Post by ferryfast admin on Apr 1, 2006 20:57:48 GMT -5
Navy's plan to add ships makes waves
McCain questions long history of costly overruns
By Stephen J. Hedges
Washington Bureau
CHICAGO TRIBUNE
www.chicagotribune.com/
Published April 1, 2006
WASHINGTON -- While conflicts in Iraq and Afghanistan have drained American ground forces of personnel, equipment and cash, the U.S. Navy has quietly cruised ahead with a multibillion-dollar plan to build 30 new ships, despite years of controversial overspending and a one-time $2.7 billion shipbuilding price spike due to Hurricane Katrina damage.
The plan envisions annual spending of about $13.5 billion to expand the fleet to 313 ships, including the stealthy DDX destroyer and smaller littoral combat ships to support military operations along coastal waterways. The Navy now has 281 ships, with some due to come on line and others to be retired.
The buildup comes amid renewed questions about the growing cost of the wars in Iraq and Afghanistan--the White House has requested more than $390 billion in war funding as of October 2005--and the accuracy of the Navy's own accounting, not to mention the value of the ships it wants to buy.
The Navy's current budget plan, for instance, is not large enough to pay for the new round of 30 ships and submarines it plans to build, according to the Congressional Budget Office, a shortfall that has already drawn attention in Congress and the Pentagon. The CBO predicts that the annual cost of building the 30 ships will be $18 billion, not $13.5 billion, for a total of more than $250 billion.
That has angered some in Congress. "You'll never see a 313-ship Navy if these costs prevail," Sen. John McCain (R-Ariz.) said during a recent hearing on the Navy's plans. "These are staggering numbers. In the past 10 to 15 years, the cost escalation has been astronomical."
This year, those numbers have risen even more, as the Navy and one of its two chief shipbuilders, Northrop Grumman, try to recover from shipyard damage caused by Katrina.
Northrop Grumman shipyards sustained damage to the Ingalls Shipyard in Pascagoula, Miss., and the Avondale yard in New Orleans. Both had ships under construction. Physical damage was the worst at Ingalls, where work on nine Navy ships was under way.
"The entire electrical grid for the shipyard was destroyed in Pascagoula," said Northrop Grumman spokesman Randy Belote.
Labor shortage after storm
The shipyards also had labor shortages after workers were displaced by the storm.
Northrop Grumman is in a legal dispute in an effort to recover more than $1 billion in Katrina damage. In a lawsuit filed in California last year, the company claims its insurer, Factory Mutual, improperly denied claims for damage caused by flooding. Factory Mutual, in court documents, disagrees.
Congress initially provided $1 billion to the Navy shipyards to cover Katrina-related damage, and another $1.7 billion as part of a hurricane relief supplemental funding bill. The Navy and Northrop Grumman emphasize that the funds have gone to repair and replace damaged Navy equipment, not that owned by the contractor.
The Navy has been routinely criticized on Capitol Hill for underestimating the cost of its ships, leaving Congress with little choice but to ante up as vessels near completion. A string of recent federal studies, including reports by the General Accountability Office, Congressional Research Service and CBO, all found flaws in the Navy's accounting.
"Navy practices for estimating costs, contracting and budgeting for ships have resulted in unrealistic funding of programs, increasing the likelihood of cost growth," a GAO audit reported a year ago.
Navy leaders have promised fixes, and Vice Adm. Lewis Crenshaw, deputy chief of naval operations for resources, requirements and assessments, did so again Wednesday before a Senate subcommittee. Crenshaw said the Navy plans to emphasize "common electronics and open architecture" on future vessels to cut costs.
But the Congressional Research Service last month disclosed that the cost of the Navy's cutting-edge, midsize littoral combat ship has increased by more than one-third, to nearly $300 million apiece.
The 2006 defense authorization act places spending requirements on the Navy regarding its new ships, a bid by a worried Congress for a greater say in spending decisions by the service.
The cost of the DDX destroyer is estimated at 20 percent to 33 percent higher than first projected, according to the Congressional Research Service. The Navy plans to buy seven DDX destroyers, one a year, beginning in 2007.
Wobbly numbers
In 2004, the Navy projected the first DDX cost $2.8 billion, including $1 billion in one-time design and startup expenses, with subsequent ships to cost $1.8 billion. In fact, the Congressional Research Service reports, the first DDX will likely cost $3.2 billion, about $400 million more than the Navy's earlier estimate, and the other ships will come in at $2.5 billion each.
But even those numbers are wobbly.
"No one believes that the Navy's going to hit that target," said Robert Work, a Navy analyst for the Center for Strategic and Budgetary Assessments.
Creeping cost increases, caused by design changes during construction, are a primary reason the cost of ships has skyrocketed. Analysts and congressional auditors say other reasons include rosy cost estimates provided by the Navy to Congress, the rising cost of materials and now Katrina.
If Congress balks at providing the money the Navy needs for its new ships, the service may have to change the composition of its future fleet, and possibly its tactics.
The Navy's vision of its future force, spelled out in a plan called Sea Power 21, includes a mix of powerful standoff carriers, amphibious assault ships and destroyers like the stealthy DDX and the littoral combat ship. It relies on stationing ships around the world and on "sea-basing" when landing and basing options might be limited.
The recent announcement by Adm. Michael Mullen, the Navy's chief of naval operations, that the Navy would build a 313-ship Navy was praised by contractors as something that will lend stability to the shipbuilding process. But the key to controlling costs, officers say, will be adhering strictly to the Navy's stated plan.
"We have realized that we have to stabilize the process," Crenshaw said. "We are almost our own worst enemies when we change it."
----------
shedges@tribune.com
McCain questions long history of costly overruns
By Stephen J. Hedges
Washington Bureau
CHICAGO TRIBUNE
www.chicagotribune.com/
Published April 1, 2006
WASHINGTON -- While conflicts in Iraq and Afghanistan have drained American ground forces of personnel, equipment and cash, the U.S. Navy has quietly cruised ahead with a multibillion-dollar plan to build 30 new ships, despite years of controversial overspending and a one-time $2.7 billion shipbuilding price spike due to Hurricane Katrina damage.
The plan envisions annual spending of about $13.5 billion to expand the fleet to 313 ships, including the stealthy DDX destroyer and smaller littoral combat ships to support military operations along coastal waterways. The Navy now has 281 ships, with some due to come on line and others to be retired.
The buildup comes amid renewed questions about the growing cost of the wars in Iraq and Afghanistan--the White House has requested more than $390 billion in war funding as of October 2005--and the accuracy of the Navy's own accounting, not to mention the value of the ships it wants to buy.
The Navy's current budget plan, for instance, is not large enough to pay for the new round of 30 ships and submarines it plans to build, according to the Congressional Budget Office, a shortfall that has already drawn attention in Congress and the Pentagon. The CBO predicts that the annual cost of building the 30 ships will be $18 billion, not $13.5 billion, for a total of more than $250 billion.
That has angered some in Congress. "You'll never see a 313-ship Navy if these costs prevail," Sen. John McCain (R-Ariz.) said during a recent hearing on the Navy's plans. "These are staggering numbers. In the past 10 to 15 years, the cost escalation has been astronomical."
This year, those numbers have risen even more, as the Navy and one of its two chief shipbuilders, Northrop Grumman, try to recover from shipyard damage caused by Katrina.
Northrop Grumman shipyards sustained damage to the Ingalls Shipyard in Pascagoula, Miss., and the Avondale yard in New Orleans. Both had ships under construction. Physical damage was the worst at Ingalls, where work on nine Navy ships was under way.
"The entire electrical grid for the shipyard was destroyed in Pascagoula," said Northrop Grumman spokesman Randy Belote.
Labor shortage after storm
The shipyards also had labor shortages after workers were displaced by the storm.
Northrop Grumman is in a legal dispute in an effort to recover more than $1 billion in Katrina damage. In a lawsuit filed in California last year, the company claims its insurer, Factory Mutual, improperly denied claims for damage caused by flooding. Factory Mutual, in court documents, disagrees.
Congress initially provided $1 billion to the Navy shipyards to cover Katrina-related damage, and another $1.7 billion as part of a hurricane relief supplemental funding bill. The Navy and Northrop Grumman emphasize that the funds have gone to repair and replace damaged Navy equipment, not that owned by the contractor.
The Navy has been routinely criticized on Capitol Hill for underestimating the cost of its ships, leaving Congress with little choice but to ante up as vessels near completion. A string of recent federal studies, including reports by the General Accountability Office, Congressional Research Service and CBO, all found flaws in the Navy's accounting.
"Navy practices for estimating costs, contracting and budgeting for ships have resulted in unrealistic funding of programs, increasing the likelihood of cost growth," a GAO audit reported a year ago.
Navy leaders have promised fixes, and Vice Adm. Lewis Crenshaw, deputy chief of naval operations for resources, requirements and assessments, did so again Wednesday before a Senate subcommittee. Crenshaw said the Navy plans to emphasize "common electronics and open architecture" on future vessels to cut costs.
But the Congressional Research Service last month disclosed that the cost of the Navy's cutting-edge, midsize littoral combat ship has increased by more than one-third, to nearly $300 million apiece.
The 2006 defense authorization act places spending requirements on the Navy regarding its new ships, a bid by a worried Congress for a greater say in spending decisions by the service.
The cost of the DDX destroyer is estimated at 20 percent to 33 percent higher than first projected, according to the Congressional Research Service. The Navy plans to buy seven DDX destroyers, one a year, beginning in 2007.
Wobbly numbers
In 2004, the Navy projected the first DDX cost $2.8 billion, including $1 billion in one-time design and startup expenses, with subsequent ships to cost $1.8 billion. In fact, the Congressional Research Service reports, the first DDX will likely cost $3.2 billion, about $400 million more than the Navy's earlier estimate, and the other ships will come in at $2.5 billion each.
But even those numbers are wobbly.
"No one believes that the Navy's going to hit that target," said Robert Work, a Navy analyst for the Center for Strategic and Budgetary Assessments.
Creeping cost increases, caused by design changes during construction, are a primary reason the cost of ships has skyrocketed. Analysts and congressional auditors say other reasons include rosy cost estimates provided by the Navy to Congress, the rising cost of materials and now Katrina.
If Congress balks at providing the money the Navy needs for its new ships, the service may have to change the composition of its future fleet, and possibly its tactics.
The Navy's vision of its future force, spelled out in a plan called Sea Power 21, includes a mix of powerful standoff carriers, amphibious assault ships and destroyers like the stealthy DDX and the littoral combat ship. It relies on stationing ships around the world and on "sea-basing" when landing and basing options might be limited.
The recent announcement by Adm. Michael Mullen, the Navy's chief of naval operations, that the Navy would build a 313-ship Navy was praised by contractors as something that will lend stability to the shipbuilding process. But the key to controlling costs, officers say, will be adhering strictly to the Navy's stated plan.
"We have realized that we have to stabilize the process," Crenshaw said. "We are almost our own worst enemies when we change it."
----------
shedges@tribune.com