed operations.



                        Page 4                                            GAO/NSIAIM@lOt3 Flying Houiu
Executive Summary




GAO agrees that flexibility is required. However, the Navy bases its fly-
ing hour budget on the operations of individual aircraft types. If the
planned flying hours are based on the Navy’s expert judgment of what
is needed for pilots to become proficient and maintain their proficiency
and if that judgment is accurate, then it is possible that variances
between the planned and actual flying by aircraft type could adversely
affect the proficiency and mission readiness of pilots. These variances
need to be closely monitored. In recognition of the value of analyzing
variances by aircraft type, DOD stated that ongoing Navy studies will
include a review of the best method to address program variances
whether by carrier air wing or aircraft community.




Page 5                                           GAO/NSJAD-WlW3Flying Hours
Contents


Executive Summary                                                                                  2

Chapter 1                                                                                          8
Introduction               Overview of Flying Hour Program
                           Previous Reviews and Congressional Concerns Regarding
                                                                                                   8
                                                                                                   9
                               the Program
                           Objectives, Scope, and Methodology                                     10

Chapter 2                                                                                         12
                           Programming and Budgeting Flying Hours and Costs                       12
Bud$et   and   Execution   Executing the Progrm
                                                                                                  14
Processesof the
Flying Hour Program
Chapter 3                                                                                         16
The Flying Hour            Program Lacks Effective Budget Estimates and                           16
                                Performance Measures
Program Needs              Variances Are Not Evaluated for Program Effects                        17
Measures of                DOD and Navy Actions                                                   21
Effectiveness              Conclusions                                                            22


Appendixes                 Appendix   I: Activities Visited                                       24
                           Appendix   II: Case Study of the F-14A Aircraft                        25
                           Appendix   III: Comments From the Department of Defense                36
                           Appendix   IV: Major Contributors to This Report                       47

Tables                     Table 3.1: Overall Program Variances From the Navy’s                   18
                               Budgets in Hours and Dollars
                           Table 3.2: Flying Hour Variances From the Navy’s                       18
                               Budgets for Selected Aircraft by Fiscal Year
                           Table 3.3: Flying Hour Cost Variances From the Navy’s                  19
                               Budgets for Selected Aircraft
                           Table 11.1:F-14A Flying Hours Requested and Used                       28
                           Table 11.2: Funds Requested and Used for F-14A Flying by               28
                               the Atlantic and Pacific Fleets and the Naval Reserve
                           Table 11.3:F-14A Flying Hours Requested and Flown by                   29
                               the Atlantic and Pacific Fleets and the Naval Reserve
                           Table 11.4:Variances in Atlantic Fleet F-14A Aircrew                   33
                               Flying



                           Page 6                                        GAO/NSIAD-99-108Flying Hours
          Contents




          Table 11.5:Variances in F-14A Naval Reserve Aircrew                       34
              Flying
          Table 11.6:Flying Hours and Funds Requested and Used                      35
              by F-14A Fleet Training Squadrons

Figures   Figure II. 1: U.S. Navy F-14A “Tomcat” Aircraft                           26
          Figure 11.2:Percent of Programed Hours Flown Over the                     27
               Operational Cycle




          Abbreviations

          DOD        Department of Defense
          FHCRS      Flying Hour Cost Reporting System
          GAO        General Accounting Office
          TAcAm/
           ASW       tactical air/antisubmarine   warfare
          TMS        type, model, and series


          Page7                                             GAO/NSIAD49-108 Flyine Houra
Chapter 1

Introduction


                         The Navy’s ability to perform its missions effectively is critical to the
                         defense of the nation and its success in wartime. To that end, it is essen-
                         tial that aircrews who perform tasks related to the Navy’s tactical air
                         mission-striking    naval targets and protecting ships from air threats-
                         be proficient. These tasks, and related shipboard take-offs and landings,
                         are difficult and dangerous. They demand highly developed skills that
                         aircrews must apply on missions that arise with little notice, such as
                         those flown near Libya in 1986. The Navy’s primary means of providing
                         proficient aircrews is through hands-on training in its flying hour pro-
                         gram. This program funds the number of hours Navy and Marine Corps
                         aircraft can be flown and provides each aircrew with a certain amount
                         of flight time.


                         The Navy’s flying hour program accounts for part of the operating costs
Overview of Flying       for most Navy and Marine Corps aircraft-specifically,     the costs for
Hour Program             fuel, other petroleum products, and repairs to aircraft components, as
                         well as those associated with administrative supplies and services.’ On
                         the basis of various objectives, the Navy estimates the number of hours
                         aircraft must be flown and the costs associated with those hours. Flying
                         hour requirements in the Navy’s justification to the President’s budget
                         request for fiscal year 1987 were projected at 2.2 million flying hours,
                         costing $2.9 billion, or 13 percent of the amount requested for Navy
                         operations and maintenance.

                         Funds provided for the program are used for

                     l   training (aircrew training; unit or squadron training; and battle group,
                         fleet, and joint service exercises),
                     l   operations (reconnaissance and communications),
                     l   support (logistics and airlift, services to others, as when transporting
                         material or people), and
                     l   administration (delivering aircraft, maintenance-check flights, gunnery,
                         or bombing competitions, etc.).

                         The Special Assistant to the Deputy Chief of Naval Operations for Air
                         Warfare is designated the program manager and is responsible for pro-
                         gram budgeting, coordination, and monitoring. The Navy Comptroller
                         allocates funds to the Commanders of the Atlantic and Pacific Fleets
                         and the Naval Reserve and monitors program spending. These

                         ‘Procurement, overhaul, and repair of aircraft and engines are paid for by other programs, as are the
                         aircrew and the maintenance payroll, maintenance training, and the costs of aviation facilities.



                         Page S                                                            GAO/NSIAD-S9-108Flying Hours
                           Chapter 1
                           Wroduction




                           commanders are responsible for providing combat ready aircrews and
                           for ensuring that hours flown and funds spent do not exceed those
                           allocated.


                           Our prior reports questioned the adequacy of the processes the Navy
Previous
 -
         Reviews and       uses to budget and execute this program.
Congressional
                       . In 1976, citing examples of nonessential flights and an inability to know
Conierns Regarding       if readiness standards were being met by air-crews, we reported2 that the
the Program              Navy needed to manage its flying hour program more effectively. We
                         recommended that the Navy improve the accuracy of reports on aircrew
                         readiness, eliminate unnecessary flying, and increase the benefits
                         derived from hours flown.
                       . In 1979 we reexamined the program and concluded that the process for
                         programming training requirements for tactical and patrol aircraft
                         employed faulty practices.3 We concluded that the Navy’s standards for
                         P-3 patrol aircraft flying could have been reduced and that its central
                         programming of flying hours did not adequately consider the operating
                         environment, such as material readiness and maintenance problems.
                         Also, flying by many supervisory and staff pilots may not have been
                         necessary. We recommended that the Department of Defense (DOD)
                         improve its guidance for managing the services’ flying hour programs by
                         more closely linking budget requests to actual needs.
                       l In 1983 we reported4 that the Navy’s budget estimates were based on
                         formulas that did not represent the missions being funded; i.e., the
                         budget was based on training needs but much of the Navy’s flying was
                         for nontraining activities. Further, the Navy lacked program goals and
                         performance indicators to measure program effectiveness and to
                         develop future budget requests.

                           The Congress has taken steps to obtain reliable information on the costs
                           and benefits of DOD programs, including the Navy’s flying hour program.
                           On April 5, 1988, citing our continuing concerns regarding the flying
                           hour program, the House Committee on Armed Services, in House




                           3The Services Can Further Refine Management of Flying Hour Programs (LCD-‘79-401, Mar. 27,
                           1979).

                           4The Defense Budget: A Look at Budgetary Resources, Accomplishments, and Problems (GAO/
                                 83-62, Apr. 27, 1983).



                           Page 9                                                        GAO/NSL4D-99-199Plying Hours
                          Chapter 1
                          Introduction




                          Report 100-563, directed the Navy to provide budget justifications                        that
                          include

                        . measurable mission-related goals and the resources needed to meet each
                          goal,
                        . a method for measuring the degree to which the goals are met, and
                        . an explanation of the variances between goals and actual results.


                          At the request of the former Chairmen, Subcommittees on Defense,
Objectives, Scope,and     House and Senate Committees on Appropriations, we reviewed certain
Methodology               aspects of the management of the Navy’s flying hour program. We were
                          asked to review how flying hour requirements were determined and the
                          validity of the determinations, report program trends, and determine if
                          program execution matched the justifications in the budget requests.

                          We concentrated on three major segments-tactical     air forces, fleet air
                          training, and tactical air and antisubmarine reserve forces6 -that rep-
                          resented about 1.4 million hours and 62 percent of the program for fis-
                          cal year 1987. Our review covered the program for fiscal years 1983
                          through 1987.

                          To determine how the Navy budgets, manages, and executes the pro-
                          gram and to obtain an understanding of the program’s management con-
                          trols, we interviewed officials and reviewed pertinent documents at
                          Navy headquarters, fleet, and operating commands. (See app. I for a list
                          of the activities visited.) To gain further insight into the program, we
                          did a case study of the F-14A aircraft to illustrate these processes for
                          one type of aircraft. To determine how closely program execution
                          matched the hours and funds requested in the President’s budget, we
                          gathered and analyzed the Navy’s information on funds spent, hours
                          flown, and number of air-crews. We could not compare program expendi-
                          tures to the amounts appropriated because flying hour funds were not
                          separately appropriated nor were the amounts identified in the Navy’s
                          operations and maintenance appropriation.

                           Many of our analyses were based on computer data obtained from three
                           Navy systems. Data included estimated and actual flying hours and dol-
                           lars, maintenance activity, and aircraft inventory. However, we were

                           “Other program segments include operations, intelligence and communication, undergraduate aircrew
                           training, and airlift support. These segments represented 836,411 hours and 38 percent of the
                           amounts requested in the President’s fiscal year 1987 budget.



                           Page 10                                                         GAO/NSIAD-fW108Flying Hour
Chapter 1
Introduction




unable to verify the accuracy of much of the data drawn from computer
systems because the Navy did not retain the original records.

We performed our review in accordance with generally accepted govern-
ment auditing standards.




Page 11                                       GAO/NSIAD-99-108Flying Hours
Budget and Execution Processesof the Flying
Hour Program

                            As part of the operations and maintenance appropriation, the Navy’s
                            flying hour program is budgeted and executed under DOD’S Planning,
                            Programming, and Budgeting System. The Department of the Navy has
                            assigned key managerial responsibilities for this program to the Office
                            of the Deputy Chief of Naval Operations for Air Warfare and the Kavy
                            Comptroller. Fleet and Reserve commanders implement the program.


                            The general programming and budgeting of the flying hour program are
Programming and             directed by DOD guidance in the areas of policy, strategy, force and
Budgeting Flying            resource planning, and fiscal decision-making. Programming determines
Hours and Costs             the number of hours that must be flown to meet the various needs of the
                            Navy’s active and Reserve forces. Budgeting provides estimates for
                            funding requirements and, given likely appropriation limits, the reduc-
                            tions in the program’s hours and funding.


Programming Hours and       During the programming process, the Special Assistant to the Deputy
                            Chief of Naval Operations for Air Warfare, as the program manager,
costs
                            computes flying hour requirements-the          number of hours needed for
                            each aircraft type, model, and series (TMS). The method of calculating
                            hours varies by program segment. For example, support and administra-
                            tive flying use historical aircraft utilization rates, and each of the four
                            other segments-tactical     air/antisubmarine warfare (TACAIR/ASW), car-
                            rier deployable reserves, fleet replacement squadrons, and undergradu-
                            ate training-has    its own formula.

                            These formulas are undocumented, communicated by the outgoing to the
                            incoming program manager, and represent the historical practice of past
                            managers. The formulas use certain values, of which some-like the
                            monthly flying hours per aircrew-vary      by aircraft, and others-such
                            as the reduction for flight simulator use-are applied to all aircraft. The
                            need for accurate, objective standards is evidenced by their importance
                            in computing flying hour requirements and therefore Navy budget
                            requests.


Budgeting Hours and Costs   After determining the number of hours needed per aircraft type, the
                            program manager estimates the cost per flying hour for each and
                            adjusts it for inflation. Next, the program manager multiplies the cost
                            per hour by the number of hours for each aircraft. The product of the
                            hours and costs constitutes the program’s resource requirements.



                            Page 12                                           GAO/NSLAD-S9-108
                                                                                             Flying Hours
Chapter 2
Budget and Execution Processesof the Plying
Hour Program




According to Navy officials, program funding has historically been less
than programmed requirements. Therefore, the Navy Comptroller has
made adjustments to reduce the hours for selected aircraft. The adjusted
results appear in justification documents that support the Navy’s fund-
ing request for aircraft operations in the President’s budget,

Funding for aircraft operations is provided primarily through the gen-
eral purpose forces budget activity of the Navy’s operations and mainte-
nance appropriation. The Navy’s congressional budget submission
identifies the funds requested for general purpose forces and for each
general purpose forces account, such as aircraft operations. For aircraft
operations, it identifies total amounts requested for TACAIR~ASW,fleet air
training, and fleet air support operations. Other supporting budget
exhibits, which are not usually submitted with the budget, identify
hours and costs budgeted for each specific type of aircraft.

The Congress appropriates one amount for all Navy operations and
maintenance accounts. The Navy then allocates the appropriated funds
among operations and maintenance budget activities. The Navy may
move funds among the various accounts within the general purpose
forces budget activity throughout the execution year without informing
the Congress. The reprogramming of $5 million or more between opera-
tions and maintenance and other budgets, such as between the aircraft
procurement budget and the operations and maintenance budget,
requires congressional approval.

In commenting on a draft of this report, DOD concurred with our basic
description of the programming and budgeting of the flying hour pro-
gram. However, it took exception to our statement that the formulas
used to determine flying hour requirements are passed informally from
the outgoing program manager to the incoming program manager. While
DOD agreed that there is no Navy-wide directive that encompasses all
aspects of this program, it stated that the program is managed under
defined and accepted programming guidance applicable to all Navy pro-
grams and that historical records are maintained to provide the program
manager with insight into past management. It added that the program
manager must have a broad knowledge of program guidance and histori-
cal documents, as well as a thorough understanding of the planning, pro-
gramming, and budgeting processes. DOD also provided a more detailed
description of certain aspects of the programming and budgeting
processes of the flying hour program. (See app. III.)




Page 13                                          GAO/NSIALb89-108Flying Hours
                         Chapter 2
                         Budget and Execution Processesof the Flying
                         Hour Program




                         We did not question the qualifications of Navy personnel managing the
                         flying hour program nor the programming guidance. Our point was that
                         the process for computing flying hour requirements was not documented
                         and that the values used in its requirements formula were not validated.
                         The Navy agreed.


                         Once funds are appropriated by the Congress, the Navy Comptroller
Executing the            allocates operations and maintenance funds (i.e., confers obligational
Program                  authority) to major claimants1 Within their obligational authority, com-
                         manders and squadron subordinates fund flying hour program require-
                         ments to train combat ready aircrews. They also ensure that hours
                         flown and obligations incurred do not exceed resources allocated. The
                         hours and obligations are also reported to the program manager, who
                         uses the data to monitor program execution.


Flow of Funds to Users   The Navy Comptroller distributes quarterly obligational authority to
                         fleet commanders in chief based on their spending plans and prior quar-
                         terly obligation rates. If any quarterly obligation exceeds plans, obliga-
                         tional authority for the remaining quarters may be decreased.

                         Quarterly obligational authority is passed from fleet commanders in
                         chief through command channels to squadron commanders. Squadron
                         commanders must ensure that hours flown and obligations incurred do
                         not exceed the resources allocated without prior written approval.
                         Major claimants, however, may reallocate obligational authority and fly-
                         ing hours among their squadrons and aircraft as needed.


Reporting Program Data   Until recently, the Navy operated four systems to collect data on the
                         program. Three of these maintained data on specialized aspects of the
                         program -aircraft   maintenance, aircraft inventory, and naval officers’
                         flying. The fourth, the Flying Hour Cost Reporting System (FHCRS),
                         maintained data on hours flown and obligations incurred.

                         The FHCRSwas designed to enable the program manager to monitor the
                         program and develop estimates for program projections. Under it,
                         squadrons prepare and submit to their major claimants monthly reports

                         ‘In the flying hour program, major claimants include the Commander, Naval Air Forces, U.S. r\tlantic
                         Fleet; the Commander, Naval Air Forces, U.S. Pacific Fleet; the Chief of Naval Education and Train-
                         ing; the Commander, Naval Forces, Europe; and the Commander. Air Reserve.



                         Page 14                                                           GAO/NSIALM9-108 Flying How
                     Chapter 2
                     Budget and Execution Processesof the Plying
                     Hour Program




                     that identify number of operating aircraft, number of hours flown, and
                     amount of fuel consumed. These reports are summarized in a monthly
                     flying hour cost report that the major claimants submit to the program
                     manager, who uses the information to estimate future flying hour costs.
                     This cost report lists the financial obligations directly associated with
                     operating and maintaining aircraft, as well as the number of hours
                     flown and the number of operational aircraft.

                     According to the program manager, on January 1, 1987, the Navy con-
                     solidated all but the FHCRSinto one new system, the Naval Flight Record
                     Subsystem. This subsystem uses the same data source-the flight rec-
                     ord that each aircrew fills out after each flight-and  produces the same
                     reports formerly created by the three separate systems. The difference
                     is that the source data are entered into one system rather than piece-
                     meal into three separate systems.


Monitoring Program   In monitoring the program, the program manager uses the FHCRSto
                     ensure that obligations match funding, coordinate with the Navy Comp-
Execution            troller on selected program data, and review major exceptions to
                     planned flying hours and obligations. The program manager prepares
                     and submits a quarterly summary report to the major claimants who
                     inform the program manager of significant deviations in funding and
                     flying hours found during their reviews.

                     The Navy Comptroller also monitors execution of the TACUR/ASWseg-
                     ment to check the status of obligations. The Comptroller uses quarterly
                     reports that have been specially prepared by the fleet commanders in
                     chief and that contain data on the number of onboard aircrews and the
                     hours flown for four mission areas (training, exercises, contingency
                     operations, and services).

                     Although controls have been established to monitor hours flown and
                     obligations incurred to ensure they do not exceed resources allocated,
                     the Navy has flexibility in deciding where to place its resources. Man-
                     agers may move operations and maintenance funds between the various
                     types of aircraft and among other categories of the general purpose
                     forces budget activity to respond to operating conditions, e.g., the
                     unavailability of aircraft due to the failure of or the lack of spare parts.
                     Flying hour program execution depends on many factors. For example,
                     world conditions, such as the Persian Gulf situation, dictate Navy deci-
                     sions on how and where to use flying hour resources.



                     Page 16                                           GAO/NSIAD-89-108Flying Hours
Chapter 3

The Flying Hour Program Needs Measures
of Effectiveness

                       Funding to maintain the readiness of the Navy’s airplanes plus the pro-
                       ficiency of its crews is provided through the Navy’s operations and
                       maintenance budget. But, the Navy’s budget submission does not
                       directly relate costs or funding requests for flying hours to measures of
                       proficiency or effectiveness. Consequently, the Congress cannot deter-
                       mine how more or less resources would affect mission effectiveness or
                       aircrew proficiency. In prior reviews of the Navy’s flying hour program,
                       we questioned whether program operations were linked in any demon-
                       strable way to proficiency or effectiveness. Our current review raised
                       many of those same concerns. However, responding to congressional
                       concerns raised during this review, the Navy has initiated several
                       efforts to quantify relationships between hours flown and the attain-
                       ment of skill proficiency and mission effectiveness. These studies have
                       identified links between the application of resources and the attainment
                       of skill proficiency. However, identifying the best measures is likely to
                       be an evolutionary process.


                       The Navy’s budget estimates for aircraft operations are based on flying
Program Lacks          hour requirements that are computed from formulas that quantify
Effective Budget       hours and funds to satisfy the operating tempo the Navy expects to
Estimates and          achieve. According to Navy officials, key values incorporated in the for-
                       mulas, such as standard monthly flying hours for aircrew training
Performance Measures   needed to maintain combat proficiency and authorized crew-to-seat
                       ratios,’ are based on historical or expert military judgments. These for-
                       mulas are passed informally from program manager to program man-
                       ager as rotations of assignments occur.

                       Although we discussed the process and the formulas with Navy offi-
                       cials, they did not provide, and we could not locate, documented valida-
                       tions of the values or documentation of how the values came to be
                       accepted as justifications for flying hour requirements. For example, the
                       25-hour monthly standard used for F-14A flying hours was carried over
                       from the F-4 aircraft. There is no study that computed the standard and
                       it has not been changed or reviewed since the aircraft was introduced
                       into the fleet.

                       Fleet and Reserve commanders are responsible for providing combat
                       ready aircrews and for insuring that hours flown and funds spent do not
                       exceed those allocated by the Navy Comptroller. Current managerial

                       ‘The crew-to-seat ratio is the ratio between the number of authorized aircrews and the number of
                       authorized aircraft. The ratio also takes into account sickness, iqjuries, and leave.



                       Page 16                                                          GAO/NSIAD&b108 F’lying Hour
                               Chapter 3
                               The Flying Hour Program NeedsMeasures
                               of Effectiveness




                               controls insure that commanders do not exceed dollar allocations in total
                               for the general purpose forces budget activity. But neither the Navy’s
                               budget nor its management information system link requirements deter-
                               mination or resource expenditures to any measure of program achieve-
                               ment. In fact, the Navy has not adopted mission-related performance
                               objectives describing what the program is expected to achieve and
                               therefore cannot tell whether requirements estimated or resources
                               requested are valid. In our opinion, such measures or performance objec-
                               tives might be based on (1) the number of combat ready aircrews
                               trained, (2) the number of mission hours flown developing skills and
                               building proficiency in performing missions like the antisubmarine war-
                               fare missions, or (3) the number of hours flown for special operations,
                               such as the Persian Gulf mission.

                               During April 1988, citing our continuing concerns regarding the flying
                               hour program, the House Committee on Armed Services, in its report on
                               the National Defense Authorization Act for fiscal year 1989, directed
                               the Navy to incorporate specific flying hour goals and related costs in its
                               fiscal year 1990 budget submission and to report fiscal year 1988 actual
                               expenditures and 1989 estimated expenditures for each goal.


                      Navy managers do not have procedures or information that would rou-
Variances Are Not     tinely identify and evaluate variances in budgeted and actual flying
Evaluated for Program hours and costs. If more hours are flown by F-14A aircrews, then air-
Effects               crews that fly A-6s or F/A-18s must fly less or funds may possibly be
                      taken from other program categories, such as real property maintenance
                               or ship modernization. In any event, the Navy cannot explain the impact
                               of variances as the Congress requested. Consequently, the Navy does
                               not have a way of measuring the impact that flying more or less hours
                               has on its ability to carry out its missions, such as TACAIR and MW.

                               From fiscal years 1983 to 1987, the annual number of flying hours
                               ranged from 2 million to 2.2 million and the cost ranged from $1.8 billion
                               to $3 billion. A comparison of funds and flying hours estimated with
                               those used for this period shows that the Navy, in total, used 94 percent
                               of the flying hours estimated and spent 90 percent of its funds. The
                               hours flown and the costs incurred were generally less than estimated
                               until fiscal year 1987, when both hours and costs exceeded amounts
                               estimated by about 2.6 percent. (See table 3.1.)




                               Page 17                                          GAO/NSIAD-89-108Plying Hours
                                               Chapter 3
                                               The Plying Hour Program NeedsMeasures
                                               of Effectiveness




Table 3.1: Overall Program Variances
From the Navy’s Budgets in Hours and                                                    Hour variance                     Dollar variance
Dollars                                        Fiscal year                          Thousands        Percent             Millions       Percent
                                               1983                                      -111.3             -5.2          $-41.1           -2.2
                                               1984                                       -30.9             -1.5              3.3            0.2
                                               1985                                       -26.2             -1.2          -172.4           -6.3
                                               1986                                        -71.5            -3.2          -328.9           -9.9
                                               1987                                          55.5             2.6            79.7            2.7
                                               Source:U.S Navy data

                                               Although hours flown and costs incurred generally correlate with the
                                               total amounts estimated in the Navy’s budget justification, our review of
                                               flying hour statistics for specific types of aircraft showed much greater
                                               variances in the flying hours and the funds allocated and used. (See
                                               tables 3.2 and 3.3.)


Table 3.2: Flying Hour Variances From the Navy’s Budgets for Selected Aircraft by Fiscal Year
                             1984                       1985                         1986                                      1987
TMS aircraft             Hours      Percent        Hours        Percent          Hours        Percent                      Hours        Percent
A-6E                     4,293            7.7              -935             -1.6            3,184             5.6          -1,911          -3.0
A-7E                     6,526            5.8            -1,489             -1.2        -10,817             -9.0             2,826           3.3
E-2C                     8,408           29.9            -4,573            -10.7          -3,322            -8.2             1,693           5.0
F-14A                   15,999           17.2            -1,341             -1.2         -1,422             -1.2           -5,676          -4.6
F/A-18                 -3,341          -14.2             -3,359             -9.1         -1,143             -1.7             -427           -.5
SH-2F                    3,629             8.3             1,739              3.6        -1,514             -2.8             2,536           5.0
SH3H                   -1,504            -3.2              1,006              2.0        -5,010             -9.3           -1,400          -2.8
P-3c                     2,449             1.8             9,672              6.6        -6,555             -4.2           -1,029           -.7
S-3A                   -1,554           -2.6               5,677             10.3          3,208              5.4           5,033            9.3
                                                 Source: Navy Flying Hour ProjectIon System and GAO computations




                                                 Page 18                                                           GAO/NSIAD-99-108Plying Hours
                                                Chapter 3
                                                The Flying Hour Program NeedsMeasures
                                                of Effectiveness




Table 3.3: Flying Hour Cost Variances From the Navy’s Budgets for Selected Aircraft
Dollars m millions
                            1984                              1985                           1986                              1987
TMS aircraft          Dollars       Percent             Dollars        Percent         Dollars        Percent            Dollars      Percent
A-6E                  $12.072          13.97            $-,612             -.46         $36.113            25.31          $10.074          6.02
A-7E                    14023          12.87            -2.129            -1.29            8.498            4.70               ,031          .02
E-2C                     3.725         17.00           -11.641          -20.94           -6.127           -9.07             13.309        24.38
F-14A                   13.191          6.93              4.899             1.61       -51.283          -13.82             -7.035        -2.15
F/A-18                 -5.069        -14.22            -22.826          -22.46         -53.708          -12.53           -17.334       -17.11
SH-2F                    1.414          8.01                ,566            1.61          21.626           43.41           -2.538        -3.82
SH-3H                  -2.393        -11.24               -8.018        -1726          -16.154          -23.97            -5.838       -11.30
P-3c                     1.152            .81               4.269          2.06         -9.804            -4.00           -7.323        -3.28
S-3A                   -8.730        -15.32                -.951          -.97         -21.581          -15.56             29.882        3004
                                                Source Navy Flying Hour ProjectIon System and GAO computations

                                                Discussions with Navy officials provided the following opinions as to
                                                why some variations occurred between budgeted and actual costs and
                                                hours.

                                         . The requirement for aviation depot level repairables (a category of
                                           repair parts) was made a part of the flying hour program in fiscal year
                                           1986. However, the cost was not included in the fiscal year 1986 flying
                                           hour budget estimate. Consequently, flying hour costs exceeded the
                                           budget estimate by $34 million. In the following year, the Navy over
                                           compensated and increased its estimate. These actions caused variations
                                           in flying hour costs without a corresponding increase in the number of
                                           hours flown.
                                         l The cost of flying varies from one squadron to another, even if both fly
                                           the same type of plane. For example, A-6E costs for training squadrons
                                           differ from A-6E tactical squadrons. Atlantic Fleet costs differ from
                                           Pacific Fleet costs. The type of flying also influences costs. Air combat
                                           requires more fuel and puts more strain on the aircraft than general
                                           instrument flying. This could increase both costs for fuel and for mainte-
                                           nance. (A report on variances, such as those reflected in the tables,
                                           could provide explanations similar to those cited.)


F-14A Flying Hour                               To obtain a thorough understanding of the flying hour program, we
Program                                         examined the Navy’s program operations for F-14A tactical fighter for
                                                fiscal years 1983 through 1987. We selected the F-14A because it repre-
                                                sents a significant part of the Navy’s allocation for TACAIRIASW flying



                                                Page 19                                                           GAO/NSIAD439-108Flying Hours
Chapter 3
The Flying Hour Program NeedsMeasures
of Effectiveness




hours. In fiscal year 1986, the F-14A had the largest dollar allocation
among the Navy’s TACAIR~ASWaircraft. The methods for calculating fly-
ing hour requirements for each of the three types of squadrons -
deployable, fleet training, and Reserve F-14A - are discussed in more
detail in appendix II.

For fiscal year 1987, the Navy estimated that 120,730 hours and $319.7
million were needed to fly the F-14A aircraft. These amounts repre-
sented 5.5 percent of the hours and 10.6 percent of the dollars requested
for all Navy flying. The percentage of F-14A flying hours to total flying
hours has been essentially constant since 1983. However, our analysis
showed that during fiscal years 1984 through 1987 deployed Atlantic
Fleet F-14A squadrons flew 18,700 more hours than requirements for-
mulas justified, at an additional cost of $46.5 million. During the same
period, Reserve F-14A aircrews flew 4,500 more hours than estimated,
at an additional cost of $9.8 million.

The Navy can move funds between the various types of aircraft and
among other categories within the general purpose forces budget activ-
ity. The additional funds used for F-14A flying may be taken from other
Navy aircraft programs or other budget categories. However, the Navy,
as a matter of routine, does not identify these variances or their effects
on the individual aircraft program. Therefore, questions of whether the
proficiency of F-14A aircrews improved as a result of increased flying
or whether other programs were adversely affected by the correspond-
ing reductions are not addressed.

In commenting on a draft of this report, DOD disagreed that Navy man-
 agement did not routinely identify and evaluate variances in budgeted
 and actual flying hours and costs. DOD stated that variances were
reviewed at the carrier air wing level but not evaluated by specific type
of aircraft. Carrier air wings are composed of a mixture of aircraft types
 and, as a unit, are responsible for multiple missions. Training to meet
these multiple missions requires use of different carrier air wing assets
at different times. DOD expressed the view that it is essential that the
carrier air wing commander have the flexibility to modify training plans
 in response to specific threats as scenarios change in deployed opera-
tions. We agree that flexibility is needed, but the Navy bases its flying
 hour budget on the operations of individual aircraft types. Also, its
 training and skill qualification are by aircraft type. If the planned flying
 hours are based on the Navy’s expert judgment of what is needed for
the pilots to become proficient and maintain their proficiency and if thal
judgment is accurate, then it is possible that variances between the


Page 20                                           GAO/NSIALWS-108Flying Hour
               Chapter 3
               The Flying Hour Program NeedsMeasures
               of Effectiveness




               planned and actual flying by aircraft type could adversely affect pilot
               proficiency and mission readiness. These variances need to be closely
               monitored on a Navy-wide basis as well as by the carrier wing com-
               mander. DOD stated that ongoing Navy studies are expected to produce a
               methodology to track the determination of requirements through the
               budget process to program execution, and will include a review to deter-
               mine the best method to address program variances whether by carrier
               air wing or aircraft community.


               Acting on the results of our work, the House Committee on Armed Ser-
DOD and Navy   vices, on April 5, 1988, in House Report 100-563, directed the Navy to
Actions        provide budget justifications that include measurable mission-related
               goals and resources needed to meet each goal and develop a method for
               measuring the degree to which the goals and objectives are met. The
               Committee also directed the Navy to examine the variances between its
               objectives and actual results, explain the differences, and submit this
               analysis along with its annual budget justification.

               DOD and the Navy have begun a number of efforts that are designed to
               measure the relationship between the kinds and amounts of resources
               expended and the operational capabilities attained. Stated another way,
               the Navy and DOD are working on developing output measures of readi-
               ness When available, these measures could be used to track variations
               in readiness that are associated with variations in resource levels and
               should be useful to those who plan and program the resources needed
               for operations.

               DOD agrees that better performance indicators can be developed to mea-
               sure readiness. In commenting on this report, it discussed an ongoing
               research project aimed at developing linkages between flying hours and
               indicators of operational performance. The major research performed
               under this project during 1988 has been an analysis of Navy carrier
               landing grades and Marine Corps bombing scores as a function of pilots’
               recent and career flying experience. As expected, the results indicate
               that there is a positive relationship between both short-term and long-
               term flying experience and performance. An extensive program of
               future research is planned to follow up on these results.

               The Navy has also begun two projects to gain a better understanding of
               the effects of variation in hours flown on pilot performance during the




               Page 21                                        GAO/NSIAD439-108Flying Hours
              Chapter 3
              The Flying Hour Program NeedsMeasures
              of Effectiveness




              various phases of the deployment cycle.* Another study is planned to
              develop a methodology to determine aircrew readiness for each type of
              aircraft. According to the Navy, this process should also result in the
              development of indicators for justifying budget resources and measuring
              execution. However, transition from the current process to a system
              that more precisely links readiness to resources will be a major evolu-
              tion that is likely to require several years.

              DOD  also recognized the need to develop and maintain a system for
              aggregating data on the benefits of additional flying hours. For example,
              in June 1987 DOD directed the Institute for Defense Analysis to provide a
              study on improved methodologies for relating flying hour activities to
              operational readiness and safety measures. This study is to be con-
              ducted in three phases; phase one has been completed. A conclusion of
              phase one is that data exist to develop links between flying hours and
              measures of operational performance and safety for a wide range of air-
              craft. Candidate performance measures include carrier boarding rates,
              bombing scores, mishap rates, carrier landing scores, flight check
              grades, and air effectiveness measurements. The second phase, now
              underway, is to identify as many illustrative relationships between fly-
              ing hours and performance as possible. Plans for the third phase include
              a broad research effort covering all of the services and a wide range of
              aircraft types.


              The Navy’s budget requests are based on the resources the Navy expects
Conclusions   to use, such as the fuel needed by its aircraft and the flying hours to be
              used by each aircrew. However, formulas used to estimate flying hour
              requirements are not based on validated standards or on identified mis-
              sion needs. Also, neither the Navy’s budget nor its management informa-
              tion system link requirements determinations or resources used to any
              measure of program achievement, such as the number of combat ready
              aircrews trained, the number of mission hours flown to maintain qualifi-
              cations for combat missions, or the number of hours flown for special
              operations, such as the Persian Gulf mission. Furthermore, Navy man-
              agement does not have procedures or information systems that routinely
              identify variances in flying hours and funds allocated and used or that
              analyze their effects on aircrew proficiency and effectiveness. Finally,
              the Navy has not adopted performance objectives describing what the

              “A deployment cycle consists of about 6 months deployment aboard an aircraft carrier; 1 month in a
              personnel turnover and leave status upon return from deployment; 8 months of less intensive tum-
              around training; and 3 months of more intense training for the next deployment.



              Page 22                                                         GAO/NSIAD49-108 Flying Hours
Chapter 3
The Flying Hour Program NeedsMeamree
of Effectiveness




program is expected to achieve, which further compounds the program
manager’s task. As a result, the Navy cannot determine the effective-
ness or efficiency of the program’s application of resources (flying hours
and funds).

In response to the House Committee on Armed Services’ direction and
this effort, DOD and the Navy have several studies underway to accumu-
late and analyze cost and performance data and to relate the data to
flying hour requirements, Military judgment is likely to play a role in
determining combat readiness and pilot proficiency, but the high cost of
flying dictates that emphasis be placed on developing better measures of
pilot proficiency and mission effectiveness. We recognize that it is fre-
quently not an easy task to identify and determine which measures por-
tray the results of a program accurately and clearly. Devising the best
way to demonstrate the application of resources and the resulting opera-
tional effectiveness is likely to be difficult and an evolutionary process.




Page 23                                          GAO/NSLAD4B-108Flying Hours
Appendix I

Activities Visited


Washington, D.C.           l       Office of the Secretary of Defense, Training Policy Directorate
                           l       Office of the Deputy Chief of Naval Operations for Air Warfare
                           l       Office of the Navy Comptroller


New Orleans, Louisiana     l       Commander of Naval Reserve Force
                           l       Commander of Naval Air Reserve Force


Norfolk, Virginia          l       Commander of Naval Air Force, Atlantic Fleet
                           l       U.S.S. Dwight D. Eisenhower (CVN-69)


Virginia Beach, Virginia       . Commander, Fighter, Medium Attack, Early Warning Wing, Atlantic
                               . Fighter Wing One, Naval Air Station, Oceana
                               l Fighter Squadron 101, Naval Air Station, Oceana


San Diego, California          . Commander Naval Air Force, U.S. Pacific Fleet
                               l Fighter, Airborne Early Warning Wing, U.S. Pacific Fleet
                               l Fighter Squadrons 124, 191, and 194, Naval Air Station, Miramar


Dallas, Texas                  l   Fighter Squadrons 201 and 202, Naval Air Station, Dallas




                                   Page 24                                         GAO/NSIAD-89-108Flying Hours
Appendix II

CaseStudy of the F’-14A Aircraft


                      The F-14A aircraft (see fig. 11.1) is the Navy’s premier fighter and is
                      designed and built specifically to fight enemy planes. Known as the
                      “Tomcat,” the F-14A is a two-seat, twin-engine aircraft with variable
                      sweep wings that can land and take-off from aircraft carriers or land
                      bases. It can detect aircraft and missiles in the sky at extended ranges
                      and track and attack several of them simultaneously. As of April 1987,
                      the Navy had received 557 F-14A aircraft.


                      The F-14A is flown by Navy deployable, fleet training, and Reserve
Who Flys the F-14A?   squadrons. The Navy has 22 F-14A deployable squadrons, each autho-
                      rized 14 aircrews’ and 12 aircraft. These squadrons are an integral part
                      of 11 of the 13 carrier air wings and rotate through an l&month opera-
                      tional cycle. (See fig. 11.2.) The cycle consists of about 6 months deploy-
                      ment aboard an aircraft carrier; 1 month in a personnel turnover and
                      leave status upon return from deployment; 8 months of less intense,
                      turnaround training; and 3 months of more intense training for the next
                      deployment.

                      Deployable squadrons fly F-14As to maintain aircrew readiness and con-
                      duct air operations for the carrier task force. In addition, squadron aug-
                      mentation aircrews in the Naval Reserve use the deployable squadrons’
                      aircraft and flying hours on a limited basis to maintain aircraft carrier
                      landing qualifications.

                      Fleet training squadrons in the Atlantic and Pacific Fleets train graduate
                      pilots and radar intercept officers selected from basic flight school to
                      form F-14A aircrews. The training squadrons also retrain aircrews who
                      formerly flew F-14As. The Atlantic Fleet training squadron was autho-
                      rized 18 instructor pilots and 24 instructor radar intercept officers in
                      1985. In 1986 it had 36 F-14A aircraft.

                      The Naval Reserve has equipped and crewed F-14A squadrons to deploy
                      upon mobilization to the two Reserve carrier airwings and squadron
                      augmentation units-aircrews     designated to augment specific deploy-
                      able squadrons during mobilization. Reserve squadrons conduct aircrew
                      readiness training to prepare for mobilization as a unit and are autho-
                      rized 12 F-14A aircraft and 17 aircrews each. Augmentation aircrews
                      use F-14A aircraft belonging to the Reserve, fleet training, and deploy-
                      able squadrons to obtain their flight training.


                      ‘One pilot and one radar intercept officer constitute an F-14A aircrew.



                      Page 26                                                            GAO/NSIAD-W108 Flying Hours
                                            Appendix II
                                            CaseStudy of the F-14AAircraft




Figure 11.1:U.S. Navy F-14A “Tomcat” Aircraft




                                            Page 26                          GAO/NSIAD-SC108Flying Hours
                                                          Appendix II
                                                          CaseStudy of the F-14AAircraft




Figure
     11.2:Percent                  of Programed Hours Flown Over the OperetiOnel Cycle
125       Percent       of Hours




      1             2          3         4     5      5      7       6        9           10          11   12   13   14       15     16     17     16
      Months

          -              25 Hours
          I I I -        Performance   Level

                                                          Month 1: Personnel turnover and        leave
                                                          Months 2-9: Turnaround   training

                                                          Months 10-l 2: Pre-deployment        training

                                                          Months 13-18: Deployment    period

                                                          Source: Navy briefing documents.




                                                          In its justification for the President’s fiscal year 1987 operations and
Trends in F-14A                                           maintenance budget, the Navy estimated flying hour requirements for
Flying Hours                                              the F-14A aircraft at 120,730 hours and $319.7 million. These amounts
                                                          represented 5.6 percent of the hours and 10.9 percent of the funds the
                                                          Navy estimated for the flying hour program. The percentage of F-14A
                                                          flying hours to total Navy flying hours has been essentially constant
                                                          since 1983.

                                                          However, the F-14A flying hours estimated increased each year from
                                                          fiscal years 1983 through 1987 and the flying hours used increased in 4



                                                          Page 27                                                         GAO/NSLAD-89-108Flying Hours
                                                 Appendix II
                                                 CaseStudy of the F-14AAircraft




                                                 of the 5 years. (See table 11.1.) The Navy flew F-14As about 9,900 and
                                                 15,615 more hours than estimated in fiscal years 1983 and 1984, respec-
                                                 tively. Conversely, it flew F-14As from 1,412 to 5,872 less hours than
                                                 estimated during fiscal years 1985 through 1987.

Table 11.1:F-14A Flying Hours Requested
and Used                                                                                              Flyinq hours
                                                                                                                           Variance
                                                 Fiscal year                Estimated                Actual              Hours             Percent
                                                 1983                            86,737               96,637              9,900                 11.4
                                                 1984                            91,633              107,248             15,615                 170
                                                 1985                           107,144              105,732            -1,412                 -13
                                                 1986                           115,055              113,303            -1,752                 -1.5
                                                 1987                           120,730              114.858            -5.872                 -49
                                                 Note: Estimated amounts are those requested in the President’s budgets submitted to the Congress
                                                 Source: Navy Flytng Hour Projection System and GAO computations

                                                 The Navy spent more for F14-A flying than estimated in fiscal years
                                                 1983 through 1985 and less than that estimated for fiscal years 1986
                                                 and 1987 (see table 11.2.)


Table 11.2:Funds Requested and Used for F-l 4A Flying by the Atlantic and Pacific Fleets and the Naval Reserve
Dollars in millions
                             Atlantic                       Pacific                          Reserve                           Total
Fiscal year           Requested         Actual      Requested             Actual      Requested               Actual   Requested            Actual
1983                       $111.9       $108.7             $80.7            $84.0               $0                $0        $192.6           $192.7
1984                        104.0        108.8              83.2             91.4                0                 0           187.2          200.1
1985                        163.4        158.0             133.5            140.1              3.3               6.7           300.2          304.8
1986                        199.6        170.5             150.7            128.7             15.1              13.4           365.4          312.5
1987                        169.0        159.7             131.9            135.9             18.8              17.9           319.7          313.6
                                                 Note Amounts requested in the Prestdent’s budgets submttted to the Congress
                                                 Source: Navy Flytng Hour Protectron System and GAO computations

                                                 The Atlantic Fleet estimated and used more F-14A flying hours and
                                                 funds than the Pacific Fleet during fiscal years 1983 through ,1987. The
                                                 Reserve had little F-14A flying during this period since it did not begin
                                                 forming F-14A squadrons until fiscal year 1985. (See table 11.3.)




                                                 Page 28                                                           GAO/NSIAD439-108Flying Hours
                                              Appendix II
                                              CaseStudy of the F-14AAircraft




Table 11.3:F-14A Flying Hours Requested and Flown by the Atlantic and Pacific Fleets and the Naval Reserve
                           Atlantic                   Pacific                     Reserve                       Total
Fiscal year        Requested         Actual   Requested          Actual   Requested          Actual   Requested                           Actual
1983                    50,247       54,942       36,490          41,695             0             0       86,737                          96,637
1984                   51,448        59,134             40,185          48,114                0                0          91,633          107,248
1985                   59,351        56,449             46,625          46,588            1,168            2,695         107,144          105,732
1986                   63,238        56,329             47,227          51,143            4,590            5,831         115,055          113,303
1987                   57,740        55,688             54,409          50,411            8.581            8.759         120,730          114.858
                                              Note: Amounts requested II- the President's budgets submltted to the Congress.
                                              Source Navy Flying Hour ProjectIon System and GAO computations



                                              The Navy uses various methodologies in developing its F-14A flying
Budget Development                            hour budget estimate. Navy officials said that the methodologies are
Methodology                                   based on tradition, not on written guidance and instructions. Regardless
                                              of the methodology used, aircrew training is the justification for the
                                              estimated flying hour requirements for the F-14A aircraft.

                                              The program manager, using mathematical formulas, develops the
                                              number of hours needed for deployable F-14A, fleet training, and
                                              Reserve squadrons. According to the program manager, he prices the
                                              F-14A flying hours and consolidates this amount with that for other
                                              types of aircraft to determine the dollar amount to be included in the
                                              President’s operations and maintenance budget request for aircraft
                                              operations. As the request is considered, any changes that affect the
                                              Navy’s total planned flying also will affect the flying hours of particular
                                              aircraft types and will eventually have to be compensated for in the pro-
                                              gram’s execution.


Deployable Squadrons                          Navy headquarters officials said they determined the flying hours
                                              needed for F-14A deployable squadrons by using a standard formula
                                              that is applied to all aircraft employed in tactical air and antisubmarine
                                              warfare. The formula-! for determining F-14A flying hour requirements
                                              is:




                                              ‘The formula for fiscal year 1987 and out years includes an aircrew manning factor that adjusts the
                                              request per the available aircrew. The adjustment for fiscal year 1987 was 95.5 percent of request
                                              and for fiscal years 1988 to 1989, it was 96.5 percent. The simulator reduction was eliminated from
                                              the fiscal year 1987 budget.



                                              Page 29                                                           GAO/NSL4D-89-108Flying Hours
Appendix II
CaseStudy of the F-14AAircraft




Projected average F-14A inventory X budgeted F-14A aircrew-to-seat
ratio = F-14A aircrews requested

F-14A aircrews requested X 25 hours a month = total hours a month for
F-14A aircrews

Total hours a month X 12 months - 2 percent F-14A flight simulator time
= F-14A annual flying hours

F-14A annual flying hours X primary mission readiness rate’ = F-14A
annual flying hours needed

Total F-14A flying hours needed X F-14A cost per hour = dollar amount
included in the Navy’s flying hour program request

According to the deputy program manager, the projected average inven-
tory is the Navy’s estimate of the average number of F-14A aircraft
expected to be held in inventory by all squadrons for the budget year.
The budgeted aircrew-to-seat ratio is based on the Navy’s goals for
staffing each F-14A squadron. The 25 hours is the Navy’s judgment of
the average monthly flying hours each aircrew needs to be proficient at
its job. The primary mission readiness rate is a factor used to compute
the flying hours needed to maintain the minimum acceptable readiness
posture over the long term. Navy officials explained that this rate is
adjusted for those times in the operational cycle when little flying is
done.

According to Navy officials, when applying the formula each year, the
Navy varies the projected average F-14A inventory to reflect the
expected aircraft inventory and the primary mission readiness rate to
reflect the one provided in the program objective memorandum. Accord-
ing to the program manager, the aircrew-to-seat ratio, the 25-hour
monthly standard, and the 2-percent reduction for flight simulator time
remain the same each year.

The flying hours and funds estimated for F-14A deployable squadrons
increased from 66,600 hours and $148.6 million for fiscal year 1983 to
88,300 hours and $235.9 million for fiscal year 1987. In each year, the
Pacific Fleet’s estimate was less than the Atlantic Fleet’s estimate.

“The primary mission readiness factor is adjusted to account for simulator time. For example, the
fiscal year 1987 primary mission readiness rate was reduced from 87 percent to 85 percent for
simulators.



Page 30                                                           GAO/NSIAD-89-108Flying Hours
                           Appendix II
                           CaseStudy of the F-14AAircraft




Naval Reserve              The Navy uses a formula different than that used for deployable
                           squadrons when it estimates flying hour requirements for its F-14A
                           Reserve squadrons. A Navy official explained that it yields about one-
                           half the number of hours required for aircrews in deployable squadrons.
                           Reserve aircrews have experience in F-14s, having served in deployable
                           squadrons while in the active Navy and do not need as many hours. The
                           formula is:

                           Number of Reserve pilot billets X 150 hours4 a year X primary mission
                           readiness rate - 2.5 percent F-14A flight simulator time = annual
                           Reserve flying hours

                           According to the flying hour program manager, he multiplies the total
                           hours determined in the above process by the hourly cost for F-14A
                           Reserve aircraft to compute funds required.

                           For fiscal years 1985 to 1987, the Reserve F-14A flying hour estimate in
                           the Navy’s justification to the President’s budget was relatively small
                           (see tables II.2 and 11.3) because squadrons did not begin flying the air-
                           craft until fiscal year 1985. In that year, the Navy estimated 1,168
                           hours and $3.3 million for the Reserve. These estimates increased to
                           8,581 hours and $18.8 million in fiscal year 1987.


Fleet Training Squadrons   Estimating the flying hours needed for fleet training squadrons is a
                           multi-step process. The Deputy Chief of Naval Operations, Air Warfare,
                           first estimates the number of student pilots and radar intercept officers
                           that will be trained during the budget year. This estimate includes an
                           adjustment to compensate for expected aircrew attrition from the train-
                           ing squadrons and the Fleets’ deployable squadrons. The Deputy Chief
                           then multiplies the adjusted number of students by the number of flying
                           hours required for F-14A training, which varies depending on the flying
                           experience of the students. For example, pilots who have flown 250
                           hours in F-14As have an annual training requirement of 130 hours. More
                           experienced pilots with 1,000 to 1,500 hours experience have an annual
                           training requirement of 80 hours.

                           The Deputy Chief determines the program funds required by multiply-
                           ing the number of flying hours by the F-14A hourly flying cost for the
                           fleet training squadrons. The amounts estimated for fleet training

                           4When computing the flying hours needed by squadron augmentation ah-crews, the Navy uses 136,
                           rather than 150, hours.



                           Page 31                                                       GAO/‘NSIADWlOt3 Flying Honre
                       Appendix II
                       CaseStudy of the F-14AAircraft




                       squadrons increased from 20,099 hours and $44 million for fiscal year
                       1983 to 23,835 hours and $65 million for fiscal year 1987 (see table II.6
                       for this trend). The Pacific Fleet’s training squadron estimate was gener-
                       ally smaller than the Atlantic Fleet’s estimate.


                       Although flying to train aircrews and to maintain proficiency is the
Program Execution      Navy’s justification for its F-14A flying hour estimate, deployable
                       squadrons also obligate hours and funds to fly nontraining missions,
                       such as operations and support. The Navy traditionally allocates more
                       training hours to its F-14A Reserve aircrews than the formula yields.
                       The fleet training squadron generally flew less and spent less than the
                       amounts requested.


Deployable Squadrons   Flying for training constitutes most of the F-14A flying hours expended.
                       However, F-14A deployable squadrons also fly operational missions,
                       from aircraft carrier decks, to investigate and intercept foreign aircraft
                       that intrude into U.S. airspace and approach US. vessels at sea. When
                       deployed aboard aircraft carriers in high threat areas, these squadrons
                       fly combat air patrols to protect carriers and other ships in the force
                       against threatening aircraft. Other reasons for flying include functional
                       checks flights and developmental or evaluation flights.

                       Some F-14A aircrews fly more hours monthly than those produced by
                       the formula. For example, the requirements development formula com-
                       puted a 21.25 hour monthly flying rate for each pilot in fiscal year 1986.
                       During the year, 25 percent of the F-14A aircrews flew 23.5 hours or
                       more a month; some flew as much as 63 hours a month. This can be
                       attributed in part to variations in the number of hours flown during the
                       different stages of the operational cycle. On the high side, aircrews fly
                       about 28.8 hours a month (115 percent of requested hours) during the
                       squadrons’ approximately 6-month deployment period. On the low side,
                       aircrews fly about 6.3 hours a month (25 percent of requested hours)
                       during the stand-down period, which occurs at the end of a g-month
                       deployment.

                       Notwithstanding operational cycle flying requirements, F-14A deploy-
                       able squadrons generally fly more hours than programmed. For exam-
                       ple, Atlantic Fleet aircrews in these squadrons flew 18,743 hours more




                        Page 32                                         GAO/NSIAD49-108 Flying Houra
                                         Appendix II
                                         CaseStudy of the F-14AAircraft




                                         than estimated requirements5 for fiscal years 1984 through 1987, cost-
                                         ing $46.4 million (see table 11.4.)

Table 11.4:Variances in Atlantic Fleet
F-14A Aircrew Flying                     Dollars in millions
                                                                                     Flying hours
                                         Fiscal year                   Formula               Flown           Difference             Amount
                                         1984                             40.188              46.747               6.559               $11.9
                                         1985                             41,208              44,856               3,648                  9.8
                                         1986                             40,494              45,426               4,932                14.3
                                         1987                             40,341              43,945               3,604                 10.4
                                         Total                          162.231             160.974               10.743               $46.4
                                         Source: Navy Flying Hour Prelection System, Atlantlc Fleet monthly squadron tralmng and readiness
                                         reports data, and GAO computattons

                                         We computed Atlantic Fleet flying hours using the Navy’s formula and
                                         compared it with the actual hours flown by the squadrons. The result
                                         was hours flown in excess of formula generated requirements. The
                                         hours were priced out using average hourly costs from the Navy’s flying
                                         hour projection system. While the Navy can adjust formula generated
                                         requirements, we found that aircrews flew more hours than projected
                                         by our computations using the formula and actual data. The same situa-
                                         tion existed for the Reserve (see table 11.5).

                                         According to Navy officials, the 25-hour standard has been used from
                                         the first year the F-14A became operational. However, it was reevalu-
                                         ated and found to be less than what air-crews actually needed to main-
                                         tain their proficiency. While the data suggest that too many hours are
                                         flown, Navy officials said too few are flown. However, it appears that
                                         no one really knows.

                                         In commenting on a draft of this report, DOD stated that it was inappro-
                                         priate to compare the results generated by the requirements formula
                                         with the hours actually flown. According to DOD, it is more appropriate
                                         to compare the larger amount contained in the President’s budget
                                         request with the actual flying. We believe our comparison is appropriate
                                         since our focus was on the validity of the requirements formula, which,
                                         according to the Navy, provides sufficient hours to maintain the profi-
                                         ciency of pilots.



                                         “Computed by multiplying the programmed monthly flying hours per aircrew times the average
                                         assigznedaircrews in Atlantic Fleet F-14A squadrons.



                                         Page 33                                                           GAO/NSIAD-99-109Flying Hours
                                      Appendix II
                                      CaseStudy of the F-14A Aircraft




Naval Reserve                         Flying hours requested for F-14A Naval Reserve squadrons and squad-
                                      ron augmentation units are used solely for training. During fiscal year
                                      1985, when Reserve squadrons received F-14A aircraft, they flew a total
                                      of 2,695 hours, costing $6.7 million. By fiscal year 1987, after additional
                                      F-14A aircraft were added to Reserve squadrons, flying hours and dol-
                                      lars spent increased to 8,759 and $17.9 million, respectively.

                                      According to Reserve officials, in fiscal year 1987 the Navy allocated
                                      135 flying hours to each F-14A Reserve aircrew, even though the com-
                                      puted annual requirements yielded an actual aircrew average of 130
                                      hours. A Navy official explained that this was done to insure that 100
                                      percent of the funds were used since, traditionally, Naval Reserve
                                      squadrons manage their flight operations conservatively and tend to
                                      underobligate their allocations. However, like the deployable squadrons,
                                      we found that F-14A Reserve aircrews generally flew more hours than
                                      the projected requirements6 Since fiscal year 1985, actual Reserve air-
                                      crew flying hours have exceeded formula requirements by 4,553 hours,
                                      costing $9.8 million (see table 11.5).

Table 11.6:Variances In F-14A Naval
Reserve Aircrew Flying                Dollars in millions
                                                                                      Flying hours
                                      Fiscal vear                   Formula                Flown           Difference             Amount
                                      1985                              2.544               2.695                   151                   $4
                                      1986                              4,198               5,831                1,633                    3.7
                                      1987                              5,990               8,759                2,769                    5.7
                                      Total                           12,732              17,286                 4,553                   $9.8
                                      Source: Navy Flying Hour ProjectIon System, Reserve squadron monthly traintng and readiness reports,
                                      and GAO computations



Fleet Training Squadrons              F-14A training squadron hours flown and funds used fluctuated during
                                      fiscal years 1983 through 1987. (See table 11.6.)




                                      “Computed by multiplying the programmed monthly flying     hours   per aircrew times the average
                                      assigned aircrews in Atlantic Fleet F-14A squadrons.



                                      Page 34                                                            GAO/NSIAIMS-109 Flying Hours
                                             Appendix II
                                             CaseStudy of the F-14AAircraft




Table 11.6:Flying Hours and Funds Requested and Used by F-14A Fleet Training Squadrons
Dollars in mdhons
Fiscal                                          Flying hours                                                  Dollar3
year        Fleet              Requested                 Used            Variance        Requested                      Used     Variance
1983        Atlantic                11,193               11,353                160              $24.3                   $23.2       G1.2
            Pacific                  8,906                8,807               -99                19.7                    17.5        -2.2
            Total                   20,099               20,160                  61              44.1                    40.7        -34
i984        Atlantic                 9,597               12,387              2,790               19.0                    23.6           4.6
            Pacific                  9,772               10,586                 814              20.2                    21.1             .8
            Total                   19,369               22,973              3,604               39.3                    44.6           5.4
1985        Atlantic                12,075               11,593              -482                33.9                    37.1           3.2
            Pacific                 10,058                9,263              -795                28.8                    30.3           1.5
            Total                   22,133               20,856            -1,277                62.7                    67.4           4.7
1986        Atlantic                12,102               10,903            -1,199                42.2                    38.7         -3.5
            Pacific                 11,890               11,831                -59               41.0                    24.0       -17.0
            Total                   23,992               22,734            -1,258                83.1                    62.7       -20.4
1987        Atlantic                12,001               11,743              -258                41.1                    33.3           7.9
            Pacific                 11,834               10,952              -882                23.9                    28.4           4.5
            Total                   23,835               22,695            -1,140                65.1                    61.7           3.4
                                             aTotals do not add due to rounding.
                                             Source: Navy Flymg Hour ProjectIon System and GAO computations

                                             Both fleet training squadrons averaged eight classes a year in fiscal year
                                             1988. A class is 30 to 33 weeks duration, depending on the extent of
                                             preliminary training that students receive before the class, such as sur-
                                             vival training. Also, some students require more flying time than others
                                             to complete the training program.




                                             Page 35                                                          GAO/NSIAD-89-108Flying Hours
Appendix III

Comments From the Department of Defense



                                            ASSiST*NT    SECRETARY      OF   DEFENSE




                                                                                          26   JAN1988
               Mr. Frank C. Conahan
               Director,      National      Security     and
                  International        Affairs     Division
               U.S. General       Accounting       Office
               Washington,      DC 20548
               Dear Mr. Conahan:
                       This is the Department             of Defense (DOD) response        to the
               General    Accounting        Office    (GAO)   draft report,   "NAVY FLYING HOUR
               PROGRAM: Costs Should Be Linked to Operational                   Effectiveness,"
               dated October         14, 1988 (GAO Code 394199/OSD Case 7803).                 The
               Department      generally       concurs    in most of the report      findings,     but
               certain    clarifications          and corrections     are necessary     to make the
               report   fully      accurate.
                         The Department          agrees that the standards              used in
               determining         flying     hour requirements           need to be validated          and
               that better         performance       objectives,        linking    requirements
               determination           and requested       resources,        should be developed.            As
               an initial        step,     the Navy is in the process              of revalidating         the
               standards       used to determine           program requirements.             The DOD and
               the Navy are also working                toward developing          better    linkages
               between flying           hours and mission          performance.         For balance,       the
               GAO report        should acknowledge           these initiatives,          which are
               intended      to improve        the effectiveness           and efficiency        of the Navy
               flying     hour program.           Developing       new methods of budgeting             and
               justifying        flying     hour programs        is a difficult         and complex
               process.        It is projected          that the new methodology             will   first     be
               reflected       in the FY 1992-FY 1993 President's                    Budget.
                       The Department         does not agree with the statement            in the
               draft   report     that variances       between the budget for the flying
               hour program and its execution              are not analyzed       for program
               effect.     Variances      are reviewed        at the carrier    air wing level
               for effect       on mission     readiness.       Review of variances      at the
               Navy-wide      type model series        level,    as suggested     by the GAO, does
               not adequately        consider     the dynamics of the training          environment.
               However,    the Navy is reviewing           alternative     methods for evaluating
               variances.
                        Detailed   Department   of Defense             comments        on the GAO findings
               are   provided    in the enclosure.




               Enclosure:
               As Stated




                     Page36                                                                 GAO/NSIADSS-108F'lyingHours
                                    Appendix KU
                                    CommentaProm the Department of Defense




                                                GAO DRAFT REPORT, DATED OCTOBER 14, 1988
                                                     GAO CODE 394199, OSD CASE 7803
                                          "NAVY FLYING HOUR PROGRAM: COSTS SHOULD BE LINKED
                                                     TO OPERATIONAL EFFECTIVENESS"
                                                         DEPARTMENT OF DEFENSE COMMENTS
                                                                        l    l   t   *   t




                                                                            FINDINGS

                              FINDING A: Overview                of Flying     Hour Program.          The GAO reported
                              that the Navy's primary                 means of providing         proficient      aircrews     is
                              through hands-on            training      in the flying        hour program,       which funds
                              the number of hours Navy and Marine Corps aircraft                              can be flown
                              and provides         each aircrew         with flight       time.      The GAO explained
                              that the Navy flying               hour   program accounts          for part of the costs
                              for fuel,     other       petroleum       products,      and repairs       to aircraft
                              components,       as well as those costs associated                     with administrative
                              supplies     and services.              The GAO further        explained      that
                              procurement,         overhaul,         and repair     of aircraft       and engines       are
                              paid for by other programs,                  as are the aircrew           and the
                              maintenance       payroll,         maintenance      training,       and the costs of
                              aviation     facilities.             The GAO reports        that flying       hour
                              requirements         in the Navy’s justification                of the President's
                              budget request           for FY 1987 were projected               at 2.2 million        flying
                              hours,    costing        $3.1 billion.          (In order to obtain           an
                              understanding          of the flying         hour program,        the GAO conducted          an
Now on pp, El-9 and pp. 25.   in-depth     case study of the Navy F-14A.)                    (p. 1, pp. 7-9, pp.
35                            35-54/GAO Draft           Report)
                              DOD Response:      Concur.      It should be noted, however,      that the
                              flying     hours and costs cited       in this finding  represent    the
                              FY 1987 President's       Budget Request for both active        and reserve
                              forces     for the total    Department    of the Navy Flying    Hour Program.
                              The GAO report,      on the other hand, focuses on the Tactical
                              Air/Antisubmarine       Warfare    (TACAIR/ASW) portion    of the General
                              Purpose Forces Flying        Hour Program.
                              FINDING B: Previous       Reviews And Congressional      Concerns.                     The GAO
                              pointed   out    that, ' Drevious
                                                     in              GAO reoorts. the adeouacv                     of the
                              processes     the Naby used to budget and execute       the flyi;g                    hour
                              program were questioned,        as follows:




                                                                                             Enclosure to Letter on
                                                                                             GAO Draft Report W7803
                                                                                             Page 1 of 10




                                     Page 37                                                                GAO/NSIAD-S9-108Flying Hours
                             Appendix III
                             CommentsFrom the Department of Defense




                         -   In 1976, the GAO cited         examples of nonessential          flights    and an
                             inability    to determine      if readiness     standards      were being met
                             by aircrews,     and concluded      that the Navy needed a more
                             effective    management of its flying         hours.       At that time     the
                             GAO recommended the Navy improve the accuracy                  of reports     on
                             aircrew   readiness,     eliminate     unnecessary     flying,     and increase
                             the benefits     derived    from hours flown.       l/
                         -   In 1979,    the GAG reexamined           the program and found that the
                             Military    Services     had improved        the flying       hour program
                             management systems;        however,        some areas required         further
                             attention.       21 The GAO concluded           that (1) the Navy's
                             standards     for P-3 patrol        aircraft     flying     could have been
                             reduced,    (2) the central         programming        of flying    hours did not
                             adequately      consider    the operating       environment--i.e.,           material
                             readiness     and maintenance         problems,      and (3) flying       by many
                             supervisory      and staff     pilots      may not have been necessary.               At
                             that time the GAO recommended the DOD develop                      improved
                             guidance    for managing the Services'               flying    hour programs.
                         -   In 1983, the GAO reported          3/ budget estimates   were based on
                             formulas      that did not represent      the missions being
                             funded--i.e.,        the budget was based on training     needs, while
                             much of the Navy’s flying          was for nontraining   activities.   At
                             that time the GAO concluded           the Navy lacked program goals and
                             performance       indicators   needed to measure program effectiveness
                             and to develop         future budget requests.
                         The GAO reported            that,     in April     1988, citing      continuing    GAO
                         concerns        regarding       the flying      hour program,      the House Committee
                         on Armed Services             directed     the Navy to provide         budget
                         justifications,           to include       (1) measurable       mission-related       goals
                         and the resources             needed to meet each goal,            (2) a method for
                         measuring         the degree to which the goals are met, and (3) an
                         explanation          of the variances          between goals and actual         results.
Nowon   pp.   4and9-10   (p. 3, pp.1 g-lo/GAO Draft                 Report)
                         DOD Response:         Concur.

                             i/"Flying       Hour Programs of the Military     Services:
                                   Opportunities     for Improved Management,"     June             18,   1976,
                                   OSD Case 4245
                             z/"The    Services   Can Further  Refine Management                 of Flying      Hour
                                  Programs,"    March 27, 1979, OSD Case 5038
                             z/"The    Defense Budget:   A Look at Budgetary    Resources,
                                  Accomplishments,    and Problems," April   27, 1983, OSD
                                  Case 6192
                                                                                    Enclosure to Letter  on
                                                                                    GAO Draft Report t7803
                                                                                    Page 2 of 10




                              Page 38                                                              GAO/NSIAD-89-IO8Flying Hours
    Appendix III
    Comments From the Department of Defense




FINDING C: Programming                 and Budgeting          Flying     Hours and Costs.
The GAO reported            that,    during       the programming          process,      the
program manager computes flying                      hour requirements--i.e.,                the
number of hours needed for each aircraft                           type,     model, and series
(TMS ) . The GAO found that the method of calculating                                  hours varies
by program segment:               for example,         support     and administrative
flying      uses    historical       aircraft-utilization              rates,       while each of
the four other segments                 (TACAIR/ASW, carrier-deployable                    reserves,
fleet-replacement              squadrons,      and undergraduate             training)      has its
own formula.           According        to the GAO, these formulas                  are passed,
informally,         from the outgoing             to the incoming          program manager and
represent        the historical          practice       of past managers.              The GAO
explained        that the formulas            use certain        values,       of which some
(like     the monthly hours per aircrew)                     vary by aircraft,            and other
(such as the reduction                for flight-simulator              use)     were applied       to
all aircraft.            According        to the GAO, the need for accurate,
objective        standards        is evidenced         by their      importance        in computing
flying      hour requirements             and, therefore,          Navy budget requests.
The GAO concluded              that inaccurate           standards      result      in overstated
or understated           requirements         computations,          which impact resource
requests       and usage.
The GAO explained           the    requirements        determination/budget              process
as follows~
     general   programming   and budgeting      of the flying  hour program
     are directed     by DOD guidance     in the areas of policy,     strategy,
     and force and resource      planning    as well as fiscal    decision-
     making:
     after determining    the number of hours needed                         per   aircraft
     type.  the program manager estimates       the cost                     per   flying       hour
     for each and adjusts     it for inflation:
     the program manager            then multiplies           the   cost     per hour         by the
     number of hours for            each aircraft:
     the sum of the hours and costs constitutes          the program
     resources  requirements,      which appear in justification
     documents  used to support      the Navy funding    request   for
     aircraft  operations     in the President's    budget:
     funding    for aircraft     operations     is provided                 primarily  through
     the general     purpose   forces budget activity                      of the Navy
     Operations     and Maintenance       Account:
     the Navy's   congressional      budget submission         identifies     the
     funds requested     for the general       purpose    forces budget activity
     and for each general       purpose    forces   category,      such as aircraft
     operations,   and identifies       total    amounts requested        for
     TACAIR/ASW. fleet      air training,      and fleet     air support
     operations,   and the Congress appropriates             one amount

                                                               Enclosure to Letter on
                                                               GAO Draft Report #7803
                                                               Page 3 of 10




     Page 39                                                                   GAO/NSIALM9-108 Flying Hours
                                Appendix III
                                CommentsProm the Department of Defense




                               for all Navy Operations    and Maintenance  activities,    which the
                               Navy then allocates    to each operations  and maintenance     budget
Now on pp. 2-3 and 12-14       activity.   (pp. 1-2, pp.1 13-16/GAO Draft     Report)
                           DOD Response:           Partially   concur.       The DOD agrees with the basic
                           description         of the programming       and budgeting         of the flying    hour
                           program.        The method for calculating             flying    hour requirements
                           does vary by program area (TACAIR/ASW, fleet                       readiness    squadrons,
                           fleet      support     squadrons,   reserve      forces,      and undergraduate
                           training),         since each program area has a unique function                  and
                           focus.       The GAO report       is specifically          concerned     with the budget
                           methodology         used for TACAIR/ASW.
                                  The finding       that the formulas        used to determine        flying  hours
                           are informally         passed from the outgoing            program manager to the
                           incoming     program manager is incorrect.                 While there is no
                           Navy-wide      directive       encompassing     all aspects       of the flying    hour
                           program,     the program is managed under defined                   and documented
                           programming       and budgeting        guidance    applicable       to all Navy
                           programs.       Additionally,        historical     records      are maintained    to
                           provide    the program manager insight               into past management.         The
                           program manager must have a broad knowledge                      of the guidance     and
                           historical      documents,       as well as a thorough understanding              of the
                           Planning,      Programming,        and Budgeting       System (PPBS) process,        in
                           order to execute           his duties.
                                 The description    of the requirements       determination/budget
                           process   for the TACAIR/ASW portion         of the flying      hour program
                           provided    in the finding     is also not fully      correct.      The process
                           is more accurately      described    as follows:
                                  -   Fiscal    guidance     is provided     by the Secretary    of
                                      Defense for the overall           Department   of the Navy program at
                                      the commencement of the PPBS process.               From this
                                      guidance,     the Secretary       of the Navy develops     specific
                                      programming      guidance    for the flying     hour program.       Prior
                                      congressional       action   and direction     that will   impact
                                      future    programming      decisions    are also considered.
                                  -   Programmed/budgeted         requirements     are stated in terms of
                                      hours per crew per month for each type of aircraft,              as
                                      approved      by the Assistant      Chief of Naval Operations     for
                                      Air Warfare.        Requests    for changes accompanied     by
                                      justification       are submitted      to the Assistant   Chief of
                                      Naval Operations        for Air Warfare by the Fleet Commanders
                                      on an 1(a8 occurring"        basis.
                                  -   Cost factors      are developed using a cost              finding system
                                      (Flying    Hour Program Management System)                and DOD-approved
                                      escalation     indices.

                                                                                         Enclosure     to Letter on
                                                                                         GAO Draft     Report 17803
                                                                                         Page 4 of     10




                                 Page 40                                                            GAO/NSIAD-WlOS Plying Hours
   Appendix III
   Comments   From the Department of Defense




         -   Historical   data are reviewed   to determine                     any anomalies
             in execution    of type model series   aircraft                    flying hours.
         -   The Flying      Hour Program Projection    System is then
             employed to ensure that the above actions         are completed
             within    financial    controls.   From this system,    the
             supporting      budget data is produced    by the program
             manager.
         -   The Fleet Commanders submit their                budget requests       and
             reconcile     changes in program and pricing                in the OP-5
             budget exhibit,       which is the primary          budget justification
             material    provided     in support    of the budget request.              The
             budget exhibits       are reviewed     by the Navy Comptroller             and
             the Off ice of the Secretary          of Defense,         and resources     are
             adjusted    to reflect     fiscal   realities.          The distribution
             of funds by type of resources             (fuel,     aviation     depot level
             repairables      (AVDLR) and intermediate            maintenance)      and by
             aircraft    type model series       is reflected          in budget
             supporting     material.
         -   After    the President’s     Budget has been submitted          to the
             Congress,    the subsequent      congressional       action   is *
             reflected    as the current      estimate      in the next President’s
             budget . This estimate         is the final      approved   program and
             the baseline     for   measuring    execution.
FINDING D: Executing                 the Program.           The GAO explained            that the
Navy     Comptroller         apportions        quarterly        obligational         authority      to
the fleet         commanders-in-chief,             based on their            spending      plans and
prior     quarterly        obligations         (if any quarterly             obligation        exceeds
plans,      obligational          authority       for the remaining             quarters       may be
decreased).            According       to the GAO, quarterly               obligational
authority         is successively           passed down from fleet                commanders-in-
chief     through        command channels           to squadron commanders.                  In turn,
each commanding officer                  authorized       to expend funds must ensure
that hours flown and obligations                       incurred       do not exceed the
resources         allocated.         The GAO reported            that the Navy uses two
systems to collect              data on the program.                 The Flying       Hour Program
Management System (FHPMS) is used to maintain                                data on hours flown
and the obligations               incurred,       while     the Navy Flight            Record
Subsystem         is used to maintain             data on aircraft             maintenance,
aircraft        inventory       and naval officers‘              flying.        The GAO explained
that the program manager uses the FHPMS to ensure that
obligations           match funding,          coordinates        with the Navy Comptroller
on selected           program data,         reviews      major exceptions            to planned
flying      hours and obligations,                and prepares          a quarterly        summary
report,      which is used to identify                   significant         deviations        in
 funding     and flying         hours.        The GAO further            explained      that the
Navy Comptroller             monitors       execution       of the TACAIR/ASW segment,
using quarterly             reports      prepared      by the fleet          commanders-

                                                                Enclosure to Letter on
                                                                GAO Draft Report #7803
                                                                Page 5 of 10




       Page 41                                                                 GAO/NSIAD-W108 Flying Iioura
                         Appendix LII
                         CommentaFrom the Department of Defense




                r-
                     in-chief,     which contain         data on the number of onboard aircrews
                     and hours flown for four mission               areas (training,         exercises,
                     contingency       operations,       and operations     and services).          The GAO
                     reported     that,    although      controls   have been established           to
                     monitor     hours flown and obligations            incurred    to ensure they do
                     not exceed resources           allocated,    program managers are allowed
                     flexibility        in deciding      where to place their       resources.          (PP.
Nowonpp.14-15        16-2O/GAO Draft         Report)
                     DOD Response:          Concur.      However,       the GAO description            of the
                     financial     procedures        for the execution           is oversimplified.
                     Squadron commanders receive                operating      target      (OPTAR) allocations
                     for fuel and administrative                supplies     only.       Maintenance        funding
                     is provided       to the supporting          Naval     Air Station       or aircraft
                     carrier.       The Flying       Hour Program Management System (FHPMS)
                     piggybacks,       to some degree,          on required        financial      reporting.
                     Squadron monthly OPTAR reports                 are used to financially                obligate
                     fuel funds.         These obligations          are then introduced             into the cost
                     finding     system of FHPMS. The primary                  reporting       system for
                     resources      obligated      in support       of the flying         hour program is the
                     official     Navy    accounting        system.       The FHPMS organizes            these costs
                     by resource       category      (fuel,     AVDLR, maintenance)            to allow timely
                     management action          as well as future           budget projections.
                     FINDING E: Program Lacks Objective                           Budget Estimates           and
                     Performance         Measures.         The GAO found flying                hour program formulas
                     employ values          that have not been objectively                       tested     or
                     demonstrated         by the Navy.             The GAO reported            that the formulas          are
                     passed informally             from program manager to program manager.                            The
                     GAO could not locate               documented          validations        of the values or
                     documentation          of how the formulas                came to be accepted             as
                     justification          for flying         hour requirements.                The GAO cited       the
                     example of the 25-hour monthly                       standard      that each F-14A aircrew
                     needs to maintain             proficiency.            The GAO reported            that,    according
                     to the Navy, this standard                    is not supported            by a study though it
                     has been used from the first                     year     the F-14A       became operational.
                     The GAO observed,             however,        that when the standard                was
                     reevaluated,         it was found to be less than what was actually
                     needed to maintain              proficiency.            The GAO noted that Fleet and
                     Reserve commanders are responsible                          for providing         combat-ready
                     aircrews       and for insuring             that total         hours flown and funds spent
                     do not exceed those allocated                      by the Navy Comptroller.                  The GAO
                     concluded        that current          management controls               insure     that commanders
                     do not exceed          dollar      allocations          in total       for the general         purpose
                     forces budget activity:                  however,       neither      the Navy budget nor its
                     management information                 system      link     requirements         determination        or
                     resource       expenditures          to any measure of program achievement.                           The
                     GAO further         concluded,         because the Navy has not adopted mission-
                     related       performance         objectives         describing        what the program is
                     expected       to achieve,         it cannot determine               the effectiveness           or
                     efficiency         of the program's             application        of resources.            The GAO

                                                                                      Enclosure       to Letter on
                                                                                      GAO Draft       Report W7803
                                                                                      Page 6 of       10




                          Page 42                                                                     GAO/NSIAD89-108Flying      Hours
                                 Appendix III
                                 CommentsFrom the Department of Defense




                            suggested   that such measures or performance                objectives       might be
                            based on (1) the number of combat-ready             aircrews         trained,     (2) the
                            number of mission       hours flown developing         skills      and building
                            proficiency    in performing     missions     like   the antisubmarine            warfare
                            missions,   or (3) the number of hours flown for special
Now on pp, 2-3, 16-17,and   operations,    such as the Persian       Gulf.     (p. 2, pp. 22-24, p.
21                          31/GAO Draft     Report)
                            DOD Response:           Concur.         The values        used in determining
                            requirements          need to be validated.                The finding        refers   to the
                            use of formulas           employing         value6     that have not been objectively
                            tested     or demonstrated           by the Navy.             The GAO is questioning
                            the value       of the hours per crew per month requirement6                           for
                            100 percent         Primary      Mission        Readiness      (PMR).     The Navy initiated
                            an evaluation          of the hours per crew per month standard                        in
                            May 1988.         This ongoing evaluation,                  involving     every aircraft
                            community and requiring                 Fleet      Commanders’ concurrence,             is
                            expected      to be completed             by the end of FY 1989.                However,     this
                            evaluation,         in itself,        will      not meet the intent           of the GAO
                            finding.        In addition,          the Navy will           be required       to transition        to
                            a different         budget methodology              for TACAIR/ASW flying            hours.       This
                            transition        is considered           a major evolution           requiring      several
                            years.      The Navy will           initiate        this process       with the intent          of
                            incorporating          available        indicators        in the FY 1992-FY 1993
                            President’s         Budget.
                                    The Department            also concurs that better                   performance
                            indicators       can be developed               to measure readiness.                 The
                            determination         of readiness            resulting          from training        activity        is
                            not an entirely           objective        process.            Readiness        is measured
                            against     a standard          derived       by applying           objective      techniques         to
                            expert     opinion.        A matrix        of     training         events     is formulated
                            based on a generic              threat     scenario.            Full achievement           of the
                            training      depicted        in this matrix              represents        the attainment          of
                            100 percent        PMR. The hours per crew per month standard for a
                            particular       aircraft         is related          directly        to the amount of flying
                            required      for a crew to complete                    this matrix         of required        training
                            events.       The evaluation             to validate           the determination           of program
                            requirements        will      also result           in the development             of indicators
                            that measure mission                performance           for justifying          budget resources
                            and measuring         execution.           The Navy will              maintain     PMR until        the
                            on-going      process       of developing             meaningful         measures of
                            requirements         and performance              is complete           and operational.
                                   An on-going       research      project,     sponsored      by the DOD and aimed
                            at developing        objective     linkages     between flying         hours and
                            indicators      of operational         performance,        is expected       to help in
                            these processes.           This DOD-sponsored          research     project,       which
                            covers both Navy/Marine            Corps and Air Force flying                programs,    is
                            described     in detail        in a GAO draft       report    on Air Force flying
                            programs,    entitled        “AIRCREW TRAINING:            Developing     Objective      Data
                            to Support      Flying     Hour Programs”       (GAO Code 392373/0SD             Case 78421,
                                                                                              Enclosure        to Letter on
                                                                                              GAO Draft        Report #7803
                                                                                              Page 7 of        10




                                 Page 43                                                                       GAO/NSIAD-SQlOSplying Houm
                                Appendix III
                                CommentsProm the Department of Defense




                            dated November       23, 1988.      The major research         done under this
                            project    during    1988 has been analysis           of Navy carrier         landing
                            grades and Marine Corps bombing scores as a function                        of pilots'
                            recent    and career     flying   experience.         The results      indicate       that,
                            in these cases,       there is a positive         relationship       between both
                            short-term      and long-term     flying    experience       and performance.            An
                            extensive     program of future        research     is planned     to follow        up on
                            these results.        Since Naval Aviation          is a full     partner       in this
                            research    project,     the GAO report       on the Navy flying          hour program
                            should give recognition         to this effort         equal to that given to Air
                            Force participation.
                                    In addition         to this research        project,     the Navy has also
                            begun two projects              to gain a better       understanding       of the
                            differential          effects     of flying     hours on aircrew        performance
                            during      various      phases of the deployment            cycle.     Another    study is
                            in preparation           with the objective         of developing       a methodology       to
                            determine        aircrew      readiness     for each type of aircraft.             For
                            balance,       the GAO report         should acknowledge          these Navy initiatives
                            to improve the effectiveness                   and efficiency        of its flying     hour
                            program.
                            FINDING F:           Variances       Are Not Evaluated              For Program Effects.
                            The GAO reported             that the flying           hour program is a part of the
                            Navy Operations            and Maintenance            Appropriations             and, as a result,
                            the Navy has the flexi,bility                    to reallocate           resources        among
                            various       aircraft       to meet unforeseen               emergencies.           According       to
                            the GAO, for the period                   FY 1983-Fy 1987, the Navy’s actual flying
                            hours under the program ranged from 2 million                                  to 2.2 million,
                            representing           at least      94 percent         of the hours requested                  in the
                            Navy budget.            The GAO reported            that,      over the period,             the Navy
                            annually        spent at least            90 percent        of the $1.8 billion               to $3.0
                            billion       requested        and, although          that overall          data implies          that
                            program execution              parallels       the request,           individual        aircraft
                            statistics          show wide variances             in flying        hours and funds
                            allocated         and used.        The GAO reported             that,      although       there are
                            variances         in program budget and execution,                       Navy     reports       do not
                            identify        the reasons         for the variances,              and management does not
                            routinely         evaluate      the effect         of the variances              on program
                            operations          or ability        to carry      out missions.              According        to the
                            GAO, during          the period         from Fy 1984-Fy 1987, the Navy data base
                            showed that deployed               Atlantic        Fleet and Reserve F-14A aircrews
                            flew 23,296 hours more than estimated,                            resulting         in additional
                            costs of $56.3 million;                   however,      the Navy does not have a way of
                            knowing how, if at all,                   the increased         flying      hours affected           F-14A
                            pilot      proficiency         or the Navy's          ability       to conduct tactical              air
Now on pp. 1-3 and 17-21’   missions.           (PP. l-3,      pp. 24-32/GAO Draft Report)

                                                                                              Enclosure to Letter  on
                                                                                              GAO Draft Report t7803
                                                                                              Page 8 of 10




                                 Page 44                                                                      GAO/NSIADS%loS Plying Hour
     Appendix III
     Comments Prom the Department             of Defense




DOD Response:           Nonconcur.         The DOD does not agree that
variances     are not evaluated             for     program effect.              Variances        in
the flying      hour program are reviewed                  at the level           that is
meaningful,       evaluated       for program effect,              and reflected            in future
budget submissions.             Since the budget for the flying                         hour program
is developed        and justified          on a PMR basis,            it is appropriate               to
review and evaluate            variances        on the same basis.                Furthermore,
since the TACAIR/ASW portion                  of the flying          hour program iS
executed     primarily       by carrier         air wings,        the PMR review            is
primarily      focused at the carrier                air wing level.              Carrier       air
wings are composed of a mixture                     of type model aircraft                 and, as
units,    are responsible           for multiple          missions.          Training       to meet
these multiple          missions      requires        use of different             carrier      air
wing assets       at different          times.        It is essential            that the carrier
air wing commander have the flexibility                         to modify training                plans
 in response       to specific        threats       as scenarios          change in deployed
operations.         When variances          occur at the type model series                         level
 in a carrier        air wing, they are in response                     to specific          training
requirements         to meet specific            threats.       The review          of variances
at the type model series                level      Navy-wide,       as suggested           by the
GAO, would not fully             capture       the mission        readiness         gains afforded
 to the carrier         air wing through            increased       flexibility.            However,
 the flying      hour program review described                    in the next paragraph
may result       in improved methods of evaluating                        program variances.
        It is anticipated           that the results           of the ongoing evaluation
to validate        determination         of program requirements              and develop
readiness       indicators      to measure mission             performance      will       also
provide     a means to address program variances                       that occur        in
execution       and their      effects.        The DOD intends           to evaluate
variances       in the flying         hour program at a level              of detail         that
will    provide      meaningful       information.         The evaluation         of the
flying     hour program is expected                 to produce a methodology               to track
the determination          of requirements            through      the budget process             to
program execution,           and will       include      a review      of the best method
to address program variances                  (i.e.,     carrier      air wing, aircraft
community).          It is projected          that the new methodology               will      be
reflected       in the FY 1992-Fy 1993 President's                      Budget.
        With regard to the methodology         used to determine     variances
in the F-14 case study,           the current  year column of the
President's         budget request    should be used to measure budget
execution       (i.e.,    to measure FY 1984 execution,     the FY 1984
current     estimate      column of the FY 1985 President's      budget request



                                                                  Enclosure       to Letter  on
                                                                  GAO  Draft      Report t7803
                                                                  Page    9 of    10




      Page 45                                                                      GAO/NS-108              Flyine   Hours
   Appendix Ill
   CommentsProm the Department of Defense




should     be used).  For example,      the corrected      numbers    for   the
Atlantic     Fleet are as follows:
                     HOURS           HOURS
            FY       BUDGETED        FLOWN          DIFFERENCE              PERCENT
           1984      46,757           46,747                  10                 .02
           1985      46,648           44,856              1,792                3.84
           1986      47,304           45,426              1,878                3.97
           1987      45,739           43,945              1,794                3.92
           TOTAL    186,448          180,975              5,474                   2.93


                                RECOMMENDATIONS

None.




                                                        Enclosure to Letter on
                                                        GAO Draft Report Y7803
                                                        Page 10 of 10




     Page 46                                                       GAO/NSIAD-89-108Plying Hour
Appendix IV

Major Contributors to This Report


            1
National SeCUrity and   Ati   Jmes
                                     ,
                                         Statistician


International Affairs
Division, Washington
D.C.

Norfolk Regional        Lawrence E. Dixon, Evaluator-in-Charge
Office                  Brenda M. Wolfred, Evaluator
                        Robert C. Mandigo, Evaluator
                        Raul S. Cajulis, Evaluator
                        George 0. Morse, Evaluator




 (394199)                Page 47                                 GAO/NSIAD-99-109Flying Hours