The Government Accountability Office issued a report this week predicting that the cost of the Navy’s first of the Gerald R. Ford class (CVN-78) of aircraft carriers will further rise from the current estimate of $12.9 billion and says the service is using funding maneuvers to mask the full cost of building the ship.
The GAO said the Navy is planning to defer work on the ship until after it is delivered in March 2016, when it could use a different funding account to pay for the remaining work and give the appearance of meeting the cost estimate and congressionally imposed cost cap. The ship is already more than $2 billion above original projections, but that overrun is now reflected in the cost cap.
“This strategy will result in the need for additional funding later, which the Navy plans to request through its post-delivery and outfitting budget account, the GAO, Congress’ investigative arm, said in its report (GAO 15-22). “However, this approach obscures visibility into the true cost of the ship and results in delivering a ship that is less complete than initially planned.”
The assistant secretary of defense for acquisition, Katrina McFarland, rejected the notion in a written response, saying “all procurement funds are included in the cost cap legislation.”
The GAO also said because of the pace of construction and issues with key technologies, the schedule of the future USS Gerald R. Ford (CVN-78) is becoming increasingly “compressed,” creating the potential for cost increases and missed schedules.
“With the shipbuilder embarking on one of the most complex phases of construction with the greatest likelihood for cost growth, cost increases beyond the current $12.9 billion cost cap appear likely,” the report said.
The GAO said that the Navy’s approach means the Ford will deploy but without completely demonstrating its full operational capabilities because it won’t meet its test schedule. Key requirements, such as increasing aircraft launch and recovery rates, probably won’t be met before the ship is deployed, GAO said.
The GAO also questioned whether the Navy’s will meet the mandated $11.5- billion cost cap for the second ship, the John F. Kennedy (CVN-79), because it is relying on overly ambitious construction efficiency gains to meet that number. The Navy has pushed back the scheduled delivery for the Kennedy by a couple of years early into the next decade to give more time to apply the lessons of Ford to reduce cost.
The Navy is also deferring work on the Kennedy until post-delivery as a maneuver designed to meet the cost cap, GAO said.
“As with CVN-78, the Navy could choose to request additional funding through post-delivery budget accounts not included in calculating the ship’s end cost,” the report said. “Navy officials view this as an approach to managing the cost cap. However, doing so impairs accountability for actual ship costs.”