United States Government Publishing Office publisher pbl distributor dst United States Government Accountability Office National Security and International Affairs Division author aut Government Organization text government publication eng GAOREPORTS Legislative Agency Publications gao legislative 2010-08-12 U.S. Government Printing Office 1999-04-21 monographic deposited born digital 13 p. GA 1.13:T-NSIAD-99-141 https://www.govinfo.gov/app/details/GAOREPORTS-T-NSIAD-99-141 P0b002ee18039b58b f:ns99141t DGPO 2010-08-12 2011-03-28 GAOREPORTS-T-NSIAD-99-141 machine generated eng fdlp REPORT GAOREPORTS-T-NSIAD-99-141 T-NSIAD-99-141 Naval procurement Comparative analysis Leases Cost effectiveness analysis Equipment contracts Military cost control Decision making Military vessels T-5 Tanker Maritime Prepositioning Ship Sealift Tanker U.S.S. Cory Chouest Navy Industrial Fund Testimony NSIAD

Pursuant to a congressional request, GAO discussed the Navy's decisions in the early 1970s and early 1980s to lease Sealift Tankers, Maritime Prepositioning Ships, and T-5 replacement tankers, and more recently, Chouest specialized support vessels, focusing on the: (1) basis and support for the Navy's decisions to lease rather than purchase these vessels; (2) concerns that surrounded the decisions; and (3) legislative and regulatory changes that have been implemented that will influence future lease versus purchase decisions.<p/>GAO noted that: (1) the primary reason the Navy decided to use long-term leases to acquire auxiliary vessels in the early 1970s and early 1980s was because available procurement funds were needed for higher-priority combat ships, and leasing arrangements allowed the Navy to acquire the support ships without a large, up-front obligation of procurement funds; (2) the Navy also believed that leasing was cost-effective and helped support the industrial base; (3) the Navy complied with existing requirements to perform lease versus purchase cost comparisons; (4) these comparisons concluded that leasing was cheaper than purchasing; (5) the Navy's decision to enter into long-term leases in the early 1970s and early 1980s raised concerns regarding the budget authority needed to make such large long-term funding commitments; (6) Congress expressed concern about whether the Navy Industrial Fund could adequately cover the total obligations that would accrue from these leases; (7) to address this concern, the Navy requested and received specific congressional authorization to carry out the acceptance provisions of the long-term leasing contracts; (8) there were also concerns regarding the cost-effectiveness of these leases; (9) when the leasing decisions were made, there were limited standardized government-wide guidelines for conducting lease versus purchase analyses; (10) as a result, the studies used different assumptions and methodologies in analyzing the alternatives and drew different conclusions; (11) in 1983, GAO's report and a congressional staff study questioned the validity of the assumptions used in the Navy's studies and their conclusions; (12) had the Navy's studies used assumptions that more fully reflected the government's total costs, they would have concluded that purchasing was the cheaper alternative; (13) since the long-term leasing decisions of the early 1970s and early 1980s, a number of changes have occurred that will affect future long-term leasing decisions by increasing oversight and improving cost analyses; (14) Congress has increased visibility of and control over these types of decisions; (15) budget-scoring guidelines increase the emphasis on up-front budget authority by providing Congress with a mechanism to assess the cumulative impact of long-term leasing decisions prior to the obligation of funds; (16) tax benefits that favored leasing have been reduced; and (17) as part of the decisionmaking process, more detailed guidelines require that the Navy perform lease versus purchase analyses that better reflect the government's total cost of long-term leasing arrangements. https://www.govinfo.gov/content/pkg/GAOREPORTS-T-NSIAD-99-141/html/GAOREPORTS-T-NSIAD-99-141.htm https://www.govinfo.gov/content/pkg/GAOREPORTS-T-NSIAD-99-141/pdf/GAOREPORTS-T-NSIAD-99-141.pdf GAO/T-NSIAD-99-141 https://www.govinfo.gov/app/details/GAOREPORTS-T-NSIAD-99-141 Testimony GAO/T-NSIAD-99-141; Defense Acquisition: Historical Insights Into Navy Ship Leasing; Naval procurement Comparative analysis Leases Cost effectiveness analysis Equipment contracts Military cost control Decision making Military vessels T-5 Tanker Maritime Prepositioning Ship Sealift Tanker U.S.S. Cory Chouest Navy Industrial Fund Title 10 Section 2401 10 U.S.C. 2401 Title 31 Section 1341 31 U.S.C. 1341 Public Law 98-63