The U.S. Navy should delay the award of a multibillion-dollar
contract to Huntington Ingalls Industries Inc. to build the second
aircraft carrier in a new class as the first one faces failings from its
radar to the gear that launches planes, congressional investigators
said.
“Technical, design and construction challenges” with the first
carrier, the USS Gerald R. Ford, have caused “significant cost increases
and reduce the likelihood that a fully functional ship will be
delivered on time,” the Government Accountability Office said in a draft
report obtained by Bloomberg News.
The Ford, already the most expensive warship ever built, is projected
to cost $12.8 billion, 22 percent more than estimated five years ago.
The report raises questions about the future of U.S. seapower in a time
of reduced defense budgets and about whether new carriers are affordable
as they assume greater importance in the Pentagon’s strategy to project
U.S. power in the Asia-Pacific region.
Delays and “reliability deficiencies” with the flattop’s new
dual-mission radar, electromagnetic launch system and arresting gear for
aircraft mean that the Ford “will likely face operational limitations
that extend past commissioning” in March 2016 and “into initial
deployments,” the agency said.
The GAO, the investigative arm of Congress, said that’s reason enough
to delay the contract that’s scheduled to be issued this year for the
second ship, the USS John F. Kennedy.
‘Repeating Mistakes’
“It will be important to avoid repeating mistakes” in the contract
for the Kennedy, the GAO said. “Staying within budget” will require the
Navy to reduce “significant risk mainly by completing land-based testing
for critical technologies before negotiating a contract” with Newport
News, Virginia-based Huntington Ingalls.
Beci Brenton, a company spokeswoman, said in a telephone interview
that “it would not be appropriate to comment on a draft report.”
Naval Sea Systems Command spokeswoman Colleen O’Rourke said the command also wouldn’t comment.
“As the Navy is currently working with the GAO on this report, it
would be inappropriate to comment on any draft findings at this time,”
she said in an e-mail. “When the report is finalized, it will include
Navy comments.”
Huntington Ingalls rose 2.4 percent to $56.64 in New York at 3:20 p.m. after rising 31 percent this year.
The Navy is grappling with how to pay for a shipbuilding plan that
anticipates $43 billion for three carriers in the Ford class, as well as
$34 billion for 52 Littoral Combat Ships and a 12-vessel nuclear
submarine fleet to replace the Ohio-class submarine.
Estimate ‘Optimistic’
While the GAO said that the Navy and Huntington Ingalls are taking
steps to control costs for the Ford, most increases occur after a vessel
is 60 percent complete and key systems are installed and integrated.
The Ford is now 56 percent complete.
Even the current $12.8 billion estimate is “optimistic because it
assumes the shipbuilder will maintain its current level of performance
throughout the remainder of construction,” the GAO said.
The Pentagon’s independent cost-estimating office, the Congressional
Budget Office and a Navy-commissioned panel project final costs as high
as $14.2 billion, the GAO said.
The draft report also raises questions about how many aircraft
carriers the nation will have ready this decade. Congress has given the
service temporary relief from the requirement to have 11 fully capable
aircraft carriers. There are now 10 after deactivation of the USS
Enterprise, and the Ford is supposed to bring that back to 11 by March
2016.
‘Reliability Shortfalls’
“As it now stands, the Navy will not be positioned to deliver a fully capable ship at the time,” the GAO said.
“Reliability shortfalls facing key Ford-class systems cloud the
Navy’s ability to forecast when, or if” the carrier will meet the
aircraft sortie rates and reduced manning requirements that distinguish
it from the older Nimitz class, the GAO said.
O’Rourke, the Naval Sea Systems Command spokeswoman, wouldn’t comment
on the specific value of the potential detailed design and construction
contract to Huntington Ingalls for the Kennedy that the GAO said is due
in September.
Cost Breakdown
The largest share of the cost increase for the Ford, 38 percent,
stemmed from technologies delivered by the Navy, including the radar,
launch system and arresting gear, according to the GAO.
The electromagentic launch system made by San Diego-based General
Atomics has increased to $742.6 million, up 134 percent since 2008, the
GAO said. The cost of arresting gear also made by the company increased
125 percent to $169 million.
Raytheon Co.’s dual-band radar has increased 140 percent to $484
million, according to data cited by the GAO. Twenty-seven percent of the
cost growth was pegged to shipbuilder design issues and another 27
percent to construction, both attributed to Huntington Ingalls.
Huntington Ingalls is building the Ford under a $4.9 billion detailed
design contract that covers the shipbuilder’s portion of constructing
the vessel. It doesn’t cover other costs, such as the nuclear reactor to
power the ship and other government-furnished equipment.
The GAO said its analysis indicates that Huntington Ingalls “was
forecasting an overrun at contract completion of over $913 million” that
it said stemmed from “the shipbuilder not accomplishing work as
planned.”
Huntington’s Brenton said in an e-mail in May that, “as the first new
design carrier beginning construction in more than 40 years,” the Ford
“is designed to provide increased capability and reduced total ownership
cost by about $4 billion compared to Nimitz-class carriers.”
“For this first-of-class ship, construction commenced in parallel
with design completion based on earlier decisions at Department of
Defense,” she said. “Ongoing design during the construction process
caused delay and inefficiencies in procurement, manufacturing, and
assembly.”
