Need To Extend the Period of Availability for Navy Shipbuilding Funds

MASAD-81-22: Published: Apr 1, 1981. Publicly Released: May 1, 1981.

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The Navy's shipbuilding programs are fully funded, and the funds must be obligated within 5 years or they expire. The Navy has requested that the current 5-year time limit for obligation of shipbuilding and conversion funds be extended to 7 years.

Because construction times average 6 to 7 years, the Navy has been unable to obligate the total full-funding dollars approved for shipbuilding programs within the 5-year period. In most cases, additional work needs to be funded after the appropriations have expired. In order to finance the completion of ship construction, the Navy has requested and obtained special funding extensions. GAO believes that the 7-year availability period is reasonable and represents the best funding option available. Extending the funding availability from 5 to 7 years would maintain the integrity of the full-funding policy and would provide the Navy with the time to complete most programs, while allowing Congress to maintain control through the fixed-term appropriation.

Matters for Congressional Consideration

  1. Status:

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

    Matter: Congress should give the Navy 7 years in which to obligate shipbuilding funds and make the extension retroactive to include the FYs 1978 through 1981 appropriations.

  2. Status:

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

    Matter: Congress should consider providing cost growth funds as a part of the individual ship budget line item, rather than including all ship program cost growth in one budget line item. For example, the budget line for FFG would then contain funds for the fiscal year procurement, advance procurement on future year programs, and cost growth on prior year ships. This would provide the Congress greater visibility and control over the funds applied to individual ships, like the FFG, since all funds would be in one budget line. However, if such an action is taken, the Congress should also recognize that doing so reduces the Navy's flexibility to adjust resources among ship programs to meet changing requirements, especially in view of the line item appropriation which allows no reprograming actions without prior approval. The need for some flexibility has been recognized by both the Congress and us.


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