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Audit of Surge Sealift Readiness Reporting (DODIG-2020-047)

Audit

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Publicly Released: January 24, 2020

 

Objective

The objective of this audit was to determine whether U.S. Transportation Command (USTRANSCOM) provided adequate oversight of the reporting on surge sealift activation requirements. To assess the accuracy of this reporting, we reviewed surge sealift readiness reporting in the Defense Readiness Reporting System–Navy (DRRS-N) and the Defense Readiness Reporting System–Strategic (DRRS-S) from FYs 2017 and 2018.

 

Background

USTRANSCOM is a unified, functional combatant command that provides global mobility solutions to the other U.S. combatant commands, the Military Services, Defense agencies, and other Government organizations. USTRANSCOM has three component commands that transport military resources over land, air, and sea. The Military Sealift Command (MSC) provides the sea transportation for DoD agencies and military services. The MSC uses a surge sealift fleet to support the initial sealift demands associated with operational plans (OPLANs).

The surge sealift fleet consists of 50 Government owned contractor-operated ships managed by both the DoD and the Department of Transportation (DOT). The 50 ships have a cargo capacity of 10.7 million square feet. The DoD owns 15 of the ships (4.6 million square feet of the overall surge sealift capacity), and the DOT owns the remaining 35 ships (6.1 million square feet of the overall surge sealift capacity).

MSC personnel update the readiness status for the 15 MSC ships in DRRS-N using contractor-provided readiness reports. The MSC relies on the DOT Maritime Administration (MARAD) to update the readiness status for its 35 ships in DRRS-N. The readiness status in DRRS-N is reported as: mission available, available with limitations, or not available. USTRANSCOM identifies its mission requirements based on the square footage of the items needing to be shipped. To convert from ship availability in DRRS-N to the square footage requirements in DRRS-S, MSC officials review the number of ships that are reported in DRRS-N as available or available with limitations. In short, DRRS-N reports whether each individual ship is ready or not; while DRRS-S reports the total amount of square footage available for meeting mission requirements. After review, MSC officials total all of the ships’ square footage to determine how close the ships are to meeting the readiness target.

The MSC then reports the total surge sealift capability monthly in DRRS-S, which is tracked by USTRANSCOM.

 

Findings

 We determined that the MSC did not accurately report the readiness status for 15 MSC-owned surge sealift ships during FYs 2017 and 2018.

We determined that the MSC inaccurately reported the readiness status of its surge sealift ships because the MSC relied on ship contractors to accurately report ship readiness. MSC officials stated they believed that the ship’s captains were in the best position to assess the ability of the ship to meet mission requirements, and therefore the MSC did not have procedures to verify that ship inspection reports matched casualty reports or to reconcile ship casualty reports to the DRRS-N ship readiness status.

Consequently, as a result of the MSC’s inaccurate ship readiness reporting, USTRANSCOM’s assessment of surge sealift capability was unreliable and could lead geographic combatant commanders to make incorrect assumptions about the initial availability of equipment and resupply of critical items.

The surge sealift provides 90 percent of cargo space needed to meet OPLAN requirements. For example, the inability of a single ship to perform its mission could result in an armored brigade combat team’s equipment not being delivered when expected.

In addition, we found that MARAD contractors did not follow the MSC criteria for assessing and reporting the readiness status for the MARAD-owned surge sealift ships. MARAD contractors followed assessment and reporting criteria contained in the MARAD contract that has different definitions than MSC criteria for the rating categories. When we applied the MSC assessment criteria to the MARAD ships, we identified inaccuracies in the reported readiness status. For example, one MARAD ship had a deficiency identified in April 2018 that would have resulted in a not-available rating under the MSC criteria, but MARAD reported the ship as available for 99 days in DRRS-N.

The difference in ship assessment and reporting occurred because the MSC did not establish standard reporting procedures with MARAD. In addition, the MSC has accepted the MARAD readiness reporting in DRRS-N without performing oversight to verify the readiness statuses being reported.

As a result, the DoD spent $477.8 million from FYs 2016 through 2018 on maintenance and repairs of the 35 MARAD surge sealift ships and plans to spend an additional $843.9 million from FYs 2019 through 2022, without verification that the surge sealift ships are being maintained at the levels expected and will be mission ready when required.

 

Recommendations

 For MSC ship oversight, we recommend that the MSC Commander establish policies to:

• verify that deficiencies identified in ship inspection reports match the corresponding contractor-issued casualty reports;

• hold contractors accountable when casualty reports do not match ship inspections reports or are not submitted as required; and

• reconcile casualty reports to the ship’s reported status in DRRS-N to ensure accurate ship readiness reporting.

For MARAD ship oversight, we recommend that the MSC Commander:

• develop business a process agreement with MARAD to establish standard criteria for readiness assessments for MSC and MARAD surge sealift ships; and

• develop an oversight plan to verify the readiness status of the MARAD ships and coordinate with MARAD to obtain the documentation and establish the processes necessary for MSC to perform the oversight.

 

Management Comments and Our Response

The USTRANSCOM Chief of Staff, responding for the MSC Commander, agreed with the recommendations to verify that the deficiencies in the ship inspection reports match the casualty reports and to reconcile the casualty reports with the readiness status reported in DRRS-S. The Chief of Staff stated that the MSC contracts require the contractors to comply with ship inspections and to file casualty reports in accordance with guidance. However, comments from the Chief of Staff did not address the specifics of the recommendations, and we disagree that the actions to verify the deficiencies and reconcile the reports were performed. Therefore, these recommendations are unresolved. The Chief of Staff should provide comments to the final report describing specific procedures on how the MSC will ensure that the contractors will follow the contract requirements.

The USTRANSCOM Chief of Staff agreed with the recommendation to hold contractors accountable when casualty reports do not match inspection reports or are not submitted. The Chief of Staff stated that MSC holds contractors accountable through their internal Contractor Discrepancy Reports that can positively or negatively impact future contract acquisitions. Comments from the Chief of Staff addressed all specifics of the recommendation; therefore, the recommendation is resolved but will remain open. We will close this recommendation once the Chief of Staff provides documentation that the MSC issued Contract Discrepancy Reports for ship contractors.

The Chief of Staff agreed with the recommendation to develop an agreement with MARAD to establish standard criteria for readiness assessments. The Chief of Staff acknowledged that the MOA between the DoT and the DoD allows for agreements to be in place to improve business processes. The Chief of Staff stated that the MSC and MARAD will continue to work together to institute best business practices across the entire fleet. Comments from the Chief of Staff addressed the specifics of the recommendation; therefore, the recommendation is resolved, but will remain open. We will close the recommendation once the Chief of Staff provides documentation verifying that the MSC and MARAD has established a standard criteria for readiness assessments.

The Chief of Staff agreed with the recommendation to develop an oversight plan to verify the readiness status of MARAD ships and to coordinate with MARAD to obtain the necessary documentation and establish the processes for the MSC to perform the oversight. The Chief of Staff stated that USTRANSCOM would continue to verify and monitor readiness reporting through established processes. However, comments from the Chief of Staff did not address the specifics of the recommendations, and we disagree that the actions to develop standardized readiness reporting criteria through existing USTRANSCOM processes will improve the accuracy of readiness reporting. Therefore, these recommendations are unresolved. The Chief of Staff should provide comments to the final report describing the development of a detailed oversight plan to ensure that the readiness reported by MARAD is an accurate representation of the ship’s readiness.

 

This report is the product of Proj. No. D2018-D000RG-0184.000