Two Contracts for Nuclear Attack Submarines Modified Under Authority of Public Law 85-804--Status as of December 22, 1979

The Defense Appropriation Authorization Act of 1979 requires the Comptroller General to annually report the results of audits and reviews of two contracts for submarines awarded by the Navy to General Dynamics Corporation. The purpose of the audits and reviews is to ensure that funds authorized to provide relief under Public Law 85-804 are used only in connection with the contracts and that the prime contractor does not realize any total combined profit on the contracts. The report covered the year ended December 22, 1979.

It was found that the funds provided were still being used only on the specified contracts. Electric Boat, the division of General Dynamics constructing the submarines, continued to project an overall loss on the contracts and will have to experience a significant underrun on the remaining estimated costs to become profitable. Its chances of achieving such an underrun appeared to be remote. An unresolved weld problem identified in December 1979 has the potential for significant cost growth. A problem concerning the use of nonconforming steel which has caused delays in ship construction and increased costs has not been resolved. The report fairly presented the positions of Electric Boat and the Navy in their actions relating to the problems.