Defense Logistics: Navy Needs to Develop and Implement a Plan to Ensure That Voyage Repairs Are Available to Ships Operating near Guam when Needed
Published: 2008-05-12T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Unscheduled ship maintenance, known as voyage repairs, is a high priority for the U.S. Navy. Such repairs are sometimes beyond the capability of the ship's crew to perform; cannot be deferred; and must be made at a remote location. After the 1995 Base Realignment and Closure Commission recommended closing the former Naval Ship Repair Facility, Guam, the Navy leased the property at that facility to the Guam Economic Development and Commerce Authority, which sub-leased the property to a private shipyard. DOD has since begun planning for a military buildup on Guam. In January 2007 the Navy recommended allowing the private shipyard's lease on Navy land to expire in 2012. Consequently, the House Armed Services Committee asked GAO to determine the extent to which the Navy has (1) identified future ship repair requirements at Guam, and (2) identified and assessed options to address those requirements. GAO reviewed documents related to ship maintenance and interviewed officials affiliated with private contractors, the Guam government, the Marine Corps, Military Sealift Command, and the Navy in conducting this review.
section_title: What GAO Found
paragraphs: The Navy has not identified voyage surface ship repair requirements for 2012 and beyond for vessels operating near Guam, although some information is available on which to base estimated requirements for planning. Navy officials stated that they cannot estimate such requirements because the Navy expects to change its force structure, the Marine Corps has not finalized its plans for any additional vessels associated with the buildup, and Military Sealift Command expects changes to its force structure at Guam. Although the Navy, Marine Corps, and Military Sealift Command have not made final force structure decisions or operational plans for vessels operating at or near Guam, information is available to support an estimation of ship repair requirements as part of the multiyear planning and budgeting process. Specifically, the Navy (1) knows the history of voyage repairs conducted on Guam; (2) can identify vessels likely to operate near Guam based on planned force structure realignments in the 2006 Quadrennial Defense Review; and (3) can identify ship repair capabilities available at other strategic locations in the Pacific area, including Yokosuka, Japan. Developing requirements is a prerequisite for planning, and without developing estimated repair requirements the Navy cannot adequately evaluate options for meeting them. Navy officials identified potential options for providing repairs in Guam, but have not fully assessed their viability or identified time-critical planning tasks. According to Navy officials, once the Navy identifies voyage ship repair requirements for the Guam area, they will choose from four options or a combination of options for providing voyage repairs. First, the Navy could try to expand existing organic repair capabilities to conduct voyage repairs. However, the existing ship maintenance capabilities and facilities have little excess capacity without augmentation, limiting their ability to perform additional work. Second, the Navy could rely on repair teams flown in from naval shipyards in the United States. Third, the Navy could build a new Navy ship repair facility, though that could require years of planning and new funding. Fourth, the Navy could contract out work to either or both of the private ship repair providers now operating in Guam, or to any other private ship repair facility that might choose to locate in Guam. Three of these options might require building new facilities or expanding existing facilities. Officials said they would not begin planning until preparations begin for submissions to the President's budget for fiscal year 2012. However, lead time is required to perform planning tasks necessary to provide repair capabilities from the Navy's suggested options. Without assessing the viability of each option for voyage repairs in a timely manner, the Navy increases the risk that voyage repair capabilities for ships operating in the Pacific may not be available when needed, potentially undermining ships' ability to accomplish their missions.

section_title: Letter
paragraphs: Guam is a territory of the United States with strategic value to the  Guam is a territory of the United States with strategic value to the  Department of Defense (DOD). It is the westernmost U.S. territory with  Department of Defense (DOD). It is the westernmost U.S. territory with  Navy repair facilities, and DOD projects it will become increasingly  Navy repair facilities, and DOD projects it will become increasingly  important in supporting emerging U.S. strategic and political interests in  important in supporting emerging U.S. strategic and political interests in  the Pacific. U.S. Navy and Military Sealift Command (MSC) ships operate  the Pacific. U.S. Navy and Military Sealift Command (MSC) ships operate  at or near Guam. Between fiscal years 1987 and 1995 the Navy downsized  at or near Guam. as part of the 1995 Base  close the Naval Ship Repair Facility, Guam, that included (1) major  performed intermediate- and depot-level repairs The  (hereinafter referred to as voyage repairs) on Navy and MSC ships.
MSC operates logistics support vessels and stations them at strategic points such as  Guam, and typically has several vessels at or near Guam.
Ship repair facilities differ from shipyards in that shipyards are generally found near fleet  homeport concentrations while ship repair facilities are generally found near more remote  deployment or operating areas.
Navy maintenance is performed at three different levels of increasing complexity:  shipboard, intermediate, and depot. Depot-level maintenance is generally performed by  civilian depot artisans or contractors.
Emergent and voyage repairs generally consist of maintenance to repair any problems  that emerge during deployment, or emergency work needed to enable a ship to continue its  mission and which can usually be accomplished without a significant change to a ship’s  operating schedule. former Naval Ship Repair Facility, Guam resided to the government of  Guam, which in turn leased it to a contractor doing business as Guam  Shipyard. The Navy pointed to the strategic value of having a private ship  repair capability in Guam as the rationale for noncompetitively awarding  contracts to Guam Shipyard from 1998 to 2007 to overhaul MSC ships and  conduct other Navy ship repair work, including voyage repairs. Guam  Shipyard continues to operate on the leased property. Guam Shipyard’s  lease was to expire by October 1, 2007, although Guam Shipyard exercised  an option to extend its sub-lease with the Guam Economic Development  and Commerce Authority by 5 years, and they in turn exercised the option  to extend the lease by 5 years with the Navy. The lease terms gave the  Navy the power to terminate the lease at any time for cause, if cause  existed.
DOD’s planning effort for a military buildup on Guam, which could have  an impact on ship repair requirements in Guam, has begun. DOD plans to  (1) relocate about 8,000 Marines and 9,000 dependents from Okinawa to  Guam, (2) construct a new Navy pier to support visiting aircraft carriers,  (3) improve piers to support visiting amphibious vessels, (4) increase the  submarine presence on Guam and in the Pacific region generally, and (5)  locate an Army ballistic missile defense capability on Guam. Historically,  U.S. naval ships whose home port was Guam were permitted by U.S. law  to undergo overhaul, repair, or maintenance in shipyards outside the  United States or Guam. The John Warner National Defense Authorization  Act for Fiscal Year 2007 (the Act) amended section 7310 of Title 10 of the  U.S. Code to prohibit U.S. naval vessels home-ported in Guam from  undergoing such work in shipyards outside the United States or Guam,  other than in the case of voyage repairs. The Act also required the Navy to  evaluate options for Guam Shipyard’s lease and any anticipated future ship  repair workloads in Guam, and to report its findings to Congress. In  January 2007, the Navy issued its report and concluded that it would  prefer that future ship repair contracts on Guam be awarded  competitively, and that it would be premature to extend the lease with  Guam Shipyard as a result of the planned military build-up on Guam.  Specifically, the Navy recommended that the lease with the government of  Guam and with Guam Shipyard be allowed to expire on October 1, 2007,  and that negotiations be opened to terminate Guam Shipyard’s option to  extend the lease by 5 years or to allow the lease to run to the 2012  expiration on a smaller acreage, if negotiations to terminate the extension  option failed. The Navy has not initiated negotiations since issuing its  recommendations, and has taken no action to terminate its lease with the  government of Guam for cause. Guam Shipyard exercised its option to  extend its lease with the government of Guam until 2012 without reducing  its acreage, and the government of Guam completed its lease extension  with the Navy for that time period.
The Act also required GAO to evaluate the Navy report. On June 22, 2007,  we briefed your staff on our evaluation and concluded that the Navy’s  recommendation to allow Guam Shipyard’s lease to expire was logically  supported, and we could not disagree with the Navy’s conclusion based on  the information available at that time. At that briefing, your staff asked  that we also determine the extent to which the Navy has (1) identified  future ship repair requirements for the Guam area, and (2) identified and  assessed options to address those requirements. This report responds to  that request.
To determine the extent to which the Navy has identified future repair  requirements for ships operating in the Guam area and identified and  assessed options to address those requirements, we reviewed documents  related to past ship repair requirements in Guam, contracts associated  with ship repairs, and Navy records related to ship repair facilities and  activities. In addition, we interviewed officials at Guam Shipyard and  another private ship repair provider, Gulf Copper, Inc.; Guam government  officials; Navy officials in Washington, D.C., Hawaii, and Guam; and MSC  officials in Washington, D.C., Norfolk, Virginia, San Diego, California, and  Guam. We conducted this performance audit from July 2007 to March 2008  in accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient and 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. See appendix I for a more  detailed scope and methodology.
subsections: section_title: Background
paragraphs: Ships’ crews are often able to complete voyage repairs while the ship or  battle group is underway. According to Navy officials, because ships often  include redundant systems, repairs can usually be undertaken without  interrupting the ship’s mission or be postponed until the ship reaches a  repair facility or its home port. However, voyage repairs are occasionally  beyond the capability of ships’ crews to complete, and must be performed  by an intermediate or depot-level ship repair activity. Historically, Navy  ships home-ported in Guam were permitted by U.S. law to be overhauled,  repaired, or maintained in shipyards outside the United States or Guam.  However, the John Warner National Defense Authorization Act for Fiscal  Year 2007 amended section 7310 of Title 10 of the U.S. Code to prohibit  U.S. naval ships home-ported in Guam from being repaired in shipyards  outside the United States or Guam, other than in the case of voyage  repairs.
Since the closure of the Navy Ship Repair Facility, Guam, the Navy and  MSC have relied on four different sources to provide voyage repairs in  Guam. First, the Navy submarine tender USS Frank Cable, which is a ship  home-ported in Guam, has provided voyage repair capabilities for  submarines when needed. Second, the Navy has relied on its Emergent  Repair Facility to repair submarines by using a repair crew left behind  from the USS Frank Cable when that ship is deployed. Third, fly-away  teams from U.S. Naval shipyards have been sent to Guam to conduct  voyage repairs when needed. Finally, the Navy has used its contract with  Guam Shipyard for voyage repairs of both submarines and surface ships.
Guam Shipyard has repaired most MSC ships operating around Guam and  has assisted the Navy in completing voyage repairs on other ships and  submarines. For example, Guam Shipyard assisted U.S. Naval shipyards  with extensive voyage repairs on the USS San Francisco, a submarine that  struck an undersea mountain, by providing dry-dock services and selected  support services. Voyage repairs have averaged about 17 percent of the  total annual workload performed at Guam Shipyard. While Guam Shipyard  officials told us that the voyage repair work would not be sufficient to  support its current infrastructure and personnel, in 2007 it won a  competition for the overhaul of the USNS Bridge, an MSC Pacific fleet  support vessel. Competitions for overhaul of other MSC ships operating  near Guam are scheduled beyond 2008.
While Guam Shipyard has been the only commercial shipyard capable of  supporting Navy ship repair and overhaul requirements on Guam since  1998, a private ship repair provider new to Guam, Gulf Copper, has  initiated ship repair operations there. Although the Navy had indicated in  its 2007 report to Congress that additional voyage repairs could be  addressed by the submarine tender USS Frank Cable’s repair department,  MSC has awarded contracts to both Guam Shipyard and Gulf Copper for  voyage repairs that may be needed during fiscal year 2008. MSC awarded  single-year contracts without renewal options, but MSC officials said that  they plan similar contracts for 2009 that will include option years. Voyage  repairs are unscheduled, and the capabilities required to address them  cannot be precisely predicted.
section_title: Navy Has Not Identified Future Voyage Ship Repair Requirements at Guam although Some information is Available for Use in Planning
paragraphs: The Navy has not identified voyage ship repair requirements for 2012 and  beyond for surface vessels operating at or near Guam, although some  information is available on which to base estimated requirements to  support planning efforts. Navy officials stated that requirements have not  been developed for the following three reasons. First, the Navy has not  fully identified its future Pacific force structure or finalized operational  plans. Second, the Marine Corps’ plans for additional vessels, if any, and  operations at Guam are still evolving. Third, MSC projects making changes  to its force structure for ships operating near Guam. However, some  information is available that could enable the Navy to develop estimates of  ship repair requirements. Estimation of requirements is a prerequisite for  assessing each option’s ability to address those requirements in a cost- effective and timely fashion. Without developing estimated repair  requirements, the Navy cannot determine the best alternative among  various potential sources of repair or support planning to provide needed  maintenance capabilities.
subsections: section_title: Officials State That Requirements Cannot be Estimated until Force Structure Plans Are Final
paragraphs: Navy officials stated that voyage ship repair requirements at Guam cannot  be identified until its future force structure plans are finalized. The 2006  Quadrennial Defense Review indicated that the Navy plans to operate six  aircraft carrier strike groups and 60 percent of its submarine force in the  Pacific. Moreover, the service has plans for a 313-ship Navy, but it has not  yet identified the specific ships that will comprise the force structure in  the Pacific beyond 2012. Officials stated that operational plans will dictate  the number and type of vessels that will visit Guam, but those plans are  periodically adjusted due to changes in the global security environment.  As a result, Navy officials stated that they cannot yet develop requirements  for voyage ship repairs at Guam for 2012 and beyond.
Similarly, the Marine Corps’ plans for additional vessels in Guam have not  been finalized, but conceptual plans for relocating Marines from Okinawa  to Guam may include the home-porting of four new High-Speed Vessels  and two new Littoral Combat Ships at Guam. In addition to the possibility  of adding vessels, the Marine Corps’ force relocation from Okinawa to  Guam is expected to result in visits by amphibious vessels home-ported in  Japan. These vessels are to deploy to Guam to support training exercises  for the Marines stationed on Guam, and they may generate demands for  voyage repairs during these operations.
MSC also expects changes to its force structure operating near Guam, but  the timeline for these changes is uncertain. Current MSC vessels, such as  ammunition ships and combat stores ships, are expected to be replaced  by new dry cargo/ammunition ships on a one-for-one basis. MSC officials  believe that these new vessels will require less maintenance than the  vessels they replace, thus potentially reducing repair requirements. For  example, these vessels use new technology, including propulsion and  electrical systems that are thought to require less frequent maintenance  and different repair capabilities. Guam’s first new dry cargo/ammunition  ship is to arrive on station sometime in 2008, but acquisition schedules for  additional such ships indicate deployment delays. Delaying the arrival of  the new ships will delay decommissioning of the older ships, thus raising  questions about the need to continue existing levels of repair capabilities  in the near term, as MSC believes the older ships may require more  intensive maintenance.
section_title: Some Information Is Available to Develop Estimated Requirements for Repair Capabilities
paragraphs: While the precise force structure requirements associated with the military  buildup around Guam remain uncertain, the Navy has some information  that can be used to identify estimated ship repair requirements.  Specifically, the Navy knows the history of voyage repairs conducted on  Guam; it can identify vessels likely to operate near Guam, based on  planned force structure realignments in the 2006 Quadrennial Defense  Review; and it can identify ship repair capabilities available at other  strategic locations in the area, including Pearl Harbor, and Yokosuka,  Japan.
Historical data are available showing voyage repairs that have been  performed on surface vessels and submarines in Guam for at least the past  6 years, and could be used to estimate likely future repair requirements  based on past experience. MSC recently used these data to formulate  contracts awarded for providing voyage repairs on vessels operating at or  near Guam for fiscal year 2008. Table 1 shows the average number of man- days and the cost to complete voyage repairs from private sources on  Guam for fiscal years 2002-2007.
The Navy has identified some vessel assignments associated with the force  structure changes identified in the 2006 Quadrennial Defense Review.  Specifically, the Navy plans to replace the USS Kitty Hawk at its home  port in Japan with the USS George Washington—a new, nuclear-powered  aircraft carrier. Navy officials stated that operational plans for that  carrier’s strike group will include visits to Guam for periods of 2 to 3  weeks. Although the Navy has not identified the specific vessels that will  make up the strike group, Navy officials know the types of vessels that are  normally part of a strike group. Moreover, Navy vessels have operated in  the Pacific for decades, and voyage repair experiences are readily  available to the Navy through repair records, shipyard billing, or similar  documents. Nonetheless, the Navy has not used these records to forecast  estimated surface ship repair requirements for Guam beyond 2012.
Further, extensive ship repair capabilities exist in other locations in the  Pacific, such as Pearl Harbor. Given that future ship repair capabilities on  Guam may need to support a larger number and different mix of ships, the  Navy could use ship repair data from Pearl Harbor and other strategic  forward-deployed locations—such as the Navy Ship Repair Facility,  Yokosuka, Japan, and the facility that repairs the Navy amphibious ships  that support the Marine Corps at Sasebo, Japan—to help it develop  estimated voyage repair forecasts for Guam.
DOD guidance requires that maintenance programs be clearly linked to  strategic and contingency planning, and that a determination be made as  to whether a specific industrial capability is required to meet DOD needs.  This guidance calls for the Navy to follow industrial-based planning to  ensure that required ship repair capabilities will be available when needed.  Specifically, DOD Directive 5000.60, “Defense Industrial Capabilities  Assessments,” requires that planning occur when a known or projected  problem exists, or when there is a substantial risk that an essential  capability may be lost. Such problems can consist of inadequate industrial  capacity operated by a DOD entity or similar inadequate capabilities in the  private sector. Estimation of requirements is a prerequisite for performing  an assessment of the viability of each option available for addressing those  requirements in a cost-effective and timely fashion. Although some  information is available for developing estimated requirements, the Navy  has not identified voyage surface ship repair requirements for 2012 and  beyond for vessels operating near Guam. Without developing estimated  repair requirements the Navy cannot determine the best alternative among  various potential sources of repair or support planning to provide needed  maintenance capabilities.
section_title: The Navy Has Not Evaluated Options for Meeting Voyage Repair Requirements in Guam beyond 2012, and Risks Not Having a Repair Capability in Place when Needed
paragraphs: While the Navy has not planned for meeting voyage repair requirements on  Guam for 2012 and beyond, it has identified options for providing repairs,  although some require long lead times to implement. However, by not  performing timely planning the Navy risks not having a repair capability in  place when needed, and as time passes, limits the options that may be  available to it. Navy officials have stated that they do not intend to develop  plans for a voyage ship repair capability on Guam until preparations for  the 2012 budget cycle begin. However, in response to our inquiries, the  Navy identified four potential options for meeting future voyage ship  repair requirements on Guam and acknowledged that it cannot avoid  doing some voyage repairs there. First, the Navy could use existing Navy- owned voyage repair capabilities in Guam, though these face certain  limitations in their ability to take on additional voyage repairs. Second, fly- away teams could be brought in from Navy-owned shipyards in the United  States, and these teams would rely on facilities and infrastructure in place  on Guam. Third, the Navy could develop a new repair facility, which would  entail significant planning, repair of existing infrastructure, and possibly  new military construction. Fourth, the Navy could contract out the work  to either or both of the existing private ship repair providers or to any  other contractor that might choose to locate at Guam. DOD guidance  requires that a determination be made as to whether a specific industrial  capability is required to meet DOD needs and that a selection be made for  meeting those needs. Moreover, Navy officials acknowledge that if the  option to expand existing Navy repair capabilities on Guam or establish  new Navy repair capabilities were chosen, early identification of mission  requirements would be needed to facilitate planning and budgeting of new  or expanded Navy construction to ensure that a fully functioning Navy- owned ship repair facility would be operational in 2012.
subsections: section_title: A Navy-Operated Ship Repair Capability Presents One Option, but Existing Navy-Owned Capabilities on Guam Are Inadequate to Accept Additional Voyage Repairs
paragraphs: Existing Navy-owned capabilities in Guam are inadequate to address  current voyage repair requirements for surface vessels and are unable to  address additional voyage repair requirements without increased  capabilities and capacity. First, the primary mission for the USS Frank  Cable is to provide maintenance and support for the three fast attack  submarines home-ported on Guam, and to address the needs of visiting  submarines. At the time of our review, the submarine tender’s repair crew  was operating at full capacity in meeting its primary mission. As a result,  the Navy contracted with Guam Shipyard to complete $1.2 million in  voyage repairs on submarines between fiscal years 2002 and 2007, mostly  to provide additional manpower to augment the submarine tender’s repair  crew. Although the Navy has not developed voyage repair plans for  surface ships, it has developed some plans for the provision of voyage and  other repairs for submarines. For example, current plans will require the  USS Frank Cable to provide support for the new guided missile submarine  that will visit Guam for rotational crewing. Additionally, the Navy plans to  use part of the repair crew from the USS Frank Cable to perform repair  services for the submarine tender USS Emory S. Land, which will be  stationed at Diego Garcia in the British Indian Ocean Territories. The  repair crew on the USS Frank Cable will be increased by about 170  personnel to enable about 160 to rotate for workload assignments on the  USS Emory S. Land, leaving no more than 10 repair personnel to take on  additional work. As a result, according to Navy officials, it is unlikely that  the USS Frank Cable could provide voyage repairs for surface vessels in  Guam in the future without adding capability and capacity beyond the 170  additional personnel already planned.
Second, the Emergent Repair Facility on Guam that supports submarines  when the USS Frank Cable is away from port lacks the capability to meet  surface voyage repair requirements. This facility is used by a stay-behind  repair crew from the USS Frank Cable when that ship is away from its  home port. According to Navy officials, the Emergent Repair Facility is not  adequate even for its current role. Officials estimated that the Navy would  need about $21 million to expand and equip the facility just to meet its  current submarine mission requirements, without taking on additional  voyage repairs for surface ships. For example, the facility has no  communications capabilities; repair personnel must use personal cellular  telephones for any necessary communications. Navy officials acknowledge  that it would have to be expanded to meet any future surface voyage  repair requirements. Moreover, larger vessels may be unable to approach  the Emergent Repair Facility without conducting dredging operations and  completing pier improvements. As a result the Emergent Repair Facility  cannot be used to provide voyage repairs for surface vessels without  considerable planning and capital investment.
section_title: Effective Use of Fly-Away Teams from U.S. Naval Shipyards Is a Second Option, but Depends upon Ability of Naval Shipyards to Deploy Personnel to Guam and the Infrastructure and Facilities Available There
paragraphs: The effective use of fly-away teams from Navy-owned shipyards in the  continental United States to perform voyage repairs at Guam depends on  the ability of U.S. Naval shipyards to provide personnel to perform repairs  without negatively impacting their own ongoing work, as well as on the  adequacy of infrastructure and facilities available for their use in Guam.  Further, U.S. Naval shipyards have not been provided with voyage repair  estimates to conduct workload planning and determine their capacity to  provide fly-away teams to Guam. The use of fly-away teams may not be  practicable or cost-effective for performing large amounts of voyage repair  work, because Navy-owned shipyards in the United States that provide fly- away teams are currently operating beyond their target capacities,  although they anticipate having excess capacity in the coming years.  However, deploying fly-away teams to Guam to meet large amounts of  voyage repair requirements without advance planning could undermine  scheduled maintenance at the U.S. Naval shipyards. Fly-away teams also  need sufficient infrastructure and equipment at the location at which they  will conduct voyage repairs. Because the USS Frank Cable and the  Emergent Repair Facility both face limitations, fly-away teams that deploy  to Guam cannot be assured that these facilities would be available to  provide needed infrastructure or equipment. Without more clearly defined  repair requirements and further examination of equipment and personnel  necessary to meet those requirements, the viability of using fly-away teams  to provide future voyage repairs is uncertain.
section_title: Establishment of a New Navy Depot Capability on Guam Is a Third Option, but Would Require Infrastructure, Equipment, Personnel, and Funding
paragraphs: Building a new Navy depot-level repair capability would require years of  planning and additional infrastructure, equipment, personnel, and funding.  If the lease on the property at the former Naval Ship Repair Facility,  Guam, is allowed to expire, establishing a new Navy-owned ship repair  capability at that location would require the Navy to address  infrastructure, equipment, and personnel requirements to create the  capability needed to meet surface voyage repair requirements on Guam.
The Navy would have to determine what capability is needed and then  take action to acquire the equipment to provide that capability.  Furthermore, infrastructure repairs may be needed to support work on  Navy vessels. For example, according to Navy officials the typhoon  moorings at Guam Shipyard may require repair. A new Navy depot-level  ship repair capability in Guam would also require staffing by military and  civilian personnel. Without a determination of equipment, infrastructure,  personnel, and funding requirements for providing new surface ship repair  capabilities, the Navy cannot know whether establishing a new ship repair  capability in Guam is a viable option. Additionally, implementing this  option would also require significant lead time.
section_title: Private-Sector Ship Repair Providers Offer a Fourth Option, but the Navy Has Not Determined the Extent to Which It Will Rely on Them beyond 2012
paragraphs: The Navy has not determined the extent to which it will rely on private- sector ship repair providers beyond 2012, when the lease on Navy property  occupied by Guam Shipyard expires. While it is unclear what kind of  private sector capability will be available beyond 2012, both private ship  repair providers operating in Guam have been awarded 1-year contracts by  MSC to provide selected voyage repairs to surface vessels operating at or  near Guam for fiscal year 2008. According to MSC officials, new contracts  are to be executed by the end of fiscal year 2008, and this contracting  arrangement will include option years that address voyage repair  requirements for MSC ships through 2012. Guam Shipyard operates on  Navy property located within Naval Base, Guam. Gulf Copper operates  from approximately 700 feet of pier space at the commercial port opposite  Navy property on Apra Harbor. It is possible that additional private ship  repair providers may express interest in performing voyage repairs at  Guam in the future, and that Guam Shipyard may continue operations at  another location in Guam beyond 2012 when its lease on U.S. Navy  property expires. Figure 1 depicts the physical locations of Guam Shipyard  and Gulf Copper.
The Joint Depot Maintenance Program provides guidance on selecting  sources of maintenance and repair, and a DOD Handbook entitled  Assessing Defense Industrial Capabilities provides a framework for  coordinating analysis and determining the most cost- and time-effective  options for meeting DOD needs. If the option selected by the Navy for  providing ship repairs in Guam requires military construction, as may be  the case if the Navy chooses to expand existing Navy-owned capabilities  or to establish new Navy-owned capabilities, the military construction  requirements would have to be included in the budgeting process for fiscal  year 2010 in order for new facilities to be ready by October 2012. However,  Navy officials have stated that they do not intend to develop plans for a  voyage ship repair capability on Guam until preparations for the 2012  budget cycle begin. Without performing an assessment of the viability of  each of the options for voyage repairs in a timely manner to support  planning and budgeting of critical tasks, the Navy risks not having  adequate voyage repair capabilities in place when needed to support  operations in the Pacific Ocean, and as time passes, limits the options that  could be available to it by 2012.
section_title: Conclusions
paragraphs: The Navy has not effectively identified voyage repair requirements that are  a prerequisite for selecting among the options to provide such capabilities  on Guam. While the Navy does not fully know its voyage surface ship  repair requirements near Guam for 2012 and beyond, it does possess data  that could be used to estimate requirements. Namely, it could use existing  ship repair experiences, projected requirements identified in the 2006  Quadrennial Defense Review, and information about repair capabilities  maintained at other strategic locations to identify its ship repair  requirements for Guam in the near term and to aid in developing a baseline  forecast of repair capabilities it will need for 2012 and beyond. Moreover,  the requirements determination process is a precursor to planning for the  provision of ship repair capabilities and selecting an option to provide  those capabilities, since a certain amount of lead time would be required  to implement some of the options. Additionally, a decision about future  industrial repair requirements should be an integral part of ongoing Guam  infrastructure planning to support the transfer of Marines to Guam from  Japan. However, the Navy has not developed such plans, nor has it  assessed the challenges associated with the options identified, or selected  an option to provide ship repair capabilities on Guam. Without identifying  requirements, performing a risk-based assessment of the viability and  costs of each of the options, selecting the best option or combination of  options available, and then developing and implementing an action plan to  address any challenges associated with the option or options selected, the  Navy lacks reasonable assurance that it will have sufficient time to  prepare the best option or combination of options for meeting future  surface ship repair requirements on Guam beyond 2012.
section_title: Recommendations for Executive Action
paragraphs: To ensure that adequate voyage repair capabilities are available for ships  operating near Guam, and recognizing the lead time required to implement  options, we recommend that the Secretary of Defense direct the Secretary  of the Navy to    estimate requirements for repairs for surface vessels operating at or  near Guam based on data determined to be most appropriate by the  Secretary of the Navy;    assess the benefits and limitations of each of the options for providing  repairs to ships operating near Guam, and perform an assessment of  anticipated costs and risks associated with each option; and    select the best option or combination of options for providing repair  capabilities to support surface ships operating near Guam, and develop  a plan and schedule for implementing a course of action to ensure that  the required ship repair capability will be available by October 2012.
section_title: Agency Comments and Our Evaluation
paragraphs: In a written response to a draft of this report, DOD concurred with all of  our recommendations with comments. The department’s comments are  reprinted in their entirety in appendix II.  The department also provided  several technical comments that have been incorporated as appropriate.
With regard to our first recommendation for an assessment of  requirements for repairs for surface vessels operating at or near Guam, the  Navy responded that it has a methodology to determine annual emergent  repair requirements by ship class and fleet—which includes voyage repair  execution history as a subset—and that this requirement will be included  in the future years defense plan, and that no further direction is necessary.  While we acknowledge that the Navy looks at overall maintenance  requirements as a part of the annual budget process, this process does not  provide a detailed listing of specific capabilities required for voyage  repairs at strategic locations, such as Guam beyond 2012. Given its unique  location and the changing circumstances that will impact voyage repair  requirements in and around that location, we continue to believe that a  specific assessment of requirements for providing surface vessel voyage  repairs in Guam represents a necessary baseline for planning for the  provision of ship repair capabilities beyond 2012 and for the selection of  an option or combination of options to provide those capabilities.
In concurring with our second recommendation regarding the need for an  assessment of the benefits and limitations of each of the options for  providing repairs to ships operating near Guam, the department’s response  was that the Navy has already identified a plan for providing repair  capabilities for ships operating near Guam and that the Navy has  determined that establishing a new repair facility on Guam is not viable  since the expenditure of funds to do this is not necessary. The  department’s response also noted that the Navy is already developing a  military construction project to expand the existing repair capabilities on  Guam in fiscal year 2010, that the Navy intends to continue the practice of  utilizing repair teams from U.S. Naval shipyards and private shipyards as  needed, and that the Navy intends to continue the practice of contracting  voyage repair work to one or more private ship repair providers.  The  Navy may have determined that a new repair capability on Guam is not  necessary, but much of the existing repair equipment currently used to  support voyage repair on surface vessels—including floating dry dock,  floating crane, and industrial equipment—are owned by Guam Shipyard  and could potentially be removed at the conclusion of the existing lease, if  a new lease were not negotiated. We continue to believe that it is essential  that the department determine whether it will have continued need for  expensive capital equipment such as the floating dry dock and crane, and  whether the capability provided by such equipment will be available from  the private sector. Finally, it is commendable that the Navy has a plan for  providing ship repair capabilities on Guam and is moving forward to  implement it. However, at the time of our exit briefing with the Navy in  January, the Navy did not inform us of this plan. Moreover, Navy officials  have told us that this plan was developed in February, subsequent to our  exit briefing and in response to our recommendations.
In concurring with our third recommendation regarding selection of the  best option or combination of options for providing repair capabilities to  support surface ships operating near Guam, the department stated again  that the Navy’s plan for providing repair capabilities to support surface  ships operating near Guam has already been determined, and that  direction from the Secretary of Defense to the Secretary of the Navy is not  needed. The response also stated that committing the Navy to a lease  agreement in 2008 for a capability in 2012 is premature. While we agree  that committing the Navy to a lease in 2008 for a capability required in  2012 is premature, it is not premature to decide whether or not there will  be an industrial activity—either owned and operated by the government or  leased by a private contractor—within the Navy installation. The  department stated in its response that the Navy intends to use private- sector capability, but it did not state whether that would be on the Navy  installation on Guam. Given the detailed planning that is required to  support the planned buildup of military personnel expected over the next  few years in Guam, we believe it is essential that the Navy determine  whether or not it expects to continue to have an industrial activity  operating as a part of the Guam Master Plan, and that it determine what  acreage this activity would occupy.
We are sending copies of this report to the appropriate congressional  committees; the Secretary of Defense; the Secretary of the Navy; the  Commandant of the Marine Corps; and the Director of the Office of  Management and Budget.
If you or your staff has any questions about this report, please contact me  on (202) 512-4523 or at leporeb@gao.gov. Contact points for our Offices of  Congressional Relations and Public Affairs may be found on the last page  of this report. Additional contacts and staff acknowledgments are  provided in appendix III.
section_title: Appendix I: Scope and Methodology
paragraphs: To determine the extent to which the Navy has identified future ship  repair requirements for ships operating in the Guam area and assessed  options to address those requirements, we reviewed documents related to  ship maintenance. In addition, we interviewed officials responsible for  force structure planning, contracting for repairs on vessels belonging to  the U.S. Navy and Military Sealift Command, and performing repairs on  vessels belonging to the Navy and Military Sealift Command on Guam as  well as related organizations in Hawaii, and on the west coast of the  United States. Specifically, we interviewed officials and analyzed  documents related to ship repair requirements and the options proposed  to meet them at the offices of the Chief of Naval Operations; the  Commander, Pacific Fleet; the Commander, Marine Forces Pacific; the  Commander, Naval Sea Systems Command; the Commander, Naval Forces  Marianas; the Chief of Naval Installations; the Commander, Military Sealift  Command; the Commander, Naval Facilities Pacific; and the Guam  Economic Development and Commerce Authority. We also performed  work at the offices of several private ship repair providers to determine  the extent to which private-sector repair capabilities may be available on  Guam in the future. We also examined Department of Defense (DOD)  policy and Joint Guidance for providing maintenance and repair of DOD  assets afloat. We performed our review from July 2007 to January 2008 in  accordance with generally accepted government audit standards. Those  standards require that we plan and perform the audit to obtain sufficient  and 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 Contact
section_title: Acknowledgments
paragraphs: In addition to the contact named above, Julia Denman, Assistant Director;  Jeffrey Kans; Julia C. Matta; John E.Trubey; and Cheryl Weissman made  major contributions to this report.