Navy Shipbuilding:

Cost and Schedule Problems on the DDG-51 AEGIS Destroyer Program

NSIAD-90-84: Published: Jan 17, 1990. Publicly Released: Jan 17, 1990.

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GAO examined the status of the DDG-51 destroyer program, focusing on contracts for the lead ship and the first two follow ships.

GAO found that: (1) major contract problems arose because the contractor's computer equipment did not have adequate storage capacity to design a complex warship and accommodate late design data from the Navy; (2) the problems resulted in two revisions to the contract which delayed the delivery schedule a total of 17 months; (3) although the contractor had completed more than 50 percent of the lead ship, completion required incorporating and integrating the Aegis combat system and demonstrating that other systems worked as designed; (4) the Department of Defense (DOD) expected total design and construction costs to total about $500 million, more than double the original contract estimates; (5) modifications to the lead ship contract restructured compensation to both the contractor and the Navy, which would eliminate losses of about $41.5 million; (6) the contract modifications could establish an inappropriate precedent, since over 50 percent of the Navy's competitively awarded fixed-price-incentive shipbuilding contracts experienced cost overruns; and (7) because DOD has awarded or will award contracts for follow ships, and as many as 17 ships could be under construction before completion of the lead ship, unanticipated lead ship problems might increase costs and delay deliveries for many follow ships.

Recommendation for Executive Action

  1. Status: Closed - Not Implemented

    Comments: DOD disregarded the recommendation and awarded five additional ships in fiscal year 1990 as scheduled.

    Recommendation: The Secretary of Defense should ensure that sufficient information exists to justify the award of contracts for follow ships beyond the seven now under contract.

    Agency Affected: Department of Defense

 

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