Specifically, we determined whether MSC has adequate management controls (1) to oversee contractors and prevent abuses and (2) to ensure contractual requirements are being met. Specifically, MSC lacks basic internal controls in its supervision of overhaul work, in its verification of crew-performed repairs, and in its review of invoices for subcontracts. During our review, however, we found that MSC does not have the organizational structure or the standardized procedures necessary to effectively manage its contractor-operated ship programs. Finally, MSC has no formal system to coordinate ideas to improve the contractors’ performance or reduce the programs’ costs. MSC Does Not Ensure That Contractors Comply With Requirements for Crew Trustworthiness and Security Clearances

No office in MSC is responsible for tracking trustworthiness evaluations and security clearances for MSC’s contractor-operated ship programs to ensure that contractors are complying with contract requirements. However, MSC still will not have a system in place to systematically establish personnel requirements and to identify and implement best practices.
Why GAO Did This Study

Pursuant to a congressional request, GAO reviewed the Military Sealift Command's (MSC) management of its contractor-operated ships, focusing on whether MSC has: (1) adequate management controls to oversee contractors and prevent abuses; and (2) sufficient oversight to ensure that contractual requirements are being met.

What GAO Found

GAO found that MSC: (1) does not require contractors to adequately document minor repairs, crew time, or subcontracted work; (2) does not adequately verify crew-performed repairs, review subcontractor invoices, or supervise overhaul work; (3) lacks sufficient internal controls to adequately manage its ship operation contracts; (4) has no guidelines for systematically establishing personnel requirements; (5) does not ensure that contractors comply with requirements for trustworthiness evaluations and security clearances; (6) has no formal system to identify and implement best practices that could improve contractor performance and reduce costs; and (7) has acknowledged its organizational problems and plans to designate program managers and establish formal lines of accountability.