Summary: Navy reviews done between 1989 and 1991 and later GAO tests found that labor estimates for ship repairs often were overstated. In addition to increasing repair prices, overstated labor estimates caused the reporting of erroneous labor efficiency data. Without accurate labor efficiency data, managers could not measure labor performance and identify areas needing attention. This problem arose because shipyard planners did not always follow estimating policies, internal controls were absent, and labor standards were not always current to help planners prepare accurate estimates. The shipyards did devote considerable effort to implementing labor-saving improvements, such as more efficient production methods and equipment. The benefits from these improvements, however, were not always incorporated into labor estimates for repairs because planners were not told of new processes and equipment. Consequently, labor savings stemming from improvements often were not reflected in reduced benchmarks for efficiency measurement or in lower repair prices.
