New Attack Submarine

The Navy's goal of producing a new attack submarine at significantly lower cost than that of the Seawolf is unlikely to be achieved. The Navy's cost estimate for the new submarine has already risen from $1.5 billion to $1.8 billion, and further cost increases may well occur because of various program risks. Recent legislation directed the Navy to accelerate construction of the first two submarines and to use two shipyards instead of one to build the first four vessels. According to the Navy, this change has boosted the cost of building 30 new attack submarines by $3 billion. The Defense Department contends that a $3.8-billion increase in budget authority will be needed to comply with the recent legislation. GAO believes that other cost increases are possible because of the following program risks: (1) Changes in the ship's design or the addition of new technologies are anticipated. (2) The new attack submarine's command, control, communication, and combat system development and integration program is highly complex and the schedule for its completion is optimistic. (3) Some prototype equipment is being developed concurrently with the ship's construction. (4) The cost of transferring the submarine's design from the first to the second shipbuilder is based on an optimistic estimate that is less than the actual cost of the last major design transfer.

GAO found that: (1) the NSSN program is not likely to meet the objective of producing a submarine that is significantly less costly than the Seawolf; (2) based on Navy estimates for a 30-ship, single shipbuilder program, the Seawolf's average acquisition cost was estimated to be about $1.85 billion compared to the NSSN's estimate of about $1.5 billion; (3) based on a 30-ship, two shipbuilder program, the Navy's current estimated acquisition cost for the fifth ship of the NSSN class has already risen from about $1.5 billion to about $1.8 billion; (4) Public Law 104-106 directed the Navy to accelerate construction of the first two submarines and to use two shipyards instead of one to build the first four submarines; (5) according to the Navy, this change has increased the estimated cost of developing and building 30 NSSNs by $3 billion; (6) although GAO believes the cost categories seem reasonable, GAO has no basis to agree or disagree with the total program estimate because the Navy has not provided support for the costs associated with the individual categories; (7) according to the Department of Defense, a $3.8-billion increase in budget authority for the Fiscal Year 1997-2001 Future Years Defense Plan period will be needed to acquire two submarines earlier than originally planned as directed by the law; (8) GAO believes there is a potential for other cost increases because of a variety of program risks: (a) anticipated changes in the ship's design or the addition of new technologies are likely; (b) the NSSN command, control, communication, and intelligence combat system development and integration program is highly complex and optimistic; (c) development of some prototype equipment is concurrent with ship construction; and (d) the cost of transferring the submarine's design from the first to the second shipbuilder is based on an optimistic estimate that is less than the actual cost of the last major design transfer; and (9) there is a divergence of views on the start-up costs for the second shipbuilder.