This is the accessible text file for GAO report number GAO-13-396 
entitled 'Ford-Class Carriers: Lead Ship Testing and Reliability 
Shortfalls Will Limit Initial Fleet Capabilities' which was released 
on September 5, 2013. 

This text file was formatted by the U.S. Government Accountability 
Office (GAO) to be accessible to users with visual impairments, as 
part of a longer term project to improve GAO products' accessibility. 
Every attempt has been made to maintain the structural and data 
integrity of the original printed product. Accessibility features, 
such as text descriptions of tables, consecutively numbered footnotes 
placed at the end of the file, and the text of agency comment letters, 
are provided but may not exactly duplicate the presentation or format 
of the printed version. The portable document format (PDF) file is an 
exact electronic replica of the printed version. We welcome your 
feedback. Please E-mail your comments regarding the contents or 
accessibility features of this document to Webmaster@gao.gov. 

This is a work of the U.S. government and is not subject to copyright 
protection in the United States. It may be reproduced and distributed 
in its entirety without further permission from GAO. Because this work 
may contain copyrighted images or other material, permission from the 
copyright holder may be necessary if you wish to reproduce this 
material separately. 

United States Government Accountability Office: 
GAO: 

Report to Congressional Requesters: 

September 2013: 

Ford-Class Carriers: 

Lead Ship Testing and Reliability Shortfalls Will Limit Initial Fleet 
Capabilities: 

GAO-13-396: 

GAO Highlights: 

Highlights of GAO-13-396, a report to congressional requesters. 

Why GAO Did This Study: 

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. 

What GAO Found: 

The Navy faces technical, design, and construction challenges to 
completing Gerald R. Ford (CVN 78) that have led to significant cost 
increases and reduced the likelihood that a fully functional ship will 
be delivered on time. The Navy has achieved mixed progress to date 
developing CVN 78’s critical technologies, such as a system intended 
to more effectively launch aircraft from the ship. In an effort to 
meet required installation dates aboard CVN 78, the Navy has elected 
to produce some of these systems prior to demonstrating their 
maturity—-a strategy that GAO’s previous work has shown introduces 
risk of late and costly design changes and rework, and leaves little 
margin to incorporate additional weight growth in the ship. In 
addition, progress in constructing CVN 78 has been overshadowed by 
inefficient out-of-sequence work, driven largely by material 
shortfalls, engineering challenges, and delays developing and 
installing critical technology systems. These events are occurring in 
a constrained budget environment, even as lead ship costs have 
increased by over 22 percent since construction authorization in 
fiscal year 2008—-to $12.8 billion. Additional increases could follow 
due to uncertainties facing critical technology systems and 
shipbuilder underperformance. 

The Navy’s strategy for providing timely demonstration of CVN 78 
capabilities is hampered by post-delivery test plan deficiencies, 
Joint Strike Fighter aircraft delays, and reliability shortfalls 
affecting key ship systems. Additional risk is introduced due to the 
Navy’s plan to conduct integration testing of key systems with the 
ship at the same time as initial operational test and evaluation 
(IOT&E). This strategy will constrain opportunities to implement 
timely, corrective actions if problems are discovered with key ship 
systems. In addition, significant discoveries during IOT&E could delay 
demonstration of ship capabilities. The Joint Strike Fighter, intended 
to operate with the carrier, has faced delays, and there is the 
likelihood of costly retrofits to the ship to accommodate the aircraft 
after CVN 78 is delivered to the Navy. But even after the ship 
commissions, several key ship systems will continue to face 
significant reliability shortfalls that will likely increase costs to 
the government and limit the ship’s mission effectiveness. The extent 
of these limitations will not be known until after IOT&E. GAO 
contemplated making a recommendation to delay CVN 78 commissioning 
until the ship successfully completes IOT&E. However, based on 
additional information provided by DOD, GAO decided not to include 
this recommendation in the report. 

The Navy and shipbuilder are implementing process improvements aimed 
at reducing the cost of the follow-on ship, John F. Kennedy (CVN 79), 
ahead of the main construction contract award for that ship, currently 
planned for September 2013. CVN 79 is to be of nearly identical design 
to CVN 78. The shipbuilder plans to employ a new, more efficient build 
strategy, but remaining technical and design risks with the lead ship 
could interfere with the Navy’s ability to achieve its desired cost 
savings for CVN 79. These uncertainties also affect the soundness of 
the Navy’s current CVN 79 cost estimate, which is optimistic. These 
factors, when coupled with the existing sole source environment for 
aircraft carrier construction, may compromise the government’s 
negotiating position for CVN 79. 

What GAO Recommends: 

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. 

View [hyperlink, http://www.gao.gov/products/GAO-13-396]. For more 
information, contact Michele Mackin at (202) 512-4841 or 
mackinm@gao.gov. 

[End of section] 

Contents: 

Letter: 

Background: 

Technology, Design, and Construction Challenges Pose Risk to Lead Ship 
Cost and Schedule Outcomes: 

Demonstration of Ship Capabilities after Delivery Is Limited by Test 
Plan Deficiencies and Reliability Shortfalls: 

Lead Ship Unknowns Complicate the Navy's Ability to Determine Follow-
on Ship Cost Outcomes: 

Conclusions: 

Recommendations for Executive Action: 

Agency Comments and Our Evaluation: 

Appendix I: Scope and Methodology: 

Appendix II: Comments from the Department of Defense: 

Appendix III: GAO Contact and Staff Acknowledgments: 

Tables: 

Table 1: Planned Capabilities and Development Status of Ford-class 
Critical Technologies: 

Table 2: CVN 78 Procurement Cost Growth Since Fiscal Year 2008 for 
Selected Critical Technology Systems: 

Table 3: F-35C Integration Requirements with CVN 78: 

Table 4: Comparison of CVN 79 Procurement Funding Strategies Outlined 
in the Navy's Fiscal Year 2012, 2013, and 2014 Budget Submissions: 

Figures: 

Figure 1: Critical Technologies on the Ford-Class Aircraft Carrier: 

Figure 2: Ford Class Budgeting and Contracting Strategies: 

Figure 3: Delays to the CVN 78 Construction Schedule and Land-Based 
Test Programs for Critical Technologies Since 2008: 

Figure 4: CVN 78 Procurement Cost History: 

Figure 5: CVN 78 Procurement Cost Growth Drivers as of June 2012: 

Figure 6: CVN 78 Post-Delivery Testing Schedule and Key Milestones: 

Figure 7: Advanced Arresting Gear Reliability Performance and Growth 
Projections: 

Figure 8: Electromagnetic Aircraft Launch System Reliability 
Performance and Growth Projections: 

Figure 9: Schedule of CVN 78 and CVN 79 Construction Milestones: 

Abbreviations: 

DFARS: Defense Federal Acquisition Regulation Supplement: 

DOD: Department of Defense: 

EMALS: electromagnetic aircraft launch system: 

HSLA 65: high strength low alloy steel: 

HSLA 115: high strength toughness steel: 

IOT&E: initial operational test and evaluation: 

JPALS: joint precision approach and landing system: 

TRL: technology readiness level: 

[End of section] 

GAO:
United States Government Accountability Office: 
441 G St. N.W. 
Washington, DC 20548: 

September 5, 2013: 

The Honorable Carl Levin: 
Chairman: 
Committee on Armed Services: 
United States Senate: 

The Honorable John McCain: 
Ranking Member: 
Subcommittee on Seapower: 
Committee on Armed Services: 
United States Senate: 

The Navy is developing the Ford-class nuclear powered aircraft carrier 
to serve as the future centerpiece of the carrier strike group, which 
combines different types of ships together to gain and maintain sea 
control. The Ford class is the successor to the Nimitz-class aircraft 
carrier designed in the 1960s. The Ford class carriers will introduce 
several advanced technologies that are intended to create operational 
efficiencies while enabling higher sortie rates (operational flights 
by aircraft, such as the Joint Strike Fighter) with reduced manpower 
compared to current carriers. The Navy plans to invest over $43 
billion to develop, design, construct, and test three Ford class 
carriers. At present, the lead ship, Gerald R. Ford (CVN 78), is under 
construction, and initial construction activities are underway for the 
first follow-on ship, John F. Kennedy (CVN 79). 

In 2012, the Navy reported a significant increase in its budget 
estimate for construction of the lead ship. That ship is now expected 
to cost $12.8 billion--a $1.3 billion increase since 2011. This cost 
growth has led to concerns about the Navy's ability to deliver the 
three Ford-class aircraft carriers as planned and with the promised 
levels of capability. 

In light of these developments, you asked us to review the Navy's 
acquisition of the Ford class. Specifically, we (1) assessed 
technical, design, and construction challenges the Navy faces in 
delivering the lead ship, CVN 78, within current budget and schedule 
estimates; (2) evaluated whether the Navy's post-delivery test and 
evaluation strategy for CVN 78 will provide timely demonstration of 
required capabilities; and (3) identified actions the Navy is taking 
to improve cost outcomes for the first follow-on ship, CVN 79, ahead 
of that ship's upcoming contract award for detail design and 
construction. 

To assess technical, design, and construction challenges the Navy 
faces in delivering CVN 78 within current budget and schedule 
estimates, we reviewed Department of Defense (DOD) and contractor 
documentation to identify technology development, design stability, 
and construction activities. This documentation included Navy 
technology readiness assessments and briefings, ship and key subsystem 
test plans, and contract performance reports. To evaluate whether the 
Navy's post-delivery test and evaluation strategy for CVN 78 will 
provide timely demonstration of required capabilities, we reviewed the 
Navy's draft revision to the CVN 78 test and evaluation master plan, 
Joint Strike Fighter performance reports and briefings, and 
reliability data for key CVN 78 systems. To identify actions the Navy 
is taking to improve cost outcomes for CVN 79 ahead of that ship's 
detail design and construction contract award, we reviewed shipbuilder 
reports on lessons learned constructing CVN 78, the Navy's request for 
proposals for CVN 79 detail design and construction, and CVN 79 
construction plans. To corroborate information for each of these 
objectives, we interviewed DOD officials and contractor 
representatives responsible for Ford-class carrier requirements, 
development, acquisition, and testing. A more detailed description of 
our scope and methodology is presented in appendix I. 

We conducted this performance audit from June 2012 to September 2013 
in accordance with generally accepted government auditing standards. 
Those standards require that we plan and perform the audit to obtain 
sufficient, appropriate evidence to provide a reasonable basis for our 
findings and conclusions based on our audit objectives. We believe 
that the evidence obtained provides a reasonable basis for our 
findings and conclusions based on our audit objectives. 

Background: 

The Navy intends for Ford-class nuclear-powered aircraft carriers to 
serve as premier forward assets for crisis response and provide early 
striking power during major combat operations. The Ford-class is 
expected to feature a number of improvements over existing aircraft 
carriers that the Navy believes will improve the combat capability of 
the carrier fleet while simultaneously reducing acquisition and life 
cycle costs. These improvements include the following: 

* increased sortie generation rates for the aircraft being deployed 
from the carrier, 

* a near threefold increase in electrical generating capability, 

* increased operational availability, and: 

* increased service life margins for weight and stability to support 
future configuration changes to the ship over its expected 50-year 
service life. 

To facilitate these capability and efficiency gains, the Navy is 
developing 13 new, critical technologies for installation on Ford-
class carriers.[Footnote 1] For example, the ship includes a new 
electromagnetic aircraft launch system (EMALS) to propel aircraft off 
the ship, an advanced arresting gear to recover the aircraft, and an 
improved anti-aircraft missile system. It also includes a new dual 
band radar, which integrates two radars operating on different 
frequency bands to provide air traffic control, ship self-defense, and 
other capabilities. Other technologies are intended to improve the 
ship's propulsion, supply (replenishment), water generation, and waste 
disposal systems. 

Aside from their own intrinsic capabilities, these technologies are 
also intended to permit the Navy to implement favorable design 
features into the ship. Key design features include an enlarged flight 
deck; a smaller, aft-positioned island with fewer rotating radars than 
Nimitz-class carriers; and a track-based, flexible infrastructure 
system that allows ship compartments to be easily reconfigured to 
support changing missions over time. The Navy is managing these 
technology development activities across several different program 
offices and contractors, using quarterly integrated product team 
meetings to track progress. Figure 1 highlights the location of the 13 
critical technologies on the ship. 

Figure 1: Critical Technologies on the Ford-Class Aircraft Carrier: 

[Refer to PDF for image: illustration] 

Illustrations of aircraft carrier specifically depicts the following: 

Evolved sea sparrow missile; 
Plasma arc waste destruction system; 
Advanced weapon elevators; 
Heavy underway replenishment; 
Advanced arresting gear; 
Dual band radar: 
* Multi-function radar; 
* Volume search radar; 
Joint precision approach and landing system; 
Reverse osmosis desalination system; 
Electromagnetic aircraft launch system; 
Nuclear propulsion and electric plant; 
High strength alloy steel (HSLA 65); 
High strength toughness steel (HSLA 115). 

Source: GAO (presentation); Navy (image). 

[End of figure] 

The Navy's strategy for acquiring a new class of carriers has changed 
from its initial concept. Initially, the Navy employed an evolutionary 
acquisition strategy, with technology improvements planned to be 
introduced gradually with each successive carrier. The Navy 
established the CVN(X) program in 1998 in support of this concept. 
Under the CVN(X) program, introduction of new technologies would be 
spread over three ships, beginning with the final Nimitz-class 
carrier, CVN 77, which was authorized in fiscal year 2001 to begin 
construction, and continuing over two, new design CVN(X) class 
carriers. In 2002, however, DOD decided to restructure the CVN(X) 
program (renamed as CVN 21) and accelerated plans for introducing new 
technologies on the first ship of the new class. To support this 
acceleration, in 2004 the Navy increased its planned research, 
development, test, and evaluation funding for the program from $2.3 
billion to $4.3 billion.[Footnote 2] In 2006, the Secretary of the 
Navy named the lead ship of the program (CVN 78) Gerald R. Ford, thus 
initiating the Ford class. 

Due to their vast size and complexity, aircraft carriers require 
funding for design, long-lead materials (such as nuclear propulsion 
plant components), and construction over many years. To accomplish 
these activities, the Navy awards contracts for two phases of 
construction--construction preparation and detail design and 
construction--underpinned by advance procurement and procurement 
funding. Additional funding, termed "cost to complete" funding, may be 
needed to cover unexpected cost growth that occurs during construction. 

Figure 2 outlines the Navy's budgeting and contracting strategies for 
the Ford class. As indicated in the figure, construction preparation 
contracts can be awarded several years after advance procurement funds 
are in place, to allow for procurement of long-lead materials. 

Figure 2: Ford Class Budgeting and Contracting Strategies: 

[Refer to PDF for image: illustration] 

CVN 78: 

Advance procurement (AP) funding: 
Fiscal year 2001-2007: 7 years. 

Procurement funding: 
Fiscal year 2007-2011: 4 years. 

3Q FY 2004: Contract award; 
Construction preparation; 
4Q FY 2008: Contract award; 
Detail design and construction; 
2Q FY 2016: Ship delivery. 

CVN 79: 

Advance procurement (AP) funding: 
Fiscal year 2007-2012: 6 years. 

Procurement funding: 
Fiscal year 2016-2018: 6 years. 

2Q FY 2009: Contract award; 
Construction preparation; 
4Q FY 2013: Contract award; 
Detail design and construction; 
4Q FY 2022: Ship delivery. 

CVN 80: 

Advance procurement (AP) funding: 
Fiscal year 2016-2017: 2 years. 

Procurement funding: 
Fiscal year 2017-2023: 6 years. 

1Q FY 2016: Contract award; 
Construction preparation; 
1Q FY 2018: Contract award; 
Detail design and construction; 
4Q FY 2027: Ship delivery. 

Source: GAO analysis of Navy documentation. 

Note: FY = fiscal year; AP = advance procurement. Unlike other ships, 
for which the Navy typically funds detail design and construction over 
1 or 2 years, Congress has authorized Ford-class carrier constructions 
to be funded in annual increments lasting up to 6 years. The Navy can 
vary the amount of funds it budgets for each increment on a year-to-
year basis to account for evolving work needs and cost changes in the 
program. 

[End of figure] 

In September 2008, the Navy awarded a $4.9 billion cost-reimbursement 
contract for detail design and construction of CVN 78 to Newport News 
Shipbuilding. Cost-reimbursement contracts, also known as cost-plus 
contracts, provide for payment of allowable incurred costs, to the 
extent prescribed in the contract. This contract type places most of 
the risk on the government, which may pay more than budgeted should 
incurred costs be more than expected when the contract is signed. 

The Navy expects to largely repeat the lead ship design for CVN 79, 
with minor modifications, and to construct that ship under a fixed-
price incentive contract with the shipbuilder. Fixed-price incentive 
contracts place increased risk on the contractor, which generally 
bears some responsibility for increased costs of performance, 
including full responsibility once the contract's ceiling is exceeded. 
These contracts include a negotiated target cost, target profit, and a 
formula for sharing the risk of cost overruns between the buyer and 
the seller (sometimes referred to as a shareline).[Footnote 3] Upon 
completion of performance, if the costs incurred by the contractor 
have exceeded the target cost, then application of the formula results 
in the contractor receiving a profit that is less than the target 
profit, and may result in a net loss for the contractor. The Navy has 
not yet determined the design parameters and contract type for CVN 80. 

Congress has previously expressed concern about Ford-class carrier 
costs. The John Warner National Defense Authorization Act for Fiscal 
Year 2007 included a provision that established (1) a procurement cost 
cap for CVN 78 of $10.5 billion, plus adjustments for inflation and 
other factors, and (2) a procurement cost cap for subsequent Ford-
class carriers of $8.1 billion each, plus adjustments for inflation 
and other factors.[Footnote 4] 

Further, in August 2007, we reported that delays in Ford class 
technology development could increase lead ship construction costs and 
lead to potential reductions in capability at delivery. In addition, 
we found that although the Navy had made considerable progress 
maturing CVN 78's design, significant schedule pressures in 
development of the ship's critical technologies could impede 
completion of the detailed phases of design and potentially disrupt 
construction. We also found that the Navy's cost estimate used to 
develop the CVN 78 budget was optimistic. We recommended actions to 
improve the realism of the CVN 78 budget estimate, improve the Navy's 
cost surveillance capability, and schedule carrier-specific tests of 
the dual band radar.[Footnote 5] The Navy addressed some, but not all, 
of our recommendations. 

As is typical for all ships, Ford-class carrier construction is 
conducted over several phases: 

* Block fabrication: Metal plates are welded together into elements 
called blocks. Blocks are the basic building units for a ship, and 
when completed they will form completed or partial compartments, 
including accommodation spaces, engine rooms, and storage areas. 

* Assembly and outfitting of blocks: Blocks are generally outfitted 
with pipes, brackets for machinery or cabling, ladders, and any other 
equipment that may be available for installation at this early stage 
of construction. This allows a block to be installed as a completed 
unit when it is welded to the hull of the ship. Installing equipment 
at the block stage of construction is preferable because access to 
spaces is not limited by doors or machinery, unlike at later phases. 

* Block erection: Blocks are welded together to form grand blocks, 
which are then erected with other grand blocks in a drydock. 

* Launch: Once the ship is watertight and the decision is made to 
launch--or float the ship in water--the ship is then towed into a quay 
or dock area where final outfitting and testing of machinery and 
equipment such as main engines will occur. Afterward, the ship embarks 
on sea trials where performance is evaluated against the contractually 
required specifications and overall quality is assessed. 

* Delivery: Following sea trials, the shipyard delivers the ship to 
the buyer (Navy). 

* Commissioning: Following delivery, the act or ceremony of 
commissioning a ship marks its entry into active service. 

DOD acquisition policy requires major defense acquisition programs, 
including shipbuilding programs, to execute and complete developmental 
testing, reliability growth testing, initial operational test and 
evaluation (IOT&E), and live-fire testing activities: 

* Developmental testing is intended to assist in the maturation of 
products, product elements, or manufacturing or support processes. For 
ship technologies, developmental testing typically includes robust 
land-based testing activities prior to introducing the technology to a 
maritime environment. 

* Reliability growth testing is an integral part of the systems 
engineering process for a weapon system. Simply stated, reliability is 
the ability of a system and its parts to perform its mission without 
failure, degradation, or demand on the support system under a 
prescribed set of conditions. Program managers are responsible for 
developing reliability growth curves for weapon systems, which outline 
a series of intermediate goals that are tracked through test and 
evaluation events until minimum reliability requirements are 
satisfied. In addition, program managers and operational test agencies 
are responsible for assessing and reporting on the reliability growth 
required for a system to achieve its minimum reliability requirements 
during IOT&E. The Navy measures reliability for key CVN 78 systems in 
terms of mean (average) time between failures and average number of 
cycles between critical mission failures. [Footnote 6] 

* IOT&E--a major component of operational testing--is intended to 
assess a weapon system's capability in a realistic environment when 
maintained and operated by sailors, subjected to routine wear-and-
tear, and employed in combat conditions against a simulated enemy who 
fights back. During this test phase, the ship is exposed to as many 
actual operational scenarios as possible--a process that reveals the 
weapon system's capabilities under stress. IOT&E for CVN 78 will take 
place after the shipbuilder completes construction and delivers the 
ship to the Navy. 

* Live-fire testing provides timely assessment of the survivability 
and/or lethality of a weapon system as it progresses through its 
design and development. For ships, two major components of this 
testing are the full-ship shock trial and total ship survivability 
trial. The Navy defines a full-ship shock trial as an at-sea trial 
conducted to identify any unknown weakness in the ability of the ship 
to withstand specified levels of shock from underwater explosions. The 
Navy defines a total ship survivability trial as an at-sea, scenario-
based assessment of the ability of the ship and crew to control 
damage, reconfigure, and attempt to reconstitute mission capability 
after damage. 

DOD also establishes two key milestones for introducing new weapon 
systems, including ships, to the warfighter: initial operational 
capability and full operational capability. 

* Initial operational capability (or initial capability) for a weapon 
system is, in general, attained once some units and/or organizations 
in the force structure scheduled to receive the system have received 
it and have the ability to employ and maintain it. For CVN 78, initial 
capability closely follows the completion of combat system ship 
qualification trials, which are a series of technical and training 
events conducted aboard newly commissioned warships. 

* Full operational capability (or full capability) generally 
represents the point when all units and/or organizations in the force 
structure scheduled to receive the system have received it and have 
the ability to employ and maintain it. For CVN 78, full capability 
closely follows the completion of joint task force exercises, which 
are designed to test the carrier's ability to operate in hostile, 
complex environments alongside other U.S. and coalition forces. The 
purpose of these exercises is to prepare the carrier for an upcoming 
deployment. 

In addition, DOD acquisition policy requires the development of a life 
cycle cost estimate for weapon systems. A cost estimate is a summation 
of individual cost elements--using established methods and valid data--
to estimate the future costs of a program, based on what is known 
today. Cost estimates are necessary for many reasons: to support 
decisions about funding one program over another, to develop annual 
budget requests, to evaluate resource requirements at key decision 
points, and to develop performance measurement baselines. The 
management of a cost estimate involves continually updating the cost 
estimate with actual data as they become available, revising the 
estimate to reflect changes, and analyzing differences between 
estimated and actual costs. The Navy completed its initial life cycle 
cost estimate for CVN 78 in 2004, which largely underpinned initial 
budget requests for that ship. Since that time, the Navy has 
periodically updated that cost estimate and also recently developed a 
cost estimate for CVN 79 detail design and construction. 

Finally, the Defense Federal Acquisition Regulation Supplement (DFARS) 
requires certain contracts, to include the Ford class contract, to 
include a clause requiring the contractor to maintain a government-
validated earned value management system and to provide monthly 
contract performance reports to the government.[Footnote 7] Earned 
value management is a program management tool for assessing cost and 
schedule performance. It goes beyond simply comparing budgeted costs 
to actual costs. It measures the value of work accomplished in a given 
period and compares it with the planned value of work scheduled for 
that period and with the actual cost of work accomplished. By using 
the metrics derived from these values to understand performance status 
and to estimate cost and time to complete the work, earned value 
management can alert program managers to potential problems sooner 
than expenditures alone can. 

Technology, Design, and Construction Challenges Pose Risk to Lead Ship 
Cost and Schedule Outcomes: 

While construction of CVN 78 is more than halfway complete, the Navy 
and shipbuilder must still overcome significant technology 
development, design, and construction challenges in order to deliver a 
fully functional ship to the fleet at the currently budgeted cost of 
$12.8 billion and the February 2016 delivery date. However, several 
critical technologies--provided to the shipbuilder by the Navy--have 
encountered developmental delays and, subsequently, have not yet 
reached a level of maturity that will enable them to be effectively 
incorporated onto the ship. These delays are most evident in the land-
based test programs for these technologies, which are lagging 
significantly behind schedule. At the same time, the ship's design 
stability--a key factor in controlling future cost growth--is 
contingent on critical technologies maturing in the configurations 
currently anticipated. In addition, construction inefficiencies at the 
shipyard have delayed--and threaten additional delays to--ship launch 
and delivery. These combined challenges and uncertainties suggest that 
more cost growth could occur for CVN 78. 

Some Critical Technologies Are Mature, but Others Face Significant 
Land-Based Testing Delays: 

At present, the Navy assesses 7 of CVN 78's 13 critical technologies 
as mature, meaning that they have been proven in an operational 
environment. The shipbuilder has begun installing the remaining 6 
technologies on the ship even though their capabilities are not yet 
fully proven. This strategy introduces the risk of late and costly 
design changes aboard the ship. Specifically, progress continues to 
lag for several systems that are integral to the ship achieving its 
intended mission capabilities. 

Our previous work has shown that good acquisition outcomes are 
achieved through a knowledge-based approach to product development 
that demonstrates high levels of knowledge before significant 
commitments are made.[Footnote 8] In essence, knowledge supplants risk 
over time. In this approach, developers make investment decisions on 
the basis of specific, measurable levels of knowledge at critical 
junctures before investing more money and advancing to the next phase 
of acquisition. Shipbuilding programs are no exception. As we have 
previously reported, leading commercial ship buyers and shipbuilders 
retire program risks, including technology risk, prior to signing a 
contract.[Footnote 9] Demonstrating the maturity of critical 
technologies--by testing representative prototypes in realistic 
environments--is a key component to reducing these risks. 

DOD uses technology readiness levels (TRL) to describe the maturity of 
critical technologies in programs. Technologies with TRLs below 6 are 
at a stage of development where only components or a basic proof of 
concept of the system have been validated. Technologies developed into 
representative prototypes and successfully tested in a relevant 
environment meet requirements for TRL 6. Technologies developed into 
actual system prototypes (full form, fit, and function) and tested in 
an operational environment meet requirements for TRL 7. We have 
previously reported that TRL 7 constitutes low risk for starting a 
product development and, for shipbuilding programs, should be achieved 
for individual technologies prior to detail design contract 
award.[Footnote 10] Consequently, our assessment of CVN 78 
technologies refers to technologies that have reached TRL 6 and TRL 7 
as approaching maturity and as mature, respectively. Technologies 
exceeding TRL 7 represent actual systems that have been proven to work 
in final form and under expected (TRL 8) or actual (TRL 9) mission 
conditions. Table 1 summarizes the planned capabilities and 
development status of current Ford-class technologies and DOD's 
assessment of TRLs since contract award in 2008. 

Table 1: Planned Capabilities and Development Status of Ford-class 
Critical Technologies: 

Technology: Volume Search Radar (part of dual band radar); 
Capability improvement: Volume search radar includes long-range, above-
horizon surveillance and air traffic control capabilities. The dual 
band radar permits reduced manning and higher sortie generation rates 
aboard CVN 78 via anticipated operational availability increases and 
size reductions to the ship's island; 
2008 TRL: 5; 
2013 TRL: 6; 
Development status: Technical deficiencies have slowed development, and 
key functions, including air traffic control capabilities, remain 
undemonstrated. The Navy is using a lower powered prototype to complete 
land-based testing. At present, the first test of a fully configured 
volume search radar is scheduled for fiscal year 2016 aboard CVN 78. 
Following this testing, the Navy expects the radar will reach maturity 
(TRL 7) in fiscal year 2017. 

Technology: Multifunction Radar (part of dual band radar); 
Capability improvement: Multifunction radar includes horizon search, 
surface search and navigation, and missile communications. This system 
facilitates reduced manning through anticipated improvements in 
operational availability; 
2008 TRL: 6; 
2013 TRL: 7; 
Development status: Although the Navy has assessed the system as mature 
since 2010, it plans to restart land-based testing of this radar in 
fiscal year 2013 to demonstrate certain CVN 78-specific functionalities 
that the Navy previously deferred. New tests will employ production 
equipment and prototype test articles. The Navy plans to transition to 
shipboard testing in fiscal year 2014 using a production unit system 
that will complete requirements verifications not addressed at the 
land-based test site and will integrate the system with the CVN 78 
volume search radar. 

Technology: Advanced Arresting Gear; 
Capability improvement: Advanced arresting gear recovers current and 
future aircraft and contributes to increased sortie generation rate 
and reduced manning; 
2008 TRL: 5; 
2013 TRL: 6; 
Development status: Developmental test failures led to system 
redesigns. Navy is presently executing the first phase of land-based 
testing concurrent with system production and installation on CVN 78. 
The system is scheduled to arrest its first aircraft in November 2013. 
The Navy anticipates system maturity (TRL 7) in fiscal year 2014. 

Technology: Electromagnetic Aircraft Launch System (EMALS); 
Capability improvement: EMALS uses an electrically generated moving 
magnetic field to propel aircraft, which places less physical stress 
on aircraft as compared to steam catapult launchers. The system is a 
key contributor to CVN 78's planned sortie generation rate and reduced 
manning, largely because of Navy expectations about EMALS's increased 
operational availability; 
2008 TRL: 6; 
2013 TRL: 6; 
Development status: EMALS land-based testing is proceeding 
concurrently with system production and installation on CVN 78. To 
date, EMALS has successfully launched a wide range of aircraft using a 
single launcher and 4 motor generators. The shipboard system will 
employ a more complex configuration of 4 launchers and 12 generators 
sharing a power interface. EMALS is scheduled to mature (TRL 7) in 
fiscal year 2014 following aircraft compatibility and environmental 
testing. 

Technology: Advanced Weapons Elevators; 
Capability improvement: These 
elevators rely on electromagnetic fields to move instead of cables. 
Capability improvements include an expected 200 percent greater load 
capacity than legacy carrier elevators. Advanced weapons elevators 
facilitate reduced manning and enable higher sortie generation rates; 
2008 TRL: 5; 
2013 TRL: 6; 
Development status: Prior to installation on the ship, system testing 
was limited to factory tests of the first production unit in a 
configuration that was unrepresentative of shipboard doors, hatches, 
and ramps. Planned tests aboard CVN 78 will verify system performance 
against load requirements and under casualty (degraded) conditions. 
The Navy anticipates system maturity (TRL 7) in fiscal year 2014. 

Technology: Evolved Sea Sparrow Missile Joint Universal Weapons Link; 
Capability improvement: This system supports anti-air warfare. The 
system provides capability to defeat high-density raids and facilitates 
reduced manning aboard the ship; 
2008 TRL: 4; 
2013 TRL: 6; 
Development status: The Navy expects this technology to mature (TRL 7) 
in fiscal year 2014 following completion of qualification and 
integration tests, to include integration with CVN 78's multifunction 
radar. 

Technology: Joint Precision Approach and Landing System; (JPALS); 
Capability improvement: JPALS is a global positioning system technology 
allowing for all-weather, day and night aircraft landings. JPALS is 
expected to become the primary landing system for F-35C Joint Strike 
Fighter aircraft on all carriers, including the Ford class. JPALS 
permits reduced manning; 
2008 TRL: 6; 
2013 TRL: 6; 
Development status: Shore-based flight tests of the system are ongoing. 
Shipboard flight testing is scheduled to begin in fiscal year 2013, 
which the Navy expects will mature the system to TRL 7. Technical risks 
include operations within electronic jamming environments. 

Technology: Heavy Underway Replenishment Receiving Station; 
Capability improvement: This system provides quicker shipboard 
replenishment (supply) than legacy underway replenishment systems. The 
system facilitates F-35C power module replacement and higher sortie 
generation rates for the Ford class; 
2008 TRL: 6; 
2013 TRL: 7; 
Development status: In fiscal year 2013, the Navy matured the system by 
completing a full-scale transfer of 12,000-pound loads to a CVN 78 
prototype receiving station in accordance with required conditions. 
Although CVN 78 will have this capability installed, the Navy's plan to 
install this system on supply ships has slipped 8 years. 

Technology: Plasma Arc Waste Destruction System; 
Capability improvement: This system uses extreme temperatures to 
convert 6,800 pounds per day of plastic and other waste into gaseous 
emissions. It facilitates reduced manning aboard the ship; 
2008 TRL: 7; 
2013 TRL: 7; 
Development status: System maturity was achieved in 2007 following 
engineering development model testing that satisfied all performance 
objectives. A similar system was tested on a cruise ship. 

Technology: Nuclear propulsion/electric plant; 
Capability improvement: The system converts energy into electricity, 
providing a nearly a three-fold increase in power generation over the 
Nimitz-class plant. The plant design also facilitates manning 
reductions and preservation of service life weight and stability 
allowances; 
2008 TRL: 7; 
2013 TRL: 8; 
Development status: The Navy matured the system in 2004 and it is now 
installed aboard CVN 78. Currently, the Navy and shipbuilder are 
conducting flushing/hydrostatic testing, control system testing, and 
electric plant testing. Plans call for this system to demonstrate 
initial capability in December 2014. 

Technology: Reverse Osmosis Desalinization System; 
Capability improvement: This system desalinates water without a steam 
distribution system, facilitating reduced manning and improved weight 
and stability allowances; 
2008 TRL: 7; 
2013 TRL: 8; 
Development status: System maturity was achieved in 2003 followed over 
1,800 hours of prototype testing. Following later shock, vibration, and 
maintainability tests, first unit qualifications were completed in 
2010. 

Technology: High Strength Toughness Steel (HSLA 115); 
Capability improvement: HSLA 115 is stronger and lighter than legacy 
ship steel types and comprises the CVN 78 flight deck. HSLA 115 
improves weight and stability allowances; 
2008 TRL: 7; 
2013 TRL: 8; 
Development status: HSLA 115 completed prototype and first article 
qualification testing in fiscal years 2007 and 2008, respectively. The 
Navy has assessed the system as mature since 2007. Since then, the 
shipbuilder has successfully constructed CVN 78 flight deck sections 
using HSLA 115. 

Technology: High Strength Low Alloy Steel (HSLA 65); 
Capability improvement: HSLA 65 is stronger and lighter than legacy 
ship steel types, and is used in bulkhead and deck constructions. HSLA 
65 improves weight and stability allowances; 
2008 TRL: 8; 
2013 TRL: 9; 
Development status: HSLA 65 was rated TRL 8 in 2004 and is currently 
employed aboard a Nimitz class carrier. CVN 78, however, represents the 
first widespread application of HSLA 65 on a Navy ship. 

Source: GAO analysis of Navy and contractor documentation. 

Note: TRL refers to technology readiness level. The TRLs outlined in 
the table reflect DOD's estimates of maturity. Additionally, the Navy 
has removed several systems from the ship that it had previously 
tracked as critical technologies. For example, the Navy deferred CVN 
78's planned dynamic armor protection system to future carriers as a 
cost-savings measure. 

[End of table] 

As indicated in the table, the Navy has largely retired the risks 
posed by the reverse osmosis desalinization, plasma arc waste 
destruction, and nuclear propulsion/electric plant systems. These 
technologies are currently at TRL 7 or higher and were mature even 
before the CVN 78 contract award for detail design and construction. 
However, other critical technologies were immature at contract award 
and still must undergo extensive testing before reaching maturity. 
These technologies moved through development with lower-than-desired 
levels of knowledge and subsequently faced technical, design, and 
production challenges. For example, three systems integral to the 
ship's ability to execute its mission assignments--the volume search 
radar, advanced arresting gear, and EMALS--were immature at CVN 78 
detail design and construction contract award in 2008. These systems 
continue to experience disruptions in development and delays in the 
land-based testing that is needed to assess their levels of maturity. 
In contrast to the knowledge-based approach used by leading commercial 
ship buyers, the Navy, in an effort to meet required installation 
dates aboard CVN 78, elected to produce these systems prior to 
demonstrating their maturity. More information about the status of 
these three critical technologies follows: 

* Volume search radar: Prior to the CVN 78 detail design contract 
award, the Navy had only built, tested, and integrated prototype 
components of the volume search radar in controlled laboratory 
environments. As we previously reported, these tests revealed 
deficiencies related to key components of the radar.[Footnote 11] 
Under the Navy's 2008 program schedule, the volume search radar was to 
be developed and tested as part of the Zumwalt-class destroyer program 
and was expected to approach maturity following land-based testing in 
fiscal year 2009. The radar would then participate in combat system 
integration testing with the other major component of the dual band 
radar, the multifunction radar, and eventually demonstrate maturity as 
part of Zumwalt-class destroyer at-sea testing in fiscal year 2014. In 
2010, however, to reduce Zumwalt-class construction costs, the Navy 
removed the volume search radar from the destroyer program and 
suspended remaining land-based testing, leaving key Ford-class testing 
requirements unaddressed. The Navy subsequently transferred remaining 
development work to the Ford class program and planned to resume land-
based testing in fiscal year 2012 using an actual production unit of 
the radar--but contracting delays pushed the start of this testing out 
to fiscal year 2013. As a result of this delay, and the Navy's desire 
not to slow down the current radar installation schedule for CVN 78, 
remaining land-based testing will be completed in fiscal year 2014, 
4.5 years later than originally planned, using a less capable 
developmental radar array than the actual production configuration 
that will be installed on CVN 78. The Navy has also scheduled 
shipboard testing beginning in fiscal year 2016 to complete additional 
volume search radar testing not executed on land. This testing 
schedule increases the risk that discovery of problems with the system 
will trigger costly design changes and rework aboard the ship. 

* Advanced arresting gear: Prior to CVN 78's detail design contract 
award, the advanced arresting gear completed early verification tests 
to prove out the system's concept, along with some component testing. 
Under the Navy's 2008 program schedule, this system was scheduled to 
execute the following land-based testing program: (1) extended 
reliability testing in fiscal year 2009 to demonstrate integration of 
high risk subcomponents and produce reliability growth data; (2) 
environmental qualification testing between fiscal years 2009 and 
2011, which would verify the system's suitability; (3) jet car track 
site testing--where the system arrests jet-engine-propelled vehicles 
that travel down a railway with different physical loads and speeds--
between fiscal years 2010 and 2011 to validate the system's full range 
of performance; and (4) runway arrested landing site testing between 
fiscal years 2011 and 2012, which would verify aircraft compatibility 
and performance with the system. Progress has proven slower than 
anticipated, however. Deficiencies affecting five major components, 
plus software, have contributed to several redesigns of the system 
since 2007. Most recently, the Navy and its contractor redesigned and 
remanufactured the energy absorbing "water twister" components of the 
system, which turned out to be costly, time consuming processes that 
have delayed installation of these units aboard the ship.[Footnote 12] 
Consequently, the Navy has delayed the start of runway arrested 
landing site testing--required to mature the advanced arresting gear 
technology--until fiscal year 2014. Under this revised testing 
schedule, the Navy now expects to complete land-based developmental 
testing, 2.5 years later than initially planned, by fiscal year 2015--
after it has installed the full system aboard CVN 78. 

* EMALS: Unlike the other critical technologies discussed above, this 
system was approaching maturity prior to the CVN 78 detail design 
contract award because the Navy had built and tested competitive 
prototypes of the system as part of the contractor selection process 
for EMALS development in 2004. Under the Navy's 2008 program schedule, 
land-based testing for the system was scheduled to occur between 
fiscal years 2008 and 2011. However, technical issues affecting the 
EMALS power interface and conversion systems, among other 
deficiencies, have slowed progress. The Navy's 2012 development 
schedule calls for land-based testing to continue into fiscal year 
2014, which, upon completion, the Navy expects will mature the EMALS 
technology. In the meantime, however, significant numbers of EMALS 
components have already been produced, delivered to the shipbuilder, 
and installed on CVN 78--even though the functional requirements, 
performance, and suitability of the system remain unproven. 

Although the Navy has encountered land-based testing delays totaling 
2.5 to 4.5 years each for the volume search radar, advanced arresting 
gear, and EMALS critical technologies, it has elected to not adjust 
the CVN 78 construction schedule to compensate for these delays. As a 
result, the Navy and its shipbuilder are constructing CVN 78 with less 
knowledge about the ship's critical technologies than it deemed 
appropriate at contract award in 2008. As the disparity between land-
based testing and construction schedules persists--or worsens--the 
Navy faces significant risk of unbudgeted cost growth arising from 
technical discoveries late in construction. Figure 3 illustrates 
changes to the CVN 78 construction schedule and to land-based testing 
programs for critical technologies that have been incurred since the 
2008 detail design and construction contract award. 

Figure 3: Delays to the CVN 78 Construction Schedule and Land-Based 
Test Programs for Critical Technologies Since 2008: 

[Refer to PDF for image: illustrated timeline] 

CVN 78 construction timeline: 
FY 2008: Construction contract award; 
(5 month delay since contract award); 
FY 2016: Delivery. 

Advanced arresting gear; 2.5 year delay: 
Estimated completion date for land based testing at contract award: FY 
2012; 
Current estimated completion date for land based testing: FY 2015. 

Electromagnetic aircraft launch system; 2.75 year delay: 
Estimated completion date for land based testing at contract award: FY 
2011; 
Current estimated completion date for land based testing: FY 2014. 

Volume search radar; 4.5 year delay: 
Estimated completion date for land based testing at contract award: FY 
2009; 
Current estimated completion date for land based testing: FY 2014. 

Source: GAO analysis of Navy documentation. 

Note: FY = fiscal year. 

[End of figure] 

Design Stability Contingent on Technologies Maturing As Planned: 

Since the CVN 78 contract was awarded in 2008, the Navy and 
shipbuilder have made progress stabilizing and completing the Ford-
class design. The Ford class represents the first time that the 
shipbuilder has used a 3D, computer-aided design product model to 
generate the design of an entire aircraft carrier. The product model 
generates a detailed design, allowing engineers to visualize the 
arrangement of spaces and systems. The design is also fed into a 
simulated 3D environment that allows engineers, planners, and 
construction workers to validate the design and build strategy by 
conducting virtual "walkthroughs." These tests validate elements of 
the design prior to construction, thereby avoiding potentially costly 
rework. 

In our work on shipbuilding best practices, we found that achieving 
design stability before start of fabrication is a key step that 
leading shipbuilders and ship buyers follow to ensure their vessels 
deliver on-time, within planned costs, and with planned capabilities. 
[Footnote 13] Leading commercial firms assess a ship design as stable 
once all basic and functional design activities have been completed. 
Basic and functional design refers to two-dimensional drawings and 3D 
computer-aided models (when employed) that fix the ship's hull 
structure; set the ship's hydrodynamics; route all major distributive 
systems including electricity, water, and other utilities; and 
identify the exact positioning of piping and other outfitting within 
each block of the ship. At the point of design stability, the 
shipbuilder has a clear understanding of the ship structure as well as 
electrical, piping, and other systems that traverse individual blocks 
of the ship. To achieve design stability, shipbuilders need suppliers 
(also called vendors) to provide complete, accurate system information 
prior to beginning basic design. This vendor-furnished information 
describes the exact dimensions of a system or piece of equipment going 
into a ship, including space and weight requirements, and also 
requirements for power, water, and other utilities that will have to 
feed the system. 

The CVN 78 shipbuilder completed its 3D product model in November 
2009--over a year after the construction contract was awarded. At 
contract award, 76 percent of the model was complete and the 
shipbuilder had already begun construction of at least 25 percent of 
its structural units under the previous construction preparation 
contract. While the model is now considered functionally complete, 
maintaining design stability depends on the critical technologies 
discussed above fitting within the space, weight, cooling, and power 
reservations allotted them. To date, evolving information about the 
attributes of these technologies has produced a weight/stability 
configuration for CVN 78 that leaves little margin to incorporate 
additional weight growth high up in the ship without making 
corresponding weight trade-offs elsewhere or compromising the future 
growth potential of the ship.[Footnote 14] Shipbuilder representatives 
have recently expressed concern about this possibility, particularly 
regarding additional design changes to critical technologies still in 
development--including the volume search radar, advanced arresting 
gear, and EMALS technologies. According to shipbuilder 
representatives, additional weight growth to the advanced arresting 
gear was of particular concern and could trigger a need for future 
structural and space modifications around the installed system. 
Further, until the advanced weapons elevators, joint precision 
approach and landing system, and evolved sea sparrow missile weapons 
link each demonstrate maturity, the likelihood of additional design 
changes to CVN 78 persists. 

In addition, as construction progresses, the shipbuilder is 
discovering "first-of-class" type design changes, which it will use to 
update the model prior to the follow-on ship construction. To date, 
several of these design changes have related to EMALS configuration 
changes, which have required electrical, wiring, and other changes 
within the ship. Although the Navy reports that these EMALS-related 
changes are nearing completion, it anticipates additional design 
changes stemming from remaining advanced arresting gear development 
and testing. In total, over 1,200 anticipated design changes remain to 
be completed (out of nearly 19,000 planned changes). According to the 
Navy, many of these 19,000 changes were programmed into the 
construction schedule early on--a result of the government's decision 
at contract award to introduce improvements during construction to the 
ship's warfare systems, which are heavily dependent on evolving 
commercial technologies. 

Construction Progress Slowed by Inefficiencies that Could Delay 
Delivery of the Ship: 

As of April 2013, the shipbuilder had erected 95 percent of the ship's 
structural units and had achieved a key milestone of installing the 
ship's island (command tower) onto the flight deck. Nevertheless, the 
ship was only 56 percent complete in April 2013, as compared to the 
builder's planned 62 percent completion rate at that point in 
construction. As a result of these construction delays, the Navy and 
shipbuilder recently elected to delay CVN 78's launch and delivery by 
4 months each. 

Ships are ideally designed and constructed using the most cost 
efficient sequence for construction, called the optimal sequence. 
Typically, an optimal construction sequence includes designing and 
building the ship from the bottom up, maximizing the work completed in 
shipyard shops, and minimizing tasks performed when the ship is 
already in the water, which tend to be costlier than tasks completed 
on land. As a general shipbuilding rule, the earlier a particular task 
can be performed in the production plan, the fewer labor hours it will 
consume. The sequence is outlined in the shipbuilder's integrated 
master schedule, which links all of the detailed construction tasks 
based on key event dates. 

By comparison, progress constructing CVN 78 has been constrained by 
inefficient out-of-sequence work driven largely by material 
shortfalls, engineering challenges, and delays developing and 
installing certain critical technology systems (provided by the Navy 
to the shipbuilder for installation). These outcomes are consistent 
with those experienced by other Navy shipbuilding programs that began 
lead ship constructions prior to maturing critical technologies, 
stabilizing their designs, or both.[Footnote 15] Key examples of 
construction issues with the CVN 78 include the following: 

* Material shortfalls: CVN 78 has experienced significant shortages of 
developmental valves throughout the ship due to delayed vendor 
deliveries. These valves are crucial for installing the ship's chilled 
water system, which provides air conditioning and cooling for 
electronic systems, as well as other distributive piping systems. To 
mitigate the impact of valve delinquencies, the shipbuilder installed 
temporary metal spool pieces in place of missing valves in order to 
continue construction work for piping systems. Installing the valves 
later, out-of-sequence, required additional labor hours to complete. 
According to shipbuilding representatives, their vendor base for 
valves did not have sufficient experience developing and manufacturing 
new Navy ship system valves, and consequently encountered difficulties 
meeting Navy and shipbuilder specifications. To improve vendor 
performance, the shipbuilder provided on-site engineering and 
procurement assistance. The shipbuilder reports that suppliers have 
now delivered over 90 percent of the required valves and that most of 
the spool piece installations have been replaced with actual valves. 

* Engineering challenges: The shipbuilder's use of HSLA 65 thin steel 
plating for ship decks--intended to reduce weight in the ship's 
design--excessively warped and flexed during construction, which 
contributed to lower than desired levels of pre-outfitting and 
additional disruption to build processes. In an effort to compensate 
for the warping and flexing, the shipbuilder erected scaffolding 
around ship blocks to secure the assemblies. This scaffolding 
facilitated some pre-outfitting improvements, but produced 
corresponding cost increases and schedule delays. In addition, ship 
welders experienced substantial difficulty early on working this new 
plate steel because it was thinner than what had traditionally been 
used on aircraft carriers. 

The Navy and shipbuilder have also experienced other engineering 
challenges, including late delivery of accurate construction drawings 
and instructions to shipworkers. In many instances, the shipbuilder 
produced construction drawings--derived from the ship's 3D product 
model--that lacked sufficient detail necessary for efficiently 
installing critical components within the ship. This lack of 
comprehensive, detailed construction drawings contributed to 
inefficient work delays and restarts. 

* Critical technology system delays: Advanced arresting gear delivery 
delays to date have caused the shipbuilder to modify the planned 
arresting gear engine room loading sequence. Instead of being built in 
one piece in the yard and hoisted into place as originally envisioned, 
arresting gear components will be installed in sequence, including 
through a hole cut in the flight deck. This strategy has caused 
additional work and interfered with the construction of other ship 
features in some areas, such as duct work and cabling. Further, late 
dual band radar equipment deliveries have required the shipbuilder to 
cut open previously closed areas of the ship to allow loading of 
equipment. Additional delays, as well as rework or retrofits on 
installed components, remain possible as these developmental systems 
continue to progress through testing. 

The construction inefficiencies suffered by CVN 78 have only recently 
begun to materialize in the form of schedule delays. Recently revised 
Navy and shipbuilder plans now call for the ship to be launched in 
November 2013 at a 70 percent completion level--a total lower than 
what is found among leading commercial shipbuilding programs, which 
complete as much as 95 percent of the ship before launch.[Footnote 16] 
Executing these plans requires completion of certain shipbuilding 
activities prior to the scheduled launch date. For example, the 
establishment of the chilled water system--necessary to support the 
ship's energization of the electrical distribution system for launch--
is several weeks behind schedule. As launch gets delayed, so, too, 
does the shipbuilder's post-launch test program for key systems. Since 
this testing program is synced closely with ship delivery, the 4-month 
delay to the planned July 2013 launch date has produced a 
corresponding delay in delivering the ship to the Navy. 

Lead Ship Costs Will Likely Exceed Current Budget Estimates: 

Since CVN 78 construction was authorized with the contract award in 
fiscal year 2008, the Navy has consistently increased its procurement 
budget for the ship to account for cost growth as construction has 
progressed. Budgeted costs have grown to $12.8 billion, compared to 
the Navy's initial $10.5 billion procurement budget request. This 
total represents an increase of $2.3 billion, or 22.3 percent, and 
includes almost $1.4 billion in future years' funding (fiscal years 
2014 and 2015) to cover the anticipated cost growth. It also exceeds 
the $10.5 billion legislative cost cap on the program, which the Navy 
is currently seeking to amend as part of its fiscal year 2014 budget 
submission.[Footnote 17] 

Figure 4 outlines the evolution of CVN 78 procurement costs. 

Figure 4: CVN 78 Procurement Cost History: 

[Refer to PDF for image: line graph] 

22.3% cost growth as a percent of initial budget: 

Fiscal year: 2008; 
Procurement cost: $10.49 billion. 

Fiscal year: 2009; 
Procurement cost: $10.46 billion. 

Fiscal year: 2010; 
Procurement cost: $10.85 billion. 

Fiscal year: 2011; 
Procurement cost: $11.53 billion. 

Fiscal year: 2012; 
Procurement cost: $11.53 billion. 

Fiscal year: 2013; 
Procurement cost: $12.32 billion. 

Fiscal year: 2014; 
Procurement cost: $12.83 billion. 

Source: GAO analysis of Navy documentation. 

[End of figure] 

As figure 5 highlights, CVN 78 cost growth to date is primarily 
attributable to cost increases with acquiring critical technology 
systems provided to the shipbuilder by the Navy, although the 
shipbuilder detail design and construction inefficiencies discussed 
above also account for considerable growth. 

Figure 5: CVN 78 Procurement Cost Growth Drivers as of June 2012: 

[Refer to PDF for image: pie-chart] 

Shore based spares: 3%; $67 million; 
Special tooling and test equipment: 6%; $147 million; 
Shipbuilder design: 27%; $680 million; 
Shipbuilder construction: 27%; $690 million; 
Critical technology systems (delivered by Navy to shipbuilders): 38%; 
$955 million. 

Source: GAO analysis of Navy documentation. 

Note: The Navy has identified $141 million in miscellaneous cost 
reductions for the ship that partially offset the cost growth 
identified in the figure. 

[End of figure] 

We further analyzed the reasons for the 38 percent procurement cost 
growth in the critical technology systems aboard the ship. Table 2 
shows that the cost growth is largely attributable to the dual band 
radar (volume search and multifunction radars), advanced arresting 
gear, and EMALS acquisitions. 

Table 2: CVN 78 Procurement Cost Growth Since Fiscal Year 2008 for 
Selected Critical Technology Systems: 

System: EMALS; 
Fiscal year 2008 budget: $317.7 million; 
Fiscal year 2014 budget: $742.6 million; 
Difference in cost: $424.9 million; 
Cost growth as a percent of fiscal year 2008 budget: 133.7%. 

System: Dual band radar; 
Fiscal year 2008 budget: $201.9 million; 
Fiscal year 2014 budget: $484.0 million; 
Difference in cost: $282.1 million; 
Cost growth as a percent of fiscal year 2008 budget: 139.7%. 

System: Advanced arresting gear; 
Fiscal year 2008 budget: $75.0 million; 
Fiscal year 2014 budget: $168.6 million; 
Difference in cost: $93.6 million; 
Cost growth as a percent of fiscal year 2008 budget: 124.8%. 

System: Total; 
Fiscal year 2008 budget: $594.6 million; 
Fiscal year 2014 budget: $1.395 billion; 
Difference in cost: $800.6 million; 
Cost growth as a percent of fiscal year 2008 budget: 134.6%. 

Source: GAO analysis of Navy documentation. 

[End of table] 

The Navy has taken steps to limit cost growth for EMALS and the 
advanced arresting gear, which are being developed and produced under 
contracts separate from the CVN 78 detail design and construction 
contract. Most notably, in 2010, the Navy negotiated firm fixed-price 
contracts for production of these systems for CVN 78.[Footnote 18] 
According to the Navy, these contracts have helped cap cost growth for 
these systems and have incentivized more timely deliveries to the 
shipyard. While EMALS is farther along in development than both the 
dual band radar and advanced arresting gear systems, all have 
experienced significant cost growth, and costs are likely to increase, 
given the remaining work needed to fully develop, test, and integrate 
the systems on CVN 78. This potential for additional cost growth is 
also apparent based on the Navy's experience with the most recent 
Nimitz-class carrier, CVN 77. That ship experienced cost growth during 
its system integration, even though that effort employed mostly 
nondevelopmental systems. 

Aside from the risk of cost growth stemming from the integration of 
critical technology systems into the ship, the shipbuilder's cost and 
schedule performance under the detail design and construction contract 
suggests additional overruns are looming. Our review of the 
contractor's earned value management data for the program indicates 
that shipbuilder cost pressures remain high and additional costs are 
likely, especially as key developmental items are integrated onto the 
ship.[Footnote 19] We reviewed 18 months of earned value management 
data for the CVN 78 ship program during the period of July 2011 
through December 2012. During this time, the shipbuilder increased its 
estimate of the number of labor hours required to construct CVN 78 
from 44.4 million to 47.3 million. Consequently, the shipbuilder's 
budgeted cost grew substantially, from $4,758 million to $5,266 
million (an increase of $508 million).[Footnote 20] Our analysis shows 
that, as of December 2012, the contractor was forecasting an overrun 
at contract completion of over $913 million. This cost growth is 
attributable to the shipbuilder not accomplishing work as planned. The 
Navy has largely, but not fully, funded this cost growth within CVN 
78's $12.8 billion procurement budget. 

Further, the Navy's current budget estimate of $12.8 billion for 
completing CVN 78 is optimistic because it assumes the shipbuilder 
will maintain its current level of performance throughout the 
remainder of construction. This assumption is inconsistent with 
historical Navy shipbuilding experiences for recent lead ships, which 
have suffered from performance degradation late in construction. Our 
previous work has shown that the full extent of cost growth does not 
usually manifest itself until after the ship is more than 60 percent 
complete, when key systems are being installed and integrated. 
[Footnote 21] In April 2013, the ship was 56 percent complete. The 
Director of DOD's Cost Assessment and Program Evaluation office and 
the Congressional Budget Office--as well as Navy cost analysts and a 
Navy-commissioned expert panel--have also projected higher than 
budgeted procurement costs for CVN 78, with cost estimates ranging 
from $13.0 to $14.2 billion. 

Additional CVN 78 cost growth could also place the Navy's long-term 
shipbuilding plan at risk. Previously, we have reported on this plan, 
which the Navy revises annually, and its significant weaknesses. 
[Footnote 22] A key tenet underpinning this plan is that the Navy will 
be able to maintain cost control over its major shipbuilding 
acquisition programs. Yet, the budgets for many ships, including CVN 
78, have already proven inadequate to cover the costs required to 
complete their constructions. To compensate, the Navy must shift funds 
away from other priorities--including future ship constructions--or 
request additional funds from Congress to pay for this cost growth. 
Analysis of the Navy's fiscal year 2014 long-term shipbuilding plan 
shows that Ford-class procurement costs alone are estimated to 
comprise approximately 14 percent of the Navy's total new ship 
construction budgets between fiscal years 2014 and 2018. Even a small 
percentage of cost growth on these ships could lead to the need for 
hundreds of millions of dollars in additional funding. Already, the 
Navy is programming $1.3 billion between fiscal years 2014 and 2015 to 
cover CVN 78 cost growth. To the extent that this cost growth 
continues for CVN 78 or follow-on ships, it may result in fewer ships 
acquired than planned in the near term. 

Demonstration of Ship Capabilities after Delivery Is Limited by Test 
Plan Deficiencies and Reliability Shortfalls: 

Several factors are likely to hamper the Navy's plans to demonstrate 
CVN 78 capabilities after it accepts delivery of the ship. In 
particular, significant risk is introduced due to the Navy's plan to 
conduct integration testing of critical technologies concurrently with 
the ship's IOT&E. This strategy will constrain opportunities to 
implement timely, corrective actions if problems are discovered with 
key ship systems. If significant discoveries are made during IOT&E, 
initial deployment could be delayed. In addition, Joint Strike Fighter 
integration with CVN 78 remains in its infancy, with work to date 
limited to paper-based assessments and a single test with EMALS. 
Further, key ship systems face reliability shortfalls that the Navy 
does not expect to resolve until many years after CVN 78 
commissioning, which will limit the ship's mission effectiveness 
during initial deployments and likely increase costs to the government. 

Post-Delivery Test Plans Are Unlikely to Provide Timely Discovery of 
Deficiencies: 

Following ship delivery in February 2016 and a brief maintenance 
period, the Navy plans to embark on two separate developmental and 
operational test phases for CVN 78 intended to demonstrate successful 
integration of key ship systems and overall effectiveness and 
suitability of the ship itself.[Footnote 23] At present, the Navy 
anticipates requiring 10 months to complete the first phase--
integration testing--and 32 months to complete the second phase--
IOT&E. Further, in an effort to meet the lead ship's anticipated 
deployment schedule, the Navy plans to execute much of its integration 
testing concurrent with IOT&E. This concurrent strategy will constrain 
opportunities for the Navy to implement corrective actions to problems 
discovered in integration testing and risks introducing significant 
discovery during IOT&E--outcomes that could delay demonstration of 
ship capabilities. DOD and Navy operational test officials stated that 
they share these concerns. According to the Director, Operational Test 
and Evaluation's Test and Evaluation Master Plan Guidebook, premature 
commencement of IOT&E can waste scarce resources if testing is 
suspended or terminated early because of technical problems that 
should have been resolved prior to the start of this testing phase. 
This guidance further states that a system should demonstrate 
acceptable hardware and software performance during mission-focused 
developmental testing conducted in operationally realistic 
environments with the hardware and software to be used in IOT&E. 
[Footnote 24] 

Figure 6 illustrates how the Navy has sequenced its test plans for CVN 
78, as outlined in the Navy's current post-delivery test schedule, and 
where they fall with regard to ship delivery, initial and full 
capability, and the planned initial deployment of the ship. 

Figure 6: CVN 78 Post-Delivery Testing Schedule and Key Milestones: 

[Refer to PDF for image: timeline] 

Construction: FY 2015-FY 2017; 
February 2016: Delivery; 
August 2016-February 2017: Maintenance availability period. 

Integration testing: FY 2017-FY 2018; 
February 2017: Integration testing start; 
November 2017: Integration testing complete. 

Operational testing: FY 2017-FY 2020; 
July 2017: Initial operational test and evaluation start; 
January 2020: Initial operational test and evaluation complete. 

Integration and operational testing: Late FY 2017-early FY 2018. 

Source: GAO analysis of Navy documentation. 

Note: FY = fiscal year. 

[End of figure] 

In 2012, the Navy added the integration testing component to the CVN 
78 post-delivery schedule in recognition of concerns raised by the 
Deputy Assistant Secretary of Defense for Developmental Test and 
Evaluation and the Director, Operational Test and Evaluation, that 
under previous testing plans, developmental systems would not be 
tested with one another until IOT&E. Previously, the CVN 78 program 
office planned to rely on developmental testing of individual systems 
as a means to establish confidence in the interoperability of 
capabilities ahead of IOT&E--a strategy assessed as high risk by DOD 
and Navy operational testers. Earlier testing of developmental systems 
with one another--above and beyond testing individual systems 
separately--is beneficial and can provide earlier demonstration of 
interoperability and combined capabilities, including measured 
performance against ship requirements ahead of IOT&E. Under the 
integrated testing approach, for example, the dual band radar will be 
required to conduct near-simultaneous air traffic control and self-
defense operations, using both the multifunction radar and the volume 
search radar. On CVN 78, these operations will occur in an environment 
where multiple antennas and arrays are emitting and receiving 
transmissions, and multiple loads are placed upon the ship's power and 
cooling systems. Incompatibility between the dual band radar and other 
elements of the ship's combat system could endanger mission execution. 
To date, however, the Navy has not defined the scope or activities 
that will be covered by the new integration testing phase, which is 
planned to begin in February 2017, or the resources required to 
execute this testing. CVN 78 program officials told us they are 
defining these items as part of the updated Ford-class test and 
evaluation master plan, which is scheduled to be approved shortly 
before CVN 79 detail design and construction contract award in 
September 2013. Until integration testing scope and activities are 
clarified, and resource requirements are defined, the sufficiency of 
this testing and availability of necessary schedule and funding 
remains unknown. 

Further, the aforementioned developmental testing delays facing 
critical technology systems also threaten the Navy's integration 
testing plans for CVN 78. In the draft revision to the Ford class test 
and evaluation master plan, program officials stated a willingness to 
defer developmental test events for critical technologies to the 
integration testing phase, should remaining land-based testing 
activities not progress at planned rates. Already, the program has 
deferred certain tests of the volume search radar from land to sea. To 
the extent that the Navy defers additional critical technology tests 
planned over the next 4 years, CVN 78's current integration testing 
schedule will face increased disruption, and the revised test and 
evaluation master plan may prove unexecutable. 

In addition, live-fire test and evaluation plans for CVN 78 remain 
unclear. In 2004, the Navy and the Director, Operational Test and 
Evaluation, reached agreement that two major components of live-fire 
test and evaluation--full-ship shock trial and total ship 
survivability trial--would occur as part of CVN 78 post-delivery tests 
and trials. However, in 2012, the Navy modified its live-fire testing 
plans for the Ford class, citing resource constraints facing the lead 
ship, and deferred this testing to the first follow-on ship, CVN 79. 
The Director, Operational Test and Evaluation disagreed with this 
proposed strategy, expressing concern that delaying the testing to CVN 
79 would cause a 5-to 7-year delay in obtaining data critical to 
evaluating Ford class survivability and would preclude timely 
modification of subsequent ships. On this basis, the Director 
rescinded approval of the Navy's alternative life-fire test and 
evaluation plan and recommended that the Navy plan and budget for 
adequate live-fire testing on CVN 78. Although the Navy's draft test 
and evaluation master plan appears to take steps toward addressing the 
Director's concerns--stating plans to conduct a total ship 
survivability trial following CVN 78 delivery--shock trial plans 
remain linked to CVN 79. According to CVN 78 program officials, the 
Navy continues to work with the Director, Operational Test and 
Evaluation to provide a robust modeling, simulation, and analysis 
process to better understand the survivability characteristics of the 
Ford class. However, these program officials also state that they 
expect the Defense Acquisition Board to ultimately decide the Ford 
class's live-fire test and evaluation strategy as part of its planned 
program review later this year ahead of the detail design and 
construction contract award for CVN 79.[Footnote 25] 

Delayed Availability of Joint Strike Fighter Aircraft Has Hampered 
Integration Efforts: 

The Ford-class is designed to accommodate the new Joint Strike Fighter 
carrier variant aircraft (F-35C), but aircraft development and testing 
delays have affected integration activities on CVN 78. These 
integration activities include testing the F-35C with CVN 78's EMALS 
and advanced arresting gear system and testing the ship's storage 
capabilities for the F-35C's lithium-ion batteries (which provide 
start-up and back-up power), tires, and wheels. 

While the Navy has engaged in paper-based assessments to define F-35C 
integration requirements--and plans to incorporate necessary design 
changes ahead of scheduled CVN 78 deployment--actual integration 
testing of F-35C and CVN 78 system hardware and software remains in 
its infancy. To date, F-35C aircraft have participated in only one 
test with EMALS, and have not completed any tests with the advanced 
arresting gear system. Joint Strike Fighter program officials state 
that prior to deploying aboard CVN 78, F-35C aircraft will need to 
complete multiple qualification tests, on the order of 60 advanced 
arresting gear arrestments and 80-100 EMALS launches at the Navy's 
land-based testing site in Lakehurst, New Jersey. 

Previously, F-35C initial capability was scheduled to occur prior to 
the shipbuilder's delivery of CVN 78 to the Navy in 2016. However, as 
a result of F-35C developmental delays, the Navy will not field the 
aircraft until at least 2017--one year after CVN 78 delivery. As a 
result, the Navy has deferred critical F-35C integration activities, 
which introduces risk of system incompatibilities and costly retrofits 
to the ship after it is delivered to the Navy. 

As Table 3 illustrates, the CVN 78 design baseline includes several F-
35C-required accommodations to facilitate integration, and the Navy is 
evaluating modifications to other aspects of the ship design so as to 
better accommodate F-35C aircraft. 

Table 3: F-35C Integration Requirements with CVN 78: 

Requirements incorporated in existing CVN 78 design: 
Aircraft electrical servicing station upgrade; 
Ordnance work center; 
Autonomic Logistics Information System; 
Joint Precision Approach and Landing System; 
Heavy underway replenishment system (supports F-35C power module); 
Modifications to various rooms including ready rooms (areas where 
aircraft pilots mission plan) and a secure tactical briefing room; 
Carrier intelligence center mission planning facility. 

Requirements for which design solutions remain under development: 
Jet blast deflector modifications; 
Third deck level noise abatement; 
Lithium-ion battery handling and stowage facility; 
Pilot equipment and helmet stowage; 
Seat shop modifications. 

Source: GAO analysis of Navy documentation. 

[End of table] 

Reliability Shortfalls Facing Key Systems Will Constrain Ship 
Capabilities during Initial Deployments: 

Reliability is a key driver of system performance, directly affecting 
the amount of time that individual systems are online and mission 
capable. Reliability also drives life cycle costs related to manning, 
repairs, and sparing. When systems demonstrate low reliability, they 
can risk costing more than planned and not delivering the intended 
capability to the warfighter. DOD acquisition policy requires program 
managers to analyze, plan, track, and report on reliability for their 
systems--including taking steps to improve it, as needed--at intervals 
throughout the acquisition process.[Footnote 26] 

Reliability Shortfalls Prevalent in Key Ford Class Systems: 

The Navy's business case for Ford class carriers hinges on improved 
capabilities--particularly the ship's increased sortie generation 
rates--and reduced manning requirements, as compared to legacy Nimitz-
class carriers. Together, these requirements are intended to position 
the Navy to field more capability in the fleet at a lower operating 
cost. At present, however, the Navy projects that the dual band radar, 
advanced arresting gear, EMALS, and advanced weapons elevators will 
all fall well short of their required reliability rates ahead of CVN 
78 IOT&E. High reliability is a key attribute that underpins the 
contributions that these systems are intended to make toward Ford-
class sortie generation rates and manning levels. 

Navy's Reliability Growth Plans Optimistic and Insufficient to Meet 
Operational Testing Criteria: 

For the advanced arresting gear and EMALS, the Navy has outlined 
reliability growth curves, which illustrate the anticipated positive 
improvement in system reliability in future years due to 
implementation of corrective actions to system design, operation or 
maintenance procedures, or manufacturing processes. However, 
developmental testing to date has demonstrated that reliability for 
both of these systems was much lower than the Navy initially 
estimated. This shortfall has undermined the effectiveness of the 
Navy's initial reliability improvement plans. In response to these 
realities, the Navy crafted new curves for each system, which assumed 
lower reliability at the start. However, these more realistic starting 
points were offset by more optimistic assumptions about the pace of 
reliability gains in coming years. Therefore, the revised reliability 
growth curves project (1) sharp increases in system reliability in 
coming years and (2) achievement of required reliability levels within 
roughly the same amount of time as under initial plans--scenarios that 
may not be underpinned by sound methodologies. According to Navy 
officials, reliability growth projections for the advanced arresting 
gear and EMALS technologies are generated using a DOD growth planning 
methodology--called the Duane methodology--coupled with historical 
aircraft data from relevant points in development. However, DOD's 
handbook on reliability growth management notes certain drawbacks to 
the Duane methodology, including with how growth curves are calculated 
within that model.[Footnote 27] Specifically, Duane's assumptions 
about the rate of reliability growth, which date back to 1981, have 
since been shown to be unrealistic. Further, Duane's methodology for 
estimating regression makes no allowance for variation. Subsequently, 
the handbook outlines several alternative models to Duane to use when 
projecting reliability growth for a system. 

The validity of the Navy's updated growth curves is further undermined 
by recent reliability data on the advanced arresting gear and EMALS, 
which show continued underperformance against growth estimates. 
Although these technologies are assessed as approaching maturity (TRL 
6), as discussed above, TRL criteria do not account for reliability 
performance. The Navy measures advanced arresting gear and EMALS 
reliability in terms of the average number of arrestments and 
launches, respectively, that the systems can complete prior to 
failing. The total number of arrestments and launches that these two 
systems complete over time are referred to as cycles. Figures 7 and 8 
highlight the Navy's reliability growth projections, and current 
reliability performance, for the advanced arresting gear and EMALS 
technologies. As the figures show, neither of these systems is 
scheduled to reach its required rate of reliability until many years 
after CVN 78 is scheduled to complete IOT&E. 

Figure 7: Advanced Arresting Gear Reliability Performance and Growth 
Projections: 

[Refer to PDF for image: multiple line graph] 

Reliability rate as of March 2013: 

Year 2017: 
CVN 78 Initial operational test and evaluation start; 
Total cycles = 1,500. 

Year 2022: 
Total cycles = 45,000. 

Year 2025: 
Total cycles = 225,000. 

Year 2027: 
Total cycles = 335,000. 

Total arrestment cycles: 10; 
Average number of arrestments between critical failures: 
Minimum reliability requirement: 
Original plan: 
Rebaselined plan: 

Total arrestment cycles: 100; 
Average number of arrestments between critical failures: 
Minimum reliability requirement: 
Original plan: 
Rebaselined plan: 

Total arrestment cycles: 1,000; 
Average number of arrestments between critical failures: 
Minimum reliability requirement: 
Original plan: 
Rebaselined plan: 

Total arrestment cycles: 10,000; 
Average number of arrestments between critical failures: 
Minimum reliability requirement: 
Original plan: 
Rebaselined plan: 

Total arrestment cycles: 100,000; 
Average number of arrestments between critical failures: 
Minimum reliability requirement: 
Original plan: 
Rebaselined plan: 

Total arrestment cycles: 1,000,000; 
Average number of arrestments between critical failures: 
Minimum reliability requirement: 
Original plan: 
Rebaselined plan: 

Source: GAO analysis of Navy reliability growth plans. 

[End of figure] 

Figure 8: Electromagnetic Aircraft Launch System Reliability 
Performance and Growth Projections: 

[Refer to PDF for image: multiple line graph] 

Reliability rate as of March 2013: 

Average number of launches between critical failures: 

Year 2017: 
CVN 78 Initial operational test and evaluation start; 
Total cycles = 10,000. 

Year 2020:
Total cycles = 30,000. 

Year 2025; 
Total cycles = 130,000. 

Year 2032; 
Total cycles = 315,000. 

Source: GAO analysis of Navy documentation. 

Note: Reliability growth projections and the minimum reliability 
requirement for the electromagnetic aircraft launch system are both 
based on a single launcher configuration as currently employed at the 
Navy's land-based test site. 

[End of figure] 

While the Navy also anticipates reliability growth testing for the 
dual band radar and advanced weapons elevators, program officials have 
not yet completed plans for demonstrating this growth. Further, Navy 
officials stated that reliability requirements for these two systems 
continue to evolve, noting, in particular, that reliability metrics 
for the dual band radar were recently invalidated based on evolving 
analysis from their subject matter experts. As a result, the planned 
reliability of each system at key points, including CVN 78 IOT&E, is 
unknown. For the dual band radar, however, Navy program officials 
state that they are collecting reliability data during first unit 
production and factory testing--a phase that typically produces high 
failure rates over limited run times. Additional data collection 
opportunities for dual band radar include land-based testing, shipyard 
testing, and post-delivery testing and trials for CVN 78. According to 
Navy officials, data collected during shipboard testing will support a 
reliability assessment of the dual band radar. 

In addition, the ship itself has operational availability requirements 
that are linked to the reliability performance of its individual 
systems, such as EMALS and the advanced arresting gear. The projected 
reliability shortfalls for these key systems--even under the Navy's 
optimistic assumptions--could delay CVN 78's planned entry into IOT&E 
in 2017. The Navy's draft test and evaluation master plan for the 
program identifies various entrance criteria that it must meet before 
initiating IOT&E. In particular, these criteria include a requirement 
that testing and analysis demonstrate that the ship's reliability will 
meet or exceed program requirements. The criteria further stipulate 
that adequate reliability data be available (or planned) to enable 
evaluation of current versus predicted reliability growth progress. 
During land-based and shipboard developmental testing, the Deputy 
Assistant Secretary of Defense for Developmental Test and Evaluation 
will conduct assessments that consider testing progress to date as 
well as the risks associated with the ship's capability to meet 
operational suitability and effectiveness goals (including 
reliability). These assessments will be based, in part, on the IOT&E 
entrance criteria outlined in the program's test and evaluation master 
plan. Ultimately, the Under Secretary of Defense for Acquisition, 
Technology, and Logistics will make the determination as to CVN 78's 
readiness for IOT&E. 

Ship Likely to Deploy without Required Capabilities: 

Because of the development and testing delays and reliability 
deficiencies affecting key systems, CVN 78 will likely face 
operational limitations that extend past commissioning and into 
initial deployments. Thus, the ship will likely deploy without meeting 
its key sortie generation rate and reduced manning requirements. In 
the National Defense Authorization Act for Fiscal Year 2010, Congress 
gave the Navy a temporary waiver that lowered the statutory 
requirement for the minimum number of operational aircraft carriers 
from 11 to 10 during the period between the then-planned inactivation 
of the USS Enterprise (CVN 65) and commissioning into active service 
of CVN 78, currently planned for March 2016.[Footnote 28] The 
temporary waiver granted to the Navy on its number of operational 
aircraft carriers ends on the date that CVN 78 is commissioned into 
the fleet. However, because of the magnitude of its operational 
deficiencies, it is unlikely that CVN 78 will adequately fill the 
capability gap created by the inactivation of CVN 65 for some time. 
For example, between February and June 2011, CVN 65 aircraft completed 
flight operations in support of Operation Enduring Freedom that 
totaled 2,970 combat missions and a 99.1 percent sortie completion 
rate.[Footnote 29] Further, of the 112 days that the ship was on 
station for these operations, only 18 days were consumed performing 
maintenance. 

Until the ship completes IOT&E, the full scope of CVN 78's operational 
limitations remains unclear. In the interim, the Navy is evaluating 
adding extra spares and maintenance personnel to the ship for initial 
deployments--at a presently unknown, additional cost to the 
government--to help offset some of these reliability shortfalls. The 
Navy also plans to conduct reliability testing for these systems as 
their development progresses to support updated reliability analyses 
and assessments. 

In January 2013, the Joint Requirements Oversight Council issued a 
memorandum encouraging program managers and other acquisition 
executives--in coordination with requirements sponsors--to request 
requirements relief when major performance requirements for a system 
appear out of line with an appropriate cost-benefit analysis. 
According to the memo, requirements that do not provide the best 
return on investment for warfighters should be considered for 
reevaluation. The memorandum further highlighted the pressures that 
DOD faces from increased fiscal constraints, noting the importance of 
providing cost effective capability to warfighters, consideration of 
risk-informed trades throughout the life cycle of programs, and, when 
needed, revisitation of previously validated requirements at the joint 
and component levels. 

DOD last validated CVN 78 requirements in 2007--well before important 
knowledge was gained about the capabilities of key ship technologies. 
These requirements include a 25 percent increase in sortie generation 
rate above Nimitz class capabilities--performance contingent on the 
advanced arresting gear and EMALS maturing as planned. In addition, 
the dual band radar, advanced arresting gear, and EMALS together are 
projected to reduce manning requirements by over 100 people, as 
compared to the Nimitz class. While the Navy continues to assess 
reliability growth for these technologies, it has not yet considered 
the costs and benefits of maintaining current requirements versus 
modifying them. Such analysis could affect the Navy's investment 
priorities in the program over the long term. For example, trade-off 
assessments could inform decisions about the soundness and effect of 
less strenuous sortie generation rate requirements on the warfighter's 
mission versus the costs associated with the approximately 15-year 
effort needed to reach current minimum requirements. 

Lead Ship Unknowns Complicate the Navy's Ability to Determine Follow-
on Ship Cost Outcomes: 

The Navy and shipbuilder are implementing changes to the build 
strategy for CVN 79 aimed at reducing that ship's costs before the 
construction contract is awarded, currently planned for September 
2013. These changes include increased time allotted to construct the 
ship and in-yard construction process improvements. Remaining 
technical and design risks with CVN 78, however, could interfere with 
the Navy's ability to achieve its desired cost savings for CVN 79. 
These uncertainties also affect the Navy and contractor's ability to 
assess the likely CVN 79 costs ahead of contract award and, when 
coupled with the existing sole source environment for aircraft carrier 
construction, compromise the government's negotiating position for CVN 
79. 

Planned Improvements to Follow-on Ship Construction Are Complicated by 
Lead Ship Uncertainties: 

The Navy and its shipbuilder have learned valuable lessons from CVN 78 
construction that have the potential to improve cost outcomes for the 
construction of the first follow-on ship, CVN 79. The shipbuilder 
plans to employ a new build strategy for CVN 79 that (1) allots more 
time to fund and construct the ship compared to CVN 78 and (2) 
implements process improvements aimed at completing more work earlier 
in the build process--steps that the Navy anticipates will achieve 
construction efficiency improvements as compared to CVN 78. However, 
remaining technical and design risks in the program could undermine 
the Navy's ability to realize cost savings on CVN 79. 

Changes to Funding Profile and Construction Schedule: 

In its fiscal year 2012 budget, the Navy programmed CVN 79 
construction funding over a 4-year period beginning in fiscal year 
2013. However, as part of its fiscal year 2013 budget, the Navy 
revisited this strategy and requested congressional authority to 
extend Ford-class construction funding, including for CVN 79, across 6 
years for each ship. Congress approved this strategy change as part of 
the National Defense Authorization Act for Fiscal Year 2013.[Footnote 
30] As table 4 illustrates, this strategy allows the Navy to request 
less funding in the near term for CVN 79 construction, but also 
reflects a $1.1 billion increase in cost as compared to the fiscal 
year 2012 budget estimate for the ship. According to CVN 78 program 
officials, roughly half of this increase is a direct result of the 
increased build duration, whereas the remaining half is attributable 
to (1) design, construction, and critical technology system pricing 
changes and (2) shipyard and supplier base effects, including growth 
in overhead and inflation estimates. 

Table 4: Comparison of CVN 79 Procurement Funding Strategies Outlined 
in the Navy's Fiscal Year 2012, 2013, and 2014 Budget Submissions: 

Then-year dollars: 

Budget Submission: Fiscal year 2012; 
Prior funding received: $2.778 billion; 
Fiscal year 2012[A]: $554.8 million; 
Fiscal year 2013[B]: $1.942 billion; 
Fiscal year 2014: $1.920 billion; 
Fiscal year 2015: $2.031 billion; 
Fiscal year 2016: $1.027 billion; 
Fiscal year 2017: [Empty]; 
Fiscal year 2018: [Empty]; 
Total: $10.253 billion. 

Budget Submission: Fiscal year 2013; 
Prior funding received: $2.773 billion; 
Fiscal year 2012[A]: $554.8 million; 
Fiscal year 2013[B]: $608.2 million; 
Fiscal year 2014: $666.1 million; 
Fiscal year 2015: $2.999 billion; 
Fiscal year 2016: $979.4 million; 
Fiscal year 2017: $1.824 billion; 
Fiscal year 2018: $1.007 billion; 
Total: $11.411 billion. 

Budget Submission: Fiscal year 2014; 
Prior funding received: $2.773 billion; 
Fiscal year 2012[A]: $554.8 million; 
Fiscal year 2013[B]: $608.2 million; 
Fiscal year 2014: $944.9 million; 
Fiscal year 2015: $1.834 billion; 
Fiscal year 2016: $1.236 billion; 
Fiscal year 2017: $1.496 billion; 
Fiscal year 2018: $1.891.8 billion; 
Total: $11.338 billion. 

Source: GAO analysis of Navy budget documentation. 

[A] The Navy's fiscal year 2012 budget provided the final installment 
of advance procurement funding for CVN 79. 

[B] The Navy's fiscal year 2013 budget provided the first increment of 
procurement funding for CVN 79. 

[End of table] 

The Navy's decision to fund CVN 79 construction over 6 years was 
coupled with a decision to increase the build time for the ship as 
compared to CVN 78.[Footnote 31] According to the Navy, it will use 
the additional time to improve CVN 79's construction sequence and 
implement cost reduction initiatives. Further, Ford class shipbuilders 
report that the increased time afforded to CVN 79 construction 
provides additional opportunities to apply lessons learned from lead 
ship construction. The Navy expects the combined savings from these 
actions to more than offset the increased costs associated with 
extending the funding of the ship by 2 years. Figure 9 compares CVN 78 
and CVN 79 construction schedules. 

Figure 9: Schedule of CVN 78 and CVN 79 Construction Milestones: 

[Refer to PDF for image: timeline] 

CVN 78: 
May 2004: Construction preparation contract award; 
April 2005: Start fabrication; 
September 2008: Design, detail and construction contract award; 
November 2009: Keel laid; 
November 2013: Launch; 
February 2016: Delivery. 

CVN 79: 
January 2009: Construction preparation contract award; 
December 2010: Start fabrication; 
September 2013: Design, detail and construction contract award; 
May 2015: Keel laid; 
March 2019: Launch; 
September 2022: Delivery. 

Source: GAO analysis of Navy documentation. 

[End of figure] 

Process Improvements: 

Side bar: 

Planned process improvements for CVN 79: 

* Increasing levels of planned preoutfitting and modular construction 
beyond what was planned and accomplished for CVN 78. This is expected 
to decrease the total number of erectable units and support more 
efficient construction. 

* Moving more planned work—-including complex ship assemblies-—from 
the ship to shop environment, which is expected to increase efficiency 
and yield labor reductions. 

* Implementing common integrated work packages to bundle information 
and increase craftsmen productivity. 

* Various producibility improvements based on CVN 78 learning. For 
example, reducing the number and extent of welded pipefitting to 
eliminate component costs. 

* Increasing overall ship completion levels at each key construction 
milestone event. 

* Completing whole ship bill. 

Source: GAO analysis of Navy and shipbuilder data. 

[End of side bar] 

As part of CVN 79 construction, the shipbuilder plans to implement 
process improvements aimed at reducing the labor hours--and cost--
required to construct the ship, as compared to CVN 78. The sidebar 
outlines several examples of key improvements planned. 

The core of the shipbuilder's strategy for CVN 79 is moving more 
planned work--including complex ship assemblies--earlier in the build 
process so that it can be completed in shipyard workshops. Generally, 
the earlier work can be sequenced in the build process, the more 
efficiently it can be completed. As we have previously reported, 
shipbuilders often describe a general "1-3-8" rule where work that 
takes 1 hour to complete in a workshop takes 3 hours to complete once 
the steel panels have been welded into blocks, and 8 hours to complete 
after a block has been erected and/or after the ship has been 
launched.[Footnote 32] 

Potential Disruptions from Late Testing Discoveries: 

Although the Navy and shipbuilder expect CVN 79's design to be 
virtually the same as that of the lead ship--another step toward 
improving follow-on ship outcomes--remaining developmental and design 
risks in the program could undermine the actual realization of cost 
savings. As discussed above, these risks are exemplified by key ship 
systems not progressing through their land-based test programs at the 
pace the Navy anticipated--delays largely attributable to persisting 
technical deficiencies. Navy and shipbuilder efforts to resolve these 
deficiencies on CVN 78--concurrent with follow-on ship construction--
are likely to lead to redesign and potentially costly out of sequence 
work or rework for CVN 79. If these discoveries and fixes disrupt CVN 
79 construction and offset planned improvements, they could jeopardize 
the Navy's ability to complete the ship within planned cost and 
schedule estimates. 

Lead Ship Uncertainties Limit Visibility on Follow-on Ship Costs in 
Sole Source Environment: 

The Navy's cost estimate for CVN 79 detail design and construction is 
closely linked to CVN 78 outcomes and reflects an expectation that the 
shipbuilder will deliver the lead ship within current labor hour 
estimates. One key component of the CVN 79 cost estimate is a Navy 
assumption that 15 percent fewer labor hours will be required to 
construct the follow-on ship as compared to the lead ship. This 
estimate is also underpinned by expectations that the shipbuilder's 
current level of performance will persist between now and lead ship 
delivery. Further, the Navy's budget for CVN 79 is predicated on even 
higher performance gains than those forecast in the cost estimate--
notably, 20 percent fewer labor hours in construction as compared to 
CVN 78. Yet, as we previously detailed, the Navy's understanding of 
the costs required to construct and deliver CVN 78 remains incomplete. 
These knowledge gaps add risk and uncertainty to CVN 79 cost and 
budget estimates. 

The Navy plans to award a fixed-price incentive type contract for CVN 
79 detail design and construction, as compared to CVN 78's cost-plus 
incentive contract.[Footnote 33] A fixed-price incentive contract 
provides for adjusting profit and establishment of a final contract 
price by application of a formula (sometimes referred to as a 
shareline) based on the relationship of total final negotiated cost to 
total target cost. A fixed-price incentive contract includes a ceiling 
(maximum) price that constrains the government's exposure to potential 
cost growth. For CVN 79, the Navy's request for proposal stipulated a 
120 percent (of target cost) ceiling price and a 50/50 cost shareline 
between the government and the contractor (shipbuilder) for cost 
increases above target cost, although final contract terms are subject 
to change pending completion of negotiations between the government 
and shipbuilder. 

Because the Ford-class shipbuilder represents the only domestic entity 
capable of constructing, testing, and delivering nuclear-powered 
aircraft carriers, the government's contract negotiating position is 
compromised. Contracting in this sole source environment, the 
government lacks the leverage it would have in a competitive 
environment to negotiate lower costs or capability enhancements. 
Similarly, the shipbuilder's proposed price will not be influenced by 
competition and, as such, is likely to account for the remaining 
technical and design risks facing the Ford class program. For example, 
in a previous solicitation for Littoral Combat Ship constructions, 
potential shipbuilders submitted proposals which were priced 
significantly higher than the Navy's expectations. Even in light of 
the competition in this case, contractor officials stated that the 
fixed-price terms the Navy sought prompted a forthright assessment of 
remaining program risks--including technical, design, and funding 
uncertainties--and subsequent pricing of that risk in their proposals. 
[Footnote 34] Alternatively, Navy officials report that the CVN 79 
shipbuilder could propose to remove high-risk items from the 
contract's shareline or move to renegotiate the planned cost-sharing 
terms altogether. For example, in Zumwalt-class destroyer contract 
negotiations, the Navy and its shipbuilder reached agreement to remove 
work from the scope of the lead ship's construction contract and to 
include a special incentive fee associated with construction and 
delivery of the ship's innovative, composite-material deckhouse, which 
had never before been manufactured.[Footnote 35] 

Conclusions: 

The Navy awarded a multibillion dollar contract for detail design and 
construction of CVN 78 in 2008, even in light of substantial 
technology development risks and an overly optimistic budget. Now, 
nearly 5 years later, the cost of the lead ship has increased by more 
than $2.3 billion and many risks still remain which are likely to lead 
to further cost increases before the ship is completed. Although the 
ship is now more than half constructed, and promises significant 
capability increases over existing carriers, it is still grappling 
with land-based testing delays and system reliability deficiencies for 
critical government-provided technologies, a high-risk operational 
testing strategy, potentially unachievable performance requirements, 
and cost estimating uncertainties. Further complicating matters, the 
Navy is attempting to manage these challenges within an operational 
environment that is pressuring it to deliver CVN 78 to the fleet with 
haste. 

Congress granted the Navy a temporary waiver from the requirement to 
have 11 operational aircraft carriers in the fleet. Under the terms of 
the waiver, the waiver period ends at the planned CVN 78 commissioning 
in March 2016. As it stands, the Navy will not be positioned to 
deliver a fully capable ship at that time. For example, recent Navy 
decisions to introduce shipboard integration testing after lead ship 
delivery will provide valuable insights and facilitate identification 
of any deficiencies of integrated ship systems. However, because of 
the overlapping timing of this testing with IOT&E--as well as with 
deferred developmental tests for ship systems--the Navy will not have 
time to incorporate potentially significant results of the testing 
before CVN 78 likely deploys. Further, reliability shortfalls facing 
key Ford-class systems cloud the Navy's ability to forecast when, or 
if, current sortie generation rate and manning requirements for the 
ship will be met--analysis that could inform decisions on cost and 
requirements trade-offs in the program, both within DOD and by 
Congress. 

As the Navy looks ahead to its planned detail design and construction 
contract award for CVN 79, it will be important to avoid repeating the 
mistakes of the past. Staying within budget will require the Navy to 
retire significant technical risks mainly by completing land-based 
testing for critical technologies before negotiating a contract with 
the shipbuilder. The results of this important testing will allow the 
government and shipbuilder to gain clearer insights on the 
capabilities of each system and, subsequently, better position the 
government to avoid paying a costly risk premium within the planned, 
fixed-price incentive contract. Further, the Navy's current CVN 79 
cost and budget estimates are overly optimistic in that they do not 
take into account remaining developmental and design risks with the 
lead ship. A more realistic assessment of CVN 79 costs would put the 
government in a better negotiating position, even within the existing 
sole source environment. Until these issues are resolved, the Navy 
cannot be confident that the CVN 79 capabilities it desires can be 
attained at the most advantageous price to the taxpayer. 

Recommendations for Executive Action: 

We recommend the Secretary of Defense direct the Secretary of the Navy 
to take the following five actions: 

To ensure Ford-class carrier acquisitions are supported by sound 
requirements and a comprehensive testing strategy, and to promote the 
introduction of reliable, warfighting capable ships into the fleet, 
take the following actions prior to accepting delivery of CVN 78: 

* Conduct a cost-benefit analysis on (1) currently required 
capabilities, including increased sortie generation rates and reduced 
manning and (2) the time and money needed to field systems to provide 
these capabilities, in light of known and projected reliability 
shortfalls for critical systems. This analysis should be informed by 
demonstrated system performance from land-based testing, including 
updated reliability growth projections, and should identify trade 
space among competing cost, schedule, and performance parameters. The 
analysis should also consider whether the Navy should seek 
requirements relief from the Joint Requirements Oversight Council, to 
the extent necessary, to maximize its return on investment to the 
warfighter. The Navy should report the results of this analysis to 
Congress within 30 days of CVN 78 commissioning. 

* Update the Ford class program's test and evaluation master plan to 
account for developmental testing outcomes experienced since 2013 and 
ensure that sufficient time is allotted post-delivery to complete 
developmental testing activities deferred from land to sea prior to 
initiating integration testing. 

* Adjust the planned post-delivery test schedule to ensure that system 
integration testing is completed prior to entering initial operational 
test and evaluation. 

To improve the Navy's ability to manage the costs and schedule of CVN 
79 detail design and construction, take the following actions: 

* Defer the CVN 79 detail design and construction contract award until 
land-based testing for critical, developmental ship systems including 
the dual band radar, advanced arresting gear, and EMALS is completed. 

* During the recommended deferral period, update the Navy’s CVN 79 
cost estimate on the basis of actual costs and labor hours associated 
with CVN 78 construction to determine whether the preliminary 
information and assumptions remain relevant and accurate. 

Agency Comments and Our Evaluation: 

We provided a draft of this report to DOD for comment. In its written 
comments, which are reprinted in appendix II, DOD concurred with one 
of our recommendations, partially concurred with three 
recommendations, and did not concur with one recommendation. 
Additionally, we removed one recommendation from our final report 
based on new information that DOD provided. DOD also provided 
technical comments that we incorporated into the report, as 
appropriate. 

DOD partially concurred with our recommendation to conduct a cost-
benefit analysis on Ford-class capability requirements and the time 
and money needed to field systems to provide these capabilities. While 
DOD agreed that seeking requirements relief from the Joint 
Requirements Oversight Council is a potential long term solution if 
certain systems do not meet stated capabilities, it disagreed that a 
cost-benefit analysis is needed within 30 days of CVN 78 
commissioning. In its comments, DOD stated that it does not anticipate 
major requirements changes for the ship and offered that the most cost-
effective path forward in the program is to complete construction of 
the existing design. However, DOD noted that after measuring CVN 78 
warfighting capabilities through planned developmental and operational 
testing and following lead ship delivery, it intends to identify 
mitigations for any systems that do not meet stated capabilities, 
which could include seeking requirements relief from the Joint Staff. 
Under DOD's proposed approach, the process of measurement and 
mitigation would conceivably extend into 2020, when CVN 78 is 
scheduled to complete IOT&E. This strategy is unnecessarily 
concurrent--particularly since the Navy has already identified several 
significant, long-term limitations that will face the ship. We believe 
the knowledge gained from developmental testing--coupled with 
additional study and evaluation leading up to CVN 78 delivery in 2016--
would provide a strong foundation for conducting a cost-benefit 
analysis of the ship's current required capabilities. Waiting until 
IOT&E is completed may be too late to make effective tradeoffs among 
cost, schedule, and performance. Further, such analysis could provide 
a sound basis for investment decisions related to CVN 80, prior to 
that ship's planned detail design and construction contract award in 
late 2017. 

DOD concurred with our recommendation to update the Ford class 
program's test and evaluation master plan prior to delivery of CVN 78. 
DOD cited its current efforts to update the program's test and 
evaluation master plan as being responsive to our recommendation. 
According to DOD, the revised plan is expected to include three phases 
of land-based developmental testing followed by two phases of 
integration testing for shipboard systems. The first integration 
testing phase is scheduled to commence three months prior to CVN 78 
delivery, to be followed by the second integration testing phase 
beginning in 2017. Although DOD expressed confidence that its planned 
testing strategy would provide ample time for developmental and 
integration testing prior to operational testing, it did not directly 
address our recommendation related to ensuring that sufficient time is 
allotted to complete certain land-based testing activities that have 
been deferred to sea prior to beginning integration testing. Further, 
the extent to which additional testing will be deferred to sea remains 
unknown, as it hinges on land-based developmental testing outcomes 
leading up to CVN 78 delivery in 2016. Consequently, DOD's current 
update of the test and evaluation master plan will be structured 
around assumptions about future land-based testing outcomes that may 
or may not come to fruition. 

DOD partially concurred with our recommendation to adjust the planned 
post-delivery test schedule for CVN 78 to ensure that system 
integration testing is completed prior to entering IOT&E. In its 
comments, DOD presented a plan under which warfare and non-warfare 
systems will separately complete integration testing prior to entering 
into their respective operational testing phases. However, this plan 
shows that when non-warfare system operational testing is scheduled to 
begin, integration testing of the warfare systems will be just past 
halfway complete. As we point out in our report, concurrency in 
integration and operational test schedules will constrain 
opportunities for the Navy to implement any needed corrective actions 
stemming from problems identified in the integration testing. Further, 
given the strong linkage between non-warfare and warfare systems, this 
overlap poses risk to the test program. For instance, ship warfare 
systems such as the dual band radar, EMALS, and advanced arresting 
gear require cooling and power from non-warfare systems aboard the 
ship. Subsequently, until these warfare systems are fully integrated 
and developmentally tested with the non-warfare systems upon which 
they rely, the Navy cannot be confident that the ship is ready to 
enter IOT&E. 

DOD did not agree with our recommendation to defer the CVN 79 detail 
design and construction contract award until land-based testing for 
critical, developmental ship systems is completed. In its comments, 
DOD responded as if we had recommended a total work stoppage for CVN 
79--a drastic measure inconsistent with our recommendation. As we 
noted in this report, the Navy has contracted for construction 
preparation activities for this ship since 2009. That ongoing contract 
provides a vehicle for continuing limited CVN 79 construction work 
into the future--while allowing time for land-based testing activities 
to regain traction and retire risks--and precludes any need for a 
detail design and construction contract in the near term. In its 
response, DOD noted that an extension of the CVN 79 construction 
preparation contract would require use of fiscal year 2014 funds for 
additional bid and proposal efforts. In response to our further 
inquiry on this matter, the Navy stated the costs would be on the 
order of $5-10 million and acknowledged there are no known legal or 
regulatory impediments to a limited extension of the construction 
preparation contract. According to the Navy, under an extension of the 
construction preparation contract, building and outfitting of 
structural units and the procurement of materials could continue. 
Retiring remaining risks in land-based testing will improve the Navy 
and shipbuilder's ability to assess the likely CVN 79 costs before the 
planned detail design and construction contract is awarded. We 
continue to believe that, in light of the existing sole source 
environment for aircraft carrier construction, a delay in awarding the 
CVN 79 detail design and construction contract--by extending the 
construction preparation contract--would improve the government's 
negotiating position for the ship. 

DOD partially concurred with our recommendation to update the Navy's 
CVN 79 cost estimate on the basis of actual costs and labor hours 
associated with CVN 78 construction. We recommended that this update 
take place following deferral of the CVN 79 detail design and 
construction contract award--an action DOD did not agree to take, as 
discussed above. Nonetheless, DOD stated that it plans to have an 
updated independent cost estimate prepared by the Office of Cost 
Assessment and Program Evaluation ahead of the CVN 79 detail design 
and construction contract award. According to DOD, this cost estimate 
will take into account actual costs and labor hours associated with 
CVN 78 construction. 

DOD did not concur with our recommendation on delaying the 
commissioning of CVN 78 that was included in the draft report that we 
sent to DOD for comment. We made the decision to remove this 
recommendation based on information DOD provided about unintended 
consequences associated with delaying the commissioning of the ship, 
including potential issues related to how a noncommissioned ship would 
operate effectively within the Navy's chain of command. The intent of 
the draft recommendation was to highlight the operational limitations 
that will be associated with the ship when it is commissioned, but DOD 
noted in its response that the ship will not be designated 
operationally ready until testing and trials are completed--an 
estimated 34 months after delivery. Until the ship is judged 
operationally ready, it will lack the ability to conduct assigned 
operations for which it is designed. 

Further, DOD disagreed with our finding that, when it is commissioned, 
CVN 78 will have significant operational limitations due to the 
expected reliability rates of key technologies, including EMALS, 
advanced arresting gear, dual band radar, and advanced weapons 
elevator systems. DOD stated that these systems are designed and 
engineered to be highly reliable. However, DOD did not address the 
significant evidence we present in this report demonstrating that 
these systems are projected to experience reliability deficiencies 
well into future years. For instance, the Navy now estimates that the 
advanced arresting gear and EMALS will not demonstrate their minimum 
required reliabilities until 2027 and 2032, respectively. High 
reliability from these and other ship systems is key to enabling the 
Ford class to achieve its planned capabilities. DOD also outlined the 
Navy's disagreement with our findings related to the effect that land-
based testing delays have had on the development of certain critical 
technologies within the Ford-class program. The response asserts that 
our report overstates the cost, schedule, and technical risks 
associated with these delays. According to the response, the system 
designs for EMALS, advanced arresting gear, and dual band radar have 
progressed to the point where the Navy expects that any future changes 
will be internal to each system and independent of the ship interface. 
As a result, the Navy concludes that the ship's design is stable. We 
disagree. As we have documented in this report, the Navy's knowledge 
deficit about these systems is evidenced by the significant land-based 
testing delays that EMALS, advanced arresting gear, and volume search 
radar (a dual band radar component) have encountered. Tests to date 
have uncovered a multitude of deficiencies that the Navy did not 
anticipate when it developed its CVN 78 and CVN 79 construction 
schedules. These outcomes have prompted Navy decisions to produce the 
systems prior to achievement of stable designs--a strategy that risks 
costly retrofits and rework aboard CVN 78 before and after ship 
delivery. In light of the considerable testing scope that remains for 
each of these developmental technologies, we do not share the Navy's 
confidence that all future design changes to these systems will be 
independent of the overall ship design. 

We are sending copies of this report to interested congressional 
committees, the Secretary of Defense, and the Secretary of the Navy. 
In addition, the report is available at no charge on the GAO website 
at [hyperlink, http://www.gao.gov]. 

If you or your staff have any questions about this report, please 
contact me at (202) 512-4841 or mackinm@gao.gov. Contact points for 
our Offices of Congressional Relations and Public Affairs may be found 
on the last page of this report. 

Signed by: 

Michele Mackin: 
Director: 
Acquisition and Sourcing Management: 

[End of section] 

Appendix I: Scope and Methodology: 

This report evaluates the Navy's acquisition of Ford-class aircraft 
carriers. Specifically, we (1) assessed technical, design, and 
construction challenges the Navy faces in delivering the lead ship, 
CVN 78, within current budget and schedule estimates; (2) evaluated 
whether the Navy's post-delivery test and evaluation strategy for CVN 
78 will provide timely demonstration of required capabilities; and (3) 
identified actions the Navy is taking to improve cost outcomes for the 
first follow-on ship, CVN 79, ahead of contract award for detail 
design and construction. 

To assess challenges the Navy faces delivering CVN 78, we reviewed 
Department of Defense (DOD) and contractor documents that address 
technology development efforts including technology readiness 
assessments, test reports, program schedules and briefings, and 
reports to Congress. We also witnessed testing of the electromagnetic 
aircraft launch system (EMALS) and the advanced arresting gear 
critical technologies at the Navy's land-based test site in Lakehurst, 
New Jersey, and we visited the Nimitz-class carrier USS Harry S. 
Truman (CVN 75) to improve our understanding of the capability 
improvements and technical innovations planned for introduction aboard 
CVN 78. In our review, we relied on DOD's selection of critical 
technologies and its determination of the demonstrated levels of 
maturity. Although we did not validate the technology readiness levels 
(TRL) that DOD assigned to Ford-class critical technologies, we did 
seek to clarify the TRLs in those cases where information existed that 
raised concerns. To identify design changes and to understand the 
impact of these changes to CVN 78 construction, we reviewed quarterly 
ship production progress conference briefings, contract performance 
reports, and program schedules and briefings. We also evaluated Navy 
and contractor documents outlining cost and schedule parameters for 
CVN 78 including budget submissions, contracts, contract performance 
reports, reports to Congress, and program schedules and briefings. We 
also relied on our prior work evaluating the Ford-class program and 
shipbuilding best practices to supplement the above analyses.[Footnote 
36] To further corroborate documentary evidence and gather additional 
information in support of our review, we conducted interviews with 
relevant Navy and contractor officials responsible for managing the 
technology development, design, and construction of CVN 78, such as 
the Program Executive Office, Aircraft Carriers; CVN 78 program 
office; Newport News Shipbuilding (a division of Huntington Ingalls 
Industries) (CVN 78 shipbuilder); Supervisor of Shipbuilding, 
Conversion, and Repair officials; Aircraft Launch and Recovery program 
office; General Atomics (EMALS and advanced arresting gear prime 
contractor); Program Executive Office, Integrated Warfare Systems; 
Above Water Sensors program office; Integrated Combat Systems program 
office; and Raytheon Integrated Defense Systems (dual band radar prime 
contractor). We also held discussions with the Office of the Under 
Secretary of Defense for Acquisition, Technology, and Logistics; 
Office of the Director, Cost Assessment and Program Evaluation; Office 
of the Director, Operational Test and Evaluation; Office of the Deputy 
Assistant Secretary of Defense for Developmental Test and Evaluation; 
Office of the Deputy Assistant Secretary of the Navy for Ship 
Programs; Office of the Chief of Naval Operations' Air Warfare 
directorate; Office of the Commander, Navy Operational Test and 
Evaluation Force; Naval Sea Systems Command's Nuclear Propulsion and 
Cost Engineering and Industrial Analysis offices; Naval Air Warfare 
Center--Aircraft Division; and the Defense Contract Audit Agency. 

To evaluate whether the Navy's post-delivery test and evaluation 
strategy for CVN 78 will provide timely demonstration of required 
capabilities, we analyzed (1) development schedules and test reports 
for CVN 78 critical technologies; (2) construction, delivery, and 
testing schedules and reports for CVN 78; and (3) the Navy's December 
2012 draft revision to the CVN 78 test and evaluation master plan to 
identify concurrency among developmental, integration, and operational 
testing plans. Further, we reviewed Joint Strike Fighter reports and 
program briefings to identify plans for integrating that aircraft with 
CVN 78. We also reviewed the draft CVN 78 test and evaluation master 
plan, reliability data and growth curves for key ship systems, program 
briefings, and DOD guidance to identify and assess the impact of 
reliability shortfalls on CVN 78 capabilities. To further corroborate 
documentary evidence and gather additional information in support of 
our review, we held discussions with Navy and contractor officials and 
DOD agencies responsible for managing development and reliability 
growth for key CVN 78 systems, ship integration testing, and 
operational testing, including the Program Executive Office, Aircraft 
Carriers; CVN 78 program office; Newport News Shipbuilding; Aircraft 
Launch and Recovery program office; Program Executive Office, 
Integrated Warfare Systems; Above Water Sensors program office; Office 
of the Director, Operational Test and Evaluation; Office of the Deputy 
Assistant Secretary of Defense for Developmental Test and Evaluation; 
Office of the Commander, Navy Operational Test and Evaluation Force; 
Naval Air Warfare Center--Aircraft Division; and the Joint Strike 
Fighter joint program office. 

To identify actions the Navy is taking to improve cost outcomes for 
CVN 79 ahead of detail design and construction contract award, we 
reviewed shipbuilder reports detailing lessons learned constructing 
CVN 78, the Navy's request for proposals for detail design and 
construction of CVN 79, CVN 79 construction plans and reports, program 
briefings, Navy budget submissions, and our prior work.[Footnote 37] 
To supplement our analysis and gain additional visibility into the 
Navy's actions for improving CVN 79 outcomes, we interviewed officials 
from the Program Executive Office, Aircraft Carriers; CVN 78 program 
office; CVN 79 and CVN 80 program office; Newport News Shipbuilding; 
Office of the Director, Cost Assessment and Program Evaluation; and 
Naval Sea Systems Command's Contracting and Cost Engineering and 
Industrial Analysis offices. 

We conducted this performance audit from June 2012 to September 2013 
in accordance with generally accepted government auditing standards. 
Those standards require that we plan and perform the audit to obtain 
sufficient, appropriate evidence to provide a reasonable basis for our 
findings and conclusions based on our audit objectives. We believe 
that the evidence obtained provides a reasonable basis for our 
findings and conclusions based on our audit objectives. 

[End of section] 

Appendix II: Comments from the Department of Defense: 

The Assistant Secretary of Defense: 
Acquisition: 
3015 Defense Pentagon: 
Washington, DC 20301-3015: 

July 11, 2013: 

Ms. Michele Mackin 
Director, Acquisition and Sourcing Management: 
U.S. Government Accountability Office: 
441 G Street. N.W. 
Washington. DC 20548: 

Dear Ms. Mackin: 

This is the Department of Defense response to the GAO Draft Report. 
GAO-13-396, 'Ford-Class Carriers: Lead Ship Testing and Reliability 
Shortfalls Will Limit Initial Fleet Capabilities,' dated June 6. 2013 
(GAO Code 121076). The Department acknowledges receipt of the draft 
report. 

As more fully explained in the enclosure, the Department non-concurs 
with recommendations 4 and 5. concurs with recommendation 2, and 
partially concurs with recommendations 1, 3, and 6. 

The Department appreciates the opportunity to comment on the draft 
report. For further questions concerning this report, please contact 
Mr. Jack Evans, Deputy Director, Naval Warfare, 703-614-3170. 

Sincerely, 

Signed by: 

Katrina McFarland: 

Enclosure: As stated: 

GAO Draft Report Dated June 6, 2013: 
GAO-13-396 (GAO Code 121076): 

"Ford-Class Carriers: Lead Ship Testing And Reliability Shortfalls 
Will Limit Initial Fleet Capabilities" 

Department of Defense Comments: 

Navy Statement on GAO Finding: Some Critical Technologies Arc Mature, 
but Others Face Significant Land Based Testing Delays: 

The Navy agrees that delays have occurred in land based testing of 
some critical technologies, but does not agree with the impact and 
conclusions GAO has drawn from those delays. 

System Functional Demonstration land based testing of the 
Electromagnetic Aircraft Launch System (EMALS) commenced in September 
2010. Since then EMA LS has demonstrated its full operational range 
and proved system functionality through 134 aircraft launches, 2,324 
deadload launches (as of February 2013) and thousands of no load 
launches. The EMALS system design is stable with low risk that future 
testing will discover any significant deficiencies requiring design 
changes that could impact ship construction. 

Advanced Arresting Gear (AAG) testing to date includes extended 
reliability tests, deadload commissioning tests, environmental 
qualification testing, and initial system performance testing. AAG 
completed over 350 dead load arrestments and successfully demonstrated 
the full operational range. The remaining test events include several 
hundred dead load arrestments, approximately 600 aircraft arrestments, 
continued environmental testing, and demonstration of system 
maintenance procedures. Remaining tests are expected to complete in 
September 2015. Although AAG land based testing is behind schedule, 
all currently identified hardware and software design changes will 
either be incorporated prior to equipment delivery to the ship or 
corrected onboard the ship prior to certification testing. The system 
design has matured to the extent that future changes are expected to 
be internal to the system architecture (both hardware and software) 
and independent of the ship interface. 

The Dual Band Radar (DBR) land based testing schedule, which includes 
the S-band SPY-4 Volume Search Radar (VSR) and X-band SPY-3 Multi-
Function Radar (MFR), is on track. The MFR underwent extensive testing 
since contract award in 1999 to include land based testing in 2003 and 
at sea testing on the Self-Defense Test Ship (SOTS) in 2006. The 
testing, completed while installed on the SDTS. was essential to 
production decisions and gave insight into the operational 
environment. The VSR development produced an engineering development 
model that was installed and tested at Port Hueneme, CA in 2007. The 
MFR and VSR were integrated and tested separately at Wallops Island 
until late 2009, when both systems were integrated to form the DBR. 
DBR land based testing was conducted in 2010 and has resumed along 
with combat system integration testing in 2013. This testing, 
scheduled to complete December 2014, will conclude in advance of 
shipboard testing. The last significant DBR design modification was 
identified over two years ago, and is being resolved through software 
updates and internal Government Furnished Equipment (OFE) cabinet 
modifications; with minimal impact to the ship's design. Based on 
historical land based integration testing of similar systems 
at Wallops Island, there is a very high probability that all 
identified issues will be mitigated or corrected through software or 
internal GFE equipment modifications. with no impact to the ship's 
design stability or construction schedule. 

The ship's design is stable, As stated above, EMALS, AAG and DBR 
system designs have matured to the extent that any future changes are 
expected to be internal to the system's architecture (both hardware 
and software), and independent of the ship interface. The cost, 
schedule, and technical risks associated with delayed land based 
testing have been overstated in the GAO draft report. 

Department of Defense Responses to Specific GAO Recommendations: 

Recommendation 1: To ensure Ford~class carrier acquisitions are 
supported by sound requirements and a comprehensive testing strategy, 
and to promote the introduction of reliable, warfighting capable ships 
into the fleet, GAO recommends the Secretary of Defense direct the 
Secretary of the Navy to take the following action prior 10 accepting 
delivery of CVN 78: 

Conduct a cost-benefit analysis on (1) currently required 
capabilities, including increased sortie generation rates and reduced 
manning and (2) the time and money needed to field systems to provide, 
these capabilities, in light of known and projected reliability 
shortfalls for critical systems. This analysis should be informed by 
demonstrated system performance from land~based testing, including 
updated reliability growth projections, and should identify trade 
space among competing cost, schedule, and performance parameters. The 
analysis should also consider whether the Navy should seek 
requirements relief from the Joint Requirements Oversight Council, to 
the extent necessary, to maxi mize its return on investment to the 
warfighter. The Navy should report the results of this analysis to 
Congress within 30 days of CVN 78 commissioning. 

DoD Response: Partial Concur. The Department agrees that seeking 
requirements relief from the Joint Requirements Oversight Council 
(JROC) is a potential long term mitigating solution if certain systems 
do not meet the stated capabilities. The Department disagrees that a 
cost~benefit analysis should be conducted and the results reported to 
Congress within 30 days of CVN 78 commissioning, as recommended. With 
91% of the planned RDT&E investment in CVN 78 capability complete, 
major requirements changes are not anticipated. No additional 
RDT&E investments are planned in pursuit of additional capability or 
further improvements to performance. As testing has progressed, the 
Navy has continued to be mindful of the investments made to deliver 
new technology and complete testing compared to the capability 
improvement targets. At this point in CVN 78 construction. the most 
cost effective path forward is to complete construction of the 
existing design. The Navy intends to measure resultant CVN 78 
performance and key performance parameters through a comprehensive 
test strategy including extensive developmental and operational 
testing phases. Alter measuring CVN 78 war fighting capabilities 
following lead ship delivery. any systems that do not meet stated 
capabilities will have mitigations identified. Those mitigations might 
include seeking requirements relief from the Joint Staff, if 
appropriate. For reference purposes this recommendation will be 
identified as item GAO~13-396~01. 

Recommendation 2: To ensure Ford-class carrier acquisitions are 
supported by sound requirements and a comprehensive testing strategy. 
and to promote the introduction of reliable, warfighting capable ships 
into the Fleet. GAO recommends the Secretary of Defense direct the 
Secretary of the Navy to take the following action prior to accepting 
delivery of CYN 78: 

Update the Ford class program's test and evaluation master plan to 
account for developmental testing outcomes experienced since 2013 and 
ensure that sufficient time is allotted post-delivery to complete 
developmental testing activities deferred from land to sea prior to 
initiating integration testing. 

DoD Response: Concur. The Department agrees that sufficient time 
should be allotted within the post-delivery test plan to account for 
Developmental Testing COT) outcomes. The Program's Test and Evaluation 
Master Plan (TEMP 1610) is currently under revision. This revision 
includes five distinct Developmental Test phases which include 
Integrated Testing to accommodate developmental and operational test 
objectives and mitigate risk to operational testing and initial 
operational test and evaluation. The first three Developmental 
Testing/Integrated Testing (DT/IT) phases emphasize land-based testing 
of individual systems and ship-based systems, while the last t\NO 
phases (Phase 4 and Phase 5) cover shipboard integrated systems 
testing. Phase 4 commences three months before ship's delivery. It 
includes six months of sea trials during the shakedown period and 
completes during the Post Shakedown Availability (PSA). Phase 5 begins 
after PSA and ends approximately nine months later following 
completion of combat systems testing. These DT/IT phases provide ample 
time for DT and associated integration testing to occur prior to 
operational testing. The revised TEMP 1610 also defines the Carrier 
Integrated Test Team and the Developmental Testing Working 
Group which evaluate lest results, adjust testing priorities and 
periodically update the integrated post-delivery test and trials 
schedule. This approach was established based on recommendation 
received from, and in collaboration with tIle Navy and Office of the 
Secretary of Defense testing communities. For reference purposes this 
recommendation will be identified as item GAO-13-396-02. 

Recommendation 3: To ensure Ford-class carrier acquisitions are 
supported by sound requirements and a comprehensive testing strategy. 
and to promote the introduction of reliable. warfighting capable ships 
into the fleet, GAO recommends the Secretary of Defense direct the 
Secretary of the Navy to take the following action prior 10 accepting 
delivery of CVN 78: 

Adjust the planned post-delivery test schedule to ensure that system 
integration testing is completed prior to entering initial operational 
test and evaluation. 

DoD Response: Partial Concur. As stated in the answer to 
Recommendation #2, the Test and Evaluation Master Plan describe the 
roles of the CatTier Integrated Test Team and the Developmental 
Testing Working Group, which collaborate to assess test results and 
adjust the Post Delivery Test and Trials schedule periodically 
according to test outcomes. Developmental Testing (On and associated 
integration testing will occur prior to Operational Testing (OT). As 
shown in the figure below. Warfare Systems and Non-Warfare Systems DT 
and OT periods overlap, but in all cases DT, along with its associated 
integration testing, will occur prior to OT. For reference purposes 
this recommendation will be identified as item GAO-13-396-03. 

Shipboard Developmental Testing (DT) and Integration Testing (IT) 
Synchronized with Operational Testing (OT): 

Non~Warfare Systems: 
DT/IT-4; DT/IT-5; OT-C1. 

Warfare Systems: 
DT/IT-4; DT/IT-5; OT-C2. 

PSA: overlaps DT/IT-4 in both systems prior to DT/IT-5. 

Recommendation 4: [This recommendation was removed from the final 
report. See page 51] In recognition of the significant operational 
limitations that CVN 78 is expected to face following its planned 
March 2016 commissioning, particularly as reliability of key systems 
remains deficient. GAO recommends that the Secretary of Defense 
direct the Secretary of the Navy to take the following action: 

Delay CVN 78 commissioning, until the ship successfully completes 
initial operational test and evaluation, as determined by the 
operational testing community. 

DoD Response: Non-Concur. The GAO assertion that CVN 78 will have 
significant operational limitations due to deficient reliability at 
commissioning is not valid. All CVN 78 systems including the 
Electromagnetic Aircraft Launch System (EMALS), the Advanced 
Arresting Gear (AAG), the Dual Band Radar (DBR), and the Advanced 
Weapons Elevator (AWE) are designed and engineered to be highly 
reliable and maintainable systems and to meet the ship's operational 
availability requirements. 

The Navy applied the rigorous systems engineering processes that 
started with deriving the reliability requirement from Operational 
Availability requirement from the CVN 78 Operational Requirement 
Document, allocating reliability requirements at the subsystem and 
component level and. conducting testing, failure analyses, and 
corrective actions at these levels to engineer reliability into the 
systems. This rigorous process was also conducted at the system level 
including for EMALS, AAG, DBR and A WE. The failure reporting and 
corrective. action system is maintained by the Navy throughout each 
system's life cycle. The Navy also is using the Reliability Growth 
Curve (RGC) as an effective tool to plan. illustrate. and report the 
progress of obtaining testing or operating time information to 
demonstrate statistical confidence that design reliability 
requirements have been met. Due to the nature of the statistical 
analysis, this data collection for ship systems frequently requires an 
extended data collection period which goes beyond the Initial 
Operational Test and Evaluation (lOT&E) period. The GAO recommendation 
is based solely on the availability of data to populate the RGC and 
improve the statistical confidence that the system will reach the 
reliability threshold before IOT&E, without consideration of the 
actual system reliability at delivery. 

Additionally. the use of redundant reliable sub-systems (i.e. four 
EMALS catapults, four AAG arresting wires. three DBR arrays per 
horizon search and volume search function. multiple upper and lower 
stage weapons elevators) contributes to each system's ability to 
achieve the highest availability requirements. 

It is a goal of the Navy's shipbuilding and modernization effort to 
deliver to the Fleet complete ships capable of supporting the Navy's 
primary mission and which are free from either contractor or 
government responsible deficiencies. A new ship undergoes extensive 
industrial testing during construction in the building yard. This 
testing is typically conducted by a team of shipbuilders. system 
providers. and Navy representatives. as a Ship Production Acceptance 
Test and Evaluation program under the auspices of a Total Ship Test 
Program. These industrial tests, which include an at-sea period known 
as Builder's Trials, are then followed by Acceptance Trials 
conducted at-sea by the President, Board of Inspection and Survey 
(INSURV) as an independent verification or a ship's readiness for 
acceptance prior to ship delivery by the shipbuilding contractor. Upon 
successful completion, INSURV provides the recommendation for accepting 
delivery of the ship and fleet introduction. 

In addition to the pre-delivery tests and trials, certain number of 
tests and trials are still required to be conducted by the Navy after 
delivery, including the JOT&E. These tests and trials utilize 
specialized instrumentation, resources, ranges and facilities in order 
to demonstrate the ship's performance and mission capabilities in an 
operational environment while using the ship's crew during what is 
known as the Post-Delivery Tests and Trials (PDT&T) period. 

Every NIMITZ class aircraft carrier delivered to the fleet underwent a 
PDT&T period, a post shakedown availability to correct deficiencies. 
and a crew training period resulting in ships being operationally 
ready an average of 25 months after commissioning. These events 
typically involved numerous periods at-sea to best evaluate ship 
performance. For CVN 78, the first ship of the GERALD R. FORD Class, 
additional testing and trials will result in 34 months between 
delivery and operational readiness. Longer periods between ship 
commissioning and completion of initial operational test and 
evaluation are typical for lead ships or the class given the more 
extensive test program. The period of time between commissioning and 
operational readiness for CVN 78 is factored into Fleet planning 
schedules. 

Additionally, there are serious concerns with operating CVN 78 in a 
non-commissioned status for a prolonged period of time. Per Navy 
Regulations 8, a Commanding Officer is not designated until ship 
commissioning. Navy Regulations further state, "the prospective 
commanding officer of a ship not yet commissioned shall have no 
independent authority over the preparation of the ship for service by 
virtue of assignment to such duty. until the ship is commissioned and 
placed under his or her command." It is unclear how the ship and its 
crew would operate effectively within the Navy chain of command in a 
non-commissioned status. This GAO proposal would result in an 
unprecedented method of ship delivery and testing that is not prudent 
to pursue. For reference purposes this recommendation will be 
identified as item GAO-13-396-04. 

Recommendation 5: To improve the Navy's ability to manage the costs 
and schedule of CVN 79 detail design and construction. GAO recommends 
that the Secretary of Defense direct the Secretary of the Navy to 
take the following action: 

Defer the CVN 79 detail design and construction contract award until 
land-based testing for critical, developmental ship systems including 
the dual band radar, advanced arresting gear, and EMALS is completed. 

DoD Response: Non-Concur. The Department disagrees with GAO's 
contention that the Navy's ability to manage costs and schedule for 
CVN 79 would be improved by delaying award of the CVN 79 Detail Design 
and Construction (DD&C) contract until completion of land-based tests 
for certain systems on the first ship of the class, CVN 78. This would 
likely involve over a one year delay to CVN 79 construction plans. Any 
perceived cost avoidance resulting from waiting until completion of 
testing would be outpaced by real cost increases arising from the 
detrimental impacts of construction interruption, loss of momentum on 
cost improvement initiatives, required reissuance of a solicitation by 
Navy and submission of a proposal from the shipbuilder. interruption 
of planned material procurements. erosion of an experienced workforce. 
costs to retrain and rehire workforce once CVN 79 construction and 
planning efforts are restarted. and disruption of the fragile sub-
vendor supplier base. In all. the risk reduction achieved due to the 
delay of the CVN 79 DD&C contract award does not justify the 
significant cost increase that would result. 

With regard to the risk reduction that might be achieved by such a 
delay, the CVN 78 design already incorporates multiple design 
modifications resulting from the years of testing that has already 
occurred with the development systems. The Advanced Arresting Gear 
Dual Band Radar, and Electromagnetic Aircraft Launching System designs 
have matured to the extent that future changes are expected to be 
internal to the system architecture (both hardware and software), and 
independent of the ship interface. There is little cost risk remaining 
for CVN 79 design and construction relative to these systems. which 
are design repeats from CVN 78. Lessons learned going forward on CVN 
78 will likely involve the shipboard test program efforts. The CVN 79 
test program is not slated to begin until 20 18 or later. Therefore, 
the existing interval between CVN 78 and CVN 79 provides ample 
opportunity to implement CVN 78 lessons learned. including those 
identified through completion of the shipboard test program. In 
addition, the approach to CVN 79 construction underwent an extensive 
affordability review with significant changes that will reduce the 
cost of building the ship. CVN 79 construction will start with a 
complete design, a complete bill of materials, and an optimal build 
plan. 

Advance Procurement funding for CVN 79 was first appropriated in 
Fiscal Year (FY) 2007. The National Defense Authorization Act for 
FY2010 authorized the initiation of advance construction efforts. 
Fabrication of the first construction units was begun in December 
201O. In the time since, long lead time material procurement and 
advance construction authority has enabled the shipbuilder, Huntington 
Ingalls Industries--Newport News Shipbuilding (HII-NNS), to make 
significant progress in accordance with its build plan: 

* Rollover of the CVN 78 design in the 3-D product model is 90% 
complete. 

* Over 50% of contractor furnished, direct buy material has been 
placed on order; more than 40% of this amount has been received in the 
shipyard. 

* Fabrication has been started on 225 of 1,156 total construction 
units; of these, 97 are complete. 

* 1,030 full-time equivalents are currently supporting the program. 

* Approximately 50% of Government-Furnished Equipment (GFE) has been 
ordered, including all propulsion plant GFE. 

The CVN 79 program established considerable positive momentum during 
the Construction Preparation (CP) phase of the program, and advance 
construction performance to date demonstrates the shipbuilder is well 
positioned to carry this momentum into the DD&C phase. Build strategy 
improvement initiatives identified in the recently submitted report to 
Congress on cost control measures are currently being implemented by 
the shipbuilder, and interruption of these ongoing efforts would 
increase costs. HII-NNS personnel would be released from the 
program due to the loss of this construction workload. The subsequent 
ramp back up and retraining of the workforce to support the delayed 
award would come with an attendant loss of program knowledge. loss of 
efficiency, and adverse cost impact. In addition, there would be cost 
implications to the VIRGINIA Class nuclear submarine work and CVN 68 
Class refueling and complex overhaul work at HII-NNS due to the 
construction break between CVN 78 and CVN 79. To minimize the 
detrimental impact of complete interruption of these efforts, an 
extension of the existing CP contract and a continuation of advance 
construction efforts would be required utilizing FY 2014 procurement 
funding. 

Furthermore, additional bid and proposal efforts needed to complete 
the CP Extension contract and to request, resubmit, and review the 
HII~NNS DD&C proposal would have to be repeated, adding further cost 
10 the program. 

Finally, following the truncation to the DOG 1000 program at three 
ships, CVN 79 will be the last ship to be outfitted with the Dual Band 
Radar. The current cost estimate for an FY 2014 procurement of DBR 
includes a premium to restart production at Raytheon. Delaying this 
procurement beyond FY 2014 would increase this premium. For reference 
purposes this recommendation will be identified as item OAO-13·396-0S. 

Recommendation 6: To improve the Navy's ability to manage the costs 
and schedule of CVN 79 detail design and construction, GAO recommends 
that the Secretary of Defense direct the Secretary of the Navy to take 
the following action: 

During the recommended deferral period, update the Navy's CVN 79 cost 
estimate on the basis of actual costs and labor hours associated with 
CVN 78 construction to determine whether the preliminary information 
and assumptions remain relevant and accurate. 

DoD Response: Partial Concur. Notwithstanding the Department's non-
concur with the recommended deferral period detailed in the response 
to GAO Recommendation 5, the Department is planning to have an updated 
independent cost estimate prepared by the Office of Cost Assessment 
and Program Evaluation to support the Defense Acquisition Board Interim 
Program Review to be conducted prior to awarding the CVN 79 Detail 
Design and Construction contract. This independent cost estimate will 
take into account actual costs and labor hours associated with the CVN 
78 construction. For reference purposes this recommendation will be 
identified as item GAO-J3-396-06. 

[End of section] 

Appendix III: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

Michele Mackin, (202) 512-4841 or mackinm@gao.gov: 

Staff Acknowledgments: 

In addition to the contact named above, key contributors to this 
report were Diana Moldafsky, Assistant Director; John Oppenheim, 
Assistant Director; Greg Campbell; Christopher R. Durbin; Laura 
Greifner; Kristine Hassinger; Karen Richey; W. Kendal Roberts; Charlie 
Shivers; Roxanna Sun; and Holly Williams. 

Footnotes: 

[1] DOD acquisition guidance defines a technology element as 
"critical" if the system being acquired depends on this technology 
element to meet its operational requirements (within acceptable cost 
and schedule limits) and if the technology element or its application 
is either new or novel or in an area that poses major technological 
risk during detailed design and demonstration. 

[2] The Navy further increased this total to $4.4 billion in 2005, 
which continues to reflect the approved funding baseline for research, 
development, test, and evaluation investments in the program. To date, 
the Navy has received over $3.7 billion to support these activities, 
with remaining funding scheduled through fiscal year 2022. 

[3] The target cost is the pre-established cost of the contracted 
goods/services that is a reasonable prediction of the final incurred 
costs. Target profit is the pre-established profit that the contractor 
will earn if the negotiated final cost of the contracted 
goods/services is the same as the target cost. 

[4] Pub. L. No. 109-364, § 122. 

[5] GAO, Defense Acquisitions: Navy Faces Challenges Constructing the 
Aircraft Carrier Gerald R. Ford within Budget, [hyperlink, 
http://www.gao.gov/products/GAO-07-866] (Washington, D.C.: Aug. 23, 
2007). 

[6] DOD defines mean time between failures as, for a particular 
interval, the total functional life of a population of an item divided 
by the total number of failures (requiring corrective maintenance 
actions) within the population. The definition holds for time, rounds, 
miles, events, or other measures of life unit (such as cycles). 

[7] DFARS subpart 234.201 and section 252.234-7002. DOD's earned value 
management implementation policy includes requirements that for cost-
reimbursable and/or incentive fee contracts valued at or above $50 
million, (1) a DOD contracting officer must formally validate and 
accept a contractor's earned value management system at contract award 
and throughout contract performance and (2) the contractor must 
provide monthly contract performance reports to DOD. 

[8] GAO, Defense Acquisitions: Assessments of Selected Weapon 
Programs, [hyperlink, http://www.gao.gov/products/GAO-11-233SP] 
(Washington, D.C.: Mar. 29, 2011). 

[9] GAO, Best Practices: High Levels of Knowledge at Key Points 
Differentiate Commercial Shipbuilding from Navy Shipbuilding, 
[hyperlink, http://www.gao.gov/products/GAO-09-322] (Washington, D.C.: 
May 13, 2009). 

[10] [hyperlink, http://www.gao.gov/products/GAO-09-322]. 

[11] GAO, Defense Acquisitions: Navy Faces Challenges Constructing the 
Aircraft Carrier Gerald R. Ford within Budget, [hyperlink, 
http://www.gao.gov/products/GAO-07-866] (Washington, D.C.: Aug. 23, 
2007). 

[12] Water twisters are energy-absorbing water brakes that convert 
kinetic energy to heat through fluid turbulence. They operate 
automatically during aircraft arrestment and adjust automatically to 
accommodate aircraft of varying weights, engaging speeds, and off-
center arrestments within the specified performance limits of the 
system. 

[13] [hyperlink, http://www.gao.gov/products/GAO-09-322]. 

[14] In designing and constructing a new ship, the Navy seeks to 
preserve "service life allowances"--room for weight growth after the 
vessel enters service--in order to provide room to take on new, 
heavier equipment over the ship's life cycle. The Navy generally sets 
service life allowances for a new ship's overall weight and for its 
vertical center of gravity (stability). For the Ford class carrier, 
these minimum margins are 5.0 percent of full load displacement in 
long tons and 1.5 feet, respectively. 

[15] [hyperlink, http://www.gao.gov/products/GAO-09-322] and GAO, 
Defense Acquisitions: Assessments of Selected Weapons Programs, 
[hyperlink, http://www.gao.gov/products/GAO-10-388SP] (Washington, 
D.C.: Mar. 30, 2010). Program examples include the Littoral Combat 
Ship, Zumwalt-class destroyer (DDG 1000), America-class amphibious 
assault ship (LHA 6), San Antonio-class amphibious transport dock (LPD 
17), and Seawolf-class attack submarine (SSN 21). 

[16] [hyperlink, http://www.gao.gov/products/GAO-09-322]. 

[17] In 2010, the Secretary of the Navy, using authority granted him 
by subsection (b) of section 122 of the John Warner National Defense 
Authorization Act for Fiscal Year 2007, increased the cost cap for CVN 
78 to $11.755 billion. Pub. L. No. 109-364. The Navy's fiscal year 
2014 budget proposal seeks to amend the statutory cost cap imposed by 
subsection (a)(1) of that section to the program manager's current 
estimate at completion of $12.887 billion. 

[18] Firm fixed-price contracts provide a firm price to the 
government. This contract type places the risk on the contractor, 
which generally bears the responsibility of increased costs of 
performance. 

[19] The earned value data we reviewed are limited to the main CVN 78 
detail design and construction contract and do not fully account for 
the integration of critical technology systems onto the ship platform. 

[20] Budget at completion is the sum of all estimated budgets, 
representing the cumulative value of the budgeted cost of the work 
scheduled over the life of the project. 

[21] GAO, Defense Acquisitions: Realistic Business Cases Needed to 
Execute Navy Shipbuilding Programs, [hyperlink, 
http://www.gao.gov/products/GAO-07-943T] (Washington, D.C.: July 24, 
2007). 

[22] GAO, Defense Acquisitions: Challenges Associated with the Navy's 
Long-Range Shipbuilding Plan, [hyperlink, 
http://www.gao.gov/products/GAO-06-587T] (Washington, D.C.: Mar. 30, 
2006). 

[23] The Navy's planned maintenance period for CVN 78 will be used to 
(1) install systems and equipment deferred during construction phase 
or not included in the construction contract, (2) install upgrades or 
improvements to existing systems, (3) correct new or previously 
identified construction deficiencies, and (4) perform maintenance. 

[24] Director, Operational Test and Evaluation, DOT&E TEMP Guidebook 
(Washington, D.C.: Feb. 27, 2012). 

[25] The Defense Acquisition Board is DOD's senior-level forum for 
advising the Under Secretary of Defense for Acquisition, Technology, 
and Logistics on critical decisions concerning major defense 
acquisition programs, such as the Ford-class carrier. 

[26] Under Secretary of Defense for Acquisition, Technology, and 
Logistics, Reliability Analysis, Planning, Tracking, and Reporting, 
Directive Type Memorandum 11-003 (Washington, D.C.: Mar. 21, 2011). 

[27] DOD, Handbook: Reliability Growth Management, MIL-HDBK-189C 
(Aberdeen Proving Ground, Md.: Jun. 14, 2011). 

[28] Pub. L. No. 111-84, § 1023(a). The number of the Navy’s 
operational carriers has changed over time. The National Defense 
Authorization Act for Fiscal Year 2006 amended the U.S. Code to 
require that the Navy have no fewer than 12 operational aircraft 
carriers. Pub. L. No. 109-163, § 126(a), amending section 5062 of 
title 10 of the U.S. Code. The following year, in the John Warner 
National Defense Authorization Act for Fiscal Year 2007, Congress 
reduced the number of required operational aircraft carriers to 11. 
Pub. L. No. 109-364, § 1011(a). 

[29] Operation Enduring Freedom is the ongoing United States-led 
operation that conducts counter-terrorism operations in Afghanistan 
and elsewhere. 

[30] Pub. L. No. 112-239, § 121. Based on the Navy's existing funding 
profile for CVN 78, the provision, in practice, only applies to CVN 79 
and CVN 80. The new 6-year funding strategy is the latest in a series 
of funding plans in the Ford class program. Previously, Congress 
authorized the Navy to fund Ford-class carrier constructions over 
periods of 4 years each. Pub. L. No. 109-364, § 121. Congress later 
amended this authorization to permit funding periods totaling 5 years 
for each carrier. Pub. L. 112-81, § 124. 

[31] The Navy has not yet established a construction schedule for CVN 
80. 

[32] [hyperlink, http://www.gao.gov/products/GAO-09-322]. 

[33] A cost-plus incentive contract is a cost-reimbursement contract 
that provides for an initially negotiated fee to be adjusted by a 
formula based on the relationship of total allowable costs to total 
target costs. 

[34] GAO, Defense Acquisitions: Navy's Ability to Overcome Challenges 
Facing the Littoral Combat Ship Will Determine Eventual Capabilities, 
[hyperlink, http://www.gao.gov/products/GAO-10-523] (Washington, D.C.: 
Aug. 31, 2010). 

[35] The Zumwalt-class destroyer's deckhouse is a structure that 
integrates the ship's radar and communications systems. 

[36] GAO, Defense Acquisitions: Navy Faces Challenges Constructing the 
Aircraft Carrier Gerald R. Ford within Budget, [hyperlink, 
http://www.gao.gov/products/GAO-07-866] (Washington, D.C.: Aug. 23, 
2007); and Best Practices: High Levels of Knowledge at Key Points 
Differentiate Commercial Shipbuilding from Navy Shipbuilding, 
[hyperlink, http://www.gao.gov/products/GAO-09-322] (Washington, D.C.: 
May 13, 2009). 

[37] [hyperlink, http://www.gao.gov/products/GAO-07-866] and 
[hyperlink, http://www.gao.gov/products/GAO-09-322]. 

[End of section] 

GAO’s Mission: 

The Government Accountability Office, the audit, evaluation, and 
investigative arm of Congress, exists to support Congress in meeting 
its constitutional responsibilities and to help improve the 
performance and accountability of the federal government for the 
American people. GAO examines the use of public funds; evaluates 
federal programs and policies; and provides analyses, recommendations, 
and other assistance to help Congress make informed oversight, policy, 
and funding decisions. GAO’s commitment to good government is 
reflected in its core values of accountability, integrity, and 
reliability. 

Obtaining Copies of GAO Reports and Testimony: 

The fastest and easiest way to obtain copies of GAO documents at no 
cost is through GAO’s website [hyperlink, http://www.gao.gov]. Each 
weekday afternoon, GAO posts on its website newly released reports, 
testimony, and correspondence. To have GAO e-mail you a list of newly 
posted products, go to [hyperlink, http://www.gao.gov] and select 
“E-mail Updates.” 

Order by Phone: 

The price of each GAO publication reflects GAO’s actual cost of 
production and distribution and depends on the number of pages in the 
publication and whether the publication is printed in color or black 
and white. Pricing and ordering information is posted on GAO’s 
website, [hyperlink, http://www.gao.gov/ordering.htm]. 

Place orders by calling (202) 512-6000, toll free (866) 801-7077, or 
TDD (202) 512-2537. 

Orders may be paid for using American Express, Discover Card, 
MasterCard, Visa, check, or money order. Call for additional 
information. 

Connect with GAO: 

Connect with GAO on facebook, flickr, twitter, and YouTube.
Subscribe to our RSS Feeds or E mail Updates. Listen to our Podcasts.
Visit GAO on the web at [hyperlink, http://www.gao.gov]. 

To Report Fraud, Waste, and Abuse in Federal Programs: 

Contact: 
Website: [hyperlink, http://www.gao.gov/fraudnet/fraudnet.htm]; 
E-mail: fraudnet@gao.gov; 
Automated answering system: (800) 424-5454 or (202) 512-7470. 

Congressional Relations: 

Katherine Siggerud, Managing Director, siggerudk@gao.gov: 
(202) 512-4400: 
U.S. Government Accountability Office: 
441 G Street NW, Room 7125: 
Washington, DC 20548. 

Public Affairs: 

Chuck Young, Managing Director, youngc1@gao.gov: 
(202) 512-4800: 
U.S. Government Accountability Office: 
441 G Street NW, Room 7149: 
Washington, DC 20548. 

[End of document]