Arleigh Burke Destroyers: Additional Analysis and Oversight Required to Support the Navy's Future Surface Combatant Plans

Published by the Government Accountability Office on 2012-01-24.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

               United States Government Accountability Office

GAO            Report to the Ranking Member,
               Subcommittee on Defense, Committee
               on Appropriations, House of

January 2012
               ARLEIGH BURKE
               Additional Analysis
               and Oversight
               Required to Support
               the Navy’s Future
               Surface Combatant

                                            January 2012

                                            ARLEIGH BURKE DESTROYERS
                                            Additional Analysis and Oversight Required to
                                            Support the Navy’s Future Surface Combatant Plans
Highlights of GAO-12-113, a report to the
Ranking Member, Subcommittee on Defense,
Committee on Appropriations, House of

Why GAO Did This Study                      What GAO Found
After nearly a decade and almost            The Navy relied on its 2009 Radar/Hull Study as the basis to select DDG 51 over
$10 billion in development on Zumwalt       DDG 1000 to carry the Air and Missile Defense Radar (AMDR) as its preferred
class destroyers, the Navy changed its      future surface combatant—a decision that may result in a procurement of up to
acquisition approach from procuring         43 destroyers and cost up to $80 billion over the next several decades. The
Zumwalts to restarting production of        Radar/Hull Study may not provide a sufficient analytical basis for a decision of
Arleigh Burke class destroyers (DDG         this magnitude. Specifically, the Radar/Hull Study:
51) and building a new version, known
as Flight III. As requested, GAO            •   focuses on the capability of the radars it evaluated, but does not fully
reviewed the Navy’s plans for DDG 51            evaluate the capabilities of different shipboard combat systems and ship
and missile defense capabilities by             options under consideration,
(1) evaluating how the Navy                 •   does not include a thorough trade-off analysis that would compare the
determined the most appropriate                 relative costs and benefits of different solutions under consideration or
platform to meet surface combatant              provide robust insight into all cost alternatives, and
requirements; (2) identifying and           •   assumes a significantly reduced threat environment from other Navy
analyzing differences in design, cost,          analyses, which allowed radar performance to seem more effective than it
and schedule of the restart ships               may actually be against more sophisticated threats.
compared with previous ships; and
(3) assessing the feasibility of Navy
plans for maturing and integrating new      The Navy’s planned production schedules of the restart DDG 51 ships are
technologies and capabilities. GAO          comparable with past performance and officials told us that hull and mechanical
analyzed Navy and contractor                systems changes are modest, but these ships will cost more than previous DDG
documentation and interviewed Navy,         51s. A major upgrade to the ship’s combat system software also brings several
contractor, and other officials.            challenges that could affect the restart ships, due in part to a key component of
                                            this upgrade that has already faced delays. Further delays could postpone
What GAO Recommends                         delivery to the shipyard for the first restart ship, and could also jeopardize the
GAO is making several                       Navy’s plan to install and test the upgrade on an older DDG 51 prior to
recommendations to the Secretary of         installation on the restart ships. This first installation would serve to mitigate risk,
Defense, including requiring the Navy       and if it does not occur on time the Navy will be identifying, analyzing, and
to conduct thorough analyses of             resolving any combat system problems on the first restart ship. Further, the Navy
alternatives for its future surface         does not plan to fully test new capabilities until after certifying the upgrade as
combatant program and conduct               combat-ready, and has not planned for realistic operational testing necessary to
realistic operational testing of the        fully demonstrate its integrated cruise and ballistic missile defense performance.
integrated missile defense capability of
the DDG 51’s upgrade, ensuring that
the Navy does not include the lead          The Navy faces significant technical risks with its new Flight III DDG 51 ships,
Flight III ship in a multiyear
                                            and the current level of oversight may not be sufficient given these risks. The
procurement request, and raising the
                                            Navy is pursuing a reasonable risk mitigation approach to AMDR development,
level of oversight for this program.
DOD agreed with the                         but it will be technically challenging. According to Navy analysis, selecting the
recommendations to varying degrees,         DDG 51 hullform to carry AMDR requires significant redesign and reduces the
but generally did not offer specific        ability of these ships to accommodate future systems. This decision also limits
actions to address them. GAO believes       the radar size to one that will be at best marginally effective and incapable of
all recommendations remain valid and        meeting the Navy’s desired capabilities. The Navy may have underestimated the
has included matters for congressional      cost of Flight III, and its plan to include the lead ship in a multiyear procurement
consideration to ensure the soundness       contract given the limited knowledge about the configuration and the design of
of the Navy’s business case.                the ship creates potential cost risk. Finally, the current level of oversight may not
                                            be commensurate with a program of this size, cost, and risk and could result in
View GAO-12-113. For more information,
contact Belva Martin at (202) 512-4841 or
                                            less information being available to decision makers.

                                                                                       United States Government Accountability Office

Letter                                                                                      1
               Background                                                                   2
               The Navy’s Study may not Provide a Sufficient Basis for a Sound,
                  Long-Term Acquisition Program                                             7
               Restart Ships are Costlier than Recent DDG 51s and Face a
                  Challenging Combat System Upgrade                                       20
               Flight III Cost and Technical Risks Pose Challenges for Oversight          31
               Conclusions                                                                51
               Recommendations for Executive Action                                       52
               Agency Comments and Our Evaluation                                         53
               Matters for Congressional Consideration                                    55

Appendix I     Objectives, Scope, and Methodology                                         57

Appendix II    Comments from the Department Of Defense                                    60

Appendix III   GAO Contacts and Staff Acknowledgments                                     64

               Table 1: Overview of Radar Options Considered in Radar Hull
                        Study                                                               8
               Table 2: Combat System Architecture Modifications Considered                 9
               Table 3: Examples of Combat System Characteristics That Could
                        Have Been Evaluated in the Radar/Hull Study                       11
               Table 4: Ship Characteristics That Could Have Been Evaluated in
                        the Radar/Hull Study                                              12
               Table 5: Lead Ship Cost Estimates, Radar/Hull Study                        15
               Table 6: Comparison of Selected Ship Characteristics from the
                        Radar/Hull Study                                                  17
               Table 7 Selected Major DDG 51 Changes and Corresponding
                        Design Changes                                                    21
               Table 8: ACB 12 Components                                                 26
               Table 9: AMDR Technologies and Key Technical Challenges                    35
               Table 10: SLA Considerations with Select Ship Classes                      41
               Table 11: Differences in the Estimated Cost of the Lead DDG 51
                        Flight III Ship                                                   46

               Page i                                      GAO-12-113 Arleigh Burke Destroyers
          Table 12: Flight III Program Compared with Factors to Determine
                  ACAT ID Status                                                                    50

          Figure 1: Timeline of Key Events in Future Surface Combatant
                   Selection Process                                                                 6
          Figure 2: Variants Considered in Radar/Hull Study                                         14
          Figure 3: Notional Depiction of a Limited Trade-off Analysis                              16
          Figure 4: Proposed Design Changes for Restart Ships                                       21
          Figure 5: Historic DDG 51 Construction Durations                                          24
          Figure 6: Timeline of Aegis Upgrade Installation and Testing Events                       28
          Figure 7: Notional DDG 51 Flight III with AMDR                                            33
          Figure 8: AMDR Schedule                                                                   34
          Figure 9: SLA of Navy DDG 51 Flight III Concepts                                          40
          Figure 10: Comparison of Procurement Costs for Flight III                                 47


          ACB               Advanced Capability Build
          AOA               Analysis of Alternatives
          AMDR              Air and Missile Defense Radar
          BMD               Ballistic Missile Defense
          DOD               Department of Defense
          IAMD              Integrated Air and Missile Defense
          MAMDJF            Maritime Air and Missile Defense of Joint Forces
          SLA               Service Life Allowance
          SPY               Maritime surveillance radar
          TSCE              Total Ship Computing Environment

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          Page ii                                               GAO-12-113 Arleigh Burke Destroyers
United States Government Accountability Office
Washington, DC 20548

                                   January 24, 2012

                                   The Honorable Norm Dicks
                                   Ranking Member
                                   Subcommittee on Defense
                                   Committee on Appropriations
                                   House of Representatives

                                   Dear Mr. Dicks:

                                   After nearly a decade and almost $10 billion in development of the
                                   Zumwalt class destroyer (DDG 1000), the Navy—citing in part advances
                                   in ballistic and anti-ship missiles and proliferation of this technology—
                                   changed its acquisition approach for surface combatants from procuring
                                   DDG 1000 to restarting production of the Arleigh Burke class destroyers
                                   (DDG 51). Navy officials believe that DDG 51—carrying the Aegis combat
                                   system 1—has a proven ballistic missile defense capability that makes it
                                   the preferred option over other ships to fill a gap in the Navy’s abilities to
                                   provide simultaneous defense against ballistic and cruise missiles (known
                                   as Integrated Air and Missile Defense, or IAMD), and that modifying DDG
                                   1000 would be too costly and bear too much risk. Concurrently, the Navy
                                   also cancelled its planned new air warfare-focused cruiser program,
                                   known as CG(X). Ultimately the Navy is procuring current versions of
                                   DDG 51 ships and plans to begin building a new version of the class
                                   (known as Flight III 2) that is to be modified to carry the advanced Air and
                                   Missile Defense Radar (AMDR) to meet the identified threats. Pursuing
                                   this strategy could require an investment of up to approximately $80
                                   billion for up to 43 destroyers, with DDG 51s providing IAMD capability for
                                   potentially up to the next 60 years. In this context, you asked us to review
                                   the Navy’s plans for DDG 51 and missile defense capabilities. In
                                   particular, we: (1) evaluated how the Navy determined the most
                                   appropriate platform to meet current and future surface combatant
                                   requirements; (2) identified and analyzed differences in design, cost, and

                                     A combat system is a naval defense architecture that uses computers to integrate
                                   sensors (such as a radar) with shipboard weapon systems and can recommend weapons
                                   to the sailor through a command and control function.
                                     There are three previous DDG 51 Flights: Flight I, Flight II, and Flight IIA. The
                                   differentiation of the various flights generally indicates upgrades that bring different
                                   capabilities and equipment to the ships of that flight.

                                   Page 1                                                   GAO-12-113 Arleigh Burke Destroyers
             schedule of the restart DDG 51 ships compared with previous ships, and
             risks associated with the restart; and (3) assessed the feasibility of Navy
             plans for maturing and integrating new technologies and capabilities into
             the Flight III ships.

             To conduct our work, we analyzed Navy technical studies related to Flight
             III; documentation related to Flight III, CG(X), and AMDR; and
             Department of Defense (DOD) and Navy threat assessments. We
             analyzed AMDR performance specifications and contractor performance
             data related to ongoing Aegis combat system upgrades, as well as cost
             estimates for Flight III. We also met with Missile Defense Agency (MDA),
             Navy, and other DOD officials, as well as shipyard representatives from
             Bath Iron Works in Bath, Maine and Ingalls Shipbuilding in Pascagoula,
             Mississippi, and radar contractor representatives from Lockheed Martin,
             Northrop Grumman, and Raytheon. We are also providing you with a
             classified annex containing supplemental information. This annex is
             available upon request to those with the appropriate clearance and a
             validated need to know. For more information on our scope and
             methodology, see appendix I.

             We conducted this performance audit from January 2011 to January 2012
             in accordance with generally accepted government auditing standards.
             Those standards require that we plan and perform the audit to obtain
             sufficient, appropriate evidence to provide a reasonable basis for our
             findings and conclusions based on our audit objectives. We believe that
             the evidence obtained provides a reasonable basis for our findings and
             conclusions based on our audit objectives, and that the data we obtained
             and analyzed are sufficiently reliable for the purposes of our assessment.

             In the mid-2000s, the Navy was developing the DDG 1000 Zumwalt class
Background   destroyer—a new multimission land-attack ship—and laying the analytical
             framework to support a new air warfare cruiser acquisition program
             known as CG(X). The Navy planned to end DDG 51 production with the
             delivery of DDG 112 in 2011 (which would have completed the 62-ship
             program), and concentrate instead on DDG 1000—initially intended to be
             a class of up to 32 ships—and building up to 19 CG(X). However, at a
             July 31, 2008, hearing before the House Armed Services Committee,
             Seapower and Expeditionary Forces Subcommittee, the Navy stated that
             it faces a growing proliferation of ballistic missiles and antiship cruise
             missiles, requiring greater integrated air and missile defense capability
             and that the naval land attack capability provided by DDG 1000 had been
             obviated by improved precision munitions and targeting. Navy officials

             Page 2                                       GAO-12-113 Arleigh Burke Destroyers
added that DDG 1000 had performance deficiencies compared to DDG
51, most notably in the areas of ballistic missile defense (BMD), area air
defense, and some types of antisubmarine warfare. 3 Most importantly, the
Navy stated that at that time DDG 1000 could not carry the Standard
Missile (SM) 2, SM-3, or SM-6 and was incapable of conducting BMD,
though officials have since told us that DDG 1000 is now capable of
carrying the SM-2 missile, and that the Mk 57 Vertical Launching System
is expected to be capable of carrying any of the standard missiles. 4 The
Navy stated that DDG 51 was a proven ship with a proven combat
system, and that the Navy intended on restarting production of DDG 51 to
defend against substantial ballistic missile proliferation as a bridge to the
deployment of CG(X). The Navy focused on building additional DDG
ships, but did not discuss AMDR during this hearing. Following this
hearing, the Navy began to initiate plans to truncate the DDG 1000
program and made preparations to restart the DDG 51 program.

The DOD Joint Requirements Oversight Council had previously identified
simultaneous defense against ballistic missiles and antiship cruise
missiles as a capability gap and in 2006 validated that IAMD was an
operational requirement not sufficiently addressed by other platforms. At
the same time the Navy adopted BMD as a core Navy mission that it
would perform in concert with MDA. In September 2009, the Joint
Requirements Oversight Council also updated and revalidated IAMD
requirements. In order to determine the appropriate type of ship and radar
that would best address identified IAMD capability gaps, the Navy
conducted an Analysis of Alternatives (AOA) known as the Maritime Air

  DDG 1000 is optimized for littoral antisubmarine warfare, and the Navy testified that the
DDG 51 is superior in the deep ocean. However, in a May 11, 2009 letter to the Chairman
of the Senate Armed Services Committee, Subcommittee on Seapower, the Chief of
Naval Operations stated that in some conditions the DDG 1000 could be expected to
perform as well as or better than DDG 51s in antisubmarine warfare activities, and that at
a campaign level the performance of both ships could be assumed as the same.
  Officials stated that DDG 1000 requires a modification to the combat system in order for
the radar and combat system to communicate with the missiles.

Page 3                                                GAO-12-113 Arleigh Burke Destroyers
and Missile Defense of Joint Forces (MAMDJF). 5 An AOA is an analytical
comparison of the operational effectiveness, suitability, and life-cycle cost
of alternative potential solutions to address valid capability needs.
According to DOD acquisition guidance, an AOA examines potential
material solutions with the goal of identifying the most promising option
and is required to support a program’s initiation of the technology
development phase at Milestone A. 6 We have previously reported on the
importance of a robust AOA as a key element in ensuring a program has
a sound, executable business case prior to program initiation. 7 Our work
has found that programs that conduct a limited AOA tended to experience
poorer outcomes—including cost growth. 8

In 2007, as a result of conclusions identified in the MAMDJF AOA, the
Navy determined that it needed a very large radar carried on a larger,
newly designed surface combatant to counter the most stressing ballistic
and cruise missile threats. Consequently, the MAMDJF AOA served as
the AOA for both the CG(X) program and for a new, dual-band radar
development effort called AMDR. The Navy initiated development of
CG(X) and AMDR—a large radar designed to be scalable, meaning that it
could be increased in physical size to allow it to provide increased
capability to meet future threats.

  MAMDJF AOA considered a wide range of ship variants, including a new cruiser
concept, a new radar ship concept, modified and upgraded DDG 1000 variants, a modified
DDG 51 variant with a 40’ hull extension (known as a plug), and a modified LPD 17
amphibious transport dock ship variant. IAMD is the simultaneous defense against both
ballistic missile threat and air warfare threats such as hostile aircraft and cruise missiles.
Some CG 47s and DDG 51s can perform air warfare and BMD, the Oliver Hazard Perry
class frigates (FFG 7) can only conduct short range anti-air warfare and no ballistic missile
  Defense Acquisition Guidebook, section 3.3. The Weapons System Acquisition Reform
Act of 2009 established a requirement for the development of study guidance for an AOA
that requires, at a minimum, full consideration of possible trade-offs among cost,
schedule, and performance objectives for each alternative considered, and an
assessment of whether or not the joint military requirement can be met in a manner that is
consistent with the cost and schedule objectives recommended by the Joint Requirements
Oversight Council. Pub. L. No. 111-23, § 201(d).
  GAO, Many Analyses of Alternatives Have Not Provided a Robust Assessment of
Weapon System Options, GAO-09-665 (Washington, D.C.: Sept. 24, 2009).

Page 4                                                 GAO-12-113 Arleigh Burke Destroyers
In January 2009, in response to the Navy’s planned changes to its
surface combatant program, the Office of the Under Secretary of Defense
for Acquisition, Technology and Logistics released a memorandum
stating that the Navy’s plan to buy additional DDG 51 Flight IIA ships
would be followed by a procurement of either DDG 1000- or DDG 51-
based destroyers. The memorandum stated that this procurement would
be referred to as the “Future Surface Combatant” until the appropriate
hullform to carry AMDR was selected, and required that a study be
conducted to identify this hullform.

To meet this requirement, in 2009 the Navy conducted a limited study
referred to as the Radar/Hull Study. In the Radar/Hull Study, the Navy
examined only the two existing destroyer designs—DDG 51 and DDG
1000—with several different radar concepts to determine which pairing
would best address the IAMD capability gap and would be more
affordable than CG(X), which Navy officials told us was estimated to cost
upwards of $6 billion per ship. A senior review panel—known as a “red
team”—also independently assessed the study, its analyses, and
alternatives considered and provided a separate report on its findings.
Following the conclusion of the Radar/Hull Study, the Navy validated the
MAMDJF AOA’s findings that a very large radar carried on a larger, newly
designed surface combatant was necessary to counter the most stressing
threats, but decided, based on the analysis of the Radar/Hull Study, that
the preferred solution to meet the IAMD capability gap would be pairing a
smaller AMDR with the familiar DDG 51 hullform and the Aegis combat
system—which would be referred to as DDG 51 Flight III. The Navy at the
same time also cancelled the CG(X) program, largely as a result of cost
considerations. The timing of this analysis and key decision making was
compressed, as reflected in figure 1.

Page 5                                     GAO-12-113 Arleigh Burke Destroyers
Figure 1: Timeline of Key Events in Future Surface Combatant Selection Process

                                        The Navy now plans to build 9 DDG 51s in an upgraded Flight IIA
                                        configuration. Construction of the first restart ship (DDG 113) began at
                                        Ingalls Shipbuilding in July 2011, approximately 4 years after construction
                                        started on the last DDG 51 at that yard. Though the restart program refers
                                        to all 9 restart ships, we focus on DDG 113-115 because these are the
                                        first restart ships built at both yards—Ingalls Shipbuilding and Bath Iron
                                        Works, the only two shipyards that currently build destroyers—and
                                        because contracts for these three ships were recently awarded (DDG 113
                                        in June 2011; DDG 114, 115, and an option for DDG 116 in September
                                        2011). After the first 9 ships, the Navy will then transition to building 22
                                        DDG 51s in the new Flight III configuration including AMDR, starting with
                                        construction of the lead Flight III ship (DDG 123) in fiscal year 2016, with
                                        an initial operating capability planned for 2023. The Navy is currently
                                        reviewing technical considerations and options for Flight III as part of an

                                        Page 6                                       GAO-12-113 Arleigh Burke Destroyers
                           ongoing flight upgrade study that was initiated in February 2010. The
                           Navy also has a notional Flight IV DDG 51 in its long-range shipbuilding

                           The Radar/Hull Study may not provide a sufficient analytical basis given
The Navy’s Study May       the magnitude of the Navy’s acquisition decision, including up to 43
Not Provide a              destroyers (22 of which will be in the Flight III configuration and 21 in a
                           later Flight IV configuration, and both may require significant ship
Sufficient Basis for a     redesign), a new radar, and major combat system upgrades. The cost of
Sound, Long-Term           22 Flight III ships is estimated to range from $58 to $64 billion (in constant
Acquisition Program        2012 dollars), including research and development and procurement. This
                           study played a central role in determining future Navy surface combatant
                           acquisitions by contributing to a selection of the Navy’s preferred radar,
                           combat system and ship solutions, making it, in essence, an AOA.
                           Namely, the Radar/Hull Study provided analysis of the capability of
                           multiple ship and radar alternatives against a revised IAMD capabilities
                           gap, informing the selection of DDG 51 with AMDR as its preferred ship
                           and radar combination. However, it does not provide an adequate
                           evaluation of combat system and ship characteristics, and does not
                           include key elements that are expected in an AOA that would help
                           support a sound, long-term acquisition program decision.

The Navy Viewed Radar      Navy officials who were involved in the Radar/Hull Study told us that the
Capability as Primary      capability of the technology concepts they evaluated was considered a
Evaluative Criteria, Not   major priority, and that the goal was identifying the most capable solution
                           to meet the IAMD threat in the near-term that was also cost-effective.
Combat System and Ship     Within this context, the study team analyzed the capability of the radar
Characteristics            variants considered. The Navy determined that a dual-band radar (S- and
                           X-Band radars working together as an integrated unit) was required to
                           effectively perform IAMD. As a result, the study team focused on
                           assessing several different combinations of S- and X-Band radars, as
                           show in table 1.

                           Page 7                                        GAO-12-113 Arleigh Burke Destroyers
Table 1: Overview of Radar Options Considered in Radar Hull Study

Radar component Component name                      Component description
S-Band            AMDR-S                            Developmental radar design; 12- or 14-foot array size considered.
                  Volume Search Radar+              Updated, more powerful version of the VSR developed for DDG 1000; 12- or 14-
                  (VSR+)                            foot array size considered.
X-Band            SPY-3                             Current X-Band radar for DDG 1000, consists of 3 array faces.
                  SPQ-9B                            Rotating X-Band radar currently on CG 47, LPD 17, and other ship classes.
                                         Source: GAO analysis of Radar/Hull Study.

                                         The maximum radar size studied in the Radar/Hull Study was a 14-foot
                                         radar, since this was determined to be the largest size of radar that the
                                         DDG 51 hull could carry and the largest radar that DDG 1000 could carry
                                         without substantial deckhouse modifications. These radars were
                                         evaluated first against each other, and then combinations of radars were
                                         evaluated and compared with the capability of the current S-Band SPY-
                                         1D(V) radar installed on recent DDG 51 ships. All provided enhanced
                                         power over and above that of SPY-1D(V); this difference was quantified
                                         as a “SPY+” (in decibels) equating to the increase in target tracking range
                                         for a fixed amount of resources over the SPY-1D(V) radar. SPY+15 has a
                                         32 times better signal to noise factor—or intensity of the returning radar
                                         signal echoing off a target over the intensity of background noise—than a
                                         SPY-1D(V) radar. Radars with additional average power and larger
                                         antennas have enhanced sensitivity, and thus better performance in
                                         advanced threat environments. The Navy found that the SPY+15 S-Band
                                         radars performed better than the SPY+11 S-Band radars, and the
                                         Radar/Hull Study’s independent red team described the capability of
                                         SPY+15 as marginally adequate. The Navy also found that the AMDR-S
                                         performed IAMD better than the VSR+. For the X-Band, the Radar/Hull
                                         Study identified that SPY-3 performed better than SPQ-9B.

Limited Evaluation of Combat             Although the Navy considered capability as a driving factor in its decision
System Architectures                     making, the Radar/Hull Study did not include a thorough comparative
Capability                               analysis of the capabilities of the two combat system architectures—
                                         Aegis on DDG 51 and the Total Ship Computing Environment (TSCE) on
                                         DDG 1000—into which the radars would need to be integrated. 9 Other

                                          According to the Navy, the combat system consists not only of the combat system
                                         architecture (such as Aegis or TSCE), but it also includes the ship’s weapon systems,
                                         such as missiles and launchers, and ship sensors. When we discuss combat system
                                         options, we are referring only to the combat system architecture.

                                         Page 8                                                  GAO-12-113 Arleigh Burke Destroyers
                                        than assessing the BMD capability that Aegis currently possesses and
                                        the absence of BMD capability in TSCE, the Navy evaluated Aegis and
                                        TSCE by focusing on the amount of new software code that it estimated
                                        would be required to integrate the radars and to effectively perform IAMD
                                        and the costs and risks involved in this development. Such analysis is
                                        important because selection of a combat system essentially determines
                                        the ship choice, and the combat system is the interface between the radar
                                        and the ship’s weapons. Since TSCE does not currently have an inherent
                                        BMD capability, the Navy identified several ways to add this capability
                                        using Aegis software and hardware. Similarly, changes were assessed to
                                        Aegis to provide it enhanced IAMD capability and the ability to leverage a
                                        dual-band radar. Table 2 depicts the combat system modifications that
                                        were considered.

Table 2: Combat System Architecture Modifications Considered

Combat system
architecture       Goal                                     Modification considered                     Navy evaluation
Aegis              Integrate S-Band radar with SPY-         TSCE components related to radar            Preferred solution.
                   3; enhance IAMD functionality.           operation added into Aegis.
                   Integrate S-Band radar with SPQ-                                                     SPQ-9B considered inferior radar.
                   9B; enhance IAMD functionality.
TSCE               Add BMD functionality to TSCE.           TSCE command and control component Complicated modification
                                                            replaced with the Aegis component. requiring significant software
                                                            TSCE architecture stays largely intact,     Higher risk.
                                                            select components replaced with Aegis
                                        Source: GAO analysis of Radar/Hull Study.
                                         Each combat system architecture modification was further subdivided into VSR+ and AMDR-S radar

                                        Though TSCE was intended to be the combat system architecture for
                                        CG(X) and thus would have been modified to perform BMD, the
                                        Radar/Hull Study states that developing a BMD capability “from scratch”
                                        for TSCE was not considered viable enough by the study team to warrant
                                        further analysis, particularly because of the investment already made in
                                        the Aegis program. The Navy concluded that developing IAMD software
                                        and hardware specifically for TSCE would be more expensive and

                                        Page 9                                                        GAO-12-113 Arleigh Burke Destroyers
present higher risk. 10 Ultimately, the Navy determined that Aegis was its
preferred combat system option. Navy officials stated that Aegis had
proven some BMD capability and was widely used across the fleet, and
that the Navy wanted to leverage the investments it had made over the
years in this combat system, especially in its current development of a
version that provides a new, limited IAMD capability.

While the Navy’s stated goal for the Radar/Hull Study was to identify the
most capable solutions with an additional goal of affordability, the Navy
selected Aegis based largely on its assessment of existing BMD
capability, development costs and risk, and not on an analysis of other
elements of combat system capability. Specifically, beyond the fact that
Aegis already has a level of proven BMD capability and TSCE does not,
other characteristics of the two combat systems that can contribute to
overall performance were not evaluated. 11 Table 3 summarizes some
examples of combat system characteristics that could have been
evaluated; more characteristics may exist. Since this analysis was not
conducted, any impact of these capabilities on IAMD or other missions or
how each system compares with each other is unknown.

   Raytheon—the lead contractor for TSCE—submitted an unsolicited proposal to develop
BMD capability within TSCE while the Radar/Hull Study was under way, but Navy officials
told us that this proposal was rejected because it was deemed incomplete, and the Navy
was unable to determine if it was realistic. Navy officials also told us that the TSCE
contract contains language prohibiting BMD development work within TSCE.
   For additional discussion on combat system capabilities, see Classified Annex A which
will be made available upon request to those with the appropriate clearance and a
validated need to know.

Page 10                                             GAO-12-113 Arleigh Burke Destroyers
                              Table 3: Examples of Combat System Characteristics That Could Have Been
                              Evaluated in the Radar/Hull Study

                               Characteristic          Description
                               Computer                Ability of the computer system to process data; metrics may
                               processing ability      include the throughput of data that the system can manage and the
                                                       speed at which it can complete work (e.g.: time to solution).
                               Cyber warfare           Offensive and defensive electronic and information operations may
                               capability              be a key component of future Navy missions. A combat system
                                                       that enables the ship to defend against electronic attacks and
                                                       possibly conduct electronic attacks of its own could contribute to
                                                       enhanced capability and performance.
                               Reliability             A measure of how long the system can operate without incurring
                                                       failures that may require corrective maintenance actions.
                               Information             Measures that protect and defend information and information
                               assurance               systems by ensuring their availability, integrity, authentication,
                               capability              confidentiality, and nonrepudiation. This includes providing for
                                                       restoration of information systems by incorporating protection,
                                                       detection, and reaction capabilities. A combat system with robust
                                                       information assurance capabilities would be less vulnerable to
                                                       interference in the ship’s electronic network (e.g., viruses, hacking)
                                                       than other systems.
                               Usability               A human-system interface measure of the extent to which a
                                                       system can be used to achieve specified goals with effectiveness,
                                                       efficiency, and satisfaction.
                               Proprietary versus      Level of proprietary software code, which dictates whether or not
                               open architecture       combat system development efforts can be openly competed.
                               combat systems          Competing combat system upgrades could lead to reduced costs.
                               Scalability             The ability of a system to handle an increased workload, either
                                                       without adding or by adding additional resources.
                              Source: GAO analysis.

                              Note: Because the characteristics noted above were not included in the Navy’s analysis, the
                              implications of assessing or not assessing them is unknown.

                              While considering the resident BMD capabilities of Aegis and comparing
                              software development costs and risks are essential to making a decision,
                              without a thorough combat system assessment, the Navy cannot be sure
                              how other combat system characteristics can contribute to overall

Capability of Ships Not       Because Aegis is carried by DDG 51 and not DDG 1000 ships, selection
Evaluated Beyond Ability to   of Aegis as the preferred combat system essentially determined the
Carry AMDR                    preferred hull form. The Radar/Hull Study did not include any significant
                              analysis of the ships themselves beyond comparing the costs to modify
                              the ships to carry the new radar configurations and to procure variants of
                              both types. Several characteristics associated with the ships (such as
                              displacement or available power and cooling) were identified in the study.

                              Page 11                                                    GAO-12-113 Arleigh Burke Destroyers
The ships were evaluated on their ability to meet Navy needs and the
impact of these ship characteristics on costs. However, there was no
documented comparison or discussion of the benefits or drawbacks
associated with any additional capabilities that either ship may bring.
Navy officials told us that these characteristics were not weighted or
evaluated against one another. Other ship variables that directly relate to
ship capability and performance—such as damage tolerance and stealth
features that were explicitly designed into DDG 1000—were not
discussed in the Radar/Hull Study, even though they were discussed in
the MAMDJF AOA. The MAMDJF AOA notes that a stealthy ship is
harder for enemy forces to detect and target, thus making it more likely
that a stealthy ship would be available to execute its BMD mission.
However, senior Navy officials told us that the Radar/Hull Study did not
consider the impact of stealth on performance because the study
assumed that stealth would not have a significant impact on performance
in IAMD scenarios. Navy officials added that any additional benefits
provided by DDG 1000 stealth features were not worth the high costs,
and that adding larger radars to DDG 1000 would reduce its stealth.
However, no modeling or simulation results or analysis were presented to
support this conclusion. Table 4 depicts ship characteristics that were
evaluated in the MAMDJF AOA that could have been evaluated in the
Radar/Hull Study.

Table 4: Ship Characteristics That Could Have Been Evaluated in the Radar/Hull

Characteristics            Description
Damage                     Ability of ship to sustain damage. Navy standards establish a
survivability              minimum, but some ships may exceed these standards.
Ship signatures            Ship emissions (e.g.: radar cross section, acoustic and magnetic
                           signatures) which when reduced can enable stealthy operations.
Time on station            Ability of ship to remain in position without needing to refuel.
Range                      Maximum distance a ship can travel on a full tank of fuel.
Surge-to-objective Required number of replenishments required to transit ship to a
                   specified objective.
Source: GAO analysis of Radar/Hull Study and MAMDJF AOA.

Note: Because the characteristics noted above were not included in the Navy’s analysis, the
implications of assessing or not assessing them is unknown.

These characteristics influence performance, and each ship option has
strengths and weaknesses that could have been compared to help
provide a reasonable basis for selecting a ship. For example, DDG 1000

Page 12                                                      GAO-12-113 Arleigh Burke Destroyers
                             has enhanced damage survivability and reduced ship signatures, while
                             DDG 51 is capable of longer time-on-station and endurance. 12

Radar/Hull Study Did Not     The Radar/Hull Study did not include a robust trade-off analysis for the
Include a Robust Trade-off   variants studied to support the Navy’s DDG 51 selection decision, which
Analysis to Inform a Sound   is currently planned to result in an acquisition of 22 modified Flight III
                             DDG 51s and a further 21 modified DDG 51s known as Flight IV. DOD
Decision                     acquisition guidance indicates that a discussion of trade-offs between the
                             attributes of each variant being considered is important in an AOA to
                             support the rationale and cost-effectiveness of acquisition programs. A
                             trade-off analysis usually entails evaluating the impact on cost of
                             increasing the capability desired, essentially answering the question of
                             how much more will it cost to get a greater degree of capability. A trade-
                             off analysis allows decision makers to determine which combination of
                             variables provides the optimal solution for a cost they are willing to pay.
                             For the Radar/Hull Study, the Navy examined 16 different combinations of
                             ship, radar, and combat system options based around DDG 51 and DDG
                             1000. These variants are depicted in figure 2.

                                For a more detailed explanation of ship signature issues, see Classified Annex A which
                             will be made available upon request to those with the appropriate clearance and a
                             validated need to know.

                             Page 13                                              GAO-12-113 Arleigh Burke Destroyers
Figure 2: Variants Considered in Radar/Hull Study

                                        The Radar/Hull Study documents full cost data for only 4 of the 16 ship
                                        variants; 8 ship variants have no cost data, and 4 others do not have ship
                                        procurement and operations and support costs. Instead, the Radar/Hull
                                        Study provided full cost data for only the most expensive and least
                                        expensive DDG 51 and DDG 1000 variants (high and low), and
                                        operations and support costs for these four variants. Higher costs were
                                        largely driven by the combat system selected. For example, the high DDG
                                        1000 variant included a 14-foot AMDR coupled with a SPY-3 radar, and
                                        the more expensive combat system solution, which comprised replacing
                                        the central core of DDG 1000's TSCE combat system with the core of the
                                        Aegis combat system. The high DDG 51 variant included a 14-foot AMDR
                                        coupled with a SPY-3 radar and the Aegis combat system. The low DDG
                                        1000 variant coupled a 12-foot VSR+ with the SPY-3 radar and a less
                                        expensive combat system solution involving replacing only portions of
                                        TSCE with portions of Aegis. The low DDG 51 included VSR+ coupled
                                        with the SPQ-9B radar and the Aegis combat system. In both the DDG
                                        1000 high and low cases, the combat system solutions would be equally
                                        capable; the difference was in the level of effort and costs required to

                                        Page 14                                    GAO-12-113 Arleigh Burke Destroyers
                                              implement the changes. Since only a high and low version of DDG 1000s
                                              were priced out, the study did not include a DDG 1000 variant with AMDR
                                              and the less complicated TSCE combat system upgrade that may be a
                                              less expensive—but equally capable—option. Because this variant was
                                              not included in the study, cost data were not provided. This study also
                                              presented a brief analysis of operations and support costs; the Navy
                                              concluded that it found only negligible differences between the operations
                                              and support costs for the DDG 51 and DDG 1000 variants. Previous DDG
                                              1000 cost estimates had indicated 28 percent lower long-term costs than
                                              DDG 51. While both ships had increases in these costs, the Navy
                                              determined in the Radar/Hull Study that adding additional crew to DDG
                                              1000 to perform BMD-related tasks and increased fuel costs were more
                                              significant for that ship, and made the costs essentially equal between the
                                              two ships. The costs of the 4 variants that the Radar/Hull Study priced are
                                              shown in table 5.

Table 5: Lead Ship Cost Estimates, Radar/Hull Study

(Dollars in millions)
                           DDG 51 variants                                                              DDG 1000 variants
            Low                                 High                                         Low                                 High
         VSR+/SPQ-9B                         AMDR-S/SPY-3                                 VSR+/SPY-3                          AMDR-S/SPY-3
 Operations                        Operations                                   Operations and             Operations
and supporta      Procurementb     and support          Procurement                support     Procurement and support Procurement
     $65.3              $2,310        $65.3                  $2,946                   $66.5              $3,203             $67.8            $3,367
                                              Source: Radar/Hull Study.
                                                  Operations and support costs are provided in fiscal year 2010 dollars in millions/per ship/per year
                                                The low options of both ships are priced in fiscal year 2015 dollars, while the high options are priced
                                              in fiscal year 2016 dollars.

                                              Navy officials agreed that they could have developed cost estimates for
                                              all 16 of the variants, but stated that there was a time constraint for the
                                              study that prohibited further analysis, and that they believed that pricing
                                              the high and low options was enough to bound the overall costs for each
                                              ship class. Without complete cost data for all variants, the Navy could not
                                              conduct a thorough trade-off analysis of the variants that fell between the
                                              high and low extremes because the costs of these variants are unknown.
                                              DOD acquisition guidance highlights the importance of conducting a
                                              trade-off analysis. Conducting a trade-off analysis with costs for all the
                                              variants would have established the breakpoints between choices, and
                                              identified potential situations where a cheaper, slightly less capable ship
                                              or a more expensive but much more capable ship might be a reasonable

                                              Page 15                                                         GAO-12-113 Arleigh Burke Destroyers
choice. Figure 3 is a notional depiction of the limitations of missing cost
data when conducting a trade-off analysis with only high and low data

Figure 3: Notional Depiction of a Limited Trade-off Analysis

Further, the Navy also did not prioritize what aspects of the radar, combat
system, and ship it valued more than others, which could also be used to
inform a trade-off analysis. For example, if performance is valued more
than cost, choosing a ship variant that has 10 percent more performance
than another variant but with a 20 percent increase in cost might be in the
Navy’s best interest. Alternatively, if cost was weighted more than
performance, the Navy might choose the cheaper and slightly less
capable ship as it would be able to get a 20 percent reduction in cost with
only a 10 percent reduction in performance. Similarly, the study did not
discuss the Navy’s preferences with regard to ship characteristics and the
impact that differences in these characteristics might have on a trade-off
analysis. For example, Navy officials told us that electrical power was a
major concern for future destroyers, but the considerable difference in
available power between DDG 51 and DDG 1000 (approximately 8,700
kilowatts for DDG 51 after the addition of a supplemental generator

Page 16                                           GAO-12-113 Arleigh Burke Destroyers
                                        compared to 78,000 kilowatts for DDG 1000 with no additional generators
                                        required) was not compared in a trade-off analysis. Finally, the Navy did
                                        not assess potential impacts of ship selection on future fleet composition.
                                        The MAMDJF AOA found that more capability can be obtained by fewer,
                                        more capable ships (meaning those with larger radars) than a greater
                                        number of less capable ships (meaning those with smaller radars). This
                                        could change the acquisition approach and would result in different
                                        program costs as a result if it is found that fewer, more capable ships are
                                        more cost-effective than many, less capable ships.

                                        Navy officials told us that some of these trade offs were not done in the
                                        Radar/Hull Study because they were already studied in the MAMDJF
                                        AOA. However, that study, using a different threat environment and ship
                                        concepts, eliminated the DDG 51 variant from further consideration as a
                                        single ship solution; it also eliminated the DDG 1000 option without a
                                        radar larger than the 14-foot design that was considered in the Radar/Hull
                                        Study. Consequently, its analysis is not directly comparable or
                                        interchangeable with the Radar/Hull Study. When comparing the raw ship
                                        data from the Radar/Hull Study, we found that the two ships offer different
                                        features worth evaluating. For example, all DDG 1000 variants offer more
                                        excess cooling and service life allowance, meaning the ability of the ship
                                        to accommodate new technologies over the life of the ship without major,
                                        costly overhauls than DDG 51 variants, while DDG 51 variants offer
                                        greater endurance and lower procurement costs. Table 6 depicts a
                                        simplified presentation of this comparison.

Table 6: Comparison of Selected Ship Characteristics from the Radar/Hull Study

(Dollars in millions)
                   Procurement                              Excess                  Service life     Full load             Number of
Variants           cost            Excess power             cooling                 allowanceb       displacement          missile cells
High DDG 51        $2,946          1,174 kW after           284 tons                4.4 percent      9,865 long tons       96
                                   addition of a                                    0.52 feet
High DDG 1000 $3,367               968 kW no          461 tons                      10.0 percent     15,300 long tons      96
                                   additional                                       1.0 feet
                                   generator required
                                        Source: GAO analysis of Radar/Hull Study.
                                            Procurement costs only (fiscal year 2016 dollars, in millions)
                                         Navy weight and center of gravity allowances to enable future changes to the ships, such as adding
                                        equipment and reasonable growth during the ship's service life without unacceptable impacts on the
                                        ship. Ten percent of weight and 1.0 foot of center of gravity are the Navy requirements for surface

                                        Page 17                                                         GAO-12-113 Arleigh Burke Destroyers
                            As this table shows, these two ships offer different characteristics. Both
                            were deemed capable of carrying AMDR, but without conducting a trade-
                            off analysis of these characteristics, the Navy did not consider their
                            relative merit and the significance, if any, of any differences between the
                            two. Senior Navy officials told us that it is now conducting these types of
                            trade-off analyses; however, these analyses are focused only on
                            assessing various DDG 51 configurations, and were not done to help
                            inform the ship selection decision. A preliminary finding of these new
                            analyses is that the cost of Flight III is estimated to range from $58 billion
                            to $64 billion (in constant 2012 dollars), including research and
                            development and procurement.

Radar/Hull Study Assumed    The Radar/Hull Study assumed a significantly reduced threat environment
a Significantly Reduced     compared to the earlier MAMDJF AOA and other Navy studies. How the
Threat Than Other Studies   threat is characterized is important because against a reduced threat
                            environment, a less capable radar than what was identified as necessary
                            in the MAMDJF AOA was described by the Radar/Hull Study as
                            marginally adequate. Both the Radar/Hull Study and MAMDJF AOA
                            analyzed the performance of radars in several different classified tactical
                            situations that presented threats of varying levels of complexity. The most
                            stressing situations involved a number of different air and missile threats
                            and a complex timing of events. 13 In the MAMDJF AOA, these tactical
                            situations involved many different types of simultaneous threats and
                            larger radars, and were developed in consultation with the Office of Naval
                            Intelligence—the agency tasked to provide validated threat intelligence to
                            support Navy and joint, Navy-led acquisition programs—as well as MDA.
                            Conversely, the subsequent Radar/Hull Study assumed a significantly
                            reduced threat environment and smaller radar solutions than did the
                            MAMDJF AOA. This study modeled radar performance based on a very
                            limited air and missile threat which are both quantitatively and
                            qualitatively less stressing than the threat environment established in the
                            MAMDJF AOA, in other Navy and DOD threat analyses, and in system
                            guideline documents for AMDR. Also, the Office of Naval Intelligence was

                               For a more detailed description of the threat environments, see Classified Annex B
                            which will be made available upon request to those with the appropriate clearance and a
                            validated need to know.

                            Page 18                                             GAO-12-113 Arleigh Burke Destroyers
not actively engaged in the Radar/Hull Study. 14 The system guideline
documents for AMDR that were generated at approximately the same
time as the Radar/Hull Study also included significantly more taxing
tactical situations than the Radar/Hull Study, and in some cases they are
even more stressing than those found in the MAMDJF AOA. The Office of
Naval Intelligence also provided input to these AMDR system guidelines.

The Navy believes that some of the differences in the threat environment
result from the different timeframes for the Radar/Hull Study and the
MAMDJF AOA; the MAMDJF AOA states that it is based on a 2024
through 2030 timeframe while the Radar/Hull Study states that it is based
on a 2015 through 2020 timeframe. However, Navy officials also told us
that the IAMD threats are actually emerging more rapidly than they had
assumed in the MAMDJF AOA, which could mean that some of the
MAMDJF AOA threats may be present earlier. The Navy does not
document why the Radar/Hull Study based its analysis on a reduced
threat environment compared to the MAMDJF AOA, since both studies
are attempting to identify solutions to the same capabilities gap and set of
requirements. Navy officials later told us that the assumption in the
Radar/Hull Study was that no single Navy ship would likely have to deal
with all the threats in the battlespace, compared to the threat environment
in the MAMDJF AOA where more of a single-ship solution was
considered. However, other Navy studies developed in a similar
timeframe to the Radar/Hull Study describe a larger number of threats
than the Radar/Hull Study. Further, while the Navy’s assumption may
account for some of the quantitative differences between the Radar/Hull
Study and all the other Navy studies we analyzed, it should have no
bearing on the qualitative difference in the composition of the threat, since
this is a variable that is independent of Navy concepts of operations and
is a variable over which the Navy has no influence.

   Navy officials stated that the Office of Naval Intelligence provided information to the
Radar/Hull Study team in two briefings on ballistic and cruise missile threats. However, in
a written statement the Office of Naval Intelligence stated that they did not participate in
the development or review of the Radar/Hull Study.

Page 19                                                GAO-12-113 Arleigh Burke Destroyers
                         According to the Navy and shipbuilders, the changes to the restarted
Restart Ships are        DDG 51’s hull and mechanical systems appear less substantial than
Costlier than Recent     previous modifications to earlier DDG 51s. However, due in part to a
                         break in production, an initially noncompetitive environment, and other
DDG 51s and Face a       factors, the restart ships are budgeted to cost more than previous DDG
Challenging Combat       51 Flight IIA ships. While the shipbuilders’ planned production schedules
System Upgrade           are generally in line with past shipyard performance, the delivery
                         schedule for the first restart ship (DDG 113) may be challenging because
                         of a significant upgrade in the Aegis combat system, where major
                         software development efforts are under way and a critical component has
                         faced delays. Although the Navy plans to install and test this upgrade on
                         an older DDG 51 (DDG 53) prior to installation on DDG 113, delays in
                         these efforts could pose risks to a timely delivery in support of DDG 113
                         and ability to mitigate risk. If this occurs, the Navy may need additional
                         time to identify, analyze, and work to resolve problems with the combat
                         system—adding pressure to the schedule for DDG 113. Even if current
                         testing goes as planned, the Navy has not planned for realistic
                         operational testing necessary to ensure that the Aegis upgrades are
                         capable of performing IAMD against multiple ballistic and cruise missile

The Navy Believes        While the restart ships will have some changes to the ship’s design and
Proposed Hull and        physical structure, Navy officials told us that they are less substantial than
Mechanical Changes Are   prior modifications, despite changes to a large number of design
                         drawings. The Navy has been building DDG 51s since the late 1980s,
Less Substantial Than    and over time the ship design has been modified, including additions such
Previous Modifications   as helicopter hangars, additional missiles, and significant combat system
                         upgrades. As shown in table 7, a large number of design drawing
                         changes are required for the DDG 51 restart program, similar to those
                         implemented as part of previous major upgrades, such as the upgrade
                         from Flight II to Flight IIA (DDGs 79 and higher). While these design
                         changes may not be complex, they affect numerous areas of the ship.

                         Page 20                                       GAO-12-113 Arleigh Burke Destroyers
Table 7: Selected Major DDG 51 Changes and Corresponding Design Changes

                 Number of drawing
Hull number      changes                   Description of changes
DDG 79           2705                      Addition of dual helicopter hangars and moving radar arrays, and replacement of
                                           crane used to move missiles with additional missiles.
DDG 85           659                       Physical dimensions of the ship unchanged, major Aegis combat system upgrade.
DDG 103          1898                      Physical dimensions of the ship unchanged, major Aegis upgrade.
DDG 113          1175                      Physical dimensions of the ship unchanged, major Aegis upgrade, modest hull and
                                           mechanical changes (e.g. anchor deletion)
                                      Source: GAO analysis of Navy data.
                                          Design work for DDG 113 is still underway, so this number is estimated.

                                      According to shipyard officials, most design drawings for the restart ships
                                      will have applicability from previous hulls and will not require re-design,
                                      but the Navy told us that they currently expect 1175 drawings will be
                                      changed, and the design work is still underway. As figure 4 shows, some
                                      of the changes will affect the topside of the ship, and include removing
                                      some redundant or unneeded equipment from the ship (e.g. the forward
                                      kingpost and port anchor) while internal changes largely pertain to
                                      upgrading the Aegis combat system with new computer displays and
                                      computer cabinets.

                                      Figure 4: Proposed Design Changes for Restart Ships

                                      Page 21                                                       GAO-12-113 Arleigh Burke Destroyers
Restart Ships Cost More   The Navy has budgeted approximately $17.5 billion for the 10 Flight IIA
Than Previous DDG 51      restart ships. 15 The first three restart ships, beginning with DDG 113, cost
Flight IIA Ships          45 percent more than recently delivered DDG 51s. 16 DDG 113 through
                          DDG 115 are currently budgeted to cost a total of $5.8 billion, which is
                          approximately $1.8 billion higher than the last three DDG 51s built. 17
                          Unlike the previous 24 ships, the restart ships are not part of multiyear
                          ship procurements, which can be more cost-efficient due to economies of
                          scale. The Navy partially attributes the increase in procurement costs to a
                          4-year gap in production. Construction of the last DDG 51s began in late
                          2007 and production on DDG 113 began in July 2011. The shipbuilders
                          and the Navy anticipate that additional labor hours will be required to
                          build DDG 113-115 due in part to a loss of experienced workers who will
                          have been laid off or otherwise left the shipyard during the production
                          gap. This attrition—along with changes in equipment and processes
                          associated with the shutdown of the production line—contributes to a loss
                          of learning whereby a less experienced and less efficient workforce
                          requires more time to complete tasks with additional hours spent on
                          rework. While the Navy in part attributes the higher ship costs to the need
                          for additional labor hours to build the ships, it does not associate
                          increases with significant changes in the supplier base. In general, the
                          Navy found the supplier base for ship equipment was primarily intact, with
                          most of the DDG 51 suppliers still in production, which allowed the Navy
                          to get the equipment it needed at prices it considered reasonable. 18 In
                          cases where the suppliers were no longer available, the Navy
                          recompeted some key equipment contracts in order to maximize value
                          and to compensate for some modest changes in its supplier base.

                          The Navy’s initial noncompetitive acquisition strategy also contributed to a
                          higher budgeted cost for the first three restart ships. In response to the
                          truncation of the DDG 1000 program, the Navy and the two shipyards had

                               In then-year dollars.
                            The Navy calculates this difference to be 27 percent based on future anticipated budget
                          savings and differences in inflation indices.
                             In constant fiscal year 2012 dollars. Cost includes the procurement of the ship,
                          including ship construction, design, change orders and government-furnished equipment.
                          Research and development (R&D) costs are not included.
                             Some suppliers were keeping their production lines open due to the Aegis
                          modernization program, a backlog of orders, or the fact that suppliers were producing and
                          selling equipment to foreign navies such as Australia.

                          Page 22                                              GAO-12-113 Arleigh Burke Destroyers
agreed to allocate the construction of DDG 1000s and the first three DDG
51s (DDG 113-115) between Bath Iron Works and Ingalls Shipbuilding to
ensure workload stability between the shipyards. 19 The parties agreed,
subject to negotiation of fair and reasonable prices and other conditions,
that Bath Iron Works would be responsible for all of the remaining DDG
1000 design and construction work and construction of DDG 115, while
Ingalls Shipbuilding would construct DDG 113 and DDG 114. 20 After
these first three ships, the Navy intended to competitively award contracts
for future surface combatants. The Navy assumed that it would pay a
premium for the first three ships because a lack of competition between
the two shipyards would drive up costs. Indeed, Navy officials noted that
a noncompetitive environment, along with disagreements on the impact of
the production gap, were among the reasons that initial bids from the
shipbuilders were unreasonably high and in excess of Navy budget

In an effort to generate more competitive pricing, the Navy changed its
acquisition strategy in May 2011 to “competitively allocate” DDG 114 and
115. This strategy change allowed the Navy to award contracts to each
shipbuilder using a Profit Related to Offers strategy, whereby the
shipbuilder that submitted the lowest cost bid for its allocated ship would
receive a higher target profit percentage, and the shipbuilder that
submitted the lower bid for DDG 116 would be awarded an option for
construction of that ship. The Navy believed that through its new strategy
it would be able to reduce the costs for DDG 114 and DDG 115, noting its
successful use on 30 previous DDG 51 ships since 1996. Additionally, the
strategy allowed the Navy to award both DDG 114 and DDG 115 to one
shipbuilder in the event that it failed to arrive at a fair and reasonable
price with each shipbuilder on its allocated ship. After prolonged
negotiations with the shipyards and over a year delay from when the
Navy planned to award the DDG 113 contract, the Navy awarded a
contract to Ingalls Shipbuilding for DDG 113 in June 2011 and DDG 114
in September 2011, and awarded a contract to Bath Iron Works for DDG
115 in September 2011, with an option to build DDG 116.

  Prior to the truncation Bath Iron Works was responsible for building the majority of DDG
1000, while Ingalls Shipbuilding was responsible for the majority of DDG 1001. The
shipbuilders shared in designing the ship. The Navy had planned to compete DDG 1002
and the remaining four ships.
   Ingalls Shipbuilding would also continue to build the composite deckhouse and hanger
for all three DDG 1000 ships.

Page 23                                              GAO-12-113 Arleigh Burke Destroyers
Restart Production                      The Navy expects DDG 113 to be built in 47 months (from the start of
Schedules Appear in-Line                construction to delivery), DDG 114 in 41 months, and DDG 115 in 58
with Past Shipyard                      months. As show in figure 5, Ingalls Shipbuilding—which is building the
                                        two first ships —averages 41 months to build a DDG 51, though in recent
Performance                             years has required more time due in part to after-effects of Hurricane
                                        Katrina. Bath Iron Works typically requires an average of closer to 54
                                        months. Navy officials told us that this longer 58 month schedule planned
                                        for DDG 115 is due to the shipyard beginning construction earlier than
                                        planned in part to maintain stability in the shipyard labor force, while
                                        maintaining the delivery date.

Figure 5: Historic DDG 51 Construction Durations

                                        The schedules, while in line with past performance, are contingent on
                                        achieving an optimum build sequence, meaning the most efficient
                                        schedule for constructing a ship, including building the ship from the
                                        bottom up and installing ship systems before bulkheads have been built
                                        and when spaces are still easily accessible. Shipbuilders generate
                                        specific dates for when systems need to arrive at the shipyard in order to
                                        take advantage of these efficiencies. According to shipyard officials,
                                        approximately 10 percent to 12 percent of the suppliers for the restart
                                        ships will be new vendors. Some key pieces of equipment—like the main
                                        reduction gear, the machinery control system, and the engine controllers

                                        Page 24                                     GAO-12-113 Arleigh Burke Destroyers
                            —will now be government-furnished equipment, meaning that the Navy
                            will be responsible for ensuring an on-time delivery to the shipyard, not
                            the shipbuilder. 21 For the main reduction gear, the Navy is now
                            contracting with a company that bought the gear production line from the
                            past supplier, and while this supplier builds reduction gears for San
                            Antonio class ships, it does not have experience building DDG 51 main
                            reduction gears. An on-time delivery of this key component is particularly
                            important to the schedule because it is installed early in the lower
                            sections of the ship. A delay in a main reduction gear could result in a
                            suboptimal build sequence as the shipbuilder has to restructure work to
                            leave that space open until the gear arrives. The Defense Contract
                            Management Agency reports production of the first gear ship set is
                            progressing well, and that Navy officials are tracking the schedule closely.

Combat System Upgrade       A major change for the restart ships is a significant upgrade to the Aegis
Has Faced Delays, and Key   combat system currently under way. This upgrade, known as Advanced
Testing Is Undefined        Capability Build 12 (ACB 12), will be retrofitted on some of the current
                            fleet of DDG 51s (starting with DDG 53); following DDG 53, the upgrade
                            will also be installed on the restart ships (starting with DDG 113). The
                            retrofit on DDG 53 will provide the Navy with a risk mitigation opportunity,
                            since any challenges or problems can be identified and resolved prior to
                            installation on DDG 113. The Navy believes this is the most complex
                            Aegis upgrade ever undertaken and will enable the combat system to
                            perform limited IAMD for the first time. This upgrade will also move the
                            Navy towards a more open architecture combat system, meaning that
                            there will be a reduction of proprietary software code and hardware so
                            that more elements can be competitively acquired in the future. To date,
                            Lockheed Martin maintains intellectual property rights over some Aegis
                            components. ACB 12 requires both software and hardware changes, and
                            consists of three related development efforts: (1) development of a
                            multimission signal processor (MMSP), (2) changes to the ballistic missile
                            suite (BMD 5.0), and (3) changes to the Aegis combat system core. While
                            the Navy manages the development of MMSP and ACB 12, MDA
                            manages the development of BMD 5.0. Table 8 describes each of the
                            three efforts.

                               Main reduction gears function like a transmission and reduce the high-speed rotations
                            from the engines to a lower speed that can be used to turn the ship’s propellers.

                            Page 25                                              GAO-12-113 Arleigh Burke Destroyers
Table 8: ACB 12 Components

Element                Description
MMSP                    Radar signal processor that enables IAMD by simultaneously processing radar inputs from ballistic and
                       cruise missile targets. This component is the essential enabler for providing initial IAMD capability.
BMD 5.0                Upgraded set of algorithms and software integrated for the first time into the combat system.
                       Development managed by MDA.
Aegis Modernization    Overall combat system upgrade in addition to MMSP and BMD 5.0, including new workstations and
                       display screens.
                                       Source: GAO analysis of Navy and contractor data.

Delays in Aegis Combat System          While the Navy has made significant progress in developing the
Development May Compromise             components of ACB 12, MMSP is proving more difficult than estimated
Installation and Testing               and is currently 4 months behind schedule, with $10 million in cost growth
Schedule, Shifting Risk to DDG         realized and an additional $5 million projected. A substantial amount of
113                                    software integration and testing remains before MMSP can demonstrate
                                       full capability and is ready for installation on DDG 53—and later DDG
                                       113. While all of the software has been developed, only 28 percent of the
                                       eight software increments have been integrated and tested. The
                                       integration phase is typically the most challenging in software
                                       development, often requiring more time and specialized facilities and
                                       equipment to test software and fix defects. According to the Navy, the
                                       contractor underestimated the time and effort required to develop and
                                       integrate the MMSP software. In December 2010, MMSP was unable to
                                       demonstrate planned functionality for a radar test event due to integration
                                       difficulties, and MMSP more recently experienced software problems
                                       during radar integration which resulted in schedule delays. In response,
                                       the contractor implemented a recovery plan, which included scheduling
                                       additional tests and replanning the remaining work to improve system
                                       stability. However, the recovery plan compresses the time allocated for
                                       integrating MMSP with the rest of the combat system from 10 months to 6

                                       In order to meet schedule goals and mitigate software development risk in
                                       the nearterm, the contractor also moved some development of MMSP
                                       capability to future builds. However, this adds pressure to future
                                       development efforts and increases the probability of defects and
                                       integration challenges being realized late in the program. The contractor
                                       already anticipates a 126 percent increase in the number of software
                                       defects that it will have to correct over the next year, indicating the
                                       significant level of effort and resources required for the remaining
                                       development. According to the program office, the high level of defects

                                       Page 26                                               GAO-12-113 Arleigh Burke Destroyers
projected is due to the complexities of integrating and testing with Aegis.
Each defect takes time to identify and correct, so a high level of defects
could result in significant additional work and potentially further delays if
the contractor cannot resolve the defects as planned. The Navy believes
the schedule risk associated with this increase is understood and
anticipates no further schedule impacts. However, the Defense Contract
Management Agency, which is monitoring the combat system
development for the Navy, has characterized the MMSP schedule as high

As shown in figure 6 below, the Navy will not test ACB 12’s IAMD
capabilities with combined live ballistic and cruise missile tests until after
it certifies the combat system. Certification is an assessment of the
readiness and safety of ACB 12 for operational use including the ability to
perform Aegis ship missions. The Navy and MDA plan to determine future
opportunities for additional testing to prove the system. The Navy plans
to leverage a first quarter fiscal year 2015 test that MDA does not actually
characterize as an IAMD test to demonstrate IAMD capabilities.

Page 27                                       GAO-12-113 Arleigh Burke Destroyers
Figure 6: Timeline of Aegis Upgrade Installation and Testing Events

                                         The Navy initially planned to test the combat system’s IAMD tracking
                                         capability during a BMD test event to occur by third quarter fiscal year
                                         2013. The test—tracking and simulated engagement of BMD and air
                                         warfare targets—would have provided confidence prior to certification of
                                         ACB 12 that the software worked as intended. However, this event was
                                         removed from the test schedule The Navy now plans to test tracking and
                                         simulated IAMD engagement capability during a BMD test event in third
                                         quarter 2014. According to the Navy, this is the earliest opportunity for
                                         sea-based testing of the ACB 12 upgrade installed on DDG 53. This
                                         event will help demonstrate functionality and confidence in the system,
                                         but only allows five months between the test and certification of the
                                         system to resolve any problems that may be identified during testing. The
                                         Navy and MDA plan on conducting a live ballistic missile exercise in
                                         second quarter fiscal year 2014, this will only test the combat system’s
                                         BMD capability, not IAMD. Consequently, the Navy will certify that the
                                         combat system is mission ready without validating with live ballistic and
                                         cruise missile targets that it can perform the IAMD mission. The first

                                         Page 28                                    GAO-12-113 Arleigh Burke Destroyers
                                   IAMD test with live targets is not scheduled until first quarter fiscal year

                                   Delays in MMSP could also lead to concurrence between final software
                                   integration and the start of ACB 12 installation on DDG 53. Although the
                                   Navy has stated that the contractor is currently on schedule, if the
                                   contractor is unable to resolve defects according to plan, Aegis Light-Off
                                   (when the combat system is fully powered on for the first time) on DDG
                                   53 could slip or the test period could move closer to the start of
                                   installation on DDG 113, which could limit risk mitigation opportunities.
                                   Contractor officials told us that they plan to deliver the combat system
                                   hardware to the shipyard for installation on DDG 113 in May 2013. While
                                   the Navy believes the current schedule allows time for the Navy and
                                   contractor to remedy any defects or problems found with ACB 12 before it
                                   is scheduled to be installed on DDG 113, we have previously reported
                                   that concurrent development contributes to schedule slips and strains
                                   resources required to develop, integrate, test, and rework defects, which
                                   could encroach into this buffer. 22

                                   Additionally, if DDG 53 is not available when currently planned to begin its
                                   upgrade, this process could also be delayed. DDG 53’s upgrade schedule
                                   already slipped from May 2012 to September 2012, and any significant
                                   shifts could mean further schedule compression, or if it slipped past the
                                   start of installation on DDG 113 this new-construction ship could become
                                   the ACB 12 test bed, which would increase risk.

Navy Has Not Fully Planned for     At present, DOD weapons testers and Navy and MDA officials are unsure
Realistic Operational Testing of   to what extent the new IAMD capabilities of Aegis will be fully
Aegis IAMD Capabilities            operationally tested and evaluated. Operational testing involves the
                                   employment of a new system in a realistic operational environment to
                                   determine the operational effectiveness and suitability of the system. This
                                   testing is required to: (1) determine if performance thresholds are met, (2)
                                   assess impacts to combat operations, and (3) provide additional
                                   information on the system’s operational capability. Since the ACB 12
                                   upgrade of Aegis is central to the combat capabilities of the ship, Navy
                                   weapons testers believe that Aegis should have a rigorous operational

                                     GAO, Defense Acquisitions: Significant Challenges Ahead in Developing and
                                   Demonstrating Future Combat System's Network and Software, GAO-08-409,
                                   (Washington, D.C.: Mar. 7, 2008) and Joint Strike Fighter: Restructuring Places Program
                                   on Firmer Footing, but Progress Still Lags, GAO-11-325 (Washington, D.C.: Apr. 7, 2011).

                                   Page 29                                             GAO-12-113 Arleigh Burke Destroyers
testing program—similar in scope to what was done for the first DDG
51s—in order to validate that the combat system still functions in all
areas. According to DOD officials, there should be a high level of
coordination between the Navy and MDA with regard to testing the IAMD
capability of ACB 12. However, creation of robust test plans for IAMD is
complicated because of the division of responsibility between MDA and
the Navy. While IAMD consists of both defense against cruise missile and
aircraft threats and BMD, MDA is responsible for funding and testing BMD
functionality while the Navy is responsible for funding and testing
everything else. 23

Since Navy assessments include the possibility of IAMD engagements
with multiple-missile threats, DOD weapons testers agree that a robust,
operationally relevant test of IAMD capabilities should include a test with
multiple, simultaneous BMD and air warfare targets. However, neither the
Navy nor MDA has such a test in their current plans, nor, according to
MDA officials, has such a test ever occurred. 24 The IAMD test event in
first quarter fiscal year 2015 will only test the combat system’s capability
against a single ballistic missile and cruise missile target—not multiple
targets. According to MDA officials, the focus of MDA testing is to validate
BMD performance, not IAMD performance. MDA officials have stated that
MDA test assets are very expensive, and the agency does not know how
the Navy intends to validate the performance of IAMD capabilities, though
they have stated that they will try to support the Navy as best they can,
and that they are currently assisting the Navy in developing strategies to
test and characterize IAMD performance. The Navy’s proposed test plan
includes acquiring three Aegis BMD targets to be fired and tracked with
simulated cruise missile threats, which will allow the Navy to simulate
ACB 12 performance in an IAMD environment. Though cost and other
constraints may limit the practicality of live test events, DOD weapons
testers told us that though Aegis testing and performance evaluation can

   Because MDA has not yet formally entered the defense acquisition cycle, it has not
followed the procedures under DOD Instruction 5000.02, Operation of the Defense
Acquisition System, and does not generate a Test and Evaluation Master Plan like the
Navy which is subject to Director, Operational Test and Evaluation review and approval.
MDA does prepare an Integrated Master Test Plan.
  According to MDA officials, the Aegis combat system first demonstrated the potential to
be used for IAMD during a flight test on April 26, 2007, when Aegis engaged a BMD target
and a target simulating a high-performance aircraft, but this test did not use the ACB 12
version of Aegis.

Page 30                                              GAO-12-113 Arleigh Burke Destroyers
                       be done via modeling and simulation, the Navy still needs sufficient data
                       from flight tests conducted in an operationally relevant environment in
                       order to validate the simulation models with actual performance data.
                       Similarly, MDA told us that model validation requires making comparisons
                       between previous flight test results and the results of the models. Without
                       actual operational tests, the Navy’s IAMD models will lack vital real-world
                       data needed to validate how accurately they model the performance of

                       The Navy plans to procure the first of 22 Flight III DDG 51s in 2016 with
Flight III Cost and    the new AMDR and plans to achieve Flight III initial operational capability
Technical Risks Pose   in 2023. Other than AMDR, the Navy has not identified any other
                       technologies for inclusion on Flight III or decided on the size of AMDR.
Challenges for         Although the analysis supporting Flight III discusses a 14-foot AMDR,
Oversight              senior Navy officials recently told us that a 12-foot AMDR may also be
                       under consideration. While the Navy is pursuing a thoughtful approach to
                       AMDR development, it faces several significant technical challenges that
                       may be difficult to overcome within the Navy’s current schedule. The red
                       team assessment of an ongoing Navy Flight III technical study found that
                       the introduction of AMDR on DDG 51 leads to significant risks in the
                       ship’s design and a reduced future capacity and could result in design
                       and construction delays and cost growth on the lead ship. Further, the
                       Navy’s choice of DDG 51 as the platform for AMDR limits the overall size
                       of the radar to one that will be unable to meet the Navy’s desired
                       (objective) IAMD capabilities. If the Navy selects a 12-foot AMDR—which
                       may reduce the impacts on the ship and design—it may not be able to
                       meet the requirements for AMDR as currently stated in the Navy’s draft
                       capabilities document. 25 Given the level of complexity and the preliminary
                       Navy cost estimates, the Navy has likely underestimated the cost of Flight
                       III. However, since the DDG 51 program is no longer in the DOD
                       milestone review process, decision makers currently cannot take
                       advantage of knowledge gained through a thorough review of the
                       program typically provided at a milestone. Further, since the Navy is
                       responsible for acquisition oversight of the program, there is no

                          While the capabilities document has been approved by the Navy, it has not been
                       formally reviewed by the Office of the Secretary of Defense and is subject to change.
                       Since AMDR has not yet reached its milestone decision, according to DOD officials,
                       AMDR requirements could still change.

                       Page 31                                              GAO-12-113 Arleigh Burke Destroyers
                            requirement for a DOD-level assessment before making further
                            investments in the program.

The Navy Is Pursuing a      AMDR represents a new type of radar for the Navy, which the Navy
Thoughtful Approach to      believes will bring a significantly higher degree of capability than is
AMDR, but Success Is        currently available to the fleet. AMDR is to enable a higher degree of
                            IAMD than is possible with the current legacy radars. Further, the Navy
Contingent on a Number of   believes that through the use of active electronically scanned array
Technological               radars, AMDR will be able to “look” more places at one time, thus
Advancements                allowing it to identify more targets with better detection sensitivity. 26 It will
                            also allow the radar to view these targets with better resolution. AMDR is
                            conceived to consist of three separate parts:

                                •     AMDR-S: a 4 faced S-Band radar providing volume search for air
                                      and ballistic missile defense;
                                •     AMDR-X: a 3 faced, 4-foot by 6-foot X-Band radar providing
                                      horizon search (as well as other tasks such as periscope and
                                      floating mine detection); and
                                •     Radar suite controller: interface to integrate the two radars and
                                      interface with the combat system.

                            Figure 7 depicts a notional employment of AMDR’s two radar bands.
                            Three contractors are under contract to mature and demonstrate the
                            critical AMDR-S radar technology required; the acquisition of the AMDR-
                            X portion is still in the preliminary stage, and the Navy plans to award a
                            contract for it in fiscal year 2012.

                               Radar sensitivity is a measure of how well the radar can detect an object at a distance.
                            A more sensitive radar can detect smaller objects at a range farther from the radar given a
                            fixed resource consumption. It is a function of radar power and radar aperture (size).

                            Page 32                                               GAO-12-113 Arleigh Burke Destroyers
Figure 7: Notional DDG 51 Flight III with AMDR

The Navy recognized the risks inherent in the AMDR-S program early on,
and implemented a risk mitigation approach to help develop and mature
specific radar technologies that it has identified as being particularly
difficult. Additionally, the Navy used an initial AMDR-S concept
development phase to gain early contractor involvement in developing
different concepts and earlier awareness of potential problems. In
September 2010, the Navy awarded three fixed-priced incentive contracts
to three contractors for a 2-year technology development phase. All three
contractors are developing competing concepts with a goal of maturing
and demonstrating S-Band and radar suite controller technology
prototypes. In particular, the contractors are required to demonstrate
performance and functionality of radar algorithms in a prototype one-fifth
the size of the final AMDR-S.

The Navy has estimated that AMDR will cost $2.2 billion for research and
development activities and $13.2 billion to procure at most 24 radars. At
the end of the 2-year phase, the Navy will hold a competition leading to
award of an engineering and manufacturing contract to one contractor.

Page 33                                          GAO-12-113 Arleigh Burke Destroyers
                          As shown in figure 8, AMDR is first scheduled to be delivered to a
                          shipyard in fiscal year 2019 in support of DDG 123—the lead ship of
                          Flight III.

Figure 8: AMDR Schedule

                          AMDR-S relies on several cutting-edge technologies. Three of the most
                          significant of these pertain to digital beamforming, the transmit/receive
                          modules, and the radar/combat system interface. Table 9 highlights these
                          technologies and key challenges.

                          Page 34                                    GAO-12-113 Arleigh Burke Destroyers
Table 9: AMDR Technologies and Key Technical Challenges

Technology          Description                                    Key technical challenges
Digital             •  Advanced software algorithms                •   Without this technology, requirements may have to be reduced and
beamforming            digitize the radar signal, enabling             radar may be less efficient in littoral or dense electromagnetic
                       simultaneous generation and                     interference environments.
                       processing of multiple beams,               •   This technology has never been demonstrated to the size and
                       increasing radar resources                      architecture planned for AMDR.
                       available for multiple missions.a
                       This allows beams to be modified
                       to help eliminate interference or
                       clutter in an electromagnetic
                       interference environment.
Transmit/ receive   •   Individual units that emit the radar       •     To achieve this increased level, the contractors may use Gallium
modules                 signal from the radar.                           Nitride-based semiconductors, which may provide higher power and
                    •   AMDR transmit/receive modules                    efficiency than current material. This material is relatively new and
                        must generate significantly more                 long-term reliability is unknown. It has never been used in a radar of
                        radio frequency power over                       this scale.
                        modules in the DDG 1000’s                  •     Inability to use Gallium Nitride may require use of current materials,
                        Volume Search Radar, and 10                      and thus additional ship power and cooling. Alternatively,
                        percent more efficiency to enable                performance requirements may be set lower with a spiral
                        AMDR’s required capabilities.b                   development plan to achieve the objective power levels at a later
                                                                   •     Past radar programs (Volume Search Radar and the Cobra Judy
                                                                         Replacement radar) have needed more time to test and mature
                                                                         transmit/receive modules than estimated, causing cost and schedule
Combat system       •   Aegis Combat System requires               •     Software integration and testing is a lengthy effort and is typically the
integration             modification in order to                         most challenging phase of software development, requiring
                        accommodate and exploit AMDR’s                   specialized skills and integration test lines.
                        additional capability and mission          •     The Navy has yet to fully identify what interfaces will be impacted or
                        sets (e.g. periscope detection).                 to develop estimates of the level of effort that will be required. A
                                                                         Navy/industry combat system integration working group was
                                                                         established but has had a limited role to date. Integration will likely be
                                                                         challenging because multiple technology developers and two
                                                                         program offices will have to work closely together.
                                                                   •     Lack of test and evaluation assets early in process could result in
                                                                         shipboard integration issues.
                                             Source: GAO analysis of Navy data.
                                              Radar resources are a percentage that radar arrays are required to be dedicated to a particular task.
                                             For instance, if a searching task takes a total of 1 second and is repeated every 4 seconds, that task
                                             would consume 25 percent of radar resources.
                                              Radar efficiency means that it can operate at higher levels of power with less demand for electricity
                                             and less heat generation that requires cooling.
                                               The Cobra Judy Replacement program is a ship that carries a powerful dual band radar suite that is
                                             used for ballistic missile treaty verification and to provide data collection of ballistic missiles in flight.
                                             The ship consists of an X and S-band radar with a common radar controller.

                                             Though the Navy has been pursuing risk mitigation efforts related to
                                             some key AMDR technologies, realizing AMDR will require overcoming

                                             Page 35                                                          GAO-12-113 Arleigh Burke Destroyers
several significant technical challenges. For example, though the Navy
worked with the United Kingdom on a radar development program to
demonstrate large radar digital beamforming, including limited live target
testing, the technical challenges facing the development of AMDR have
not been fully mitigated by these efforts. The joint radar development
program used a digital beamforming architecture different than what is
intended for AMDR, and the demonstrator was much smaller than what is
envisioned for AMDR-S. Further, the Navy’s previous effort also did not
demonstrate against BMD targets, which are the most stressful for the
radar resources. The Navy told us that the contractors have been
successful in their AMDR development efforts to date, and that power and
cooling requirements may be less than initially estimated. However,
substantial work remains, and failure to achieve any of these technologies
may result in AMDR being less effective than envisioned. AMDR
development is scheduled for 10 years, compared with 9 years for the
DDG 1000’s VSR. 27

Integration with the Aegis combat system may also prove challenging:
Aegis currently receives data from only a single band SPY-1D(V) radar,
and adding AMDR will require modifying Aegis to receive these data, to
accommodate some new capabilities, and to integrate Aegis with the
radar suite controller. The Navy has deferred this integration, as it
recently decided to eliminate AMDR integration work from its upcoming
Aegis upgrade (ACB 16) contract, although Navy officials pointed out that
this work could be started later under a separate contract. If the Navy
does not fund AMDR integration work in ACB 16, this work may not be
under way until the following ACB upgrade, which could be completed in
2020 at the earliest if the Navy remains on the same 4 year upgrade
schedule. With an initial operating capability for Flight III planned for
2023, this could leave little margin for addressing any problems in
enabling AMDR to communicate with the combat system.

     This included development and land-based testing for VSR.

Page 36                                              GAO-12-113 Arleigh Burke Destroyers
Physical Constraints Will   DDG 51 is already the densest surface combatant class; density refers to
Result in a Complicated     the extent to which ships have equipment, piping, and other hardware
Flight III Design and       tightly packed within the ship spaces. 28 According to a 2005 DOD-
                            sponsored shipbuilding study, the DDG 51 design is about 50 percent
Construction Process and
                            more dense and complex than modern international destroyers. High-
May Increase Ship Costs     density ships have spaces that are more difficult to access; this results in
                            added work for the shipbuilder since there is less available space to work
                            efficiently. As a legacy design, the ship’s physical dimensions are already
                            fixed, and it will be challenging for the Navy to incorporate AMDRs’ arrays
                            and supporting equipment into this already dense hullform. Some
                            deckhouse redesign will be necessary to add the additional radar arrays:
                            a current DDG 51 only carries four SPY radar arrays, while Flight III is
                            envisioned to carry four AMDR-S arrays plus three additional AMDR-X
                            band arrays. The deckhouse will need to be redesigned to ensure that
                            these arrays remain flush with the deckhouse structure. Adding a 14-foot
                            AMDR to DDG 51 will also require significant additional power generating
                            and cooling equipment to power and cool the radar. Navy data show that
                            as a result of adding AMDR the ships will require 66 percent more power
                            and 81 percent more cooling capacity than current DDG 51s. If the Navy
                            elects to use a smaller AMDR for Flight III these impacts may be reduced,
                            but the ship would also have a significant reduction in radar performance.

                            The addition of AMDR and the supporting power and cooling equipment
                            will significantly impact the design of Flight III. For example, additional
                            large cooling units—each approximately 8 feet by 6 feet—required to
                            facilitate heat transfer between the radar coolant and the ship’s chilled
                            water system will have to be fit into the design. Similarly, a new electrical
                            architecture may be required to power AMDR, which would result in
                            changes to many electrical and machinery control systems and the
                            addition of a fourth large generator. The red team assessment of the
                            Navy’s ongoing Flight III technical study found that modifying DDG 51 to
                            accommodate these changes will be challenging with serious design
                            complexity. Since Flight III design work is just in the concept phases, it is
                            currently unknown how the additional cooling and power generating units
                            added to support AMDR will be arranged, or any impact they will have on
                            ship spaces and habitability. For example, the Navy is currently
                            considering five possible cooling unit configurations. Of these, one cannot

                               Measured in terms of pounds of weight per cubic foot (lbs/cf), the DDG 51 class has an
                            outfit density of close to 8 lbs/cf, which is more than the DDG 1000 and FFG 7 classes,
                            which are approximately 7 lbs/cf, and the CG 47 class, which is approximately 7.5 lbs/cf.

                            Page 37                                              GAO-12-113 Arleigh Burke Destroyers
be arranged within the existing spaces, another will be very difficult to
arrange, and three of these options will require significant changes to the
arrangements of the chilled water systems. Similarly, all of the options the
Navy is considering for possible power generation options will require
rearrangement and some impact on other spaces, including
encroachment on storage and equipment rooms. Navy officials told us
that hybrid electric drive is being researched for Flight III, and the Navy
has awarded a number of contracts to study concepts. 29 The Navy told us
that this technology has the ability to generate an additional 1 megawatt
of electricity, and thus could potentially obviate the need for an additional
generator to support AMDR. However, adding hybrid electric drive would
require additional design changes to accommodate the new motors and
supporting equipment.

Not only can density complicate design of the ship as equipment needs to
be rearranged to fit in new items, but Navy data also show that
construction of dense vessels tends to be more costly than construction
of vessels with more open space. For example, submarine designs are
more complicated to arrange and the vessels are more complicated and
costly to build than many surface ships. DDG 1000 was designed in part
to have reduced density, which could help lower construction costs.
According to a 2005 independent study of U.S. naval shipbuilding, any
incremental increase in the complexity of an already complex vessel
results in a disproportionate increase in work for the shipbuilder, and
concluded that cost, technical and schedule risk, and the probability of
cost and schedule overrun all increase with vessel density and
complexity. 30 Therefore, further adding to the density of DDG 51 to
incorporate AMDR is likely to result in higher construction costs and
longer construction schedules than on Flight IIA ships.

The addition of equipment to Flight III adds weight to the ship, and adding
the large, heavy AMDR arrays to the deckhouse will also change the
ship’s center of gravity—defined as the height of the ship’s vertical center
of gravity as measured from the bottom of the keel, including keel

   Hybrid electric drive uses an electric motor integrated through the main reduction gear
to reduce the use of the ship’s primary gas turbines to provide both propulsion (which in
turn can reduce fuel consumption) and additional electrical power. This equipment may
also be backfit on prior ships.
  First Marine International Findings for the Global Shipbuilding Industrial Base
Benchmarking Study, First Marine International (London: August 2005).

Page 38                                               GAO-12-113 Arleigh Burke Destroyers
thickness. Weight and center of gravity are closely monitored in ship
design due to the impact they can have on ship safety and performance.
The Navy has required service life allowances (SLA) for weight and
center of gravity for ships to allow for future changes to the ships, such as
adding equipment and reasonable growth during the ship's service life—
based on historical data—without unacceptable compromises to hull
strength, reserve buoyancy, and stability (e.g., tolerance against
capsizing). Adding new systems or equipment may require mitigating
action such as removing weight (e.g., equipment, combat systems) from
the ship to provide enough available weight allowance to add desired new
systems or equipment. A reduced center of gravity may require mitigation
such as adding additional weight in the bottom of the ship to act as
ballast, though this could also reduce the available weight allowance.
These changes all require redesign which can increase costs, and this
design work and related costs can potentially recur over the life of the

The Navy is considering a range of design options to deal with adding
AMDR and its supporting power and cooling equipment. None of the DDG
51 variants under consideration as part of an ongoing Navy study meet
Navy SLA requirements of 10 percent of weight and 1 foot of center of
gravity for surface combatants. Figure 9 shows that several variants
provide less than half of the required amounts.

Page 39                                      GAO-12-113 Arleigh Burke Destroyers
Figure 9: SLA of Navy DDG 51 Flight III Concepts

The “most SLA” variant has the highest percentage of weight margin and the second best KG

The Navy has determined that only by completely changing the material
of the entire fore and aft deckhouses and the helicopter hangars to
aluminum or composite as well as expanding the overall dimensions of
the hull (especially the width, or beam) can the full SLA be recovered for
a Flight III with a 14-foot AMDR. Though a decision has not yet been
made, at this time Navy officials do not believe that a composite or
aluminum deckhouse will be used. The Navy also told us that removing
combat capability from DDG 51 may be required in an effort to manage
weight after adding AMDR, effectively reducing the multimission
functionality of the class. Navy officials stated that SLA has not always
been required, and that this allowance is included in designs to eventually
be consumed. They pointed to other classes of ships that were designed
with less than the required SLA margins and that have performed
adequately. However, as shown in Table 10, our analysis of the data
indicates that these ships have faced SLA-related issues.

Page 40                                                  GAO-12-113 Arleigh Burke Destroyers
                              Table 10: SLA Considerations with Select Ship Classes

                                  Class                 Description
                                  CG 47                 •  Based on DD 963 Spruance class hullform. According to a naval
                                  Ticonderoga              architect on the Navy’s technical study red team, adding Aegis
                                                           compromised weight and center of gravity margins, requiring
                                                           weight removal from the deckhouse to compensate. This weight
                                                           removal in part contributed to cracking and buckling of
                                                           deckhouses and superstructure.
                                                        •  CG 47-CG 51 had most significant SLA impacts. These hulls were
                                                           retired with an average life of 20 years; structural modernization
                                                           needed so remaining hulls can reach 35-year service life.
                                                        •  No CG 47’s can accept an increase in weight or a rise of center of
                                                           gravity due to reduced SLA; any new equipment will require
                                                           weight and center of gravity adjustments.
                                  FFG 7 Oliver          •  21 of 49 have been retired early after an average lifespan of only
                                  Hazard Perry             17 years.a
                                                        •  Reduced SLA means majority of remaining hulls cannot accept
                                                           weight or center of gravity growth.
                              Source: GAO analysis of Navy data.
                               Other factors that can contribute to early decommissioning are structural integrity of the hull, costs to
                              upgrading the combat systems, condition of propulsion machinery, and cost to operate the vessel.
                              The ships of the FFG 7 class are expected to operate for 30 years.

                              According to Navy data, delivery weight of DDG 51s has gotten
                              considerably heavier over the course of building the class, with current
                              51s weighing approximately 700-900 long tons (a measure of ship
                              displacement) more than the first DDG 51s. Further, while the current
                              DDG 51s all can accept both an increase in weight or rise in the center of
                              gravity, the ships are already below the required center of gravity
                              allowances, though Navy officials told us that this could be corrected with
                              ballasting if the Navy opted to fund the change. In commenting on the
                              ongoing Navy study, the independent red team identified reduced SLA as
                              a significant concern for Flight III, and noted that if the Navy does not
                              create a larger hullform for Flight III, any future ship changes will be
                              significantly constrained.

Flight III Will Not Achieve   Flight III with a 14-foot AMDR will not be powerful enough to meet the
Navy Desired IAMD             Navy’s objective, or desired IAMD capabilities. The shipyards and the
Capabilities with No          Navy have determined that 14-foot radar arrays are the largest that can
                              be accommodated within the confines of the existing DDG 51
Future Ship Planned in the    configuration. Adding a radar larger than 14 feet to DDG 51 is unlikely
Near-Term                     without major structural changes to the ship. AMDR is being specifically
                              developed to be a scalable radar—meaning that it can be increased in
                              size and power to provide enhanced capability against emerging threats.

                              Page 41                                                       GAO-12-113 Arleigh Burke Destroyers
According to AMDR contractors, the Navy had originally contracted for an
investigation of a Variant 2 AMDR with a sensitivity of SPY+40, but this
effort was cancelled. They added that the maximum feasible size of
AMDR would be dictated by the ship and radar power and cooling
demands, but that they had investigated versions as large as 36 feet.
Leveraging AMDR’s scalability will not be possible on DDG 51 without
major changes, such as a new deckhouse or adding to the dimensions of
the hullform itself by broadening the beam of the ship or adding a new
section (called a plug) to the middle of the ship to add length. Navy
officials have stated that adding a plug to DDG 51 is not currently a viable
option due to the complexity, and that a new ship design is preferable to a
plugged DDG 51.

The Navy has not yet determined the size of AMDR for Flight III, and two
sizes are under consideration: a 14-foot AMDR with a sensitivity of
SPY+15, and a 12-foot AMDR with a sensitivity of SPY+11. According to
a draft AMDR Capability Development Document, the Navy has identified
that an AMDR with SPY+15 will meet operational performance
requirements against the threat environment illustrated in the Radar/Hull
Study. This document also notes that a significantly larger SPY+30
AMDR is required to meet the Navy’s desired capability (known as
objective) against the threat environment illustrated in the MAMDJF AOA.
The Navy could choose to change these requirements. The MAMDJF
AOA eliminated the DDG 51-based SPY+15 solution from consideration
in part due to the limited radar capability, and identified that a radar closer
to SPY+30 power with a signal to noise ratio 1,000 times better than
SPY+0 and an array size over 20 feet is required to address the most
challenging threats. 31 If a 12-foot array is chosen, the Navy will be
selecting a capability that is less than the “marginally adequate” capability
offered by a SPY+15 radar as defined by the Radar/Hull Study red team
assessment. According to Navy officials, only through adding additional
square footage can the Navy effectively make large improvements in the

   Other reasons provided in the MAMDJF AOA for the elimination of the DDG 51 concept
from consideration as a single ship concept include minimal opportunity for growth, limited
service life, and constrained operational capabilities. For a discussion of the performance
of SPY+15 and SPY+30 radars against the different threat environments, see Classified
Annex C which will be made available upon request to those with the appropriate
clearance and a validated need to know.

Page 42                                               GAO-12-113 Arleigh Burke Destroyers
                              sensitivity of the radar; 32 the SPY+30 radar considered in the MAMDJF
                              AOA could only be carried by a newly designed cruiser or a modified San
                              Antonio class ship, and only a modified DDG 1000 and could carry the
                              approximately SPY+25 radar. According to the draft AMDR Capability
                              Development Document, the Navy’s desired IAMD capability can only be
                              accommodated on a larger, currently unspecified ship. As part of the
                              MAMDJF AOA, the Navy identified that DDG 1000 can accommodate a
                              SPY+25 radar. As part of a technical submission to the Navy, BIW—the
                              lead designer for DDG 1000—also identified a possible design for a 21-
                              foot radar on DDG 1000. The Navy did not include a variant with this size
                              radar in the Radar/Hull Study.

Navy Plans to Leverage Off-   According to senior Navy officials, since the MAMDJF AOA was released
board Sensors to Augment      the Navy has changed its concept on the numbers of Navy ships that will
Radar Performance, but        be operating in an IAMD environment. Rather than one or a small number
Concept Is Unproven           of ships conducting IAMD alone and independently managing the most
                              taxing threat environments without support, the Navy now envisions
                              multiple ships that they can operate in concert with different ground and
                              space-based sensor assets to provide cueing for AMDR when targets are
                              in the battlespace. This cueing would mean that the shooter ship could be
                              told by the off-board sensors where to look for a target, allowing for earlier
                              detection and increased size of the area that can be covered. According
                              to the Navy, this concept—referred to as sensor netting—can be used to
                              augment the reduced radar capability afforded by a 12 or 14-foot AMDR
                              as compared to the larger radars studied in the MAMDJF AOA. For
                              example, the Navy cited the use of the Precision Tracking Space System
                              program as an example of sensors that could be leveraged. However,
                              this program (envisioned as a constellation of missile tracking satellites) is
                              currently in the conceptual phase, and the independent Radar/Hull Study
                              red team stated that the development timeline for this system is too long
                              to consider being able to leverage this system for Flight III. Navy officials
                              told us that another option would be to leverage the newly completed
                              Cobra Judy Replacement radar ship and its very powerful dual-band
                              radar to provide cueing for DDG 51s. This cueing could allow the DDG
                              51s to operate a smaller AMDR and still be effective. The Cobra Judy
                              Replacement ship is comparatively cheaper than DDG 51s

                                 Navy officials explained that radar sensitivity scales as a cube of the size of the radar
                              aperture. While improvements can also be made to the transmit/receive modules that emit
                              the radar signal, Navy officials stated that this is a linear (not cubic) relationship and only
                              adds marginal capability on the order of +1 or 2 dB.

                              Page 43                                                 GAO-12-113 Arleigh Burke Destroyers
                                 (approximately $1.7 billion for the lead ship), and was commercially
                                 designed and built. However, it is not a combatant ship, which would limit
                                 its employment in a combat environment and make it difficult to deploy to
                                 multiple engagement locations.

                                 Senior Navy officials told us that the concept of sensor netting is not yet
                                 well defined, and that additional analysis is required to determine what
                                 sensor capabilities currently exist or will be developed in the future, as
                                 well as how sensor netting might be conceptualized for Flight III. 33 Sensor
                                 netting requires not only deployment of the appropriate sensors and for
                                 these sensors to work alone, but they also need to be able to share
                                 usable data in real-time with Aegis in the precise manner required to
                                 support BMD engagements. Though sharing data among multiple
                                 sensors can provide greater capabilities than just using individual stand-
                                 alone sensors, officials told us that every sensor system has varying
                                 limitations on its accuracy, and as more sensors are networked together
                                 and sharing data, these accuracy limitations can compound. Further,
                                 though there have been recent successes in sharing data during BMD
                                 testing, DOD weapons testers responsible for overseeing BMD testing
                                 told us that there have also been issues with sending data between
                                 sensors. Although sensor technology will undoubtedly evolve in the
                                 future, how sensor netting will be leveraged by Flight III and integrated
                                 with Navy tactics to augment Aegis and the radar capability of Flight III is

No Navy Plans to Procure a       The Navy has added a future DDG 51 flight (known as Flight IV) to its
More Capable Ship until Flight   annual long-range shipbuilding plan submitted to Congress, with
IV in 2032                       procurement of 21 ships to begin in 2032. According to the Navy, this
                                 Flight IV ship could be notionally based on the DDG 51 hullform, but it
                                 may be largely or entirely a clean sheet design. DOD officials stated that
                                 no decisions have been made with respect to the capabilities of this future
                                 platform, and that Executive Office of the President and DOD decisions
                                 may ultimately dictate further analysis on the capabilities needed for
                                 future surface combatants. If additional studies are completed and
                                 materiel solutions are recommended, DOD officials stated that an AOA
                                 may be warranted. Senior Navy officials told us that they do not know if
                                 Flight IV will carry a larger, more powerful radar or not or what the overall

                                   For more specifics on sensor netting, see Classified Annex C which will be made
                                 available upon request to those with the appropriate clearance and a validated need to

                                 Page 44                                              GAO-12-113 Arleigh Burke Destroyers
                              improvements in capabilities will be, even though AMDR is being built
                              with the capability to be scaled up in size. In its recent annual long-range
                              shipbuilding plan, the Navy currently estimates that its notional Flight IV
                              ships will cost approximately $2.1 billion each—the same as the Flight III
                              ships, which implies no expectations of changes to the hullform. 34 Navy
                              officials told us that this amount was a placeholder.

                              Officials told us that a major consideration in the future will be electrical
                              power. While Flight III will most likely not leverage technologies
                              developed as part of the DDG 1000 program because of DDG 51’s
                              design constraints, Navy officials stated that Flight IV may carry some
                              form of the integrated power system developed for DDG 1000. The Navy
                              examined the use of the integrated power system for Flight III in the Flight
                              Upgrade Study, but found that it was not currently viable due to current
                              component technology. The constrained nature of Flight III will likely limit
                              the ability of the Navy to add future weapon technologies to these ships—
                              such as an electromagnetic rail gun or directed energy weapons as these
                              technologies mature—unless the Navy wants to remove current weapon
                              systems. For example, the ongoing Navy Flight Upgrade Study examined
                              an option to add a small rail gun by removing the ship’s main 5-inch gun
                              and the forward 32-cell missile launcher system. It is unknown when
                              these future technologies may be used.

Navy Acquisition              Costs of the lead Flight III ship will likely exceed current budget estimates.
Approach for Flight III Not   Although the Navy has not yet determined the final configuration for the
Commensurate with Risks       Flight III ships, regardless of the variant it selects, it will likely need
                              additional funding to procure the lead ship above the level in its current
                              shipbuilding budget. The Navy has estimated $2.6 billion in its fiscal year
                              2012 budget submission for the lead Flight III ship. However, this
                              estimate may not reflect the significant design and construction
                              challenges that the Navy will face in constructing the Flight III DDG 51s—
                              and the lead ship in particular. In fact, the Navy’s most current estimates
                              for a range of notional Flight III options are between $400 million and $1
                              billion more than current budget estimates, depending on the
                              configuration and equipment of the variant selected (see table 11 below).

                                   In constant fiscal year 2011 dollars.

                              Page 45                                       GAO-12-113 Arleigh Burke Destroyers
Table 11: Differences in the Estimated Cost of the Lead DDG 51 Flight III Ship

    2012 President’s Budget               2009 Radar-Hull Study   2011 Flight Upgrade Study
    $2.6 billion                          $2.9 billion            $3.0-3.6 billionb
Source: GAO analysis of Navy documentation.

Note: Shipbuilding and Conversion, Navy (SCN) in then year dollars for the lead ship.
Compared with an estimated $3.4 billion for the DDG 1000 alternative.
Represents the range of options currently under review.

Further, across the entire flight of 22 ships, the Navy currently estimates
Flight III research and development and procurement costs to range from
$58.5 billion to $64.1 billion in constant 2012 dollars. However, the Navy
estimated in its 2011 long-range shipbuilding plan to Congress that these
same 22 ships would cost approximately $50.5 billion in constant 2012
dollars. As shown in figure 10 below, depending on the extent of changes
to hullform, the Navy may need at least $4.2 billion to $11.4 billion more
to procure DDG 51 Flight III ships.

Page 46                                                      GAO-12-113 Arleigh Burke Destroyers
Figure 10: Comparison of Procurement Costs for Flight III

Based on past experience, the Navy’s estimates for future DDG 51s will
likely increase further as it gains greater certainty over the composition of
Flight III and beyond. At the beginning of a program, uncertainty about
cost estimates is high. Our work has shown that over time, cost estimates
become more certain as the program progresses—and generally increase
as costs are better understood and program risks are realized. 35 Recent
Navy shipbuilding programs, such as the Littoral Combat Ship program,
initially estimated each ship to cost less than $220 million. This estimate
has more than doubled as major elements of the ships’ design and
construction became better understood. In the case of Flight III, the Navy
now estimates 3 to 4 additional crew members will be required per Flight
III ship to support the IAMD mission and AMDR than it estimated in the

  GAO: GAO Cost Estimating and Assessment Guide, GAO-09-3SP (Washington D.C.:
March 2009).

Page 47                                          GAO-12-113 Arleigh Burke Destroyers
                               earlier Radar/Hull Study. Increases in the cost of Flight III would add
                               further pressure to the Navy’s long-range shipbuilding plan. Beginning in
                               2019, the Navy will face significant constraints on its shipbuilding account
                               as it starts procuring new ballistic missile submarines to replace the
                               current Ohio class. The Navy currently estimates that this program will
                               cost approximately $80.6 billion in procurement alone, with production
                               spanning over a decade.

The Navy Plans to Procure      Despite uncertainty in the costs of the DDG 123, the Flight III lead ship,
Lead Ship in Multiyear         the Navy currently plans to buy the ship as part of a multiyear
Procurement Despite Inherent   procurement, including 8 DDG Flight IIA ships, and award the contract in
Risks                          fiscal year 2013. Multiyear contracting is a special contracting method to
                               acquire known requirements for up to 5 years if, among other things, a
                               product’s design is stable and technical risk is not excessive. According to
                               the Navy, from fiscal year 1998 through 2005, the Navy procured Flight
                               IIA ships using multiyear contracts yielding significant savings estimated
                               at over $1 billion. However, the Navy first demonstrated production
                               confidence through building 10 Flight IIAs before using a multiyear
                               procurement approach. While Flight III is not a new clean sheet design,
                               the technical risks associated with AMDR and the challenging ship
                               redesign as well as a new power and cooling architecture coupled with
                               the challenges to construct such a dense ship, will make technical risk
                               high. Further, technical studies about Flight III and the equipment it will
                               carry are still underway, and key decisions about the ship have not yet
                               been made. DDG 123 is not due to start construction until fiscal year
                               2016. If the Navy proceeds with this plan it would ultimately be awarding
                               a multiyear contract including this ship next fiscal year, even though
                               design work has not yet started and without sufficient knowledge about
                               cost or any construction history on which to base its costs, while waiting
                               until this work is done could result in a more realistic understanding of
                               costs. Our prior work has shown that construction of lead ships is
                               challenging, the risk of cost growth is high, and having sufficient
                               construction knowledge is important before awarding shipbuilding
                               contracts. 36

                                  GAO, Defense Acquisitions: Improved Management Practices Could Help Minimize
                               Cost Growth in Navy Shipbuilding Programs, GAO-05-183 (Washington, D.C.: Feb. 28,

                               Page 48                                          GAO-12-113 Arleigh Burke Destroyers
Current Level of Program           Given the potential technology, design, and construction risks, and level
Oversight May Not Be               of the investment, the current level of program oversight for DDG 51
Sufficient Given Potential Risks   Flight III may not be sufficient. The DDG 51 program has a long history
                                   and has already passed through all of the DOD acquisition milestone
                                   reviews (formerly Milestones 0 through IV, now Milestones A through C),
                                   and is now an Acquisition Category (ACAT) 1C program. 37 A program’s
                                   acquisition category is based on its location in the acquisition process,
                                   dollar value, and Milestone Decision Authority special interest, and the
                                   acquisition category determines the program’s decision authority. For an
                                   ACAT 1C program, the Assistant Secretary of the Navy (Research,
                                   Development, and Acquisition) is ultimately the Milestone Decision
                                   Authority. As the Milestone Decision Authority, the Assistant Secretary is
                                   designated as having the authority to approve entry of an acquisition
                                   program into the next phase of the acquisition process, and is
                                   accountable for cost, schedule, and performance reporting to higher
                                   authority, including congressional reporting. This differs from the higher-
                                   level ACAT 1D designation, where the Undersecretary of Defense for
                                   Acquisition, Technology and Logistics is the Milestone Decision Authority.
                                   The ACAT 1D designation provides a higher level of oversight to the
                                   program, and also provides enterprisewide visibility over acquisition
                                   program decisions.

                                   Although it is a potentially $64 billion investment spanning decades, DDG
                                   51 program office officials do not believe that the Flight III changes are
                                   significant enough to warrant a return to ACAT 1D oversight. According to
                                   officials, since the AMDR program—which they believe is the risky
                                   element of Flight III—is already an ACAT 1D on its own and is also
                                   progressing through the milestone process, the ship does not warrant
                                   ACAT 1D designation. Similarly, program officials have stated that they
                                   believe AMDR has sufficient oversight for Flight III and that it is
                                   unnecessary for the ship to repeat any milestones. However, significant
                                   re-design and changes to the hull and mechanical and electrical systems
                                   will be required for Flight III, which could bring potentially significant risks
                                   not being captured by AMDR oversight alone. For example, the addition

                                      According to DOD Instruction 5000.02, a program is designated as ACAT I if it is either
                                   a Major Defense Acquisition Program—defined as a program estimated by the
                                   Undersecretary of Defense for Acquisition, Technology and Logistics to require an
                                   eventual total expenditure for research, development, and test and evaluation of more
                                   than $365 million in fiscal year 2000 constant dollars or, for procurement, of more than
                                   $2.190 billion in fiscal year 2000 constant dollars—or if it is designated by the Milestone
                                   Decision Authority as a special interest program.

                                   Page 49                                               GAO-12-113 Arleigh Burke Destroyers
of AMDR requires a challenging ship redesign and software modifications
to Aegis to integrate the new radar. Further, the program has historically
switched from ACAT 1C to ACAT 1D during the transition from Flight I to
Flight II which introduced new capabilities. Our analysis shows that Flight
III meets DOD criteria for ACAT ID (see table 12 below).

Table 12: Flight III Program Compared with Factors to Determine ACAT ID Status

 DOD Instruction 5000.02                              Flight III Program
 Technological complexity                             Addition of AMDR and significant design
                                                      changes to ship.
 Large commitment of resources                        At least $2.6 billion for lead ship, approximately
                                                      $58-$64 billion for the entire Flight III class.
 Critical to achievement of a                         Brings IAMD capability to the fleet.
 Joint program                                        Shared development effort with the Missile
                                                      Defense Agency.
Source: GAO analysis of DOD and Navy documentation.

Note: Other factors include congressional interest.

Officials from the Office of the Secretary of Defense have indicated
support for designating the Flight III program an ACAT 1D program,
though a final decision is not expected until 2012 at the earliest. It has
also not been decided if the program will be required to return to a prior
milestone, a decision also not expected until 2012 at the earliest.
Typically, a milestone review gives decision makers an opportunity to
evaluate important program documentation to help demonstrate that the
program has the appropriate knowledge to proceed with development or
production. In preparation for a milestone, programs submit documents
for well over 10 information requirements, including an independent cost
estimate, and technology readiness and affordability assessments.
Though the Navy is working on a draft capabilities document for Flight III,
without a milestone decision there may be no requirement to compel the
Navy to develop this document. Further, without a milestone there will be
no requirement for the Navy to seek an independent cost estimate from
the office of Cost Assessment and Program Evaluation, typically
submitted at a milestone review. According to Navy officials, they may
consider developing a life-cycle cost estimate prior to requesting approval
for the multiyear procurement approach. The DDG 51 program last
conducted an independent cost estimate in 1993.

Page 50                                                            GAO-12-113 Arleigh Burke Destroyers
              The Navy is in the early stages of a potential $80 billion investment in up
Conclusions   to 43 DDG 51 destroyers to provide IAMD capability for potentially up to
              the next 60 years. Such investment decisions cannot be made without
              some degree of uncertainty; they will always involve risks—especially in
              the early stages of a program. Yet, a decision of this magnitude should
              proceed with a solid base of analysis—regarding the alternatives, cost,
              and technical risks—as well as a plan for oversight that provides sufficient
              leverage and flexibility to adapt to information as it emerges. These
              pieces are not sufficiently in place, at least with respect to Flight III and
              AMDR. To its credit, the Navy’s goal was to move towards a lower-cost
              solution that could be rapidly fielded; however, there are a number of key
              shortfalls in the Navy’s analysis in support of its decisions. As it stands,
              the Navy risks getting a solution that is not low cost, will not be fielded in
              the near-term, or meet its long-term goals. DDG 51 may ultimately be the
              right decision, but at this point, the Navy’s analysis has not shown this to
              be the case. Specific issues include:

              •   The Navy’s choices for Flight III will likely be unsuitable for the most
                  stressful threat environments it expects to face.
              •   While the Navy potentially pursued a lower-cost ship solution, it did
                  not assess the effect of this decision in terms of long-term fleet needs
                  where more of these ships may be required to provide the same
                  capability of a smaller number of more costly, but more capable,
              •   Though the Navy hopes to leverage sensor netting to augment the
                  capability of these ships, there is a shortage of analysis and testing
                  with operational assets to demonstrate that this is a viable option.
              •   The Navy clearly states in recent AMDR documents that a new, as-of-
                  yet undefined ship is required to meet its desired IAMD capability.
                  However, it has not yet articulated its long-term plans for a new
                  surface combatant that is sized to be able to carry a larger AMDR,
                  and such a ship is not currently in the Navy’s long-range shipbuilding
              •   Without a robust operational test program that will demonstrate both
                  DDG 51 with the modified Aegis combat system and the new AMDR,
                  the Navy cannot be sure that the ships can perform the IAMD mission
                  as well as planned.

              In addition to these issues about the analysis underpinning the DDG 51
              program, oversight of the program moving forward could be limited by two

              Page 51                                       GAO-12-113 Arleigh Burke Destroyers
                      •   If the milestone decision authority remains at its current level, needed
                          scrutiny may not occur. While the proper milestone entry may be
                          discretionary, it is clear that the cost and risk of Flight III and AMDR
                          warrant additional oversight.
                      •   If the Navy pursues a multiyear shipbuilding contract that includes the
                          lead ship of Flight III, visibility over the risks inherent in lead ship
                          construction could be obscured.

                      We recommend that the Secretary of Defense direct the Secretary of the
Recommendations for   Navy to take the following three actions:
Executive Action
                      1. Conduct a thorough AOA in accordance with DOD acquisition
                         guidance for its future surface combatant program to include: (a) a
                         range of representative threat environments developed in concert with
                         the intelligence community; (b) results of its ongoing Flight III studies
                         and full cost estimates in advance of awarding DDG 51 Flight III
                         production contracts; (c) implications of the ability of the preferred ship
                         to accommodate new technologies on future capabilities to determine
                         the most suitable ship to carry AMDR and meet near-term IAMD
                         requirements and provide a path to far-term capabilities; (d)
                         implications on future fleet composition; and (e) an assessment of
                         sensor netting—conducted in consultation with MDA and other
                         cognizant DOD components—to determine the risks inherent in the
                         sensor netting concept, potential current or planned programs that
                         could be leveraged, and how sensor netting could realistically be
                         integrated with the selected future surface combatant to assist in
                         conducting BMD. This AOA should be briefed to the Joint
                         Requirements Oversight Council.
                      2. Report to Congress in its annual long-range shipbuilding plan on its
                         plans for a future, larger surface combatant, carrying a more capable
                         version of AMDR and the costs and quantities of this ship.
                      3. In consultation with MDA and DOD and Navy weapons testers, define
                         an operational testing approach for the Aegis ACB-12 upgrades that
                         includes sufficient simultaneous live-fire testing needed to fully
                         validate IAMD capabilities.

                      We also recommend that the Secretary of Defense take the following two

                      1. Upgrade the oversight of the Navy’s future surface combatant
                         program to ACAT 1D status, and ensure that the appropriate
                         milestone entry point is selected to provide cost baselines and
                         assessments of design and technical risks and maturity.

                      Page 52                                       GAO-12-113 Arleigh Burke Destroyers
                     2. Ensure that the planned DDG 51 multiyear procurement request does
                        not include a Flight III ship.

                     We provided a draft of this report to DOD for review and comment. DOD
Agency Comments      provided a written response which is reprinted in appendix II. DOD also
and Our Evaluation   submitted technical comments that were incorporated into the report as

                     DOD concurred with our second recommendation that the Navy report to
                     Congress in its annual long-range shipbuilding plan on its plans for a
                     future larger surface combatant carrying a more capable version of
                     AMDR. Given the assessments that the Navy is currently conducting on
                     surface combatants, the Navy’s next submission should include more
                     specific information about its planned future surface combatant
                     acquisitions. DOD also agreed with our third recommendation on live-fire
                     testing of Aegis ACB-12 upgrades, stating that the Navy and the MDA—
                     working under Office of the Secretary of Defense oversight—are
                     committed to conducting adequate operational testing of ACB-12, but did
                     not offer concrete steps they would take to address our concerns. Moving
                     forward, DOD should demonstrate its commitment to fully validating IAMD
                     capabilities by including robust simultaneous operational live-fire testing
                     of multiple cruise and ballistic missile targets in its Aegis Test and
                     Evaluation Master Plan that is signed by Director, Operational Test and

                     DOD did not agree with our first recommendation to conduct an AOA to
                     support its future surface combatant selection decision, stating that its
                     previous analyses—specifically the MAMDJF AOA and the Radar/Hull
                     Study—comprise a body of work that satisfies the objectives of an AOA.
                     However, DOD did not present any additional evidence to refute our
                     findings. DOD did agree that an assessment of sensor netting needs to
                     be performed. Our analysis shows that the Radar/Hull Study, which was
                     the key determinant in the DDG 51 decision, was a departure from the
                     MAMDJF AOA. These studies are neither complementary nor can they be
                     aggregated. While both sought to determine the best solution to address
                     identified integrated air and missile defense gaps, the Radar/Hull Study
                     essentially answered a different question than the MAMDJF AOA. In
                     essence, it was attempting to identify a cost-constrained, less robust
                     solution, which makes analysis from one study not always appropriate to
                     apply to the other. Specifically, the MAMDJF AOA considered a
                     significantly more taxing threat environment than the Radar/Hull Study,
                     requiring ships carrying very large radars to independently manage these
                     threats. Alternatively, the Radar/Hull Study considered a much less taxing

                     Page 53                                     GAO-12-113 Arleigh Burke Destroyers
threat environment, allowing for ships carrying smaller radars but that
would need to work together to be effective. Ultimately, the MAMDJF
AOA eliminated DDG 51 from consideration as a single-ship solution.
DOD also states that it is currently conducting additional studies on Flight
III, but since these are solely focused on DDG 51, they do not provide any
additional insight into the decision as to the appropriate ship that might be
used to supplement the Navy’s existing analysis. As we note in this
report, the proposed program calls for an investment of up to
approximately $80 billion for 43 destroyers, and likely more if the Navy
chooses to pursue a Flight IV concept. Given the scope of the Navy’s
plans, a thorough AOA is essential to affirm that the decision made is the
right one and a sound investment moving forward. This AOA should be
briefed to Joint Requirements Oversight Council because of the
magnitude of this potential acquisition and because of the joint service
interest in IAMD that make it important to have an overarching body
review the Navy’s analysis and decisions. We believe that this
recommendation remains valid.

DOD disagreed with our fourth recommendation to upgrade the
acquisition category designation of the Navy’s future surface combatant
program to ACAT ID at this time, stating that a determination on the
ACAT designation of DDG 51 Flight III will be made by the fourth quarter
of fiscal year 2012, once sufficient information is available. If the results of
the Navy’s analysis continue to support a DDG 51 Flight III as the
appropriate solution, our analysis shows that Flight III already meets
criteria for ACAT ID status, and that this status provides an enhanced
level of oversight appropriate for a program of this magnitude. This
strategy is also in line with the past flight upgrades that were also
conducted under ACAT ID status. We therefore believe this
recommendation remains valid.

Regarding our fifth recommendation that DOD not include a Flight III ship
in its planned DDG 51 multiyear procurement request, DOD partially
concurred, stating that it is following the statutory requirements for
multiyear procurement authority. DOD commented that it will select an
acquisition approach that provides flexibility and minimizes the cost and
technical risk across all DDG 51 class ships. DOD expects to make a
determination on including or excluding Flight III ships within the
certification of the planned multiyear procurement that is due to Congress
by March 1, 2012. While the Secretary can certify that due to exceptional
circumstances, proceeding with a multiyear contract is in the "best
interest" of DOD, notwithstanding the fact that one or more of the
conditions of the required statutory certification are not met, requesting a

Page 54                                        GAO-12-113 Arleigh Burke Destroyers
                multiyear procurement in March 2012 that includes the lead Flight III ship
                carries significant risk. DOD will be committing to a cost with no actual
                construction performance data on which to base its estimates and a ship
                concept and design that are not finalized. While DOD argued that it has in
                the past included DDG 51’s that were receiving major upgrades in
                multiyear procurements, as this report shows, planned changes for Flight
                III could far exceed those completed in past DDG 51 upgrades. We
                therefore believe that, in view of the current uncertainty and risk, our
                recommendation remains valid to exclude a Flight III ship from the
                upcoming multiyear procurement request.

                In view of the Navy’s disagreement with a number of our
Matters for     recommendations, we are elevating these issues to the attention of
Congressional   Congress. In the coming years, the Navy will ask Congress to approve
                funding requests for DDG 51 Flight III ships and beyond. Without a solid
Consideration   basis of analysis, we believe Congress will not have assurance that the
                Navy is pursuing an appropriate strategy with regard to its future surface
                combatants, including the appropriate level of oversight given its
                significant cost. To help ensure that the department makes a sound
                investment moving forward, Congress should consider directing the
                Secretary of Defense to:

                    1. require the Navy to submit a thorough, well-documented AOA for
                       the its future surface combatant program that follows both DOD
                       acquisition guidance and the elements outlined in our first
                       recommendation prior to issuing solicitations for any detail design
                       and construction contracts of DDG 51 Flight III ships;

                    2. elevate the ACAT status of the DDG 51 Flight III to an ACAT ID
                       level if the decision is made to continue pursuing the program; and

                    3. include the lead DDG 51 Flight III ship in a multi-year procurement
                       request only when the Navy has adequate knowledge about ship
                       design, cost, and risk.

                We are sending copies of this report to the Secretary of Defense. We are
                also sending copies to the appropriate congressional committees. In
                addition, the report is available at no charge on GAO’s website at

                Page 55                                     GAO-12-113 Arleigh Burke Destroyers
If you or your staff has any questions about this report, please contact
Belva Martin at (202) 512-4841 or martinb@gao.gov. Contact points for
our Offices of Congressional Relations and Public Affairs may be found
on the last page of this report. GAO staff who made major contributions to
this report are listed in appendix III.

Sincerely yours,

Belva M. Martin
Director, Acquisition and Sourcing Management

Page 56                                    GAO-12-113 Arleigh Burke Destroyers
Appendix I: Objectives, Scope, and
              Appendix I: Objectives, Scope, and


              The overall objectives of this review were to assess (1) the Navy’s
              determination of the most appropriate platform to meet current and future
              surface combatant requirements; (2) the differences in cost, schedule,
              and design of the restart DDG 51 destroyers compared with previous
              ships, and the risks associated with the restart; and (3) the feasibility of
              the Navy’s plans for maturing and integrating new technologies into the
              future DDG 51 ships.

              To assess how the Navy determined the most appropriate platform to
              meet current and future surface combatant requirements, we analyzed
              the Navy’s Radar/Hull Study, which was the main tool the Navy used for
              assessing the radar and ship options and reviewed the accompanying
              “red team” assessment. We compared this study with other Navy studies
              related to ballistic missile defense (BMD) and integrated air and missile
              defense (IAMD), including the Navy’s Maritime Air and Missile Defense of
              Joint Forces (MAMDJF) analysis of alternatives, the Navy BMD “Knee in
              the Curve Study,” a Navy Cruiser and Destroyer analysis study, and
              Office of Naval Intelligence threat assessment studies. We also reviewed
              the Operational Requirements Document for the DDG 1000 and the draft
              Capability Definition Document for the Air and Missile Defense Radar
              (AMDR). We also obtained and reviewed internal Navy briefing slides
              used to present the findings of the Radar/Hull Study to Navy decision
              makers. To assess the steps taken by the Navy in making this decision,
              we reviewed relevant Department of Defense (DOD) policy and guidance
              documents addressing, among other things, acquisition program initiation
              including DOD Instruction 5000.02 and the Weapon Systems Acquisition
              Reform Act of 2009. We compared the Radar/Hull Study with DOD
              analysis of alternatives guidance found in the Defense Acquisition
              Guidebook, DOD Instruction 5000.02, and a July 2008 Air Force Analysis
              of Alternatives handbook. We also analyzed key contractor data
              submissions related to the ship variants and the radar concepts that were
              provided to the Navy to support its decision. We met with officials from
              the Radar/Hull Study team, the Applied Physics Laboratory at Johns
              Hopkins University who were technical consultants on the study, the DDG
              51 and DDG 1000 program offices, representatives from the Office of the
              Chief of Naval Operations Surface Warfare Division, officials from the
              Program Executive Office for Ships (PEO Ships), the Program Executive
              Office for Integrated Warfare Systems (PEO IWS) program offices
              responsible for the Aegis combat system and for AMDR, and contractor
              officials from Raytheon, Lockheed Martin, and Northrop Grumman. We
              met with officials from the Office of Naval Intelligence to discuss the threat
              environment, and we met with officials from the Joint Integrated Air and
              Missile Defense Organization to discuss the recent Joint Capabilities Mix

              Page 57                                       GAO-12-113 Arleigh Burke Destroyers
Appendix I: Objectives, Scope, and

study which established required numbers of Navy BMD capable ships.
We also met with an official from the Joint Staff to discuss the role of the
Joint Requirements Oversight Council in the DDG 1000 truncation and
DDG 51 restart decisions.

To assess the differences in cost between the restart DDG 51 ships and
previous DDG 51 ships, we examined the Navy budget for DDG 51
restart ships and compared it with the budget for prior ships. We also
spoke with the DDG 51 program office and Navy cost estimating officials,
and discussed their methodology for estimating the impact of the
production gap on prices, and spoke to officials from Bath Iron Works in
Bath, Maine and Ingalls Shipbuilding in Pascagoula, Mississippi—the
shipyards responsible for building DDG 51 destroyers—and the officials
from the Navy’s Supervisor of Shipbuilding at both sites about the impact
of the gap on cost estimates. We also spoke to shipyard officials at both
sites about their readiness to begin construction. We analyzed the Navy’s
revised acquisition strategy for hulls DDG 114 through DDG 116. To
assess differences in production schedules we compared the Navy’s
projected schedules for the Flight IIA restarts with the actual schedule
performance on previous Flight IIA ships. We also spoke with Navy and
shipyard officials at both shipyards. To assess the design changes for the
restart ships, we compared the estimated number of design drawing
changes and engineering change proposals for Flight IIA restart ships
with those for previous Flight IIA ships. We examined Navy and
contractor-provided analyses pertaining to the Aegis upgrade (ACB 12)
with specific focus on the source lines of code (SLOC), and compared
SLOC estimates with SLOC actual numbers. We also reviewed software
defect rates and development schedules related to the ACB 12 upgrade,
and we analyzed the ACB-12 development and test schedules, risk
matrices, and results from relevant test events that might impact ACB 12
availability for installation on DDG 113. We analyzed Defense Contract
Management Agency (DCMA) reports on ACB 12 development, and
spoke to relevant DCMA officials. We also reviewed Navy, Missile
Defense Agency (MDA), and Director, Operational Test and Evaluation
(DOT&E) proposed operational test schedules and plans to assess
integration efforts to verify IAMD capability, and interviewed relevant
Lockheed Martin, MDA, DOT&E, and DOD Development Test and
Evaluation officials.

To address the feasibility of the Navy’s plans for maturing new
technologies intended for DDG 51 Flight III ships, we analyzed key Navy
documentation including the DDG 51 Flight Upgrade Study (Phase I) and
the accompanying “red team” assessment, contractor AMDR concept

Page 58                                       GAO-12-113 Arleigh Burke Destroyers
Appendix I: Objectives, Scope, and

development documents, and AMDR Top Level Radar Performance
documents. We compared the development of AMDR and its
development schedule with previous Navy radar development programs
(e.g. Cobra Judy Replacement radar, Dual Band Radar) to determine the
feasibility of the technology and the development schedule. We also
discussed development, testing, and in-yard date schedules with the
Navy. We met with each of the three AMDR contractors: Raytheon,
Lockheed Martin, and Northrop Grumman. To determine the feasibility of
integrating AMDR and other technologies into Flight III, we compared the
Navy’s Flight III concepts with Navy service life allowance guidelines, and
spoke with officials from both shipyards and a former Navy ship designer.
To assess the feasibility of the Navy’s acquisition strategy for Flight III we
analyzed relevant DOD acquisition guidance including DOD Instruction
5000.02, and spoke with officials from the Office of the Secretary of
Defense for Acquisition, Technology, and Logistics. We also used GAO’s
Cost Estimating and Assessment Guide. We are providing you with a
classified annex containing supplemental information.

We conducted this performance audit from January 2011 through January
2012 in accordance with generally accepted government auditing
standards. Those standards require that we plan and perform the audit to
obtain sufficient, appropriate evidence to provide a reasonable basis for
our findings and conclusions based on our audit objectives. We believe
that the evidence obtained provides a reasonable basis for our findings
and conclusions based on our audit objectives, and that the data we
obtained and analyzed are sufficiently reliable for the purposes of our

Page 59                                       GAO-12-113 Arleigh Burke Destroyers
Appendix II: Comments from the Department
             Appendix II: Comments from the Department
             Of Defense

Of Defense

             Page 60                                     GAO-12-113 Arleigh Burke Destroyers
Appendix II: Comments from the Department
Of Defense

Page 61                                     GAO-12-113 Arleigh Burke Destroyers
Appendix II: Comments from the Department
Of Defense

Page 62                                     GAO-12-113 Arleigh Burke Destroyers
Appendix II: Comments from the Department
Of Defense

Page 63                                     GAO-12-113 Arleigh Burke Destroyers
Appendix III: GAO Contacts and Staff
                  Appendix III: GAO Contacts and Staff


                  Belva Martin, 202-512-4841 or martinb@gao.gov.
GAO Contact
                  In addition to the contact above, Diana Moldafsky, Assistant Director;
Acknowledgments   Jennifer Echard; Laura Greifner; Kristine Hassinger; Jeremy Hawk; Ioan
                  Ifrim; C. James Madar; G. Michael Mikota; Karen Richey; W. Kendall
                  Roberts; Roxanna Sun; and Alyssa Weir made key contributions to this

                  Page 64                                   GAO-12-113 Arleigh Burke Destroyers
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