United States General Accounting Office

GAO Report to Congressional Committees

April 1998 NAVY SHIP

MAINTENANCE

Temporary Duty

Assignments of

Temporarily Excess

Shipyard Personnel

Are Reasonable

GAO/NSIAD-98-93

GAO United States

General Accounting Office

Washington, D.C. 20548

National Security and

International Affairs Division

B-278547 

April 21, 1998

The Honorable Strom Thurmond

Chairman

The Honorable Carl Levin

Ranking Minority Member

Committee on Armed Services

United States Senate

The Honorable Floyd Spence

Chairman

The Honorable Ike Skelton

Ranking Minority Member

Committee on National Security

House of Representatives

As required by section 366 of the National Defense Authorization Act for

Fiscal Year 1998, we reviewed the Department of the Navy’s practice of

using temporary duty assignments of naval shipyard personnel to perform

ship maintenance and repair work at homeports without nearby naval

shipyard capability. Specifically, the act required us to review (1) the

rationale supporting the Navy’s practice, (2) the cost-effectiveness of these

assignments, and (3) the factors affecting future requirements for the

practice.

Background The Navy uses a multilevel approach to ship repair and maintenance that,

depending on the type and complexity of work, places responsibility at

three different levels: organizational, intermediate, and depot. Depot-level

repairs are the most complex, requiring the capabilities and technical

skills of naval or private shipyards. During fiscal year 1997, the Navy

employed about 22,000 personnel at its four naval shipyards. The

shipyards are the Portsmouth Naval Shipyard, Portsmouth, New

Hampshire; the Norfolk Naval Shipyard, Portsmouth, Virginia; the Puget

Sound Naval Shipyard, Bremerton, Washington; and the Pearl Harbor

Naval Shipyard, Pearl Harbor, Hawaii. The shipyards are not directly

funded, but are paid by their customers—primarily the Pacific and Atlantic

Fleets.1

 The fleets are provided depot maintenance funds from the Navy’s

operations and maintenance appropriation. Funding for the Navy’s

1

The naval shipyards use the Working Capital Fund to finance the cost of producing goods and

services ordered by its customers, primarily the fleets. Subsequently, the shipyards receive

reimbursement by billing, much as a private business does.

Page 1 GAO/NSIAD-98-93 Navy Ship Maintenance
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depot-level ship maintenance and repair program in fiscal year 1998 is

$2.1 billion.

The Navy schedules its planned ship repair work for a 7-year period and

updates this schedule annually. In developing the schedule, the Navy

considers various factors, including (1) its policy to perform work of 

6 months or less in the ship’s homeport, (2) statutory requirements

regarding the public/private sector workload distribution,2

 (3) the

capabilities and capacity of each shipyard, and (4) expected funding and

personnel levels. The published schedule shows the depot-level ship repair

work assigned to each naval shipyard and the workload to be performed

by the private sector. The Navy also develops an historically derived

estimate of the direct labor staff-days each naval shipyard will expend on

unscheduled (emergent) ship repair work and adds it to the schedule to

arrive at the planned shipyard workload. The final schedule includes both

scheduled and unscheduled work that requires temporary duty (TDY)

assignments. For fiscal years 1995-97, about 70 percent of the total work

assigned to naval shipyards was for scheduled repair work.

The Navy uses TDY assignments primarily to perform work at homeports

not located near a naval shipyard. The Navy considers shipyard personnel

temporarily excess when they are required for planned future

requirements and the time and cost of reducing and reacquiring needed

personnel justifies retention. In some cases, personnel are considered

temporarily excess for more than a year. Since private sector repair

capabilities may be available at these locations, questions have been raised

regarding the cost-effectiveness of sending naval shipyard personnel TDY to

perform the work. During fiscal years 1995-97 naval shipyards spent an

estimated 580,000 direct labor staff-days, valued at an estimated

$134.1 million, on TDY assignments. TDY travel, per diem, and other related

travel costs amounted to an additional $59 million. About 5.5 percent of

the shipyards’ total direct labor staff-days were spent on TDY assignments.

Results in Brief The Navy’s rationale for temporary duty assignments is twofold. First,

such assignments are required to perform work at locations where no

local public or private shipyards have the required depot-level

maintenance capability. Most temporary duty assignments are for this

reason. The Navy performs work at such locations to comply with its

2

Until fiscal year 1998, the Navy was required by statute (10 USC 2466) to place no more than

40 percent of its depot-level ship repair work into private facilities. In the 1998 Defense Authorization

Act, this was amended to 50 percent. During fiscal years 1992-96, the Navy placed an average of about

34 percent into private facilities.

Page 2 GAO/NSIAD-98-93 Navy Ship Maintenance
B-278547 

policy to perform ship repairs of 6 months or less at the ship’s homeport

and when it is not practical to bring ships to the shipyard. Second, the

Navy believes that using temporarily excess naval shipyard workers on

temporary duty assignments is cost-effective, even when there is local

private sector capability. The Navy states that using temporarily excess

workers is efficient and cost-effective because these workers will be

needed in the future to perform ship repair work.

The Navy’s rationale for sending temporarily excess naval shipyard

personnel on temporary duty assignments appears reasonable from a cost

and operational standpoint. However, in some cases, other approaches

may be more cost-effective. The Navy is currently retaining some

temporarily excess shipyard personnel to ensure that it can handle the

planned refuelings of nuclear attack submarines for fiscal years 1999 and

beyond. Retaining the personnel for these purposes appears reasonable,

since the Navy has a need for the personnel. It is following the same

practice to perform nuclear ship repair work at San Diego because local

private shipyards do not have nuclear capability. However, other practical

approaches, such as making greater use of the private sector, may warrant

consideration. For example, a major private sector shipyard with nuclear

repair capabilities has established a presence in San Diego through its

recent purchase of a small local shipyard.

Possible changes to future ship repair workloads could affect the

requirement for future temporary duty assignments and retention of

current naval shipyard personnel levels. For example, the Navy has

canceled 17 planned nuclear attack submarine refuelings since 

fiscal year 1993. Further reductions in the number of planned refuelings

would substantially decrease the on-site workloads planned for three

naval shipyards, especially Portsmouth. Similarly, a proposal to homeport

three nuclear aircraft carriers in San Diego, California, which does not

have a local naval shipyard, could substantially increase temporary duty

assignments. Other factors that could affect the amount of future

temporary duty assignments include (1) further reductions in the number

of Navy ships, (2) full implementation of the Navy’s Regional Maintenance

Program,3

 and (3) a new round of base closures.

3

Under the program, the Navy plans to streamline and consolidate its maintenance functions. The

program is designed to integrate depot-level and below-depot level maintenance activities, including

ship repairs. We discuss the program’s status in our report Navy Regional Maintenance: Substantial

Opportunities Exist to Build on Infrastructure Streamlining Progress (GAO/NSIAD-98-4, Nov. 13, 1997).

Page 3 GAO/NSIAD-98-93 Navy Ship Maintenance
B-278547 

The Navy’s Rationale

for TDY Assignments

The Navy cites two reasons for using TDY assignments. First, such

assignments are required to perform work at locations where no local

public or private sector shipyards have the required ship repair

capabilities. Second, the Navy believes that using temporarily excess

shipyard workers on temporary duty assignments is cost-effective, even

when there is a local private sector capability. The Navy performs work at

locations without a naval shipyard to comply with its homeporting policy

and when it is not practical to perform the work at public or private

shipyards. The amount of TDY assignments depends on several interrelated

factors, including a shipyard’s proximity to homeported ships, the number

and types of ships assigned to each homeport, the type of repair or

maintenance needed, the ability of private shipyards at or near the

homeport to perform required repairs, and the number of temporarily

excess naval shipyard personnel. The naval shipyards’ financial and

management information systems do not identify the purpose for specific

TDY assignments, and the Navy could not provide the data needed to

identify the exact number of TDY assignments for each reason.

Local Capability Rationale The Navy performs ship repair TDY work at locations where it believes the

necessary capability to perform the work is not locally available. The Navy

performs work at these locations primarily to comply with its homeporting

policy and also when it is not practical to bring ships to the shipyard. For

example, a substantial amount of TDY has been for nuclear submarine

repair work at San Diego, where there is no local naval shipyard or private

sector nuclear repair capability. Also, local capability is usually not

considered when naval shipyard warranty work is involved and for

advanced planning prior to a ship going to a naval shipyard for repairs.

Because of data limitations, we could not identify the exact number of TDY

assignments, but available data supports Navy officials’ judgments that

most TDY assignments are performed because there is no local capability.

For example, because San Diego does not have nuclear repair capability,

all nuclear submarine repair work is performed by naval shipyard workers

at San Diego. The total submarine work of 145,000 staff-days represents

about 25 percent of the total TDY staff-days for fiscal years 1995-97.

Cost-Effectiveness

Rationale

In some cases, the Navy believes it is cost-effective to send shipyard

workers that are considered temporarily excess on TDY assignments to

locations where there is a local private sector capability. The Navy reasons

that the excess workers would have to be paid whether or not they are

working and that the cost of travel and per diem is the only additional cost

Page 4 GAO/NSIAD-98-93 Navy Ship Maintenance
B-278547 

of using the excess workers. The travel and per diem costs are generally

less than local private sector labor rates.

Shipyard workers become temporarily excess when there is a reduction in

the naval shipyards’ originally scheduled and budgeted workload for such

reasons as ship deployment extensions, reductions in the scope of the

projected ship repairs, force level changes, and funding reductions. In

some cases, expected future workloads are used to justify retaining some

excess shipyard personnel. Excess personnel are retained when the Navy

determines that the excess is temporary and that the time and cost of

reducing and reacquiring the needed personnel justifies retention. This is

especially true when workload reductions take place during the fiscal year

in which the work is scheduled to be performed. In such cases, naval

shipyard personnel levels are set for the year, and according to the Navy, it

is very difficult to make major adjustments to personnel levels due to Civil

Service regulations. For example, during the latest reductions in force at

the four naval shipyards, the reductions took about 12 months to

complete, from initial planning to the time the employees were actually

removed from the shipyards’ payrolls.

Navy’s Homeporting Policy

Impacts TDY Assignments

The Navy’s policy to perform all ship repair work of 6 months or less at the

ship’s homeport substantially increased the amount of TDY ship repair

work performed in locations without a naval shipyard. Because crews

remain with their ships when the ships need maintenance and repairs, the

policy is to improve crew retention and the quality of life by reducing time

away from homeports. Since many of the Navy’s 23 ship homeports are not

located near one of the four naval shipyards, the work is often performed

by naval shipyard personnel on TDY assignments. Figure 1 shows the

location of the four naval shipyards and some U.S. homeports. The

number and type of ships located at each of the Navy’s 23 homeports is

shown in appendix I.

Page 5 GAO/NSIAD-98-93 Navy Ship Maintenance
B-278547 

Figure 1: Naval Shipyards and U.S. Homeports

Puget Sound Naval Shipyard

Bremerton, WA

Pearl Harbor Naval Shipyard

Honolulu, HI

Mayport, FL

Portsmouth Naval Shipyard

Portsmouth, NH

Groton, CT

Little Creek, VA

Norfolk Naval Shipyard

Portsmouth, VA

Kings Bay, GA

San Diego, CA

Naval Shipyard

Homeport

Ingleside, TX

Norfolk, VA

Honolulu, HI

Bangor, WA

Everett, WA

Bremerton, WA

As shown in table 1, a large number of ships are homeported at or near the

Norfolk and Pearl Harbor Naval Shipyards and provide each with a large

potential workload for which temporarily excess shipyard personnel can

be effectively used. The temporarily excess personnel can work on ships

homeported in the area without being on TDY status. The two shipyards,

however, also use the personnel to do some work that requires TDY

assignments. On the other hand, relatively few ships are homeported near

Page 6 GAO/NSIAD-98-93 Navy Ship Maintenance
B-278547 

the Portsmouth and Puget Sound Naval Shipyards. As a result, these

shipyards perform more work that requires TDY.

Table 1: Naval Ships Homeported at or

Near a Naval Shipyard Shipyard Carriers Surface ships Submarines Total

Portsmouth 0 0 1 1

Norfolk 5 65 17 87

Pearl Harbor 0 17 23 40

Puget Sound 1 5 12 18

Table 2 shows, by shipyard, the percent of total direct labor staff-days

each naval shipyard spent on TDY assignments during fiscal 

years 1995-97. As table 2 shows, Portsmouth and Puget Sound Naval

Shipyards used about 480,000 direct labor staff-days, or about 83 percent

of the estimated 580,000 direct labor staff-days naval shipyards used on

TDY assignments during fiscal years 1995-97.

Table 2: Direct Labor Staff-Days Spent

on TDY Assignments (fiscal years

1995-97) Shipyard Total staff-days TDY staff-days

Percent of total

staff-days

Portsmouth 1,540,000 320,000 20.8

Norfolk 3,270,000 90,000 2.8

Pearl Harbor 1,360,000 10,000 0.1

Puget Sound 4,330,000 160,000 3.7

Total 10,500,000 580,000 5.5

Note: All staff-days are rounded to the nearest ten thousand.

Table 3 shows, by shipyard, the reported direct labor costs of TDY

assignments and the related travel costs for fiscal years 1995-97.

Portsmouth and Puget Sound Naval Shipyards expended about

$164.6 million of the $193.1 million, or about 85 percent of the total TDY

costs (direct labor costs plus travel costs).

Table 3: Reported TDY Assignment

Costs (fiscal years 1995-97) Dollars in millions

Naval shipyard Direct labor costs Travel costs Total

Portsmouth $74.5 $26.3 $100.8

Norfolk 19.6 6.9 26.5

Pearl Harbor 1.3 0.7 2.0

Puget Sound 38.7 25.1 63.8

Total $134.1 $59.0 $193.1

Page 7 GAO/NSIAD-98-93 Navy Ship Maintenance
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Cost-Effectiveness of

TDY Assignments

As noted earlier, available data indicates that most TDY assignments are

based on the rationale that no local capability exists. In those cases where

there is a local private sector capability, the cost-effectiveness rationale

for TDY assignments is valid to the extent that naval shipyard personnel are

temporarily excess. There is excess capacity and personnel in some naval

shipyards. The Navy is retaining the excess personnel to meet anticipated

future requirements. Meanwhile, the Navy is using TDY assignments and is

reallocating work from the private sector to the naval shipyards to make

maximum use of the excess shipyard personnel.

TDY Assignments When

There Is No Local

Capability

The Navy states that most TDY assignments are made because the required

ship repair capabilities do not exist locally. In these cases, the Navy

reasons that cost-effectiveness is not an issue because there is no practical

alternative. As noted earlier, the Navy cites the use of TDY assignments to

perform nuclear submarine repairs at San Diego as an example where no

local private shipyard has nuclear repair capability. We agree that there

may not be a practical alternative to some TDY assignments, but the Navy

does not identify the rationale for each of its TDY assignments or provide

the basis for any determination that there is no other practical alternative.

In the case of San Diego, we found no basis to question the Navy’s

statement that no local private shipyard has the necessary nuclear repair

capabilities; however, there may be other practical alternatives that are

not being considered. For example, Newport News Shipbuilding, a nuclear

repair capable private shipyard in Virginia, has established a presence in

San Diego through its recent purchase of Continental Marine Industries.

Cost-Effectiveness of TDY

Assignments When Local

Private Capability Exists

TDY assignments to locations with a private sector capability are likely to

be cost-effective when shipyard personnel are temporarily excess. When

naval shipyard personnel are temporarily excess, their cost is considered

fixed and will be paid whether or not the personnel are performing repair

work. We have reported that when labor costs are fixed, the only added

costs to the government for the TDY assignments are travel, per diem, and

other related costs.4

 To determine the cost-effectiveness of TDY

assignments, these travel-related costs would have to be compared to the

average private shipyard staff-day rate for performing ship repairs. We

examined several private shipyard staff-day rates and naval shipyard TDY

costs and found that when the private shipyards’ staff-day rates were

compared only to the naval shipyards’ TDY costs, the private shipyards’

4

Naval Shipyards: Management of Borrowed Labor Can Be Enhanced by Stronger Internal Controls

(GAO/NSIAD 87-188, Sept. 23, 1987).

Page 8 GAO/NSIAD-98-93 Navy Ship Maintenance
B-278547 

costs were always higher, usually substantially higher. For example, the

Puget Sound Naval Shipyard estimated that its average daily travel cost

per worker for scheduled TDY work in San Diego in 1997 was about $116,

while the average daily rate per private shipyard worker in San Diego was

about $330. Assuming the productivity of both the public and private

sector personnel are fairly comparable, it would be cost-effective from a

cost and operational standpoint to perform the work using temporarily

excess personnel.

TDY assignments are not likely to be cost-effective when the naval

shipyards’ projected long-term workloads do not support existing

personnel levels and local private shipyards are willing and capable of

doing the work. In this case, both the naval shipyards’ direct labor costs

and travel costs should be considered in making cost-effectiveness

determinations. To illustrate, in the earlier example, the Puget Sound

Naval Shipyard’s staff-day rate of $474 for fiscal year 1997 would have to

be added to the $116 daily travel and per diem costs and the resulting $590

staff-day rate compared to the private sector’s rate of about $330 per day.

Clearly, it would not be cost-effective for TDY shipyard personnel to do the

work. Navy officials commented that naval shipyards have reduced

personnel levels when long-term workload projections indicated a need to

do so.

Some Shipyard TDY

Assignments Reflect

Long-Term Excess

Capacity

In its fiscal years 1996-2001 business plan, the Defense Depot Maintenance

Council showed large amounts of excess capacity at some of the naval

shipyards. Table 4 shows the percent of expected excess capacity5

reported for each naval shipyard for fiscal years 1998-2001.

Table 4: Excess Capacity in Naval

Shipyards Fiscal year

Shipyard

1998

(percent)

1999

(percent)

2000

(percent)

2001

(percent)

Portsmouth 54 54 41 41

Norfolk 26 27 (6)a 23

Puget Sound 21 16 6 (10)a

Pearl Harbor 39 30 24 11

aNegative excess capacity means that a shipyard anticipates more workload than it has the

capacity to accomplish.

5

Excess capacity is constrained by the availability of trained personnel and the organization of work

stations. It is the amount of additional workload, expressed in direct labor hours, that a facility like a

shipyard can effectively produce annually on a single shift, 40-hour week basis while producing the

product mix that the facility is designed to accommodate.

Page 9 GAO/NSIAD-98-93 Navy Ship Maintenance
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Included in the reported excess capacity calculations are workloads such

as several major nuclear submarine refuelings that were later canceled.

Such cancellations further increase excess capacity and personnel. Also,

the calculations include shipyard workloads that require TDY assignments.

Without these workloads, the reported excess capacity and the availability

of shipyard personnel would be higher. Unless additional workloads are

identified, the personnel will be excess to the shipyard.

Navy Management of Excess

Capacity and Personnel

Excess naval shipyard capacity exists even though the Navy closed four

naval shipyards through the Base Realignment and Closure process and

reduced the personnel levels at the four remaining naval shipyards during

fiscal years 1991-97 from about 36,000 to 22,000, a 38-percent reduction.

The Navy believes that it needs to retain its current shipyard capacity and

associated personnel levels to meet anticipated future requirements.

Meanwhile, the Navy is using TDY assignments and is reallocating work

from the private sector to more effectively use its excess capacity and

personnel. For example, when three nuclear attack submarine refuelings

scheduled for the Portsmouth Naval Shipyard were canceled, the Navy,

rather than further reducing personnel, decided to provide the shipyard

with ship repair workload either previously located in other naval

shipyards or in the private sector. For fiscal years 1997-99, this workload

included work associated with the repair of submarines homeported in

Groton, Connecticut. In the past, part of this work was performed by

Electric Boat, a private nuclear-capable shipyard located in Groton, and

part was done by Portsmouth Naval Shipyard personnel on TDY

assignments. However, for the last 3 years, the Portsmouth Naval Shipyard

has been assigned all the depot-level workload at Groton. The Navy

believes this assignment of TDY workload to Portsmouth is cost-effective

because it needs to retain skilled personnel to perform planned submarine

refuelings from fiscal year 1999 to 2005. Beginning in fiscal year 2000, the

Navy plans to return part of the Groton workload to the private sector.

The Navy’s plan to use TDY assignments and reallocate private sector

workloads to the naval shipyards to make effective use of excess shipyard

capacity and temporarily excess personnel appears reasonable. However,

for TDY assignments to homeports without required ship repair

capabilities, other practical alternatives may warrant consideration, such

as making greater use of the private sector.

Page 10 GAO/NSIAD-98-93 Navy Ship Maintenance
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Factors Affecting the

Future Use of TDY

Assignments

A reduction in the number of planned labor-intensive refuelings of nuclear

attack submarines and the homeporting of up to three nuclear aircraft

carriers in San Diego could substantially increase future TDY assignments.

Other factors that could affect the extent of future TDY assignments

include potential reductions in the number of Navy ships, the

regionalization of the Navy’s ship maintenance, and another round of base

closures.

Refueling of Nuclear

Attack Submarines

The Navy has retained significant excess capacity at the Portsmouth Naval

Shipyard to ensure that it, along with the Pearl Harbor and Norfolk Naval

Shipyards, can handle the refueling of 11 nuclear attack submarines during

fiscal years 1999-2005. Each refueling requires about 300,000 staff-days of

work and costs about $215 million. If these refuelings are done as

scheduled, the number of excess personnel available for TDY will be

reduced. For example, at Portsmouth, about 32 percent of the fiscal 

year 1998 planned workload will require TDY assignments, but only 

22 percent of the fiscal year 1999 planned workload will require TDY

assignments because a nuclear attack submarine refueling is scheduled.

If the refuelings are not done and shipyard capacity and associated

personnel reductions are not made, TDY assignments are likely to increase.

Since fiscal year 1993, the Navy has reduced planned submarine

refuelings. For example, although the Navy planned to refuel 32 nuclear

attack submarines during fiscal years 1993-2005, it has canceled 17

refuelings. Of the remaining 15 refuelings, four have been completed and

the remaining 11 have been scheduled. Because the Navy reduced the

number of refuelings, Portsmouth Naval Shipyard personnel were assigned

to perform submarine repair work at the Groton and San Diego

homeports. As a result, the shipyard’s TDY assignments increased

substantially during this time. Further reductions in the number of planned

refuelings would substantially decrease the on-site workloads planned for

three naval shipyards, especially Portsmouth.

San Diego Nuclear Aircraft

Carrier Work

By the end of fiscal year 2005, the Navy anticipates that as many as three

nuclear aircraft carriers could be homeported at San Diego. The

percentage of depot-level maintenance to be done by public and private

shipyards was not settled at the time of our review; however, if the Navy

does the work as planned, its use of TDY assignments will increase

substantially.

Page 11 GAO/NSIAD-98-93 Navy Ship Maintenance
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Because no private shipyard in San Diego currently has nuclear repair

capabilities, the Navy plans to use personnel on TDY from Puget Sound

Naval Shipyard, starting in October 1998, to do the nuclear work on the

U.S.S. Stennis, the first nuclear carrier scheduled to be homeported in San

Diego. The work entails operating a nuclear repair facility currently under

construction as well as performing depot-level nuclear propulsion plant

work and integrating it with nonpropulsion plant work done by local

private contractors and ship personnel. The Navy said that this work

would enable the shipyard to maintain the skilled workforce required to

support Pacific Fleet aircraft carrier maintenance and that the cyclical

nature of the nuclear workload makes it uneconomical to maintain more

than a skeletal workforce of skilled Puget Sound shipyard personnel

needed for engineering and for quality and radiological controls in San

Diego.

Under current Navy plans, Puget Sound personnel will use about 112,000

direct labor staff-days for nuclear work on the Stennis. Not all of the

Navy’s work would be done at San Diego: planning, some engineering

work, and some assembly would be done at Puget Sound. San Diego

private shipyards would use about 53,000 direct labor staff-days for

nonnuclear work. Newport News Shipbuilding, a nuclear repair capable

private shipyard in Virginia, expressed interest in doing work in San Diego

by submitting to the Navy an unsolicited proposal to integrate the

nonnuclear propulsion plant work into the nuclear propulsion plant work

schedule.

The Navy’s plan for accomplishing the nuclear aircraft carrier work in San

Diego has not been finalized. On March 13, 1997, the Under Secretary of

Defense for Acquisition and Technology signed a memorandum that

requires the Navy to develop a clear statement of work for use in a

competition between Puget Sound Naval Shipyard and qualified private

sector sources6

 for the nuclear aircraft carrier work planned to be

performed in San Diego. The statement is to be forwarded to the Deputy

Under Secretary of Defense for Logistics by October 1998. If all the

nuclear work is turned over to the private sector, the amount of TDY

assignments would be substantially reduced, and excess capacity at the

naval shipyards would increase unless personnel adjustments were made

to reflect the workload reductions.

6

Newport News Shipbuilding and Electric Boat are currently the only private shipyards qualified to do

nuclear ship repair work.

Page 12 GAO/NSIAD-98-93 Navy Ship Maintenance
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Other Factors TDY assignments could also be affected by (1) potential future reductions

in the number of Navy ships, (2) the regionalization of Navy ship

maintenance, and (3) another round of base closures.

Potential Force Structure

Reductions

The Navy expects to reduce its fleet of ships from 354 in 1997 to 304 by

2006. Most recently, the Navy implemented a recommendation of the

Quadrennial Defense Review that called for the inactivation of 2 nuclear

attack submarines and 15 surface ships. As a consequence, the naval

shipyards’ planned workload will be reduced by about 825,000 direct labor

staff-days. This reduction could affect TDY assignments, depending on how

the Navy reallocates its remaining shipyard workload.

Navy Maintenance

Regionalization

The Navy is streamlining and consolidating its maintenance functions in

areas of fleet concentrations as part of its Regional Maintenance Program.

Under this program, the Navy plans to ultimately integrate its

intermediate- and depot-level maintenance and establish regional

maintenance centers. A prototype center is under development in Pearl

Harbor, Hawaii. According to Navy officials, the establishment of such

centers will provide the Navy with greater flexibility for using excess ship

repair personnel, without incurring TDY assignments. For example, as part

of its Pearl Harbor Pilot Demonstration Project, the Navy is integrating its

intermediate maintenance facility and the nearby naval shipyard.

Personnel will be used interchangeably, provided they have the necessary

skills.

Additional Base Closures The Navy closed four naval shipyards and four major homeports during

four rounds of base closures, which concluded in 1995. The Secretary of

Defense requested an additional two rounds of base closures. If approved,

TDY assignments could increase or decrease, depending on which (if any)

homeports and shipyards would close.

Conclusions The Navy’s rationale for using temporarily excess naval shipyard

personnel is generally sound from a cost and operational standpoint.

However, in cases where shipyard personnel are sent on temporary duty

because no local repair capabilities exist, there may be cost-effective

private sector alternatives. Changes in naval shipyard personnel levels,

workloads, and homeport locations could affect the use of TDY

assignments. The planned nuclear attack submarine refuelings and the

homeporting of up to three nuclear aircraft carriers in San Diego would

likely have the most impact on TDY assignments in the near future.

Page 13 GAO/NSIAD-98-93 Navy Ship Maintenance
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Recommendations To ensure that Navy resources are used in the most cost-effective manner,

we recommend that the Secretary of Defense direct the Navy to consider

using the private sector for workloads that are performed routinely by

naval shipyard personnel on temporary duty. Further, when reductions in

future workloads are significant, we recommend that the Navy determine

the extent to which it could reduce its shipyard capacity and associated

personnel. In making these determinations, the Navy needs to ensure that

all applicable statutory requirements are met.

Agency Comments The Department of Defense (DOD) provided written comments on the draft

of this report, which are presented in appendix III. DOD concurred with

both of our recommendations. DOD also suggested several minor technical

and editorial changes, which we have made, as appropriate.

We conducted our review between July 1997 and February 1998 in

accordance with generally accepted government auditing standards. The

scope and methodology for our review are discussed in appendix II.

We are sending copies of this report to the Chairmen and Ranking

Minority Members of the Subcommittee on Defense, Senate Committee on

Appropriations, and the Subcommittee on National Security, House

Committee on Appropriations. We are also sending copies of the report to

the Secretaries of Defense and the Navy; the Chief of Naval Operations;

and the Director, Office of Management and Budget. We will make copies

available to others upon request.

Page 14 GAO/NSIAD-98-93 Navy Ship Maintenance
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If you or your staff have any questions concerning this report, please

contact me on (202) 512-8412 or my Assistant Director, George A.

Jahnigen, on (202) 512-8434. Major contributors to this report are listed in

appendix IV.

David R. Warren, Director

Defense Management Issues

Page 15 GAO/NSIAD-98-93 Navy Ship Maintenance
Contents

Letter 1

Appendix I 

Ship Homeports

18

Appendix II 

Objectives, Scope,

and Methodology

19

Appendix III 

Comments From the

Department of

Defense

21

Appendix IV 

Major Contributors to

This Report

23

Tables Table 1: Naval Ships Homeported at or Near a Naval Shipyard 7

Table 2: Direct Labor Staff-Days Spent on TDY Assignments 7

Table 3: Reported TDY Assignment Costs 7

Table 4: Excess Capacity in Naval Shipyards 9

Table I.1: Navy Ship Homeports and Number of Ships in Each

Homeport

18

Figure Figure 1: Naval Shipyards and U.S. Homeports 6

Abbreviations

DOD Department of Defense

TDY temporary duty

Page 16 GAO/NSIAD-98-93 Navy Ship Maintenance
Page 17 GAO/NSIAD-98-93 Navy Ship Maintenance
Appendix I 

Ship Homeports

As of September 1997, the Navy had ships homeported in 23 locations. The

number and type of ships in the homeports range from 76 ships, including

aircraft carriers, surface ships, and submarines, to one surface ship. These

factors can influence the number of TDY assignments at each homeport.

Table I.1 shows the Navy’s homeports and the number and type of ships

located at each one.

Table I.1: Navy Ship Homeports and

Number of Ships in Each Homeport

Homeport Carriers

Surface

ships Submarines Total

Norfolk, Va. 5 54 17 76

Little Creek, Norfolk, Va. 11 11

Bath, Me. 1 1

Earle, N.J. 3 3

Groton, Conn. 23 23

Portsmouth, N.H. 1 1

Charleston, S.C. 1 1

Mayport, Fla. 1 25 26

Pascagoula, Miss. 4 4

Ingleside, Tex. 14 14

Kings Bay, Ga. 9 9

San Diego, Calif. 2 50 6 58

Pearl Harbor, Hawaii 17 23 40

Bremerton, Wash. 1 5 2 8

Everett, Wash. 1 6 7

Bangor, Wash. 10 10

Concord, Calif. 1 1

Newport News, Va. 1 1

Gaeta, Italy 1 1

La Maddalena, Italy 1 1

Sasebo, Japan 6 6

Yokosuka, Japan 1 9 10

Guam 1 1

No homeport assigned 41 41

Total 12 251 91 354

Page 18 GAO/NSIAD-98-93 Navy Ship Maintenance
Appendix II 

Objectives, Scope, and Methodology

As required by section 366 of the National Defense Authorization Act for

Fiscal Year 1998, we reviewed the Department of the Navy’s practice of

using temporary duty (TDY) assignments of naval shipyard personnel to

perform ship maintenance and repair work at homeports not having naval

shipyards. Specifically, the act required us to review (1) the rationale

supporting the Navy’s practice, (2) the cost-effectiveness of these

assignments, and (3) the factors affecting future requirements for the

practice.

To determine the Navy’s rationale for using TDY assignments of naval

shipyard personnel, we interviewed officials and obtained pertinent

studies, briefings, and other documents from the offices of the Deputy

Under Secretary of Defense for Acquisition and Technology; the Deputy

Chief of Naval Operations for Logistics; the Assistant Secretary of the

Navy for Research, Development, and Acquisition; and the Naval Sea

Systems Command. We also interviewed Atlantic and Pacific Fleet

maintenance officials, visited the four naval shipyards, and interviewed

shipyard officials to determine their views on TDY assignments and to

obtain data on the extent of TDY assignments for fiscal years 1995-97.

To determine what methodology would be appropriate to measure the

cost-effectiveness of TDY assignments, we interviewed Navy officials and

defense consulting officials from the Center for Naval Analysis, the

Logistics Management Institute, and the Institute for Defense Analysis. We

obtained their opinions on the appropriate methodology to use when the

naval shipyards do or do not have adequate time to adjust their personnel

levels to match workload changes. We then compared this methodology to

the one we had previously used in our 1987 report on the

cost-effectiveness of naval shipyards’ borrowing labor from one another to

meet assigned workloads.1

 We found them to be essentially the same.

We then used the methodology to determine the cost-effectiveness of

using TDY assignments for ship repairs. We assumed the average direct

labor costs as fixed when a naval shipyard did not have adequate time to

adjust its personnel to workload reductions. Consequently, we compared

only the average additional cost to the government of travel-related

expenses to the average private shipyard staff-day rate for performing ship

repairs. If the shipyard’s travel-related costs were less than the private

shipyard staff-day rate, we considered the use of TDY assignments to be

cost-effective. However, when the shipyards had sufficient time to make

1

For our report Naval Shipyards: Management of Borrowed Labor Can Be Enhanced by Stronger

Internal Controls (GAO/NSIAD-87-188, Sept. 23, 1987), we used the fixed cost concept to assess the

cost-effectiveness of the borrowed labor practice.

Page 19 GAO/NSIAD-98-93 Navy Ship Maintenance
Appendix II 

Objectives, Scope, and Methodology

needed personnel adjustments, we added the average naval shipyard

direct labor costs to the average travel-related costs and compared this

total amount to the average private shipyard staff-day rate. If a naval

shipyard’s total costs were more than the private shipyard’s staff-day rate,

we considered the use of TDY assignments not to be cost-effective.

To obtain information on the cost components, we reviewed information

generated by the shipyards’ management information and financial

systems. To determine the average staff-day rate for private shipyards, we

contacted the Office of the Supervisor for Shipbuilding at the Naval Sea

Systems Command, which negotiates and administers ship repair

contracts with the private sector. We found that the naval shipyards’

systems did not specifically identify or summarize the amount of direct

labor staff-days spent on TDY assignments, nor did they identify the

reasons for the TDY assignments. We, therefore, developed a data

collection instrument that would gather the desired information, using the

best available shipyard data and estimates. While the data was not precise

or verifiable, it represented the best information on the staff-days

expended by naval shipyards on TDY and travel, per diem, and other related

travel costs resulting from TDY assignments. We used the estimated data

primarily to show the relative magnitude of TDY use.

To determine the factors affecting the future use of TDY assignments, we

interviewed and obtained documents and other pertinent data from

officials of the offices of the Deputy Under Secretary of Defense for

Acquisition and Technology, the Deputy Chief of Naval Operations for

Logistics, and the Naval Sea Systems Command. We also interviewed

officials from the four naval shipyards, the consulting firms previously

mentioned, and private shipyards in the San Diego area.

The results of our review are based on the assumption that the current

naval shipyard infrastructure would remain in place.

Page 20 GAO/NSIAD-98-93 Navy Ship Maintenance
Appendix III 

Comments From the Department of Defense

Page 21 GAO/NSIAD-98-93 Navy Ship Maintenance
Appendix III 

Comments From the Department of Defense

Now on p. 14.

Now on p. 14.

Page 22 GAO/NSIAD-98-93 Navy Ship Maintenance
Appendix IV 

Major Contributors to This Report

National Security and

International Affairs

Division, Washington,

D.C.

James F. Wiggins, Associate Director

George A. Jahnigen, Assistant Director

Nancy Ragsdale, Senior Evaluator (Communications Analyst)

Charles Perdue, Senior Economist

Los Angeles Field

Office

Dennis A. De Hart, Evaluator-in-Charge

Samuel S. Van Wagner, Senior Evaluator

Jean M. Orland, Senior Evaluator

(709288) Page 23 GAO/NSIAD-98-93 Navy Ship Maintenance
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