Navy Maintenance:

Cost Growth and Schedule Overrun Problems Continue at the Shipyards

NSIAD-90-144: Published: Jul 24, 1990. Publicly Released: Jul 24, 1990.

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Pursuant to a congressional request, GAO reviewed the Navy's costs to overhaul and repair ships at public and private shipyards, focusing on the: (1) extent of cost growth and schedule overruns at both public and private shipyards; and (2) causes of the increases.

GAO found that: (1) contract costs increased from $2.8 billion to $3.7 billion between 1985 and 1988; (2) at private shipyards, cost growth averaged 31 percent and schedule overruns averaged 43 days; (3) at public shipyards, cost growth averaged 3 percent and schedule overruns averaged 81 days; (4) at private shipyards, inadequate and late government-furnished information and materials were among the major causes of contract cost growth and schedule overruns on 23 contracts; (5) government-caused delays and disruptions to contractors also result in cost growth and schedule overruns; (6) when a public shipyard becomes overloaded and has insufficient workers to properly execute the work load, cost growth and schedule overruns result; (7) public shipyards cited poorly defined work packages and poorly prepared drawings and specifications as causes for cost growth and schedule overruns; and (8) making major alterations on ships as quickly as possible was more important than the additional costs that resulted from poorly defined work packages.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: The Secretary of the Navy has formed a Naval Industrial Review Council to ensure that approved recommendations and goals are fully implemented. Specific corrective actions are covered by the Naval Shipyard Corporate Operations Strategy and Plan which outlines the plans for improving shipyard availability scheduling and reducing public shipyard costs. Quarterly reviews are held at Navy headquarters

    Recommendation: The Secretary of the Navy should ensure that the Navy's plan to correct problems in ship depot maintenance at public shipyards is fully implemented.

    Agency Affected: Department of Defense: Department of the Navy

  2. Status: Closed - Implemented

    Comments: The Navy has embarked on a comprehensive strategic planning process incorporating the principles of total quality leadership. Process action teams will be formed to streamline and enhance existing practices to improve the efficiency and effectiveness of operations and, consequently, the private ship repair efforts they administer. The DOD/IG plans a followup review in 1993.

    Recommendation: The Secretary of the Navy should develop and implement a similar plan to correct depot maintenance problems at private shipyards.

    Agency Affected: Department of Defense: Department of the Navy

  3. Status: Closed - Implemented

    Comments: The Naval Industrial Review Council will ensure implementation of approximately 30 decision papers that include detailed plans for improving a variety of problems associated with ship depot maintenance. Cost is a factor in deciding when and where to make alterations, and it is anticipated that in the future there will be fewer alterations. Reporting and measuring systems have been implemented.

    Recommendation: The Secretary of the Navy should ensure that plans to correct depot maintenance problems at public and private shipyards explain details on how best to improve such areas as work packages, government-furnished information and materials, and scheduling. The plans should also: (1) ensure that cost is a major consideration in deciding when and where to make ship alterations; and (2) provide a mechanism for reporting and measuring progress.

    Agency Affected: Department of Defense: Department of the Navy

 

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