Navy Shipbuilding:

Policy Changes Needed to Improve the Post-Delivery Process and Ship Quality

GAO-17-418: Published: Jul 13, 2017. Publicly Released: Jul 13, 2017.

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Contact:

Michele Mackin
(202) 512-4841
mackinm@gao.gov

 

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In 2013, we found that shipbuilders regularly deliver ships to the Navy with lots of defects. Are all of the significant defects corrected before the Navy provides these ships to the fleet?

We examined 8 Navy ships and found that all either entered or will likely enter the fleet with unfinished work and quality problems.

Also, Navy reports to Congress don't indicate if ships are truly complete or actually ready for operations when they enter the fleet.

We recommended the Navy take 4 actions to improve ships' quality when they enter the fleet, and provide more detailed information to Congress on the true status of ships.

Number of Defects at Delivery and at Time Ships in Our Sample Entered the Fleet

Bar chart showing numbers of defects at delivery lower, but still present, when ships entered fleet

Bar chart showing numbers of defects at delivery lower, but still present, when ships entered fleet

Additional Materials:

Contact:

Michele Mackin
(202) 512-4841
mackinm@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

What GAO Found

GAO reviewed six ships valued at $6.3 billion that had completed the post-delivery period, and found they were provided to the fleet with varying degrees of incomplete work and quality problems. GAO used three quality assurance metrics, identified by Navy program offices, to evaluate the completeness of the six ships—LPD 25, LHA 6, DDG 112, Littoral Combat Ships (LCS) 3 and 4, and SSN 782—at delivery and also at the time each ship was provided to the fleet. Although the Navy resolved many of the defects by the end of the post-delivery period, as the table below shows, quality problems persisted and work was incomplete when the selected ships were turned over to the operational fleet.

Number of Quality Problems or Defects at the Beginning and End of the Post-Delivery Period across Six Selected Ships

 

At delivery

At the time the Navy provided the ship to the fleet

Significant construction deficiencies

363

45

Systems not meeting minimal functional standard

139

54

Significant deficiencies in mission-essential equipment

N/Aa

53

Source: GAO analysis of Navy documents and data. | GAO-17-418

aThis information is not evaluated at delivery

Fleet officials reported varying levels of concern with the overall quality and completeness of the ships, such as with unreliable equipment or a need for more intense maintenance than expected. For CVN 78 and DDG 1000, the Navy plans to complete significantly more work and testing during the post-delivery period than the other six ships GAO reviewed. As such, these ships are at a greater risk of being provided to the fleet at the end of their post-delivery periods with incomplete construction work and unknowns about quality.

The Navy's ship delivery policy does not facilitate a process that provides complete and quality ships to the fleet and practices do not comport with policy. The policy emphasizes that ships should be defect-free and mission-capable, but lacks clarity regarding what defects should be corrected and by when. Without a clear policy, Navy program offices define their own standards of quality and completeness, which are not always consistent. Further, because the Navy's Board of Inspection and Survey (INSURV) does not inspect ships at the end of the post-delivery period, it is not in a position to verify each ship's readiness for the fleet, as required by Navy policy. The Navy has not assessed the costs and benefits of ensuring INSURV does this. Addressing these policy concerns would improve the likelihood of identifying and correcting deficiencies before fleet introduction and increase consistency in how the Navy defines quality.

The Navy does not use consistent definitions for key milestones in its reports to Congress—such as delivery or Initial Operational Capability (IOC)—and, therefore, these milestones are not as informative as they could be regarding ship quality and completeness. For example, the Navy has routinely declared IOC on new ship classes without having demonstrated that ships are able to perform mission operations—contrary to Department of Defense (DOD) guidance, which, for nearly all acquisition models, generally states that IOC should be declared only after successful operational testing that demonstrates performance.

Why GAO Did This Study

The U.S. Navy spends at least $18 billion per year on shipbuilding—a portion of which is spent after ships are delivered. During the post-delivery period—after delivery from the shipbuilder and before the ships enter the fleet—Navy ships undergo a variety of tests, trials, and construction.

GAO was asked to assess the post-delivery period, including quality and completeness of ships when they are delivered to the fleet. The Senate Report on the National Defense Authorization Act for Fiscal Year 2017 included additional questions about ship status after delivery. This report assesses the extent to which the Navy (1) provides complete and quality ships to the fleet, (2) has a ship delivery policy that supports those efforts, and (3) reports ship quality and completeness to Congress. GAO reviewed a nongeneralizable sample of eight Navy ships, six of which have entered the fleet and two that recently began the post-delivery period. GAO reviewed program documentation and interviewed Navy officials.

What GAO Recommends

The Navy should revise its ship delivery policy to identify what kinds of defects should be corrected and by when and study how to best ensure that INSURV verifies ships. Also, the Navy should reflect in its reports to Congress key milestones and consistent definitions in line with DOD policy. DOD did not concur with two recommendations, partially concurred with a third, and fully agreed with a fourth. GAO stands by its recommendations, which will help ensure that complete and quality ships are provided to the fleet and that Congress is provided with meaningful information on ship status.

For more information, contact Michele Mackin at (202) 512-4841 or mackinm@gao.gov.

Recommendations for Executive Action

  1. Status: Open

    Priority recommendation

    Comments: DOD disagreed with our recommendation to clarify the Navy's ship delivery policy, and stated that other existing policies help ensure the completion and capability of ships at delivery. However, Navy acquisition officials confirmed that the ship delivery policy, OPNAVINST 4700.8K, is the primary policy governing the delivery and post-delivery process for ships. Additionally, we had reviewed the other policies identified by DOD during the course of our audit and found that they were not focused on construction and the post-delivery period and did not provide guidance on the level of quality and completeness expected when ships are provided to the fleet. In line with our finding that the Navy's ship delivery policy has not ensured complete and mission-capable ships are being delivered to the fleet, Congress included a provision in the fiscal year 2019 National Defense Authorization Act which stipulated that the Navy could no longer count ships towards its battle force at commissioning, which occurs shortly after delivery. Instead, Congress directed that ships could only be counted in the battle force once they were both commissioned and capable of contributing to the Navy's missions. As such, we maintain that the Navy's ship delivery policy is a key instruction for ensuring that complete, mission-capable ships are provided to the fleet and should be revised in line with our recommendation. Nonetheless, as of July 2019, DOD officials confirmed that the Navy does not intend to revise its ship delivery policy. In continuing to not acknowledge the importance of its ship delivery policy and taking steps to clarify it, the Navy is missing important opportunities to improve the completeness and capability of its ships and remains at risk of providing ships to the fleet with significant quality problems. To fully implement this recommendation, the Navy should revise its ship delivery policy to clearly define what constitutes a complete and defect-free ship and by when that should be achieved.

    Recommendation: The Secretary of Defense should direct the Secretary of the Navy to revise the Navy's ship delivery policy to clarify what types of deficiencies need to be corrected and what mission capability (including the levels of quality and capability) must be achieved at (1) delivery and (2) when the ship is provided to the fleet (at the obligation work limiting date (OWLD)). In doing so, the Navy should clearly define what constitutes a complete ship and when that should be achieved.

    Agency Affected: Department of Defense

  2. Status: Open

    Comments: DOD did not concur with this recommendation, noting that the current timing of Navy Board of Inspection and Survey (INSURV) trials provides the Navy with an opportunity to ensure contractual obligations have been met and identify construction deficiencies for correction during the post-delivery period. DOD also stated that adding another INSURV trial at the end of the post-delivery period would not be cost-effective and could delay ship deployment schedules. However, we found that most of the significant construction deficiencies identified prior to delivery were not corrected until the post-delivery period and, therefore, INSURV generally did not have an opportunity to inspect these corrections before ships were provided to the fleet. Given this, we maintain that the Navy should re-assess the timing of its post-delivery trials in support of INSURV's responsibility to make recommendations for fleet introduction. As of July 2019, DOD officials confirmed that the Navy does not plan to reassess the timing of INSURV's post-delivery assessments. Until this occurs, the Navy will continue to be at risk of providing ships to the fleet with significant deficiencies.

    Recommendation: The Secretary of Defense should direct the Secretary of the Navy to reconcile policy with practice to support INSURV's role in making a recommendation for fleet introduction. Accomplishing this may require a study of the current timing of ship trials, and the costs and benefits associated with adding an INSURV assessment prior to providing ships to the fleet.

    Agency Affected: Department of Defense

  3. Status: Open

    Comments: DOD partially concurred with this recommendation. The department agreed to report obligation work limiting dates (OWLD) in its Selected Acquisition Reports to Congress, and, as of December 2018, has implemented this portion of the recommendation. The department added the OWLDs for all ships that have yet to achieve this milestone to its Selected Acquisition Reports and plans to continue reporting this information in all subsequent Selected Acquisition Reports. However, DOD did not agree to report ready-to-deploy dates in the Selected Acquisition Reports to Congress, noting that operational factors outside of acquisition concerns can affect the timing of this milestone. While we agree that readiness to deploy is a fleet determination, we continue to believe that this date is important for Congressional oversight, as it remains the best milestone for determining when a ship has achieved a sufficient level of completeness to operate, under the Navy's current framework for ship delivery.

    Recommendation: The Secretary of Defense should direct the Secretary of the Navy to reflect additional ship milestones in Selected Acquisition Reports to Congress, including OWLD and readiness to deploy.

    Agency Affected: Department of Defense

  4. Status: Closed - Implemented

    Comments: DOD concurred with this recommendation. For shipbuilding programs that have not yet achieved initial operational capability (IOC), the Navy will include the IOC definition in its Selected Acquisition Reports to Congress and, as of December 2018, has begun reporting this information for some programs. The department does not plan to revisit existing IOC definitions, as these definitions have already been approved by department leadership. However, for new shipbuilding programs going forward, the department plans to develop improved IOC definitions in line with the findings of our report, as it has done for its new guided missile frigate program. The IOC definitions for these new programs will be focused on ships' demonstrated operational capability, rather than the achievement of schedule milestones. We have determined that these actions meet the intent of our recommendation.

    Recommendation: The Secretary of Defense should direct the Secretary of the Navy to, in Selected Acquisition Reports to Congress, ensure that the criteria used to declare IOC aligns with DOD guidance, and reflect the definition of this milestone in the reports.

    Agency Affected: Department of Defense

 

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