A U.S. Navy plan to sign an $11
billion, five-year contract with General Dynamics Corp. and
Northrop Grumman Corp. to build seven nuclear submarines may not
deliver promised cost savings, a federal report says.
The Navy’s estimates for the $83 billion program to design
and build 30 Virginia-class submarines have been so unreliable
that the estimated $805 million savings from the multiyear
contract are not assured, according to a report by the General
Accounting Office, the investigative agency of Congress.
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“Based on recent experience we do not believe that the Navy
has demonstrated that its cost estimates are reliable,” Paul
Francis, GAO’s director for acquisition and sourcing management,
wrote in a report.
The report was requested by Representative Jerry Lewis, a
California Republican and chairman of the House Defense
Appropriations subcommittee, which this week will debate the $400
billion 2004 Defense bill.
Navy officials said the GAO report represents “a fundamental
misunderstanding of the program.”
The Navy and contractors need congressional approval to sign
the multiyear contract for the construction of seven more nuclear
submarines. Four are already being built and the Navy has plans
for 30 Virginia-class submarines in total. Pentagon supporters of
the weapons programs favor long-term contracts because they
protect the programs from budget cuts and can produce savings from
buying systems in quantity.
The $83 billion Virginia-class program is the Pentagon’s
second-most costly program after the Joint Strike Fighter.
Bloomberg News
