MILITARY 

READINESS

Navy Needs to Assess 

Risks to Its Strategy to 

Improve Ship 

Readiness

Report to Congressional Committees

September 2012

GAO-12-887

United States Government Accountability Office

GAO
United States Government Accountability Office

Highlights of GAO-12-887, a report to 

congressional committees

Date

MILITARY READINESS

Navy Needs to Assess Risks to Its Strategy to

Improve Ship Readiness

Why GAO Did This Study

In 2010, the Navy concluded that 

decisions it made to increase 

efficiencies of its surface force had 

adversely affected ship readiness and 

service life. To improve ship readiness 

the Navy developed a new strategy, 

which includes several initiatives. 

House Report 112-78, accompanying a

proposed bill for the Fiscal Year 2012 

National Defense Authorization Act 

(H.R.1540), directed GAO to review 

the recent Navy initiatives. GAO 

assessed 1) how the Navy evaluates 

the material readiness of its surface 

combatant and amphibious warfare 

ships and the extent to which data

indicate trends or patterns in the 

material readiness of these ships, and 

2) the extent to which the Navy has 

taken steps to improve the readiness 

of its surface combatant and 

amphibious warfare ships, including 

implementing its new readiness 

strategy. GAO analyzed Navy policies, 

material and readiness data from 

January 2008—two years prior to the 

release of the Navy’s 2010 report on 

the degradation of surface force 

readiness—through March 2012, two 

years after the release of the report, 

and interviewed headquarters and 

operational officials and ship crews. 

What GAO Recommends

GAO recommends that the Navy 

conduct a comprehensive assessment 

of the risks the new strategy faces and 

develop alternatives to mitigate these 

risks. DOD partially concurred, but felt 

that current assessments sufficiently 

identify risks. GAO continues to believe 

that a comprehensive assessment that 

takes into account the full range of risk 

to the overall strategy is needed.

What GAO Found

Recent data show variations in the material readiness of different types of ships, 

but do not reveal any clear trends of improvement or decline for the period from 

2008 to 2012. The Navy uses a variety of means to collect, analyze, and track 

the material readiness of its surface combatant and amphibious warfare ships. 

Three data sources the Navy uses to provide information on the material 

readiness of ships are: casualty reports, which reflect equipment malfunctions; 

Defense Readiness Reporting System-Navy (DRRS-N) reports; and Board of 

Inspection and Survey (INSURV) material inspection reports. These data sources 

can be viewed as complementary, together providing data on both the current 

and life cycle material readiness of the surface force. INSURV and casualty 

report data show that the material readiness of amphibious warfare ships is lower 

than that of frigates and destroyers. However, there is no clear upward or 

downward trend in material readiness across the entire Navy surface combatant 

and amphibious warfare ships. From 2010 to March 2012, INSURV data 

indicated a slight improvement in the material readiness of the surface combatant 

and amphibious warfare fleet, but over that period casualty reports from the ships 

increased, which would indicate a decline in material readiness. DRRS-N data 

also show differences in material readiness between ship types, but the precise 

differences are classified and therefore are not included in this report.

The Navy has taken steps to improve the readiness of its surface combatant and 

amphibious warfare ships, including a new strategy to better integrate

maintenance actions, training, and manning, but it faces risks to fully 

implementing its strategy and has not assessed these risks or developed 

alternatives to mitigate them. In March 2012, near the end of a year-long pilot, 

the Navy issued its Surface Force Readiness Manual, which calls for integrating 

and synchronizing maintenance, training and manning among multiple 

organizations. The Navy expects this strategy to provide a standard, predictable 

path for ships to achieve and sustain surface force readiness, but certain factors, 

such as high operational tempos and supporting organizations’ staffing levels, 

could delay the entry of some ships into the strategy and the execution of the 

strategy. For example, one supporting organization reported needing an 

additional 680 personnel to fully execute the strategy. As of August 2012, the 

Navy plans to reflect its funding needs for 410 personnel in its fiscal year 2014 

budget request and the remaining 270 in subsequent requests. Also, due to high 

operational tempos the phased implementation of some ships into the strategy 

may be delayed. Furthermore, ships that do not execute the strategy’s 

maintenance periods as planned will have lifecycle maintenance actions

deferred. GAO has previously reported that risk assessment can inform effective 

program management by helping managers make decisions about the allocation 

of finite resources, and alternative courses of action. However, the Navy has not 

undertaken a comprehensive assessment of risks to the implementation of its 

strategy, nor has it developed alternatives to mitigate its risks. GAO believes 

operational tempo, supporting organizations’ staffing levels, and other risks may 

hinder the Navy’s full implementation of its surface force readiness strategy. If 

not addressed, this could lead to deferrals of lifecycle maintenance, which have

in the past contributed to increased maintenance costs, reduced readiness, and 

shorter service lives for some ships. 

View GAO-12-887. For more information, 

contact Sharon Pickup at (202) 512-9619 or 

pickups@gao.gov. 
Page i GAO-12-887 Military Readiness

Letter 1 

Background 3

Data Indicate Differences in Material Readiness Between Ship 

Types, but Do Not Reveal Readiness Trends Due to Limitations 

in the Data 7

Navy Has Acted to Improve Readiness but Not Assessed Risks to 

Achieving Full Implementation of Its Recent Strategy 13

Conclusions 19

Recommendations for Executive Action 19

Agency Comments and Our Evaluation 20

Appendix I Scope and Methodology 23

Appendix II Comments from the Department of Defense 29

Appendix III GAO Contacts and Staff Acknowledgments 32

Tables

Table 1: Classes of Surface Ships Reviewed 3

Table 2: The 27-month Fleet Response Plan for Surface Combatant 

and Amphibious Warfare Ships 5

Table 3: Navy’s Material Readiness Data Sources 8

Table 4: INSURV and CASREP Data by Ship Type: January 2008 - 

March 2012 9

Table 5: Average INSURV Equipment Operational Capability Scores 

for All Surface Combatant and Amphibious Warfare Ships 

from January 2008 through March 2012 12

Table 6: Navy Ships Planned For Early Retirement 17

Table 7: Summary of Regression Model Parameters 26

Figures

Figure 1: Administrative Chain of Command 4

Figure 2: Average Number of Casualty Reports, per Ship, of Surface 

Combatant and Amphibious Warfare Ships by Quarter 

from January 2008 through March 2012 11

Contents
Page ii GAO-12-887 Military Readiness

Figure 3: Notional 27-month Fleet Response Plan Cycle 15

Figure 4: INSURV Process for Determining Overall Material 

Inspection Ratings 24

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Page 1 GAO-12-887 Military Readiness

United States Government Accountability Office

Washington, DC 20548

September 21, 2012

The Honorable Carl Levin

Chairman

The Honorable John McCain

Ranking Member

Committee on Armed Services

United States Senate

The Honorable Howard P. “Buck” McKeon

Chairman

The Honorable Adam Smith

Ranking Member

Committee on Armed Services

House of Representatives

In support of national interests, the Navy maintains a large surface force 

to meet its current missions and long-term obligations, including ensuring 

sea control, projecting power, and providing maritime security. The 

Navy’s plan, which is to grow its current fleet of 286 ships to about 300 by 

2019, is dependent both on its ability to acquire new ships and to 

maintain current ships for their expected service lives. The costs of 

procuring new ships and maintaining current ships can both be 

significant. For example, the cost of a new destroyer is more than $1.6 

billion, and in fiscal year 2011, the Navy spent an average of $11 million 

maintaining each of its 62 destroyers. In the past, when faced with the 

high costs of maintaining ships’ material conditions and keeping them 

mission-ready, the Navy elected to retire ships early—before they 

reached their expected service lives. For example, in January 2012, the 

Navy announced plans to retire seven cruisers and two amphibious ships 

early, in 2013 and 2014. Navy officials later testified that the service 

would redirect the savings from these early retirements to fund the 

maintenance of its remaining ships.

In 2010, a Navy report found that the material readiness of its surface 

force had declined over the previous ten years and was well below the 

levels necessary to support reliable, sustained operations at sea and 

achieve expected ship service lives. Among other things, the report found 

that the declines in material readiness were attributable to reductions in 

the number of assessments and inspections, deferrals of scheduled 

maintenance, and reductions in the length of major repair periods from 15 

to 9 weeks. In response, the Navy developed several maintenance 

 
 

Page 2 GAO-12-887 Military Readiness

initiatives and a new readiness strategy that it expects will improve the 

material condition of its ships and help them achieve their expected 

service lives. The strategy and initiatives are in various stages of 

implementation.

In House Report 112-78, accompanying a bill for the Fiscal Year 2012 

National Defense Authorization Act (H.R. 1540), the House Armed 

Services Committee directed GAO to review the Navy’s initiatives to 

improve the material condition of its surface ship fleet.1

To address our first objective, we analyzed Navy policies and procedures 

for determining surface force material readiness, as well as various 

studies and reports on the Navy’s material readiness process. We also 

interviewed officials from Navy commands that are responsible for 

maintaining, assessing, evaluating, and inspecting the material condition 

of the Navy’s surface ships. In addition, we analyzed readiness, 

maintenance, and inspection data to determine any changes in readiness 

from 2008—two years prior to the release of the Navy’s 2010 report on 

the degradation of surface force readiness—through March 2012, two 

years after the release of the report. Specifically, we analyzed data for the 

Navy’s guided-missile cruisers (CG 47 class), guided-missile destroyers 

(DDG 51 class), frigates (FFG 7 class), amphibious assault ships (LHA 1 

and LHD 1 classes), amphibious transport dock ships (LPD 4 and LPD 17 

classes), and dock landing ships (LSD 41 and LSD 49 classes). To 

address our second objective, we reviewed relevant Navy instructions on 

Navy material readiness, including the Navy’s Surface Force Readiness 

Manual, and prior GAO work on risk management. We also interviewed 

Navy training and maintenance officials to discuss how the Navy is 

implementing its new readiness strategy. Finally, we met with ship 

personnel to discuss possible challenges in implementing the new

readiness strategy and efforts.

This report 

analyzes 1) how the Navy evaluates the material readiness of its surface 

combatant and amphibious warfare ships and the extent to which data 

indicate trends or patterns in the material readiness of these ships, and 2) 

the extent to which the Navy has taken steps intended to improve the 

readiness of its surface combatant and amphibious warfare ships, 

including efforts to implement its recent strategy.

 

1 H.R. Rep. No-112-78, at 110 (2011).
 

Page 3 GAO-12-887 Military Readiness

We conducted this performance audit from July 2011 to September 2012 

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. We discuss our scope and 

methodology in more detail in appendix I.

The Navy’s fleet includes aircraft carriers, cruisers, destroyers, frigates, 

littoral combat ships, submarines, amphibious warfare, mine warfare, 

combat logistics, and fleet support ships. Our review focused on surface 

combatant and amphibious warfare ships, which constitute slightly less 

than half of the total fleet. Table 1 shows the classes of surface ships we 

reviewed along with their numbers, expected service lives, and current 

average ages.

Table 1: Classes of Surface Ships Reviewed

Ship Class Ship Numbers

Expected Service

Life of Ship Class (years)

Current Average Age of 

Active Ship Class (years) 

Surface Combatants 107

Cruisers (CG 47) 22 35 22

Destroyers

• DDG 51(I and II)

• DDG 51 (IIA) 

28

34

35

40

16

7 

Frigates (FFG 7) 23 30 28

Amphibious Warfare Ships 28 

LHA 1

LPD 4

LHD 1

LPD 17

LSD 41

LSD 49

1 

1 

8 

6 

8 

4 

35

35

40

40

40

40

32

44

15

4 

24

16

Total 135

Source: GAO analysis of Navy data.

Figure 1 shows the administrative chain of command for Navy surface 

ships. The U.S. Pacific Fleet and U.S. Fleet Forces Command organize, 

man, train, maintain, and equip Navy forces, develop and submit budgets, 

and develop required and sustainable levels of fleet readiness, with U.S. 

Background 
 

Page 4 GAO-12-887 Military Readiness

Fleet Forces Command serving as the lead for fleet training requirements 

and policies to generate combat-ready Navy forces. The Navy’s surface 

type commanders—Commander, Naval Surface Force, U.S. Pacific Fleet 

and Commander, Naval Surface Force, Atlantic have specific 

responsibilities for the maintenance, training, and readiness of their 

assigned surface ships.2

Figure 1: Administrative Chain of Command

To meet the increased demands for forces following the events of 

September 2001, the Navy established a force generation model—the 

Fleet Response Plan—and in August 2006 the Navy issued a Fleet 

Response Plan instruction.3

 

2 The Navy also has two air type commanders responsible for aircraft and aircraft carriers 

assigned to their geographic areas of responsibility and two submarine type commanders.

The plan seeks to build readiness so the 

Navy can surge a greater number of ships on short notice while 

continuing to meet its forward-presence requirements. As depicted in 

table 2, there are four phases in the Fleet Response Plan 27-month cycle 

that applies to surface combatant and amphibious warfare ships. The four 

Fleet Response Plan phases are (1) basic, or unit-level training; (2) 

integrated training; (3) sustainment (which includes deployment); and (4) 

maintenance.

3 Office of the Chief of Naval Operations Instruction 3000.15, Fleet Response Plan (FRP)

(Aug. 31, 2006).
 

Page 5 GAO-12-887 Military Readiness

Table 2: The 27-month Fleet Response Plan for Surface Combatant and Amphibious Warfare Ships

Phase Basic Integrated Sustainment Maintenance

Activities Sea trials, ammunition 

loading and unloading, unitlevel training

Multi-ship training 

exercises up to the carrier 

strike group level

Continued advanced multi-ship 

training, including carrier strike 

group exercises after 

deployment

Includes major maintenance 

overhauls

Source: GAO analysis of Navy data.

In September 2009, the Commanders of U.S. Pacific Fleet and U.S. Fleet 

Forces directed Vice Admiral Balisle, USN-Ret., to convene and lead a 

Fleet Review Panel to assess surface force readiness. The Panel issued

its report in February 2010. It stated that Navy decisions made to 

increase efficiencies throughout the fleet had adversely affected surface 

ship current readiness and life cycle material readiness.4

We have previously reported on the Navy’s initiatives to achieve greater 

efficiencies and reduce costs. In June 2010, we issued a report regarding 

the training and crew sizes of cruisers and destroyers. In it we found that 

changes in training and reductions in crew sizes had contributed to 

declining material conditions on cruisers and destroyers. We 

Reducing 

preventative maintenance requirements and the simultaneous cuts to 

shore infrastructure were two examples of the detrimental efficiencies 

cited in the report. The report also stated that if the surface force stayed 

on the present course, surface ships would not reach their expected 

service lives. For instance, it projected that destroyers would achieve 25-

27 years of service life instead of the 35-40 years expected. The report 

concluded that each decision to improve efficiency may well have been 

an appropriate attempt to meet Navy priorities at the time, but there was 

limited evidence to identify any changes that were made with surface 

force readiness as the top priority—efficiency was sought over 

effectiveness. The Fleet Review Panel made several maintenance, 

crewing, and training recommendations that it stated should be 

addressed not in isolation but as a circle of readiness. According to the 

report, it will take a multi-faceted, systematic solution to stop the decline 

in readiness, and begin recovery.

 

4 Fleet Review Panel, Final Report, Fleet Review Panel of Surface Force Readiness (Feb. 

26, 2010). For the purposes of this report, we are defining current readiness as ships’ 

abilities to meet near term operational requirements and life cycle material readiness as 

ships’ abilities to achieve their expected service lives.
 

Page 6 GAO-12-887 Military Readiness

recommended that the Navy reevaluate its ship workload requirements 

and develop additional metrics to measure the effectiveness of Navy 

training. DOD agreed with these recommendations.5 Also, in July 2011 

we reported6 on the training and manning information presented in the 

Navy’s February 20117

In January 2011, the commanders of U.S. Fleet Forces Command and 

U.S. Pacific Fleet jointly instructed their type commanders to develop a 

pilot program to “establish a sequenced, integrated, and building block 

approach” to achieve required readiness levels. This pilot program began 

in March 2011, and in March 2012, near the end of the pilot, the Navy 

issued its Surface Force Readiness Manual, which details a new strategy 

for optimizing surface force readiness throughout the Fleet Response 

Plan.

report to Congress regarding ship readiness. The 

Navy’s report included information on ships’ ability to perform required 

maintenance tasks, pass inspection, and any projected effects on the 

lifespan of individual ships. We concluded that the Navy’s report did not 

provide discussion of data limitations or caveats to any of the information 

it presented, including its conclusions and recommendations. However, 

we found that the Navy did outline specific actions that it was taking or 

planned to take to address the declines in readiness due to manning and 

crew changes.

8 The strategy calls for integrating and synchronizing maintenance, 

training, and resources among multiple organizations such as Afloat 

Training Groups and Regional Maintenance Centers.

 

5 GAO, Military Readiness: Navy Needs to Reassess Its Metrics and Assumptions for Ship 

Crewing Requirements and Training, GAO-10-592 (Washington, D.C.: June 2010). 

6 GAO, Military Readiness: Navy’s Report to Congress on the Impact of Training and 

Crew Size on Surface Force Material Readiness, GAO-11-746R (Washington, D.C.: July 

2011).

7 Department of the Navy, Report to Congress: Impact of Training and Crew Size on 

Surface Force Material Readiness (Washington, D.C.: February 2011). 

8 Commander, Naval Surface Force U.S. Pacific Fleet/Commander, Naval Surface Force 

Atlantic Instruction 3502.3. Surface Force Readiness Manual (Mar. 9, 2012).
 

Page 7 GAO-12-887 Military Readiness

For the period from 2008 to 2012, available data show variations in 

material readiness between different types of ships—such as material 

readiness differences between amphibious warfare ships and surface 

combatants—but data limitations prevent us from making any conclusions 

concerning improvements or declines in the overall readiness of the 

surface combatant and amphibious warfare fleet during the period. 

Through a variety of means and systems, the Navy collects, analyzes, 

and tracks data that show the material condition of its surface ships—in 

terms of both their current and life cycle readiness. Three of the data 

sources the Navy uses to provide information on the material condition of 

ships are casualty reports9

; Defense Readiness Reporting System – Navy 

(DRRS-N) reports; and Board of Inspection and Survey (INSURV) 

material inspection reports. None of these individual data sources are 

designed to provide a complete picture of the overall material condition of 

the surface force. However, the data sources can be viewed as 

complementary and, when taken together, provide data on both the 

current and life cycle material readiness of the surface force. For 

example, some casualty report data must be updated every 72 hours and 

provides information on individual pieces of equipment that are currently 

degraded or out of commission. DRRS-N data is normally reported 

monthly and focuses on current readiness by presenting information on 

broader capability and resource areas, such as ship command, control, 

and communications, rather than individual equipment. INSURV data is 

collected less frequently—ships undergo INSURV inspections about once 

every 5 years—but the data is extensive, and includes inspection results 

for structural components, individual pieces of equipment, and broad 

systems, as well as assessments of a ship’s warfighting capabilities. The 

INSURV data is used to make lifecycle decisions on whether to retain or 

decommission Navy ships. Casualty reports, DRRS-N data, and INSURV 

reports are all classified when they identify warfighting capabilities of 

individual ships. However, when casualty reports and INSURV 

information is consolidated and summarized above the individual ship 

level it is unclassified. Even summary DRRS-N data is classified, and 

therefore actual DRRS-N data is not included in this unclassified report. 

Table 3 provides additional details on each of the data sources.

 

9 Casualty reports reflect equipment malfunctions that impact a ship’s ability to support 

required mission areas and suggest a deficiency in mission essential equipment. We drew 

casualty report data from the Maintenance Figure of Merit program.

Data Indicate 

Differences in 

Material Readiness 

Between Ship Types, 

but Do Not Reveal 

Readiness Trends Due 

to Limitations in the 

Data
 

Page 8 GAO-12-887 Military Readiness

Table 3: Navy’s Material Readiness Data Sources

Source: GAO analysis of Navy data.

Legend: INSURV = Board of Inspection and Survey and DRRS-N = Defense Readiness Reporting 

System–Navy.

INSURV and casualty report data from January 2008 through March 2012 

consistently show differences in material readiness between different 

types of ships. As illustrated in Table 4, there are differences between 

frigates, destroyers, cruisers, and amphibious warfare ships in their 

overall INSURV ratings—which reflect ship abilities to carry out their 

primary missions; their INSURV Equipment Operational Capability 

scores—which reflect the material condition of 19 different functional 

areas; and their average numbers of casualty reports—which reflect 

material deficiencies in mission essential equipment. The differences 

within the average Equipment Operational Capability and casualty reports 

were found to be statistically significant. See additional details regarding 

the statistical significance of average Equipment Operational Capability 

scores and the average number of casualty reports in Appendix I.

Data Source INSURV DRRS-N Casualty Reports

Data Owner Navy Board of Inspection and 

Survey 

Office of the Chief of Naval 

Operations

United States Fleet Forces 

Command and United States 

Pacific Fleet 

Purpose and Types of Data 

Collected

Determines fitness of Navy 

ships for further service; 

assesses material condition to 

include equipment operating 

capability and demonstrational 

testing. 

Measures current readiness in 

terms of capabilities, training, 

and resources (people, 

equipment, supplies, and 

ordnance). 

Provides a measure of the 

material condition of a ship, in 

terms of deficiencies. 

Limitations Inspections may be delayed 

due to deployment, 

maintenance requirements, or 

other factors such as 

coordination of schedules.

Focus on ability to meet current 

mission requirements may not 

reflect elements of material 

condition requiring action in the 

long term, such as corrosion.

Casualty report data has not 

been consistently reported and 

can vary among ships due to 

differences in leadership 

philosophy, crew experience and 

training, and the number of 

independent assessments.

Frequency of Reports Generally, every 48 to 60 

months 

Monthly/Within 24 hours of a 

significant change

As often as every 72 hours 
 

Page 9 GAO-12-887 Military Readiness

Table 4: INSURV and CASREP Data by Ship Type: January 2008 - March 2012 

Source: GAO analysis of Navy data.

Notes: Percentages may not add to 100 percent due to rounding.

INSURV overall ratings are assigned based on the ship’s ability to materially carry out its missions. A 

rating of ‘satisfactory’ indicates an ability to carry out all missions, ‘degraded’ indicates an inability to 

carry out one mission; a rating of ‘unsatisfactory’ indicates an inability to carry out more than one 

mission.

INSURV assigns Equipment Operational Capability scores to different functional areas of inspected 

ships’ systems. The scores range from 0 to 1 with 1 being the best score. The average Equipment 

Operational Capability scores shown in table 4 are based on GAO analysis of INSURV scores for all 

19 functional areas (18 areas in the case of amphibious ships). Differences in Equipment Operational 

Capability scores between ship types are statistically significant at the 95 percent confidence level. 

Differences in Average Number of Casualty Reports per Ship between ship types are statistically 

significant at the 95 percent confidence level. Differences in INSURV Overall Ratings were not 

assessed statistically. See additional statistical details in Appendix I.

For example, the data in table 4 shows that, for the time period covered, 

the material condition of amphibious ships is generally lower than that of 

frigates and destroyers. For example, a lower percentage of amphibious 

warfare ships received overall “satisfactory” ratings in INSURV 

inspections than destroyers and frigates; likewise, amphibious ships had 

lower average INSURV Equipment Operational Capability scores than 

those two types of ships. Amphibious warfare ships also have on average 

more casualty reports per ship than destroyers and frigates. According to 

Navy officials, some of these differences may result from differences in 

the size, complexity, and age of the various types of ships. Likewise, 

cruisers have a lower material condition than that of destroyers. The data 

show that 22 percent of cruisers were rated “unsatisfactory” compared to 

3 percent of destroyers, and the average cruiser Equipment Operational 

Capability score of 0.786 was also lower than the destroyer score of 

0.829. Finally, the average of 18 casualty reports per cruiser was about 

24 percent higher than the 14.5 casualty reports per destroyer. DRRS-N 

data also show that there are readiness differences between the Navy’s 

different types of ships but the precise differences are classified and 

therefore are not included in this report.

January 2008 to March 2012 Frigates Destroyers Cruisers

Amphibious 

Ships 

INSURV Overall

Rating 

Number of ships inspected 20 38 18 18

‘Unsatisfactory’ 5% 3% 22% 6%

‘Degraded’ 5% 14% 11% 28%

‘Satisfactory’ 90% 84% 67% 67%

INSURV Average EOC Scores 0.806 0.829 0.786 0.746

Average Number of Casualty Reports per Ship 11.8 14.5 18.0 22.3
 

Page 10 GAO-12-887 Military Readiness

Material readiness data show some clear differences between types of 

ships as shown in table 4. However, when we considered the surface 

combatant and amphibious warfare ships in aggregate, we were unable 

to make any conclusions concerning trends in the overall readiness of 

these ships. One readiness measure—casualty reports—indicates that 

the material readiness of these ships has declined but other readiness 

measures show both upward and downward movement. Because of the 

relatively small number of INSURV inspections conducted each year, it is 

not possible to draw a conclusion about trends in the material readiness 

of surface combatant and amphibious warfare ships from January 2008 to 

March 2012 based on INSURV data.

Casualty report data from January 2008 to March 2012 show that there is 

a significant upward trend in the average daily number of casualty reports 

per ship for both surface combatants and amphibious warfare ships, 

which would indicate declining material readiness. Specifically, the 

average daily numbers of casualty reports per ship have been increasing 

at an estimated rate of about 2 and 3 per year, respectively. Furthermore, 

for both ship types, there is not a statistically significant difference in the 

trend when comparing the periods before February 2010—when the Fleet 

Review Panel’s findings were published—and after February 2010. 

According to Navy officials, increases in casualty reports could be 

reflective of the greater numbers of material inspections and evaluations 

than in the past, which is likely to identify more material deficiencies and 

generate more casualty reports. Figure 2 shows the increases in casualty 

reports over time.
 

Page 11 GAO-12-887 Military Readiness

Figure 2: Average Number of Casualty Reports, per Ship, of Surface Combatant and Amphibious Warfare Ships by Quarter 

from January 2008 through March 2012

Table 5 shows the summary data for all the INSURV inspections of 

surface combatant and amphibious warfare ships that were conducted 

from January 2008 through March 2012.10

 

10 The data includes all first inspection data but does not include data from any reinspections that were conducted following an “unsatisfactory” inspection.

Throughout the period, the 

data fluctuate in both an upward and downward direction. For example, 

the proportion of surface combatant and amphibious warfare ships rated 

‘satisfactory’ fell 11 percent from 83 percent in 2008 to 72 percent in 

2010, and then increased to 77 percent in 2011. Average Equipment 

Operational Capability scores also fluctuated throughout the period—

increasing in 2011 and declining in 2009, 2010, and 2012. As previously 

noted, because of the relatively small number of INSURV inspections 

conducted each year, it is not possible to draw a conclusion about trends 

in the material readiness of surface combatant and amphibious warfare 

ships between 2008 and 2012 based on INSURV data.
 

Page 12 GAO-12-887 Military Readiness

Table 5: Average INSURV Equipment Operational Capability Scores for All Surface Combatant and Amphibious Warfare Ships 

from January 2008 through March 2012

INSURV by 

Calendar Year

Total Number and Percent of Surface

Combatant and Amphibious Warfare Ships

Average Equipment 

Operational 

Capability Scores for 

Surface Combatant 

and Amphibious 

Inspected ‘Satisfactory’ ‘Degraded’ Warfare Ships

‘Unsatisfactory’ 

2008 29 24

(83%)

3 

(10%)

2 

(7%)

0.796

2009 23 19

(83%)

2 

(9%)

2 

(9%)

0.795

2010 25 18

(72%)

5 

(20%)

2 

(8%)

0.785

2011 13 10 a

(77%)

2 

(15%)

1 

(8%)

0.842

2012 4 b 3 

(75%)

1 

(25%)

0 

(0%)

0.836

Source: GAO analysis of Navy data.

Note: Percentages may not add to 100 percent due to rounding.

a

Because the Board of Inspection and Survey conducts INSURV inspections of all Navy ships, the 

number of INSURV inspections of surface combatant and amphibious warfare ships can vary widely 

from year to year.

b

Data for 2012 goes through March 2012.

The casualty report and INSURV data that we analyzed are consistent 

with the findings of the Navy’s Fleet Review Panel, which found that the 

material readiness of the Navy’s ships had been declining prior to 2010. 

Our analysis showed a statistically significant increase in casualty reports 

between 2008 and 2010 which would indicate a declining material 

condition. Although the statistical significance of the INSURV data from 

2008 to 2010 could not be confirmed due to the small number of ships 

that were inspected during this time period, that data showed declines in 

both the percentage of satisfactory inspections and average Equipment 

Operational Capability scores.
 

Page 13 GAO-12-887 Military Readiness

The Navy has taken steps intended to improve the readiness of its 

surface combatant and amphibious warfare ships. However, it faces risks 

to achieving full implementation of its recent strategy and has not 

assessed these risks or developed alternative implementation 

approaches to mitigate risks.

The Navy has taken several steps to help remedy problems it has 

identified in regard to maintaining the readiness of its surface combatant 

and amphibious warfare ships. In the past, material assessments, 

maintenance, and training were carried out separately by numerous 

organizations, such as the Regional Maintenance Centers and Afloat 

Training Groups. According to the Navy, this sometimes resulted in 

overlapping responsibilities and duplicative efforts. Further, the Navy has 

deferred maintenance due to high operational requirements. The Navy 

recognizes that deferring maintenance can affect readiness and increase 

the costs of later repairs. For example, maintenance officials told us that 

Navy studies have found that deferring maintenance on ballast tanks to 

the next major maintenance period will increase costs by approximately 

2.6 times, and a systematic deferral of maintenance may cause a 

situation where it becomes cost prohibitive to keep a ship in service. This 

can lead to early retirements prior to ships reaching their expected 

service lives.

In the past few years the Navy has taken a more systematic and 

integrated approach to address its maintenance requirements and 

mitigate maintenance problems. For example, in November 2010 it 

established the Surface Maintenance Engineering Planning Program, 

which provides life cycle management of maintenance requirements, 

including deferrals, for surface ships and monitors life cycle repair work. 

Also, in December 2010 the Navy established Navy Regional 

Maintenance Center headquarters, and began increasing the personnel 

levels at its intermediate maintenance facilities in June 2011. More 

recently, in March 2012, the Navy set forth a new strategy in its Surface 

Navy Has Acted to 

Improve Readiness 

but Not Assessed 

Risks to Achieving 

Full Implementation 

of Its Recent Strategy 

Navy Steps to Improve 

Surface Force Readiness
 

Page 14 GAO-12-887 Military Readiness

Force Readiness Manual.11 This strategy is designed to integrate material 

assessments, evaluations, and inspections with maintenance actions and 

training and ensure that surface ships are (1) ready to perform their 

current mission requirements and (2) able to reach their expected service 

lives.12

According to the Surface Force Readiness Manual, readiness is based 

upon a foundation of solid material condition that supports effective 

training. In line with this integrated maintenance and training approach, 

the new strategy tailors the 27-month Fleet Response Plan by adding a 

fifth phase that is not included in the Fleet Response Plan, the 

shakedown phase. This phase allows time between the end of the 

maintenance phase and the beginning of the basic phase to conduct a 

material assessment of the ship to determine if equipment conditions are 

able to support training. In addition, the new strategy shifts the cycle’s 

starting point from the basic phase to the sustainment phase to support 

the deliberate planning required to satisfactorily execute the maintenance 

phase and integrate maintenance and training for effective readiness. 

Under the new strategy, multiple assessments, which previously certified 

ship readiness all throughout the Fleet Response Plan cycle, will now be 

consolidated into seven readiness evaluations at designated points within 

the cycle. Because each evaluation may have several components, one 

organization will be designated as the lead and will be responsible for 

coordinating the evaluation with the ship and other assessment teams, 

thereby minimizing duplication and gaining efficiencies through 

synchronization. Figure 3 shows the readiness evaluations that occur 

within each phase of the strategy’s notional 27-month cycle.

The manual addresses the need for the organizations involved in 

supporting ship readiness to take an integrated, systematic approach to 

eliminate redundancy, build training proficiency to deploy at peak 

readiness, and reduce costs associated with late identified work.

 

11 Commander, Naval Surface Force U.S. Pacific Fleet/Commander, Naval Surface Force 

Atlantic Instruction 3502.3, Surface Force Readiness Manual (Mar. 9, 2012).

12 The Surface Force Readiness Manual applies to most surface ships in the fleet.

However, aircraft carriers and littoral combat ships are governed by separate instructions. 
 

Page 15 GAO-12-887 Military Readiness

Figure 3: Notional 27-month Fleet Response Plan Cycle

As previously noted, development of the Navy’s new strategy began with 

a pilot program. The pilot was conducted on ships from both the East and 

West coasts beginning in March 2011. Initial implementation of the new 

strategy began in March 2012 and is currently staggered, with ships’ 

schedules being modified to support the strategy’s integration of training, 

manning, and maintenance efforts.13 Ships that were not involved in the 

pilot program will begin implementing the strategy when they complete 

the maintenance phase of the Fleet Response Plan cycle. The Navy 

plans to fully implement the new strategy in fiscal year 2015 (i.e. to have 

all surface ships operating under the strategy and resources needed to 

conduct the strategy’s required tasks in place). While the Surface Force 

Readiness Manual states that providing a standard, predictable path to 

readiness is one of the tenets of the Navy’s new strategy, it also 

acknowledges that circumstances may arise that will require a deviation 

from the notional 27-month cycle.

Certain factors could affect the Navy’s ability to fully implement its 

strategy, but the Navy has not assessed the risks to implementation or 

developed alternatives. As we have previously reported,14

 

13 Currently, no ships have applied the strategy throughout an entire 27-month Fleet

Response Plan cycle.

risk 

assessment can provide a foundation for effective program management. 

Risk management is a strategic process to help program managers make 

14 GAO, Standards for Internal Control in the Federal Government, GAO/AIMD-00-21.3.1 

(Washington, D.C.: November 1999).

Navy Has Not Assessed 

Risks to Implementing its 

Strategy as Planned or 

Developed Alternatives
 

Page 16 GAO-12-887 Military Readiness

decisions about assessing risk, allocating finite resources, and taking 

actions under conditions of uncertainty. To carry out a comprehensive risk 

assessment, program managers need to identify program risks from both 

external and internal sources, estimate the significance of these risks, 

and decide what steps should be taken to best manage them. Although 

such an assessment would not assure that program risks are completely 

eliminated, it would provide reasonable assurance that such risks are 

being minimized.

As the Navy implements its new surface force readiness strategy one risk 

we identified involves the tempo of operations. While the strategy 

acknowledges circumstances may arise that require a deviation from the 

27-month Fleet Response Plan cycle, it also states that predictability is 

necessary in order to synchronize the maintenance, training, and 

operational requirements. However, the tempo of operations is currently 

higher than planned for in the Fleet Response Plan. According to Navy 

officials, this makes execution of the strategy challenging. High 

operational tempos pose challenges because they could delay the entry 

of some ships into the strategy as well as the movement of ships through 

the strategy. For example, some ships that have been operating at 

increased tempos, such as the Navy’s ballistic missile defense cruisers 

and destroyers, have not followed the Navy’s planned 27-month cycle.

Navy officials told us that requirements for ballistic missile defense ships 

are very high leading to quick turnarounds between deployments. They 

said, in some cases, ships may not have time for the maintenance or full 

basic and integrated/advanced training phases. The manual notes that 

ships without an extended maintenance period between deployments will 

remain in the sustainment phase. According to Navy guidance, the 

maintenance phase is critical to the success of the Fleet Response Plan 

since this is the optimal period in which lifecycle maintenance activities—

major shipyard or depot-level repairs, upgrades, and modernization 

installations—occur. Thus, ships with a high operational tempo that do not 

enter the maintenance phase as planned will have lifecycle maintenance 

activities deferred, which could lead to increased future costs. Further, 

ships that do not enter the maintenance phase may be delayed entering 

into the strategy. This delay would be another risk to the implementation 

of the Navy’s new readiness strategy and ships’ lifecycle readiness.

In addition, the Navy’s plan to decrease the number of surface combatant 

and amphibious warfare ships through early retirements is likely to 

increase operational tempos even further for many ships that remain in 

the fleet. DOD’s fiscal year 2013 budget request proposes the early 

retirement of seven Aegis cruisers and two amphibious ships in fiscal 
 

Page 17 GAO-12-887 Military Readiness

years 2013 and 2014. When fewer ships are available to meet a given 

requirement, ships must deploy more frequently. Table 6 shows the ships 

that the Navy plans to retire early, their ages at retirement, and their 

homeports.

Table 6: Navy Ships Planned For Early Retirement 

Hull No. Name Year to be Retired

Age at

Retirement (years) Homeport

CG 63 Cowpens FY 13 22 Yokosuka, Japan

CG 68 Anzio FY 13 21 Norfolk, VA

CG 69 Vicksburg FY 13 21 Mayport, FL

CG 73 Port Royal FY 13 19 Pearl Harbor, HI

CG 64 Gettysburg FY 14 23 Mayport, FL

CG 65 Chosin FY 14 23 Pearl Harbor, HI

CG 66 Hue City FY 14 23 Mayport, FL

LSD 41 Whidbey Island FY 14 29 Norfolk, VA

LSD 46 Tortuga FY 14 24 Sasebo, Japan

Source: GAO analysis of Navy data.

Legend: FY = Fiscal Year

Also, recent changes in national priorities,15

In addition to the risks posed by high operational tempos, several 

supporting organizations currently have staffing levels that are below the 

levels needed to fulfill their roles in the new integrated readiness strategy.

For example, Navy Afloat Training Group officials have identified the 

staffing levels required to fully support the strategy, and reported that they 

need an additional 680 personnel to fully execute the new strategy. As of 

August 2012, the Navy plans to reflect its funding needs for 410 of the 

680 personnel in its fiscal year 2014 budget request and for the remaining 

270 in subsequent requests. Under the new strategy, the Afloat Training 

which call for an increased 

focus on the Asia-Pacific region that places a renewed emphasis on air 

and naval forces, make it unlikely that operational tempos will decline. At 

the same time, DOD will still maintain its defense commitments to Europe 

and other allies and partners.

 

15 Department of Defense, Sustaining U.S. Global Leadership: Priorities For 21st Century 

Defense (Jan. 3, 2012).
 

Page 18 GAO-12-887 Military Readiness

Groups provide subject matter experts to conduct both material, and 

individual and team training. Previously the Afloat Training Groups used a 

“Train the Trainer” methodology, which did not require the same number 

of trainers because ships’ crews included their own system experts to 

train the crew and the Afloat Training Groups just trained the ships’ 

trainers. Afloat Training Group Pacific officials told us that there are times 

when the training events that can be offered—to ships currently under the 

strategy and/or ships that have not yet implemented the strategy—are 

limited because of their staffing level gaps. Current staffing allows 

executing all portions of the Basic Phase in select mission areas only. 

Other mission areas are expected to gain full training capability as staffing 

improves over the next several years. Until then, the Afloat Training 

Group officials plan to schedule training events within the limited 

capability mission areas based on a prioritized hierarchy.

Further, Surface Maintenance Engineering Planning Program officials told 

us they are also short of staff. They said they need 241 staff to perform 

their requirements, but currently have 183 staff. They stated that while 

current budget plans include funding to reach the 241 staffing level in 

2013, it will be reduced below the 241 requirement in 2014.

As with the Afloat Training Groups and Surface Maintenance Engineering 

Planning Program, officials at the Navy Regional Maintenance Center 

headquarters told us they currently lack the staff needed to fully execute 

the ship readiness assessments called for in the new strategy. Ship 

readiness assessments evaluate both long-term lifecycle maintenance 

requirements (e.g. preservation to prevent structural corrosion) and 

maintenance to support current mission requirements (e.g. preventative 

and corrective maintenance for the Aegis Weapons System). According 

to the officials, ship readiness assessments allow them to deliberately 

plan the work to be done during major maintenance periods and prioritize 

their maintenance funds. The goal is for ships to receive all the prescribed 

ship readiness assessments in fiscal year 2013. However, Navy officials 

stated that they are evaluating the impact of recent readiness assessment 

revisions on changes in the Regional Maintenance Center’s funding and 

personnel requirements.

The Navy has not undertaken a comprehensive assessment of the impact 

of high operational tempos, staffing shortages, or any other risks it may 

face in implementing its new readiness strategy, nor has it developed 

alternatives to mitigate any of these risks. The Navy does recognize in its 

strategy that circumstances may arise that require ships to deviate from 

the 27-month Fleet Response Plan cycle and has considered the 
 

Page 19 GAO-12-887 Military Readiness

adjustments to training that would need to take place in such a case. 

However, the strategy does not discuss, nor identify plans to mitigate, 

maintenance challenges that could arise from delays in full 

implementation. We believe the risks we identified may delay full 

implementation, which could lead to continued deferrals of lifecycle 

maintenance, increasing costs and impacting the Navy’s ability to achieve 

expected service lives for its ships.

Today’s fleet of surface combatant and amphibious warfare ships

provides core capabilities that enable the Navy to fulfill its missions. In 

order to keep this fleet materially and operationally ready to meet current 

missions and sustain the force for future requirements, the Navy must 

maximize the effective use of its resources and ensure that its ships 

achieve their expected service lives. Full implementation of its new 

strategy, however, may be delayed if the Navy does not account for the 

risks it faces and devise plans to mitigate against those risks. Navy 

organizations have taken individual steps to increase their staffing levels, 

but the Navy has yet to consider alternatives if the integration of 

assessment, maintenance, and training under the strategy is delayed. 

Without an understanding of risks to full implementation and plans to 

mitigate against them, the Navy is likely to continue to face the challenges 

it has encountered in the past, including the increased costs that arise 

from deferring maintenance and the early retirement of ships. This could 

impact the Navy’s ability to meet its long-term commitments. Further, 

ongoing maintenance deferrals—and early retirements that increase the 

pace of operations for the remaining surface force—could potentially 

impact the Navy’s ability to meet current missions.

To enhance the Navy’s ability to implement its strategy to improve surface 

force material readiness, we recommend that the Secretary of Defense 

direct the Secretary of the Navy to take the following two actions: 

• Develop a comprehensive assessment of the risks the Navy faces in 

implementing its Surface Force Readiness Manual strategy, and 

alternatives to mitigate risks. Specifically, a comprehensive risk 

assessment should include an assessment of risks such as high 

operational tempos and availability of personnel.

• Use the results of this assessment to make any necessary 

adjustments to its implementation plan.

Conclusions 

Recommendations for 

Executive Action
 

Page 20 GAO-12-887 Military Readiness

In written comments on a draft of this report, DOD partially concurred with 

our recommendations. Overall, DOD stated it agrees that risk assessment 

is an important component of program management, but does not agree 

that a comprehensive assessment of the risks associated with 

implementation of the Navy’s Surface Force Readiness strategy is either 

necessary or desirable. It also stated that existing assessment processes 

are sufficient to enable adjustments to implementation of the strategy. 

DOD also noted several specific points. For example, according to DOD, 

a number of factors impact surface ship readiness and some of those 

factors, such as budgetary decisions, emergent operational requirements, 

and unexpected major ship repair events are outside of the Navy’s direct 

control. DOD further stated that the strategy, and the organizations that 

support the strategy, determine and prioritize the full readiness 

requirement through reviews of ship material condition and assess the 

risk of any gaps between requirements and execution, as real world 

events unfold. DOD also noted that the Surface Ship Readiness strategy 

has a direct input into the annual Planning, Programming, Budgeting, and 

Execution (PPBE) process. It stated that its position is that execution of 

the strategy and PPBE process adequately identify and mitigate risks. 

DOD further believes that a separate one-time comprehensive 

assessment of risks, over and above established tracking mechanisms, is 

an unnecessary strain on scarce resources. Moreover, DOD stated that 

the Navy now has the technical resources available, using a disciplined 

process, to inform risk-based decisions that optimize the balance 

between current operational readiness and future readiness tied to 

expected service life through the standup of its Surface Maintenance 

Engineering Planning Program and Commander Navy Regional 

Maintenance Centers. Specifically, DOD noted documenting and 

managing the maintenance requirement is now a fully integrated process. 

According to DOD, the Navy’s Surface Type Commanders identify and 

adjudicate risks to service life and this approach is consistent with 

fundamental process discipline and risk management executed by the 

submarine and carrier enterprises. Finally, according to DOD, the Navy is 

continually assessing progress in achieving the strategy and has the 

requisite tools in place to identify changes in force readiness levels that 

may result from resource constraints, and will adjust the process as 

necessary to ensure readiness stays on track. 

As described in our report, we recognize that the Navy has taken a more 

systematic and integrated approach to address its maintenance 

requirements and mitigate problems, and specifically cite the Surface 

Readiness strategy, and actions such as standing up Surface 

Maintenance Engineering Planning Program and Commander Navy 

Agency Comments 

and Our Evaluation
 

Page 21 GAO-12-887 Military Readiness

Regional Maintenance Centers. We also recognize that the Navy 

conducts various assessments of ship readiness and considers resource

needs associated with implementing the strategy as part of the budget 

process. However, we do not agree that any of the current assessments 

or analyses offer the type of risk assessment that our report recommends. 

For example, the PPBE process does not address the specific risk that 

high operational tempos pose to implementation of the strategy nor does 

it present alternatives for mitigating this risk. Also, despite the ongoing 

efforts by Surface Maintenance Engineering Planning Program and 

Commander Navy Regional Maintenance Centers officials to document 

and manage the maintenance requirement of the surface force in an 

integrated process, both organizations are currently under staffed. The 

challenges identified in our report, including high operational tempos and 

current organizational staffing levels, have hindered the Navy’s ability to 

achieve the desired predictability in ships’ operations and maintenance 

schedules, as called for in its strategy. Given factors such as the Navy’s 

plan to decrease the number of ships as well as changes in national 

priorities that place a renewed emphasis on naval forces in the Asia 

Pacific region, these challenges we identified are unlikely to diminish in 

the near future, and there could be additional risks to the strategy’s 

implementation. Without an understanding of the full range of risks to 

implementing its strategy and plans to mitigate them, the Navy is likely to 

continue to face the challenges it has encountered in the past, including 

increased costs that arise from deferring maintenance and the early 

retirement of ships. Therefore, we continue to believe that a 

comprehensive risk assessment is needed. 

We are sending copies of this report to appropriate congressional 

committees, the Secretary of Defense, the Secretary of the navy, and 

other interested parties. In addition, the report is available at no charge 

on the GAO website at http://www.gao.gov

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

me at (202) 51209619. Contact points for our Offices of Congressional 
 

Page 22 GAO-12-887 Military Readiness

Relations and Public Affairs may be found on the last page of this report. 

GAO staff who made key contributions to this report are listed in 

appendix III. 

Sharon Pickup

Director

Defense Capabilities and Management
Appendix I: Scope and Methodology

Page 23 GAO-12-887 Military Readiness

To assess how the Navy evaluates the material readiness of its surface 

combatant and amphibious warfare ships and the extent to which data 

indicate trends or patterns in the material readiness of these ships, we 

interviewed officials from the Commander Naval Surface Force, U.S. 

Pacific Fleet, Commander Naval Surface Force, U.S. Atlantic Fleet, as 

well as visiting a number of ships, to include the USS Leyte Gulf (CG 55), 

USS Arleigh Burke (DDG 51), USS San Antonio (LPD 17), and USS 

Higgins (DDG-76). We obtained and analyzed Navy policies and 

procedures for determining surface force readiness, as well as various 

studies and reports on the Navy’s material readiness process. We 

obtained and analyzed material readiness data from the Navy’s Board of 

Inspection and Survey (INSURV) as well as the United States Fleet 

Forces Command (USFF). We also met with Navy officials from the 

Board of Inspection and Survey and the United States Fleet Forces 

Command to complement our data analysis, and observed the INSURV 

material inspection of the USS Cole (DDG 67).

We limited our data analysis to the period from January 2008 to March 

2012 in order to cover a period of approximately two years prior to, and 

two years following, publication of the Fleet Review Panel of Surface 

Force Readiness report. Specifically, we analyzed data for the Navy’s 

guided-missile cruisers (CG 47 class), guided-missile destroyers (DDG 51 

class), frigates (FFG 7 class), amphibious assault ships (LHA 1 and LHD 

1 classes), amphibious transport dock ships (LPD 4 and LPD 17 classes), 

and dock landing ships (LSD 41 and LSD 49 classes).

We analyzed data from three of the primary data sources the Navy uses 

to provide information on the material condition of ships: casualty reports; 

Board of Inspection and Survey (INSURV) material inspection reports; 

and the Defense Readiness Reporting System – Navy (DRRS-N) reports. 

None of these individual data sources are designed to provide a complete 

picture of the overall material condition of the surface force.

From the Board of Inspection and Survey we met with INSURV officials 

and observed an INSURV inspection onboard the USS Cole (DDG 67) 

conducted on December 12, 2011 and December 14, 2011. We obtained 

all INSURV initial material inspection reports dating from 2008 through 

2012 for cruisers, destroyers, frigates, and amphibious warfare ships. We 

then extracted relevant data from those reports, including INSURV’s 

overall assessment of the material condition of these surface ships 

(satisfactory, degraded, unsatisfactory), Equipment Operational Capability 

scores for the different functional areas of ships systems (on a 0.00 to 

1.00 scale), and dates when these ships were inspected. Although 

Appendix I: Scope and Methodology
Appendix I: Scope and Methodology

Page 24 GAO-12-887 Military Readiness

INSURV provides an overall assessment, we included Equipment 

Operational Capability scores to provide additional insight into the 

material condition of a ship’s systems. Overall assessments focus on a 

ship’s material readiness to perform primary missions. As such, while 

multiple individual systems may be in an unsatisfactory condition 

(Equipment Operational Capability scores below 0.80 are considered 

“degraded,” while those below 0.60 are considered “unsatisfactory”), the 

ship may receive an overall rating of “satisfactory” due to its material 

readiness to meet its primary missions. Figure 4 below shows the process 

for determining INSURV ratings, with that segment for determining 

Equipment Operational Capability scores highlighted.

Figure 4: INSURV Process for Determining Overall Material Inspection Ratings

We analyzed both INSURV overall ratings and Equipment Operational 

Capability scores to identify differences in material readiness between 

types of ships. To determine if there were statistically significant 

differences in the Equipment Operational Capability scores among four 

types of ships (cruisers, destroyers, frigates, and amphibious ships), we 

took the average of the various Equipment Operational Capability scores 

for each ship and conducted a one-way analysis of variance (ANOVA). In 

addition, we conducted post-hoc multiple comparison means tests to 

determine which ship types, if any, differed. Based on the results of this 

analysis, we concluded that there were statistically significant differences 

in the average Equipment Operational Capability score between the four 

ship types (p-value < 0.0001). Specifically, the average for amphibious 

ships was significantly lower, at the 95 percent confidence level, than the 

average scores for cruisers, destroyers, and frigates and the average for 

cruisers was significantly lower than the average for destroyers.
Appendix I: Scope and Methodology

Page 25 GAO-12-887 Military Readiness

In presenting our results, we standardized relevant data where necessary 

in order to present a consistent picture. For example, in 2010, the Board 

of Inspection and Survey moved from rating those ships with the worst 

material condition as “unfit for sustained combat operations” to rating 

them as “unsatisfactory.” We have treated both these ratings as 

“unsatisfactory” in this report. 

We obtained casualty report data for the same set of ships from the 

United States Fleet Forces Command office responsible for the Navy’s 

Maintenance Figure of Merit program. Casualty report data provided 

average daily numbers of casualty reports per ship for cruisers, 

destroyers, frigates, and amphibious warfare ships. We then used these 

daily averages to identify differences between ship types and to calculate 

and analyze changes in these daily averages from month to month and 

quarter to quarter.

We assessed the reliability of casualty report data presented in this 

report. Specifically, the Navy provided information based on data 

reliability assessment questions we provided, which included information 

on an overview of the data, data collection processes and procedures, 

data quality controls, and overall perceptions of data quality. We received 

documentation about how the systems are structured and written 

procedures in place to ensure that the appropriate material readiness 

information is collected and properly categorized. Additionally, we 

interviewed the Navy officials to obtain further clarification on data 

reliability and to discuss how the data were collected and reported into 

the system. After assessing the data, we determined that the data were 

sufficiently reliable for the purposes of assessing the material condition of 

Navy surface combatant and amphibious warfare ships, and we discuss 

our findings in the report.

To determine if there were statistically significant differences in the daily 

averages among the four types of ships (cruisers, destroyers, frigates, 

and amphibious warfare ships), we conducted a one-way analysis of 

variance (ANOVA), followed by post-hoc multiple comparison means 

tests to determine which ship types, if any, differed. Based on the results 

of this analysis we concluded that there were statistically significant 

differences in the daily averages between the four ship types (p-value < 

0.0001), and specifically, the daily average for amphibious warfare ships 

was significantly higher, at the 95 percent confidence level, than the daily 

average for cruisers, destroyers, and frigates.
Appendix I: Scope and Methodology

Page 26 GAO-12-887 Military Readiness

Next we analyzed the changes in the daily averages to determine if there 

was an increasing, decreasing, or stationary trend from month to month.

We did this separately for surface combatant ships (cruisers, destroyers, 

and frigates) and amphibious warfare ships. To estimate the trends, we 

conducted a time-series regression analysis to account for the correlation 

in the average daily scores from month to month. We then tested the 

estimated trends for significant changes after February 2010 — when the 

Fleet Review Panel’s findings were published – using the Chow test for 

structural changes in the estimated parameters. We fit a time-series 

regression model with autoregressive errors (AR lag of 1) to monthly data 

for both surface combatants and amphibious ships to account for the 

autocorrelation between monthly observations. The total R-squared, a 

measure that reflects how well the model predicts the data, was 0.9641 

for the surface combatant ships model and 0.9086 for the amphibious 

warfare ships model which indicate both models fit the data well. A 

summary of the model parameters is given in the table below.

Table 7: Summary of Regression Model Parameters

Model:

Model: 

Total R-Squared

Model:

Regression R-Squared Parameter Estimate p-value

Surface Combatants 0.9641 0.6063 Intercept 9.8221 <0.0001

Month (trend) 0.1770 <0.0001

Amphibious Ships 0.9086 0.4013 Intercept 16.1106 <0.0001

Month (trend) 0.2438 <0.0001

Source: GAO analysis of Navy data. 

We observed statistically significant positive trends in the daily average 

for both models. Specifically, the estimated trend for the daily average 

number of casualty reports per ship increased at a rate of about 2 per 

year (0.1770 * 12 months) for surface combatant ships and about 3 per 

year (0.2438 * 12 months) for amphibious warfare ships. In addition, 

neither of the tests for significant structural changes in the model 

parameters after February 2010 were significant at the 95 percent 

confidence level. Based on this, we concluded that there is not enough 

evidence to suggest there were significant changes in the estimated 

trends after February 2010 for either ship type.

We analyzed data from the Defense Readiness Reporting System-Navy 

(DRRS-N), which contains data that is normally reported monthly and 

focuses on current readiness by presenting information on broader 

capability and resource areas. We obtained classified DRRS-N readiness 
Appendix I: Scope and Methodology

Page 27 GAO-12-887 Military Readiness

data for all surface combatant and amphibious warfare ships from 

January 2008 through March 2012. DRRS-N data showed upward and 

downward movements between 2008 and 2012, but we did not evaluate 

the statistical significance of these movements.

To determine the extent to which the Navy has taken steps intended to 

improve the readiness of its surface combatant and amphibious warfare 

ships including efforts to implement its recent strategy, we reviewed 

relevant Navy instructions on Navy material readiness, including the 

strategy—the Surface Force Readiness Manual—to identify the policies 

and procedures required by the Navy to ensure its surface ships are 

ready to perform their current mission requirements and reach their 

expected service lives. We also reviewed prior GAO work on risk 

management and collected and analyzed data on the resources needed 

to implement the strategy, and interviewed relevant officials.

To gain a better understanding of how the Navy’s independent 

maintenance, training, and manning initiatives will be integrated into the 

new strategy, we collected data on the staffing resources needed to 

implement the strategy and met with officials from the Commander Navy 

Regional Maintenance Center, the Surface Maintenance Engineering 

Planning Program, and the Afloat Training Group Pacific. We focused 

primarily on the Navy’s maintenance initiatives because we have 

previously reported on its training and manning initiatives. 1

In addition, we met with personnel on board four Navy ships to obtain 

their views on the impact of the Navy’s maintenance initiatives, such as 

readiness assessments and material inspections, on the readiness of 

these ships. Specifically, we visited the USS Leyte Gulf (CG 55), USS 

Arleigh Burke (DDG 51), USS San Antonio (LPD 17), and USS Higgins 

(DDG 76). We also discussed initial implementation of the new strategy 

with personnel on board the USS Higgins.

We also met with officials from the Commander Naval Surface Force, 

U.S. Pacific Fleet who are responsible for administering the strategy for 

 

1 Footnote numbers start over at “1” in appendices. GAO, Military Readiness: Navy’s 

Report to Congress on the Impact of Training and Crew Size on Surface Force Material 

Readiness, GAO-11-746R (Washington, D.C.: July 7, 2011) and Military Readiness: Navy 

Needs to Reassess Its Metrics and Assumptions for Ship Crewing Requirements and 

Training, GAO-10-592 (Washington, D.C.: June 9, 2010). 
Appendix I: Scope and Methodology

Page 28 GAO-12-887 Military Readiness

surface ships on the West coast and in Hawaii and Japan to discuss 

timeframes for transitioning ships into the strategy, challenges 

implementing the strategy, and plans to address any risks that may occur 

during the strategy’s implementation. Additionally, we obtained written 

responses to our questions from these officials and from officials at the 

Commander Naval Surface Force, U.S. Atlantic Fleet who administer the 

strategy for surface ships on the East coast.

Finally, we reviewed prior GAO work on risk assessment as well as Navy 

testimony on the readiness of its ships and aircraft and Department of 

Defense strategic guidance on the key military missions the department 

will prepare for and budget priorities for fiscal years 2013-2017.

We conducted this performance audit from July 2011 to September 2012, 

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.
Appendix II: Comments from the Department 

of Defense

Page 29 GAO-12-887 Military Readiness

Appendix II: Comments from the Department 

of Defense
Appendix II: Comments from the Department 

of Defense

Page 30 GAO-12-887 Military Readiness
Appendix II: Comments from the Department 

of Defense

Page 31 GAO-12-887 Military Readiness
Appendix III: GAO Contacts and Staff 

Acknowledgments

Page 32 GAO-12-887 Military Readiness

Sharon L. Pickup, (202) 512-9619 or pickups@gao.gov

In addition to the contact named above, key contributors to this report 

were Michael Ferren (Assistant Director), Jim Ashley, Mary Jo Lacasse,

David Rodriguez, Michael Silver, Amie Steele, Nicole Volchko, Erik 

Wilkins-McKee, Nicole Willems, and Ed Yuen.

Appendix III: GAO Contacts and Staff 

Acknowledgments 

GAO Contacts

Staff 

Acknowledgments

(351621)
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