Summary

Using Puget Sound Naval Shipyard as a model, GAO examined the Navy's accounting practices at nuclear shipyards. In fiscal year 1991, Puget Sound worked on 24 nuclear-powered and three conventionally powered ships. About 31 percent of the workdays and 35 percent of total costs were for nuclear work. The average cost per workday for nuclear labor was 25 percent higher than for non-nuclear work, and the average cost per day for overhead for nuclear work was about 60 percent higher. These higher costs are due to the complexity of nuclear work, which requires a higher level of services, and the higher cost of specially trained workers and specialized shipyard departments that support nuclear work.

GAO found that: (1) the Puget Sound Naval Shipyard's cost accounting system captures and accumulates direct and overhead costs; (2) direct costs include the costs that are identifiable without undue effort to a specific project, while overhead costs include costs that cannot be easily traced because the benefits apply to more than one project; (3) overhead costs are applied to each hour of direct labor charged to a project to ensure that they accurately reflect the overhead costs being incurred; (4) the shipyard's cost accounting system also captures the cost of nuclear or nonnuclear work, but is not designed to accumulate or report total costs in those categories on a fiscal year basis; (5) the shipyard worked on 24 nuclear-powered and 3 conventionally powered ships in FY 1991, and the shipyard's total costs were about $784.9 million, of which about $736.4 million was charged to shipyard projects through job orders; (6) for FY 1991, about 31 percent of workdays and 35 percent of total costs charged to job orders at the shipyard were for nuclear work, and the average cost for nuclear labor was 25 percent higher than for nonnuclear labor; and (7) the primary difference between nuclear and nonnuclear work is the complex nature of nuclear work, which requires increased services and extensive training and supervision. GAO included a Navy report on its plan for handling and disposing of nuclear and radioactively contaminated materials from nuclear-powered ships.