Navy confirms cost overrun on CVN 78

Officials acknowledge the new ship has gone $1 billion over budget so far, but say it'll enter the fleet on schedule.

Navy Secretary Ray Mabus confirmed Thursday that the cost overrun for the aircraft carrier USS Gerald R. Ford is projected to reach $1 billion, bringing the ship’s total cost to some $12 billion — but said it’s on track to be delivered on schedule.

The admission took place under questioning from Arizona Sen. John McCain, the ranking Republican on the Senate Armed Services Committee, who pointedly asked Mabus “what have you been doing on your watch” to control the costs on the new ship.

Mabus said the Navy’s deal with shipbuilder Huntington-Ingalls Industries is such that the government has “recovered its fee” for the project, and remainder of the money for the ship will only go to cover its costs. He also said the Navy expected to use the lessons learned on the first-in-class Ford to make sure the next ship, the USS John F. Kennedy, would not have the same types of cost problems.

Would the Navy need to ask Congress for permission to go above the cost cap on the ship? McCain asked. Not this year, Mabus said — but next year, the service will probably have to get special authorization to pay to continue building.

Navy officials had said before that their worst-case scenario for the Ford was a $1.1 billion cost overrun, and that’s what they had planned for internally. But they said they thought the previous public number, $800 million, was probably as bad as it would get, leaving some headroom in their plans for the medium term.

McCain told Mabus that he’d be “reluctant” to spend more money on the Ford class until the Navy and Huntington-Ingalls can show they’ve gotten the ships’ costs under control. But there doesn’t seem to be any serious threat to the future of the program — if the Pentagon wanted to save the money it must spend on carriers, it could have reduced its requirements in its new “strategy” But it didn’t.

What’s difficult to understand is just how the ship could continue to increase in cost even as it stays on schedule. Often, ship cost overruns take place because engineers need to go back and undo or redo earlier work, which adds delays, which add costs. It’s possible that H-I built enough of a cushion into the schedule for the Ford that the problems it has been having could just absorb more money without needing more time, but we’ve asked for more information to be sure.

And as embarrassing as it might be for the Navy to admit cost growth on top of cost growth, and need to come back to Congress cap in hand, this situation could be a lot worse: Skeptics feared for years that the Ford’s advanced new Electromagnetic Aircraft Launch System — which takes the place of the Nimitz class’ old fashion steam cats — might not work. That could have necessitated ripping the ship apart and installing a steam system, to the tune of new costs that could dwarf this one.

By all accounts, however, EMALS works and the Navy appears to expect it to work at sea. We’re a long way off from actual, underway proof of that —  first the Navy just has to get this ship built.

  • DCbound

    THIS IS NOT A COST OVER RUN! The Navy knew at contract signing the cost was low, but demanded the cost be reduced because it did not have the budget. The Navy received the true cost on the first estimate submitted by NNS and was forewarned that was what it would cost.

    The Navy wanted a ground up, new design ship, with the latest technology of which three major GFE technologies had failed testing at the time of contract signing (EMALS, arresting gear, and one I can’t mention).

    The Navy wanted a new Bentley for the price of a old Cadillac.

    The ship construction contract excluding GFE was $5.1 billion and not $13 billion which includes the Navy GFE material and one time engineering and design costs.