Shipyard Facilities and Equipment Are in Poor Condition

Although the Navy has committed to increasing shipyard capital  investment and implementing improvement plans, the physical condition  of the shipyards’ facilities remains poor according to Navy data, and the  cost to address restoration and modernization backlogs is increasing. For example, we estimate that it will take at least 19 years to clear the  backlog (through fiscal year 2036), 6 years longer than the Navy  estimated in 2013. The average age of capital equipment at  the shipyards exceeds its expected useful life, and the overall condition of  this equipment may be deteriorating. Shipyard Facilities Are in Poor Condition

GAO’s analysis of data on Navy facilities found that the average rating for  the overall condition of facilities at the Navy’s four shipyards remains  poor. Given the current average funding levels for capital facilities that the  shipyards have received from the Navy of approximately $260 million per  year, we calculated that it would take the Navy at least 19 years (through  fiscal year 2036) to eliminate the $4.86 billion backlog of facilities  restoration and modernization that the shipyards faced at the end of fiscal  year 2016. Shipyard Capital Facilities and Equipment Are Not Fully Meeting the Navy’s Operational Needs and Will Likely Not Support Projected Operational Needs

The shipyards’ capital facilities and equipment are not fully meeting the  Navy’s operational needs, in part due to their condition. Maintenance  delays partially attributable to inadequate facilities and equipment at the  shipyards have led to thousands of lost operational days for submarines  and aircraft carriers over the last 16 fiscal years. Our analysis shows that facilities and equipment in poor condition can  contribute to maintenance delays. These overruns in maintenance periods  resulted in at least 1,300 lost operational days—days that a ship is not  available for operations—for aircraft carriers and about 12,500 days for  submarines during fiscal years 2000 through 2016 (see figure 7). The  Navy projects that the shipyards will be unable to support 73—or about  one-third—of 218 maintenance periods planned for the shipyards over the  next 23 years, including 5 aircraft carrier and 50 submarine maintenance  periods. The Navy’s Capital Investment Approach Is Not Fully Addressing the Shipyards’ Challenges

Though the Navy has developed detailed plans for capital investment in  facilities and equipment at the shipyards that attempt to prioritize their  investment strategies, this approach does not fully address the shipyards’  challenges, in part because the plans are missing key elements. However,  without adopting a management approach for its capital investment needs  that includes key results-oriented elements, the Navy risks continued  deterioration at its shipyards, hindering its ability to efficiently and  effectively support Navy readiness over the long term. The Navy’s Capital Investment Plans Lack Key Elements of a Results-Oriented Approach

Though the Navy’s capital investment approach has resulted in the  development of three capital investment plans, those plans are missing  key elements, including the development of analytically-based goals that  would help guide long-term planning, a full identification of the shipyards’  resource needs, metrics that would allow the Navy to assess the  effectiveness of its capital investment spending in supporting the ability of  the shipyards to meet operational needs, regular management reviews of  progress, and reporting on progress to key Navy decision makers and  Congress. On July 6, 2017, the House Armed Services Committee released report  115-200 accompanying a bill for the National Defense Authorization Act  for Fiscal Year 2018. (Recommendation 3)

	Agency Comments

We provided a draft of this report to DOD for review and comment. Appendix II: Condition and Performance of the Individual Naval Shipyards

There are four Navy-operated shipyards: Norfolk Naval Shipyard,  Portsmouth Naval Shipyard, Puget Sound Naval Shipyard and  Intermediate Maintenance Facility, and Pearl Harbor Naval Shipyard and  Intermediate Maintenance Facility.
Why GAO Did This Study

The Navy's four public shipyards—Norfolk Naval Shipyard, Portsmouth Naval Shipyard, Puget Sound Naval Shipyard and Intermediate Maintenance Facility, and Pearl Harbor Naval Shipyard and Intermediate Maintenance Facility—are critical to maintaining fleet readiness and supporting ongoing operations involving the Navy's nuclear-powered aircraft carriers and submarines. The condition of these facilities affects the readiness of the aircraft carrier and submarine fleets. Senate Report 114-255, accompanying a bill for the National Defense Authorization Act for Fiscal Year 2017, included a provision for GAO to examine the capital investment in and performance of the Navy's shipyards. GAO evaluated (1) the state of the naval shipyards' capital facilities and equipment, (2) the extent to which shipyard capital facilities and equipment support the Navy's operational needs, and (3) the extent to which the Navy's capital investment plans for facilities and equipment are addressing shipyard challenges. GAO reviewed data from fiscal years 2000 through 2016 on shipyard capital investment and performance and the age and condition of facilities and equipment; reviewed Navy guidance; visited the shipyards; and interviewed Navy and shipyard officials.

What GAO Found

Although the Navy committed to increased capital investment and developed an improvement plan in 2013, the shipyards' facilities and equipment remain in poor condition. GAO's analysis of Navy shipyard facilities data found that their overall physical condition remains poor. Navy data show that the cost of backlogged restoration and maintenance projects at the shipyards has grown by 41 percent over five years, to a Navy-estimated $4.86 billion, and will take at least 19 years (through fiscal year 2036) to clear. Similarly, a Navy analysis shows that the average age of shipyard capital equipment now exceeds its expected useful life.
Partly as a result of their poor condition, the shipyards have not been fully meeting the Navy's operational needs. In fiscal years 2000 through 2016, inadequate facilities and equipment led to maintenance delays that contributed in part to more than 1,300 lost operational days—days when ships were unavailable for operations—for aircraft carriers and 12,500 lost operational days for submarines (see figure). The Navy estimates that it will be unable to conduct 73 of 218 maintenance periods over the next 23 fiscal years due to insufficient capacity and other deficiencies.
Though the Navy has developed detailed plans for capital investment in facilities and equipment at the shipyards that attempt to prioritize their investment strategies, this approach does not fully address the shipyards' challenges, in part because the plans are missing key elements. Missing elements include analytically-based goals and metrics, a full identification of the shipyards' resource needs, regular management reviews of progress, and reporting on progress to key decision makers and Congress. For example, the Navy estimates that it will need at least $9.0 billion in capital investment over the next 12 fiscal years, but this estimate does not account for all expected costs, such as those for planning and modernizing the shipyards' utility infrastructure. Unless it adopts a comprehensive, results-oriented approach to addressing its capital investment needs, the Navy risks continued deterioration of its shipyards, hindering its ability to efficiently and effectively support Navy readiness over the long term.T

What GAO Recommends

GAO recommends that the Navy develop a comprehensive plan to guide shipyard capital investment, conduct regular management reviews, and report to Congress on progress in addressing the shipyards' needs. DOD concurred with all 3 recommendations.