FY2023 NDAA: Organic Industrial Base

INSIGHTi

FY2023 NDAA: Organic Industrial Base
October 3, 2022
The Department of Defense (DOD) oversees a network of government-owned industrial facilities
collectively referred to as the organic industrial base (OIB). These facilities produce, store, and dispose
of many of the conventional munitions used by the U.S. armed services; they also maintain, overhaul, and
repair weapon systems and defense equipment. Several provisions in the House-passed (H.R. 7900) and
Senate Armed Services Committee (SASC)-reported (S. 4543) National Defense Authorization Act for
Fiscal Year 2023 (FY2023 NDAA) would introduce new reporting, planning, and investing requirements
for the OIB, as well as authorizing additional appropriations for military construction projects at certain
facilities.
Background
The OIB encompasses both government-owned, government operated (GOGO) and government-owned,
contractor-operated (GOCO) facilities.
Title 10, Section 2464 of the U.S. Code (U.S.C.) states that “it is essential for the national defense that the
Department of Defense maintain a core logistics capability that is Government-owned and Government-
operated,” specifying further that this “shall include those capabilities that are necessary to maintain and
repair” weapon systems and other military equipment. These capabilities reside in GOGO arsenals,
depots, production plants, shipyards, readiness centers, and logistics complexes operated by each of the
military departments; 10 U.S.C. §2476 designates 21 GOGO facilities as “covered depots,” subject to
reporting and minimum capital investment requirements. For more information, see CRS In Focus
IF11466, Defense Primer: Department of Defense Maintenance Depots.
Table 1. Selected FY2023 NDAA OIB Provisions
House-passed (H.R. 7900)
SASC-reported (S. 4543)
Covered Depots and Ammunition Production Facilities
Sec. 361 would require DOD to report the workloads,
No similar provisions
budgeting, and material condition of all covered depots and
ammunition production facilities annually.
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House-passed (H.R. 7900)
SASC-reported (S. 4543)
Sec. 362 would extend depots’ authority to undertake
Sec. 2806 would extend depots’ authority to undertake
unspecified minor military construction through FY2025.
unspecified minor military construction through FY2025.
Sec. 363 would raise each military department’s annual
No similar provisions
minimum capital investment requirement for its covered
depots.
Sec. 364 would continue a requirement that DOD report
No similar provisions
core depot-level maintenance issues to Congress biennially.
Sec. 365 would continue a requirement that DOD report
No similar provisions
depot-level maintenance and repair expenditures to
Congress annually.
Sec. 366 would require the military departments to annually
No similar provisions
report five-year plans for depot infrastructure improvement
to Congress annually.
Public Shipyards
Sec. 1079G would require a study of Shipyard Infrastructure
Sec. 351 would require the Navy to develop metrics for
Optimization Program (SIOP) efforts to improve public
measuring public shipyard improvements and to utilize
shipyards.
certain cost estimating measures in SIOP planning.
Sec. 1094 would establish the National Commission on the
No similar provisions
Future of the Navy and direct it to, in part, assess the SIOP
and ship depot maintenance.
Sec. 1109 would require a comparative review of the
No similar provisions
Federal Wage System and public shipyard worker wage
rates.
Source: CRS analysis of legislation on Congress.gov.

Table 2. Selected FY2023 NDAA Military Construction Authorizations for OIB Facilities
(in millions of dollars of discretionary budget authority)
House-passed (H.R. 7900)
SASC-reported (S. 4543)
Portsmouth Naval Shipyard (Kittery, ME)
$503.28 (Multi-Mission Dry Dock #1 Extension)
$503.28 (Multi-Mission Dry Dock #1 Extension)
Norfolk Naval Shipyard (Portsmouth, VA)
$47.72 (Dry Dock Saltwater System for CVN-78)
$47.72 (Dry Dock Saltwater System for CVN-78)
Pearl Harbor Naval Shipyard (Pearl Harbor, HI)
$621.19 (Dry Dock 3 Replacement)
$421.19 (Dry Dock 3 Replacement)
Fleet Readiness Center Southeast (Jacksonville, FL)
$86.23 (Engine Test Cells Modifications)
$86.23 (Engine Test Cells Modifications)
Letterkenny Army Depot (Letterkenny, PA)
$38.0 (Shipping and Receiving Building)
$38.0 (Shipping and Receiving Building)

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House-passed (H.R. 7900)
SASC-reported (S. 4543)
Corpus Christi Army Depot (Corpus Christi, TX)
$83.0 (Powertrain Facility, Engine Assembly)
$55.0 (Powertrain Facility, Engine Assembly)
Source: H.Rept. 117-397 accompanying H.R. 7900 and S.Rept. 117-130 accompanying S. 4543.

Discussion
OIB maintenance, repair, and production capabilities play a critical role in supporting U.S. military
readiness. The OIB-related provisions of the FY2023 NDAA bills reflect congressional concern that
present resourcing and facility conditions may not meet the country’s defense needs. A 2022 Government
Accountability Office (GAO) report on DOD’s covered depots found that most capital equipment was in
use past expected service life, and assessed overall infrastructure conditions as “fair to poor.” In its report
(H.Rept. 117-397) accompanying H.R. 7900, the House Armed Services Committee noted the importance
of “consistent, strategic capital investments” in the OIB, and expressed particular concern that base
budget funding for ammunition production facilities “is not adequate to achieve timely and efficient
industrial facilities modernization.”
Covered Depots and Ammunition Production Facilities
To provide Congress with more information on the condition of OIB facilities, Sections 361, 364, 365,
and 366 of the House bill would establish new reporting and planning requirements. Under these
provisions, DOD would be required to report annually: the workloads, budgeting, and material condition
of OIB facilities (Sec. 361); all depot-level maintenance and repair expenditures (Sec. 365); and five-year
plans to improve depot infrastructure (Sec. 366). DOD would also be required to report biennially on core
depot-level maintenance requirements, workloads, and capabilities (Sec. 364).
To address potential OIB resourcing shortfalls, Section 363 of the House bill would require the military
departments to increase minimum capital investments in covered depots from six to eight percent of the
average total maintenance, repair, and overhaul workload funded at all depots over the preceding three
years, and further require that at least two percent of this total be invested in Facilities Sustainment,
Restoration, and Modernization activities.
To provide greater flexibility in meeting physical infrastructure requirements, both Section 2806 of the
SASC-reported bill and Section 362 of the House-passed bill would extend authorization to use depot
working capital funds for unspecified minor military construction (i.e., military construction projects with
an approved cost of $6 million or less) through FY2025.
Public Shipyards
Both bills contain provisions aimed at assessing and improving the Navy’s four public shipyards
(Portsmouth Naval Shipyard, Norfolk Naval Shipyard, Puget Sound Naval Shipyard and Intermediate
Maintenance Facility, and Pearl Harbor Naval Shipyard and Intermediate Maintenance Facility).
In the House bill, Section 1079G would direct the Navy to commission a federally-funded research and
development center (FFRDC) study on the optimization and recapitalization efforts of the Shipyard
Infrastructure Optimization Program (SIOP). Section 1094 would establish a National Commission on the
Future of the Navy and direct it to, among other items, assess public shipyards and recommend
improvements to the SIOP and the ship depot maintenance program. Section 1109 would require a GAO

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review to ensure parity between the Federal Wage System and the prevailing wage rate for public
shipyard workers.
In the SASC-reported bill, Section 351 would direct the Navy to develop metrics for public shipyard
improvements, and require the SIOP program office to prepare a comprehensive cost estimate and obtain
an independent cost estimate before prioritizing projects.
Military Construction
Both NDAA bills would authorize new appropriations for military construction projects at multiple OIB
sites.
For Navy OIB sites, both bills would authorize $503 million to expand a dry dock at Portsmouth Naval
Shipyard to support Los Angeles and Virginia-class attack submarines. Both would authorize
approximately $48 million for a dry dock saltwater conveyance and drainage infrastructure at Norfolk
Naval Shipyard to support Gerald R. Ford-class aircraft carriers. Both would also authorize
appropriations for the replacement of a dry dock at Pearl Harbor Naval Shipyard, but for different
amounts: the House bill would authorize $621 million, while the SASC-reported bill would authorize
$421 million. Both bills would also authorize $86 million for facilities to test repaired aircraft engines at
the Navy’s Fleet Readiness Center Southeast.
For Army OIB sites, both bills would authorize $38 million for a shipping and receiving facility at
Letterkenny Army Depot. Both bills would also authorize appropriations for a powertrain facility at
Corpus Christi Army Depot used for rotary wing rebuild activities, but for different amounts: the House
bill would authorize $83 million, while the SASC-reported bill would authorize $55 million.

Author Information

Luke A. Nicastro

Analyst in U.S. Defense Infrastructure Policy




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