Navy Policies and Procedures for Allocating Ship Maintenance Work in the Norfolk Area

The Navy’s allocation of ship maintenance workload in the Norfolk, Virginia, area is guided by legislative requirements and established Navy policy objectives, such as (1) retaining a certain level of public sector capability, (2) allowing sailors to remain at their home ports when shorter repairs are being done, and (3) achieving economic and efficient public depot maintenance operations. Obligations for Ship Maintenance and Repair Work in the Norfolk Area

In terms of reported obligations for ship maintenance work in the Norfolk area during fiscal years 1994 through 1998, the largest amount of ship maintenance funding went to the private shipyards and repair companies.Among the private sector activities, Newport News received the largest portion of the obligated funds. Movement of Funds Had Relatively Little Effect on the Atlantic Fleet’s Ship Depot Maintenance Program

During fiscal years 1994 through 1998, the Navy transferred or reprogrammed appropriated funds into and out of its ship depot maintenance program. While Newport News received the largest portion of that private funding, obligations to other smaller shipyards and repair companies have fluctuated from year to year. The greatest change occurred in fiscal year 1998, when these smaller companies received less than in other years and less than the Navy initially scheduled. This was largely because the conventional workload that traditionally goes to these companies is declining, scheduled maintenance and operational requirements changed during fiscal year 1998, and four conventional maintenance projects originally scheduled to go to the private sector were reassigned to the Norfolk Naval Shipyard to stabilize and achieve more efficient operations at the public shipyard. Lastly, while the Navy did reprogram ship depot maintenance funds to meet other priorities, the Atlantic Fleet’s ship depot maintenance program was not adversely affected because it received a slight increase over the amount budgeted during fiscal years 1994 through 1998. We did not verify the validity of the Navy’s ship maintenance and repair requirements in the Norfolk area. To identify the extent to which ship maintenance workloads in the Norfolk area were affected by the migration of funding from the ship depot maintenance program since fiscal year 1994, we examined a variety of Navy budget documents.
Why GAO Did This Study

Pursuant to a congressional request, GAO reviewed the Navy's declining ship maintenance workload, focusing on: (1) the Navy's policies and procedures for allocating ship maintenance work to public and private facilities in the Norfolk area; (2) ship maintenance and modernization funding obligated to the Norfolk Naval Shipyard and private ship repair companies during the fiscal years (FY) 1994 through 1998; and (3) the extent to which the Atlantic Fleet's ship maintenance program has been affected by the movement of funds out of the ship depot maintenance program since FY 1994.

What GAO Found

GAO noted that: (1) the Navy's allocation of ship maintenance workload in the Norfolk, Virginia area, is guided by legislative requirements and established policy objectives, such as retaining a certain level of public sector capability, allowing sailors to remain at their home ports when shorter repairs are being done, and achieving economic and efficient public depot maintenance operations; (2) during FY 1994 through FY 1998, private shipyards and repair companies in the Norfolk, Virginia, area received proportionately more funding for ship maintenance work than the Navy's Norfolk Naval Shipyard; (3) among the private sector activities, Newport News Shipbuilding and Drydock Company has received the largest portion of ship maintenance funding in the Norfolk area; (4) funding obligated to other smaller shipyards and repair companies has fluctuated from year to year, with the greatest change occurring in FY 1998 when these companies received proportionately much less of the annual ship maintenance funding than in other years and also received less than initially scheduled by the Navy; (5) this was largely because: (a) the conventional workload that traditionally goes to these companies is declining; (b) scheduled maintenance and operational requirements changed during FY 1998; and (c) four conventional maintenance projects originally scheduled to go to the private sector were reassigned to the Norfolk Naval Shipyard to stabilize and achieve more economical and efficient operations at that public shipyard; (6) the Navy did move appropriated funds from its ship depot maintenance account during FY 1994 through FY 1998; (7) however, the Atlantic Fleet received a slight increase over the amount budgeted for its ship depot maintenance program during this period; and (8) consequently, the movement of ship depot maintenance funds did not reduce the amount of funds provided to the public and private sectors in the Norfolk, Virginia, area.