Navy Maintenance

Cost growth and schedule overruns at the San Diego and Long Beach shipyards were quite similar during fiscal years 1989-91. The cost growth averaged about 30 percent in both areas. In San Diego, cost growth affected 84 of 94 ships, and schedule overruns occurred on 47 of 94 ships. In Long Beach, cost growth affected 31 of 33 ships and schedule overruns occurred on 19 of 33 ships. At the Long Beach Shipyard, cost growth affected eight of 23 ships and schedule overruns occurred on 10 of 23 ships. Overall, there was almost no difference between the government cost estimates at the start of repair and the actual costs at completion. This is because the government estimate (1) generally includes a 10- to 15-percent growth factor and (2) is an agreed upon price negotiated by the shipyard and the Navy before work is started.

GAO found that: (1) final contract costs generally exceeded contract award prices by 30 percent on most ship repairs, but they were generally less than government estimates; (2) 50 to 57 percent of repairs exceeded the original schedule completion dates by an average of over 30 days; (3) cost and schedule overruns were similar at San Diego and Long Beach shipyards; (4) the Long Beach Naval Shipyard overall showed an insignificant difference between cost estimates and actual repair costs, although 8 of 23 ships did have cost overruns averaging $4.1 million, and 10 of 23 ships had schedule overruns averaging 22 days; (5) differences between government estimates and actual costs were small, since the government estimate was a negotiated price between the government and the shipyard, and generally included a 10- to 15-percent growth factor; and (6) the causes of cost and schedule overruns were inability to determine exact maintenance requirements, inadequate and late government-furnished information and materials, government-caused delays and disruptions, and work added after start of repairs.