Defense Infrastructure
Observations on the Department of the Navy's Depot Capital Investment Program Gao ID: GAO-10-726R June 14, 2010This letter formally transmits briefing slides in response to your request. We were asked to determine to what extent the Department of the Navy complied with the requirement in Section 2476 of Title 10 of the United States Code to invest a total amount equal to not less than 6 percent of the average total combined workload funded at all the depots of the Department of the Navy for the preceding 3 fiscal years in the capital budgets of covered depots listed in the law. We presented this briefing to your staff on May 5, 2010, in which we concluded that the Department of the Navy complied with the minimum required depot capital investment. In addition, we have a related ongoing review of the condition of the public Naval shipyards, which are included under the Navy depots that receive capital investment funding.
Our analysis indicates that the Navy complied with the minimum capital investment requirement mandated by 10 U.S.C. 2476 for FYs 2007 through 2009 and is projected to meet the requirement for FY 2010.
GAO-10-726R, Defense Infrastructure: Observations on the Department of the Navy's Depot Capital Investment Program
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GAO-10-726R:
United States Government Accountability Office:
Washington, DC 20548:
June 14, 2010:
Congressional Requesters:
Subject: Defense Infrastructure: Observations on the Department of the
Navy's Depot Capital Investment Program:
This letter formally transmits the enclosed briefing slides in
response to your request. We were asked to determine to what extent
the Department of the Navy complied with the requirement in Section
2476 of Title 10 of the United States Code to invest a total amount
equal to not less than 6 percent of the average total combined
workload funded at all the depots of the Department of the Navy for
the preceding 3 fiscal years in the capital budgets of covered depots
listed in the law. We presented this briefing to your staff on May 5,
2010, in which we concluded that the Department of the Navy complied
with the minimum required depot capital investment. More details on
our findings are provided in enclosure I. In addition, we have a
related ongoing review of the condition of the public Naval shipyards,
which are included under the Navy depots that receive capital
investment funding.
We provided a draft of the enclosed report to the Department of
Defense for review and comment. The Department agreed with our
findings and its oral comments are included as part of the briefing.
We are sending copies of this report to the appropriate congressional
committees and senators. We are also sending copies to the Secretary
of Defense, the Secretary of the Navy, and the Commandant of the
Marine Corps. The report will also be available at no charge on the
GAO Web site at [hyperlink, http://www.gao.gov].
Should you or your staff have any questions concerning this report,
please contact me at (202) 512-5257 or MerrittZ@gao.gov . Contact
points for our Offices of Congressional Relations and Public Affairs
may be found on the last page of this report. Key contributors to this
report include Laura Durland, Assistant Director; Leslie Bharadwaja;
Larry Bridges; and Gina Hoffman.
Signed by:
Zina D. Merritt:
Acting Director:
Defense Capabilities and Management:
Enclosure:
List of Requesters:
The Honorable Evan Bayh:
Chairman:
Subcommittee on Readiness and Management Support:
Committee on Armed Services:
United States Senate:
The Honorable Daniel K. Akaka:
United States Senate:
The Honorable Maria Cantwell:
United States Senate:
The Honorable Susan M. Collins:
United States Senate:
The Honorable Patty Murray:
United States Senate:
The Honorable Mark R. Warner:
United States Senate:
The Honorable Jim Webb:
United States Senate:
[End of section]
Enclosure I: Briefing Slides:
Observations on the Department of the Navy's Depot Capital Investment
Program:
Briefing for Senate Armed Services Committee Staff:
May 5, 2010:
Agenda:
* Briefing Objective;
* Background;
* Scope and Methodology;
* Observations;
* Agency Comments.
Briefing Objective:
GAO was requested to determine:
* To what extent the Department of the Navy complied with the
requirement in 10 U.S.C. § 2476, to invest a total amount equal to not
less than 6 percent of the average total combined workload funded at
all the depots of the Department of the Navy for the preceding 3
fiscal years in the capital budgets of covered depots listed in the
law.
Background:
* For purposes of the law, overall Department of the Navy capital
investment includes funding for Navy shipyards, Navy fleet readiness
centers, and Marine Corps depots listed in 10 U.S.C. § 2476(e).
* The law allowed the Navy 2 years to phase up its depot capital
investment level, requiring at least 4 percent investment in fiscal
year (FY) 2007, at least 5 percent in FY 2008, and eventually 6
percent in FY 2009.
* Under § 2476, the capital budget of a depot includes investment
funds spent on depot infrastructure, equipment, and process
improvements in direct support of depot operations.
Scope and Methodology:
* We reviewed the 10 U.S.C. § 2476 requirement for depot capital
investment, obtained depot capital investment data for FYs 2007
through 2010, and discussed the Navy's implementation of the
requirement with officials from the Office of the Under Secretary of
Defense (Comptroller) and Office of the Assistant Secretary of the
Navy (Financial Management and Comptroller).
* We reviewed and analyzed the Navy's depot capital investment funding
data to determine if the Navy complied with the minimum capital
investment percentage required under 10 U.S.C. § 2476.
* We analyzed a breakout of the Navy capital investment funding
distributed to depots in the Navy shipyards, Navy fleet readiness
centers, and Marine Corps depots.
* To determine the reliability of the Navy's depot capital investment
funding data, we interviewed officials and analyzed responses
regarding the accuracy and completeness of the data. We determined
that the funding data used were sufficiently reliable for our purposes.
* We conducted this performance audit from February 2010 through May
2010 in accordance with generally accepted government auditing
standards. Those standards require that we plan and perform the audit
to obtain sufficient, appropriate evidence to provide a reasonable
basis for our findings and conclusions based on our audit objective.
We believe that the evidence obtained provides a reasonable basis for
our findings and conclusions based on our audit objective.
Observations:
Our analysis indicates that the Navy complied with the minimum capital
investment requirement mandated by 10 U.S.C. § 2476 for FYs 2007
through 2009 and is projected to meet the requirement for FY 2010.
Observations: Total Navy Capital Investment for FY 2007 to FY 2010:
As illustrated in table 1, data reported by the Navy shows that the
Department exceeded the required capital investment for FYs 2007
through 2009, and is projected to exceed the requirement in FY 2010.
Table 1: Navy Depots' Reported Capital Investment Compared to Prior 3-
Year Funding ($ in millions):
Preceding 3-year Average Total of Navy Depot Funding:
FY 2007 (Actual) Amount: $5,964.0;
FY 2007 (Actual) Percentage: N/A;
FY 2008 (Actual) Amount: $5,794.3;
FY 2008 (Actual) Percentage: N/A;
FY 2009 (Actual) Amount: $5,696.9;
FY 2000 (Actual) Percentage: N/A;
FY 2010 (Estimate) Amount: $5,956.9;
FY 2010 (Estimate) Percentage: N/A.
Congressionally Required Minimum Capital Investment:
FY 2007 (Actual) Amount: $238.6;
FY 2007 (Actual) Percentage: 4.0%;
FY 2008 (Actual) Amount: $289.7;
FY 2008 (Actual) Percentage: 5.0%;
FY 2009 (Actual) Amount: $341.8;
FY 2000 (Actual) Percentage: 6.0%;
FY 2010 (Estimate) Amount: $357.4;
FY 2010 (Estimate) Percentage: 6.0%.
Reported Total Investment Navy Wide:
FY 2007 (Actual) Amount: $306.5;
FY 2007 (Actual) Percentage: 5.1%;
FY 2008 (Actual) Amount: $436.2;
FY 2008 (Actual) Percentage: 7.5%;
FY 2009 (Actual) Amount: $442.5;
FY 2000 (Actual) Percentage: 7.8%;
FY 2010 (Estimate) Amount: $620.1;
FY 2010 (Estimate) Percentage: 10.4%.
Difference Between Requirement and Investment:
FY 2007 (Actual) Amount: $67.9;
FY 2007 (Actual) Percentage: 1.1%;
FY 2008 (Actual) Amount: $146.5;
FY 2008 (Actual) Percentage: 2.5%;
FY 2009 (Actual) Amount: $100.7;
FY 2000 (Actual) Percentage: 1.8%;
FY 2010 (Estimate) Amount: $262.7;
FY 2010 (Estimate) Percentage: 4.4%.
Source: GAO analysis of Navy data as of March 2010.
[End of table]
As illustrated in table 2, the shipyards received most of the Navy's
capital investment funding for FYs 2007 to 2009, and are projected to
receive most of the capital investment funding in FY 2010.
Table 2: Reported Capital Investment to the Navy and Marine Corps
($ in millions):
Navy Shipyards:
FY 2007 (Actual): $218.2;
FY 2008 (Actual): $318.4;
FY 2009 (Actual): $306.9;
FY 2010 (Estimate): $499.4.
Navy Fleet Readiness Centers:
FY 2007 (Actual): $78.7;
FY 2008 (Actual): $104.9;
FY 2009 (Actual): $114.3;
FY 2010 (Estimate): $102.5.
Marine Corps Depots:
FY 2007 (Actual): $9.7;
FY 2008 (Actual): $13.0;
FY 2009 (Actual): $21.3;
FY 2010 (Estimate): $18.3.
Total Navy Wide:
FY 2007 (Actual): $306.5;
FY 2008 (Actual): $436.2;
FY 2009 (Actual): $442.5;
FY 2010 (Estimate): $620.1.
Source: GAO analysis of Navy data as of March 2010. Numbers may not
add due to rounding.
[End of table]
Observations: Breakout of Navy Depot Capital Investment by Individual
Depots for FY 2007 to FY 2010:
A breakout of each depot's capital investment FYs 2007-2010 shows that
the Norfolk Naval Shipyard generally received the highest amount of
funding.
The amount of capital investment for the fleet readiness centers,
while considerably less than the shipyards, is generally consistent
among the fleet readiness centers.
The amount of capital investment for the Marine Corps depots is less
than the investment for Navy shipyards and Navy fleet readiness
centers.
Table 3: Navy Depots' Reported Capital Investment for FY 2007 to FY
2010 ($ in millions):
Navy Shipyards:
FY 2007 (Actual): $218.2;
FY 2008 (Actual): $318.4;
FY 2009 (Actual): $306.9;
FY 2010 (Estimate): $499.4.
Norfolk Naval Shipyard, VA:
FY 2007 (Actual): $99.0;
FY 2008 (Actual): $44.1;
FY 2009 (Actual): $106.1;
FY 2010 (Estimate): $305.8.
Pearl Harbor Naval Shipyard, HI:
FY 2007 (Actual): $47.1;
FY 2008 (Actual): $71.9;
FY 2009 (Actual): $49.2;
FY 2010 (Estimate): $31.7.
Portsmouth Naval Shipyard, ME:
FY 2007 (Actual): $28.9;
FY 2008 (Actual): $46.2;
FY 2009 (Actual): $58.2;
FY 2010 (Estimate): $45.5.
Puget Sound Naval Shipyard, WA:
FY 2007 (Actual): $43.1;
FY 2008 (Actual): $156.3;
FY 2009 (Actual): $93.5;
FY 2010 (Estimate): $116.3.
Navy Fleet Readiness Centers (FRC):
FY 2007 (Actual): $78.7;
FY 2008 (Actual): $104.9;
FY 2009 (Actual): $114.3;
FY 2010 (Estimate): $102.5.
FRC East Site, Cherry Point, NC:
FY 2007 (Actual): $28.6;
FY 2008 (Actual): $27.8;
FY 2009 (Actual): $50.3;
FY 2010 (Estimate): $33.6.
FRC Southeast Site, Jacksonville, FL:
FY 2007 (Actual): $32.9;
FY 2008 (Actual): $36.1;
FY 2009 (Actual): $35.8;
FY 2010 (Estimate): $34.8.
FRC Southwest Site, North Island, CA:
FY 2007 (Actual): $17.1;
FY 2008 (Actual): $41.0;
FY 2009 (Actual): $28.1;
FY 2010 (Estimate): $34.1.
Marine Corps Depots:
FY 2007 (Actual): $9.7;
FY 2008 (Actual): $13.0;
FY 2009 (Actual): $21.3;
FY 2010 (Estimate): $18.3.
Marine Corps Logistics Base, Albany, GA:
FY 2007 (Actual): $4.7;
FY 2008 (Actual): $7.9;
FY 2009 (Actual): $12.5;
FY 2010 (Estimate): $7.7.
Marine Corps Logistics Base, Barstow, CA:
FY 2007 (Actual): $5.0;
FY 2008 (Actual): $5.1;
FY 2009 (Actual): $8.8;
FY 2010 (Estimate): $10.6.
Total Navy Investment:
FY 2007 (Actual): $306.5;
FY 2008 (Actual): $436.2;
FY 2009 (Actual): $442.5;
FY 2010 (Estimate): $620.1.
Source: GAO analysis of Navy data as of March 2010. Numbers may not
add up due to rounding.
[End of table]
Agency Oral Comments:
Officials from the Office of the Under Secretary of Defense
(Comptroller) and Office of the Assistant Secretary of the Navy
(Financial Management and Comptroller) reviewed the briefing and
orally commented that they concurred with our findings.
Officials noted that while the Marine Corps depots received less
capital investment funds than the Navy shipyards and fleet readiness
centers, according to the officials, this is because the Marine Corps
depots have a smaller business base, with a less technically demanding
workload (e.g., no nuclear work).
GAO on the Web:
Web site: [hyperlink, http://www.gao.gov/].
Contact:
Chuck Young, Managing Director, Public Affairs, youngc1@gao.gov:
(202) 512-4800:
U.S. Government Accountability Office:
441 G Street NW, Room 7149:
Washington, D.C. 20548:
Copyright:
This is a work of the U.S. government and is not subject to copyright
protection in the United States. The published product may be
reproduced and distributed in its entirety without further permission
from GAO. However, because this work may contain copyrighted images or
other material, permission from the copyright holder may be necessary
if you wish to reproduce this material separately.
[End of Briefing slides]
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