Award of a Navy Contract To Overhaul the U.S.S. Henry B. Wilson (DDG-7)

PLRD-83-41: Published: Mar 10, 1983. Publicly Released: Mar 24, 1983.

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In response to a congressional request, GAO reviewed the Navy's contract decision to repair the San Diego-based U.S.S. Henry B. Wilson (DDG-7) in Portland, Oregon.

GAO found that the Navy decided that evaluation criteria other than cost were more important in assessing a potential contractor's ability to successfully perform this particular overhaul. The Navy was especially concerned with timely completion of the complex ship overhaul to ensure that fleet operating schedules were maintained. The Navy decided to accept a higher cost proposal because it was technically superior and more realistic cost-wise than other proposals. GAO found nothing to show that the Navy exceeded its available discretions in this matter. The Navy chose a cost-plus-fixed-fee type contract because of the cost uncertainties associated with the procurement. Further, the Navy's decision to relocate the scheduled overhaul of four ships, one of which was the Wilson, to the private sector was responsible for the Navy's not following its policy of home port repair. Navy officials stated that, because of insufficient shipyard capacity, an average of only 46 percent of overhauls have been accomplished in home ports. A recent policy change could, in the opinion of GAO, significantly alter the home port repair situation and result in a greater geographic dispersion of some of the overhaul work. Finally, the GAO review disclosed that personnel and dependent relocation costs, foreseeable costs, crew morale, and retention were not considered in the proposal evaluation process.

Recommendation for Executive Action

  1. Status: Closed - Implemented

    Comments: The Navy completed the relocation costs analysis as recommended. It concluded that it would exclude crew relocation but would continue to include ship relocation costs as an evaluation element for future cost-type contracts.

    Recommendation: The Secretary of the Navy should direct the Chief of Naval Material to promulgate instructions and guidelines for contracting activities governing the consideration of foreseeable and relocation costs in the source selection process.

    Agency Affected: Department of Defense: Department of the Navy

 

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