The Navy will likely exceed its $11.4 billion budget on the second Gerald R. Ford-class aircraft carrier now under construction at Newport News Shipbuilding, partly because it's counting on savings that haven't been achieved in 50 years of carrier construction, a new report says.
The Government Accountability Office, in a report issued Tuesday, recommended the Navy develop a new estimate for the future USS John F. Kennedy that stands up to cost reviews. It should also obtain an independent cost estimate before building future ships.
The Navy had a mixed response to the report, but repeated its commitment to finishing Kennedy at or under the cost cap of $11.4 billion.
The cost estimate "is not reliable and does not address lessons learned from the performance of the lead ship, (the Gerald R. Ford). As a result, the estimate does not demonstrate that the program can meet its $11.4 billion cost cap," the GAO said.
The Kennedy is the second of three next-generation aircraft carriers that will spearhead naval sea power in the decades to come. The first-in-class Gerald R. Ford was recently delivered to the Navy from the Newport News shipyard, a division of Huntington Ingalls Industries and the exclusive builder of nuclear-powered aircraft carriers for the Navy.
Advance work is underway at Newport News on the third ship of the class, to be named Enterprise.
Navy leaders have long conceded flaws in building the Ford. Construction began before the design was finished. The Defense Department chose to pack the ship with multiple new systems instead of phasing in that technology over several ships, a move that Sen. John McCain characterized in 2015 as "the original sin that so damaged this program."
However, officials at the Newport News shipyard say they have learned many lessons from building the Ford that will translate into improvements in construction of the Kennedy. For example, it consolidates the number of "super-lifts" required to assemble the ship in dry dock.
"However," GAO says, "the new build sequence and shipyard improvements are untested and there are no historical data available to support whether the planned labor reductions can be achieved."
Shipyard spokeswoman Christie Miller referred questions on the GAO report to the Navy.
The GAO said the Navy is counting on a labor cost savings that has never been seen -- not even close.
The Navy "developed an estimate for CVN-79 (Kennedy) that assumes a reduction in labor hours needed to construct the ship that is unprecedented in the past 50 years of aircraft carrier construction," the report states.
The largest percentage drop in labor hours in recent years was 9.3 percent from the USS Nimitz to the USS Dwight D. Eisenhower. The Navy has negotiated an 18 percent drop from Ford to Kennedy, the GAO says.
The report lists three recommendations for developing better cost estimates. In its written response, the Defense Department partially concurred with the first two, intending to seek an independent cost estimate for the Kennedy with updated data but still vowing to build the ship at or under the cost cap.
The GAO also recommended a more detailed cost breakdown for individual Ford-class ships. The Navy should prepare a Selected Acquisition Report -- annual cost, status, and performance reports to Congress -- for each ship in the class in addition to the overall Ford program.
The current SAR provides "only aggregate program cost for all three ships currently in the class, a practice that limits transparency into individual ship costs," the GAO says. "As a result, Congress has diminished ability to oversee one of the most expensive programs in the defense portfolio."
The Defense Department disagreed with this one, defending the level of insight into each ship.
Since 2011, it has provided monthly progress reports on the cost of Ford and quarterly reports on the cost of Kennedy.
Due to the level of detail in the current SAR, which includes sections called subprograms, issuing individual reports on each ship "would be unnecessary duplication," the Defense Department said.
This article is written by Hugh Lessig from Daily Press (Newport News, Va.) and was legally licensed via the Tribune Content Agency through the NewsCred publisher network. Please direct all licensing questions to email@example.com.