Military Readiness: Navy Needs to Assess Risks to Its Strategy to Improve Ship Readiness
Published: 2012-09-21T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: In 2010, the Navy concluded that decisions it made to increase efficiencies of its surface force had adversely affected ship readiness and service life. To improve ship readiness the Navy developed a new strategy, which includes several initiatives. House Report 112-78, accompanying a proposed bill for the Fiscal Year 2012 National Defense Authorization Act (H.R.1540), directed GAO to review the recent Navy initiatives. GAO assessed 1) how the Navy evaluates the material readiness of its surface combatant and amphibious warfare ships and the extent to which data indicate trends or patterns in the material readiness of these ships, and 2) the extent to which the Navy has taken steps to improve the readiness of its surface combatant and amphibious warfare ships, including implementing its new readiness strategy. GAO analyzed Navy policies, material and readiness data from January 2008two years prior to the release of the Navys 2010 report on the degradation of surface force readinessthrough March 2012, two years after the release of the report, and interviewed headquarters and operational officials and ship crews.
section_title: What GAO Found
paragraphs: Recent data show variations in the material readiness of different types of ships, but do not reveal any clear trends of improvement or decline for the period from 2008 to 2012. The Navy uses a variety of means to collect, analyze, and track the material readiness of its surface combatant and amphibious warfare ships. Three data sources the Navy uses to provide information on the material readiness of ships are: casualty reports, which reflect equipment malfunctions; Defense Readiness Reporting System-Navy (DRRS-N) reports; and Board of Inspection and Survey (INSURV) material inspection reports. These data sources can be viewed as complementary, together providing data on both the current and life cycle material readiness of the surface force. INSURV and casualty report data show that the material readiness of amphibious warfare ships is lower than that of frigates and destroyers. However, there is no clear upward or downward trend in material readiness across the entire Navy surface combatant and amphibious warfare ships. From 2010 to March 2012, INSURV data indicated a slight improvement in the material readiness of the surface combatant and amphibious warfare fleet, but over that period casualty reports from the ships increased, which would indicate a decline in material readiness. DRRS-N data also show differences in material readiness between ship types, but the precise differences are classified and therefore are not included in this report.
The Navy has taken steps to improve the readiness of its surface combatant and amphibious warfare ships, including a new strategy to better integrate maintenance actions, training, and manning, but it faces risks to fully implementing its strategy and has not assessed these risks or developed alternatives to mitigate them. In March 2012, near the end of a year-long pilot, the Navy issued its Surface Force Readiness Manual, which calls for integrating and synchronizing maintenance, training and manning among multiple organizations. The Navy expects this strategy to provide a standard, predictable path for ships to achieve and sustain surface force readiness, but certain factors, such as high operational tempos and supporting organizations staffing levels, could delay the entry of some ships into the strategy and the execution of the strategy. For example, one supporting organization reported needing an additional 680 personnel to fully execute the strategy. As of August 2012, the Navy plans to reflect its funding needs for 410 personnel in its fiscal year 2014 budget request and the remaining 270 in subsequent requests. Also, due to high operational tempos the phased implementation of some ships into the strategy may be delayed. Furthermore, ships that do not execute the strategys maintenance periods as planned will have lifecycle maintenance actions deferred. GAO has previously reported that risk assessment can inform effective program management by helping managers make decisions about the allocation of finite resources, and alternative courses of action. However, the Navy has not undertaken a comprehensive assessment of risks to the implementation of its strategy, nor has it developed alternatives to mitigate its risks. GAO believes operational tempo, supporting organizations staffing levels, and other risks may hinder the Navys full implementation of its surface force readiness strategy. If not addressed, this could lead to deferrals of lifecycle maintenance, which have in the past contributed to increased maintenance costs, reduced readiness, and shorter service lives for some ships.
section_title: What GAO Recommends
paragraphs: GAO recommends that the Navy conduct a comprehensive assessment of the risks the new strategy faces and develop alternatives to mitigate these risks. DOD partially concurred, but felt that current assessments sufficiently identify risks. GAO continues to believe that a comprehensive assessment that takes into account the full range of risk to the overall strategy is needed.

section_title: Letter
paragraphs: In support of national interests, the Navy maintains a large surface force  to meet its current missions and long-term obligations, including ensuring  sea control, projecting power, and providing maritime security. The  Navy’s plan, which is to grow its current fleet of 286 ships to about 300 by  2019, is dependent both on its ability to acquire new ships and to  maintain current ships for their expected service lives. The costs of  procuring new ships and maintaining current ships can both be  significant. For example, the cost of a new destroyer is more than $1.6  billion, and in fiscal year 2011, the Navy spent an average of $11 million  maintaining each of its 62 destroyers. In the past, when faced with the  high costs of maintaining ships’ material conditions and keeping them  mission-ready, the Navy elected to retire ships early—before they  reached their expected service lives. For example, in January 2012, the  Navy announced plans to retire seven cruisers and two amphibious ships  early, in 2013 and 2014. Navy officials later testified that the service  would redirect the savings from these early retirements to fund the  maintenance of its remaining ships.
In 2010, a Navy report found that the material readiness of its surface  force had declined over the previous ten years and was well below the  levels necessary to support reliable, sustained operations at sea and  achieve expected ship service lives. Among other things, the report found  that the declines in material readiness were attributable to reductions in  the number of assessments and inspections, deferrals of scheduled  maintenance, and reductions in the length of major repair periods from 15  to 9 weeks. In response, the Navy developed several maintenance  initiatives and a new readiness strategy that it expects will improve the  material condition of its ships and help them achieve their expected  service lives. The strategy and initiatives are in various stages of  implementation.
In House Report 112-78, accompanying a bill for the Fiscal Year 2012  National Defense Authorization Act (H.R. 1540), the House Armed  Services Committee directed GAO to review the Navy’s initiatives to  improve the material condition of its surface ship fleet. This report  analyzes 1) how the Navy evaluates the material readiness of its surface  combatant and amphibious warfare ships and the extent to which data  indicate trends or patterns in the material readiness of these ships, and 2)  the extent to which the Navy has taken steps intended to improve the  readiness of its surface combatant and amphibious warfare ships,  including efforts to implement its recent strategy.
To address our first objective, we analyzed Navy policies and procedures  for determining surface force material readiness, as well as various  studies and reports on the Navy’s material readiness process. We also  interviewed officials from Navy commands that are responsible for  maintaining, assessing, evaluating, and inspecting the material condition  of the Navy’s surface ships. In addition, we analyzed readiness,  maintenance, and inspection data to determine any changes in readiness  from 2008—two years prior to the release of the Navy’s 2010 report on  the degradation of surface force readiness—through March 2012, two  years after the release of the report. Specifically, we analyzed data for the  Navy’s guided-missile cruisers (CG 47 class), guided-missile destroyers  (DDG 51 class), frigates (FFG 7 class), amphibious assault ships (LHA 1  and LHD 1 classes), amphibious transport dock ships (LPD 4 and LPD 17  classes), and dock landing ships (LSD 41 and LSD 49 classes). To  address our second objective, we reviewed relevant Navy instructions on  Navy material readiness, including the Navy’s Surface Force Readiness  Manual, and prior GAO work on risk management. We also interviewed  Navy training and maintenance officials to discuss how the Navy is  implementing its new readiness strategy. Finally, we met with ship  personnel to discuss possible challenges in implementing the new  readiness strategy and efforts.
We conducted this performance audit from July 2011 to September 2012  in accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives. We discuss our scope and  methodology in more detail in appendix I.
subsections: section_title: Background
paragraphs: The Navy’s fleet includes aircraft carriers, cruisers, destroyers, frigates,  littoral combat ships, submarines, amphibious warfare, mine warfare,  combat logistics, and fleet support ships. Our review focused on surface  combatant and amphibious warfare ships, which constitute slightly less  than half of the total fleet. Table 1 shows the classes of surface ships we  reviewed along with their numbers, expected service lives, and current  average ages.
Figure 1 shows the administrative chain of command for Navy surface  ships. The U.S. Pacific Fleet and U.S. Fleet Forces Command organize,  man, train, maintain, and equip Navy forces, develop and submit budgets,  and develop required and sustainable levels of fleet readiness, with U.S.
Fleet Forces Command serving as the lead for fleet training requirements  and policies to generate combat-ready Navy forces. The Navy’s surface  type commanders—Commander, Naval Surface Force, U.S. Pacific Fleet  and Commander, Naval Surface Force,  Atlantic have specific  responsibilities for the maintenance, training, and readiness of their  assigned surface ships.
To meet the increased demands for forces following the events of  September 2001, the Navy established a force generation model—the  Fleet Response Plan—and in August 2006 the Navy issued a Fleet  Response Plan instruction. The plan seeks to build readiness so the  Navy can surge a greater number of ships on short notice while  continuing to meet its forward-presence requirements. As depicted in  table 2, there are four phases in the Fleet Response Plan 27-month cycle  that applies to surface combatant and amphibious warfare ships. The four  Fleet Response Plan phases are (1) basic, or unit-level training; (2)  integrated training; (3) sustainment (which includes deployment); and (4)  maintenance.
In September 2009, the Commanders of U.S. Pacific Fleet and U.S. Fleet  Forces directed Vice Admiral Balisle, USN-Ret., to convene and lead a  Fleet Review Panel to assess surface force readiness. The Panel issued  its report in February 2010. It stated that Navy decisions made to  increase efficiencies throughout the fleet had adversely affected surface  ship current readiness and life cycle material readiness. Reducing  preventative maintenance requirements and the simultaneous cuts to  shore infrastructure were two examples of the detrimental efficiencies  cited in the report. The report also stated that if the surface force stayed  on the present course, surface ships would not reach their expected  service lives. For instance, it projected that destroyers would achieve 25- 27 years of service life instead of the 35-40 years expected. The report  concluded that each decision to improve efficiency may well have been  an appropriate attempt to meet Navy priorities at the time, but there was  limited evidence to identify any changes that were made with surface  force readiness as the top priority—efficiency was sought over  effectiveness. The Fleet Review Panel made several maintenance,  crewing, and training recommendations that it stated should be  addressed not in isolation but as a circle of readiness. According to the  report, it will take a multi-faceted, systematic solution to stop the decline  in readiness, and begin recovery.
We have previously reported on the Navy’s initiatives to achieve greater  efficiencies and reduce costs. In June 2010, we issued a report regarding  the training and crew sizes of cruisers and destroyers. In it we found that  changes in training and reductions in crew sizes had contributed to  declining material conditions on cruisers and destroyers. We  recommended that the Navy reevaluate its ship workload requirements  and develop additional metrics to measure the effectiveness of Navy  training. DOD agreed with these recommendations. Also, in July 2011  we reported on the training and manning information presented in the  Navy’s February 2011 report to Congress regarding ship readiness. The  Navy’s report included information on ships’ ability to perform required  maintenance tasks, pass inspection, and any projected effects on the  lifespan of individual ships. We concluded that the Navy’s report did not  provide discussion of data limitations or caveats to any of the information  it presented, including its conclusions and recommendations. However,  we found that the Navy did outline specific actions that it was taking or  planned to take to address the declines in readiness due to manning and  crew changes.
In January 2011, the commanders of U.S. Fleet Forces Command and  U.S. Pacific Fleet jointly instructed their type commanders to develop a  pilot program to “establish a sequenced, integrated, and building block  approach” to achieve required readiness levels. This pilot program began  in March 2011, and in March 2012, near the end of the pilot, the Navy  issued its Surface Force Readiness Manual, which details a new strategy  for optimizing surface force readiness throughout the Fleet Response  Plan. The strategy calls for integrating and synchronizing maintenance, training, and resources among multiple organizations such as Afloat  Training Groups and Regional Maintenance Centers.
section_title: Data Indicate Differences in Material Readiness Between Ship Types, but Do Not Reveal Readiness Trends Due to Limitations in the Data
paragraphs: For the period from 2008 to 2012, available data show variations in  material readiness between different types of ships—such as material  readiness differences between amphibious warfare ships and surface  combatants—but data limitations prevent us from making any conclusions  concerning improvements or declines in the overall readiness of the  surface combatant and amphibious warfare fleet during the period.  Through a variety of means and systems, the Navy collects, analyzes,  and tracks data that show the material condition of its surface ships—in  terms of both their current and life cycle readiness. Three of the data  sources the Navy uses to provide information on the material condition of  ships are casualty reports; Defense Readiness Reporting System – Navy  (DRRS-N) reports; and Board of Inspection and Survey (INSURV)  material inspection reports. None of these individual data sources are  designed to provide a complete picture of the overall material condition of  the surface force. However, the data sources can be viewed as  complementary and, when taken together, provide data on both the  current and life cycle material readiness of the surface force. For  example, some casualty report data must be updated every 72 hours and  provides information on individual pieces of equipment that are currently  degraded or out of commission. DRRS-N data is normally reported  monthly and focuses on current readiness by presenting information on  broader capability and resource areas, such as ship command, control,  and communications, rather than individual equipment. INSURV data is  collected less frequently—ships undergo INSURV inspections about once  every 5 years—but the data is extensive, and includes inspection results  for structural components, individual pieces of equipment, and broad  systems, as well as assessments of a ship’s warfighting capabilities. The  INSURV data is used to make lifecycle decisions on whether to retain or  decommission Navy ships. Casualty reports, DRRS-N data, and INSURV  reports are all classified when they identify warfighting capabilities of  individual ships. However, when casualty reports and INSURV  information is consolidated and summarized above the individual ship  level it is unclassified. Even summary DRRS-N data is classified, and  therefore actual DRRS-N data is not included in this unclassified report.  Table 3 provides additional details on each of the data sources.
INSURV and casualty report data from January 2008 through March 2012  consistently show differences in material readiness between different  types of ships. As illustrated in Table 4, there are differences between  frigates, destroyers, cruisers, and amphibious warfare ships in their  overall INSURV ratings—which reflect ship abilities to carry out their  primary missions; their INSURV Equipment Operational Capability  scores—which reflect the material condition of 19 different functional  areas; and their average numbers of casualty reports—which reflect  material deficiencies in mission essential equipment. The differences  within the average Equipment Operational Capability and casualty reports  were found to be statistically significant. See additional details regarding  the statistical significance of average Equipment Operational Capability  scores and the average number of casualty reports in Appendix I.
For example, the data in table 4 shows that, for the time period covered,  the material condition of amphibious ships is generally lower than that of  frigates and destroyers. For example, a lower percentage of amphibious  warfare ships received overall “satisfactory” ratings in INSURV  inspections than destroyers and frigates; likewise, amphibious ships had  lower average INSURV Equipment Operational Capability scores than  those two types of ships. Amphibious warfare ships also have on average  more casualty reports per ship than destroyers and frigates. According to  Navy officials, some of these differences may result from differences in  the size, complexity, and age of the various types of ships. Likewise,  cruisers have a lower material condition than that of destroyers. The data  show that 22 percent of cruisers were rated “unsatisfactory” compared to  3 percent of destroyers, and the average cruiser Equipment Operational  Capability score of 0.786 was also lower than the destroyer score of  0.829. Finally, the average of 18 casualty reports per cruiser was about  24 percent higher than the 14.5 casualty reports per destroyer. DRRS-N  data also show that there are readiness differences between the Navy’s  different types of ships but the precise differences are classified and  therefore are not included in this report.
Material readiness data show some clear differences between types of  ships as shown in table 4. However, when we considered the surface  combatant and amphibious warfare ships in aggregate, we were unable  to make any conclusions concerning trends in the overall readiness of  these ships. One readiness measure—casualty reports—indicates that  the material readiness of these ships has declined but other readiness  measures show both upward and downward movement. Because of the  relatively small number of INSURV inspections conducted each year, it is  not possible to draw a conclusion about trends in the material readiness  of surface combatant and amphibious warfare ships from January 2008 to  March 2012 based on INSURV data.
Casualty report data from January 2008 to March 2012 show that there is  a significant upward trend in the average daily number of casualty reports  per ship for both surface combatants and amphibious warfare ships,  which would indicate declining material readiness. Specifically, the  average daily numbers of casualty reports per ship have been increasing  at an estimated rate of about 2 and 3 per year, respectively. Furthermore,  for both ship types, there is not a statistically significant difference in the  trend when comparing the periods before February 2010—when the Fleet  Review Panel’s findings were published—and after February 2010.  According to Navy officials, increases in casualty reports could be  reflective of the greater numbers of material inspections and evaluations  than in the past, which is likely to identify more material deficiencies and  generate more casualty reports. Figure 2 shows the increases in casualty  reports over time.
Table 5 shows the summary data for all the INSURV inspections of  surface combatant and amphibious warfare ships that were conducted  from January 2008 through March 2012. Throughout the period, the  data fluctuate in both an upward and downward direction. For example,  the proportion of surface combatant and amphibious warfare ships rated  ‘satisfactory’ fell 11 percent from 83 percent in 2008 to 72 percent in  2010, and then increased to 77 percent in 2011. Average Equipment  Operational Capability scores also fluctuated throughout the period— increasing in 2011 and declining in 2009, 2010, and 2012. As previously  noted, because of the relatively small number of INSURV inspections  conducted each year, it is not possible to draw a conclusion about trends  in the material readiness of surface combatant and amphibious warfare  ships between 2008 and 2012 based on INSURV data.
The casualty report and INSURV data that we analyzed are consistent  with the findings of the Navy’s Fleet Review Panel, which found that the  material readiness of the Navy’s ships had been declining prior to 2010.  Our analysis showed a statistically significant increase in casualty reports  between 2008 and 2010 which would indicate a declining material  condition. Although the statistical significance of the INSURV data from  2008 to 2010 could not be confirmed due to the small number of ships  that were inspected during this time period, that data showed declines in  both the percentage of satisfactory inspections and average Equipment  Operational Capability scores.
section_title: Navy Has Acted to Improve Readiness but Not Assessed Risks to Achieving Full Implementation of Its Recent Strategy
paragraphs: The Navy has taken steps intended to improve the readiness of its  surface combatant and amphibious warfare ships. However, it faces risks  to achieving full implementation of its recent strategy and has not  assessed these risks or developed alternative implementation  approaches to mitigate risks.
subsections: section_title: Navy Steps to Improve Surface Force Readiness
paragraphs: The Navy has taken several steps to help remedy problems it has  identified in regard to maintaining the readiness of its surface combatant  and amphibious warfare ships. In the past, material assessments,  maintenance, and training were carried out separately by numerous  organizations, such as the Regional Maintenance Centers and Afloat  Training Groups. According to the Navy, this sometimes resulted in  overlapping responsibilities and duplicative efforts. Further, the Navy has  deferred maintenance due to high operational requirements. The Navy  recognizes that deferring maintenance can affect readiness and increase  the costs of later repairs. For example, maintenance officials told us that  Navy studies have found that deferring maintenance on ballast tanks to  the next major maintenance period will increase costs by approximately  2.6 times, and a systematic deferral of maintenance may cause a  situation where it becomes cost prohibitive to keep a ship in service. This  can lead to early retirements prior to ships reaching their expected  service lives.
In the past few years the Navy has taken a more systematic and  integrated approach to address its maintenance requirements and  mitigate maintenance problems. For example, in November 2010 it  established the Surface Maintenance Engineering Planning Program,  which provides life cycle management of maintenance requirements,  including deferrals, for surface ships and monitors life cycle repair work.  Also, in December 2010 the Navy established Navy Regional  Maintenance Center headquarters, and began increasing the personnel  levels at its intermediate maintenance facilities in June 2011. More  recently, in March 2012, the Navy set forth a new strategy in its Surface  Force Readiness Manual. This strategy is designed to integrate material  assessments, evaluations, and inspections with maintenance actions and  training and ensure that surface ships are (1) ready to perform their  current mission requirements and (2) able to reach their expected service  lives.supporting ship readiness to take an integrated, systematic approach to  eliminate redundancy, build training proficiency to deploy at peak  readiness, and reduce costs associated with late identified work.
The manual addresses the need for the organizations involved in  According to the Surface Force Readiness Manual, readiness is based  upon a foundation of solid material condition that supports effective  training. In line with this integrated maintenance and training approach,  the new strategy tailors the 27-month Fleet Response Plan by adding a  fifth phase that is not included in the Fleet Response Plan, the  shakedown phase. This phase allows time between the end of the  maintenance phase and the beginning of the basic phase to conduct a  material assessment of the ship to determine if equipment conditions are  able to support training. In addition, the new strategy shifts the cycle’s  starting point from the basic phase to the sustainment phase to support  the deliberate planning required to satisfactorily execute the maintenance  phase and integrate maintenance and training for effective readiness.  Under the new strategy, multiple assessments, which previously certified  ship readiness all throughout the Fleet Response Plan cycle, will now be  consolidated into seven readiness evaluations at designated points within  the cycle. Because each evaluation may have several components, one  organization will be designated as the lead and will be responsible for  coordinating the evaluation with the ship and other assessment teams,  thereby minimizing duplication and gaining efficiencies through  synchronization. Figure 3 shows the readiness evaluations that occur  within each phase of the strategy’s notional 27-month cycle.
As previously noted, development of the Navy’s new strategy began with  a pilot program. The pilot was conducted on ships from both the East and  West coasts beginning in March 2011. Initial implementation of the new  strategy began in March 2012 and is currently staggered, with ships’  schedules being modified to support the strategy’s integration of training,  manning, and maintenance efforts. Ships that were not involved in the  pilot program will begin implementing the strategy when they complete  the maintenance phase of the Fleet Response Plan cycle. The Navy  plans to fully implement the new strategy in fiscal year 2015 (i.e. to have  all surface ships operating under the strategy and resources needed to  conduct the strategy’s required tasks in place). While the Surface Force  Readiness Manual states that providing a standard, predictable path to  readiness is one of the tenets of the Navy’s new strategy, it also  acknowledges that circumstances may arise that will require a deviation  from the notional 27-month cycle.
section_title: Navy Has Not Assessed Risks to Implementing its Strategy as Planned or Developed Alternatives
paragraphs: Certain factors could affect the Navy’s ability to fully implement its  strategy, but the Navy has not assessed the risks to implementation or  developed alternatives. As we have previously reported,assessment can provide a foundation for effective program management.  Risk management is a strategic process to help program managers make   risk  decisions about assessing risk, allocating finite resources, and taking  actions under conditions of uncertainty. To carry out a comprehensive risk  assessment, program managers need to identify program risks from both  external and internal sources, estimate the significance of these risks,  and decide what steps should be taken to best manage them. Although  such an assessment would not assure that program risks are completely  eliminated, it would provide reasonable assurance that such risks are  being minimized.
As the Navy implements its new surface force readiness strategy one risk  we identified involves the tempo of operations. While the strategy  acknowledges circumstances may arise that require a deviation from the  27-month Fleet Response Plan cycle, it also states that predictability is  necessary in order to synchronize the maintenance, training, and  operational requirements. However, the tempo of operations is currently  higher than planned for in the Fleet Response Plan. According to Navy  officials, this makes execution of the strategy challenging. High  operational tempos pose challenges because they could delay the entry  of some ships into the strategy as well as the movement of ships through  the strategy. For example, some ships that have been operating at  increased tempos, such as the Navy’s ballistic missile defense cruisers  and destroyers, have not followed the Navy’s planned 27-month cycle.  Navy officials told us that requirements for ballistic missile defense ships  are very high leading to quick turnarounds between deployments. They  said, in some cases, ships may not have time for the maintenance or full  basic and integrated/advanced training phases. The manual notes that  ships without an extended maintenance period between deployments will  remain in the sustainment phase. According to Navy guidance, the  maintenance phase is critical to the success of the Fleet Response Plan  since this is the optimal period in which lifecycle maintenance activities— major shipyard or depot-level repairs, upgrades, and modernization  installations—occur. Thus, ships with a high operational tempo that do not  enter the maintenance phase as planned will have lifecycle maintenance  activities deferred, which could lead to increased future costs. Further,  ships that do not enter the maintenance phase may be delayed entering  into the strategy. This delay would be another risk to the implementation  of the Navy’s new readiness strategy and ships’ lifecycle readiness.
In addition, the Navy’s plan to decrease the number of surface combatant  and amphibious warfare ships through early retirements is likely to  increase operational tempos even further for many ships that remain in  the fleet. DOD’s fiscal year 2013 budget request proposes the early  retirement of seven Aegis cruisers and two amphibious ships in fiscal  years 2013 and 2014. When fewer ships are available to meet a given  requirement, ships must deploy more frequently. Table 6 shows the ships  that the Navy plans to retire early, their ages at retirement, and their  homeports.
Also, recent changes in national priorities, which call for an increased  focus on the Asia-Pacific region that places a renewed emphasis on air  and naval forces, make it unlikely that operational tempos will decline. At  the same time, DOD will still maintain its defense commitments to Europe  and other allies and partners.
In addition to the risks posed by high operational tempos, several  supporting organizations currently have staffing levels that are below the  levels needed to fulfill their roles in the new integrated readiness strategy.  For example, Navy Afloat Training Group officials have identified the  staffing levels required to fully support the strategy, and reported that they  need an additional 680 personnel to fully execute the new strategy. As of  August 2012, the Navy plans to reflect its funding needs for 410 of the  680 personnel in its fiscal year 2014 budget request and for the remaining  270 in subsequent requests. Under the new strategy, the Afloat Training  Groups provide subject matter experts to conduct both material, and  individual and team training. Previously the Afloat Training Groups used a  “Train the Trainer” methodology, which did not require the same number  of trainers because ships’ crews included their own system experts to  train the crew and the Afloat Training Groups just trained the ships’  trainers. Afloat Training Group Pacific officials told us that there are times  when the training events that can be offered—to ships currently under the  strategy and/or ships that have not yet implemented the strategy—are  limited because of their staffing level gaps. Current staffing allows  executing all portions of the Basic Phase in select mission areas only.  Other mission areas are expected to gain full training capability as staffing  improves over the next several years. Until then, the Afloat Training  Group officials plan to schedule training events within the limited  capability mission areas based on a prioritized hierarchy.
Further, Surface Maintenance Engineering Planning Program officials told  us they are also short of staff. They said they need 241 staff to perform  their requirements, but currently have 183 staff. They stated that while  current budget plans include funding to reach the 241 staffing level in  2013, it will be reduced below the 241 requirement in 2014.
As with the Afloat Training Groups and Surface Maintenance Engineering  Planning Program, officials at the Navy Regional Maintenance Center  headquarters told us they currently lack the staff needed to fully execute  the ship readiness assessments called for in the new strategy. Ship  readiness assessments evaluate both long-term lifecycle maintenance  requirements (e.g. preservation to prevent structural corrosion) and  maintenance to support current mission requirements (e.g. preventative  and corrective maintenance for the Aegis Weapons System). According  to the officials, ship readiness assessments allow them to deliberately  plan the work to be done during major maintenance periods and prioritize  their maintenance funds. The goal is for ships to receive all the prescribed  ship readiness assessments in fiscal year 2013. However, Navy officials  stated that they are evaluating the impact of recent readiness assessment  revisions on changes in the Regional Maintenance Center’s funding and  personnel requirements.
The Navy has not undertaken a comprehensive assessment of the impact  of high operational tempos, staffing shortages, or any other risks it may  face in implementing its new readiness strategy, nor has it developed  alternatives to mitigate any of these risks. The Navy does recognize in its  strategy that circumstances may arise that require ships to deviate from  the 27-month Fleet Response Plan cycle and has considered the  adjustments to training that would need to take place in such a case.  However, the strategy does not discuss, nor identify plans to mitigate,  maintenance challenges that could arise from delays in full  implementation. We believe the risks we identified may delay full  implementation, which could lead to continued deferrals of lifecycle  maintenance, increasing costs and impacting the Navy’s ability to achieve  expected service lives for its ships.
section_title: Conclusions
paragraphs: Today’s fleet of surface combatant and amphibious warfare ships  provides core capabilities that enable the Navy to fulfill its missions. In  order to keep this fleet materially and operationally ready to meet current  missions and sustain the force for future requirements, the Navy must  maximize the effective use of its resources and ensure that its ships  achieve their expected service lives. Full implementation of its new  strategy, however, may be delayed if the Navy does not account for the  risks it faces and devise plans to mitigate against those risks. Navy  organizations have taken individual steps to increase their staffing levels,  but the Navy has yet to consider alternatives if the integration of  assessment, maintenance, and training under the strategy is delayed.  Without an understanding of risks to full implementation and plans to  mitigate against them, the Navy is likely to continue to face the challenges  it has encountered in the past, including the increased costs that arise  from deferring maintenance and the early retirement of ships. This could  impact the Navy’s ability to meet its long-term commitments. Further,  ongoing maintenance deferrals—and early retirements that increase the  pace of operations for the remaining surface force—could potentially  impact the Navy’s ability to meet current missions.
section_title: Recommendations for Executive Action
paragraphs: To enhance the Navy’s ability to implement its strategy to improve surface  force material readiness, we recommend that the Secretary of Defense  direct the Secretary of the Navy to take the following two actions:
Develop a comprehensive assessment of the risks the Navy faces in  implementing its Surface Force Readiness Manual strategy, and  alternatives to mitigate risks. Specifically, a comprehensive risk  assessment should include an assessment of risks such as high  operational tempos and availability of personnel.
Use the results of this assessment to make any necessary  adjustments to its implementation plan.
section_title: Agency Comments and Our Evaluation
paragraphs: In written comments on a draft of this report, DOD partially concurred with  our recommendations. Overall, DOD stated it agrees that risk assessment  is an important component of program management, but does not agree  that a comprehensive assessment of the risks associated with  implementation of the Navy’s Surface Force Readiness strategy is either  necessary or desirable. It also stated that existing assessment processes  are sufficient to enable adjustments to implementation of the strategy.   DOD also noted several specific points. For example, according to DOD,  a number of factors impact surface ship readiness and some of those  factors, such as budgetary decisions, emergent operational requirements,  and unexpected major ship repair events are outside of the Navy’s direct  control.  DOD further stated that the strategy, and the organizations that  support the strategy, determine and prioritize the full readiness  requirement through reviews of ship material condition and assess the  risk of any gaps between requirements and execution, as real world  events unfold. DOD also noted that the Surface Ship Readiness strategy  has a direct input into the annual Planning, Programming, Budgeting, and  Execution (PPBE) process. It stated that its position is that execution of  the strategy and PPBE process adequately identify and mitigate risks.  DOD further believes that a separate one-time comprehensive  assessment of risks, over and above established tracking mechanisms, is  an unnecessary strain on scarce resources. Moreover, DOD stated that  the Navy now has the technical resources available, using a disciplined  process, to inform risk-based decisions that optimize the balance  between current operational readiness and future readiness tied to  expected service life through the standup of its Surface Maintenance  Engineering Planning Program and Commander Navy Regional  Maintenance Centers.  Specifically, DOD noted documenting and  managing the maintenance requirement is now a fully integrated process.   According to DOD, the Navy’s Surface Type Commanders identify and  adjudicate risks to service life and this approach is consistent with  fundamental process discipline and risk management executed by the  submarine and carrier enterprises.  Finally, according to DOD, the Navy is  continually assessing progress in achieving the strategy and has the  requisite tools in place to identify changes in force readiness levels that  may result from resource constraints, and will adjust the process as  necessary to ensure readiness stays on track.
As described in our report, we recognize that the Navy has taken a more  systematic and integrated approach to address its maintenance  requirements and mitigate problems, and specifically cite the Surface  Readiness strategy, and actions such as standing up Surface  Maintenance Engineering Planning Program and Commander Navy  Regional Maintenance Centers.  We also recognize that the Navy  conducts various assessments of ship readiness and considers resource  needs associated with implementing the strategy as part of the budget  process.  However, we do not agree that any of the current assessments  or analyses offer the type of risk assessment that our report recommends.   For example, the PPBE process does not address the specific risk that  high operational tempos pose to implementation of the strategy nor does  it present alternatives for mitigating this risk.   Also, despite the ongoing  efforts by Surface Maintenance Engineering Planning Program and  Commander Navy Regional Maintenance Centers officials to document  and manage the maintenance requirement of the surface force in an  integrated process, both organizations are currently under staffed.  The  challenges identified in our report, including high operational tempos and  current organizational staffing levels, have hindered the Navy’s ability to  achieve the desired predictability in ships’ operations and maintenance  schedules, as called for in its strategy.  Given factors such as the Navy’s  plan to decrease the number of ships as well as changes in national  priorities that place a renewed emphasis on naval forces in the Asia  Pacific region, these challenges we identified are unlikely to diminish in  the near future, and there could be additional risks to the strategy’s  implementation.  Without  an understanding of the full range of risks to  implementing its strategy and plans to mitigate them, the Navy is likely to  continue to face the challenges it has encountered in the past, including  increased costs that arise from deferring maintenance and the early  retirement of ships.  Therefore, we continue to believe that a  comprehensive risk assessment is needed.
We are sending copies of this report to appropriate congressional  committees, the Secretary of Defense, the Secretary of the navy, and  other interested parties.  In addition, the report is available at no charge  on the GAO website at http://www.gao.gov  If you or your staff have any questions about this report, please contact  me at (202) 51209619.  Contact points for our Offices of Congressional   Relations and Public Affairs may be found on the last page of this report.   GAO staff who made key contributions to this report are listed in   appendix III.
section_title: Appendix I: Scope and Methodology
paragraphs: To assess how the Navy evaluates the material readiness of its surface  combatant and amphibious warfare ships and the extent to which data  indicate trends or patterns in the material readiness of these ships, we  interviewed officials from the Commander Naval Surface Force, U.S.  Pacific Fleet, Commander Naval Surface Force, U.S. Atlantic Fleet, as  well as visiting a number of ships, to include the USS Leyte Gulf (CG 55),  USS Arleigh Burke (DDG 51), USS San Antonio (LPD 17), and USS  Higgins (DDG-76). We obtained and analyzed Navy policies and  procedures for determining surface force readiness, as well as various  studies and reports on the Navy’s material readiness process. We  obtained and analyzed material readiness data from the Navy’s Board of  Inspection and Survey (INSURV) as well as the United States Fleet  Forces Command (USFF). We also met with Navy officials from the  Board of Inspection and Survey and the United States Fleet Forces  Command to complement our data analysis, and observed the INSURV  material inspection of the USS Cole (DDG 67).
We limited our data analysis to the period from January 2008 to March  2012 in order to cover a period of approximately two years prior to, and  two years following, publication of the Fleet Review Panel of Surface  Force Readiness report. Specifically, we analyzed data for the Navy’s  guided-missile cruisers (CG 47 class), guided-missile destroyers (DDG 51  class), frigates (FFG 7 class), amphibious assault ships (LHA 1 and LHD  1 classes), amphibious transport dock ships (LPD 4 and LPD 17 classes),  and dock landing ships (LSD 41 and LSD 49 classes).
We analyzed data from three of the primary data sources the Navy uses  to provide information on the material condition of ships: casualty reports;  Board of Inspection and Survey (INSURV) material inspection reports;  and the Defense Readiness Reporting System – Navy (DRRS-N) reports.  None of these individual data sources are designed to provide a complete  picture of the overall material condition of the surface force.
From the Board of Inspection and Survey we met with INSURV officials  and observed an INSURV inspection onboard the USS Cole (DDG 67)  conducted on December 12, 2011 and December 14, 2011. We obtained  all INSURV initial material inspection reports dating from 2008 through  2012 for cruisers, destroyers, frigates, and amphibious warfare ships. We  then extracted relevant data from those reports, including INSURV’s  overall assessment of the material condition of these surface ships  (satisfactory, degraded, unsatisfactory), Equipment Operational Capability  scores for the different functional areas of ships systems (on a 0.00 to  1.00 scale), and dates when these ships were inspected. Although  INSURV provides an overall assessment, we included Equipment  Operational Capability scores to provide additional insight into the  material condition of a ship’s systems. Overall assessments focus on a  ship’s material readiness to perform primary missions. As such, while  multiple individual systems may be in an unsatisfactory condition  (Equipment Operational Capability scores below 0.80 are considered  “degraded,” while those below 0.60 are considered “unsatisfactory”), the  ship may receive an overall rating of “satisfactory” due to its material  readiness to meet its primary missions. Figure 4 below shows the process  for determining INSURV ratings, with that segment for determining  Equipment Operational Capability scores highlighted.
We analyzed both INSURV overall ratings and Equipment Operational  Capability scores to identify differences in material readiness between  types of ships. To determine if there were statistically significant  differences in the Equipment Operational Capability scores among four  types of ships (cruisers, destroyers, frigates, and amphibious ships), we  took the average of the various Equipment Operational Capability scores  for each ship and conducted a one-way analysis of variance (ANOVA). In  addition, we conducted post-hoc multiple comparison means tests to  determine which ship types, if any, differed. Based on the results of this  analysis, we concluded that there were statistically significant differences  in the average Equipment Operational Capability score between the four  ship types (p-value < 0.0001). Specifically, the average for amphibious  ships was significantly lower, at the 95 percent confidence level, than the  average scores for cruisers, destroyers, and frigates and the average for  cruisers was significantly lower than the average for destroyers.
In presenting our results, we standardized relevant data where necessary  in order to present a consistent picture. For example, in 2010, the Board  of Inspection and Survey moved from rating those ships with the worst  material condition as “unfit for sustained combat operations” to rating  them as “unsatisfactory.” We have treated both these ratings as  “unsatisfactory” in this report.
We obtained casualty report data for the same set of ships from the  United States Fleet Forces Command office responsible for the Navy’s  Maintenance Figure of Merit program. Casualty report data provided  average daily numbers of casualty reports per ship for cruisers,  destroyers, frigates, and amphibious warfare ships. We then used these  daily averages to identify differences between ship types and to calculate  and analyze changes in these daily averages from month to month and  quarter to quarter.
We assessed the reliability of casualty report data presented in this  report. Specifically, the Navy provided information based on data  reliability assessment questions we provided, which included information  on an overview of the data, data collection processes and procedures,  data quality controls, and overall perceptions of data quality. We received  documentation about how the systems are structured and written  procedures in place to ensure that the appropriate material readiness  information is collected and properly categorized. Additionally, we  interviewed the Navy officials to obtain further clarification on data  reliability and to discuss how the data were collected and reported into  the system. After assessing the data, we determined that the data were  sufficiently reliable for the purposes of assessing the material condition of  Navy surface combatant and amphibious warfare ships, and we discuss  our findings in the report.
To determine if there were statistically significant differences in the daily  averages among the four types of ships (cruisers, destroyers, frigates,  and amphibious warfare ships), we conducted a one-way analysis of  variance (ANOVA), followed by post-hoc multiple comparison means  tests to determine which ship types, if any, differed. Based on the results  of this analysis we concluded that there were statistically significant  differences in the daily averages between the four ship types (p-value <  0.0001), and specifically, the daily average for amphibious warfare ships  was significantly higher, at the 95 percent confidence level, than the daily  average for cruisers, destroyers, and frigates.
Next we analyzed the changes in the daily averages to determine if there  was an increasing, decreasing, or stationary trend from month to month.  We did this separately for surface combatant ships (cruisers, destroyers,  and frigates) and amphibious warfare ships. To estimate the trends, we  conducted a time-series regression analysis to account for the correlation  in the average daily scores from month to month. We then tested the  estimated trends for significant changes after February 2010 — when the  Fleet Review Panel’s findings were published – using the Chow test for  structural changes in the estimated parameters. We fit a time-series  regression model with autoregressive errors (AR lag of 1) to monthly data  for both surface combatants and amphibious ships to account for the  autocorrelation between monthly observations. The total R-squared, a  measure that reflects how well the model predicts the data, was 0.9641  for the surface combatant ships model and 0.9086 for the amphibious  warfare ships model which indicate both models fit the data well. A  summary of the model parameters is given in the table below.
We observed statistically significant positive trends in the daily average  for both models. Specifically, the estimated trend for the daily average  number of casualty reports per ship increased at a rate of about 2 per  year (0.1770 * 12 months) for surface combatant ships and about 3 per  year (0.2438 * 12 months) for amphibious warfare ships. In addition,  neither of the tests for significant structural changes in the model  parameters after February 2010 were significant at the 95 percent  confidence level. Based on this, we concluded that there is not enough  evidence to suggest there were significant changes in the estimated  trends after February 2010 for either ship type.
We analyzed data from the Defense Readiness Reporting System-Navy  (DRRS-N), which contains data that is normally reported monthly and  focuses on current readiness by presenting information on broader  capability and resource areas. We obtained classified DRRS-N readiness  data for all surface combatant and amphibious warfare ships from  January 2008 through March 2012. DRRS-N data showed upward and  downward movements between 2008 and 2012, but we did not evaluate  the statistical significance of these movements.
To determine the extent to which the Navy has taken steps intended to  improve the readiness of its surface combatant and amphibious warfare  ships including efforts to implement its recent strategy, we reviewed  relevant Navy instructions on Navy material readiness, including the  strategy—the Surface Force Readiness Manual—to identify the policies  and procedures required by the Navy to ensure its surface ships are  ready to perform their current mission requirements and reach their  expected service lives. We also reviewed prior GAO work on risk  management and collected and analyzed data on the resources needed  to implement the strategy, and interviewed relevant officials.
To gain a better understanding of how the Navy’s independent  maintenance, training, and manning initiatives will be integrated into the  new strategy, we collected data on the staffing resources needed to  implement the strategy and met with officials from the Commander Navy  Regional Maintenance Center, the Surface Maintenance Engineering  Planning Program, and the Afloat Training Group Pacific. We focused  primarily on the Navy’s maintenance initiatives because we have  previously reported on its training and manning initiatives.
In addition, we met with personnel on board four Navy ships to obtain  their views on the impact of the Navy’s maintenance initiatives, such as  readiness assessments and material inspections, on the readiness of  these ships. Specifically, we visited the USS Leyte Gulf (CG 55), USS  Arleigh Burke (DDG 51), USS San Antonio (LPD 17), and USS Higgins  (DDG 76). We also discussed initial implementation of the new strategy  with personnel on board the USS Higgins.
We also met with officials from the Commander Naval Surface Force,  U.S. Pacific Fleet who are responsible for administering the strategy for  surface ships on the West coast and in Hawaii and Japan to discuss  timeframes for transitioning ships into the strategy, challenges  implementing the strategy, and plans to address any risks that may occur  during the strategy’s implementation. Additionally, we obtained written  responses to our questions from these officials and from officials at the  Commander Naval Surface Force, U.S. Atlantic Fleet who administer the  strategy for surface ships on the East coast.
Finally, we reviewed prior GAO work on risk assessment as well as Navy  testimony on the readiness of its ships and aircraft and Department of  Defense strategic guidance on the key military missions the department  will prepare for and budget priorities for fiscal years 2013-2017.
We conducted this performance audit from July 2011 to September 2012,  in accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.
section_title: Appendix II: Comments from the Department of Defense
section_title: Appendix III: GAO Contacts and Staff Acknowledgments
subsections: section_title: GAO Contacts
section_title: Staff Acknowledgments
paragraphs: In addition to the contact named above, key contributors to this report  were Michael Ferren (Assistant Director), Jim Ashley, Mary Jo Lacasse,  David Rodriguez, Michael Silver, Amie Steele, Nicole Volchko, Erik  Wilkins-McKee, Nicole Willems, and Ed Yuen.