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. 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.