Navy's Service Life Extension Program

GAO analyzed the Department of the Navy's cost study on the proposed service life extension work, and the relative advantages in awarding it either to the Philadelphia Naval Shipyard or Newport News Shipbuilding and Dry Dock Company, a private yard. The Navy is embarking on a service life extension program for four of its older carriers, with potential follow-on ships beyond the four. The initial question was whether this work should be done in the Philadelphia Naval Shipyard or in a private shipyard. The Navy considered splitting the work, but felt the advantages in learning curve and work force management clearly pointed to doing all four carriers in one yard over a specified period of time. GAO felt that the cost study should be adjusted in several areas, with a net effect of providing Newport News with a greater cost advantage than the Navy had shown. Private studies have indicated that it is cheaper to construct and overhaul ships in private yards. GAO recommended that in view of the sizeable cost differences, the Navy reevaluate its decision to award the carrier to Philadelphia.