Navy’s top officer sees lessons in shipbuilding program failures

A year into his tenure as chief of naval operations, Adm. Gary Roughead said the Navy needs to change the way it designs and builds new ships. Citing "extraordinary" cost overruns, program delays and poorly conceived requirements, he said the service has learned from the problems it encountered in two major programs: the Littoral Combat Ship and the DDG-1000 Zumwalt-class destroyer.

"I kind of view the Navy budget the way I view my personal budget," Roughead told an audience at a Government Executive leadership breakfast on Wednesday. "I don't overdraw my personal budget, and I like to make sure as I plan my expenses [that] I'm going to be able to cover them."

Roughead said he is committed to building all 55 ships in the LCS program, but added the Navy made a number of missteps in its attempt to build the ship quickly. Last Thursday, five years into the program, the Navy accepted delivery of the first ship from lead contractor Lockheed Martin Corp. The ship is designed to operate close to shore and be able to counter submarines and mines.

"There was a rush, and we thought we could get by with some commercial specifications," Roughead said. "As we got into building the ship, some of those commercial applications weren't going to do it from a survivability standpoint. That required some recasting of specifications."

It also required a lot more time and money. The Navy initially established a $220 million cost target and a two-year construction cycle for each of the two lead ships. According to the Government Accountability Office, costs had exceeded $1 billion by July, and construction had been delayed by 21 months.

The Navy sought to design and build the ship concurrently, "which is not necessarily a good thing," Roughead said. And in an effort to improve efficiency, the service "backed off" staffing in technical and oversight areas in the shipyards. "That came back to bite us," he said.

Despite the problems, Roughead said he is "very optimistic" about the program based on the first Littoral Combat Ship's sea trials, and said it brings a much-needed capability to the fleet. That's not the case with the DDG-1000 destroyer program, he said. The ship simply doesn't have the capabilities the Navy needs to counter future threats, he said. The Zumwalt-class destroyer was conceived in the early 1990s, when the threats the United States faced appeared very different. The Navy originally planned to buy seven ships, but this summer, after sinking 10 years and $13 billion into the program, the service tried to cancel the remaining five ships (it is already under contract for the first two ships). Congress, however, is pressing for a third ship. A compromise version of the fiscal 2009 Defense authorization bill provides $2.5 billion for a third DDG-1000 Zumwalt-class destroyer.

Although the Navy concluded the best approach was to truncate the program after the first two ships, Roughead said after discussions with members of Congress the Navy will go ahead with a third ship, in part to preserve the industrial base. He was emphatic about stopping the program after the third ship, however. Instead of continuing, he wants to restart the production line for the DDG-51, the previous class of destroyers.

"What we will be able to do is take the technology from the DDG-1000, the capability and capacity that [will be achieved] as we build more DDG-51s, and [bring those] together around 2017 in a replacement ship for our cruisers," he said.

A turning point in Roughead's thinking about the Navy's future needs occurred in April 2006. That's when the terrorist organization Hezbollah fired a sophisticated missile at an Israeli ship operating off the coast of Lebanon and almost sank it.

"As I looked at the DDG-1000, it did not give us the capability" to counter such threats, he said. "To be sure, there's great technology on the DDG-1000. The program is well-run. That's not the issue. The real issue for me is capability. When you're talking about buying a ship for a cost that will likely exceed $3 billion, we have to look at capability."

In many ways, the DDG-1000 was too ambitious for the time and budget requirements placed on the program. The ship has a revolutionary hull design and aimed to include nearly a dozen cutting-edge technologies, weapons and sensors, as well as a new propulsion system. GAO estimated the software requirements alone would entail 14 million to 16 million lines of code.

"It's very easy in the world we live in to become enamored with technology," Roughead said. "I'm not a Luddite, but I think we need to be very clear when looking at the capabilities we're trying to put into the fleet. You can be drawn away by higher technology if you take your eye off, 'What is it we must give our sailors and Marines to go out and do their jobs?' "

That may prove easier said than done. A recent report by the Center for Strategic and International Studies said Navy shipbuilding programs are in "serious disarray."

"The problem starts at a conceptual disconnect between strategy and reality," according to the Aug. 19 report, "Abandon Ships: The Costly Illusion of Unaffordable Transformation." As a result, shipbuilding plans are shaped more by budget constraints than by a response to any threat.

"No reforms in procurement, changes in program management, cost analysis, and test and evaluation can begin to compensate for taking hard and realistic decisions at the top, and holding senior flag officers, senior civilians and the secretary of the Navy accountable," the report stated.

In late July, Paul Francis, director of acquisition and sourcing management at GAO, told the House Armed Services Committee, "Clearly, changes are needed in how programs are conceptualized and approved." The Navy has continually put off ship construction as near-term deferrals stack up, resulting in a situation where the service will need significant funding increases in the coming years -- something GAO views as unlikely.

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