Defense Acquisitions: Guidance Needed on Navy's Use of Investment Incentives at Private Shipyards

GAO-10-686 Published: Jul 26, 2010. Publicly Released: Jul 26, 2010.
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As fiscal constraints increasingly shape Navy shipbuilding plans, the pressure to increase efficiency mounts. Modernizing facilities and equipment at shipyards that build Navy ships can lead to improved efficiency, ultimately reducing the cost of constructing ships. In response to a request from the House Appropriations Subcommittee on Defense, GAO (1) identified investments in facilities and equipment at privately-owned shipyards over the last 10 years; (2) determined the Navy's role in financing facilities and equipment investments at these shipyards; and (3) evaluated how the Navy ensures investments result in expected outcomes. To address these objectives, GAO analyzed shipyard investment data over the past 10 years; interviewed shipyard, corporate, and Navy officials; and reviewed contracts, investment business cases, and other Navy and contractor documents.

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Recommendations for Executive Action

Agency Affected Recommendation Status
Department of Defense The Secretary of Defense should direct the Secretary of the Navy to develop a policy that identifies the intended goals and objectives of investment incentives, criteria for using incentives, and methods for validating outcomes.
Closed - Implemented
In August 2012, the Navy issued a policy that provides guidance for program managers, contracting officers, and other acquisition personnel to develop investment incentives.

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