ANNISTON ARMY DEPOT, Ala. -- For the past several years, one underlying question that always becomes a topic of conversation around the depot is “How much is the GAP Award going to be this year?” This year, the question has turned to “Are we going to get a GAP Award?”
The depot has enjoyed many years of prosperity with a robust workload that has normally increased in the year of execution, which created ample opportunities to improve our Net Operating Result. For FY11, the workload tables have turned the other way.
Coming into the year, our budget numbers were based on executing 4.5 million direct labor hours, but, because of program cuts in various areas, we are now expecting to work around 4.1 million direct labor hours.
The workload downturn, coupled with a revenue shortfall, has resulted in a bigger NOR loss than expected. Steps have been ongoing to improve our financial position, such as reduced overtime, spending cuts and a hiring freeze, but those measures were already considered and can only help to maintain our expected loss and prevent it from growing larger.
Also, our workload for FY12 and FY13 appears to be on the downward trend, which puts the depot in a position of right-sizing our workforce to try to prevent employee losses.
This effort has already started with the offer of VERA/VSIP in June, in order to incentivize employees to retire and abolish their jobs prior to Sept. 30. This incentive is not free to the depot. It will cost approximately $7-$10 million (a cost that was not included in our budget plans).
These issues will add to our financial challenges and will impact our financial posture in future years by increasing our labor rates, which would further impact our already decreasing workload.
For now, our focus needs to be securing our workload and our workforce while maintaining a competitive rate. Therefore, it is not feasible or practical to plan for a GAP Award this fiscal year.
Again, depot employees have enjoyed several years of plenty, with a GAP Award payout each year since 2001. Our ultimate purpose has never been about receiving that payout, but about producing a quality product to supply our warfighters with the best equipment, on time and at the best price. It is very important to continue that focus for our war fighters, our country and the future of our depot.
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