The estimated $115 billion price for building 12 Columbia-class ballistic-missile submarines is inaccurate because it doesn’t factor in all the labor, which could cause cost overruns and production delays, a government watchdog said.
The new submarines will replace the 14 aging Ohio-class submarines that will begin to be retired in 2027.
The pace for building submarines has intensified as the Navy seeks to keep up with the Russian and Chinese navies, which have been boosting their submarine fleets.
But the Navy in its push to modernize its ballistic forces is not thoroughly assessing the costs involved, and that could lead to future funding shortfalls, the Government Accountability Office said in its report issued Monday.
“The Navy’s $115 billion procurement cost estimate is not reliable partly because it is based on overly optimistic assumptions about the labor hours needed to construct the submarines,” the GAO said.
Construction of the new submarines is slated to begin in 2020 with the aim of having the first boat making a maiden patrol in 2031 — a schedule that GAO finds “aggressive” and not realistic.
Building the lead submarine in a new class takes additional time to design, develop new technologies and work out bugs through trial and error, the GAO said. The Navy has not included reasonable margins of error in time, labor and efficiency, essentially using a best-case scenario with little to substantiate it, it said.
For instance, the Navy anticipates it will need 12 million labor hours to build the lead submarine — 17 percent fewer hours than what was needed to construct the lead Virginia-class submarine, the report said. Unforeseen labor costs in the past year have added to the project’s costs, such as fixing a defective propulsion motor, it noted.
Production capacity is another factor. The heightened pace of submarine construction — unprecedented since the 1980s – is putting a strain on the shipbuilder. Electric Boat, which is building Columbia-class and Virginia-class subs, is investing $1 billion in its factories and hiring 6,000 workers but will need some time to reach full production.
Another snag is that suppliers of high-end components have dwindled since submarine construction tailed off after the Cold War ended. Some suppliers are now producing components, such as missile tubes, that haven’t been made since the early 1990s.
GAO recommended that the Navy come up with more detailed, well-documented cost analyses that takes potential repairs and setbacks into consideration.
Navy officials told the agency that they have calculated more detailed cost estimates based on risk factors and the history of submarine construction. It also includes savings from using a special fund created for developing Columbia-Class submarines.
GAO says it has yet to see those updated figures.
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