DEFENSE 

INFRASTRUCTURE

Navy's Analysis of 

Costs and Benefits 

Regarding Naval 

Station Mayport 

Demonstrated Some 

Best Practices and 

Minimally Addressed 

Other Requirements

Report to Congressional Committees

May 2013

GAO-13-501

United States Government Accountability Office
United States Government Accountability Office

Highlights of GAO-13-501, a report to 

congressional committees

May 2013

DEFENSE INFRASTRUCTURE

Navy's Analysis of Costs and Benefits Regarding 

Naval Station Mayport Demonstrated Some Best 

Practices and Minimally Addressed Other 

Requirements

Why GAO Did This Study

Over the next couple of years, 

maintenance work available to the ship 

repair industrial base supporting Naval 

Station Mayport is expected to 

decrease. Section 1017 of the National 

Defense Authorization Act for Fiscal 

Year 2012 required the Navy to 

analyze the costs and benefits of 

stationing additional DDG-51 class 

destroyers at Naval Station Mayport 

and to include other considerations. It 

also required GAO to provide an 

assessment of the Navy’s analysis. 

The Navy provided its analysis in a 

report submitted to Congress on 

December 31, 2012.

GAO’s objectives were to describe the 

extent to which the Navy’s analysis (1) 

demonstrated the use of applicable 

best practices for an analysis of costs 

and benefits and (2) provided 

information on other considerations, as 

required by Section 1017. In 

conducting our assessment, GAO 

identified applicable best practices for 

analyzing costs and benefits and 

discussed the Navy’s documentation 

and methodology with knowledgeable 

officials. GAO also reviewed the 

information in the Navy’s analysis, 

interviewed Navy and private ship 

repair firm officials, and visited Naval 

Station Mayport.

GAO is not making recommendations 

in this report. DOD and the Department 

of the Navy reviewed a draft of this 

report and did not have formal 

comments. The Navy provided 

technical comments that were 

incorporated as appropriate in the 

report.

What GAO Found

The Navy’s analysis of the costs and benefits of stationing additional DDG-51 

class destroyers at Naval Station Mayport, Florida, demonstrated some 

applicable best practices for analyzing costs and benefits. GAO identified eight 

applicable best practices and applied them to the Navy’s discussion of the costs 

and benefits of stationing DDG-51 class destroyers at Naval Station Mayport. 

GAO found that the Navy demonstrated the best practices of clearly defining a 

problem statement and objectives, and including key facts and assumptions. The 

Navy partially demonstrated the best practices of estimating costs and benefits, 

and identifying and discussing uncertainty. However, the Navy’s analysis did not 

demonstrate the best practice of describing alternatives, and therefore, it did not 

compare alternatives or contain recommendations about them.

Navy’s analysis minimally addressed other requirements, and it did not provide 

some information that would have been useful for oversight and decision making. 

Information required by Section 1017 GAO’s assessment

Consideration of negative effects on the 

ship repair industrial base at Mayport 

caused by the retirement of FFG-7 

class frigates and delays in 

procurement of Littoral Combat Ships—

including, in particular, increased costs 

(which would be passed on to the 

taxpayer) of reconstituting the ship 

repair industrial base at Mayport 

following the projected drastic decrease 

in workload.

The Navy provided an explanation of the 

retirement of the FFG-7 class frigates at 

Naval Station Mayport; discussed one 

negative effect—work days would be lost due 

to the retirements of the frigates—and stated 

that the Navy plans to station other ships to 

compensate for the lost workload. However, 

the analysis did not specifically address how

the reduction in workload could affect local 

ship repair firms, explicitly discuss the 

procurement delay of the Littoral Combat 

Ship, or thoroughly describe the cost of 

reconstituting the ship repair industrial base 

at Mayport. Additionally, GAO believes that 

including the views of the ship repair industry 

at Mayport would have been beneficial.

Updated consideration of life extensions 

of FFG–7 class frigates in light of 

continued delays in deliveries of the 

Littoral Combat Ship.

The Navy concluded that extending the 

service life of the FFG-7 class frigates would 

be cost prohibitive, but the analysis relied on 

2010 data that was not updated to reflect 

current circumstances. Additionally, Navy 

officials told GAO that the Navy could 

consider slowing down the decommissioning 

of the frigates if the Littoral Combat Ships are 

significantly delayed, but the analysis did not 

fully discuss that option.

Consideration of the possibility of 

bringing additional surface warships to 

Naval Station Mayport for maintenance 

with the consequence of spreading the 

ship repair workload appropriately 

amongst the various public and private 

shipyards and ensuring the long-term 

health of the shipyard in Mayport.

The Navy’s analysis discussed the Navy’s 

intention to transfer surface ships to Mayport 

and that the Navy strives to maintain a steady 

maintenance workload at all its homeports, 

but it did not specifically address the effect 

that the Navy’s plan could have on the 

distribution of the workload among the ship 

repair industrial base at public and private 

shipyards.

View GAO-13-501. For more information, 

contact Brian Lepore at (202) 512-4523 or 

leporeb@gao.gov.
Page i GAO-13-501 Defense Infrastructure

Letter 1 

Background 3

The Navy’s Analysis of the Costs and Benefits of Stationing 

Additional DDG-51 Class Destroyers Demonstrated Some 

Applicable Best Practices 5

The Navy’s Report Minimally Addressed Other Requirments and 

Did Not Include Some Additional Information That Would Have 

Benefitted Oversight and Decision Making 10

Agency Comments 12

Appendix I Objectives, Scope, and Methodology 15

Appendix II Information on Master Ship Repair Firms in Northeast Florida 

Supporting Naval Station Mayport 17

Appendix III GAO Contact and Staff Acknowledgments 19

Related GAO Products 20

Tables

Table 1: Evaluation of the Navy’s Analysis of Costs and Benefits 7

Table 2: Information Provided in the Navy’s Analysis and Our 

Assessment 11

Contents 
Page ii GAO-13-501 Defense Infrastructure

Abbreviation

DOD Department of Defense

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without further permission from GAO. However, because this work may contain 

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Page 1 GAO-13-501 Defense Infrastructure

441 G St. N.W.

Washington, DC 20548

May 23, 2013

Congressional Committees

Until February 2012, the Navy planned to establish a homeport for a 

nuclear aircraft carrier at Naval Station Mayport, Florida—the second 

largest naval base on the eastern coast of the United States—by 2019. 

However, with lower projected defense budgets anticipated over the next 

several years, the Navy decided to defer moving a nuclear aircraft carrier 

to Mayport. Additionally, several FFG-7 class frigates and CG-47 class 

cruisers currently stationed at Naval Station Mayport are scheduled to be 

decommissioned by fiscal year 2015. These force structure changes will 

significantly reduce the potential available work days1 for the private ship 

repair industrial base2 that supports Naval Station Mayport. To minimize 

the impact of these reduced work days and balance the strategic and 

operational capabilities across the Navy and at the naval station, the 

Navy intends to transfer a three-ship Amphibious Ready Group3

Section 1017 of the National Defense Authorization Act for Fiscal Year 

2012 required the Secretary of the Navy, not later than one year after the 

enactment of the act, to conduct an analysis of the costs and benefits of 

stationing additional DDG-51 class destroyers at Naval Station Mayport, 

during 

fiscal year 2014, three DDG-51 class destroyers by fiscal year 2014, and 

three Patrol Coastal Craft—two in 2014 and one in 2015—to Naval 

Station Mayport. Navy plans also call for homeporting the new Littoral 

Combat Ship at Naval Station Mayport beginning in fiscal year 2016, with 

up to eight of these ships currently scheduled to arrive there by 2020.

 

1 Although the Navy uses the industrial term “manday” when referring to ship 

maintenance, for purposes of this report we use the term work day. Both refer to the 

industrial unit of production equal to the work one person can produce in a day.

2 For the purpose of this report we define the ship repair industrial base as the private ship 

repair firms, including the smaller firms and temporary labor with which they work, that 

support Navy ship repair, maintenance, and modernization requirements in northeast 

Florida.

3 An Amphibious Ready Group typically consists of an Amphibious Assault Ship, 

Amphibious Transport Dock Ship, and a Dock Landing Ship and is designed to embark, 

deploy, and land elements of a landing force containing helicopters, landing craft, and 

amphibious vehicles.

 
 

Page 2 GAO-13-501 Defense Infrastructure

Florida.4

1. consideration of the negative effects on the ship repair industrial base 

at Naval Station Mayport caused by the retirement of FFG-7 class 

frigates and the procurement delays of the Littoral Combat Ship, 

including, in particular, the increase in costs (which would be passed 

on to the taxpayer) of reconstituting the ship repair industrial base at 

Naval Station Mayport following the projected drastic decrease in 

workload;

Section 1017 required the Navy to include in its analysis, at a 

minimum, the following three considerations:

2. updated consideration of life extensions of FFG-7 class frigates in 

light of continued delays in deliveries of the Littoral Combat Ship; and

3. consideration of the possibility of bringing additional surface warships 

to Naval Station Mayport for maintenance with the consequence of 

spreading the ship repair workload appropriately amongst the various 

public and private shipyards and ensuring the long-term health of the 

shipyard in Mayport.5

In addition, Section 1017 required us to submit an assessment of the 

Navy’s report, including a determination of whether it complied with 

applicable best practices.6 The Navy submitted the report containing its 

analysis to Congress on December 31, 2012. 7

To determine the extent to which the Navy’s analysis regarding stationing 

additional DDG-51 class destroyers at Naval Station Mayport 

To assist Congress in its 

assessment of the Navy’s plans regarding Naval Station Mayport, our 

objectives were to describe the extent to which the Navy’s analysis

(1) demonstrated the use of applicable best practices for an analysis of 

costs and benefits and (2) provided information on other considerations, 

as required by Section 1017.

 

4 Pub. L. No. 112-81, § 1017(a)(1) (2011). The National Defense Authorization Act for 

Fiscal Year 2012 was enacted on December 31, 2011. In this report, we refer to the 

relevant provision as “section 1017.” 

5 § 1017(a)(2). We provided a draft of this report to your offices on April 30, 2013 to satisfy 

the requirement.

6 See § 1017(b).

7 Department of the Navy, Report to Congress, Assessment on Ship Repair Industrial 

Base of Stationing of Additional DDG-51 Class Destroyers at Naval Station Mayport, 

Dec. 31, 2012. 
 

Page 3 GAO-13-501 Defense Infrastructure

demonstrated best practices for an analysis of costs and benefits, we 

identified the following applicable best practices for an analysis of costs 

and benefits: clearly-defined background and objectives, an explanation 

of assumptions that affect the analysis, a description of alternatives, an 

estimate of the life-cycle costs and life-cycle benefits associated with 

each alternative, an uncertainty analysis, and a comparison and ranking 

of alternatives to arrive at a recommendation. These best practices and 

how we derived them are discussed later in the report. In addition, 

although we did not independently verify the data used by the Navy in its 

analyses, we reviewed documentation the Navy used to prepare its 

analysis of costs and benefits, and we discussed the Navy’s methodology 

and data reliability with knowledgeable officials. To determine the extent 

to which the Navy’s analysis provided information on other 

considerations, as required of the Department by Section 1017, we 

reviewed the information provided in the Navy’s analysis with 

documentation we obtained from the Navy and in discussions with Navy 

officials at Navy headquarters in Washington, D.C. We also visited Naval 

Station Mayport and met with Navy officials there as well as with 

representatives from local private ship repair industrial base firms. We 

determined that the Navy’s data were sufficiently reliable for our 

purposes.

We conducted this performance audit from February 2013 through

May 2013 in accordance with generally accepted government auditing 

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

and 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. Additional details 

regarding our scope and methodology can be found in appendix I.

The Navy has identified Naval Station Mayport, Florida—located in 

northeast Florida, on the Atlantic Coast, near Jacksonville, roughly 469 

nautical miles south-southwest of Norfolk, Virginia—as a key east-coast 

location for different types of ship force structure, such as the DDG-51 

class destroyers, the Amphibious Ready Group, and the Littoral Combat 

Ship. Naval Station Mayport has grown to become the third largest naval 

fleet concentration area in the United States and the second largest on 

the east coast. Until 1994, Naval Station Mayport was a homeport to two 

conventional aircraft carriers and 30 or more surface ships (including both 

steam and gas turbine-powered) all supported by the local private ship 

repair firms. Since 1994, the Navy has been reducing the number of ships 

Background 
 

Page 4 GAO-13-501 Defense Infrastructure

at Naval Station Mayport, but according to the Navy, the local private ship 

repair firms in northeast Florida have repeatedly adjusted their capability 

and capacity regarding the evolving naval force structure.

The private ship repair firms provide depot-level maintenance8

In addition, since 2010, we have issued five reports on issues related to 

basing and maintenance issues at Naval Station Mayport, including a 

report

for the 

Department of the Navy, which generally consists of maintaining many 

complex weapon systems—such as many types of ships—and 

equipment—such as generators and radars—that require regular and 

emergency maintenance to continue to be available for the Department of 

Defense (DOD) to meet national security goals. Appendix II provides 

information on the three master ship repair firms in northeast Florida area 

that support maintenance of Navy ships at Naval Station Mayport.

9 evaluating a 2010 Navy report on the ability of the private ship 

maintenance industrial base in northeast Florida to support nuclearpowered aircraft carrier maintenance requirements at Mayport. Our 

previous reports are listed at the end of this report.

 

8 Depot-level maintenance was recently redefined as material maintenance or repair 

requiring the overhaul, upgrading, or rebuilding of parts, assemblies, or subassemblies, 

and the testing and reclamation of equipment as necessary, regardless of the source of 

funds for the maintenance or repair or the location at which the maintenance or repair is 

performed. The term includes all aspects of software maintenance classified by DOD as of 

July 1, 1995, as depot-level maintenance and repair, as well as interim contractor support 

or contractor logistics support (or any similar contractor support), to the extent that the 

support is for the performance of the services described in the previous sentence. Depotlevel maintenance does not include the procurement of major modifications or upgrades of 

weapon systems designed to improve program performance, nor the nuclear refueling or 

defueling of an aircraft carrier and any concurrent complex overhaul. The term does not 

include procurement of parts for safety modifications but would include installation of parts 

for that purpose. See 10 U.S.C. § 2460 (amended by the National Defense Authorization 

Act for Fiscal Year 2013, Pub. L. No. 112-239, § 322(a)(1), (b)(1), (c) (2013)).

9 GAO, Defense Infrastructure: Ability of Ship Maintenance Industrial Base to Support a 

Nuclear Aircraft Carrier at Naval Station Mayport, GAO-11-388R (Washington, D.C.:

Mar. 29, 2011).
 

Page 5 GAO-13-501 Defense Infrastructure

The Navy’s analysis of the costs and benefits of moving the DDG-51 

class destroyers to Naval Station Mayport demonstrated some applicable 

best practices. We researched best practices for an analysis of costs and 

benefits to determine whether the Navy’s analysis demonstrated them. 

Based on our evaluation, we determined that the Navy’s analysis 

demonstrated three, partially demonstrated three, and did not 

demonstrate two of the eight applicable best practices we identified.

In researching best practices for an analysis of costs and benefits, we 

found a recent Navy guide that presents best practices for an economic 

analysis including an analysis of costs and benefits to help inform Navy 

and Marine Corps resource allocation decisions. The Navy’s guide 

contains applicable best practices consistent with those found in prior 

GAO work and the publications of other agencies, including DOD.10

1. Problem Statement/Background - The analysis should clearly define 

the problem, requirement, or opportunity to be analyzed; explain why an 

analysis is being done; and provide background information to put the 

problem in context. The Problem Statement should explain the purpose of 

the analysis and the framework for its recommendation.

The 

Navy’s guide focuses not just on estimating costs, but presents a 

framework and method of comparing alternative ways of achieving a 

given objective. From the Navy’s guide, we identified the following best 

practices for an economic analysis including an analysis of costs and 

benefits:

2. Objective – The analysis should clearly define and quantify (to the 

extent possible) what the project or program under study seeks to attain.

3. Key Facts and Assumptions – The analysis should include both key 

facts and assumptions. Key facts—such as laws, defined criteria, ground 

 

10 GAO, GAO Cost Estimating and Assessment Guide: Best Practices for Developing and 

Managing Capital Program Costs, GAO-09-3SP (Washington, D.C.: March 2009); and

Department of the Navy, Economic Analysis Guide (Feb. 26, 2013). The Navy’s Economic 

Analysis Guide presents best practices, expanding on those found in DOD Instruction 

7041.3, Economic Analysis for Decisionmaking and Office of Management and Budget 

Circular A-94, Guidelines and Discount Rates for Benefit-Cost Analysis of Federal 

Programs. The Navy’s guide was published after the Navy’s report; however we used it in 

reviewing the Navy’s report since the guide reflects applicable best practices identified in 

similar guides published before the Navy conducted the analysis published in its Mayport 

report.

The Navy’s Analysis 

of the Costs and 

Benefits of Stationing 

Additional DDG-51 

Class Destroyers 

Demonstrated Some 

Applicable Best 

Practices 
 

Page 6 GAO-13-501 Defense Infrastructure

rules, constraints, regulations, and DOD guidance—are factors known to 

be true that may affect the current or future conditions under 

consideration in the analysis. Assumptions are what one believes, but 

does not know, about the future conditions that could affect the analysis. 

One makes assumptions when lacking reliable knowledge to assign 

values or probabilities to factors influencing decisions. The 

reasonableness and validity of assumptions, as well as the need for new 

assumptions, should be periodically re-assessed throughout the course of 

the analysis. Only necessary and reasonable assumptions should be 

included in an economic analysis.

4. Alternatives/Courses of Action – The analysis should discuss various 

methods of attaining the stated objective, with a full description of each. It 

should also fully explain what each alternative involves, especially those 

things that drive costs and benefits. Explain how each process or 

procedure would work; what personnel, equipment, or facilities would be 

required; and what other changes would be involved. The analysis should 

describe each alternative completely, so that someone unfamiliar with the 

alternative can fully understand it and what would be involved in its 

implementation. At a minimum, the description of each alternative should 

include all things resulting in costs to the government.

5. Cost Analysis – The analysis should estimate the life-cycle costs 

associated with each alternative. Life-cycle costs are the costs to the 

government for a system over its full life, including the cost of 

development, procurement, operation, support and disposal.

6. Benefit Analysis – The analysis should estimate the life-cycle benefits 

associated with each alternative. Benefits can include monetary and nonmonetary benefits.

7. Uncertainty Analysis - The analysis should discuss any uncertainties 

related to costs and benefits. Estimates of costs and benefits contain 

uncertainties because of imprecision in both underlying data and 

assumptions. Since estimating errors can be introduced into the analysis 

in these ways, the analysis must consider the effect that potential errors 

could have on the analysis and its recommended alternative. Information 

useful in an analysis of uncertainty includes the key sources of 

uncertainty and the sensitivity of analysis results to the primary sources of 

uncertainty.

8. Comparison of Alternatives and Recommendation - Once all the costs 

and benefits of each alternative have been estimated, the analysis must 
 

Page 7 GAO-13-501 Defense Infrastructure

compare and rank the alternatives to arrive at a recommended 

alternative.

We evaluated the Navy’s use of these best practices for the portion of its 

report assessing the costs and benefits of stationing additional DDG-51 

class destroyers at Naval Station Mayport. Our evaluation of the Navy’s 

analysis is summarized in table 1 below.

Table 1: Evaluation of the Navy’s Analysis of Costs and Benefits 

Applicable best practices for an analysis of costs and benefits Our evaluation

1. Problem statement/background are clearly defined

a

Demonstrated

2. Objectives are clearly defined Demonstrated

3. Key facts and assumptions are included Demonstrated

4. Alternatives are described Not demonstrated

5. Costs include estimated life-cycle costs Partially demonstrated

6. Benefits include estimated life-cycle benefits Partially demonstrated

7. Uncertainties are identified and discussed. Partially demonstrated

8. Alternatives are compared and ranked, leading to recommendations Not demonstrated

Source: GAO assessment of Navy’s December 2012 report’s analysis of costs and benefits.

a For the purposes of our analysis, we determined that a best practice was “demonstrated” if the 

Navy’s analysis contained documentation showing that the Navy followed the best practice for an 

analysis of costs and benefits. We determined that a best practice was “partially demonstrated” if the 

Navy’s analysis in part followed an applicable best practice for an analysis of costs and benefits. If the 

Navy’s analysis did not use the best practice, we determined that the Navy’s use of the best practice 

for an analysis of costs and benefits was “not demonstrated.” 

Demonstrated - The Navy’s report included the language of Section 1017 

from the National Defense Authorization Act for Fiscal Year 2012. In 

addition, the background section included the Navy’s views on homeport 

assignments to balance strategic and operational requirements. For 

example, the background noted that Naval Station Mayport is a critical 

strategic east coast naval base and is part of the long term maintenance 

and modernization strategy for the Navy.

Demonstrated – Section 1017 required the Secretary of the Navy to 

conduct an analysis of the costs and benefits of stationing additional 

DDG-51 class destroyers at Naval Station Mayport, Florida. Therefore, 

this is the objective for the Navy’s analysis of costs and benefits. The 

Navy’s report showed an analysis of costs and benefits for moving three 

DDG-51 class destroyers from Naval Station Norfolk to Naval Station 

Mayport and results in five DDG-51 class destroyers in fiscal year 2013, 

Applicable Best Practice 1: 

Problem 

Statement/Background 

Applicable Best Practice 2: 

Objectives
 

Page 8 GAO-13-501 Defense Infrastructure

seven in fiscal year 2014, and six from fiscal years 2015 through 2017, 

which will be located at Mayport.

Demonstrated - The report’s analysis of costs and benefits included key 

facts, such as the Navy’s current plan to move three DDG-51 class 

destroyers from Naval Station Norfolk to Naval Station Mayport and to 

move one DDG-51 destroyer from Naval Station Mayport to a forwarddeployed port in Rota, Spain. In addition, the report’s analysis included 

key assumptions such as the timeframe for the intended movements of 

the ships to Mayport, the additional estimated costs to the Navy’s 

operations and maintenance budget; one-time permanent change of 

station costs; and savings based on the lower basic allowance for 

housing rate at Naval Station Mayport as compared with Naval Station 

Norfolk. For example, the Navy’s report noted the planned movement of 

the DDG-51 class destroyers from Naval Station Norfolk to Naval Station 

Mayport during fiscal years 2013 through 2014, but it noted that the dates 

were not yet finalized. Additionally, the report’s analysis included 

assumptions about the estimated increased labor rates and utility costs in 

Mayport—specifically, that the maintenance work day rate and utility cost 

are about 8 percent and 60 percent higher at Naval Station Mayport, 

respectively, than at Naval Station Norfolk. In addition, the report’s 

analysis included the dollar amounts of the combined effect of the 

differences in the Navy’s operation and maintenance and its military 

personnel budgets from fiscal year 2013 through fiscal year 2017. 

Furthermore, the report included a statement about the limitation of its 

analysis. Specifically, the report’s analysis considered only the ships and 

crews and does not include implementation or sustainment costs for 

facilities.

Not Demonstrated – As noted above, the objective was the analysis of 

the costs and benefits of stationing additional DDG-51 class destroyers at 

Naval Station Mayport, Florida. While the report’s analysis provides a 

description of the planned movement of three DDG-51 class destroyers 

from Naval Station Norfolk to Naval Station Mayport, it does not consider 

alternatives such as whether additional DDG-51 class destroyers from 

Naval Station Norfolk—or those currently stationed at Naval Station San 

Diego, California; Naval Station Everett, Washington; or Naval Station 

Pearl Harbor, Hawaii—could be moved to Naval Station Mayport.

Applicable Best Practice 3: 

Key Facts and 

Assumptions 

Applicable Best Practice 4: 

Alternatives
 

Page 9 GAO-13-501 Defense Infrastructure

Partially Demonstrated - The report’s analysis provided estimated costs to 

move three DDG-51 class destroyers from Naval Station Norfolk to Naval 

Station Mayport from fiscal years 2013 through 2017. For example, the 

report’s analysis estimated that, in fiscal year 2013, it will cost the Navy 

$0.35 million more in recurring costs for maintenance and utilities and a 

$1.1 million one-time, permanent change of station cost to move one 

DDG-51 destroyer and its crew and their dependents from Naval Station 

Norfolk to Naval Station Mayport. Over fiscal years 2013 – 2017, the 

Navy estimated the additional recurring costs for maintenance, utilities, 

and a one-time permanent change of station cost to be about

$11.34 million to move the DDG-51 class destroyers to Mayport. As noted 

above, while the report included an analysis of the costs related to the 

ship and the crew, it did not include implementation or sustainment costs 

for facilities. In addition, applicable best practices call for including the 

estimated life-cycle costs as well as estimated recurring—annual or 

periodic—and one-time costs. The report reflected the estimated 

recurring and one-time costs from fiscal years 2013 through 2017 but not 

the total life-cycle costs over the estimated 35-year or 40-year service life 

of the DDG-51 class destroyers.11

Partially Demonstrated - The Navy report’s analysis estimated that, 

beginning in fiscal years 2013 through 2017, the Navy will reap estimated 

savings of $9.44 million due to the lower basic allowance for housing at 

Naval Station Mayport compared to Naval Station Norfolk. Therefore, 

according to the report’s analysis, over fiscal years 2013 through 2017, 

the net cost to move the three DDG-51 class destroyers will be

$1.89 million. The report also noted that the DDG-51 class destroyers the 

Navy intends to move to Mayport would provide additional workload12 for 

the private ship repair firms. The report’s analysis did not discuss the 

quantifiable benefits or estimated savings over the 35-year or 40-year life 

cycle of the DDG-51 class destroyer to Naval Station Mayport.

 

11 DDG 51 Flights I and II have an expected service life of 35 years; DDG 51 Flight IIA has 

an expected service life of 40 years.

12 In this report, we use the term workload to refer to the amount of work performed by the 

ship repair industrial base on Navy ships.

Applicable Best Practice 5: 

Cost Analysis

Applicable Best Practice 6: 

Benefit Analysis
 

Page 10 GAO-13-501 Defense Infrastructure

Partially Demonstrated – The Navy report’s analysis identified timeframes 

and estimated costs as key assumptions for moving the DDG-51 class 

destroyers to Mayport. While the report stated that a final decision on 

specific dates for ships moving to Naval Station Mayport has not been 

made, the report did not discuss how uncertainty regarding these dates 

could affect estimated costs and benefits.

Not Demonstrated - Because the Navy report’s analysis did not describe 

any alternatives to the planned movement of the DDG-51 class

destroyers from Naval Station Norfolk to Naval Station Mayport, the 

analysis could not compare alternatives or make any recommendations 

about the alternatives.

Section 1017 specified other considerations to be included in the Navy’s 

analysis. Based on our assessment, the Navy’s report minimally 

addressed these requirements and it did not include some additional 

information that—while not required by the provision—would have been 

useful for congressional oversight and decision making. Table 2 

describes the information provided by the Navy and our assessment.

Applicable Best Practice 7:

Uncertainty Analysis

Applicable Best Practice 8:

Comparison of 

Alternatives and 

Recommendation

The Navy’s Report 

Minimally Addressed 

Other Requirements 

and Did Not Include 

Some Additional 

Information That 

Would Have 

Benefitted Oversight 

and Decision Making
 

Page 11 GAO-13-501 Defense Infrastructure

Table 2: Information Provided in the Navy’s Analysis and Our Assessment 

Information required Our assessment

Consideration of the negative effects on the ship repair 

industrial base at Naval Station Mayport caused by the 

retirement of FFG–7 class frigates and the procurement 

delays of the Littoral Combat Ship, including, in particular, 

the increase in costs (which would be passed on to the 

taxpayer) of reconstituting the ship repair industrial base at 

Naval Station Mayport following the projected drastic 

decrease in workload.

• The Navy provided an explanation of the retirement of the FFG-7 

class frigates at Naval Station Mayport, and it discussed one 

negative effect—that work days would be lost due to the retirements 

of the frigates. In addition, the Navy concluded that the maintenance 

work days lost when six FFG-7 class frigates are retired will be 

approximately compensated with the arrival of the three-ship 

amphibious ready group at Naval Station Mayport beginning in fiscal 

year 2014.

• The Navy provided an overview of the Navy’s projected inventory of 

the FFG-7 class frigates and Littoral Combat Ships from fiscal year 

2013 through 2017, including the remaining frigates that could help 

to mitigate the near term impact of the gradual introduction of Littoral 

Combat Ships, some of which are planned to be stationed at Naval 

Station Mayport beginning in fiscal year 2016.

• The Navy stated that, in the mid to long term, the Navy’s planned 

force structure would provide a gradual increase to the workload to 

the private ship repair industry at Naval Station Mayport and stated 

that minimizing the reconstitution of the ship repair capability and 

capacity helps to keep costs down for the Navy.

• We found that the Navy did not

o explicitly discuss the potential for negative effects that the 

reduction in workdays caused by the retirement of the

FFG-7 class frigates could have on the ship repair industrial 

base at Naval Station Mayport,

o thoroughly describe the cost of reconstituting the ship repair 

industrial base at Naval Station Mayport following any 

decrease in workload caused by the retirement of the

FFG-7 class frigates, or

o explicitly acknowledge whether procurement delays existed 

with the Littoral Combat Ship and what effect, if any, a 

procurement delay would have on the ship repair industrial 

base at Naval Station Mayport.

Updated consideration of life extensions of FFG–7 class 

frigates in light of continued delays in deliveries of the 

Littoral Combat Ship.

• The Navy provided a high-level discussion of its updated 

consideration of extending the service life of the FFG-7 class 

frigates. The Navy concluded that extending the service life of the 

FFG-7 class frigates would be cost prohibitive, but the report relied 

on 2010 data that was not updated to reflect current circumstances.
 

Page 12 GAO-13-501 Defense Infrastructure

Information required Our assessment

Consideration of the possibility of bringing additional 

surface war ships to Naval Station Mayport for 

maintenance with the consequence of spreading the ship 

repair workload appropriately amongst the various public 

and private shipyards and ensuring the long-term health of 

the shipyard in Mayport.

• The analysis discussed the Navy’s intention to transfer a three-ship 

amphibious ready group and planned moves of the new Littoral 

Combat Ships and the patrol coastal craft to Naval Station Mayport.

• The analysis stated that the Navy strives to maintain a steady 

maintenance workload in all its homeports in order to maintain the 

industrial infrastructure and support a stable, well-trained workforce 

and that the force structure plan is expected to provide a consistent 

and gradually increasing workload.

• The Navy states that it is difficult to assess the impact on the ship 

repair industry of a home port until specific ship moves are finalized.

• We found that the analysis did not specifically address the effect that 

planned surface ship movements could have on spreading the ship 

repair workload among the various public and private shipyards.

Source: GAO assessment of Navy’s December 2012 report.

Additional information regarding how any procurement delays of the 

Littoral Combat Ship might affect the decommissioning schedule of the 

FFG-7 class frigates would have been beneficial to include in the Navy’s 

analysis. For example, Navy officials told us that the Navy could consider 

slowing down the process of decommissioning the FFG-7 class frigates if 

delivery of the Littoral Combat Ships is delayed by a significant amount of 

time, but the Navy’s analysis did not fully discuss that option. Additional 

information on the views of officials from the private ship repair firms at 

Mayport—particularly regarding the effect that any projected decrease in 

workload would have on the cost to reconstitute the industrial base at 

Mayport—would have been beneficial but was not included.

We are not making recommendations in this report. DOD and the 

Department of the Navy reviewed a draft of this report and did not have 

formal comments. The Navy provided technical comments that were 

incorporated as appropriate in the report.

We are sending copies of this report to appropriate congressional 

committees, the Secretary of Defense, the Secretary of the Navy, and the 

Director of the Office of Management and Budget. This report also is 

available at no charge on our Web site at http://www.gao.gov. 

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

me at (202) 512-4523 or leporeb@gao.gov. Contact points for our Offices 

of Congressional Relations and Public Affairs may be found on the last 

page of this report. GAO staff who made major contributions to this report 

are listed in appendix III.

Agency Comments
 

Page 13 GAO-13-501 Defense Infrastructure

Brian J. Lepore

Director

Defense Capabilities and Management
 

Page 14 GAO-13-501 Defense Infrastructure

List of Committees

The Honorable Carl Levin

Chairman

The Honorable James M. Inhofe

Ranking Member

Committee on Armed Services

United States Senate

The Honorable Dick Durbin

Chairman

The Honorable Thad Cochran

Ranking Member

Subcommittee on Defense

Committee on Appropriations

United States Senate

The Honorable Howard P. “Buck” McKeon

Chairman

The Honorable Adam Smith

Ranking Member 

Committee on Armed Services

House of Representatives

The Honorable C.W. Bill Young

Chairman

The Honorable Pete Visclosky

Ranking Member

Subcommittee on Defense

Committee on Appropriations

House of Representatives
Appendix I: Objectives, Scope, 

and Methodology

Page 15 GAO-13-501 Defense Infrastructure

Our objectives were to describe the extent to which the Navy’s analysis, 

contained in its December 31, 2012 report to Congress (1) demonstrated 

the use of applicable best practices for an analysis of costs and benefits 

and (2) provided information on other considerations, as required by 

section 1017.

As part of our review to determine whether the Navy’s analysis regarding 

stationing additional DDG-51 class destroyers at Naval Station Mayport 

demonstrated best practices for an analysis of costs and benefits, we 

reviewed documentation the Navy used to prepare its analysis, discussed 

the Navy’s methodology with knowledgeable officials, and interviewed 

relevant Navy officials regarding the reliability and accuracy of the data 

and the Navy’s internal review of its analysis and subsequent December 

2012 report. We then compared the Navy’s analysis to the best practices 

we identified.1

To determine whether the Navy’s analysis provided information on other 

considerations required in section 1017, we reviewed the Navy’s analysis 

and compared it to the provisions within section 1017. We obtained and 

reviewed the supporting documentation the Navy used to prepare its 

analysis, including depot-level maintenance availabilities and work-day 

data for the DDG-51 found in the Office of the Chief of Naval Operations 

Notice 4700.

For the purposes of our assessment, we determined that a 

best practice was “demonstrated” if the Navy’s analysis contained 

documentation showing that the Navy followed the best practice for an 

analysis of costs and benefits. We determined that a best practice was 

“partially demonstrated” if the Navy’s analysis in part followed an 

applicable best practice for an analysis of costs and benefits. If the Navy’s 

analysis did not use the best practice, we determined that the Navy’s use 

of the best practice for an analysis of costs and benefits was “not 

demonstrated.” 

2

 

1 See the main body of the report for a discussion of the best practices we identified and 

how we applied them.

In addition, we interviewed Chief of Naval Operations and 

Naval Sea Systems Command officials regarding the reliability and 

accuracy of the data and about the Navy’s internal review of its report to 

Congress. We determined that the Navy’s data were sufficiently reliable 

2 Office of the Chief of Naval Operations Notice 4700, Representative Intervals, Durations, 

and Repair Mandays for Depot Level Maintenance Availabilities of U.S. Navy Ships

(Aug. 11, 2011).

Appendix I: Objectives, Scope, 

and Methodology
Appendix I: Objectives, Scope, 

and Methodology

Page 16 GAO-13-501 Defense Infrastructure

for our purposes. Additionally, we visited Naval Station Mayport and met 

with officials from the base’s command staff and the Navy’s Southeast 

Regional Maintenance Center, which provides surface ship maintenance 

and repair support to U.S. Navy ships in the southeast region of the 

United States. We also met with the Jacksonville Area Ship Repair 

Association, which is comprised of representatives from local area’s 

private ship repair firms supporting ship maintenance at Naval Station 

Mayport, to obtain an understanding of the impact of the 

decommissioning of the FFG-7 class frigates and the decreases in the 

depot-level maintenance work days at Mayport.

We conducted this performance audit from February 2013 through May 

2013 in accordance with generally accepted government auditing 

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

and 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: Information on Master Ship Repair 

Firms in Northeast Florida Supporting Naval 

Station Mayport

Page 17 GAO-13-501 Defense Infrastructure

The northeast Florida area has three master ship repair firms—BAE 

Systems Southeast Shipyards Jacksonville, General Dynamics NASSCO, 

and North Florida Shipyards, Inc.— certified by the Navy as having the 

capabilities and capacity required to perform maintenance and 

modernization on all Navy ships. There are a number of smaller, 

specialized firms that provide support to these master ship repair firms at 

Mayport. The following is a description of the capabilities and capacity of 

these master ship repair firms.

BAE Systems is the largest of the three master ship repair firms in 

northeast Florida. It has modern ship repair facilities located adjacent to 

Wharf F at Naval Station Mayport. These facilities are fully dedicated to 

supporting Navy vessels. BAE Systems also maintains an administrative 

facility at Naval Station Mayport to execute support functions such as 

solicitation, execution planning, and program management. The facilities 

at Naval Station Mayport include the following trade shops: pipe, welding, 

electric, rigging, paint, pump, sheet metal, insulation, and warehouse.

In addition to the facilities located at Naval Station Mayport, BAE Systems 

also has substantial capabilities at its Jacksonville shipyard. The 

Jacksonville shipyard is just across the St. John’s River from Naval 

Station Mayport, less than 5 miles by car. The facility performs both Navy 

and commercial work. Three Naval Sea Systems Command certified dry 

docks are located at this facility, including a 4,000-ton marine railway and 

a 13,500-ton dry dock capable of docking cruiser and destroyer class 

ships. The Jacksonville shipyard facilities and equipment are available to 

Naval Station Mayport if needed. As of March 2013, BAE Systems 

employs approximately 600 full-time ship repair personnel at its Naval 

Station Mayport and Jacksonville repair facilities combined. In March 

2011, BAE had 800 full-time ship repair personnel at these two locations.

The facilities at General Dynamics NASSCO Mayport (formerly Earl 

Industries) 1

 

1 As of August 1, 2012, Earl Industries LLC was purchased, renamed, and is now 

operated by General Dynamics NASSCO.

were designed specifically to support Navy ship repair. The 

2-acre compound occupied by General Dynamics NASSCO Mayport, 

adjacent to Wharf F, includes a fully equipped machine shop, structural 

shop, electrical clean room, sheet metal shop, and pipe shop. 

Additionally, a fully equipped 30,000-square foot production building 

Appendix II: Information on Master Ship 

Repair Firms in Northeast Florida Supporting 

Naval Station Mayport
Appendix II: Information on Master Ship Repair 

Firms in Northeast Florida Supporting Naval 

Station Mayport

Page 18 GAO-13-501 Defense Infrastructure

constructed in fiscal year 2005 is located 500 yards from the piers. This 

facility was designed to support aircraft carrier maintenance 

requirements; however, since the decommissioning of the USS John F. 

Kennedy in 2007, the building has not been utilized to its full capabilities. 

General Dynamics NASSCO Mayport also maintains mobile, 

containerized tool rooms and shop facilities that are readily transportable 

to the wharf job site. General Dynamics NASSCO Mayport also has a 

lease on a 10,000-square foot warehouse and 2 more acres of temporary 

storage area a half-mile outside the Naval Station’s main gate. For 

several years General Dynamics NASSCO Mayport employed about 250 

personnel—150 of its own employees augmented by 100 personnel from 

sub-contracted labor. As of March 2013, General Dynamics NASSCO 

Mayport has reduced its work force to 90 personnel and has alerted 65 

additional personnel regarding reductions in work days.

North Florida Shipyards has a 60,000-square foot facility located on

2.5 acres adjacent to Wharf F on Naval Station Mayport. This facility 

houses a fabrication shop, pipe shop, machine shop, electric shop, crane 

and rigging shop, paint shop, and material storage warehouse. In addition 

to the Mayport facility, North Florida Shipyards also has a commercial 

facility located at Commodore Point in Jacksonville, Florida. This facility 

has additional capabilities and equipment that are available to support 

Navy work being performed at Naval Station Mayport if needed. The 

Jacksonville facility has a 2,800 ton certified dry-dock and a 600 metric 

ton certified Travelift,2 each capable of dry-docking smaller naval vessels 

and barges. North Florida Shipyards employs approximately 15 full-time 

ship repair personnel at its Naval Station Mayport and 75 full-time ship 

repair personnel at its Jacksonville locations. In March 2011, we reported 

that North Florida shipyard had 235 full-time ship repair personnel at its 

Naval Station Mayport and Jacksonville locations combined.3

 

2 Marine equipment used to lift boats and ships out of the water for service and repair at 

the shipyard.

3 GAO, Defense Infrastructure: Ability of Ship Maintenance Industrial Base to Support a 

Nuclear Aircraft Carrier at Naval Station Mayport, GAO-11-388R (Washington, D.C.:

Mar. 29, 2011).
Appendix III: GAO Contact and Staff 

Acknowledgments

Page 19 GAO-13-501 Defense Infrastructure

Brian J. Lepore, (202) 512-4523 or leporeb@gao.gov

In addition the contact named above, Mark J. Wielgoszynski, Assistant 

Director; Pat L Bohan, Susan Ditto, Brandon Jones, Carol Petersen, and

Michael Shaughnessy made key contributions to this report.

Appendix III: GAO Contact and Staff 

Acknowledgments 

GAO Contact

Staff 

Acknowledgments 
Related GAO Products

Page 20 GAO-13-501 Defense Infrastructure

Defense Infrastructure: The Navy’s Use of Risk Management at Naval 

Stations Mayport and Norfolk. GAO-12-710R. Washington, D.C.:

July 13, 2012.

Defense Infrastructure: Ability of Ship Maintenance Industrial Base to 

Support a Nuclear Aircraft Carrier at Naval Station Mayport.

GAO-11-388R. Washington, D.C.: March 29, 2011.

Defense Infrastructure: Navy Can Improve the Quality of Its Cost 

Estimate to Homeport an Aircraft Carrier at Naval Station Mayport.

GAO-11-309. Washington, D.C.: March 3, 2011.

Depot Maintenance: Navy Has Revised Its Estimated Workforce Cost for 

Basing an Aircraft Carrier at Mayport, Florida. GAO-11-257R. 

Washington, D.C.: March 3, 2011.

Defense Infrastructure: Opportunities Exist to Improve the Navy’s Basing 

Decision Process and DOD Oversight. GAO-10-482. Washington, D.C.: 

May 11, 2010.

Related GAO Products

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