Overseas Ship Repairs and Associated Costs
NSIAD-93-61: Published: Nov 13, 1992. Publicly Released: Nov 13, 1992.
- Full Report:
Pursuant to a congressional request, GAO provided information on the maintenance of Navy ships at overseas locations, focusing on the: (1) amount of maintenance performed at overseas repair facilities and foreign shipyards; (2) operational impact of returning Japan-based ships to the United States for maintenance; (3) costs of returning other U.S. foreign-based ships for maintenance; (4) U.S.-Japan labor cost-sharing agreement; and (5) internal controls ensuring compliance with legislative restrictions on overseas ship repairs.
GAO found that: (1) between 1987 and 1991, Navy overseas ship maintenance costs totalled $1.3 billion, including $762 million for long-term planned maintenance and $544 million for corrective maintenance; (2) due to reductions in defense spending, a decreasing fleet size, and foreign labor cost agreements, maintenance costs between 1987 and 1991 decreased by 28 percent; (3) the Navy projected that 1992 to 1998 maintenance costs would total $1.1 billion; (4) 85 percent of all repairs were performed at three Navy-operated facilities; (5) returning Japan-based ships to U.S. shipyards would conflict with Navy separation and deployment policies which require ships to remain at homeports twice as long as they have been deployed; (6) long-term U.S. facility maintenance costs of Japan-based ships would increase from $211.7 million to $741.6 million; (7) Japan's labor cost sharing agreement reduced the total repair costs and, by 1996, Japan will fund 100 percent of the ship maintenance labor costs; and (8) the Navy lacked sufficient internal controls and data to ensure overseas maintenance processes comply with statutory limitations, and has not incorporated legislative limitations on overseas ship repairs into Navy policy and procedures.
Recommendation for Executive Action
Status: Closed - Implemented
Comments: Chief of Naval Operations Instruction 4700.5 was issued on December 4, 1992, containing explicit guidance regarding the restrictions of 10 U.S.C. 7309(c) and clarifying the types of repairs that can be performed overseas. Compliance with the statutory limitations has been identified as a material weakness and incorporated in the Financial Integrity Act process. In addition, a corrective action plan has been approved.
Recommendation: The Secretary of the Navy should: (1) incorporate section 7309(c) of title 10, U.S. Code, into the Department's policy and guidance; (2) conduct the evaluation necessary to determine if compliance with statutory limitations on overseas ship maintenance activities is an issue needing corrective action in the Federal Managers' Financial Integrity Act assessment process; and (3) if so, develop and implement a corrective action plan.
Agency Affected: Department of Defense: Department of the Navy