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The Navy Could Better Use Private-Sector Capacity and Expertise to Support the Naval Shipyards

• The Navy could use the private sector for submarine tank preservation and nonnuclear carrier work in large modernization alterations.

Long-Range, Future Maintenance Workload Is Projected to Remain at Least at Current Levels, with Historical Trends Suggesting That Higher Maintenance Levels Are Likely

• This projection applies in both the public and private sectors.
• Deferral of maintenance actions will complicate the management of maintenance demands.
• At a minimum, if maintenance is to be deferred, there should be a conscious effort to retire the deferrals on a consistent basis.

The Navy Warship Maintenance Industrial Base Is Characterized by a Relatively Small Number of Private-Sector Providers in Each Port

• Of the estimated 110,000 people working in the private-sector shipbuilding and repair industry, only a fraction supports Navy warships.
• In the regions where there is a public shipyard that supports surface warship maintenance, the public shipyard employs nearly four times as many people as the sum of its private-sector counterparts.

The Current Industrial Base Can Likely Meet the Expected Demands of the Navy

• The amount of work that the Navy is planning to provide to the ports between 2017 and 2019 is what the ship repair associations indicate would be required to keep the providers in the port employed, in all ports, in most years.
• The public shipyards are recovering capacity through the additional hiring of labor, but it will take time for these new hires to become journeymen.

There Are Risks That Should Be Managed to Ensure That Capacity Is Available Tomorrow

• The private sector has seen significant consolidations in the past 20 years.
• There are only a handful of privately held companies that perform maintenance on the Navy's surface warships.
• The Navy needs to continue to provide incentives for companies to stay in the market.
• Commercial providers would not be available on short notice to compensate for unexpected public shipyard shortfalls.

A Significant Issue Is the Availability of Dry Docks in Homeport

• Coast-wide bidding can help to alleviate some of the capacity shortfalls, but other approaches will also need to be pursued.

The U.S. Navy's ship inventory and the shipbuilding and repair industrial base that supports these ships have experienced significant changes over the previous three decades. And in the next 30 years, additional significant changes to the fleet composition and the maintenance requirements of the fleet are likely to occur. However, the number of maintenance providers has declined. And the work conducted at the public shipyards that once also maintained surface ships has largely transitioned to the private-sector providers. To ensure that the private-sector industrial base is available and able to support the Navy's future maintenance and modernization requirements, the Navy must understand the future maintenance needs and develop a strategic approach to ensure that the necessary capabilities — including facilities, engineers, and trade labor — are available. RAND Corporation researchers assisted the Commander of the Naval Sea Systems Command (NAVSEA) to assess possible supply and demand capabilities in the ship maintenance workload and note long-term challenges facing mitigation efforts.

There are several limitations to maintaining the ability of the Navy to procure the services it needs. For example, broader changes in the labor and capital markets may change how demand is met by the Navy — and the Navy often has little influence over these factors. There are also limitations to how quickly the industrial base can grow before additional constraints and productivity barriers are reached. Moreover, there is a cost to sustaining an industrial base that is constantly going through boom and bust cycles. This report offers a number of recommendations for NAVSEA and Department of Defense leadership to consider to mitigate challenges and plan strategically for the coming years.

• Chapter One

  Introduction

• Chapter Two

  The Future Demand for U.S. Navy Ship Repair

• Chapter Three

  The U.S. Navy Ship Maintenance Industrial Base

• Chapter Four

  Industry Incentives Within the Maintenance Industrial Base

• Chapter Five

  Demand-Supply Mismatches

• Chapter Six

  Conclusions and Recommendations

• Appendix A

  Shipbuilding and Maintenance Capabilities in the United States, by Region and Shipyard

• Appendix B

  Cleaning VAMOSC Data