GAO's Past and Present Involvement in the Issue of Shipbuilding Claims

The major causes of shipbuilding claims are the result of actions and inactions by the Navy and contractors. A recent review showed that current Navy claims settlement procedures are adequate to assure the reasonableness of settlements. Shipbuilders were found to be submitting overstated claims and providing the Navy with untimely support for the claims. Prompt advance payments to contractors for those portions of claims that are decidedly due the contractors would improve the business relationship between the Navy and shipbuilders and reduce interest payments by the Government. The basic causes of claims resulting from Navy-caused actions are late and inaccurate lead-yard plans, inadequate specifications, defective and late delivery of Government-furnished equipment and property, unanticipated increases in quality assurance requirements, and indiscriminate use of verbal constructive change orders. The Navy should make prompt advance payments to contractors for those portions of claims that are decidedly due the contractors, and should give priority to those claim prevention actions aimed at correcting Navy inefficiencies and thus reduce costs to the Government.