AIRCRAFT CARRIER 

DISMANTLEMENT 

AND DISPOSAL

Options Warrant 

Additional Oversight 

and Raise Regulatory 

Questions

Report to Congressional Committees

August 2018

GAO-18-523

United States Government Accountability Office
United States Government Accountability Office

Highlights of GAO-18-523, a report to 

congressional committees

August 2018

AIRCRAFT CARRIER DISMANTLEMENT AND 

DISPOSAL

Options Warrant Additional Oversight and Raise 

Regulatory Questions

What GAO Found

The Navy is assessing two options to dismantle and dispose of its first nuclearpowered aircraft carrier—ex-USS Enterprise (also known as CVN 65). CVN 65 

dismantlement and disposal will set precedents for processes and oversight that 

may inform future aircraft carrier dismantlement decisions.

Characteristics of the Navy’s Potential CVN 65 Dismantlement and Disposal Options

Naval shipyard option Full commercial option

General approach Puget Sound Naval Shipyard 

dismantles a distinct section of the 

ship—the propulsion space 

section—that contains the 8 

defueled reactors and all other 

nuclear-related material

Shipyard prepares reactor 

packages for transport and disposal 

at facility in Hanford, Washington

Commercial company dismantles 

and recycles or disposes of nonnuclear sections

Commercial company(ies)

dismantles entire ship; potential 

companies and work locations yet 

to be determined

Nuclear-related dismantlement uses

applicable industry work practices—

may include cutting into smaller 

components for shipping; disposal 

site(s) yet to be determined

Commercial company recycles or 

disposes of non-nuclear portions

Navy preliminary 

cost estimate

(dollars)

1.05 billion-1.55 billion 750 million-1.4 billion

Navy preliminary 

schedule estimate

10 years, 2034 start About 5 years, 2024 start

Nuclear regulatory 

authority

Naval Reactors (Department of 

Energy)

Disagreement exists between Naval 

Reactors and Nuclear Regulatory 

Commission

Source: GAO analysis of Navy and Nuclear Regulatory Commission information. | GAO-18-523

The Navy could rely on its extensive regulatory experience for the naval shipyard 

option. However, the Navy’s ability to effectively evaluate the full commercial 

option is hampered by a disagreement with the Nuclear Regulatory Commission 

(NRC), which oversees the commercial nuclear industry. Naval Reactors officials 

assert that NRC’s regulatory authority should apply to the full commercial option. 

NRC disagrees with this position. Coordination between the two agencies to 

identify the applicable regulatory authority and craft a regulatory plan would help 

ensure accountability, solidify cost estimates, and facilitate a CVN 65 decision.

The budget documentation and reporting that the Navy typically uses for ship

dismantlement and disposal projects will not enable adequate oversight of CVN 

65—a multi-year project with a cost that may exceed $1 billion. The documents 

that support Navy budget requests for dismantlement and disposal funding do 

not provide data that decision makers can readily use to track dismantlement 

costs against an established baseline or to evaluate funding plans for future 

years. Further, the Navy has no reporting requirements to support accountability 

for CVN 65 activities. Large defense acquisition programs generally are required 

to submit more detailed budget information and report on cost, schedule, and 

performance. These practices could be adapted for CVN 65 to provide 

information that will facilitate oversight commensurate with the scale of the effort.

View GAO-18-523. For more information, 

contact Shelby S. Oakley at (202) 512-4841 or 

OakleyS@gao.gov.

Why GAO Did This Study

The Navy is planning to dismantle and 

dispose of CVN 65 after 51 years of 

service. In 2013, the estimated cost to 

complete the CVN 65 work as 

originally planned increased to well 

over $1 billion, leading the Navy to 

consider different dismantlement and 

disposal options.

The Senate Report accompanying a 

bill for the National Defense 

Authorization Act for Fiscal Year 2018

included a provision for GAO to review 

the Navy’s plans for CVN 65. This 

report addresses (1) dismantlement 

and disposal options under 

consideration; (2) nuclear regulatory 

authority considerations; and (3) 

funding and reporting practices. 

GAO reviewed budget, cost, and 

schedule documentation, as well as 

applicable laws, regulations, executive 

orders, policies, and guidance. GAO

interviewed officials from the Navy and

commercial companies about the 

dismantlement and disposal options, 

and NRC and state agencies about 

regulatory considerations. 

What GAO Recommends

Congress should consider requiring

Naval Reactors to coordinate with NRC

to identify the applicable regulatory 

authority for a CVN 65 commercial 

dismantlement and disposal. GAO is

also making four recommendations, 

including that the Navy take action to

provide additional budget information 

and reporting to facilitate improved 

transparency and accountability for the

CVN 65 cost, schedule, and risks. The 

Department of Defense agreed with all 

four recommendations.
Page i GAO-18-523 Aircraft Carrier Dismantlement and Disposal

Letter 1

Background 3

Naval Shipyard Option for CVN 65 Is More Defined than Full 

Commercial Option but May Pose Challenges for Meeting Navy 

Priorities 10

Budget Documentation and Reporting Does Not Include Sufficient 

Information to Facilitate Transparency and Oversight for CVN 

65 22

The Navy’s Evaluation of CVN 65 Dismantlement and Disposal 

Options Is Hampered by a Regulatory Authority Disagreement 29

Conclusions 37

Matter for Congressional Consideration 38

Recommendations for Executive Action 38

Agency Comments 39

Appendix I – Objectives, Scope, and Methodology 42

Appendix II – Comments from the Department of Defense 46

Appendix III – Comments from the Nuclear Regulatory Commission 50

Appendix IV – GAO Contact and Staff Acknowledgments 51

Tables

Table 1: Characteristics of the Navy’s Potential CVN 65 

Dismantlement and Disposal Options 13

Table 2: Changes in Puget Sound Naval Shipyard CVN 65 Plans, 

Estimate Methodology, Schedule, and Cost 15

Table 3: DOD Acquisition Reporting Elements That Could Be 

Adapted for Use with CVN 65 Dismantlement and 

Disposal 28

Table 4: Regulatory Authority Scenarios Being Considered by the 

Navy for Nuclear-Related CVN 65 Dismantlement and 

Disposal Activities 30

Contents
Page ii GAO-18-523 Aircraft Carrier Dismantlement and Disposal

Figures

Figure 1: CVN 65 Aircraft Carrier Timeline of Events Following 

Decommissioning 4

Figure 2: Relative Size of CVN 65 Nuclear-Powered Aircraft 

Carrier 5

Figure 3: General Process for Nuclear-Powered Ship 

Dismantlement and Disposal at Puget Sound Naval 

Shipyard 7

Figure 4: Laws and Executive Order Related to Nuclear Materials 9

Figure 5: Proposed CVN 65 Sectioning Approach for Puget Sound 

Naval Shipyard Dismantlement Option 12

Figure 6: Puget Sound Naval Shipyard Average Workload 

Projections with Available Workforce and Notional 

Growth without CVN 65 Work 19

Abbreviations 

ACAT Acquisition category

DOD Department of Defense

NRC Nuclear Regulatory Commission

OMN Operation and Maintenance, Navy

SCN Shipbuilding and Conversion, Navy

This is a work of the U.S. government and is not subject to copyright protection in the 

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Page 1 GAO-18-523 Aircraft Carrier Dismantlement and Disposal

441 G St. N.W.

Washington, DC 20548

August 2, 2018

Congressional Committees

After 51 years of service, ex-USS Enterprise (also known as CVN 65)—

the Navy’s first nuclear-powered aircraft carrier—is being prepared for 

dismantlement and disposal. At approximately 76,000 tons, CVN 65 will 

require an unprecedented level of work to dismantle and dispose of as 

compared to previous ships. The Navy originally intended to dismantle 

the entire CVN 65, both nuclear and non-nuclear components, at Puget 

Sound Naval Shipyard and Intermediate Maintenance Facility (hereafter 

referred to as Puget Sound Naval Shipyard), which is its usual facility for 

this type of activity. However, in 2013, the Navy’s cost estimate for the 

shipyard to perform all CVN 65 dismantlement and disposal activities 

increased—from a range of $500 million to $750 million—to well over $1 

billion. This led the Navy to consider alternatives. In 2016, the Navy 

issued a request for proposals to have a commercial company recycle the 

non-nuclear portions of the ship. The Navy also sought information from 

industry at that time on the potential for a commercial company to 

dismantle and dispose of the entire ship. In February 2017, the Navy 

announced it canceled its request for proposals on commercial recycling 

of non-nuclear portions of the ship and continued assessing its options.

As part of this assessment, the Navy determined it will not dismantle the 

entire ship at Puget Sound Naval Shipyard. Instead, it is focused on two 

potential options. One involves Puget Sound Naval Shipyard dismantling 

and disposing of a section of the ship that contains the nuclear material—

referred to as the propulsion space section—with disposal at the 

Department of Energy’s Hanford low-level radioactive waste disposal site 

in the state of Washington. The other entails the Navy awarding a 

contract for commercial industry to fully dismantle and dispose of the 

nuclear and non-nuclear materials for the entire ship. For the purposes of 

this report, we refer to these two options as (1) the naval shipyard option 

and (2) the full commercial option, respectively.

Regardless of the approach the Navy chooses, CVN 65 will set 

precedents for the processes, costs, and oversight that may be used to 

dismantle and dispose of nuclear-powered aircraft carriers in the future, 

such as the Nimitz-class carriers which the Navy will begin to retire in the 

mid-2020s. Senate Report 115-125 accompanying a bill for the National 

Defense Authorization Act for Fiscal Year 2018 included a provision for 

GAO to review the Navy’s plans for CVN 65 dismantlement and disposal. 

Letter
Page 2 GAO-18-523 Aircraft Carrier Dismantlement and Disposal

This report (1) describes the differences between the dismantlement and 

disposal options under consideration, including cost and schedule as well 

as workload and facilities; (2) evaluates the Navy’s funding and reporting 

practices for dismantlement and disposal activities; and (3) assesses the 

effect that nuclear regulatory authority considerations have on 

dismantlement and disposal options for CVN 65.

To conduct our work, we reviewed documentation on prior, ongoing, and 

future Navy ship dismantlement and disposal plans and activities, as well 

as information specific to the different CVN 65 options the Navy has 

considered or is considering. We used this information to evaluate the 

Navy’s history with ship dismantlement and disposal, how its plans for 

CVN 65 have evolved, and what is currently known about the different 

options the Navy is considering for the ship. We also reviewed the Navy’s 

preliminary cost and schedule information and assessed naval shipyard 

workload and facility data. This included workload data for fiscal years 

2006 through 2025 and facility data for fiscal years 2018 through 2035. 

To assess the reliability of these data, we interviewed knowledgeable 

officials and reviewed documentation to verify the controls and measures 

used to validate and maintain the data. We determined these data to be 

reliable for our purposes of discussing the existing and planned workload 

at Puget Sound Naval Shipyard. We also reviewed documentation on the 

Navy’s funding and reporting practices, as well as regulatory authorities 

and processes for nuclear materials that may apply to CVN 65 

dismantlement and disposal. This included a review of applicable laws, 

regulations, executive orders, policies, and guidance. Further, we 

assessed the typical budget information and reporting requirements for 

dismantlement and disposal in relation to federal internal control 

standards.1 Additionally, we reviewed past GAO reports that addressed 

operation and maintenance activities at naval shipyards, and the 

processes, facilities, and requirements for nuclear materials.2 We also 

 1

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

(Washington, D.C.: September 2014).

2

GAO, Naval Shipyards: Actions Needed to Improve Poor Conditions that Affect 

Operations, GAO-17-548 (Washington, D.C.: Sept. 12, 2017); Depot Maintenance: 

Executed Workload and Maintenance Operations at DOD Depots, GAO-17-82R 

(Washington, D.C.: Feb. 3, 2017); Nuclear Regulatory Commission: Regulatory FeeSetting Calculations Need Greater Transparency, GAO-17-232 (Washington, D.C.: Feb. 2, 

2017); Nuclear Security: NRC Has Enhanced the Controls of Dangerous Radioactive 

Materials, but Vulnerabilities Remain, GAO-16-330 (Washington, D.C.: July 1, 2016); and 

National Environmental Policy Act: Little Information Exists on NEPA Analyses,

GAO-14-370 (Washington, D.C.: Apr. 15, 2014).
Page 3 GAO-18-523 Aircraft Carrier Dismantlement and Disposal

reviewed federal and Department of Defense (DOD) budget, financial, 

and acquisition policies and guidance, as well as relevant reports from 

DOD and other nuclear energy-related organizations, such as the 

Organisation for Economic Co-operation and Development’s Nuclear 

Energy Agency.

In addition to reviewing documentation that addresses these areas, we 

interviewed officials from the Naval Sea Systems Command—which 

includes Naval Reactors—Puget Sound Naval Shipyard, and the Nuclear 

Regulatory Commission (NRC). We also interviewed officials from health 

and environmental agencies for the states of Texas and Washington. 

Ship dismantlement activities have occurred in these states and both 

have nuclear waste disposal sites. Additionally, we interviewed officials 

and reviewed documentation from commercial companies involved in 

shipbreaking or nuclear-related industries. These companies include 

Atkins Global; EnergySolutions; Huntington Ingalls Industries (HII –

Nuclear); International Shipbreaking Limited; NorthStar Group Services; 

and Waste Control Specialists. For more information on our scope and 

methodology, see appendix I.

We conducted this performance audit from August 2017 to August 2018 

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.

In 1961, the Navy commissioned the first and only Enterprise-class 

aircraft carrier, CVN 65, which was the world’s first nuclear-powered 

aircraft carrier.3 CVN 65 served the Navy’s needs for 51 years, deploying 

25 times and sailing more than 1 million miles during that time. The 

carrier, which was powered by eight nuclear reactors, was the 

predecessor of the two-reactor Nimitz-class aircraft carriers that followed 

 3

A nuclear-powered ship is constructed with the nuclear power plant(s) inside the 

engineering spaces. Each nuclear reactor onboard a U.S. Navy warship is located inside a 

specifically engineered space called the reactor compartment. A nuclear reactor is the 

heart of a nuclear power plant, in which nuclear fission may be initiated and controlled in a 

self-sustaining chain reaction to generate energy or produce heat. In shipboard nuclear 

reactors, the heat of nuclear reaction is transferred to water in a secondary steam system. 

The steam is then used as the source of power for the propulsion plant.

Background
Page 4 GAO-18-523 Aircraft Carrier Dismantlement and Disposal

it into service. The Navy plans to begin retiring the Nimitz-class carriers in 

the next decade.

Following the retirement of CVN 65 in 2012, the Navy began preparing 

the ship for dismantlement and disposal in a process called inactivation. 

These inactivation activities—which Navy officials stated cost $863 million 

to complete—included removing the nuclear fuel from the ship’s reactors 

and taking off equipment and other materials in preparation for 

dismantlement of the ship. The Navy’s next steps include planning efforts 

to meet the environmental requirements associated with dismantling and 

disposing of a nuclear-powered ship, such as handling of radioactive and 

other hazardous materials. The final step for CVN 65 will be 

dismantlement, including the recycling of non-nuclear portions of the ship 

and safe disposal of nuclear and other hazardous materials. Figure 1 

provides a timeline of CVN 65 events.

Figure 1: CVN 65 Aircraft Carrier Timeline of Events Following Decommissioning

CVN 65 is the largest nuclear-powered ship that has been retired by the 

Navy. Figure 2 compares the size of CVN 65 to previous and future Navy 

vessels requiring dismantlement and disposal, as well as other relatable 

structures.
Page 5 GAO-18-523 Aircraft Carrier Dismantlement and Disposal

Figure 2: Relative Size of CVN 65 Nuclear-Powered Aircraft Carrier
Page 6 GAO-18-523 Aircraft Carrier Dismantlement and Disposal

In 1990, the Navy authorized a program to recycle decommissioned 

submarines at Puget Sound Naval Shipyard in Bremerton, Washington. 

According to Navy officials, the Department of Energy’s low-level waste 

site in Hanford, Washington, was the only practical site at the time for 

disposal of the defueled submarine reactor compartments, which included 

low-level radioactive waste.4 Puget Sound Naval Shipyard is the largest 

shipyard on the U.S. West Coast, and while it is equipped and staffed to 

work on all classes of Navy vessels, it primarily conducts maintenance on 

nuclear-powered aircraft carriers and submarines, which the Navy 

considers a priority. This shipyard has the only dry dock on the West 

Coast capable of servicing an aircraft carrier and is the Navy’s only site 

for dismantlement and disposal of nuclear-powered ships.

Since 1990, the Navy has inactivated over 130 nuclear-powered vessels. 

Inactivation is the process used to prepare a ship for disposing of the 

compartments that house the reactors and recycling the hull or for safe 

storage pending dismantlement and disposal at a later date. Inactivation 

includes draining hydraulic systems and tanks, and removing hazardous 

and expendable materials, tools, spare parts, and furnishings from the 

ship. The removal of the spent fuel from a ship’s nuclear reactor(s), 

referred to as defueling, usually happens as part of inactivation. 

Historically, when a ship is dismantled at Puget Sound Naval Shipyard, 

the reactor compartments are removed and packaged for transport to the 

Hanford low-level radioactive waste disposal site. Figure 3 shows the 

typical path followed for dismantlement and disposal at the shipyard.

 4

Low-level radioactive waste includes items that have become contaminated with 

radioactive material or have become radioactive through exposure to neutron radiation. It 

typically consists of contaminated protective shoe covers and clothing, reactor water 

treatment residues, and equipment and tools, among other items. Radioactivity can range 

from just above background levels found in nature, to very highly radioactive in certain 

cases, such as what may occur with parts from inside the reactor vessel in a nuclear 

power plant. 

Puget Sound Naval 

Shipyard Dismantlement 

and Disposal Activities
Page 7 GAO-18-523 Aircraft Carrier Dismantlement and Disposal

Figure 3: General Process for Nuclear-Powered Ship Dismantlement and Disposal at Puget Sound Naval Shipyard

The Navy often uses commercial industry to dismantle and recycle its 

non-nuclear ships, including aircraft carriers, such as ex-USS 

Constellation and ex-USS Ranger completed in 2017. Navy officials noted 

that the cost to the government in recycling recent ships has been 

minimal—ranging from 1¢ to $6 million—because of the resale value of 

their scrap metal.

Dismantlement and 

Disposal by Commercial 

Industry
Page 8 GAO-18-523 Aircraft Carrier Dismantlement and Disposal

Commercial companies have decommissioned 32 civilian nuclear reactor 

plants—work that the Navy has noted is comparable to nuclear-powered 

ship dismantlement and disposal. Commercial industry uses a 

component-based process for commercial nuclear plant 

decommissioning. This process breaks the reactor down into smaller 

components for transport and disposal, and separates nuclear waste from 

non-nuclear waste as much as possible to reduce disposal costs.

Several laws and an executive order have established the regulatory 

authority and requirements underlying the dismantlement and disposal of 

nuclear-powered Navy vessels. The Atomic Energy Commission 

exercised control of nuclear technology primarily for military purposes 

until 1954, when the Atomic Energy Act was amended.5 These 

amendments allowed for the possibility of a privatized nuclear energy 

industry. Twenty years later, the Atomic Energy Commission was 

abolished and split into the Nuclear Regulatory Commission (NRC) and 

the Energy Research and Development Administration—which was later 

absorbed into the Department of Energy.

Under this structure, NRC is responsible for overseeing commercial 

nuclear reactor safety, licensing reactors, and establishing regulations 

and guidelines for radioactive waste disposal for the commercial nuclear 

industry. The National Nuclear Security Administration, a separately 

organized agency within the Department of Energy, is responsible for the 

management and security of the nation’s nuclear weapons, as well as 

nonproliferation programs. The Naval Nuclear Propulsion Program—also 

known as Naval Reactors—is a joint program of the Department of 

Energy and DOD that has cradle-to-grave responsibility for all naval 

nuclear propulsion matters. Figure 4 provides a brief description of laws 

and orders related to nuclear materials.

 5

Atomic Energy Act of 1954, Pub. L. No. 83-703, 68 Stat. 919 (codified as amended at 42 

U.S.C. §§ 2011-2297g-4 (2018)).

Requirements Related to 

Dismantlement and 

Disposal of NuclearPowered Ships
Page 9 GAO-18-523 Aircraft Carrier Dismantlement and Disposal

Figure 4: Laws and Executive Order Related to Nuclear Materials

a

See also 50 U.S.C. §§ 2406, 2511 (2018).

In addition to the nuclear-specific requirements guiding the dismantlement 

and disposal process, the Navy must comply with the National 

Environmental Policy Act.6 Specifically, this act requires federal agencies 

to evaluate the likely environmental effects of projects they are proposing, 

generally by preparing either an environmental assessment or a more 

detailed environmental impact statement.7 An environmental impact 

statement must, among other things, (1) describe the environment that 

will be affected, (2) identify alternatives to the proposed action and 

identify the agency’s preferred alternative, (3) present the environmental 

impacts of the proposed action and alternatives, and (4) identify any 

 6

42 U.S.C. §§ 4321-4347 (2018).

7

Agencies may prepare an environmental assessment to determine whether a proposed 

project is expected to have a potentially significant impact on the human environment. If 

the agency determines that the project may cause significant environmental impacts, an 

environmental impact statement should be prepared. However, if the agency determines 

there are no significant impacts from the proposed project, then it is to prepare a Finding 

of No Significant Impact that presents the reasons why the agency has reached that 

conclusion. If a proposed project fits within a category of activities that an agency has 

already determined normally does not have the potential for significant environmental 

impacts or the activity has been excluded from National Environmental Policy Act analysis 

by statute, then the agency may instead approve it by using a categorical exclusion.
Page 10 GAO-18-523 Aircraft Carrier Dismantlement and Disposal

adverse environmental impacts that cannot be avoided should the 

proposed action be implemented. The Act’s requirements are invoked for 

major federal actions, such as the construction of buildings or highways, 

or the dismantlement and disposal of reactor compartments from nuclearpowered vessels.

Since 1996, nuclear-related dismantlement and disposal activities 

performed by Puget Sound Naval Shipyard have been based on the 

same environmental impact statement—which addresses the effects of 

disposing of submarine and cruiser reactor compartments. In 2012, the 

Navy produced an environmental assessment analyzing the effects of 

removing and preparing the reactor compartments of CVN 65 for disposal 

at Puget Sound Naval Shipyard and transporting the compartment 

packages to the Hanford site for disposal. It found that these activities 

would have no significant impact on the environment beyond existing 

activity. Naval Reactors subsequently decided, however, that a new 

environmental impact statement is required for CVN 65 because the 

alternatives identified for dismantling and disposing of the ship could 

potentially have significant impacts on the environment that are not 

captured by the existing environmental assessment. As part of the new 

statement for CVN 65, Navy officials said environmental factors that 

account for the naval shipyard and full commercial options will be 

reviewed, as well as indefinite waterborne storage of the ship pending 

dismantlement and disposal at a later date.

The Navy is weighing a number of considerations before making a 

decision for CVN 65 dismantlement and disposal. The naval shipyard 

option offers well-established processes for dismantlement and disposal 

of the ship’s nuclear material and better understood cost and schedule 

estimates than the full commercial option. Our analysis of available data, 

however, found that the naval shipyard option would contribute to existing 

workload backlogs and exacerbate facility challenges at the shipyard that 

could affect its work maintaining the active fleet—a Navy priority. While 

the Navy has not defined its requirements for the full commercial option, 

industry does not expect to face workload or facility challenges. Navy 

officials also believe that the full commercial option potentially could 

shorten the timeline for completing the work and reduce the total cost.

Naval Shipyard 

Option for CVN 65 Is 

More Defined than 

Full Commercial 

Option but May Pose 

Challenges for 

Meeting Navy 

Priorities
Page 11 GAO-18-523 Aircraft Carrier Dismantlement and Disposal

Although CVN 65 is the first nuclear-powered aircraft carrier requiring 

dismantlement and disposal, the Navy has well-established processes for 

dismantling and disposing of nuclear-powered submarines and cruisers. 

Navy officials explained that the shipyard’s extensive dismantlement and 

disposal experience with these vessels has resulted in a strong 

understanding of how to accomplish the work. Further, the Navy has been 

working on plans to address the ship-specific needs of CVN 65 for many 

years. If the Navy chooses the naval shipyard option for CVN 65, it 

expects to adapt and use these well-established processes to dismantle 

the 28,000-ton nuclear propulsion space section at Puget Sound Naval 

Shipyard. This section would contain the 8 defueled reactors and all other 

nuclear-related material that remains on the ship. To separate the 

propulsion space from the ship, a commercial company would perform 

“ship-shaping” to create a dedicated ship section for all of the nuclearrelated work. This activity would minimize the portion of the ship 

transported to the naval shipyard for dismantlement and disposal. The 

remaining ship sections would be commercially recycled. The shipyard is 

evaluating two designs for reactor compartment packages that could be 

used for transport and disposal of the ship’s nuclear material. One 

design—based on a package previously used for cruiser reactors—would 

involve the shipyard preparing 8 single reactor packages. The other 

includes a new design that would enclose 2 reactors in dual reactor 

packages. Figure 5 shows how the Navy anticipates the ship would be 

divided into sections through this process.

Naval Shipyard Option Is 

Based on a WellEstablished Process, 

While Navy Has Yet to 

Characterize Full 

Commercial Option
Page 12 GAO-18-523 Aircraft Carrier Dismantlement and Disposal

Figure 5: Proposed CVN 65 Sectioning Approach for Puget Sound Naval Shipyard 

Dismantlement Option

In contrast, the Navy formally began considering the potential for a full 

commercial option for CVN 65 within the past 4 years. According to Navy 

officials, although information received through previous requests for 

information and hosting discussions with commercial industry helped 

shape their understanding of the potential for a commercial ship 

dismantlement, they ultimately have had relatively limited interaction with 

commercial companies to determine their potential plans and processes 

for CVN 65 dismantlement and disposal. Naval Reactors officials stated 

they are waiting for the environmental impact statement process to 

officially begin before further engaging with prospective commercial 

companies and the public.

Many of the details for a full commercial option will depend upon Navy 

requirements, such as standards, technology, or specific procedures 

required to do the work; data and analysis in the environmental impact 

statement; and preferred work practices and facilities of prospective 

companies. Officials we interviewed from companies with potential 

interest in the work stated that because the Navy has not communicated 

its CVN 65 requirements for a full commercial option, any commercial 

approach described for the work would be hypothetical at this point, 

relying on their extensive prior experience with nuclear materials 

handling, packaging, shipping, and disposal—including nuclear ship 
Page 13 GAO-18-523 Aircraft Carrier Dismantlement and Disposal

maintenance and decommissioning of commercial reactors—or ship

recycling. Commercial company officials noted that despite the lack of 

definitive information available, they would anticipate employing typical 

practices used for commercial nuclear reactor decommissioning, ship 

dismantlement, and control of nuclear materials to complete CVN 65 

work. In terms of locations for the work, Naval Reactors officials noted 

that many coastal sites in the United States could potentially 

accommodate CVN 65 dismantlement activities, and the location of the 

work site would affect the proposed disposal site or sites. Table 1 

provides characteristics of the two options that the Navy is considering for 

CVN 65 dismantlement and disposal.

Table 1: Characteristics of the Navy’s Potential CVN 65 Dismantlement and Disposal Options

Naval shipyard option Full commercial option

General approach Commercial company divides CVN 65 into 

sections and creates a distinct nuclear 

propulsion space section in the middle of the 

ship that contains the 8 defueled reactors and all 

other nuclear-related material

Company dismantles and recycles or disposes 

of non-nuclear sections

Propulsion space section is transported by 

heavy-lift towing to Puget Sound Naval Shipyard

Naval shipyard dismantles nuclear propulsion 

space section using established shipyard 

processes and constructs 4 or 8 reactor 

packages for transport and disposal 

Commercial company(ies) dismantles entire ship 

based on applicable industry practices; may be 

similar to component-based dismantlement used 

for nuclear power plant decommissioning

Company recycles or disposes of non-nuclear 

portions

Nuclear-related 

dismantlement location

Puget Sound Naval Shipyard Not yet determined 

Disposal path Transport reactor compartment packages by 

barge and ground transport vehicle to low-level 

radioactive waste disposal facility in Hanford, 

Washington

Not yet determined 

Navy preliminary cost and 

schedule estimates

$1.05 billion-$1.55 billion

10 years, 2034 start

$750 million-$1.4 billion

About 5 years, 2024 start

Source: GAO analysis of Navy documentation and interviews. | GAO-18-523
Page 14 GAO-18-523 Aircraft Carrier Dismantlement and Disposal

Cost and schedule estimates for both CVN 65 options have yet to be 

formally established by the Navy. Puget Sound Naval Shipyard has been 

refining CVN 65 plans and estimates over many years. However, its most 

recent estimates for cost and schedule still may not fully account for 

uncertainties in completing the work because it represents a first-of-itskind project with an unprecedented scale. The Navy’s notional estimates 

for the commercial option are a first step in establishing expectations and 

will evolve as requirements for the work are better understood. The Navy 

awarded a contract in July 2018 to the Center for Naval Analyses—a 

federally funded research and development center serving the Navy and 

other defense agencies—to complete a cost analysis for the full 

commercial option. This effort is expected to provide the Navy with a cost 

estimate for CVN 65 in October 2018, followed by a model through which 

the Navy can develop cost estimates for future Nimitz-class 

dismantlement and disposal efforts. The findings from the CVN 65 

environmental impact statement may contribute to the final cost and 

schedule estimates for either option.

Better Fidelity in Existing Naval Shipyard Option Estimates

Puget Sound Naval Shipyard officials explained that as their planning has 

progressed, they have refined their cost and schedule estimates for CVN 

65 dismantlement and disposal. Overall, the Navy’s cost estimates have 

increased significantly from initial estimates but have been relatively 

stable since 2016. The schedule went through similar fluctuations but has 

steadied. Table 2 outlines changes in the shipyard’s plans and how they 

affected cost and schedule.

Estimates for Both 

Dismantlement Options 

Require Further 

Development
Page 15 GAO-18-523 Aircraft Carrier Dismantlement and Disposal

Table 2: Changes in Puget Sound Naval Shipyard CVN 65 Plans, Estimate Methodology, Schedule, and Cost

Year Planning history Estimate methodology

Schedule 

duration

Cost 

(in thenyear dollars)

2011 Puget Sound Naval Shipyard dismantles 

and disposes of entire ship beginning in 

2017

- prepare 8 single reactor compartment 

packages

- recycle non-nuclear portions

Based on workdays per ton to reflect 

returns of completed cruiser reactor 

packages

7 years 500 million-750 million

2013 Same approach as 2011 Developed manning profiles for each 

phase of work

- added cost for removal of 

hazardous materials

- added support costs for increased 

duration of effort

12 years, 9 

months

1.25 billion-1.85 billion 

2014 Puget Sound Naval Shipyard begins 

dismantlement and disposal of 

propulsion space section of ship in 

2019 

Commercial recycling of non-nuclear 

portions

Updated manning profiles

- reduced non-nuclear work and 

duration at shipyard

12 years 950 million-1.4 billion

2016 Same overall approach as 2014

- prepare 4 dual reactor compartment 

packages

Based on actual ship checks, 

drawings, and work teams

- included nuclear and fire safety 

oversight

- added oversight for ship-shaping to 

create propulsion space section

10 years 1.05 billion-1.55 billiona

Source: GAO analysis of Navy documentation. | GAO-18-523

Note: Navy officials stated that all estimates include an average of $113 million in capital investments 

to Puget Sound Naval Shipyard required to execute the CVN 65 reactor compartment package 

disposal, while also ensuring that doing so would not affect the shipyard’s maintenance of active 

ships.

a

Puget Sound Naval Shipyard included a $51 million (6 percent of labor costs) management reserve 

for risk mitigation.

The schedule for starting the work at the naval shipyard also changed. 

Navy officials stated that as a result of the Navy’s decision in early 2017 

to reassess its options for CVN 65, it delayed the expected start date for 

the naval shipyard option from 2019 to 2034 based on analysis of the 

workload at the naval shipyard, which we discuss below.

Although Puget Sound Naval Shipyard officials noted their cost estimate 

includes some margin to account for CVN 65 being the first project of its 

kind, it may not adequately account for the extent of unknown facts or 
Page 16 GAO-18-523 Aircraft Carrier Dismantlement and Disposal

circumstances that could affect cost. For example, unrecognized 

hazardous materials may exist in inaccessible areas of the CVN 65 

propulsion space section that will only be discovered once the work is 

underway, which could affect cost and schedule. Execution of the work in 

support of a new dual reactor compartment package design also could 

lead to unanticipated challenges that cause deviations from estimates.

No Formal Estimates for Full Commercial Option

The Navy has notionally estimated cost and schedule for a full 

commercial option to be $750 million to $1.4 billion and about 5 years to 

complete. These estimates suggest that the commercial option could cost 

less and take less time to complete than the naval shipyard option. Navy 

officials stated that the notional cost estimate is derived from data 

reported by nuclear power plant operators, with differences in size and 

scope for the nuclear reactors incorporated.8 They also said that the 

notional estimate will be updated once it receives additional information 

from industry during the planning process.

Navy officials told us they expect the cost per reactor for CVN 65 would 

be significantly less than the NRC decommissioning average for a 

commercial facility because CVN 65 reactor compartments are smaller, 

the reactors are more compact, and they have already been through the 

costly defueling activity. A 2016 international study on the cost of 

decommissioning nuclear power plants identified several high-level 

categories and their contribution to total costs for reactors 

decommissioned in the United States, such as project management, site 

restoration, and waste packaging, transportation, and disposal.9

According to this study, about 25 percent of decommissioning costs can 

be attributed to reactor decontamination and dismantling. Using this 

percentage and the average cost to decommission a commercial nuclear 

reactor, we estimate the cost to dismantle the eight CVN 65 defueled 

reactors to range from $1.2 billion to 1.3 billion, which is at the higher end 

of the Navy’s notional estimated range for the full commercial option.

 8

The Nuclear Regulatory Commission noted these reported data are not equivalent to the 

actual cost to decommission a reactor, but represent the majority of the cost associated 

with safely decommissioning a single nuclear facility.

9

Organisation for Economic Co-operation and Development, Nuclear Energy Agency, 

Costs of Decommissioning Nuclear Power Plants, NEA report No. 70201, 2016.
Page 17 GAO-18-523 Aircraft Carrier Dismantlement and Disposal

In addition to the potential cost, the Navy initially projected about a 5-year 

period of performance for the full commercial option based on limited 

industry input. Navy officials told us the full commercial option start date, 

beginning no earlier than 2024, is contingent on the finalization of the 

environmental impact statement and a record of decision that chooses 

this option as the Navy’s path forward. The Navy’s intent would be to 

award a contract shortly after the environmental impact statement is 

completed if the Navy decides to pursue the full commercial option. 

Commercial officials told us they do not anticipate a need for significant 

lead time before starting work, though the need will be better understood 

once the Navy outlines requirements for the work.

Finally, the cost for a full commercial option could be influenced by the 

contract type selected by the Navy. Contract type selection is a key factor 

in determining how cost risk is shared between the Navy and the 

contractor. Firm-fixed-price contracts are suitable for situations where the 

risk involved is minimal or can be predicted with an acceptable degree of 

certainty. Conversely, cost-type contracts are used when either 

requirements are not sufficiently defined or uncertainties with contract 

performance do not permit costs to be sufficiently estimated to use a 

fixed-price contract. Although no decision has been made, Navy officials 

told us they are interested in using a firm-fixed-price contract—a contract 

type that has been used for commercial reactor decommissioning. Under 

a firm-fixed-price contract, the contractor agrees to perform the work for a 

price that is not subject to change based on the contractor’s cost 

experience in performing the contract, placing full responsibility for all 

costs and resulting profit on the contractor. Navy officials stated that 

because CVN 65 is the first nuclear-powered aircraft carrier to be 

disposed of, the scope of the effort will need to be better defined before 

they could reliably conclude that firm-fixed-price contracting would be 

appropriate. Specifically, insufficiently understood risks may make 

potential contractors unwilling to accept the risks associated with a firmfixed-price contract.
Page 18 GAO-18-523 Aircraft Carrier Dismantlement and Disposal

The Navy has stated its priority for Puget Sound Naval Shipyard is the 

work associated with maintaining nuclear-powered aircraft carriers and 

submarines currently in the fleet. However, as we reported in 2017, Puget 

Sound Naval Shipyard has had significant fleet maintenance delays since 

fiscal year 2000.10 These delays resulted in 4,720 lost operational days 

for nuclear-powered aircraft carriers and submarines. The addition of 

CVN 65 would contribute to challenges in the naval shipyard’s ability to 

meet workload demands and further constrain its available facilities. In 

comparison, despite the lack of detail about the Navy’s requirements, 

commercial company officials we interviewed stated they currently do not 

anticipate any major workload challenges or conflicts with other ongoing 

or future work in completing the work on CVN 65 based on their existing 

workforce and potential facilities for performing the work.

Puget Sound Naval Shipyard Workload and Facility Challenges

Based on our analysis of workload and resources data from Puget Sound 

Naval Shipyard, we found that the shipyard consistently operates at its 

maximum annual workload level and this likely will continue regardless of 

the Navy’s decision for CVN 65. A Naval Reactors analysis of the 

shipyard’s workload data also shows the workload meeting or exceeding 

capacity for the foreseeable future. The shipyard’s workload projections 

that we reviewed show it will be working at or near capacity through fiscal 

year 2025—the last year for which data were available. Adding the work 

associated with dismantlement and disposal of CVN 65 would put the 

shipyard over current workload capacity.

Shipyard officials explained that historically, the workload projection for a 

given year matures as that year approaches, and the dips that sometimes 

are depicted in future-year workload projections generally vanish. 

Workload maturity or growth can be attributed to changes in the Navy’s 

maintenance plans, deferred maintenance, growth from the previous 

year, and overall shipyard productivity. The condition of a ship when it 

arrives for maintenance can also contribute to growth if inspections of 

systems or components reveal a need for unplanned repairs. To account 

for historical variability and improve projections of overall workload, in 

2015 shipyard officials began including 10 percent in unallocated 

workload to projections.

 10GAO-17-548.

The Navy’s Priorities for 

Puget Sound Naval 

Shipyard Present 

Challenges Not Expected 

for Full Commercial Option
Page 19 GAO-18-523 Aircraft Carrier Dismantlement and Disposal

In reviewing the shipyard workload and resources data, we also found 

that the shipyard regularly underestimates workload for future years—

especially 5 years or more out—with workload growth for future years 

consistently exceeding 15 percent. Even without the CVN 65 work at the 

naval shipyard, projections show its workload with average notional 

growth will meet or exceed the workforce available to complete the work, 

as shown in figure 6.

Figure 6: Puget Sound Naval Shipyard Average Workload Projections with Available 

Workforce and Notional Growth without CVN 65 Work

Notes: The average total resource need indicates the amount of work days that are estimated to 

complete planned work for each work day. When this exceeds the available workforce, the shipyard 

must use measures, such as overtime hours, to address the additional need.

CVN 65 dismantlement and disposal workload projections are not included in these data.

According to the Navy, it is typical for naval shipyards to continually shift 

resources across projects to align worker-specific trade skills to the type 

of work executed on any hull in the shipyard, at any particular time. To 
Page 20 GAO-18-523 Aircraft Carrier Dismantlement and Disposal

achieve a level and sustainable workforce across the fiscal years, the 

number of full-time employees required to support planned work is sized 

as part of the total workforce. The shipyard mitigates peaks in workload 

(above the available workforce) through the use of additional overtime, 

loans from other naval shipyards, and contracting. When that cannot 

occur, the shipyard will defer workload until it can be executed.

The CVN 65 dismantlement and disposal work could affect the shipyard’s 

ability to complete active fleet maintenance. We found that the addition of 

the CVN 65 dismantlement and disposal would add almost a year’s worth 

of work across the estimated 10-year dismantlement and disposal period 

to an already busy shipyard that has demonstrated difficulties in 

accurately projecting its future work. The Navy prioritizes maintenance of 

the active fleet, but the scale of the CVN 65 work would reduce the 

shipyard’s ability to delay or reprioritize dismantlement and disposal. 

Shipyard officials noted that the Navy often defers planned dismantlement 

and disposal to address higher-priority active fleet maintenance. For 

example, smaller submarines prepared for dismantlement can instead be 

stored at the shipyard until workforce and space are available to complete 

the work. However, an aircraft carrier—even when reduced to a 

propulsion space section as proposed for CVN 65—would not offer the 

same level of flexibility to defer work. CVN 65 would involve a more 

extensive resource commitment because of its increased size relative to 

past ship dismantlement projects and would occupy limited facilities at the 

shipyard. Specifically, current plans require 3 years pier side to prepare 

the propulsion space section for dismantlement and reactor compartment 

disposal and about 5 years in a dry dock for the actual dismantlement.

Further, the shipyard expects a significant increase in its submarine 

inactivation and reactor compartment disposal and hull recycling workload 

due to the end of service for an additional class of submarines—

specifically, the Ohio-class submarines starting in 2027. The estimated 

increase in inactivation and reactor recycling workload would overlap with 

the planned start for CVN 65 dismantlement and disposal in 2034, if the 

Navy elects to pursue this option. In addition, the shipyard already has a 

backlog of 10 submarines and the ex-USS Long Beach cruiser in storage 

awaiting disposal and recycling at its long-term storage facility for 

defueled, decommissioned, and inactivated nuclear-powered ships. 

Another 3 submarines are pier-side at Puget Sound Naval Shipyard. This 

backlog is not expected to subside as submarines continue to be retired, 

and each vessel represents thousands of workdays that the shipyard has 

to commit to its dismantlement and disposal.
Page 21 GAO-18-523 Aircraft Carrier Dismantlement and Disposal

Navy and Industry Expect Full Commercial Option to Face Fewer 

Challenges

While the Navy has not established specific requirements for the full 

commercial option, Navy officials maintain that it does not present the 

same workload and facility challenges that exist for the naval shipyard 

option. Commercial companies have flexibility in selecting a location for 

CVN 65 dismantlement activities based on facility and workforce 

availability considerations. Some company officials we spoke with also 

noted they have existing worksites—which are audited and approved by 

Naval Reactors—where they process, package, and transport low-level 

radioactive waste or operate low-level radioactive waste disposal sites 

licensed by NRC. These include facilities for radioactive waste processing 

and decontamination of materials for recycling. Additionally, company 

officials said they anticipate that a substantial amount of the work could 

be performed with the ship in the water—similar to the traditional 

approach used to dismantle non-nuclear vessels for recycling—and 

existing contractor facilities likely would not require major upgrades or 

improvements other than to provide for the radiological-based waste 

handling and packaging considerations.

Commercial company officials told us that they would not expect

significant additional hiring needs based on their limited understanding of 

the potential CVN 65 work and their existing workforce capacity. They 

added that the nuclear dismantlement and disposal industry has an 

available, qualified workforce that could easily be employed if additional 

workforce were needed. Given the early stage of the Navy’s planning for 

CVN 65 and the Navy’s lack of formal engagement with commercial 

companies at the time of our review, we did not assess the current or 

future commercial workforce capacity. Any details on potential CVN 65 

facility and workforce plans from commercial companies will be 

hypothetical until the Navy formally begins efforts to seek input from 

commercial companies and communicate requirements.
Page 22 GAO-18-523 Aircraft Carrier Dismantlement and Disposal

The Navy’s approach typically used to budget for and report on ship 

dismantlement and disposal does not provide sufficient information to 

support decision makers’ oversight of CVN 65—a multi-year project that 

may require more than $1 billion to complete. We found the Navy is not 

required to provide detailed budget information or report dismantlement 

and disposal cost, schedule, and programmatic information to decision 

makers. Providing additional information through budget requests and 

reporting would help ensure that decision makers have sufficient 

information to oversee CVN 65 dismantlement and disposal activities and 

to support future decisions.

The Navy uses budget exhibits to provide congressional decision makers 

information about dismantlement and disposal efforts. If no changes are 

made to the information provided within the Operation and Maintenance, 

Navy (OMN) budget exhibits, the CVN 65 dismantlement and disposal 

budget request will include limited details for planned work, funding 

needs, and total estimated costs. The bulk of the Navy’s past 

dismantlement and disposal work is comprised of comparatively low-cost 

projects—particularly submarines—with limited resource demands 

compared to a nuclear-powered aircraft carrier like CVN 65, a multi-year 

project with a cost that will potentially exceed $1 billion. For example, 

nuclear-powered submarines have an average dismantlement and 

disposal cost of about $26 million and average about 50,000 workdays. 

Federal internal control standards recommend that agency management 

communicate with external stakeholders the necessary quality 

information—such as complete cost and schedule information for CVN 65 

dismantlement and disposal—to achieve objectives.11 Budget exhibits are 

a primary source of information about all programs and other activities 

during budget planning and congressional appropriation decisions. Wellprepared budget exhibits help provide a rationale for the amount and 

timing of funding requests. Given that this multi-year, large-scale project 

is the first of its kind, more detailed information would facilitate greater 

transparency and oversight of cost, schedule, and performance.

 11

GAO-14-704G.

Budget 

Documentation and 

Reporting Does Not 

Include Sufficient 

Information to 

Facilitate 

Transparency and 

Oversight for CVN 65

Budget Exhibits for 

Dismantlement and 

Disposal Lack ShipSpecific Details
Page 23 GAO-18-523 Aircraft Carrier Dismantlement and Disposal

Limited Budget Information Provided for Dismantlement and 

Disposal

The Navy uses the OMN appropriation account to fund dismantlement 

and disposal activities.12 The Navy’s Financial Management Policy 

Manual provides overall summary guidance on OMN budget formulation, 

but it does not provide specific guidance on reporting criteria for 

dismantlement and disposal of Navy ships.13 Budget exhibits are 

prepared to justify appropriation requests and are key documents that can 

be used to support congressional oversight. DOD acquisition training 

materials state that well prepared budget exhibits make programs more 

defensible. However, in assessing the OMN budget exhibits associated 

with dismantlement activities for fiscal years 2007-2018, we found they 

provide little ship-specific detail that could be used to monitor a significant 

project such as the planned effort for CVN 65 dismantlement and 

disposal, which may begin requesting funding as soon as fiscal year 

2023.

Specifically, we reviewed the dismantlement and disposal funding 

requests from the past several years, which reside within the Navy’s OMN 

budget exhibits under the Ship Activations/Inactivations sub-activity group 

of the Mobilization budget activity. In doing so, we found these exhibits 

generally contain high-level information with a summary of funding 

changes for the current fiscal year and the requested funding estimate for 

the budget year. We could not definitively identify or track dismantlement 

and disposal of specific ships because

• key work activities are not described by ship,

• cost and schedule for individual ships are not presented, and

• prior year costs and cost to complete a specific ship’s dismantlement 

and disposal are not provided.

In reviewing programmatic documentation other than the budget 

requests, such as Puget Sound Naval Shipyard dismantlement planning 

 12OMN appropriations are for expenses not otherwise provided for, such as day-to-day 

costs of operating naval forces, including fuel, supplies, and maintenance of ships. 

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

Management and Comptroller), Financial Management Policy Manual, Oct. 2017.

13Department of the Navy, Office of the Assistant Secretary of the Navy (Financial 

Management and Comptroller), Financial Management Policy Manual, Oct. 2017.
Page 24 GAO-18-523 Aircraft Carrier Dismantlement and Disposal

documents and the Navy’s long-range shipbuilding plans, we found 

instances of submarine inactivation costs significantly exceeding 

estimates and notable delays to the start dates for work activities. We 

found that, although not required, this information was not reflected in the 

budget exhibit documents we reviewed. As another example we 

previously noted, Navy officials stated that CVN 65 inactivation—already 

completed in December 2017—cost $863 million. We could not track this 

cost from the budget exhibits because of their limited detail. As a 

consequence of the general lack of detail in the budget exhibits, decision 

makers cannot readily identify if cost growth occurred or if a specific ship 

was dismantled when planned, hindering oversight of dismantlement and 

disposal projects.

The Navy’s OMN annual appropriations fund work activities on a year-byyear basis, which does not necessarily allow for tracking of the full 

resource commitment of a project over time or enable monitoring of cost 

growth to determine if additional funds are needed. Navy officials stated 

that they fully fund dismantlement and disposal efforts that span multiple 

fiscal years. They added that for CVN 65, the Navy may divide the work 

into multiple discrete phases that are separately funded due to the 

lengthy projected schedule. This approach could require the Navy to seek 

OMN appropriations in several non-consecutive years. Such an approach 

could make tracking CVN 65 dismantlement and disposal funding 

challenging, as the total cost and any changes would be obscured among 

the multiple funded activities that collectively compose the total 

dismantlement and disposal effort. Navy officials acknowledged that they 

could provide further information, such as total project cost and an overall 

schedule for CVN 65, in the OMN budget exhibits. However, without 

direction from DOD leadership or Congress, Navy officials stated that 

they have no plans to deviate from providing the traditional OMN budget 

exhibit information. Providing additional information in the CVN 65 budget 

exhibit could enable decision makers to track total cost, any cost 

changes, schedule progress, and general performance for the CVN 65 

dismantlement and disposal.

Navy Could Provide More Budget Details for CVN 65

While the Navy funds ship dismantlement and disposal from the OMN 

account, budget exhibits for other accounts—such as the Shipbuilding 

and Conversion, Navy (SCN) account typically used for major investment 

items—offer examples of how to provide decision makers with more 

detailed information. Budget exhibits for SCN appropriations are 

structured to identify major elements of cost and track those costs over 
Page 25 GAO-18-523 Aircraft Carrier Dismantlement and Disposal

time, consistent with DOD Financial Management Regulations. For 

example, the SCN budget exhibits typically contain specific information 

for each ship being procured with a distinct funding line for major cost 

categories such as basic construction, propulsion, and electronics. 

Additionally, these budget exhibits describe the program with specific 

plans for the upcoming budget year and estimate across 5 fiscal years 

(known as DOD’s Future Years Defense Program), including the total 

cost to complete the program.14 While some of the SCN budget exhibit 

elements are not applicable to dismantlement and disposal, others could 

be adapted and used in an OMN budget exhibit for CVN 65 to provide 

information that would enable better oversight, such as

• work activities planned and performed by fiscal year;

• prior years’ funding data;

• future years’ funding plans;

• total estimated cost;

• cost to complete dismantlement;

• schedule of key events; and

• information on the contractor(s), contract type, and contract award 

and completion dates.

Navy officials said they typically would not provide the level of detail found 

in SCN budget exhibits or the exhibits for other DOD acquisition programs 

because OMN exhibits are not designed to support the same level of 

oversight. Unlike DOD acquisition programs, DOD projects completed 

with operation and maintenance funds typically are not investment 

programs and generally do not require the same level of oversight. 

However, as we previously indicated, Navy officials noted that if DOD 

leadership or Congress provided clear direction on what additional details 

related to CVN 65 dismantlement and disposal should be included in 

OMN budget exhibits, it could provide that additional information to 

support oversight. Navy officials stated that given the considerable 

funding needs and congressional interest with CVN 65, they were 

 14The Future Years Defense Program is the program and financial plan for DOD as 

approved by the Secretary of Defense. It arrays programmed dollars, manpower and force 

structure over a 5-year period (force structure for an additional 3 years), portraying this 

data by Major Force Program (i.e., strategic forces, mobility forces, and research and 

development) for DOD internal review for the program and budget review submission. It is 

also provided to the Congress in conjunction with the President’s budget submission.
Page 26 GAO-18-523 Aircraft Carrier Dismantlement and Disposal

assessing options for providing specific detail in the OMN budget exhibit 

for its dismantlement and disposal activities. They added that no specific 

decisions had been made on what additional information, if any, would be 

included for CVN 65.

Despite being a part of the final phase in the program’s life cycle, we 

found no specific reporting requirement related to the cost, schedule, risk 

management, and general performance of dismantlement and disposal 

activities in DOD or Navy policy that would support oversight by DOD or 

Congress.15 Officials from Naval Reactors and the Naval Sea Systems 

Command confirmed that there is no reporting requirement for 

performance of dismantlement and disposal of Navy ships. Navy officials 

noted that dismantlement and disposal activities are included in their 

annual briefings to Congress that support the Navy’s budget requests, but 

acknowledged that the typical comparatively low-cost ship dismantlement 

and disposal activities are generally of less interest when combined with a 

briefing on shipbuilding and other high-dollar acquisition investments. 

This approach may be appropriate for submarine dismantlement and 

disposal activities that have lower costs, shorter periods of performance, 

and a well-established history. However, the magnitude of CVN 65’s 

anticipated cost of dismantlement and disposal is comparable to that of 

large DOD acquisition programs. Such programs generally are expected 

to provide more information to decision makers within DOD and Congress 

through formal reporting on plans, activities, and performance to support 

accountability than what has traditionally been provided with respect to 

Navy dismantlement and disposal activities.

The precedent-setting nature of the CVN 65 dismantlement and disposal 

adds a level of risk and heightens the importance of having sufficient 

accountability measures to facilitate oversight. There is greater potential 

for unexpected challenges to arise because a nuclear-powered aircraft 

 15DOD Directive 5000.01, The Defense Acquisition System, describes the management 

principles for DOD’s acquisition programs. DOD Instruction 5000.02, Operation of the 

Defense Acquisition System, outlines a framework for managing acquisition programs. 

Collectively, these are known as the DOD 5000 series. Secretary of the Navy Instruction 

5000.2E, Department of the Navy Implementation and Operation of the Defense 

Acquisition System and the Joint Capabilities Integration and Development System, 

issues procedures for major and non-major defense acquisition programs. Current law 

requires major defense acquisition programs to submit a summary report to several 

congressional committees at Milestone A that contains the total life-cycle cost estimate for 

the program. 10 U.S.C. § 2366a(c)(1)(B)(i).

Lack of Reporting 

Requirements Limits 

Opportunities for Insight 

into CVN 65 

Dismantlement and 

Disposal Cost, Schedule, 

and Performance
Page 27 GAO-18-523 Aircraft Carrier Dismantlement and Disposal

carrier has not been dismantled and disposed of before. Additionally, 

CVN 65 provides an opportunity to establish a foundation for 

management and oversight of future aircraft carrier dismantlement and 

disposal efforts, with the first of 10 Nimitz-class carriers expected to reach 

the end of its service life in the next decade. Standards for internal control 

in federal government state that in order to identify and mitigate risk, 

program objectives such as a baseline for cost and schedule, should be 

clearly defined in measurable terms so performance in attempting to 

achieve those objectives can be assessed.16 Doing so would also provide 

the Navy with the ability to collect important historical cost data that could 

be used to inform cost estimates for future aircraft carrier dismantlement 

and disposal efforts.

DOD acquisition programs could serve as a model to identify appropriate 

cost and schedule objectives for the CVN 65 dismantlement and disposal, 

even though it is not an acquisition program and not subject to these 

requirements. DOD acquisition programs with significant resource 

commitments comparable to that expected of CVN 65 are generally 

subject to structured oversight and have reporting requirements to 

support performance transparency and accountability. As discussed 

earlier, preliminary cost estimates for CVN 65 dismantlement and 

disposal may exceed $1 billion, regardless of the option the Navy 

ultimately selects. While many requirements for DOD acquisition 

programs are not relevant to dismantlement and disposal, even when 

costs may reach similar levels, we found elements of the reporting 

requirements associated with larger DOD acquisition category (ACAT) 

programs that the Navy could leverage to facilitate oversight of CVN 65 

dismantlement and disposal.17 For example, ACAT II programs—which 

have estimated costs comparable to CVN 65 dismantlement and disposal 

cost expectations—are required by DOD policy to establish a program 

cost and schedule baseline prior to program start and report any 

significant deviations from the established baseline.18 They also are

required by statute to provide information on risk management. Table 3 

 16GAO-14-704G. 

17Defense acquisition program ACAT classifications depend on estimated costs and type 

of acquisition. All acquisition programs generally are required by statute or DOD guidance 

to provide program information at milestones and other decision points, although these 

requirements differ by ACAT level and may be tailored in many circumstances.

18Defense acquisition programs are designated as ACAT II when estimated to require a 

total expenditure for procurement of more than $835 million in fiscal year 2014 dollars.
Page 28 GAO-18-523 Aircraft Carrier Dismantlement and Disposal

highlights some DOD acquisition program reporting elements that could 

support oversight of CVN 65 dismantlement and disposal.

Table 3: DOD Acquisition Reporting Elements That Could Be Adapted for Use with CVN 65 Dismantlement and Disposal 

Acquisition element Description Potential benefits of application 

Acquisition program 

baseline

Establishes cost and schedule baseline estimates 

before project start and requires reporting of certain 

deviations in cost, schedule, or performance, among 

others

If a baseline for cost and schedule is established 

prior to contract award or funding naval shipyard 

work, it would allow tracking and reporting of cost 

and schedule deviations above certain thresholds 

from initial estimates through the life of the project

Independent cost 

estimate or 

assessment

Provides an independent evaluation of the quality, 

accuracy, and reasonableness of a program’s cost 

estimate, with emphasis on specific cost and 

technical risks

Identifies risks related to budget shortfalls or 

excesses

Allows for a validation of the Navy’s cost 

expectations and a determination of whether the 

Navy’s estimate accurately reflects the project 

expectations

Could support a determination that the project can 

be completed without the need for significant 

adjustment to future budgets if the elements of 

project cost risk are properly identified, evaluated, 

and include mitigation plans

Risk management 

plan

Establishes procedures to identify, manage, and 

mitigate risks; estimates the likelihood and possible 

consequences in terms of cost, schedule, and 

performance

Procedures that could help to manage risks for a 

large-scale, first-of-its-kind project 

Source: GAO analysis of DOD Instruction 5000.02 and GAO cost estimation guidance. | GAO-18-523

For example, once a cost baseline is established, comparison to an 

independent cost estimate or assessment could provide greater 

assurance that the risks associated with performing CVN 65’s large-scale, 

first-of-a-kind dismantlement activities were adequately considered and 

appropriately estimated. GAO’s Cost Estimating and Assessment Guide

states an independent review of a program’s cost estimate is crucial to 

establishing confidence in the estimate.19 It provides an unbiased test of 

whether the program cost estimate is reasonable and can be used to 

identify risks related to budget shortfalls or excesses. The Naval Center 

for Cost Analysis is responsible for developing independent cost 

assessments for ACAT II Navy programs, while the Office of the 

Secretary of Defense’s Office of Cost Assessment and Program 

 19GAO, GAO Cost Estimating and Assessment Guide: Best Practices for Developing and 

Managing Capital Program Costs, GAO-09-3SP (Washington, D.C.: March 2009). 
Page 29 GAO-18-523 Aircraft Carrier Dismantlement and Disposal

Evaluation develops independent cost estimates for major defense 

programs.

As noted earlier, the Navy continues to refine its cost estimate of the 

naval shipyard option and expects to receive an estimate for the full 

commercial option from the Center for Naval Analyses in October 2018. 

The Navy stated it considers the anticipated cost estimate and model 

from the Center for Naval Analyses to be the independent cost estimate 

for the full commercial option. We view this estimate as a valuable step in 

establishing cost expectations for the full commercial option, but believe it 

is inadequate because it will determine the Navy’s cost expectations as 

opposed to validating an existing estimate—the intent of having an 

independent assessment. For the naval shipyard option, the Navy 

suggested no plans for an independent cost estimate as it continues to 

refine the current cost estimate prior to a decision for CVN 65. 

Completing an independent cost estimate for both CVN 65 options prior 

to a Navy decision on its dismantlement and disposal approach would 

provide additional information to inform a decision that could have 

repercussions for carrier dismantlement and disposal activities for years 

to come. Adapting certain acquisition program requirements to the CVN 

65 effort, as described above, would help the Navy establish baselines 

that can be tracked by decision makers to assess cost and schedule, and 

help identify deviations, if any. These types of reporting requirements 

would provide decision makers with greater information to support their 

oversight and hold the Navy accountable for meeting CVN 65 

dismantlement and disposal expectations.

The regulatory authority determines the rules, procedures, and oversight 

that will guide the dismantlement and disposal process for CVN 65. The 

Navy is considering three regulatory authority scenarios related to the 

naval shipyard or full commercial options, as discussed in table 4.

The Navy’s 

Evaluation of CVN 65 

Dismantlement and 

Disposal Options Is 

Hampered by a 

Regulatory Authority 

Disagreement
Page 30 GAO-18-523 Aircraft Carrier Dismantlement and Disposal

Table 4: Regulatory Authority Scenarios Being Considered by the Navy for Nuclear-Related CVN 65 Dismantlement and 

Disposal Activities

Regulatory authority Description of scenario

Naval shipyard 

option

Naval Reactors Naval Reactors serves as regulatory authority for dismantlement and disposal 

managed by Puget Sound Naval Shipyard.

Many existing shipyard oversight organizations and activities to assist Naval 

Reactors with its oversight based on extensive experience (about 130 reactors 

dismantled and disposed of at shipyard).

Full commercial 

option

Nuclear Regulatory 

Commission (NRC) or 

agreement statea

Naval Reactors officials view ship dismantlement and disposal as similar to its other 

nuclear-related processing and disposal activities, and believe NRC or a state 

should be able to serve as regulatory authority.

NRC asserts it does not have regulatory authority for naval nuclear propulsion 

waste, nor would a state.

Continued pursuit of the full commercial option without resolving this disagreement 

could present challenges for

• ensuring accountability for safe dismantlement and disposal;

• business case analysis used to examine costs, benefits, and risks;

• Navy and industry cost estimates; and

• industry workload and schedule estimates.

Full commercial 

option

Naval Reactors Naval Reactors lacks experience, organizational structure, and practices to draw 

upon for nuclear-related dismantlement and disposal work performed by industry.

Naval Reactors would need to establish new roles and responsibilities for oversight 

which it has typically done through naval shipyard support.

Source: GAO analysis of Naval Reactors and NRC information. | GAO-18-523

a

NRC is authorized to enter into agreements where it relinquishes authority to states—referred to as 

agreement states—which then assume regulatory authority over certain nuclear materials.

If the Navy chooses the naval shipyard option, it can rely on Naval 

Reactors’ extensive experience serving as the regulatory authority for 

dismantlement activities conducted at Puget Sound Naval Shipyard. 

Naval Reactors has overseen the dismantlement and disposal of roughly 

130 reactors from submarines and cruisers by the naval shipyard. Many 

shipyard oversight organizations and activities, as well as on-site Naval 

Reactors personnel, help control environmental and human health 

exposures. For example, the Radiological Controls Office is responsible 

for monitoring radiation exposure to the workforce and ensuring 

radioactivity is confined to controlled work areas. The Nuclear Quality 

Division employs nuclear auditors who review performance, processes, 

and instructions for all nuclear work at the shipyard.

Although the scale and design of CVN 65 creates some unique 

dismantlement and disposal considerations as compared to the 

The Navy Has Regulatory 

Precedent for the Naval 

Shipyard Option
Page 31 GAO-18-523 Aircraft Carrier Dismantlement and Disposal

submarine and cruiser activities, Navy officials stated they plan to use the 

same organizations located at the shipyard and practices to oversee 

performance if they decide to complete the CVN 65 work at the shipyard. 

The environmental impact statement planned for CVN 65 is expected to 

outline the different needs that the aircraft carrier presents for the 

dismantlement process and disposal path, such as changes related to the 

transportation of CVN 65 reactor packages required if the Navy chooses 

to use four larger dual reactor compartment disposal packages instead of 

eight single packages to dispose of the carrier’s reactors. While the Navy 

can rely on familiar regulatory practices to support the naval shipyard 

option, as discussed earlier, this option includes potential workload and 

schedule disadvantages.
Page 32 GAO-18-523 Aircraft Carrier Dismantlement and Disposal

Naval Reactors’ position is that a commercial company could dismantle 

and dispose of CVN 65 under the regulatory authority of NRC or an 

agreement state. According to Naval Reactors officials, the full 

commercial option would represent a continuation of Naval Reactors’ long 

history of nuclear-related activities with vendors licensed and regulated by 

NRC or agreement states. For example, Naval Reactors officials noted 

they commonly have used facilities licensed by NRC or agreement states 

for a range of manufacturing, processing, and disposal activities available 

for naval nuclear materials. Naval Reactor officials specifically assert that, 

as CVN 65 has already been defueled, such a facility should be able to 

process the byproduct material on the ship.20 However, NRC stated its 

disagreement that it or an agreement state is able to serve as the 

regulatory authority for CVN 65, emphasizing that regulatory responsibility 

for the safe processing and disposal of Navy ships falls to Naval Reactors 

under its Department of Energy authority. NRC officials also noted that 

Naval Reactors has been regulating nuclear-powered ship dismantlement 

and disposal activities exclusively at Puget Sound Navy Shipyard for 

decades. 

Coordination between Naval Reactors and NRC to identify the applicable 

regulatory authority and establish a regulatory plan for the CVN 65 full 

commercial option would help ensure accountability for safe 

dismantlement and disposal of CVN 65 under the full commercial option. 

It would also enable the Navy and commercial companies to effectively 

estimate costs. Without a resolution, the Navy could face challenges in 

estimating the cost and completing a comprehensive business case 

analysis of costs, benefits, and risks for the full commercial option if it is 

unsure of which regulatory authority will be responsible for enforcement. 

Furthermore, companies with potential interest in the CVN 65 work may 

not be able to effectively estimate the workload and associated cost 

without a clearly identified regulatory authority. Resolution of this 

disagreement also has relevance for other future ship dismantlement and 

disposal activities, such as with the Surface Ship Support Barge in the 

near term and the Nimitz-class aircraft carriers in the long term.

 20Byproduct material includes certain material made radioactive by exposure to the 

operation of a nuclear reactor.

Disagreement Persists 

about the Appropriate 

Regulatory Authority for 

the Full Commercial 

Option

Agreement State Program

The Atomic Energy Act gives the Nuclear 

Regulatory Commission (NRC) authority over 

domestic industrial, medical, and research 

uses of radioactive materials. The act also 

authorizes NRC to enter into agreements with 

states (called agreement states) so they 

assume, and NRC relinquishes, regulatory 

authority over specified radioactive materials. 

Specifically, NRC is authorized to enter into 

agreements to allow states to assume 

regulatory authority over source, byproduct, 

and special nuclear materials in quantities 

insufficient to form a critical mass. NRC must 

find a state program adequate to protect 

public health and safety and compatible with 

NRC’s program for regulating such materials 

before entering into these agreements. The 

mechanism for the transfer of NRC's authority 

to a state is an agreement signed by the 

governor of the state and the chair of the 

Commission.

Map of Agreement States

Source: GAO (data); MapResources (map). | GAO-18-523
Page 33 GAO-18-523 Aircraft Carrier Dismantlement and Disposal

Naval Reactors’ Position

Naval Reactors could use its own authority to regulate a full commercial 

dismantlement of CVN 65. Naval Reactors officials stated, however, that 

NRC or agreement states—which regulate industrial, medical, and 

research uses of radioactive materials—also have authority to regulate 

commercial dismantlement and disposal of CVN 65, and the Navy would 

benefit from leveraging their regulatory experience and structure. In 

particular, Naval Reactors officials stated that for the full commercial 

option, their responsibility to provide for processing and disposal of the 

byproduct material—which Naval Reactors indicated is what remains on 

CVN 65—can be best met by contracting with commercial companies 

licensed by NRC or an agreement state.21

According to Naval Reactors officials, even if NRC maintains that it 

cannot regulate material from CVN 65, some states may do so under their 

own authority. Specifically, Naval Reactors’ position is that states that had 

agreements with the old Atomic Energy Commission prior to its 

abolishment and the creation of NRC in 1974 were granted—and 

continue to maintain—authority to process naval nuclear propulsion 

waste. Accordingly, Naval Reactors officials stated that these states could 

serve as the sole regulatory authority over commercially-performed CVN 

65 dismantlement and disposal.

Naval Reactors officials also asserted specific potential advantages of 

having NRC or an agreement state regulate commercial dismantlement 

and disposal of CVN 65. First, they said the regulatory structure that NRC 

and agreement states apply to commercial nuclear-related activities 

includes an enforcement process to impose fines for violations, which 

Naval Reactors does not have.

22

 21The Atomic Energy Act authorizes the Atomic Energy Commission to provide for safe 

processing and disposal of waste resulting from naval nuclear propulsion programs. When 

the Atomic Energy Commission was abolished, NRC received its licensing and related 

regulatory functions while all other authorities generally devolved to the Department of 

Energy. Because the Navy’s use of CVN 65 is exempt from licensing by NRC, the 

Department of Energy bears the responsibility to provide for its processing and disposal. 

As a joint program of the Department of Energy and the Navy, Naval Reactors carries out 

this responsibility for the Department of Energy.

22In reviewing a draft of this report, DOD commented that Naval Reactors has the 

authority, deriving from the Department of Energy, to levy fines under the Price Anderson 

Amendments Act of 1988, but Naval Reactors has chosen not to utilize that authority. See 

42 U.S.C. § 2273(a) (2018).

Navy Surface Ship Support Barge

The Surface Ship Support Barge is a 

dockside refueling facility constructed from a 

converted Navy tanker vessel used to 

disassemble spent nuclear fuel for shipment 

within a water pool. Naval Reactors noted this 

facility is now obsolete, with no further use 

planned, and the Navy is interested in 

dismantling and disposing of it commercially. 

According to Naval Reactors officials, the 

barge contains very low radioactivity in the 

water pool and fluid systems, which requires 

appropriate dismantlement and disposal 

measures. 

The Navy halted its pursuit of a contract 

award to dismantle and dispose of the barge 

in early 2017 based on NRC formally stating 

it has no regulatory authority over the 

dismantlement and disposal of naval vessels. 

A Naval Reactors official stated a request for 

information may be issued in 2018 to solicit 

input from commercial companies for 

dismantlement and disposal of this barge, but 

plans remain unsettled. 

Source: GAO analysis of Navy information. | GAO-18-523
Page 34 GAO-18-523 Aircraft Carrier Dismantlement and Disposal

Additionally, Naval Reactors officials noted the Navy’s contract strategy 

options could be improved if NRC or an agreement state serves as the 

regulatory authority for CVN 65. Specifically, they stated that a reason for 

the Navy’s interest in using NRC or agreement state authority is the 

possibility of emulating the firm-fixed-price contract currently being used 

to decommission a commercial nuclear power plant. In this example, the 

operating license was transferred from the utility that owns the plant and 

site to a dismantlement contractor to more quickly complete the 

decommissioning. This effectively gave a dismantlement and disposal 

company the power plant owner’s responsibility for the safe 

dismantlement and disposal of the power plant, with NRC continuing to 

act as the regulatory authority. According to Naval Reactors, the firmfixed-price contract used in this case was viable because the 

dismantlement contractor had total responsibility independent of the plant 

owner to perform the work in accordance with the regulations and 

requirements of NRC. Naval Reactors officials stated that the firm-fixedprice contract created an incentive for the company to thoroughly 

understand what the work entailed and perform the work efficiently to 

maximize its profit.

Naval Reactors officials stated that a total separation of the owner from 

regulatory decisions and interpretations, like the one currently being used 

for the commercial nuclear power plant, is the Navy’s best means to 

facilitate the potential use of a firm-fixed-price dismantlement contract for 

CVN 65. They further stated that an approach wherein Naval Reactors 

retained regulatory authority could undercut the prospect of a firm-fixedprice contract by eliminating the clear division between regulator and 

owner. In taking this position, Naval Reactors officials suggest that a 

conflict of interest exists in being both the owner who wants to establish a 

fixed price for the work as well as the regulator with the potential to affect 

costs. Naval Reactors officials also noted that if Naval Reactors were the 

regulator, with no experience in regulating this type of work, commercial 

companies could have difficulty pricing such regulatory risk. In contrast, 

they stated that in NRC-regulated commercial plant dismantlement, as 

well as agreement state-regulated, large-scale radioactive waste 

processing work, commercial companies have demonstrated that they are 

willing to accept this regulatory risk, agreeing to contracts on a fixed-price 

basis.

Nuclear Regulatory Commission’s Position

In February 2017, NRC formally stated its position in a letter responding 

to a congressional inquiry that it has no regulatory authority for Navy 
Page 35 GAO-18-523 Aircraft Carrier Dismantlement and Disposal

ships, such as CVN 65. NRC said that under the Atomic Energy Act it is 

the responsibility of the Department of Energy, and accordingly Naval 

Reactors, to provide for processing and disposal of naval nuclear 

propulsion waste.23 NRC stated that agreement states also lack 

jurisdiction because their authority derives from NRC’s authority. NRC 

officials we interviewed also disputed Naval Reactors’ position that states 

have independent authority to process naval nuclear propulsion waste for 

two reasons. First, they stated that regulation of reactor dismantlement is 

not an activity that can be relinquished to the states.24 Second, they 

pointed out that the authorities that can be relinquished to the states 

under the Atomic Energy Act are licensing activities conducted under 

specific provisions of the act, and that the responsibility to safely process 

and dispose of naval nuclear propulsion waste is conducted under a 

different set of provisions which are not subject to licensing.25

NRC officials acknowledged that naval nuclear propulsion waste has 

been processed at facilities licensed by NRC or an agreement state, but 

distinguished such examples from CVN 65. Specifically, they noted that 

no additional regulatory oversight was required to process incidental 

amounts of such waste at facilities licensed to process commercial waste, 

but CVN 65 is not licensed by NRC or an agreement state and would 

involve only naval nuclear propulsion waste. NRC officials emphasized 

that the additional work that would be required to regulate the 

dismantlement of CVN 65—an unlicensed facility—puts it beyond NRC’s 

jurisdiction. Additionally, NRC stated that while such work could be 

 23As noted previously, this Department of Energy Authority has been delegated to Naval 

Reactors by Executive Order 12344.

24The Atomic Energy Act prohibits relinquishment to states of authorities associated with 

the construction and operation of nuclear reactors, and NRC’s position is that 

dismantlement would constitute construction and/or operation. Naval Reactors contends 

that CVN 65’s reactors have been rendered inoperable by the defueling and deactivation 

process to the extent that they no longer constitute reactors.

25The Atomic Energy Act allows for the relinquishment to states of authorities in chapters 

6, 7, and 8 of the act related to licensing byproduct materials, source materials, and 

special nuclear materials in quantities not sufficient to form a critical mass. Naval 

Reactors’ responsibility to provide for the safe processing and disposal of naval propulsion 

waste is located in chapter 9 of the act and is not subject to the licensing requirements of 

the act. The act also allows for the relinquishment of authorities under section 161 of the 

act, and section 161(b) of the act authorizes the establishment of standards governing the 

possession of byproduct material without regard to licensing. However, neither Naval 

Reactors nor NRC had analyzed the extent to which this provision was previously used by 

the Atomic Energy Commission or could be used by Naval Reactors to delegate authority 

to states over naval nuclear propulsion waste. 
Page 36 GAO-18-523 Aircraft Carrier Dismantlement and Disposal

carried out by a contractor, including a contractor with an NRC or 

agreement state license, the work would not be covered by that license, 

as NRC and agreement states do not have authority to regulate such 

activity. Essentially, NRC’s position is that while Naval Reactors can 

contract to have the dismantlement and disposal performed by a 

commercial entity, Naval Reactors would retain its own regulatory 

responsibility for enforcing that contract.

NRC stated that if Naval Reactors desired technical support in regulating 

a commercial dismantlement, NRC or an agreement state could provide 

such services through a contract. This approach, according to NRC 

officials, would offer Naval Reactors a regulatory consultant familiar with 

commercial dismantlement while maintaining Naval Reactors as the 

regulatory enforcement authority. In such an arrangement, NRC or an 

agreement state could identify regulatory concerns, but Naval Reactors 

would be responsible for determining what corrective action is taken to 

address those concerns. Naval Reactors officials stated they are in 

ongoing discussions with NRC about this potential approach. They also 

asserted that this potential approach is not optimal because, as 

previously discussed, it could create regulatory uncertainty for 

commercial companies by preventing a clear separation of the regulator 

and owner.

Since Naval Reactors has its own authority as part of the Department of 

Energy, it could choose to regulate a CVN 65 commercial dismantlement. 

However, with Puget Sound Naval Shipyard having performed the 

dismantlement and disposal work for previous nuclear-powered vessels, 

Naval Reactors lacks experience to draw upon for a full commercial 

option. It also cannot rely on the organizational structure and practices in 

place at Puget Sound Naval Shipyard to support a commercial CVN 65 

dismantlement that will be conducted at an offsite facility. If Naval 

Reactors serves as the regulatory authority for a full commercial 

dismantlement, it will have to determine what mechanisms are needed to 

provide sufficient monitoring of the work and how they will fulfill the roles 

and responsibilities typically filled by the naval shipyard’s support. These 

mechanisms may include elements similar to those used by the naval 

shipyard as well as new ones unique to the dismantlement practices used 

by commercial companies.

A significant consideration for Naval Reactors when working to establish 

an approach to monitor commercial dismantlement and disposal is the 

component-based dismantlement process that companies may use. This 

Naval Reactors Lacks 

Regulatory Experience 

and Structure for 

Commercial 

Dismantlement and 

Disposal
Page 37 GAO-18-523 Aircraft Carrier Dismantlement and Disposal

process, which is commonly used to dismantle commercial nuclear power 

reactors, involves segmenting reactor components (i.e., cutting to reduce 

in size) so the pieces can be put in standardized containers for transport 

and disposal. This process is a contrast to the traditional dismantlement 

approach that Nuclear Reactors uses at Puget Sound Naval Shipyard—

an approach that would leave CVN 65’s reactors largely intact by 

encasing them in packages for disposal. As noted by Naval Reactors 

officials, commercial dismantlement practices potentially could require the 

Navy to decide whether to adjust its standard radiological work practices 

to better align with different dismantlement and disposal activities or use 

the same practices it uses for work performed at Puget Sound Naval 

Shipyard. Using the same practices could affect cost expectations for the 

Navy and commercial companies by changing the way the work is 

performed. As an example, applying the Navy’s standard practices for 

total containment of radionuclides to a dismantlement process that 

involves increased cutting could require additional measures to control 

the work environment.

Over 50 years ago, CVN 65 set a precedent as the Navy’s first nuclearpowered aircraft carrier. The Navy’s plans and decisions for this aircraft 

carrier’s dismantlement and disposal represent an opportunity to create a 

standard that the Navy may use for decades to come as the Nimitz-class 

carriers enter retirement. As the Navy considers how to proceed, it will be 

critical to ensure that there is sufficient oversight and accountability for 

what likely will be an effort greater than $1 billion that lasts the better part 

of a decade. Since budget exhibits are a primary tool to aid Congress in 

making well-informed funding decisions, without additional details, 

transparency and the ability to assess CVN 65 progress could be limited. 

In particular, a more robust budget exhibit for CVN 65 that includes cost 

and schedule information across the Future Years Defense Program, as 

well as the status of activities—including any contract awards and a 

tracking of high level changes in cost and schedule—could help increase

transparency for oversight.

Reporting requirements for DOD acquisition programs, which are not 

required or currently planned for CVN 65 dismantlement and disposal, 

provide examples of the types of information that decision makers can 

use to ensure that resource-intensive programs are meeting expectations 

or make changes as necessary. Without establishing a cost and schedule 

baseline that has been validated by an independent cost estimate or 

assessment, it will be difficult for decision makers to track cost and 

schedule performance or have confidence in CVN 65 costs. The Navy 

Conclusions
Page 38 GAO-18-523 Aircraft Carrier Dismantlement and Disposal

has indicated it is receptive to providing additional information to support 

oversight that is commensurate with other Navy programs of a similar 

funding level. However, the Navy also stated that it requires clear 

direction from DOD leadership or Congress on what additional 

accountability measures are desired before it would make any changes to 

current budget exhibits and reporting.

Naval Reactors is charged with cradle-to-grave responsibility for our 

nation’s naval nuclear propulsion material. The disagreement between 

Naval Reactors and NRC about the regulatory authority for commercial 

dismantlement and disposal of Navy nuclear ships persists. Coordination 

between the two agencies to identify the applicable regulatory authority 

for a full commercial dismantlement and disposal of CVN 65 and to 

develop a regulatory plan would help establish which practices and 

standards will apply to uphold nuclear safety and security. It would also 

help ensure the Navy’s selection of a dismantlement and disposal plan for 

CVN 65 is informed by well understood regulatory expectations and cost 

and schedule estimates that reflect those expectations.

We are making one matter for congressional consideration.

Congress should consider requiring Naval Reactors to coordinate with the 

Nuclear Regulatory Commission for any CVN 65 dismantlement and 

disposal performed commercially to identify the applicable regulatory 

authority. In the event that an entity other than Naval Reactors will serve 

as the regulatory authority, Naval Reactors should submit to Congress a 

plan that identifies the regulatory authority for CVN 65 activities, and 

includes acknowledgement from that regulatory entity of its agreement 

with Naval Reactors and the legal basis for its authority. If the regulatory 

entity is an agreement state, such acknowledgment should be 

coordinated with the Nuclear Regulatory Commission. (Matter 1)

We are making the following four recommendations to DOD.

The Secretary of Defense should ensure that the Navy provides 

additional information in the annual President’s budget exhibits 

associated with CVN 65 dismantlement and disposal to facilitate 

improved transparency and accountability. Additions should, at a 

minimum, include the CVN 65 funding estimate across the Future Years 

Defense Program, activities planned or performed for applicable fiscal 

years, tracking of total cost and high level changes in cost and schedule 

Matter for 

Congressional 

Consideration

Recommendations for 

Executive Action
Page 39 GAO-18-523 Aircraft Carrier Dismantlement and Disposal

from the prior year with explanations for changes, and if applicable, 

contract type, awardee, award value, and award and completion date 

estimates. (Recommendation 1)

The Secretary of Defense should require the Navy to obtain an 

independent cost estimate, performed by DOD’s Office of Cost Analysis 

and Program Evaluation or the Naval Center for Cost Analysis, for both 

the naval shipyard and full commercial options before choosing a 

dismantlement and disposal approach for CVN 65. (Recommendation 2)

The Secretary of Defense should require the Navy to complete a risk 

management plan prior to beginning the CVN 65 dismantlement and 

disposal. (Recommendation 3)

The Secretary of Defense should require the Navy to approve a cost and 

schedule baseline prior to beginning the CVN 65 dismantlement and 

disposal. (Recommendation 4)

We provided a draft of this report to DOD and NRC for comment. Both 

DOD and NRC agreed with the draft report and its findings, and DOD 

concurred with the four recommendations we directed to the department. 

DOD and NRC provided written comments, which have been reproduced 

in appendix II and appendix III, respectively. DOD and NRC also provided 

technical comments, which we incorporated as appropriate.

We are sending copies of this report to the appropriate congressional 

committees; the Secretary of Defense, the Secretary of the Navy, the 

Nuclear Regulatory Commission, and other interested parties. This report 

will also be available at no charge on GAO’s website at 

http://www.gao.gov.

Agency Comments
Page 40 GAO-18-523 Aircraft Carrier Dismantlement and Disposal

If you or your staff members have any questions regarding this report, 

please contact me at (202) 512-4841 or oakleys@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 key 

contributions to the report are listed in appendix IV.

Shelby S. Oakley

Director, Contracting and National Security Acquisitions
Page 41 GAO-18-523 Aircraft Carrier Dismantlement and Disposal

List of Committees

The Honorable John McCain

Chairman

The Honorable Jack Reed

Ranking Member

Committee on Armed Services

United States Senate

The Honorable Richard Shelby

Chairman

The Honorable Dick Durbin

Ranking Member

Subcommittee on Defense

Committee on Appropriations

United States Senate

The Honorable Mac Thornberry

Chairman

The Honorable Adam Smith

Ranking Member

Committee on Armed Services

House of Representatives

The Honorable Kay Granger

Chairwoman

The Honorable Pete Visclosky

Ranking Member

Subcommittee on Defense

Committee on Appropriations

House of Representatives
Appendix I – Objectives, Scope, and 

Methodology

Page 42 GAO-18-523 Aircraft Carrier Dismantlement and Disposal

This report (1) describes the differences between the dismantlement and 

disposal options under consideration, including cost and schedule as well 

as workload and facilities; (2) evaluates the Navy’s funding and reporting 

practices for dismantlement and disposal activities; and (3) assesses the 

effect that nuclear regulatory authority considerations have on

dismantlement and disposal options for CVN 65.

To identify the differences between the potential CVN 65 dismantlement 

and disposal options, we reviewed Navy documentation on prior, ongoing, 

and future dismantlement and disposal activities, as well as information 

related to the different options the Navy has considered or is considering 

for CVN 65. We interviewed Navy officials and reviewed documentation 

from the Naval Sea Systems Command, which includes Naval Reactors, 

and Puget Sound Naval Shipyard and Intermediate Maintenance Facility 

(hereafter referred to as Puget Sound Naval Shipyard). To obtain an 

understanding of the full commercial dismantlement and disposal 

approach, including work practices and potential work sites, we 

interviewed officials and reviewed documentation from commercial 

companies that the Navy identified as having involvement in shipbreaking 

or nuclear-related industries and potential interest in CVN 65. These 

companies include Atkins Global; EnergySolutions; Huntington Ingalls 

Industries (HII – Nuclear); International Shipbreaking Limited; NorthStar 

Group Services; and Waste Control Specialists.

For CVN 65 cost and schedule estimates, the Navy considers all 

estimates to still be preliminary because the Navy has yet to formally 

begin the environmental impact statement process and remains years 

away from a decision on its dismantlement and disposal approach. As a 

result, we did not formally evaluate the reasonableness of any cost or 

schedule estimates. However, we did review the initial estimates to gain 

insight on historical and current cost expectations. To assess the Navy’s 

preliminary cost estimates for the naval shipyard option, we reviewed 

Navy data on the basis for the cost estimates, particularly estimates since 

2011. This included reviewing the cost factors that contributed to each 

estimate to understand how the shipyard’s increasing knowledge of CVN 

65’s ship characteristics and changes to the planned dismantlement 

approach fed into the different estimates. For the Navy’s notional cost 

estimate of the CVN 65 full commercial option, we reviewed the data and 

approach used by the Navy to develop initial cost information. This 

included commercial decommissioning data, which the Navy used to 

establish a rough order of magnitude cost estimate based on the limited 

information available that is comparable to CVN 65 dismantlement and 

disposal.

Appendix I – Objectives, Scope, and 

Methodology
Appendix I – Objectives, Scope, and 

Methodology

Page 43 GAO-18-523 Aircraft Carrier Dismantlement and Disposal

We used the same data to generate our own notional estimated cost 

range based on a Nuclear Regulatory Commission (NRC) cost formula, 

as well as published data from the Organisation for Economic Cooperation and Development’s Nuclear Energy Agency. This included 

analysis of costs reported by operating power reactor licensees in NRC’s 

2015 decommissioning funding status report to comply with 

decommissioning financial assurance reporting requirements. Our review 

of historical data from the Nuclear Energy Agency and a 2011 report on 

nuclear decommissioning by an independent panel established by the 

California Public Utilities Commission helped us identify cost drivers and 

categories of costs attributed to specific activities that occur when 

decommissioning commercial power plants.

To assess workload and facility considerations related to CVN 65, we 

analyzed Puget Sound Naval Shipyard workload and resource 

requirements data for fiscal years 2006 through 2025, and facility data for 

fiscal years 2018 through 2035. To assess the reliability of these data, we 

interviewed knowledgeable officials and reviewed documentation to verify 

the controls and measures used to validate and maintain the data. We 

determined these data to be reliable for our purposes of discussing the 

existing and planned workload at Puget Sound Naval Shipyard. We 

compared projections to actual workload when available to identify 

differences and compared the average amount of annual projected 

workload to the average amount of annual projected workforce available. 

We also reviewed a 2018 report on the Navy’s strategic plan for 

addressing the infrastructure deficiencies at the public naval shipyards as 

well as the Navy’s long-range shipbuilding plans for fiscal years 2011, 

2016, and 2019. Additionally, we reviewed past GAO reports that 

addressed operation and maintenance activities at naval shipyards, and 

the related workload demands and facilities’ requirements.1

To identify the Navy’s funding and reporting practices for dismantlement 

and disposal activities, we reviewed Navy documentation on prior, 

ongoing, and future ship dismantlement and disposal activities, as well as 

Navy procurement and operation and maintenance budget exhibits—

fiscal years 2016 and 2017 for procurement exhibits and fiscal years 2007 

through 2017 for operation and maintenance budget exhibits. We also 

 1

GAO, Naval Shipyards: Actions Needed to Improve Poor Conditions that Affect 

Operations, GAO-17-548 (Washington, D.C.: Sept. 12, 2017) and Depot Maintenance: 

Executed Workload and Maintenance Operations at DOD Depots, GAO-17-82R 

(Washington, D.C.: Feb. 3, 2017).
Appendix I – Objectives, Scope, and 

Methodology

Page 44 GAO-18-523 Aircraft Carrier Dismantlement and Disposal

reviewed Federal Acquisition Regulations, Office of Management and 

Budget guidance on budget information, and the Department of Defense 

and Navy acquisition regulations. We interviewed officials from Naval 

Reactors and the Program Executive Office for Aircraft Carriers. Based 

on these efforts, we evaluated the Navy’s historical approach for funding, 

conducting oversight, and reporting on dismantlement and disposal 

activities. We assessed the Navy’s approach against federal standards 

for internal control.2 Additionally, we assessed how funding and typical 

reporting requirements for Department of Defense acquisition programs 

align with the potential need to facilitate oversight for CVN 65 

dismantlement and disposal.

To determine the effect that nuclear regulatory authority considerations 

have on dismantlement and disposal for CVN 65, we examined applicable 

laws, regulations, executive orders, policies, and guidance documents 

related to nuclear-powered ships. We also reviewed past GAO reports 

related to environmental and nuclear requirements.3 We reviewed Navy 

documentation on prior, ongoing, and future ship dismantlement and 

disposal activities. We also interviewed officials and reviewed 

documentation from Naval Reactors; the Assistant Secretary of the Navy 

for Energy, Installations, and Environment; the Chief of Naval Operations 

Environmental Readiness Division; the Program Executive Office for 

Aircraft Carriers; Puget Sound Naval Shipyard; and the Nuclear 

Regulatory Commission. Additionally, we interviewed officials from the 

Washington State Departments of Health and Ecology, the Texas 

Commission on Environmental Quality, and the Texas Department of 

State Health Services—two states in which ship dismantlement activities 

have recently occurred and that have nuclear waste disposal sites.

We conducted this performance audit from August 2017 to August 2018 

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 

 2

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

(Washington, D.C.: September 2014).

3

GAO, Nuclear Regulatory Commission: Regulatory Fee-Setting Calculations Need 

Greater Transparency, GAO-17-232 (Washington, D.C.: Feb. 2, 2017); Nuclear Security: 

NRC Has Enhanced the Controls of Dangerous Radioactive Materials, but Vulnerabilities 

Remain, GAO-16-330 (Washington, D.C.: July 1, 2016); and National Environmental 

Policy Act: Little Information Exists on NEPA Analyses, GAO-14-370 (Washington, D.C.:

Apr. 15, 2014). 
Appendix I – Objectives, Scope, and 

Methodology

Page 45 GAO-18-523 Aircraft Carrier Dismantlement and Disposal

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 46 GAO-18-523 Aircraft Carrier Dismantlement and Disposal

Appendix II – Comments from the 

Department of Defense
Appendix II – Comments from the Department 

of Defense

Page 47 GAO-18-523 Aircraft Carrier Dismantlement and Disposal
Appendix II – Comments from the Department 

of Defense

Page 48 GAO-18-523 Aircraft Carrier Dismantlement and Disposal
Appendix II – Comments from the Department 

of Defense

Page 49 GAO-18-523 Aircraft Carrier Dismantlement and Disposal
Appendix III – Comments from the Nuclear 

Regulatory Commission

Page 50 GAO-18-523 Aircraft Carrier Dismantlement and Disposal

Appendix III – Comments from the Nuclear 

Regulatory Commission
Shelby S. Oakley, (202) 512-4841 or oakleys@gao.gov.

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

were Diana Moldafsky, Assistant Director; Antoinette Capaccio; Kurt 

Gurka; Stephanie Gustafson; Kristine Hassinger; Jean Lee; Sean Merrill; 

LeAnna Parkey; Karen Richey; and Roxanna Sun.

Appendix IV – GAO Contact and Staff 

Acknowledgments

GAO Contact

Staff 

Acknowledgments

(102258)
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