Navy Has Opportunities To Reduce Ship Overhaul Costs

LCD-80-70: Published: Jun 17, 1980. Publicly Released: Jun 17, 1980.

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The Navy can reduce ship overhaul costs by sending damaged parts to a central point and either repairing them in batches or scrapping them. The remove-and-replace concept avoids unnecessary repair of items that are available in the supply system and increases shipyard efficiency. The Navy uses the concurrent rework concept which entails components being repaired simultaneously with the ship's overhaul. This method is less efficient than the remove-and-replace concept, which is not followed because implementing procedures were never issued. In the last 6 years, costs per overhaul have increased almost threefold. Components which were available in the supply system could have been overhauled at a lower cost through batch processing. Navy policy is to ensure that all material is readily available before starting ship overhauls to avoid production stoppages, but in practice, not all of this material is used during overhauls. Shipyards have accumulated sizable inventories of leftover material. Excess items in shipyard inventories occurred because the supply system did not have visibility over the material, and the shipyard did not report the excesses to the supply system in a timely manner. Items which are in excess when individual job orders are complete are not reported as excess until ship overhaul is complete. This interval can vary from a few months to over a year.

The Navy could reduce overhaul costs for electronic components by several million dollars a year by taking advantage of the remove-and-replace concept. The Navy should establish procedures to ensure that assets available in the system are adequately considered before initiating any concurrent rework. It should also periodically monitor and evaluate shipyards' implementation of established procedures and policy. Greater efficiency and effectiveness is possible through better supply system visibility of shipyard inventories. During the interval between job order completion and ship overhaul completion, the supply system does not have visibility over the excess material and identical items may be procured or repaired by inventory managers to satisfy the needs of other users.

Recommendation for Executive Action

  1. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Secretary of Defense should direct the Navy to: (1) discontinue routine concurrent rework except for those items where replacements are not available; (2) develop and implement operating procedures that require shipyards to use the remove-and-replace concept during ship overhauls when replacement items are available in the supply system; (3) periodically monitor and evaluate shipyard efforts in carrying out the Navy policy of using available supply system assets; (4) require shipyards to promptly review and report unneeded materials to the supply system after job orders are closed; and (5) develop procedures to provide the supply system managers with visibility over all assets, including those earmarked for specific projects. Such procedures would allow the supply system managers to: (l) compare shipyard assets with unfilled customer orders; and (2) release assets to the highest priority customers when warranted.

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