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Cost Overruns On USS Gerald Ford Could Top $1 Billion

The first in the Navy’s new class of supercarriers is likely to end up costing a lot more than anticipated:

The U.S. Navy has estimated a worst-case cost overrun of as much as $1.1 billion for the aircraft carrier USS Gerald R. Ford, the service’s most expensive warship.

The carrier is being built by Huntington Ingalls Industries under a cost-plus, incentive-fee contract in which the Navy pays for most of the overruns. Even so, the service’s efforts to control expenses may put the company’s $579.2 million profit at risk, according to the Navy.

A review of the carrier’s rising costs began in August after the Navy’s program manager indicated that the “most likely” overrun had risen to $884.7 million, or about 17 percent over the contract’s target price of $5.16 billion. That’s up from a $650 million overrun estimated in April, according to internal Navy figures made available to Bloomberg News. The worst-case assessment would be about 21 percent over the target.

“Regular reviews of the cost performance indicated cost increases were occurring,” Capt. Cate Mueller, a Navy spokeswoman, said in a statement.

Some rising costs are tied to construction inefficiencies, the Navy said. Sean Stackley, Navy assistant secretary for acquisition, directed the review “to determine specific causes and what recovery actions could be put in place,” Mueller said.

Even as the Navy conducts its internal review, it is trying to assure U.S. lawmakers and Pentagon officials that costs of major vessel programs are being controlled. The Pentagon is evaluating strategy, retirement health benefits, weapons programs and military service budgets to find as much as $488 billion in reductions through 2021. The service has already offered to delay construction of the second Ford-class vessel, the CVN-79 John F. Kennedy, by two years.

As the first of its class, it’s not unusual for cost overruns to occur in this type of situation I suppose. And it’s worth taking into account that we’re talking about a ship that could have a useful life span of half a century or more. The ship the Ford is replacing sometime in 2015 when it’s ready, the USS Enterprise (CVN-65) was launched in 1961 and will have had some 55 years of active service by that time.

Artists depiction of USS Gerald Ford via Wikipedia

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About Doug Mataconis
Doug holds a B.A. in Political Science from Rutgers University and J.D. from George Mason University School of Law. He joined the staff of OTB in May, 2010 and also writes at Below The Beltway. Follow Doug on Twitter | Facebook

Comments

  1. Michael J. Listner, Esquire says:

    It is ironic that cost overruns on this first-in-class ship should bear the name of the president who introduced the Whip Inflation Now program. Then again, that program’s success was marginal.

    Like or Dislike: Thumb up 2 Thumb down 0

  2. Michael,

    Perhaps they need to hand out some WIN buttons at the shipyard

    Like or Dislike: Thumb up 1 Thumb down 0

  3. Hey Norm says:

    On any project of this size and duration I would expect to carry at least 15% for contingencies…so I’m not overly shocked by 17% or even 20% on a prototype project….especially on a cost-plus basis. That method of project delivery is just begging for additional costs.
    Also…while in general inflation is relatively flat…steel costs have been escalating.

    Like or Dislike: Thumb up 0 Thumb down 0

  4. James in LA says:

    This is what happens when you name a ship of death after a pardoner of war criminals.

    Like or Dislike: Thumb up 1 Thumb down 9

  5. Michael J. Listner, Esquire says:

    @James in LA:

    I’m not sure I see the connection.

    Like or Dislike: Thumb up 1 Thumb down 1

  6. Vast Variety says:

    I’m guessing someone went to Office Depot for the WIN buttons and accidentally picked up some of these instead.

    http://www.wowhead.com/item=18230/broken-i-w-i-n-button

    Delaying the construction of the JFK (CVN-79) doesn’t bode well for the construction of CVN-80, which a lot of people are hoping gets renamed the USS Enterprise.

    Like or Dislike: Thumb up 0 Thumb down 0

  7. Al says:

    There’s a good argument to be made that the supercarrier is rapidly approaching, or has already reached, obsolescence. Submarines already pose a huge threat to carriers and now with ASBMs being fielded I’m having a hard time seeing the class being all that useful in a large scale conflict. The loss of just one CVN will effectively put them all out of commission as they’ll be held so far back that they won’t be effective.

    It’s already a given that the aircraft that replace the F-22 and F-35 will be unmanned and the US Navy has already successfully launched UAVs from subs. Recentering the fleet’s air power around sub launched UAVs eliminates the vulnerability to ASBMs, greatly reduces the threat posed by other subs and spreads the risk over more hulls.

    We’re only keeping a class of ships around just because they are what the Admiralty wanted to command when they were lieutenants. That didn’t make sense when it was the battleship and it still doesn’t now.

    Like or Dislike: Thumb up 1 Thumb down 0

  8. Vast Variety says:

    @Al: The Supercarrier is far from obsolete and if we ever have to fight another war in the Pacific they will be essential, even in a world of unmanned UAV’s.

    Like or Dislike: Thumb up 2 Thumb down 1

  9. Al says:

    The last time the US Navy fought a war in the Pacific it was won by submarines. What makes you think the next one will be different?

    Like or Dislike: Thumb up 1 Thumb down 4

  10. Vast Variety says:

    @Al: Carriers have played extremely significant roles in every Pacific conflict since WWII.

    Japan used 6 carriers to attack Peal Harbor.

    The Battle of Midway would have been lost without the presence of US carriers and their planes which in turn sunk 4 of Japan’s main carriers and thus crippling the Imperial Navy’s navel air power for the rest of the war.

    Most of the Fighter sorties flown over Korea and Vietnam originated from Carriers.

    Both Iraq Wars were supported by air cover provided by carriers.

    You might be thinking however of the WWII Battle of the Atlantic which yes, was won by submarines.

    Like or Dislike: Thumb up 1 Thumb down 1

  11. rodney dill says:

    USS Gerald Ford stumbles?

    Like or Dislike: Thumb up 0 Thumb down 1

  12. Al says:

    @Vast Variety:

    The numbers tell a different story when it comes to the Battle of the Pacific. Subs sunk more than two times as many ships as carrier based aircraft and that was at a time when torpedoes were essentially unguided and the subs couldn’t operate for long submerged.

    Korea, Vietnam and Iraq posed no significant naval threat. Hell, Yankee Station and Dixie Station were static locations. LHAs could accomplish the same mission and cost significantly less.

    Like or Dislike: Thumb up 1 Thumb down 3

  13. James in LA says:

    We do not have any ships named U.S.S. Richard M. Nixon, and his ghost now haunts his pardoner’s tub.

    http://www.time.com/time/magazine/article/0,9171,2065246,00.html

    Like or Dislike: Thumb up 0 Thumb down 0

  14. anjin-san says:

    the president who introduced the Whip Inflation Now

    Lies, all lies. The economy was humming along in the 70′s before Carter. Humming, I say!

    Like or Dislike: Thumb up 0 Thumb down 0

  15. ponce says:

    Yowza!

    $13.5 billion?

    I thought carriers cost about $ billion.

    Like or Dislike: Thumb up 1 Thumb down 0

  16. Al says:

    @ponce:

    Thinking of costs in terms of the carrier itself doesn’t mean a whole lot. A Carrier Battle Group costs about one trillion dollars and I imagine that number will go up even further when you consider how expensive the F-35 is getting to be.

    Like or Dislike: Thumb up 1 Thumb down 2

  17. Vast Variety says:

    @Al: Al, I think you need to spend more time studying the history of WWII.

    Like or Dislike: Thumb up 2 Thumb down 1

  18. ponce says:

    Carrier Battle Group costs about one trillion dollars

    Guess I’m stuck in the 70s.

    Like or Dislike: Thumb up 0 Thumb down 0

  19. Al says:

    @Vast Variety:

    Such as what? The Pear Harbor scenario of today wouldn’t involve CBGs, that’s much too risky. Today it’d involve sub launched missiles or some kind of unconventional terrorist attack.

    Yes, US carriers made Midway a turning point but that also goes with what I’m saying. Japanese carriers were so successful up until Midway because all they faced were battleships. Once they faced ships that weren’t obsolete they didn’t do so well.

    Like or Dislike: Thumb up 1 Thumb down 2

  20. michael reynolds says:

    We don’t have carriers for naval battles, we have carriers so we can bring air power to bear on coastal areas where we don’t have land-based aircraft.

    That said, I think it’s probably true that the real obsolescence is in piloted aircraft. So building a 13 billion dollar landing field for obsolete aircraft does seem a wee bit silly. We can launch drones and missiles from much cheaper, smaller, more survivable ships.

    This reeks of fighting the last war.

    Like or Dislike: Thumb up 1 Thumb down 1

  21. ponce says:

    I think it’s probably true that the real obsolescence is in piloted aircraft.

    I’m not sure that battle has been decided yet, as Iran’s recent..acquisition of one of our drones shows.

    If remotely controlled, there’s always the risk a drone can be hijacked or at least jammed.

    If fully autonomous, well, you’re turning over death-dealing decisions to some programmer and their bugs.

    I think there will always be a use for piloted aircraft in the military.

    Like or Dislike: Thumb up 3 Thumb down 0

  22. @ponce:

    Right now, aircraft carriers remain the best method for force projection over long distances.

    Like or Dislike: Thumb up 2 Thumb down 0

  23. Al says:

    @ponce:

    If fully autonomous, well, you’re turning over death-dealing decisions to some programmer and their bugs.

    Aren’t we already doing that with cruise missiles?

    Like or Dislike: Thumb up 0 Thumb down 1

  24. ponce says:

    Aren’t we already doing that with cruise missiles?

    Well, not technically.

    I believe cruise missiles are fired directly at a particular target by a human operator.

    It’s my understanding that a lot of the recent missions flown by carrier pilots were of the loiter in an area and attack targets of opportunity kind. I think we’ve still got a while before we’re willing to cede that kind of responsibility to a computer.

    http://autocowrecks.failblog.org/2011/12/29/mobile-phone-texting-autocorrect-nuts/

    Like or Dislike: Thumb up 1 Thumb down 0

  25. DennisJP says:

    Carriers will always be needed. As long as country’s have Navy’s there will be naval battles. The fleet that has control of the air has a much more advantage and is able to knock out enemy fleets before they can come into range of anti ship missles.
    What i see is two things:
    1) People are trying to go back to the old way of thinking that surface forces will colide like the battles in WW1 at Jutland. This is farthiest from the truth. It will never happen. Not against the US. It will be like the day’s of the Battle of the Sabuyan Sea where you had a surface task force under attack by a Carrier task force. We will pound them with our aircraft until there sunk or they retreat out of aircraft range. If there was a small surface engagment it would be mop up.
    2) Thank God for FDR!!! He was the one that rebuilt our Navy. If it was not for him Task Force 58 would not have existed. All the Carriers and Battleships that joined the Navy in the 40′s were all designed and construction started before the war.
    Those budget cutters though they always like to cut the Military down to nothing. The time now is worse than before WW2.
    Sorry to say the “cold war” is not over. It just has a new face. Also with the rise of China. Their motives are not clear I hear but looking at their actions they claim the South China sea as their own as well as launch a balistic missle 35 miles off the coast of Los Angeles. Not even Russia did something like that during the 70′s and 80′s.
    So when having possibilities of both Russia and China and then throw in Iran and terrorist groups, includeing pirates. That is quite a bit of resources needed.
    The thing of it is is some people want to become isolated like before WW2. There are Governments that hate the American way of life and would attack us if given the chance in one form or another. I think it is because we have freedoms that they are to scared to give their people because they would not be in power for very long after it would be given.
    So the U.S Government takes a more proactive roll by faces those people overseas instead of in the U.S by sending our fleet to patrol and exercise with our allies and so forth. we also have to keep our word on our agreements we have made with our allies. Some people say we are the police of the world by having this strategy. I think we are just looking out for our interest as well as helping our allies and keeping our country safe by a more proactive stance instead of a passive stance.

    Like or Dislike: Thumb up 1 Thumb down 0