prompt_front: You are given two reports by the government agency.



Question: Write a one-page summary of the report 1.

Report 1: This report presents background information and issues for Congress concerning the Navy's force structure and shipbuilding plans  The current and planned size and composition of the Navy, the rate of Navy ship procurement, and the prospective affordability of the Navy's shipbuilding plans have been oversight matters for the congressional defense committees for many years  The Navy's proposed FY2020 budget requests funding for the procurement of 12 new ships, including one Gerald R  Ford (CVN-78) class aircraft carrier, three Virginia-class attack submarines, three DDG-51 class Aegis destroyers, one FFG(X) frigate, two John Lewis (TAO-205) class oilers, and two TATS towing, salvage, and rescue ships  The issue for Congress is whether to approve, reject, or modify the Navy's proposed FY2020 shipbuilding program and the Navy's longer-term shipbuilding plans  Decisions that Congress makes on this issue can substantially affect Navy capabilities and funding requirements, and the U S  shipbuilding industrial base  Detailed coverage of certain individual Navy shipbuilding programs can be found in the following CRS reports: CRS Report R41129, Navy Columbia (SSBN-826) Class Ballistic Missile Submarine Program: Background and Issues for Congress , by Ronald O'Rourke  CRS Report RL32418, Navy Virginia (SSN-774) Class Attack Submarine Procurement: Background and Issues for Congress , by Ronald O'Rourke  CRS Report RS20643, Navy Ford (CVN-78) Class Aircraft Carrier Program: Background and Issues for Congress , by Ronald O'Rourke  (This report also covers the issue of the Administration's FY2020 budget proposal, which the Administration withdrew on April 30, to not fund a mid-life refueling overhaul [called a refueling complex overhaul, or RCOH] for the aircraft carrier Harry S  Truman [CVN-75], and to retire CVN-75 around FY2024 ) CRS Report RL32109, Navy DDG-51 and DDG-1000 Destroyer Programs: Background and Issues for Congress , by Ronald O'Rourke  CRS Report R44972, Navy Frigate (FFG[X]) Program: Background and Issues for Congress , by Ronald O'Rourke  CRS Report RL33741, Navy Littoral Combat Ship (LCS) Program: Background and Issues for Congress , by Ronald O'Rourke  CRS Report R43543, Navy LPD-17 Flight II Amphibious Ship Program: Background and Issues for Congress , by Ronald O'Rourke  (This report also covers the issue of funding for the procurement of an amphibious assault ship called LHA-9 ) CRS Report R43546, Navy John Lewis (TAO-205) Class Oiler Shipbuilding Program: Background and Issues for Congress , by Ronald O'Rourke  For a discussion of the strategic and budgetary context in which U S  Navy force structure and shipbuilding plans may be considered, see Appendix A   On December 15, 2016, the Navy released a force-structure goal that calls for achieving and maintaining a fleet of 355 ships of certain types and numbers  The 355-ship force-level goal replaced a 308-ship force-level goal that the Navy released in March 2015  The 355-ship force-level goal is the largest force-level goal that the Navy has released since a 375-ship force-level goal that was in place in 2002-2004  In the years between that 375-ship goal and the 355-ship goal, Navy force-level goals were generally in the low 300s (see Appendix B )  The force level of 355 ships is a goal to be attained in the future; the actual size of the Navy in recent years has generally been between 270 and 290 ships  Table 1 shows the composition of the 355-ship force-level objective  The 355-ship force-level goal is the result of a Force Structure Assessment (FSA) conducted by the Navy in 2016  An FSA is an analysis in which the Navy solicits inputs from U S  regional combatant commanders (CCDRs) regarding the types and amounts of Navy capabilities that CCDRs deem necessary for implementing the Navy's portion of the national military strategy and then translates those CCDR inputs into required numbers of ships, using current and projected Navy ship types  The analysis takes into account Navy capabilities for both warfighting and day-to-day forward-deployed presence  Although the result of the FSA is often reduced for convenience to single number (e g , 355 ships), FSAs take into account a number of factors, including types and capabilities of Navy ships, aircraft, unmanned vehicles, and weapons, as well as ship homeporting arrangements and operational cycles  The Navy conducts a new FSA or an update to the existing FSA every few years, as circumstances require, to determine its force-structure goal  Section 1025 of the FY2018 National Defense Authorization Act, or NDAA ( H R  2810 / P L  115-91 of December 12, 2017), states the following: SEC  1025  Policy of the United States on minimum number of battle force ships  (a) Policy —It shall be the policy of the United States to have available, as soon as practicable, not fewer than 355 battle force ships, comprised of the optimal mix of platforms, with funding subject to the availability of appropriations or other funds  (b) Battle force ships defined —In this section, the term "battle force ship" has the meaning given the term in Secretary of the Navy Instruction 5030 8C  The term battle force ships in the above provision refers to the ships that count toward the quoted size of the Navy in public policy discussions about the Navy  The Navy states that a new FSA is now underway as the successor to the 2016 FSA, and that this new FSA is to be completed by the end of 2019  The new FSA, Navy officials state, will take into account the Trump Administration's December 2017 National Security Strategy document and its January 2018 National Defense Strategy document, both of which put an emphasis on renewed great power competition with China and Russia, as well as updated information on Chinese and Russian naval and other military capabilities and recent developments in new technologies, including those related to unmanned vehicles (UVs)  Navy officials have suggested in their public remarks that this new FSA could change the 355-ship figure, the planned mix of ships, or both  Some observers, viewing statements by Navy officials, believe the new FSA in particular might shift the Navy's surface force to a more distributed architecture that includes a reduced proportion of large surface combatants (i e , cruisers and destroyers), an increased proportion of small surface combatants (i e , frigates and LCSs), and a newly created third tier of unmanned surface vehicles (USVs)  Some observers believe the new FSA might also change the Navy's undersea force to a more distributed architecture that includes, in addition to attack submarines (SSNs) and bottom-based sensors, a new element of extremely large unmanned underwater vehicles (XLUUVs), which might be thought of as unmanned submarines  In presenting its proposed FY2020 budget, the Navy highlighted its plans for developing and procuring USVs and UUVs in coming years  Shifting to a more distributed force architecture, Navy officials have suggested, could be appropriate for implementing the Navy's new overarching operational concept, called Distributed Maritime Operations (DMO)  Observers view DMO as a response to both China's improving maritime anti-access/area denial capabilities (which include advanced weapons for attacking Navy surface ships) and opportunities created by new technologies, including technologies for UVs and for networking Navy ships, aircraft, unmanned vehicles, and sensors into distributed battle networks  Figure 1 shows a Navy briefing slide depicting the Navy's potential new surface force architecture, with each sphere representing a manned ship or a USV  Consistent with Figure 1 , the Navy's 355-ship goal, reflecting the current force architecture, calls for a Navy with twice as many large surface combatants as small surface combatants  Figure 1 suggests that the potential new surface force architecture could lead to the obverse—a planned force mix that calls for twice as many small surface combatants than large surface combatants—along with a new third tier of numerous USVs  Observers believe the new FSA might additionally change the top-level metric used to express the Navy's force-level goal or the method used to count the size of the Navy, or both, to include large USVs and large UUVs  Table 2 shows the Navy's FY2020 five-year (FY2020-FY2024) shipbuilding plan  The table also shows, for reference purposes, the ships funded for procurement in FY2019  The figures in the table reflect a Navy decision to show the aircraft carrier CVN-81 as a ship to be procured in FY2020 rather than a ship that was procured in FY2019  Congress, as part of its action on the Navy's proposed FY2019 budget, authorized the procurement of CVN-81 in FY2019  As shown in Table 2 , the Navy's proposed FY2020 budget requests funding for the procurement of 12 new ships, including one Gerald R  Ford (CVN-78) class aircraft carrier, three Virginia-class attack submarines, three DDG-51 class Aegis destroyers, one FFG(X) frigate, two John Lewis (TAO-205) class oilers, and two TATS towing, salvage, and rescue ships  If the Navy had listed CVN-81 as a ship procured in FY2019 rather than a ship to be procured in FY2020, then the total numbers of ships in FY2019 and FY2020 would be 14 and 11, respectively  As also shown Table 2 , the Navy's FY2020 five-year (FY2020-FY2024) shipbuilding plan includes 55 new ships, or an average of 11 new ships per year  The Navy's FY2019 budget submission also included a total of 55 ships in the period FY2020-FY2024, but the mix of ships making up the total of 55 for these years has been changed under the FY2020 budget submission to include one additional attack submarine, one additional FFG(X) frigate, and two (rather than four) LPD-17 Flight II amphibious ships over the five-year period  The FY2020 submission also makes some changes within the five-year period to annual procurement quantities for DDG-51 destroyers, ESBs, and TAO-205s without changing the five-year totals for these programs  Compared to what was projected for FY2020 itself under the FY2019 budget submission, the FY2020 request accelerates from FY2023 to FY2020 the aircraft carrier CVN-81 (as a result of Congress's action to authorize the ship in FY2019), adds a third attack submarine, accelerates from FY2021 into FY2020 a third DDG-51, defers from FY2020 to FY2021 an LPD-17 Flight II amphibious ship to FY2021, defers from FY2020 to FY2023 an ESB ship, and accelerates from FY2021 to FY2020 a second TAO-205 class oiler  Table 3 shows the Navy's FY2020-FY2049 30-year shipbuilding plan  In devising a 30-year shipbuilding plan to move the Navy toward its ship force-structure goal, key assumptions and planning factors include but are not limited to ship construction times and service lives, estimated ship procurement costs, projected shipbuilding funding levels, and industrial-base considerations  As shown in Table 3 , the Navy's FY2020 30-year shipbuilding plan includes 304 new ships, or an average of about 10 per year  Table 4 shows the Navy's projection of ship force levels for FY2020-FY2049 that would result from implementing the FY2020 30-year (FY2020-FY2049) 30-year shipbuilding plan shown in Table 3   As shown in Table 4 , if the FY2020 30-year shipbuilding plan is implemented, the Navy projects that it will achieve a total of 355 ships by FY2034  This is about 20 years sooner than projected under the Navy's FY2019 30-year shipbuilding plan  This is not primarily because the FY2020 30-year plan includes more ships than did the FY2019 plan: The total of 304 ships in the FY2020 plan is only three ships higher than the total of 301 ships in the FY2019 plan  Instead, it is primarily due to a decision announced by the Navy in April 2018, after the FY2019 budget was submitted, to increase the service lives of all DDG-51 destroyers—both those existing and those to be built in the future—to 45 years  Prior to this decision, the Navy had planned to keep older DDG-51s (referred to as the Flight I/II DDG-51s) in service for 35 years and newer DDG-51s (the Flight II/III DDG-51s) for 40 years  Figure 2 shows the Navy's projections for the total number of ships in the Navy under the Navy's FY2019 and FY2020 budget submissions  As can be seen in the figure, the Navy projected under the FY2019 plan that the fleet would not reach a total of 355 ships any time during the 30-year period  The projected number of aircraft carriers in Table 4 , the projected total number of all ships in Table 4 , and the line showing the total number of ships under the Navy's FY2020 budget submission in Figure 2 all reflect the Navy's proposal, under its FY2020 budget submission, to not fund the mid-life nuclear refueling overhaul (called a refueling complex overhaul, or RCOH) of the aircraft carrier Harry S  Truman (CVN-75), and to instead retire CVN-75 around FY2024  On April 30, 2019, however, the Administration announced that it was withdrawing this proposal from the Navy's FY2020 budget submission  The Administration now supports funding the CVN-75 RCOH and keeping CVN-75 in service past FY2024  As a result of the withdrawal of its proposal regarding the CVN-75 RCOH, the projected number of aircraft carriers and consequently the projected total number of all ships are now one ship higher for the period FY2022-FY2047 than what is shown in Table 4 , and the line in Figure 2 would be adjusted upward by one ship for those years  (The figures in Table 4 are left unchanged from what is shown in the FY2020 budget submission so as to accurately reflect what is shown in that budget submission ) As shown in Table 4 , although the Navy projects that the fleet will reach a total of 355 ships in FY2034, the Navy in that year and subsequent years will not match the composition called for in the FY2016 FSA  Among other things, the Navy will have more than the required number of large surface combatants (i e , cruisers and destroyers) from FY2030 through FY2040 (a consequence of the decision to extend the service lives of DDG-51s to 45 years), fewer than the required number of aircraft carriers through the end of the 30-year period, fewer than the required number of attack submarines through FY2047, and fewer than the required number of amphibious ships through the end of the 30-year period  The Navy acknowledges that the mix of ships will not match that called for by the 2016 FSA but states that if the Navy is going to have too many ships of a certain kind, DDG-51s are not a bad type of ship to have too many of, because they are very capable multi-mission ships  One issue for Congress is whether the new FSA that the Navy is conducting will change the 355-ship force-level objective established by the 2016 FSA and, if so, in what ways  As discussed earlier, Navy officials have suggested in their public remarks that this new FSA could shift the Navy toward a more distributed force architecture, which could change the 355-ship figure, the planned mix of ships, or both  The issue for Congress is how to assess the appropriateness of the Navy's FY2020 shipbuilding plans when a key measuring stick for conducting that assessment—the Navy's force-level goal and planned force mix—might soon change  Another oversight issue for Congress concerns the prospective affordability of the Navy's 30-year shipbuilding plan  This issue has been a matter of oversight focus for several years, and particularly since the enactment in 2011 of the Budget Control Act, or BCA ( S  365 / P L  112-25 of August 2, 2011)  Observers have been particularly concerned about the plan's prospective affordability during the decade or so from the mid-2020s through the mid-2030s, when the plan calls for procuring Columbia-class ballistic missile submarines as well as replacements for large numbers of retiring attack submarines, cruisers, and destroyers  Figure 3 shows, in a graphic form, the Navy's estimate of the annual amounts of funding that would be needed to implement the Navy's FY2020 30-year shipbuilding plan  The figure shows that during the period from the mid-2020s through the mid-2030s, the Navy estimates that implementing the FY2020 30-year shipbuilding plan would require roughly $24 billion per year in shipbuilding funds  As discussed in the CRS report on the Columbia-class program, the Navy since 2013 has identified the Columbia-class program as its top program priority, meaning that it is the Navy's intention to fully fund this program, if necessary at the expense of other Navy programs, including other Navy shipbuilding programs  This led to concerns that in a situation of finite Navy shipbuilding budgets, funding requirements for the Columbia-class program could crowd out funding for procuring other types of Navy ships  These concerns in turn led to the creation by Congress of the National Sea-Based Deterrence Fund (NSBDF), a fund in the DOD budget that is intended in part to encourage policymakers to identify funding for the Columbia-class program from sources across the entire DOD budget rather than from inside the Navy's budget alone  Several years ago, when concerns arose about the potential impact of the Columbia-class program on funding available for other Navy shipbuilding programs, the Navy's shipbuilding budget was roughly $14 billion per year, and the roughly $7 billion per year that the Columbia-class program is projected to require from the mid-2020s to the mid-2030s (see Figure 3 ) represented roughly one-half of that total  With the Navy's shipbuilding budget having grown in more recent years to a total of roughly $24 billion per year, the $7 billion per year projected to be required by the Columbia-class program during those years does not loom proportionately as large as it once did in the Navy's shipbuilding budget picture  Even so, some concerns remain regarding the potential impact of the Columbia-class program on funding available for other Navy shipbuilding programs  If one or more Navy ship designs turn out to be more expensive to build than the Navy estimates, then the projected funding levels shown in Figure 3 would not be sufficient to procure all the ships shown in the 30-year shipbuilding plan  As detailed by CBO and GAO, lead ships in Navy shipbuilding programs in many cases have turned out to be more expensive to build than the Navy had estimated  Ship designs that can be viewed as posing a risk of being more expensive to build than the Navy estimates include Gerald R  Ford (CVN-78) class aircraft carriers, Columbia-class ballistic missile submarines, Virginia-class attack submarines equipped with the Virginia Payload Module (VPM), Flight III versions of the DDG-51 destroyer, FFG(X) frigates, LPD-17 Flight II amphibious ships, and John Lewis (TAO-205) class oilers, as well as other new classes of ships that the Navy wants to begin procuring years from now  The statute that requires the Navy to submit a 30-year shipbuilding plan each year (10 U S C  231) also requires CBO to submit its own independent analysis of the potential cost of the 30-year plan (10 U S C  231[d])  CBO is now preparing its estimate of the cost of the Navy's FY2020 30-year shipbuilding plan  In the meantime, Figure 4 shows, in a graphic form, CBO's estimate of the annual amounts of funding that would be needed to implement the Navy's FY2019 30-year shipbuilding plan  This figure might be compared to the Navy's estimate of its FY2020 30-year plan as shown in Figure 3 , although doing so poses some apples-vs -oranges issues, as the Navy's FY2019 and FY2020 30-year plans do not cover exactly the same 30-year periods, and for the years they do have in common, there are some differences in types and numbers of ships to be procured in certain years  CBO analyses of past Navy 30-year shipbuilding plans have generally estimated the cost of implementing those plans to be higher than what the Navy estimated  Consistent with that past pattern, as shown in Table 5 , CBO's estimate of the cost to implement the Navy's FY2019 30-year (FY2019-FY2048) shipbuilding plan is about 27% higher than the Navy's estimated cost for the FY2019 plan  ( Table 5 does not pose an apples-vs -oranges issue, because both the Navy and CBO estimates in this table are for the Navy's FY2019 30-year plan ) More specifically, as shown in the table, CBO estimated that the cost of the first 10 years of the FY2019 30-year plan would be about 2% higher than the Navy's estimate; that the cost of the middle 10 years of the plan would be about 13% higher than the Navy's estimate; and that the cost of the final 10 years of the plan would be about 27% higher than the Navy's estimate  The growing divergence between CBO's estimate and the Navy's estimate as one moves from the first 10 years of the 30-year plan to the final 10 years of the plan is due in part to a technical difference between CBO and the Navy regarding the treatment of inflation  This difference compounds over time, making it increasingly important as a factor in the difference between CBO's estimates and the Navy's estimates the further one goes into the 30-year period  In other words, other things held equal, this factor tends to push the CBO and Navy estimates further apart as one proceeds from the earlier years of the plan to the later years of the plan  The growing divergence between CBO's estimate and the Navy's estimate as one moves from the first 10 years of the 30-year plan to the final 10 years of the plan is also due to differences between CBO and the Navy about the costs of certain ship classes, particularly classes that are projected to be procured starting years from now  The designs of these future ship classes are not yet determined, creating more potential for CBO and the Navy to come to differing conclusions regarding their potential cost  For the FY2019 30-year plan, the largest source of difference between CBO and the Navy regarding the costs of individual ship classes was a new class of SSNs that the Navy wants to begin procuring in FY2034 as the successor to the Virginia-class SSN design  This new class of SSN, CBO says, accounted for 42% of the difference between the CBO and Navy estimates for the FY2019 30-year plan, in part because there were a substantial number of these SSNs in the plan, and because those ships occur in the latter years of the plan, where the effects of the technical difference between CBO and the Navy regarding the treatment of inflation show more strongly  The second-largest source of difference between CBO and the Navy regarding the costs of individual ship classes was a new class of large surface combatant (i e , cruiser or destroyer) that the Navy wants to begin procuring in the future, which accounted for 20% of the difference, for reasons that are similar to those mentioned above for the new class of SSNs  The third-largest source of difference was the new class of frigates (FFG[X]s) that the Navy wants to begin procuring in FY2020, which accounts for 9% of the difference  The remaining 29% of difference between the CBO and Navy estimates was accounted for collectively by several other shipbuilding programs, each of which individually accounts for between 1% and 4% of the difference  The Columbia-class program, which accounted for 4%, is one of the programs in this final group  Detailed coverage of legislative activity on certain Navy shipbuilding programs (including funding levels, legislative provisions, and report language) can be found in the following CRS reports: CRS Report R41129, Navy Columbia (SSBN-826) Class Ballistic Missile Submarine Program: Background and Issues for Congress , by Ronald O'Rourke  CRS Report RL32418, Navy Virginia (SSN-774) Class Attack Submarine Procurement: Background and Issues for Congress , by Ronald O'Rourke  CRS Report RS20643, Navy Ford (CVN-78) Class Aircraft Carrier Program: Background and Issues for Congress , by Ronald O'Rourke  (This report also covers the issue of the Administration's FY2020 budget proposal, which the Administration withdrew on April 30, to not fund a mid-life refueling overhaul [called a refueling complex overhaul, or RCOH] for the aircraft carrier Harry S  Truman [CVN-75], and to retire CVN-75 around FY2024 ) CRS Report RL32109, Navy DDG-51 and DDG-1000 Destroyer Programs: Background and Issues for Congress , by Ronald O'Rourke  CRS Report R44972, Navy Frigate (FFG[X]) Program: Background and Issues for Congress , by Ronald O'Rourke  CRS Report RL33741, Navy Littoral Combat Ship (LCS) Program: Background and Issues for Congress , by Ronald O'Rourke  CRS Report R43543, Navy LPD-17 Flight II Amphibious Ship Program: Background and Issues for Congress , by Ronald O'Rourke  (This report also covers the issue of funding for the procurement of an amphibious assault ship called LHA-9 ) CRS Report R43546, Navy John Lewis (TAO-205) Class Oiler Shipbuilding Program: Background and Issues for Congress , by Ronald O'Rourke  Legislative activity on individual Navy shipbuilding programs that are not covered in detail in the above reports is covered below  The Navy's proposed FY2020 budget requests funding for the procurement of 12 new ships: 1 Gerald R  Ford (CVN-78) class aircraft carrier; 3 Virginia-class attack submarines; 3 DDG-51 class Aegis destroyers; 1 FFG(X) frigate; 2 John Lewis (TAO-205) class oilers; and 2 TATS towing, salvage, and rescue ships  As noted earlier, the above list of 12 ships reflects a Navy decision to show the aircraft carrier CVN-81 as a ship to be procured in FY2020 rather than a ship that was procured in FY2019  Congress, as part of its action on the Navy's proposed FY2019 budget, authorized the procurement of CVN-81 in FY2019  The Navy's proposed FY2020 shipbuilding budget also requests funding for ships that have been procured in prior fiscal years, and ships that are to be procured in future fiscal years, as well as funding for activities other than the building of new Navy ships  Table 6 summarizes congressional action on the Navy's FY2020 funding request for Navy shipbuilding  The table shows the amounts requested and congressional changes to those requested amounts  A blank cell in a filled-in column showing congressional changes to requested amounts indicates no change from the requested amount  Appendix A  Strategic and Budgetary Context This appendix presents some brief comments on elements of the strategic and budgetary context in which U S  Navy force structure and shipbuilding plans may be considered  Shift in International Security Environment World events have led some observers, starting in late 2013, to conclude that the international security environment has undergone a shift over the past several years from the familiar post-Cold War era of the past 20-25 years, also sometimes known as the unipolar moment (with the United States as the unipolar power), to a new and different strategic situation that features, among other things, renewed great power competition with China and Russia, and challenges to elements of the U S -led international order that has operated since World War II  This situation is discussed further in another CRS report  World Geography and U S  Grand Strategy Discussion of the above-mentioned shift in the international security environment has led to a renewed emphasis in discussions of U S  security and foreign policy on grand strategy and geopolitics  From a U S  perspective on grand strategy and geopolitics, it can be noted that most of the world's people, resources, and economic activity are located not in the Western Hemisphere, but in the other hemisphere, particularly Eurasia  In response to this basic feature of world geography, U S  policymakers for the past several decades have chosen to pursue, as a key element of U S  national strategy, a goal of preventing the emergence of a regional hegemon in one part of Eurasia or another, on the grounds that such a hegemon could represent a concentration of power strong enough to threaten core U S  interests by, for example, denying the United States access to some of the other hemisphere's resources and economic activity  Although U S  policymakers have not often stated this key national strategic goal explicitly in public, U S  military (and diplomatic) operations in recent decades—both wartime operations and day-to-day operations—can be viewed as having been carried out in no small part in support of this key goal  U S  Grand Strategy and U S  Naval Forces As noted above, in response to basic world geography, U S  policymakers for the past several decades have chosen to pursue, as a key element of U S  national strategy, a goal of preventing the emergence of a regional hegemon in one part of Eurasia or another  The traditional U S  goal of preventing the emergence of a regional hegemon in one part of Eurasia or another has been a major reason why the U S  military is structured with force elements that enable it to cross broad expanses of ocean and air space and then conduct sustained, large-scale military operations upon arrival  Force elements associated with this goal include, among other things, an Air Force with significant numbers of long-range bombers, long-range surveillance aircraft, long-range airlift aircraft, and aerial refueling tankers, and a Navy with significant numbers of aircraft carriers, nuclear-powered attack submarines, large surface combatants, large amphibious ships, and underway replenishment ships  The United States is the only country in the world that has designed its military to cross broad expanses of ocean and air space and then conduct sustained, large-scale military operations upon arrival  The other countries in the Western Hemisphere do not design their forces to do this because they cannot afford to, and because the United States has been, in effect, doing it for them  Countries in the other hemisphere do not design their forces to do this for the very basic reason that they are already in the other hemisphere, and consequently instead spend their defense money on forces that are tailored largely for influencing events in their own local region  The fact that the United States has designed its military to do something that other countries do not design their forces to do—cross broad expanses of ocean and air space and then conduct sustained, large-scale military operations upon arrival—can be important to keep in mind when comparing the U S  military to the militaries of other nations  For example, in observing that the U S  Navy has 11 aircraft carriers while other countries have no more than one or two, it can be noted other countries do not need a significant number of aircraft carriers because, unlike the United States, they are not designing their forces to cross broad expanses of ocean and air space and then conduct sustained, large-scale military operations upon arrival  As another example, it is sometimes noted, in assessing the adequacy of U S  naval forces, that U S  naval forces are equal in tonnage to the next dozen or more navies combined, and that most of those next dozen or more navies are the navies of U S  allies  Those other fleets, however, are mostly of Eurasian countries, which do not design their forces to cross to the other side of the world and then conduct sustained, large-scale military operations upon arrival  The fact that the U S  Navy is much bigger than allied navies does not necessarily prove that U S  naval forces are either sufficient or excessive; it simply reflects the differing and generally more limited needs that U S  allies have for naval forces  (It might also reflect an underinvestment by some of those allies to meet even their more limited naval needs ) Countries have differing needs for naval and other military forces  The United States, as a country located in the Western Hemisphere that has adopted a goal of preventing the emergence of a regional hegemon in one part of Eurasia or another, has defined a need for naval and other military forces that is quite different from the needs of allies that are located in Eurasia  The sufficiency of U S  naval and other military forces consequently is best assessed not through comparison to the militaries of other countries, but against U S  strategic goals  More generally, from a geopolitical perspective, it can be noted that that U S  naval forces, while not inexpensive, give the United States the ability to convert the world's oceans—a global commons that covers more than two-thirds of the planet's surface—into a medium of maneuver and operations for projecting U S  power ashore and otherwise defending U S  interests around the world  The ability to use the world's oceans in this manner—and to deny other countries the use of the world's oceans for taking actions against U S  interests—constitutes an immense asymmetric advantage for the United States  This point would be less important if less of the world were covered by water, or if the oceans were carved into territorial blocks, like the land  Most of the world, however, is covered by water, and most of those waters are international waters, where naval forces can operate freely  The point, consequently, is not that U S  naval forces are intrinsically special or privileged—it is that they have a certain value simply as a consequence of the physical and legal organization of the planet  Uncertainty Regarding Future U S  Role in the World The overall U S  role in the world since the end of World War II in 1945 (i e , over the past 70 years) is generally described as one of global leadership and significant engagement in international affairs  A key aim of that role has been to promote and defend the open international order that the United States, with the support of its allies, created in the years after World War II  In addition to promoting and defending the open international order, the overall U S  role is generally described as having been one of promoting freedom, democracy, and human rights, while criticizing and resisting authoritarianism where possible, and opposing the emergence of regional hegemons in Eurasia or a spheres-of-influence world  Certain statements and actions from the Trump Administration have led to uncertainty about the Administration's intentions regarding the U S  role in the world  Based on those statements and actions, some observers have speculated that the Trump Administration may want to change the U S  role in one or more ways  A change in the overall U S  role could have profound implications for DOD strategy, budgets, plans, and programs, including the planned size and structure of the Navy  Declining U S  Technological and Qualitative Edge DOD officials have expressed concern that the technological and qualitative edge that U S  military forces have had relative to the military forces of other countries is being narrowed by improving military capabilities in other countries  China's improving military capabilities are a primary contributor to that concern  Russia's rejuvenated military capabilities are an additional contributor  DOD in recent years has taken a number of actions to arrest and reverse the decline in the U S  technological and qualitative edge  Challenge to U S  Sea Control and U S  Position in Western Pacific Observers of Chinese and U S  military forces view China's improving naval capabilities as posing a potential challenge in the Western Pacific to the U S  Navy's ability to achieve and maintain control of blue-water ocean areas in wartime—the first such challenge the U S  Navy has faced since the end of the Cold War  More broadly, these observers view China's naval capabilities as a key element of an emerging broader Chinese military challenge to the long-standing status of the United States as the leading military power in the Western Pacific  Longer Ship Deployments U S  Navy officials have testified that fully meeting requests from U S  regional combatant commanders (CCDRs) for forward-deployed U S  naval forces would require a Navy much larger than today's fleet  For example, Navy officials testified in March 2014 that a Navy of 450 ships would be required to fully meet CCDR requests for forward-deployed Navy forces  CCDR requests for forward-deployed U S  Navy forces are adjudicated by DOD through a process called the Global Force Management Allocation Plan  The process essentially makes choices about how best to apportion a finite number forward-deployed U S  Navy ships among competing CCDR requests for those ships  Even with this process, the Navy has lengthened the deployments of some ships in an attempt to meet policymaker demands for forward-deployed U S  Navy ships  Although Navy officials are aiming to limit ship deployments to seven months, Navy ships in recent years have frequently been deployed for periods of eight months or more  Limits on Defense Spending in Budget Control Act of 2011 as Amended Limits on the "base" portion of the U S  defense budget established by Budget Control Act of 2011, or BCA ( S  365 / P L  112-25 of August 2, 2011), as amended, combined with some of the considerations above, have led to discussions among observers about how to balance competing demands for finite U S  defense funds, and about whether programs for responding to China's military modernization effort can be adequately funded while also adequately funding other defense-spending priorities, such as initiatives for responding to Russia's actions in Ukraine and elsewhere in Europe and U S  operations for countering the Islamic State organization in the Middle East  Appendix B  Earlier Navy Force-Structure Goals Dating Back to 2001 The table below shows earlier Navy force-structure goals dating back to 2001  The 308-ship force-level goal of March 2015, shown in the first column of the table, is the goal that was replaced by the 355-ship force-level goal released in December 2016  Appendix C  Comparing Past Ship Force Levels to Current or Potential Future Ship Force Levels In assessing the appropriateness of the current or potential future number of ships in the Navy, observers sometimes compare that number to historical figures for total Navy fleet size  Historical figures for total fleet size, however, can be a problematic yardstick for assessing the appropriateness of the current or potential future number of ships in the Navy, particularly if the historical figures are more than a few years old, because the missions to be performed by the Navy, the mix of ships that make up the Navy, and the technologies that are available to Navy ships for performing missions all change over time; and the number of ships in the fleet in an earlier year might itself have been inappropriate (i e , not enough or more than enough) for meeting the Navy's mission requirements in that year  Regarding the first bullet point above, the Navy, for example, reached a late-Cold War peak of 568 battle force ships at the end of FY1987, and as of May 7, 2019, included a total of 289 battle force ships  The FY1987 fleet, however, was intended to meet a set of mission requirements that focused on countering Soviet naval forces at sea during a potential multitheater NATO-Warsaw Pact conflict, while the May 2019 fleet is intended to meet a considerably different set of mission requirements centered on influencing events ashore by countering both land- and sea-based military forces of China, Russia, North Korea, and Iran, as well as nonstate terrorist organizations  In addition, the Navy of FY1987 differed substantially from the May 2019 fleet in areas such as profusion of precision-guided air-delivered weapons, numbers of Tomahawk-capable ships, and the sophistication of C4ISR systems and networking capabilities  In coming years, Navy missions may shift again, and the capabilities of Navy ships will likely have changed further by that time due to developments such as more comprehensive implementation of networking technology, increased use of ship-based unmanned vehicles, and the potential fielding of new types of weapons such as lasers or electromagnetic rail guns  The 568-ship fleet of FY1987 may or may not have been capable of performing its stated missions; the 289-ship fleet of May 2019 may or may not be capable of performing its stated missions; and a fleet years from now with a certain number of ships may or may not be capable of performing its stated missions  Given changes over time in mission requirements, ship mixes, and technologies, however, these three issues are to a substantial degree independent of one another  For similar reasons, trends over time in the total number of ships in the Navy are not necessarily a reliable indicator of the direction of change in the fleet's ability to perform its stated missions  An increasing number of ships in the fleet might not necessarily mean that the fleet's ability to perform its stated missions is increasing, because the fleet's mission requirements might be increasing more rapidly than ship numbers and average ship capability  Similarly, a decreasing number of ships in the fleet might not necessarily mean that the fleet's ability to perform stated missions is decreasing, because the fleet's mission requirements might be declining more rapidly than numbers of ships, or because average ship capability and the percentage of time that ships are in deployed locations might be increasing quickly enough to more than offset reductions in total ship numbers  Regarding the second of the two bullet points above, it can be noted that comparisons of the size of the fleet today with the size of the fleet in earlier years rarely appear to consider whether the fleet was appropriately sized in those earlier years (and therefore potentially suitable as a yardstick of comparison), even though it is quite possible that the fleet in those earlier years might not have been appropriately sized, and even though there might have been differences of opinion among observers at that time regarding that question  Just as it might not be prudent for observers years from now to tacitly assume that the 286-ship Navy of September 2018 was appropriately sized for meeting the mission requirements of 2018, even though there were differences of opinion among observers on that question, simply because a figure of 286 ships appears in the historical records for 2016, so, too, might it not be prudent for observers today to tacitly assume that the number of ships of the Navy in an earlier year was appropriate for meeting the Navy's mission requirements that year, even though there might have been differences of opinion among observers at that time regarding that question, simply because the size of the Navy in that year appears in a table like Table H-1   Previous Navy force structure plans, such as those shown in Table B-1 , might provide some insight into the potential adequacy of a proposed new force-structure plan, but changes over time in mission requirements, technologies available to ships for performing missions, and other force-planning factors, as well as the possibility that earlier force-structure plans might not have been appropriate for meeting the mission demands of their times, suggest that some caution should be applied in using past force structure plans for this purpose, particularly if those past force structure plans are more than a few years old  The Reagan-era goal for a 600-ship Navy, for example, was designed for a Cold War set of missions focusing on countering Soviet naval forces at sea, which is not an appropriate basis for planning the Navy today, and there was considerable debate during those years as to the appropriateness of the 600-ship goal  Appendix D  Industrial Base Ability for, and Employment Impact of, Additional Shipbuilding Work This appendix presents background information on the ability of the industrial base to take on the additional shipbuilding work associated with achieving and maintaining the Navy's 355-ship force-level goal and on the employment impact of additional shipbuilding work  Industrial Base Ability The U S  shipbuilding industrial base has some unused capacity to take on increased Navy shipbuilding work, particularly for certain kinds of surface ships, and its capacity could be increased further over time to support higher Navy shipbuilding rates  Navy shipbuilding rates could not be increased steeply across the board overnight—time (and investment) would be needed to hire and train additional workers and increase production facilities at shipyards and supplier firms, particularly for supporting higher rates of submarine production  Depending on their specialties, newly hired workers could be initially less productive per unit of time worked than more experienced workers  Some parts of the shipbuilding industrial base, such as the submarine construction industrial base, could face more challenges than others in ramping up to the higher production rates required to build the various parts of the 355-ship fleet  Over a period of a few to several years, with investment and management attention, Navy shipbuilding could ramp up to higher rates for achieving a 355-ship fleet over a period of 20-30 years  An April 2017 CBO report stated that all seven shipyards [currently involved in building the Navy's major ships] would need to increase their workforces and several would need to make improvements to their infrastructure in order to build ships at a faster rate  However, certain sectors face greater obstacles in constructing ships at faster rates than others: Building more submarines to meet the goals of the 2016 force structure assessment would pose the greatest challenge to the shipbuilding industry  Increasing the number of aircraft carriers and surface combatants would pose a small to moderate challenge to builders of those vessels  Finally, building more amphibious ships and combat logistics and support ships would be the least problematic for the shipyards  The workforces across those yards would need to increase by about 40 percent over the next 5 to 10 years  Managing the growth and training of those new workforces while maintaining the current standard of quality and efficiency would represent the most significant industrywide challenge  In addition, industry and Navy sources indicate that as much as $4 billion would need to be invested in the physical infrastructure of the shipyards to achieve the higher production rates required under the [notional] 15-year and 20-year [buildup scenarios examined by CBO]  Less investment would be needed for the [notional] 25-year or 30-year [buildup scenarios examined by CBO]  A January 13, 2017, press report states the following: The Navy's production lines are hot and the work to prepare them for the possibility of building out a much larger fleet would be manageable, the service's head of acquisition said Thursday  From a logistics perspective, building the fleet from its current 274 ships to 355, as recommended in the Navy's newest force structure assessment in December, would be straightforward, Assistant Secretary of the Navy for Research, Development and Acquisition Sean Stackley told reporters at the Surface Navy Association's annual symposium  "By virtue of maintaining these hot production lines, frankly, over the last eight years, our facilities are in pretty good shape," Stackley said  "In fact, if you talked to industry, they would say we're underutilizing the facilities that we have " The areas where the Navy would likely have to adjust "tooling" to answer demand for a larger fleet would likely be in Virginia-class attack submarines and large surface combatants, the DDG-51 guided missile destroyers—two ship classes likely to surge if the Navy gets funding to build to 355 ships, he said  "Industry's going to have to go out and procure special tooling associated with going from current production rates to a higher rate, but I would say that's easily done," he said  Another key, Stackley said, is maintaining skilled workers—both the builders in the yards and the critical supply-chain vendors who provide major equipment needed for ship construction  And, he suggested, it would help to avoid budget cuts and other events that would force workforce layoffs  "We're already prepared to ramp up," he said  "In certain cases, that means not laying off the skilled workforce we want to retain " A January 17, 2017, press report states the following: Building stable designs with active production lines is central to the Navy's plan to grow to 355 ships  "if you look at the 355-ship number, and you study the ship classes (desired), the big surge is in attack submarines and large surface combatants, which today are DDG-51 (destroyers)," the Assistant Secretary of the Navy, Sean Stackley, told reporters at last week's Surface Navy Association conference  Those programs have proven themselves reliable performers both at sea and in the shipyards  From today's fleet of 274 ships, "we're on an irreversible path to 308 by 2021  Those ships are already in construction," said Stackley  "To go from there to 355, virtually all those ships are currently in production, with some exceptions: Ohio Replacement, (we) just got done the Milestone B there (to move from R&D into detailed design); and then upgrades to existing platforms  So we have hot production lines that will take us to that 355-ship Navy " A January 24, 2017, press report states the following: Navy officials say a recently determined plan to increase its fleet size by adding more new submarines, carriers and destroyers is "executable" and that early conceptual work toward this end is already underway     Although various benchmarks will need to be reached in order for this new plan to come to fruition, such as Congressional budget allocations, Navy officials do tell Scout Warrior that the service is already working—at least in concept—on plans to vastly enlarge the fleet  Findings from this study are expected to inform an upcoming 2018 Navy Shipbuilding Plan, service officials said  A January 12, 2017, press report states the following: Brian Cuccias, president of Ingalls Shipbuilding [a shipyard owned by Huntington Ingalls Industries (HII) that builds Navy destroyers and amphibious ships as well as Coast Guard cutters], said Ingalls, which is currently building 10 ships for four Navy and Coast Guard programs at its 800-acre facility in Pascagoula, Miss , could build more because it is using only 70 to 75 percent of its capacity  A March 2017 press report states the following: As the Navy calls for a larger fleet, shipbuilders are looking toward new contracts and ramping up their yards to full capacity     The Navy is confident that U S  shipbuilders will be able to meet an increased demand, said Ray Mabus, then-secretary of the Navy, during a speech at the Surface Navy Association's annual conference in Arlington, Virginia  They have the capacity to "get there because of the ships we are building today," Mabus said  "I don't think we could have seven years ago " Shipbuilders around the United States have "hot" production lines and are manufacturing vessels on multi-year or block buy contracts, he added  The yards have made investments in infrastructure and in the training of their workers  "We now have the basis     [to] get to that much larger fleet," he said     Shipbuilders have said they are prepared for more work  At Ingalls Shipbuilding—a subsidiary of Huntington Ingalls Industries—10 ships are under construction at its Pascagoula, Mississippi, yard, but it is under capacity, said Brian Cuccias, the company's president  The shipbuilder is currently constructing five guided-missile destroyers, the latest San Antonio-class amphibious transport dock ship, and two national security cutters for the Coast Guard  "Ingalls is a very successful production line right now, but it has the ability to actually produce a lot more in the future," he said during a briefing with reporters in January  The company's facility is currently operating at 75 percent capacity, he noted     Austal USA—the builder of the Independence-variant of the littoral combat ship and the expeditionary fast transport vessel—is also ready to increase its capacity should the Navy require it, said Craig Perciavalle, the company's president  The latest discussions are "certainly something that a shipbuilder wants to hear," he said  "We do have the capability of increasing throughput if the need and demand were to arise, and then we also have the ability with the present workforce and facility to meet a different mix that could arise as well " Austal could build fewer expeditionary fast transport vessels and more littoral combat ships, or vice versa, he added  "The key thing for us is to keep the manufacturing lines hot and really leverage the momentum that we've gained on both of the programs," he said  The company—which has a 164-acre yard in Mobile, Alabama—is focused on the extension of the LCS and expeditionary fast transport ship program, but Perciavalle noted that it could look into manufacturing other types of vessels  "We do have excess capacity to even build smaller vessels … if that opportunity were to arise and we're pursuing that," he said  Bryan Clark, a naval analyst at the Center for Strategic and Budgetary Assessments, a Washington, D C -based think tank, said shipbuilders are on average running between 70 and 80 percent capacity  While they may be ready to meet an increased demand for ships, it would take time to ramp up their workforces  However, the bigger challenge is the supplier industrial base, he said  "Shipyards may be able to build ships but the supplier base that builds the pumps … and the radars and the radios and all those other things, they don't necessarily have that ability to ramp up," he said  "You would need to put some money into building up their capacity " That has to happen now, he added  Rear Adm  William Gallinis, program manager for program executive office ships, said what the Navy must be "mindful of is probably our vendor base that support the shipyards " Smaller companies that supply power electronics and switchboards could be challenged, he said  "Do we need to re-sequence some of the funding to provide some of the facility improvements for some of the vendors that may be challenged? My sense is that the industrial base will size to the demand signal  We just need to be mindful of how we transition to that increased demand signal," he said  The acquisition workforce may also see an increased amount of stress, Gallinis noted  "It takes a fair amount of experience and training to get a good contracting officer to the point to be [able to] manage contracts or procure contracts " "But I don't see anything that is insurmountable," he added  At a May 24, 2017, hearing before the Seapower subcommittee of the Senate Armed Services Committee on the industrial-base aspects of the Navy's 355-ship goal, John P  Casey, executive vice president–marine systems, General Dynamics Corporation (one of the country's two principal builders of Navy ships) stated the following: It is our belief that the Nation's shipbuilding industrial base can scale-up hot production lines for existing ships and mobilize additional resources to accomplish the significant challenge of achieving the 355-ship Navy as quickly as possible     Supporting a plan to achieve a 355-ship Navy will be the most challenging for the nuclear submarine enterprise  Much of the shipyard and industrial base capacity was eliminated following the steep drop-off in submarine production that occurred with the cancellation of the Seawolf Program in 1992  The entire submarine industrial base at all levels of the supply chain will likely need to recapitalize some portion of its facilities, workforce, and supply chain just to support the current plan to build the Columbia Class SSBN program, while concurrently building Virginia Class SSNs  Additional SSN procurement will require industry to expand its plans and associated investment beyond the level today     Shipyard labor resources include the skilled trades needed to fabricate, build and outfit major modules, perform assembly, test and launch of submarines, and associated support organizations that include planning, material procurement, inspection, quality assurance, and ship certification  Since there is no commercial equivalency for Naval nuclear submarine shipbuilding, these trade resources cannot be easily acquired in large numbers from other industries  Rather, these shipyard resources must be acquired and developed over time to ensure the unique knowledge and know-how associated with nuclear submarine shipbuilding is passed on to the next generation of shipbuilders  The mechanisms of knowledge transfer require sufficient lead time to create the proficient, skilled craftsmen in each key trade including welding, electrical, machining, shipfitting, pipe welding, painting, and carpentry, which are among the largest trades that would need to grow to support increased demand  These trades will need to be hired in the numbers required to support the increased workload  Both shipyards have scalable processes in place to acquire, train, and develop the skilled workforce they need to build nuclear ships  These processes and associated training facilities need to be expanded to support the increased demand  As with the shipyards, the same limiting factors associated with facilities, workforce, and supply chain also limit the submarine unique first tier suppliers and sub-tiers in the industrial base for which there is no commercial equivalency     The supply base is the third resource that will need to be expanded to meet the increased demand over the next 20 years  During the OHIO, 688 and SEAWOLF construction programs, there were over 17,000 suppliers supporting submarine construction programs  That resource base was "rationalized" during submarine low rate production over the last 20 years  The current submarine industrial base reflects about 5,000 suppliers, of which about 3,000 are currently active (i e , orders placed within the last 5 years), 80% of which are single or sole source (based on $)  It will take roughly 20 years to build the 12 Columbia Class submarines that starts construction in FY21  The shipyards are expanding strategic sourcing of appropriate non-core products (e g , decks, tanks, etc ) in order to focus on core work at each shipyard facility (e g , module outfitting and assembly)  Strategic sourcing will move demand into the supply base where capacity may exist or where it can be developed more easily  This approach could offer the potential for cost savings by competition or shifting work to lower cost work centers throughout the country  Each shipyard has a process to assess their current supply base capacity and capability and to determine where it would be most advantageous to perform work in the supply base     Achieving the increased rate of production and reducing the cost of submarines will require the Shipbuilders to rely on the supply base for more non-core products such as structural fabrication, sheet metal, machining, electrical, and standard parts  The supply base must be made ready to execute work with submarine-specific requirements at a rate and volume that they are not currently prepared to perform  Preparing the supply base to execute increased demand requires early non-recurring funding to support cross-program construction readiness and EOQ funding to procure material in a manner that does not hold up existing ship construction schedules should problems arise in supplier qualification programs  This requires longer lead times (estimates of three years to create a new qualified, critical supplier) than the current funding profile supports     We need to rely on market principles to allow suppliers, the shipyards and GFE material providers to sort through the complicated demand equation across the multiple ship programs  Supplier development funding previously mentioned would support non-recurring efforts which are needed to place increased orders for material in multiple market spaces  Examples would include valves, build-to-print fabrication work, commodities, specialty material, engineering components, etc  We are engaging our marine industry associations to help foster innovative approaches that could reduce costs and gain efficiency for this increased volume     Supporting the 355-ship Navy will require Industry to add capability and capacity across the entire Navy Shipbuilding value chain  Industry will need to make investment decisions for additional capital spend starting now in order to meet a step change in demand that would begin in FY19 or FY20  For the submarine enterprise, the step change was already envisioned and investment plans that embraced a growth trajectory were already being formulated  Increasing demand by adding additional submarines will require scaling facility and workforce development plans to operate at a higher rate of production  The nuclear shipyards would also look to increase material procurement proportionally to the increased demand  In some cases, the shipyard facilities may be constrained with existing capacity and may look to source additional work in the supply base where capacity exists or where there are competitive business advantages to be realized  Creating additional capacity in the supply base will require non-recurring investment in supplier qualification, facilities, capital equipment and workforce training and development  Industry is more likely to increase investment in new capability and capacity if there is certainty that the Navy will proceed with a stable shipbuilding plan  Positive signals of commitment from the Government must go beyond a published 30-year Navy Shipbuilding Plan and line items in the Future Years Defense Plan (FYDP) and should include: Multi-year contracting for Block procurement which provides stability in the industrial base and encourages investment in facilities and workforce development Funding for supplier development to support training, qualification, and facilitization efforts—Electric Boat and Newport News have recommended to the Navy funding of $400M over a three-year period starting in 2018 to support supplier development for the Submarine Industrial Base as part of an Integrated Enterprise Plan Extended Enterprise initiative Acceleration of Advance Procurement and/or Economic Order Quantities (EOQ) procurement from FY19 to FY18 for Virginia Block V Government incentives for construction readiness and facilities / special tooling for shipyard and supplier facilities, which help cash flow capital investment ahead of construction contract awards Procurement of additional production back-up (PBU) material to help ensure a ready supply of material to mitigate construction schedule risk     So far, this testimony has focused on the Submarine Industrial Base, but the General Dynamics Marine Systems portfolio also includes surface ship construction  Unlike Electric Boat, Bath Iron Works and NASSCO are able to support increased demand without a significant increase in resources      Bath Iron Works is well positioned to support the Administration's announced goal of increasing the size of the Navy fleet to 355 ships  For BIW that would mean increasing the total current procurement rate of two DDG 51s per year to as many as four DDGs per year, allocated equally between BIW and HII  This is the same rate that the surface combatant industrial base sustained over the first decade of full rate production of the DDG 51 Class (1989-1999)     No significant capital investment in new facilities is required to accommodate delivering two DDGs per year  However, additional funding will be required to train future shipbuilders and maintain equipment  Current hiring and training processes support the projected need, and have proven to be successful in the recent past  BIW has invested significantly in its training programs since 2014 with the restart of the DDG 51 program and given these investments and the current market in Maine, there is little concern of meeting the increase in resources required under the projected plans  A predictable and sustainable Navy workload is essential to justify expanding hiring/training programs  BIW would need the Navy's commitment that the Navy's plan will not change before it would proceed with additional hiring and training to support increased production  BIW's supply chain is prepared to support a procurement rate increase of up to four DDG 51s per year for the DDG 51 Program  BIW has long-term purchasing agreements in place for all major equipment and material for the DDG 51 Program  These agreements provide for material lead time and pricing, and are not constrained by the number of ships ordered in a year  BIW confirmed with all of its critical suppliers that they can support this increased procurement rate     The Navy's Force Structure Assessment calls for three additional ESBs  Additionally, NASSCO has been asked by the Navy and the Congressional Budget Office (CBO) to evaluate its ability to increase the production rate of T-AOs to two ships per year  NASSCO has the capacity to build three more ESBs at a rate of one ship per year while building two T-AOs per year  The most cost effective funding profile requires funding ESB 6 in FY18 and the following ships in subsequent fiscal years to avoid increased cost resulting from a break in the production line  The most cost effective funding profile to enable a production rate of two T-AO ships per year requires funding an additional long lead time equipment set beginning in FY19 and an additional ship each year beginning in FY20  NASSCO must now reduce its employment levels due to completion of a series of commercial programs which resulted in the delivery of six ships in 2016  The proposed increase in Navy shipbuilding stabilizes NASSCO's workload and workforce to levels that were readily demonstrated over the last several years  Some moderate investment in the NASSCO shipyard will be needed to reach this level of production  The recent CBO report on the costs of building a 355-ship Navy accurately summarized NASSCO's ability to reach the above production rate stating, "building more … combat logistics and support ships would be the least problematic for the shipyards " At the same hearing, Brian Cuccias, president, Ingalls Shipbuilding, Huntington Ingalls Industries (the country's other principal builder of Navy ships) stated the following: Qualifying to be a supplier is a difficult process  Depending on the commodity, it may take up to 36 months  That is a big burden on some of these small businesses  This is why creating sufficient volume and exercising early contractual authorization and advance procurement funding is necessary to grow the supplier base, and not just for traditional long-lead time components; that effort needs to expand to critical components and commodities that today are controlling the build rate of submarines and carriers alike  Many of our suppliers are small businesses and can only make decisions to invest in people, plant and tooling when they are awarded a purchase order  We need to consider how we can make commitments to suppliers early enough to ensure material readiness and availability when construction schedules demand it  With questions about the industry's ability to support an increase in shipbuilding, both Newport News and Ingalls have undertaken an extensive inventory of our suppliers and assessed their ability to ramp up their capacity  We have engaged many of our key suppliers to assess their ability to respond to an increase in production  The fortunes of related industries also impact our suppliers, and an increase in demand from the oil and gas industry may stretch our supply base  Although some low to moderate risk remains, I am convinced that our suppliers will be able to meet the forecasted Navy demand     I strongly believe that the fastest results can come from leveraging successful platforms on current hot production lines  We commend the Navy's decision in 2014 to use the existing LPD 17 hull form for the LX(R), which will replace the LSD-class amphibious dock landing ships scheduled to retire in the coming years  However, we also recommend that the concept of commonality be taken even further to best optimize efficiency, affordability and capability  Specifically, rather than continuing with a new design for LX(R) within the "walls" of the LPD hull, we can leverage our hot production line and supply chain and offer the Navy a variant of the existing LPD design that satisfies the aggressive cost targets of the LX(R) program while delivering more capability and survivability to the fleet at a significantly faster pace than the current program  As much as 10-15 percent material savings can be realized across the LX(R) program by purchasing respective blocks of at least five ships each under a multi-year procurement (MYP) approach  In the aggregate, continuing production with LPD 30 in FY18, coupled with successive MYP contracts for the balance of ships, may yield savings greater than $1 billion across an 11-ship LX(R) program  Additionally, we can deliver five LX(R)s to the Navy and Marine Corps in the same timeframe that the current plan would deliver two, helping to reduce the shortfall in amphibious warships against the stated force requirement of 38 ships  Multi-ship procurements, whether a formal MYP or a block-buy, are a proven way to reduce the price of ships  The Navy took advantage of these tools on both Virginia-class submarines and Arleigh Burke-class destroyers  In addition to the LX(R) program mentioned above, expanding multi-ship procurements to other ship classes makes sense     The most efficient approach to lower the cost of the Ford class and meet the goal of an increased CVN fleet size is also to employ a multi-ship procurement strategy and construct these ships at three-year intervals  This approach would maximize the material procurement savings benefit through economic order quantities procurement and provide labor efficiencies to enable rapid acquisition of a 12-ship CVN fleet  This three-ship approach would save at least $1 5 billion, not including additional savings that could be achieved from government-furnished equipment  As part of its Integrated Enterprise Plan, we commend the Navy's efforts to explore the prospect of material economic order quantity purchasing across carrier and submarine programs  At the same hearing, Matthew O  Paxton, president, Shipbuilders Council of America (SCA)—a trade association representing shipbuilders, suppliers, and associated firms—stated the following: To increase the Navy's Fleet to 355 ships, a substantial and sustained investment is required in both procurement and readiness  However, let me be clear: building and sustaining the larger required Fleet is achievable and our industry stands ready to help achieve that important national security objective  To meet the demand for increased vessel construction while sustaining the vessels we currently have will require U S  shipyards to expand their work forces and improve their infrastructure in varying degrees depending on ship type and ship mix – a requirement our Nation's shipyards are eager to meet  But first, in order to build these ships in as timely and affordable manner as possible, stable and robust funding is necessary to sustain those industrial capabilities which support Navy shipbuilding and ship maintenance and modernization     Beyond providing for the building of a 355-ship Navy, there must also be provision to fund the "tail," the maintenance of the current and new ships entering the fleet  Target fleet size cannot be reached if existing ships are not maintained to their full service lives, while building those new ships  Maintenance has been deferred in the last few years because of across-the-board budget cuts     The domestic shipyard industry certainly has the capability and know-how to build and maintain a 355-ship Navy  The Maritime Administration determined in a recent study on the Economic Benefits of the U S  Shipyard Industry that there are nearly 110,000 skilled men and women in the Nation's private shipyards building, repairing and maintaining America's military and commercial fleets 1 The report found the U S  shipbuilding industry supports nearly 400,000 jobs across the country and generates $25 1 billion in income and $37 3 billion worth of goods and services each year  In fact, the MARAD report found that the shipyard industry creates direct and induced employment in every State and Congressional District and each job in the private shipbuilding and repairing industry supports another 2 6 jobs nationally  This data confirms the significant economic impact of this manufacturing sector, but also that the skilled workforce and industrial base exists domestically to build these ships  Long-term, there needs to be a workforce expansion and some shipyards will need to reconfigure or expand production lines  This can and will be done as required to meet the need if adequate, stable budgets and procurement plans are established and sustained for the long-term  Funding predictability and sustainability will allow industry to invest in facilities and more effectively grow its skilled workforce  The development of that critical workforce will take time and a concerted effort in a partnership between industry and the federal government  U S  shipyards pride themselves on implementing state of the art training and apprenticeship programs to develop skilled men and women that can cut, weld, and bend steel and aluminum and who can design, build and maintain the best Navy in the world  However, the shipbuilding industry, like so many other manufacturing sectors, faces an aging workforce  Attracting and retaining the next generation shipyard worker for an industry career is critical  Working together with the Navy, and local and state resources, our association is committed to building a robust training and development pipeline for skilled shipyard workers  In addition to repealing sequestration and stabilizing funding the continued development of a skilled workforce also needs to be included in our national maritime strategy     In conclusion, the U S  shipyard industry is certainly up to the task of building a 355-ship Navy and has the expertise, the capability, the critical capacity and the unmatched skilled workforce to build these national assets  Meeting the Navy's goal of a 355-ship fleet and securing America's naval dominance for the decades ahead will require sustained investment by Congress and Navy's partnership with a defense industrial base that can further attract and retain a highly-skilled workforce with critical skill sets  Again, I would like to thank this Subcommittee for inviting me to testify alongside such distinguished witnesses  As a representative of our nation's private shipyards, I can say, with confidence and certainty, that our domestic shipyards and skilled workers are ready, willing and able to build and maintain the Navy's 355-ship Fleet  Employment Impact Building the additional ships that would be needed to achieve and maintain the 355-ship fleet could create many additional manufacturing and other jobs at shipyards, associated supplier firms, and elsewhere in the U S  economy  A 2015 Maritime Administration (MARAD) report states, Considering the indirect and induced impacts, each direct job in the shipbuilding and repairing industry is associated with another 2 6 jobs in other parts of the US economy; each dollar of direct labor income and GDP in the shipbuilding and repairing industry is associated with another $1 74 in labor income and $2 49 in GDP, respectively, in other parts of the US economy  A March 2017 press report states, "Based on a 2015 economic impact study, the Shipbuilders Council of America [a trade association for U S  shipbuilders and associated supplier firms] believes that a 355-ship Navy could add more than 50,000 jobs nationwide " The 2015 economic impact study referred to in that quote might be the 2015 MARAD study discussed in the previous paragraph  An estimate of more than 50,000 additional jobs nationwide might be viewed as a higher-end estimate; other estimates might be lower  A June 14, 2017, press report states the following: "The shipbuilding industry will need to add between 18,000 and 25,000 jobs to build to a 350-ship Navy, according to Matthew Paxton, president of the Shipbuilders Council of America, a trade association representing the shipbuilding industrial base  Including indirect jobs like suppliers, the ramp-up may require a boost of 50,000 workers " Appendix E  A Summary of Some Acquisition Lessons Learned for Navy Shipbuilding This appendix presents a general summary of lessons learned in Navy shipbuilding, reflecting comments made repeatedly by various sources over the years  These lessons learned include the following: At the outset, get the operational requirements for the program right  Properly identify the program's operational requirements at the outset  Manage risk by not trying to do too much in terms of the program's operational requirements, and perhaps seek a so-called 70%-to-80% solution (i e , a design that is intended to provide 70%-80% of desired or ideal capabilities)  Achieve a realistic balance up front between operational requirements, risks, and estimated costs  Impose cost discipline up front  Use realistic price estimates, and consider not only development and procurement costs, but life-cycle operation and support (O&S) costs  Employ competition where possible in the awarding of design and construction contracts  Use a contract type that is appropriate for the amount of risk involved , and structure its terms to align incentives with desired outcomes  Minimize design/construction concurrency by developing the design to a high level of completion before starting construction and by resisting changes in requirements (and consequent design changes) during construction  Properly supervise construction work  Maintain an adequate number of properly trained Supervisor of Shipbuilding (SUPSHIP) personnel  Provide stability for industry , in part by using, where possible, multiyear procurement (MYP) or block buy contracting  Maintain a capable government acquisition workforce that understands what it is buying, as well as the above points  Identifying these lessons is arguably not the hard part—most if not all these points have been cited for years  The hard part, arguably, is living up to them without letting circumstances lead program-execution efforts away from these guidelines  Appendix F  Some Considerations Relating to Warranties in Shipbuilding and Other Defense Acquisition This appendix presents some considerations relating to warranties in shipbuilding and other defense acquisition  In discussions of Navy (and also Coast Guard) shipbuilding, one question that sometimes arises is whether including a warranty in a shipbuilding contract is preferable to not including one  The question can arise, for example, in connection with a GAO finding that "the Navy structures shipbuilding contracts so that it pays shipbuilders to build ships as part of the construction process and then pays the same shipbuilders a second time to repair the ship when construction defects are discovered " Including a warranty in a shipbuilding contract (or a contract for building some other kind of defense end item), while potentially valuable, might not always be preferable to not including one—it depends on the circumstances of the acquisition, and it is not necessarily a valid criticism of an acquisition program to state that it is using a contract that does not include a warranty (or a weaker form of a warranty rather than a stronger one)  Including a warranty generally shifts to the contractor the risk of having to pay for fixing problems with earlier work  Although that in itself could be deemed desirable from the government's standpoint, a contractor negotiating a contract that will have a warranty will incorporate that risk into its price, and depending on how much the contractor might charge for doing that, it is possible that the government could wind up paying more in total for acquiring the item (including fixing problems with earlier work on that item) than it would have under a contract without a warranty  When a warranty is not included in the contract and the government pays later on to fix problems with earlier work, those payments can be very visible, which can invite critical comments from observers  But that does not mean that including a warranty in the contract somehow frees the government from paying to fix problems with earlier work  In a contract that includes a warranty, the government will indeed pay something to fix problems with earlier work—but it will make the payment in the less-visible (but still very real) form of the up-front charge for including the warranty, and that charge might be more than what it would have cost the government, under a contract without a warranty, to pay later on for fixing those problems  From a cost standpoint, including a warranty in the contract might or might not be preferable, depending on the risk that there will be problems with earlier work that need fixing, the potential cost of fixing such problems, and the cost of including the warranty in the contract  The point is that the goal of avoiding highly visible payments for fixing problems with earlier work and the goal of minimizing the cost to the government of fixing problems with earlier work are separate and different goals, and that pursuing the first goal can sometimes work against achieving the second goal  The Department of Defense's guide on the use of warranties states the following: Federal Acquisition Regulation (FAR) 46 7 states that "the use of warranties is not mandatory " However, if the benefits to be derived from the warranty are commensurate with the cost of the warranty, the CO [contracting officer] should consider placing it in the contract  In determining whether a warranty is appropriate for a specific acquisition, FAR Subpart 46 703 requires the CO to consider the nature and use of the supplies and services, the cost, the administration and enforcement, trade practices, and reduced requirements  The rationale for using a warranty should be documented in the contract file     In determining the value of a warranty, a CBA [cost-benefit analysis] is used to measure the life cycle costs of the system with and without the warranty  A CBA is required to determine if the warranty will be cost beneficial  CBA is an economic analysis, which basically compares the Life Cycle Costs (LCC) of the system with and without the warranty to determine if warranty coverage will improve the LCCs  In general, five key factors will drive the results of the CBA: cost of the warranty + cost of warranty administration + compatibility with total program efforts + cost of overlap with Contractor support + intangible savings  Effective warranties integrate reliability, maintainability, supportability, availability, and life-cycle costs  Decision factors that must be evaluated include the state of the weapon system technology, the size of the warranted population, the likelihood that field performance requirements can be achieved, and the warranty period of performance  Appendix G  Some Considerations Relating to Avoiding Procurement Cost Growth vs  Minimizing Procurement Costs This appendix presents some considerations relating to avoiding procurement cost growth vs  minimizing procurement costs in shipbuilding and other defense acquisition  The affordability challenge posed by the Navy's shipbuilding plans can reinforce the strong oversight focus on preventing or minimizing procurement cost growth in Navy shipbuilding programs, which is one expression of a strong oversight focus on preventing or minimizing cost growth in DOD acquisition programs in general  This oversight focus may reflect in part an assumption that avoiding or minimizing procurement cost growth is always synonymous with minimizing procurement cost  It is important to note, however, that as paradoxical as it may seem, avoiding or minimizing procurement cost growth is not always synonymous with minimizing procurement cost, and that a sustained, singular focus on avoiding or minimizing procurement cost growth might sometimes lead to higher procurement costs for the government  How could this be? Consider the example of a design for the lead ship of a new class of Navy ships  The construction cost of this new design is uncertain, but is estimated to be likely somewhere between Point A (a minimum possible figure) and Point D (a maximum possible figure)  (Point D, in other words, would represent a cost estimate with a 100% confidence factor, meaning there is a 100% chance that the cost would come in at or below that level ) If the Navy wanted to avoid cost growth on this ship, it could simply set the ship's procurement cost at Point D  Industry would likely be happy with this arrangement, and there likely would be no cost growth on the ship  The alternative strategy open to the Navy is to set the ship's target procurement cost at some figure between Points A and D—call it Point B—and then use that more challenging target cost to place pressure on industry to sharpen its pencils so as to find ways to produce the ship at that lower cost  (Navy officials sometimes refer to this as "pressurizing" industry ) In this example, it might turn out that industry efforts to reduce production costs are not successful enough to build the ship at the Point B cost  As a result, the ship experiences one or more rounds of procurement cost growth, and the ship's procurement cost rises over time from Point B to some higher figure—call it Point C  Here is the rub: Point C, in spite of incorporating one or more rounds of cost growth, might nevertheless turn out to be lower than Point D, because Point C reflected efforts by the shipbuilder to find ways to reduce production costs that the shipbuilder might have put less energy into pursuing if the Navy had simply set the ship's procurement cost initially at Point D  Setting the ship's cost at Point D, in other words, may eliminate the risk of cost growth on the ship, but does so at the expense of creating a risk of the government paying more for the ship than was actually necessary  DOD could avoid cost growth on new procurement programs starting tomorrow by simply setting costs for those programs at each program's equivalent of Point D  But as a result of this strategy, DOD could well wind up leaving money on the table in some instances—of not, in other words, minimizing procurement costs  DOD does not have to set a cost precisely at Point D to create a potential risk in this regard  A risk of leaving money on the table, for example, is a possible downside of requiring DOD to budget for its acquisition programs at something like an 80% confidence factor—an approach that some observers have recommended—because a cost at the 80% confidence factor is a cost that is likely fairly close to Point D  Procurement cost growth is often embarrassing for DOD and industry, and can damage their credibility in connection with future procurement efforts  Procurement cost growth can also disrupt congressional budgeting by requiring additional appropriations to pay for something Congress thought it had fully funded in a prior year  For this reason, there is a legitimate public policy value to pursuing a goal of having less rather than more procurement cost growth  Procurement cost growth, however, can sometimes be in part the result of DOD efforts to use lower initial cost targets as a means of pressuring industry to reduce production costs—efforts that, notwithstanding the cost growth, might be partially successful  A sustained, singular focus on avoiding or minimizing cost growth, and of punishing DOD for all instances of cost growth, could discourage DOD from using lower initial cost targets as a means of pressurizing industry, which could deprive DOD of a tool for controlling procurement costs  The point here is not to excuse away cost growth, because cost growth can occur in a program for reasons other than DOD's attempt to pressurize industry  Nor is the point to abandon the goal of seeking lower rather than higher procurement cost growth, because, as noted above, there is a legitimate public policy value in pursuing this goal  The point, rather, is to recognize that this goal is not always synonymous with minimizing procurement cost, and that a possibility of some amount of cost growth might be expected as part of an optimal government strategy for minimizing procurement cost  Recognizing that the goals of seeking lower rather than higher cost growth and of minimizing procurement cost can sometimes be in tension with one another can lead to an approach that takes both goals into consideration  In contrast, an approach that is instead characterized by a sustained, singular focus on avoiding and minimizing cost growth may appear virtuous, but in the end may wind up costing the government more  Appendix H  Size of the Navy and Navy Shipbuilding Rate Size of the Navy Table H-1 shows the size of the Navy in terms of total number of ships since FY1948; the numbers shown in the table reflect changes over time in the rules specifying which ships count toward the total  Differing counting rules result in differing totals, and for certain years, figures reflecting more than one set of counting rules are available  Figures in the table for FY1978 and subsequent years reflect the battle force ships counting method, which is the set of counting rules established in the early 1980s for public policy discussions of the size of the Navy  As shown in the table, the total number of battle force ships in the Navy reached a late-Cold War peak of 568 at the end of FY1987 and began declining thereafter  The Navy fell below 300 battle force ships in August 2003 and as of April 26, 2019, included 289 battle force ships  As discussed in Appendix C , historical figures for total fleet size might not be a reliable yardstick for assessing the appropriateness of proposals for the future size and structure of the Navy, particularly if the historical figures are more than a few years old, because the missions to be performed by the Navy, the mix of ships that make up the Navy, and the technologies that are available to Navy ships for performing missions all change over time, and because the number of ships in the fleet in an earlier year might itself have been inappropriate (i e , not enough or more than enough) for meeting the Navy's mission requirements in that year  For similar reasons, trends over time in the total number of ships in the Navy are not necessarily a reliable indicator of the direction of change in the fleet's ability to perform its stated missions  An increasing number of ships in the fleet might not necessarily mean that the fleet's ability to perform its stated missions is increasing, because the fleet's mission requirements might be increasing more rapidly than ship numbers and average ship capability  Similarly, a decreasing number of ships in the fleet might not necessarily mean that the fleet's ability to perform stated missions is decreasing, because the fleet's mission requirements might be declining more rapidly than numbers of ships, or because average ship capability and the percentage of time that ships are in deployed locations might be increasing quickly enough to more than offset reductions in total ship numbers  Shipbuilding Rate Table H-2 shows past (FY1982-FY2019) and requested or programmed (FY2020-FY2024) rates of Navy ship procurement 


Report 2: The Veterans Access, Choice, and Accountability Act of 2014 provided up to $10 billion in funding for veterans to obtain health care services from community providers through the Choice Program when veterans faced long wait times, lengthy travel distances, or other challenges accessing care at VA medical facilities  The temporary authority and funding for the Choice Program was separate from other previously existing programs through which VA has the option to purchase care from community providers  Legislation enacted in August and December of 2017 and June 2018 provided an additional $9 4 billion for the Veterans Choice Fund  Authority of the Choice Program will sunset on June 6, 2019  In October 2014, VA modified its existing contracts with two TPAs that were administering another VA community care program—the Patient- Centered Community Care program—to add certain administrative responsibilities associated with the Choice Program  For the Choice Program, each of the two TPAs—Health Net and TriWest—are responsible for managing networks of community providers who deliver care in a specific multi-state region  (See fig  1 ) Specifically, the TPAs are responsible for establishing networks of community providers, scheduling appointments with community providers for eligible veterans, and paying community providers for their services  Health Net’s contract for administering the Choice Program will end on September 30, 2018, whereas TriWest will continue to administer the Choice Program until the program ends, which is expected to occur in fiscal year 2019  VA’s TPAs process claims they receive from community providers for the care they deliver to veterans and pay providers for approved claims  Figure 2 provides an overview of the steps the TPAs follow for processing claims and paying community providers  VA’s contracts with the TPAs do not include a payment timeliness requirement applicable to the payments TPAs make to community providers  Instead, a contract modification effective in March 2016 established a non-enforceable “goal” of processing—approving, rejecting or denying—and, if approved, paying clean claims within 30 days of receipt  To be reimbursed for its payments to providers, the TPAs in turn submit electronic invoices—or requests for payment—to VA  TPAs generate an invoice for every claim they receive from community providers and pay  VA reviews the TPAs’ invoices and either approves or rejects them  Invoices may be rejected, for example, if care provided was not authorized  Approved invoices are paid, whereas rejected invoices are returned to the TPAs  The federal Prompt Payment Act requires VA to pay its TPAs within 30 days of receipt of invoices that it approves  The VA MISSION Act of 2018, among other things, requires VA to consolidate its community care programs once the Choice Program sunsets 1 year after the passage of the Act, authorizes VA to utilize a TPA for claims processing, and requires VA to reimburse community providers in a timely manner  Specifically, the act requires VA (or its TPAs) to pay community providers within 30 days of receipt for clean claims submitted electronically and within 45 days of receipt for clean claims submitted on paper  In December 2016, prior to enactment of the VA MISSION Act of 2018, VA issued an RFP for contractors to help administer the Veterans Community Care Program  The Veterans Community Care Program will be similar to the current Choice Program in certain respects  For example, VA is planning to award community care network contracts to TPAs, which would establish regional networks of community providers and process and pay those providers’ claims  However, unlike under the Choice Program, under the Veterans Community Care Program, VA is planning to have medical facilities—not the TPAs—generally be responsible for scheduling veterans’ appointments with community providers  From November 2014 through June 2018, VA’s TPAs paid a total of about 16 million clean claims—which are claims that contain all required data elements—under the Choice Program, of which TriWest paid about 9 6 million claims and Health Net paid about 6 4 million  Data on the median number of days VA’s TPAs have taken to pay clean claims each month show wide variation over the course of the Choice Program—from 7 days to 68 days  As discussed previously, in March 2016, VA established a non-enforceable goal for its TPAs to process and, if approved, pay clean claims within 30 days of receipt each month  Most recently, from January through June 2018, the median number of days taken to pay clean claims ranged from 26 to 28 days for TriWest, while it ranged from 28 to 44 days for Health Net  (See fig  3 ) In addition to the 16 million clean claims the TPAs paid from November 2014 through June 2018, during this time period they also paid approximately 650,000 claims (or 4 percent of all paid claims) that were classified as non-clean claims when first received after obtaining the required information  Non-clean claims are claims that are missing required information, which the TPA must obtain before the claim is paid  From November 2014 through June 2018, TriWest paid around 641,000 non-clean claims (or 6 percent of all paid claims) while Health Net paid about 9,600 non-clean claims (or less than 1 percent of all paid claims)  Data on the median number of days VA’s TPAs have taken to pay non- clean claims each month also show wide variation over the course of the Choice Program—from 9 days to 73 days  (See fig  4 ) The data on the time TPAs have taken to pay approved clean and non- clean claims do not fully account for the length of time taken to pay providers whose claims are initially rejected or denied, as, according to the TPAs, providers are generally required to submit a new claim when the original claim is rejected or denied  Thus, providers that submit claims that are rejected or denied may experience a longer wait for payment for those claims or may not be paid at all  In some cases, providers’ claims may be rejected or denied multiple times after resubmission  VA and its TPAs identified three key factors affecting the timeliness of claim payments to community providers under the Choice Program: (1) VA’s untimely payments of TPA invoices; (2) Choice Program contractual requirements related to provider reimbursement; and (3) inadequate provider education on filing Choice Program claims, as discussed below  VA’s untimely payments of TPA invoices  According to VA and TPA officials, VA made untimely invoice payments to its TPAs—that is, payments made more than 30 days from the date VA received the TPAs’ invoices—which resulted in the TPAs at times having insufficient funds available to pay community providers under the Choice Program  A VA Office of Inspector General (OIG) report estimated that from November 2014 through September 2016, 50 percent of VA’s payments to its TPAs during this time frame were untimely  VA officials stated that VA’s untimely payments to the TPAs resulted from limitations in its fee-basis claims system, which VA used at the beginning of the Choice Program to process all TPA invoices  In addition, the VA OIG found that VA underestimated the number of staff necessary to process Choice Program invoices in a timely manner  Choice Program reimbursement requirements  According to VA and TPA officials, three Choice Program requirements, some of which were more stringent than similar requirements in other federal health care programs, led to claim denials, which, in turn, contributed to the length of time TPAs have taken to pay community providers when the providers did not meet these requirements: 1  Medical documentation requirement  Prior to a March 2016 contract modification, VA required providers to submit relevant medical documentation with their claims as a condition of payment from the TPAs  According to TriWest officials, those Choice Program claims that did not include medical documentation were classified by TriWest as non-clean claims and placed in pending status until the documentation was received  When community providers did not provide the supporting medical documentation after a certain period of time, TriWest typically denied their claims  According to Health Net officials, Choice Program claims that did not include medical documentation were denied by Health Net  2  Timely filing requirement  VA requires providers to file Choice Program claims within 180 business days from the end of an episode of care  TPAs deny claims that are not filed within the required time frame  3  Authorization requirement  VA requires authorizations for community providers to serve veterans under the Choice Program and receive reimbursement for their services; however, if community providers deliver care after an authorization period or include services that are not authorized, the TPAs typically deny their claims  According to TPA data, denials related to authorizations are among the most common reasons the TPAs deny community provider claims  Inadequate provider education on filing Choice Program claims  According to VA and TPA officials as well as providers we interviewed, issues related to inadequate provider education may have contributed to the length of time it has taken the TPAs to pay community providers under the Choice Program  These issues have included providers submitting claims with errors, submitting claims to the wrong payer, or otherwise failing to meet Choice Program requirements  For example, some VA community care programs require the claims to be sent to one of VA’s claims processing locations, while the Choice Program requires claims to be sent to TriWest or Health Net  Claims sent to the wrong entity are rejected or denied and have to be resubmitted to the correct payer  Ten of the 15 providers we interviewed stated that that they lacked education and/or training on the claims filing process when they first began participating in the Choice Program, including knowing where to file claims and the documentation needed to file claims that would be processed successfully  Four of these 10 providers stated that they learned how to submit claims through trial and error  At the infancy of the Choice Program, November 2014 through March 2016, VA was unable to monitor the timeliness of its TPAs’ payments to community providers because it did not require the TPAs to provide data on the length of time taken to pay these claims  Effective in March 2016, VA modified its TPA contracts and subsequently began monitoring TPA payment timeliness, requiring TPAs to report information on claims processing and payment timeliness as well as information on claim rejections and denials  However, because VA had not established a payment timeliness requirement, VA officials said that VA had limited ability to penalize TPAs or compel them to take corrective actions to address untimely claim payments to community providers  Instead, the March 2016 contract modification established a non-enforceable goal for the TPAs to process and pay clean claims within 30 days of receipt  As of July 2018, according to VA officials, VA did not have a contractual requirement it could use to help ensure that community providers received timely payments in the Choice Program  Officials from VA’s Office of Community Care told us that VA’s experience with payment timeliness in the Choice Program informed VA’s RFP for new contracts for the Veterans Community Care Program, which includes provisions that strengthen VA’s ability to monitor its future TPAs  For example, in addition to requiring future TPAs to submit weekly reports on claim payment timeliness as well as claim rejections and denials, VA’s RFP includes claim payment timeliness standards that are similar to those in the Department of Defense’s TRICARE program  Specifically, according to the RFP, TPAs in the Veterans Community Care Program will be required to process and pay, if approved, 98 percent of clean claims within 30 return claims, other than clean claims, to the provider with a clear explanation of deficiencies within 30 days of original receipt, and process resubmitted claims within 30 days of resubmission receipt  The RFP also identifies monitoring techniques that VA may employ to assess compliance with these requirements, including periodic inspections and audits  VA officials told us that VA will develop a plan for monitoring the TPAs’ performance on these requirements once the contracts are awarded  We found that VA has made system and process changes that improved its ability to pay TPA invoices in a timely manner  However, while VA has modified two Choice Program requirements that contributed to provider claim payment delays, it has not fully addressed delays associated with authorizations for care  Furthermore, while VA and its TPAs have taken steps to educate community providers in order to help prevent claims processing issues, 9 of the 15 providers we interviewed reported poor customer service when attempting to resolve these issues  VA has taken steps to reduce untimely payments to its TPAs, which contributed to delayed TPA payments to providers, by implementing a new system and updating its processes for paying TPA invoices so that it can pay these invoices more quickly  Specifically, VA has made the following changes: In March 2016, VA negotiated a contract modification with both TPAs that facilitated the processing of certain TPA invoices outside of the fee basis claims system from March 2016 through July 2016  According to VA officials, due to the increasing volume of invoices that the TPAs were expecting to submit to VA during this time period, without this process change, VA would have experienced a high volume of TPA invoices entering its fee basis claims system, which could have exacerbated payment timeliness issues  In February through April 2017, VA transitioned all TPA invoice payments from its fee basis claims system to an expedited payment process under a new system called Plexis Claims Manager  VA officials told us that instead of re-adjudicating community provider claims as part of its review of TPA invoices, Plexis Claims Manager performed up front checks in order to pay invoices more quickly, and any differences in billed and paid amounts were addressed after payments were issued to the TPAs  In January 2018, VA transitioned to a newer version of the Plexis Claims Manager that enabled VA to once again re-adjudicate community provider claims as part of processing TPA invoices, but in a timelier manner compared with the fee basis claims system  According to VA officials, this is due to the automation of claims processing under Plexis Claims Manager, which significantly reduced the need for manual claims processing by VA staff that occurred under the fee basis claims system  Based on VA data, as of July 2018, VA is paying 92 percent of TriWest’s submitted invoices within 7 days, with payments being made in an average of 4 days, and 90 percent of Health Net’s invoices within 7 days, with payments being made in an average of 4 days under the newer version of Plexis Claims Manager  In addition to steps taken to address untimely payments to the TPAs under the current Choice Program contracts, VA has taken steps to help assure payment timeliness in the forthcoming Veterans Community Care Program  Specifically, the RFP includes a requirement for VA to reimburse TPAs within 14 days of receiving an invoice  VA officials stated that to achieve this metric, they are implementing a new payment system that will replace Plexis Claims Manager and will no longer re-adjudicate TPA invoices prior to payment  VA has issued a contract modification and waivers for two Choice Program contract requirements that contributed to provider payment delays—(1) the medical documentation requirement and (2) the timely filing requirement  However, while VA issued a contract modification to amend the requirements for obtaining authorizations for Choice Program care, provider payment delays associated with requesting these authorizations may persist, because VA is not ensuring that VA medical centers review and approve these requests within required time frames  Elimination of medical documentation requirement

ground_truth: The current and planned size and composition of the Navy, the rate of Navy ship procurement, and the prospective affordability of the Navy's shipbuilding plans have been oversight matters for the congressional defense committees for many years. On December 15, 2016, the Navy released a force-structure goal that calls for achieving and maintaining a fleet of 355 ships of certain types and numbers. The 355-ship force-level goal is the result of a Force Structure Assessment (FSA) conducted by the Navy in 2016. The Navy states that a new FSA is now underway as the successor to the 2016 FSA. This new FSA, Navy officials state, is to be completed by the end of 2019. Navy officials have suggested in their public remarks that this new FSA could change the 355-ship figure, the planned mix of ships, or both. The Navy's proposed FY2020 budget requests funding for the procurement of 12 new ships, including one Gerald R. Ford (CVN-78) class aircraft carrier, three Virginia-class attack submarines, three DDG-51 class Aegis destroyers, one FFG(X) frigate, two John Lewis (TAO-205) class oilers, and two TATS towing, salvage, and rescue ships. The Navy's FY2020 five-year (FY2020-FY2024) shipbuilding plan includes 55 new ships, or an average of 11 new ships per year. The Navy's FY2020 30-year (FY2020-FY2049) shipbuilding plan includes 304 ships, or an average of about 10 per year. If the FY2020 30-year shipbuilding plan is implemented, the Navy projects that it will achieve a total of 355 ships by FY2034. This is about 20 years sooner than projected under the Navy's FY2019 30-year shipbuilding plan—an acceleration primarily due to a decision announced by the Navy in April 2018, after the FY2019 plan was submitted, to increase the service lives of all DDG-51 destroyers to 45 years. Although the Navy projects that the fleet will reach a total of 355 ships in FY2034, the Navy in that year and subsequent years will not match the composition called for in the FY2016 FSA. One issue for Congress is whether the new FSA that the Navy is conducting will change the 355-ship force-level objective established by the 2016 FSA and, if so, in what ways. Another oversight issue for Congress concerns the prospective affordability of the Navy's 30-year shipbuilding plan. Decisions that Congress makes regarding Navy force structure and shipbuilding plans can substantially affect Navy capabilities and funding requirements and the U.S. shipbuilding industrial base.

prompt_front: You are given two reports by the government agency.



Question: Write a one-page summary of the report 2.



Report 2:  Effective beginning March 2016, VA issued a contract modification that eliminated the requirement that community providers must submit medical documentation as a condition of receiving payment for their claims  Data from one TPA showed a reduction in non-clean claims following the implementation of this contract modification  For example, starting in April 2016, after this modification was executed, almost 100 percent of claims submitted to TriWest were classified as clean claims, as opposed to 49 percent of claims submitted in March 2016  However, when the modification first went into effect in March 2016, TriWest and Health Net officials stated that they processed a large amount of claims from community providers that had previously been pended or denied because they lacked medical documentation and, in turn, submitted a large number of invoices to VA for reimbursement  As previously discussed, to help address the increased number of TPA invoices, VA issued lump-sum payments to the TPAs during this time period  Modification of timely filing requirement  In February and May 2018, VA issued waivers that gave TPAs the authority to allow providers to resubmit rejected or denied claims more than 180 days after the end of the episode of care if the original claims were submitted timely—that is, within 180 days of the end of the episode of care  VA officials stated that the waivers were intended to reduce the number of rejected and denied claims by giving community providers the ability to resubmit previously rejected or denied claims for which the date of service occurred more than 180 days ago  VA’s waivers were implemented as follows: In February 2018, VA issued a waiver that allowed community providers to resubmit certain claims rejected or denied for specific reasons when the provider or TPA could verify that the provider made an effort to submit the claim prior to the claims submission deadline  In May 2018, VA issued a second waiver that removed the 180 day timeliness requirement for all Choice Program claims  The waiver also provided instructions to the TPAs on informing providers that they may resubmit claims rejected or denied for specific reasons and how the TPAs are to process the resubmitted claims  In regards to the first waiver, TPA officials stated that the processing of those resubmitted claims adversely affected the timeliness of the TPAs’ payments to community providers because the waiver resulted in a large influx of older claims  As the second waiver was in the process of being implemented by the two TPAs at the time we conducted our work, we were unable to determine if the second waiver affected the TPAs’ provider payment timeliness  Changes to authorization of care requirement  VA issued a contract modification in January 2017 to expand the time period for which authorizations for community providers to provide care to veterans under the Choice Program are valid  In addition, in May 2017, VA expanded the scope of the services covered by authorizations, allowing them to encompass an overall course of treatment, rather than a specific service or set of services  According to VA officials, the changes VA made related to the authorization of care requirement were also intended to reduce the need for secondary authorization requests (SAR)  Community providers request SARs when veterans need health care services that exceed the period or scope of the original authorizations  Community providers are required to submit SARs to their TPA, which, in turn, submits the SARs to the authorizing VA medical facility for review and approval  Both Health Net and TriWest officials told us that since VA changed the time frame and scope of authorizations, the number of SARs has decreased  Despite efforts to decrease the number of SARs, payment delays or claim denials are likely to continue if SARs are needed  We found that VA is not ensuring that VA medical facilities are reviewing and approving SARs within required time frames  VA policy states that VA medical facilities are to review and make SAR approval decisions within 5 business days of receipt  However, officials from one of the TPAs and 7 of the 15 providers we interviewed stated that VA medical facilities are not reviewing and approving SARs in a timely manner  According to TriWest officials, as of May 2018, VA medical facilities in their regions were taking an average of 11 days to review and make approval decisions on SARs, with four facilities taking over 30 days for this process  According to an official from VA’s Office of Community Care, VA does not currently collect reliable national data to track the extent of nonadherence to the VA policy to review and make SAR approval decisions within 5 business days  The official told us that instead, VA relies on employees assigned to each Veterans Integrated Service Network to monitor data on VA medical facilities’ timeliness in making these SAR approval decisions  If a VA medical facility is found not to be in adherence with the SAR policy, the official told us that staff assigned to the Veterans Integrated Service Network attempt to identify the reasons for nonadherence, and perform certain corrective actions, including providing education to the facility  Despite these actions, the official told us that there are still VA medical facilities not in adherence with VA’s SAR approval policy  According to a VA official, VA is in the process of piloting software for managing authorizations that will allow VA to better track SAR approval time frames across VA medical facilities in the future  However, even after this planned software is implemented, if VA does not use the data to monitor and assess SAR approval decision time frames VA will be unable to ensure that all VA medical facilities are adhering to the policy  Standards for internal control in the Federal Government state that management should establish and operate monitoring activities to evaluate whether a specific function or process is operating effectively and take corrective actions as necessary  Furthermore, monitoring such data will allow VA to identify and take actions as needed to address any identified challenges VA medical facilities are encountering in meeting the required approval decision time frames  Without monitoring data to ensure that all VA medical facilities are adhering to the SAR approval time frames as outlined in VA policy, community providers may delay care until the SARs are approved or provide care without SAR approval  This in turn increases the likelihood that the community providers’ claims will be denied  Further, continued nonadherence to VA’s SAR policy raises concerns about VA’s ability to ensure timely approval of SARs when VA medical facilities assume more responsibilities for ensuring veterans’ access to care under the forthcoming Veterans Community Care Program  We found that VA and its TPAs have taken steps to educate community providers in order to help prevent claims processing issues that have contributed to the length of time TPAs have taken to pay these providers  Despite these efforts, 9 of the 15 providers we interviewed reported poor customer service when attempting to resolve claims payment issues  While VA’s contracts with the TPAs do not include requirements for educating and training providers on the Choice Program, both TPAs have taken steps to educate community providers on how to successfully submit claims under the Choice Program  Specifically, TriWest and Health Net officials told us that they have taken various steps to educate community providers on submitting claims correctly, including sending monthly newsletters, emails, and faxes to communicate changes to the Choice Program; updating their websites with claims processing information; and holding meetings with some providers monthly or quarterly to resolve claims processing issues  Officials from both TPAs also told us that they provided one-on-one training to some providers on the claims submission process to help reduce errors when submitting claims  In addition, VA’s RFP for the Veterans Community Care Program contracts includes requirements to provide an annual training program curriculum and an initial on-boarding and ongoing outreach and education program for community providers, which includes training on the claims submission and payment processes and TPA points of contact  VA and the TPAs have also made efforts to help providers resolve claims processing issues and outstanding payments  For example, VA launched its “top 20 provider initiative” in January 2018 to work directly with community providers with high dollar amounts of unpaid claims and resolve ongoing claims payment issues  This initiative included creating rapid response teams to work with community providers to settle unpaid claim balances within 90 days and working with both TPAs to increase the number of clean claims paid in less than 30 days  In addition, VA has developed webinars on VA’s community care programs and—in conjunction with trade organizations and health care systems—has delivered provider education on filing claims properly  TriWest officials stated that it has educated the customer service staff at its claims processing sub-contractor, who field community provider calls regarding claims processing issues, to help ensure that the staff are familiar with Choice Program changes and can effectively assist community providers and resolve claims processing issues  Internal TriWest data show that providers’ average wait time to speak to a customer service representative about claims processing issues decreased from as high as 18 minutes in 2016 to as low as 2 5 minutes in 2018  Health Net officials were unable to provide data, but stated that since the fourth quarter of 2017, Health Net has decreased the time it takes for a community provider to speak with a customer service representative by adding additional staff and extending the hours in which providers can call with questions  In addition, Health Net officials stated that they have required customer service staff to undergo additional training related to resolving claims processing issues  Despite these efforts, 7 of the 10 providers that participate in the Health Net network and 2 of the 7 providers that participate in the TriWest network we interviewed between April and June 2018 told us that when they contact the TPAs’ customer service staff to address claim processing questions, such as how to resolve claim rejections or denials, they experience lengthy hold times, sometimes exceeding one hour  In addition, 7 of the 15 providers we spoke with told us they typically reach employees who are unable to answer their questions  According to these providers, this experience frustrated them, as they often did not understand why a claim had been denied or rejected, and they required assistance correcting the claim so it could be resubmitted  One community provider stated that their common practice to resolve questions or concerns was to call customer service enough times until they received the same answer twice from a TPA representative  In addition, 5 of the 10 Health Net providers we interviewed stated that they have significant outstanding claim balances owed to them  One of these providers—who reported over $3 million in outstanding claims—stressed the importance of being able to effectively resolve claims issues with TPA customer service staff, as the administrative burden of following up on outstanding claim balances takes time away from caring for patients  The issues concerning customer service wait times and TPA staff inability to resolve some claims processing issues reported by community providers appear to be inconsistent with VA contractual requirements  VA’s current Choice Program contracts require the TPAs to establish a customer call center to respond to calls from veterans and non-VA providers  The contract requires specified levels of service for telephone inquiries at the call center  For example, VA requires TPA representatives to answer customer service calls within an average speed of 30 seconds or less and requires 85 percent of all inquiries to be fully and completely answered during the initial telephone call  However, VA officials explained that VA does not enforce the contractual requirement for responding to calls from community providers  Furthermore, according to these officials, VA allows the TPAs to prioritize calls from veterans  Officials from VA’s Office of General Counsel, Procurement Law Group, confirmed that this requirement does apply to the TPAs’ handling of calls from community providers  Because VA does not enforce the customer service requirement for providers, VA has not collected data on or monitored the TPAs’ compliance with these requirements for providers’ calls  As previously stated, standards for internal control in the Federal Government state that management should establish and operate monitoring activities to evaluate whether a specific function or process is operating effectively and take corrective actions as necessary  Without collecting data and monitoring customer service requirements for provider calls, VA does not have information on the extent to which community providers face challenges when contacting the TPAs about claims payment issues that could contribute to the amount of time it takes to successfully file claims and receive reimbursement for services under the Choice Program  This, in turn, poses a risk to the Choice Program to the extent that community providers who face these challenges decide not to serve veterans under the Choice Program  Looking forward, VA has included customer service requirements in its RFP for the Veterans Community Care Program contracts, and VA officials have told us that these requirements are applicable to provider calls  For example, the RFP includes a requirement for its future TPAs to establish and maintain call centers to address inquiries from community providers and has established customer service performance metrics to monitor call center performance  Monitoring data on provider calls under the contracts will be important as Veterans Community Care Program TPAs will continue to be responsible for building provider networks, processing claims, and resolving claims processing issues  The Choice Program relies on community providers to deliver care to eligible veterans when VA is unable to provide timely and accessible care at its own facilities  Although VA has taken steps to improve the timeliness of TPA claim payments to providers, VA is not collecting data or monitoring compliance with two Choice Program requirements, and this could adversely affect the timeliness with which community providers are paid under the Choice Program  First, VA does not have complete data allowing it to effectively monitor adherence with its policy for VA medical facilities to review SARs within 5 days of receipt, which impacts its ability to meet the requirement  To the extent that VA medical facilities delay these reviews and approvals, community providers may have to delay care or deliver care that is not authorized, which in turn increases the likelihood that the providers’ claims will be denied and the providers will not be paid  Second, VA requires the TPAs to establish a customer call center to respond to calls from veterans and non-VA providers  However, VA does not enforce the contractual requirement for responding to calls from community providers and allows the TPAs to prioritize calls from veterans  Consequently, VA is not collecting data, monitoring, or enforcing compliance with its contractual requirements for the TPAs to provide timely customer service to providers  As a result, VA does not have information on the extent to which community providers face challenges when contacting the TPAs about claims payment issues, which could contribute to the amount of time it takes to receive reimbursement for services  To the extent that these issues make community providers less willing to continue participating in the Choice Program and the forthcoming Veterans Community Care Program, they pose a risk to VA’s ability to successfully implement these programs and ensure veterans’ timely access to care  We are making the following two recommendations to VA: Once VA’s new software for managing authorizations has been fully implemented, the Undersecretary for Health should monitor data on SAR approval decision time frames to ensure VA medical facilities are in adherence with VA policy, assess the reasons for nonadherence with the policy, and take corrective actions as necessary  (Recommendation 1) The Undersecretary for Health should collect data and monitor compliance with the Choice Program contractual requirements pertaining to customer service for community providers, and take corrective actions as necessary  (Recommendation 2) We provided a draft of this report to VA for review and comment  In its written comments, reproduced in appendix I, VA concurred with our two recommendations and said it is taking steps to address them  For example, VA plans to implement software in spring 2019 that will automate the SAR process and allow for streamlined reporting and monitoring of SAR timeliness to ensure ongoing compliance  Additionally, VA has included provider customer service performance requirements and metrics in its Veterans Community Care Program RFP, and will require future contractors to provide a monthly report to VA on their call center operations and will implement quarterly provider satisfaction surveys  We are sending copies of this report to the Secretary of Veterans Affairs, the Under Secretary for Health, appropriate congressional committees, and other interested parties  This report is also available at no charge on the GAO Web site at http://www gao gov  If you or your staff have any questions about this report, please contact Sharon M  Silas at (202) 512-7114 or silass@gao gov  Contact points for our Offices of Congressional Relations and Public Affairs are on the last page of this report  GAO staff who made major contributions to this report are listed in appendix II  In addition to the contact named above, Marcia A  Mann (Assistant Director), Michael Zose (Analyst-in-Charge), and Kate Tussey made major contributions to this report  Also contributing were Krister Friday, Jacquelyn Hamilton, and Vikki Porter 
Report 2:  In addition, in our 2017 report we also noted that there are instances where deriving estimated property damage from estimated casualty costs is inappropriate  As of November 2017, FAA does not have guidance to identify such instances or to guide decisions on which tools to use in developing the MPL estimate  FAA has taken steps designed to improve two of three elements of its MPL methodology, including revising its methodology for estimating the number of potential casualties for a given launch and changing the factor it uses to derive estimated property damage from estimated casualties  However, the agency has not updated the third element, the amount it uses for the cost of an individual casualty, leaving a previously identified weakness unaddressed  Our 2012 report raised concerns with each of the three components of FAA’s MPL calculation methodology  First, we found that FAA’s method for estimating the number of casualties involved use of a single loss scenario instead of applying the insurance industry’s standard practice of catastrophe modeling, and that the agency’s method might significantly understate the number of potential casualties  Catastrophe modeling, unlike the single-loss approach, generally estimates losses by using various tools to simulate tens of thousands of scenarios to create a distribution of potential losses and the simulated probability of different levels of loss  Second, we reported that FAA had been using an outdated and likely understated figure of $3 million to estimate the cost of a single casualty—including injury or death—which Office of Commercial Space Transportation officials said has not been updated since they began using it in 1988  Third, we reported that the agency’s approach of estimating potential property damage by adding a flat 50 percent to the estimated casualty damage could lead to estimates that were too high in some cases  Given these weaknesses, we recommended that FAA reassess its MPL methodology, including assessing the reasonableness of the cost-of- casualty amount and other assumptions used  Because the agency took actions to assess its MPL methodology, we closed the recommendation as implemented  In March 2017 we reported that FAA had taken steps to address weaknesses in two of these three areas  Specifically, we reported that FAA’s adoption of the risk profile method in April 2016 had improved its estimates of the number of potential casualties associated with a particular license launch  In addition, we reported that the agency had revised the factor it uses to estimate losses from property damage in the MPL calculation from 50 percent to 25 percent  This change has resulted in property damage estimates that FAA officials believe are still conservative but more realistic than previous estimates  However, in our March 2017 report we also determined that FAA had not yet addressed weaknesses in the cost-of-casualty amount we had previously identified; despite the conclusion by a contractor it had hired to study the cost-of-casualty that it was too low  Agency officials told us that they had not addressed this weakness because of other priorities  Given the significance of the cost-of-casualty amount to the MPL calculations, we recommended that FAA prioritize the development of a plan to address the identified weakness in the cost-of-casualty amount, including setting time frames for action, and update the amount based on current information  In October 2017, FAA officials told us that they had not yet updated the cost-of-casualty because they have continued to prioritize completing other work with their limited resources, such as reviewing launch applications and fulfilling other safety responsibilities  As a result, our recommendation remains open  FAA officials told us that they have identified potential steps to update the cost-of-casualty amount, including seeking public input on whether and how to revise the amount, but that they do not expect to make a decision on whether to make any changes to the cost-of-casualty amount until June 30, 2018, at the earliest  FAA officials told us that in order to prioritize the development of a plan to address the identified weakness in the cost-of-casualty amount they will need to consult with both the commercial space and insurance industries about the necessity and implications of any potential increase in the cost-of-casualty amount  Agency officials said that they plan to do such consultations through COMSTAC  However, because COMSTAC was just reestablished in June 2017 after not having been active since November 2016 and new members had not been approved as of October 2017, the anticipated decision date of June 2018 could be further delayed  As we reported in March 2017, an understated cost-of-casualty amount can lead to an inaccurate loss calculation, which in turn understates the amount of insurance a launch company must obtain  This could increase the potential exposure to the federal government, as the insurance amount would be less than the potential losses associated with the launch activity and the property would be inadequately protected  Because of this potential exposure, we maintain that addressing this weakness is a priority  As noted above, in our 2012 report we raised concerns about the first element of FAA’s MPL methodology, which is estimating the number of potential casualties  FAA officials said that they have implemented two tools for estimating the number of potential casualties, and that each tool requires a different level of resources and is more appropriate for different launch scenarios  The Range Risk Analysis Tool creates physics-based simulations of possible accidents using launch vehicle data, such as launch trajectory and types of failures, and assigns each simulated accident a probability of occurrence based on the failure rates of the different elements of the launch vehicle  According to agency officials, the Range Risk Analysis Tool is a comprehensive, high-fidelity tool and is the most appropriate tool for coastal launch sites, which are often located in heavily populated areas, and is labor intensive  The Risk Estimator Sub- orbital and Orbital Launch Vehicle and Entry tool, which in contrast to the Range Risk Analysis Tool, is a medium-fidelity tool that can be used for low-risk launches, such as launch sites located in very sparsely populated areas and reentry operations that do not need the use of a high-fidelity tool  According to FAA, this tool significantly reduces the time required to estimate the risk from launch and reentry vehicle operations  In our 2017 report, we also reiterated that there are cases where the third element of FAA’s methodology, deriving estimated property damage from estimated casualties, could lead to misleading MPL calculations  Specifically, in March 2017 we reported that estimating losses from property damage as a percentage of losses from casualties could lead to overestimates  For example, FAA’s contractor found that, if a launch accident affected a residential area, the agency’s practice of estimating property damage based on casualties would likely overstate property damages because residential structures have relatively low values compared to losses from casualties  We also reported in March 2017 that in some accidents the number of casualties may be low but property losses could still be very large, in which case FAA’s estimating property losses based on casualties would likely understate potential property damage  For example, a launch vehicle could strike an unoccupied structure that is very expensive, such as a neighboring launch complex  Agency officials said that while deriving property losses from casualty losses is a simpler method that may be an effective use of limited FAA resources, it could be inappropriate in scenarios where the number of casualties might be low but property losses could still be very large  In October 2017, agency officials said that FAA had not developed guidance for determining, for a given launch license, which of the available tools would be most appropriate to estimate the number of potential casualties, and whether it would be more appropriate to estimate property losses separately rather than derive them from estimated casualties  While FAA officials said they believe their current decision process is adequate and that they do not need more formal guidance at this time, they also told us that they were in the process of developing internal guidance on the most appropriate tool to use for future launches  The officials said that they did not have a projected completion date for the guidance, primarily because the agency has other priorities and resource limitations  As noted earlier, these priorities include reviewing commercial space launch license applications and managing program safety  Federal internal control standards state that, as part of an entity’s risk assessment component, management should identify, analyze, and respond to risks to achieving objectives  For example, the standards state that management should design control activities in response to the entity’s objectives and risks to achieve an effective internal control system  Without such guidance, FAA could face challenges in ensuring that it is using the most appropriate method to calculate an MPL for a given launch and is making the most efficient use of its resources  Such guidance could become more important as the number of commercial space launches increases, potentially creating greater demands on its resources  We have previously reported that the commercial space launch industry has experienced significant growth in the number and complexity of launches in the past half-decade  FAA has also reported that its licensed launches have increased 60 percent and industry revenue has increased 471 percent since 2012  FAA’s MPL methodology is critical in balancing the encouragement of the U S  commercial space industry with the need to manage the federal government’s risk exposure because it determines how much risk each party will bear for third-party damages resulting from potential space launch accidents  However, despite changes to the methodology, the probability threshold that the agency uses to achieve this balance of risk has been the same since the 1990s, and has not been reviewed for appropriateness  In addition, while FAA evaluated the effect of its MPL methodology on the indirect costs of launch companies and the federal government, it did not similarly evaluate direct costs  Further, although FAA has obtained input from some stakeholders on certain aspects of its MPL methodology, it has not consulted with launch providers and insurance companies to evaluate effects on key potential costs to launch companies and the federal government, as required under CSLCA  FAA officials told us that resource issues and pursuing other priorities have prevented them from taking these actions  However, the longstanding nature of these issues, as well as their importance in determining the federal government’s financial exposure, makes their completion a priority  FAA has also begun improving other aspects of its MPL process, but important actions remain incomplete  For example, the cost of a casualty, a key component of the methodology, has not been updated since 1988  While FAA has identified potential steps to update this amount, it has not implemented these steps and our March 2017 recommendation to prioritize the updating of this amount remains open  Further, agency officials said they have begun to develop internal guidance on how to determine which methodological tools should be used for a given launch, but are not sure when this process will be completed  These are important steps to help ensure the validity of the MPL methodology and the results obtained for each launch, which in turn determine the balance between the amount of insurance launch companies are required to purchase and the potential financial exposure for the federal government  We are making the following four recommendations to FAA: The FAA Administrator should fulfill the CSLCA mandate to include ensuring a balance of risk between the federal government and launch companies as part of FAA’s MPL methodology evaluation by reexamining the current probability thresholds  (Recommendation 1) The FAA Administrator should fulfill the CSLCA mandate to analyze the cost impact of implementing its revised MPL methodology by evaluating the impact on the direct costs of launch companies and the federal government  (Recommendation 2) The FAA Administrator should fulfill the CSLCA mandate to evaluate its MPL methodology in consultation with the commercial space sector and insurance providers by consulting with those entities on the cost impact of its revised MPL methodology, including an updated cost-of-casualty amount, on the launch industry and the federal government  (Recommendation 3) The FAA Administrator should establish an estimated completion date for developing and implementing a plan to establish guidance on the most appropriate MPL methodologies and tools to use for each launch  (Recommendation 4) We provided a draft of this report to the Department of Transportation for their review and comment  In its comments, reproduced in appendix I, the Department of Transportation concurred with our recommendations  The Department of Transportation also provided technical comments, which we incorporated as appropriate  We are sending copies of this report to interested congressional committees and the Secretary of the Department of Transportation  In addition, this report will be available at no charge on GAO’s website at http://www gao gov  If you or your staff have any questions or would like to discuss this work, please contact Alicia Puente Cackley at (202) 512-8678 or cackleya@gao gov  Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report  Individuals making key contributions to this report are listed in appendix II  In addition to the contact named above, Patrick Ward (Assistant Director), Jessica Artis, Isidro Gomez (Analyst in Charge), Courtney La Fountain, Maureen Luna-Long, Jessica Sandler, Jennifer Schwartz, Joseph Silvestri, and Shana Wallace made key contributions to this report 

ground_truth: Questions have been raised about the lack of timeliness of TPAs' payments to community providers under the Choice Program and how this may affect the willingness of providers to participate in the program as well as in the forthcoming Veterans Community Care Program. You asked GAO to review issues related to the timeliness of TPAs' payments to community providers under the Choice Program. This report examines, among other things, (1) the length of time TPAs have taken to pay community providers' claims and factors affecting timeliness of payments, and (2) actions taken by VA and the TPAs to reduce the length of time TPAs take to pay community providers for Choice Program claims. GAO reviewed TPA data on the length of time taken to pay community provider claims from November 2014 through June 2018, the most recent data available at the time of GAO's review. GAO also reviewed documentation, such as the contracts between VA and its TPAs, and interviewed VA and TPA officials. In addition, GAO interviewed a non-generalizable sample of 15 community providers, selected based on their large Choice Program claims volume, to learn about their experiences with payment timeliness. The Department of Veterans Affairs' (VA) Veterans Choice Program (Choice Program) was created in 2014 to address problems with veterans' timely access to care at VA medical facilities. The Choice Program allows eligible veterans to obtain health care services from providers not directly employed by VA (community providers), who are then reimbursed for their services through one of the program's two third-party administrators (TPA). GAO's analysis of TPA data available for November 2014 through June 2018 shows that the length of time the TPAs took to pay community providers' clean claims each month varied widely—from 7 days to 68 days. VA and its TPAs identified several key factors affecting timeliness of payments to community providers under the Choice Program, including VA's untimely payments to TPAs, which in turn extended the length of time TPAs took to pay community providers' claims; and inadequate provider education on filing claims. VA has taken actions to address key factors that have contributed to the length of time TPAs have taken to pay community providers. For example, VA updated its payment system and related processes to pay TPAs more quickly. According to VA data, as of July 2018, VA was paying at least 90 percent of the TPAs' invoices within 7 days. In addition, VA and the TPAs have taken steps to improve provider education to help providers resolve claims processing issues. However, 9 of the 15 providers GAO interviewed said they continue to experience lengthy telephone hold times. According to VA and TPA officials, steps have been taken to improve the customer service offered to community providers. However, VA officials do not collect data on or monitor TPA compliance with customer service requirements—such as calls being answered within 30 seconds or less—for provider calls because they said they are not enforcing the requirements and are allowing TPAs to prioritize calls from veterans. Without collecting data and monitoring compliance, VA does not have information on challenges providers may face when contacting TPAs to resolve payment issues. GAO is making two recommendations, including that VA should collect data on and monitor compliance with its requirements pertaining to customer service for community providers. VA concurred with GAO's recommendations and described steps it will take to implement them.