Audit: Navy likely to overshoot budget on new sub fleet
By HUGH LESSIG | The Daily Press | Published: April 12, 2019
NEW PORT NEWS, Va. (Tribune News Service) — The Navy has underestimated labor costs on its top priority, a fleet of ballistic missile submarines, and will likely exceed its $115 billion estimate, a government watchdog report says.
The U.S. Government Accountability Office also said the Navy didn’t allow for likely cost overruns, which have been common in new shipbuilding programs. It also did not include potential savings derived from a special fund Congress formed for the subs.
General Dynamics Electric Boat of Groton, Conn., is the lead contractor, but the Columbia-class program will have a significant impact at Newport News Shipbuilding. EB and Newport News are the only two shipyards that can build nuclear-powered subs.
The report recommends the Navy develop new cost estimates for the lead submarine and what it expects to save by using the special fund. Then it should use that data in submitting its budget request for the first sub.
Without updated data, the request “may not reflect funding needed to construct the submarine.”
Responding to GAO, Navy officials say they have more detailed cost estimates based on risk factors, the history of sub construction and savings from the special fund.
GAO says it hasn’t yet seen those numbers.
A longstanding partnership
Once fierce rivals, Newport News Shipbuilding and EB work together to build Virginia-class attack submarines, which are in high demand. Each yard builds certain components of the sub and alternate in final assembly and delivery.
For the Columbia class, each yard will continue to build different sections, but EB will handle assembly and delivery for all 12 boats in the new fleet. That means Newport News will eventually shoulder a greater burden of Virginia-class work.
The Columbia-class subs will replace the aging Ohio-class fleet and serve as the undersea leg of America’s nuclear deterrent, which is why it’s a top priority for the Navy.
Construction of the first Columbia class sub is expected to begin in October 2020, and the Navy plans an “aggressive” work schedule, the report states.
To make that go smoother, it plans to complete 83 percent of the sub’s design before work begins. That would be an improvement over the Virginia-class program, where construction began on the lead submarine with 43 percent of the design completed. That led to a 21 percent cost overrun, GAO says.
EB faces challenges as the program’s lead contractor. The Navy plans to order larger Virginia-class submarines — adding an 84-foot-long section that includes missile tubes or other components — as work ramps up on the Columbia-class program.
To meet that challenge, EB plans to expand its workforce over the next decade by 66 percent at Quonset Point, R.I., where some construction occurs, and a 174 percent at Groton, Conn., the site of final outfitting and assembly, GAO says.
While the region’s labor pool is sufficiently large, meeting the demand will require more training, GAO notes. EB has established training programs and partnered with schools in the area to grow the workforce.
The potential downside: An influx of new workers without practical experience can drag down performance. GAO notes that cost efficiency dropped 8 percent when the Virginia-class program added new workers some years ago.
Beyond the report
Apart from GAO’s findings, concern about finding enough shipbuilders has been a common theme in New England and Hampton Roads.
Last year, politicians, industry executives and educators came together in Tidewater on an initiative meant to attract more workers to shipbuilding and ship repair as the Navy seeks to expand its fleet.
Newport News shipyard officials have said they see a positive side to ushering in a new generation of workers. Although lacking experience, they quickly adapt to digital tools now common on the waterfront.
At a House Armed Services hearing this week, Chief of Naval Operations Adm. John Richardson said he recently visited EB and was impressed at its workforce development efforts.
He characterized the influx of younger workers there as “a terrific story.”