Navy Maintenance:

Status of the Public and Private Shipyard Competition Program

NSIAD-90-161: Published: Sep 26, 1990. Publicly Released: Sep 26, 1990.

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Pursuant to a congressional request, GAO assessed the status of the Navy's public and private shipyard competition program.

GAO found that: (1) the Navy awarded contracts to private shipyards for work involving 38 surface ships, and public shipyards received awards for work involving 5 surface ships; (2) the Navy awarded 21 competed submarines to public shipyards and 4 to private shipyards, and the Navy terminated 1 at the private yard's request and assigned it to a public shipyard; (3) final costs for work completed on 33 surface ships and 22 submarines totalled $962.5 million, an increase of about $182.3 million over the cumulative award price of $780.2 million; (4) $69.8 million of the $182.3 million was for work in public shipyards and about $112.3 million was for work in private shipyards; (5) the program has achieved limited competition between public and private shipyards; (6) both public and private shipyards submitted price proposals for only 22 of the 43 competed surface ships, the Navy assigned 1 of the 21 remaining ships to a public shipyard, and only private shipyards submitted proposals on the other 20; (7) the Navy could not substantiate its original estimate that the program would result in cost savings of $200 million; and (8) the Navy claimed that the program encouraged public shipyards to adopt a cost-effective approach to ship overhauls and repairs, but could not provide any data to support those claims.

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