Multiyear Procurement Authority for the Virginia Class Submarine Program

On May 29, 2003 GAO briefed the Subcommittee on Defense, House Committee on Appropriations' staff on the fiscal year 2004 budget request for the Virginia class submarine program. This letter summarizes the information we provided in that briefing on the advantages that multiyear procurement authority offers the Virginia class submarine program as well as the risks of actually realizing these advantages.

The main advantage of multiyear procurement authority for the Virginia class submarine is its potential to reduce the program's future costs by $805 million ($115 million per submarine). Program documents indicate that these savings would be derived from reduced inflation, vendor procurement efficiencies, and greater manufacturing efficiencies. According to program officials, should Congress approve multiyear procurement authority, the contract currently under negotiation would transition into a multiyear procurement contract for fiscal year 2004 through 2008 ships. Program officials stated that without multiyear procurement authority, the program's funding would be able to support the ships to be authorized in fiscal years 2005 and 2006, but additional funding would be needed to cover the higher costs for the ships to be authorized in fiscal years 2007 and 2008. Several factors could offset the potential cost savings, which should also be considered along with the Navy's request for multiyear procurement authority. Stable funding for the Virginia class submarine program may not be assured. To date, the program's cost estimates have not proven realistic. Changes in the program's test plan could affect stability of design. In contrast, the Arleigh Burke class (DDG-51) destroyer program, the last shipbuilding program to enter into a multiyear procurement contract, was well into its acquisition cycle when multiyear procurement authority was approved. Twenty-one ships had already been commissioned and an additional 17 were under construction.