Home » Budget Industry » As Navy Faces $848M O&M Shortfall, Picking What Maintenance To Skip Is Full Of Risk


As Navy Faces $848M O&M Shortfall, Picking What Maintenance To Skip Is Full Of Risk

Sailors assigned to amphibious assault ship USS Bonhomme Richard (LHD 6) conduct maintenance during a ship's restricted availability (SRA) period in Sasebo on April 14, 2016. US Navy photo.

Sailors assigned to amphibious assault ship USS Bonhomme Richard (LHD 6) conduct maintenance during a ship’s restricted availability (SRA) period in Sasebo on April 14, 2016. US Navy photo.

A mid-year review of Navy operations and maintenance funding found a $848-million shortfall, forcing the Navy to restrict flying hours, defer five ship maintenance availabilities until Fiscal Year 2017, defer continuous maintenance work for two amphibious ready groups and a carrier strike group – and nearly suspend work at the service’s largest regional maintenance center.

Without enough money to continue at pace through the remainder of the fiscal year, a complex prioritization process began that looked at both lower-priority work that could be pushed back as well as what locations could absorb cuts with the least disruption.

The operations and maintenance shortfall – which totals just two percent of the Navy’s O&M budget but led to some painful cuts – consists of $500 million still needed for ship depot maintenance after work delays and growth in work package scope drove up costs, $255 million for flying hours and $91 million to extend the Truman Carrier Strike Group’s deployment in the Middle East, according to U.S. Fleet Forces Command and House Armed Services Committee documents related to a Navy readiness hearing held today.

“The $848-million shortfall will have no impact to our forces currently deployed, but deferring a number of depot and continuous maintenance availabilities into FY 2017 would likely delay some associated deployments,” Navy spokeswoman Lt. j.g. Kara Yingling told USNI News.
“The overall mitigation actions reduce our ability to respond to crisis, as recovery from our lowest readiness point in many years is slowed. As we move forward, we will closely manage the shortfall over the remaining four and a half months of FY16 and continue to work with the Department of Defense and Congress.”

In some years, a Pentagon-level reprogramming can take money from acquisition programs, or from Army and Air Force budgets, to help make up the funding shortfall. USNI News understands the Navy may not be able to get money from the other services this year to help cover its shortfall.

The Navy began to implement but then rescinded a suspension of work at the Southwest Regional Maintenance Center (SWRMC) in San Diego, which is illustrative of the hard choices the service has to make given the ever-increasing demands on the fleet, the continued congressional budget caps and rising costs of labor.

An early May memo from SWRMC Commanding Officer Capt. Hugh Huck, obtained by USNI News, notes that “due to funding shortfalls in the 1B4B funding accounts, SWRMC will be reducing their contract support levels, intermediate level (I level) repairs, and ability to provide after-hours support (overtime) in specific areas. Although extensive efforts have been expended up to this point in the fiscal year to limit adverse impact to the ships on the San Diego waterfront, fiscal realities have forced SWRMC into this action, starting in this third fiscal quarter and through the fourth quarter of this fiscal year.”

Specifically, the memo called for a stoppage of engineering support to include tank and void inspections, infrared surveys, underway vibration analysis and surface ship availability work certifications. Seven ships would go without needed tank and void and structural inspections, and other engineering work would have been suspended as of May 15.

In June the center would reduce parts and material procurement, and “as funding is expended, repairs to additional systems will be impacted as on hand material is expended. We project that we will not accept any new work after 15 July 2016. Intention is to complete I level jobs inducted prior to 21 June 2016 if parts have been obtained.”

That reduction in parts procurement would mean a stop to all major diesel work, surface ship torpedo tube repairs and refurbishment, air compressor overhauls, communication receiver and transmitter repairs, and repairs to electronic warfare and anti-ship missile decoy systems, according to the memo.

“As funding is expended, repairs to additional systems will be impacted as on hand material is expended. We project that we will not accept any new work after 15 July 2016. Intention is to complete I level jobs inducted prior to 21 June 2016 if parts have been obtained,” the memo reads.

The memo ends with acknowledgements that system command requirements would have to be suspended during this time and that the type commander’s priorities would guide how the SWRMC cuts were carried out, and that though the shortfall was not expected to continue into FY 2017 it would take the first quarter of the new year to reconstitute previous work capacity levels.

By May 17, however, U.S. Pacific Fleet had realigned its funding to fully support SWRMC through the end of the year.

A Navy official told USNI News that the rationale for originally selecting SWRMC to absorb some of the shortfall was that, as the largest of the regional maintenance centers, “the size and capacity of SWRMC make it able to accommodate the funding shortfall.”

“The funding shortfall at Southwest Regional Maintenance Center can be attributed to increasing the size of the government workforce in Fiscal Year 2016 to support higher projected workload in 2017 and later, travel throughout the Pacific to support the deployed fleet, and non-labor overhead costs associated with operating the RMC,” the official explained.
“Some of the funding shortage can also be attributed to the cost of renewing contractor support used to augment SWRMC government workforce. SWRMC released a naval message on 5 May to announce the curtailment of some engineering services typically provided by SWRMC in order to extend higher priority technical support work.”

“SWRMC started the fiscal year with a modest shortfall, but there was a growth in overall requirement due to the assessed condition of our ships and the need to continue the reset in stride,” the official noted.

The Navy has been warning Congress for years that extended deployments since 2001 have led to more severe maintenance problems when ships can finally go into an availability. Insufficient time and funding have led to partial completions of the work in some cases, which then creates bigger problems down the road – for example, tank inspections get skipped and then the Navy has to deal with major corrosion issues later on.

As it stands, the Navy opted to restrict flying hours for Carrier Air Wing 1, which will not deploy until 2019 – potentially stopping all flying for up to four months, U.S. Fleet Forces Command commander Adm. Phil Davidson said at the readiness hearing today. Four surface ship and one submarine maintenance availabilities will be pushed from the fourth quarter of FY 2016 into FY 2017, and smaller continuous maintenance for the Makin Island Amphibious Ready Group, the America ARG, and the Vinson CSG – a dozen ships across the three groups – will be deferred into FY 2017 as well.

“Delaying these maintenance periods, pressing them into the next fiscal year, FY 17, the budget currently under consideration, is not optimal, but it effects the smallest number of ships,” Davidson said, explaining the final decision on how to deal with the operations and maintenance shortfall.
“I will not embark on a path that partially accomplishes all availabilities across the entire fleet. That is a dangerous practice that rapidly builds maintenance and capability backlogs that are difficult to recover. Indeed, we are digging out from that sort of policy more than a decade ago.”

Davidson said that the risk the Navy takes on when it has less than full operations and maintenance funding “means accepting less readiness across the whole of the Navy, less capacity to surge in crisis and in wartime, or perhaps living with reduced readiness in our ships and submarines that would keep them from reaching the end of their service lives. In any case, recovering from these situations will cost us more in time and money in the future.”

  • vincedc

    Every government agency is seeing cuts along the same lines. Take away the money and some services have to be delayed or eliminated. Congress knew this when they passed whatever budget agreement is currently in effect….I lost track. The point is that the voters and taxpayers agreed to accept the deterioration of the fleet to save money. We have options, but no one is going to make any commitments until after the election.

    • Fred Gould

      I don’t expect much of a change then. O&M funds are always cut or shifted to pay for pet Congressional programs. As I frequently visit commands using O&M funds, I have heard this story for years.

    • tpharwell

      There is no economy in foregoing scheduled maintenance and it is simply standard bs to send a jg out to state that this will have no effect on current deployments, readiness, and/or the net force strength. This is not a choice that is being forced on the Navy. It is one that it makes in cooperation with Congress. There is always more money to be had for new ships, which as of date of deliver place new operations and maintenance burdens upon the service. And it is false to assert that this is a solution of any sort that taxpayers have been responsible for. At the urging of the Navy, in its 2017 bill, the House has recently added money for a third LCS purchase which the DOD did not ask for, over the objections of the SECDEF, while two out of six “commissioned” LCS are currently broken down, as a result of calamitous mechanical failures, placing new, if not entirely “unforeseen” financial and staffing burdens on Navy “O&M”, and predictably, if you ask me, wrecking its current budget. Sure, don’t appropriate extra money for repairs. Just order a new ship. Repair is by replacement. And to pay for it, don’t budget. Simply raid the contingency account, aka, war chest.

      There is truly no Navy SNAFU that does not have a scandal attached to it.

  • Eric Arllen

    There really isn’t much we need to be surprised about regarding deferred maintenance. That equipment you don’t maintain is going to fail at a higher rate and fixing it will be more expensive than would be the case had the maintenance be done on schedule.. But the real bite is the opportunity cost imposed by the unforeseeable timing of the surprise failures.

    Some bumper stickers are illustrative:
    “Pay me now or pay me later.”
    “For want of a nail … ”
    “If you have to ask the price, you can’t afford it.”
    “A boat (or ship, plane, tank…) is a hole in the water into which you pour money.”

    There are many more, of course. But the one that got us here is, “Rosy Scenario is a bitch.” Every defense system advocate, whether in government or industry (like there’s a difference), sells his plane or tank or any of the myriad systems that make them up with Rosy’s strong endorsement. Everyone loves Rosy until she (or is it ‘zi’?) turns into a bitch; her (zer?) true self. And she always, always does.

    But, so long as you own the press that prints money, what could go wrong?

    • DaSaint

      And $500 million of this total is overruns. Thats the kicker.

      We need more competition to drive down costs.

      • airider

        Due to requirements expansion… “consists of $500 million still needed for ship depot maintenance after work delays and growth in work package scope drove up costs,”

  • Don Bacon

    Insufficient O&M funds but billions for procurement of useless F-35s. Navy wanted only two F-35s this year but then the bought-and-paid-for pols in the House added $863m for 8 additional F-35s: 6 MC and 2 Navy jets, a complete waste of money unless you’re a Lockheed pawn. That’s where the big money is, considering Lockheed’s largess, not in O&M. No corporate campaign contributions there. Make the troops do double duty to cannibalize parts, so what. And not to worry, the Lockheed-subsidiary Pentagon says they’re making progress on F-35. Give them another fifteen years or so.

    • tpharwell

      Plus an extra LCS in the 2017 bill which the DOD did not ask for, and which, if you factored in the mission packages that will someday hopefully be ready, and have to be paid for, would quite nicely cover this current account shortfall.

  • Western

    Perhaps all those millions spent on alternative fuels and “green fleet” propaganda, coupled with all those orders for kneepads and hijabs in case you have to surrender your ship in the Persian Gulf, could have been better served supporting real operation and maintenance needs.
    The Navy is not a social experiment nor a tool for politicians to get votes. Act like it.

  • HORRIBLE……..HORRIBLE…..HORRIBLE…..maintain the fleet or PARK IT. tell the DC crats that you need the $$$ or stuff sits home.

    • bee bop

      Remember Teddy Roosevelt and his desire to send the Great White Fleet around the world and only had enough money to go half way, and Congress refused to provide additional funding! So Teddy said we’ll just send them half way…! They knew he meant what he said.

  • Thomas Pitt

    Given the Washington Post story on the seventh fleet corruption (not to mention treasonous actions “selling” secret naval ship sailing schedules, etc.) there must be loads of money floating around the Navy that is being utilized for corruption. Interesting to note none of those good ole white boy admirals taking much of a hit from this. Then a truly poorly (stupid?) worded comment by your own Naval Institute director Perter Daly that the investigation needs to be brought to a conclusion because it is “not fair.” Not fair to whom, The good ole boy admirals who will get reprimands while their inferiors will take the hit and go to jail (for rediculously short sentences cited in the Post article). I am a highly educated MBA, Ph.D.) specialist in international affairs not prone to sending nasty e-mails like this. But this obviously is a ten to fifteen year scandal involving the highest level of Navy leadership, and the most your leader can do is put out satement that makes him sound like another of the good ole boys at the top. How sad….

  • bee bop

    Bring those US Navy ships inland and ask for volunteers to come aboard and perform whatever tasks can be accomplished. Remember Mary Soo of Hong Kong and her girls who bartered with the Navy ships for garbage and leftover food, and in return provided labor there in Hong Kong Harbor to paint the ships using Navy paint. Find some deep channels in the Western River System, drop anchor, make a few phone calls… Seems simple. We’re just not poor enough to accept garbage in trade.

  • graylens

    Obama could find $6billion for Ebola, demand $1billion for zinka, $3-4 billion for syrian “refugees” etc. but no money for the Navy/Marines. Shame of Obama and Congress