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Highlights

GAO reviewed the Navy's methods for managing and controlling direct labor costs at its naval shipyards, focusing on whether labor estimates: (1) for ship repairs were reliable and effective in helping managers to control labor costs; and (2) reflected the benefits from labor-saving improvements and new equipment.

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Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Department of the Navy 1. The Secretary of the Navy should direct the Commander, NAVSEA, to establish milestones for implementing the new training program to ensure that all planners are well-trained in estimating policies and procedures.
Closed - Implemented
All naval shipyards have established milestones to implement the new training program. The scope and intent of this training has been integrated and accomplished as part of the higher priority Advanced Industrial Management program training.
Department of the Navy 2. The Secretary of the Navy should direct the Commander, NAVSEA, to ensure that each shipyard conducts periodic, independent audits of labor estimates to assess accuracy and compliance with estimating policies.
Closed - Implemented
Each shipyard has a process to audit labor estimates, as required by the Advanced Industrial Management program. The program process manual requires a thorough review of the clearly defined work and the completed labor and material estimates by several different functional organizations.
Department of the Navy 3. The Secretary of the Navy should direct the Commander, NAVSEA, to establish a labor standards improvement initiative to ensure that frequently performed repair tasks are covered by current, independently developed labor standards.
Closed - Implemented
The Navy stated that it would implement an initiative to ensure that frequently performed repair tasks would be covered by current, independently developed labor standards. Also, work will be broken down by component/task, providing a more discrete basis for accurate labor estimating. In addition, one shipyard is revising the labor standards for 85 percent of the nonnuclear production work. These actions are steps in the right direction but a follow-on review would be required to determine if the recommendation was fully implemented.
Department of the Navy 4. The Secretary of the Navy should direct the Commander, NAVSEA, to establish a procedure ensuring that shipyard planners are informed of all new production processes, methods, and equipment that improve worker efficiency.
Closed - Implemented
A job summary review process has been implemented as part of the Advanced Industrial Management program. The review specifically addresses new, revised, or standard processes for accomplishing the work, as well as the associated labor estimates. Engineers/planners, production resources, and operations/project personnel all participate in the job summary reviews.

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