Friday, March 16, 2012

U.S. Carrier Costs Will Breach Cap Next Year

From Defense News:

U.S. Carrier Costs Will Breach Cap Next Year

Mar. 16, 2012 - 05:16PM   |  
 By CHRISTOPHER P. CAVAS   |   Comments
The U.S. Navy expects cost growth on its largest shipbuilding project to continue, and will need to ask Congress next year for permission to pay the higher-than-planned-for bills.
“Will the Navy be asking for legislative relief from the cost cap of $600 billion?” Sen. John McCain, R-Ariz., asked March 15 during a Navy budget hearing.
“Not this year, but I’m certain we will be asking next year,” replied Navy Secretary Ray Mabus.
Congress in 2008 capped the acquisition cost of the new nuclear aircraft carrier Gerald R. Ford (CVN 78) at $11.76 billion. The Government Accountability Office, however, has warned that — if uncontrolled — cost growth on the project could reach as much as $1 billion by 2015.
The admission by Mabus comes despite repeated assertions by the Navy and shipbuilder Huntington-Ingalls Industries (HII) that they are working to restrain the price rise on the ship, being built to the first new carrier design since the 1960s.
“This is the lead ship of the class,” Mabus told McCain. “You and I have discussed how much new technology was put on this previously, and how the risk went up, and how the downside of that risk came true.”
Speaking to reporters after his appearance before the Senate Armed Services Committee, Mabus reiterated the challenges involved in keeping the ship within its budget.
“In the late ’90s, they were going to put new technology on three successive carriers,” he said. “In 2002, the defense secretary [Donald Rumsfeld] made the decision no, we’re going to put it on one, 78. That sent the risk sky high.
“That contract was supposed to be signed for that ship in 2006; it didn’t get signed until 2008,” Mabus said. “When the contract was signed, the ship was about 30 percent designed. That is no way to build a ship. There is no surprise that the cost has gone up.”
The Ford is designed with a host of new features, Mabus said.
“This is a brand new ship. It’s a new hull, it’s a new island, a new [aircraft] launch system, a new recovery system, a new electrical system, a new propulsion system. When you try to smush all that together in one ship, you raise the risk. And the downside of risk is cost growth.
“I think they attempted way too much on one major platform,” he added.
Mabus pledged that the situation will not be repeated on the next carrier, the John F. Kennedy (CVN 79).
“The one thing that we are absolutely committed to and the one thing that we will not go forward with on CVN 79 is that we will take the lessons learned here,” he told McCain. “We will have a firm price, and we will not come back to the Senate or Congress to ask for raising the cost cap on the John F. Kennedy, CVN-79.”

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