Summary: In response to a congressional request, GAO examined: (1) the man-day rates of Navy ship maintenance work performed in selected private and public shipyards; (2) the Navy's reasons for overhauling West Coast-based aircraft carriers at the Philadelphia Naval Shipyard; (3) whether the public yard rates included all overhead costs; and (4) whether a comparison of rates might show overhaul on the West Coast to be more cost-effective.
GAO noted that the purpose of the extensive overhauls under the aircraft carrier Service Life Extension Program (SLEP) is to extend the aircraft carriers' expected service life from 30 years to 45 years. GAO found that: (1) the fiscal year 1985, man-day rates at the public and private shipyards were very close and included most overhead costs; (2) the public and private shipyard rates did not reflect the costs for Navy management and oversight; (3) labor comprised from 80 to 88 percent of total costs for public shipyards and from 70 to 75 percent for private shipyards; (4) only private shipyards incurred costs for state and local taxes, business licenses, insurance, building space rental, and building depreciation; (5) in deciding to perform SLEP on the West Coast, the Navy considered cost, the Naval Sea Systems Command SLEP objectives, and strategic requirements; and (6) the Navy believed that conducting a reduced-scope SLEP on the West Cost would be unsatisfactory, since the Puget Sound shipyard did not include in its program the extensive modernization of hull structures and main engines.
