As of 2007, each military department must invest annually in the capital budgets of its depots at a minimum rate of six percent of their average funded workload. The relevant statute was enacted in response to the deteriorating state of organic depots in the 1990s, which lawmakers and military leaders attributed to insufficient investments in infrastructure and equipment. This study seeks to determine if and how policy should be modified in light of current depot conditions and capabilities. Specifically, it aims to identify the benefits and drawbacks of both fixed and flexible funding mechanisms within the context of the military depots. The findings of this study suggest that the fixed investment requirement should be maintained (but modified), at least until the military departments have implemented strategic investment plans. In addition, it is suggested that the Department of Defense (DoD) consider adopting an enterprise approach to management of capital investment to ensure the most effective and efficient expenditure of capital investment dollars. Among additional recommendations, the timeframe basis for the requirement should be changed, the Capital Investment Program should be streamlined, and that the DoD’s definition of capital investment should be widened and clarified.

Naval Postgraduate School Acquisition Research Program