Bloomberg L.P.
December 21, 2017
U.S. Navy’s New Sub Risks Blowing Past $128 Billion, GAO
Says
By Tony Capaccio
(Bloomberg) -- The U.S. Navy underplayed the development
risks posed by key technologies for its new $128 billion Columbia-class
nuclear-powered submarine, the Government Accountability Office said.
If the risks materialize, they are likely to result in increased
costs and schedule delays for a program that already appears to be underfunded,
the watchdog agency said in a report released Thursday on the Navy’s top
acquisition program.
General Dynamics Corp. is the prime contractor for the
submarine, which is designed to carry intercontinental ballistic missiles.
“The Navy underrepresented the program’s technology
risks”
in a key Pentagon assessment in 2015 when it failed to
“identify these technologies as ‘critical,’” according to the report issued by
Shelby Oakley, the GAO’s director of acquisition management. “Not identifying
these technologies as critical means Congress may not have had the full picture
of the technology risks and their potential effect on cost, schedule, and
performance goals as increasing financial commitments were made.”
Akin to F-35
The 12-vessel Columbia-class is the Navy’s undersea
equivalent of Lockheed Martin Corp.’s F-35 jet program in terms of potential
cost and strategic importance. Any major cost increase could affect the Navy’s
quest to increase its total fleet to 355 vessels from 279 today.
The projected $128 billion acquisition cost, which
incorporates expected inflation, puts the new submarines behind only the $406.5
billion F-35, the $165 billion multi-service ballistic-missile defense network
and the Navy’s $164.3 billion Virginia-class submarine program in cost.
More immediately, the Navy estimate sees procurement
spending for the submarine program increasing to $2.8 billion in fiscal 2019
from $773 million this year. It would hit $5.1 billion in 2022. That doesn’t
include long-range operating and support costs.
Limited Confidence
The Defense Department approved the program entering
development last year. It did so even though the Navy assigned only a 45
percent confidence level to its cost projection, the GAO disclosed in its new
report.
“This means that it is more likely than not that actual
costs to research, develop, and buy the submarines will exceed the Navy’s $128
billion estimate,” the GAO said. “Any difficulties in ongoing technology
development efforts would likely worsen the picture.”
The estimates “are optimistic because they do not account
for a sufficient amount of program risk due to ongoing technology development,
as well as the likely costs to design and construct the submarines,” according
to the report.
The GAO praised the Navy for its effort “to complete much
of the submarine’s overall design prior to starting construction to reduce the
risk of cost and schedule growth.” A top Pentagon official once described the
F-35 program’s approach of building the planes while still developing them as
“acquisition malpractice.”
Still, the Navy in September awarded a $5.1 billion
contract for General Dynamics “while critical technologies remain unproven -- a
practice not in line with best practices that has led to cost growth and
schedule delays on other programs,” GAO says.
‘Affordable Price’
The Pentagon disagreed almost entirely with the report’s
thrust in comments attached to it.
“The program accurately represented all program risks” at
the 2015 review, former Acting Undersecretary for Acquisition James MacStravic
said. “The Columbia program has adopted key tenets to promote success in
meeting cost, schedule and performance requirements.”
Captain Danny Hernandez, a Navy spokesman, said in an
email that “the Columbia program complied with all Navy, DoD, and statutory
requirements for conducting” the technology readiness assessment. He said the
program “is well-positioned to provide needed capability at an affordable
price.”
The technologies that the GAO identified as key while
questioning their state of maturity are:
* The Integrated Power System, which uses an electric
drive to propel the submarine through the water, unlike other current U.S.
subs, which use a mechanical drive system
* The propulsor, which takes the place of the traditional
propeller for moving the vessels and is part of a “coordinated stern”
* A “stern area section technical feature that’s
comprised of three sub-components” that weren’t spelled out in the report
because they are classified.
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