Navy Contracting

In response to a congressional request, GAO reviewed the Navy's plans to establish a second source for the Aegis combat system shipyard test and integration function. Specifically GAO reviewed the: (1) cost-effectiveness of second sourcing this function; (2) selection and role of the second source contractor; (3) effects second sourcing will have on the quality of the system; and (4) ability of other contractors to perform this function.

GAO found that the Navy: (1) had not completed its cost analysis of second sourcing the Aegis shipyard integration and testing function; (2) decided to develop a second source without considering cost; (3) stated that some duplication of effort would initially exist between the two contractors' test team personnel; and (4) emphasized that, although some costs would be involved in setting up a second source, no additional facility or equipment costs would be incurred. GAO also found that the second source contractor: (1) would not replace existing shipyard test team members; (2) is needed due to an increase in the number of ships completing construction and undergoing overhaul; and (3) would carry out system-level testing and integration tasks during shipyard installations, sea trials, and post shakedown operations. The Navy believes that quality would not be affected because: (1) the second source contractor would be providing engineers with prior integration and testing experience; and (2) the test engineers would be trained and qualified by experienced personnel. The Navy acknowledged that, although other contractors had some experience in shipyard integration and could possibly perform the required functions, the chosen contractor was the only one considered because of its experience and qualified pool of engineers.