Navy Battling Shipbuilding Cost Overruns, Delays

Monday, September 25, 2006
According to Reuters, U.S. Navy shipbuilding has long been plagued by billions of dollars of cost overruns and lengthy, schedule delays, but acquisition chief Delores Etter says she sees encouraging signs of progress. But the former Naval Academy electrical engineering professor said both the Navy and U.S. shipbuilders have begun making changes that should lead to improvements. She said Navy officials were working with U.S. lawmakers to move toward greater funding stability for shipbuilding. Frustrated by chronic cost overruns and keen to maintain well-paying jobs in their home districts, lawmakers have in the past tweaked Navy budget plans, adding ships, delaying ships and blocking plans to have just one shipyard build a ship.

Cost growth has around 27 percent for first-in-class ships, the Government Accountability Office said in a March report. Budget pressures are escalating throughout the Pentagon. Leaked planning documents for fiscal year 2008 indicate the Navy will spending on aviation to keep funding new ships. GAO has warned that Mullen's plan calls for shipbuilding funds to double by 2011, and stay at high levels for years to come, but such growth may not materialize, given competing demands, including funding the war in Iraq.

Since taking office in November 2005, Etter has gotten tough with companies reporting cost overruns, forcing Textron Inc.'s Bell Helicopter, for instance, to revamp its management processes to keep an $8 billion upgrade program.

She recently traveled to most U.S. military shipyards along with two House lawmakers, Republican Rep. Roscoe Bartlett of Maryland, and Democratic Rep. Gene Taylor of Mississippi, and said she was impressed with some changes under way. For instance, shipyards have begun focusing on how to more efficiently put the pieces of ships together, including a move to building mega-blocks inside buildings, safe from weather conditions that can slow down work outside. General Dynamics Corp.'s NASSCO shipyard in San Diego, had been visiting commercial shipyards in Asia and Europe to gather ideas for trimming cost here, Etter said. Northrop Grumman Corp. has also been making improvements to streamline production as it rebuilds Gulf Coast shipyards damaged by Hurricane Katrina last year.

Etter said moves to a more open architecture of missions systems -- the systems that control how the warship operates and fights -- would make it easier for competing companies to develop parts of the software and plug into the basic design. Those benefits would multiply when the same common software architecture could be used across classes of ships, Etter said, noting that systems developed for the new DD(X) destroyer could be used for the next ship, a cruiser, planned in that line. Etter lauded work by Lockheed Martin Corp. and General Dynamics on the Navy's new littoral combat ship (LCS) and said LCS would become an example of a new way of building ships more affordably and quickly. It takes two years to build an LCS, compared with seven years for an aircraft carrier and four for a destroyer. So far, she said, both LCS designs were on budget and on schedule. House and Senate negotiators last week agreed to provide $11b for Navy shipbuilding in fiscal year 2007, far more than the $8.7b the Navy had requested.

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