GAO Says Navy SIOP Cost Could Reach $200 Billion

By Amanda Reynolds Raleigh, NC · TECHNOLOGY DESK

Published 3 min read

The Government Accountability Office estimates the Navy's shipyard program could cost $200 billion over 50 years. This figure is ten times the original 2018 projection due to incomplete cost and schedule data.

The SIOP involves rebuilding the Navy’s four public shipyards and is projected to surpass $200 billion in cost over more than 50 years of execution. This scope represents an expansion from the program's origins, as the Navy initiated SIOP in 2018 to address poor shipyard conditions and capability gaps affecting fleet readiness.

Developing plans and cost estimates for the shipyard rebuilds has taken years longer than originally anticipated. The Navy established an oversight framework to guide SIOP plans and decisions, which includes tools and requirements typically used for major defense acquisition programs. Major defense acquisitions are required to provide annual program status reports with detailed metrics.

Despite these structures, the Navy has not outlined steps in the oversight framework to reevaluate program objectives and resources as the program progresses. The Navy created organizations for project oversight and program integration teams to coordinate issues with shipyards, but the GAO found that their specific functions remain unclear.

Environmental issues caused additional projects and extensive work at shipyards including Puget Sound Naval Shipyard. Seismic risks were also identified at the facility, contributing to the complexity of the infrastructure improvements required across the naval industrial base.

Why It Matters

The scale of the SIOP budget increase shows the challenges in managing long-term defense infrastructure projects. The Navy's initial 2018 estimate for the SIOP was $21 billion, but a 2026 audit by the Government Accountability Office estimates the program could cost up to $200 billion over 50 years. This represents a ten-fold increase from the original projection.

The GAO emphasized that the Navy has not developed a full cost and schedule estimate for the SIOP, and this remains a critical gap in program management. The Secretary of the Navy reported that developing a full estimate would not be possible until fiscal year 2025. The GAO found that existing cost and schedule estimates were incomplete and lacked key elements such as risk analysis and sensitivity testing.

What's New

In 2022, the Navy issued guidance outlining staffing, roles, responsibilities, and business rules for the SIOP Program Management Office, addressing a GAO recommendation to clarify these aspects. The Navy's guidance issued in April 2022 clarified that the SIOP would be treated as a major defense acquisition program, requiring adherence to best practices for cost and schedule estimating.

The GAO identified that the Navy had not fully defined the roles and responsibilities of shipyard officials within the SIOP program office, despite establishing it in 2018. The Navy's cost estimate for the Pearl Harbor Naval Shipyard increased from $6.1 billion in 2018 to $16 billion in 2022, reflecting underestimation of project scope. The Navy's Portsmouth Naval Shipyard dry dock project faced a cost increase from $528 million to $2.2 billion due to a lack of competition and incomplete design documentation.

How Sources Differ

Regarding program management office roles, the GAO report states that the Navy’s Shipyard Infrastructure Optimization Program will surpass $200 billion in cost. In contrast, gao.gov notes that in 2018, the Navy created a Program Management Office to oversee the SIOP, but it had not yet formally defined the roles and responsibilities of shipyard officials as of 2020.

On the same topic of program management office roles, the GAO report shows the $200 billion cost projection. However, gao.gov specifies that the GAO identified that the Navy had not fully defined the roles and responsibilities of shipyard officials within the SIOP program office, despite establishing it in 2018.

Concerning shipyard infrastructure optimization roles, the GAO report cites the overall program cost. Meanwhile, gao.gov records that in 2019, the GAO recommended that the shipyard optimization program office establish clear roles and responsibilities for the shipyards involved in the plan.

Regarding optimization program acquisition status, the GAO report focuses on the financial magnitude of the SIOP.

fact_check Facts

The Navy’s Shipyard Infrastructure Optimization Program (SIOP) will surpass $200 billion in cost.
The Navy’s Shipyard Infrastructure Optimization Program (SIOP) will take over 50 years to execute.
The SIOP involves rebuilding the Navy’s four public shipyards.
Environmental issues caused additional projects and extensive work at shipyards including Puget Sound Naval Shipyard.
Seismic risks were identified at Puget Sound Naval Shipyard.
The Navy established an oversight framework to guide SIOP plans and decisions.
The Navy does not provide Congress with consolidated, standardized information on full program costs and risks.
The Navy has not fully documented the roles and responsibilities of the organizations created to manage SIOP projects.

menu_bookBackground & Sources

Context and data our newsroom added to the originating report, with the primary source for each item shown below it.

The Navy initiated SIOP in 2018.
In 2019, the GAO recommended that the shipyard optimization program office (PMS 555) establish clear roles and responsibilities for the shipyards involved in the Shipyard Infrastructure Optimization Plan (SIOP).
The Navy's cost estimate for the Pearl Harbor Naval Shipyard increased from $6.1 billion in 2018 to $16 billion in 2022, reflecting significant underestimation of project scope.
The Navy's initial 2018 estimate for the SIOP was $21 billion, but a 2026 audit by the Government Accountability Office (GAO) estimates the program could cost up to $200 billion over 50 years.
In 2018, the Navy created a Program Management Office (PMS 555) to oversee the SIOP, but it had not yet formally defined the roles and responsibilities of shipyard officials as of 2020.
The SIOP was initially estimated to cost $21 billion in 2018, but auditors now estimate it could cost up to $200 billion, representing a 10-fold increase.
The Navy's Program Executive Office Industrial Infrastructure (PEO II), established in 2022, is aligned with Naval Facilities Engineering Systems Command (NAVFAC) and reports directly to the Assistant Secretary of the Navy for Research, Development, and Acquisition (ASN (RD&A)).
The GAO identified that the Navy had not fully defined the roles and responsibilities of shipyard officials within the SIOP program office, despite establishing it in 2018.
The GAO highlighted that the Navy’s cost estimate for the Portsmouth Naval Shipyard dry dock project grew from $528 million to $2.2 billion due to a lack of competition and inadequate risk analysis.
The Navy's guidance issued in April 2022 clarified that the SIOP would be treated as a major defense acquisition program, requiring adherence to best practices for cost and schedule estimating.
In 2022, the Navy issued guidance outlining staffing, roles, responsibilities, and business rules for the SIOP Program Management Office (PMS 555), addressing a GAO recommendation to clarify these aspects.
The Navy has not developed a full cost and schedule estimate for the SIOP, with the Secretary of the Navy reporting that this would not be possible until fiscal year 2025.
The Navy's oversight framework for SIOP does not include consolidated, standardized information on full program costs and risks for Congress, despite requirements for major defense acquisitions.
Source: gao.gov
The GAO reported that the Navy had not provided Congress with consolidated, standardized information on full program costs and risks, despite requirements for major defense acquisitions to do so.
The GAO emphasized that the Navy has not developed a full cost and schedule estimate for the SIOP, and this remains a critical gap in program management.
The GAO found that the Navy’s cost and schedule estimates for the SIOP were incomplete and lacked key elements such as risk analysis and sensitivity testing, which are standard in major defense acquisition programs.

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