Case Study 4, 21: From Ford-Class Aircraft Carrier, GAO-17-575, June 13, 2017

The Navy intended for the Ford class aircraft carrier to improve combat capability while reducing acquisition and life cycle costs. However, as GAO reported on extensively since 2007, the lead ship experienced cost growth of nearly 23 percent, with a reduced capability expected at delivery. CVN 78 was estimated to cost $12.9 billion, while the next ship, CVN 79, was estimated to be $11.4 billion. The Navy planned to buy 1-2 more ships in the coming years.

The cost estimate for the second Ford class aircraft carrier, CVN 79, was not reliable and did not address lessons learned from the performance of the lead ship, CVN 78. As a result, the estimate did not demonstrate that the program could meet its $11.4 billion cost cap. Cost growth for the lead ship was driven by challenges with technology development, design, and construction, compounded by an optimistic budget estimate. Instead of learning from the mistakes of CVN 78, the Navy developed an estimate for CVN 79 that assumed a reduction in labor hours needed to construct the ship that was unprecedented in the past 50 years of aircraft carrier construction.

After developing the program estimate, the Navy negotiated 18 percent fewer labor hours for CVN 79 than were required for CVN 78. CVN 79’s estimate was optimistic compared to the labor hour reductions calculated in independent cost reviews conducted in 2015 by the Naval Center for Cost Analysis and the Office of Cost Assessment and Program Evaluation. Navy analysis showed that the CVN 79 cost estimate may not have sufficiently accounted for program risks, with the current budget likely insufficient to complete ship construction.

The Navy’s reporting mechanisms, such as budget requests and annual acquisition reports to Congress, provided limited insight into the overall Ford class program and individual ship costs. For example, the program requested funding for each ship before that ship obtained an independent cost estimate. During an 11-year period prior to 2015, no independent cost estimate was conducted for any of the Ford class ships; however, the program received over $15 billion in funding. In addition, the program’s selected acquisition reports—annual cost, status, and performance reports to Congress—provided only aggregate program cost for all three ships currently in the class, a practice that limited transparency into individual ship costs. As a result, Congress had diminished ability to oversee one of the most expensive programs in the defense portfolio.

GAO reported these findings on June 13, 2017 in Ford-Class Aircraft Carrier: Follow-On Ships Need More Frequent and Accurate Cost Estimates to Avoid Pitfalls of Lead Ship, GAO-17-575.