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United States Government Accountability Office: 
GAO: 

Report to the Ranking Member, Subcommittee on Defense, Committee on 
Appropriations, House of Representatives: 

January 2012: 

Arleigh Burke Destroyers: 

Additional Analysis and Oversight Required to Support the Navy's 
Future Surface Combatant Plans: 

GAO-12-113: 

GAO Highlights: 

Highlights of GAO-12-113, a report to the Ranking Member, Subcommittee 
on Defense, Committee on Appropriations, House of Representatives. 

Why GAO Did This Study: 

After nearly a decade and almost $10 billion in development on Zumwalt 
class destroyers, the Navy changed its acquisition approach from 
procuring Zumwalts to restarting production of Arleigh Burke class 
destroyers (DDG 51) and building a new version, known as Flight III. 
As requested, GAO reviewed the Navy’s plans for DDG 51 and missile 
defense capabilities by (1) evaluating how the Navy determined the 
most appropriate platform to meet surface combatant requirements; (2) 
identifying and analyzing differences in design, cost, and schedule of 
the restart ships compared with previous ships; and (3) assessing the 
feasibility of Navy plans for maturing and integrating new 
technologies and capabilities. GAO analyzed Navy and contractor 
documentation and interviewed Navy, contractor, and other officials. 

What GAO Found: 

The Navy relied on its 2009 Radar/Hull Study as the basis to select 
DDG 51 over DDG 1000 to carry the Air and Missile Defense Radar (AMDR) 
as its preferred future surface combatant—a decision that may result 
in a procurement of up to 43 destroyers and cost up to $80 billion 
over the next several decades. The Radar/Hull Study may not provide a 
sufficient analytical basis for a decision of this magnitude. 
Specifically, the Radar/Hull Study: 

* focuses on the capability of the radars it evaluated, but does not 
fully evaluate the capabilities of different shipboard combat systems 
and ship options under consideration, 

* does not include a thorough trade-off analysis that would compare 
the relative costs and benefits of different solutions under 
consideration or provide robust insight into all cost alternatives, 
and, 

* assumes a significantly reduced threat environment from other Navy 
analyses, which allowed radar performance to seem more effective than 
it may actually be against more sophisticated threats. 

The Navy’s planned production schedules of the restart DDG 51 ships 
are comparable with past performance and officials told us that hull 
and mechanical systems changes are modest, but these ships will cost 
more than previous DDG 51s. A major upgrade to the ship’s combat 
system software also brings several challenges that could affect the 
restart ships, due in part to a key component of this upgrade that has 
already faced delays. Further delays could postpone delivery to the 
shipyard for the first restart ship, and could also jeopardize the Navy’
s plan to install and test the upgrade on an older DDG 51 prior to 
installation on the restart ships. This first installation would serve 
to mitigate risk, and if it does not occur on time the Navy will be 
identifying, analyzing, and resolving any combat system problems on 
the first restart ship. Further, the Navy does not plan to fully test 
new capabilities until after certifying the upgrade as combat-ready, 
and has not planned for realistic operational testing necessary to 
fully demonstrate its integrated cruise and ballistic missile defense 
performance. 

The Navy faces significant technical risks with its new Flight III DDG 
51 ships, and the current level of oversight may not be sufficient 
given these risks. The Navy is pursuing a reasonable risk mitigation 
approach to AMDR development, but it will be technically challenging. 
According to Navy analysis, selecting the DDG 51 hullform to carry 
AMDR requires significant redesign and reduces the ability of these 
ships to accommodate future systems. This decision also limits the 
radar size to one that will be at best marginally effective and 
incapable of meeting the Navy’s desired capabilities. The Navy may 
have underestimated the cost of Flight III, and its plan to include 
the lead ship in a multiyear procurement contract given the limited 
knowledge about the configuration and the design of the ship creates 
potential cost risk. Finally, the current level of oversight may not 
be commensurate with a program of this size, cost, and risk and could 
result in less information being available to decision makers. 

What GAO Recommends: 

GAO is making several recommendations to the Secretary of Defense, 
including requiring the Navy to conduct thorough analyses of 
alternatives for its future surface combatant program and conduct 
realistic operational testing of the integrated missile defense 
capability of the DDG 51’s upgrade, ensuring that the Navy does not 
include the lead Flight III ship in a multiyear procurement request, 
and raising the level of oversight for this program. DOD agreed with 
the recommendations to varying degrees, but generally did not offer 
specific actions to address them. GAO believes all recommendations 
remain valid and has included matters for congressional consideration 
to ensure the soundness of the Navy’s business case. 

View [hyperlink, http://www.gao.gov/products/GAO-12-113]. For more 
information, contact Belva Martin at (202) 512-4841 or MartinB@gao.gov. 

[End of section] 

Contents: 

Letter: 

Background: 

The Navy's Study may not Provide a Sufficient Basis for a Sound, Long-
Term Acquisition Program: 

Restart Ships are Costlier than Recent DDG 51s and Face a Challenging 
Combat System Upgrade: 

Flight III Cost and Technical Risks Pose Challenges for Oversight: 

Conclusions: 

Recommendations for Executive Action: 

Agency Comments and Our Evaluation: 

Matters for Congressional Consideration: 

Appendix I: Objectives, Scope, and Methodology: 

Appendix II: Comments from the Department Of Defense: 

Appendix III: GAO Contacts and Staff Acknowledgments: 

Tables: 

Table 1: Overview of Radar Options Considered in Radar Hull Study: 

Table 2: Combat System Architecture Modifications Considered: 

Table 3: Examples of Combat System Characteristics That Could Have Been 
Evaluated in the Radar/Hull Study: 

Table 4: Ship Characteristics That Could Have Been Evaluated in the 
Radar/Hull Study: 

Table 5: Lead Ship Cost Estimates, Radar/Hull Study: 

Table 6: Comparison of Selected Ship Characteristics from the Radar/
Hull Study: 

Table 7 Selected Major DDG 51 Changes and Corresponding Design Changes: 

Table 8: ACB 12 Components: 

Table 9: AMDR Technologies and Key Technical Challenges: 

Table 10: SLA Considerations with Select Ship Classes: 

Table 11: Differences in the Estimated Cost of the Lead DDG 51 Flight 
III Ship: 

Table 12: Flight III Program Compared with Factors to Determine ACAT ID 
Status: 

Figures: 

Figure 1: Timeline of Key Events in Future Surface Combatant Selection 
Process: 

Figure 2: Variants Considered in Radar/Hull Study: 

Figure 3: Notional Depiction of a Limited Trade-off Analysis: 

Figure 4: Proposed Design Changes for Restart Ships: 

Figure 5: Historic DDG 51 Construction Durations: 

Figure 6: Timeline of Aegis Upgrade Installation and Testing Events: 

Figure 7: Notional DDG 51 Flight III with AMDR: 

Figure 8: AMDR Schedule: 

Figure 9: SLA of Navy DDG 51 Flight III Concepts: 

Figure 10: Comparison of Procurement Costs for Flight III: 

Abbreviations: 

ACB: Advanced Capability Build: 

AOA: Analysis of Alternatives: 

AMDR: Air and Missile Defense Radar: 

BMD: Ballistic Missile Defense: 

DOD: Department of Defense: 

IAMD: Integrated Air and Missile Defense: 

MAMDJF: Maritime Air and Missile Defense of Joint Forces: 

SLA: Service Life Allowance: 

SPY: Maritime surveillance radar: 

TSCE: Total Ship Computing Environment: 

[End of section] 

United States Government Accountability Office: 
Washington, DC 20548: 

January 24, 2012: 

The Honorable Norm Dicks: 
Ranking Member: 
Subcommittee on Defense: 
Committee on Appropriations: 
House of Representatives: 

Dear Mr. Dicks: 

After nearly a decade and almost $10 billion in development of the 
Zumwalt class destroyer (DDG 1000), the Navy--citing in part advances 
in ballistic and anti-ship missiles and proliferation of this 
technology--changed its acquisition approach for surface combatants 
from procuring DDG 1000 to restarting production of the Arleigh Burke 
class destroyers (DDG 51). Navy officials believe that DDG 51--carrying 
the Aegis combat system[Footnote 1]--has a proven ballistic missile 
defense capability that makes it the preferred option over other ships 
to fill a gap in the Navy's abilities to provide simultaneous defense 
against ballistic and cruise missiles (known as Integrated Air and 
Missile Defense, or IAMD), and that modifying DDG 1000 would be too 
costly and bear too much risk. Concurrently, the Navy also canceled 
its planned new air warfare-focused cruiser program, known as CG(X). 
Ultimately the Navy is procuring current versions of DDG 51 ships and 
plans to begin building a new version of the class (known as Flight 
III[Footnote 2]) that is to be modified to carry the advanced Air and 
Missile Defense Radar (AMDR) to meet the identified threats. Pursuing 
this strategy could require an investment of up to approximately $80 
billion for up to 43 destroyers, with DDG 51s providing IAMD capability 
for potentially up to the next 60 years. In this context, you asked us 
to review the Navy's plans for DDG 51 and missile defense capabilities. 
In particular, we: (1) evaluated how the Navy determined the most 
appropriate platform to meet current and future surface combatant 
requirements; (2) identified and analyzed differences in design, cost, 
and schedule of the restart DDG 51 ships compared with previous ships, 
and risks associated with the restart; and (3) assessed the feasibility 
of Navy plans for maturing and integrating new technologies and 
capabilities into the Flight III ships. 

To conduct our work, we analyzed Navy technical studies related to 
Flight III; documentation related to Flight III, CG(X), and AMDR; and 
Department of Defense (DOD) and Navy threat assessments. We analyzed 
AMDR performance specifications and contractor performance data related 
to ongoing Aegis combat system upgrades, as well as cost estimates for 
Flight III. We also met with Missile Defense Agency (MDA), Navy, and 
other DOD officials, as well as shipyard representatives from Bath Iron 
Works in Bath, Maine and Ingalls Shipbuilding in Pascagoula, 
Mississippi, and radar contractor representatives from Lockheed Martin, 
Northrop Grumman, and Raytheon. We are also providing you with a 
classified annex containing supplemental information. This annex is 
available upon request to those with the appropriate clearance and a 
validated need to know. For more information on our scope and 
methodology, see appendix I. 

We conducted this performance audit from January 2011 to January 2012 
in accordance with generally accepted government auditing standards. 
Those standards require that we plan and perform the audit to obtain 
sufficient, appropriate evidence to provide a reasonable basis for our 
findings and conclusions based on our audit objectives. We believe that 
the evidence obtained provides a reasonable basis for our findings and 
conclusions based on our audit objectives, and that the data we 
obtained and analyzed are sufficiently reliable for the purposes of our 
assessment. 

Background: 

In the mid-2000s, the Navy was developing the DDG 1000 Zumwalt class 
destroyer--a new multimission land-attack ship--and laying the 
analytical framework to support a new air warfare cruiser acquisition 
program known as CG(X). The Navy planned to end DDG 51 production with 
the delivery of DDG 112 in 2011 (which would have completed the 62-
ship program), and concentrate instead on DDG 1000--initially intended 
to be a class of up to 32 ships--and building up to 19 CG(X). However, 
at a July 31, 2008, hearing before the House Armed Services Committee, 
Seapower and Expeditionary Forces Subcommittee, the Navy stated that 
it faces a growing proliferation of ballistic missiles and antiship 
cruise missiles, requiring greater integrated air and missile defense 
capability and that the naval land attack capability provided by DDG 
1000 had been obviated by improved precision munitions and targeting. 
Navy officials added that DDG 1000 had performance deficiencies 
compared to DDG 51, most notably in the areas of ballistic missile 
defense (BMD), area air defense, and some types of antisubmarine 
warfare.[Footnote 3] Most importantly, the Navy stated that at that 
time DDG 1000 could not carry the Standard Missile (SM) 2, SM-3, or SM-
6 and was incapable of conducting BMD, though officials have since 
told us that DDG 1000 is now capable of carrying the SM-2 missile, and 
that the Mk 57 Vertical Launching System is expected to be capable of 
carrying any of the standard missiles.[Footnote 4] The Navy stated 
that DDG 51 was a proven ship with a proven combat system, and that 
the Navy intended on restarting production of DDG 51 to defend against 
substantial ballistic missile proliferation as a bridge to the 
deployment of CG(X). The Navy focused on building additional DDG 
ships, but did not discuss AMDR during this hearing. Following this 
hearing, the Navy began to initiate plans to truncate the DDG 1000 
program and made preparations to restart the DDG 51 program. 

The DOD Joint Requirements Oversight Council had previously identified 
simultaneous defense against ballistic missiles and antiship cruise 
missiles as a capability gap and in 2006 validated that IAMD was an 
operational requirement not sufficiently addressed by other platforms. 
At the same time the Navy adopted BMD as a core Navy mission that it 
would perform in concert with MDA. In September 2009, the Joint 
Requirements Oversight Council also updated and revalidated IAMD 
requirements. In order to determine the appropriate type of ship and 
radar that would best address identified IAMD capability gaps, the 
Navy conducted an Analysis of Alternatives (AOA) known as the Maritime 
Air and Missile Defense of Joint Forces (MAMDJF).[Footnote 5] An AOA 
is an analytical comparison of the operational effectiveness, 
suitability, and life-cycle cost of alternative potential solutions to 
address valid capability needs. According to DOD acquisition guidance, 
an AOA examines potential material solutions with the goal of 
identifying the most promising option and is required to support a 
program's initiation of the technology development phase at Milestone 
A.[Footnote 6] We have previously reported on the importance of a 
robust AOA as a key element in ensuring a program has a sound, 
executable business case prior to program initiation.[Footnote 7] Our 
work has found that programs that conduct a limited AOA tended to 
experience poorer outcomes--including cost growth.[Footnote 8] 

In 2007, as a result of conclusions identified in the MAMDJF AOA, the 
Navy determined that it needed a very large radar carried on a larger, 
newly designed surface combatant to counter the most stressing 
ballistic and cruise missile threats. Consequently, the MAMDJF AOA 
served as the AOA for both the CG(X) program and for a new, dual-band 
radar development effort called AMDR. The Navy initiated development 
of CG(X) and AMDR--a large radar designed to be scalable, meaning that 
it could be increased in physical size to allow it to provide 
increased capability to meet future threats. 

In January 2009, in response to the Navy's planned changes to its 
surface combatant program, the Office of the Under Secretary of 
Defense for Acquisition, Technology and Logistics released a 
memorandum stating that the Navy's plan to buy additional DDG 51 
Flight IIA ships would be followed by a procurement of either DDG 1000-
or DDG 51-based destroyers. The memorandum stated that this 
procurement would be referred to as the "Future Surface Combatant" 
until the appropriate hullform to carry AMDR was selected, and 
required that a study be conducted to identify this hullform. 

To meet this requirement, in 2009 the Navy conducted a limited study 
referred to as the Radar/Hull Study. In the Radar/Hull Study, the Navy 
examined only the two existing destroyer designs--DDG 51 and DDG 1000--
with several different radar concepts to determine which pairing would 
best address the IAMD capability gap and would be more affordable than 
CG(X), which Navy officials told us was estimated to cost upwards of 
$6 billion per ship. A senior review panel--known as a "red team"--
also independently assessed the study, its analyses, and alternatives 
considered and provided a separate report on its findings. Following 
the conclusion of the Radar/Hull Study, the Navy validated the MAMDJF 
AOA's findings that a very large radar carried on a larger, newly 
designed surface combatant was necessary to counter the most stressing 
threats, but decided, based on the analysis of the Radar/Hull Study, 
that the preferred solution to meet the IAMD capability gap would be 
pairing a smaller AMDR with the familiar DDG 51 hullform and the Aegis 
combat system--which would be referred to as DDG 51 Flight III. The 
Navy at the same time also canceled the CG(X) program, largely as a 
result of cost considerations. The timing of this analysis and key 
decision making was compressed, as reflected in figure 1. 

Figure 1: Timeline of Key Events in Future Surface Combatant Selection 
Process: 

[Refer to PDF for image: timeline] 

June 2006: 
MAMDJF study starts. 

August 2007: 
MAMDJF study issued. 

July 2008: 
Testimony: DDG 1000 cannot do BMD. 

September 2008: 
Navy briefs Joint Requirements Oversight Council on plans to restart 
DDG 51 production. 

January 2009: 
Future surface combatant "Way Ahead" memorandum. 

June 2009: 
Radar/Hull Study starts. 

August 2009: 
DDG 1000 truncated to 3 ships.   

November 2009: 
Radar/Hull study concludes. 

February 2010  — January 2012: 
Navy  Flight III Technical Studies. 

April 2010: 
Cancels CG(X). 

April 2010: 
Navy validates MAMDJF, selects DDG 51 Flight III. 
          
July 2011: 
Start of construction for first restart ship. 

2016: 
Start of construction on first Flight III destroyer. 

Fall 2016: 
Planned AMDR production decision. 
          
2023: 
Flight III initial operating capability. 

Source: GAO analysis. 

[End of figure] 

The Navy now plans to build 9 DDG 51s in an upgraded Flight IIA 
configuration. Construction of the first restart ship (DDG 113) began 
at Ingalls Shipbuilding in July 2011, approximately 4 years after 
construction started on the last DDG 51 at that yard. Though the 
restart program refers to all 9 restart ships, we focus on DDG 113-115 
because these are the first restart ships built at both yards--Ingalls 
Shipbuilding and Bath Iron Works, the only two shipyards that 
currently build destroyers--and because contracts for these three 
ships were recently awarded (DDG 113 in June 2011; DDG 114, 115, and 
an option for DDG 116 in September 2011). After the first 9 ships, the 
Navy will then transition to building 22 DDG 51s in the new Flight III 
configuration including AMDR, starting with construction of the lead 
Flight III ship (DDG 123) in fiscal year 2016, with an initial 
operating capability planned for 2023. The Navy is currently reviewing 
technical considerations and options for Flight III as part of an 
ongoing flight upgrade study that was initiated in February 2010. The 
Navy also has a notional Flight IV DDG 51 in its long-range 
shipbuilding plans. 

The Navy's Study May Not Provide a Sufficient Basis for a Sound, Long-
Term Acquisition Program: 

The Radar/Hull Study may not provide a sufficient analytical basis 
given the magnitude of the Navy's acquisition decision, including up 
to 43 destroyers (22 of which will be in the Flight III configuration 
and 21 in a later Flight IV configuration, and both may require 
significant ship redesign), a new radar, and major combat system 
upgrades. The cost of 22 Flight III ships is estimated to range from 
$58 to $64 billion (in constant 2012 dollars), including research and 
development and procurement. This study played a central role in 
determining future Navy surface combatant acquisitions by contributing 
to a selection of the Navy's preferred radar, combat system and ship 
solutions, making it, in essence, an AOA. Namely, the Radar/Hull Study 
provided analysis of the capability of multiple ship and radar 
alternatives against a revised IAMD capabilities gap, informing the 
selection of DDG 51 with AMDR as its preferred ship and radar 
combination. However, it does not provide an adequate evaluation of 
combat system and ship characteristics, and does not include key 
elements that are expected in an AOA that would help support a sound, 
long-term acquisition program decision. 

The Navy Viewed Radar Capability as Primary Evaluative Criteria, Not 
Combat System and Ship Characteristics: 

Navy officials who were involved in the Radar/Hull Study told us that 
the capability of the technology concepts they evaluated was 
considered a major priority, and that the goal was identifying the 
most capable solution to meet the IAMD threat in the near-term that 
was also cost-effective. Within this context, the study team analyzed 
the capability of the radar variants considered. The Navy determined 
that a dual-band radar (S-and X-Band radars working together as an 
integrated unit) was required to effectively perform IAMD. As a 
result, the study team focused on assessing several different 
combinations of S-and X-Band radars, as show in table 1. 

Table 1: Overview of Radar Options Considered in Radar Hull Study: 

Radar component: S-Band; 
Component name: AMDR-S; 
Component description: Developmental radar design; 12-or 14-foot array 
size considered. 

Radar component: S-Band; 
Component name: Volume Search Radar+ (VSR+); 
Component description: Updated, more powerful version of the VSR 
developed for DDG 1000; 12-or 14-foot array size considered. 

Radar component: X-Band; 
Component name: SPY-3; 
Component description: Current X-Band radar for DDG 1000, consists of 
3 array faces. 

Radar component: X-Band; 
Component name: SPQ-9B; 
Component description: Rotating X-Band radar currently on CG 47, LPD 
17, and other ship classes. 

Source: GAO analysis of Radar/Hull Study. 

[End of table] 

The maximum radar size studied in the Radar/Hull Study was a 14-foot 
radar, since this was determined to be the largest size of radar that 
the DDG 51 hull could carry and the largest radar that DDG 1000 could 
carry without substantial deckhouse modifications. These radars were 
evaluated first against each other, and then combinations of radars 
were evaluated and compared with the capability of the current S-Band 
SPY-1D(V) radar installed on recent DDG 51 ships. All provided 
enhanced power over and above that of SPY-1D(V); this difference was 
quantified as a "SPY+" (in decibels) equating to the increase in 
target tracking range for a fixed amount of resources over the SPY-
1D(V) radar. SPY+15 has a 32 times better signal to noise factor--or 
intensity of the returning radar signal echoing off a target over the 
intensity of background noise--than a SPY-1D(V) radar. Radars with 
additional average power and larger antennas have enhanced 
sensitivity, and thus better performance in advanced threat 
environments. The Navy found that the SPY+15 S-Band radars performed 
better than the SPY+11 S-Band radars, and the Radar/Hull Study's 
independent red team described the capability of SPY+15 as marginally 
adequate. The Navy also found that the AMDR-S performed IAMD better 
than the VSR+. For the X-Band, the Radar/Hull Study identified that 
SPY-3 performed better than SPQ-9B. 

Limited Evaluation of Combat System Architectures Capability: 

Although the Navy considered capability as a driving factor in its 
decision making, the Radar/Hull Study did not include a thorough 
comparative analysis of the capabilities of the two combat system 
architectures--Aegis on DDG 51 and the Total Ship Computing 
Environment (TSCE) on DDG 1000--into which the radars would need to be 
integrated.[Footnote 9] Other than assessing the BMD capability that 
Aegis currently possesses and the absence of BMD capability in TSCE, 
the Navy evaluated Aegis and TSCE by focusing on the amount of new 
software code that it estimated would be required to integrate the 
radars and to effectively perform IAMD and the costs and risks 
involved in this development. Such analysis is important because 
selection of a combat system essentially determines the ship choice, 
and the combat system is the interface between the radar and the 
ship's weapons. Since TSCE does not currently have an inherent BMD 
capability, the Navy identified several ways to add this capability 
using Aegis software and hardware. Similarly, changes were assessed to 
Aegis to provide it enhanced IAMD capability and the ability to 
leverage a dual-band radar. Table 2 depicts the combat system 
modifications that were considered. 

Table 2: Combat System Architecture Modifications Considered: 

Combat system architecture: Aegis; 
Goal: Integrate S-Band radar with SPY-3; 
enhance IAMD functionality; 
Modification considered[A]: TSCE components related to radar operation 
added into Aegis; 
Navy evaluation: Preferred solution. 

Combat system architecture: Aegis; 
Goal: Integrate S-Band radar with SPQ-9B; enhance IAMD functionality; 
Modification considered[A]: TSCE components related to radar operation 
added into Aegis; 
Navy evaluation: SPQ-9B considered inferior radar. 

Combat system architecture: TSCE; 
Goal: Add BMD functionality to TSCE; 
Modification considered[A]: TSCE command and control component 
replaced with the Aegis component; 
Navy evaluation: Complicated modification requiring significant 
software development. 

Combat system architecture: TSCE; 
Modification considered[A]: TSCE architecture stays largely intact, 
select components replaced with Aegis components; 
Navy evaluation: Higher risk. 

Source: GAO analysis of Radar/Hull Study. 

[A] Each combat system architecture modification was further 
subdivided into VSR+ and AMDR-S radar options. 

[End of table] 

Though TSCE was intended to be the combat system architecture for 
CG(X) and thus would have been modified to perform BMD, the Radar/Hull 
Study states that developing a BMD capability "from scratch" for TSCE 
was not considered viable enough by the study team to warrant further 
analysis, particularly because of the investment already made in the 
Aegis program. The Navy concluded that developing IAMD software and 
hardware specifically for TSCE would be more expensive and present 
higher risk.[Footnote 10] Ultimately, the Navy determined that Aegis 
was its preferred combat system option. Navy officials stated that 
Aegis had proven some BMD capability and was widely used across the 
fleet, and that the Navy wanted to leverage the investments it had 
made over the years in this combat system, especially in its current 
development of a version that provides a new, limited IAMD capability. 

While the Navy's stated goal for the Radar/Hull Study was to identify 
the most capable solutions with an additional goal of affordability, 
the Navy selected Aegis based largely on its assessment of existing 
BMD capability, development costs and risk, and not on an analysis of 
other elements of combat system capability. Specifically, beyond the 
fact that Aegis already has a level of proven BMD capability and TSCE 
does not, other characteristics of the two combat systems that can 
contribute to overall performance were not evaluated.[Footnote 11] 
Table 3 summarizes some examples of combat system characteristics that 
could have been evaluated; more characteristics may exist. Since this 
analysis was not conducted, any impact of these capabilities on IAMD 
or other missions or how each system compares with each other is 
unknown. 

Table 3: Examples of Combat System Characteristics That Could Have 
Been Evaluated in the Radar/Hull Study: 

Characteristic: Computer processing ability; 
Description: Ability of the computer system to process data; metrics 
may include the throughput of data that the system can manage and the 
speed at which it can complete work (e.g.: time to solution). 

Characteristic: Cyber warfare capability; 
Description: Offensive and defensive electronic and information 
operations may be a key component of future Navy missions. A combat 
system that enables the ship to defend against electronic attacks and 
possibly conduct electronic attacks of its own could contribute to 
enhanced capability and performance. 

Characteristic: Reliability; 
Description: A measure of how long the system can operate without 
incurring failures that may require corrective maintenance actions. 

Characteristic: Information assurance capability; 
Description: Measures that protect and defend information and 
information systems by ensuring their availability, integrity, 
authentication, confidentiality, and nonrepudiation. This includes 
providing for restoration of information systems by incorporating 
protection, detection, and reaction capabilities. A combat system with 
robust information assurance capabilities would be less vulnerable to 
interference in the ship's electronic network (e.g., viruses, hacking) 
than other systems. 

Characteristic: Usability; 
Description: A human-system interface measure of the extent to which a 
system can be used to achieve specified goals with effectiveness, 
efficiency, and satisfaction. 

Characteristic: Proprietary versus open architecture combat systems; 
Description: Level of proprietary software code, which dictates 
whether or not combat system development efforts can be openly 
competed. Competing combat system upgrades could lead to reduced costs. 

Characteristic: Scalability; 
Description: The ability of a system to handle an increased workload, 
either without adding or by adding additional resources. 

Source: GAO analysis. 

Note: Because the characteristics noted above were not included in the 
Navy's analysis, the implications of assessing or not assessing them 
is unknown. 

[End of table] 

While considering the resident BMD capabilities of Aegis and comparing 
software development costs and risks are essential to making a 
decision, without a thorough combat system assessment, the Navy cannot 
be sure how other combat system characteristics can contribute to 
overall performance. 

Capability of Ships Not Evaluated Beyond Ability to Carry AMDR: 

Because Aegis is carried by DDG 51 and not DDG 1000 ships, selection 
of Aegis as the preferred combat system essentially determined the 
preferred hull form. The Radar/Hull Study did not include any 
significant analysis of the ships themselves beyond comparing the 
costs to modify the ships to carry the new radar configurations and to 
procure variants of both types. Several characteristics associated 
with the ships (such as displacement or available power and cooling) 
were identified in the study. The ships were evaluated on their 
ability to meet Navy needs and the impact of these ship 
characteristics on costs. However, there was no documented comparison 
or discussion of the benefits or drawbacks associated with any 
additional capabilities that either ship may bring. Navy officials 
told us that these characteristics were not weighted or evaluated 
against one another. Other ship variables that directly relate to ship 
capability and performance--such as damage tolerance and stealth 
features that were explicitly designed into DDG 1000--were not 
discussed in the Radar/Hull Study, even though they were discussed in 
the MAMDJF AOA. The MAMDJF AOA notes that a stealthy ship is harder 
for enemy forces to detect and target, thus making it more likely that 
a stealthy ship would be available to execute its BMD mission. 
However, senior Navy officials told us that the Radar/Hull Study did 
not consider the impact of stealth on performance because the study 
assumed that stealth would not have a significant impact on 
performance in IAMD scenarios. Navy officials added that any 
additional benefits provided by DDG 1000 stealth features were not 
worth the high costs, and that adding larger radars to DDG 1000 would 
reduce its stealth. However, no modeling or simulation results or 
analysis were presented to support this conclusion. Table 4 depicts 
ship characteristics that were evaluated in the MAMDJF AOA that could 
have been evaluated in the Radar/Hull Study. 

Table 4: Ship Characteristics That Could Have Been Evaluated in the 
Radar/Hull Study: 

Characteristics: Damage survivability; 
Description: Ability of ship to sustain damage. Navy standards 
establish a minimum, but some ships may exceed these standards. 

Characteristics: Ship signatures; 
Description: Ship emissions (e.g.: radar cross section, acoustic and 
magnetic signatures) which when reduced can enable stealthy operations. 

Characteristics: Time on station; 
Description: Ability of ship to remain in position without needing to 
refuel. 

Characteristics: Range; 
Description: Maximum distance a ship can travel on a full tank of fuel. 

Characteristics: Surge-to-objective; 
Description: Required number of replenishments required to transit 
ship to a specified objective. 

Source: GAO analysis of Radar/Hull Study and MAMDJF AOA. 

Note: Because the characteristics noted above were not included in the 
Navy's analysis, the implications of assessing or not assessing them 
is unknown. 

[End of table] 

These characteristics influence performance, and each ship option has 
strengths and weaknesses that could have been compared to help provide 
a reasonable basis for selecting a ship. For example, DDG 1000 has 
enhanced damage survivability and reduced ship signatures, while DDG 
51 is capable of longer time-on-station and endurance.[Footnote 12] 

Radar/Hull Study Did Not Include a Robust Trade-off Analysis to Inform 
a Sound Decision: 

The Radar/Hull Study did not include a robust trade-off analysis for 
the variants studied to support the Navy's DDG 51 selection decision, 
which is currently planned to result in an acquisition of 22 modified 
Flight III DDG 51s and a further 21 modified DDG 51s known as Flight 
IV. DOD acquisition guidance indicates that a discussion of trade-offs 
between the attributes of each variant being considered is important 
in an AOA to support the rationale and cost-effectiveness of 
acquisition programs. A trade-off analysis usually entails evaluating 
the impact on cost of increasing the capability desired, essentially 
answering the question of how much more will it cost to get a greater 
degree of capability. A trade-off analysis allows decision makers to 
determine which combination of variables provides the optimal solution 
for a cost they are willing to pay. For the Radar/Hull Study, the Navy 
examined 16 different combinations of ship, radar, and combat system 
options based around DDG 51 and DDG 1000. These variants are depicted 
in figure 2. 

Figure 2: Variants Considered in Radar/Hull Study: 

[Refer to PDF for image: illustration] 

DDG 51 variants: 

Variant: 1; 
S-Band array size: 12 feet; 
Radar Suite S: VSR+; 
Radar Suite X: Spy 3; 
Number of missiles: 96; 
Combat system operation: Aegis modified with select radar-related TSCE 
components. 

Variant: 2; 
S-Band array size: 12 feet; 
Radar Suite S: VSR+; 
Radar Suite X: SPQ 9B; 
Number of missiles: 96; 
Combat system operation: Aegis modified with select radar-related TSCE 
components. 

Variant: 3; 
S-Band array size: 14 feet; 
Radar Suite S: VSR+; 
Radar Suite X: Spy 3; 
Number of missiles: 96; 
Combat system operation: Aegis modified with select radar-related TSCE 
components. 

Variant: 4; 
S-Band array size: 14 feet; 
Radar Suite S: VSR+; 
Radar Suite X: SPQ 9B; 
Number of missiles: 96; 
Combat system operation: Aegis modified with select radar-related TSCE 
components. 

Variant: 4; 
S-Band array size: 12 feet; 
Radar Suite S: AMDR-S; 
Radar Suite X: Spy 3; 
Number of missiles: 96; 
Combat system operation: Aegis modified with select radar-related TSCE 
components. 

Variant: 6; 
S-Band array size: 
Radar Suite S: AMDR-S; 
Radar Suite X: SPQ 9B; 
Number of missiles: 96; 
Combat system operation: Aegis modified with select radar-related TSCE 
components. 

Variant: 7; 
S-Band array size: 
Radar Suite S: AMDR-S; 
Radar Suite X: Spy 3; 
Number of missiles: 
Number of missiles: 96; 
Combat system operation: Aegis modified with select radar-related TSCE 
components. 

Variant: 8; 
S-Band array size: 
Radar Suite S: AMDR-S; 
Radar Suite X: SPQ 9B; 
Number of missiles: 
Number of missiles: 96; 
Combat system operation: Aegis modified with select radar-related TSCE 
components. 

DDG 1000 variants: 

Variant: 9; 
S-Band array size: 12 feet; 
Radar Suite S: VSR+; 
Radar Suite X: Spy-3; 
Number of missiles: 80; 
Combat system operation: TSCE selected elements replaced with Aegis 
elements. 

Variant: 10; 
S-Band array size: 
Radar Suite S: VSR+; 
Radar Suite X: Spy-3; 
Number of missiles: 96; 
Combat system operation: Unspecified TSCE variant. 

Variant: 11; 
S-Band array size: 
Radar Suite S: VSR+; 
Radar Suite X: Spy-3; 
Number of missiles: 80; 
Combat system operation: Unspecified TSCE variant. 

Variant: 12; 
S-Band array size: 
Radar Suite S: VSR+; 
Radar Suite X: Spy-3; 
Number of missiles: 96; 
Combat system operation: Unspecified TSCE variant. 

Variant: 13; 
S-Band array size: 
Radar Suite S: AMDR-S; 
Radar Suite X: Spy-3; 
Number of missiles: 80; 
Combat system operation: Unspecified TSCE variant. 

Variant: 14; 
S-Band array size: 
Radar Suite S: AMDR-S; 
Radar Suite X: Spy-3; 
Number of missiles: 96; 
Combat system operation: Unspecified TSCE variant. 

Variant: 15; 
S-Band array size: 
Radar Suite S: AMDR-S; 
Radar Suite X: Spy-3; 
Number of missiles: 80; 
Combat system operation: Unspecified TSCE variant. 

Variant: 16; 
S-Band array size: 
Radar Suite S: AMDR-S; 
Radar Suite X: Spy-3; 
Number of missiles: 96; 
Combat system operation: TSCE command and control replaced with Aegis 
command and control. 

Source: GAO analysis of Radar/Hull Study data. 

[End of figure] 

The Radar/Hull Study documents full cost data for only 4 of the 16 
ship variants; 8 ship variants have no cost data, and 4 others do not 
have ship procurement and operations and support costs. Instead, the 
Radar/Hull Study provided full cost data for only the most expensive 
and least expensive DDG 51 and DDG 1000 variants (high and low), and 
operations and support costs for these four variants. Higher costs 
were largely driven by the combat system selected. For example, the 
high DDG 1000 variant included a 14-foot AMDR coupled with a SPY-3 
radar, and the more expensive combat system solution, which comprised 
replacing the central core of DDG 1000's TSCE combat system with the 
core of the Aegis combat system. The high DDG 51 variant included a 14-
foot AMDR coupled with a SPY-3 radar and the Aegis combat system. The 
low DDG 1000 variant coupled a 12-foot VSR+ with the SPY-3 radar and a 
less expensive combat system solution involving replacing only 
portions of TSCE with portions of Aegis. The low DDG 51 included VSR+ 
coupled with the SPQ-9B radar and the Aegis combat system. In both the 
DDG 1000 high and low cases, the combat system solutions would be 
equally capable; the difference was in the level of effort and costs 
required to implement the changes. Since only a high and low version 
of DDG 1000s were priced out, the study did not include a DDG 1000 
variant with AMDR and the less complicated TSCE combat system upgrade 
that may be a less expensive--but equally capable--option. Because 
this variant was not included in the study, cost data were not 
provided. This study also presented a brief analysis of operations and 
support costs; the Navy concluded that it found only negligible 
differences between the operations and support costs for the DDG 51 
and DDG 1000 variants. Previous DDG 1000 cost estimates had indicated 
28 percent lower long-term costs than DDG 51. While both ships had 
increases in these costs, the Navy determined in the Radar/Hull Study 
that adding additional crew to DDG 1000 to perform BMD-related tasks 
and increased fuel costs were more significant for that ship, and made 
the costs essentially equal between the two ships. The costs of the 4 
variants that the Radar/Hull Study priced are shown in table 5. 

Table 5: Lead Ship Cost Estimates, Radar/Hull Study: 

DDG 51 variants: 
Low VSR+/SPQ-9B: Operations and support: $65.3 million; 
Low VSR+/SPQ-9B: Procurement[B]: $2.31 billion; 
High: AMDR-S/SPY-3: Operations and support: $65.3 million; 
High: AMDR-S/SPY-3: Procurement: $2.946 billion; 

DDG 1000 variants: 
Low: VSR+/SPY-3: Operations and support: $66.5 million; 
Low: VSR+/SPY-3: Procurement: $3.203 billion; 
High: AMDR-S/SPY-3: Operations and support: $67.8 million; 
High: AMDR-S/SPY-3: Procurement: $3.367 billion. 

Source: Radar/Hull Study. 

[A] Operations and support costs are provided in fiscal year 2010 
dollars in millions/per ship/per year: 

[B] The low options of both ships are priced in fiscal year 2015 
dollars, while the high options are priced in fiscal year 2016 dollars. 

[End of table] 

Navy officials agreed that they could have developed cost estimates 
for all 16 of the variants, but stated that there was a time 
constraint for the study that prohibited further analysis, and that 
they believed that pricing the high and low options was enough to 
bound the overall costs for each ship class. Without complete cost 
data for all variants, the Navy could not conduct a thorough trade-off 
analysis of the variants that fell between the high and low extremes 
because the costs of these variants are unknown. DOD acquisition 
guidance highlights the importance of conducting a trade-off analysis. 
Conducting a trade-off analysis with costs for all the variants would 
have established the breakpoints between choices, and identified 
potential situations where a cheaper, slightly less capable ship or a 
more expensive but much more capable ship might be a reasonable 
choice. Figure 3 is a notional depiction of the limitations of missing 
cost data when conducting a trade-off analysis with only high and low 
data points. 

Figure 3: Notional Depiction of a Limited Trade-off Analysis: 

[Refer to PDF for image: illustration] 

Matrix of capability plotted against cost. 

Low and high options depicted; 
Distribution of variants unknown. 

Source: GAO analysis based on DOD acquisition guidance. 

[End of figure] 

Further, the Navy also did not prioritize what aspects of the radar, 
combat system, and ship it valued more than others, which could also 
be used to inform a trade-off analysis. For example, if performance is 
valued more than cost, choosing a ship variant that has 10 percent 
more performance than another variant but with a 20 percent increase 
in cost might be in the Navy's best interest. Alternatively, if cost 
was weighted more than performance, the Navy might choose the cheaper 
and slightly less capable ship as it would be able to get a 20 percent 
reduction in cost with only a 10 percent reduction in performance. 
Similarly, the study did not discuss the Navy's preferences with 
regard to ship characteristics and the impact that differences in 
these characteristics might have on a trade-off analysis. For example, 
Navy officials told us that electrical power was a major concern for 
future destroyers, but the considerable difference in available power 
between DDG 51 and DDG 1000 (approximately 8,700 kilowatts for DDG 51 
after the addition of a supplemental generator compared to 78,000 
kilowatts for DDG 1000 with no additional generators required) was not 
compared in a trade-off analysis. Finally, the Navy did not assess 
potential impacts of ship selection on future fleet composition. The 
MAMDJF AOA found that more capability can be obtained by fewer, more 
capable ships (meaning those with larger radars) than a greater number 
of less capable ships (meaning those with smaller radars). This could 
change the acquisition approach and would result in different program 
costs as a result if it is found that fewer, more capable ships are 
more cost-effective than many, less capable ships. 

Navy officials told us that some of these trade offs were not done in 
the Radar/Hull Study because they were already studied in the MAMDJF 
AOA. However, that study, using a different threat environment and 
ship concepts, eliminated the DDG 51 variant from further 
consideration as a single ship solution; it also eliminated the DDG 
1000 option without a radar larger than the 14-foot design that was 
considered in the Radar/Hull Study. Consequently, its analysis is not 
directly comparable or interchangeable with the Radar/Hull Study. When 
comparing the raw ship data from the Radar/Hull Study, we found that 
the two ships offer different features worth evaluating. For example, 
all DDG 1000 variants offer more excess cooling and service life 
allowance, meaning the ability of the ship to accommodate new 
technologies over the life of the ship without major, costly overhauls 
than DDG 51 variants, while DDG 51 variants offer greater endurance 
and lower procurement costs. Table 6 depicts a simplified presentation 
of this comparison. 

Table 6: Comparison of Selected Ship Characteristics from the Radar/ 
Hull Study: 

(Dollars in millions). 

Variant: High DDG 51; 
Procurement cost[A]: $2.946 billion; 
Excess power: 1,174 kW after addition of a generator; 
Excess cooling: 284 tons; 
Service life allowance[B]: 4.4 percent; 0.52 feet; 
Full load displacement: 9,865 long tons; 
Number of missile cells: 96. 

Variant: High DDG 1000; 
Procurement cost[A]: $3.367 billion; 
Excess power: 968 kW no additional generator required; 
Excess cooling: 461 tons; 
Service life allowance[B]: 10.0 percent; 1.0 feet; 
Full load displacement: 15,300 long tons; 
Number of missile cells: 96. 

Source: GAO analysis of Radar/Hull Study. 

[A] Procurement costs only (fiscal year 2016 dollars, in millions): 

[B] Navy weight and center of gravity allowances to enable future 
changes to the ships, such as adding equipment and reasonable growth 
during the ship's service life without unacceptable impacts on the 
ship. Ten percent of weight and 1.0 foot of center of gravity are the 
Navy requirements for surface combatants. 

[End of table] 

As this table shows, these two ships offer different characteristics. 
Both were deemed capable of carrying AMDR, but without conducting a 
trade-off analysis of these characteristics, the Navy did not consider 
their relative merit and the significance, if any, of any differences 
between the two. Senior Navy officials told us that it is now 
conducting these types of trade-off analyses; however, these analyses 
are focused only on assessing various DDG 51 configurations, and were 
not done to help inform the ship selection decision. A preliminary 
finding of these new analyses is that the cost of Flight III is 
estimated to range from $58 billion to $64 billion (in constant 2012 
dollars), including research and development and procurement. 

Radar/Hull Study Assumed a Significantly Reduced Threat Than Other 
Studies: 

The Radar/Hull Study assumed a significantly reduced threat 
environment compared to the earlier MAMDJF AOA and other Navy studies. 
How the threat is characterized is important because against a reduced 
threat environment, a less capable radar than what was identified as 
necessary in the MAMDJF AOA was described by the Radar/Hull Study as 
marginally adequate. Both the Radar/Hull Study and MAMDJF AOA analyzed 
the performance of radars in several different classified tactical 
situations that presented threats of varying levels of complexity. The 
most stressing situations involved a number of different air and 
missile threats and a complex timing of events.[Footnote 13] In the 
MAMDJF AOA, these tactical situations involved many different types of 
simultaneous threats and larger radars, and were developed in 
consultation with the Office of Naval Intelligence--the agency tasked 
to provide validated threat intelligence to support Navy and joint, 
Navy-led acquisition programs--as well as MDA. Conversely, the 
subsequent Radar/Hull Study assumed a significantly reduced threat 
environment and smaller radar solutions than did the MAMDJF AOA. This 
study modeled radar performance based on a very limited air and 
missile threat which are both quantitatively and qualitatively less 
stressing than the threat environment established in the MAMDJF AOA, 
in other Navy and DOD threat analyses, and in system guideline 
documents for AMDR. Also, the Office of Naval Intelligence was not 
actively engaged in the Radar/Hull Study.[Footnote 14] The system 
guideline documents for AMDR that were generated at approximately the 
same time as the Radar/Hull Study also included significantly more 
taxing tactical situations than the Radar/Hull Study, and in some 
cases they are even more stressing than those found in the MAMDJF AOA. 
The Office of Naval Intelligence also provided input to these AMDR 
system guidelines. 

The Navy believes that some of the differences in the threat 
environment result from the different timeframes for the Radar/Hull 
Study and the MAMDJF AOA; the MAMDJF AOA states that it is based on a 
2024 through 2030 timeframe while the Radar/Hull Study states that it 
is based on a 2015 through 2020 timeframe. However, Navy officials 
also told us that the IAMD threats are actually emerging more rapidly 
than they had assumed in the MAMDJF AOA, which could mean that some of 
the MAMDJF AOA threats may be present earlier. The Navy does not 
document why the Radar/Hull Study based its analysis on a reduced 
threat environment compared to the MAMDJF AOA, since both studies are 
attempting to identify solutions to the same capabilities gap and set 
of requirements. Navy officials later told us that the assumption in 
the Radar/Hull Study was that no single Navy ship would likely have to 
deal with all the threats in the battlespace, compared to the threat 
environment in the MAMDJF AOA where more of a single-ship solution was 
considered. However, other Navy studies developed in a similar 
timeframe to the Radar/Hull Study describe a larger number of threats 
than the Radar/Hull Study. Further, while the Navy's assumption may 
account for some of the quantitative differences between the 
Radar/Hull Study and all the other Navy studies we analyzed, it should 
have no bearing on the qualitative difference in the composition of 
the threat, since this is a variable that is independent of Navy 
concepts of operations and is a variable over which the Navy has no 
influence. 

Restart Ships are Costlier than Recent DDG 51s and Face a Challenging 
Combat System Upgrade: 

According to the Navy and shipbuilders, the changes to the restarted 
DDG 51's hull and mechanical systems appear less substantial than 
previous modifications to earlier DDG 51s. However, due in part to a 
break in production, an initially noncompetitive environment, and 
other factors, the restart ships are budgeted to cost more than 
previous DDG 51 Flight IIA ships. While the shipbuilders' planned 
production schedules are generally in line with past shipyard 
performance, the delivery schedule for the first restart ship (DDG 
113) may be challenging because of a significant upgrade in the Aegis 
combat system, where major software development efforts are under way 
and a critical component has faced delays. Although the Navy plans to 
install and test this upgrade on an older DDG 51 (DDG 53) prior to 
installation on DDG 113, delays in these efforts could pose risks to a 
timely delivery in support of DDG 113 and ability to mitigate risk. If 
this occurs, the Navy may need additional time to identify, analyze, 
and work to resolve problems with the combat system--adding pressure 
to the schedule for DDG 113. Even if current testing goes as planned, 
the Navy has not planned for realistic operational testing necessary 
to ensure that the Aegis upgrades are capable of performing IAMD 
against multiple ballistic and cruise missile targets. 

The Navy Believes Proposed Hull and Mechanical Changes Are Less 
Substantial Than Previous Modifications: 

While the restart ships will have some changes to the ship's design 
and physical structure, Navy officials told us that they are less 
substantial than prior modifications, despite changes to a large 
number of design drawings. The Navy has been building DDG 51s since 
the late 1980s, and over time the ship design has been modified, 
including additions such as helicopter hangars, additional missiles, 
and significant combat system upgrades. As shown in table 7, a large 
number of design drawing changes are required for the DDG 51 restart 
program, similar to those implemented as part of previous major 
upgrades, such as the upgrade from Flight II to Flight IIA (DDGs 79 
and higher). While these design changes may not be complex, they 
affect numerous areas of the ship. 

Table 7: Selected Major DDG 51 Changes and Corresponding Design 
Changes: 

Hull number: DDG 79; 
Number of drawing changes: 2,705; 
Description of changes: Addition of dual helicopter hangars and moving 
radar arrays, and replacement of crane used to move missiles with 
additional missiles. 

Hull number: DDG 85; 
Number of drawing changes: 659; 
Description of changes: Physical dimensions of the ship unchanged, 
major Aegis combat system upgrade. 

Hull number: DDG 103; 
Number of drawing changes: 1,898; 
Description of changes: Physical dimensions of the ship unchanged, 
major Aegis upgrade. 

Hull number: DDG 113; 
Number of drawing changes: 1,175[A]; 
Description of changes: Physical dimensions of the ship unchanged, 
major Aegis upgrade, modest hull and mechanical changes (e.g. anchor 
deletion). 

Source: GAO analysis of Navy data. 

[A] Design work for DDG 113 is still underway, so this number is 
estimated. 

[End of table] 

According to shipyard officials, most design drawings for the restart 
ships will have applicability from previous hulls and will not require 
re-design, but the Navy told us that they currently expect 1175 
drawings will be changed, and the design work is still underway. As 
figure 4 shows, some of the changes will affect the topside of the 
ship, and include removing some redundant or unneeded equipment from 
the ship (e.g. the forward kingpost and port anchor) while internal 
changes largely pertain to upgrading the Aegis combat system with new 
computer displays and computer cabinets. 

Figure 4: Proposed Design Changes for Restart Ships: 

[Refer to PDF for image: illustration] 

Depicted on the illustration: 
Vertical launch system upgrades; 
Radar room Aegis upgrades; 
Aegis upgrades; 
Remove anchor; 
Sonar control: Aegis upgrades; 
Aegis upgrades, vertical launch system upgrades; 
Combat Information Center: Aegis upgrades. 

Source: GAO analysis of Navy data. 

[End of figure] 

Restart Ships Cost More Than Previous DDG 51 Flight IIA Ships: 

The Navy has budgeted approximately $17.5 billion for the 10 Flight 
IIA restart ships.[Footnote 15] The first three restart ships, 
beginning with DDG 113, cost 45 percent more than recently delivered 
DDG 51s.[Footnote 16] DDG 113 through DDG 115 are currently budgeted 
to cost a total of $5.8 billion, which is approximately $1.8 billion 
higher than the last three DDG 51s built.[Footnote 17] Unlike the 
previous 24 ships, the restart ships are not part of multiyear ship 
procurements, which can be more cost-efficient due to economies of 
scale. The Navy partially attributes the increase in procurement costs 
to a 4-year gap in production. Construction of the last DDG 51s began 
in late 2007 and production on DDG 113 began in July 2011. The 
shipbuilders and the Navy anticipate that additional labor hours will 
be required to build DDG 113-115 due in part to a loss of experienced 
workers who will have been laid off or otherwise left the shipyard 
during the production gap. This attrition--along with changes in 
equipment and processes associated with the shutdown of the production 
line--contributes to a loss of learning whereby a less experienced and 
less efficient workforce requires more time to complete tasks with 
additional hours spent on rework. While the Navy in part attributes 
the higher ship costs to the need for additional labor hours to build 
the ships, it does not associate increases with significant changes in 
the supplier base. In general, the Navy found the supplier base for 
ship equipment was primarily intact, with most of the DDG 51 suppliers 
still in production, which allowed the Navy to get the equipment it 
needed at prices it considered reasonable.[Footnote 18] In cases where 
the suppliers were no longer available, the Navy recompeted some key 
equipment contracts in order to maximize value and to compensate for 
some modest changes in its supplier base. 

The Navy's initial noncompetitive acquisition strategy also 
contributed to a higher budgeted cost for the first three restart 
ships. In response to the truncation of the DDG 1000 program, the Navy 
and the two shipyards had agreed to allocate the construction of DDG 
1000s and the first three DDG 51s (DDG 113-115) between Bath Iron 
Works and Ingalls Shipbuilding to ensure workload stability between 
the shipyards.[Footnote 19] The parties agreed, subject to negotiation 
of fair and reasonable prices and other conditions, that Bath Iron 
Works would be responsible for all of the remaining DDG 1000 design 
and construction work and construction of DDG 115, while Ingalls 
Shipbuilding would construct DDG 113 and DDG 114.[Footnote 20] After 
these first three ships, the Navy intended to competitively award 
contracts for future surface combatants. The Navy assumed that it 
would pay a premium for the first three ships because a lack of 
competition between the two shipyards would drive up costs. Indeed, 
Navy officials noted that a noncompetitive environment, along with 
disagreements on the impact of the production gap, were among the 
reasons that initial bids from the shipbuilders were unreasonably high 
and in excess of Navy budget estimates. 

In an effort to generate more competitive pricing, the Navy changed 
its acquisition strategy in May 2011 to "competitively allocate" DDG 
114 and 115. This strategy change allowed the Navy to award contracts 
to each shipbuilder using a Profit Related to Offers strategy, whereby 
the shipbuilder that submitted the lowest cost bid for its allocated 
ship would receive a higher target profit percentage, and the 
shipbuilder that submitted the lower bid for DDG 116 would be awarded 
an option for construction of that ship. The Navy believed that 
through its new strategy it would be able to reduce the costs for DDG 
114 and DDG 115, noting its successful use on 30 previous DDG 51 ships 
since 1996. Additionally, the strategy allowed the Navy to award both 
DDG 114 and DDG 115 to one shipbuilder in the event that it failed to 
arrive at a fair and reasonable price with each shipbuilder on its 
allocated ship. After prolonged negotiations with the shipyards and 
over a year delay from when the Navy planned to award the DDG 113 
contract, the Navy awarded a contract to Ingalls Shipbuilding for DDG 
113 in June 2011 and DDG 114 in September 2011, and awarded a contract 
to Bath Iron Works for DDG 115 in September 2011, with an option to 
build DDG 116. 

Restart Production Schedules Appear in-Line with Past Shipyard 
Performance: 

The Navy expects DDG 113 to be built in 47 months (from the start of 
construction to delivery), DDG 114 in 41 months, and DDG 115 in 58 
months. As show in figure 5, Ingalls Shipbuilding--which is building 
the two first ships --averages 41 months to build a DDG 51, though in 
recent years has required more time due in part to after-effects of 
Hurricane Katrina. Bath Iron Works typically requires an average of 
closer to 54 months. Navy officials told us that this longer 58 month 
schedule planned for DDG 115 is due to the shipyard beginning 
construction earlier than planned in part to maintain stability in the 
shipyard labor force, while maintaining the delivery date. 

Figure 5: Historic DDG 51 Construction Durations: 

[Refer to PDF for image: 2 line graphs] 

Ingalls Shipbuilding (1999 to present): 

Ship: 1; 
Months (start of construction to deliver), current: 35. 

Ship: 2; 
Months (start of construction to deliver), current: 35. 

Ship: 3; 
Months (start of construction to deliver), current: 37. 

Ship: 4; 
Months (start of construction to deliver), current: 41. 

Ship: 5; 
Months (start of construction to deliver), current: 36. 

Ship: 6; 
Months (start of construction to deliver), current: 35. 

Ship: 7; 
Months (start of construction to deliver), current: 34. 

Ship: 8; 
Months (start of construction to deliver), current: 35. 

Ship: 9; 
Months (start of construction to deliver), current: 45. 

Ship: 10; 
Months (start of construction to deliver), current: 51. 

Ship: 11; 
Months (start of construction to deliver), current: 51. 

Ship: 12; 
Months (start of construction to deliver), current: 47. 

Ship: 13; 
Months (start of construction to deliver), current: 40. 

Ship: 14; 
Months (start of construction to deliver), planned: 47. 

Ship: 15; 
Months (start of construction to deliver), planned: 41. 

Bath Iron Works (1999 to present): 

Ship: 1; 
Months (start of construction to deliver), current: 52. 

Ship: 2; 
Months (start of construction to deliver), current: 54. 

Ship: 3; 
Months (start of construction to deliver), current: 50. 

Ship: 4; 
Months (start of construction to deliver), current: 50. 

Ship: 5; 
Months (start of construction to deliver), current: 48. 

Ship: 6; 
Months (start of construction to deliver), current: 48. 

Ship: 7; 
Months (start of construction to deliver), current: 48. 

Ship: 8; 
Months (start of construction to deliver), current: 48. 

Ship: 9; 
Months (start of construction to deliver), current: 50. 

Ship: 10; 
Months (start of construction to deliver), current: 54. 

Ship: 11; 
Months (start of construction to deliver), current: 50. 

Ship: 12; 
Months (start of construction to deliver), current: 53. 

Ship: 13; 
Months (start of construction to deliver), current: 56. 

Ship: 14; 
Months (start of construction to deliver), planned: 58. 

Source: GAO analysis of Navy and shipyard data. 

[End of figure] 

The schedules, while in line with past performance, are contingent on 
achieving an optimum build sequence, meaning the most efficient 
schedule for constructing a ship, including building the ship from the 
bottom up and installing ship systems before bulkheads have been built 
and when spaces are still easily accessible. Shipbuilders generate 
specific dates for when systems need to arrive at the shipyard in 
order to take advantage of these efficiencies. According to shipyard 
officials, approximately 10 percent to 12 percent of the suppliers for 
the restart ships will be new vendors. Some key pieces of equipment--
like the main reduction gear, the machinery control system, and the 
engine controllers --will now be government-furnished equipment, 
meaning that the Navy will be responsible for ensuring an on-time 
delivery to the shipyard, not the shipbuilder.[Footnote 21] For the 
main reduction gear, the Navy is now contracting with a company that 
bought the gear production line from the past supplier, and while this 
supplier builds reduction gears for San Antonio class ships, it does 
not have experience building DDG 51 main reduction gears. An on-time 
delivery of this key component is particularly important to the 
schedule because it is installed early in the lower sections of the 
ship. A delay in a main reduction gear could result in a suboptimal 
build sequence as the shipbuilder has to restructure work to leave 
that space open until the gear arrives. The Defense Contract 
Management Agency reports production of the first gear ship set is 
progressing well, and that Navy officials are tracking the schedule 
closely. 

Combat System Upgrade Has Faced Delays, and Key Testing Is Undefined: 

A major change for the restart ships is a significant upgrade to the 
Aegis combat system currently under way. This upgrade, known as 
Advanced Capability Build 12 (ACB 12), will be retrofitted on some of 
the current fleet of DDG 51s (starting with DDG 53); following DDG 53, 
the upgrade will also be installed on the restart ships (starting with 
DDG 113). The retrofit on DDG 53 will provide the Navy with a risk 
mitigation opportunity, since any challenges or problems can be 
identified and resolved prior to installation on DDG 113. The Navy 
believes this is the most complex Aegis upgrade ever undertaken and 
will enable the combat system to perform limited IAMD for the first 
time. This upgrade will also move the Navy towards a more open 
architecture combat system, meaning that there will be a reduction of 
proprietary software code and hardware so that more elements can be 
competitively acquired in the future. To date, Lockheed Martin 
maintains intellectual property rights over some Aegis components. ACB 
12 requires both software and hardware changes, and consists of three 
related development efforts: (1) development of a multimission signal 
processor (MMSP), (2) changes to the ballistic missile suite (BMD 
5.0), and (3) changes to the Aegis combat system core. While the Navy 
manages the development of MMSP and ACB 12, MDA manages the 
development of BMD 5.0. Table 8 describes each of the three efforts. 

Table 8: ACB 12 Components: 

Element: MMSP; 
Description: Radar signal processor that enables IAMD by 
simultaneously processing radar inputs from ballistic and cruise 
missile targets. This component is the essential enabler for providing 
initial IAMD capability. 

Element: BMD 5.0; 
Description: Upgraded set of algorithms and software integrated for 
the first time into the combat system. Development managed by MDA. 

Element: Aegis Modernization; 
Description: Overall combat system upgrade in addition to MMSP and BMD 
5.0, including new workstations and display screens. 

Source: GAO analysis of Navy and contractor data. 

[End of table] 

Delays in Aegis Combat System Development May Compromise Installation 
and Testing Schedule, Shifting Risk to DDG 113: 

While the Navy has made significant progress in developing the 
components of ACB 12, MMSP is proving more difficult than estimated 
and is currently 4 months behind schedule, with $10 million in cost 
growth realized and an additional $5 million projected. A substantial 
amount of software integration and testing remains before MMSP can 
demonstrate full capability and is ready for installation on DDG 53--
and later DDG 113. While all of the software has been developed, only 
28 percent of the eight software increments have been integrated and 
tested. The integration phase is typically the most challenging in 
software development, often requiring more time and specialized 
facilities and equipment to test software and fix defects. According 
to the Navy, the contractor underestimated the time and effort 
required to develop and integrate the MMSP software. In December 2010, 
MMSP was unable to demonstrate planned functionality for a radar test 
event due to integration difficulties, and MMSP more recently 
experienced software problems during radar integration which resulted 
in schedule delays. In response, the contractor implemented a recovery 
plan, which included scheduling additional tests and replanning the 
remaining work to improve system stability. However, the recovery plan 
compresses the time allocated for integrating MMSP with the rest of 
the combat system from 10 months to 6 months. 

In order to meet schedule goals and mitigate software development risk 
in the nearterm, the contractor also moved some development of MMSP 
capability to future builds. However, this adds pressure to future 
development efforts and increases the probability of defects and 
integration challenges being realized late in the program. The 
contractor already anticipates a 126 percent increase in the number of 
software defects that it will have to correct over the next year, 
indicating the significant level of effort and resources required for 
the remaining development. According to the program office, the high 
level of defects projected is due to the complexities of integrating 
and testing with Aegis. Each defect takes time to identify and 
correct, so a high level of defects could result in significant 
additional work and potentially further delays if the contractor 
cannot resolve the defects as planned. The Navy believes the schedule 
risk associated with this increase is understood and anticipates no 
further schedule impacts. However, the Defense Contract Management 
Agency, which is monitoring the combat system development for the 
Navy, has characterized the MMSP schedule as high risk. 

As shown in figure 6 below, the Navy will not test ACB 12's IAMD 
capabilities with combined live ballistic and cruise missile tests 
until after it certifies the combat system. Certification is an 
assessment of the readiness and safety of ACB 12 for operational use 
including the ability to perform Aegis ship missions. The Navy and MDA 
plan to determine future opportunities for additional testing to prove 
the system. The Navy plans to leverage a first quarter fiscal year 
2015 test that MDA does not actually characterize as an IAMD test to 
demonstrate IAMD capabilities. 

Figure 6: Timeline of Aegis Upgrade Installation and Testing Events: 

[Refer to PDF for image: timeline] 

July 2011: 
Start of construction on DDG 113. 

September 2012: 
Start of DDG 53 availability. 

February 2013: 
Start of Aegis Light-Off on DDG 53. 

September 2013: 
End of DDG 53 availability. 

October 2013: 
Start of DDG 53 Combat System Qualification testing. 

Second quarter FY 2014: 
First live ballistic missile exercise for ACB 53 on DDG 53. 
Will test BMD capability, not IAMD capability. 

Third quarter, 2014: 
First IAMD tracking exercise. 

September 2014: 
Certification of ACB 12 on DDG 53. 

First quarter FY 2015: 
ACB 12 IAMD test event, single ballistic missile target, and single 
cruise missile target. 
 
June 2015: 
Start of Aegis Light-Off on DDG 113. 

July 2016: 
DDG 113 delivery. 

Source: GAO analysis. 

[End of figure] 

The Navy initially planned to test the combat system's IAMD tracking 
capability during a BMD test event to occur by third quarter fiscal 
year 2013. The test--tracking and simulated engagement of BMD and air 
warfare targets--would have provided confidence prior to certification 
of ACB 12 that the software worked as intended. However, this event 
was removed from the test schedule The Navy now plans to test tracking 
and simulated IAMD engagement capability during a BMD test event in 
third quarter 2014. According to the Navy, this is the earliest 
opportunity for sea-based testing of the ACB 12 upgrade installed on 
DDG 53. This event will help demonstrate functionality and confidence 
in the system, but only allows five months between the test and 
certification of the system to resolve any problems that may be 
identified during testing. The Navy and MDA plan on conducting a live 
ballistic missile exercise in second quarter fiscal year 2014, this 
will only test the combat system's BMD capability, not IAMD. 
Consequently, the Navy will certify that the combat system is mission 
ready without validating with live ballistic and cruise missile 
targets that it can perform the IAMD mission. The first IAMD test with 
live targets is not scheduled until first quarter fiscal year 2015. 

Delays in MMSP could also lead to concurrence between final software 
integration and the start of ACB 12 installation on DDG 53. Although 
the Navy has stated that the contractor is currently on schedule, if 
the contractor is unable to resolve defects according to plan, Aegis 
Light-Off (when the combat system is fully powered on for the first 
time) on DDG 53 could slip or the test period could move closer to the 
start of installation on DDG 113, which could limit risk mitigation 
opportunities. Contractor officials told us that they plan to deliver 
the combat system hardware to the shipyard for installation on DDG 113 
in May 2013. While the Navy believes the current schedule allows time 
for the Navy and contractor to remedy any defects or problems found 
with ACB 12 before it is scheduled to be installed on DDG 113, we have 
previously reported that concurrent development contributes to 
schedule slips and strains resources required to develop, integrate, 
test, and rework defects, which could encroach into this buffer. 
[Footnote 22] 

Additionally, if DDG 53 is not available when currently planned to 
begin its upgrade, this process could also be delayed. DDG 53's 
upgrade schedule already slipped from May 2012 to September 2012, and 
any significant shifts could mean further schedule compression, or if 
it slipped past the start of installation on DDG 113 this new-
construction ship could become the ACB 12 test bed, which would 
increase risk. 

Navy Has Not Fully Planned for Realistic Operational Testing of Aegis 
IAMD Capabilities: 

At present, DOD weapons testers and Navy and MDA officials are unsure 
to what extent the new IAMD capabilities of Aegis will be fully 
operationally tested and evaluated. Operational testing involves the 
employment of a new system in a realistic operational environment to 
determine the operational effectiveness and suitability of the system. 
This testing is required to: (1) determine if performance thresholds 
are met, (2) assess impacts to combat operations, and (3) provide 
additional information on the system's operational capability. Since 
the ACB 12 upgrade of Aegis is central to the combat capabilities of 
the ship, Navy weapons testers believe that Aegis should have a 
rigorous operational testing program--similar in scope to what was 
done for the first DDG 51s--in order to validate that the combat 
system still functions in all areas. According to DOD officials, there 
should be a high level of coordination between the Navy and MDA with 
regard to testing the IAMD capability of ACB 12. However, creation of 
robust test plans for IAMD is complicated because of the division of 
responsibility between MDA and the Navy. While IAMD consists of both 
defense against cruise missile and aircraft threats and BMD, MDA is 
responsible for funding and testing BMD functionality while the Navy 
is responsible for funding and testing everything else.[Footnote 23] 

Since Navy assessments include the possibility of IAMD engagements 
with multiple-missile threats, DOD weapons testers agree that a 
robust, operationally relevant test of IAMD capabilities should 
include a test with multiple, simultaneous BMD and air warfare 
targets. However, neither the Navy nor MDA has such a test in their 
current plans, nor, according to MDA officials, has such a test ever 
occurred.[Footnote 24] The IAMD test event in first quarter fiscal 
year 2015 will only test the combat system's capability against a 
single ballistic missile and cruise missile target--not multiple 
targets. According to MDA officials, the focus of MDA testing is to 
validate BMD performance, not IAMD performance. MDA officials have 
stated that MDA test assets are very expensive, and the agency does 
not know how the Navy intends to validate the performance of IAMD 
capabilities, though they have stated that they will try to support 
the Navy as best they can, and that they are currently assisting the 
Navy in developing strategies to test and characterize IAMD 
performance. The Navy's proposed test plan includes acquiring three 
Aegis BMD targets to be fired and tracked with simulated cruise 
missile threats, which will allow the Navy to simulate ACB 12 
performance in an IAMD environment. Though cost and other constraints 
may limit the practicality of live test events, DOD weapons testers 
told us that though Aegis testing and performance evaluation can be 
done via modeling and simulation, the Navy still needs sufficient data 
from flight tests conducted in an operationally relevant environment 
in order to validate the simulation models with actual performance 
data. Similarly, MDA told us that model validation requires making 
comparisons between previous flight test results and the results of 
the models. Without actual operational tests, the Navy's IAMD models 
will lack vital real-world data needed to validate how accurately they 
model the performance of Aegis. 

Flight III Cost and Technical Risks Pose Challenges for Oversight: 

The Navy plans to procure the first of 22 Flight III DDG 51s in 2016 
with the new AMDR and plans to achieve Flight III initial operational 
capability in 2023. Other than AMDR, the Navy has not identified any 
other technologies for inclusion on Flight III or decided on the size 
of AMDR. Although the analysis supporting Flight III discusses a 14-
foot AMDR, senior Navy officials recently told us that a 12-foot AMDR 
may also be under consideration. While the Navy is pursuing a 
thoughtful approach to AMDR development, it faces several significant 
technical challenges that may be difficult to overcome within the 
Navy's current schedule. The red team assessment of an ongoing Navy 
Flight III technical study found that the introduction of AMDR on DDG 
51 leads to significant risks in the ship's design and a reduced 
future capacity and could result in design and construction delays and 
cost growth on the lead ship. Further, the Navy's choice of DDG 51 as 
the platform for AMDR limits the overall size of the radar to one that 
will be unable to meet the Navy's desired (objective) IAMD 
capabilities. If the Navy selects a 12-foot AMDR--which may reduce the 
impacts on the ship and design--it may not be able to meet the 
requirements for AMDR as currently stated in the Navy's draft 
capabilities document.[Footnote 25] Given the level of complexity and 
the preliminary Navy cost estimates, the Navy has likely 
underestimated the cost of Flight III. However, since the DDG 51 
program is no longer in the DOD milestone review process, decision 
makers currently cannot take advantage of knowledge gained through a 
thorough review of the program typically provided at a milestone. 
Further, since the Navy is responsible for acquisition oversight of 
the program, there is no requirement for a DOD-level assessment before 
making further investments in the program. 

The Navy Is Pursuing a Thoughtful Approach to AMDR, but Success Is 
Contingent on a Number of Technological Advancements: 

AMDR represents a new type of radar for the Navy, which the Navy 
believes will bring a significantly higher degree of capability than 
is currently available to the fleet. AMDR is to enable a higher degree 
of IAMD than is possible with the current legacy radars. Further, the 
Navy believes that through the use of active electronically scanned 
array radars, AMDR will be able to "look" more places at one time, 
thus allowing it to identify more targets with better detection 
sensitivity.[Footnote 26] It will also allow the radar to view these 
targets with better resolution. AMDR is conceived to consist of three 
separate parts: 

* AMDR-S: a 4 faced S-Band radar providing volume search for air and 
ballistic missile defense; 

* AMDR-X: a 3 faced, 4-foot by 6-foot X-Band radar providing horizon 
search (as well as other tasks such as periscope and floating mine 
detection); and: 

* Radar suite controller: interface to integrate the two radars and 
interface with the combat system. 

Figure 7 depicts a notional employment of AMDR's two radar bands. 
Three contractors are under contract to mature and demonstrate the 
critical AMDR-S radar technology required; the acquisition of the AMDR-
X portion is still in the preliminary stage, and the Navy plans to 
award a contract for it in fiscal year 2012. 

Figure 7: Notional DDG 51 Flight III with AMDR: 

[Refer to PDF for image: illustration] 

Source: GAO representation of Navy data. 

[End of figure] 

The Navy recognized the risks inherent in the AMDR-S program early on, 
and implemented a risk mitigation approach to help develop and mature 
specific radar technologies that it has identified as being 
particularly difficult. Additionally, the Navy used an initial AMDR-S 
concept development phase to gain early contractor involvement in 
developing different concepts and earlier awareness of potential 
problems. In September 2010, the Navy awarded three fixed-priced 
incentive contracts to three contractors for a 2-year technology 
development phase. All three contractors are developing competing 
concepts with a goal of maturing and demonstrating S-Band and radar 
suite controller technology prototypes. In particular, the contractors 
are required to demonstrate performance and functionality of radar 
algorithms in a prototype one-fifth the size of the final AMDR-S. 

The Navy has estimated that AMDR will cost $2.2 billion for research 
and development activities and $13.2 billion to procure at most 24 
radars. At the end of the 2-year phase, the Navy will hold a 
competition leading to award of an engineering and manufacturing 
contract to one contractor. As shown in figure 8, AMDR is first 
scheduled to be delivered to a shipyard in fiscal year 2019 in support 
of DDG 123--the lead ship of Flight III. 

Figure 8: AMDR Schedule: 

[Refer to PDF for image: timeline] 

2009: 
Concept studies (complete). 

October 2010: 
Technology development (complete). 

2013: 
Engineering and manufacturing development (planned). 

2014: 
Critical design review (planned). 

2016: 
Production and development (planned). 

2019: 
First AMDR in-yard data (planned). 

2021: 
First DDG Flight III delivery (planned). 

2023: 
Flight III initial operating capacity (planned). 

Source: GAO analysis of Navy data. 

[End of figure] 

AMDR-S relies on several cutting-edge technologies. Three of the most 
significant of these pertain to digital beamforming, the 
transmit/receive modules, and the radar/combat system interface. Table 
9 highlights these technologies and key challenges. 

Table 9: AMDR Technologies and Key Technical Challenges: 

Technology: Digital beamforming; 
Description: 
* Advanced software algorithms digitize the radar signal, enabling 
simultaneous generation and processing of multiple beams, increasing 
radar resources available for multiple missions.[A] This allows beams 
to be modified to help eliminate interference or clutter in an 
electromagnetic interference environment; 
Key technical challenges: 
* Without this technology, requirements may have to be reduced and 
radar may be less efficient in littoral or dense electromagnetic 
interference environments; 
* This technology has never been demonstrated to the size and 
architecture planned for AMDR. 

Technology: Transmit/receive modules; 
Description: 
* Individual units that emit the radar signal from the radar; 
* AMDR transmit/receive modules must generate significantly more radio 
frequency power over modules in the DDG 1000's Volume Search Radar, 
and 10 percent more efficiency to enable AMDR's required 
capabilities[B]; 
Key technical challenges: 
* To achieve this increased level, the contractors may use Gallium 
Nitride-based semiconductors, which may provide higher power and 
efficiency than current material. This material is relatively new and 
long-term reliability is unknown. It has never been used in a radar of 
this scale; 
* Inability to use Gallium Nitride may require use of current 
materials, and thus additional ship power and cooling. Alternatively, 
performance requirements may be set lower with a spiral development 
plan to achieve the objective power levels at a later date; 
* Past radar programs (Volume Search Radar and the Cobra Judy 
Replacement radar) have needed more time to test and mature transmit/ 
receive modules than estimated, causing cost and schedule growth.[C]. 

Technology: Combat system integration; 
Description: 
* Aegis Combat System requires modification in order to accommodate 
and exploit AMDR's additional capability and mission sets (e.g. 
periscope detection); 
Key technical challenges: 
* Software integration and testing is a lengthy effort and is 
typically the most challenging phase of software development, 
requiring specialized skills and integration test lines; 
* The Navy has yet to fully identify what interfaces will be impacted 
or to develop estimates of the level of effort that will be required. 
A Navy/industry combat system integration working group was 
established but has had a limited role to date. Integration will 
likely be challenging because multiple technology developers and two 
program offices will have to work closely together; 
* Lack of test and evaluation assets early in process could result in 
shipboard integration issues. 

Source: GAO analysis of Navy data. 

[A] Radar resources are a percentage that radar arrays are required to 
be dedicated to a particular task. For instance, if a searching task 
takes a total of 1 second and is repeated every 4 seconds, that task 
would consume 25 percent of radar resources. 

[B] Radar efficiency means that it can operate at higher levels of 
power with less demand for electricity and less heat generation that 
requires cooling. 

[C] The Cobra Judy Replacement program is a ship that carries a 
powerful dual band radar suite that is used for ballistic missile 
treaty verification and to provide data collection of ballistic 
missiles in flight. The ship consists of an X and S-band radar with a 
common radar controller. 

[End of table] 

Though the Navy has been pursuing risk mitigation efforts related to 
some key AMDR technologies, realizing AMDR will require overcoming 
several significant technical challenges. For example, though the Navy 
worked with the United Kingdom on a radar development program to 
demonstrate large radar digital beamforming, including limited live 
target testing, the technical challenges facing the development of 
AMDR have not been fully mitigated by these efforts. The joint radar 
development program used a digital beamforming architecture different 
than what is intended for AMDR, and the demonstrator was much smaller 
than what is envisioned for AMDR-S. Further, the Navy's previous 
effort also did not demonstrate against BMD targets, which are the 
most stressful for the radar resources. The Navy told us that the 
contractors have been successful in their AMDR development efforts to 
date, and that power and cooling requirements may be less than 
initially estimated. However, substantial work remains, and failure to 
achieve any of these technologies may result in AMDR being less 
effective than envisioned. AMDR development is scheduled for 10 years, 
compared with 9 years for the DDG 1000's VSR.[Footnote 27] 

Integration with the Aegis combat system may also prove challenging: 
Aegis currently receives data from only a single band SPY-1D(V) radar, 
and adding AMDR will require modifying Aegis to receive these data, to 
accommodate some new capabilities, and to integrate Aegis with the 
radar suite controller. The Navy has deferred this integration, as it 
recently decided to eliminate AMDR integration work from its upcoming 
Aegis upgrade (ACB 16) contract, although Navy officials pointed out 
that this work could be started later under a separate contract. If 
the Navy does not fund AMDR integration work in ACB 16, this work may 
not be under way until the following ACB upgrade, which could be 
completed in 2020 at the earliest if the Navy remains on the same 4 
year upgrade schedule. With an initial operating capability for Flight 
III planned for 2023, this could leave little margin for addressing 
any problems in enabling AMDR to communicate with the combat system. 

Physical Constraints Will Result in a Complicated Flight III Design 
and Construction Process and May Increase Ship Costs: 

DDG 51 is already the densest surface combatant class; density refers 
to the extent to which ships have equipment, piping, and other 
hardware tightly packed within the ship spaces.[Footnote 28] According 
to a 2005 DOD-sponsored shipbuilding study, the DDG 51 design is about 
50 percent more dense and complex than modern international 
destroyers. High-density ships have spaces that are more difficult to 
access; this results in added work for the shipbuilder since there is 
less available space to work efficiently. As a legacy design, the 
ship's physical dimensions are already fixed, and it will be 
challenging for the Navy to incorporate AMDRs' arrays and supporting 
equipment into this already dense hullform. Some deckhouse redesign 
will be necessary to add the additional radar arrays: a current DDG 51 
only carries four SPY radar arrays, while Flight III is envisioned to 
carry four AMDR-S arrays plus three additional AMDR-X band arrays. The 
deckhouse will need to be redesigned to ensure that these arrays 
remain flush with the deckhouse structure. Adding a 14-foot AMDR to 
DDG 51 will also require significant additional power generating and 
cooling equipment to power and cool the radar. Navy data show that as 
a result of adding AMDR the ships will require 66 percent more power 
and 81 percent more cooling capacity than current DDG 51s. If the Navy 
elects to use a smaller AMDR for Flight III these impacts may be 
reduced, but the ship would also have a significant reduction in radar 
performance. 

The addition of AMDR and the supporting power and cooling equipment 
will significantly impact the design of Flight III. For example, 
additional large cooling units--each approximately 8 feet by 6 feet--
required to facilitate heat transfer between the radar coolant and the 
ship's chilled water system will have to be fit into the design. 
Similarly, a new electrical architecture may be required to power 
AMDR, which would result in changes to many electrical and machinery 
control systems and the addition of a fourth large generator. The red 
team assessment of the Navy's ongoing Flight III technical study found 
that modifying DDG 51 to accommodate these changes will be challenging 
with serious design complexity. Since Flight III design work is just 
in the concept phases, it is currently unknown how the additional 
cooling and power generating units added to support AMDR will be 
arranged, or any impact they will have on ship spaces and 
habitability. For example, the Navy is currently considering five 
possible cooling unit configurations. Of these, one cannot be arranged 
within the existing spaces, another will be very difficult to arrange, 
and three of these options will require significant changes to the 
arrangements of the chilled water systems. Similarly, all of the 
options the Navy is considering for possible power generation options 
will require rearrangement and some impact on other spaces, including 
encroachment on storage and equipment rooms. Navy officials told us 
that hybrid electric drive is being researched for Flight III, and the 
Navy has awarded a number of contracts to study concepts.[Footnote 29] 
The Navy told us that this technology has the ability to generate an 
additional 1 megawatt of electricity, and thus could potentially 
obviate the need for an additional generator to support AMDR. However, 
adding hybrid electric drive would require additional design changes 
to accommodate the new motors and supporting equipment. 

Not only can density complicate design of the ship as equipment needs 
to be rearranged to fit in new items, but Navy data also show that 
construction of dense vessels tends to be more costly than 
construction of vessels with more open space. For example, submarine 
designs are more complicated to arrange and the vessels are more 
complicated and costly to build than many surface ships. DDG 1000 was 
designed in part to have reduced density, which could help lower 
construction costs. According to a 2005 independent study of U.S. 
naval shipbuilding, any incremental increase in the complexity of an 
already complex vessel results in a disproportionate increase in work 
for the shipbuilder, and concluded that cost, technical and schedule 
risk, and the probability of cost and schedule overrun all increase 
with vessel density and complexity.[Footnote 30] Therefore, further 
adding to the density of DDG 51 to incorporate AMDR is likely to 
result in higher construction costs and longer construction schedules 
than on Flight IIA ships. 

The addition of equipment to Flight III adds weight to the ship, and 
adding the large, heavy AMDR arrays to the deckhouse will also change 
the ship's center of gravity--defined as the height of the ship's 
vertical center of gravity as measured from the bottom of the keel, 
including keel thickness. Weight and center of gravity are closely 
monitored in ship design due to the impact they can have on ship 
safety and performance. The Navy has required service life allowances 
(SLA) for weight and center of gravity for ships to allow for future 
changes to the ships, such as adding equipment and reasonable growth 
during the ship's service life--based on historical data--without 
unacceptable compromises to hull strength, reserve buoyancy, and 
stability (e.g., tolerance against capsizing). Adding new systems or 
equipment may require mitigating action such as removing weight (e.g., 
equipment, combat systems) from the ship to provide enough available 
weight allowance to add desired new systems or equipment. A reduced 
center of gravity may require mitigation such as adding additional 
weight in the bottom of the ship to act as ballast, though this could 
also reduce the available weight allowance. These changes all require 
redesign which can increase costs, and this design work and related 
costs can potentially recur over the life of the ship. 

The Navy is considering a range of design options to deal with adding 
AMDR and its supporting power and cooling equipment. None of the DDG 
51 variants under consideration as part of an ongoing Navy study meet 
Navy SLA requirements of 10 percent of weight and 1 foot of center of 
gravity for surface combatants. Figure 9 shows that several variants 
provide less than half of the required amounts. 

Figure 9: SLA of Navy DDG 51 Flight III Concepts: 

[Refer to PDF for image: vertical bar graph] 

 Color A Color B 

Ship concept: NAVSEA requirement; 
SLA Weight: 10; 
SLA KG: 1 foot. 

Ship concept: Most SLA; 
SLA Weight: 5; 
SLA KG: 0.38 feet. 

Ship concept: Least SLA; 
SLA Weight: 4.1; 
SLA KG: 0.28 feet. 

Ship concept: Aluminum deckhouse - most SLA; 
SLA Weight: 7; 
SLA KG: 0.66 feet. 

Ship concept: Composite deckhouse - most SLA; 
SLA Weight: 6.75; 
SLA KG: 0.6 feet. 

Source: GAO analysis of Navy data. 

Note: The "most SLA" variant has the highest percentage of weight margin 
and the second best KG margin. 

[End of figure] 

The Navy has determined that only by completely changing the material 
of the entire fore and aft deckhouses and the helicopter hangars to 
aluminum or composite as well as expanding the overall dimensions of 
the hull (especially the width, or beam) can the full SLA be recovered 
for a Flight III with a 14-foot AMDR. Though a decision has not yet 
been made, at this time Navy officials do not believe that a composite 
or aluminum deckhouse will be used. The Navy also told us that 
removing combat capability from DDG 51 may be required in an effort to 
manage weight after adding AMDR, effectively reducing the multimission 
functionality of the class. Navy officials stated that SLA has not 
always been required, and that this allowance is included in designs 
to eventually be consumed. They pointed to other classes of ships that 
were designed with less than the required SLA margins and that have 
performed adequately. However, as shown in Table 10, our analysis of 
the data indicates that these ships have faced SLA-related issues. 

Table 10: SLA Considerations with Select Ship Classes: 

Class: CG 47 Ticonderoga; 
Description: 
* Based on DD 963 Spruance class hullform. According to a naval 
architect on the Navy's technical study red team, adding Aegis 
compromised weight and center of gravity margins, requiring weight 
removal from the deckhouse to compensate. This weight removal in part 
contributed to cracking and buckling of deckhouses and superstructure; 
* CG 47-CG 51 had most significant SLA impacts. These hulls were 
retired with an average life of 20 years; structural modernization 
needed so remaining hulls can reach 35-year service life; 
* No CG 47's can accept an increase in weight or a rise of center of 
gravity due to reduced SLA; any new equipment will require weight and 
center of gravity adjustments. 

Class: FFG 7 Oliver Hazard Perry; 
Description: 
* 21 of 49 have been retired early after an average lifespan of only 
17 years[A]; 
* Reduced SLA means majority of remaining hulls cannot accept weight 
or center of gravity growth. 

Source: GAO analysis of Navy data. 

[A] Other factors that can contribute to early decommissioning are 
structural integrity of the hull, costs to upgrading the combat 
systems, condition of propulsion machinery, and cost to operate the 
vessel. The ships of the FFG 7 class are expected to operate for 30 
years. 

[End of table] 

According to Navy data, delivery weight of DDG 51s has gotten 
considerably heavier over the course of building the class, with 
current 51s weighing approximately 700-900 long tons (a measure of 
ship displacement) more than the first DDG 51s. Further, while the 
current DDG 51s all can accept both an increase in weight or rise in 
the center of gravity, the ships are already below the required center 
of gravity allowances, though Navy officials told us that this could 
be corrected with ballasting if the Navy opted to fund the change. In 
commenting on the ongoing Navy study, the independent red team 
identified reduced SLA as a significant concern for Flight III, and 
noted that if the Navy does not create a larger hullform for Flight 
III, any future ship changes will be significantly constrained. 

Flight III Will Not Achieve Navy Desired IAMD Capabilities with No 
Future Ship Planned in the Near-Term: 

Flight III with a 14-foot AMDR will not be powerful enough to meet the 
Navy's objective, or desired IAMD capabilities. The shipyards and the 
Navy have determined that 14-foot radar arrays are the largest that 
can be accommodated within the confines of the existing DDG 51 
configuration. Adding a radar larger than 14 feet to DDG 51 is 
unlikely without major structural changes to the ship. AMDR is being 
specifically developed to be a scalable radar--meaning that it can be 
increased in size and power to provide enhanced capability against 
emerging threats. According to AMDR contractors, the Navy had 
originally contracted for an investigation of a Variant 2 AMDR with a 
sensitivity of SPY+40, but this effort was canceled. They added that 
the maximum feasible size of AMDR would be dictated by the ship and 
radar power and cooling demands, but that they had investigated 
versions as large as 36 feet. Leveraging AMDR's scalability will not 
be possible on DDG 51 without major changes, such as a new deckhouse 
or adding to the dimensions of the hullform itself by broadening the 
beam of the ship or adding a new section (called a plug) to the middle 
of the ship to add length. Navy officials have stated that adding a 
plug to DDG 51 is not currently a viable option due to the complexity, 
and that a new ship design is preferable to a plugged DDG 51. 

The Navy has not yet determined the size of AMDR for Flight III, and 
two sizes are under consideration: a 14-foot AMDR with a sensitivity 
of SPY+15, and a 12-foot AMDR with a sensitivity of SPY+11. According 
to a draft AMDR Capability Development Document, the Navy has 
identified that an AMDR with SPY+15 will meet operational performance 
requirements against the threat environment illustrated in the 
Radar/Hull Study. This document also notes that a significantly larger 
SPY+30 AMDR is required to meet the Navy's desired capability (known 
as objective) against the threat environment illustrated in the MAMDJF 
AOA. The Navy could choose to change these requirements. The MAMDJF 
AOA eliminated the DDG 51-based SPY+15 solution from consideration in 
part due to the limited radar capability, and identified that a radar 
closer to SPY+30 power with a signal to noise ratio 1,000 times better 
than SPY+0 and an array size over 20 feet is required to address the 
most challenging threats.[Footnote 31] If a 12-foot array is chosen, 
the Navy will be selecting a capability that is less than the 
"marginally adequate" capability offered by a SPY+15 radar as defined 
by the Radar/Hull Study red team assessment. According to Navy 
officials, only through adding additional square footage can the Navy 
effectively make large improvements in the sensitivity of the radar; 
[Footnote 32] the SPY+30 radar considered in the MAMDJF AOA could only 
be carried by a newly designed cruiser or a modified San Antonio class 
ship, and only a modified DDG 1000 and could carry the approximately 
SPY+25 radar. According to the draft AMDR Capability Development 
Document, the Navy's desired IAMD capability can only be accommodated 
on a larger, currently unspecified ship. As part of the MAMDJF AOA, 
the Navy identified that DDG 1000 can accommodate a SPY+25 radar. As 
part of a technical submission to the Navy, BIW--the lead designer for 
DDG 1000--also identified a possible design for a 21-foot radar on DDG 
1000. The Navy did not include a variant with this size radar in the 
Radar/Hull Study. 

Navy Plans to Leverage Off-board Sensors to Augment Radar Performance, 
but Concept Is Unproven: 

According to senior Navy officials, since the MAMDJF AOA was released 
the Navy has changed its concept on the numbers of Navy ships that 
will be operating in an IAMD environment. Rather than one or a small 
number of ships conducting IAMD alone and independently managing the 
most taxing threat environments without support, the Navy now 
envisions multiple ships that they can operate in concert with 
different ground and space-based sensor assets to provide cueing for 
AMDR when targets are in the battlespace. This cueing would mean that 
the shooter ship could be told by the off-board sensors where to look 
for a target, allowing for earlier detection and increased size of the 
area that can be covered. According to the Navy, this concept--
referred to as sensor netting--can be used to augment the reduced 
radar capability afforded by a 12 or 14-foot AMDR as compared to the 
larger radars studied in the MAMDJF AOA. For example, the Navy cited 
the use of the Precision Tracking Space System program as an example 
of sensors that could be leveraged. However, this program (envisioned 
as a constellation of missile tracking satellites) is currently in the 
conceptual phase, and the independent Radar/Hull Study red team stated 
that the development timeline for this system is too long to consider 
being able to leverage this system for Flight III. Navy officials told 
us that another option would be to leverage the newly completed Cobra 
Judy Replacement radar ship and its very powerful dual-band radar to 
provide cueing for DDG 51s. This cueing could allow the DDG 51s to 
operate a smaller AMDR and still be effective. The Cobra Judy 
Replacement ship is comparatively cheaper than DDG 51s (approximately 
$1.7 billion for the lead ship), and was commercially designed and 
built. However, it is not a combatant ship, which would limit its 
employment in a combat environment and make it difficult to deploy to 
multiple engagement locations. 

Senior Navy officials told us that the concept of sensor netting is 
not yet well defined, and that additional analysis is required to 
determine what sensor capabilities currently exist or will be 
developed in the future, as well as how sensor netting might be 
conceptualized for Flight III.[Footnote 33] Sensor netting requires 
not only deployment of the appropriate sensors and for these sensors 
to work alone, but they also need to be able to share usable data in 
real-time with Aegis in the precise manner required to support BMD 
engagements. Though sharing data among multiple sensors can provide 
greater capabilities than just using individual stand-alone sensors, 
officials told us that every sensor system has varying limitations on 
its accuracy, and as more sensors are networked together and sharing 
data, these accuracy limitations can compound. Further, though there 
have been recent successes in sharing data during BMD testing, DOD 
weapons testers responsible for overseeing BMD testing told us that 
there have also been issues with sending data between sensors. 
Although sensor technology will undoubtedly evolve in the future, how 
sensor netting will be leveraged by Flight III and integrated with 
Navy tactics to augment Aegis and the radar capability of Flight III 
is unknown. 

No Navy Plans to Procure a More Capable Ship until Flight IV in 2032: 

The Navy has added a future DDG 51 flight (known as Flight IV) to its 
annual long-range shipbuilding plan submitted to Congress, with 
procurement of 21 ships to begin in 2032. According to the Navy, this 
Flight IV ship could be notionally based on the DDG 51 hullform, but 
it may be largely or entirely a clean sheet design. DOD officials 
stated that no decisions have been made with respect to the 
capabilities of this future platform, and that Executive Office of the 
President and DOD decisions may ultimately dictate further analysis on 
the capabilities needed for future surface combatants. If additional 
studies are completed and materiel solutions are recommended, DOD 
officials stated that an AOA may be warranted. Senior Navy officials 
told us that they do not know if Flight IV will carry a larger, more 
powerful radar or not or what the overall improvements in capabilities 
will be, even though AMDR is being built with the capability to be 
scaled up in size. In its recent annual long-range shipbuilding plan, 
the Navy currently estimates that its notional Flight IV ships will 
cost approximately $2.1 billion each--the same as the Flight III 
ships, which implies no expectations of changes to the hullform. 
[Footnote 34] Navy officials told us that this amount was a 
placeholder. 

Officials told us that a major consideration in the future will be 
electrical power. While Flight III will most likely not leverage 
technologies developed as part of the DDG 1000 program because of DDG 
51's design constraints, Navy officials stated that Flight IV may 
carry some form of the integrated power system developed for DDG 1000. 
The Navy examined the use of the integrated power system for Flight 
III in the Flight Upgrade Study, but found that it was not currently 
viable due to current component technology. The constrained nature of 
Flight III will likely limit the ability of the Navy to add future 
weapon technologies to these ships--such as an electromagnetic rail 
gun or directed energy weapons as these technologies mature--unless 
the Navy wants to remove current weapon systems. For example, the 
ongoing Navy Flight Upgrade Study examined an option to add a small 
rail gun by removing the ship's main 5-inch gun and the forward 32-
cell missile launcher system. It is unknown when these future 
technologies may be used. 

Navy Acquisition Approach for Flight III Not Commensurate with Risks: 

Costs of the lead Flight III ship will likely exceed current budget 
estimates. Although the Navy has not yet determined the final 
configuration for the Flight III ships, regardless of the variant it 
selects, it will likely need additional funding to procure the lead 
ship above the level in its current shipbuilding budget. The Navy has 
estimated $2.6 billion in its fiscal year 2012 budget submission for 
the lead Flight III ship. However, this estimate may not reflect the 
significant design and construction challenges that the Navy will face 
in constructing the Flight III DDG 51s--and the lead ship in 
particular. In fact, the Navy's most current estimates for a range of 
notional Flight III options are between $400 million and $1 billion 
more than current budget estimates, depending on the configuration and 
equipment of the variant selected (see table 11 below). 

Table 11: Differences in the Estimated Cost of the Lead DDG 51 Flight 
III Ship: 

2012 President's Budget: $2.6 billion; 
2009 Radar-Hull Study: $2.9 billion[A]; 
2011 Flight Upgrade Study: $3.0-3.6 billion[B]. 

Source: GAO analysis of Navy documentation. 

Note: Shipbuilding and Conversion, Navy (SCN) in then year dollars for 
the lead ship. 

[A] Compared with an estimated $3.4 billion for the DDG 1000 
alternative. 

[B] Represents the range of options currently under review. 

[End of table] 

Further, across the entire flight of 22 ships, the Navy currently 
estimates Flight III research and development and procurement costs to 
range from $58.5 billion to $64.1 billion in constant 2012 dollars. 
However, the Navy estimated in its 2011 long-range shipbuilding plan 
to Congress that these same 22 ships would cost approximately $50.5 
billion in constant 2012 dollars. As shown in figure 10 below, 
depending on the extent of changes to hullform, the Navy may need at 
least $4.2 billion to $11.4 billion more to procure DDG 51 Flight III 
ships. 

Figure 10: Comparison of Procurement Costs for Flight III: 

[Refer to PDF for image: vertical bar graph] 

Ship concept: Long-term plan; 
Lowest cost estimate: $50.5 billion. 

Ship concept: Flight upgrade study; 
Lowest cost estimate: $54.6 billion; 
Difference to highest cost estimate: $7.2 billion. 

Source: GAO analysis of Navy data. 

[End of figure] 

Based on past experience, the Navy's estimates for future DDG 51s will 
likely increase further as it gains greater certainty over the 
composition of Flight III and beyond. At the beginning of a program, 
uncertainty about cost estimates is high. Our work has shown that over 
time, cost estimates become more certain as the program progresses--
and generally increase as costs are better understood and program 
risks are realized.[Footnote 35] Recent Navy shipbuilding programs, 
such as the Littoral Combat Ship program, initially estimated each 
ship to cost less than $220 million. This estimate has more than 
doubled as major elements of the ships' design and construction became 
better understood. In the case of Flight III, the Navy now estimates 3 
to 4 additional crew members will be required per Flight III ship to 
support the IAMD mission and AMDR than it estimated in the earlier 
Radar/Hull Study. Increases in the cost of Flight III would add 
further pressure to the Navy's long-range shipbuilding plan. Beginning 
in 2019, the Navy will face significant constraints on its 
shipbuilding account as it starts procuring new ballistic missile 
submarines to replace the current Ohio class. The Navy currently 
estimates that this program will cost approximately $80.6 billion in 
procurement alone, with production spanning over a decade. 

The Navy Plans to Procure Lead Ship in Multiyear Procurement Despite 
Inherent Risks: 

Despite uncertainty in the costs of the DDG 123, the Flight III lead 
ship, the Navy currently plans to buy the ship as part of a multiyear 
procurement, including 8 DDG Flight IIA ships, and award the contract 
in fiscal year 2013. Multiyear contracting is a special contracting 
method to acquire known requirements for up to 5 years if, among other 
things, a product's design is stable and technical risk is not 
excessive. According to the Navy, from fiscal year 1998 through 2005, 
the Navy procured Flight IIA ships using multiyear contracts yielding 
significant savings estimated at over $1 billion. However, the Navy 
first demonstrated production confidence through building 10 Flight 
IIAs before using a multiyear procurement approach. While Flight III 
is not a new clean sheet design, the technical risks associated with 
AMDR and the challenging ship redesign as well as a new power and 
cooling architecture coupled with the challenges to construct such a 
dense ship, will make technical risk high. Further, technical studies 
about Flight III and the equipment it will carry are still underway, 
and key decisions about the ship have not yet been made. DDG 123 is 
not due to start construction until fiscal year 2016. If the Navy 
proceeds with this plan it would ultimately be awarding a multiyear 
contract including this ship next fiscal year, even though design work 
has not yet started and without sufficient knowledge about cost or any 
construction history on which to base its costs, while waiting until 
this work is done could result in a more realistic understanding of 
costs. Our prior work has shown that construction of lead ships is 
challenging, the risk of cost growth is high, and having sufficient 
construction knowledge is important before awarding shipbuilding 
contracts.[Footnote 36] 

Current Level of Program Oversight May Not Be Sufficient Given 
Potential Risks: 

Given the potential technology, design, and construction risks, and 
level of the investment, the current level of program oversight for 
DDG 51 Flight III may not be sufficient. The DDG 51 program has a long 
history and has already passed through all of the DOD acquisition 
milestone reviews (formerly Milestones 0 through IV, now Milestones A 
through C), and is now an Acquisition Category (ACAT) 1C program. 
[Footnote 37] A program's acquisition category is based on its 
location in the acquisition process, dollar value, and Milestone 
Decision Authority special interest, and the acquisition category 
determines the program's decision authority. For an ACAT 1C program, 
the Assistant Secretary of the Navy (Research, Development, and 
Acquisition) is ultimately the Milestone Decision Authority. As the 
Milestone Decision Authority, the Assistant Secretary is designated as 
having the authority to approve entry of an acquisition program into 
the next phase of the acquisition process, and is accountable for 
cost, schedule, and performance reporting to higher authority, 
including congressional reporting. This differs from the higher-level 
ACAT 1D designation, where the Undersecretary of Defense for 
Acquisition, Technology and Logistics is the Milestone Decision 
Authority. The ACAT 1D designation provides a higher level of 
oversight to the program, and also provides enterprisewide visibility 
over acquisition program decisions. 

Although it is a potentially $64 billion investment spanning decades, 
DDG 51 program office officials do not believe that the Flight III 
changes are significant enough to warrant a return to ACAT 1D 
oversight. According to officials, since the AMDR program--which they 
believe is the risky element of Flight III--is already an ACAT 1D on 
its own and is also progressing through the milestone process, the 
ship does not warrant ACAT 1D designation. Similarly, program 
officials have stated that they believe AMDR has sufficient oversight 
for Flight III and that it is unnecessary for the ship to repeat any 
milestones. However, significant re-design and changes to the hull and 
mechanical and electrical systems will be required for Flight III, 
which could bring potentially significant risks not being captured by 
AMDR oversight alone. For example, the addition of AMDR requires a 
challenging ship redesign and software modifications to Aegis to 
integrate the new radar. Further, the program has historically 
switched from ACAT 1C to ACAT 1D during the transition from Flight I 
to Flight II which introduced new capabilities. Our analysis shows 
that Flight III meets DOD criteria for ACAT ID (see table 12 below). 

Table 12: Flight III Program Compared with Factors to Determine ACAT 
ID Status: 

DOD Instruction 5000.02: Technological complexity; 
Flight III Program: Addition of AMDR and significant design changes to 
ship. 

DOD Instruction 5000.02: Large commitment of resources; 
Flight III Program: At least $2.6 billion for lead ship, approximately 
$58-$64 billion for the entire Flight III class. 

DOD Instruction 5000.02: Critical to achievement of a capability/ 
capabilities; 
Flight III Program: Brings IAMD capability to the fleet. 

DOD Instruction 5000.02: Joint program; 
Flight III Program: Shared development effort with the Missile Defense 
Agency. 

Source: GAO analysis of DOD and Navy documentation. 

Note: Other factors include congressional interest. 

[End of table] 

Officials from the Office of the Secretary of Defense have indicated 
support for designating the Flight III program an ACAT 1D program, 
though a final decision is not expected until 2012 at the earliest. It 
has also not been decided if the program will be required to return to 
a prior milestone, a decision also not expected until 2012 at the 
earliest. Typically, a milestone review gives decision makers an 
opportunity to evaluate important program documentation to help 
demonstrate that the program has the appropriate knowledge to proceed 
with development or production. In preparation for a milestone, 
programs submit documents for well over 10 information requirements, 
including an independent cost estimate, and technology readiness and 
affordability assessments. Though the Navy is working on a draft 
capabilities document for Flight III, without a milestone decision 
there may be no requirement to compel the Navy to develop this 
document. Further, without a milestone there will be no requirement 
for the Navy to seek an independent cost estimate from the office of 
Cost Assessment and Program Evaluation, typically submitted at a 
milestone review. According to Navy officials, they may consider 
developing a life-cycle cost estimate prior to requesting approval for 
the multiyear procurement approach. The DDG 51 program last conducted 
an independent cost estimate in 1993. 

Conclusions: 

The Navy is in the early stages of a potential $80 billion investment 
in up to 43 DDG 51 destroyers to provide IAMD capability for 
potentially up to the next 60 years. Such investment decisions cannot 
be made without some degree of uncertainty; they will always involve 
risks--especially in the early stages of a program. Yet, a decision of 
this magnitude should proceed with a solid base of analysis--regarding 
the alternatives, cost, and technical risks--as well as a plan for 
oversight that provides sufficient leverage and flexibility to adapt 
to information as it emerges. These pieces are not sufficiently in 
place, at least with respect to Flight III and AMDR. To its credit, 
the Navy's goal was to move towards a lower-cost solution that could 
be rapidly fielded; however, there are a number of key shortfalls in 
the Navy's analysis in support of its decisions. As it stands, the 
Navy risks getting a solution that is not low cost, will not be 
fielded in the near-term, or meet its long-term goals. DDG 51 may 
ultimately be the right decision, but at this point, the Navy's 
analysis has not shown this to be the case. Specific issues include: 

* The Navy's choices for Flight III will likely be unsuitable for the 
most stressful threat environments it expects to face. 

* While the Navy potentially pursued a lower-cost ship solution, it 
did not assess the effect of this decision in terms of long-term fleet 
needs where more of these ships may be required to provide the same 
capability of a smaller number of more costly, but more capable, ships. 

* Though the Navy hopes to leverage sensor netting to augment the 
capability of these ships, there is a shortage of analysis and testing 
with operational assets to demonstrate that this is a viable option. 

* The Navy clearly states in recent AMDR documents that a new, as-of-
yet undefined ship is required to meet its desired IAMD capability. 
However, it has not yet articulated its long-term plans for a new 
surface combatant that is sized to be able to carry a larger AMDR, and 
such a ship is not currently in the Navy's long-range shipbuilding 
plan. 

* Without a robust operational test program that will demonstrate both 
DDG 51 with the modified Aegis combat system and the new AMDR, the 
Navy cannot be sure that the ships can perform the IAMD mission as 
well as planned. 

* In addition to these issues about the analysis underpinning the DDG 
51 program, oversight of the program moving forward could be limited 
by two factors: 

* If the milestone decision authority remains at its current level, 
needed scrutiny may not occur. While the proper milestone entry may be 
discretionary, it is clear that the cost and risk of Flight III and 
AMDR warrant additional oversight. 

* If the Navy pursues a multiyear shipbuilding contract that includes 
the lead ship of Flight III, visibility over the risks inherent in 
lead ship construction could be obscured. 

Recommendations for Executive Action: 

We recommend that the Secretary of Defense direct the Secretary of the 
Navy to take the following three actions: 

1. Conduct a thorough AOA in accordance with DOD acquisition guidance 
for its future surface combatant program to include: (a) a range of 
representative threat environments developed in concert with the 
intelligence community; (b) results of its ongoing Flight III studies 
and full cost estimates in advance of awarding DDG 51 Flight III 
production contracts; (c) implications of the ability of the preferred 
ship to accommodate new technologies on future capabilities to 
determine the most suitable ship to carry AMDR and meet near-term IAMD 
requirements and provide a path to far-term capabilities; (d) 
implications on future fleet composition; and (e) an assessment of 
sensor netting--conducted in consultation with MDA and other cognizant 
DOD components--to determine the risks inherent in the sensor netting 
concept, potential current or planned programs that could be 
leveraged, and how sensor netting could realistically be integrated 
with the selected future surface combatant to assist in conducting 
BMD. This AOA should be briefed to the Joint Requirements Oversight 
Council. 

2. Report to Congress in its annual long-range shipbuilding plan on 
its plans for a future, larger surface combatant, carrying a more 
capable version of AMDR and the costs and quantities of this ship. 

3. In consultation with MDA and DOD and Navy weapons testers, define 
an operational testing approach for the Aegis ACB-12 upgrades that 
includes sufficient simultaneous live-fire testing needed to fully 
validate IAMD capabilities. 

We also recommend that the Secretary of Defense take the following two 
actions: 

1. Upgrade the oversight of the Navy's future surface combatant 
program to ACAT 1D status, and ensure that the appropriate milestone 
entry point is selected to provide cost baselines and assessments of 
design and technical risks and maturity. 

2. Ensure that the planned DDG 51 multiyear procurement request does 
not include a Flight III ship. 

Agency Comments and Our Evaluation: 

We provided a draft of this report to DOD for review and comment. DOD 
provided a written response which is reprinted in appendix II. DOD 
also submitted technical comments that were incorporated into the 
report as appropriate. 

DOD concurred with our second recommendation that the Navy report to 
Congress in its annual long-range shipbuilding plan on its plans for a 
future larger surface combatant carrying a more capable version of 
AMDR. Given the assessments that the Navy is currently conducting on 
surface combatants, the Navy's next submission should include more 
specific information about its planned future surface combatant 
acquisitions. DOD also agreed with our third recommendation on live-
fire testing of Aegis ACB-12 upgrades, stating that the Navy and the 
MDA--working under Office of the Secretary of Defense oversight--are 
committed to conducting adequate operational testing of ACB-12, but 
did not offer concrete steps they would take to address our concerns. 
Moving forward, DOD should demonstrate its commitment to fully 
validating IAMD capabilities by including robust simultaneous 
operational live-fire testing of multiple cruise and ballistic missile 
targets in its Aegis Test and Evaluation Master Plan that is signed by 
Director, Operational Test and Evaluation. 

DOD did not agree with our first recommendation to conduct an AOA to 
support its future surface combatant selection decision, stating that 
its previous analyses--specifically the MAMDJF AOA and the Radar/Hull 
Study--comprise a body of work that satisfies the objectives of an 
AOA. However, DOD did not present any additional evidence to refute 
our findings. DOD did agree that an assessment of sensor netting needs 
to be performed. Our analysis shows that the Radar/Hull Study, which 
was the key determinant in the DDG 51 decision, was a departure from 
the MAMDJF AOA. These studies are neither complementary nor can they 
be aggregated. While both sought to determine the best solution to 
address identified integrated air and missile defense gaps, the 
Radar/Hull Study essentially answered a different question than the 
MAMDJF AOA. In essence, it was attempting to identify a cost-
constrained, less robust solution, which makes analysis from one study 
not always appropriate to apply to the other. Specifically, the MAMDJF 
AOA considered a significantly more taxing threat environment than the 
Radar/Hull Study, requiring ships carrying very large radars to 
independently manage these threats. Alternatively, the Radar/Hull 
Study considered a much less taxing threat environment, allowing for 
ships carrying smaller radars but that would need to work together to 
be effective. Ultimately, the MAMDJF AOA eliminated DDG 51 from 
consideration as a single-ship solution. DOD also states that it is 
currently conducting additional studies on Flight III, but since these 
are solely focused on DDG 51, they do not provide any additional 
insight into the decision as to the appropriate ship that might be 
used to supplement the Navy's existing analysis. As we note in this 
report, the proposed program calls for an investment of up to 
approximately $80 billion for 43 destroyers, and likely more if the 
Navy chooses to pursue a Flight IV concept. Given the scope of the 
Navy's plans, a thorough AOA is essential to affirm that the decision 
made is the right one and a sound investment moving forward. This AOA 
should be briefed to Joint Requirements Oversight Council because of 
the magnitude of this potential acquisition and because of the joint 
service interest in IAMD that make it important to have an overarching 
body review the Navy's analysis and decisions. We believe that this 
recommendation remains valid. 

DOD disagreed with our fourth recommendation to upgrade the 
acquisition category designation of the Navy's future surface 
combatant program to ACAT ID at this time, stating that a 
determination on the ACAT designation of DDG 51 Flight III will be 
made by the fourth quarter of fiscal year 2012, once sufficient 
information is available. If the results of the Navy's analysis 
continue to support a DDG 51 Flight III as the appropriate solution, 
our analysis shows that Flight III already meets criteria for ACAT ID 
status, and that this status provides an enhanced level of oversight 
appropriate for a program of this magnitude. This strategy is also in 
line with the past flight upgrades that were also conducted under ACAT 
ID status. We therefore believe this recommendation remains valid. 

Regarding our fifth recommendation that DOD not include a Flight III 
ship in its planned DDG 51 multiyear procurement request, DOD 
partially concurred, stating that it is following the statutory 
requirements for multiyear procurement authority. DOD commented that 
it will select an acquisition approach that provides flexibility and 
minimizes the cost and technical risk across all DDG 51 class ships. 
DOD expects to make a determination on including or excluding Flight 
III ships within the certification of the planned multiyear 
procurement that is due to Congress by March 1, 2012. While the 
Secretary can certify that due to exceptional circumstances, 
proceeding with a multiyear contract is in the "best interest" of DOD, 
notwithstanding the fact that one or more of the conditions of the 
required statutory certification are not met, requesting a multiyear 
procurement in March 2012 that includes the lead Flight III ship 
carries significant risk. DOD will be committing to a cost with no 
actual construction performance data on which to base its estimates 
and a ship concept and design that are not finalized. While DOD argued 
that it has in the past included DDG 51's that were receiving major 
upgrades in multiyear procurements, as this report shows, planned 
changes for Flight III could far exceed those completed in past DDG 51 
upgrades. We therefore believe that, in view of the current 
uncertainty and risk, our recommendation remains valid to exclude a 
Flight III ship from the upcoming multiyear procurement request. 

Matters for Congressional Consideration: 

In view of the Navy's disagreement with a number of our 
recommendations, we are elevating these issues to the attention of 
Congress. In the coming years, the Navy will ask Congress to approve 
funding requests for DDG 51 Flight III ships and beyond. Without a 
solid basis of analysis, we believe Congress will not have assurance 
that the Navy is pursuing an appropriate strategy with regard to its 
future surface combatants, including the appropriate level of 
oversight given its significant cost. To help ensure that the 
department makes a sound investment moving forward, Congress should 
consider directing the Secretary of Defense to: 

1. require the Navy to submit a thorough, well-documented AOA for the 
its future surface combatant program that follows both DOD acquisition 
guidance and the elements outlined in our first recommendation prior 
to issuing solicitations for any detail design and construction 
contracts of DDG 51 Flight III ships; 

2. elevate the ACAT status of the DDG 51 Flight III to an ACAT ID 
level if the decision is made to continue pursuing the program; and: 

3. include the lead DDG 51 Flight III ship in a multi-year procurement 
request only when the Navy has adequate knowledge about ship design, 
cost, and risk. 

We are sending copies of this report to the Secretary of Defense. We 
are also sending copies to the appropriate congressional committees. 
In addition, the report is available at no charge on GAO's website at 
[hyperlink, http://www.gao.gov]. 

If you or your staff has any questions about this report, please 
contact Belva Martin at (202) 512-4841 or martinb@gao.gov. Contact 
points for our Offices of Congressional Relations and Public Affairs 
may be found on the last page of this report. GAO staff who made major 
contributions to this report are listed in appendix III. 

Sincerely yours, 

Signed by: 

Belva M. Martin: 
Director, Acquisition and Sourcing Management: 

[End of section] 

Appendix I: Objectives, Scope, and Methodology: 

The overall objectives of this review were to assess (1) the Navy's 
determination of the most appropriate platform to meet current and 
future surface combatant requirements; (2) the differences in cost, 
schedule, and design of the restart DDG 51 destroyers compared with 
previous ships, and the risks associated with the restart; and (3) the 
feasibility of the Navy's plans for maturing and integrating new 
technologies into the future DDG 51 ships. 

To assess how the Navy determined the most appropriate platform to 
meet current and future surface combatant requirements, we analyzed 
the Navy's Radar/Hull Study, which was the main tool the Navy used for 
assessing the radar and ship options and reviewed the accompanying 
"red team" assessment. We compared this study with other Navy studies 
related to ballistic missile defense (BMD) and integrated air and 
missile defense (IAMD), including the Navy's Maritime Air and Missile 
Defense of Joint Forces (MAMDJF) analysis of alternatives, the Navy 
BMD "Knee in the Curve Study," a Navy Cruiser and Destroyer analysis 
study, and Office of Naval Intelligence threat assessment studies. We 
also reviewed the Operational Requirements Document for the DDG 1000 
and the draft Capability Definition Document for the Air and Missile 
Defense Radar (AMDR). We also obtained and reviewed internal Navy 
briefing slides used to present the findings of the Radar/Hull Study 
to Navy decision makers. To assess the steps taken by the Navy in 
making this decision, we reviewed relevant Department of Defense (DOD) 
policy and guidance documents addressing, among other things, 
acquisition program initiation including DOD Instruction 5000.02 and 
the Weapon Systems Acquisition Reform Act of 2009. We compared the 
Radar/Hull Study with DOD analysis of alternatives guidance found in 
the Defense Acquisition Guidebook, DOD Instruction 5000.02, and a July 
2008 Air Force Analysis of Alternatives handbook. We also analyzed key 
contractor data submissions related to the ship variants and the radar 
concepts that were provided to the Navy to support its decision. We 
met with officials from the Radar/Hull Study team, the Applied Physics 
Laboratory at Johns Hopkins University who were technical consultants 
on the study, the DDG 51 and DDG 1000 program offices, representatives 
from the Office of the Chief of Naval Operations Surface Warfare 
Division, officials from the Program Executive Office for Ships (PEO 
Ships), the Program Executive Office for Integrated Warfare Systems 
(PEO IWS) program offices responsible for the Aegis combat system and 
for AMDR, and contractor officials from Raytheon, Lockheed Martin, and 
Northrop Grumman. We met with officials from the Office of Naval 
Intelligence to discuss the threat environment, and we met with 
officials from the Joint Integrated Air and Missile Defense 
Organization to discuss the recent Joint Capabilities Mix study which 
established required numbers of Navy BMD capable ships. We also met 
with an official from the Joint Staff to discuss the role of the Joint 
Requirements Oversight Council in the DDG 1000 truncation and DDG 51 
restart decisions. 

To assess the differences in cost between the restart DDG 51 ships and 
previous DDG 51 ships, we examined the Navy budget for DDG 51 restart 
ships and compared it with the budget for prior ships. We also spoke 
with the DDG 51 program office and Navy cost estimating officials, and 
discussed their methodology for estimating the impact of the 
production gap on prices, and spoke to officials from Bath Iron Works 
in Bath, Maine and Ingalls Shipbuilding in Pascagoula, Mississippi--
the shipyards responsible for building DDG 51 destroyers--and the 
officials from the Navy's Supervisor of Shipbuilding at both sites 
about the impact of the gap on cost estimates. We also spoke to 
shipyard officials at both sites about their readiness to begin 
construction. We analyzed the Navy's revised acquisition strategy for 
hulls DDG 114 through DDG 116. To assess differences in production 
schedules we compared the Navy's projected schedules for the Flight 
IIA restarts with the actual schedule performance on previous Flight 
IIA ships. We also spoke with Navy and shipyard officials at both 
shipyards. To assess the design changes for the restart ships, we 
compared the estimated number of design drawing changes and 
engineering change proposals for Flight IIA restart ships with those 
for previous Flight IIA ships. We examined Navy and contractor-
provided analyses pertaining to the Aegis upgrade (ACB 12) with 
specific focus on the source lines of code (SLOC), and compared SLOC 
estimates with SLOC actual numbers. We also reviewed software defect 
rates and development schedules related to the ACB 12 upgrade, and we 
analyzed the ACB-12 development and test schedules, risk matrices, and 
results from relevant test events that might impact ACB 12 
availability for installation on DDG 113. We analyzed Defense Contract 
Management Agency (DCMA) reports on ACB 12 development, and spoke to 
relevant DCMA officials. We also reviewed Navy, Missile Defense Agency 
(MDA), and Director, Operational Test and Evaluation (DOT&E) proposed 
operational test schedules and plans to assess integration efforts to 
verify IAMD capability, and interviewed relevant Lockheed Martin, MDA, 
DOT&E, and DOD Development Test and Evaluation officials. 

To address the feasibility of the Navy's plans for maturing new 
technologies intended for DDG 51 Flight III ships, we analyzed key 
Navy documentation including the DDG 51 Flight Upgrade Study (Phase I) 
and the accompanying "red team" assessment, contractor AMDR concept 
development documents, and AMDR Top Level Radar Performance documents. 
We compared the development of AMDR and its development schedule with 
previous Navy radar development programs (e.g. Cobra Judy Replacement 
radar, Dual Band Radar) to determine the feasibility of the technology 
and the development schedule. We also discussed development, testing, 
and in-yard date schedules with the Navy. We met with each of the 
three AMDR contractors: Raytheon, Lockheed Martin, and Northrop 
Grumman. To determine the feasibility of integrating AMDR and other 
technologies into Flight III, we compared the Navy's Flight III 
concepts with Navy service life allowance guidelines, and spoke with 
officials from both shipyards and a former Navy ship designer. To 
assess the feasibility of the Navy's acquisition strategy for Flight 
III we analyzed relevant DOD acquisition guidance including DOD 
Instruction 5000.02, and spoke with officials from the Office of the 
Secretary of Defense for Acquisition, Technology, and Logistics. We 
also used GAO's Cost Estimating and Assessment Guide. We are providing 
you with a classified annex containing supplemental information. 

We conducted this performance audit from January 2011 through January 
2012 in accordance with generally accepted government auditing 
standards. Those standards require that we plan and perform the audit 
to obtain sufficient, appropriate evidence to provide a reasonable 
basis for our findings and conclusions based on our audit objectives. 
We believe that the evidence obtained provides a reasonable basis for 
our findings and conclusions based on our audit objectives, and that 
the data we obtained and analyzed are sufficiently reliable for the 
purposes of our assessment. 

[End of section] 

Appendix II: Comments from the Department Of Defense: 

Office of The Under Secretary Of Defense: 
Acquisition, Technology And Logistics: 
3000 Defense Pentagon: 
Washington, DC 20301-3000: 

January 6, 2012: 

Ms. Belva M. Martin: 
Director, Acquisition and Sourcing Management: 
U.S. Government Accountability Office: 
441 G Street NW: 
Washington, DC 20548: 

Dear Ms. Martin: 

This is the Department of Defense (DoD) response to the GAO draft 
report, GAO-12-113, "Arleigh Burke Destroyers: Additional Analysis and 
Oversight Required to Support Navy's Future Surface Combatant Plans," 
dated November 22, 2011 (GAO Code 120948). The Department's comments 
on the five specific recommendations are enclosed. 

The DoD concurs with recommendations 2 and 3. The DoD partially 
concurs with recommendations 1, 4, and 5. In response to 
recommendation 2, the DoD agrees to include in long range shipbuilding 
plans any future, larger surface combatant, carrying a more capable 
version of the Air and Missile Defense Radar, including the costs and 
quantities, if such capability is determined necessary and affordable. 
With regard to recommendation 3, the DoD will conduct adequate 
operational testing of the Aegis Advanced Capability Build 12 upgrades.
The partial concur on recommendation 1 relates to Department concerns 
about conducting another analysis of alternatives on future surface 
combatants, following extensive studies that have already met the 
objectives of the GAO recommendations. The partial concur on 
recommendation 4 relates to the DoD's concerns on the timing and need 
for designating the DDG 51 Flight III program as acquisition category 
ID. The Department agrees to review the program scope and make a 
determination on oversight level when appropriate. The partial concur 
on recommendation 5 relates to the DoD's concern about potentially 
excluding DDG 51 Flight III ships from the planned multi-year 
procurement. The Department will review the costs and risks of 
including Flight III ships and make its determination prior to 
submitting the certification report to Congress. 

The Department appreciates the opportunity to comment on the draft 
report. Technical comments were provided separately. For further 
questions concerning this report, please contact Ms. Darlene Costello, 
Director, Naval Warfare, 703-697-2205. 

Sincerely, 

Signed by: 

David G. Ahern: 
Deputy Assistant Secretary of Defense: 
Strategic and Tactical Systems: 

Enclosure: As stated: 

[End of letter] 

GAO Draft Report Dated November 22, 2011: 
GAO-12-113 (GAO Code 120948): 

"Arleigh Burke Destroyers: Additional Analysis And Oversight Required 
To Support Navy's Future Surface Combatant Plans" 

Department Of Defense Comments To The GAO Recommendations: 

Recommendation 1: GAO recommends that the Secretary of Defense direct 
the Secretary of the Navy to conduct a thorough AoA in accordance with 
DOD acquisition guidance for its future surface combatant program to 
include: (1) a range of representative threat environments developed 
in concert with the intelligence community, (2) results of its ongoing 
Flight III studies and full cost estimates in advance of awarding DDG 
51 Flight III production contracts, (3) implications of the ability of 
the preferred ship to accommodate new technologies on future 
capabilities to determine the most suitable ship to carry AMDR and 
meet near-term IAMD requirements and provide a path to far-term 
capabilities, (4) implications on future fleet composition, and (5) an 
assessment of sensor netting conducted in consultation with MDA and 
other cognizant DOD components-to determine the risks inherent in the 
sensor netting concept, potential current or planned programs that 
could be leveraged, and how sensor netting could realistically be 
integrated with the selected future surface combatant to assist in 
conducting BMD. This AoA should be briefed to the Joint Requirements 
Oversight Council. 

DoD Response: Partially concur. The Department of Defense (DoD) 
disagrees with the GAO recommendation to conduct another Analysis of 
Alternatives (AoA) relative to the way ahead for DDG 51 Flight III. 
The DoD previously conducted detailed analyses covering items one 
through four of the five items identified in the GAO recommendation.
The DoD conducted a thorough analysis of alternatives for future 
integrated air and missile defense ship systems under phase 1 of the 
Maritime Air and Missile Defense of Joint Forces AoA, which reported 
out in August 2007. That AoA, combined with the Navy's Hull and Radar 
Study completed in 2009, analyzed a broad range of representative 
threat environments developed in concert with the intelligence 
community and assessed the ability of alternative ship types to 
accommodate new technologies and to provide a path to far term 
capabilities. From those analyses, the DoD concluded that the most 
cost effective way ahead is to continue production of DDG 51 class 
ships and to insert Air and Missile Defense Radar (AMDR) capabilities 
in a Flight III variant, thus stabilizing the future fleet composition 
on a DDG 51-based surface combatant rather than a DDG 1000-based 
surface combatant. The Navy is currently conducting additional studies 
on Flight III and OSD Cost Assessment and Program Evaluation will 
provide an assessment of the cost estimates in advance of awarding 
production contracts for the Flight III ships. The DoD also disagrees 
that the GAO-recommended AoA should be briefed to the Joint 
Requirements Oversight Council (JROC). The JROC previously reviewed 
the Navy's future surface combatant plan and had no objections. The 
DoD agrees that sensor netting might be a key capability for the 
future; however, sensor netting has not been determined to be a 
requirement for any future surface combatant including
DDG 51 Flight III. The DoD agrees that an assessment of sensor netting 
involving all cognizant DoD components to determine the risks inherent 
in the sensor netting concept, potential current or planned programs 
that could be leveraged, and how sensor netting could realistically be 
integrated with both future surface combatants and other military 
assets to assist in conducting Ballistic Missile Defense needs to be 
performed. For reference purposes this recommendation will be 
identified as item GAO-12-113-01. 

Recommendation 2: GAO recommends that the Secretary of Defense direct 
the Secretary of the Navy to report to Congress in its annual long 
range shipbuilding plan on its plans for a future, larger surface 
combatant, carrying a more capable version of AMDR and the costs and 
quantities of this ship. 

DoD Response: Concur, although additional direction to the Navy is not 
required. Section 231 of title 10, United States Code, requires the 
submission of a periodic report to Congress on the long range plan for 
the construction of naval vessels. The Navy will continue to assess 
future threats and ship affordability, modify its shipbuilding plan, 
and make future periodic reports as required by section 231. The Navy 
will include in long range shipbuilding plans any future, larger 
surface combatant, carrying a more capable version of AMDR, including 
the costs and quantities, if such capability is determined necessary 
and affordable. For reference purposes this recommendation will be 
identified as item GAO-12-113-02. 

Recommendation 3: GAO recommends that the Secretary of Defense direct 
the Secretary of the Navy to, in consultation with MDA and DoD and 
Navy weapons testers, define an operational testing approach for the 
Aegis ACB-12 upgrades that includes sufficient simultaneous live-fire 
testing needed to fully validate IAMD capabilities. 

DoD Response: Concur. The Navy and the Missile Defense Agency, working 
under OSD oversight for both developmental and operational test and 
evaluation, are committed to conducting adequate operational testing 
of the Aegis Advanced Capability Build-12 not limited to Integrated 
Air and Missile Defense capabilities. The Navy's Commander Operational 
Test and Evaluation Forces (COTF) has and will continue its early 
involvement in land-based and at-sea testing via developmental testing 
assists and through the COTF Detachment Naval Surface Warfare Center 
Dahlgren Division to provide early insight into system performance. 
For reference purposes this recommendation will be identified as item 
GAO-12-113-03. 

Recommendation 4: GAO recommends that the Secretary of Defense upgrade 
the oversight of the Navy's future surface combatant program to ACAT 
ID status, and ensure that the appropriate Milestone entry point is 
selected to provide cost baselines and assessments of design and 
technical risks and maturity. 

DoD Response: Partially concur. The DoD does not agree to upgrade 
oversight of the Navy's future surface combatant program to 
Acquisition Category (ACAT) ID status at this time. The Defense 
Acquisition Executive (DAE) will review the DDG 51 Flight III program 
and make a determination on the ACAT designation at the appropriate 
time. If the DAE determines that his oversight is needed, then the 
program will be designated ACAT ID. The DoD plans to make the 
determination on ACAT designation for the Flight III program once 
sufficient information on the scope and cost of the modifications to 
the Flight Ha design are fully characterized, by the fourth quarter of 
FY 2012. Once the ACAT decision is made, the designated Milestone 
Decision Authority will select the appropriate milestone entry point 
and require an Acquisition Program Baseline along with assessments of 
design and technical risks and maturity to support entering the 
acquisition system at the selected point. For reference purposes this 
recommendation will be identified as item GAO-12-113-04. 

Recommendation 5: GAO recommends that the Secretary of Defense ensure 
that the planned DDG 51 multi-year procurement request does not 
include a Flight III ship. 

DoD Response: Partially concur. The DoD is following the certification 
requirements of section 2306b of title 10, United States Code, 
regarding requests for multi-year procurement authority. The DoD will 
make its determination on including or excluding Flight III ships 
within the certification of the planned multi-year procurement that is 
due to Congress by March 1, 2012. The DoD will select an acquisition 
approach that provides flexibility and minimizes the risk, both cost 
and technical, to successful procurement across all DDG 51 Class 
ships. It should be noted that the Navy successfully introduced major 
upgrades to the DDG 51 Class within the two previous DDG 51 Class 
multi-year procurements. For reference purposes this recommendation 
will be identified as item GAO-12-113-05. 

[End of section] 

Appendix III: GAO Contacts and Staff Acknowledgments: 

GAO Contact: 

Belva Martin, 202-512-4841 or martinb@gao.gov. 

Acknowledgments: 

In addition to the contact above, Diana Moldafsky, Assistant Director; 
Jennifer Echard; Laura Greifner; Kristine Hassinger; Jeremy Hawk; Ioan 
Ifrim; C. James Madar; G. Michael Mikota; Karen Richey; W. Kendall 
Roberts; Roxanna Sun; and Alyssa Weir made key contributions to this 
report. 

[End of section] 

Footnotes: 

[1] A combat system is a naval defense architecture that uses 
computers to integrate sensors (such as a radar) with shipboard weapon 
systems and can recommend weapons to the sailor through a command and 
control function. 

[2] There are three previous DDG 51 Flights: Flight I, Flight II, and 
Flight IIA. The differentiation of the various flights generally 
indicates upgrades that bring different capabilities and equipment to 
the ships of that flight. 

[3] DDG 1000 is optimized for littoral antisubmarine warfare, and the 
Navy testified that the DDG 51 is superior in the deep ocean. However, 
in a May 11, 2009 letter to the Chairman of the Senate Armed Services 
Committee, Subcommittee on Seapower, the Chief of Naval Operations 
stated that in some conditions the DDG 1000 could be expected to 
perform as well as or better than DDG 51s in antisubmarine warfare 
activities, and that at a campaign level the performance of both ships 
could be assumed as the same. 

[4] Officials stated that DDG 1000 requires a modification to the 
combat system in order for the radar and combat system to communicate 
with the missiles. 

[5] MAMDJF AOA considered a wide range of ship variants, including a 
new cruiser concept, a new radar ship concept, modified and upgraded 
DDG 1000 variants, a modified DDG 51 variant with a 40' hull extension 
(known as a plug), and a modified LPD 17 amphibious transport dock 
ship variant. IAMD is the simultaneous defense against both ballistic 
missile threat and air warfare threats such as hostile aircraft and 
cruise missiles. Some CG 47s and DDG 51s can perform air warfare and 
BMD, the Oliver Hazard Perry class frigates (FFG 7) can only conduct 
short range anti-air warfare and no ballistic missile defense. 

[6] Defense Acquisition Guidebook, section 3.3. The Weapons System 
Acquisition Reform Act of 2009 established a requirement for the 
development of study guidance for an AOA that requires, at a minimum, 
full consideration of possible trade-offs among cost, schedule, and 
performance objectives for each alternative considered, and an 
assessment of whether or not the joint military requirement can be met 
in a manner that is consistent with the cost and schedule objectives 
recommended by the Joint Requirements Oversight Council. Pub. L. No. 
111-23, § 201(d). 

[7] GAO, Many Analyses of Alternatives Have Not Provided a Robust 
Assessment of Weapon System Options, [hyperlink, 
http://www.gao.gov/products/GAO-09-665] (Washington, D.C.: Sept. 24, 
2009). 

[8] [hyperlink, http://www.gao.gov/products/GAO-09-665]. 

[9] According to the Navy, the combat system consists not only of the 
combat system architecture (such as Aegis or TSCE), but it also 
includes the ship's weapon systems, such as missiles and launchers, 
and ship sensors. When we discuss combat system options, we are 
referring only to the combat system architecture. 

[10] Raytheon--the lead contractor for TSCE--submitted an unsolicited 
proposal to develop BMD capability within TSCE while the Radar/Hull 
Study was under way, but Navy officials told us that this proposal was 
rejected because it was deemed incomplete, and the Navy was unable to 
determine if it was realistic. Navy officials also told us that the 
TSCE contract contains language prohibiting BMD development work 
within TSCE. 

[11] For additional discussion on combat system capabilities, see 
Classified Annex A which will be made available upon request to those 
with the appropriate clearance and a validated need to know. 

[12] For a more detailed explanation of ship signature issues, see 
Classified Annex A which will be made available upon request to those 
with the appropriate clearance and a validated need to know. 

[13] For a more detailed description of the threat environments, see 
Classified Annex B which will be made available upon request to those 
with the appropriate clearance and a validated need to know. 

[14] Navy officials stated that the Office of Naval Intelligence 
provided information to the Radar/Hull Study team in two briefings on 
ballistic and cruise missile threats. However, in a written statement 
the Office of Naval Intelligence stated that they did not participate 
in the development or review of the Radar/Hull Study. 

[15] In then-year dollars. 

[16] The Navy calculates this difference to be 27 percent based on 
future anticipated budget savings and differences in inflation indices. 

[17] In constant fiscal year 2012 dollars. Cost includes the 
procurement of the ship, including ship construction, design, change 
orders and government-furnished equipment. Research and development 
(R&D) costs are not included. 

[18] Some suppliers were keeping their production lines open due to 
the Aegis modernization program, a backlog of orders, or the fact that 
suppliers were producing and selling equipment to foreign navies such 
as Australia. 

[19] Prior to the truncation Bath Iron Works was responsible for 
building the majority of DDG 1000, while Ingalls Shipbuilding was 
responsible for the majority of DDG 1001. The shipbuilders shared in 
designing the ship. The Navy had planned to compete DDG 1002 and the 
remaining four ships. 

[20] Ingalls Shipbuilding would also continue to build the composite 
deckhouse and hanger for all three DDG 1000 ships. 

[21] Main reduction gears function like a transmission and reduce the 
high-speed rotations from the engines to a lower speed that can be 
used to turn the ship's propellers. 

[22] GAO, Defense Acquisitions: Significant Challenges Ahead in 
Developing and Demonstrating Future Combat System's Network and 
Software, [hyperlink, http://www.gao.gov/products/GAO-08-409], 
(Washington, D.C.: Mar. 7, 2008) and Joint Strike Fighter: 
Restructuring Places Program on Firmer Footing, but Progress Still 
Lags, [hyperlink, http://www.gao.gov/products/GAO-11-325] (Washington, 
D.C.: Apr. 7, 2011). 

[23] Because MDA has not yet formally entered the defense acquisition 
cycle, it has not followed the procedures under DOD Instruction 
5000.02, Operation of the Defense Acquisition System, and does not 
generate a Test and Evaluation Master Plan like the Navy which is 
subject to Director, Operational Test and Evaluation review and 
approval. MDA does prepare an Integrated Master Test Plan. 

[24] According to MDA officials, the Aegis combat system first 
demonstrated the potential to be used for IAMD during a flight test on 
April 26, 2007, when Aegis engaged a BMD target and a target 
simulating a high-performance aircraft, but this test did not use the 
ACB 12 version of Aegis. 

[25] While the capabilities document has been approved by the Navy, it 
has not been formally reviewed by the Office of the Secretary of 
Defense and is subject to change. Since AMDR has not yet reached its 
milestone decision, according to DOD officials, AMDR requirements 
could still change. 

[26] Radar sensitivity is a measure of how well the radar can detect 
an object at a distance. A more sensitive radar can detect smaller 
objects at a range farther from the radar given a fixed resource 
consumption. It is a function of radar power and radar aperture (size). 

[27] This included development and land-based testing for VSR. 

[28] Measured in terms of pounds of weight per cubic foot (lbs/cf), 
the DDG 51 class has an outfit density of close to 8 lbs/cf, which is 
more than the DDG 1000 and FFG 7 classes, which are approximately 7 
lbs/cf, and the CG 47 class, which is approximately 7.5 lbs/cf. 

[29] Hybrid electric drive uses an electric motor integrated through 
the main reduction gear to reduce the use of the ship's primary gas 
turbines to provide both propulsion (which in turn can reduce fuel 
consumption) and additional electrical power. This equipment may also 
be backfit on prior ships. 

[30] First Marine International Findings for the Global Shipbuilding 
Industrial Base Benchmarking Study, First Marine International 
(London: August 2005). 

[31] Other reasons provided in the MAMDJF AOA for the elimination of 
the DDG 51 concept from consideration as a single ship concept include 
minimal opportunity for growth, limited service life, and constrained 
operational capabilities. For a discussion of the performance of 
SPY+15 and SPY+30 radars against the different threat environments, 
see Classified Annex C which will be made available upon request to 
those with the appropriate clearance and a validated need to know. 

[32] Navy officials explained that radar sensitivity scales as a cube 
of the size of the radar aperture. While improvements can also be made 
to the transmit/receive modules that emit the radar signal, Navy 
officials stated that this is a linear (not cubic) relationship and 
only adds marginal capability on the order of +1 or 2 dB. 

[33] For more specifics on sensor netting, see Classified Annex C 
which will be made available upon request to those with the 
appropriate clearance and a validated need to know. 

[34] In constant fiscal year 2011 dollars. 

[35] GAO: GAO Cost Estimating and Assessment Guide, [hyperlink, 
http://www.gao.gov/products/GAO-09-3SP] (Washington D.C.: March 2009). 

[36] GAO, Defense Acquisitions: Improved Management Practices Could 
Help Minimize Cost Growth in Navy Shipbuilding Programs, [hyperlink, 
http://www.gao.gov/products/GAO-05-183] (Washington, D.C.: Feb. 28, 
2005). 

[37] According to DOD Instruction 5000.02, a program is designated as 
ACAT I if it is either a Major Defense Acquisition Program--defined as 
a program estimated by the Undersecretary of Defense for Acquisition, 
Technology and Logistics to require an eventual total expenditure for 
research, development, and test and evaluation of more than $365 
million in fiscal year 2000 constant dollars or, for procurement, of 
more than $2.190 billion in fiscal year 2000 constant dollars--or if 
it is designated by the Milestone Decision Authority as a special 
interest program. 

[End of section] 

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