The U.S. Navy currently maintains 11 nuclear carriers—5 homeported on the West Coast of the United States, 5 on the East Coast of the United States, and 1 in Yokosuka, Japan. Of the West Coast carriers, 3 are homeported in San Diego, California; 1 in Bremerton, Washington; and 1 in Everett, Washington. All 5 East Coast carriers are homeported in Norfolk, Virginia. As some of the most technologically advanced ships in the world, nuclear-powered aircraft carriers require continuous and regularly scheduled maintenance to keep them ready to meet mission requirements. Naval Station Mayport has served as a conventional aircraft carrier homeport at various times since the 1950s, including homeporting two conventional carriers at one time, but it has not served as homeport for a nuclear-powered aircraft carrier. Consequently, to homeport a nuclear powered aircraft carrier, several major infrastructure upgrades are required at Mayport. These infrastructure improvements include construction of four new buildings: (1) controlled industrial facility, (2) ship maintenance facility, (3) maintenance support facility, and (4) parking garage. The controlled industrial facility would be used for the inspection, modification, and repair of radiologically controlled equipment and components associated with naval nuclear propulsion plants. The ship maintenance facility is necessary to perform nonnuclear maintenance on the carrier’s nuclear propulsion plants. The maintenance support facility would provide the needed administrative and technical staff offices to support propulsion plant maintenance and a central area for receiving, inspecting, shipping, and storing materials. The parking garage would replace parking spaces lost through construction of the three new maintenance buildings. The infrastructure upgrades also include improvements to Wharf F, which would receive improvement to its structural components, berthing capability, and utility and security systems in order to make it capable of homeporting a nuclear carrier. Additionally, traffic improvements would be made to the Massey Avenue corridor to rebuild a boulevard-style roadway with two lanes each way divided by a grass median. Dredging would also be necessary to deepen the Mayport turning basin to allow access for a fully loaded nuclear aircraft carrier. Figure 1 shows the location and expected time line for completion of the planned infrastructure and facility improvements at Naval Station Mayport. Massey Ave. The Navy’s estimate of one-time and recurring costs for establishing a nuclear-powered aircraft carrier homeport at Naval Station Mayport is contained in two DOD information papers dated February 25, 2010, and August 5, 2010. The February 2010 information paper was produced by the Navy’s Office of the Chief of Naval Operations in response to a request from the Congressional Research Service and provided only the one-time costs of the carrier homeport. Those one-time costs were primarily drawn from a series of DD Form 1391s, which DOD uses as budget justification material to support funding requests for military construction. However in addition to military construction costs, there are also one-time costs associated with planning and design, the initial equipment outfitting for the new maintenance facilities to be built in Mayport, and the permanent change of station cost for the relocation of the carrier crew to Mayport. The August 2010 information paper was also prepared by staff working for the Chief of Naval Operations, in response to questions from GAO about the recurring costs for the planned homeporting. This information paper contained estimates of the recurring costs associated with the carrier homeport. There were nine recurring costs listed in the information paper including: (1) permanently assigned labor for the new maintenance facilities, (2) base operating support, (3) facilities sustainment, (4) facilities restoration and modernization, (5) transportation of equipment for the carrier air wing, (6) travel and per diem for public shipyard workers traveling from Norfolk to Mayport to work on the carrier’s nuclear propulsion systems, (7) the additional biennial maintenance dredging needed to allow access for a fully loaded nuclear aircraft carrier, (8) the differential between Norfolk and Mayport in basic allowance for housing costs, and (9) the differential between Norfolk and Mayport in utilities costs. The recurring costs do not represent the total cost of operating a nuclear-powered aircraft carrier. Rather, they are the subset of costs associated with nuclear carrier maintenance in which there is a cost differential between conducting the maintenance in Mayport and conducting the maintenance in Virginia. On December 28, 2010, the Chief of Naval Operations transmitted a report to the congressional defense committees that essentially consolidated the estimates provided in the two information papers. However, the report differed from the information papers in its treatment of inflation for one- time costs and in the total for the one-time permanent change of station cost. The February 2010 information paper showed the one-time military construction costs as budgeted amounts in then-year dollars, which include the effects of inflation, while the December 2010 report showed al one-time cost in base year 2010 dollars, which exclude the effects of inflation and use 2010 prices throughout the life cycle. The one-time permanent change of station cost was reduced from $26 million to $10 million in the December 2010 report. The report did not provide any additional description or documentation that was not contained in t DOD information papers. A reliable cost estimate is critical to the success of any program because it can provide the basis for informed investment decision making, realistic budget formulation and program resourcing, meaningful progress measurement, proactive course correction when warranted, and accountability for results. In March 2009, GAO issued a cost estimating and assessment guide that compiled cost estimating best practices drawn from across industry and government. Specifically, the guide includes four characteristics of a high-quality cost estimate by which an organization’s management can assess cost estimates in making informed decisions. A cost estimate is: e when it accounts for all possible costs associated with a project, is structured in sufficient detail to ensure that costs are neither omitted nor double-counted, and the estimating teams’ composition is commensurate with the assignment; well documented when supporting documentation is accompani narrative explaining the process, sources, and metho the estimate and contains the underlying data used to develop the estimate; accurate when it is based on an assessment of the costs most likely d and not overly conservative or too optimistic; and credible when it has been cross-checked with an independent cost estimate, the level of confidence associated with the point estim been identified through a risk and uncertainty analysis, and a sensitivity analysis has been conducted—that is, the project has ate has examined the effect of changing one assumption related to eac activity while holding all other variables constant in order to iden which variable most affects the cost estimate. In addition, GAO’s cost estimating and assessment guide l steps that, when followed, should result in high-quality cost estimates that are comprehensive and accurate and that can be easily and clearly traced , replicated, and updated. The guide also contains hundreds of best practices drawn from across industry and government for carrying out these steps. Table 1 shows these 12 key steps and how they relate t four characteristics of a high-quality cost estimate. Our independent estimate of the total cost for homeporting a nuclear- powered aircraft carrier at Naval Station Mayport is lower than the Navy’s estimate. Specifically, the Navy’s estimate of one-time costs is outside the upper range of our estimate, while its estimate of recurring costs falls within the upper range of our estimate. Our independent cost estimate suggests that the total one-time cost of homeporting a nuclear-powered aircraft carrier at Naval Station Mayport will be between $258.7 million and $356.0 million, in base year 2010 dollars. The Navy’s estimate of the one-time costs is $537.6 million, also in base year 2010 dollars, which is outside the upper range of our estimate. Unlike our estimate, the Navy did not conduct a risk and uncertainty analysis on its one-time costs; as a result, its estimate does not include a range. Reporting a range of costs around a point estimate is useful to decision makers because it conveys a level of confidence in achieving the most likely cost. Table 2 shows a comparison between our estimated range and the Navy’s estimate for one-time costs. Specifically, the table shows our estimated range at an 80 percent confidence interval and whether the Navy’s estimate falls into that range. The low value of the estimate range ($258.7 million) represents a 10 percent chance that the cost will be that amount or less, and the high value of the estimated range ($356.0 million) represents a 90 percent chance that the cost will be that amount or less. The last column in the table identifies whether the Navy’s estimate is within our estimated range. Our initial point estimate of the one-time dredging cost based on historical data was $44.3 million, which was $2 million less than the Navy’s estimate. However, in accordance with the best practices recommended by the GAO Cost Estimating and Assessment Guide, we have updated our estimate based on the $26.6 million contract awarded in August 2010. Our estimated range now reflects the contract award price plus the Navy’s overhead and contingency amounts. Navy officials attributed the lower than estimated contract costs to supply and demand within the private dredging sector, which because of lower demand has caused firms to compete at lower cost. We also compared the Navy’s point estimate to our estimate at the 65 percent confidence level. A confidence level is the chance that the actual costs will be equal to or less than the adjusted amount. In table 2, we reported the 10 percent confidence level estimate as our low estimate range and the 90 percent confidence level estimate as our high estimate range. For an element-by-element comparison of our estimate with the Navy’s point estimate, we chose the 65 percent confidence level since we consider this confidence level to be an appropriate budgeting range.