Navy Ships: Applying Leading Practices and Transparent Reporting Could Help Reduce Risks Posed by Nearly $1.8 Billion Maintenance Backlog

GAO-22-105032 Published: May 09, 2022. Publicly Released: May 09, 2022.
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Fast Facts

Navy ships need regular, intensive maintenance. But the Navy reported a $1.7 billion backlog of deferred maintenance on just its surface ships. Of that, $1.2 billion is for ships the Navy proposed decommissioning early—in part because of their maintenance costs.

Navy reports don't show the full extent, causes, or risks of deferred maintenance. Reducing the backlog could help fleets last longer and improve Navy operations.

Leading practices for managing maintenance backlogs could help the Navy get on track. For example, one practice is setting performance goals for backlog reduction. We recommended aligning Navy efforts with these practices.

The USS Ashland, an amphibious dock landing ship, in Yokosuka, Japan

A ship and a crane

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Highlights

What GAO Found

In the past decade, surface ships have accounted for nearly all of the Navy's deferred depot maintenance backlog. Aircraft carriers have experienced minimal increases in backlog, and maintenance is rarely deferred for submarines. At GAO's request, the Navy developed an estimate of its maintenance backlog that totaled nearly $1.8 billion, comprising nearly $1.7 billion for surface ships and nearly $100 million for carriers. The surface ship maintenance backlog included $1.2 billion for deferred maintenance on ships the Navy proposed to decommission early in its fiscal year 2022 budget request. The accumulated maintenance backlog contributed to the Navy decisions to decommission nine ships, according to officials, which will result in the loss of 34 years of ship service life (see figure). Early decommissioning leads to a smaller fleet and could hinder efforts to meet operational and presence requirements.

Proposed or Actual Decommissioning of Ships with Deferred Maintenance Backlog

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Managing the surface fleet's depot maintenance backlog, the Navy met six of the nine leading practices that GAO has previously identified as effective strategies for managing deferred maintenance backlogs. Specifically, it has not established comprehensive performance measures for reducing the backlog; identified the full range of risks posed by a lack of timely investment; or identified the funding needed to address the backlog of deferred depot maintenance. Doing so would help the Navy better manage its surface fleet.

The Navy understated the amount of its ship deferred depot maintenance in its 2021 financial reports by about $1.6 billion. The Navy reported only about $181 million in unfunded ship deferred maintenance in its 2021 annual financial report even though estimates it prepared for GAO show a nearly $1.8 billion backlog. The Navy has not established clear guidance for required information on ship deferred maintenance in financial reports. Having quality information on the costs of deferred maintenance—and the effects on maintenance backlogs—would provide the Navy and Congress with greater transparency about the Navy's efforts to maintain ships and would promote improved operational readiness.

Why GAO Did This Study

To keep its fleet of surface ships, aircraft carriers, and submarines ready, the Navy requires ships to undergo regular, intensive depot-level maintenance. Yet at times the Navy has deferred required depot-level maintenance due to operational demands or limited shipyard capacity and funding. This has created a backlog of deferred maintenance. Navy leaders stated maintaining the ships it currently has is a cost-effective way to help achieve its goal of growing the fleet.

House Report 116-442 included a provision that GAO review Navy deferred depot maintenance. GAO examines the Navy's (1) extent of deferred depot maintenance on surface ships, aircraft carriers, and submarines; (2) use of leading practices in managing deferred maintenance; and (3) reporting on the costs of deferred maintenance.

GAO examined deferred depot-level maintenance for surface ships, aircraft carriers, and submarines, and the associated backlog; reviewed Navy data and documents, including financial documents; and interviewed Navy officials. GAO evaluated Navy practices against leading practices GAO had identified for managing public-sector deferred maintenance backlogs.

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Recommendations

GAO is making nine recommendations to incorporate leading practices for managing deferred maintenance and to improve Navy reporting on the depot maintenance backlog. DOD generally concurred with the recommendations.

Recommendations for Executive Action

Agency Affected Recommendation Status
Department of the Navy The Secretary of the Navy should ensure that Naval Sea Systems Command (NAVSEA) establishes performance goals, baselines for outcomes, and performance measures to manage the surface ship deferred depot maintenance backlog. (Recommendation 1)
Open
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Department of the Navy The Secretary of the Navy should ensure that the Office of the Chief of Naval Operations identifies and assesses the full range of fleet-wide risks, including operational, technical, and economic risks, associated with deferred surface ship depot maintenance, and includes the assessment in an annual report to the Chief of Naval Operations published by NAVSEA. (Recommendation 2)
Open
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Department of the Navy The Secretary of the Navy should ensure that NAVSEA publish in an annual report to the Chief of Naval Operations the current aggregate backlog estimate and an estimate of the maintenance required to be programmed and executed for each ship with canceled depot maintenance periods. (Recommendation 3)
Open
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Department of the Navy The Secretary of the Navy should ensure that the Office of the Chief of Naval Operations modifies its maintenance requirement process to require that SURFMEPP continue estimating depot-level maintenance requirements until the Congress has accepted Navy decommissioning proposals. (Recommendation 4)
Open
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Department of the Navy The Secretary of the Navy should ensure that information on the aggregate ship deferred maintenance backlog estimate is included in congressional budget requests and related reports. (Recommendation 5)
Open
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Department of the Navy The Secretary of the Navy should ensure that information on the deferred maintenance backlog estimate for any ships proposed for decommissioning is included in congressional budget requests and related reports. (Recommendation 6)
Open
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Department of the Navy The Secretary of the Navy should ensure that the Office of the Assistant Secretary of the Navy (Financial Management and Comptroller) issues guidance on the disclosure of ship deferred maintenance in annual financial statements. (Recommendation 7)
Open
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Department of the Navy The Secretary of the Navy should ensure that the Office of the Assistant Secretary of the Navy (Financial Management and Comptroller) coordinates with OPNAV N83 and discloses the aggregate ship deferred maintenance backlog estimate in annual financial statements. (Recommendation 8)
Open
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Department of the Navy The Secretary of the Navy should ensure that the Office of the Assistant Secretary of the Navy (Financial Management and Comptroller) discloses both funded and unfunded ship deferred maintenance in annual financial statements. (Recommendation 9)
Open
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

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