Summary: In response to a congressional request, GAO evaluated the Navy's fleet modernization program.
The Navy often fails to follow its guidelines concerning the management of its fleet modernization program. As a result, many ship alterations are deferred and data for cost estimates are not available. In addition, the Navy does not always properly order material for the program, resulting in unnecessary procurements. GAO determined that the Navy deferred about 35 percent of its fiscal year 1980 congressionally budgeted alterations. Over half of these occurred because ship overhauls were rescheduled, and the rest were deferred because: funds were needed to perform unscheduled emergency alterations, onhand material was insufficient, and plans and drawings were late. Since program managers frequently did not follow the guidelines, critical milestones were missed, some alterations had to be deferred while still in the planning stage, and data for cost estimates were not always available. GAO believes that the Navy could improve its budget cost estimates if it would use the actual costs for previous alterations to assess the reasonableness of shipyards' cost estimates. The Navy is taking steps to improve the visibility of ship alteration material at the wholesale and shipyard levels. However, more could be done to improve the effectiveness of material management and to reduce material costs.
