Navy Ford (CVN-78) Class Aircraft Carrier
Program: Background and Issues for Congress
Ronald O'Rourke
Specialist in Naval Affairs
February 16April 13, 2010
Congressional Research Service
7-5700
www.crs.gov
RS20643
CRS Report for Congress
Prepared for Members and Committees of Congress
Navy Ford (CVN-78) Class Aircraft Carrier Program: Background and Issues for Congress
Summary
CVN-78, CVN-79, and CVN-80 are the first three ships in the Navy’s new Gerald R. Ford (CVN78) class of nuclear-powered aircraft carriers (CVNs).
CVN-78 was procured in FY2008 and is being funded with congressionally authorized four-year
incremental funding in FY2008-FY2011. The Navy’s proposed FY2011 budget estimates the
ship’s procurement cost at $11,531.0 million (i.e., about $11.5 billion) in then-year dollars, and
requests $1,731.3 million in procurement funding as the final increment to complete this
estimated procurement cost.
CVN-79 is scheduled for procurement in FY2013, and has received advance procurement funding
since FY2007. The Navy’s proposed FY2011 budget estimates the ship’s procurement cost at
$10,413.1 million (i.e., about $10.4 billion) in then-year dollars and requests $908.3 million in
advance procurement funding for the ship.
CVN-80 is scheduled for procurement in FY2018, with advance procurement funding scheduled
to begin in FY2014. The Navy’s proposed FY2011 budget estimates the ship’s procurement cost
at $13,577.0 million (i.e., about $13.6 billion) in then-year dollars.
On April 6, 2009, Secretary of Defense Robert Gates announced a number of recommendations
he was making for the FY2010 defense budget. One of these was to shift procurement of carriers
to five-year intervals. This recommendation effectively deferred the scheduled procurement of
CVN-79 from FY2012 to FY2013, and the scheduled procurement of CVN-80 from FY2016 to
FY2018. Secretary of Defense Robert Gates stated on April 6, 2009, that shifting carrier
procurement to five-year intervals would put carrier procurement on “a more fiscally sustainable
path.”
Potential oversight issues for Congress for FY2011 for the CVN-78 program include the
following:
•
Did shifting carrier procurement to five-year intervals put carrier procurement on
a more fiscally sustainable path?
•
Where do the estimated procurement costs of CVNs 78, 79, and 80 stand in
relation to the unit procurement cost caps for the CVN-78 program that were
established by Section 122 of the FY2007 defense authorization act (H.R.
5122/P.L. 109-364 of October 17, 2006)?
•
What is the likelihood that the estimated procurement costs of CVNs 78, 79, and
80 will increase from the estimates shown in the FY2011 budget?
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Navy Ford (CVN-78) Class Aircraft Carrier Program: Background and Issues for Congress
Contents
Introduction ................................................................................................................................1
Background ................................................................................................................................2
The Navy’s Aircraft Carrier Force .........................................................................................2
Aircraft Carrier Construction Industrial Base.........................................................................2
Gerald R. Ford (CVN-78) Class Program ..............................................................................2
CVN-78 ..........................................................................................................................2
CVN-79 ..........................................................................................................................3
CVN-80 ..........................................................................................................................3
Procurement Funding ......................................................................................................4
Increase in Estimated Unit Procurement Costs.................................................................4
Procurement Cost Cap.....................................................................................................56
Issues for Congress .....................................................................................................................6
Shift to Five-Year Intervals: A More Fiscally Sustainable Path?.............................................6
Estimated Procurement Costs in Relation to Procurement Cost Cap.......................................9
Potential for Additional Growth in Estimated Procurement Costs ..........................................9
Legislative Activity for FY2011 ................................................................................................ 11
Tables
Table 1. Procurement Funding for CVNs 78, 79, and 80 ..............................................................4
Table 2. Estimated Procurement Costs of CVNs 78, 79, and 80 ...................................................5
Appendixes
Appendix A. Text of Navy Report on Effects of Shifting to Five-Year Intervals ......................... 12
Appendix B. July 16, 2009, Hearing on EMALS.... ....................................................................... 1216
Contacts
Author Contact Information ...................................................................................................... 1721
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Navy Ford (CVN-78) Class Aircraft Carrier Program: Background and Issues for Congress
Introduction
CVN-78, CVN-79, and CVN-80 are the first three ships in the Navy’s new Gerald R. Ford (CVN78) class of nuclear-powered aircraft carriers (CVNs).
CVN-78 was procured in FY2008 and is being funded with congressionally authorized four-year
incremental funding in FY2008-FY2011. The Navy’s proposed FY2011 budget estimates the
ship’s procurement cost at $11,531.0 million (i.e., about $11.5 billion) in then-year dollars, and
requests $1,731.3 million in procurement funding as the final increment to complete this
estimated procurement cost.
CVN-79 is scheduled for procurement in FY2013, and has received advance procurement funding
since FY2007. The Navy’s proposed FY2011 budget estimates the ship’s procurement cost at
$10,413.1 million (i.e., about $10.4 billion) in then-year dollars and requests $908.3 million in
advance procurement funding for the ship.
CVN-80 is scheduled for procurement in FY2018, with advance procurement funding scheduled
to begin in FY2014. The Navy’s proposed FY2011 budget estimates the ship’s procurement cost
at $13,577.0 million (i.e., about $13.6 billion) in then-year dollars.
On April 6, 2009, Secretary of Defense Robert Gates announced a number of recommendations
he was making for the FY2010 defense budget. One of these was to shift procurement of carriers
to five-year intervals. This recommendation effectively deferred the scheduled procurement of
CVN-79 from FY2012 to FY2013, and the scheduled procurement of CVN-80 from FY2016 to
FY2018. Secretary of Defense Robert Gates stated on April 6, 2009, that shifting carrier
procurement to five-year intervals would put carrier procurement on “a more fiscally sustainable
path.”1
Potential oversight issues for Congress for FY2011 for the CVN-78 program include the
following:
•
Did shifting carrier procurement to five-year intervals put carrier procurement on
a more fiscally sustainable path?
•
Where do the estimated procurement costs of CVNs 78, 79, and 80 stand in
relation to the unit procurement cost caps for the CVN-78 program that were
established by Section 122 of the FY2007 defense authorization act (H.R.
5122/P.L. 109-364 of October 17, 2006)?
•
What is the likelihood that the estimated procurement costs of CVNs 78, 79, and
80 will increase from the estimates shown in the FY2011 budget?
1
Source: Statement of Secretary of Defense Robert Gates, at April 6, 2009, news conference on his recommendations
for the FY2010 defense budget.
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Navy Ford (CVN-78) Class Aircraft Carrier Program: Background and Issues for Congress
Background
The Navy’s Aircraft Carrier Force
The Navy’s aircraft carrier force consists of 11 nuclear-powered ships—the one-of-a-kind
Enterprise (CVN-65) and 10 Nimitz-class ships (CVNs 68 through 77). The most recently
commissioned carrier, the George H. W. Bush (CVN-77), the final Nimitz-class ship, was
procured in FY2001 and commissioned into service on January 10, 2009.2 CVN-77 replaced the
Kitty Hawk (CV-63), which was the Navy’s last remaining conventionally powered carrier. 3
Aircraft Carrier Construction Industrial Base
All U.S. aircraft carriers procured since FY1958 have been built by the Newport News, VA,
shipyard that forms part of Northrop Grumman Shipbuilding (NGSB). NGSB’s Newport News
yard is the only U.S. shipyard that can build large-deck, nuclear-powered aircraft carriers. The
aircraft carrier construction industrial base also includes hundreds of subcontractors and suppliers
in dozens of states.
Gerald R. Ford (CVN-78) Class Program
The Gerald R. Ford (CVN-78) class carrier design is the successor to the Nimitz-class carrier
design.4 Compared to the Nimitz-class design, the Ford-class design will incorporate several
improvements, including an ability to generate substantially more aircraft sorties per day and
features permitting the ship to be operated by several hundred fewer sailors than a Nimitz-class
ship, significantly reducing life-cycle operating and support costs. Navy plans call for procuring
at least three Ford-class carriers—CVN-78, CVN-79, and CVN-80.
CVN-78
CVN-78, which was named in 2007 for presidentPresident Gerald R. Ford,5 was procured in FY2008 and
is being funded with congressionally authorized four-year incremental funding in FY20082
Congress approved $4,053.7 million in FY2001 procurement funding to complete CVN-77’s then-estimated total
procurement cost of $4,974.9 million. Section 122 of the FY1998 defense authorization act (H.R. 1119/P.L. 105-85 of
November 18, 1997) limited the ship’s procurement cost to $4.6 billion, plus adjustments for inflation and other
factors. The Navy testified in 2006 that with these permitted adjustments, the cost cap stood at $5.357 billion. The
Navy also testified that CVN-77’s estimated construction cost had increased to $6.057 billion, or $700 million above
the adjusted cost cap. Consequently, the Navy in 2006 requested that Congress increase the cost cap to $6.057 billion.
Congress approved this request: Section 123 of the FY2007 defense authorization act (H.R. 5122/P.L. 109-364 of
October 17, 2006), increased the cost cap for CVN-77 to $6.057 billion.
3
The Kitty Hawk was decommissioned on January 31, 2009.
4
The CVN-78 class was earlier known as the CVN-21 class, which meant nuclear-powered aircraft carrier for the 21st
century.
5
Section 1012 of the FY2007 defense authorization act (H.R. 5122/P.L. 109-364 of October 17, 2006) expressed the
sense of the Congress that CVN-78 should be named for presidentPresident Gerald R. Ford. On January 16, 2007, the Navy
announced that CVN-78 would be so named. CVN-78 and other carriers built to the same design will consequently be
referred to as Ford (CVN-78) class carriers. For further discussion of Navy ship names, see CRS Report RS22478,
Navy Ship Names: Background for Congress, by Ronald O’Rourke.
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FY2011.6 The Navy’s proposed FY2011 budget estimates the ship’s procurement cost at
$11,531.0 million (i.e., about $11.5 billion) in then-year dollars, and requests $1,731.3 million in
procurement funding as the final increment to complete this estimated procurement cost.
CVN-78 is scheduled to enter service as the replacement for Enterprise (CVN-65). The Navy
projects that there will be a 33-month period between the scheduled decommissioning of
Enterprise in November 2012 and the scheduled commissioning of CVN-78 in September 2015.
During this 33-month period, the Navy’s carrier force is to temporarily decline from 11 ships to
10 ships. Since 10 USC 5062(b) requires the Navy to maintain a force of at least 11 operational
carriers, the Navy asked Congress for a temporary waiver of 10 USC 5062(b) to accommodate
the 33-month period between the scheduled decommissioning of Enterprise and the scheduled
commissioning of CVN-78. Section 1023 of the FY2010 defense authorization act (H.R.
2647/P.L. 111-84 of October 28, 2009) authorizes the waiver and requires the Secretary of
Defense to submit a report on the operational risk of temporarily reducing the size of the carrier
force.
CVN-79
CVN-79 is scheduled for procurement in FY2013, and has received advance procurement funding
since FY2007. The Navy’s proposed FY2011 budget estimates the ship’s procurement cost at
$10,413.1 million (i.e., about $10.4 billion) in then-year dollars and requests $908.3 million in
advance procurement funding for the ship.
In the FY2009 budget, CVN-79 was scheduled to be procured in FY2012. On April 6, 2009,
Secretary of Defense Robert Gates announced a number of recommendations he was making for
the FY2010 defense budget. One of these was to shift procurement of carriers to five-year
intervals. Since CVN-78 was procured in FY2008, this recommendation effectively deferred the
scheduled procurement of CVN-79 from FY2012 to FY2013. Secretary of Defense Robert Gates
stated that shifting carrier procurement to five-year intervals would put carrier procurement on “a
more fiscally sustainable path.”7
CVN-80
CVN-80 is scheduled for procurement in FY2018, with advance procurement funding scheduled
to begin in FY2014. The Navy’s proposed FY2011 budget estimates the ship’s procurement cost
at $13,577.0 million (i.e., about $13.6 billion) in then-year dollars. Secretary of Defense Gates’
April 2009 recommendation to shift carrier procurement to five-year intervals (see above
discussion of CVN-79) effectively deferred the procurement of CVN-80 from FY2016 to
FY2018.
6
The use of four-year incremental funding is consistent with Section 121 of the FY2007 defense authorization act
(H.R. 5122/P.L. 109-364 of October 17, 2006), which granted the Navy the authority to use four-year incremental
funding for CVN-78, CVN-79, and CVN-80.
7
Source: Statement of Secretary of Defense Robert Gates, at April 6, 2009, news conference on his recommendations
for the FY2010 defense budget.
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Procurement Funding
Table 1 shows procurement funding for CVNs 78, 79, and 80. Each ship is being procured with
several years of advance procurement funding, followed by four-year incremental procurement
funding of the remainder of the ship’s cost. The funding profile for CVN-78, for example,
includes advance procurement funding in FY2001-FY2007, followed by four years of
incremental procurement funding in FY2008-FY2011.
Table 1. Procurement Funding for CVNs 78, 79, and 80
(Millions of then-year dollars, rounded to nearest tenth – figures may not add due to rounding)
FY
CVN-78
CVN-79
CVN-80
Total
FY01
21.7
0
0
21.7
FY02
135.5
0
0
135.5
FY03
395.5
0
0
395.5
FY04
1,162.9
0
0
1,162.9
FY05
623.1
0
0
623.1
FY06
618.9
0
0
618.9
FY07
735.8
52.8
0
788.6
FY08
2,685.0
123.5
0
2,808.5
FY09
2,684.6
1,210.6
0
3,895.2
FY10
737.0
482.9
0
1,219.9
FY11 (requested)
1,731.3
908.3
0
2,639.6
FY12 (projected)
0
494.8
0
494.8
FY13 (projected)
0
2,418.3
0
2,418.3
FY14 (projected)
0
3,158.5
228.1
3,386.6
FY15 (projected)
0
760.7
1,523.8
2,284.5
Source: FY2009, FY2010, and FY2011Navy budget submissions.
Note: Figures may not add due to rounding.
Increase in Estimated Unit Procurement Costs
As shown in Table 2, the estimated procurement costs of CVNs 78, 79, and 80 in the FY2011
budget submission are 10.3%, 13.3%, and 26.7% higher, respectively, than in then-year dollars than
those in the FY2009
budget submission. budget submission.8
8
The Congressional Budget Office (CBO) in 2008 and the Government Accountability Office (GAO) in 2007
questioned the accuracy of the Navy’s cost estimate for CVN-78. CBO reported in June 2008 that it estimated that
CVN-78 would cost $11.2 billion in constant FY2009 dollars, or about $900 million more than the Navy’s estimate of
$10.3 billion in constant FY2009 dollars, and that if “CVN-78 experienced cost growth similar to that of other lead
ships that the Navy has purchased in the past 10 years, costs could be much higher still.” CBO also reported that,
although the Navy publicly expressed confidence in its cost estimate for CVN-78, the Navy had assigned a confidence
level of less than 50% to its estimate, meaning that the Navy believed there was more than a 50% chance that the
estimate would be exceeded. (Congressional Budget Office, Resource Implications of the Navy’s Fiscal Year 2009
(continued...)
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Table 2. Estimated Procurement Costs of CVNs 78, 79, and 80
(As shown in FY2009, FY2010, and FY2011 budgets, in millions of then-year dollars)
Budget
CVN-78
FY09 budget
CVN-79
CVN-80
Estimated
procurement
cost
Scheduled
fiscal year of
procurement
Estimated
procurement
cost
Scheduled
fiscal year of
procurement
Estimated
procurement
cost
Scheduled
fiscal year of
procurement
10,457.9
FY08
9,191.6
FY12
10,716.8
FY16
FY13b
n/aa
FY18b
FY13
13,577.0
FY18
FY10 budget
10,845.8
FY08
n/aa
FY11 budget
11,531.0
FY08
10,413.1
% increase:
FY09 budget
to FY10 budget
3.7
n/a
n/a
FY10 budget to
FY11 budget
6.3
n/a
n/a
FY09 budget to
FY11 budget
10.3
13.3
26.7
Source: FY2009, FY2010, and FY2011Navy budget submissions.
a.
n/a means not available –; the FY2010 budget submission did not show estimated procurement costs for
CVNs 79 and 80.
b.
The FY2010 budget submission did not show scheduled years of procurement for CVNs 79 and 80; the
dates shown here for the FY2010 budget submission are inferred from the shift to five-year intervals for
procuring carriers that was announced by Secretary of Defense Gates in his April 6, 2009, news conference
regarding recommendations for the FY2010 defense budget.
The increases in the estimated procurement costs of CVNs 78, 79, and 80 since the FY2009
budget submission have at least four potential causes:
•
one additional year of inflation being incorporated into the cost of CVN-79 as a
result of its scheduled procurement being deferred from FY2012 to FY2013, and
(...continued)
Shipbuilding Plan, June 9, 2008, p. 20.) GAO reported in August 2007 that:
Costs for CVN 78 will likely exceed the budget for several reasons. First, the Navy’s cost estimate,
which underpins the budget, is optimistic. For example, the Navy assumes that CVN 78 will be
built with fewer labor hours than were needed for the previous two carriers. Second, the Navy’s
target cost for ship construction may not be achievable. The shipbuilder’s initial cost estimate for
construction was 22 percent higher than the Navy’s cost target, which was based on the budget.
Although the Navy and the shipbuilder are working on ways to reduce costs, the actual costs to
build the ship will likely increase above the Navy’s target. Third, the Navy’s ability to manage
issues that affect cost suffers from insufficient cost surveillance. Without effective cost
surveillance, the Navy will not be able to identify early signs of cost growth and take necessary
corrective action.
(Government Accountability Office, Defense Acquisitions[:] Navy Faces Challenges Constructing
the Aircraft Carrier Gerald R. Ford within Budget, GAO-07-866, August 2007, summary page. See
also Government Accountability Office, Defense Acquisitions[:] Realistic Business Cases Needed
to Execute Navy Shipbuilding Programs, Statement of Paul L. Francis, Director, Acquisition and
Sourcing Management Team, Testimony Before the Subcommittee on Seapower and Expeditionary
Forces, Committee on Armed Services, House of Representatives, July 24, 2007 (GAO-07-943T),
p. 15.)
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two years of additional inflation being incorporated into the cost of CVN-80 as a
result of its scheduled procurement being deferred from FY2016 to FY2018;
•
increases in projected annual rates of inflation;
•
higher estimates of real (i.e., inflation-adjusted) material costs, real labor rates, or
labor hours (given a certain position on the production learning curve) for
building CVN-78 class carriers; and
•
increased costs due to loss of learning and reduced spreading of fixed overhead
costs resulting from shifting to five-year intervals for procuring carriers.
Procurement Cost Cap
Section 122 of the FY2007 defense authorization act (H.R. 5122/P.L. 109-364 of October 17,
2006) established a procurement cost cap for CVN-78 of $10.5 billion, plus adjustments for
inflation and other factors, and a procurement cost cap for subsequent Ford-class carriers of $8.1
billion each, plus adjustments for inflation and other factors. The conference report (H.Rept. 109702 of September 29, 2006) on P.L. 109-364 discusses Section 122 on pages 551-552.
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Issues for Congress
Potential oversight issues for Congress for FY2011 for the CVN-78 program include the
following:
•
Did shifting carrier procurement to five-year intervals put carrier procurement on
a more fiscally sustainable path?
•
Where do the estimated procurement costs of CVNs 78, 79, and 80 stand in
relation to the unit procurement cost caps for the CVN-78 program that were
established by Section 122 of the FY2007 defense authorization act (H.R.
5122/P.L. 109-364 of October 17, 2006)?
•
What is the likelihood that the estimated procurement cost of CVN-78, CVN-79,
or CVN-80 will increase from the estimates shown in the FY2011 budget?
Each of these issues is discussed below.
Shift to Five-Year Intervals: A More Fiscally Sustainable Path?
As mentioned earlier, when Secretary of Defense Gates announced on April 6, 2009, that he was
recommending that carrier procurement be shifted to five-year intervals, he stated that this would
put carrier procurement on “a more fiscally sustainable path.” This was interpreted as meaning
that shifting to five-year intervals (compared to a previous combination of four- and five-year
intervals in
previous Navy 30-year shipbuilding plans) would reduce the average amount of funding
required required
each year for procuring carriers.
As a simplified notional example, if carriers are assumed to cost $10 billion each, then shifting
from a four-year interval to a five-year interval would reduce the average amount of carrier
procurement funding needed each year from $2.5 billion to $2.0 billion, a reduction of $500
million per year.
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This simplified notional example, however, assumes that shifting from four- to five-year intervals
does not by itself cause an increase in the procurement cost of the carriers. Increasing the
procurement interval could by itself increase the procurement cost of the carriers by causing
reduced learning-curve benefits (i.e., loss of learning) from one carrier to the next, and by
reducing the spreading of fixed overhead costs at the Newport News shipyard and at supplier
firms. An increase in carrier procurement costs due to such effects would offset at least some of
the reduction in the average amount of carrier procurement funding needed each year that would
result from shifting to five-year intervals.
Shifting to five-year intervals for procuring carriers could also increase the costs of other Navy
ship programs. NGSB’s Newport News shipyard performs mid-life nuclear refueling complex
overhauls (RCOHs) on Nimitz-class carriers, and jointly builds Virginia-class nuclear-powered
attack submarines along with another shipyard (General Dynamics’ Electric Boat Division). In
addition, vendors that make nuclear-propulsion components for carriers make analogous
components for nuclear-powered submarines. A reduced spreading of fixed costs at NGSB’s
Newport News yard and at nuclear-propulsion component vendors due to the shift to five-year
intervals for carrier procurement might thus also increase costs for Nimitz-class RCOHs and
Virginia-class submarines. Increases in costs for these programs would further offset the
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reduction in the average amount of carrier procurement funding needed each year that would
result from shifting to five-year intervals for carrier procurement.
The Navy in July 2009 estimated on a preliminary basis that increasing the carrier procurement
interval to five years could increase the procurement cost of each Virginia-class submarine by $20
million to $50 million. The Navy stated:
The Navy is currently assessing the impact of the proposed shift to 5 year centers for CVN
construction, however in general the cost per ship would increase due to workload
reallocation at the Northrop Grumman Shipbuilding (NGSB) facility in Newport News, VA.
The increased cost per ship, is due to overhead reallocation for labor and materials, includes
impacts to the shipbuilder’s cost as well as the cost impact on Government Furnished
Equipment. The actual cost increase of each ship varies, and is being evaluated as part of
FY11 budget deliberations. The preliminary expected impact to individual Virginia Class
submarines varies between $20M and $50M per hull across the program.8
Since Navy plans call for procuring two Virginia-class submarines per year starting in FY2011,
the increase for the Virginia-class program might, on this basis, be $40 million to $100 million
per year in FY2011 and subsequent years.
Potential key oversight questions for Congress for FY2011 include the following:
•
How much of the increase since the FY2009 budget submission in the estimated
procurement costs of CVNs 78, 79, and 80 (see Table 2) is due to the shift to
five-year intervals for procuring carriers?
•
How do potential increases in the costs of CVN-78 class aircraft carriers, Nimitzclass RCOHs, and Virginia-class submarines caused by the shift to five-year
intervals for procuring carriers affect the calculation of the net change in average
annual funding requirements that results from shifting carrier procurement to
five-year intervals?
A May 2009 Northrop Grumman Shipbuilding statement on the cost impact of shifting to fiveyear intervals for procuring carriers states:
One element of the announcement by the Secretary of Defense last week was to shift from
four (4) years to five (5) years between construction start for each new Ford Class carrier.
Past Northrop Grumman Shipbuilding experience with carrier new construction has shown
that the optimum time between carrier construction is less than 4 years. This allows the most
efficient flow of the work force from one ship to the next, and facilitates a learning curve for
carriers. Moving to five (5) year intervals between starts will require the shipyard to suboptimize manning level sequencing and result in added trade training, loss of learning, and
added startup costs.
Increasing the time between carrier construction can have a large impact on the supplier
base, driving cost increases of 5-10 percent, or higher in some cases, above normal
escalation. Material costs of suppliers who provide similar components to other Navy
programs currently under contract will also experience cost growth. Some equipment
suppliers can be expected to exit the market as a result of the additional year with the
expense of component requalification being realized.
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Finally, the decrease in production labor volume on an annual basis, created by the increase
in the time interval between carrier construction starts will increase the cost to other
programs in the yard. This applies to work already under contract, namely Virginia class
submarines (VCS) Block 2 and Block 3, and CVN 78 predominately; and for future work not
yet under contract, namely Carrier RCOH’s, CVN79 and follow-on Ford class carrier
construction, and later Blocks of VCS. The impact to work already under contract is
expected to be in the range of $100M of cost growth. We also expect cost increases for
future contracts yet to be priced. Conservative projections of the shipbuilder cost impact to
8
Navy information paper dated July 15, 2009, on the subject “5 Year Centers for CVN, Impact on VIRGINIA Class,”
provided to CRS by Navy Office of Legislative Affairs.
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CVN 79 and CVN80 for the one year delay will be on the order of a 9-15 percent cost
increase.9
Potential key oversight questions for Congress for FY2011 include the following:
•
How much of the increase since the FY2009 budget submission in the estimated
procurement costs of CVNs 78, 79, and 80 (see Table 2) is due to the shift to
five-year intervals for procuring carriers?
•
How do potential increases in the costs of CVN-78 class aircraft carriers, Nimitzclass RCOHs, and Virginia-class submarines caused by the shift to five-year
intervals for procuring carriers affect the calculation of the net change in average
annual funding requirements that results from shifting carrier procurement to
five-year intervals?
CVN 79 and CVN80 for the one year delay will be on the order of a 9-15 percent cost
increase.9
A March 2010 Government Accountability Office (GAO) report stated that if carrier procurement
were shifted to five-year intervals, “the fabrication start date for CVN 80 will be delayed by 2
years, which will increase the amount of shipyard overhead costs paid under the CVN 79
contract.”10
Section 126 of the FY2010 defense authorization act (H.R. 2647/P.L. 111-84 of October 28,
2009) requiresrequired the Secretary of the Navy to submit a report to the congressional defense
committees on the effects of using a five-year interval for the construction of Ford-class aircraft
carriers. The text of Section 126 is as follows:
SEC. 126. FORD-CLASS AIRCRAFT CARRIER REPORT.
Not later than February 1, 2010, the Secretary of the Navy shall submit to the congressional
defense committees a report on the effects of using a five-year interval for the construction of
Ford-class aircraft carriers. The report shall include, at a minimum, an assessment of the
effects of such five-year interval on the following:
(1) With respect to the supplier base—
(A) the viability of the base, including suppliers exiting the market or other potential
reductions in competition; and
(B) cost increases to the Ford-class aircraft carrier program.
(2) Training of individuals in trades related to ship construction.
(3) Loss of expertise associated with ship construction.
(4) The costs of—
(A) any additional technical support or production planning associated with the start of
construction;
(B) material and labor;
(C) overhead; and
(D) other ship construction programs, including the costs of existing and future contracts.
9
Northrop Grumman Shipbuilding statement dated May 1, 2009, entitled “NGSB Statement Regarding Extending the
Time Interval between New Build Starts For the Ford Class of Aircraft Carriers,” provided to CRS by Northrop
Grumman.
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Regarding Section 126, the conference report (H.Rept. 111-288 of October 7, 2009) on H.R.
2647/P.L. 111-84 states:
Ford-class aircraft carrier report (sec. 126)
The House bill contained a provision (sec. 122) that would require the Secretary of the Navy
to make an assessment of the cost of shifting to 5-year intervals for the construction of
aircraft carriers, including the effect of such shifting of that interval on other programs. The
House bill would have placed a limitation on the use of any funds for the aircraft carrier,
designated CVN–79, for shifting to a 5-year interval.
The Senate amendment contained no similar provision.
The Senate recedes with an amendment that would remove the limitation on the use of funds
for CVN–79.
The conferees note that a 5-year interval for aircraft carrier construction, as proposed by the
Secretary of Defense, may be the appropriate course of action for the Department of the
Navy. However, the conferees are concerned that this decision may not have been made
following a rigorous cost-benefit analysis. Therefore, the conferees expect that the Secretary
of the Navy will take no further action to preclude the ability of the Secretary to award a
construction contract for CVN–79 in fiscal year 2012 or the aircraft carrier designated CVN–
80 in fiscal year 2016, consistent with the Annual Long-Range Plan for Construction of
Naval Vessels for Fiscal Year 2009, until he completes the required assessment and fully
informs the congressional defense committees of any such a decision. (Page 680)conference report (H.Rept. 111-288 of October 7, 2009) on H.R. 2647/P.L. 111-84
stated the following regarding Section 126:
The conferees note that a 5-year interval for aircraft carrier construction, as proposed by the
Secretary of Defense, may be the appropriate course of action for the Department of the
Navy. However, the conferees are concerned that this decision may not have been made
following a rigorous cost-benefit analysis. Therefore, the conferees expect that the Secretary
of the Navy will take no further action to preclude the ability of the Secretary to award a
construction contract for CVN–79 in fiscal year 2012 or the aircraft carrier designated CVN–
80 in fiscal year 2016, consistent with the Annual Long-Range Plan for Construction of
Naval Vessels for Fiscal Year 2009, until he completes the required assessment and fully
informs the congressional defense committees of any such a decision. (Page 680)
The Navy submitted the report on March 4, 2010.11 The report states, among other things, that
•
“It is reasonable to assume that some vendor base inefficiencies, in addition to
inflation may occur by increasing CVN build intervals to five years.”
•
“While a five-year interval between carrier construction starts will result in
potential inefficiencies and gaps for specific carrier construction trade skills, the
Navy plans to closely manage the transition to 5-year centers to minimize the
impact of this change on training of individuals required to support ship
construction.”
•
“The Navy estimated that a four-year build interval would maximize the
opportunity to achieve labor efficiencies due to learning. A five-year build
9
Northrop Grumman Shipbuilding statement dated May 1, 2009, entitled “NGSB Statement Regarding Extending the
Time Interval between New Build Starts For the Ford Class of Aircraft Carriers,” provided to CRS by Northrop
Grumman.
10
Government Accountability Office, Defense Acquisitions[:] Assessments of Selected Weapon Programs, GAO-10388SP, March 2010, p. 54.
11
This is the date of the cover letters to the congressional recipients. The report itself has a cover date of February
2010.
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interval reduces this opportunity; however, the overall impact for loss of learning
associated with a shift to five-year centers is manageable through Advance
Procurement and Advance Construction.”
•
“The Navy assessed the NIMITZ Class cost returns for shipbuilder labor and
material and GFE to determine the correlation between these cost elements and
the number of years between carrier awards. The Navy estimates that impact to
Basic Construction is around 1.0% for CVN 79 and CVN 80.”
•
“The change to five-year build intervals results in an overhead decrease in direct
labor workload for aircraft carrier construction, thereby causing the overhead
rates to increase proportionately. The Navy estimates the construction portion
increase is less than 1% each for CVN 78, CVN 79 and CVN 80.”
•
“The impact of changing the interval between carrier awards to the VIRGINIA
Class submarine current Block II and Block III contracts is estimated to be $3050 million per hull.”12
The report does not provide an overall dollar calculation of how much of the increase since the
FY2009 budget submission in the estimated procurement costs of CVNs 78, 79, and 80 is due to
the shift to five-year intervals for procuring carriers. Virginia-class submarines are scheduled to
be procured at a rate of two ships per year starting FY2011. If the cost increase of $30 million to
$50 million for each Virginia-class boat cited in the Navy’s report holds for Virginia-class boats
procured in FY2011 and subsequent years, then the shift to five-year intervals for procuring
carriers would increase Virginia-class procurement costs by $60 million to $100 million per year.
For the text of the Navy’s report, see Appendix A.
Estimated Procurement Costs in Relation to Procurement Cost Cap
A second potential oversight issue for Congress for the CVN-78 program concerns where the
estimated procurement costs of CVNs 78, 79, and 80 as shown in the FY2011 budget stand in
relation to the unit procurement cost caps for the CVN-78 program that were established by
Section 122 of the FY2007 defense authorization act (H.R. 5122/P.L. 109-364 of October 17,
2006). As mentioned earlier (see “Procurement Cost Cap” in the “Background” section), the cost
caps established by Section 122 can be adjusted upward to take into account inflation and other
factors.
Potential for Additional Growth in Estimated Procurement Costs
A third potential oversight issue for Congress for the CVN-78 program concerns the likelihood
that the estimated procurement costs of CVNs 78, 79, or 80 will increase from the estimates
shown in the FY2011 budget. One possible source of additional cost growth in CVN-78 is new
technologies that are being developed for the ship, particularly the electromagnetic aircraft launch
system (EMALS)—an electromagnetic (as opposed to the traditional steam-powered) aircraft
catapult. Problems in developing EMALS or other technologies could delay the ship’s completion
and increase its development and/or procurement cost. GAO reported in March 2009 that:
Nine of the CVN 21 program’s 14 critical technologies are not yet fully mature. Of these
technologies, EMALS, the advanced arresting gear, and the dual band radar present the
greatest risk to the ship’s cost and schedule. Problems during EMALS development have
already resulted in cost growth and schedule delays. In order to meet CVN 78’s delivery
date, the Navy adopted a strategy that will test, produce, and ultimately install EMALS with
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a high degree of concurrency. In September 2008, the contractor completed the first round of
high-cycle testing, gaining confidence in the performance of the generator—a source of past
problems. Contractor-led integrated land-based system testing will not be complete until the
end of fiscal year 2011—2-years later than estimated in December 2007. Assuming no
further delays, EMALS will not demonstrate full performance of a shipboard ready system
until at least 7 months after installation on CVN 78 has begun. The advanced arresting gear
has completed early verification tests that proved the system’s concept. Integrated land-based
testing with both simulated and live aircraft has slipped by one year since last year’s
assessment and is now scheduled for 2010. The Navy recently postponed delivery of the
arresting gear to the shipyard. Consequently, the shipbuilder will not install the gear prior to
laying the flight deck—a less optimal and more costly approach to building the ship. The
dual band radar—which includes the volume search and multifunction radars—is being
developed as part of the DDG 1000 program. While the multifunction radar has been tested
at sea, considerable testing remains for the volume search radar. Land-based tests of the
volume search radar prototype will not be completed until May 2009—2 years later than
planned. Upcoming land-based tests will be conducted at a lower voltage than needed to
meet requirements—and without the radome (the radar’s composite shield). Full power
output will not be tested on a complete system until 2012. Tests of carrier-specific
functionality will not conclude until shortly before shipyard delivery in 2013 leaving little
time to resolve problems before ship installation....
The program has faced challenges in maintaining its design schedule due to delays in the
receipt of technical information on EMALS and the advanced arresting gear; however, the
Navy believes this issue has been largely resolved. The shipbuilder anticipates changes to
CVN 78’s design based on the results of EMALS testing....
A February 2008 program assessment recommended a number of changes to the EMALS
program to improve performance. The Navy re-planned the test program and changed the
management approach. The CVN 21 program office is now responsible for overseeing
EMALS production and ship integration, rather than the Naval Air Systems Command. In
addition, EMALS will no longer be provided as government-purchased equipment. Instead,
the shipbuilder will purchase EMALS, giving it a more direct role in managing the
integration on CVN 78. The cost impact of this change has not been finalized.10
Navy officials testified on April 1, 2009, that they were reviewing the EMALS situation and that
“We do not see that it will have an impact on the actual schedule of the carrier at this point in
time.”11 On April 16, 2009, it was reported that the Navy had decided, based on its review of the
situation, to continue with the plan to build CVN-78 with EMALS.12
10
Government Accountability Office, Defense Acquisitions[:] Assessments of Selected Weapon Programs, GAO-09326SP, March 2009, pp. 68.
11
They stated that “We're looking at all options. There has been cost growth to the EMALS system. We're looking at—
at the total cost of acquisition and life cycle for EMALS and steam [catapults]. We're looking at schedule and what
does—does that do if we went back to steam [catapults] on CVN-78. What would that do to schedules? We’re in the
process of getting information from industry so that we can make an informed decision and we’ve had independent
technical looks at it within the department.” They also stated that “The technology itself is not new, but it’s the
application in the aircraft carrier [that’s new]. And so there is a lot of rigor we want to go through for component
testing so that we understand the reliability of the components as well as system testing. We are in the component
testing phase right now. We have seen minor issues in testing which we've been able to resolve. But there is some
concurrency with the schedules [for EMALS development and CVN-78 construction] and that’s one of the things we
want to evaluate going forward. Is the [EMALS] development schedule still ongoing? How do we—how do we
mitigate the risk to this carrier schedule so that that does (inaudible). Right now, we don’t see an impact to the carrier
schedule.” The Navy officials testified that they were waiting to receive an estimate from Northrop Grumman Newport
News on the potential cost impact of shifting to steam catapults for CVN-78. They stated that: “Right now, Mr.
(continued...)
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The EMALS development effort was the subject of a July 16, 2009, hearing before the Seapower
and Expeditionary Forces subcommittee of the House Armed Services Committee. Materials from
this hearing are presented in the Appendix.
Legislative Activity for FY2011
The Navy’s proposed FY2011 budget was submitted to Congress on February 1, 2010. The
budget requests $1,731.3 million in procurement funding for CVN-78 and $908.3 million in
advance procurement funding for CVN-79.
(...continued)
Chairman, the plan is—is to go to EMALS, or to continue with Electromagnetic Aircraft Launching System. That’s
going to be briefed to the CNO and the acting secretary here in the next week to 10 days.” (Source: Transcript of
spoken testimony of Allison Stiller, Deputy Assistant Secretary of the Navy [Ship Programs], and [for the final quote]
Vice Admiral Bernard McCullough, Deputy Chief of Naval Operations for Integration of Capabilities and Resources, at
an April 1, 2009, hearing on Navy shipbuilding before the Defense subcommittee of the House Appropriations
Committee. The comments by Stiller and McCullough came in response to questions on the EMALS issue posed by
Representative John Murtha, the subcommittee chairman.)
For press reports during this period discussing the EMALS issue, see Peter Frost, “Questions Swirl About New Aircraft
Catapult Systems For Next Carrier,” DailyPress.com (Newport News, VA), March 31, 2009; Emelie Rutherford and
Geoff Fein, “Navy Exploring Impact of Switching From EMALS To Steam Catapults For CVN-78,” Defense Daily,
April 2, 2009: 7-8; Rebekah Gordon, “Navy Examining Impacts of Switching to Steam Catapult on CVN-78,” Inside
the Navy, April 6, 2009; and Christopher P. Cavas, “Next-Gen Carrier Launch System Could Be Shelved,”
DefenseNews.com, April 6, 2009.
12
A Navy spokesman stated: “This decision is based on completion of an extensive review of the EMALS program,
which included consideration of many significant factors and represents a balance between cost, schedule, technical
performance, and consideration of the risks to each.” (Andrew Tilghman, “Navy to Press on With EMALS,”
NavyTimes,com, April 16, 2009.) Another Navy spokesman stated: “To ensure the program delivers on schedule, while
limiting cost growth, the Navy is entering into detailed, fixed-price contract negotiations for procurement of
production-level equipment while implementing additional risk management efforts associated with completion of
development testing, production planning, installation and test.” (Geoff Fein, “Navy Stands By EMALS As Aircraft
Launch System For CVN-78,” Defense Daily, April 17, 2009: 3-4.)
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Appendix
12
Department of the Navy, Report to Congress on Effects of Five-year Build Intervals for Force Class Aircraft
Carriers, February 2010, 5 pp. Copy provided to CRS by Navy Office of legislative Affairs on April 8, 2010.
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and increase its development and/or procurement cost. GAO reported the following in March
2010 regarding the status of the CVN-78 program, including the potential for cost growth:
Technology Maturity
The CVN 21 program has consistently demonstrated the maturity of its critical technologies
later than recommended by best practices. Only 4 of the program’s 19 critical technologies
were mature when the construction preparation contract was awarded in 2004. Of the
program’s 13 current critical technologies, 8 have not been demonstrated in a realistic
environment. Three of these technologies—EMALS, advanced arresting gear, and dual band
radar-present the greatest risk to the ship’s cost and schedule. While CVN 21 program
officials stated that the EMALS program is on schedule to deliver material to the shipyard
when it is needed for construction, concurrent EMALS testing and ship construction
continue to present cost and schedule risks to the program. The Navy completed a second
phase of testing for the EMALS generator—an area of prior concern—and the first phase of
testing for the EMALS launch motor in 2009. As a result of the tests, the program identified
design changes that are necessary to improve the performance of EMALS, but add cost and
schedule risk to the program. The Navy plans to test EMALS with actual aircraft in summer
2010. The advanced arresting gear includes seven major subsystems. Programs officials
expect that six of the subsystems will be mature after analyzing data from a recent reliability
test. The remaining subsystem—control system software—will remain immature until
integrated land-based testing with actual aircraft occurs in fiscal year 2012. This testing will
overlap with the first arresting gear deliveries to the shipyard. Testing of carrier specific dual
band radar functionality is scheduled to conclude in fiscal year 2012. Dual band radar
equipment will be delivered incrementally from fiscal years 2012 through 2014.
Design Maturity
The CVN 78 began construction in September 2008 without a complete product model. The
program began production with approximately 76 percent of the 3D product model complete.
In November 2009, the contractor completed the detail phase in the 3D product model.
However, program officials reported that while the 3D product model is complete, some
product model work will continue up to and after delivery of CVN 78. This additional work
includes making design adjustments for planned just-in-time technology insertions or for
unplanned delays in contractor or government furnished information.
Production Maturity
The Navy awarded the contract for CVN 78 construction in September 2008. Construction of
approximately 50 percent of the ship’s units are complete. According to program officials,
these units are low on the ship and only account for 9 percent of the ship’s production hours.
The Navy awarded a not-to-exceed fixed-price production contract to General Atomics for
EMALS and the advanced arresting gear in 2009. At the time of award, the contract price
had not been finalized. The Navy expects to finalize the price of this contract in March 2010.
Other Program Issues
The Navy plans to use the dual band radar on both CVN 21 carriers and DDG 1000
destroyers. Given the recent decision to truncate the DDG 1000 program, CVN 21 program
officials stated that the dual band radar production line may be idle for up to 4 years before
production begins for CVN 79. The cost of the CVN 79 dual band radar could increase due
to the costs associated with restarting the production line. In addition, the fiscal year 2010
President’s Budget recommends moving the carrier to a 5-year build cycle. If adopted, the
fabrication start date for CVN 80 will be delayed by 2 years, which will increase the amount
of shipyard overhead costs paid under the CVN 79 contract.
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Program Office Comments
The program office generally concurs with the assessment that concurrent technology
development, particularly regarding EMALS, the advanced arresting gear, and the dual-band
radar system, presents the highest programmatic risk. Officials stated that all critical
technologies are being aggressively managed through established processes to mitigate cost,
schedule, and development risk and remain on track to meet required shipbuilder in-yard
need dates. 13
The EMALS development effort was the subject of a July 16, 2009, hearing before the Seapower
and Expeditionary Forces subcommittee of the House Armed Services Committee. Materials from
this hearing are presented in the Appendix B.
Legislative Activity for FY2011
The Navy’s proposed FY2011 budget was submitted to Congress on February 1, 2010. The
budget requests $1,731.3 million in procurement funding for CVN-78 and $908.3 million in
advance procurement funding for CVN-79.
13
Government Accountability Office, Defense Acquisitions[:] Assessments of Selected Weapon Programs, GAO-10388SP, March 2010, p. 54.
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Appendix A. Text of Navy Report on Effects of
Shifting to Five-Year Intervals
The following is the text of the Navy’s report on the effects of shifting to five-year intervals for
procuring carriers.14
I . REPORT REQUIREMENTS
Section 126 of the National Defense Authorization Act for Fiscal Year 2010, P.L. 111-84,
(hereinafter “Section 126”) requires that a report be submitted to Congress no later than
February 1, 2010 assessing the effects of using a five-year interval for the construction of
Gerald R. Ford Class aircraft carriers. The assessment shall include impacts with respect to
four specified areas resulting from this change in acquisition strategy. This report fulfills the
Navy’s reporting obligation pursuant to Section 126. The language of this section is as
follows:
“Not later than February 1, 2010, the Secretary of the Navy shall submit to the congressional
defense committees a report on the effects of using a five-year interval for the construction of
FORD Class aircraft carriers. The report shall include, at a minimum, an assessment of the
effects of such five-year interval on the following:
(1) With respect to the supplier base(A) the viability of the base, including suppliers exiting the market or other potential
reductions in competition; and
(B) cost increases to the Ford Class aircraft carrier program.
(2) Training of individuals in trades related to ship construction.
(3) Loss of expertise associated with ship construction.
(4) The costs of—
(A) any additional technical support or production planning associated with the start of
construction;
(B) material and labor;
(C) overhead; and
(D) other ship construction programs, including the costs of existing and future contracts.”
II. ASSESSMENT DISCUSSION
On April 6, 2009, Secretary of Defense announced within a Defense Budget
Recommendation Statement that the Navy’s CVN 21 aircraft carrier program (Ford Class)
14
Department of the Navy, Report to Congress on Effects of Five-year Build Intervals for Force Class Aircraft
Carriers, February 2010, 5 pp. The cover letters sent with the report are dated March 4, 2010. Copy of report provided
to CRS by Navy Office of legislative Affairs on April 8, 2010.
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would shift from a four-year to a five-year build cycle, thereby placing the program on a
more fiscally sustainable path. This will result in 10 aircraft carriers after 2040. The five-year
build cycle allows for a balance between carrier build-rate and inventory, and a more
effective use of overall Shipbuilding and Conversion, Navy funding between carrier
programs and other ship, submarine, support, and amphibious ship recapitalization plans.
1.
IMPACT TO SUPPLIER BASE
It has been the Navy’s experience that longstanding aircraft carrier suppliers have generally
responded to ship construction schedule shifts and extended workload gaps without
widespread disruption or loss of continuity for critical products from most vendors. For
example, the interval between procurement of CVN 77 and CVN 78 was originally planned
to be five years, but grew to seven years. There was no significant impact on the
shipbuilder’s procurement of components to support ship construction.
In addition, for a 2009 Navy-funded RAND Corporation study, RAND sought comments
from 46 major suppliers regarding the impact of moving the CVN 79 award date to Fiscal
Year 2013. The suppliers chosen were those deemed critical to aircraft carrier construction
by the shipbuilder. The majority of the 18 major suppliers who responded indicated that less
than 20% of their total annual revenues were from aircraft carrier construction, and nearly all
responding vendors indicated they provide services to other Navy ship platforms including
submarines, surface combatants, and aircraft carrier Refueling and Complex Overhauls
(RCOH). It is reasonable to assume that some vendor base inefficiencies, in addition to
inflation may occur by increasing CVN build intervals to five years. Efforts by the Navy to
drive cross-platform commonality of parts and proactively manage obsolescence also
mitigate the risk of economic dependence. As a result, economic dependence on Ford Class
aircraft carrier order frequency for the majority of the vendor industrial base is projected to
be low. The Navy plans to continue to closely manage this industrial base to minimize
impacts and costs.
2-3. IMPACT TO TRAINING AND EXPERTISE
The construction start of the Ford Class coincides with an overall ramp-up in shipyard
production efforts in the Fiscal Year 2010-Fiscal Year 2013 timeframe due to an increase to
two per year VIRGINIA Class submarines, more consistent carrier build frequencies,
sustained NIMITZ Class RCOH program, and the start of CVN 65 inactivation. While a fiveyear interval between carrier construction starts will result in potential inefficiencies and
gaps for specific carrier construction trade skills, the Navy plans to closely manage the
transition to 5- year centers to minimize the impact of this change on training of individuals
required to support ship construction.
The Navy estimated that a four-year build interval would maximize the opportunity to
achieve labor efficiencies due to learning. A five-year build interval reduces this opportunity;
however, the overall impact for loss of learning associated with a shift to five-year centers is
manageable through Advance Procurement and Advance Construction.
4.
COST IMPACTS
There are three primary sources of cost impact associated with increasing the intervals
between carrier construction starts - inflation, inefficiencies, and overhead impacts. The
effects of these are addressed in paragraphs 4A, 4B, and 4C for CVN 79 and CVN 80. For
other work at the shipyard, the collective impacts of the three sources are provided in
paragraph 4D.
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A. Cost of any Additional Technical Support or Production Planning Associated with the
Start of Construction
Since CVN 79 advance planning and procurement commenced prior to the five-year build
interval decision, CVN 79 technical support and production planning will be adjusted for the
five-year interval. The Construction Preparation contract will be extended by one year to
meet the construction award shift from Fiscal Year 2012 to Fiscal Year 2013. With the
exception of costs associated with an additional year of planning amounting to about 1%,
there should be no other fiscal implications with this extension.
B. Cost of Material and Labor
A five-year build interval imposes one additional year of inflation on the CVN 79 and two
additional years on CVN 80. The Navy estimates a 3% impact on the Basic Construction
Cost and Government Furnished Equipment (GFE) for CVN 79 and an 8% impact to CVN
80. This inflation impact will be addressed in the budget request for these two ships.
The Navy assessed the NIMITZ Class cost returns for shipbuilder labor and material and
GFE to determine the correlation between these cost elements and the number of years
between carrier awards. The Navy estimates that impact to Basic Construction is around
1.0% for CVN 79 and CVN 80.
C. Cost of Overhead
Overhead rates (percentage of direct labor) at the shipbuilder and major suppliers are directly
correlated to the projected direct labor workload. The change to five-year build intervals
results in an overall decrease in direct labor workload for aircraft carrier construction,
thereby causing the overhead rates to increase proportionally. The Navy estimates the
construction portion increase is less than 1% each for CVN 78, CVN 79 and CVN 80. The
Navy will be working with the shipbuilder on managing overhead in the shipyard.
D. Costs of Other Ship Construction Programs, Including the Costs of Existing and Future
Contracts
The impact of changing the interval between carrier awards to the VIRGINIA Class
submarine current Block II and Block III contracts is estimated to be $30-50 million per hull.
The increase in costs is associated with workload reallocatjon in the shipbuilding industrial
base.
III. REPORT SUMMARY
This report, as required by Section 126 of P.L. 111-84, assesses the impacts resulting from
the shift of the acquisition schedule to five-year intervals for Ford Class aircraft carriers. A
review of available information indicates there will be a minimal impact on the supplier base
if closely managed. Since the shipyard has ample opportunity to plan for five-year intervals,
any impacts to worker training or trade skill inefficiencies, and workload planning is
assessed to be manageable.
The change from a four-year to a five-year build interval will result in a unit cost increase to
the Ford Class carriers that have funding requirements in the Future Years Defense Program.
The Navy is continuing to refine the estimated impacts and will adjust future budget
submissions. These increases are due primarily to inflation, inefficiencies, and overhead
adjustments that will be factored into the overall budget request for each ship. Despite the
inflation adjusted costs per ship, the change in build interval allows carrier annual funding
requirements to be spread over longer periods of time, maintains a steady state 11 carrier
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force structure until after 2040, and facilitates a reduced average annual aircraft carrier
funding requirement.
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Appendix B. July 16, 2009, Hearing on EMALS
This appendix presents materials from a July 16, 2009, hearing on the EMALS development
effort before the Seapower and Expeditionary Forces subcommittee of the House Armed Services
Committee.
Chairman’s Opening Statement
The text of the opening statement of Representative Gene Taylor, the ranking member of the
subcommittee, is as follows:
The subcommittee will come to order.
Today the subcommittee meets in open session to receive testimony from officials of the
United States Navy on the current status of the Electromagnetic Aircraft Launch System, or
EMALS. The EMALS system is an electromagnetic catapult designed for use on the Fordclass aircraft carriers. If the system delivers its full promised capability, the Ford-class
carriers will have a catapult system which is far superior to the steam catapults of the Nimitzclass. The operational advantages are increased launch envelopes, that is, the ability to
launch both heavier and lighter aircraft than steam catapaults, higher sortie rates, reduced
weight, reduced mechanical complexity, reduced maintenance, and reduced carrier manning.
Unfortunately, what brings us together today is that the development of this program is so far
behind schedule that it threatens the delivery date for the USS Ford. For the record, I would
like to briefly summarize the history of this program and the current status:
EMALS was a core capability in the design of the next generation aircraft carrier, which the
Navy called “CVN 21” for “21th century” technology, and which eventually became the USS
Ford (CVN 78) class. In 1999 the Navy entered into technology demonstration contracts with
two different contractors; General Atomics and Northrop Grumman Marine Systems to
develop prototypes for an electromagnetic catapult. By 2004 the Navy down-selected to the
system proposed by General Atomics and entered into a System Design and Development
contract, or SDD contract, to build a full scale, ship representative prototype at the Navy test
facility in Lakehurst, New Jersey. That prototype was contracted to be completed in time for
testing to begin in 2007, testing was to have concluded after two years and presumably the
lessons learned from the test program would influence the final production system which
would be shipped to the carrier construction yard for erection into the ship. It is now July
2009 and full scale testing has yet to begin at the Lakehurst facility. The Navy is now faced
with almost complete concurrency of testing and production of the first ship-set if they are to
meet the in-yard deliver dates to keep the USS Ford on schedule. There are a number of subsystems to the complete EMALS system and each subsystem has different in-yard deliver
dates, but some of those dates are as early as the summer of 2011, and to meet those dates
the production of the components or at least the ordering of the material for the components
must begin now—before full scale testing of the prototype system has begun. To be fair,
some testing has already occurred. The High Cycle Test for the Energy Storage System is
well underway, as is the Highly Accelerated Life Cycle Testing of the launch motor
segments. Those tests have identified some minor redesign issues which can be incorporated
into the production components. But until a full scale catapult launch from the prototype
occurs, questions will remain on the systems overall performance.
I have been briefed, as I believe other Members of this subcommittee have been briefed, that
the issues in completing and delivering the SDD components were a result of the contractor’s
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inexperience managing a major production effort. I find that answer unsettling because it is
the Navy’s responsibility to oversee what their contractors are doing and to identify
problems before they are problems. I will note that a little over a year and a half ago, the
contractor did put in place an entirely new management and engineering team, hiring away
proven production engineers from both General Dynamics and Northrop Grumman. This
new team seems to have righted the ship, but that ship is still in very dangerous seas.
So what we have is a program that is so essential to the carrier that if it does not work, the
nation has paid billions of dollars for an unusable ship. If the system is delayed, the carrier is
automatically delayed. And every day of delay will push the cost of that carrier higher.
This is the first in what I intend to be a series of hearings on this program over the next few
years. This is too important to not have close congressional oversight. I intend to continue
close oversight of this program until it is delivered, installed, tested, and certified for
launching naval aircraft off the deck of the USS Ford.
Our witnesses today are:
•
VADM David Architzel, Principle Deputy to Assistant Secretary Stackley
•
CAPT Randy Mahr, Program Manager for EMALS
•
CAPT Brian Antonio, Program Manager, Ford Class Aircraft Carrier
VADM Architzel is representing the Assistant Secretary as the senior acquisition executive
who is ultimately responsible for all Navy and Marine Corps acquisition programs. CAPT
Mahr, is the official whose only responsibility is this program. CAPT Antonio is responsible
for building the entire carrier—he obviously has an interest in the success of EMALS.
This year’s National Defense Authorization Act directs the Secretary of the Navy to keep
CAPT Mahr in his position until the completion of the system development testing and the
successful production of the first ship-set of components. That means the CAPT, who has
been selected to the rank of Rear Admiral, will be in place for another few years and will
have the opportunity to visit with us again on this subject.
I would now like to call on my friend from Missouri, the Ranking Member of this
subcommittee, the Honorable Todd Akin for any opening remarks he may wish to make.
Ranking Member’s Opening Statement
The text of the opening statement of Representative Todd Akin, the ranking member of the
subcommittee, is as follows:
Thank you, Mr. Chairman, and welcome to our witnesses. We appreciate your willingness to
appear before us today. As the Chairman has indicated, the Electromagnetic Launch System,
known as EMALS, is a critical part of the military’s largest and most expensive ship, the
next generation aircraft carrier. The EMALS system is important because of the capability it
delivers to the Gerald R. Ford-class carrier, allowing our Navy to increase its sortie
generation rate and the carrier to launch both heavier and lighter aircraft, in more operating
conditions, than is currently possible. This is a significant attribute, because the first of these
carriers will be in service until at least 2065, and in order to maintain its relevance, the
carrier will need to be able to launch F-35s, UAVs, and whatever else we may develop in the
meantime.
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Additionally, EMALS is important because the schedule delays and cost growth experienced
by the system have put the construction and cost of the carrier in jeopardy. As this
subcommittee has noted on multiple occasions, the scale of our investment in aircraft carrier
construction means that even small increases in cost have the potential to break the bank.
Other shipbuilding programs have recently seen cost growth of close to 200 percent. If the
carrier grows by even 10 percent, the impact is in the billions of dollars per vessel. Simply
put, the EMALS program has no room for error. It must deliver on time, or put the carrier at
risk. To get there, the EMALS program must engage in con-current development and
production of the first ship set—a practice we know well from past experience is highly
risky.
But there is some good news. The contractor has been holding to schedule since the
beginning of the year and has agreed to a fixed price production contract. The Assistant
Secretary of the Navy for Research, Development, and Acquisition got personally involved
and conducted an in-depth review of the program. Secretary Stackley has elected to proceed
with the effort, a decision that I agree with, but has taken several steps to strengthen the
management of the program. One of these steps includes lengthening the tour of the current
program manager, CAPT Mahr, who is with us today. I have often noted that one of the first
lessons I learned during my time at IBM, is that for any project to succeed, you need to have
one person who is in charge. CAPT Mahr, this subcommittee has heard many good things
about you, and your colleague CAPT Brian Antonio, the CVN 21 Program Manager. But we
will be holding you to a very high standard. This is your baby and you must deliver. The
consequences for the rest of naval shipbuilding are too great to tolerate anything less.
In conclusion, I am interested in learning more today about the contract you are putting in
place with the EMALS contractor for the production ship set, and the activities required to
conclude system development and minimize risk to the CVN 21 program going forward.
Thank you again for being here. I look forward to your testimony.
Navy Statement
Chairman Taylor, Ranking Member Akin, and distinguished members of the Subcommittee,
thank you for the opportunity to appear before you today to report on the development of the
Electromagnetic Aircraft Launch System (EMALS) for Gerald R. Ford (CVN 78) class
aircraft carriers and the Department’s plan ahead for this effort.
Steam catapults will continue to deliver the minimum required aircraft launching capability
and remain the launching system on the NIMITZ-class aircraft carrier for the next fifty years.
However, the steam catapult system limits the full potential of the inherent improved
capability of the FORD-class aircraft carrier. As modern aircraft, including the Joint Strike
Fighter, grow heavier and require higher launching end speeds, and the maintenance manhours required to maintain the readiness of the steam catapult increases, it is imperative that
the Navy continue development of a launching system with reduced manning and increased
operational availability. In response to meeting this future need, EMALS is being developed
for the CVN 78 class to replace the steam catapult system. EMALS design requirements
support the CVN 78 sortie generation rate Key Performance Parameter (KPP) through
increased reliability and system capability. It provides a higher energy launch capability as
well as an expanded launch envelope to support future airwing capabilities. EMALS is also
projected to reduce shipboard manning requirements, improve aircraft launching system
maintainability, and provide better control and more efficient application of acceleration
forces throughout the aircraft launch cycle.
EMALS development began with a competitive prototyping effort between General Atomics
(GA) and Northrop Grumman Marine Systems in 1999. The Navy down-selected to the GA
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design in 2004 following completion of approximately 1500 launch demonstration events
conducted on both competing systems. Based on the successful prototype testing, the Navy
awarded the EMALS System Development and Demonstration (SDD) contract to GA in
2005, which is scheduled to complete in early 2012.
The EMALS program is currently executing the test portions of the SDD phase and
procuring long lead time material as it begins production of the CVN 78 ship set. Near term
events such as successful completion of High Cycle Test (HCT) Phase I and commencement
of High Cycle Test (HCT) Phase II, Highly Accelerated Life Testing (HALT), as well as
start of commissioning testing for System Functional Demonstration (SFD), will validate the
system design and enable transition into production. HCT II testing of a complete power
train, with the exception of the launch motor, is ongoing at the GA Tupelo, Mississippi site.
HALT testing of the launch motor is taking place at the Naval Air Warfare Center test site in
Lakehurst, NJ. Production Readiness Reviews (PRRs) are currently ongoing to support
release of EMALS subsystem components for production. Baseline drawing packages are
projected to complete by the end of FY 2009. Full scale, full length testing of EMALS,
including the launch of manned aircraft, is scheduled to begin at Lakehurst during the
summer of 2010.
Concurrent with testing, EMALS manufacturing and production efforts began in December
2007 with the first Long Lead Time material procurements to support CVN 78 required in
yard delivery dates and will continue through 2014 for delivery of all CVN 78 ship set
components. The Navy has placed an undefinitized contract action (UCA) with a not to
exceed value with General Atomics leading to an Advanced Acquisition Fixed Price contract
for the remaining ship set material. Definitization of this contract is targeted for later this
year. The Navy’s and GA’s support for a fixed price contract reflects our collective
confidence in the EMALS’ technology maturity and capability. The contract will be based on
the EMALS performance specification and Procurement Data Packages. Specific component
production release will be tied to Production Readiness Reviews and successful completion
of specific test events. The Production Integrated Master Schedule shows the program will
meet CVN 78 production required in yard delivery dates.
As EMALS progressed through SDD tests and began the transition to production, schedule
delays and cost overruns were experienced. A series of actions aimed at improving
management of the EMALS prime and subcontractors were taken by the Navy. In late 2007,
Navy leadership initiated a three-month independent and in-depth Production Assessment
Review (PAR). The PAR provided specific recommendations for processes and leadership
improvements, which are being implemented. Most recently, senior Navy leadership
conducted a detailed assessment of the viability of continuing with EMALS or reverting to a
legacy steam catapult system for CVN 78 based on indications that schedule and cost
performance was declining. After an extensive review, the Navy re-confirmed it’s
commitment to EMALS as the CVN 78-class aircraft launching system, while implementing
additional actions to improve performance and mitigate risk.
The production contract will ensure rigorous management and oversight. In April 2004, the
Under Secretary of Defense (Acquisition, Technology and Logistics) (USD(AT&L))
established a critical technology Integrated Product Team (IPT) to maintain oversight of all
CVN 78 critical technologies, including EMALS development. Additionally, the Navy has
implemented two detailed reviews to identify needed improvements to support better
schedule and cost performance while completing technical efforts. The review of the PAR in
2008 provided a thorough assessment of GA’s ability to transition from development to
production and to support the CVN 78 production schedule. The Navy aggressively
implemented many of the PAR recommendations including leadership changes, new
program and technical governance processes, increased involvement of the shipbuilder and a
revised test program to mitigate production schedule risks. A three-star Executive
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Committee, which includes the OPNAV resource sponsor, Commanders of the Naval Sea
Systems Command and Naval Air Systems Command, and the Principal Military Deputy for
ASN RDA meet quarterly for program reviews and to provide oversight of EMALS
development. Most importantly, direct responsibility for EMALS is being executed by the
NAVAIR program manager for Aircraft Launch & Recovery Equipment (ALRE), who
reports to PEO TACAIR and COMNAVAIR to support delivery of this new program within
cost and schedule.
Issues with cost and schedule performance have created overlaps between production
component manufacturing and system level testing. Cost and schedule performance have not
been where they need to be. Recognizing this, the Navy has taken steps to better define
needed testing, improved management oversight, insisted on near term definitization of the
DCA into a fixed price contract, and increased funding to the program to cover anticipated
growth. With system level testing ongoing the potential for additional cost increases and
schedule delays remain. However, the Navy is putting additional oversight in place to
maximize performance and minimize the likelihood of overruns. Given the advantages that
EMALS is projected to afford the next generation of aircraft carriers, these actions are
essential for providing the fleet what it needs.
Component, subsystem, and system testing is identifying technical issues, retiring technical
risk, and demonstrating the capability of the EMALS. Key to the Navy’s strategy is having a
management team in place both within the Navy and at its prime contractor that is
aggressively attacking these issues and retiring risks on a schedule that supports ship
construction. We are working hard towards these ends. The management focus, review
processes and oversight that the Navy is employing are mitigating future EMALS SDD
phase technical, cost and schedule risks. The Navy will leverage management processes
established during the SDD phase by building upon these lessons learned during system
production and ship integration, including the extensive involvement of the shipbuilder in the
production and integration process. A rigorous process exists for incorporating the results of
upcoming testing in the production baseline which will mitigate cost and schedule risks of
concurrency between the SDD and production phases. The Navy has also taken steps to
include, as mentioned previously, the use of fixed price contracting where appropriate, to
control EMALS cost and schedule variances during the subsystem production phase.
Mr. Chairman, the Navy understands the concerns you and your subcommittee have
expressed, and is aggressively working to improve performance. We are implementing your
recommendations to breakout EMALS cost and performance data for separate review by
Congress, and to provide stability in the program’s key technical and management teams.
The Department is committed to delivering CVN 78 with EMALS on time and on budget.
EMALS will enable current and future generations of Naval Aviators to perform their
missions more safely, efficiently and effectively. I thank you for the opportunity to testify
and look forward to answering your questions.13
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Statement of Vice Admiral David Architzel, USN, Principal Military Deputy, Research, Development and
Acquisition, and Captain Randy Mahr, USN, Program Manager for Aircraft Launching and Recovery Equipment
(ALRE) and Captain Brian Antonio, USN, Program Manager for Future Aircraft Carrier, Before the Seapower and
Expeditionary Warfare [sic: Forces] Subcommittee of the House Armed Services Committee [Hearing] On
Electromagnetic Aircraft Launch System (EMALS}, July 16, 2009, 43 pp.
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Author Contact Information
Ronald O'Rourke
Specialist in Naval Affairs
rorourke@crs.loc.gov, 7-7610
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