GAO reviewed the Navy's methods for managing and controlling direct
labor costs at its naval shipyards, focusing on whether labor
estimates: (1) for ship repairs were reliable and effective in
helping managers to control labor costs; and (2) reflected the
benefits from labor-saving improvements and new equipment. GAO
found that: (1) shipyard planners overestimate labor 3 to 23
percent per ship, which causes overstated repair prices, erroneous
labor efficiency data, and overstaffing; (2) excessive labor
estimates are caused by planners not consistently applying
estimating policies and procedures, the lack of internal controls
to ensure that labor estimates are properly developed and
supported, and the failure to keep labor standards current; (3) the
Naval Sea Systems Command (NAVSEA) has not fully implemented its
initiatives to correct the problems; (4) although the shipyards
have identified and implemented labor-saving and equipment
improvements, the Navy does not ensure that the benefits from the
improvements are incorporated into ship repair planning; (5)
planners often base labor estimates on processes and equipment no
longer used; and (6) the shipyards do not update labor standards to
reflect new labor processes and equipment.
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