Several Navy organizations share responsibilities for scheduling, planning, budgeting, overseeing, and setting policy for the repair, maintenance, and modernization of non-nuclear surface ships: The Secretary of the Navy, as directed by the Secretary of Defense, is responsible for conducting, and has the authority under Title 10 of the United States Code to conduct, all the affairs of the Department of the Navy, including overseeing the repair of naval ships. The Chief of Naval Operations is the senior military officer of the Department of the Navy and is responsible to the Secretary of the Navy for the command, utilization of resources, and operating efficiency of the operating forces of the Navy and of the Navy shore activities assigned by the Secretary. U.S. Pacific Fleet and U.S. Fleet Forces Command develop budgets for the operations and maintenance of ships, while also setting requirements for overall fleet readiness. Commander, Naval Surface Force, U.S. Atlantic Fleet and Commander, Naval Surface Force, U.S. Pacific Fleet—the Navy’s surface type commanders—have specific responsibilities for maintaining, training, and ensuring the readiness of their assigned surface ships. In addition, the type commanders have a significant role in scheduling repair planning activities, funding availability work, and coordinating the management and supervision of that work. The Assistant Secretary of the Navy for Research, Development and Acquisition serves as the Navy Acquisition Executive and has authority, responsibility, and accountability for all acquisition functions and programs, including surface ship repair, maintenance, and modernization. The Assistant Secretary also represents the Department of the Navy to the Under Secretary of Defense for Acquisition, Technology and Logistics and to Congress on all matters relating to acquisition policy and programs. Naval Sea Systems Command (NAVSEA) is charged with maintaining ships to meet fleet requirements, while doing so within defined cost and schedule parameters. NAVSEA has the further responsibility of establishing and enforcing technical authority in combat system design and operation. These technical standards ensure systems are engineered effectively, and that they operate safely and reliably. Figure 1 shows how these operating forces and shore-based entities are organized within the Navy. Within NAVSEA, several organizations provide headquarters-based and on-site, local support for surface ship availabilities. Functions these offices perform include contract administration, program management, and planning for future availabilities informed by the historical maintenance needs of Navy ships. Figure 2 highlights the various NAVSEA offices that participate in surface ship availabilities and their responsibilities. The level of complexity of ship repair, maintenance, and modernization can affect the length of a maintenance availability—which can range from a few weeks to more than 6 months—and informs whether the work will be competed among contractors only in the ship’s homeport or competed among all ship repair yards on the East or West Coast. The types of availabilities include the following: Chief of Naval Operations (CNO) availabilities are scheduled to accomplish industrial maintenance and modernization. Industrial maintenance requires complex industrial processes to perform restorative work on a ship, for example, involving structural, mechanical, and electrical repairs. Modernization requirements include changes that either add new capability or improve the reliability of existing systems. For example, the Navy is currently in process of modernizing cruisers and destroyers to upgrade their combat systems. CNO availabilities can last 6 months or longer and are normally scheduled every 2 to 3 years throughout a ship’s service life. To inform the work scope for a CNO availability, Navy officials or contractor representatives typically perform one or more “ship checks” to assess the material condition of the ship in advance of the availability. Continuous Maintenance availabilities are for routine maintenance work, for example, repainting parts of a ship or repairing the nonskid surfaces on a flight deck. These availabilities are normally 2 to 6 weeks in duration and typically scheduled once per non-deployed quarter during a period when the ship will be in port. Emergent Maintenance availabilities are for work of an urgent nature when the risk of prolonged disruption to a ship’s operations makes higher payments for repair acceptable. These availabilities are only completed on an as-needed basis in order to keep a ship operating. For example, in 2015, staff at one regional maintenance center discovered a propeller blade was loose during a contractor’s routine cleaning of an underwater hull of an amphibious ship and immediately arranged for the repairs. In support of its mission to ensure surface ships are mission-ready and able to achieve their expected service life, NAVSEA’s Surface Maintenance Engineering Planning Program (SURFMEPP) has developed a series of products used to support long-term maintenance for ships, focusing on capturing the technical requirements for a class of ships. For example, maintenance plans for a class of ships could identify a need for equipment overhauls, propulsion shaft replacements, and corrosion protection. To identify requirements for a specific ship, SURFMEPP coordinates the development of a “baseline availability work package” with the relevant type commander. This package represents the NAVSEA-mandated technical requirements to ensure a ship reaches its expected service life and meets its operational commitments and is tailored specifically to each ship. Planners then use these requirements as a basis for developing detailed work specifications that direct the ship repair contractor how to perform the work. SURFMEPP also manages the Master Specification Catalog, which is a module within the Navy Maintenance Database that contains information and specifications needed by planners to develop the work specifications for the repair or modernization of a specific surface ship. This catalog is the repository of all work item instructions used to execute contracted depot-level maintenance. Use of the catalog is intended to promote standardization and planning products that reduce costs and increase quality of contracted work. In September 2012, we assessed a Navy readiness strategy, known as the Fleet Response Plan, aimed at improving the readiness of Navy surface combatant and amphibious warfare ships. Our report recognized the Navy had taken steps to alleviate the consequences of deferred maintenance—such as reduced readiness and increased costs once repairs were made—by establishing SURFMEPP and the Commander, Naval Regional Maintenance Center (CNRMC) in 2010 to oversee the operations of the regional maintenance centers. However, we found the Navy had not assessed certain risks to implementation of the strategy, such as staffing shortages at SURFMEPP and CNRMC. We recommended that the Navy develop a comprehensive assessment of the risks the Navy faces in implementing its readiness strategy and develop alternatives to mitigate risks. However, in responding to our recommended actions, the Navy did not agree that a comprehensive assessment of risks was necessary or desirable—stating its view that existing assessment processes were sufficient—and did not take action. The Navy contracts with private shipyards and other firms for the repair, maintenance, and modernization of non-nuclear surface ships. These contractors comprise what is referred to as the ship repair industrial base. The extent of facilities required by a contractor to perform a maintenance availability varies by the complexity of the maintenance requirements. Contractors’ facilities might include shipyards with piers, drydocks, cranes, and separate facilities for pipe-fitting and valve repair. Certain repairs, such as inspecting or repairing the ship’s hull, or removing marine growth from the hull, might require placing a ship in a drydock. Figure 3 shows a drydock and crane. To support the execution of complex maintenance availabilities, the Navy has established a certification process to ensure that contractors are qualified to conduct the work. NAVSEA will grant a “Master Ship Repair Agreement” after certifying a ship repair firm’s capability and capacity to perform all aspects of shipboard work. To obtain this level of certification—the highest the Navy grants for ship repair—the firm must meet certain standards, including having the management, organization, production, and facilities to perform a complex repair. Certified firms must also be capable of subcontracting for elements beyond their capability or capacity, while ensuring that they have adequate oversight of the subcontracted effort. A June 1995 ship depot policy issued by the Secretary of the Navy requires that, whenever possible, ship repair and maintenance work of 6 months or less be performed by shipyards at or near the ship’s home port to improve the crew’s quality of life by reducing their time away from home. If the estimate is more than 6 months, the Navy expands the solicitation to include additional ship repair companies operating on the relevant U.S. coast. Over the years, the Navy has used different contracting strategies with the private sector to support the repairs and modernization for surface ships. Pre-MSMO (before 2004): According to Navy contracting officials, prior to the implementation of the MSMO contracting strategy that has been in place until recently, the Navy generally used firm-fixed-price contracts to contract for the maintenance and modernization of surface ships and used its own planning workforce to draft work specifications. A firm-fixed-price contract provides for a price that is not subject to any adjustment on the basis of the contractor’s cost experience in performing the contract. This contract type places maximum risk and full responsibility for all costs—and resulting profit or loss—on the contractor. It therefore provides maximum incentive for the contractor to control costs. In 1982, we reported on deficiencies with the Navy’s implementation of this contracting strategy for ship repairs. MSMO (2004 to present): The Navy has used the MSMO strategy, which features the use of cost-reimbursement contracts, to contract for ship maintenance work with the private sector. Cost- reimbursement contracts provide for the payment of allowable incurred costs, to the extent prescribed in the contract. Under a cost- reimbursement contract, the government does not contract for the performance of a specified amount of work for a predetermined price, but instead agrees to pay the contractor’s reasonable costs of performance regardless of whether the work is completed. In addition, as part of the MSMO strategy, the contractor responsible for executing the work develops the specifications to which the work was performed.