Two Contracts for Nuclear Attack Submarines Modified Under Authority of Public Law 85-804--Status as of December 20, 1980

GAO reported on the status at the end of the December 20, 1980, fiscal year of two contracts for submarines modified in the interest of national defense. The Navy and the contractor agreed to a settlement based on an estimated cost at completion of $2,668 million. The settlement provided for the contractor to absorb a $359 million loss over the remaining construction period, the Navy to cover another $359 million, the cost overruns to be divided equally up to a total of $100 million with costs above that figure being the total responsibility of the contractor, and cost underruns to be shared equally. GAO reviews the status of these contracts annually to ensure that funds authorized to provide relief in the claims settlement are used only on the two contracts and that the prime contractor does not use such funds to realize any total combined profit.