Navy Ships: Status of SSN-21 Ship Construction Program

Published by the Government Accountability Office on 1990-04-19.

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

                   United   States   General   Accounting   Office
a-      A0         Unclassified Version of a November
                   1989 Report to Congressional
                   Requesters          -

April   1990
                   NAVY SHIPS
                   Status of SSN-21 Ship
                   Construction Program

                   United States
                   General Accounting  Office
                   Washington, D.C. 20648

                   National Security and
                   International Affairs Division


                   April 19,199O

                   The Honorable Edward M. Kennedy
                   Chairman, Subcommittee on Projection
                     Forces and Regional Defense
                   Committee on Armed Services
                   United States Senate

                   The Honorable John R. Kasich
                   House of Representatives

                   This report is the unclassified version of the classified report we pro-
                   vided you in November 1989 on the results of our review of the Navy’s
                   Seawolf Nuclear Attack Submarine (SSN-21)construction program. Cur
                   objectives were to address the program’s status, the SSN-21’sperform-
                   ance capabilities, and the Navy’s ability to maintain the nuclear attack
                   submarine (SSN) force structure.

                   The Navy is using two shipyards to design the SSN-21and is proceeding
Results in Brief   with its ship construction plans. During the research and development
                   phase, the program experienced some cost increases and a revised deliv-
                   ery schedule. Indications are that further cost increases and schedule
                   adjustments are possible, and it is unclear whether overall performance
                   goals will be met since the lead submarine will not be available for test-
                   ing until 1995. The SSN-21’sshipbuilding plan is designed to achieve the
                   Navy’s 100 SSN force goal. However, fiscal constraints and ship cost may
                   prevent the Navy from achieving its SSN force goals.

                   The 100 nuclear attack submarine force is a keystone of the Navy’s mar-
Background         itime strategy and the new SSN-21is to be one of the principal compo-
                   nents of that force. The Navy sees no alternative to the SSN-21in
                   providing the quantum improvements needed in submarine warfighting
                   capability. According to the Navy, the SSN-21is needed because of Soviet
                   deployments of more capable and quieter SNS and because space and
                   weight limitations prevent further performance improvements to the
                   Los Angeles class nuclear attack submarine (~~~-688). Designed to be
                   quieter, deeper diving, and tactically faster, the SSN-21also will carry
                   more weapons than the ~~~-688s being built today. In addition, a new
                   combat system (AN/B=-2) is expected to provide the SSN-21with a
                   greater capability to detect, classify, localize, and launch weapons
                   against enemy targets. (See app. I.)

                   Page 1                                 GAO/NSIADsQ163   Submarine   Constnwtion

                 The SSN-21construction program is a major Navy initiative. Between fis-
                 cal years 1989 and 2000, the Navy plans to award contracts for 29
                 ~~~-21s including combat systems, at an estimated cost of $36 billion.
                 The SSN-21program is completing its detail design phase, and in January
                 1989 the Navy awarded the Electric Boat Division of General Dynamics
                 Corporation a construction contract for the first ship. Some research
                 and development and detail design effort will continue concurrently
                 with construction of the lead submarine. Construction of the first ship
                 began in October 1989 and delivery is scheduled for May 1995. In terms
                 of 1985 base year dollars, the first SSN-21is estimated to cost $1.6 billion
                 and the Navy expects the unit cost of the next three SSN-21swill decline
                 to the point that the fifth and the 24 following SSN-21swill not exceed
                 $1 .Obillion each.

                 The SSN-21 shipbuilding program has experienced cost increases over
Program Status   estimates and a 6-month schedule adjustment. Newport News Shipbuild-
                 ing-the lead shipyard for submarine design-has reported increased
                 costs under its cost-plus-fixed-fee design contract that has an authorized
                 cost of $343 million. Not yet included in the authorized cost is $5 million
                 for submarine redesign caused by changes in the configuration of the
                 combat system. Electric Boat, which is designing the engine room and its
                 equipment also under a cost-plus-fixed-fee contract with an authorized
                 cost of $212 million, shows a cost increase in its cost report. The Navy
                 contended that the cost increase figure was invalid because the contrac-
                 tor’s budgeted costs, against which actual costs were compared, were
                 incomplete. The amount of the individual cost increases is considered to
                 be proprietary by the contractors. According to the Navy, it agreed to a
                 6-month schedule adjustment for constructing the first SSN-21to secure
                 a lower price.

                 The AN/BSY-2 combat system development program could further exac-
                 erbate the SSN-21program’s cost and schedule problems. Managed sepa-
                 rately from the ssrj-21 program, the AN/BSY-2 is critical to the
                 submarine achieving its full mission and performance capabilities. The
                 combat system’s development schedule is set by the ship’s construction
                 schedule, and the Navy has no alternate system planned should the
                 AN/BSY-2 development be delayed. In October 1988 Newport News
                 Shipbuilding indicated to the Navy that, on the basis of its assessment, it
                 believed the AN/BSY-2 development program was 12 to 16 months
                 behind that needed for the lead submarine delivery schedule. The Navy
                 has since extended delivery of the lead submarine 6 months, to May

                 Page 2                                  GAO/NSIALMO-163   Submarine   Chwtruction

                      As of March 1989, design of the combat system was about 3 months
                      behind schedule and two important Navy design reviews had been
                      delayed about 5 months. In addition, the Department of Defense (DOD)
                      has identified problems in developing two combat system components.
                      Further combat system changes could have a major impact on completed
                      SSN-21design, with an adverse effect on program cost and schedule.

                      Until the first SSN-21 is built and fully tested, the Navy will not know
                      the exact extent to which the SSN-21 will achieve its performance goals.
                      Except for the two components, component and system development
                      test results appear satisfactory.

                      A more detailed discussion of the SSN-2I program and the AN/BSY-2
                      combat system is provided in appendix II.

Operational Testing   Section 2366 of title 10 of the United States Code provided that major
                      defense acquisition programs may not proceed beyond low rate produc-
                      tion until operational testing and evaluation is completed. The acquisi-
                      tion schedule for the SSN-21program provides that contracts for 14
                      submarines are to be awarded before the first ship is available for oper-
                      ational testing. The Navy plans to begin construction of the second and
                      third SN-21s more than 4 years before the lead ship is ready for opera-
                      tional testing.

                      In an opinion dated February 27,1989, we concluded that the SSN-21
                      program could not proceed beyond low-rate initial production on the
                      basis of “early operational assessments” that did not constitute opera-
                      tional testing. l

                      The Navy believed that waiting for operational testing of the first SSN-21
                      before contracting for more submarines would delay the program 5 or 6
                      years and entail a large cost increase. The Navy, therefore, had no plans
                      to change its acquisition schedule. However, in its comments on a draft
                      of our November 1989 report, DOD indicated that actions were underway
                      to seek legislative relief from the current requirement. Subsequent to
                      our November report, the Congress resolved this issue in the Navy’s

                      IGAO letter to the Chairman, Legislation and National Security Subcommittee. How Committee on
                      Government Operations,B222886. Feb. 27,1989.

                      Page 3                                            GAO/NSIAKMO-1fM     Submarine   Construction
                       The Navy believes the SSN-21 will allow it to maintain far-term
SSN-21 Affordability   submarine superiority into the next century. Yet, fiscally constrained
                       budgets may not allow the Navy to buy all of the ESN-21sit needs to
                       achieve and maintain its 100 SSN force. To achieve its SSN force goal and
                       execute its SSN-21shipbuilding program, the Navy, according to our
                       analysis, with sustained annual shipbuilding and conversion budget
                       growth of 3 percent above inflation, will need to increase the SSN’S share
                       of the shipbuilding and conversion budget from 19 to 26 percent. F’ur-
                       ther, during a period of zero or negative real growth budgets, the Navy’s
                       planned SSN program could consume up to 36 percent of its total ship
                       building and conversion budget, which may affect Navy total force
                       structure decisions. (See app. III.)

                       The Navy could achieve its SSNforce level goals by building a mix of
                       SSNS.This might entail acquiring fewer SN-21s  and more of the less
                       costly ~~~-688s. However, the Navy does not consider this a viable alter-
                       native to the SSN-21program. According to Navy officials, if SSN-21
                       affordability becomes an issue they would rather reduce the SSN force

                       Without aggressive funding, the Navy will probably have difficulty
Conclusions            achieving its SSN force goal and executing its SSN-21 program. SSN-21
                       affordability issues will likely require the Navy to make total force, as
                       well as SSN force, trade-off decisions. The Navy also may experience dif-
                       ficulties in achieving its current SSN-2 1 construction plan because the
                       AN/B=-2’s development, which is critical to the SSN-81 construction
                       program, may not be completed when the first submarine is delivered.
                       The SSN-21will not be operationally tested until after construction of the
                       second and third ships has started; therefore, the Navy will not pre-
                       cisely know whether the SSN-21 will provide the warfighting capabilities

                       In our November 1989 report, we recommended that the Secretary of
Recommendations        Defense direct the Secretary of the Navy to either (1) ensure that the
                       SSN-21and its combat system undergo operational testing and evaluation
                       before proceeding past low-rate initial production, as required in the
                       law, or (2) seek legislative relief that would change the law to either
                       exempt shipbuilding in general or the SSN-21 program specifically.

                       Page 4                                  GAO/NSIADSO-163   Submarine   Cmwstmction

                      DOD generally agreed with our report and with the facts as presented. In
Agency Comments and   some cases it disagreed as to how those facts were characterized and
Our Evaluation        provided an update to the Navy’s SSN force structure data. Where appro-
                      priate, we modified the report to reflect DOD'S position.

                      DOD agreed with our recommendation that the Navy either seek legisla-
                      tive relief or comply with the law. It indicated that actions were under-
                      way to seek legislative relief from the current requirement. In November
                      1989, Public Law 101-189 was enacted, which allows shipbuilding pro-
                      grams to proceed prior to the completion of operational testing of the
                      first ship.

                      This report was prepared under the direction of Martin M Ferber, Direc-
                      tor, Navy Issues, who may be reached on (202) 275-6504 if you or your
                      staff have any questions. Other major contributors are listed in appen-
                      dix IV.

                      Frank C. Conahan
                      Assistant Comptroller   General

                      Page 6                                 GAO/NSIAIMO-163   Submarine   Construction

Letter                                                                                                     1

Appendix I                                                                                                 8
Role of the Navy’s      The Maritime Strategy
                        U.S. Attack Submarine Force
Nuclear Attack          Developing SSN-2 1 Characteristics                                                 8
Submarine Force         Objectives, Scope, and Methodology                                                 9

 - -     II                                                                                            11
SSN-21 Program          cost
Status                  Performance and Developmental Testing                                          15
                        Operational Testing                                                            16
                        AN/BSY-2 Combat System                                                         17

Appendix III                                                                                           20
SSN-21Cost May          SSN Force Structure Analysis
Affect SSN Force
Appendix IV                                                                                            23
Major Contributors to
This Report
Tables                  Table II. 1: SSN-21 Program Acquisition Funding                                11
                            Requirements Through Fiscal Year 1999
                        Table 11.2:SSN-21 Program Schedule                                             14


                        C4IG      Cost Analysis Improvement Group
                        DOD       Department of Defense
                        OSD       Office of the Secretary of Defense

                        Page 6                                GAO/NSIAD90-163   Submarine   Construction
Page 7   GAO/N3IADf@163   Submarine   Construction
Appendix I

Role of the Navy’s Nuclear Attack
Submarine Force

                        “Submarine superiority” is a keystone of the Navy’s maritime strategy.
                        To fully execute that strategy, the Navy says it needs a battle force’ that
                        includes a minimum of 100 nuclear attack submarines (SSNS). The SSN
                        force level was set by the Secretary of the Navy in 1982. Subsequently,
                        in 1984 the Navy conducted a study2 that identified a higher SSN force
                        level requirement. Although larger force level requirements have been
                        identified, fiscal constraints have kept the Navy’s SSN force level goal at
                        100 SSNS.

                        The U.S. Navy’s maritime strategy is a forward deploying strategy. The
The Maritime Strategy   objectives of the strategy are to deter not only war but also less extreme
                        acts of violence. If war breaks out, however, the objectives are to
                        destroy enemy maritime forces, protect allied sea lines of communica-
                        tion, support the land campaign, and secure favorable leverage for end-
                        ing the war.

                        The U.S. SSN force is substantially outnumbered by the Soviet submarine
U.S. Attack Submarine   force; however, it has traditionally overcome this numerical disparity
Force                   through a qualitative superiority. Although the Navy estimates that the
                        U.S. ssh’ force will have a qualitative advantage over the Soviet subma-
                        rine force through the 199Os, that advantage will continue to erode,
                        especially as the Soviet Union deploys new submarines. Over the last 10
                        years, the Soviet Union has introduced five new SSN classes.

                        At the beginning of fiscal year 1989, the Navy had 97 SSNS in its active
                        force-39 were Los Angeles class (~~~-688) and the others were older
                        class submarines. While completing the ~~~-688 construction program-
                        23 more submarines-the      Navy is moving forward with plans to con-
                        struct the new Seawolf class (SSN-81). The Navy views the SSN-21 as
                        ensuring technological advantages over Soviet submarines into the 2 1st

                        Recognizing that the Soviets were closing the SSN qualitative gap, the
Developing SSN-21       Kavy, 2 years after the first ~~~-688 became operational, began studying
Characteristics         various concepts for a new SSN, as well as possible improvements to the

                        ‘This force 1scommonly referred to as the “600-ship Navy” and represents a desired ship mix that
                        includes 15 deployable aircraft carriers and 4 battleships as centerpieces of this force throqh fii
                        year 2000.
                        ‘Submarine Employment Study, Feb. 1984.

                        Page 8                                                GAO/N%AD-SO-163       Submarine   Constnrction
                        Appendix I
                        Role of the Navy’s Nuclear   Attack
                        Submarine Force

                        ~~~-688 design. The Navy concluded that the main determinants of
                        effectiveness were noise level, combat system performance, and weap-
                        ons’ load and that a versatile, highly mobile, multimission submarine
                        was the most cost-effective system to meet the objectives of national
                        policy and its maritime strategy. The Navy, on the basis of its studies,
                        established the basic SSN-21design in 1982 and 1983.

                        The Navy believes that the SN-81 will be three times better than the
                        improved ~~~-688. It will be the largest, quietest, and most heavily
                        armed SSNthe United States has ever built. Compared with the ~~~-688,
                        the SSN-21 is expected to (1) have a propulsion plant that will have more
                        power per unit of weight, (2) carry more weapons, (3) have more launch
                        tubes, (4) be less detectable, (5) have a faster tactical speed,” and (6)
                        have an improved propeller (called a propulsor) and a new combat sys-
                        tem. The Navy believes the SSN-21 will have quantum improvements
                        over existing SSNS and will restore much of the qualitative advantage its
                        SSNS have lost to the Soviets.

                        In addition, the SSN-21's size will permit the Navy to make improvements
                        to enhance the submarine’s performance. By comparison, Navy projec-
                        tions show that, because of its size, further ~~~-688 class performance
                        improvements are limited -in other words, before something new can
                        be installed something has to come off. The Navy sees no alternative to
                        the SSN-21if it is to obtain the needed quantum improvements in subma-
                        rine warfighting capability. To take full advantage of the ~~~21’s
                        enhanced performance capabilities, to address shortfalls in existing
                        combat systems, and to counter the Soviets’ gains in submarine quieting
                        and acoustic sensors, the Navy also is developing a new submarine com-
                        bat system (AN/B%-2)” for the SSN-21.

                        The Chairman, Subcommittee on Projection Forces and Regional
Objectives, Scope,and   Defense, Senate Committee on Armed Services, and Representative John
Methodology             R. Kasich requested us to examine various aspects of the SSN-21 pro-
                        gram. Our objectives were to address (1) the program’s status, including
                        scope and cost of the SSN-21research and development efforts, basic
                        capability and performance questions about the ss~21, and potential

                        3Tactical speed is the highest speed at which a submarine can operate and still detect potential enemy
                        submarines and ships without being detected in return.

                        4The M/KS-2 combat system development program is discussed in our report entitled Navy Acqui-
                        sition: Cost, Schedule, and Performance of Kew Submarine Combat Systems (GAO/NSIAD-90-'/Z,
                        Jan. 31,199o).

                        Page 9                                                GAO/NSlALHO-163       Submarine   Construction
    Appendix I
    Role of the Navy’s Nuclear   Attack
    Submarine Force

    impact the AN/BSY-2 combat system development program could have
    on the SSN-21construction program, (2) the potential effects that the
    ~~~-21’s costs could have on the Navy’s shipbuilding and conversion
    budget, and (3) the Navy’s ability to maintain the 100 SSN force goal
    during periods of constrained budgets.

    To accomplish these objectives, we reviewed Navy documents, studies,
    and publications and held discussions with responsible Navy and other
    DODpersonnel. In addition, we analyzed the Navy’s SSN-21ship construc-
    tion plans and relevant budget and force structure data and evaluated
    cost, schedule, and performance data for the SSN-21 and AN/BSY-2
    development programs. Since the SSN-21 program had only entered the
    construction phase in January 1989, we could not determine whether
    overall performance goals would be met. In our analysis of current SSN
    force levels and current and future SSNconstruction programs, we esti-
    mated future SSN force levels. This part of our analysis provided (1)
    information on the numerical differences that might exist between the
    Navy’s SSN force level goal and its SSNconstruction plans and (2) an
    extrapolation of expected SSNforce levels in fiscal years 1990 through
    2010. We did not question or validate the Navy’s judgment on how the
     100 SSN force goal was developed or whether this is the proper force
    level to execute the maritime strategy.

    We conducted our review between December 1987 and May 1989 in
    accordance with generally accepted government auditing standards. Our
    work was performed primarily at the Departments of Defense and Navy,
    Washington, D.C.; Newport News Shipbuilding and Drydock Company,
    Newport News, Virginia; and Electric Boat Division, General Dynamics
    Corporation, Groton, Connecticut. We also visited the

l   Naval Underwater Systems Center, Newport, Rhode Island;
l   David Taylor Research Center, Carderock, Maryland;
l   David Taylor Research Center, Acoustics Research Detachment,
    Bayview, Idaho;
l   Navy Operational Test Force, Norfolk, Virginia;
l   Bettis Atomic Power Laboratory, Pittsburgh, Pennsylvania; and
l   General Electric Company, Syracuse, New York.

    Page 10                               GAO/NSIADSO-163   Submarine   Conetrution
Appe-dn      II

SSN-21Program Status

                                          The s.5~2 1 program is generally on schedule, but it has experienced
                                          some cost increases in the detail design phase. Due to late delivery of
                                          combat system design data and the possibility of further design changes,
                                          some components currently not meeting noise goals, and lack of opera-
                                          tional testing, the prospects of the program staying within schedule and
                                          cost are questionable. Also, the overall performance capabilities of the
                                          SSK-21and its ability to provide the quantum improvements in subma-
                                          rine warfighting capabilities will not be known until operational testing
                                          is conducted in the mid 1990s.

                                          In terms of 1985 base year dollars, the Congress had appropriated $4.0
                                          billion through fiscal year 1989 for the development and production of
                                          the lead SSN-21 and the AN/BSY-2 combat system. These funds include
                                          $2.2 billion for research and development, of which $266 million is for
                                          the reactor and other nuclear components, and $0.7 billion for AN/BSY-2
                                          development. Shipbuilding and conversion funds amounting to $1.9 bil-
                                          lion have been appropriated for production of the lead ship, long lead
                                          items for the next two submarines to be authorized in fiscal year 1991,
                                          and the first production unit of the combat system. (Table II.1 shows a
                                          break down of the Navy’s funding requirements.) By the beginning of
                                          fiscal year 2000, the Navy plans to have 13 SSN-21s in the active fleet
                                          and 16 in various stages of construction. The Navy estimates that the
                                          development and production cost of these 29 SSNS, including the combat
                                          systems, will be $36 billion.

Table 11.1:SSN-21 Program Acquisition
Funding Requirements Through Fiscal       Dollars in billions
Year 1999 (In Fiscal Year 1985 Constant                         Fiscal year
Base Year Dollars)                                           1989 and prior                       Outyears                  Total
                                          SSN-21 (without ANIBSY-2)
                                          Develooment                       $1.45    $0.19              $0.72              82.35
                                          Production                         1.64       .39             24.53              28.58
                                          Total’                            $3.08    SO.58             $25.25             $28.91

                                          ANfBSY-2 combat system
                                          Develooment                       $0.71    $0.28              $0.57               81.58
                                          Production                           .24      .20              5.04                 5.48
                                          Total’                            $0.95    so.49              $5.80              $7.04
                                          Total’                            $4.04    $1.06             $30.85             $35.98
                                          aTotals may not add because of rounding.

                                          Page 11                                    GAO/NSLAKMO-163    Submarine   ConstructIon
-     -
                Appendix II
                SSN-21 Pro@am Status

                Newport News Shipbuilding is responsible for the submarine’s overall
                design under a cost-plus-fixed-fee contract. The company has reported a
                cost increase under this contract, which has an authorized cost of $343
                million. (The exact amount of the cost increase is considered to be pro-
                prietary information by the contractor.) The increased cost, according to
                Newport News, is the result of design changes the Navy has requested,
                the cost of training employees in computerized design, productivity in
                the design effort being less than that expected, and employee turnover.

                Electric Boat is designing the engine room and its equipment under a
                cost-plus-fixed-fee contract that has an authorized cost of $212 million.
                Electric Boat’s cost report shows a cost increase, but the Navy believed
                that this figure was invalid because the contractor’s budgeted costs,
                against which actual costs were compared, were incomplete. (The exact
                amount of the cost increase is considered to be proprietary information
                by the contractor.) To control potential cost growth, the Navy has estab-
                lished cost caps for the SSN-21 program, including $1.8 billion for the
                combat system’s development and $1.908 billion for 8SNdevelopment.
                The development cost cap for the SSN-21excludes $383 million of
                nuclear component development and $90 million for certain other SSN-21
                related development efforts.

                The Navy has set a cap of $1.6 billion for production of the first subma-
                rine and $1 billion for the fifth and following submarines. These caps do
                not pertain to the second through fourth submarines and exclude the
                added costs of constructing the ninth and following submarines with
                HY-130 steel.

                Program costs may increase further because of unanticipated problems
                with the use of HY-130 steel to construct the later submarines, possible
                understated operational and support costs, and additional changes to
                the AN/BSY-2 design data.

Hy- 130 Steel   Use of HY-130 steel will increase costs by about $70 million for each
                submarine and permit deeper diving depths. HY-130 steel has never
                been used to construct U.S. ships or submarines. Thus, before it can be
                used, the Navy must certify contractors as being capable of producing
                both the steel and suitable welding materials.

                Both Newport News and Electric Boat are involved in efforts to use this
                steel. Newport News is developing a second source of welding materials
                and a new welding technology. Electric Boat is constructing a hull ring

                Page 12                                GAO/‘NSIAIMO-163   Submarine   Construction
                           Appendix II
                           SSN-21 Program   Statua

                           made of this steel that will be sealed at both ends with similar steel. This
                           sealed hull ring will be taken to sea and subjected to an extensive test
                           program to ascertain operational suitability for the new type steel. The
                           Navy had planned to weld this hull ring into an existing submarine and
                           to subject the modified submarine to tests at sea. However, it dropped
                           this plan in February 1989 because of costs.

                           The Navy does not believe the technology to manufacture and work
                           with this steel presents significant risks, but it anticipates difficulty in
                           finding companies interested in producing suitable welding materials.
                           According to the Navy, because profits are to be found in manufacturing
                           rather than in development, companies that can develop these materials
                           will be reluctant to do so without some assurance that they will be given
                           contracts to produce the materials.

Operating and Support      Estimated operating and support costs for the SSN-81 may be low. The
                           Navy estimates these costs through fiscal year 1999 at $791 million. The
                           Navy’s life-cycle cost estimates, including operating and support costs,
                           were independently reviewed by both the Naval Center for Cost Analy-
                           sis and the Office of the Secretary of Defense’s Cost Analysis Improve-
                           ment Group (CAIG). The Naval Center concluded that the cost estimates,
                           including operating and support costs, were reasonable.

                           CAIG concluded that the development and procurement cost estimates
                           were reasonable but believed that the operating and support costs were
                           understated. It indicated, among other reasons, that the operating and
                           support cost estimate did not include the cost of certain maintenance
                           equipment that the group believed would be required and that the
                           Navy’s estimate of time required to accomplish the single overhaul
                           scheduled for each submarine was optimistic. DOD, in its comments on a
                           draft of our November 1989 report, stated that the Navy had addressed
                           the CAIG'S concerns.

AN/B%:!   Design Changes   Changes to the design of the AN/E%%-2 combat system caused a portion
                           of the ship to be redesigned, and the Navy estimates the cost of these
                           changes to be $5 million. The Navy originally provided Newport News
                           with general information regarding space and weight requirements for
                           the combat system that the shipyard used to begin designing its portion
                           of the submarine. The Navy later provided Newport News with more
                           specific information that, according to the shipyard, caused considerable
                           redesign of the submarine and increased design costs by $3.4 million.

                           Page 13                                  GAO/NSIAIHO-163   Submarine   Construction

                                     Further combat system design changes were made that the Navy esti-
                                     mates will, in turn, necessitate design changes to the SSN-21, costing an
                                     additional $1.6 million.

                                     Additional cost increases, according to Newport News, could result
                                     because of further design changes to the combat system. SSK-21design
                                     contracts are cost type, which means the government, not the contrac-
                                     tors, will bear the risk of unexpected additional costs. However, the
                                     Navy believes the impact of further combat system design changes on
                                     the submarine’s design will be minimal.

                                     Some changes in the SSN-21 program may slightly delay the program
Schedule                             schedule. Newport News and Electric Boat are 1 to 2 months behind in
                                     delivering design drawings to the Navy. However, this did not delay
                                     starting construction on the lead SSN-21 in October 1989.

                                     The planned delivery date of the lead ship, however, has been extended
                                     from November 1984 to May 1996 (see table 11.2). According to the
                                     Navy, this date was extended to permit more efficient production and
                                     hence a lower price from the contractor. The Navy also indicated that it
                                     believed the SSN-21design schedule could have fallen short of support-
                                     ing the original delivery date of November 1994 by some 6 to 8 months.

Table 11.2:SSN-21 Program Schedule
                                                                                                Milestone dates
                                     Milestone event                                 Original                 Current
                                     Program initiated                                July 1982                 July 1982
                                     Preliminary design authorization                 Dec. 1983                 Dec. 1983
                                     Design contract authorization                    May 1985                  June 1985
                                     Full scale development                           June 1985                 June 1985
                                     Detail design authorization                      Oct. 1986                 Oct. 1986
                                     Lead ship authorization                          June 1988                 June 1988
                                     Production contract for lead ship                Nov. 1988                 Jan. 1989
                                     Start construction                               Nov. 1989                 Oct. 1989
                                     Authorization for 2nd and 3rd ships              Mar. 1990                 Mar. 1990
                                     Production contract for 2nd and 3rd ships        Nov. 1990                 Nov. 1990
                                     Start construction of two follow-on ships        Mar. 1991                 Mar. 1991
                                     First shop deliverv                              Nov. 1994                 May 1995
                                     Delivery of 2nd ship                             Aug. 1995                 Aug. 1995
                                     Delivery of 3rd ship                             Mar. 1996                 Mar. 1996

                                      Page 14                                    GAO/NSIADBO-163   Submarine   Construction
                                Appendix II
                                SSN-21 Program   Status

                                In 1987 we testified’ on the importance of having a firm AN/BSY-2 com-
                                bat system configuration so that the SSN-21’s design could be finalized
                                and validated before construction starts. Subsequently, in a March 1989
                                report,* we expressed concerns about the contractor’s ability to develop
                                and test the large amount of ANIBSY-2 software and meet the system
                                delivery schedule. Our concerns about the ANIBSY-2 development and
                                its impact on the SSN-21’s capabilities and schedule still exist.

                                As shown in table 11.2,the SSN-21 schedule has a 27-month gap between
                                detail design authorization and lead ship construction contract award
                                and a 22-month gap between awarding contracts for the lead ship and
                                the second ship. Navy officials believe this approach will allow them
                                time to identify any required modifications before a number of subma-
                                rines are under construction. The Navy believes that the planned con-
                                currency of development and production of the SSN-21will not adversely
                                affect cost, schedule, and performance goals.

                                The Navy believes that innovative production techniques, including the .
                                use of modular construction and computer-aided design, will enable the
                                contractor to build SSN-21s faster than previous submarines have been
                                built. The Navy expects the lead submarine to be built in 67 months and
                                most of the later ones to be built in 50 months each. In comparison,
                                ~~~-688s have taken over 70 months to build, even though these subma-
                                rines are a third smaller than the SSN-21.

                      The overall combat effectiveness of the SSN-8 1 will not be precisely
Performance and       known until it is operationally tested, beginning in fiscal year 1995.
Developmental Testing However, except for two components, developmental test results of
                                some components and systems appear satisfactory.

                                Several SSN-21component systems, including hull, electrical, and
                                mechanical systems and components of the AN/BSY-2 combat system,
                                were tested at sea, and the Navy indicated that no significant problems
                                were found. Component testing also is being performed at land-based
                                sites and on scale models.

                                 ‘Status of the Navy’s New Seawolf Attack Submarine and its New Combat System (GAO/T-
                                         _8’i _14, Mar. 24, 1987).

                                ‘Submarine Combat System: Technical Challenges Confronting Navy’s Seawolf AN/B’-2     Develop
                                ment (GAO--35,          Mar. 13,1989).

                                Page 15                                           GAO/‘NSIAB9O-163    Submarine     Construction
                      Appendix II
                      SSN-21 Program   Status

                      The Navy believes the modeling and simulation projections of the
                      SSN-2 l’s combat effectiveness indicate that the specified quieting and
                      combat system thresholds can significantly enhance the sonar search
                      rates and threat detection capabilities. However, modeling results were
                      insufficient to project the overall combat effectiveness of the SSN-2 1.

                      Some SN-2 1 equipment and systems will not be operationally tested
                      before production. Thus, to assist in identifying deficiencies at the earli-
                      est point in production, a Navy operational test group will monitor
                      selected factory, production acceptance, and land-based tests during
                      lead ship detailed design and production. It also will monitor develop
                      mental testing, perform an independent analysis of applicable simula-
                      tions, and, whenever possible, conduct operationally oriented testing to
                      support an assessment of the SSN-21 before the 1990 decision for con-
                      struction of follow-on SSN-21s. As part of this assessment, the group will
                      independently review and validate modeling and simulation used to pro-
                      ject the SSN-81’s combat effectiveness.

                      In an opinion dated February 27,1989, we concluded that the SSN-21
Operational Testing   program could not proceed beyond low-rate initial production on the
                      basis of “early operational assessments” that did not constitute opera-
                      tional testing. The opinion was provided at the request of the Chairman,
                      Legislation and National Security Subcommittee, House Committee on
                      Government Operations.

                      The law (10 U.S.C., section 138) stated that the DOD Director of Opera-
                      tional Test and Evaluation must analyze the results of the operational
                      test and evaluation that has been conducted for each major defense
                      acquisition program and report whether the results confirm that “the
                      items or components actually tested are effective and suitable for com-
                      bat.” The law required that the report be furnished before a program
                      may proceed beyond low-rate initial production. Another statute (10
                      U.S.C., section 2366) provided that major defense acquisition programs
                      may not proceed beyond low-rate production until initial operational
                      test and evaluation is completed.

                      The acquisition schedule for the SSN-21 program provides that contracts
                      for 14 additional submarines will be awarded before the first one is
                      available for operational testing. The DOD Director of Operational Test
                      and Evaluation believed that legal requirements could be met by “early
                      operational assessments” without the need for actual operational tests

                      Page 16                                  GAO/‘NSIAD9&162   Submarine   constroetion
                 Appendix II
                 Sm.21 Program   status

                 on the system. The early operational assessments would include com-
                 puter modeling and simulations, coupled with development testing. We
                 concluded, however, that the law required actual operational testing of
                 the system under realistic combat conditions.

                 Because of the time involved, the Navy did not believe it was reasonable
                 to delay a program to construct large, complex ships long enough to con-
                 struct one or more of them and to operationally test them. The Navy
                 believed that awaiting operational testing of the first SSN-21before con-
                 tracting for more submarines would result in a prohibitive delay of 5 or
                 6 years in the program and a large cost increase. For that reason, it had
                 no plans to change its acquisition schedule. However, in its comments on
                 a draft of our November 1989 report, DOD indicated that actions were
                 underway to seek legislative relief from the legal requirement. In
                 November 1989, a new section (10 U.S.C., section 2400) was enacted
                 concerning this issue.

                 A fully capable AN@&-2 is critical to the success of the SSN-21achiev-
AN/BE&Z Combat   ing its mission requirements. The AN/BSY-2 combat system is a com-
System           puter-aided detection, classification, and tracking system with two
                 major subsystems-sonars and combat control (fire control and weap-
                 ons launch)-and     is to be more automated and more capable than the
                 AN/ESY-1 combat system.3 Using a new wide aperture array4 and
                 enhanced integrated information management, the AN/EBY-2 is being
                 designed to improve response time, operability, and firepower capabili-
                 ties needed for the SSN-21to counter the increased Soviet submarine
                 warfare threat. According to the Navy, the ANIBSY-2 is intended to take
                 advantage of significant noise reductions expected of the new SSN-21;
                 however, if the SSN-21does not meet its noise quieting requirements, the
                 AN/BSY-2 will be less effective.

                 The Navy states the system’s performance requirements will be
                 achieved by including proven technologies from previous combat system
                 programs, not from using new technology. For example, the AN/M-2    is
                 to contain modified hardware from the AN/BSY-1 combat system.

                 3The AN/EW-1 is the improved SSN-6883 combat system.

                 4A wide aperture array is a passive sensor that will be mounted on the SN-2 1‘s hull. The array is
                 expected to provide enhanced passive sensing capabilities that will allow the combat system to deter-
                 mine locations of targets faster and provide more accurate target range and target motion analysis.

                  Page 17                                              GAO/NSIAD-go-162     Submarine   Construction
Appendix II
SSN-21 Program   Status

The system’s new and larger acoustic sensors are to significantly
improve detection capabilities and provide more accurate target and
motion data than those previously available. The AN/BSY-2 also is
designed to significantly improve ship data processing and management
capabilities. For example, certain tasks (e.g., searching, detecting, and
tracking targets and setting the firing order of various weapons) are
currently performed manually or with limited computer assistance. The
AN/BSY-2 will reduce the time operators need to perform these tasks
because it will include faster and more capable computers and new cus-
tomized work stations, data displays, and additional software. These
improvements also will allow operators to perform multiple tasks,
address multiple targets concurrently, and process additional tactical
data faster and more accurately.

Collectively, these capabilities should reduce the response time between
initially detecting a target and launching a weapon. According to the
Navy, other combat systems cannot offer this capability. The Navy’s
Operational Test and Evaluation Force stated that the ANIBSY-2 has the
potential for improved effectiveness over prior systems; however, the
Navy cannot demonstrate this capability until the system is operation-
ally tested, which is scheduled 2 years after delivery of the first system.
Problems encountered during such tests could require redesign and/or
configuration changes to systems delivered and under development,
which could further delay deliveries and increase costs.

As of March 1989, the AN/B%-2 program was about 3 months behind
schedule and two important Navy design reviews that will determine
the extent to which the system will meet specification requirements had
been delayed about 5 months. In addition, a DOD assessment has identi-
fied problems in developing two combat system components-the wide
aperture array sonar system and the enhanced modular signal proces-
sor. A difference in maturity between the AN/BSY-2 and SSN-21pro-
grams has affected the ship’s design, and indications are that further
AN/BSY-2 program schedule slippages may occur. A delay in develop
ment and delivery of the first combat system could delay construction of
the first SSN-8 1.

The Navy has no backup combat system planned, nor can it use the
AN/BSY-1 if the AN/BSY-2 is unavailable because the AN/BSY-l’s con-
figuration is not the same as the AN/B%-2’s. In its comments on a draft
of our November 1989 report, DOD stated that a backup combat system
was not required because the AN/BSY-2 hardware and software were
being designed to be built and written modularly. The Navy expects the

Page 18                                 GAO/NSIAIMO-162   Submarine   Construction
Appendix III
SSN-21 Program   Status

hardware to be delivered on time and the software to be delivered incre-
mentally with final delivery taking place before technical and opera-
tional testing. Should software development delays happen, the Navy
believes that the modular development and incremental delivery
approaches will give the system and SSN-21basic warfighting capabili-
ties while the problems are being resolved.

The lead shipyard for the submarine design advised the Navy in an
October 1988 letter that its assessments indicated the AN/H-:! devel-
opment program was 12 to 16 months behind that needed for a Novem-
ber 1994 submarine delivery schedule. The submarine delivery schedule
was subsequently extended 6 months, to May 1995. Further combat sys-
tem delays or changes could have a major impact on the SSN-21 pro-
gram’s cost and schedule.

In its comments on a draft of our November 1989 report, DOD said that
shipyard officials subsequently stated that there was no reason to
believe the AN/BSY-2 combat system would not support lead ship deliv-
ery. After receiving DOD'S comments, we contacted the shipyard again,
and we were told by an official that the shipyard had no basis for an
assessment of the AN/W-2 program and should not have expressed an
opinion on the status of the program.

 Page 19                               GAO/NSIAIMH%162   Submarine   (Ihwtmction
SSN-21Cost May Affect SSNForce

                         Due to fiscal constraints, the Navy may not be able to achieve and main-
                         tain its 100 SSN force goal unless it devotes substantially more of its
                         shipbuilding budget to building SSN-21% The Navy does not believe
                         building a mix of SSNS, such as the SSN-21 and the less costly ~~-688,
                         would provide it with a force as effective as that currently planned.
                         Rather, the Navy says that if SSN-81 affordability becomes an issue, it
                         would rather reduce its SSN force level.’

                         The Navy plans to achieve its minimum SSN force level goal in the 1990s
SSNForce Structure       by requesting authority for 29 additional ESNS-1 ~~~-688 and 28
Analysis                 ~~~-21s. During this same period, however, the Navy will have 32 SSNS
                         that will have been in service 30 years, and it will be faced with block
                         obsolescence of its ~~~-637 class (10 of these SSNswill reach 30 years of
                         age in fiscal year 1999). As a result, the Navy will have to keep an
                         increasing number of older SSNS in service to achieve its force level goal.
                         In its fiscal year 1990/1991 plans, the Navy deleted funds for three of
                         the last four ~~-688s. The Navy was not able to provide us with SSN
                         force level projections through fiscal year 2010.

                         Our analysis shows that the Navy’s SSNconstruction plan is based on
                          several assumptions that may not be achievable. If the SSN construction
                         plan is executed as prepared, then the SSN construction program may
                         jeopardize other ship construction programs. In our analysis of the plan,
                          we found that to meet the construction plan the Navy must

                     l experience sustained annual shipbuilding and conversion budget growth
                       of 3 percent above inflation;
                     l increase the percentage of shipbuilding and conversion funds allocated
                       to SSNconstruction from 19 to 26 percent;
                     l reduce average planned        construction time from 65 months to about

                       52 months;
                     l obtain congressional approval and funding for 29         or an average of

                       about 3 ships per year;
                     9 continue the ~~-21 program or initiate a similar      program with a con-

                       struction rate of three ships per year and with similar cost and schedule
                     l incur no cost overruns that require supplemental funding; and

                         ‘At the beginning of fiscal year 1989, the Navy had 97 SSNs in its active force-4 prepemit class,
                         13 Permit class M&‘-594), 2 Ethan Allen class (SSN-608>,37 Sturgeon class @N-637), 1 Narwhal
                         class (SSN-671). 1 Lipscomb class @S&685), and 39 Los Angeles class (SN-688).

                         Page 20                                             GAO/NSIADS@ltN          Submaclne   Constrnction
  SSN-21 cost May A&&   SSN Force

. maintain older    SSNS in   service for 30 years without attrition due to acci-
  dent or war.

  We analyzed future SSN force levels by assuming that in the 1990s the
  shipbuilding and conversion budget would experience a (1) 3 percent
  real growth, (2) zero real growth, and (3) negative 3 percent real growth
  and would remain in real terms at the 1999 levels through the next dec-
  ade. In all three projections, we assumed that SSN construction would
  consume 26 percent of the shipbuilding and conversion budget, all SSNS
  would be built within construction cost caps, no SSN would be lost due to
  war or accident before achieving its 30-year service life, and a follow-on
  program similar in cost and schedule to the SSN-21 program would be
  authorized in fiscal years 2000 through 2009. Likewise, in each projec-
  tion, we made different assumptions about the overall size of the Navy’s
  shipbuilding and conversion budget for fiscal years 1990 through 2009
  and the time lag between authorization and delivery dates.

  The details of our analysis have been classified by DOD. However, our
  analysis showed that with a consistent 3 percent real growth shipbuild-
  ing budget, the Navy would be able to execute its SSN shipbuilding plan
  and generally achieve and maintain its 100 SSN force level goal through
  the year 2010. Conversely, zero or negative real growth shipbuilding
  budgets, without adjustments in other shipbuilding programs, would not
  allow the Navy to achieve and maintain its SSN force level goal.

  Forecasting is an inexact science that seldom, regardless of the method
  used, exactly forecasts what will happen in the future. Such analyses,
  however, use numerical data and thus unavoidably appear to be more
  precise than they ever can be, and our analysis of the Navy’s SSN force
  structure is not different in this regard. We would like to emphasize that
  our analysis was not meant to precisely predict SSN force levels. Instead,
  it is intended to explore what is likely to happen in the future, based on
  what we know about the past, and to analyze how different policy deci-
  sions would affect SSN force levels.

  During the 198Os, SN construction consumed about 19 percent of the
  Navy’s shipbuilding and conversion funds. In contrast, our analysis
  shows that with 3 percent real growth annually in the Navy’s shipbuild-
  ing and conversion budget during the 199Os, 26 percent of those funds
  would be needed to fully fund SSN construction programs. Further, if the
  shipbuilding and conversion budget has zero real growth, the Navy

  Page 2 1                                     GAO/NSIADB@162   Submarine   t3imstruction
              Appendix Ill
              SSN-21 Cost May Af’fect SSN Force

              would need about 31 percent of those funds to fully fund the SSNpro-
              gram. With a 3 percent annual decrement in the budget, the Navy would
              need about 36 percent of those funds for its SSNconstruction program.

              The ~~~-21’s acquisition cost will be significantly more than the
              ~~~-688’s but Navy studies have concluded that when life-cycle costs of
              the two SSN classes are compared the SSN-21will only cost about 10 per-
              cent more over its 30-year life. The Navy has indicated that if SN-21
              affordability becomes an issue, it would rather reduce the submarine
              force level than provide a mixed force.

              On the basis of affordability issues and past shipbuilding achievements
Conclusions   during the 198Os, it appears unrealistic to assume that the Navy can
              achieve a sustained 3 percent real growth in funding for ship construc-
              tion throughout the 1990s or that it can carry out its construction sched-
              ule as quickly as planned without cost overruns. As a result, the Navy’s
              ssh’ force will likely decline below the loo-ship goal in the cases of zero
              and negative growth in ship construction funding. Force levels will
              decrease primarily because of the block obsolescence of ~~~-637 class
              submarines at the turn of the century-10       of these ships will reach 30
              years of age in fiscal year 1999. Budget reduction measures decrease the
              planned construction rate from 3 new ships per year to 2.5 or 2.2 ships,
              and even if construction progresses on schedule, the number of new SSNS
              coming into the fleet will not make up for the loss of these older ships
              into the 21st century.

               Page 22                                GAO/NSL4D9O-162   Submarine   Construction
                     a   %ors to This &port

                            Frederick A. Bigden, Assistant Director
                ,rity and   Harold D. Padgett, Project Manager
              &l Affairs    Patricia M. Riggle, Evaluator
                            Jai E. Lee, Computer Programmer Analyst
           9 Washington,

&ston Regional Office ~~n~Av~~t~~~a~~~~uator
                            Lester L. Ward, Evaluator
Norfolk Regional            Charles T. Bolton, Evaluator

(394364)                    Page 23
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