Will America's Next Aircraft Carrier Shrink the Navy?

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USS KENNEDY, the second FORD-class carrier, is scheduled to be commissioned in 2020. (U.S. Navy)

Nuclear carriers are a fundamental part of U.S. military strategy.  They have proven to be a flexible diplomatic tool, an important military asset, even in a land war, and are likely to grow in importance as more issues arise in the Pacific basin. Congress recognized this role and passed a law requiring eleven carriers in the national arsenal. Few other weapons systems have this degree of national consensus.

They also have a long lifetime and but still require periodic replacement.  USS ENTERPRISE was retired after 60 years operation and the fuel core ran out on the predicted schedule. A new carrier class was planned to be available then, but the defense acquisition system failed to produce that ship and is now several years late depending upon the amount of operational testing needed to confirm performance. In the meantime, the current fleet is operating at a higher tempo and the sailors are enduring extended deployments to accommodate this failure.

Not only late, but over budget. Originally planned for a cost of $10.5 billion, Navy estimates the cost at $12.8 billion. Independent estimates are as high as $14.2 billion. Several laws have been passed setting cost ceilings, but these have been revised as fact of life changes. They had some impact in forcing the Navy and contractors to focus on cost control, but have not been decisive, except in showing clear dissatisfaction with program performance.

The problem is that costs are determined by specifications with inherent technical risks, workforce planning and management, but not laws. The Government Accountability Office (GAO) has been quite consistent in pointing out the high risks in the subsystem development under Navy control, but these were not controlled through competitive designs or risk managed technical approaches. Roughly half of the cost growth is attributed to the launch system, recovery system and radar developments, which have been Navy managed. The other half of the cost growth is attributable to the ship performance specifications, design and fabrication inefficiencies at the shipbuilder.

History has shown that new combatant ship designs always have cost growth towards the end of production as testing gets intensive and problems are discovered. The only question is how bad the problem will be.  USS FORD is now at the stage where design issues will be identified in system testing. The unexpected cost could be a billion dollars, according to independent estimates.

USS FORD was launched into the James River last month as it prepared to undergo 28 months of additional outfitting and testing. The ship is scheduled for delivery in 2016. (AP)

In response to issues raised about ship costs, Navy has produced a cost control plan.  This plan is nothing more than what would be the normally expected cost reduction in a follow on ship on a normal learning curve. Cost projections for the second carrier of the class, USS KENNEDY, are also reported to be very optimistic.

A major compounding problem has arisen as part of the current national budget debate. Money for defense will not be as plentiful as it has been. The result will be shrinking forces, partly caused by the failure of the acquisition process to provide affordable systems. The carrier program is a clear example since costs have risen by over 20% and are likely to go higher as testing identifies problems. Defense budgets are likely to fall 10-15% creating a gap that can be solved either by cutting forces or reducing acquisition to pay for carrier overruns.

Alternatively, this dilemma could be solved by rethinking “technical requirements and performance demands” that determine cost. The USS ENTERPRISE turned out to be a single ship class because the design was too expensive to maintain force levels. The USS FORD could be in the same category.  A Navy spokesman said that FORD contains fourteen million feet of cable while the last class contained only three million feet. Cabling is expensive, but also connects something. Is all this really necessary?  Could some of it be eliminated?  Which systems, once considered important are not? A careful review of all technical and performance parameters should be conducted with the goal of eliminating cost while maintaining key performance parameters.  The initial target should be cost reduction of 10% above current learning curve projections. That would be a major payment in saving another ship. It also recognizes that the extended refueling interval is a life cycle saving. 

It is time to return to the hard-nosed Navy and tough specification control in the interest of saving the fleet. A team reporting to the Secretary of the Navy should be established now to review and eliminate unnecessary technical and performance cost elements while efforts to improve cost performance of all contractors continues. Tighter business practices should include more emphasis on competitive make or buy decisions, value engineering and should cost studies, reinforced by a 50/50 share line and incentive payments for cost reduction ideas outside the contract. These changes should be included in all contracts for USS KENNEDY components.

Otherwise the fleet declines for no good reason.

Everett Pyatt is the Leader of the Project for Defense Management and Acquisition Leadership at the McCain Institute for International Leadership, a part of Arizona State University. He is formerly Assistant Secretary of Navy and Acquisition Executive.



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