	Background

Navy ships undergo a variety of tests, trials, and construction after  delivery from the shipbuilder (when the Navy takes custody of the ship)  and before the Navy provides the ship to the fleet—a time referred to as  the post-delivery period. Incomplete Construction Work and Quality Issues Persisted Even after Selected Ships Were Provided to the Fleet, with Lead Ships Particularly at Risk

All six ships we reviewed that had completed the post-delivery period— LPD 25, LHA 6, DDG 112, LCS 3, LCS 4, and SSN 782—were provided  to the fleet with varying degrees of incomplete work and quality problems. Fleet officials  responsible for operating and maintaining these ships reported varying  degrees of concern about the overall quality of these six ships, noting that  two were ready for operations upon being provided to them but that there  were particular quality concerns with the other four. For CVN 78 and DDG 1000, the Navy  plans to complete significantly more work and testing during the post- delivery period than the other six ships we reviewed. As such, CVN 78  and DDG 1000 are at greater risk of being provided to the fleet at the  end of their post-delivery periods with incomplete construction work and  unknown quality. The Navy’s Ship Delivery Policy Does Not Facilitate a Process That Provides Complete and Quality Ships to the Fleet

The Navy’s ship delivery policy emphasizes the importance of ensuring  that defect-free and mission capable ships are provided to the fleet. But  the policy does not elaborate on which defects it is referring to or when  they should be corrected. In the absence of a clear definition, ship program offices do  not have a consistent view regarding what standards constitute a defect- free ship. CNO officials responsible for the  policy told us that ships should be free of all deficiencies by the time they  are provided to the fleet, meaning at the end of the post-delivery period at  OWLD, which is a change from their previous interpretation of the ship  delivery policy that they authored. INSURV Does Not Verify Ship Quality When Ships Are Provided to Fleet, as Required by Policy

The Navy’s ship delivery policy identifies INSURV as the independent  entity charged with verifying the quality of ships at delivery and  recommending introduction to the fleet. Without using consistently  defined measures in its reporting, such as for delivery or IOC, the Navy is  not accurately conveying the completeness and quality of its ships to  Congress. Congress included a provision in the National Defense Authorization Act  for Fiscal Year 2017 that may address this lack of clarity and consistency  in reported delivery dates by establishing criteria that must be met in  order for a ship to be deemed delivered. In nearly all acquisition program models, DOD guidance  states that IOC occurs toward the end of operational testing. In its  written comments, which are reprinted in appendix III of this report, DOD  did not concur with two recommendations, partially concurred with a third  recommendation, and fully concurred with a fourth recommendation. The statute and two policies that other policies DOD  references in its response are not focused on construction and the post- delivery period and do not provide guidance on the level of quality and  completeness expected when ships are provided to the fleet. Appendix I: Objectives, Scope, and Methodology

This report assesses: (1) the extent to which the Navy provides complete,  quality ships to the fleet that are free of government and contractor  deficiencies; (2) the extent to which the Navy’s policy governing ship  delivery facilitates efforts to deliver complete and quality ships; and (3)  the extent to which Navy reports to Congress on the progress of  shipbuilding programs consistently define key milestones such as ship  delivery and initial operational capability. Through our review of this documentation,  we assessed what construction work was incomplete or deficient when  each case study ship was delivered to the Navy from the shipbuilder; the  availabilities, tests, and trials each ship completed during the post- delivery period; and the condition of each ship when it was provided to  the fleet following the post-delivery period. Littoral Combat Ship: Navy Complied with Regulations in Accepting Two  Lead Ships, but Quality Problems Persisted after Delivery.
Why GAO Did This Study

The U.S. Navy spends at least $18 billion per year on shipbuilding—a portion of which is spent after ships are delivered. During the post-delivery period—after delivery from the shipbuilder and before the ships enter the fleet—Navy ships undergo a variety of tests, trials, and construction.
GAO was asked to assess the post-delivery period, including quality and completeness of ships when they are delivered to the fleet. The Senate Report on the National Defense Authorization Act for Fiscal Year 2017 included additional questions about ship status after delivery. This report assesses the extent to which the Navy (1) provides complete and quality ships to the fleet, (2) has a ship delivery policy that supports those efforts, and (3) reports ship quality and completeness to Congress. GAO reviewed a nongeneralizable sample of eight Navy ships, six of which have entered the fleet and two that recently began the post-delivery period. GAO reviewed program documentation and interviewed Navy officials.

What GAO Found

GAO reviewed six ships valued at $6.3 billion that had completed the post-delivery period, and found they were provided to the fleet with varying degrees of incomplete work and quality problems. GAO used three quality assurance metrics, identified by Navy program offices, to evaluate the completeness of the six ships—LPD 25, LHA 6, DDG 112, Littoral Combat Ships (LCS) 3 and 4, and SSN 782—at delivery and also at the time each ship was provided to the fleet. Although the Navy resolved many of the defects by the end of the post-delivery period, as the table below shows, quality problems persisted and work was incomplete when the selected ships were turned over to the operational fleet.
Fleet officials reported varying levels of concern with the overall quality and completeness of the ships, such as with unreliable equipment or a need for more intense maintenance than expected. For CVN 78 and DDG 1000, the Navy plans to complete significantly more work and testing during the post-delivery period than the other six ships GAO reviewed. As such, these ships are at a greater risk of being provided to the fleet at the end of their post-delivery periods with incomplete construction work and unknowns about quality.
The Navy's ship delivery policy does not facilitate a process that provides complete and quality ships to the fleet and practices do not comport with policy. The policy emphasizes that ships should be defect-free and mission-capable, but lacks clarity regarding what defects should be corrected and by when. Without a clear policy, Navy program offices define their own standards of quality and completeness, which are not always consistent. Further, because the Navy's Board of Inspection and Survey (INSURV) does not inspect ships at the end of the post-delivery period, it is not in a position to verify each ship's readiness for the fleet, as required by Navy policy. The Navy has not assessed the costs and benefits of ensuring INSURV does this. Addressing these policy concerns would improve the likelihood of identifying and correcting deficiencies before fleet introduction and increase consistency in how the Navy defines quality.
The Navy does not use consistent definitions for key milestones in its reports to Congress—such as delivery or Initial Operational Capability (IOC)—and, therefore, these milestones are not as informative as they could be regarding ship quality and completeness. For example, the Navy has routinely declared IOC on new ship classes without having demonstrated that ships are able to perform mission operations—contrary to Department of Defense (DOD) guidance, which, for nearly all acquisition models, generally states that IOC should be declared only after successful operational testing that demonstrates performance.

What GAO Recommends

The Navy should revise its ship delivery policy to identify what kinds of defects should be corrected and by when and study how to best ensure that INSURV verifies ships. Also, the Navy should reflect in its reports to Congress key milestones and consistent definitions in line with DOD policy. DOD did not concur with two recommendations, partially concurred with a third, and fully agreed with a fourth. GAO stands by its recommendations, which will help ensure that complete and quality ships are provided to the fleet and that Congress is provided with meaningful information on ship status.