Detailed Information on the
Marine Corps Depot Maintenance Assessment

Use the Cost Performance Index (CPI) to manage the program. The CPI provides management a tool to measure the efficiency of readiness reportable lines at the Marine Corps Depots. It provides an efficiency rating for work accomplished and the resources expended either in dollars or hours. On a perodic basis, at least monthly, the Marine Corps will calulate the index and make programmatic adjustments to meet its goals. These actions may include, but are not limited to; rebaselining the program, process improvement, scope adjustment, and resouce reallocation.

Report 90% of O& M, Marine Corps funded workload metrics within the Performance Assessment Rating Tool by the year 2011.

Measure: Cost Performance Index

Explanation:The CPI is an efficiency rating for work accomplished and the resources expended either in dollars or hours. The CPI provides an efficiency ratio between the value of work accomplished and the cost or resources expended to complete the work. A simple rule of thumb is if the CPI is .83 then for every dollar spent only .83 cents is being earned. Conversely if the CPI is 1.10 then for every dollar spent we are gaining 1.10 in accomplishment. Arithmetically this is expressed as CPI = Planned/Actuals or CPI = Budgeted Cost of Work Planned / Actual Cost of Work Planned (cost of work to date).

Measure: Schedule Performance Index

Explanation:The SPI is an efficiency rating for work accomplished. It compares the cost of work accomplished with what should have been accomplished according to the plan. Arithmetically the SPI is expressed as SPI = Planned /SW or SPI = BCWP / BCWS.

Measure: Repair Cycle Index

Explanation:The Repair Cycle Index is a expression of the efficiency of the estimated Repair Cycle Time and the actual repair Cycle Time. Given that ?? k = number of observed actual repair cycle times (completions) ?? RCT is the estimated repair cycle time ?? RCX is the Repair Cycle Index ?? D is the new program duration Formulas' can produce a ratio from program completions (actual / plan), then apply the performance ratio to the sum of the planned durations to obtain a predicted completion. These formulas are expressed as: ?? RCX= RCT/ ?? D = N*RCT/RCX To provide a way to determine what the new repair cycle time will have to be to average an overall value equal to the planned RCT and complete the program within the original schedule one must:

Measure: Estimate at Completion

Explanation:The Estimate at Completion, or the cost to complete the project is, by far, the most critical element within performance reporting. At the beginning of the program the Estimate at Completion will equal the cost of all planned work which is commonly referred to as the Budget at Completion. Once resources are expended on the project the projected cost will vary either in a positive or negative direction. Projecting this trend will establish an Estimate at Completion. A simple Estimate at Completion arithmetically is EAC = A (actual cost) + FP (value of uncompleted work expressed as all planned work - Value of work completed) or EAC = ACWP (BAC-BCWP).

Measure: Cost Variance

Explanation:A comparison of the value of work performed with the actual cost of the work will provide a cost variance. In context of PART submission, the cost variance is the difference between the target and actual. If the difference (variance) is negative and breeches established thresholds a risk assessment must be done to determine if the negative variance can be recovered through program efficiencies, if scope must be reduced, if a baseline change will be required, or if the risk is an acceptable level or too costly to attempt a recovery. Conversely, if the variance is positive a determination must be made to reduce the variance by a reassessment scope, add any additional requirements, program or realign the additional dollars elsewhere, re-baseline, or retain the dollars as management reserve for approved and un-priced work. Cost variance may be expressed as a [monetary] Cost Variance or a cost variance percentage. Cost Variance may also be expressed in labor hours, material dollars and labor dollars. Arithmetically cost variance is expressed as: CV = P (value of work completed and in-process)- A (actual cost of work performed, to date). Cost variance percentage is expressed as CV% = CV / P X 100.

Measure: Schedule Variance

Explanation:Measures of schedule variance compares the value of the work scheduled/planned against the value of the work completed, or the difference between PART's "target" and "actual" using budget dollars vice days or any expression of time. Schedule variance may be expressed as a [monetary] Schedule Variance or a schedule variance percentage. Schedule Variance may also be expressed in labor hours, material dollars and labor dollars. Use of this approach, using a uniform unit of measure does provide a consistent methodology and a basis for cost and performance analysis. One must also be aware that schedule variance, at an aggregate level, does not reflect the critical path and may be rendered subjective due to work-a-rounds, work out of sequence or work ahead of schedule as is often the case in a remanufacturing facility/depot. If the various breaks established thresholds either as a negative or positive number a risk assessment must be completed and actions tracked, if deemed necessary. Arithmetically schedule variance is expressed as: SV = Performance (value of work completed and in-process) - SW (work schedule or planned, to date).

Measure: Unit Cost

Explanation:The Marine Corps Depots have the ability to track individual vehicles/weapon systems in two dimensions. One is the ability to track the costs of all component parts associated with the vehicle as it came "in the door". This concept provides a geospatial view of vehicle usage/maintenance and subsequent remanufacturing costs. The Vehicle Exit Unit Cost, used on selected product lines, represents the "out the door" cost of a product. Here the serialized parts are tracked succinctly, the non-serialized parts (secondary parts such as engines, transmissions, etc.) are averaged and the program level costs are allocated giving a "virtual" vehicle/weapon system cost. Both processes allow tracking of individual variances between the target cost and actual cost.

Measure: Material Variance

Explanation:A comparison of the actual material consumption against the planned consumption will provide a variance in material dollars. Material is a direct cost and is not influenced by annual increases. Adjustments can be made for inflation to normalize the data. .

Measure: Hours Variance

Explanation:Variance expressed in hours can be used to mollify labor rates between fiscal years and depots. The variance can be taken at the total hours level or displayed as a schedule variance.

Measure: Repair Cycle Time

Explanation:The repair cycle time is the time to return an item from an unserviceable condition to a serviceable condition.

Is the program purpose clear?

Explanation: Marine Corps Depot Maintenance is a multi-commodity maintenance program, which provides worldwide maintenance and logistics support to its customers that contributes to readiness and sustainment for peacetime and operational demands.

Evidence: Title 10, US Code Section 2460 establishes the definition of depot level maintenance and repair as material maintenance or repair requiring the overhaul, upgrading, or rebuilding of parts, assemblies, or subassemblies, and the testing and reclamation of equipment as necessary, regardless of the source of funds for the maintenance or repair or the location at which the maintenance or repair is performed. Title 10, US Code Section 2464 requires the Marine Corps to maintain core logistical capabilities that is government-owned and government-operated to ensure competencies and resources to respond to mobilization, military contingency situations and other emergency requirements.

Does the program address a specific and existing problem, interest, or need?

Explanation: The Marine Corps Depot Maintenance Program supports the readiness of the Marine Corps ground combat and combat support equipment, permitting the USMC to complete combat, civil, and humanitarian missions.

Evidence: "The Marine Corps Depot Maintenance complex consists of Maintenance Centers Albany, GA. and Maintenance Center Barstow, CA. Maintenance Center Albany and Barstow are multi-commodity industrial and repair facilities that provide global expeditionary logistics support to the Fleet Marine Force, other services, foreign partners and civil agencies in support of combat operations as well as peacetime missions and humanitarian operations. "

Is the program designed so that it is not redundant or duplicative of any other Federal, state, local or private effort?

Explanation: The Marine Corps Depot Maintenance Program addresses the rebuild, repair and upgrade of combat weapon systems and their supporting equipment and does not compete with nor duplicate private industry or other public depots.

Evidence: In accordance with Title 10, US Code Section 2460, the Marine Corps depot program supports the "material maintenance or repair requiring the overhaul, upgrading, or rebuilding of parts, assemblies, or subassemblies, and the testing and reclamation of equipment." Per Title 10, US Code Section 2464, the Marine Corps depot program is required to establish core logistical capabilities by retaining only the essential facilities, equipment and skilled personnel to minimize risk in support of contingency scenarios.Yet, at the same time, the Marine Corps actively seeks and conjoins with the private sector to maximize effectiveness and efficiency within both cost and schedule, as well as improved technical performance and reliability. The Marine Corps has repeatedly demonstrated that partnering is an effective tool to meet short and long term performance measures.

Is the program design free of major flaws that would limit the program's effectiveness or efficiency?

Explanation: On a continuing basis, the Marine Corps Depots address both effectiveness and efficiency. Incorporation of enterprise tools such as Theory of Constraints, Lean Thinking, ISO discipline and Earned Value Management directly and indirectly enhance cost, schedule, performance and efficiencies in our direct labor hour environment.

Evidence: The Marine Corps Logistics Command leadership maintains and promotes an environment that challenges the status quo and encourages a concept of value management leading to aggressive change management to constantly adapt to new management concepts, technologies and information strategies that will place the Marine Corps depot program on the cutting edge of public competitiveness.

Is the program design effectively targeted so that resources will address the program's purpose directly and will reach intended beneficiaries?

Explanation: Resource scheduling of manpower, raw material and equipment are effectively integrated at both weapon system and enterprise level to meet cost and schedule goals and customer requirements. Marine Corps Depot Maintenance Centers maintain constant communication with the intended beneficiaries/stakeholders to ensure resources are allocated to best meet their performance and cost objectives.

Evidence: Resource scheduling of manpower, raw material and equipment are effectively integrated at both weapon system and enterprise level to meet cost and schedule goals and customer requirements. Marine Corps Depot Maintenance Centers maintain constant communication with the intended beneficies/stakeholders to ensure resources are allocated to best meet their performance and cost objectives.

Does the program have a limited number of specific long-term performance measures that focus on outcomes and meaningfully reflect the purpose of the program?

Explanation: The Marine Corps Depot Maintenance Depot's Strategic Plan references GPRA metrics. The program strives to meet the Marine Corps equipment orders on-time, with a high-quality product, at a low cost. At a program level, selected readiness reportable lines (i.e. individual types of equipment) have both short and long term performance goals. In these instances the depots develop a bottoms up estimate that is time phased (schedule based) over single and multiple years with budget at completion targets.

Evidence: While the Marine Corps depots are charged with maintaining continuous readiness and sustainment necessary to meet the Fleet's operational requirements, it must do so in a cost effective and efficient manner while meeting customer quality and schedule expectations. Realizing that the need to meet Net Operating Revenue targets will, at times, constrain performance goals, the Marine Corps depots seek to maintain a balance between annual workload and multi-year commitments while adhering to technical excellence and cost and schedule efficiencies.

Does the program have ambitious targets and timeframes for its long-term measures?

Explanation: Though many programs are funded on an annual basis, several of the major, readiness reportable lines roll up their annual schedule and cost goals into multi-year targets.

Evidence: For the multi-year repair lines, an estimate is developed at current year rates and extrapolated over time with known elements such as labor costs, annual percent of materiel increases, as well as depot and market trends, risk is accessed and added to the estimate. These annual targets are then monitored on a monthly and quarterly basis against actual costs and measured against the estimate at completion. At many times the out year costs are normalized against prior year (prior year constant) rates to identify labor and/or process costs and trends.

Does the program have a limited number of specific annual performance measures that can demonstrate progress toward achieving the program's long-term goals?

Explanation: Selected readiness reportable lines track cost and schedule indices, as well as vehicle unit cost, repair cycle time and the estimate at completion.

Evidence: Cost, schedule, and repair cycle indices are used to monitor the health of the program. If a negative index is projecting an unacceptable level of risk to the schedule or cost at completion a "get well" plan is developed to bring the index back to "1" (one) or an acceptable level. In addition, the vehicle unit cost for the vehicles completed and those that are "in process" of being repaired are tracked to monitor out of scope costs, data runs and trends that are falling below threshold reporting level but represent potential out year or program risks.

Does the program have baselines and ambitious targets for its annual measures?

Explanation: Program managers that select cost performance reporting have baselines that are built from ground up estimates structured around a work breakdown structure and schedule.

Evidence: The readiness reportable equipment that have cost, schedule, performance reports use a product base work breakdown structure that complies with Mil Handbook 881 and produce either DOD Data Item Description reporting formats or negotiated formats.

Do all partners (including grantees, sub-grantees, contractors, cost-sharing partners, and other government partners) commit to and work toward the annual and/or long-term goals of the program?

Explanation: As the budgets are developed on specific programs that require partnering or subcontractor support, the programs require the partner/subcontractor to execute within the proposed cost and schedule.

Evidence: Not only does the Contracting Officer and his/her representative monitor the contract and disbursements, the depot program manager reviews the contractors work on a weekly basis using the workload reports where contract labor is broken out. Contract performance and costs are monitored (on selected weapon system) during periodic Integrated Product Reviews and quarterly by the Joint Marine Corps Logistics Command and Defense Contract Management Agency surveillance teams.

Are independent evaluations of sufficient scope and quality conducted on a regular basis or as needed to support program improvements and evaluate effectiveness and relevance to the problem, interest, or need?

Explanation: Quarterly reviews of the Cost, Schedule, and Performance program are jointly done by LOGCOM and the Defense Contract Management Agency, in addition, periodic management reviews are conducted by the various Program Managers/customers addressing performance and efficiencies.

Evidence: Internal management reports such as the weekly workload report are monitored for performance. Selected readiness reportable programs require additional reports such as funding (Contract Funds Status Reports), performance (Cost, Schedule, Status Reports) and exit cost (Vehicle Exit Unit Cost reports) reports on a monthly and/or quarterly basis. In addition, a Joint Marine Corps Logistics Command and Defense Contract Management Agency team does quarterly surveillance of the Marine Corps cost, schedule, and performance management process and issues findings.

Are Budget requests explicitly tied to accomplishment of the annual and long-term performance goals, and are the resource needs presented in a complete and transparent manner in the program's budget?

Explanation: At the individual program level (readiness reportable lines) the budgets are developed from historical performance based algorisms taking into account product fatigue (equipment age), material increases (inflation factors) and the projected labor rates. Then the budgets are rolled up at family of vehicles, depot, and enterprise levels. The budgets between the two depots are combined and submitted to higher authority with required budget exhibts.

Evidence: Although the overall budget is presented at a summary level with the mandated exhibts, the Marine Corps Depots retain the ability to demonstrate both upward and downward data traces using performance metrics (Earned Value, Six Sigma, Theory of Constraints and other management tools) to stratify and justify estimates and budgets at the individual program level.

Has the program taken meaningful steps to correct its strategic planning deficiencies?

Explanation: Within the Net Operating Revenue constraints of a Direct Labor Hour environment, selected readiness reportable lines do address estimates at completion, cost and schedule overruns, as well as quality issues.

Evidence: In essence, all depot programs are reviewed for variability. Steps to correct any deficiencies are prioritized as to threshold levels of cost, schedule, performance and quality risks.

Does the agency regularly collect timely and credible performance information, including information from key program partners, and use it to manage the program and improve performance?

Explanation: All repair/rebuild programs within the depots collect performance data against established cost and schedule baselines internally and from industry partners and subcontractors. In addition, the depots offer formal Earned Value Management Reports on selected major rebuild lines. This management tool and both Data Item Description compliant and tailored reports have been and are currently required on selected readiness reportable lines.

Evidence: Performance data is collected on a weekly, monthly, quarterly, yearly, and, at times, over a period of years. These reports and data sets are used to make prudent management decisions on cost and schedule performance effectiveness and overall efficiency. As a check and balance, data from the variance reports are reconciled and any deficiencies addressed.

Are Federal managers and program partners (including grantees, sub-grantees, contractors, cost-sharing partners, and other government partners) held accountable for cost, schedule and performance results?

Explanation: Various cost, schedule, and performance reports are used internally and with program managers to project program efficiencies and cost or schedule impacts are used to build corrective action plans or negotiate re-planned baselines.

Evidence: All variances that break established threshold levels are addressed. Significant risks that are internal and can be acted upon by the command are mitigated. External risks are passed to the source with recommendations and impacts on performance.

Are funds (Federal and partners') obligated in a timely manner, spent for the intended purpose and accurately reported?

Explanation: Funds are consistently obligated within prescribed time periods and are monitored using control and program codes to ensure accountability to their respective weapon system and/or equipment.

Evidence: Budget execution is, on selected readiness reportable lines, monitored monthly at the program, vehicle, shop, and work breakdown structure levels. This review is at both labor hour execution and material dollars. The material is reviewed against authorized quantities and parts identification. Discrepancies are addressed and corrections are made.

Does the program have procedures (e.g. competitive sourcing/cost comparisons, IT improvements, appropriate incentives) to measure and achieve efficiencies and cost effectiveness in program execution?

Explanation: Competitive sourcing and cost comparisons are continually addressed by the Marne Corps Depots and a command staff level Marketing Office. Cost Benefit Analysis, Unit Cost monitoring and process cost monitoring contribute to the effort.

Evidence: As stated in the preceding answer, the program manager and the depot have various processes in their tool box to address competitive sources. In fact, the depots have become very adapt at "make/buy" analysis. These decisions greatly enhance the effectiveness and efficiency of the depot.

Does the program collaborate and coordinate effectively with related programs?

Explanation: Various readiness reportable lines, partner with private industry and other public depots to provide effective and efficient schedule and cost solutions to our customers. Partnering with private industry has led to a government owned and contractor operated facility at one of depots and the incorporation of private industry employees working along with government employees in a joint effort to meet customer cost and schedule expectations.

Evidence: Perhaps the most dramatic examples of collaboration with private industry to constrain cost is the Marine Corps signature weapon system, the Assault Amphibious Vehicle rebuild to standard program. A decision was made to integrate private contractors in the remanufacturing line. This has resulted in an estimated cost avoidance of $1.4M on this one program alone.

Does the program use strong financial management practices?

Explanation: The Defense Department's financial management weaknesses are well-documented. While DoD continues to make efforts to improve it, the Department has yet to obtain an unqualified audit opinion. The Marine Corps does not have audit reports demonstrating that its depot maintenance program is free from internal weaknesses. Nonetheless, the Marine Corps is in the forefront of the Department of Defense, as it anticipates achieving a clean audit statement in 2007.

Evidence: Numerous audits document the Department's financial management weaknesses. Because of the magnitude of its problems, DoD is unlikely to obtain an unqualified audit for some time. GAO has specifically identified support infrastructure as one of the Department's weaknesses.

Has the program taken meaningful steps to address its management deficiencies?

Explanation: A Working Capital Fund Integrated Product Team has been established to address weaknesses in the Marine Corps financial management system. This interagency group has taken meaningful steps to position the Marine Corps to produce an unqualified audit opinion in the future.

Evidence: This interagency group has continued to work towards achieving an unqualified audit opinion. Currently, the Marine Corps Working Capital Fund is scheduled to assert its audit package in FY 08, in conjunction with the Department of the Navy. In addition, progress can be seen in more disciplined financial controls as no material weaknesses were identified in FY 05.

Has the program demonstrated adequate progress in achieving its long-term performance goals?

Explanation: The Marine Corps depot maintenance program continues to provide high quality repaired equipment to the Marine Corps. The incorporation of best pracitices from private industry has allowed the program to make consderable improvements in its efficiency and schedule performance.

Evidence: Incorporation of enterprise tools such as Theory of Constraints, Lean Thinking, ISO discipline and Earned Value Management allow the depot program to both set and achieve realistic goals in effectiveness and efficiency. One of the most successful tools has been the cultivation of the Theory of Constraints. This program is credited with a spectacular increase in throughput, as well as a decrease in "work in process" (reducing investment costs), an across the board reduction in repair cycle times as well as a decrease in costs.

Does the program (including program partners) achieve its annual performance goals?

Explanation: The Marine Corps depot maintenance program typically meets its annual performance goal. But equipment may be more damaged than originally estimated, which can make achieving annual goals impossible. This has particularly been the case with equipment returning for repairs from combat operations.

Evidence: The Marine Corps depot maintenance program has shown success in reducing repair cycle time of Marine equipment and per unit costs.

Does the program demonstrate improved efficiencies or cost effectiveness in achieving program goals each year?

Explanation: By implementing best prcitices from the private sector, such as Theory of Constraints, the Marine Corps depot maintenance program has been able to improve program efficiency considerably.

Evidence: The Marine Depot maintenance program has reduced the repair cycle time for the MK48 (Heavy all-terrain truck) from 167 days down to 58 days, thus increasing throughput and a reduction in the cost to repair.

Does the performance of this program compare favorably to other programs, including government, private, etc., with similar purpose and goals?

Explanation: The Marine Corps adheres to the Cost Comparability Handbook published by the Defense Depot Maintenance Council. The discipline enforced by this guidance calls for stabilized rates and cost comparisons that "level the playing field" between public depots and private industry.

Evidence: The Marine Corps depot maintenance program has won many, but not all, competitive sourcing competitions between public and private industry. The cost of the program is thus comparable with similar private sector efforts--although the private sector is unable to provide certain core depot maintenance capabilities, which are inherently governmental.

Do independent evaluations of sufficient scope and quality indicate that the program is effective and achieving results?

Explanation: Although Marine Corps equipment assets face the strain of wartime operations, the Marine Corps depot maintenance program continues to provide Marine units with the equipment that they need when they need it. Reviews by the Defense Contract Management Agency show that they program is performing successfully.

Evidence: Periodic internal, customer directed and Joint Marine Corps Logistics Command and Defense Contract Management Agency reviews address both organic and contractor/partnership performance. When unacceptable levels of risk or variances are found, corrective action is taken to recover cost and schedule or, if warranted, the program is re-baselined.