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entitled 'Defense Infrastructure: Actions Needed to Improve the Navy's
Processes for Managing Public Shipyards' Restoration and Modernization
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United States Government Accountability Office:
GAO:
Report to Congressional Requesters:
November 2010:
Defense Infrastructure:
Actions Needed to Improve the Navy's Processes for Managing Public
Shipyards' Restoration and Modernization Needs:
GAO-11-7:
GAO Highlights:
Highlights of GAO-11-7, a report to congressional requesters.
Why GAO Did This Study:
The Navy’s four public shipyards—Norfolk Naval Shipyard, Pearl Harbor
Naval Shipyard, Portsmouth Naval Shipyard, and Puget Sound Naval
Shipyard—are critical in maintaining fleet readiness and supporting
ongoing operations worldwide. The Navy requests funds for the shipyards’
restoration and modernization as infrastructure condition may affect
their mission and workforce. GAO was asked to review (1) the extent to
which the shipyards have plans for their restoration and modernization
needs; (2) the extent to which the Navy has a process to capture and
calculate these needs; (3) the Navy’s process to prioritize and fund
projects to meet these needs; and (4) the extent to which the
shipyards resolve infrastructure-related safety, health, and quality-
of-life issues. GAO assessed the Navy’s shipyard plans against
elements of a federal strategic planning framework; evaluated its
process for determining its restoration and modernization needs and
addressing safety, health, and quality-of-life issues; visited the
shipyards; and interviewed Navy command and shipyard officials.
What GAO Found:
Each of the Navy’s four public shipyards has plans that vary in the
extent to which they address key elements of a federal comprehensive
framework that GAO has previously identified as key principles of
strategic planning. Pearl Harbor and Portsmouth Naval Shipyards’ plans
fully or partially addressed all of the key elements, such as having
mission statements and addressing external factors that could affect
goals. Norfolk Naval Shipyard’s plans fully or partially address all
but one of the key elements—establishing metrics—and Puget Sound Naval
Shipyard’s plans do not address three key elements—establishing long-
term goals, metrics, and monitoring mechanisms. The Navy has not
issued guidance detailing the need for shipyard strategic plans or
what to include in them. Without such, the Navy and its shipyards may
not have visibility over the effectiveness of their efforts to improve
their overall infrastructure planning and may not have the information
necessary to guide and prioritize investments.
In addition, the Navy’s process to capture and calculate its total
shipyard restoration and modernization needs produces understated
total costs because certain data inputs are unavailable while others
were not fully validated or are undervalued. For example, GAO found
that some facility data, when unavailable, defaulted in the Navy’s
data system to a rating that indicated the facilities were well-
configured and thus did not generate any restoration and modernization
costs for the facilities. However, the Navy does not currently have a
plan in place to address these challenges. Without relevant, reliable,
and timely information, the Navy is limited in its ability to make
informed decisions for effective and efficient use of resources.
The Navy has a collaborative process to prioritize and fund the
shipyards’ restoration and modernization projects. The Navy has to
decide among requests from all its installations, including the
shipyards, to fund the highest-priority needs. However, current Naval
Sea Systems Command guidance to the shipyards limits the number of
military construction projects each shipyard submits per year for
infrastructure restoration and modernization, which sometimes leads to
delays in requesting and completing projects.
The Navy shipyards have processes to systematically identify safety
and occupational health mishaps and hazards, and document their
actions to resolve these issues, but do not have a method to document
actions to address other infrastructure-related situations affecting
the quality of life of their workforce. The shipyards used interim
fixes to partly address identified safety and health hazards, and in
some cases the fixes have led to quality-of-life issues for the
workforce. Shipyard officials recognize that the issues exist and
currently have restoration and modernization projects to address some
safety, health, and quality-of-life issues. However, according to
officials, projects primarily for safety, health, and quality-of-life
improvement have to compete with projects to improve shipyard
operations that may be more heavily weighted. Without capturing and
tracking quality-of-life issues, the Navy lacks visibility over the
magnitude of these issues as it weighs potential improvement
initiatives against other priorities.
What GAO Recommends:
GAO recommends that the Navy develop guidance to standardize shipyard
strategic planning requirements, improve its process for developing
shipyard restoration and modernization needs, and document resolution
of identified quality-of-life issues. In written comments on a draft
of the report, DOD concurred with GAO’s recommendations.
View [hyperlink, http://www.gao.gov/products/GAO-11-7] or key
components. For more information, contact Zina Merritt at (202) 512-
5257 or merrittz@gao.gov.
[End of section]
Contents:
Letter:
Background:
The Navy's Shipyards Have Developed Strategic Plans, but These Plans
Vary in How They Address Key Elements:
Challenges in the Navy's Process to Capture and Calculate Its
Restoration and Modernization Needs Yield Understated Results:
The Navy Has a Process to Prioritize and Fund Restoration and
Modernization Projects, but Guidance Limits the Number of Shipyard
Projects It Considers:
Shipyards Document Their Actions to Address Identified Safety and
Health Issues but Not Quality-of-Life Issues:
Conclusions:
Recommendations for Executive Action:
Agency Comments and Our Evaluation:
Appendix I: Scope and Methodology:
Appendix II: The Extent to Which Navy Shipyards' Planning Documents
Address the Essential Elements of a Strategic Plan:
Appendix III: Comments from the Department of Defense:
Appendix IV: GAO Contact and Staff Acknowledgments:
Related GAO Products:
Tables:
Table 1: Number and Percentage of Configuration Entries in the
Facility System That Were Defaulted to 100:
Table 2: Navy Shipyard Projects Submitted for Funding Consideration
and Unconstrained Funding Requirements for Fiscal Years 2009 and 2010:
Table 3: Number of Shipyard Restoration and Modernization Projects
That Include Safety, Occupational Health, and Quality-of-Life
Improvements for Fiscal Years 2009 and 2010:
Table 4: The Extent to Which Navy Shipyards' Planning Documents
Address the Essential Elements of a Strategic Plan:
Figures:
Figure 1: Locations of the Four Public Naval Shipyards:
Figure 2: Summary Analysis of Navy Shipyards' Strategic Plans:
Figure 3: Data Sources and Relationship among Data Systems That
Calculate Restoration and Modernization Needs:
Figure 4: Deteriorated Piles under Pier 4 at Puget Sound Naval
Shipyard:
Figure 5: Broken Glass Windows Replaced by Plywood Boards at
Portsmouth Naval Shipyard:
Figure 6: Rusted Movable Submarine Maintenance Enclosures at
Portsmouth Naval Shipyard:
Figure 7: Exposed Rafters after Water Damage from a Leaking Roof at
Portsmouth Naval Shipyard:
[End of section]
November 16, 2010:
The Honorable Evan Bayh:
Chairman:
Subcommittee on Readiness and Management Support:
Committee on Armed Services:
United States Senate:
The Honorable Daniel K. Akaka:
The Honorable Maria Cantwell:
The Honorable Susan M. Collins:
The Honorable Patty Murray:
The Honorable Mark R. Warner:
The Honorable James H. Webb:
United States Senate:
The Navy's four public shipyards--Norfolk Naval Shipyard in Virginia,
Pearl Harbor Naval Shipyard in Hawaii, Portsmouth Naval Shipyard in
Maine, and Puget Sound Naval Shipyard in Washington--are important in
maintaining fleet readiness and supporting ongoing operations around
the world, providing the Navy with an ability to perform ship depot-
and intermediate-level maintenance,[Footnote 1] emergency repairs,
ship modernization, and ship deactivations. The shipyards' role in
keeping the Navy's vessels ready to support military operations can be
affected by the physical condition of their infrastructure and
equipment, and the Navy requests funds for the shipyards' continuous
restoration and modernization[Footnote 2] to maintain their ability to
support the Navy's warfighter capabilities.[Footnote 3] The condition
of the shipyards' infrastructure may also affect the safety,
occupational health, and quality of life of the shipyards' workforce.
In May 2009, the Chief of Naval Operations testified that the Navy had
underfunded shore readiness because of increased operational demands,
rising manpower costs, and an aging fleet, leading to growth in the
backlog of restoration and modernization needs at shore facilities.
Further, he stated that the Navy's current planned investment levels
for the public shipyards may not meet their needs, putting future
shore readiness at risk. In October 2009, the Navy reported an
approximate backlog of $3 billion in shore facility restoration and
modernization needs at its four public shipyards.[Footnote 4] Our
prior work has found that the large backlog of needed repair and
maintenance at the Department of Defense's (DOD) installations in part
makes DOD's management of its real property a high-risk area.[Footnote
5]
You asked us to review the infrastructure restoration and
modernization needs of the Navy's four public shipyards. Specifically,
we examined (1) the extent to which the Navy shipyards have plans for
needed shipyard restoration and modernization; (2) the extent to which
the Navy's process to determine its restoration and modernization
needs captures and calculates the shipyards' infrastructure, facility,
and equipment needs; (3) the Navy's process for prioritizing and
funding restoration and modernization projects to meet each shipyard's
infrastructure, facility, and equipment needs; and (4) the extent to
which the shipyards identify and address infrastructure-related
safety, health, and quality-of-life issues.
To determine the extent to which the shipyards have plans for needed
restoration and modernization, we reviewed planning documents from
each shipyard and analyzed them to determine whether they included the
seven essential elements of a strategic plan that we have previously
reported are critical to successful strategic planning.[Footnote 6] To
examine the Navy's process for capturing and calculating the
shipyards' restoration and modernization needs, we obtained and
analyzed restoration and modernization information derived from the
Navy's data systems for each of the shipyards. We reviewed the sources
and types of data used in the Navy's process, determined the scope and
timing of the Navy's most recent shipyard infrastructure inspections
and assessments, compared dry dock replacement cost to total shipyard
facilities' replacement cost for each shipyard, and interviewed Navy
officials to determine benefits and limitations of the data systems
and results. To examine the Navy's process for prioritizing and
funding projects to meet the shipyards' infrastructure, facility, and
equipment needs, we obtained Navy guidance on projects submitted for
consideration, and obtained the respective shipyards' data on the
funds requested for sustainment, restoration, and modernization
special projects; military construction; and equipment for fiscal
years 2009 and 2010. We did not independently validate these shipyard
funding data. To determine the extent to which the shipyards identify
and address infrastructure-related safety, health, and quality-of-life
issues, we obtained and reviewed related DOD and Navy guidance,
analyzed records of the shipyards' identified health and safety
mishaps and hazards that had not been addressed as of July 2010, and
reviewed justifications of shipyard infrastructure restoration and
modernization projects for fiscal years 2009 through 2010. We also
interviewed safety and occupational health officials, shipyard command
officials, human resources officials, and union representatives at
each of the shipyards. To address all four objectives, we interviewed
officials from the Naval Sea Systems Command; the Commander, Navy
Installations Command; and officials at all four naval shipyards. In
addition, we conducted site visits at the shipyards for firsthand
observations of areas identified by the shipyards as requiring
potential restoration and modernization. However, during our visits,
we did not attempt to independently evaluate the condition of shipyard
infrastructure. Although we did not independently validate the Navy's
restoration and modernization data, budget request and approval data,
and the safety and occupational health data, we discussed with
officials the steps they had taken to ensure reasonable accuracy of
the data. We determined the data to be sufficiently reliable for the
purposes of this report.
We conducted this performance audit from October 2009 to October 2010
in accordance with generally accepted government auditing standards.
Those standards require that we plan and perform the audit to obtain
sufficient, appropriate evidence to provide a reasonable basis for our
findings and conclusions based on our audit objectives. We believe
that the evidence obtained provides a reasonable basis for our
findings and conclusions based on our audit objectives. A detailed
description of our scope and methodology is presented in appendix I.
Background:
The Navy's four public shipyards--Norfolk Naval Shipyard, Pearl Harbor
Naval Shipyard, Portsmouth Naval Shipyard, and Puget Sound Naval
Shipyard--maintain, repair, modernize, deactivate, dispose of, and
provide emergency repair to U.S. Navy ships, systems, and components.
The shipyards ensure that the Navy can maintain its own capability to
perform both ship depot maintenance and emergency repair work,
primarily for nuclear-powered aircraft carriers and submarines. Each
of the shipyards focuses on certain types of work, and together they
support and enhance the fleet's operational availability and mission
effectiveness.
* Norfolk Naval Shipyard is the Navy's oldest shipyard, originally
established in 1767 under British rule. It is the only East Coast
naval shipyard capable of dry-docking nuclear aircraft carriers.
Located in Portsmouth, Virginia, it is a full-service shipyard that
provides repair and modernization to the entire range of Navy ships,
including aircraft carriers, submarines, surface combatants, and
amphibious ships.
* Pearl Harbor Naval Shipyard, in Oahu, Hawaii, officially created by
Congress in 1908, is the largest ship repair facility located between
the West Coast and the Far East and is strategically located in a
major home port area for submarines and surface ships. Its primary
focus is the maintenance and repair of submarines and surface
combatants.
* Portsmouth Naval Shipyard, in Kittery, Maine, was established in
1800. During World War I, it took on an important role in constructing
submarines, in addition to maintaining and repairing surface ships.
The Navy continued to build submarines there until 1969, when the last
submarine built in a public shipyard was launched. Currently,
Portsmouth Naval Shipyard is exclusively a nuclear submarine repair
yard.
* Puget Sound Naval Shipyard, located in Bremerton, Washington, was
originally established in 1891 as Naval Station Puget Sound and was
designated a naval shipyard in 1901. It was originally designed to
construct ships, including submarine chasers, submarines, and
ammunition ships. Currently, it is the largest shipyard on the West
Coast, and while equipped and staffed to work on all classes of Navy
vessels, it primarily supports aircraft carriers and is the Navy's
only site for reactor compartment disposal and ship recycling for
nuclear-powered ships.
Figure 1 shows the four public naval shipyards and their respective
locations.
Figure 1: Locations of the Four Public Naval Shipyards:
[Refer to PDF for image: U.S. map]
Locations of the Four Public Naval Shipyards:
Norfolk Naval Shipyard;
Pearl Harbor Naval Shipyard & Intermediate Maintenance Facility;
Portsmouth Naval Shipyard;
Puget Sound Naval Shipyard & Intermediate Maintenance Facility.
Source: U.S. Navy.
[End of figure]
The Navy provides for restoration and modernization of shipyard
infrastructure primarily through military construction projects,
special projects, and equipment projects.
* Military construction projects. The Navy's military construction
projects are for complete new facilities or improvements to an
existing facility, such as construction, development, conversion, or
extension of all types of buildings, facilities, roads, airfield
pavements, and utility systems. The Navy uses the Military
Construction appropriation to fund these projects that cost more than
$750,000 per project.
* Special projects. The Navy refers to certain maintenance, repair, or
construction projects that cost more than $500,000 as special
projects. These include major repairs or replacement of existing
facility components--such as roofs and heating/cooling systems--that
are expected to occur periodically throughout the life of the
facilities, regularly scheduled inspections, preventive maintenance,
and emergency response repairs. The Navy uses Sustainment,
Restoration, and Modernization funds, which are a portion of its
Operation and Maintenance, Navy appropriation, to finance these
special projects.[Footnote 7]
* Equipment projects. The Navy has equipment projects for procurement,
production, and modernization of industrial support equipment. The
Navy funds large equipment projects with unit costs greater than
$250,000 through its Other Procurement, Navy appropriation.[Footnote 8]
The Navy's Shipyards Have Developed Strategic Plans, but These Plans
Vary in How They Address Key Elements:
The Navy's four shipyards have independently developed strategic plans
that address current and future restoration and modernization issues;
however, the plans vary in the extent to which they address each of
the elements of a comprehensive, results-oriented strategic planning
framework.[Footnote 9] While the Naval Sea Systems Command, in
conjunction with the Navy Installations Command, provide for the long-
term planning and operation of the shipyards, the shipyards lack
guidance from these offices that could facilitate the shipyards'
efforts to develop comprehensive strategic plans. Although the
shipyards lack guidance, they recognize the value of long-term
strategic planning and have created their own plans. However, without
this guidance, shipyard plans may continue to lack certain elements
important to successful plans and the Navy and its shipyards may not
have full visibility over the plans' effectiveness, which will affect
the shipyards' and the Navy's ability to improve their overall
infrastructure planning as well as to support decision making.
The shipyards have generally developed two types of strategic plans
that address issues facing the shipyard: a shipyard-wide strategic
plan that addresses issues facing the entire shipyard, including
personnel and workforce issues, ship maintenance, and restoration and
modernization needs, and an infrastructure-specific plan that provides
more detail on current and future infrastructure needs. Taken
together, these plans represent the strategic plan used by a shipyard
for overall planning purposes. For example, Pearl Harbor Naval
Shipyard's Fiscal Year 2010 Business Plan lays out overall goals and
objectives for the entire shipyard and its Facilities Modernization
Plan provides long-range facilities planning to guide future
facilities and infrastructure investments up to fiscal year 2035.
Similarly, Norfolk Naval Shipyard's Strategic Plan 2010-2012 focuses
on three main goals--delivering ships, developing leaders, and
providing quality work--while its draft Vision 2035 Transformation
Plan focuses on future infrastructure projects needed to modernize the
shipyard.
We have previously reported that there are seven elements that should
be incorporated into strategic plans to establish a comprehensive,
results-oriented framework--an approach whereby program effectiveness
is measured in terms of outcomes or impact:
1. Mission statement: A statement that concisely summarizes what the
organization does, presenting the main purposes for all its major
functions and operations.
2. Long-term goals: A specific set of policy, programmatic, and
management goals for the programs and operations covered in the
strategic plan. The long-term goals should correspond to the purposes
set forth in the mission statement and develop with greater
specificity how an organization will carry out its mission.
3. Strategies to achieve the goals: A description of how the goals
contained in the strategic plan and performance plan are to be
achieved, including the operational processes; skills and technology;
and the human, capital, information, and other resources required to
meet these goals.
4. External factors that could affect goals: Key factors external to
the organization and beyond its control that could significantly
affect the achievement of the long-term goals contained in the
strategic plan. These external factors can include economic,
demographic, social, technological, or environmental factors, as well
as conditions or events that would affect the organization's ability
to achieve its strategic goals.
5. Stakeholder involvement: Consideration of the views and
suggestions--solicited during the development of the strategic plan--
of those entities potentially affected by or interested in the
organization's activities.
6. Use of metrics to gauge progress: A set of metrics that will be
applied to gauge progress toward attainment of each of the plan's long-
term goals.
7. Evaluations of the plan to monitor goals and objectives:
Assessments, through objective measurement and systematic analysis, of
the manner and extent to which programs associated with the strategic
plan achieve their intended goals.
Our analysis of the shipyards' strategic plans showed that the plans
vary in the extent to which they address each of the elements of a
comprehensive, results-oriented strategic planning framework.[Footnote
10] Figure 2 presents a summary of our analysis. More detailed
information on how the shipyards' plans compare to the seven key
elements in strategic planning is presented in appendix II.
Figure 2: Summary Analysis of Navy Shipyards' Strategic Plans:
[Refer to PDF for image: table]
Essential elements of a strategic plan: Mission statement;
Norfolk: Addresses;
Pearl Harbor: Addresses;
Portsmouth: Addresses;
Puget Sound: Addresses.
Essential elements of a strategic plan: Long-term goals;
Norfolk: Addresses;
Pearl Harbor: Addresses;
Portsmouth: Addresses;
Puget Sound: Does not address.
Essential elements of a strategic plan: Strategies to achieve goals
and objectives;
Norfolk: Addresses;
Pearl Harbor: Addresses;
Portsmouth: Addresses;
Puget Sound: Partially addresses.
Essential elements of a strategic plan: Key external factors that
could affect goals;
Norfolk: Partially addresses;
Pearl Harbor: Addresses;
Portsmouth: Addresses;
Puget Sound: Partially addresses.
Essential elements of a strategic plan: Stakeholder involvement in
developing the plan;
Norfolk: Addresses;
Pearl Harbor: Addresses;
Portsmouth: Addresses;
Puget Sound: Partially addresses.
Essential elements of a strategic plan: Use of metrics to gauge
progress;
Norfolk: Does not address;
Pearl Harbor: Addresses;
Portsmouth: Partially addresses;
Puget Sound: Does not address.
Essential elements of a strategic plan: Evaluations of the plan to
monitor goals and objectives;
Norfolk: Partially addresses;
Pearl Harbor: Partially addresses;
Portsmouth: Partially addresses;
Puget Sound: Does not address.
Source: GAO analysis.
[End of figure]
Overall, we found that Pearl Harbor Naval Shipyard and Portsmouth
Naval Shipyard have plans that fully or partially address all of the
key elements of a strategic planning framework. Further, Norfolk Naval
Shipyard's plans fully or partially address all but one of the key
elements, while Puget Sound Naval Shipyard's plans do not address
three key elements.
Pearl Harbor Naval Shipyard's plans fully address six of the seven key
elements, and partially address the remaining element regarding
evaluations of the plan to monitor goals and objectives. For example,
its plans contain a mission statement for the shipyard--to keep ships
fit to fight--and an overarching goal to establish and execute an
effective facilities modernization program with several interim
objectives, such as improving the condition, capability, and capacity
of the facilities. Pearl Harbor Naval Shipyard plans take into account
key external factors that could affect its goals by also providing a
constrained version of the plan that conforms to existing development
limitations, including preservation of historic structures. Further,
its plans set up a six-point scale to gauge progress on some of its
overall goals; however, they have not set up a program evaluation
process for the shipyard's more detailed infrastructure goals.
Portsmouth Naval Shipyard has plans that fully address five of the
seven elements, and partially address the two elements on use of
metrics to gauge progress and evaluation of the plans to monitor goals
and objectives. For example, its plans present a strategy to achieve
their goals and objectives in the form of a very detailed list of all
infrastructure projects through fiscal year 2040, including cost and
time estimates. In addition, the shipyard involved stakeholders in
developing the plans and describes in the plans several external
factors that could affect its goals, such as new environmental
regulations, and methods for addressing these factors. Finally,
although Portsmouth Naval Shipyard's strategic plan lays out some
intermediate milestones to monitor progress toward meeting goals and
objectives and states that it will be continually reviewed and
updated, it does not discuss specific methodologies for doing so.
Norfolk Naval Shipyard has plans that fully addresses four of the
seven elements and partially addresses the two elements on key
external factors that could affect goals and evaluations of the plan
to monitor goals and objectives; however, the plans do not address use
of metrics to gauge progress. Specifically, the plans were developed
with stakeholder participation through consultation with labor
leadership, customers, and shipyard management. However, while the
plans mention evaluations through regular performance reviews, the
scope and methodology of these reviews are not discussed. Further, its
plans do not discuss metrics for measuring progress against overall
goals. Our prior work has shown that measuring performance allows
organizations to track the progress they are making toward their goals
and gives managers crucial information on which to base their
organizational and management decisions. In addition, it is especially
important to monitor progress toward meeting goals and objectives
because systematic evaluation of how a program was implemented can
provide crucial information about why a program did or did not succeed
and suggest ways to improve it.
Puget Sound Naval Shipyard's plans fully address one of the seven
elements--having a mission statement ("with one team ensuring freedom
by fixing ships and supporting the warfighter")--and partially
addresses three others. Its plans partially address the elements on
strategies to achieve goals and objectives, key external factors that
could affect goals, and involving stakeholders in developing the plan.
However, its plans do not address the three elements on specific long-
term infrastructure goals, use of metrics to gauge progress, and
evaluations of the plan to monitor goals and objectives. For example,
the shipyard's plans partially address the key element of strategies
to achieve goals and objectives by listing several projects that it
would like to complete in the future, but instead of specific,
measurable long-term goals, the plans include general focus areas,
such as maintaining warfighter readiness. Further, the plans do not
include metrics for measuring progress against overall goals or
describe the shipyard's method for evaluating the plan to monitor
goals and objectives. Puget Sound officials told us that they
recognize the need to further develop their strategic plans to include
more details about needed restoration and modernization projects in
order to assist in future project planning.
The Naval Sea Systems Command, in conjunction with the Navy
Installations Command, provides for the long-term planning and
operation of the shipyards, but the commands have not provided
guidance to the shipyards about creating their own strategic plans or
on what specifically to include in such plans. According to shipyard
and Naval Sea Systems Command officials, the Naval Sea Systems Command
has not required this type of strategic planning at the shipyard
level; rather it has focused primarily on providing guidance to the
shipyards on the requirements for their yearly restoration and
modernization project requests. Despite this lack of guidance, the
shipyards, recognizing the value of long-term strategic planning,
created their own plans. Although these plans present important
information about projects needed to modernize the shipyards'
infrastructure, they vary in the extent to which they address all of
the key elements of a strategic plan. Without having these essential
elements in the strategic plans, the shipyards and the Navy may not
have visibility over the effectiveness of their plans to improve their
overall infrastructure planning and may not be fully positioning
themselves to best utilize the resources available for restoration and
modernization projects.
Challenges in the Navy's Process to Capture and Calculate Its
Restoration and Modernization Needs Yield Understated Results:
The Navy has a process that provides an overview of its total shipyard
restoration and modernization needs, but it results in understated
estimates of its restoration and modernization needs. The Navy
developed the Facility Readiness Evaluation System (Facility System),
in part, to capture and calculate an estimate of its restoration and
modernization needs; however, some data inputs were unavailable or not
yet entered into the system, while others were undervalued or not
validated at the time of our review. Navy officials are aware of the
issues concerning the Facility System's data elements and have told us
that they are taking steps to address the issues, but did not provide
supporting documents showing goals and time frames for doing so.
Because of the collective limitations within the Facility System, the
estimated $3 billion total restoration and modernization needs that
the Navy reported to Congress in October 2009 is inaccurate and
understated. Consequently, both the Navy and Congress have incomplete
information on the total restoration and modernization costs
identified by the shipyards.
The Navy Has a Centralized Data System for Capturing Its
Infrastructure Restoration and Modernization Needs:
Recognizing that it did not have a centralized, single system that it
could use to calculate its total restoration and modernization
shipyard needs, beginning in fiscal year 2008, the Navy began
developing its Facility System. The purpose of the Facility System was
to provide a more flexible system that could be used for retrieving,
sorting, and calculating the Navy's restoration and modernization
costs, both as a total cost and sorted by various data elements, such
as region or installation. Further, according to Navy Installations
Command and Naval Sea Systems Command officials, implementing the
Facility System is a step toward readily providing an overview of
current facility readiness. For example, the Facility System draws
data inputs from other established Navy data systems to come up with a
snapshot of overall needs. The Facility System, in which the primary
data fields used are the configuration rating, condition rating, and
plant replacement value fields, uses algorithms to calculate total
restoration and modernization backlog for each Navy facility.[Footnote
11] The configuration rating indicates the degree to which the current
space or structure serves its intended purpose. For example, a pier
that is long enough to accommodate all the types of vessels it is
designed to berth would have a higher configuration rating than a pier
that is too short to berth certain ships. Each week, the configuration
rating is automatically fed into the Facility System from the Navy's
official asset database--the internet Navy Facility Assets Data Store
(Data Store).[Footnote 12] The condition rating shows the Navy's
assessment of the physical condition of shipyard facilities and is fed
into the Facility System through the Data Store from the database
Single Platform Maximo, which the installations use to track their
local assets. The plant replacement value is the cost of fully
replacing facilities and is calculated in the Facility System using a
standardized formula provided by DOD--not an individualized facility-
specific estimate. Figure 3 shows the sources of the configuration,
condition, and plant replacement value ratings and the relationship
among data systems that capture and calculate restoration and
modernization needs.
Figure 3: Data Sources and Relationship among Data Systems That
Calculate Restoration and Modernization Needs:
[Refer to PDF for image: illustration]
Data gathering and generation:
Condition inspections:
Condition ratings.
Inventory of facilities:
* Facility quantities;
* Configuration deficiencies.
Storage and calculation:
Single Platform MAXIMO:
Displays:
* Condition ratings.
Internet Navy Facility Asset Data Store:
Displays:
* Condition ratings.
Calculates:
* Configuration ratings;
* Plant replacement values.
Facility Readiness Evaluation System:
Displays:
* Condition and configuration ratings;
* Plant replacement values.
Calculates:
* Restoration costs;
* Modernization costs.
Analysis and decision:
* Ability to support current mission or function;
* Prioritization of facilities projects.
Source: GAO.
Note: These computer-based applications display or calculate other
facility-related data, but for clarity only fields relevant to
capturing and calculating restoration and modernization needs are
shown. Also, other computer-based applications are used in the
facilities management process but are not shown here.
[End of figure]
While the Facility System is still a work in progress, according to
Navy officials, the Navy has used the total restoration and
modernization backlog displayed in the Facility System to report to
Congress without caveats regarding any limitations to the data.
Challenges in Configuration, Condition, and Plant Replacement Value
Ratings Yield Understated Restoration and Modernization Costs:
We found that the Navy has a process to capture and calculate its
total shipyard restoration and modernization needs through the
Facility System, but in many cases, (1) the configuration data were
unavailable and not entered into the source database, (2) the
condition data had not been validated and in some cases did not
reflect the current condition of several types of infrastructure, and
(3) the plant replacement values of shipyard dry docks were
undervalued. According to the Standards for Internal Control in the
Federal Government, management needs relevant, reliable, and timely
communications and clearly documented internal controls. Such
communications and documented controls are useful to managers in
controlling operations and monitoring performance for effective and
efficient use of resources.[Footnote 13]
Configuration Data:
In numerous instances at each shipyard, we found that some
configuration data were unavailable and had not been entered into Navy
data systems that feed into the Facility System, understating the
total restoration and modernization cost determined by the shipyards.
The configuration rating is an algorithm-based calculation ranging
from 0 to 100, in which 0 denotes that the facility does not support
its current mission and 100 reflects that the facility is best
configured for its mission or function.
Our analysis of the Facility System configuration ratings for the four
shipyards showed that a large number of the facilities had a rating of
100. According to shipyard officials, the Navy has not determined
configuration assessments for utilities and some facilities, and when
configuration data are not entered into the system, the rating in the
Facility System defaults to 100. Navy officials also stated the
Facility System only shows configuration ratings of 100 when the
facilities' configuration has not been determined. This default
feature creates a false result--denoting that the facilities without
configuration data are instead perfectly configured--and thus does not
generate any restoration or modernization costs for the facilities.
Table 1 shows the number of entries in the Facility System that were
defaulted to 100 as of the time of our review.
Table 1: Number and Percentage of Configuration Entries in the
Facility System That Were Defaulted to 100:
Naval shipyard: Portsmouth;
Number of entries defaulted to 100: 84;
Total entries: 235;
Percentage: 35.7%.
Naval shipyard: Pearl Harbor;
Number of entries defaulted to 100: 62;
Total entries: 158;
Percentage: 39.2%.
Naval shipyard: Norfolk;
Number of entries defaulted to 100: 274;
Total entries: 514;
Percentage: 53.3%.
Naval shipyard: Puget Sound;
Number of entries defaulted to 100: 154;
Total entries: 243;
Percentage: 63.4%.
Source: GAO analysis of Navy data.
[End of table]
Navy officials were aware of the issues concerning the Facility
System's configuration data but did not have documented goals and time
frames for updating its processes for populating the configuration
data fields. Thus, the unavailable configuration ratings may continue
to lead, in part, to an understated total estimate of shipyard
restoration and modernization needs.
Condition Ratings:
In our analysis of the condition ratings in the Facility System, we
found that the Navy's methods for collecting and validating condition
data for all facilities are not systematically carried out and may not
reflect current conditions of some Navy facilities. Prior to 2006, the
Navy performed annual internal facilities inspections to assess the
condition of its shipyard facilities, including buildings, dry docks,
piers, wharves, and utilities. According to Navy officials, these
inspections were discontinued in 2006 because the process yielded a
low return on investment. They stated that the personnel resources to
produce the detailed condition assessments were too costly when
compared to the value of the information produced. However, the Navy
continued to annually inspect dry docks for their certification and to
inspect piers and wharves on a cyclical basis, such as every 6 years
for steel and concrete structures and every 3 years for wood
structures. In 2009, the Navy hired a contractor to perform a
condition inspection of its shipyards. According to Navy officials,
these inspections only covered major components of shipyard buildings
that were used to model and predict generally the shipyards' future
funding needs.
The information derived from the annual dry dock inspections, cyclical
pier and wharf inspections, utility inspections done in 2006, and the
inspections done on some building components in 2009 produced a
baseline condition rating for facilities in the Facility System.
However, according to shipyard officials, these condition assessments
may not reflect the current condition of some facilities. Shipyard
officials stated that they have not performed a thorough validation of
the current condition ratings for every building in the Facility
System because of the sheer magnitude of the entries. Instead,
according to shipyard officials, they validate condition ratings on an
as-needed basis. According to officials at each of the four shipyards,
when they prepare a project package for funding consideration, they
routinely have to update the condition rating for the facility in
question to ensure that it reflects current conditions. During our
site visits at the shipyards, shipyard officials highlighted a few
examples of condition ratings that do not reflect current condition.
For example, the Facility System shows that at Norfolk Naval
Shipyard's Building 510--Electronics Shop had a condition rating of 74
(indicating a high "fair" condition) as of March 2010. During our
visit, shipyard officials stated that the facility should have a
condition rating of less than 60, which indicates "poor" condition.
They noted that the building's fire sprinkler system was in violation
of fire codes, an elevator was out of service, the
heating/ventilation/air conditioning system was over 60 years old, and
numerous roof leaks continue to damage and deteriorate the building.
At Puget Sound Naval Shipyard, officials stated that the condition
data in the Facility System for Pier 4 show a rating of 90, which
indicates "good" condition; however, shipyard officials stated that
components of the pier are in poor condition, for example,
deteriorated piles supporting the pier and fenders used in mooring
ships to the pier that need to be replaced. Figure 4 shows the
deteriorated piles supporting Pier 4 at Puget Sound Naval Shipyard.
Figure 4: Deteriorated Piles under Pier 4 at Puget Sound Naval
Shipyard:
[Refer to PDF for image: photograph]
Source: GAO.
[End of figure]
Further, Puget Sound Naval Shipyard officials stated that Building
431, a machine shop, has a condition rating of 62, which indicates
"fair" condition. However, shipyard officials stated that the machine
shop faces imminent collapse if an earthquake were to occur. As a
result of the way condition ratings are currently recorded in the
Facility System, higher than actual ratings in the system's condition
field undervalue the total restoration and modernization cost that has
been reported to Congress.
Navy officials are aware of the issues concerning the Facility
System's condition data, but the Navy's current guidance for how to
conduct condition inspections still references the routine inspections
that were discontinued in 2006. Further, since stopping the annual
inspections, the Navy has not issued interim guidance for assessing
facility conditions or for routinely validating existing condition
data in the Facility System. According to Navy Installations Command
officials, the Navy is in the midst of changing its overall condition
inspection process. These officials told us that they have plans to
routinely and systematically assess infrastructure conditions in the
future, and have plans to request funding to implement the revised
inspection program in fiscal year 2012. However, the Navy does not
have documented measurable goals and time frames for routinely
updating its processes for conducting these inspections or for
validating the current condition data in the system. Consequently, the
unvalidated condition ratings lead, in part, to an understated total
estimate of the shipyards' restoration and modernization needs.
Plant Replacement Value Ratings:
DOD's formula for calculating plant replacement values does not
provide an accurate assessment of actual costs needed to design and
construct dry docks, thus undervaluing the shipyards' total
restoration and modernization needs. DOD defines plant replacement
value as the cost to design and construct a facility to current
standards to replace an existing facility at the same location. DOD
provides a standard formula for plant replacement value that
calculates this value in a consistent manner across the department.
[Footnote 14] One element in this formula is replacement unit cost,
which estimates the cost to provide a complete and usable facility
capable of serving the purpose of the original facility. Multiplying
the replacement unit cost times the actual dimensions of the facility
to be replaced and then adjusting for various other conditions, such
as project location, yields the plant replacement value.
However, according to Navy officials, plant replacement values found
in the Navy's official facility asset database do not reflect the
current costs to design and construct dry docks equivalent to those
found at the shipyards. For example, officials at Norfolk Naval
Shipyard estimated that the actual plant replacement values for their
dry docks alone were understated by a total of $1.64 billion. The
plant replacement values of dry docks constitute from 12 percent to 43
percent of a shipyard's overall plant replacement value, so
undervaluation of the dry docks' plant replacement values can
materially affect the overall shipyard backlog calculation.
According to Navy officials, they cannot unilaterally alter plant
replacement values because DOD prescribes both the formula to
calculate plant replacement value and certain cost factors used in
that calculation. However, DOD provides a method for suggesting
revisions to its published cost factors, particularly for facilities
unique to an individual service's mission. For example, in 2009 the
Navy provided historical construction cost data that led DOD to more
than double the replacement unit cost factors for both piers and
wharves. As a result, plant replacement values for these structures
more accurately reflect the current costs to design and construct
piers and wharves, and the backlog calculations that depend on plant
replacement value are also more accurate. However, we found that the
Navy has not yet provided similar documentation to DOD to change the
replacement unit cost factor for dry docks. Officials stated that
plant replacement value is not a factor in approving restoration and
modernization projects, but it is a factor in the Facility System's
calculations and left in its current state significantly understates
dry dock restoration and modernization needs. These understated plant
replacement values, along with unavailable configuration ratings and
unvalidated condition ratings, cumulatively result in an understated
total estimate of the shipyards' restoration and modernization needs
as reported to Congress. Without relevant, reliable, and timely
information on the shipyards' restoration and modernization needs, the
Navy is limited in its ability to make informed decisions for
effective and efficient use of resources.
The Navy Has a Process to Prioritize and Fund Restoration and
Modernization Projects, but Guidance Limits the Number of Shipyard
Projects It Considers:
The Navy has a collaborative process to prioritize and fund the
shipyards' restoration and modernization projects that involves the
shipyards and higher Navy management commands, although its current
guidance restricts the shipyards from submitting for consideration
potential restoration and modernization projects that officials
believe they need. According to officials, the Navy prioritizes among
the shipyards' requests and between the shipyards and other Navy
installations[Footnote 15] to fund its highest-priority needs. Current
Naval Sea Systems Command guidance to shipyards restricts the number
of projects each shipyard can submit for consideration, which
sometimes leads to delays in requesting and completing restoration and
modernization projects identified by the shipyards.
Funding Requirements for Shipyard Restoration and Modernization
Projects Are Based on Navy Priorities:
The Naval Sea Systems Command and the Navy Installations Command
provide annual guidance to the shipyards and regional commands,
respectively, for developing and submitting their requests for
military construction project, special project, and equipment project
requirements. Per Naval Sea Systems Command guidance, specifically for
the military construction projects and special projects, the shipyards
provide project documentation, including descriptions, preliminary
scoring, and economic analyses. Projects are then coordinated with
Naval Sea Systems Command officials for input on the project requests
and scoring. Navy Installations Command guidance then states that the
shipyards are to submit requests for project funds through their
regional commands, including preliminary scores to prioritize the
project requests based on the level of importance, using factors such
as mission alignment, reduction of excess infrastructure, and quality
of service support. In addition, the guidance instructs the shipyards
and regional commands to indicate in their submissions other factors
that may affect the scoring and prioritization of the projects. For
example, in guidance regarding projects submitted for funding for
fiscal year 2012, the Navy Installations Command directed the regional
commands to indicate whether submitted projects promote energy savings
or support Navy special interest areas, such as consolidation of
multiple functions into a facility and promotion of fitness
facilities. The regional commands submit regional projects, including
shipyard requirements after review and approval by the Regional
Mission Integration Group, and present their project requests to the
Navy Installations Command for review and prioritization. The
command's recommendations are then forwarded to the Navy's Shore
Mission Integration Group, which includes officials from several
components, such as the Office of the Chief of Naval Operations, the
Navy Installations Command, and the Naval Facilities Engineering
Command. The Shore Mission Integration Group reviews all Navy
installation project requests, including the shipyard requests among
projects presented by other Navy regional commands, and then approves
the projects that will be included in the Navy's full budget
submission in line with DOD's and the Navy's priorities and competing
requirements, such as prevailing in wars, deterring conflict, and
preserving and enhancing the force.[Footnote 16]
This process is similar to the process for prioritizing and requesting
equipment projects. Shipyard officials submit equipment project
requests directly to the Naval Sea Systems Command, which prioritizes
the projects among its other needs, and submits an integrated request
to the Chief of Naval Operations for approval.
In addition to the projects requested by the shipyards as part of the
Navy's prioritization process, according to Navy officials, the Navy
has included other projects that were planned for future budget
submissions, as part of its recent budget submissions because of
congressional interest in those projects. Further, the four shipyards
have received funding to accomplish some needed projects through the
American Recovery and Reinvestment Act of 2009 (Recovery Act).
[Footnote 17] Under the Recovery Act, Congress appropriated about $7.4
billion to DOD to fund, among other things, facility repair and
military construction. The Navy identified potential projects and
submitted them to DOD to be selected for funding based on several
factors, including operational need and the speed with which the
contract could be awarded. For example, according to shipyard
officials, seven of Portsmouth Naval Shipyard's eight funded projects
for fiscal year 2009 were either projects with congressional interest
that were not requested by the shipyard in the Navy's prioritization
process or were projects funded from Recovery Act funds, totaling
$54.9 million. For fiscal year 2009, Norfolk Naval Shipyard received
$2.1 million in Recovery Act funds for a special project to replace
two elevators, and according to Pearl Harbor Naval Shipyard officials,
they received $4.2 million for 2010 projects they did not submit
through the Navy's prioritization process to perform work on several
equipment improvements, including a liquid waste processing system, a
bending roll machine, a pipe bender, and a mobile crane.
According to shipyard officials, some shipyard projects may get
delayed repeatedly because of other priorities, which may lead to
critical failures and other emergencies that could become extremely
costly. For example, Norfolk Naval Shipyard officials submitted a
project in fiscal year 2000 to repair and upgrade a damaged pier. The
initial estimate for repairing and upgrading the pier was about $15.5
million. However, the project remained unfunded until the pier had
been condemned and required a total replacement. In fiscal year 2006,
the revised estimated cost to demolish and replace the pier was $78.8
million. When the pier was eventually completed in fiscal year 2010,
the total cost equaled about $85 million, illustrating that the cost
associated with delaying the initial repair and upgrade work increased
greatly over time.
Navy Guidance to Shipyards Restricts Shipyards from Submitting Their
Total Restoration and Modernization Needs:
The shipyards routinely had additional restoration and modernization
projects they believed were needed and could have reasonably been
accomplished, but these projects were not submitted for consideration
because of restrictions established in Naval Sea Systems Command
guidance. Shipyard officials stated that Naval Sea Systems Command and
Navy Installations Command budget request guidance is supplemented
with direction provided through e-mails and telephone calls from the
Naval Sea Systems Command and the Navy regions that limit the number
of projects the shipyards are allowed to submit for consideration each
year. Shipyard officials also told us that based on their prior
experience with the request and approval process, they do not submit
all of the projects they think are needed for restoration and
modernization. In addition, the Naval Sea Systems Command guidance
routinely directed the shipyards to prepare only one project request
under the Military Construction funding category per fiscal year for
the Naval Sea Systems Command's initial review prior to submission for
Navy Installations Command review. The guidance noted that exceptions
will be considered only if they have clear and convincing evidence
that being limited to one military construction project per year would
result in significant adverse mission impact. Officials from the Naval
Sea Systems Command and Navy Installations Command told us that the
process was intended to systematically prioritize projects and
constrain the development and submission of projects that may have
less likelihood of being funded.
The shipyards submitted restoration and modernization projects for
consideration for fiscal years 2009 and 2010 totaling about $1
billion. However, shipyard officials stated that they would have
submitted additional projects totaling about $508 million that they
believed were needed and could have reasonably been accomplished if
they had not been constrained by the guidance. Table 2 shows the
funding for projects the Navy shipyards submitted for consideration
compared to unconstrained requirements--the amount of funding that
shipyard officials stated that they would have requested for projects
they believe were needed and could have accomplished--for fiscal years
2009 and 2010.
Table 2: Navy Shipyard Projects Submitted for Funding Consideration
and Unconstrained Funding Requirements for Fiscal Years 2009 and 2010:
Norfolk Naval Shipyard, VA:
Shipyard-requested funding;
FY 2009: $184,445;
FY 2010: $177,711.
Unconstrained requirements;
FY 2009: $372,528;
FY 2010: $346,727.
Requirements not requested;
FY 2009: $188,083;
FY 2010: $169,016.
Pearl Harbor Naval Shipyard, HI:
Shipyard-requested funding;
FY 2009: $111,040;
FY 2010: $121,590.
Unconstrained requirements;
FY 2009: $111,040;
FY 2010: $137,290.
Requirements not requested;
FY 2009: $0;
FY 2010: $15,700.
Portsmouth Naval Shipyard, ME:
Shipyard-requested funding;
FY 2009: $71,594;
FY 2010: $46,799.
Unconstrained requirements;
FY 2009: $109,248;
FY 2010: $99,175.
Requirements not requested;
FY 2009: $37,654;
FY 2010: $52,376.
Puget Sound Naval Shipyard, WA:
Shipyard-requested funding;
FY 2009: $148,626;
FY 2010: $146,442.
Unconstrained requirements;
FY 2009: $174,626;
FY 2010: $165,822.
Requirements not requested;
FY 2009: $26,000;
FY 2010: $19,380.
Total Navy shipyards' requirements not requested;
FY 2009: $251,737;
FY 2010: $256,472.
Source: GAO analysis of Navy data.
Note: According to shipyard officials, their unconstrained
requirements include funding for projects they believe were needed for
restoration and modernization and could be accomplished. We did not
independently validate these requirements.
[End of table]
One example of these restoration and modernization projects that the
shipyards believed that they needed but did not provide for the Naval
Sea Systems Command's initial review is Pearl Harbor Naval Shipyard's
military construction project for consolidating product support shops
into a single facility. According to a shipyard official, the shipyard
refrained from submitting two military construction projects for
fiscal year 2010 with a total cost of $41.9 million because it had
another project with a higher priority for two dry docks' ship support
services costing $26.2 million--a net amount of $15.7 million in
projects not requested. According to the official, the production
support shops currently work out of different facilities, including
temporary tents, trailers, and storage bins, that create poor and
unsafe working conditions, which results in inefficient production
support to ships undergoing major work at the dry docks and increased
maintenance costs. Further, Puget Sound Naval Shipyard developed a
project for a regional lifting and handling facility costing $34.2
million, which an official told us the shipyard planned to submit for
fiscal year 2009. However, the official stated that it has not yet
been submitted for the Naval Sea Systems Command's initial review
because of project guidance restriction and budget constraints. The
project's requirement has been outstanding since fiscal year 2003.
According to the project's proposal, it would consolidate the work
performed in 12 other buildings located throughout the shipyard, and
could result in improved productivity, reduced rework, a reduction in
maintenance backlog, and increased production capability to perform
ship repairs. In addition, the project proposal stated that because of
the facility's planned earthquake safety seismic features, there would
be a significant reduction in personnel safety and health issues.
Shipyards Document Their Actions to Address Identified Safety and
Health Issues but Not Quality-of-Life Issues:
The Navy shipyards have processes to systematically identify safety
and occupational health mishaps and hazards and document their actions
to resolve these issues; however, the shipyards may not fully address
all identified hazards and do not have a method to systematically
document actions to address other infrastructure-related situations
affecting the quality of life of their workforces. Our review of the
corrective actions taken for some of the identified safety and
occupational health issues showed that the steps taken in many cases
were interim or temporary fixes that did not fully address the issues
and in some cases led to quality-of-life issues for the workforce.
While some recent infrastructure improvements have been made that
enhanced the safety, health, and quality of life of the workforce,
shipyard officials recognize that working conditions are not ideal at
the shipyards and that there is room for improvement. However,
projects have to compete with each other for the funding that is
available, and according to shipyard officials, the Navy's
prioritization process weighs projects with improvements to shipyard
operations more heavily than those designed to resolve less
significant workforce safety, health, or quality-of-life issues. In
addition, shipyard officials stated that they are limited in their
ability to fully resolve some of these issues because some facilities
have historical significance and procedural steps are required before
altering a historical facility's original design and appearance.
Without capturing quality-of-life issues and steps taken toward
resolution, the Navy lacks visibility over the magnitude of these
issues; whether any identified issues have been fully addressed; and
ultimately its ability to provide a high-quality, safe, and healthful
workplace at the shipyards.
Shipyards Document the Resolution of Identified Safety and
Occupational Health Mishaps and Hazards, Although Not All Hazards Are
Fully Resolved:
The shipyards document the resolution of identified safety and
occupational health mishaps and hazards and have recently received
awards for their safety performance, but may be limited in fully
resolving the hazards, which in some cases may lead to workforce
quality-of-life issues. A DOD directive indicates that it is DOD's
policy to protect personnel from accidental death, injury, and
occupational illness.[Footnote 18] In furtherance of this policy, a
DOD instruction requires the heads of DOD components (including the
Navy) to collect and maintain injury and occupational illness data and
ensure that effective corrective action is taken on identified causes
for accidents and occupational illnesses.[Footnote 19] In response to
these requirements, the Navy has issued various guidance regarding
safety, occupational health, and quality of life. In addition, the
Navy Ashore Vision 2030 states that the Navy advocates providing for
"high quality, safe, efficient, and environmentally sound workspace
for all sailors and employees."[Footnote 20] The Navy's Safety and
Occupational Health Program works to maintain safe and healthy working
conditions for all Navy personnel by reducing work-related hazards
(situations or practices that may result in an injury or illness) and
mishaps (incidents of injury or illness).[Footnote 21] The program
manual provides guidance on safety and occupational health standards,
including prevention and control of workplace hazards; the role of
industrial hygienists; workplace inspections; employee reporting of
hazards; and mishap investigation, reporting, and recordkeeping. Among
other things, the Navy Office of Safety and Occupational Health is
required to investigate every mishap and complete a report that
includes root causes and recommended corrective actions, perform
regular inspections to identify hazards, collect and respond to
employee reporting of suspected hazards, post deficiency notices at
hazard locations, forward notices to the responsible offices within
the shipyard, and follow up on these notices.
We found that the shipyards, through the Navy's Safety and
Occupational Health Program, have mechanisms to systematically
identify and document corrective actions to resolve both safety and
occupational health mishaps and hazards. For mishaps, Navy Office of
Safety and Occupational Health officials use an injury tracking
database to maintain a log of safety mishaps and occupational
illnesses, including date of initial identification; location of the
mishap; type of injury or illness; and a narrative to provide more
detail, such as the cause of the mishap and how the mishap was
resolved. The shipyard safety offices analyze mishap information to
develop annual mishap reduction goals and identify trends to adjust
training. For hazards, each of the shipyards use a database to retain
information, including date of initial identification, risk assessment
(measuring hazard severity and mishap probability), and date of the
most recent inspection. These databases also include actions to fully
address or partially control the hazards, such as isolation of the
hazard or completed or planned repair of infrastructure deficiencies
that may have caused the hazard or mishap. According to shipyard
safety and health officials, they continue to monitor the hazards that
are partially controlled and do not consider a hazard fully abated
until it has been completely resolved. In addition, the shipyards have
recently received awards for their safety performance. For example,
each of the shipyards has the Star status in the Occupational Safety
and Health Administration's Voluntary Protection Program, indicating
injury and illness rates at or below the national average of
respective industries. Further, Pearl Harbor Naval Shipyard received
the 2009 Chief of Naval Operations Shore Safety Award and the Navy's
2008 Safety Excellence Award.
In analyzing the shipyards' safety and occupational health information
and during our shipyard site visits, we found that the shipyards have
identified safety and health hazards related to shipyard
infrastructure, but not all hazards have been fully addressed. Rather,
the unresolved hazards have been monitored and interim controls or
temporary fixes have been put in place. At each of the four shipyards,
shipyard officials identified examples of these hazards in office and
shipyard industrial buildings that are currently occupied and used by
shipyard workforce, such as lack of sufficient ventilation, heating
and air conditioning problems, nonfunctioning fire suppression or
alarm systems, mold, improper railings to protect people from falling,
and broken glass falling from windows. Figure 5 shows an example of
broken glass windows that have been replaced by plywood boards in an
industrial building at Portsmouth Naval Shipyard.
Figure 5: Broken Glass Windows Replaced by Plywood Boards at
Portsmouth Naval Shipyard:
[Refer to PDF for image: photograph]
Source: GAO.
[End of figure]
At Pearl Harbor Naval Shipyard, shipyard officials identified and
showed us multiple buildings with critical structural deficiencies,
which may be hazardous to personnel or compromise the integrity of the
building, as well as vermin infestations. At Norfolk Naval Shipyard,
shipyard officials showed us extensive water damage that resulted in
unsound walkways and ceilings in several office buildings.
At Puget Sound Naval Shipyard, officials told us that although they
are in the process of seismically reinforcing buildings in the
shipyards, there still are multiple office and industrial buildings
that are currently occupied but are not seismically sound in the event
of an earthquake. At Portsmouth Naval Shipyard, shipyard officials
showed us rusted movable submarine maintenance enclosures as well as
water leaks onto electrical main feeds that officials stated often
caused power outages and damage to office ceilings. Figure 6 shows
examples of the rusted mobile submarine maintenance enclosures, which
according to officials are large equipment that are placed around
submarines undergoing maintenance while in dry docks to shield
shipyard workers from winter weather conditions. Figure 7 shows a room
currently used by the shipyard workforce with open rafters after
ceiling tiles that were damaged from leaks in the roof were removed.
Figure 6: Rusted Movable Submarine Maintenance Enclosures at
Portsmouth Naval Shipyard:
[Refer to PDF for image: photograph]
Source: GAO.
[End of figure]
Figure 7: Exposed Rafters after Water Damage from a Leaking Roof at
Portsmouth Naval Shipyard:
[Refer to PDF for image: photograph]
Source: GAO.
[End of figure]
According to shipyard safety and occupational health officials, their
databases for monitoring safety and occupational health mishaps and
hazards do not easily separate mishaps or hazards caused by
deficiencies in the shipyard infrastructure. However, safety and
occupational health officials notify shipyard command officials and
the shipyards' Naval Facilities Engineering Command officials when
infrastructure repair is needed to resolve safety and health issues.
Our review of the corrective actions taken for some of the identified
safety and occupational health issues showed that the steps taken in
many cases were interim or temporary fixes, such as isolation,
accommodation of individuals, or work-arounds, which did not fully
address the issues. In addition, Pearl Harbor Naval Shipyard and
Portsmouth Naval Shipyard officials stated that they control mold by
painting over the area or closing off the affected rooms until they
can fully address the structural deficiencies that caused the excess
moisture, which led to the mold. However, according to shipyard
officials, using temporary controls and not fully resolving these
hazards may lead to quality-of-life issues, such as poor ventilation
and temperature control in buildings.
Although we observed some quality-of-life issues and some unresolved
shipyard hazards, the shipyards have made recent infrastructure
improvements that enhanced the safety, health, and quality of life of
the workforce. For example, at Pearl Harbor Naval Shipyard, a new
facility was built to replace two office buildings with infrastructure
deficiencies. According to shipyard officials, the new facility was an
improvement for the office workers' occupational health and quality of
life. At Puget Sound Naval Shipyard, a large, new cafeteria area was
built to provide nearby food service for the shipyard workforce,
consolidating smaller food service locations that were in disrepair.
At Norfolk Naval Shipyard, because of the expansion of an
administrative building, officials stated that they were able to
consolidate employees from different areas in the shipyard in one
building and provide larger, more high-quality work spaces.
However, shipyard officials recognize that working conditions are not
ideal at the shipyards and that there is room for improvement.
Shipyard officials stated that some safety and occupational health
hazards and quality-of-life issues have been addressed through current
or planned restoration and modernization projects. As part of its
justification of proposed restoration and modernization projects, Navy
guidance provides for improvements to the workforce's safety and
occupational health under the broad category "Quality of Service,"
which also includes improvements to workplace productivity and
efficiency.
Our analysis of the projects included in the Navy's budget submission
for fiscal years 2009 and 2010 showed that 71 of the 113 project
submission documents showed improvements to safety and occupational
health, as well as quality-of-life issues included as part of projects
that provided for improvements to shipyard operations. Table 3
provides the total number of projects related to safety, health, or
quality of life by shipyard for fiscal years 2009 and 2010.
Table 3: Number of Shipyard Restoration and Modernization Projects
That Include Safety, Occupational Health, and Quality-of-Life
Improvements for Fiscal Years 2009 and 2010:
Shipyard: Norfolk;
FY 2009: Total number of projects: 12;
FY 2009: Number of projects related to safety, health, and quality of
life: 6;
FY 2010: Total number of projects: 9;
FY 2010: Number of projects related to safety, health, and quality of
life: 9.
Shipyard: Pearl Harbor;
FY 2009: Total number of projects: 17;
FY 2009: Number of projects related to safety, health, and quality of
life: 10;
FY 2010: Total number of projects: 17;
FY 2010: Number of projects related to safety, health, and quality of
life: 10.
Shipyard: Portsmouth;
FY 2009: Total number of projects: 9;
FY 2009: Number of projects related to safety, health, and quality of
life: 7;
FY 2010: Total number of projects: 10;
FY 2010: Number of projects related to safety, health, and quality of
life: 6.
Shipyard: Puget Sound;
FY 2009: Total number of projects: 25;
FY 2009: Number of projects related to safety, health, and quality of
life: 20;
FY 2010: Total number of projects: 14;
FY 2010: Number of projects related to safety, health, and quality of
life: 3.
Shipyard: Total;
FY 2009: Total number of projects: 63;
FY 2009: Number of projects related to safety, health, and quality of
life: 43;
FY 2010: Total number of projects: 50;
FY 2010: Number of projects related to safety, health, and quality of
life: 28.
Source: GAO analysis of Navy information.
[End of table]
Officials from the Navy Installations Command and Naval Sea Systems
Command and shipyard and Navy officials acknowledge that projects with
improvements to shipyard operations are generally weighed more heavily
than some projects that are developed primarily to address workforce
safety, health, and quality-of-life issues that have not been fully
addressed. Our analysis of the shipyard projects for fiscal years 2009
and 2010 found that these project submission documents showed
improvements to safety and occupational health, as well as quality-of-
life issues included as part of projects that provided for
improvements to shipyard operations. Norfolk Naval Shipyard's projects
for infrastructure improvements related to safety and occupational
health include replacing elevators and renovating bathrooms.
Portsmouth Naval Shipyard's projects include replacement of roofs,
windows, and heat and air conditioning systems. Projects at Puget
Sound Naval Shipyard include seismic upgrades to one building.
Shipyard officials told us that they are limited in their ability to
fully resolve some safety, health, and quality-of-life issues because
some facilities have historical significance and procedural steps are
required before altering a historical facility's original design and
appearance. For example, Norfolk Naval Shipyard officials showed us
multiple instances of non-weatherproof windows with peeling paint and
deteriorated wooden frames that they could not replace with newer and
different window styles. Instead, they stated that they would need to
find a contractor that could replicate the window design using similar
materials, which they claim would be at a much greater cost than if
they were to replace them with newer window designs. Further, Pearl
Harbor Naval Shipyard officials showed us that next to occupied office
and shipyard industrial buildings, there are two empty facilities that
were condemned for structural deterioration and asbestos hazards, but
according to officials, these facilities could not be demolished and
rebuilt because they needed to retain the historical skyline
appearance of the installation.
No Systematic Shipyard Process to Identify and Resolve Quality-of-Life
Issues Related to the Condition of Infrastructure:
We found that the shipyards lack a formal process to systematically
identify and document resolution of infrastructure-related quality-of-
life issues--those situations that negatively affect the quality of an
employee's work space but that the Navy may not consider safety and
occupational health hazards and that may not be fully addressed
through the Navy's Safety and Occupational Health Program. According
to shipyard officials, some of the quality-of-life issues result from
temporary fixes put in place to resolve occupational health hazards.
As stated previously in this report, DOD and the Navy have issued
guidance promoting the importance of safety, occupational health, and
quality of life. In addition, the Navy Ashore Vision 2030 states that
the Navy promotes providing "high quality, safe, efficient, and
environmentally sound workspace for all sailors and employees."
During our site visits to each shipyard, we observed and learned of
examples of quality-of-life issues. For example, at each of the
shipyards, officials showed us that several buildings had windows that
were not weatherproof or had poor heating, ventilation, and air
conditioning systems, which led to uncomfortable temperatures or
excessive moisture; training spaces in poor condition, which officials
stated were not beneficial to retaining skilled workers; and congested
work areas with uneven or broken up roadways, which made the work area
hard to navigate according to officials.
While none of the four shipyards has a formal process to document
resolution of shipyard infrastructure issues that affect the
workforce's quality of life, each shipyard has established venues for
quality-of-life issues to be communicated to shipyard command
officials. Shipyard command officials communicate with union
representatives who raise quality-of-life issues that may not be
readily identified and addressed through the Safety and Occupational
Health Program. For example, at Portsmouth Naval Shipyard, union
representatives and command officials regularly meet as part of the
Facilities and Equipment Planning Team to identify and potentially
address safety, occupational health, and quality-of-life issues
concerning the shipyard's workforce. Pearl Harbor Shipyard officials
also stated that union representatives and department leaders meet
every other week as part of its Command Leadership Council, which
provides an opportunity for union officials to identify and request
resolution of quality-of-life issues. Puget Sound Naval Shipyard's
Guiding Coalition consists of command officials and volunteers from
the workforce to identify needed changes and facilitate these changes,
including addressing quality-of-life issues, such as providing new
furniture in the cafeterias or assisting in refurbishing restroom
areas. Norfolk Naval Shipyard established the Ownership,
Accountability, Responsibility, and Stewardship Group that includes
shipyard command officials, union officials, and workforce
representatives and has regular meetings to identify and work to
resolve safety, occupational health, and quality-of-life problems.
Although each shipyard has these lines of communication in place,
according to union and shipyard command officials, they do not
regularly document these communications and minutes of these meetings
may not indicate any resolution of identified issues.
According to shipyard officials, the Navy does not have guidance for
the shipyards on systematically tracking and documenting resolution of
identified quality-of-life issues. While Navy guidance promotes a safe
and healthful workplace for all personnel, because the Navy does not
routinely capture quality-of-life issues as they are encountered and
document the resolution of the issues, the Navy lacks visibility over
the magnitude of quality-of-life issues; whether any identified issues
have been fully addressed; and ultimately its ability to provide a
high-quality, safe, and healthful workplace at the shipyards.
Conclusions:
At a time when the federal government is facing long-term fiscal
challenges and its agencies face increasing competition for federal
discretionary funds, the Navy must make resource allocation decisions
that maximize its ability to meet its goals, including fulfilling
mission requirements and maintaining safe and healthy workplaces. The
Navy's four public shipyards ensure that the Navy can maintain its own
capability to perform both ship and depot maintenance and emergency
repair work, and together they support and enhance the fleet's
operational availability and mission effectiveness. The ability of the
shipyards to meet their mission--keeping the fleet operational--
depends on maintaining the shipyards' infrastructure and equipment,
and to do this the Navy and Congress need an accurate picture of the
costs involved in order to exercise oversight and make knowledgeable
funding decisions. The Navy has reported a backlog of its shipyard
restoration and modernization needs and recognizes that this backlog
poses a challenge to future shore readiness. Decision makers need to
be aware of the full extent of the shipyards' restoration and
modernization needs, and improvements could be made in the shipyards'
strategic planning so that the essential elements of a results-
oriented strategic framework are consistently incorporated across the
shipyards. In addition, the Navy's process for updating its facility
assessments could be improved to ensure that facility data used in
determining restoration and modernization needs are current. The Navy
has taken steps to improve the plant replacement value calculation for
piers and wharves; however, its replacement unit cost factor for dry
docks has not been updated and still produces understated restoration
and modernization costs. As a result, total shipyard restoration and
modernization costs are underestimated. Furthermore, the data that
decision makers need include not only the full extent of the
shipyards' restoration and modernization needs, but also how current
infrastructure challenges affect the quality of life of the shipyards'
workforce. Such data could help decision makers to target resources
efficiently to enable the Navy's four shipyards to meet their mission
and provide a high-quality, safe, and healthy workplace.
Recommendations for Executive Action:
To improve overall visibility of the Navy shipyards' restoration and
modernization needs and quality-of-life issues, we recommend that the
Secretary of Defense direct the Secretary of the Navy to take the
following four actions:
1. In consultation with the Naval Sea Systems Command and the Navy
Installations Command, develop guidance that lays out the requirement
for the shipyards to develop strategic plans that address their future
restoration and modernization needs and that reflect the seven
essential elements of a comprehensive strategic planning framework.
2. Develop and document a method for systematically collecting and
updating the Navy's configuration and condition information, including
establishing measurable goals and time frames for updating its
processes so that the data are complete and accurate.
3. Submit documentation to the Office of the Deputy Under Secretary of
Defense for Installations and Environment to update the replacement
unit cost factor for dry docks so that plant replacement value
calculations for dry docks, and subsequent restoration and
modernization cost calculations, more accurately reflect the
shipyards' unique infrastructure needs.
4. Develop guidance for the shipyards to systematically collect
information on and document corrective actions to prioritize and
address identified quality-of-life issues.
Agency Comments and Our Evaluation:
In written comments on a draft of this report, DOD concurred with all
four of our recommendations related to improvements in the managing of
the Navy shipyards' restoration and modernization needs and quality-of-
life issues. DOD's written comments are reprinted in appendix III. DOD
also provided technical comments that we have incorporated into this
report where applicable.
DOD concurred with our recommendation to direct the Secretary of the
Navy, in consultation with the Naval Sea Systems Command and the Navy
Installations Command, to develop guidance that lays out the
requirement for the shipyards to develop strategic plans that address
their future restoration and modernization needs and reflect the seven
essential elements of a comprehensive strategic planning framework. In
commenting on this recommendation, the Department of the Navy noted
that strategic planning in development of recapitalization
requirements has to be done at the regional and installation levels,
taking into account all Navy missions within current funding
constraints, and noted that we did not include in our report higher-
level strategic plans, such as the Global Shore Infrastructure Plan
and the Naval Sea Systems Command Depot Maintenance Plan. We
acknowledge that these higher-level strategic plans provide context
for the individual shipyard plans; however, the shipyards have
developed their plans to assist them in addressing current and future
restoration and modernization issues. Therefore, we maintain our view
that these shipyard plans should reflect the seven essential elements
of a comprehensive strategic planning framework to provide shipyards
better visibility over the effectiveness of their plans.
DOD also concurred with our recommendation to direct the Secretary of
the Navy to develop and document a method for systematically
collecting and updating its configuration and condition information.
DOD stated in its comments that the Infrastructure Condition
Assessment Program is in place to assess the condition of the Navy
shipyard buildings and waterfront structures and will correctly report
this information in relevant systems, with a pilot assessment to be
conducted in fiscal year 2011. Additionally, the department stated
that this program will include configuration assessments and that the
Navy is working to provide information for the missing configuration
ratings in fiscal year 2011. However, the department did not provide
any documentation outlining the specific details of the Infrastructure
Condition Assessment Program nor did it provide any specific timelines
for taking future actions to provide information for the missing data.
In addition, in its technical comments, the department also noted that
because of its efforts to update its configuration and condition
assessments, it believes that it is premature to conclude that the
$3.0 billion backlog in restoration and modernization needs is
understated. However, DOD did not provide any material to refute the
logic that if the configuration element is automatically defaulting to
a rating that shows no restoration or modernization is needed, the
backlog has to be understated.
DOD also concurred with our recommendation to direct the Secretary of
the Navy to submit documentation to the Office of the Deputy Under
Secretary of Defense to update the replacement unit cost factor for
dry docks. The Department of the Navy stated that it has recently
funded an effort to investigate the replacement cost unit factor for
dry docks, but did not provide any details or specific time frames for
completing its review.
The department also concurred with our recommendation to direct the
Secretary of the Navy to develop guidance for the shipyards to
systematically collect information on and document corrective actions
to prioritize and address identified quality-of-life issues. DOD
commented that Navy configuration and condition ratings include an
assessment of the impact of facilities on the quality of life for the
employees and are used in its process to prioritize its restoration
and modernization projects. While the Navy continues to make
improvements in its configuration and condition ratings, we believe
these efforts could be enhanced by the Department of the Navy
systematically collecting information on employee reported quality-of-
life issues and documenting corrective actions.
We are sending copies of this report to interested congressional
committees, the Secretary of Defense, and the Secretary of the Navy.
The report also is available at no charge on the GAO Web site at
[hyperlink, http://www.gao.gov].
If you or your staff have any questions concerning this report, please
contact me at (202) 512-5257 or merrittz@gao.gov. Contact points for
our Offices of Congressional Relations and Public Affairs may be found
on the last page of this report. Key contributors to this report are
listed in appendix IV.
Signed by:
Zina D. Merritt:
Acting Director:
Defense Capabilities and Management:
[End of section]
Appendix I: Scope and Methodology:
To determine the extent to which the shipyards have plans for needed
restoration and modernization, we obtained and reviewed planning
documents from each shipyard and analyzed them to determine if they
addressed the seven essential elements of a strategic plan that we
have previously reported are critical to successful strategic
planning. In performing our analysis, one team member initially
analyzed the plans to determine if they addressed, partially
addressed, or did not address the seven key elements. A second team
member independently reviewed and verified the initial analysis. The
two team members discussed and reconciled any differences. We also met
with shipyard officials to discuss their strategic planning processes.
To understand the Navy's process and the extent to which it captures
and calculates the Navy's restoration and modernization needs for the
shipyards' infrastructure, facilities, and equipment, we obtained and
reviewed relevant Navy guidance on process for determining restoration
and modernization needs and interviewed Navy officials. Through
interviews with Navy headquarters and shipyard officials, we
determined how the Navy uses the Facility Readiness Evaluation System
(Facility System) to calculate, capture, and report the restoration
and modernization needs (i.e., backlog) for each of the four
shipyards. We also examined, to some extent, other systems, such as
the Single Platform Maximo and the internet Navy Facility Asset Data
Store (Data Store), that interface with the Facility System. Using the
Facility System data provided by each of the four shipyards, we
performed analyses on the configuration, condition, and plant
replacement value data to determine the extent to which these factors
would collectively yield an accurate backlog assessment. As reported,
we found some instances where the data were unavailable, not
validated, and undervalued, thus we concluded that the restoration and
modernization costs were understated. We were not able to recalculate
a more precise backlog assessment for any of the four shipyards
because the data were not available.
Specifically, to assess the configuration data in the Facility System,
we performed analyses to show the number and percentage of occurrences
in which the configuration rating defaulted to 100 for every facility
listed in the Facility System data provided by each of the four
shipyards at the time of our review. To examine the condition rating
data in the Facility System, we obtained and reviewed Navy guidance
and interviewed Navy officials to determine when the last physical
inspections of shipyard facilities (i.e., buildings, utilities, dry
docks, piers, and wharves) were conducted and entered into the Single
Platform Maximo database that updates the Data Store and ultimately
the Facility System database. We reviewed project proposals and
compared the condition described or rated on the proposals to the
condition data in the Facility System. We also observed the physical
condition of several facilities during a guided tour at each shipyard
and interviewed Navy officials about their process for reviewing and
updating any needed changes to the condition data. We did not attempt
to independently evaluate the condition of shipyard infrastructure. We
also reviewed guidance and interviewed Navy officials to determine the
extent to which the Navy has established systematic procedures, time
frames, and budgeting for its plans to change the condition inspection
process. To assess the effect of plant replacement values in the
Facility System on backlog calculations, we reviewed Department of
Defense (DOD) guidance for calculating plant replacement values;
information provided by Navy officials concerning the plant
replacement value of piers, wharves, and dry docks; and documents
showing Navy methods for calculating backlog. Using data from the
Facility System provided by the Navy, we calculated the percentage of
each shipyard's total plant replacement value represented by dry docks
at that shipyard to determine the relative significance of dry dock
plant replacement values. We also interviewed Navy officials to better
understand their backlog calculation methods and to establish the
actions they had taken to address their concerns about the accuracy of
plant replacement values in the Facility System. We assessed the
reliability of the data from the Navy's databases that we used to
conduct our review by reviewing documentation and interviewing
knowledgeable officials on the purpose, data input sources,
calculations, validation of data inputs, and internal controls. We
also tested the configuration data by checking for data that were
missing or defaulted to 100, and compared examples of condition
ratings and officials' condition assessments to the data in the Navy's
databases to determine accuracy and currency of the data. Based on our
review, we determined that the Navy data were sufficiently reliable
for our purposes of the audit objectives.
To examine the Navy's process to prioritize and fund projects to meet
shipyards' restoration, modernization, and equipment needs, we
obtained and reviewed Navy policies, guidance, and related procedures
for the shipyards to identify, prioritize, and submit their funding
requests and for Navy headquarters to review, rank, and approve the
respective shipyards' submitted funding requests. We obtained the four
shipyards' funding requests for the military construction projects;
sustainment, restoration, and modernization special projects; and
equipment projects for fiscal years 2009 and 2010. We also obtained
each shipyard's unconstrained funding requirements for each of the 2
years. The unconstrained requirements included the shipyard's
requested funding and were based on what shipyard officials stated
that the respective shipyard could reasonably execute with the
existing workforce without affecting the shipyard's planned
maintenance workload. We did not independently validate the shipyards'
funding data. We also identified the related impact of delaying
selected projects on the respective shipyard's infrastructure,
equipment, and related operations.
To determine the extent to which the shipyards identify and address
infrastructure-related safety, occupational health, and quality-of-
life issues, we obtained and reviewed DOD and Navy guidance that
provided policy, standards, and processes regarding evaluation of
safety and occupational health mishaps and hazards, as well as goals
for improving the Navy workforce's quality of life. We also analyzed
records of the shipyards' identified safety and occupational health
mishaps and hazards, including hazard records that had not been closed
as of July 2010, and reviewed planning documents and project proposal
justifications of shipyard infrastructure restoration and
modernization projects for fiscal years 2009 and 2010. We assessed the
reliability of the data from these databases by reviewing relevant
Navy guidance and comparing it to information we gathered from
interviews with knowledgeable agency officials on internal controls
and how they identify, track, and address safety and health issues. We
also reviewed examples of databases used by the shipyards to track
safety mishaps and health hazards in order to corroborate information
from interviews with agency officials. Based on this review, we
determined that the Navy data were sufficiently reliable for the
purposes of our audit. Further, we conducted site visits and
interviewed safety and occupational health officials, human resources
officials, shipyard command officials, and union representatives at
each of the shipyards regarding methods for identifying,
communicating, and resolving infrastructure-related safety,
occupational health, and quality-of-life issues affecting the
workforce.
To address each of these objectives, we also spoke with officials from
the Office of the Assistant Secretary of the Navy (Installations and
Environment); the Naval Sea Systems Command; the Commander, Navy
Installations Command; and all four naval shipyards: Norfolk Naval
Shipyard, Pearl Harbor Naval Shipyard, Portsmouth Naval Shipyard, and
Puget Sound Naval Shipyard. Although we did not independently validate
the Navy's restoration and modernization data, budget request and
approval data, and safety and occupational health data, we discussed
with officials the steps they had taken to ensure reasonable accuracy
of the data. We determined the data to be sufficiently reliable for
the purposes of this report.
We conducted this performance audit from October 2009 to October 2010
in accordance with generally accepted government auditing standards.
Those standards require that we plan and perform the audit to obtain
sufficient, appropriate evidence to provide a reasonable basis for our
findings and conclusions based on our audit objectives. We believe
that the evidence obtained provides a reasonable basis for our
findings and conclusions based on our audit objectives.
[End of section]
Appendix II: The Extent to Which Navy Shipyards' Planning Documents
Address the Essential Elements of a Strategic Plan:
We reviewed strategic planning documents from all four shipyards and
found that they address current and future restoration and
modernization issues, but the plans vary in the extent to which they
address each of the elements of a comprehensive, results-oriented
strategic plan framework.[Footnote 22] Table 4 summarizes our analysis
of the shipyards' strategic plans.
Table 4: The Extent to Which Navy Shipyards' Planning Documents
Address the Essential Elements of a Strategic Plan:
Essential elements of a strategic plan: Mission statement;
Norfolk: Addresses: The Norfolk Naval Shipyard Strategic Plan contains
a mission statement. Specifically, its operational mission is to
provide safe, quality, on-time, and on-cost ship maintenance, repair,
alteration, overhaul, and refueling service to the fleet;
Pearl Harbor: Addresses: The Pearl Harbor Naval Shipyard Business Plan
contains a mission statement. Specifically, the mission of the
shipyard is "we keep them fit to fight";
Portsmouth: Addresses: The Portsmouth Naval Shipyard Strategic Plan
contains a mission statement: "to deliver modernized and reliable
undersea platforms and equipment to the fleet while setting the
standards of excellence for safety, cost, schedule, and quality";
Puget Sound: Addresses: Puget Sound Naval Shipyard has a mission
statement: one team ensuring freedom by fixing ships and supporting
the warfighter."
Essential elements of a strategic plan: Long-term goals;
Norfolk: Addresses: The Norfolk Naval Shipyard Strategic Plan contains
three broad goals: deliver ships, develop leaders, and do it right.
Its Vision 2035 Plan also contains some broad goals, including align
the shipyard into product districts and process hubs, recapitalize the
waterfront, and create a state-of-the-art shipyard. The vision plan
also specifies some interim goals, in the form of infrastructure
projects, and lists the desired execution year of each project;
Pearl Harbor: Addresses: The Pearl Harbor Naval Shipyard Business Plan
contains several goals, including an overall goal to establish and
execute an effective facilities modernization program with several
interim objectives, including improving the condition, capability, and
capacity of the facilities;
Portsmouth: Addresses: The Portsmouth Naval Shipyard Strategic Plan
contains a long-term goal to improve the infrastructure of the
shipyard, and to modernize and maintain its facilities to efficiently
perform future work while preserving the historical character of the
base. The long-term plan presented in the Portsmouth Naval Shipyard
Vision 2040 Plan builds on this objective;
Puget Sound: Does not address: Puget Sound Naval Shipyard has an
Execution Plan and a document that lays out some maintenance and
modernization needs. Neither of these plans contains specific,
measurable long-term goals. Rather, these documents contain focus
areas. For example, the execution plan contains three focus areas,
including maintain warfighting readiness, while the infrastructure
planning document focuses on projects needed to improve the dry docks
and piers.
Essential elements of a strategic plan: Strategies to achieve goals
and objectives;
Norfolk: Addresses: Through its Vision 2035 Plan, Norfolk Naval
Shipyard lays out future military construction projects needed to meet
its overall goals and estimates the costs of these projects;
Pearl Harbor: Addresses: The Pearl Harbor Naval Shipyard Modernization
Plan lays out future infrastructure projects needed to meet its
overall goals and objectives and estimates the costs and time frames
of these projects;
Portsmouth: Addresses: Through its Vision 2040 Plan, Portsmouth Naval
Shipyard lays out future infrastructure projects needed to meet its
overall goals and estimates the costs and time frames of these
projects;
Puget Sound: Partially addresses: Though Puget Sound Naval Shipyard
does not have concrete goals in place, it has developed a list of
restoration and modernization projects that it would like to complete.
Completion of these projects will help with its overall goal of fixing
ships.
Essential elements of a strategic plan: Key external factors that
could affect goals;
Norfolk: Partially addresses: The Vision 2035 Plan briefly mentions
considering certain constraints, including the lack of long-term
funding and lack of enterprise support, and the strategic plan
mentions future budget constraints, but neither plan discusses methods
for assessing or addressing these factors;
Pearl Harbor: Addresses: The Pearl Harbor Naval Shipyard Modernization
Plan presents two options for future projects, given the potential
constraints--a constrained plan that conforms to existing development
constraints, including the preservation of historic structures and
antiterrorism force protection concerns, and an unconstrained plan
that assumes no development constraints;
Portsmouth: Addresses: The Vision 2040 Plan mentions several external
factors, including new environmental regulations and antiterrorism
force protection concerns. In addition, the plan discusses methods for
addressing these factors;
Puget Sound: Partially addresses: Puget Sound Naval Shipyard's
planning documents discuss how limited funding and time constraints
affect its ability to complete infrastructure projects, but neither
plan discusses methods for assessing or addressing these factors.
Essential elements of a strategic plan: Stakeholder involvement in
developing the plan;
Norfolk: Addresses: The Norfolk Naval Shipyard Strategic Plan was
developed in consultation with labor leadership, customers, and
shipyard management. The Vision 2035 Plan was developed as a
collaborative effort with a broad spectrum of shipyard employees;
Pearl Harbor: Addresses: Pearl Harbor Naval Shipyard interviewed key
leadership in developing its Modernization Plan;
Portsmouth: Addresses: The Portsmouth Naval Shipyard Strategic Plan
was developed by many different players within the shipyard, and its
Vision 2040 Plan was developed as a collaborative effort of many of
the shipyard's installation personnel;
Puget Sound: Partially addresses: The Puget Sound Naval Shipyard
Execution Plan states that the shipyard will work closely with
stakeholders to address challenges, but it does not mention how, if at
all, stakeholders were involved in the development of the plan.
Essential elements of a strategic plan: Use of metrics to gauge
progress;
Norfolk: Does not address: Neither of Norfolk Naval Shipyard's plans
discusses metrics for measuring progress against its overall goals;
Pearl Harbor: Addresses: Pearl Harbor Naval Shipyard measures its
progress on its objectives each year using a six-point scale;
Portsmouth: Partially addresses: The Portsmouth Naval Shipyard
Strategic Plan includes intermediate milestones to measure progress
toward meeting overall goals and objectives but does not include
specific metrics that measure performance against these goals;
Puget Sound: Does not address: Neither of Puget Sound Naval Shipyard's
plans discusses metrics for measuring progress against overall goals.
Essential elements of a strategic plan: Evaluations of the plan to
monitor goals and objectives;
Norfolk: Partially addresses: The Norfolk Naval Shipyard Strategic
Plan states that it will be evaluated through regular performance and
accountability reviews, including monthly reviews with department
heads. Progress toward goals is addressed in the yearly Execution
Plan. The plan does not, however, describe the scope and methodology.
The Vision 2035 Plan states that plan oversight will be by the
shipyard's Vision 2035 Planning Board and Leadership Council. The plan
will be reevaluated yearly throughout execution to determine necessary
course adjustments. Updates to the plan will align with the regular
budget cycle;
Pearl Harbor: Partially addresses: Objectives presented in the Pearl
Harbor Naval Shipyard Business Plan are continually monitored and
scored, but the Modernization Plan does not mention any program
evaluation process;
Portsmouth: Partially addresses: Both the Portsmouth Naval Shipyard
Strategic Plan and the Vision 2040 Plan state that they will be
reviewed and updated as needed. Neither plan, however, describes
specific methodologies for conducting these reviews;
Puget Sound: Does not address: The Puget Sound Naval Shipyard
Execution Plan says that progress will be measured, but it does not
contain any mention of how this will happen.
Source: GAO analysis.
[End of table]
[End of section]
Appendix III: Comments from the Department of Defense:
Department Of The Navy:
Office Of The Assistant Secretary:
(Energy, Installations & Environment):
1000 Navy Pentagon:
Washington DC 20350-1000:
November 1, 2010:
Zina D. Merritt:
Director, Defense Capabilities and Management:
U.S. Government Accountability Office:
441 G Street, NW:
Washington, DC 20548:
Dear Ms. Merritt:
This is the Department of the Navy's response to the GAO draft report
"Actions Needed to Improve the Navy's Processes for Determining Public
Shipyards' Restoration and Modernization Needs" (GAO-11-7). Comments
on the report and its recommendations are enclosed.
We appreciate the opportunity to provide comments on your draft report.
Sincerely,
Signed by:
Stephen J. Keating, Jr.:
By Direction:
Enclosure: As stated:
Copy to: DoD Inspector General:
[End of letter]
GAO Draft Report Dated October 2010:
GAO-11-7 (GAO Code 351402):
"Defense Infrastructure: Action Needed To Improve The Navy's Processes
For Managing Public Shipyards' Restoration And Modernization Needs"
Department Of Navy Comments To The GAO Recommendations:
Recommendation 1: The GAO recommends that the Secretary of Defense
direct the Secretary of the Navy to, in consultation with Naval Sea
Systems Command and Navy Installations Command, develop guidance that
lays out the requirement for the shipyards to develop strategic plans
that address their future restoration and modernization needs and that
reflect the seven essential elements of a comprehensive strategic
planning framework. (See page 36/GAO Draft Report.)
DoN Response: Concur. While the Navy recognizes the importance of
strategic planning in development of recapitalization requirements,
those plans have to he at a Regional and Installation level taking
into account all Navy missions within current funding constraints. It
should be noted that the draft report does not mention the Navy's
Global Shore Infrastructure Plan (GSIP), which serves as a higher
order strategic document that provides context for the individual
shipyard plans reviewed by GAO. Additionally, the NAVSEA Depot
Maintenance Plan. also not cited in the draft report, serves as the
strategic corporate plan to address shipyard restoration and
modernization issues.
Recommendation 2: The GAO recommends that the Secretary of Defense
direct the Secretary of the Navy to develop and document a method for
systematically collecting and updating its configuration and condition
information, including establishing measurable goals and timeframes
for updating its processes so that the data are complete and accurate.
(See page 36/GAO Draft Report.)
DoN Response: Concur. Navy, through the Infrastructure Condition
Assessment Program (ICAP), has a program in place to assess the
condition of shipyard buildings and waterfront structures and have
this information correctly reported in relevant IT systems (iNFADS,
FRES, etc). A pilot assessment is to be conducted at Portsmouth Naval
Shipyard in Fiscal Year (FY) 2011. Additionally, configuration
(obsolescence) will also be assessed and reported as necessary using
the asset evaluation program. With respect to the configuration data,
the Navy is working towards populating the missing Q-Ratings in FY
2011.
Recommendation 3: The GAO recommends that the Secretary of Defense
direct the Secretary of the Navy to submit documentation to the office
of the Deputy Under Secretary of Defense for Installations and
Environment to update the replacement unit cost factor for dry-docks
so that plant replacement value calculations for dry-docks, and
subsequent restoration and modernization cost calculations, more
accurately reflect the shipyards' unique infrastructure needs. (See
page 36/GAO Draft Report.)
DoN Response: Concur. Navy has recently funded an effort to
investigate the replacement unit cost factor (RCF) for dry-docks. The
intent of the investigation is to ensure the quality of information of
the specific inputs/components and ensure the RCF for dry-docks is in-
line with the rest of the DoD infrastructure. Also, Navy is
incorporating dry-docks into the condition assessment program to
ensure they are accurately represented in data systems.
Recommendation 4: The GA.0 recommends that the Secretary of Defense
direct the Secretary of the Navy to develop guidance for the shipyards
to systematically collect information on and document corrective
actions to prioritize and address identified. quality-of-life issues.
(See page 36/GAO Draft Report.)
DoN Response: Concur. Navy configuration and condition ratings include
an assessment of the impact of facilities on quality of life for the
employees. These ratings are used in prioritization of facility
investments.
[End of section]
Appendix IV: GAO Contact and Staff Acknowledgments:
GAO Contact:
Zina D. Merritt, (202) 512-5257 or merrittz@gao.gov:
Staff Acknowledgments:
In addition to the contact named above, key contributors to this
report were Laura Durland, Assistant Director; Leslie Bharadwaja;
Larry Bridges; John Edwards; Dawn Godfrey; Nicole Harms; Gina Hoffman;
Erik Wilkins-McKee; Michael Willems; and Elizabeth Wood. In addition,
Michael Armes, Terry Dorn, Paul Francis, and Karen Zuckerstein
provided their expertise and guidance.
[End of section]
Related GAO Products:
Defense Infrastructure: Observations on the Department of the Navy's
Depot Capital Investment Program. [hyperlink,
http://www.gao.gov/products/GAO-10-726R]. Washington, D.C.: June 14,
2010.
Depot Maintenance: Improved Strategic Planning Needed to Ensure That
Navy Depots Can Meet Future Maintenance Requirements. [hyperlink,
http://www.gao.gov/products/GAO-10-585]. Washington, D.C.: June 11,
2010.
Depot Maintenance: Actions Needed to Identify and Establish Core
Capability at Military Depots. [hyperlink,
http://www.gao.gov/products/GAO-09-83]. Washington, D.C.: May 14, 2009.
High-Risk Series: An Update. [hyperlink,
http://www.gao.gov/products/GAO-09-271]. Washington, D.C.: January
2009.
Depot Maintenance: DOD's Report to Congress on Its Public-Private
Partnerships at Its Centers of Industrial and Technical Excellence
(CITEs) Is Not Complete and Additional Information Would Be Useful.
[hyperlink, http://www.gao.gov/products/GAO-08-902R]. Washington,
D.C.: July 1, 2008.
Defense Infrastructure: Continued Management Attention Is Needed to
Support Installation Facilities and Operations. [hyperlink,
http://www.gao.gov/products/GAO-08-502]. Washington, D.C.: April 24,
2008.
Defense Infrastructure: Changes in Funding Priorities and Strategic
Planning Needed to Improve the Condition of Military Facilities.
[hyperlink, http://www.gao.gov/products/GAO-03-274]. Washington, D.C.:
February 19, 2003.
Defense Maintenance: Sustaining Readiness Support Capabilities
Requires a Comprehensive Plan. [hyperlink,
http://www.gao.gov/products/GAO-01-533T]. Washington, D.C.: March 23,
2001.
[End of section]
Footnotes:
[1] Ship depot-level maintenance involves materiel maintenance or
repair requiring the overhaul, upgrading, or rebuilding of parts,
assemblies, or subassemblies and testing and reclamation of equipment
as necessary. Ship intermediate-level maintenance includes
calibrating, repairing, or replacing damaged parts; manufacturing
critical unavailable parts; and providing technical assistance.
[2] Restoration includes repair and replacement work needed to restore
facilities degraded from several causes, such as natural disaster,
fire, accident, excessive age, or inadequate sustainment.
Modernization includes both renovation and replacement of existing
facilities to implement new or higher standards, accommodate new
functions, or replace building components that typically last more
than 50 years. In this report, when we refer to restoration and
modernization, these include improvements to infrastructure and
equipment.
[3] The Commander, Navy Installations Command, is responsible for
shipyard land and buildings, and the Naval Sea Systems Command is
responsible for ship maintenance and repair processes at the
shipyards. These two commands work together to provide and support
shipyard capabilities.
[4] The Navy calculated its estimated $3 billion backlog through the
Facility Readiness Evaluation System, which assesses data for all Navy
installations, including the four shipyards. We discuss the Facility
Readiness Evaluation System in detail later in this report.
[5] GAO, Federal Real Property: Progress Made Toward Addressing
Problems, but Underlying Obstacles Continue to Hamper Reform,
[hyperlink, http://www.gao.gov/products/GAO-07-349] (Washington, D.C.:
Apr. 13, 2007), and High-Risk Series: An Update, [hyperlink,
http://www.gao.gov/products/GAO-09-271] (Washington, D.C.: January
2009).
[6] GAO, Managing for Results: Critical Issues for Improving Federal
Agencies' Strategic Plans, [hyperlink,
http://www.gao.gov/products/GAO/GGD-97-180] (Washington, D.C.: Sept.
16, 1997).
[7] In the case of construction projects, 10 U.S.C. § 2805 limits the
use of Operation and Maintenance funds to projects costing not more
than $750,000, or in the case of construction projects intended solely
to correct a deficiency that is life-threatening, health-threatening,
or safety-threatening, not more than $1.5 million.
[8] The Navy funds equipment projects in which unit costs are less
than $250,000 out of the operating appropriation of the installation
making the procurement. The cost of installing the equipment is
usually paid out of the same appropriation used to procure the
equipment.
[9] [hyperlink, http://www.gao.gov/products/GAO/GGD-97-180].
[10] The Naval Sea Systems Command has created a strategic plan
encompassing all four shipyards--the Naval Shipyard Business Plan. We
have previously reported that this strategic plan did not address all
of the essential strategic planning elements. Specifically, we found
that the plan contained a results-oriented mission statement, but
either partially addressed or did not address the remaining six key
elements. See GAO, Depot Maintenance: Improved Strategic Planning
Needed to Ensure That Navy Depots Can Meet Future Maintenance
Requirements, [hyperlink, http://www.gao.gov/products/GAO-10-585]
(Washington, D.C.: June 11, 2010).
[11] In the mathematical formula the Facility System uses to calculate
total restoration and modernization backlog, configuration rating data
are used to calculate modernization costs, condition rating data are
used to calculate restoration costs, and plant replacement value is
used as a weighting factor.
[12] The Data Store was designed to capture all of the data necessary
to support real property inventory, planning, and acquisition for the
Navy and Marine Corps.
[13] GAO, Standards for Internal Control in the Federal Government,
[hyperlink, http://www.gao.gov/products/GAO/AIMD-00-21.3.1]
(Washington, D.C.: November 1999).
[14] Plant Replacement Value = (Facility Quantity) x (Replacement Unit
Cost) x (Area Cost Factor) x (Historical Records Adjustment) x
(Planning and Design Factor) x (Supervision Inspection and Overhead
Factor) x (Contingency Factor).
[15] In addition to the shipyards, the Navy has a variety of other
installations, such as naval stations, air stations, hospitals,
weapons stations, and training centers.
[16] Department of the Navy Office of Budget, Highlights of the
Department of the Navy Fiscal Year 2011 Budget (Washington, D.C.:
February 2010).
[17] Pub. L. No. 111-5 (2009).
[18] Department of Defense Directive 4715.1E, Environment, Safety, and
Occupational Health (Mar. 19, 2005).
[19] Department of Defense Instruction 6055.07, Accident
Investigation, Reporting, and Record Keeping (Apr. 24, 2008).
[20] Chief of Naval Operations, Naval Ashore Vision 2030: Navy
Installations--The Foundation for Readiness (Nov. 3, 2004).
[21] Office of the Secretary of the Navy Instruction 5100.10J,
Department of the Navy Policy for Safety, Mishap Prevention,
Occupational Health and Fire Protections Programs (Oct. 26, 2005);
Office of the Chief of Naval Operations Instruction 5100.8G, Navy
Safety and Occupational Safety and Health Program (May 24, 1989); and
Office of the Chief of Naval Operations Instruction 5100.23G, Navy
Safety and Occupational Health (SOH) Program Manual (Dec. 30, 2005).
[22] [hyperlink, http://www.gao.gov/products/GAO/GGD-97-180].
[End of section]
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