The Navy Has Reduced Deficiencies at Delivery but Still Accepts Some Ships with Numerous Construction Deficiencies

Recognizing that it has experienced significant quality problems with  several ship classes, the Navy has focused on reducing the number of  serious deficiencies, particularly “starred” deficiencies, which require a  waiver from the Chief of Naval Operations to defer correction until after  delivery. Even so, the Navy still accepts some ships with  large numbers of open deficiencies. Navy policy states that ships are to  be delivered based on acceptance trials and satisfactory correction or  resolution of deficiencies. Commercial Firms Resolve Quality Deficiencies before Delivery, with Some Practices Potentially Informative for Navy in Spite of Different Environment

The environment in which leading commercial ship buyers and builders  operate differs in substantial ways from the Navy’s. Nevertheless, some commercial  practices supporting delivery of ships with a minimum number of  deficiencies may be useful for the Navy. Leading Commercial Ship Buyers Focus on Taking Delivery of Ships Meeting Quality Expectations

Throughout the construction process, the ship buyer’s oversight team, the  shipbuilders’ quality personnel, and classification society personnel  routinely identify deficiencies such as design errors, supplier and vendor  quality issues, and problems with workmanship. In the commercial world, ship buyers use payment terms as leverage to  ensure that the shipbuilder delivers a ship to the expected level of quality. Commercial and Navy Shipbuilding Utilize Differing Approaches to Foster Accountability and Ensure Quality

			Commercial Ship Buyer Oversight Structure Creates Clear Lines of Accountability While Navy Oversight Is More Diffused

Another mechanism commercial ship buyers use to ensure quality  assurance is having dedicated, trained inspection teams on site to  monitor and oversee all aspects of construction. Increasing the emphasis on  quality may help contribute to the goal of delivering ships that are defect- free, or nearly defect-free, as called for in Navy policy and demonstrated  in commercial shipbuilding. Inspectors  regularly patrol the shipyard, where they observe the shipyard’s in- process work. Most SUPSHIP locations reported  spending about 30 percent of their inspection efforts on in-process  evaluations. The shipbuilders agree that quality problems are generally  the result of a breakdown with the execution of their quality management  plans rather than problems with the plans themselves.contractor shipyards we visited reported having made progress on this  front, and shipbuilder quality representatives told us they have been able  to improve the detection of quality problems earlier in the production  process and hold front-line supervisors accountable for the quality of the  work they oversee. Further, there are signs that builders are starting to  hold their workforce accountable for quality issues. Recommendations for Executive Action

To improve the construction quality of ships delivered to the Navy, we  recommend that the Secretary of the Defense direct the Secretary of the  Navy to take the following five actions:  1. 2. In its response,  DOD concurred with two of our recommendations and partially concurred  with three. DOD said that it  will continue to strive to reduce the number of open deficiencies to zero at  the time the ship is delivered to the Navy. Further, although trends have improved over time, recently delivered  ships still had a significant number of deficiencies. DOD partially concurred with our third recommendation, to provide  guidance on quality requirements in contracts. This report will also be available at no charge on  GAO’s website at http://www.gao.gov. Lastly, we reviewed the Navy’s efforts to improve ship quality by  reviewing key memos and documents outlining the Back to Basics  program and meeting with the officials responsible for implementing these  efforts—most of whom were in the Navy’s Supervisor of Shipbuilding,  Conversion and Repair commands. When meeting with  commercial ship buyers and shipbuilders, we also discussed the ship  classification process and the role of classification societies in  shipbuilding.
Why GAO Did This Study

The Navy expects to spend about $15 billion per year to provide its fleet with the most advanced ships to support national defense and military strategies. Problems with recently delivered ships have focused attention on quality issues.
House Report No. 112-110, accompanying the Department of Defense Appropriations Bill, 2012, mandated that GAO review the Navy's quality assurance processes for new ship construction. This report discusses, among other issues, (1) quality problems in constructing recently delivered ships and Navy actions to improve quality and (2) key practices employed by leading commercial ship buyers and shipbuilders to ensure quality and how these compared with Navy practices.
GAO analyzed Navy data on ship quality from 2006 to May 2013 and spoke with Navy officials and shipbuilders. GAO also reviewed deficiency data for commercial ships and spoke with buyers and builders.

What GAO Found

The Navy has experienced significant quality problems with several ship classes over the past several years. It has focused on reducing the number of serious deficiencies at the time of delivery, and GAO's analysis shows that the number of deficiencies--particularly "starred" deficiencies designated as the most serious for operational or safety reasons--has generally dropped. Nonetheless, the Navy continues to accept ships with large numbers of open deficiencies. Accepting ships with large numbers of uncorrected deficiencies is a standard practice and GAO found that there are varying interpretations of Navy policy with regard to when the defects should be resolved. In 2009, the Navy organization that oversees ship construction launched the Back to Basics initiative to improve Navy oversight of ship construction. However, a key output of the initiative promoting consistent and adequate quality requirements in Navy contracts has yet to be implemented.
Although the environment in which leading commercial ship buyers and builders operate differs in many ways from the Navy's, some commercial practices aimed at helping to ensure that ships are delivered with a minimum number of deficiencies may be informative for the Navy. Throughout the course of commercial shipbuilding projects, significant numbers of quality defects and instances of non-conforming work are identified. However, leading commercial ship buyers and shipbuilders make great efforts to ensure that these issues are resolved prior to delivery. Further, commercial ship buyers establish clear lines of accountability and hold their personnel responsible for ensuring the shipbuilder delivers a quality vessel. While commercial ship buyers focus on regularly witnessing in-process work through roaming patrols and impromptu inspections, Navy processes at the shipyards place less emphasis on in-process work. Moreover, leading commercial shipbuilders have strong quality management processes that track quality problems to the worker or supervisor level. Navy shipbuilding contractors have historically experienced difficulties in holding production workers and supervisors accountable for their work, but some of the shipyards reported they are making progress on increasing worker accountability.

What GAO Recommends

To improve the construction quality of ships delivered to the Navy, GAO is recommending, among other things, that the Navy clarify policy on when deficiencies should be addressed, provide guidance on contract quality requirements, and assess applicability of certain commercial practices to Navy shipbuilding. DOD agreed with two recommendations and partially agreed with three, stating for example that current policy is adequate but that the Navy would monitor deficiency trends. GAO believes that the recommendations remain valid as discussed in the report.