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Depot Maintenance: Status of the Navy's Pearl Harbor Pilot Project

NSIAD-99-199 Published: Sep 10, 1999. Publicly Released: Sep 10, 1999.
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Highlights

Pursuant to a congressional request, GAO examined the Navy's progress in implementing the Pearl Harbor Pilot project, focusing on: (1) the preliminary results of the Pearl Harbor Pilot on improving performance of maintenance activities; (2) the usefulness of the pilot as a model for future consolidations; and (3) issues related to financial and organizational structures for such consolidations.

Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Department of Defense As the Navy proceeds with other similar consolidations, the Secretary of Defense should require the Secretary of the Navy to resolve issues related to the appropriate mechanism to finance and manage these types of activities. Specific financial questions that need to be resolved include the impact of using the direct appropriations to finance the pilot and other potential regionalization actions with regard to: (1) the Navy shipyards and activities remaining in the working capital fund; (2) ship maintenance activities during periods without appropriations; (3) cost visibility of ship maintenance activities; (4) incentives inherent under NWCF's buyer/seller relationship for improving productivity and performance; and (5) the capital investment program for ship maintenance activities. In addition, other questions that need to be resolved include determining whether the pilot's command structure under the Fleet's ownership has helped streamline the ship maintenance process and improve operations in Hawaii.
Closed – Implemented
The Navy has assessed the financial effect of its consolidation efforts and determined that the impact will be positive or have limited impact. The Navy has maintained the same degree of total depot maintenance cost and performance visibility as prior to consolidation. The consolidated maintenance activity at Pearl Harbor runs the same management information systems as the shipyards that continue to operate within the Navy Working Capital Fund. All required cost and performance management data remain available and therefore the cost visibility is identical. For example, in May 2003, the OSD Comptroller requested a special detailed set of cost data from all Naval Shipyards to assess if full cost visibility is being maintained. The OSD comptroller concluded that the data from Pearl Harbor provided the same degree of total cost detail and visibility as that from the other Naval Shipyards still under the Navy Working Capital Fund. Regarding maintaining adequate capital investment for ship maintenance activities, the experience at the consolidated Pearl Harbor facility demonstrates improving levels of capital investment, including facility and equipment improvement. Under the Pearl Harbor consolidation, capital investment funding increased from $8M in fiscal year (FY) 1999 to $21.7M in FY2003. (Note: The funding in the intervening years was $5.7M for FY2000; $20M for FY2001; and $23M for FY2002--overall sizeable increases.) Regarding the overall impact of consolidation on Navy shipyards and activities remaining in the working capital fund, (1) the Navy plans to migrate all of its shipyard activity out of the working capital fund, and (2) the impact on other remaining activities will be relatively small and manageable. According to Navy officials, the remaining shipyard activities comprise less than 10 percent of the total Navy Working Capital Fund revenues. The Navy's actions implement GAO's recommendations regarding shipyard consolidations.

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Topics

Cost effectiveness analysisEquipment maintenanceFederal agency reorganizationStaff utilizationMilitary downsizingMilitary vesselsNaval facilitiesPerformance measuresU.S. NavyWorking capital fund