Improved management practices could slow cost growth in the
Navy’s shipbuilding programs, the Government Accountability
Office has said.
It said $7.6 billion was allotted to the Navy for ship
construction in 2005 and that cost growth is a long-standing
problem in efforts to maintain the technological
superiority of destroyers, carriers, amphibious docking
ships, and Virginia class subs.
In the past few years the Navy has been relying on
additional appropriations for ships already under contract
to pay for frequent cost overruns, that occur partly
because the Navy does not account for them when estimating
costs, contracting, and budgeting for ships, resulting in
unrealistic program funding, according to GAO-05-183.
It said Navy decision makers need more information about
potential costs, such as from independent cost estimates
for carriers, or when substantial changes occur in a
ship’s class.
Contract prices in programs GAO looked at were negotiated
on budgets established without sufficient design and
construction knowledge, the report said, adding that
incomplete and late reporting on program progress
prevented the early detection of problems and hindered
the Navy’s ability to respond.
