Navy Ships:

Turning Over Auxiliary Ship Operations to the Military Sealift Command Could Save Millions

NSIAD-97-185: Published: Aug 8, 1997. Publicly Released: Aug 8, 1997.

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Pursuant to a congressional request, GAO reviewed the Navy's use of alternative crewing arrangements for Navy auxiliary ships, focusing on: (1) the Navy's plans for turning over the operation of military crewed auxiliary ships to its Military Sealift Command (MSC) for civil service or commercial crewing; (2) whether cost savings would be realized if the Navy turned over the operation of the remaining military crewed auxiliary ships to MSC; (3) the relative costs of operating a Navy auxiliary ship with a civil service crew and the costs of operating the same ship with a commercial crew; and (4) the increase in the merchant mariner pool if the operation of the multiproduct ships were turned over to MSC.

GAO noted that: (1) the Navy plans to turn over the operation of its remaining three ammunition ships to MSC for crewing with civil service mariners; (2) as of May 1997, the Navy had not decided on whether to turn over the operation of the remaining seven auxiliary ships as well as the single ship under construction to MSC; (3) all eight of these ships are multiproduct ships; (4) based on Navy cost data and MSC cost estimates, the Navy could save about $139.6 million annually by turning over the operation of these eight multiproduct ships to MSC for crewing with civil service mariners; (5) this savings is due primarily to a much smaller crew size than has been traditional on military crewed auxiliary ships; (6) these savings would be offset by a one-time conversion cost of $30 million to $45 million per ship, or about $300 million for all eight ships, to meet Coast Guard standards; (7) MSC might also need fewer ships to provide underway replenishment since unlike the Navy, it does not have the personnel and operating limitations on the number of operating days per ship and on days at sea per crewmember; (8) three other studies conducted since 1990 by the Center for Naval Analyses, the Institute for Defense Analyses, and the Naval Audit Service have also identified the potential for large cost savings if the Navy were to transfer additional ships to MSC; (9) these studies' projected savings were also primarily due to the smaller crew sizes on MSC ships; (10) the Navy does not intend to divert from its current policy of not using commercial mariners to crew auxiliary ships; (11) its position is that these ships must be crewed by military or civil service personnel due to their military mission; (12) however, if it were to change this policy, GAO's analysis shows that it would cost the Navy about $321,000, or about 5 percent more a year, to operate a commonly used MSC oiler ship with commercial crews than with civil service crews; (13) the difference in costs is primarily attributable to higher fringe benefit costs for commercial crews; (14) with respect to the size of the mariner pool under different crewing alternatives, GAO calculated that the pool of U.S. civil service mariners would increase by about 1,700 merchant mariners if the 8 remaining auxiliary ships were turned over to MSC and were crewed by civil service mariners; and (15) the pool of commercial merchant mariners would increase by about 2,700 to 3,400 mariners if these same ships were crewed by commercial mariners.

Recommendation for Executive Action

  1. Status: Closed - Implemented

    Comments: In commenting on the draft of this report, DOD partially concurred with this recommendation. In June 2001, the Navy made a decision to transfer 1 multiproduct ship (AOE) to the Military Sealift Command by July 1, 2001, after extensive study by the Navy, in accordance with recommendations by GAO and the Center for Naval Analysis. The Navy plans to transfer 3 additional AOE ships to the Military Sealift Command in FYs 2002, 2003, and 2004. The Navy decided to retire the 4 older AOE ships.

    Recommendation: Given the potential savings that could result if the Navy turned over the operation of the seven active multiproduct auxiliary ships and the one ship due for delivery in early 1998 to MSC for crewing with civil service mariners, the Secretary of Defense should direct the Secretary of the Navy to devise a detailed plan for turning over, in a timely manner, the operation of the multiproduct auxiliary ships to MSC.

    Agency Affected: Department of Defense

 

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