Depot Maintenance

In recent years, the Navy has made many changes to make its fleet support activities more efficient and effective. The Navy assumed that consolidating similar activities within a region could eliminate inefficiencies and redundancies. In 1998, as part of this effort, the Navy began a pilot project consolidating the management, operations, and funding of the Pearl Harbor Naval Shipyard and the Naval Intermediate Maintenance Facility in Hawaii. The Navy expects that the pilot project will serve as a model for other possible consolidations by showing that integrating shipyard and other intermediate activities can yield greater efficiency and lower overall unit costs. This report discusses (1) the preliminary results of the Pearl Harbor pilot project on improving performance of maintenance activities, (2) the usefulness of the pilot as a model for future consolidations, and (3) issues related to financial and organizational structures for such consolidations.

GAO noted that: (1) although the Pearl Harbor Pilot is not complete, preliminary results have been mixed, showing either improvements, no improvements, or insufficient data to determine results; (2) where data are available, overall indications are that the pilot has the potential to improve maintenance activities in Hawaii; (3) while the Navy's pilot test plan calls for evaluating performance using nine metrics, data has been gathered for only five to compare performance under the consolidated operation with performance under the preconsolidation organizations; (4) preliminary results for two metrics indicate improvements that meet or exceed the Navy's expectations, and two others indicate improvements that fall slightly short of the Navy's expectations, while one metric indicates no improvement; (5) other positive results include increasing workforce flexibility by integrating nearly 4,000 workers from two centers into a single workforce; (6) consequently, the number of workers assigned daily to the excess labor shop has dropped from about 200 to below 10; (7) the Navy has reduced the maintenance infrastructure by 11 buildings (114,131 square feet) and plans to eliminate another 6 buildings (24,907 square feet); (8) the Pearl Harbor Pilot is likely to serve only as a general model for future consolidation efforts because of unique aspects of ship maintenance activities in Hawaii, such as the close proximity of facilities and the large portions of fleet-funded work than in other locations; (9) likewise, because of this uniqueness, the pilot provides only a general indication that future consolidations elsewhere will result in similar efficiencies; (10) nevertheless, it does provide general information on such issues as combining workforces from separate activities and consolidating equipment and facilities; (11) the Pearl Harbor Pilot has sharpened the debate over the most appropriate financial and organizational structures for such consolidated activities; (12) conflicting views continue to exist within the Department of Defense and the Navy over whether these consolidated activities should operate under direct appropriations, the Navy Working Capital Fund (NWCF), or a combination of the two financial structures, particularly in terms of maintaining visibility over total operational costs; and (13) similarly, little progress has been made toward resolving the departments' differences over the most appropriate organizational structure to manage these types of activities.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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