Depot Maintenance: Improvements Needed to Achieve Benefits from Consolidations and Funding Changes at Naval Shipyards
Highlights
To improve fleet support activities, the Navy is consolidating maintenance facilities and converting its shipyards from financing under the Navy Working Capital Fund to funding through direct appropriations (direct funding). Puget Sound Naval Shipyard was converted to direct funding in 2003. The National Defense Authorization Act for Fiscal Year 2006 directed the Navy to assess the impact of converting Puget Sound to direct funding and directed that GAO review the Navy's report. The Navy submitted its report to Congress in March 2006, confirming its position that direct funding was more advantageous than working capital funding and can best satisfy fleet maintenance priorities. GAO's objectives were to evaluate the extent to which the Navy's report (1) provided data and other supporting evidence for its overall assessment of the impact of converting Puget Sound to direct funding, (2) addressed unresolved issues that had been identified in prior studies, and (3) disclosed any other issues that have affected the implementation of direct funding.
Recommendations
Matter for Congressional Consideration
| Matter | Status | Comments |
|---|---|---|
| Congress may wish to require the Navy to periodically report on its specific improvement plans and progress, as well as any impediments requiring congressional action, to ensure that shortcomings in the information systems supporting the Navy's consolidation of regional maintenance facilities and conversion to direct funding are addressed in a timely manner. | Congress has not acted on this matter. |
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Department of Defense | To improve the Navy's management of consolidated maintenance facilities and the conversion of shipyards to direct funding, the Secretary of Defense should direct the Secretary of the Navy to implement a method to routinely and systematically provide for total cost visibility of ship maintenance work performed. |
The Navy has taken steps that meet the intent of our recommendation because they have (1) established working groups to develop policy and guidance aimed at providing total cost visibility of ship maintenance, (2) issued a Memorandum of Agreement that provides a framework for business operations under mission funding, (3) provided guidance for the budgeting and execution of program funds under mission funding, and (4) prepared a budget exhibit for the fiscal year 2011 President's Budget reflecting the four shipyards operating under mission funding.
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| Department of Defense | To improve the Navy's management of consolidated maintenance facilities and the conversion of shipyards to direct funding, the Secretary of Defense should direct the Secretary of the Navy to develop metrics to ensure that the planned changes to consolidate the management, operations, and funding of facilities performing ship maintenance are being implemented; that specific productivity improvements and other benefits are being achieved; and that areas where performance is lacking or problems exist are identified. |
As of July 2010, the Navy has not provided additional documentation of metrics that ensure the planned changes to consolidate the management operations, funding of ship maintenance facilities, and specific productivity improvements are being implemented.
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| Department of Defense | To improve the Navy's management of consolidated maintenance facilities and the conversion of shipyards to direct funding, the Secretary of Defense should direct the Secretary of the Navy to develop specific plans for information systems designed to efficiently support the financial and business operations at its shipyards, including identification of requirements, corrective actions, time frames, and resources needed. |
The Navy took actions that meet the intent of the recommendation. Specifically, the Navy (1) realigned funds to transition Norfolk Naval Shipyard and Portsmouth Naval Shipyards information systems in the mission funding environment; (2) budgeted to eliminate the manual workaround previously identified; and (3) is developing a new information system program designed to modernize, migrate, and consolidate its legacy systems.
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