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EXPENDITURES ON OBSOLETE TYPES OF SHIPS.
It is believed that money spent in an endeavor to improve old ships and bring them up to date is often a wasteful expenditure, and, as a rule, not justified by any corresponding gain in fighting efficiency. As an illustration, the case of the New York, now the Saratoga, may be mentioned, where $1,547,071.37, or 51 per cent of the original cost, was spent on alterations and improvements. Also the cases of the Oregon, Massachusetts, and Indiana, where $3,530,971.69 have been expended. While their efficiency has no doubt been greatly improved, they are nevertheless of but minor value when pitted against a modern Dreadnought, and they are not suited to join the modern fleet at sea in spite of the great expenditures upon them. This policy has been discontinued and extensive changes are discouraged.
Much has been done toward perfecting the present plan of organization at navy yards. Two conferences have been held in Washington, attended by the commandants of the various navy yards. The methods in force and the results obtained at the different yards were freely discussed, with a view to establishing uniform and economical methods of administration. The rules and regulations proposed by them to this end were approved by the department. It is intended to continue these conferences from time to time.
Considerable attention has been given in the assignment of work at the various navy yards, so regulating the distribution as to avoid any great fluctuation in the employment of labor.
The upbuilding and improvements at navy yards are considered from the point of view of the general policy adopted by the department in regard to the military requirements for the various yards.
The efficiency of any vessel in battle being based to a very large extent upon the performance of her engines and their appurtenances, and her value as a strategical unit being directly dependent upon the economical use of fuel, the department, in General Order No. 26, laid down rules establishing yearly competitive steaming tests between battleships, armored cruisers, torpedo-boat destroyers, and torpedo boats, and providing for money prizes to be given to the men of the engineer's force of the vessel winning the contest through superior speed and economy in coal and oil consumption, and suitable trophies to be carried by the winning vessels for the year following the competition. These competitions, placing practically all vessels of the Navy on a competitive basis, have been the means of inaintaining the machinery in a high state of efficiency, increasing the speed and accomplishing great economy in the consumption of fuel at cruising speeds, in port, and at navy yards. From the reports rendered necessary by these competitions, strategical as well as technical information of great value has been and will be obtained.
Last year I recommended that the four aids be legalized, and now renew this recommendation. The usefulness of the aids in securing economical results and good administration in the Navy Department is beyond question. From my experience, it would be difficult to administer thoroughly the affairs of the Navy Department without their expert counsel and advice.
OPERATING CREDITS UNDER THE NAVAL SUPPLY ACCOUNT.
During the past fiscal year, under the provisions of the act creating the naval supply account, there has been credited to various appropriations on the books of the Bureau of Supplies and Accounts the sum of $1,001,179.13 for the value of surveyed material taken from repairs to ships or plant at navy yards and stations and for stores turned in from ships.
As provided for in the act of June 25, 1910, this amount has been deducted from the operating expenses of the Navy for the year, and the Treasury Department has been requested to credit the several appropriations and carry this amount to the surplus fund.
DEPARTMENTAL BUSINESS METHODS.
The board of officers appointed to cooperate with the President's Commission on Economy and Efficiency has considered, in conjunction with the commission, many subjects affecting the business methods of the department. It has supervised the preparation of data regarding records, documents, files, organization, employees and their duties, methods and procedure employed, and critical and constructive reports, with recommendations pertaining to each unit of the department. Improvements in filing systems and the classification of correspondence have been considered.
The board recommended a simplification of correspondence in the naval service which has been adopted and put into effect.
The President's commission, working with representatives of the departments, has prepared an elaborate system of accounting, with revised forms of expenditure documents, which is intended to be as nearly uniform as possible in all departments.
In connection with this system a comprehensive classification of objects of expenditures has been prepared.
Due largely to the interest awakened by the inquiries of the commission, many of the more minor items and methods have already been improved by the bureaus and offices. With the formulation of uniform methods, which should result from a continuation of a well-directed inquiry, it is believed that considerable economies will be obtained.
BUSINESS METHODS UNDER BUREAUS, ETC.
During the past two years, in an effort to improve the business methods and secure greater economies in Navy Department administration, marked improvement has been made, and the following instances are given under different bureaus to show some of the actual results:
BUREAU OF CONSTRUCTION AND REPAIR.
It has been the endeavor to tabulate and plot information and data by curves and in other ways for quick use in the design branch for the purpose of making preliminary design, with the result that at the present time a very close estimate to the displacement of a preliminary design can be made in a few days instead of requiring a considerable period, as was previously the case. For first approximation to designs, the practice of making more or less complete plans has been abandoned and small sketch plans substituted, which indicate all the essential features and can be made much quicker and cheaper than by the other plan.
A card record of suggestions for improvement in design has been established, so that any suggestion for improvement in design is so recorded and indexed as to be definitely considered in the preparation of each year's building program.
Standard sketches, to suitable scale, have been prepared for various ships' fittings that are frequently required to be indicated on plans.
By improvements in method of work and details of construction, largely through adopting suggestions made by various navy yards, as a result of practical experience, the average cost of boats has been much reduced, and recent instructions on the subject are expected still further to decrease this cost.
The use of substitutes for linseed oil, turpentine, etc., is under experiment. From information available, these substitutes have proven satisfactory for a number of purposes, and their use is being extended. The estimated saving to the Government per annum by the introduction of the above material is $40,000.
In the cost analysis division one of the most salient improvements in economy in the work under this bureau, for which there are at hand comparative figures, is in the cost of docking vessels at navy yards, and the routine work of painting bottoms, overhauling sea valves and zincs, and making minor structural repairs to underwater body. Reports from Portsmouth, Boston, New York, Philadelphia, Norfolk, and Charleston indicate that during the fiscal year 1911 there has been effected a saving of $46,000, or a reduction in cost of 20 per cent as compared with what this work would have cost at the rates current at the same yards in 1910. These figures take into account the reduction in the amount of indirect charges distributed to the cost of work which was put into effect on July 1, 1910, that is, at the beginning of the fiscal year 1910. The comparison of total displacement of vessels above 100 tons docked in two years at those navy yards is as follows:
Tons. 1,021, 027 1, 293, 361
$214, 147 183, 750
The bureau prepared a comparison for the fiscal year 1910 and circulated the same so that each yard could see whether the cost of the work was high as compared with other yards and to what individual part of the work the high cost was due, if any. The results show that when the administrative officers at navy yards were supplied with properly prepared comparative costs they were used to promote economy.
BEDUCTION IN COST OF MANUFACTURE.
Another item of work under the bureau in which marked economy has been effected during the last year is in the cost of manufacturing standard articles of equipment at the various navy yards. The policy followed by the bureau was to compare the costs of similar articles at different yards and concentrate the manufacture of certain definite articles at the two yards at which the previous results showed that they could be made most economically, thus placing the two yards on a competitive basis as regards that particular article. As an example of what has been accomplished in this direction, it may be stated that the average unit direct labor cost of manufacturing 800-pound coaling bags at all navy yards was, during the fiscal year 1910, $3.42; total cost $15.22. At the yard at which they are made most cheaply the direct labor cost has been reduced to $1.76 each ; total cost $11.82 each. The cost of standard mess tables during the fiscal year 1910 was as high as $20 each at one navy yard. The cost was reduced during 1911, at one navy yard, to $11.94.
BUREAU OF SUPPLIES AND ACCOUNTS.
In accordance with "General Order No. 78, the general storekeeping system, as existing at navy yards and stations, has been extended to all cruising ships in commission having pay officers regularly attached. The principal objects of this system are the consolidation of all supplies aboard ship and the consequent economy in storeroom space; the maintaining of a single stock of supplies under the custody of the ship’s general storekeeper; the charging to the appropriations concerned for such quantities only of supplies as are actually needed for the maintenance of each ship's department; the abolishing of separate stocks of supplies in the custody of other heads of ship departments; the reduction in value of stocks necessarily carried aboard ship; and the elimination of waste by deterioration and obsolescence.
Formerly the allowance lists of vessels provided for certain numbers or quantities of articles required, without regard to value. A system has been established whereby a money allotment of a certain fixed sum for a fixed period is allowed to each vessel for the withdrawal from store of such articles, without regard to number or quantity, as are contained in the ship's allowance list. In order to engender in the service emulation and to encourage economy in the expenditure of supplies, the department, by General Order No. 79, provided for publishing quarterly the total expenditures of supplies (except coal and ammunition) in each ship's department for each quarter upon all vessels having the general storekeeping system in operation, and for the consideration of claims from vessels for correction to the cost of expenditures against allotments, in order that published comparisons as between vessels in competition may be equitable.
In conjunction with the cost-accounting system installed at navy yards, a modern set of books have been opened for the recording of the operations of each yard. By this system of bookkeeping all transactions are recorded and a monthly trial balance obtained.
Annual contracts are now being made for all articles which experience has shown can be advantageously purchased in this manner, and a considerable saving has been effected.
In prior years, hemp for the manufacture of rope at the navy yard, Boston, Mass., has almost invariably been purchased through dealers in the United States. Arrangements have been made for the purchase of hemp through the purchasing pay officer of the Navy at Manila, thereby making a saving of practically $10 per ton, or an estimated yearly saving of $30,000.