Actions Needed to Improve the Navy's Processes for Managing Public Shipyards' Restoration and Modernization Needs
GAO-11-7, Nov 16, 2010
The Navy's four public shipyards--Norfolk Naval Shipyard, Pearl Harbor Naval Shipyard, Portsmouth Naval Shipyard, and Puget Sound Naval Shipyard--are critical in maintaining fleet readiness and supporting ongoing operations worldwide. The Navy requests funds for the shipyards' restoration and modernization as infrastructure condition may affect their mission and workforce. GAO was asked to review (1) the extent to which the shipyards have plans for their restoration and modernization needs; (2) the extent to which the Navy has a process to capture and calculate these needs; (3) the Navy's process to prioritize and fund projects to meet these needs; and (4) the extent to which the shipyards resolve infrastructure-related safety, health, and quality-of-life issues. GAO assessed the Navy's shipyard plans against elements of a federal strategic planning framework; evaluated its process for determining its restoration and modernization needs and addressing safety, health, and quality-of-life issues; visited the shipyards; and interviewed Navy command and shipyard officials.
Each of the Navy's four public shipyards has plans that vary in the extent to which they address key elements of a federal comprehensive framework that GAO has previously identified as key principles of strategic planning. Pearl Harbor and Portsmouth Naval Shipyards' plans fully or partially addressed all of the key elements, such as having mission statements and addressing external factors that could affect goals. Norfolk Naval Shipyard's plans fully or partially address all but one of the key elements--establishing metrics--and Puget Sound Naval Shipyard's plans do not address three key elements--establishing long-term goals, metrics, and monitoring mechanisms. The Navy has not issued guidance detailing the need for shipyard strategic plans or what to include in them. Without such, the Navy and its shipyards may not have visibility over the effectiveness of their efforts to improve their overall infrastructure planning and may not have the information necessary to guide and prioritize investments. In addition, the Navy's process to capture and calculate its total shipyard restoration and modernization needs produces understated total costs because certain data inputs are unavailable while others were not fully validated or are undervalued. For example, GAO found that some facility data, when unavailable, defaulted in the Navy's data system to a rating that indicated the facilities were well-configured and thus did not generate any restoration and modernization costs for the facilities. However, the Navy does not currently have a plan in place to address these challenges. Without relevant, reliable, and timely information, the Navy is limited in its ability to make informed decisions for effective and efficient use of resources. The Navy has a collaborative process to prioritize and fund the shipyards' restoration and modernization projects. The Navy has to decide among requests from all its installations, including the shipyards, to fund the highest-priority needs. However, current Naval Sea Systems Command guidance to the shipyards limits the number of military construction projects each shipyard submits per year for infrastructure restoration and modernization, which sometimes leads to delays in requesting and completing projects. The Navy shipyards have processes to systematically identify safety and occupational health mishaps and hazards, and document their actions to resolve these issues, but do not have a method to document actions to address other infrastructure-related situations affecting the quality of life of their workforce. The shipyards used interim fixes to partly address identified safety and health hazards, and in some cases the fixes have led to quality-of-life issues for the workforce. Shipyard officials recognize that the issues exist and currently have restoration and modernization projects to address some safety, health, and quality-of-life issues. However, according to officials, projects primarily for safety, health, and quality-of-life improvement have to compete with projects to improve shipyard operations that may be more heavily weighted. Without capturing and tracking quality-of-life issues, the Navy lacks visibility over the magnitude of these issues as it weighs potential improvement initiatives against other priorities. GAO recommends that the Navy develop guidance to standardize shipyard strategic planning requirements, improve its process for developing shipyard restoration and modernization needs, and document resolution of identified quality-of-life issues. In written comments on a draft of the report, DOD concurred with GAO's recommendations.
- Review Pending
- Closed - implemented
- Closed - not implemented
Recommendations for Executive Action
Recommendation: To improve overall visibility of the Navy shipyards' restoration and modernization needs and quality-of-life issues, the Secretary of Defense should direct the Secretary of the Navy to submit documentation to the Office of the Deputy Under Secretary of Defense for Installations and Environment to update the replacement unit cost factor for dry docks so that plant replacement value calculations for dry docks, and subsequent restoration and modernization cost calculations, more accurately reflect the shipyards' unique infrastructure needs.
Agency Affected: Department of Defense
Comments: DOD concurred with this recommendation. The Navy had recently funded an effort to investigate the replacement unit cost factor (RCF) for dry-docks. The intent of the investigation is to ensure the quality of information of the specific inputs/components and ensure the RCF for dry docks is in-line with the rest of the DOD infrastructure. Also, the Navy is incorporating dry-docks into the condition assessment program to ensure they are accurately represented in data systems. As of September 2011, the Navy stated that in June 2011, the Commander Navy Installations Command initiated a review to update the replacement unit cost factor for drydocks. The study will examine worldwide drydock construction as well as historical Navy drydock construction and unique requirements of nuclear-capable drydocks. The draft report related to this effort is expected in November 2011. As of April 2012, the report on an updated Replacement Unit Cost has been received by the Commander, Navy Installations Command and is being analyzed. Based on the review, which is expected to be completed by June 1, 2012, the Navy will decide whether to recommend updating the Replacement Unit Cost in the DOD Facilities Pricing Guide (UFC3-701-01).
Recommendation: To improve overall visibility of the Navy shipyards' restoration and modernization needs and quality-of-life issues, the Secretary of Defense should direct the Secretary of the Navy to develop and document a method for systematically collecting and updating the Navy's configuration and condition information, including establishing measurable goals and time frames for updating its processes so that the data are complete and accurate.
Agency Affected: Department of Defense
Comments: DOD concurred with this recommendation. Through the Infrastructure Condition Assessment Program (ICAP), the Navy has a program in place to assess the condition of shipyard buildings and waterfront structures and have this information correctly reported in its relevant IT systems. The Navy plans a pilot assessment to be conducted at Portsmouth Naval Shipyard in FY2011. Additionally, Configuration will also be assessed and reported as necessary using the asset evaluation program. The Navy is working towards populating the missing Q-rating data in FY 2011. As of September 2011, the Navy stated that the Assessment Evaluation process generates the configuration rating. The Norfolk Naval Shipyard had an assessment update of property report cards, excluding the controlled industrial area, completed in 2010. Assessment of the CIA is underway and will be completed by the end of FY 2012's first quarter. The Navy has a contract to updated the Portsmouth Naval Shipyard's property report card, which will be completed in FY 2012, and updates for the Puget Sound and Pearl Harbor Naval Shipyards are awaiting funding. As of April 2012, the Navy provided copies of Naval Facilities Engineering Command's Business Management System processes 15.1 through 15.5, which describe when condition ratings should be updated, how to update them, how to interpret condition ratings, and how to use condition rating information to support project development. Upon completion of a condition assessment or asset evaluation, ratings are updated in the Internet Naval Facilities Assets Data Store (iNFADS), which feeds other relevant Navy and DOD IT systems.
Recommendation: To improve overall visibility of the Navy shipyards' restoration and modernization needs and quality-of-life issues, the Secretary of Defense should direct the Secretary of the Navy, in consultation with the Naval Sea Systems Command and the Navy Installations Command, to develop guidance that lays out the requirement for the shipyards to develop strategic plans that address their future restoration and modernization needs and that reflect the seven essential elements of a comprehensive strategic planning framework.
Agency Affected: Department of Defense
Comments: DOD concurred with this recommendation and added that while the Navy recognizes the importance of strategic planning in development of recapitalization requirements, those plans have to be at a Regional and Installation level taking into account all Navy Missions within current funding constraints. As of September 2011, NAVSEA is developing a corporate shipyard strategic infrastructure plan, which includes the 7 essential elements as identified by GAO and will address future restoration and modernization needs. As of April 2012, the FY 2012 National Defense Authorization Act modified 10 USC 2476, which changed shipyard investment parameters, and delayed updating the infrastructure plans to reflect the 7 essential elements of a strategic plan. The 2012 NDAA also required the Navy to submit a plan to address the facilities and infrastructure requirements at each public shipyard by September 1, 2012.
Recommendation: To improve overall visibility of the Navy shipyards' restoration and modernization needs and quality-of-life issues, the Secretary of Defense should direct the Secretary of the Navy to develop guidance for the shipyards to systematically collect information on and document corrective actions to prioritize and address identified quality-of-life issues.
Agency Affected: Department of Defense
Status: Closed - Implemented
Comments: DOD concurred with this recommendation. Navy configuration and condition ratings include an assessment of the impact of facilities on quality of life for the employees. These ratings are used in prioritization of facility investments.While we believe the Navy is making improvements in its configuration and condition ratings, these efforts could be enhanced by the Department developing a mechanism for systematically collecting information on the employees reported quality-of-life issues and documenting corrective action. As of March 2011, the Navy stated that its configuration and condition ratings include an assessment of the impact of facilities on the quality of life for the employees and are used in its process to prioritize its restoration and modernization projects.