Ford Class Aircraft Carrier Follow On Ships Need More Frequent And Accurate Cost Estimates To Avoid Pitfalls Of Lead Ship

The Navy intended for the Ford Class aircraft carrier to improve combat capability while reducing acquisition and life-cycle costs. However, as GAO has reported on extensively since 2007, the lead ship has experienced cost growth of nearly 23 percent, with a reduced capability expected at delivery. This report assesses: (1) the extent to which the CVN 79 cost estimate is a reliable basis for meeting the cost cap and addresses known cost risks from the lead ship, and (2) the extent to which oversight mechanisms provide Congress with insight into ship costs. The Navy should develop a new, reliable cost estimate for CVN 79 validated by cost reviews and obtain an independent cost estimate before requesting funding for future ships.

" The Navy intended for the Ford Class aircraft carrier to improve combat capability while reducing acquisition and life-cycle costs. However, as GAO has reported on extensively since 2007, the lead ship has experienced cost growth of nearly 23 percent, with a reduced capability expected at delivery. CVN 78 is estimated to cost $12.9 billion, while the next ship, CVN 79, is estimated to be $11.4 billion. The Navy plans to buy 1-2 more ships in the coming years. The Senate Armed Services Committee Report accompanying the National Defense Authorization Act for Fiscal Year 2016 included a provision that GAO review Ford-class cost estimates, among related issues. This report assesses: (1) the extent to which the CVN 79 cost estimate is a reliable basis for meeting the cost cap and addresses known cost risks from the lead ship, and (2) the extent to which oversight mechanisms provide Congress with insight into ship costs. To do this work, GAO compared the CVN 79 cost estimate with GAO's Cost Estimating and Assessment Guide, analyzed cost reports, and interviewed relevant officials. "

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CVN-78, CVN-79, CVN-80, and CVN-81 are the first four ships in the Navy's new Gerald R. Ford (CVN-78) class of nuclear-powered aircraft carriers (CVNs). CVN-78 (named for Gerald R. Ford) was procured in FY2008. The Navy's proposed FY2019 budget estimates the ship's procurement cost at $12,964.0 million (i.e., about $13.0 billion) in then-year dollars. The ship received advance procurement (AP) funding in FY2001-FY2007 and was fully funded in FY2008-FY2011 using congressionally authorized four-year incremental funding. To help cover cost growth on the ship, the ship received an additional $1,394.9 million in FY2014-FY2016 and FY2018 cost-to-complete procurement funding. The ship was delivered to the Navy on May 31, 2017, and was commissioned into service on July 22, 2017. CVN-79 (named for John F. Kennedy) was procured in FY2013. The Navy's proposed FY2019 budget estimates the ship's procurement cost at $11,341.4 million (i.e., about $11.3 billion) in then-year dollars. The ship received AP funding in FY2007-FY2012, and was fully funded in FY2013-FY2018 using congressionally authorized six-year incremental funding. The ship is scheduled for delivery to the Navy in September 2024. CVN-80 (named Enterprise) was procured in FY2018. The Navy's proposed FY2019 budget estimates the ship's procurement cost at $12,601.7 million (i.e., about $12.6 billion) in then-year dollars. The ship received AP funding in FY2016 and FY2017, and the Navy plans to fully fund the ship in FY2018-FY2023 using congressionally authorized six-year incremental funding. The Navy's proposed FY2019 budget requests $1,598.2 million in procurement funding for the ship. The ship is scheduled for delivery to the Navy in September 2027. CVN-81 (not yet named) is scheduled to be procured in FY2023. The Navy's proposed FY2019 budget estimates the ship's procurement cost at $15,088.0 million (i.e., about $15.1 billion) in then-year dollars. The Navy plans to request AP funding for the ship in FY2021 and FY2022, and then fully fund the ship in FY2023-FY2028 using congressionally authorized six-year incremental funding. The Navy's FY2019 budget submission programs the initial increment of AP funding for the ship in FY2021. The ship is scheduled for delivery to the Navy in September 2032. Oversight issues for Congress for the CVN-78 program for FY2019 include the following: whether to approve, reject, or modify the Navy's FY2019 procurement funding requests for the CVN-78 program; whether to accelerate the procurement of CVN-81 from FY2023 to an earlier year, or use a block buy contract to procure multiple aircraft carriers, or pursue a combined material buy for multiple aircraft carriers, or do some combination of these things; cost growth in the CVN-78 program, Navy efforts to stem that growth, and Navy efforts to manage costs so as to stay within the program's cost caps; whether to conduct the shock trial for the CVN-78 class in the near term, on the lead ship in the class, or years later, on the second ship in the class; CVN-78 program issues that were raised in a January 2018 report from the Department of Defense's (DOD's) Director of Operational Test and Evaluation (DOT&E); and whether the Navy should shift at some point from procuring large-deck, nuclear-powered carriers like the CVN-78 class to procuring smaller aircraft carriers.

CVN-78, CVN-79, CVN-80, and CVN-81 are the first four ships in the Navy's new Gerald R. Ford (CVN-78) class of nuclear-powered aircraft carriers (CVNs). CVN-78 was fully funded in prior fiscal years. The Navy's proposed FY2016 budget requests procurement for CVN-79 and advance procurement (AP) funding for CVN-80. CVN-78 was procured in FY2008. The Navy's proposed FY2017 budget estimates the ship's procurement cost at $12,887.0 million (i.e., about $12.9 billion) in then-year dollars. The ship received advance procurement funding in FY2001-FY2007 and was fully funded in FY2008-FY2011 using congressionally authorized four-year incremental funding. To help cover cost growth on the ship, the ship received an additional $1,374.9 million in FY2014-FY2016 in FY2015 in so-called cost-to-complete procurement funding. The Navy's proposed FY2017 budget does not request any additional funding for the ship. The Navy has postponed the ship's delivery date repeatedly to accommodate delays in its construction and testing process. As of January 2017, the ship was scheduled to be delivered to the Navy in April 2017. CVN-79 was procured in FY2013. The Navy's proposed FY2017 budget estimates the ship's procurement cost at $11,398.0 million (i.e., about $11.4 billion) in then-year dollars. The ship received advance procurement funding in FY2007-FY2012, and the Navy plans to fully fund the ship in FY2013-FY2018 using congressionally authorized six-year incremental funding. The Navy's proposed FY2017 budget requests $1,291.8 million in procurement funding for the ship. The ship is scheduled for delivery to the Navy in June 2022. CVN-80 is scheduled to be procured in FY2018. The Navy's proposed FY2017 budget estimates the ship's procurement cost at $12,900.0 million (i.e., $12.9 billion) in then-year dollars. The Navy wants to use AP funding for the ship in FY2016 and FY2017, and then fully fund the ship in FY2018-FY2023 using congressionally authorized six-year incremental funding. The Navy's proposed FY2017 budget requests $1,370.8 million in AP funding for the ship. CVN-81 is scheduled to be procured in FY2023. Under current plans, the Navy would use AP funding for the ship in FY2021 and FY2022, and then fully fund the ship in FY2023-FY2028 using congressionally authorized six-year incremental funding. The Navy's FY2017 budget submission programs the initial increment of AP funding for the ship in FY2021. Oversight issues for Congress for the CVN-78 program (and other carrier-related issues) include the following: whether to approve, reject, or modify the Navy's FY2017 procurement and advance procurement (AP) funding requests for the CVN-78 program; whether to provide advance procurement (AP) funding in FY2017 for the purchase of materials for CVN-81, so as to enable a combined purchase of materials for CVN-80 and CVN-81 (the Navy's proposed FY2017 budget does not request any AP funding for the procurement of materials for CVN-81); whether to approve, reject, or modify the Navy's proposal in its FY2017 budget submission to deactivate one of the Navy's carrier air wings; cost growth in the CVN-78 program, Navy efforts to stem that growth, and Navy efforts to manage costs so as to stay within the program's cost caps; CVN-78 program issues that were raised in a January 2016 report from the Department of Defense's (DOD's) Director of Operational Test and Evaluation (DOT&E); and whether the Navy should shift at some point from procuring large-deck, nuclear-powered carriers like the CVN-78 class to procuring smaller aircraft carriers.

The Navy plans to spend over $43 billion to produce three Ford-class aircraft carriers. The lead ship, CVN 78, is under construction, and preparation work is underway for the second, CVN 79. These ships will feature new technologies designed to increase capability and reduce crew size. GAO was asked to evaluate the progress of the Ford class. This report examines (1) technical, design, and construction challenges to delivering the lead ship within budget and schedule estimates; (2) the Navy's test strategy for demonstrating CVN 78's required capabilities; and (3) actions the Navy is taking to improve CVN 79 cost outcomes. GAO analyzed documents related to mission requirements, acquisition plans and performance, and testing strategies, and interviewed Department of Defense (DOD) and contractor officials. GAO recommends the Secretary of Defense take several actions aimed at ensuring Ford-class carrier acquisitions are supported by sound requirements and a comprehensive testing strategy, including conducting a cost-benefit analysis of required capabilities and associated costs. GAO is also recommending actions to improve the Navy's knowledge about CVN 79 capabilities and costs before beginning contract negotiations. DOD concurred with one recommendation, partially concurred with three others, and did not concur with the recommendation to defer CVN 79's detail design and construction contract award. GAO maintains that DOD's current schedule for awarding this contract undermines the government's negotiating position.

CVN-78 and CVN-79 are the first two ships in the Navy's new Gerald R. Ford (CVN-78) class of nuclear-powered aircraft carriers. CVN-78 was procured in FY2008 and is scheduled to enter service in 2015. The ship's procurement cost is estimated in the proposed FY2010 budget at $10,846 million in then-year dollars--$389 million (about 3.7%) more than the estimate in the FY2009 budget. Although CVN-78 was procured in FY2008, it is being funded with four-year incremental funding across FY2008-FY2011. The proposed FY2010 requests $739.3 million in procurement funding to help complete the ship's procurement cost. The Congressional Budget Office (CBO) reported in June 2008 that it estimates that CVN-78 will cost about $900 million more than the Navy estimates, and that if "CVN-78 experienced cost growth similar to that of other lead ships that the Navy has purchased in the past 10 years, costs could be much higher still." The Government Accountability Office (GAO) and other observers have expressed concern that difficulties in developing the CVN-78's new electromagnetic aircraft catapult (called the electromagnetic aircraft launch system, or EMALS), could delay the schedule for building the ship and increase the ship's construction cost. GAO highlighted the issue in a March 2009 report ...