NAVY SHIP 

MAINTENANCE

Action Needed to 

Maximize New 

Contracting Strategy's 

Potential Benefits

Accessible Version

Report to Congressional Committees

November 2016

GAO-17-54

United States Government Accountability Office
United States Government Accountability Office

Highlights of GAO-17-54, a report to 

congressional committees

November 2016

NAVY SHIP MAINTENANCE

Action Needed to Maximize New Contracting

Strategy’s Potential Benefits

What GAO Found

The Navy’s Multiple Award Contract, Multi Order (MAC-MO) contracting strategy 

for ship repair offers a number of potential benefits compared to the former Multi 

Ship, Multi-Option (MSMO) contracting strategy, including increased competition. 

A key difference is that the MAC-MO strategy intends to control costs through 

the use of firm-fixed price contracts and the use of third-party planners, which 

could be cost-effective if the planner produces clearly defined work specifications 

for the repair contractor to price and execute. Prior to implementation of the new 

strategy, the Navy conducted market research and pilot-tested attributes of the 

strategy with pilot maintenance periods for a number of ships.

The Navy recognized several lessons learned from its pilot maintenance periods 

and has made subsequent process changes to address key lessons and support 

MAC-MO. These include a longer time frame for the planning process for 

finalizing work requirements (see figure). According to the Navy, this additional 

time is needed to promote stable requirements and, therefore, pricing. 

Changes to Planning Milestones for Maintenance Periods under the Navy’s New Strategy 

The Navy is assessing outcomes of individual maintenance periods; however, it 

lacks a systematic process involving the fleet- and shore-based maintenance 

communities to assess overall implementation of MAC-MO. This is inconsistent 

with federal standards for internal control, which state that management should 

evaluate its response to risks and evaluate progress made toward program 

objectives. Not ensuring progress is systematically assessed—particularly in light 

of the many stakeholders involved—could undermine the Navy’s ability to obtain 

the improved outcomes it seeks with the MAC-MO strategy.

The MAC-MO strategy will increase competition opportunities and set aside work 

for small businesses, but it is too soon to determine how these changes will 

impact the ship repair industrial base. Industry viewpoints GAO collected on 

MAC-MO varied both by shipyard location and contractor size. However, former 

MSMO contract holders reported that the uncertainty associated with the need to 

continually compete for work could result in decisions to reduce their workforce 

and facilities. Small businesses GAO spoke with have in the past mostly 

performed work as subcontractors to MSMO contract holders, but many 

expressed interest in competing as prime contractors under MAC-MO.

View GAO-17-54. For more information, 

contact Michele Mackin at (202) 512-4841 or 

mackinm@gao.gov.

Why GAO Did This Study

The Navy has over 150 non-nuclear 

surface ships that it repairs, maintains, 

and modernizes using privately owned 

shipyards. The Navy concluded in 

2010 that readiness of the surface ship 

force was below acceptable levels. 

This, in addition to the concerns of 

leadership about cost and schedule 

growth, led to a revised readiness 

strategy and, in 2015, introduction of a 

new contracting strategy for ship 

repair, referred to as MAC-MO.

House Report 114-102 accompanying 

the fiscal year 2016 National Defense 

Authorization Act included a provision 

for GAO to review the Navy’s 

implementation of the MAC-MO 

strategy. This report assesses (1) the 

potential benefits of the MAC-MO 

contracting strategy, (2) process 

changes the Navy has made to 

address any challenges and to 

capitalize on anticipated benefits, and 

(3) how the strategy will potentially 

affect the Navy’s ship repair industrial 

base.

GAO analyzed the Navy’s acquisition 

planning documentation, lessons 

learned, and contracts. GAO 

interviewed Navy officials and visited 

regional maintenance centers in 

Norfolk, Va.; San Diego, Calif.; and 

Mayport, Fla. GAO also interviewed 

previous and prospective Navy ship 

maintenance contractors.

What GAO Recommends

GAO recommends the Navy assign 

responsibility to a single entity to 

systematically assess implementation 

of the MAC-MO strategy. DOD agreed 

with GAO’s recommended action and 

plans to report biennially on strategy 

implementation. 
Letter 1

Page i GAO-17-54 Navy Ship Maintenance

Background 3

Market Research and Piloting Helped Inform Roll-out of MAC-MO 

Strategy, Which Offers Potential Benefits Compared to MSMO 12

Additional Action Needed to Address Potential Challenges to 

Implementation of the MAC-MO Contract Strategy 19

MAC-MO Strategy Will Increase Competition Opportunities, but It 

Is Too Soon to Assess Other Effects on the Ship Repair 

Industrial Base 28

Conclusions 41

Recommendation for Executive Action 42

Agency Comments 42

Appendix I: Objectives, Scope, and Methodology 45

Appendix II: Comments from the Department of Defense 50

Appendix III: GAO Contact and Staff Acknowledgments 52

Appendix IV: Accessible Data 54

Tables

Table 1: Key Differences between the MAC-MO and MSMO 

Strategies for Ship Maintenance Availability Execution 12

Table 2: Multiple Award Contract, Multi-Order Attributes 

Demonstrated by the 2014 San Diego Pilot Ship 

Maintenance Availabilities 16

Table 3: Status of Actions to Address Key Lessons Learned 

During Multiple Award Contract-Multi-Order (MAC-MO) 

Pilot Ship Maintenance Availabilities 20

Table 4: GAO Analysis of Destroyer Availabilities in Norfolk, 

Virginia, Fiscal Years 2010-2014 30

Data Table for Highlights Original Milestones (in days0 54

Data Table for Figure 1: Organizational Chart for Navy Operating 

Forces and Shore Establishment Responsible for NonNuclear Surface Ship Repair, Maintenance, and 

Modernization. 54

Data Table for Figure 2: NAVSEA Offices Responsible for Surface 

Ship Repair, Maintenance, and Modernization 55

Contents
Data Table for Figure 4: Timeline of Initial Awards to Support the 

MAC-MO Strategy for Ship Maintenance Availabilities 55

Data Table for Figure 5: Comparison (in days) of Planning 

Milestones for Work Package Development in a Chief of 

Naval Operations Availability (>$5 million and <$20 

million) under the MSMO and MAC-MO Strategies 57

Data Table for Figure 6: Recent Historical and Forecasted Navy 

Maintenance Workload in Port of Norfolk, Virginia, fiscal 

years 2015-2020 58

Data Table for Figure 7: Recent Historical and Forecasted Navy 

Maintenance Workload in Port of San Diego, California, 

fiscal years 2015-2020 36

Data Table for Figure 8: Recent Historical and Forecasted Navy 

Maintenance Workload in Port of Mayport, Florida, fiscal 

years 2015-2020 62

Data Table for Figure 9: Characteristics of Selected Contractors in 

Each Port Where the Navy Is Implementing the Multiple 

Award Contract-Multi Order Strategy 64

Figures

Page ii GAO-17-54 Navy Ship Maintenance

Figure 1: Navy Operating Forces and Shore Establishment 

Responsible for Non-Nuclear Surface Ship Repair, 

Maintenance, and Modernization 5

Figure 2: NAVSEA Offices Responsible for Surface Ship Repair, 

Maintenance, and Modernization 6

Figure 3: Floating Drydock and Crane Used for Repair of 

Amphibious Assault Ships 9

Figure 4: Timeline of Initial Awards to Support the MAC-MO 

Strategy for Ship Maintenance Availabilities 18

Figure 5: Comparison (in days) of Planning Milestones for Work 

Package Development in a Chief of Naval Operations 

Availability (>$5 million and <$20 million) under the 

MSMO and MAC-MO Strategies 25

Figure 6: Recent Historical and Forecasted Navy Maintenance 

Workload in Port of Norfolk, Virginia, fiscal years 2015-

2020 35

Figure 7: Recent Historical and Forecasted Navy Maintenance 

Workload in Port of San Diego, California, fiscal years 

2015-2020 36
Figure 8: Recent Historical and Forecasted Navy Maintenance 

Workload in Port of Mayport, Florida, fiscal years 2015-

2020 37

Figure 9: Characteristics of Selected Contractors in Each Port 

Where the Navy Is Implementing the Multiple Award 

Contract-Multi Order Strategy 39

Page iii GAO-17-54 Navy Ship Maintenance

Abbreviations
CG Cruisers

CNO Chief of Naval Operations

CNRMC Commander, Navy Regional Maintenance Center 

DASN AP Deputy Assistant Secretary of the Navy for Acquisition and

 Procurement

DDG Destroyers 

FAR Federal Acquisition Regulation 

IDIQ Indefinite Delivery Indefinite Quantity

MAC-MO Multiple Award Contract-Multi Order 

MARMC Mid-Atlantic Regional Maintenance Center 

MSMO Multi-Ship, Multi-Option 

MSRA Master Ship Repair Agreement 

NAVSEA Naval Sea Systems Command 

OFRP Optimized Fleet Response Plan 

RMC Regional Maintenance Center 

SEA 21 Deputy Commander for Surface Warfare 

SERMC Southeast Regional Maintenance Center 

SURFMEPP Surface Maintenance Engineering Planning Program 

SWRMC Southwest Regional Maintenance Center

Page iv GAO-17-54 Navy Ship Maintenance

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Page 1 GAO-17-54 Navy Ship Maintenance

441 G St. N.W.

Washington, DC 20548

November 21, 2016

Congressional Committees

In support of its mission to maintain combat-ready forces, the Navy 

acquires, fields, and sustains a large fleet, which currently includes over 

150 non-nuclear surface ships.1 The Navy relies on these ships to be 

ready to operate when needed and to meet their expected service lives. 

To accomplish these objectives, the Navy contracts for ship repair, 

maintenance, and modernization through scheduled periods, called 

availabilities, during which the ship is temporarily unavailable for 

operations. The Navy concluded in 2010 that the material readiness of 

the surface ship force was well below acceptable levels to preserve ships 

to their full service lives, finding that deferrals of scheduled maintenance 

and reductions in the amount of time allowed for completing major repairs 

contributed to persisting deficiencies. These deferrals and reductions also 

had not remedied the longstanding problem of cost and schedule growth 

in ship maintenance availabilities. The Navy has since taken steps to 

improve the readiness of its non-nuclear surface combatant and 

amphibious warfare ships, including introducing a revised operational 

schedule intended to provide, among other things, for the predictable

scheduling of tasks for ship maintenance, known as the Optimized Fleet 

Response Plan (OFRP).2

In 2015, the Navy transitioned to a different contract strategy for the 

maintenance and modernization of surface ships, which it expects to 

support the goals of the OFRP and alleviate cost and schedule growth 

incurred during availabilities. This new strategy is called Multiple Award 

Contract-Multi Order (MAC-MO). As opposed to the prior strategy, which 

used cost-reimbursement contracts and was only competed among ship 

repair contractors every 5 years, MAC-MO will use firm-fixed-price

contracts, a third-party contractor to identify and plan the work, and 

increased competition, among other things. The MAC-MO strategy will 

cover maintenance needs for six classes of surface combatant and 

 

1Our focus for this review is on non-nuclear surface ships, which the Navy repairs, 

maintains, and modernizes under contracts with private industry.

2We recently reported on aspects of OFRP. See GAO, Navy’s Optimized Fleet Response 

Plan, GAO-16-466R (Washington, D.C.: May 2, 2016). 

Letter
Letter

amphibious assault ships, which the Navy estimates will cost about $6.5 

billion to maintain from fiscal year 2016 through fiscal year 2020.

Page 2 GAO-17-54 Navy Ship Maintenance

3

House Report 114-102 accompanying the fiscal year 2016 National 

Defense Authorization Act included a provision for us to review the Navy’s 

implementation of the MAC-MO contracting strategy. This report 

assesses (1) the potential benefits of the MAC-MO contracting strategy, 

(2) process changes the Navy has taken to address any challenges and 

to capitalize on anticipated benefits, and (3) how the strategy will 

potentially affect the Navy’s ship repair industrial base.

To assess the potential benefits of the MAC-MO strategy, we analyzed 

the Navy’s acquisition planning documentation, compared conditions 

under which cost-reimbursement contracts and firm-fixed-price contracts 

are appropriate, and interviewed senior contracting officials and 

contractors with experience conducting maintenance availabilities. To 

determine how the previous Multi-Ship, Multi-Option (MSMO) and current 

MAC-MO strategies differ in terms of contract pricing, planning the work, 

and structuring the competition among ship repair yards, we analyzed the 

contents of MAC-MO acquisition planning documentation, and reviewed 

related Federal Acquisition Regulation (FAR) provisions and MSMO 

contracts. To assess process changes the Navy has taken to address 

challenges and to capitalize on intended benefits of the MAC-MO 

strategy, we analyzed documentation on lessons learned from the 

availabilities used to pilot the MAC-MO strategy and actions the Navy 

took in response, such as were identified in staffing and training plans, 

and proposals for revised planning milestones. For these two objectives, 

we also interviewed Navy officials responsible for planning, administering, 

and funding the ship repair contracts, including the offices of the Deputy 

Commander for Surface Warfare (SEA 21); Commander, Naval Surface 

Force, Atlantic; Commander, Naval Surface Force, Pacific; Commander, 

Navy Regional Maintenance Center; the Mid-Atlantic Regional 

Maintenance Center (MARMC) in Norfolk, Virginia; the Southwest 

Regional Maintenance Center (SWRMC) in San Diego, California; and 

the Southeast Regional Maintenance Center (SERMC) in Mayport, 

Florida. These are the three maintenance centers where the Navy is 

implementing the new contracting strategy. To understand how the new 

 

3The MAC-MO strategy includes Amphibious Dock Landing (LSD) ships, Amphibious 

Transport Dock (LPD) ships, Landing Helicopter Deck (LHD) ships, Landing Helicopter 

Assault (LHA) ships, Arleigh Burke class Guided Missile Destroyers (DDG), and Guided 

Missile Cruisers (CG).
Letter

strategy might affect the Navy’s industrial base for ship repair, we used a 

data collection instrument and a semi-structured interview to collect 

viewpoints and a description of existing facilities from 14 selected 

contractors serving the Navy homeports of Norfolk, Virginia; Mayport, 

Florida; and San Diego, California. The contractors included former 

MSMO contract holders and additional contractors the Navy identified as 

potential competitors for MAC-MO contracts in its market research, 

including small businesses. In addition, we obtained information from the 

Navy on the number and scheduling of future availabilities for each of 

these three home ports. See appendix I for more information about our 

scope and methodology.

We conducted this performance audit from September 2015 to November 

2016 in accordance with generally accepted government auditing 

standards. Those standards require that we plan and perform the audit to 

obtain sufficient, appropriate evidence to provide a reasonable basis for 

our findings and conclusions based on our audit objectives. We believe 

that the evidence obtained provides a reasonable basis for our findings 

and conclusions based on our audit objectives.

Several Navy organizations share responsibilities for scheduling, 

planning, budgeting, overseeing, and setting policy for the repair, 

maintenance, and modernization of non-nuclear surface ships:

· The Secretary of the Navy, as directed by the Secretary of Defense, 

is responsible for conducting, and has the authority under Title 10 of 

the United States Code to conduct, all the affairs of the Department of 

the Navy, including overseeing the repair of naval ships.

· The Chief of Naval Operations is the senior military officer of the 

Department of the Navy and is responsible to the Secretary of the 

Navy for the command, utilization of resources, and operating 

efficiency of the operating forces of the Navy and of the Navy shore 

activities assigned by the Secretary.

· U.S. Pacific Fleet and U.S. Fleet Forces Command develop 

budgets for the operations and maintenance of ships, while also 

setting requirements for overall fleet readiness.

· Commander, Naval Surface Force, U.S. Atlantic Fleet and 

Commander, Naval Surface Force, U.S. Pacific Fleet—the Navy’s 

surface type commanders—have specific responsibilities for 

Page 3 GAO-17-54 Navy Ship Maintenance

Background
Letter

maintaining, training, and ensuring the readiness of their assigned 

surface ships.

Page 4 GAO-17-54 Navy Ship Maintenance

4

In addition, the type commanders have a significant 

role in scheduling repair planning activities, funding availability work, 

and coordinating the management and supervision of that work.

· The Assistant Secretary of the Navy for Research, Development 

and Acquisition serves as the Navy Acquisition Executive and has 

authority, responsibility, and accountability for all acquisition functions 

and programs, including surface ship repair, maintenance, and 

modernization. The Assistant Secretary also represents the 

Department of the Navy to the Under Secretary of Defense for 

Acquisition, Technology and Logistics and to Congress on all matters 

relating to acquisition policy and programs.

· Naval Sea Systems Command (NAVSEA) is charged with 

maintaining ships to meet fleet requirements, while doing so within 

defined cost and schedule parameters. NAVSEA has the further 

responsibility of establishing and enforcing technical authority in 

combat system design and operation. These technical standards 

ensure systems are engineered effectively, and that they operate 

safely and reliably.

Figure 1 shows how these operating forces and shore-based entities are 

organized within the Navy. 

 

4All ships are organized into categories by type of ship. Normally, the type command 

controls the ship during its primary and intermediate training cycles and then it moves 

under the operational control of a fleet commander. 
Letter

Figure 1: Navy Operating Forces and Shore Establishment Responsible for NonPage 5 GAO-17-54 Navy Ship Maintenance

Nuclear Surface Ship Repair, Maintenance, and Modernization

Within NAVSEA, several organizations provide headquarters-based and 

on-site, local support for surface ship availabilities. Functions these 

offices perform include contract administration, program management, 

and planning for future availabilities informed by the historical 

maintenance needs of Navy ships. Figure 2 highlights the various 

NAVSEA offices that participate in surface ship availabilities and their 

responsibilities.
Letter

Figure 2: NAVSEA Offices Responsible for Surface Ship Repair, Maintenance, and 

Page 6 GAO-17-54 Navy Ship Maintenance

Modernization

The level of complexity of ship repair, maintenance, and modernization 

can affect the length of a maintenance availability—which can range from 

a few weeks to more than 6 months—and informs whether the work will 

be competed among contractors only in the ship’s homeport or competed 

among all ship repair yards on the East or West Coast. The types of 

availabilities include the following:

· Chief of Naval Operations (CNO) availabilities are scheduled to 

accomplish industrial maintenance and modernization. Industrial 

maintenance requires complex industrial processes to perform 

restorative work on a ship, for example, involving structural, 

mechanical, and electrical repairs. Modernization requirements 

include changes that either add new capability or improve the 

reliability of existing systems. For example, the Navy is currently in 
Letter

process of modernizing cruisers and destroyers to upgrade their 

combat systems. CNO availabilities can last 6 months or longer and 

are normally scheduled every 2 to 3 years throughout a ship’s service 

life. To inform the work scope for a CNO availability, Navy officials or 

contractor representatives typically perform one or more “ship checks” 

to assess the material condition of the ship in advance of the 

availability.

· Continuous Maintenance availabilities are for routine maintenance 

work, for example, repainting parts of a ship or repairing the nonskid 

surfaces on a flight deck. These availabilities are normally 2 to 6 

weeks in duration and typically scheduled once per non-deployed 

quarter during a period when the ship will be in port.

· Emergent Maintenance availabilities are for work of an urgent 

nature when the risk of prolonged disruption to a ship’s operations 

makes higher payments for repair acceptable. These availabilities are 

only completed on an as-needed basis in order to keep a ship 

operating. For example, in 2015, staff at one regional maintenance 

center discovered a propeller blade was loose during a contractor’s 

routine cleaning of an underwater hull of an amphibious ship and 

immediately arranged for the repairs.

In support of its mission to ensure surface ships are mission-ready and 

able to achieve their expected service life, NAVSEA’s Surface 

Maintenance Engineering Planning Program (SURFMEPP) has 

developed a series of products used to support long-term maintenance 

for ships, focusing on capturing the technical requirements for a class of 

ships. For example, maintenance plans for a class of ships could identify 

a need for equipment overhauls, propulsion shaft replacements, and 

corrosion protection. To identify requirements for a specific ship, 

SURFMEPP coordinates the development of a “baseline availability work 

package” with the relevant type commander. This package represents the 

NAVSEA-mandated technical requirements to ensure a ship reaches its 

expected service life and meets its operational commitments and is 

tailored specifically to each ship. Planners then use these requirements 

as a basis for developing detailed work specifications that direct the ship 

repair contractor how to perform the work. SURFMEPP also manages the 

Master Specification Catalog, which is a module within the Navy 

Maintenance Database that contains information and specifications 

needed by planners to develop the work specifications for the repair or 

modernization of a specific surface ship. This catalog is the repository of 

all work item instructions used to execute contracted depot-level 

maintenance. Use of the catalog is intended to promote standardization 

Page 7 GAO-17-54 Navy Ship Maintenance
Letter

and planning products that reduce costs and increase quality of 

contracted work.

In September 2012, we assessed a Navy readiness strategy, known as 

the Fleet Response Plan, aimed at improving the readiness of Navy 

surface combatant and amphibious warfare ships.

Page 8 GAO-17-54 Navy Ship Maintenance

5 Our report recognized 

the Navy had taken steps to alleviate the consequences of deferred 

maintenance—such as reduced readiness and increased costs once 

repairs were made—by establishing SURFMEPP and the Commander, 

Naval Regional Maintenance Center (CNRMC) in 2010 to oversee the 

operations of the regional maintenance centers. However, we found the 

Navy had not assessed certain risks to implementation of the strategy, 

such as staffing shortages at SURFMEPP and CNRMC. We 

recommended that the Navy develop a comprehensive assessment of the 

risks the Navy faces in implementing its readiness strategy and develop 

alternatives to mitigate risks. However, in responding to our 

recommended actions, the Navy did not agree that a comprehensive 

assessment of risks was necessary or desirable—stating its view that 

existing assessment processes were sufficient—and did not take action.

The Navy contracts with private shipyards and other firms for the repair, 

maintenance, and modernization of non-nuclear surface ships. These 

contractors comprise what is referred to as the ship repair industrial 

base.6 The extent of facilities required by a contractor to perform a 

maintenance availability varies by the complexity of the maintenance

requirements. Contractors’ facilities might include shipyards with piers, 

drydocks, cranes, and separate facilities for pipe-fitting and valve repair. 

Certain repairs, such as inspecting or repairing the ship’s hull, or 

removing marine growth from the hull, might require placing a ship in a 

drydock. Figure 3 shows a drydock and crane.

 

5GAO, Military Readiness: Navy Needs to Assess Risks to Its Strategy to Improve Ship 

Readiness, GAO-12-887 (Washington, D.C.: Sept. 21, 2012). 

6Although the Navy operates several government-owned shipyards, those shipyards are 

used to support the repair, maintenance, and modernization of nuclear powered ships, 

such as submarines and aircraft carriers.

Private Ship Repair 

Contractors and Facilities
Letter

Figure 3: Floating Drydock and Crane Used for Repair of Amphibious Assault Ships

Page 9 GAO-17-54 Navy Ship Maintenance

To support the execution of complex maintenance availabilities, the Navy 

has established a certification process to ensure that contractors are 

qualified to conduct the work. NAVSEA will grant a “Master Ship Repair 

Agreement” after certifying a ship repair firm’s capability and capacity to 

perform all aspects of shipboard work. To obtain this level of 

certification—the highest the Navy grants for ship repair—the firm must 

meet certain standards, including having the management, organization, 

production, and facilities to perform a complex repair. Certified firms must 

also be capable of subcontracting for elements beyond their capability or 

capacity, while ensuring that they have adequate oversight of the 

subcontracted effort.

A June 1995 ship depot policy issued by the Secretary of the Navy 

requires that, whenever possible, ship repair and maintenance work of 6 

months or less be performed by shipyards at or near the ship’s home port 

to improve the crew’s quality of life by reducing their time away from 

home.7

If the estimate is more than 6 months, the Navy expands the 

 

7The policy implemented 10 U.S.C. § 7299a.
Letter

solicitation to include additional ship repair companies operating on the 

relevant U.S. coast.

Page 10 GAO-17-54 Navy Ship Maintenance

8

Over the years, the Navy has used different contracting strategies with 

the private sector to support the repairs and modernization for surface 

ships.

· Pre-MSMO (before 2004): According to Navy contracting officials, 

prior to the implementation of the MSMO contracting strategy that has 

been in place until recently, the Navy generally used firm-fixed-price 

contracts to contract for the maintenance and modernization of 

surface ships and used its own planning workforce to draft work 

specifications. A firm-fixed-price contract provides for a price that is 

not subject to any adjustment on the basis of the contractor’s cost 

experience in performing the contract. This contract type places 

maximum risk and full responsibility for all costs—and resulting profit 

or loss—on the contractor. It therefore provides maximum incentive 

for the contractor to control costs.9

In 1982, we reported on 

deficiencies with the Navy’s implementation of this contracting 

strategy for ship repairs.10

· MSMO (2004 to present): The Navy has used the MSMO strategy, 

which features the use of cost-reimbursement contracts, to contract 

for ship maintenance work with the private sector. Costreimbursement contracts provide for the payment of allowable 

incurred costs, to the extent prescribed in the contract. Under a costreimbursement contract, the government does not contract for the 

performance of a specified amount of work for a predetermined price, 

but instead agrees to pay the contractor’s reasonable costs of 

performance regardless of whether the work is completed.11 In 

addition, as part of the MSMO strategy, the contractor responsible for 

executing the work develops the specifications to which the work was 

performed. While the Navy initially identified several benefits with the 

 

8We discussed this issue in GAO, Navy Ship Maintenance: Allocation of Ship 

Maintenance Work in the Norfolk, Virginia Area, GAO/NSIAD-99-54 (Washington, D.C.: 

Feb. 24, 1999).

9FAR § 16.202-1.

10GAO, Actions Needed to Reduce Schedule Slippages and Cost Growth on Contracts for 

Navy Ship Overhauls, PLRD-82-29 (Washington, D.C.: Mar. 17, 1982). 

11FAR § 16.301-1.

History of Navy 

Contracting, Planning, and 

Scheduling Approaches 

for Ship Repair
Letter

MSMO strategy, including contractor assistance with developing the 

work package specifications, Navy leadership determined that the 

business case for the strategy had deteriorated as ship availabilities 

were incurring excessive cost and schedule growth.

· MAC-MO (2015 to present): In 2015, the Navy began transitioning to 

the use of its newest contracting strategy for ship maintenance—

MAC-MO—which relies on (1) cost-reimbursement type contracts with 

a third-party planner (i.e., a contractor other than the contractor 

performing the actual repair work) to develop work specifications and 

(2) firm-fixed-price contracts with ship repair contractors to execute 

availabilities. In addition, the MAC-MO contracting strategy features 

the use of indefinite delivery/indefinite quantity (IDIQ) contracts for 

ship repair contractors. IDIQ contracts do not specify exact times for 

delivery of supplies or services at contract award; those are 

established via task orders during contract performance. The use of 

multiple award, IDIQ contracts (contract awards to more than one 

contractor) and orders is consistent with Department of Defense 

Better Buying Power initiatives aimed at increasing competition.

Shortly preceding implementation of the MAC-MO strategy, in November 

2014 the Navy began implementing OFRP—a revision of its earlier Fleet 

Response Plan outlining fleet training, maintenance, deployment, and 

sustainment schedules. As we found in a May 2016 report, to meet heavy 

operational demands over the past decade, the Navy has increased ship 

deployment lengths and has reduced or deferred ship maintenance, 

reducing the predictability of ship deployments.

Page 11 GAO-17-54 Navy Ship Maintenance

12 In addition, we found 

that public and private shipyards involved in Navy ship maintenance face 

a number of challenges in completing maintenance on time, including 

unanticipated work requirements, workforce inexperience, and workload 

fluctuations. The OFRP is intended to prioritize maintenance by 

developing a predictable schedule that allows sufficient time to 

accomplish needed maintenance tasks and ensure that platforms meet 

their expected service lives.

 

12GAO-16-466R. 
Letter

Our analysis of the key attributes of the MAC-MO contracting strategy 

versus its MSMO predecessor indicates that the new strategy offers 

significant potential benefits, key among them being the ability to control 

contract costs through the use of firm-fixed-price contracts. The Navy has 

taken several proactive steps, including market research and piloting, 

which provided insights ahead of the strategy’s implementation. Because 

MAC-MO is in the early stages of implementation, though, it is too soon to 

assess the extent to which the new strategy will achieve its objectives.

The Navy’s objectives for the MAC-MO contracting strategy are to:

· maximize competition for surface combatants and amphibious ships

· improve cost control, quality of workmanship, and schedule 

adherence, and

· maintain an appropriate level of flexibility and responsiveness to the 

fleet.

The MAC-MO contracting strategy differs from the previous MSMO 

strategy in four significant ways, as shown in table 1.

Table 1: Key Differences between the MAC-MO and MSMO Strategies for Ship Maintenance Availability Execution

Page 12 GAO-17-54 Navy Ship Maintenance

Strategy 

attributes

Multi-Ship, Multi-Option (MSMO) Multiple Award Contract-Multi Order (MAC-MO)

Contract pricing 

and incentives

Cost-reimbursement contracts provide for payment 

of incurred costs. They are appropriate when the 

agency cannot define requirements or accurately 

estimate costs.

MSMO contracts provided for award and incentive 

fees with award fees based on the government’s 

judgmental evaluation of contract performance.

Firm-fixed-price contracts set firm prices for supplies or 

services. They are appropriate when specifications for the 

service provided are reasonably definite and costs can be 

estimated.

Firm-fixed-price contracts provide maximum incentive for 

the contractor to control costs, but allow for the use of 

award fee or delivery incentives.

Planning 

responsibilities 

Contractor executing the availability also plans 

the work specifications under the terms of the costreimbursement MSMO contract.

No separate competition for planning the availability, 

since one contractor both plans and executes the 

work.

Contract uses both incentive and award fees, with 

award fees based on government’s judgmental 

evaluation of contractor performance in planning work 

specifications.

Naval Sea Systems Command (NAVSEA) contracts 

with a third-party firm to provide advance planning 

services. The third-party firm is then ineligible to compete 

for executing the availability.

NAVSEA competes cost-reimbursement contracts for thirdparty advance planning. The performance period is 5 

years, assuming all the options are exercised.

NAVSEA uses cost-reimbursement contracts with incentive 

fees based on pre-established formulas, which 

predominantly relate to the accuracy of the submitted 

specifications.

Market Research and 

Piloting Helped 

Inform Roll-out of 

MAC-MO Strategy, 

Which Offers 

Potential Benefits 

Compared to MSMO

The MAC-MO Strategy 

Reflects Potential Benefits 

to Government as 

Compared to MSMO 

Strategy
Letter

Page 13 GAO-17-54 Navy Ship Maintenance

Ship repair 

contract options 

and ordering

Single contract is awarded for multiple availabilities 

for ship repair, modernization, and continuous and 

emergent maintenance for an entire ship class or 

group of ship classes within their homeport.

According to NAVSEA, MSMO contracts were 

awarded with options for up to five years based on 

“notional” work packages for each ship. The notional 

work packages consisted of individual work items, the 

costs of which would vary with the type of scheduled 

availability. 

Multiple indefinite delivery-indefinite quantity (IDIQ) 

contracts are awarded for a class of ships within their 

respective homeports, but NAVSEA may also award single 

contracts for emergent work and for CNO availabilities 

longer than 6 months.

IDIQ contracts are awarded for ordering periods of up to 5 

years, comprised of a base year and four option periods of 

12 months each. Orders under the contracts will be 

completed and awarded based on actual work 

specifications.

Competition 

opportunities for 

ship repairs

Single competition for a ship class or a group of ship 

classes, which could have separate competitions for 

work needing drydocks. NAVSEA issued contract 

modifications to authorize each availability.

According to NAVSEA, MSMO contracts did not 

include any work set aside for small businesses to 

serve as prime contractors. However, NAVSEA 

required prime contractors to subcontract 40 percent 

of the work to small businesses.

According to NAVSEA, it executed few, if any, coastwide competitions for Chief of Naval Operations 

(CNO) availabilities longer than 6 months. 

Competition for multiple award IDIQ contracts for a class of 

ships, with separate competitions for complex and 

noncomplex work. NAVSEA plans to compete orders for 

each availability.a

NAVSEA intends to set aside “noncomplex” work for small 

businesses to serve as prime contractors. NAVSEA 

requires prime contractors to set aside about 20 percent of 

their work to subcontractors.

NAVSEA plans to promote the use of coast wide 

competition for CNO availabilities longer than 6 months to 

provide for additional competition opportunities. 

Source: GAO analysis of the Federal Acquisition Regulation, NAVSEA documents, and interviews.| GAO-17-54

aNAVSEA generally considers non-complex work to include continuous maintenance availabilities and 

emergent maintenance availabilities less than 6 months, provided that the availability does not 

include work on shipboard critical systems.

The attributes of MAC-MO offer significant benefits as compared to 

MSMO. The increase in competition opportunities that MAC-MO offers 

has the potential to help save the taxpayer money, improve contractor 

performance, and promote accountability for results.13 MAC-MO contract 

structures also offer benefits as compared to MSMO. Under MAC-MO’s 

firm-fixed-price contracts for executing availabilities, prices do not change 

based on contractor performance, even if the contractor underbids to win 

the contract. For MAC-MO’s third-party planning contracts, NAVSEA 

determined that those should be cost-reimbursement type contracts, but 

that incentives were appropriate to motivate contractor performance. The 

contracts will feature two types of incentives, incentive fees and award 

terms. The incentive fees will allow the contractor to earn profit based on 

the accuracy of its work specifications, adherence to schedule, or both. 

The award term plan allows the contractor to earn additional option years, 

exercisable at the government’s discretion, if the government decides the 

 

13We discuss the importance of competition in GAO, Federal Contracting: Noncompetitive 

Contracts Based on Urgency Need Additional Oversight, GAO-14-304 (Washington, D.C.: 

Mar. 26, 2014). 
Letter

contractor generally performed satisfactorily regarding quality, cost, and 

schedule.

Prior to finalizing the MAC-MO acquisition plan in April 2015, NAVSEA 

conducted market research to identify how the proposed strategy could 

promote competition for the award of contracts for third-party planners 

and for the execution of maintenance availabilities. Market research—the 

process used to collect and analyze data about capabilities in the market 

that could satisfy an agency’s needs—is a critical step in the acquisition 

process, informing key decisions about how best to acquire goods and 

services.

Page 14 GAO-17-54 Navy Ship Maintenance

14 The FAR requires, among other things, that market research 

be used to promote and provide for full and open competition, and as part 

of the acquisition planning process, that contract requirements be 

structured to facilitate competition by and among small business 

concerns.15

NAVSEA contracting staff used a variety of market research techniques 

to inform their analyses, such as holding industry days and publishing 

requests for information on www.FedBizOpps.gov to gauge industry 

interest in competing for MAC-MO contracts.16 As a result of the analyses, 

NAVSEA:

· identified potential competition for the execution of complex 

maintenance availabilities for the six ship classes included in the 

strategy within the three homeports (Mayport, Florida; Norfolk, 

Virginia; and San Diego, California) and the East and West Coastwide competitions, as well as for the third-party planning contracts.17

 

14GAO, Market Research: Better Documentation Needed to Inform Future Procurements 

at Selected Agencies, GAO-15-8 (Washington, D.C.: Oct. 9, 2014).

15FAR § 7.102(a)(2). The FAR also directs that the results of market research are to be 

used to determine if sources capable of satisfying the agency’s requirements exist. FAR § 

10.001(a)(3)(i). 

16Federal Business Opportunities, commonly referred to as FedBizOpps, is a web-based 

government portal which allows all potential vendors to consider federal procurement 

opportunities. 

17Federal regulations require agencies to perform acquisition planning activities, including 

market research for all acquisitions to ensure the government meets its needs in the most 

effective, economical, and timely manner possible. FAR § 7.102. See GAO, Acquisition 

Planning: Opportunities to Build Strong Foundations for Better Services Contracts, 

GAO-11-672 (Washington, D.C.: Aug. 9, 2011).

The Navy Used Market 

Research and Pilot Ship 

Availabilities to Inform 

MAC-MO Implementation
Letter

· determined that two or more capable small businesses existed to 

justify setting aside noncomplex work to small businesses in the 

homeports of Norfolk and San Diego, but not Mayport or the coastwide competitions.

· made an initial determination that the use of a single award IDIQ, 

planned for the repair of destroyers, was feasible. However, according 

to NAVSEA officials, the Navy subsequently decided not to pursue 

this contracting approach on the basis of two factors. First, single 

award IDIQs would have required potential contractors to pre-price 

availabilities years into the future, which industry cited as highly 

problematic. In addition, NAVSEA found that the use of single award 

IDIQs would likely undermine its negotiating position with respect to 

individual modernizations.

In addition, in 2014 NAVSEA used San Diego-based pilot availabilities for 

five ships to test the MAC-MO strategy, and assembled lessons learned. 

These availabilities, which SWRMC oversaw in San Diego, California, 

ranged in level of complexity. The Navy also considered lessons learned 

from earlier maintenance availabilities, particularly the USS Porter in 

2013, for which NAVSEA awarded a firm-fixed-price contract for 

maintenance and collision damage repairs. A mixed maintenance team 

composed of personnel from SERMC and MARMC provided oversight 

over the planning and execution of this availability in Norfolk, Virginia. 

Table 2 identifies the MAC-MO attributes demonstrated during these pilot 

availabilities.

Page 15 GAO-17-54 Navy Ship Maintenance
Letter

Table 2: Multiple Award Contract, Multi-Order Attributes Demonstrated by the 2014 San Diego Pilot Ship Maintenance 

Page 16 GAO-17-54 Navy Ship Maintenance

Availabilities

Attribute of the Proposed Strategy Demonstrated

Contract Pricing Planning Ordering Competition

Firmfixed 

price 

Regional 

Maintenance 

Center writes 

requests for 

contract 

changesa

Thirdparty 

planner

Regional 

Maintenance 

Center verifies 

plans

Single 

Contract

MultiAward 

IDIQ

HomeportCoast 

wide

Small 

business 

set aside

San Diego Pilot Ships 

USS William P. 

Lawrence YES YES YES YES NO YES YES NO NO

USS Bunker Hill YES YES YES YES NO YES YES NO NO

USS Spruance YES YES YES YES NO YES YES NO NO

USS Mobile Bay YES YES YES YES NO YES YES NO NO

USS Cape St. 

George YES YES YES YES NO YES YES NO NO

Source: GAO analysis of NAVSEA contract data and interviews. | GAO-17-54

aA request for contract change is a formal process between the government and contractor for 

modifying a contract for which a final price had been previously agreed to and can expand the scope 

of work on a contract

While the pilot ships provided the Navy useful information, the Navy did 

not test all aspects of the MAC-MO strategy. For example, the pilot was 

limited to maintenance, modernization, and repair of DDG 51 and CG 47 

class ships in San Diego, California. In addition, the cost of the more 

complex pilot availabilities—the destroyers USS William P. Lawrence and 

USS Spruance—was relatively low compared to more typical costs for 

surface combatants, suggesting that the scope of work was much less 

than a typical CNO availability. Our analysis showed that these 

availabilities cost about $4.2 million and $3.7 million, respectively, 

whereas CNRMC data from 2011 to 2014 shows the average cost of a 

CNO availability for a destroyer to have been about $17 million and a 

cruiser about $32 million. In responding to our analysis, SWRMC 

contracting staff said that the type of work conducted in the pilot 

availabilities was typical of other drydocking availabilities and was ideal 

because it was small enough to identify potential problems with the 

proposed strategy without risking significant schedule delays and cost 

overruns.
Letter

NAVSEA began implementing the MAC-MO strategy following the Deputy 

Assistant Secretary of the Navy for Acquisition and Procurement’s 

approval in May 2014 and April 2015, respectively, of acquisition 

strategies for acquiring third-party planning services and for execution of 

the ship availabilities. In February 2015, NAVSEA awarded the first of 

three third-party planning contracts to QED Systems, Inc. and, in 

February 2016, NAVSEA awarded the first of the two multiple award IDIQ 

contracts specifically for complex availabilities in Norfolk, Virginia.

To provide a bridge between when the MSMO contracts ended and the 

award of the MAC-MO contracts, NAVSEA awarded a series of single 

contracts for the execution of mostly destroyer availabilities, including one 

that was competed along the East Coast. NAVSEA refers to these as 

“gap ships.” Nine contract competitions to date have taken place for gap 

ships homeported in Norfolk, Virginia, and an additional availability was 

competed along the East Coast. According to NAVSEA officials, they do 

not anticipate requiring gap ship awards for any ships homeported in San 

Diego, California or Mayport, Florida. Figure 4 shows the timeline for 

these gap ship contract awards and other awards related to the MAC-MO 

strategy.

Page 17 GAO-17-54 Navy Ship Maintenance

Implementation of the 

MAC-MO Strategy Is 

Underway
Letter

Figure 4: Timeline of Initial Awards to Support the MAC-MO Strategy for Ship Maintenance Availabilities

Page 18 GAO-17-54 Navy Ship Maintenance
Letter

By April 2016, the Navy had awarded all three of the third-party advance 

planning contracts—all to QED Systems, Inc. While the Navy anticipated 

competition, it reported that only the Landing Helicopter Assault/Landing 

Helicopter Deck class third-party advance planning solicitation received 

multiple offers. As a result, one firm is currently responsible for planning 

specifications for all of the MAC-MO availabilities. According to Navy staff 

we interviewed, QED Systems had prior experience drafting work 

specifications for ship availabilities as a subcontractor for MSMO ship 

repair contractors. As of August 2016, QED Systems had developed 

specifications for the Norfolk gap ships USS Normandy and USS 

Gettysburg and was in the process of planning additional availabilities.

NAVSEA has awarded multiple award IDIQ contracts for the execution of 

complex availabilities in Norfolk and San Diego, and reported MARMC 

and SWRMC have issued their first orders. In addition, as of August 

2016, SERMC had solicited, with the intent to award multiple IDIQ 

contracts, for the execution of availabilities in Mayport, Florida. MARMC 

and SWRMC have posted draft solicitations for the award of IDIQs to 

small business contractors in their respective ports.

The Navy has taken steps to mitigate potential challenges as it moves 

forward with the MAC-MO contracting strategy, primarily by responding to 

11 key lessons learned from its pilot availabilities. As of August 2016, the 

Navy has taken actions that partially address 8 and fully address 3 of 

those lessons learned. A persistent theme across several of the lessons 

learned is the need for sufficient staffing within the regional maintenance 

centers (RMC)—a deficiency that has existed for years, according to 

NAVSEA officials. In addition, the lessons learned highlight the 

importance of stabilizing requirements prior to solicitation of firm-fixedprice contracts—a cornerstone of the MAC-MO approach. The Navy has 

developed new milestones that aim to do so; however, its discipline in 

performing to these milestones remains largely untested, and it has 

historically experienced challenges in this area. In addition, although 

individual RMCs are assessing the outcomes of individual ship 

availabilities under MAC-MO, many different maintenance community 

stakeholders are involved and the Navy lacks a coordinated process to 

evaluate whether implementation of the new strategy is progressing as 

planned.

Page 19 GAO-17-54 Navy Ship Maintenance

Additional Action 

Needed to Address 

Potential Challenges 

to Implementation of 

the MAC-MO 

Contract Strategy
Letter

Based on our analysis of Navy documentation and interviews with 

NAVSEA officials, we identified 11 key lessons learned stemming from 

the pilot maintenance availabilities. All but one of these lessons learned 

focused on the need to mitigate potential challenges associated with 

MAC-MO’s envisioned use of firm-fixed-price contracts and third-party 

planners. We considered lessons learned to be key if (1) NAVSEA staff 

documented them as lessons learned and (2) NAVSEA officials 

knowledgeable with the pilot ship experiences identified them as 

significant.

Page 20 GAO-17-54 Navy Ship Maintenance

18 According to our analysis, the Navy has made progress 

towards addressing the lessons learned, fully addressing 3 and partially 

addressing the remaining 8.

Table 3 highlights these lessons learned, Navy actions related to them, 

and our assessment of the Navy’s actions.

Table 3: Status of Actions to Address Key Lessons Learned During Multiple Award Contract-Multi-Order (MAC-MO) Pilot Ship 

Maintenance Availabilities

Strategy attribute

Related lesson learned regarding 

potential challenge to implementation Action taken GAO assessment

Use of firm-fixedprice contractsNeed for stakeholders, such as the type 

commanders and modernization sponsors, 

to establish work requirements early to 

provide the third-party planner adequate 

time to produce accurate specifications

Naval Sea Systems Command 

(NAVSEA) proposed revised milestones 

to help ensure the requirements are 

established on a schedule that supports 

third-party planner needs.

Actions taken partially 

address the lesson 

learned 

Need for strategies to reduce the impact of 

changes to work requirements after 

contract award to prevent schedule delays

NAVSEA plans use of mechanisms, 

(such as formally reserving funds and 

using contract options) to fund additional 

work surfacing after contract award, to 

reduce the need to negotiate contract 

changes.

Actions taken partially 

address the lesson 

learned 

Need for additional regional maintenance 

center (RMC) staff for execution of the 

contract as staff assume additional 

responsibilities, such as drafting requests 

for contract changes, formerly done by 

Multi-Ship, Multi-Option (MSMO) 

contractors

RMCs have required and received 

funding approval for additional staff to 

fulfill needs that existed before 

implementation of the MAC-MO strategy 

and while there have been intermittent 

delays, hiring at RMCs is in progress.

Actions taken partially 

address the lesson 

learned 

Need for additional RMC staff training as 

they take on new responsibilities for 

oversight of the firm-fixed-price contracts 

Commander, Navy Regional 

Maintenance Center (CNRMC) has 

enhanced the content of required course 

work and introduced new courses related 

to firm-fixed-price contracts.

Actions taken partially 

address the lesson 

learned 

 

18See appendix I for more information about our methodology.

The Navy Has Made 

Progress Addressing 

Potential Challenges in 

Implementing MAC-MO
Letter

Page 21 GAO-17-54 Navy Ship Maintenance

Need to revisit the use of contractor 

incentives in a firm-fixed-price environment 

because penalties for not completing the 

contract as agreed, known as liquidated 

damages, were not seen as an effective 

tool

NAVSEA reports working on finding the 

most effective incentive structure, and 

RMC program managers would decide if 

an incentive were needed.

Actions taken partially 

address the lesson 

learned 

Use of third-party 

planners

Need for incentives for third-party planners 

for improving Surface Maintenance 

Engineering Planning Program 

(SURFMEPP) planning products for future 

use and producing quality work 

specifications

NAVSEA includes monetary incentives in 

the third-party planning contract tied to 

updating technical data and accurate 

work specifications for the duration of the 

contract.

Actions taken fully 

address the lesson 

learned 

Need for third-party planners to check the 

condition of the ship (“ship check”) to 

minimize growth work

NAVSEA includes a requirement in the 

third-party planning contract to conduct 

ship checks

Actions taken fully 

address the lesson 

learned 

Need for third-party planners to have 

better access to the Navy Maintenance 

Database to more easily develop work 

specifications. 

SURFMEPP has taken steps to improve 

the third-party planner’s access to the 

database, although gaps remain because 

of safeguards needed to protect 

proprietary information. 

Actions taken partially 

address the lesson 

learned 

At MARMC and SWRMC, based on staff 

reporting, need for additional staff to 

administer the third-party planner contract 

and review specifications produced by the 

third-party planner

These RMCs reported they are shifting 

staff from other duties to perform these 

responsibilities and restructuring their 

planning divisions to support the strategy.

Actions taken partially 

address the lesson 

learned 

At MARMC and SWRMC, need for 

stronger staff capabilities to review the 

accuracy of third-party planning 

specifications

CNRMC is sponsoring training and 

created new courses to train staff on the 

specification review process.

Actions taken partially 

address the lesson 

learned 

Use of IDIQ

contracts

Need for new arrangements to order and 

store advance materials, as MSMO 

contracts were generally for 5 years and 

contractors could store such materials.

NAVSEA included a contract requirement 

for the third-party planner to order and 

store these materials.

Actions taken fully 

address the lesson 

learned 

Separate 

competitions for 

noncomplex and 

complex work

N/Aa N/Aa

N/Aa

Legend:  = Actions taken fully address the lesson learned;  = Actions taken partially address the lesson learned;  = No actions yet taken or actions 

taken did not address the lesson learned.

Source: GAO analysis of Navy data and documentation. | GAO-17-54

a

The Navy did not test this attribute during the pilot availabilities.

The documented need to hire additional staff applied to two attributes—

use of firm-fixed-price contracts and use of third-party planners. This 

issue also surfaced in interviews we conducted at two of the three MACMO implementing RMCs—MARMC and SWRMC. MARMC staff we 

interviewed reported they did not have the staff needed to implement 
Letter

MAC-MO, and SWRMC leaders reported that the San Diego pilot 

availabilities validated the importance of them moving forward with hiring 

to approved staffing levels in areas such as specification review.

However, firm-fixed-price contracts—such as exist under MAC-MO—

generally should require fewer government resources to administer than 

the cost-reimbursement contracts of the MSMO strategy. For instance, 

the use of a cost-reimbursement contract requires the contracting officer 

to determine before the award the contractor’s accounting system is 

adequate, to perform surveillance during execution to ensure the 

contractor is exercising effective cost controls, and to employ audits to 

ensure only allowable costs are being paid. None of these measures is 

necessary for firm-fixed-price contracts, under which the contractor must 

perform the specified work regardless of incurred expenses.

In response to our question on why additional staff were needed to 

support the MAC-MO strategy, a senior CNRMC official commented that 

the current need for additional staffing at MARMC and SWRMC was not a 

result of the change in contracting strategy to MAC-MO, but rather 

indicative of persistent staffing shortages that existed under the MSMO 

strategy. For example, the officials said that although RMC staff reported 

the need to hire qualified contracting specialists to support the MAC-MO 

strategy, shortages in this position existed under MSMO because the 

demands of the job produced high turnover. In 2014, several years after 

the establishment of the RMCs, U.S. Fleet Forces Command 

commissioned a study that assessed RMC manning requirements. 

CNRMC officials stated that this study served as justification for 

requesting approximately 300 additional staff across the RMCs beginning 

in fiscal year 2017. However, a senior CNRMC official cited budget 

constraints within U.S. Fleet Forces Command, which approves RMC 

budgets, as a limiting factor on how rapidly the RMCs could overcome 

existing staffing shortfalls. Nonetheless, a CNRMC official stated that 

MAC-MO might alleviate shortfalls, although it could be years before the 

impacts are realized.

In addition, Navy officials stated that they plan to continuously assess and 

incorporate lessons learned throughout implementation of the MAC-MO 

strategy. According to CNRMC officials, one recent example of this 

learning occurred during the execution of the gap ship availabilities in 

Norfolk, which identified a need to train contracting staff on how to obtain 

funding for contract changes when funding for the original contract had 

been obligated in the prior fiscal year. Since this process was never 

needed to fund changes to MSMO cost-reimbursement contracts, 

Page 22 GAO-17-54 Navy Ship Maintenance
Letter

MARMC staff were unfamiliar with the process.

Page 23 GAO-17-54 Navy Ship Maintenance

19 In addition, RMC 

officials identified a variety of lessons learned after the third-party 

planning contractor completed its first set of work specifications for the 

USS Normandy, a gap ship availability. RMC officials reported that 

although the third-party planner met almost all of the planning milestones, 

the experiences during the planning process underscored the importance 

of RMC staff meeting frequently with the planner to discuss and answer 

questions and review specifications and outcomes of ship checks.

Unstable work requirements have historically posed risks to the Navy’s 

maintenance and readiness goals and hold significant implications for the 

MAC-MO contracting strategy. Without stable requirements, the thirdparty planner cannot develop work specifications that reflect the full scope 

of work needed to be done. In our May 2016 report on OFRP, we found 

that from 2011 to 2014, on average, surface combatants experienced a 

34 percent increase in unanticipated growth in maintenance 

requirements, resulting in average annual cost growths of $164.8 million. 

Officials primarily attribute the unanticipated growth and new work to 

estimating difficulties and high operational tempo, among other reasons.20

Increases in growth and new work also have consequences for the length 

of a maintenance availability as RMC staff and contractors need to 

negotiate contract changes and agree on costs. For example, the Navy 

reported that from May to October 2015, the median time to process and 

complete negotiations for new work for surface combatants was 18 days, 

exceeding the Navy’s standard of 5 days.

The MAC-MO San Diego pilot availabilities identified the need for 

NAVSEA to provide sufficient time to finalize work requirements (known 

as package lock) before the third-party planner develops the work 

specifications that accompany the solicitation. Accordingly, in 2015, 

 

19Department of the Navy, Office of the Assistant Secretary of the Navy, (Financial 

Management and Comptroller), Financial Management Policy Manual, 2015. Expired 

funds may generally be used for obligation adjustments, commonly referred to as upward 

obligation adjustments, resulting from within scope contract changes, as well as out of 

scope changes or other new obligations for which legal authority exists to use expired 

funds.

20The Navy defines growth as any additional work that is identified or authorized after 

contract definitization that is related to a work item included in the original contract. 

Alternatively, the Navy defines new work as any additional work that is identified or 

authorized after contract definitization that is not related to a work item included in the 

original contract definitization.

Transition to the MAC-MO 

Strategy Requires 

Stakeholders to Stabilize 

Requirements Early to 

Support Development of 

Accurate Specifications
Letter

NAVSEA proposed revised planning milestones for CNO availabilities, 

which lengthened the amount of time between the start of the planning 

process and the start of maintenance availability from 360 days (which 

was the MSMO standard) to 540 days. Although key stakeholder roles 

remain the same under the new MAC-MO milestones, NAVSEA’s move 

to lock the work package earlier to allow time for solicitation of the 

contract has implications for stakeholders who develop modernization 

and maintenance requirements, as well as stakeholders who verify the 

accuracy of the work specifications prepared by the third-party planner. 

For example, the requirements must be locked 175 days, rather than 90 

days, before the start of an availability.

According to NAVSEA officials, the Navy has not yet formally approved 

and implemented the revised MAC-MO milestones. NAVSEA officials 

reported currently using the revised milestones for its firm-fixed-price

contracts as it wants to see how they work before formally approving 

them. See figure 5 for a comparison of the planning milestones for a CNO 

availability under MSMO and MAC-MO.

Page 24 GAO-17-54 Navy Ship Maintenance
Letter

Figure 5: Comparison (in days) of Planning Milestones for Work Package Development in a Chief of Naval Operations 

Page 25 GAO-17-54 Navy Ship Maintenance

Availability (>$5 million and <$20 million) under the MSMO and MAC-MO Strategies

Note: Under MSMO, the Navy did not solicit proposals for individual availabilities. Consequently, the 

MAC-MO RFP release and award events are not correspondent to any MSMO milestones.

Senior NAVSEA, type command, RMC, and SURFMEPP officials agreed 

that development of fully-defined and timely work requirements is needed 

to support the planning process, but senior RMC officials as well as 

NAVSEA officials expressed concerns related to the occasionally 

conflicting goals of the fleet and the maintenance community. As officials 

explained, the fleet would prefer to wait as late as possible to define the 

requirements, as for example, ship systems continue to operate—and can 

thus break—up to the point that a ship enters an availability. Alternatively, the maintenance 

community prefers to lock requirements early in order to award the 

contract and support the solicitation of the availability. One senior 

NAVSEA program official commented that defining requirements later in 

the planning process was possible under the MSMO contracting strategy 

because the contract holder was responsible for repairing and 

maintaining the same ship year after year and could more easily 

accommodate changes in the scope of work to be completed. According 

to Navy officials, under MSMO, the contractor could even be tasked with 

writing requests for contract changes, which was the common practice at 

MARMC, but not SERMC or SWRMC. Alternatively, under MAC-MO, 

RMC staff exclusively are expected to develop these requests.
Letter

Several NAVSEA officials, including RMC officials, and a type command 

official commented that the use of firm-fixed-price contracts under MACMO will force earlier definition of requirements, which necessitates the 

Navy becoming more disciplined in its planning processes. Further, one 

RMC contracting official, experienced with the use of firm-fixed-price

contracting, commented that one of the biggest challenges to MAC-MO 

will be making sure stakeholders responsible for developing the 

requirements are collectively meeting each of the milestones for locking 

the requirements. Consistently, Navy officials at the various commands 

we interviewed acknowledged the importance of achieving accurate work 

specifications for a maintenance availability, as inaccurate work 

specifications could result in contract modifications, leading to schedule 

delays and cost growth and thus contravening the goals of MAC-MO.

Several senior Navy officials expressed hope about the MAC-MO 

strategy’s likelihood of success because they said the nature of firm-fixedprice contracts would make the tradeoffs between adding additional work 

after the start of an availability and adhering to the schedule more 

apparent, adding discipline to the process. A CNRMC official commented 

that adding additional work under the MSMO contracting strategy was 

relatively easy because the type commands and the modernization teams 

could go straight to the contractor and ask for more work to be done, and 

the contractors were willing to have new work added. In contrast, under 

the MAC-MO strategy adding work will be more time-consuming yet 

transparent because the cost of additional work will need to be negotiated 

before the work commences. Further, one senior acquisition planning 

official added that even if the need for new and growth work was 

identified after the contract was awarded, the government has the option 

of performing the work later at a subsequent availability provided the 

additional work is not related to the core functionality of the ship or a 

safety issue.

The Navy has processes in place for evaluating the contract performance 

of its individual surface ship availabilities, including metrics that measure 

schedule delays, cost growth, and contract changes associated with 

growth and new work. This evaluation process, which is centered in the 

RMCs, has largely carried over from the previous MSMO strategy, 

although under MAC-MO’s firm-fixed-price contracts, it will not include 

award fee evaluation board reviews of the availability contractor. In 

addition, while the CNRMC collectively analyzes the metrics, it is not 

responsible for determining whether the strategy itself is achieving its 

objectives.

Page 26 GAO-17-54 Navy Ship Maintenance

The Navy Lacks a 

Systematic Process for 

Evaluating MAC-MO 

Implementation and 

Progress
Letter

Apart from these availability-specific evaluations, the Navy does not have 

a systematic process in place to evaluate the extent to which the MACMO strategy is meeting its overall objectives and whether risks to its 

success, such as timely completion of work requirements under the 

proposed milestones and shortfalls in RMC staffing, have been 

cooperatively addressed and mitigated by stakeholders within the Navy 

maintenance community. According to federal standards for internal 

control, management should design control activities to respond to risks 

and evaluate if objectives are being met, which involves leadership-level 

reviews of performance and establishment of performance measures.

Page 27 GAO-17-54 Navy Ship Maintenance

21

As we have previously reported, risk assessment can provide a 

foundation for effective program management because it provides 

reasonable assurance that such risks are being minimized.22

As noted above, the Navy faces some challenges to successfully 

implementing MAC-MO. Greater discipline is required to plan and execute 

ship availabilities using firm-fixed-price contracts and third-party planners, 

requiring greater coordination among stakeholders in the fleet and 

NAVSEA to identify potential risks to the strategy. Achieving stable 

requirements and specifications requires extensive coordination within the 

type commands, across NAVSEA offices, and with the third-party 

planner—an approach the Navy has only demonstrated to a limited extent 

to date, primarily through its San Diego pilot availabilities. Further, as 

experiences with the Norfolk gap ships suggest, the Navy is likely to 

identify additional lessons learned. Without effective coordination across 

myriad stakeholders within the Navy’s maintenance communities who 

together are responsible for scheduling, planning, budgeting, overseeing, 

and setting policy for surface ship availabilities, there is the risk that MACMO will not be implemented as envisioned and the potential benefits may 

not be fully realized.

The Navy already recognizes the importance of establishing forums 

where issues of cross-cutting interest to the fleet and maintenance 

communities can be addressed. In June 2016, the Navy chartered a 

committee to identify and address maintenance and modernization 

requirements for surface ships. This committee, known as the Surface 

and Expeditionary Warfare Maintenance and Modernization Committee, 

 

21GAO, Standards for Internal Control in the Federal Government, GAO-14-704G 

(Washington, D.C.: Sept. 10, 2014).

22GAO-12-887. 
Letter

includes stakeholders from the fleet and shore-based maintenance 

communities. As stated in the Navy instruction establishing the 

committee, this coordination is best accomplished through a standing 

group of knowledgeable and accountable representatives who actively 

participate in the development and assessment of maintenance and 

modernization requirements and resourcing solutions.

Page 28 GAO-17-54 Navy Ship Maintenance

23 In addition, as 

SWRMC recommended as part of its lessons learned from the San Diego 

pilot availabilities, a committee known as Surface Team 1 could have the 

potential to track the successful aspects of MAC-MO’s implementation 

and develop metrics to evaluate its performance. The Navy has tasked 

Surface Team 1, a previously existing committee, whose representatives 

also include members of the fleet and shore-based maintenance 

communities, with responsibilities for setting and developing surface ship 

maintenance and modernization priorities, but has not tasked it with 

assessing MAC-MO’s implementation.

NAVSEA designed the MAC-MO contracting strategy to increase the 

number of competition opportunities for the maintenance and 

modernization of surface ships. This goal is achieved through a 

competitive ordering process for individual availabilities, expansion of the 

base of potential prime contractors to include small businesses, and 

greater use of coast-wide—rather than just homeport-specific—

solicitations. Aside from these increased competitions, it is too soon to tell 

what other effects MAC-MO may have on the ship repair industrial base. 

Navy MSMO contractors in the MAC-MO homeports of Mayport, Florida; 

Norfolk, Virginia; and San Diego, California stated they have begun taking 

steps to reduce overhead costs to position them to operate efficiently 

within a firm-fixed-price contracting environment. Contractor 

representatives report these steps include reduced investments in training 

and facilities. The effect of these steps, however, depends in part on 

factors unrelated to MAC-MO—most notably, the Navy’s ability to provide 

consistent and stable workloads within these ports. In contrast, nonMSMO contract holders, including small businesses, did not share these 

concerns since they were accustomed to working in a firm-fixed-price 

contract environment and maintained less extensive facilities. All of the 

contractors we interviewed intend to compete for MAC-MO contracts, and 

 

23OPNAVINST 4700.40 N9 15 June 2016. The instruction authorizing this committee is

applicable to all surface and expeditionary ship maintenance and modernization 

requirements with the exception of nuclear-powered surface ships.

MAC-MO Strategy 

Will Increase 

Competition 

Opportunities, but It Is 

Too Soon to Assess 

Other Effects on the 

Ship Repair Industrial 

Base
Letter

several cited potential changes needed to their workforces to prepare for 

an environment of increased competition under MAC-MO.

The MAC-MO strategy expands competition opportunities in three key 

ways:

· holders of IDIQ multiple award contracts will compete for orders for 

each availability,

· noncomplex availabilities are set aside for small businesses, and

· coast-wide competitions will enable contractors not located in the 

ship’s homeport to compete for the maintenance availability.

NAVSEA officials told us they expect increased competition to reduce the 

overall cost of ship availabilities, although it is too soon to determine if the 

Navy will realize these benefits. Details follow on each aspect of planned 

competition.

Under the MAC-MO strategy, more opportunities for contractors to 

compete for work will exist because the multiple award contract structure 

allows the Navy to compete orders for each individual availability among 

the pool of IDIQ awardees. This represents a departure from the MSMO 

strategy because under MSMO, a single contract is awarded to one 

contractor to execute availabilities for a class of ship over a 5-year period. 

Under MSMO two contracts could be awarded for a class of ships—one 

for maintenance availabilities that required a drydock facility (docker 

contract) and one for those that did not (non-docker contract).

To illustrate the number of IDIQ orders that could potentially be competed 

under the MAC-MO strategy, we analyzed DDG 51-class destroyer 

availabilities completed in Norfolk between fiscal years 2010 and 2014. 

The Navy executed these maintenance availabilities under two different 

MSMO contracts—a docker contract and a non-docker contract. We 

performed this analysis because under the MAC-MO strategy, individual 

availabilities—which were previously covered by a single MSMO 

contract—could now be competed as individual orders among the pool of 

IDIQ awardees. As shown in table 4, our analysis indicates that over a 5-

year period, the Navy could have realized over 350 competitive orders for 

Page 29 GAO-17-54 Navy Ship Maintenance

MAC-MO Strategy 

Expands Competition 

Opportunities in Three 

Ways

IDIQ Multiple Award Contracts 

Facilitate Competition for Each 

Availability
Letter

the destroyer availabilities it completed in Norfolk, had a MAC-MO IDIQ 

contract with associated competition opportunities been in place.

Page 30 GAO-17-54 Navy Ship Maintenance

24

Table 4: GAO Analysis of Destroyer Availabilities in Norfolk, Virginia, Fiscal Years 2010-2014 

Number of Potential Competitions under Multiple Award Contract-Multi Order Strategy

Type of Contract FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2010-FY 2014

Non-Docker 31 41 38 39 47 196

Docker 23 35 32 30 36 156

Totals 54 76 70 69 83 352

Source: GAO analysis of Navy data. | GAO-17-54

In addition, NAVSEA officials told us they plan to broaden the pool of 

potential competitors for IDIQ complex and noncomplex awards by setting 

up rolling admissions for additional proposals, meaning that qualified 

contractors can apply to become a part of the pool of IDIQ awardees 

beyond the initial IDIQ solicitation period. They plan to release a 

solicitation for rolling admissions in San Diego and Norfolk in early fiscal 

year 2017.

25 The purpose of the rolling admission is to expand the 

contractor base for modernization of surface combatants and amphibious 

ships. A representative from one small business, which did not hold a 

MSMO contract, told us it would consider applying for an IDIQ award for 

complex availabilities once the MAC-MO strategy is fully implemented 

because of the flexibility offered by rolling admissions.

The MAC-MO strategy broadens the pool of prime contractors qualified to 

compete for work in Norfolk, Virginia and San Diego, California by setting 

aside noncomplex availabilities in those locations for small businesses.26

Small businesses told us that historically they were more likely to work as 

 

24However, a MARMC official told us that the majority of these availabilities are 

considered to be complex work, so would not be considered small business set asides 

under the MAC-MO strategy.

25In June 2016, NAVSEA released the pre-solicitation for rolling admission for complex 

continuous maintenance, emergent maintenance, and CNO availabilities for work in 

Norfolk, Virginia and San Diego, California. 

26As part of its market research analysis, consistent with FAR requirements to structure 

contracts to facilitate small business participation, NAVSEA determined the potential 

existed for small businesses to compete in two of the homeport markets—Norfolk and San 

Diego—as prime contractors for IDIQs structured to cover noncomplex work but not the 

third—Mayport. In Mayport, NAVSEA determined there were not enough existing small 

businesses to warrant a small business set aside for non-complex work. 

Noncomplex Availabilities 

Competed Among Small 

Businesses
Letter

subcontractors to MSMO contract holders, offering specialized services 

such as electrical work, sometimes under a teaming agreement with the 

prime contractor.

Page 31 GAO-17-54 Navy Ship Maintenance

27

Under MAC-MO, small businesses are not required to hold a Master Ship 

Repair Agreement (MSRA) certification in order to compete for 

noncomplex availabilities. In March 2016, a NAVSEA official briefed 

contractors that, alternatively, small businesses competing for 

noncomplex contracts would be required to have “MSRA-like” capabilities 

and capacity to successfully compete for the contract.28 The term “MSRAlike” means that small businesses will be required to have similar 

management and quality processes to that required of a certified MSRA 

holder, and the capability to successfully complete typical work 

requirements associated with continuous maintenance availabilities. As of 

September 2016, NAVSEA had not awarded any IDIQ contracts for 

noncomplex availabilities, so it is too soon to tell how NAVSEA will 

adjudicate this process.

Small business representatives we interviewed consistently expressed 

interest in performing as prime contractors under MAC-MO.

Representatives of all seven small businesses we interviewed stated that 

they plan to compete as prime contractors for noncomplex availabilities—

even in Mayport, Florida, where the Navy plans to compete noncomplex 

availabilities among both small and large businesses. Some small 

business representatives noted they were likely to continue to act as 

subcontractors for complex availabilities. Representatives from small 

businesses identified a variety of factors they would consider on whether 

to compete for complex availabilities. For example, three small 

businesses told us it would depend on the nature of the work in a given 

availability, and more specifically, the facility requirements set forth in the 

solicitation. Further, 4 of the 7 small businesses we interviewed told us 

they do not own their own piers or have the dredged water space 

alongside the piers to berth ships. These businesses told us they typically 

 

27FAR § 9.601. A teaming arrangement refers to an agreement between two or more 

companies to form a partnership or joint venture to act as a prime contractor or in which a 

potential prime contractor agrees with one or more companies to have them act as 

subcontractor on a particular contract or program. 

28Naval Sea Systems Command Instruction 4280.2C, Master Agreement for Repair and 

Alteration of Vessels; Master Ship Repair Agreement (MSRA) and Agreement for Boat 

Repair (ABR) (Nov. 27, 1996). A CNRMC official advised us that the Navy is in the 

process of revising the MSRA certification program to update information on contractors. 
Letter

rely on the Navy’s facilities or those of large contractors to berth the ship 

so that they can conduct work on the ship. NAVSEA officials told us that it 

is not their intent for small businesses to perform work at facilities owned 

by large contractors and that, in general, the Navy will provide pier space 

for completion of noncomplex availabilities.

Navy policy requires that, whenever possible, ship repair and 

maintenance work of 6 months or less be performed by shipyards at or 

near the ship’s homeport to improve the crew’s quality of life by reducing 

their time away from home.

Page 32 GAO-17-54 Navy Ship Maintenance

29 Although NAVSEA officials told us they 

solicited few if any coast-wide availabilities under MSMO, as part of the 

transition to the MAC-MO strategy, NAVSEA has already competed 

several availabilities coast-wide and plans to compete nine additional 

maintenance availabilities along the East and West Coasts from 2017 to 

2019. Accordingly, any contractor on either coast with access to a pier 

and drydock will be able to compete for these availabilities. For example, 

shipyards in Charleston, South Carolina and Pascagoula, Mississippi 

would be allowed to compete for East Coast solicitations. NAVSEA 

officials told us they intend to evaluate the total cost of moving a ship out 

of its homeport—including fuel and transportation—before making an 

award for availabilities competed coast-wide, as moving ships from their 

homeport can be expensive and offset potential savings from the 

competition.

The Navy’s plan to compete nine coast-wide availabilities represents a 

significant increase over those competed under MSMO, where, according 

to NAVSEA officials, RMCs competed few if any coast-wide availabilities. 

Under the statute in effect since 1986 and Navy policy dating back to 

1995, if the work will take 6 months or less and there is adequate 

competition available among firms able to perform the work at the 

homeport of the vessel, then the contract solicitation must be limited to 

only homeport firms.30 Contract solicitations for work taking longer than 6 

months generally must be competed coast-wide. According to NAVSEA 

officials, under MSMO, the availabilities were planned to be shorter than 6 

months.

Navy officials offered various reasons as to why availabilities under 

MSMO were planned to be completed in less than 6 months. Because 

 

29This policy was established in June 1995, in accordance with 10 U.S.C. § 7299a. 

3010 U.S.C. § 7299a.

Increased Use of Coast Wide 

Competitions
Letter

MSMO contracts typically provided for 5 years of planned availabilities for 

a ship class within a given homeport, NAVSEA officials told us estimates 

of availability durations regularly had to be made years before the actual 

work requirements were known. Nevertheless, by planning the 

availabilities to be less than 6 months, NAVSEA did not need to compete 

them coast-wide (as it would have under the 1986 statute) and move the 

ship out of its homeport. In one instance, though, we found a MSMO 

contract that included options to cover any instances of work anticipated 

to take longer than 6 months, such as extended modernization 

availabilities. Therefore, the period of performance of these availabilities 

would have exceeded the 6-month limitation if the options had been 

exercised. NAVSEA and RMC officials told us that, in general, RMC 

contracting staff have been opposed to moving a ship out of its homeport 

because of the potential negative effects on sailor morale and the 

anticipated costs of moving the ship.

NAVSEA officials reported taking two separate actions to clarify the 

homeport exception to coast-wide competitions. First, NAVSEA officials 

recognized that the Navy homeport policy does not use the term “work”, 

which is included in the current statute. Specifically, the homeport policy 

does not define the scope of work included in an availability or when 

measuring of that work (estimating the number of days needed to execute 

the availability) should take place. NAVSEA officials stated they are 

drafting a revision to the 1996 homeport policy and that this draft revision 

will define the term “work” as meaning “work for the overhaul, repair, or 

maintenance of a naval vessel”. Additionally, the Navy’s proposed policy 

revision will require that 540 days prior to the start of an availability, the 

Navy identify how work days will be measured for that availability. In 

addition, NAVSEA officials told us they are developing a legislative 

proposal to increase the 6-month exception to coast-wide competitions to 

allow for a longer period before they have to do a coast-wide competition 

because availabilities with modernization packages now regularly exceed 

6 months, unlike in the past.

A variety of factors, including the Navy’s level of demand for maintenance 

and repair work at each of the three homeports in our review, will 

determine how the MAC-MO strategy might affect the industrial base, if at 

all. The possibility exists that some firms may choose to exit or enter the 

market, but it is too soon to tell how the MAC-MO contracting strategy 

might affect the industry’s capacity to meet the Navy’s long-term needs, 

especially since fluctuations in the Navy’s workload forecasts could also 

affect industrial base conditions within individual homeports.

Page 33 GAO-17-54 Navy Ship Maintenance

Multiple Factors Likely to 

Affect the Industrial Base 

as Contractors Respond to 

the MAC-MO Strategy
Letter

CNRMC officials told us they expect a predictable repair and 

maintenance workload in the homeports of Mayport, Florida; Norfolk, 

Virginia; and San Diego, California in future years, although this workload 

is cyclical in nature as it was under the MSMO strategy. Various factors, 

including the deployment of ships, can affect the demand for work in each 

of the homeports. For example, according to a Fleet Forces Command 

official, an upswing in workload for surface ships is expected in Norfolk as 

deployed ships move back into their homeport during fiscal year 2018. 

Similarly, the Navy plans to homeport newly constructed surface ships in 

San Diego, providing an upswing in future workload there as these new 

ships come in for maintenance and repairs. However, the Navy could 

make other decisions that could affect a homeport’s industrial base, such 

as when the Navy relocated three amphibious ships from Norfolk, Virginia 

to Mayport, Florida in fiscal year 2014.

Page 34 GAO-17-54 Navy Ship Maintenance

31 See figures 6, 7, and 8 for the 

Navy’s recent historical and forecasted workload in these three ports.

 

31 GAO-13-501. 

Navy Maintenance Workloads 

Drive Demand for Contractor 

Services
Letter

Figure 6: Recent Historical and Forecasted Navy Maintenance Workload in Port of Norfolk, Virginia, fiscal years 2015-2020

Page 35 GAO-17-54 Navy Ship Maintenance

Note: Resources per day is derived from the Navy’s estimate of total mandays budgeted for each 

availability, which is then summarized to provide an estimated forecast of a port’s entire 

workload. Total resources pre-implementation of the MAC-MO strategy includes contracts under the 

MSMO strategy, gap ship contracts, and anticipated MAC-MO contracts. Total resources per day 

non-MAC-MO strategy includes availabilities on aircraft carriers and other vessels which are not 

included in the MAC-MO strategy. This forecast does not include an estimate of the resources per 

day needed to execute anticipated coast-wide competed availabilities.
Letter

Figure 7: Recent Historical and Forecasted Navy Maintenance Workload in Port of San Diego, California, fiscal years 2015-

Page 36 GAO-17-54 Navy Ship Maintenance

2020

Note: Resources per day is derived from the Navy’s estimate of total mandays budgeted for each 

availability, which is then summarized to provide an estimated forecast of a port’s entire 

workload. Total resources pre-implementation of the MAC-MO strategy includes contracts under the 

MSMO strategy, gap ship contracts, and anticipated MAC-MO contracts. Total resources per day 

non-MAC-MO strategy includes availabilities on air craft carriers and other vessels which are not 

included in the MAC-MO strategy. This forecast does not include an estimate of the resources per 

day needed to execute anticipated coast-wide competed availabilities.
Letter

Figure 8: Recent Historical and Forecasted Navy Maintenance Workload in Port of Mayport, Florida, fiscal years 2015-2020

Page 37 GAO-17-54 Navy Ship Maintenance

Note: Resources per day is derived from the Navy’s estimate of total mandays budgeted for each 

availability, which is then summarized to provide an estimated forecast of a port’s entire 

workload. Total resources pre-implementation of the MAC-MO strategy includes contracts under the 

MSMO strategy, gap ship contracts, and anticipated MAC-MO contracts. Total resources per day 

non-MAC-MO strategy includes availabilities on air craft carriers and other vessels which are not 

included in the MAC-MO strategy. This forecast does not include an estimate of the resources per 

day needed to execute anticipated coast-wide competed availabilities.

Generally, former MSMO contract holders we interviewed in Norfolk and 

San Diego expressed less concern about the transition from MSMO to 

MAC-MO than they did the Navy’s ability to provide stable workloads in 

their ports, irrespective of contract type. In May 2016, we found that wide 

swings in port workload can have a negative effect on the private-sector 

industrial base, and various factors can affect those workloads.32 Further, 

 

32 GAO-16-466R. 
Letter

Navy documents show that OFRP will drive changes to the maintenance 

cycles for carrier and expeditionary strike groups and, in turn, cause 

significant fluctuations in port workloads, which could affect the industrial 

base’s ability to hire and retain a skilled workforce. Navy officials stated 

that they have begun to take steps to ensure that ships that comprise a 

carrier or expeditionary strike group—including non-nuclear surface ships, 

such as destroyers, cruisers, and amphibious ships—stagger their 

maintenance start and stop timelines, which would alleviate, in part, the 

concerns that industry cited.

Former MSMO and non-MSMO contractors offered various views on the 

potential effects of the MAC-MO strategy on the industrial base, primarily 

related to the need for contractors to compete for orders after the award 

of the IDIQ multiple award contracts. In part, these views are shaped by 

the various types of facilities—such as drydocks and piers—that an 

individual contractor maintains. According to two former MSMO 

contractors, these facilities represent significant capital investments on 

the part of the contractor, which then relies on sustained Navy workloads 

to fund their maintenance. Figure 9 highlights the characteristics of 

selected contractors we interviewed across the three ports where the 

Navy is implementing the MAC-MO strategy.

Page 38 GAO-17-54 Navy Ship Maintenance

Availability of Industrial Base 

Facilities and Workforce
Letter

Figure 9: Characteristics of Selected Contractors in Each Port Where the Navy Is Implementing the Multiple Award ContractPage 39 GAO-17-54 Navy Ship Maintenance

Multi Order Strategy

Contractors we interviewed commented on potential challenges and 

changes they are making to prepare for the increase in competition 

opportunities under the MAC-MO fixed price approach.

· Five former MSMO contractors told us they are working to reduce 

their overhead costs in order to remain competitive in a firm-fixedprice environment. In general, under the 5-year MSMO cost-
Letter

reimbursable contract, they stated they had confidence that they 

would receive regular workload from the Navy for a given class of 

ships. This confidence underpinned investments they made in 

maintaining and upgrading their facilities and training their workforces. 

Under MAC-MO, which will require competition for every availability 

within a homeport, these contractors do not have similar confidence or 

visibility into future work. Consequently, three MSMO contract holders 

told us they are laying off staff and reducing training programs to 

remain competitive. These layoffs are in addition to ones in 2015 and 

2016 reported by several Norfolk contractors and attributed to the 

decrease in workload in that port, which was unrelated to the MACMO strategy. Four MSMO contract holders also told us they are 

eliminating apprenticeship programs for workers. Further, one 

contractor told us that it may cease dredging the water surrounding its 

drydock to reduce its overhead costs, which would eliminate certain 

classes of ships being serviced in that port. Because the Navy only 

recently implemented MAC-MO, whether these reductions actually 

occur and, if so, their net effect on the industrial base’s capability and 

capacity to respond to the Navy’s maintenance needs remains 

indeterminate.

· Non-MSMO contractors told us that they are accustomed to working 

under firm-fixed-price contracts, having served as prime contractors 

for the Military Sealift Command, commercial companies, and smallscale NAVSEA availabilities. However, six of the non-MSMO contract 

holders we interviewed were small businesses with varying 

experience working as a prime contractor for the Navy. 

Representatives from one small business told us that the type of 

contract does not change the type of work to be completed. 

Representatives from four small businesses told us they are making 

changes to become more competitive under MAC-MO, such as 

realigning staff positions to reduce the company’s overhead costs.

· Both former MSMO holders and non-MSMO holders rely on full-time 

and temporary laborers to conduct work on Navy availabilities. Three

MSMO contract holders told us they have laid off skilled laborers in 

response to decreases in work and may have to rely on temporary 

laborers to complete certain availabilities. One contractor told us that 

it is harder to secure and incentivize temporary laborers to complete 

requested work on time. Contractors also have the option of hiring 

new, untrained laborers into their workforces, but these individuals 

require time to train and become proficient at their trades, which can 

reduce work efficiencies in the near-term. Two contractors also 

expressed concern about finding, training, and retaining qualified, 

skilled laborers when new contracts are secured under MAC-MO. 

Page 40 GAO-17-54 Navy Ship Maintenance
Letter

Navy officials told us they anticipated certain workforce reductions 

within the private sector under the firm-fixed-price contract structure.

Representatives from all of the companies we interviewed told us they 

plan to compete for work under the MAC-MO strategy; for many, the Navy 

is their primary customer. For instance, former MSMO contract holders in 

Norfolk reported they rely on Navy work for at least 97 percent of their 

revenue. However, nine of the companies we interviewed across the 

three MAC-MO ports reported that they diversify their Navy workload with 

work from other government customers and commercial work, and three 

would consider competing for other work should they not have a Navy 

contract in hand. For example, in San Diego, one former MSMO contract 

holder reported less than 60 percent of their revenue coming from the 

Navy. In Mayport, one small business contractor reported more than 40 

percent of its revenue coming from commercial and other government 

customers and signaled an intention to shift more resources into 

commercial work if it did not secure a MAC-MO contract.

Small businesses who are dependent on the Navy for work, and do not 

own drydocks or piers, told us they plan to aggressively compete for noncomplex work. In addition, three of the four small businesses in Norfolk 

told us they depend on the Navy for more than 75 percent of their 

revenue. Three Norfolk small businesses told us they have relocated 

personnel to Mayport in order to compete for Navy availabilities there.

In developing its MAC-MO contracting strategy, the Navy has taken a 

thoughtful approach that builds on the promising results from its pilot 

availabilities by incorporating lessons learned, and establishing 

milestones that promote the timely definition of work requirements in 

availabilities. These steps reflect an upfront recognition on the part of the 

Navy that the practices and processes it employed to manage 

availabilities under cost-reimbursement, MSMO contracts would likely 

prove untenable under firm-fixed-price, MAC-MO contracts. However, the 

implementation process does not end there. Additional learning is likely to 

take place as the Navy orders ship maintenance availabilities under MACMO. New aspects of the strategy will be tested, as will the discipline of the 

Navy’s fleet and shore-based maintenance communities to adhere to the 

MAC-MO milestones they have set. Further, the actions the ship repair 

industrial base takes to adapt to MAC-MO will become more evident, as 

will any potential implications. Harnessing new lessons learned, and 

ensuring key stakeholders are committed to their implementation, can 

position the MAC-MO strategy for success. The Navy has not put in place 

Page 41 GAO-17-54 Navy Ship Maintenance

Maintaining Contractor Interest 

in Competing for Navy Work

Conclusions
Letter

such a process for MAC-MO. Particularly in light of the large and complex 

nature of ship repair stakeholders in the Navy, not ensuring that progress 

is systematically assessed and that new lessons learned are incorporated 

in a timely manner could undermine the Navy’s ability to obtain the 

improved cost, schedule, and quality outcomes it seeks under the new 

strategy. To realize MAC-MO’s benefits, the Navy will need information to 

decide on how to make adjustments to the strategy. The existing 

committees—Surface Team 1 or the Surface and Expeditionary Warfare 

Maintenance and Modernization Committee—could provide a starting 

point.

In order to promote effective implementation of the MAC-MO contracting 

strategy, we recommend that the Secretary of Defense direct the 

Secretary of the Navy to complete the following action:

Assign responsibility to a single entity comprised of representatives from 

the fleet and shore-based maintenance communities, such as Surface 

Team 1, to perform systematic assessments of MAC-MO’s 

implementation that include the following:

· Review of lessons learned and identification of changes to Navy 

processes, including staffing, needed to support the MAC-MO 

strategy,

· Evaluation of performance against anticipated cost, schedule, and 

quality objectives, as outlined in the MAC-MO acquisition strategy, 

and

· Input and recommendations from all Navy parties that participate in 

the scheduling, planning, budgeting, oversight, and policy 

development for the repair, maintenance, and modernization of nonnuclear surface ships.

We provided a draft of this product to DOD for comment. In its written 

comments, reproduced in appendix II, DOD concurred with our 

recommendation on the need to provide systematic assessments of the 

MAC-MO strategy implementation. To address our recommendation, the 

Navy will identify criteria to be used to perform the assessment, identify 

appropriate stakeholders, identify which entity is best positioned to 

perform the assessment, and submit biennial reports beginning in 

December 2017 to the Director, Defense Procurement and Acquisition 

Policy in the Office of the Under Secretary of Defense for Acquisition, 

Technology and Logistics.

Page 42 GAO-17-54 Navy Ship Maintenance

Recommendation for 

Executive Action

Agency Comments 
Letter

Secretary of Defense, the Secretary of the Navy, and other interested 

parties. In addition, the report will be available at no charge on the GAO 

website at http://www.gao.gov. 

If you or your staff have any questions concerning this report, please 

contact me at (202) 512-4841 or by e-mail at mackinm@gao.gov. Contact 

points for our Offices of Congressional Relations and Public Affairs may 

be found on the last page of this report. Key contributors to this report are 

listed in appendix III.

Michele Mackin

Director, Acquisition and Sourcing Management

Page 43 GAO-17-54 Navy Ship Maintenance

We are sending copies to appropriate congressional committees, the 
Letter

List of Committees

The Honorable John McCain

Chairman

The Honorable Jack Reed

Ranking Member

Committee on Armed Services

United States Senate

The Honorable Thad Cochran

Chairman

The Honorable Richard Durbin

Ranking Member

Subcommittee on Defense

Committee on Appropriations

United States Senate

The Honorable Mac Thornberry

Chairman

The Honorable Adam Smith

Ranking Member

Committee on Armed Services

House of Representatives

The Honorable Rodney Frelinghuysen

Chairman

The Honorable Pete Visclosky

Ranking Member

Subcommittee on Defense

Committee on Appropriations

House of Representatives

Page 44 GAO-17-54 Navy Ship Maintenance
Appendix I: Objectives, Scope, and 

Methodology

In 2015, the Navy transitioned to the Multiple Award Contract-Multi Order 

(MAC-MO) contract strategy for the maintenance and modernization of 

surface ships. This report assesses (1) the potential benefits of the MACMO contracting strategy, (2) process changes the Navy has taken to 

address any challenges and to capitalize on anticipated benefits, and (3) 

how the strategy might affect the Navy’s ship repair industrial base.

To assess the potential benefits of the MAC-MO strategy, we analyzed 

acquisition planning and contract documentation and interviewed senior 

Naval Sea Systems Command (NAVSEA) officials about the strategy, 

including staff from the Deputy Commander for Surface Warfare. To 

determine the key differences between the MAC-MO and the Multi-Ship, 

Multi-Option (MSMO) contracting strategies in contract pricing, planning 

the work, ordering, and structuring the competition among ship repair 

contractors, we analyzed NAVSEA’s acquisition planning documentation 

for the MAC-MO strategy and reviewed contents of selected MSMO 

contracts the Navy identified as illustrative, most recent, or were still in a 

period of performance and MAC-MO contract documentation for thirdparty planning contract awards. We also considered applicable Federal 

Acquisition Regulation (FAR) provisions describing the conditions under 

which firm-fixed-price and cost-reimbursement contracts are appropriate. 

To identify the Navy’s rationale on how to proceed with the new strategy, 

we analyzed acquisition planning documentation to understand how 

NAVSEA applied the results of its market research as prescribed by the 

FAR.

Page 45 GAO-17-54 Navy Ship Maintenance

1 To further our understanding of NAVSEA’s decision to proceed 

with the MAC-MO strategy, we examined the characteristics of ship 

availabilities used to pilot features of the strategy, for example, the use of 

firm-fixed-price contracts and use of indefinite delivery, indefinite quantity 

(IDIQ) contracts and interviewed Southwest Regional Maintenance 

Center (SWRMC) in San Diego, California, who administered the pilot 

contracts. We also interviewed senior NAVSEA officials, including the 

Commander, Navy Regional Maintenance Center (CNRMC) staff, and 

contractors with experience in executing ship availabilities, to obtain their 

perspectives on the strategy. To identify the progress the Navy had made 

as of September 2016 in implementing the MAC-MO strategy, including 

the “gap ship” contract awards, we interviewed and obtained information 

from the Mid-Atlantic Regional Maintenance Center (MARMC) staff in 

 

1FAR Part 10.

Appendix I: Objectives, Scope, and 

Methodology

Potential Benefits of 

the MAC-MO 

Strategy
Appendix I: Objectives, Scope, and 

Methodology

Norfolk, Virginia and senior NAVSEA contracting staff, and analyzed

supporting contract documentation.

To assess process changes the Navy has made to address any 

challenges and to capitalize on anticipated benefits, we analyzed Navy 

documentation containing assessments of lessons learned from pilot 

maintenance availabilities used to test key features of the MAC-MO 

strategy. We identified a total of 18 lessons learned based on our 

assessment the Navy’s documentation of the San Diego pilot and USS 

Porter maintenance availabilities. We categorized 11 of the lessonslearned as key because they were also identified as lessons-learned in 

one or more interviews with NAVSEA officials knowledgeable about the 

pilot ship experiences. We excluded 7 lessons that did not meet this 

additional criterion. We interviewed Navy officials responsible for 

availability funding and oversight, contract administration, and program 

management pertaining to the MAC-MO contracting strategy and pilot 

availabilities. These offices included the Deputy Commander for Surface 

Warfare; Commander, Naval Surface Force, Atlantic; Commander, Naval 

Surface Force, Pacific; CNRMC; MARMC in Norfolk, Virginia; SWRMC in 

San Diego, California; and the Southeast Regional Maintenance Center 

(SERMC) in Mayport, Florida. To assess the Navy’s progress in taking 

actions to address potential challenges posed by the 11 key lessons 

learned, we evaluated Navy documents, including staffing and training 

plans for the contracting workforce across the RMCs, proposals for 

revised planning milestones, strategy and planning documents, and the 

contents of contracts for the third-party planner. We also interviewed 

Navy contracting, maintenance, and program management officials 

previously mentioned. To assess the extent to which the Navy has taken 

actions, we developed the following three-point scale:

· Not Met—The Navy has not taken any action to respond to identified 

lessons learned.

· Partially Met—The Navy has taken some action to respond to the 

identified lessons learned, but has not completed the action needed to 

address the identified risk.

· Met—The Navy has completed the action needed to address the 

identified lesson learned.

To identify roles and responsibilities for planning maintenance 

availabilities, we reviewed procedural documents to ascertain the lead 

offices that administer, plan and coordinate Navy availabilities, including 

Page 46 GAO-17-54 Navy Ship Maintenance

Navy Process 

Changes
Appendix I: Objectives, Scope, and 

Methodology

organizations that oversee repair and modernization efforts at private 

shipyards. In addition, as previously discussed, we interviewed officials 

responsible for planning and implementing the strategy. To describe the 

extent of maintenance overruns and their impact on the Navy, we used

information from a previous GAO report that analyzed ship maintenance 

data from fiscal years 2011 to 2015, which included availabilities 

conducted before and after Optimized Fleet Response Plan 

implementation, to ascertain the extent to which maintenance 

availabilities for surface combatants had been completed on time.

Page 47 GAO-17-54 Navy Ship Maintenance

2

To identify the extent to which the Navy has made provisions to assess 

implementation of the strategy and if it is meeting its goals, we 

interviewed senior NAVSEA officials on whether performance metrics had 

been developed to assess the strategy and if an organization had been 

assigned responsibility. We used federal internal control standards to 

determine if the Navy appropriately defined objectives related to the 

contracting strategy; assessed its internal processes to identify risks 

related to the strategy, including the development of performance 

measures; and created strategies to mitigate those risks.

To assess how the MAC-MO contracting strategy might affect the ship 

repair industrial base for surface ships, we examined the ways in which 

the strategy had the potential to increase competition opportunities and 

how the contractors within the industrial base might respond to these 

opportunities. To understand how IDIQ multiple award contracts and how 

setting aside noncomplex work to small businesses might promote 

competition, we identified how MAC-MO and MSMO contract provisions 

differed, as previously described, and also obtained the perspectives of 

NAVSEA officials and selected contractors.3 To understand the potential 

of IDIQ multiple award contracts for increasing competition, we selected 

two contracts reflective of the work—DDG 51 class ships in the homeport 

of Norfolk, Virginia—that would to be included under the MAC-MO 

strategy. To do so, we analyzed documentation listing the availabilities 

completed under two MSMO contracts—one contract requiring a drydock 

and one not requiring a drydock—to ensure we covered the range of 

availabilities that could be covered by a MAC-MO complex and 

 

2GAO, Navy’s Optimized Fleet Response Plan, GAO-16-466R (Washington, D.C.: May 2, 

2016.) 

3The industrial base consists of private ship repair firms, including smaller firms

Ship Repair Industrial 

Base
Appendix I: Objectives, Scope, and 

Methodology

noncomplex contract. We analyzed the data for consistency and 

completeness, although we did not trace the data to the original contract 

documentation. Since the purpose of this analysis was to illustrate how 

the number of competitive opportunities contract awards could increase 

under an IDIQ contract for one class of ships, and the Navy’s 

maintenance needs can change year by year, the results are not 

generalizable to other availabilities or future time periods. In addition, to 

understand how the Navy intends to promote the use of coast-wide 

competitions, we interviewed NAVSEA policy officials about the 

application of the Navy’s June 1995 Ship Depot Maintenance Solicitation 

Policy and obtained data from CNRMC on the use of such competitions 

under MSMO.

To identify the Navy’s projected workload for non-nuclear surface ships in 

the homeports of Mayport, Florida; Norfolk, Virginia, and San Diego, 

California, where the MAC-MO strategy will be implemented, we obtained 

data from CNRMC from fiscal years 2015 through the end of 2020.

Page 48 GAO-17-54 Navy Ship Maintenance

4 The 

CNRMC estimated these trends based on an analysis of needed staffing 

resources, including data housed in the Navy Database Environment. 

Since the purpose of our analysis was to show the Navy’s projections in 

anticipated port workload, we did not conduct our own assessment of the 

accuracy of this data. We excluded data on the coast-wide competitions 

from our analyses because these availabilities could be executed in ports 

other than the ship’s homeport.

To obtain the perspective of contractors from the three homeports where 

the MAC-MO contracting strategy will implemented, we conducted semistructured interviews to obtain viewpoints from selected 14 contractors. 

We identified 30 contractors which (1) held MSMO contracts as prime 

contractors under the MSMO contracting strategy, (2) the Navy identified 

as potential competitors in the MAC-MO acquisition plan, and (3) the 

Navy identified as potential competitors in its market research 

documentation. From these 30 contractors, we selected 14 contractors 

that represented a mix of these categories. Specifically, the 14 

contractors included 6 former MSMO contract holders and 8 non MSMO 

 

4The three ports where the MAC-MO strategy is planned to be implemented are Norfolk 

Virginia; San Diego, California; and Mayport, Florida. In Florida, firms may have facilities 

in Jacksonville, but conduct their work at the Naval Facilities in Mayport. One contractor 

we interviewed conducted work in San Diego, Puget Sound, and Everett, Washington. 

This contractor held a MSMO contract in Puget Sound. However, Puget Sound was 

outside the scope of our review so for purposes of this report we did not classify them as a 

MSMO contract holder. 
Appendix I: Objectives, Scope, and 

Methodology

contract holders, which comprised 7 small businesses and 7 large 

businesses. We used data provided by the Navy to verify if the selected 

contractors met the Navy’s small business certification requirements. We 

conducted 10 semi-structured interviews in person and 4 by 

teleconference. The viewpoints of the 14 contractors are 

nongeneralizable to all contractors which conduct and perform work 

under Navy maintenance, repair, and modernization contracts.

Further, we used a data collection instrument to collect information from 

each of the selected 14 contractors on their facilities, workforce, and 

sources of revenue. For example, we gathered information on what types 

of facilities the contractor owned, such as a drydock or a pier, the number 

of the contractor’s full-time staff, and the percentage of revenue from 

entities other than from the Navy. We verified that contractors did or did 

not have drydocks for 10 of the 14 contractors during our onsite 

contractor visits. We did not verify the number of full-time staff that the 

contractor employed or the contractor sources of revenue.

We conducted this performance audit from September 2015 to November 

2016 in accordance with generally accepted government auditing 

standards. Those standards require that we plan and perform the audit to 

obtain sufficient, appropriate evidence to provide a reasonable basis for 

our findings and conclusions based on our audit objectives. We believe 

that the evidence obtained provides a reasonable basis for our findings 

and conclusions based on our audit objectives.

Page 49 GAO-17-54 Navy Ship Maintenance
Appendix II: Comments from the Department 

of Defense

Page 50 GAO-17-54 Navy Ship Maintenance

Appendix II: Comments from the Department 

of Defense
Appendix II: Comments from the Department 

of Defense

Page 51 GAO-17-54 Navy Ship Maintenance
Appendix III: GAO Contact and Staff 

Acknowledgments

Michele Mackin, (202) 512-4841 or mackinm@gao.gov

In addition to the contact named, Christopher R. Durbin, Assistant 

Director; Pedro A. Almoguera; Peter Anderson; Sonja Bensen; Jessica M. 

Berkholtz; Lorraine R. Ettaro; Kurt S. Gurka; Cale T. Jones; Charles T. 

Schartung; Leslie G. Stubbs; and Roxanna Sun made key contributions to 

this report.

Page 52 GAO-17-54 Navy Ship Maintenance

Appendix III: GAO Contact and Staff 

Acknowledgments

GAO Contact

Staff 

Acknowledgments

(100327)
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Data Table for Highlights Original Milestones (in days)

Milestones for multi-ship, multi-option (MSMO) cost reimbursement contracts (in 

days)

360 Planning

commences

90 Work

requirements

finalized

89 Planning 

complete

0 Start of work

Milestones proposed for multiple-award contract, multi-order (MAC-MO) firm fixed 

price contracts (in days)

540 Planning

commences

175 Work

requirements

finalized

160 Planning 

complete

60 Award at

60 days

0 Start of work

Data Table for Figure 1: Organizational Chart for Navy Operating Forces and Shore Establishment Responsible for NonNuclear Surface Ship Repair, Maintenance, and Modernization. 

Reporting Relationships not described. More information available upon request.

Secretary of the Navy

Assistant Secretary 

of the Navy, Research, 

Development, and 

Acquisition

Chief of Naval Operations Naval Sea Systems

Command

(NAVSEA)

Commander,

U.S. Fleet Forces

Commander,

U.S. Pacific Fleet

Appendix IV: Accessible  Data
Commander,

Naval Surface Force

U.S. Atlantic Fleet

Commander,

Naval Surface Force

U.S. Pacific Fleet

Surface ships located

on the East Coast,

and in Italy, and Bahrain

Surface ships located

on the West Coast,

and in Hawaii, Japan, 

and Bahrain

Data Table for Figure 2: NAVSEA Offices Responsible for Surface Ship Repair, Maintenance, and Modernization

Naval Sea Systems

Command (NAVSEA)

Commander, Naval Regional 

Maintenance Center (CNRMC)

Responsible for coordinating the maintenance of the Navy's 

surface fleet and for resourcing the many requirements necessary 

to keep the Navy's warships materially ready for action.

Surface Warfare (SEA 21)

Responsible for life-cycle management of the Navy's in-service 

surface ships and 

for managing critical modernization, maintenance, training and 

inactivation programs.

Regional maintenance

centers (RMC)

Administers contracts for the repair, maintenance, and 

modernization of surface ships and oversee availabilities. 

• Mid-Atlantic Regional Maintenance Center (MARMC)

• Southeast Regional Maintenance Center (SERMC)

• Southwest Regional Maintenance Center (SWRMC)

Surface Maintenance

Engineering Planning

Program (SURFMEPP)

Provides life-cycle management of maintenance requirements, 

including deferrals, for surface ships and monitors life-cycle repair 

work.

Data Table for Figure 4: Timeline of Initial Awards to Support the MAC-MO Strategy for Ship Maintenance Availabilities

Third-party planning events

May 2014 DASN AP approves

acquisition plan

for third-party

planning

Acquisition plan signed

February 2015 NAVSEA awards

3PP contract for

DDG and CG

class ships

Third-party planner contract award
May 2015 NAVSEA awards

3PP contract for

LPD and LSD

class ships

Third-party planner contract award

April 2016 NAVSEA awards

3PP contract for

LHA and LHD

class ships

Third-party planner contract award

Multiple Award Contract-Multi-Order events

April 2015 DASN AP approves

acquisition plan

for execution of

availabilities

Acquisition plan signed

February 2016 NAVSEA awards IDIQ

contracts for complex

work in Norfolk, Virginia, 

for 6 ship classes, to 3 

contractors

IDIQ contract award for ships

March 2015 NAVSEA awards IDIQ contracts 

for complex work in San 

Diego, California, for 6 ship 

classes, to 3 contractors

IDIQ contract award for ships

Gap ship contract awards

May 2015 NAVSEA awards a 

contract for the USS 

Mitscher (DDG 57)

Contract award for gap ship availability, 

coast wide bid

August 2015 Mid-Atlantic Regional 

Maintenance Center 

(MARMC) awards a 

contract for the USS 

Oscar Austin (DDG 79)

Contract award for gap ship availability

August 2015 MARMC awards

a contract for

the USS James 

E. Williams 

(DDG 95)

Contract award for gap ship availability

October 2015 MARMC awards a 

contract for the 

USS Jason Dunham

(DDG 109) 

Contract award for gap ship availability
November 2015 MARMC awards a

contract for the 

USS Forrest

Sherman (DDG 98)

Contract award for gap ship availability

January 2016 MARMC awards a contract for the 

USS Winston S. Churchill (DDG 81)

Contract award for gap ship availability

February 2016 MARMC awards 

a contract for 

the USS Normandy 

(CG 60)

Contract award for gap ship availability

April 2016 MARMC awards a contract for 

the USS Gettysburg (CG 64)

Contract award for gap ship availability

May 2016 MARMC awards a contract for 

the USS Bainbridge (DDG 96)

Contract award for gap ship availability

May 2016 MARMC awards a contract for 

the USS Tortuga (LSD 46)

Contract award for gap ship availability

3PP = Third-party planning

DASN AP = Deputy Assistant Secretary of the Navy, Acquisition and Procurement

NAVSEA = Naval Sea Systems Command

IDIQ = Indefinite delivery, indefinite quantity

DDG = Destroyers

CG = Cruisers

LHA = Landing Helicopter Assault

LHD = Landing Helicopter Deck

LPD = Landing Platform Dock

LSD = Dock Landing Ships

Data Table for Figure 5: Comparison (in days) of Planning Milestones for Work Package Development in a Chief of Naval 

Operations Availability (>$5 million and <$20 million) under the MSMO and MAC-MO Strategies 

Milestones for multi-ship, multi-option (MSMO) cost reimbursement contracts (in days)

360 Planning

commences

120 Modernization

requirements

finalized

90 Work

requirements

finalized

89 Planning 

complete

0 Start of work
Milestones proposed for multiple-award contract, multi-order (MAC-MO) firm fixed price contracts (in days)

0 Planning

commences

240 Modernization

requirements

finalized

175 Work

requirements

finalized

160 Planning 

complete

120 Request for 

Proposal (RFP) 

release

60 Award at

60 days

0 Start of work

Data Table for Figure 6: Recent Historical and Forecasted Navy Maintenance Workload in Port of Norfolk, Virginia, fiscal years 

2015-2020

Month Total resources per day 

non MAC-MO strategy

Total resources per day preimplementation of Multi Award 

Contract, Multi Option (MAC-MO)

Total resources per day 

MAC-MO

Fiscal year 2015 October 2399.19 3587.53 0 

November 2318.76 2723.91 0 

December 2468.69 2910.09 0 

January 2487.01 3321.47 0 

February 2504.99 3480.58 0 

March 2444.2 3974.26 0 

April 2411.27 4229.44 0 

May 2392.22 4640.88 0 

June 2233.28 4722.56 0 

July 2270.17 4212.88 0 

August 2085.47 4744.34 0 

September 2134.72 4472.2 0 

Fiscal year 2016 October 1804.94 4697.31 0 

November 1960.82 4426.78 0 

December 2199.67 3717.11 0 

Year
January 1768.16 3412.83

0

February 1849.24 2642.540

March 2398.23 2710.560

April 2084.35 1951.460

May 1806.07 1703.610

June 2350.57 1400.930

July 1666.01 2633.320

August 1551.82 2989.070

September 1880.49 3669.230

Fiscal year 2017 October 2334.10 3812.14

November 2362.520 3479.42

December 2658.050 3126.93

January 26280 3166.24

February 2625.530 3046.25

March 2695.790 3395.89

April 2629.460 3337.16

May 2521.240 3634.01

June 2161.010 3313.01

July 18290 2994.02

August 2508.010 2305.03

September 2843.770 1979.83

Fiscal year 2018 October 2650.680 2212.5

November 2586.980 3712.65

December 2606.30 5064.53

January 2330.680 5611.3

February 20800 5477.78

March 1958.920 5552.57

April 2185.180 5043.07

May 2184.840 4716.21

June 2217.320 4306.71

July 2016.060 3687.03

August 2015.010 3243.68

September 2113.070 4912.08

Fiscal year 2019 October 2446.670 4515.72

November 2307.40 4477.05

December 2321.060 4820.02

January 2029.790 7490.32

February 2092.560 7311.2
March 2919.78 0 6113.5

April 2619.19 0 4597.17

May 2098.39 0 3472.3

June 2075.57 0 2673.54

July 1810.13 0 2868.49

August 1882.65 0 2919.76

September 2583.97 0 3116.3

October 2376.15 0 3460.04

Data Table for Figure 7: Recent Historical and Forecasted Navy Maintenance Workload in Port of San Diego, California, fiscal 

years 2015-2020 36

Month Total resources per day 

non MAC-MO strategy

Total resources per day preimplementation of Multi Award 

Contract, Multi Option (MAC-MO)

Total resources per day 

MAC-MO

Fiscal year 2015 October 2867.44 5223.34 0

November 2199.71 4068.14 0

December 2251.28 5281.3 0

January 1921.47 5218.58 0

February 1872.89 3758.39 0

March 1940.8 4277.6 0

April 2094.99 4258.47 0

May 2040.17 5421.1 0

June 1593.01 5019.95 0

July 1104.88 5915.39 0

August 1383.35 5330.87 0

September 1670.1 4146.78 0

Fiscal year 2016 October 2281.4 5420.81 0

November 2282.7 4224.82 0

December 2080.75 3350.27 0

January 1543.62 3126.61 0

February 1232.34 2790.69 0

March 1582.34 3537.13 0

April 1823.19 4159.32 0

May 1754.97 3877.59 0

June 2092.85 3722.19 0

July 1518.02 4219.94 0

August 1539.13 3542.54 0

Year
September 1428.95 3139.12

0

Fiscal year 2017 October 1865.60 2886.08

November 1856.860 2825.2

December 1830.080 3395

January 1325.390 5505.37

February 1310.220 5922.57

March 1799.730 5294.28

April 3086.250 5002.74

May 3456.530 4339.3

June 2888.750 2710.12

July 1464.550 2877.92

August 1324.490 3989.88

September 1661.440 3830.14

Fiscal year 2018 October 1983.070 3362.93

November 1598.120 2849.52

December 1898.120 2498

January 1991.90 4977.97

February 2276.10 6187.78

March 1994.760 6836.65

April 1540.340 5848.99

May 1508.350 5877.53

June 1922.590 4623.05

July 1652.920 5521.32

August 2011.830 4815.32

September 1995.820 4158.03

Fiscal year 2019 October 2498.990 4373.13

November 2389.060 4344.27

December 2315.240 3980.19

January 1755.050 3893.14

February 1873.830 6923.53

March 1843.660 7313.72

April 2352.120 7293.42

May 2671.750 5373.49

June 2320.350 3958.31

July 1754.90 2649.55

August 1474.320 1845.53

September 1008.720 2000.67

October 1952.80 1834.43
Data Table for Figure 8: Recent Historical and Forecasted Navy Maintenance Workload in Port of Mayport, Florida, fiscal years 

2015-2020

Month Total resources per day 

non MAC-MO strategy

Total resources per day preimplementation of Multi Award 

Contract, Multi Option (MAC-MO)

Total resources per day 

MAC-MO

Fiscal year 2015 October 611.443 762.451 0

November 656.518 588 0

December 656.518 582 0

January 349.443 591.74 0

February 304.345 594 0

March 304.345 585 0

April 233.345 867.1 0

May 203.702 900.852 0

June 253.936 771 0

July 371.936 760 0

August 294.91 315 0

September 187.745 578 0

Fiscal year 2016 October 346.745 540 0

November 346.745 540 0

December 336.745 1005 0

January 248.765 1003 0

February 483.586 972 0

March 323.046 826 0

April 237 754 0

May 232 856 0

June 240 806 0

July 160 1062.37 0

August 100 999.533 0

September 209 925.237 0

Fiscal year 2017 October 289 0 1115.5

November 328 0 942.845

December 289 0 735.182

January 319 0 625.281

February 319 0 552.162

March 319 0 369.772

April 149 0 1294.75

Year
May 149

0 1268.21

June 1590 1205.33

July 4290 1171.28

August 5590 1093.17

September 543.0770 935.96

Fiscal year 2018 October 647.7770 587.924

November 404.4620 340.826

December 391.4230 340.826

January 165.3460 809.999

February 165.3460 839.978

March 165.3460 724.792

April 195.3460 537.495

May 467.7070 532.485

June 560.2480 462.035

July 815.5310 443.298

August 822.080 194.864

September 544.2380 759.044

Fiscal year 2019 October 646.030 793.96

November 434.4590 793.96

December 433.4450 793.96

January 508.5260 793.96

February 557.9540 760.985

March 505.5360 862.935

April 462.0810 516.811

May 194.0680 220.784

June 4960 317.25

July 5760 379.62

August 566.3020 285.401

September 565.1290 662.268

"October 780.160 698.179
Data Table for Figure 9: Characteristics of Selected Contractors in Each Port Where the Navy Is Implementing the Multiple 

Award Contract-Multi Order Strategy

Location Company Multi-ship Multi 

Option (MSMO) 

contract holder

Small business Naval Sea Systems 

Command 

(NAVSEA) certified 

drydock

Pier

Mayport, FL 1. BAE Systems 

Southeast Shipyards 

Mayport LLC

Yes No Yes Yes

2. Metro Machine 

(doing business as 

General Dynamics 

NASSCO)

No No No No

3. North Florida 

Shipyards, Inc

No Yes No No

Norfolk, VA 4. BAE Systems 

Norfolk Ship Repair, 

Inc.

Yes No Yes Yes

5. General Dynamics 

NASSCO

Yes No Yes Yes

6. Marine Hydraulics 

International, LLC

Yes Yes Yes Yes

7. Colonna's Ship 

Yard, Incorporated and 

Steel America Division

No No No No

8. Técnico Corporation No No No No

9. East Coast Repair & 

Fabrication LLC

No No No No

San Diego, CA 10. BAE Systems San 

Diego Ship Repair

Yes No Yes Yes

11. General Dynamics 

National Steel & 

Shipbuilding Company 

(NASSCO)

Yes No Yes Yes

12. Continental 

Maritime of San Diego, 

Inc.

No No No No

13. Pacific Ship Repair 

& Fabrications, Inc

No Yes No No

14. Propulsion 

Controls Engineering

No Yes No No