Naval Shipyards:

Actions Needed to Improve Poor Conditions that Affect Operations

GAO-17-548: Published: Sep 12, 2017. Publicly Released: Sep 12, 2017.

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  • GAO: Poor Conditions at Navy ShipyardsVIDEO: Poor Conditions at Navy Shipyards
    The Navy currently operates four shipyards to maintain its aircraft carriers and submarines, but aging facilities and backlogs create challenges to maintaining Navy readiness.

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Zina Merritt
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merrittz@gao.gov

 

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What GAO Found

Although the Navy committed to increased capital investment and developed an improvement plan in 2013, the shipyards' facilities and equipment remain in poor condition. GAO's analysis of Navy shipyard facilities data found that their overall physical condition remains poor. Navy data show that the cost of backlogged restoration and maintenance projects at the shipyards has grown by 41 percent over five years, to a Navy-estimated $4.86 billion, and will take at least 19 years (through fiscal year 2036) to clear. Similarly, a Navy analysis shows that the average age of shipyard capital equipment now exceeds its expected useful life.

Partly as a result of their poor condition, the shipyards have not been fully meeting the Navy's operational needs. In fiscal years 2000 through 2016, inadequate facilities and equipment led to maintenance delays that contributed in part to more than 1,300 lost operational days—days when ships were unavailable for operations—for aircraft carriers and 12,500 lost operational days for submarines (see figure). The Navy estimates that it will be unable to conduct 73 of 218 maintenance periods over the next 23 fiscal years due to insufficient capacity and other deficiencies.

Shipyard Maintenance Delays, Fiscal Years 2000–2016

Shipyard Maintenance Delays, Fiscal Years 2000–2016

Note: Aircraft carrier data are incomplete for fiscal year 2016, and submarine data are incomplete for fiscal years 2014 through 2016. Both will likely be higher once these data are complete.

Though the Navy has developed detailed plans for capital investment in facilities and equipment at the shipyards that attempt to prioritize their investment strategies, this approach does not fully address the shipyards' challenges, in part because the plans are missing key elements. Missing elements include analytically-based goals and metrics, a full identification of the shipyards' resource needs, regular management reviews of progress, and reporting on progress to key decision makers and Congress. For example, the Navy estimates that it will need at least $9.0 billion in capital investment over the next 12 fiscal years, but this estimate does not account for all expected costs, such as those for planning and modernizing the shipyards' utility infrastructure. Unless it adopts a comprehensive, results-oriented approach to addressing its capital investment needs, the Navy risks continued deterioration of its shipyards, hindering its ability to efficiently and effectively support Navy readiness over the long term.T

Why GAO Did This Study

The Navy's four public shipyards—Norfolk Naval Shipyard, Portsmouth Naval Shipyard, Puget Sound Naval Shipyard and Intermediate Maintenance Facility, and Pearl Harbor Naval Shipyard and Intermediate Maintenance Facility—are critical to maintaining fleet readiness and supporting ongoing operations involving the Navy's nuclear-powered aircraft carriers and submarines. The condition of these facilities affects the readiness of the aircraft carrier and submarine fleets. Senate Report 114-255, accompanying a bill for the National Defense Authorization Act for Fiscal Year 2017, included a provision for GAO to examine the capital investment in and performance of the Navy's shipyards. GAO evaluated (1) the state of the naval shipyards' capital facilities and equipment, (2) the extent to which shipyard capital facilities and equipment support the Navy's operational needs, and (3) the extent to which the Navy's capital investment plans for facilities and equipment are addressing shipyard challenges. GAO reviewed data from fiscal years 2000 through 2016 on shipyard capital investment and performance and the age and condition of facilities and equipment; reviewed Navy guidance; visited the shipyards; and interviewed Navy and shipyard officials.

What GAO Recommends

GAO recommends that the Navy develop a comprehensive plan to guide shipyard capital investment, conduct regular management reviews, and report to Congress on progress in addressing the shipyards' needs. DOD concurred with all 3 recommendations.

For more information, contact Zina Merritt at (202) 512-5257 or merrittz@gao.gov.

Recommendations for Executive Action

  1. Status: Open

    Priority recommendation

    Comments: The Navy concurred with this recommendation and said it would take steps to develop and implement a comprehensive plan. As of July 2018, DOD had begun the process of addressing this recommendation. Specifically, Navy Sea Systems Command produced a Shipyard Optimization Report, which it presented to Congress in February 2018, that is intended to guide their overhaul and improvement of the Navy shipyards. This plan includes some of the elements needed to meet the recommendation, such as outlining the desired goal, and providing an estimate of the costs and risks of the plan (including associated planning costs). However, the Plan did not include metrics for assessing progress. Navy officials have stated that they intend to develop metrics to meet this element, but that this development will take place during a second phase that will be complete in FY19. To fully implement this recommendations, DOD should ensure that the Navy's plan fully incorporates the elements of a results-oriented management approach, including metrics to help it assess progress towards meeting its goal and measuring the effectiveness of capital investments.

    Recommendation: The Secretary of the Navy should develop a comprehensive plan for shipyard capital investment that establishes (1) the desired goal for the shipyards' condition and capabilities; (2) an estimate of the full costs to implement the plan, addressing all relevant requirements, external risk factors, and associated planning costs; and (3) metrics for assessing progress toward meeting the goal that include measuring the effectiveness of capital investments. (Recommendation 1)

    Agency Affected: Department of Defense: Department of the Navy

  2. Status: Open

    Priority recommendation

    Comments: The Navy concurred with this recommendation and said it would take steps to conduct regular management reviews. In June 2018, the Navy issued NAVSEA Notice 5450, which established a new program management office responsible for planning, developing, scheduling, budgeting, and sustaining the replacement of shipyard facilities and equipment. By creating this office, the Navy has taken a first step toward establishing a result-oriented management approach and toward implementing our recommendation to conduct regular management reviews, though additional steps (such as identifying all relevant stakeholders, holding meetings, and reviewing oversight metrics) must still be taken.

    Recommendation: The Secretary of the Navy should conduct regular management reviews that include all relevant stakeholders to oversee implementation of the plan, review metrics, assess the progress made toward the goal, and make adjustments, as necessary, to ensure that the goal is attained. (Recommendation 2)

    Agency Affected: Department of Defense: Department of the Navy

  3. Status: Open

    Priority recommendation

    Comments: The Navy concurred with this recommendation and said it would take steps to provide regular reporting to key decision makers and Congress. DOD officials stated in June 2018 that the Shipyard Optimization Plan, along with the creation of the Readiness Reform Oversight Council, address this recommendation. While the Readiness Reform Oversight Council does appear to involve some of the key stakeholders who should be receiving the regular reporting, the Navy has already made clear that it sees the shipyard optimization process as a 20-year long effort. Given that, regular reporting on progress cannot be achieved with a single disclosure at the beginning of the effort. Both Congress and DOD decision-makers need to receive regular updates on the implementation of the shipyard optimization plan, and while it is possible that the newly created Shipyard Program Management Office will be able to provide such reporting, that organization is still being developed and, to date, no progress reporting has yet begun.

    Recommendation: The Secretary of the Navy should provide regular reporting to key decision makers and Congress on the progress the shipyards are making to meet the goal of the comprehensive plan, along with any challenges that hinder that progress, such as cost. This may include reporting on progress to reduce their facilities restoration and modernization backlogs, improve the condition and configuration of the shipyards, and recapitalize capital equipment. (Recommendation 3)

    Agency Affected: Department of Defense: Department of the Navy

 

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