The Navy’s remaining 15 auxiliary ships are crewed by military personnel. Navy’s Current and Planned Efforts to Turn Over the Operation of Auxiliary Ships to MSC for Civil Service and/or Commercial Crewing

As of May 1997, the Navy had MSC operating 27 of its 42 auxiliary ships with civil service crews. This table also shows the size of the military detachment on these ships. The savings of over $17 million are also primarily attributable to differences in crew sizes. According to MSC unofficial estimates, these savings would be offset by a one-time cost of $45 million for an AOE-1 and $30 million for an AOE-6 to convert these ships to Coast Guard standards, which differ from Navy standards, that is, $180 million for all four AOE-1 ships and $120 million for all four AOE-6 ships, or $300 million for all eight ships. The study attributed the annual savings to much smaller crew sizes on MSC ships. It concluded that the Navy could save $4 million to $15 million a year per ship, depending on the type, by reducing the number of sea-going personnel positions on auxiliary ships and crewing them with civilians. A 1994 Naval Audit Service report also found that significant cost benefits could be achieved if Navy auxiliary ships were crewed by civil service mariners. Crewing With Civil Service Personnel Has Other Advantages

Another advantage of turning over the Navy multiproduct ships to MSC is, as Navy and MSC officials pointed out, that MSC ships do not have the constraints on operating days per ship and on days at sea per crewmember that Navy ships do. Analysis of Costs Related to Civil Service and Commercial Crews

Although the Navy’s current policy is not to use commercial crews, we compared the cost of crewing auxiliary ships with commercial and civil service crews. Based on our analysis, we found that crewing with commercial mariners costs more. We estimated that the annual labor cost to operate a Kaiser class oiler with a civil service crew would be $6.562 million and the cost with a commercial crew would be $6.883 million, a difference of about $321,000, or about 5 percent. Merchant Mariner Pool Would Increase

We calculated that the pool of U.S. civil service mariners would increase by about 1,700 merchant mariners if the operation of the multiproduct ships were turned over to MSC (see table 6). We calculated that the commercial mariner pool to support shipboard positions would increase by about 2,700 to 3,400 mariners if commercial firms operated the multiproduct ships (see table 7). Recommendation

Given the potential savings that could result if the Navy turned over the operation of the seven active multiproduct auxiliary ships and the one ship due for delivery in early 1998 to MSC for crewing with civil service mariners, we recommend that the Secretary of Defense direct the Secretary of the Navy to devise a detailed plan for turning over, in a timely manner, the operation of the multiproduct auxiliary ships to MSC. Scope and Methodology

To provide information on the Navy’s current and planned efforts to turn over the operation of military crewed auxiliary ships to MSC for civil service and/or commercial crewing, we analyzed data from and interviewed officials in the Office of the Chief of Naval Operations, MSC, the Center for Naval Analyses, commercial ship operating companies, and civilian maritime unions. To identify the potential cost savings that would be realized by turning over the operation of the Navy’s remaining military crewed auxiliary ships to MSC, we compared actual annual operating costs provided by the Navy to estimated annual operating costs provided by MSC for both classes of multiproduct ships.
Why GAO Did This Study

Pursuant to a congressional request, GAO reviewed the Navy's use of alternative crewing arrangements for Navy auxiliary ships, focusing on: (1) the Navy's plans for turning over the operation of military crewed auxiliary ships to its Military Sealift Command (MSC) for civil service or commercial crewing; (2) whether cost savings would be realized if the Navy turned over the operation of the remaining military crewed auxiliary ships to MSC; (3) the relative costs of operating a Navy auxiliary ship with a civil service crew and the costs of operating the same ship with a commercial crew; and (4) the increase in the merchant mariner pool if the operation of the multiproduct ships were turned over to MSC.

What GAO Found

GAO noted that: (1) the Navy plans to turn over the operation of its remaining three ammunition ships to MSC for crewing with civil service mariners; (2) as of May 1997, the Navy had not decided on whether to turn over the operation of the remaining seven auxiliary ships as well as the single ship under construction to MSC; (3) all eight of these ships are multiproduct ships; (4) based on Navy cost data and MSC cost estimates, the Navy could save about $139.6 million annually by turning over the operation of these eight multiproduct ships to MSC for crewing with civil service mariners; (5) this savings is due primarily to a much smaller crew size than has been traditional on military crewed auxiliary ships; (6) these savings would be offset by a one-time conversion cost of $30 million to $45 million per ship, or about $300 million for all eight ships, to meet Coast Guard standards; (7) MSC might also need fewer ships to provide underway replenishment since unlike the Navy, it does not have the personnel and operating limitations on the number of operating days per ship and on days at sea per crewmember; (8) three other studies conducted since 1990 by the Center for Naval Analyses, the Institute for Defense Analyses, and the Naval Audit Service have also identified the potential for large cost savings if the Navy were to transfer additional ships to MSC; (9) these studies' projected savings were also primarily due to the smaller crew sizes on MSC ships; (10) the Navy does not intend to divert from its current policy of not using commercial mariners to crew auxiliary ships; (11) its position is that these ships must be crewed by military or civil service personnel due to their military mission; (12) however, if it were to change this policy, GAO's analysis shows that it would cost the Navy about $321,000, or about 5 percent more a year, to operate a commonly used MSC oiler ship with commercial crews than with civil service crews; (13) the difference in costs is primarily attributable to higher fringe benefit costs for commercial crews; (14) with respect to the size of the mariner pool under different crewing alternatives, GAO calculated that the pool of U.S. civil service mariners would increase by about 1,700 merchant mariners if the 8 remaining auxiliary ships were turned over to MSC and were crewed by civil service mariners; and (15) the pool of commercial merchant mariners would increase by about 2,700 to 3,400 mariners if these same ships were crewed by commercial mariners.