Report to the Committee on Armed Services, U.S. Senate March 2020 NAVY SHIPBUILDING Increasing Focus on Sustainment Early in the Acquisition Process Could Save Billions GAO-20-2 March 2020 NAVY SHIPBUILDING Increasing Focus on Sustainment Early in the Acquisition Process Could Save Billions Highlights of GAO-20-2, a report to the Committee on Armed Services, U.S. Senate Why GAO Did This Study What GAO Found The U.S. Navy requested over $40 The Navy has delivered warships—such as aircraft carriers, destroyers, and billion each of the last 3 years to submarines—to its fleet over the past 10 years that require more effort to sustain build, operate, and sustain its fleet. than initially planned. In assessing how these classes of ships are sustained, Acquisition decisions made as ships GAO found 150 examples of class-wide problems, such as unreliable ship are developed and built can have a systems. These problems stemmed from shipbuilding programs not identifying, long-term effect on sustainment evaluating, or mitigating sustainment risks during the acquisition process. GAO costs and ship quality. found that it would cost the Navy $4.2 billion to correct just the 30 percent of GAO was asked to assess the these problems for which the Navy had data on estimated repair costs. extent to which DOD considers and plans for sustainment when Problems Requiring More Sustainment Effort than Planned Across Multiple Ships in a Class acquiring weapons. Among other objectives, this report assesses the extent to which: (1) Navy ship programs deliver ships to the fleet that can be sustained as planned; (2) the Navy develops and uses effective sustainment requirements during acquisition; (3) ship programs are effectively identifying and evaluating sustainment risks in GAO found that shipbuilding programs’ requirements for sustainment reflect planning documents; and (4) weaknesses with how Department of Defense (DOD) policy defines these leadership considers programs’ requirements for ships. Sustainment requirements should influence acquisition sustainment planning and outcomes. decisions that determine the sustainability of a ship class, such as the ship’s GAO reviewed DOD and Navy design. However, the Navy’s sustainment requirements do not provide key acquisition policy and guidance, information on how reliable and maintainable mission-critical systems should be evaluated acquisition plans, and, therefore, cannot adequately inform acquisition decisions. collected sustainment metrics, and conducted interviews with more than GAO also found that shipbuilding programs did not consistently address 100 organizations, including sustainment risks in acquisition planning documents. For example, the operating program office and fleet units. GAO and support costs included in cost estimates did not capture all sustainment risks assessed 11 classes of shipbuilding that could affect costs or evaluate sensitivity to changing sustainment programs (all nine that delivered assumptions, contrary to DOD and Navy cost estimating guidance. As a result, warships during the last 10 years, as for six shipbuilding programs whose costs GAO could assess, the Navy had well as two newer classes of ships). underestimated sustainment costs by $130 billion, as shown below. What GAO Recommends Operating and Support Cost Estimate Growth for Six Ship Classes GAO is making one matter for Congressional consideration to enhance oversight and 11 recommendations to help DOD and Navy improve ship sustainment. DOD concurred with 8 and partially concurred with 3 recommendations The Navy has begun making some changes to its acquisition oversight process, but did not describe specific actions, such as developing sustainment program baselines and adding a sustainment which GAO believes are necessary oversight review. While positive, these changes focus on considering to improve sustainment outcomes. sustainment after key decisions are made early in the acquisition process. GAO also found that DOD is not required to provide detailed information about shipbuilding programs’ sustainment cost growth to Congress. As such, Congress View GAO-20-2. For more information, does not have full insight into the extent of shipbuilding programs’ cost growth contact Shelby S. Oakley at (202) 512-4841, [email protected] and why such growth occurred. United States Government Accountability Office Contents Letter 1 Background 5 Navy Spends Billions to Fix New Ships That Are More Difficult and Costly to Sustain than Shipbuilding Programs Initially Planned 16 DOD Policy for Shipbuilding Sustainment Requirements Results in Inadequate Information for Acquisition Decisions and Reporting That Is Misleading 28 Shipbuilding Programs Do Not Consistently Identify and Evaluate Sustainment Costs and Risks in Acquisition Documents 39 Navy Leadership Does Not Ensure Shipbuilding Programs Effectively Consider Sustainment and Congress Does Not Have Full Insight into Sustainment Cost Growth 55 Product Support Managers Have Limited Influence in the Acquisition Process 68 Conclusions 73 Matter for Congressional Consideration 74 Recommendations for Executive Action 74 Agency Comments and Our Evaluation 76 Appendix I Objectives, Scope, and Methodology 79 Appendix II List of Fleet-Identified Ship Class Problems That Required More Sustainment Resources than Planned 86 Appendix III Comments from the Department of Defense and Navy ASN (RD&A) with Additional GAO Response 87 Appendix IV GAO contact and Staff Acknowledgments 96 Related GAO Products 97 Page i GAO-20-2 Navy Shipbuilding Tables Table 1: Warship Classes That the Navy Is Developing or Has Delivered during the Past 10 Years 3 Table 2: Casualty Report Summary during Two Littoral Combat Ship (LCS) Deployments 31 Table 3: Comparison of Initial and Current Operating and Support (O&S) Cost Estimates – Adjusted for Program Changes, as of December 2018 40 Table 4: Initial and Current Ford Class (CVN 78) Crewing Levels and Operating and Support (O&S) Costs Estimates as Compared to the Previous Class of Carriers 42 Table 5: Required Sustainment-related Briefing Content or Actions in Navy Gates 56 Table 6: Percentage of Operating & Support (O&S) Estimate Cost Growth for Selected Shipbuilding Programs, on a per Ship per Year Basis 67 Table 7: Navy Warships in Development or Under Construction during the Past 10 Years 80 Figures Figure 1: Acquisition Phases and Key Decision Points in the Navy Shipbuilding Process 8 Figure 2: Notional Operational Availability and Materiel Availability Requirements 11 Figure 3: Key Acquisition and Sustainment Stakeholders That Support a Ship over Its Life Cycle 13 Figure 4: Number of Class-wide Problems Identified by the Fleet That Required More Sustainment Effort than Planned for During Acquisition and Estimated Costs for Selected Problems 17 Figure 5: Major Categories of Sustainment Problems with Prevalence across Ship Classes Built during the Last 10 Years 20 Figure 6: Biofouling Inside a Pipe on an LPD 17 Class Ship 22 Figure 7: SSN 774 Class Submarine Returning from a Deployment with Missing Special Hull Treatment 24 Figure 8: LPD Flight I Knuckleboom Crane 26 Figure 9: How the Navy Set an Unacceptable Operational Availability Requirement for FFG(X) 32 Page ii GAO-20-2 Navy Shipbuilding Figure 10: DDG 1000: Unproven Assumptions Not Evaluated Using Risk and Sensitivity Analyses Led to Optimistic Operating and Support (O&S) Estimates 46 Figure 11: Advanced Arresting Gear Reliability Issues Identified during the Acquisition Process but Not Addressed in a Life-Cycle Sustainment Plan 48 Figure 12: Number of Gate Review Briefings from Fiscal Year 2014 to 2018 That Included Selected Sustainment Topics 58 Figure 13: Littoral Combat Ship (LCS) Sustainment Officials Unable to Influence a Key Acquisition Decision 73 Page iii GAO-20-2 Navy Shipbuilding Abbreviations APB acquisition program baseline ASN (RD&A) Assistant Secretary of the Navy (Research, Development, and Acquisition) CNO Chief of Naval Operations DOD Department of Defense HM&E hull, mechanical, and electrical ILA independent logistics assessment LCS Littoral Combat Ship LCSP life-cycle sustainment plan NAVSEA Naval Sea Systems Command O&S operating and support PSM product support manager SECNAVINST Secretary of the Navy Instruction SPB sustainment program baseline This is a work of the U.S. government and is not subject to copyright protection in the United States. The published product may be reproduced and distributed in its entirety without further permission from GAO. However, 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. Page iv GAO-20-2 Navy Shipbuilding Letter 441 G St. N.W. Washington, DC 20548 March 24, 2020 The Honorable James M. Inhofe Chairman The Honorable Jack Reed Ranking Member Committee on Armed Services United States Senate The United States Navy requested over $40 billion in funding each of the last three years to build, operate, and maintain a fleet of some of the most technologically advanced ships in the world.1 Though these resources are significant, the Navy has nevertheless struggled to build and maintain ships to its desired standards within estimated cost and schedule. For instance, we have previously found that in the seven-year period from 2012-2018, the Navy experienced over 27,000 days of unexpected maintenance delays across all of its ship classes—delays that increase sustainment costs and degrade readiness.2 Recent events—such as ship collisions,