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United States Government Accountability Office: 
GAO: 

Report to Congressional Committees: 

November 2014: 

Ford-Class Aircraft Carrier: 

Congress Should Consider Revising Cost Cap Legislation to Include All 
Construction Costs: 

GAO-15-22: 

GAO Highlights: 

Highlights of GAO-15-22, a report to congressional committees. 

Why GAO Did This Study: 

Ford-class aircraft carriers will feature new technologies designed to 
reduce life-cycle costs. The lead ship, CVN 78, has been under 
construction since 2008, and early construction on CVN 79 is underway. 
In 2007 Congress established a cap for procurement costs—which has 
been adjusted over time. In September 2013, GAO reported on a $2.3 
billion increase in CVN 78 construction costs. 

GAO was mandated to examine risks in the CVN 78 program since its 
September 2013 report. This report assesses (1) the extent to which 
CVN 78 will be delivered within revised cost and schedule goals; (2) 
if CVN 78 will demonstrate its required capabilities before ship 
deployment; and (3) the steps the Navy is taking to achieve CVN 79 
cost goals. To perform this work, GAO analyzed Navy and contractor 
data, and scheduling best practices. 

What GAO Found: 

The extent to which the lead Ford-class ship, CVN 78, will be 
delivered by its current March 2016 delivery date and within the 
Navy's $12.9 billion estimate is dependent on the Navy's plan to defer 
work and costs to the post-delivery period. Lagging construction 
progress as well as ongoing issues with key technologies further 
exacerbate an already compressed schedule and create further cost and 
schedule risks. With the shipbuilder embarking on one of the most 
complex phases of construction with the greatest likelihood for cost 
growth, cost increases beyond the current $12.9 billion cost cap 
appear likely. In response, the Navy is deferring some work until 
after ship delivery to create a funding reserve to pay for any 
additional cost growth stemming from remaining construction risks. 
This strategy will result in the need for additional funding later, 
which the Navy plans to request through its post-delivery and 
outfitting budget account. However, this approach obscures visibility 
into the true cost of the ship and results in delivering a ship that 
is less complete than initially planned. 

CVN 78 will deploy without demonstrating full operational capabilities 
because it cannot achieve certain key requirements according to its 
current test schedule. Key requirements—such as increasing aircraft 
launch and recovery rates—will likely not be met before the ship is 
deployment ready and could limit ship operations. Further, CVN 78 will 
not meet a requirement that allows for increases to the size of the 
crew over the service life of the ship. In fact, the ship may not even 
be able to accommodate the likely need for additional crew to operate 
the ship without operational tradeoffs. Since GAO's last report in 
September 2013, post-delivery plans to test CVN 78's capabilities have 
become more compressed, further increasing the likelihood that CVN 78 
will not deploy as scheduled or will deploy without fully tested 
systems. 

The Navy is implementing steps to achieve the $11.5 billion 
congressional cost cap for the second ship, CVN 79, but these are 
largely based on ambitious efficiency gains and reducing a significant 
amount of construction, installation, and testing—work traditionally 
completed prior to ship delivery. Since GAO last reported in September 
2013, the Navy extended CVN 79's construction preparation contract to 
allow additional time for the shipbuilder to reduce cost risks and 
incorporate lessons learned from construction of CVN 78. At the same 
time, the Navy continues to revise its acquisition strategy for CVN 79 
in an effort to ensure that costs do not exceed the cost cap, by 
postponing installation of some systems until after ship delivery, and 
deferring an estimated $200 million - $250 million in previously 
planned capability upgrades of the ship's combat systems to be 
completed well after the ship is operational. Further, if CVN 79 
construction costs should grow above the legislated cost cap, the Navy 
may choose to use funding intended for work to complete the ship after 
delivery to cover construction cost increases. As with CVN 78, the 
Navy could choose to request additional funding through post-delivery 
budget accounts not included in calculating the ship's end cost. Navy 
officials view this as an approach to managing the cost cap. However, 
doing so impairs accountability for actual ship costs. 

What GAO Recommends: 

Congress should consider revising the cost cap legislation to improve 
accountability of Ford-class construction costs, by requiring that all 
work included in the initial ship cost estimate is counted against the 
cost cap. If warranted, the Navy would be required to seek statutory 
authority to increase the cap. GAO is not making new recommendations, 
but believes previous recommendations, including a re-examination of 
requirements and improvements to the test plan, remain valid. DOD 
agreed with much of the report, but disagreed with GAO's position on 
the cost caps. GAO believes that changes to the legislation are 
warranted to improve cost accountability. 

View [hyperlink, http://www.gao.gov/products/GAO-15-22]. For more 
information, contact Michele Mackin at (202) 512-4841 or 
mackinm@gao.gov. 

[End of section] 

Contents: 

Letter: 

Background: 

With Risks Remaining in CVN 78 Construction, the Navy Plans to Defer 
Work in an Effort to Meet Delivery Schedule and Cost Cap Goals: 

CVN 78 Will Not Demonstrate Key Capabilities Prior to Deployment and 
Faces Continued Post-Delivery Testing Challenges: 

Navy's Ability to Meet CVN 79 Cost Cap Predicated on Ambitious 
Efficiency Gains and Deferring Work until after Ship Delivery: 

Conclusions: 

Matter for Congressional Consideration: 

Recommendations for Executive Action: 

Agency Comments and Our Evaluation: 

Appendix I: Scope and Methodology: 

Appendix II: New Technologies Introduced on Ford-Class Ships: 

Appendix III: Comments from the Department of Defense: 

Appendix IV: GAO Contact and Staff Acknowledgments: 

Tables: 

Table 1: Indicators of Lagging Construction Progress on CVN 78: 

Table 2: CVN 78 Planned Work Deferred to Post-Delivery to Create 
Funding Reserve: 

Table 3: CVN 78 Construction Contract Estimated Costs at Ship 
Completion: 

Table 4: Nimitz-Class and Ford-Class Sortie Generation Rates: 

Table 5: Current Reliability Rates for EMALS and AAG Systems: 

Table 6: Ship's Manning Totals for Nimitz-and Ford-Class Aircraft 
Carriers as of September 2014: 

Table 7: CVN 78 Current Projected Manning and Available Accommodations: 

Table 8: Number of Construction Labor Hours Required to Build Aircraft 
Carriers: 

Table 9: Scope of Advanced Construction Work under CVN 79 Construction 
Preparation Contract Extension Strategy: 

Table 10: Planned CVN 79 System Upgrades and Modernizations Deferred 
Until Future Maintenance Periods: 

Table 11: New Technologies for the Ford-Class Aircraft Carrier: 

Figures: 

Figure 1: Cost Cap Increases During Acquisition of the Ford Class: 

Figure 2: System Developmental Testing Delays: 

Figure 3: Comparison of AAG Test Strategies: 

Figure 4: Changes to CVN 78 Post-Delivery Test Schedule Since 2013: 

Figure 5: Comparison of the Planned and Actual Number of Labor Hours 
Required to Complete Advanced Construction Work for the First 205 
Structural Units on CVN 79: 

Figure 6: Comparison of CVN 79's September 2013 and October 2014 
Revised Acquisition Schedules: 

Figure 7: Critical Technologies on the Ford-Class Aircraft Carrier: 

Abbreviations: 

AAG: advanced arresting gear: 

CP: construction preparation: 

DOD: Department of Defense: 

DOT&E: Director for Operational Test and Evaluation: 

DT&E: Developmental Test and Evaluation: 

DBR: dual band radar: 

EMALS: electromagnetic aircraft launch system: 

IOT&E: initial operational test and evaluation: 

SGR: sortie generation rate: 

TEMP: test and evaluation master plan: 

[End of section] 

United States Government Accountability Office: 
GAO:
441 G St. N.W. 
Washington, DC 20548: 

November 20, 2014: 

Congressional Committees: 

The Navy is developing the Ford-class nuclear-powered aircraft carrier 
to serve as the future centerpiece of the carrier strike group. The 
Ford class is the successor to the Nimitz-class aircraft carrier 
designed in the 1960s and is introducing a number of advanced 
technologies to the fleet in the areas of propulsion, aircraft launch 
and recovery, weapons handling, and survivability. These technologies 
are intended to create operational efficiencies while enabling a 25 
percent increase in sortie rates (operational flights by aircraft) as 
compared to legacy Nimitz-class aircraft carriers. In addition, the 
Navy anticipates that these technologies will enable Ford-class 
carriers to operate with reduced manpower as compared to the legacy 
carriers. The Navy plans to invest over $43 billion to develop, design, 
construct, and test three Ford-class carriers. At present, the lead 
ship, Gerald R. Ford (CVN 78), is about 80 percent complete and early 
construction work is under way for the first follow-on ship, John F. 
Kennedy (CVN 79). 

Since 2008, the Navy has increased its budget estimate for construction 
of the lead ship from $10.5 billion to $12.9 billion in then-year 
dollars--an increase of over 20 percent above initial estimates, and 
delayed delivery from September 2015 to March 2016. We found in 
September 2013 that continued cost growth has the potential to derail 
the Navy's ability to deliver Ford-class aircraft carriers on its 
schedule with expected capabilities. In light of our September 2013 
report, a Senate report accompanying a bill for the National Defense 
Authorization Act for Fiscal Year 2014 mandated GAO to review the 
Navy's acquisition of the Ford-class.[Footnote 1] This report examines 
remaining risks in the CVN 78 program since September 2013 by 
assessing: (1) the extent to which CVN 78 will be delivered to the Navy 
within its revised cost and schedule goals; (2) if, after delivery, CVN 
78 will demonstrate its required capabilities through testing before 
the ship is deployment ready; and (3) the steps the Navy is taking to 
achieve CVN 79 cost goals. 

To identify challenges in delivering the lead ship within current 
budget and schedule estimates, we analyzed Navy budget submissions, 
contract performance reports, and briefings, and historical cost 
performance on previous carriers. To evaluate the Navy's strategy to 
demonstrate CVN 78's capabilities, we met with system developers and 
analyzed the program's test and evaluation master plan, as well as test 
plans, development schedules, and reliability data for key CVN 78 
systems. To assess the steps the Navy is taking to achieve CVN 79 cost 
goals, we met with Navy and shipbuilder officials, analyzed CVN 79 
construction preparation contract documents and scopes of work as well 
as the shipbuilder's performance for related work activities. We also 
reviewed the shipbuilder's plans for process improvements and labor 
hour reduction efforts and the associated cost savings, and analyzed 
construction schedules for CVN 78 and CVN 79 and compared them with 
scheduling best practices. Lastly, we evaluated the Navy's revised 
build strategy for CVN 79 and compared it with the ship's previous 
acquisition schedule. To corroborate information for each of these 
objectives, we interviewed DOD officials and the shipbuilder 
responsible for the Ford-class carrier requirements, development, 
acquisition, and testing. A more detailed description of our scope and 
methodology is presented in appendix I. 

We conducted this performance audit from December 2013 to November 2014 
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. 

Background: 

The Ford class features a number of improvements over existing aircraft 
carriers that the Navy believes will improve the combat capability of 
the carrier fleet while simultaneously reducing acquisition and life 
cycle costs. These improvements include an increased rate of aircraft 
deploying from the carrier (sorties), reduced manning, significant 
growth in electrical generating capability, and larger service life 
margins for weight and stability to support future changes to the ship 
during its expected 50-year service life. 

To meet its requirements, the Navy developed over a dozen new 
technologies for installation on Ford-class ships (see appendix II). 
For example, advanced weapons elevators, using an electromagnetic field 
to transport weapons within the ship instead of cables, are expected to 
increase payload capacity by 229 percent as compared to Nimitz-class 
carriers, while also facilitating reduced manning and higher sortie 
generation rates. Other technologies allowed the Navy to implement 
favorable design features into the ship, including an enlarged flight 
deck, a smaller, aft-positioned island, and a flexible ship 
infrastructure to accommodate changes during the ship's service life. 
As we have previously reported, of the critical technologies, three 
have presented some of the greatest challenge during development and 
construction: [Footnote 2] 

* Electromagnetic Aircraft Launch System (EMALS), which uses an 
electrically generated moving magnetic field to propel aircraft that 
places less physical stress on aircraft as compared to legacy steam 
catapult launchers on Nimitz-class carriers. 

* Advanced Arresting Gear (AAG) is an electric motor based aircraft 
recovery system that rapidly decelerates an aircraft as it lands. AAG 
replaces legacy hydraulic arresting equipment currently in use on 
Nimitz-class carriers. 

* Dual Band Radar (DBR) integrates two component radars--the 
multifunction radar and the volume search radar--to conduct air traffic 
control, ship self-defense, and other operations. The multifunction 
radar includes horizon search, surface search, navigation, and missile 
communications. The volume search radar includes long-range, above 
horizon surveillance and air traffic control capabilities. 

Shipbuilding Phases: 

As is typical in Navy shipbuilding, Ford-class carrier construction 
occurs in several phases and includes several key events, including the 
following: 

* Pre-construction and planning: Long-lead time materials and equipment 
are procured and the shipbuilder plans for beginning ship construction. 

* Block fabrication, outfitting, and erection: Metal plates are welded 
together to form blocks, which are the basic building components of the 
ship. The blocks are assembled and outfitted with pipes, brackets for 
machinery or cabling, ladders, and any other equipment that may be 
available for installation. Groupings of blocks form superlifts, which 
are then lifted by crane into dry dock and welded into the respective 
location of the ship. 

* Launch: After the ship is watertight, it can be launched--floated in 
the water--then towed into a quay or dock area where remaining 
construction and outfitting of the ship occurs. 

* Shipboard testing: Once construction and system installations are 
largely complete, the builder will test the ship's hull, mechanical and 
electrical systems, and key technologies to demonstrate compliance with 
ship specifications and provide assurance that the items tested operate 
satisfactorily within permissible design parameters. 

* Delivery: Once the Navy is satisfied that the ship is seaworthy and 
the shipbuilder has met requirements, the shipyard transfers custody of 
the ship to the Navy.[Footnote 3] 

* Post-delivery activities: After ship delivery, tests are conducted on 
the ship's combat and mission-critical systems, the ship's air wing--
consisting of the assigned fixed and rotary wing aircraft, pilots, 
support and maintenance personnel--is brought onto the ship, and the 
crew begins training and operating the ship while at sea. A period of 
planned maintenance, modernization, and correction of government-
responsible deficiencies follows--referred to as Post Shakedown 
Availability. 

* Deployment ready: The last stage of the ship acquisition process 
occurs when all crew and system operational tests, trainings, and 
certifications have been obtained and the ship has achieved the 
necessary level of readiness needed to embark on its first deployment. 

Test Events: 

During and after construction, DOD acquisition policy requires major 
defense programs, including shipbuilding programs, to execute and 
complete several types of testing, while the ship progresses toward 
operational milestones including the point during the acquisition 
process when the fleet initially receives and maintains the ship: 

* Developmental testing is intended to assist in the maturation of 
products, product elements, or manufacturing or support processes. For 
ship technologies, developmental testing typically includes land-based 
testing activities prior to introducing a new technology in a maritime 
environment and commencing with shipboard testing. Developmental 
testing does not include testing systems in concert with other systems. 

* Integration testing is intended to assess, verify, and validate the 
performance of multiple systems operating together to achieve required 
ship capabilities. For example, integration testing would include among 
other things, testing the operability of the DBR in a realistic 
environment where multiple antennas and arrays are emitting and 
receiving transmissions and multiple loads are placed upon the ship's 
power and cooling systems simultaneously. 

* Initial Operational Test and Evaluation (IOT&E) is a major component 
of post-delivery testing intended to assess a weapon system's 
capability in a realistic environment when maintained and operated by 
sailors, subjected to routine wear-and-tear, and employed in combat 
conditions against simulated enemies. During this test phase, the ship 
is exposed to as many actual operational scenarios as possible to 
reveal the weapon system's capability under stress. 

The Navy schedules and plans these test phases and milestones using a 
test and evaluation master plan (TEMP) that is approved by the Deputy 
Assistant Secretary of Defense for Developmental Test and Evaluation 
(DT&E) and the Director for Operational Test and Evaluation (DOT&E). 
The Deputy Assistant Secretary of Defense for DT&E leads the 
organization within the Office of the Secretary of Defense that is 
responsible for providing developmental test and evaluation oversight 
and support to major acquisition programs. The Director, DOT&E leads 
the organization within the Office of the Secretary of Defense that is 
responsible for providing operational test and evaluation oversight and 
support to major defense acquisition programs.[Footnote 4] 

Ford-Class Contracts: 

Due to their vast size and complexity, aircraft carriers require 
funding for design, long-lead materials, and construction over many 
years. To accomplish these activities on the Ford class, the Navy has 
awarded contracts for two phases of construction--construction 
preparation and detail design and construction--which are preceded by 
the start of advance procurement funding. Since September 2008, Newport 
News Shipbuilding has been constructing CVN 78 under a cost-
reimbursement contract for detail design and construction of CVN 78. 
This contract type places significant cost risk on the government, 
which may pay more than budgeted should costs be more than expected. 
The Navy now expects to largely repeat the lead ship design for CVN 79, 
with some modifications, and construct that ship under a fixed-price 
incentive contract, which generally places more risk on the contractor. 

Ford-Class Legislative Cost Caps: 

To ensure the Navy adheres to its cost estimates, Congress, in the 
National Defense Authorization Act for Fiscal Year 2007, established a 
$10.5 billion procurement cost cap for CVN 78, and an $8.1 billion cost 
cap for each subsequent carrier.[Footnote 5] If the Navy determines 
adjustments to the cost cap are necessary, it must first obtain 
statutory authority from Congress, which means it would be required to 
submit a proposal to Congress increasing the cost cap. The 2007 
legislation also contains six provisions that allow the Navy to make 
adjustments to the cost cap (increasing or decreasing) without seeking 
statutory authority: 

* cost changes due to economic inflation; 

* costs attributable to shipbuilder compliance with changes in Federal, 
State, or local laws; 

* outfitting and post-delivery costs; 

* insertion of new technologies onto the ships; 

* cost changes due to nonrecurring design and engineering; and: 

* costs associated with correction of deficiencies that would otherwise 
preclude safe operation and crew certification. 

The National Defense Authorization Act for Fiscal Year 2014 further 
expanded the list of allowable adjustments, solely for CVN 78, to 
include cost changes due to urgent and unforeseen requirements 
identified during shipboard testing.[Footnote 6] 

Since 2007, the Navy has sought and been granted adjustments to CVN 
78's cost cap to the current amount of $12.9 billion, which were 
attributed to construction cost overruns and economic inflation. In 
2013, the Navy increased CVN 79's cost cap to $11.5 billion, citing 
inflation and additional non-recurring design and engineering work. 
Subsequently, the National Defense Authorization Act for Fiscal Year 
2014 increased the legislated cost cap for any follow-on ship in the 
Ford-class to $11.5 billion. In addition, the Navy delayed CVN 79's 
delivery by 6 months, from September 2022 to March 2023, to reflect 
changes in the ship's budget. 

Figure 1 outlines the Navy's acquisition timeline for the Ford class, 
along with adjustments made to the legislated cost cap throughout the 
course of the shipbuilding program. 

Figure 1: Cost Cap Increases During Acquisition of the Ford Class: 

[Refer to PDF for image: illustration] 

CVN 78: 
Advance procurement (AP) funding: 2001-2007 (7 years); 

Procurement funding: 2008-2011 (4 years). 

3Q FY 2004: Contract award, Construction preparation; 

10/06: Cost cap: $10.5 billion; 

4Q FY 2008: Contract award, Detail design and construction; 

02/10: Cost cap: $11.8 billion; 

12/13: Cost cap: $12.9 billion; 

2Q FY 2016: Ship delivery. 

CVN 79: 
Advance procurement (AP) funding: 2007-2012 (6 years); 

Procurement funding: 2013-2018 (6 years). 

2Q FY 2009: Contract award, Construction preparation; 

10/06: Cost cap: $8.1 billion; 

Timeframe extended since 2013: until 2015; 

05/13: Cost cap: $11.5 billion; 

1Q FY 2015: Contract award, Detail design and construction; 

Timeframe extended since 2013: until 2023; 

2Q FY 2023: Ship delivery. 

CVN 80: 
10/06: Cost cap: $8.1 billion; 

12/13: Cost cap: $11.5 billion; 

Advance procurement (AP) funding: 2016-2017 (2 years); 

Procurement funding: 2018-2023 (6 years). 
1Q FY 2016: Contract award, Construction preparation; 

1Q FY 2018: Contract award, Detail design and construction; 

4Q FY 2027: Ship delivery. 

Source: GAO analysis of Navy data. GAO-15-22. 

[End of figure] 

Our Prior Recommendations: 

In August 2007 and September 2013, we reported on the programmatic 
challenges associated with technology development, design, 
construction, and testing of the lead ship (CVN 78). In our 2007 
report, we noted that delays in Ford-class technology development and 
overly optimistic cost estimates would likely result in higher lead 
ship costs than what the Navy allotted in its budget. We recommended 
actions to improve the realism of the CVN 78 budget estimate and the 
Navy's cost surveillance capacity, as well as develop carrier-specific 
tests of the DBR to ensure the radar meets carrier-specific 
requirements. The Navy addressed some, but not all, of our 
recommendations[Footnote 7]. 

Our 2013 report found delays in technology development, material 
shortfalls, and construction inefficiencies were contributing to 
increased lead ship construction costs and potential delays to ship 
delivery. We also found the Navy's ability to demonstrate CVN 78's 
capabilities after delivery was hampered by test plan deficiencies, and 
reliability shortfalls of key technologies could lead to the ship 
deploying without those capabilities. Lastly, we concluded that ongoing 
uncertainty in CVN 78's construction could undermine the Navy's ability 
to realize additional cost savings during construction of CVN 79--the 
follow on ship. These findings led to several recommendations to DOD: 

* conduct a cost-benefit analysis on required CVN 78 capabilities, 
namely reduced manning and the increased sortie generation rate, in 
light of known and projected reliability shortfalls for critical 
systems; 

* update the Ford-class program's test and evaluation master plan to 
allot sufficient time after ship delivery to complete developmental 
test activities prior to beginning integration testing; 

* adjust the planned post-delivery test schedule to ensure that system 
integration testing is completed before IOT&E; 

* defer the CVN 79 detail design and construction contract award until 
land-based testing for critical systems is complete; and, 

* update the CVN 79 cost estimate on the basis of actual costs and 
labor hours needed to construct CVN 78. 

While DOD agreed with some of our recommendations, it did not agree 
with our recommendation to defer the award of CVN 79's detail design 
and construction contract until certain testing of critical technology 
systems were completed, noting that deferring contract award would lead 
to cost increases resulting from the required re-contracting effort, 
among other things. Shortly after we issued our report, however, the 
Navy postponed awarding the construction contract until the first 
quarter of fiscal year 2015, citing the need for additional time to 
negotiate more favorable pricing with the shipbuilder as well as for 
the shipbuilder to continue to implement and demonstrate cost savings. 

With Risks Remaining in CVN 78 Construction, the Navy Plans to Defer 
Work in an Effort to Meet Delivery Schedule and Cost Cap Goals: 

The extent to which CVN 78 will be delivered within the Navy's revised 
schedule and cost goals is dependent on deferring work and costs to the 
ship's post-delivery period. Meeting CVN 78's current schedule and cost 
goals will require the shipbuilder to overcome lags in the construction 
schedule. Successful tests of the equipment and systems now installed 
on the ship (referred to as shipboard testing) will also be necessary. 
However, challenges with certain key technologies are likely to further 
exacerbate an already compressed test schedule. With the shipbuilder 
embarking on one of the most complex phases of construction with the 
greatest likelihood for cost growth, cost increases beyond the current 
$12.9 billion cost cap appear likely. In response, the Navy is 
deferring work until after ship delivery to create a reserve to help 
ensure that funds are available to pay for any additional cost growth 
stemming from remaining construction risks. In essence, the Navy will 
have a ship that is less complete than initially planned at ship 
delivery, but at a greater cost. The strategy of deferring work will 
result in the need for additional funding later, which the Navy plans 
to request through its post-delivery and outfitting budget account--
Navy officials view this plan as an approach to managing the cost cap. 
However, increases to the post-delivery and outfitting budget account 
are not captured in the total end cost of the ship, thereby obscuring 
the true costs of the ship. 

Lags in Construction Progress May Signal Slip in Delivery Date and 
Increased Costs: 

The shipbuilder appears to have resolved many of the engineering and 
material challenges that we reported in September 2013. These 
challenges resulted in inefficient and out-of-sequence work that led to 
a revision of the construction and shipboard test schedules and 
contributed to an increase to the ship's legislated cost cap from $10.5 
billion to the current $12.9 billion.[Footnote 8] Nevertheless, with 
about 20 percent of work remaining to complete construction and the 
shipboard test program under way, the lagging effect of these issues is 
creating a backlog of construction activities that further threaten the 
ship's revised delivery date and that may lead to further increased 
costs. As we have found in our previous work, additional cost increases 
are likely to occur because the remaining work on CVN 78 is generally 
more complex than much of the work occurring in the earlier stages of 
construction. 

As shown in table 1, the shipbuilder continues to face a backlog of 
construction activities, including: 

* completing work packages, which are sets of defined tasks and 
activities during ship construction and are how the shipbuilder manages 
and monitors construction progress through the construction master 
schedule; 

* outfitting of individual compartments on the ship; and: 

* transferring custody of completed compartments and hull, mechanical, 
and electrical systems to the Navy, referred to as "compartment and 
system turnover." 

Table 1: Indicators of Lagging Construction Progress on CVN 78: 

Work package completion rates: 
The shipbuilder has a backlog of over 5,300 delinquent work packages 
(approximately 10 percent of the total work packages scheduled).This 
is compounded by lagging performance of the ship assembly trades, such 
as the painting and sheet metal departments. According to the latest 
available data (August 2014), the shipbuilder was in the process of 
developing a plan on how to complete the delinquent work packages. 

Compartment outfitting and completion: 
According to the latest available data (August 2014), the shipbuilder 
had completed construction on 73 percent of the 777 compartments 
scheduled to be completed by that date. Late delivery of government 
furnished equipment has contributed to the delays. To meet the current 
schedule, the shipbuilder will need to complete construction of 2,608 
compartments by February 2016. 

Compartment and system turnover to the Navy: 
According to the latest available data (August 2014), the shipbuilder 
was about 25 percent behind schedule in transferring custody of 
completed compartments and hull, mechanical, and electrical systems to 
the Navy, and is generally falling short of achieving the weekly 
scheduled turnovers. The Navy is piloting an approach that 
incorporates personnel from the ship's crew to assist the Supervisor 
of Shipbuilding, Conversion and Repair (the Navy's shipbuilding 
contract oversight and project management organization) with the 
turnover process. 

Sources: GAO analysis based on Navy and shipbuilder data. GAO-15-22. 

[End of table] 

Delays in Shipboard Testing Likely Because of Issues Discovered During 
Land-Based Testing of Key Technologies: 

As the shipbuilder completes construction and compartment outfitting 
activities, the shipboard testing phase of the project commences. This 
testing is scheduled to be completed by early February 2016 on the 
ship's hull, mechanical, and electrical systems, about 2 months before 
the anticipated end of March 2016 delivery date. The shipboard test 
program is meant to ensure correct installation and operation of the 
equipment and systems in a maritime environment. This is a complex and 
iterative process that requires sufficient time for discovering 
problems inherent with the start-up and initial operation of a system, 
performing corrective work, and retesting to ensure that the issues 
have been resolved. However, as a result of previous schedule delays, 
the shipbuilder compressed the shipboard test plan, resulting in a 
schedule that leaves insufficient time for discovery and correction 
should problems arise. Further, the construction delays discussed above 
directly affect the builder's ability to test the ship's hull, 
mechanical, and electrical systems, thus increasing the likelihood of 
additional testing delays. For example, testing of the ship's fire 
sprinklers was delayed because construction of the sprinkling system 
was not completed on time. In other instances, delays stemming from 
construction can have a cascading effect on the test program. As 
another example, testing of the ship's plumbing fixtures was delayed 
until testing of the potable water distribution system was completed 
and the system activated. 

Another integral part of the shipboard test program is testing the 
ship's key technologies, many of which are being operated for the first 
time in a maritime environment, and ensuring that these technologies 
function as intended. Four of these technologies are instrumental in 
executing CVN 78's mission--AAG, EMALS, DBR, and the advanced weapons 
elevators. Although these technologies are, for the most part, already 
installed on the ship, certain technologies are still undergoing 
developmental land-based testing. Except for the advanced weapons 
elevators, which are managed by the shipbuilder, the other technologies 
are being developed by separate contractors, with the government 
providing the completed system to the shipbuilder for installation and 
testing. The shipboard test programs for EMALS and the advanced weapons 
elevators are currently under way, while AAG and DBR testing is 
scheduled to commence in fiscal year 2015. However, developmental 
testing for AAG, EMALS, and DBR is taking place concurrently at 
separate land-based facilities (as well as aboard the ship). This 
situation presents the potential for modifications to be required for 
the shipboard systems that are already installed if land-based testing 
reveals problems. Three of the systems we reported on in our last 
report in September 2013--AAG, EMALS, and DBR--have since experienced 
additional developmental test delays (as shown in figure 2). 

Figure 2: System Developmental Testing Delays: 

[Refer to PDF for image: timeline] 

Shipboard testing: 

CVN 78 shipboard test events: 

EMALS shipboard testing: Q4, FY 2014; Test schedule as of 2008; 
Delivery: 2Q, FY 2016; Test schedule as of 2008; 
Flight deck certification: 3Q, FY 2016; Test schedule as of 2008; 
Integration testing: FY 2017 and beyond; Test schedule delay as of 
2014. 

Land-based testing: 

Advanced Arresting Gear: 
Test schedule as of 2008: 2Q, FY 2012; 
Test schedule delay as of 2013: Q1, FY 2015 (2.6 years); 
Test schedule delay as of 2014: Q1, FY 2017 (2 years). 

Electromagnetic Aircraft Launch System: 
Test schedule as of 2008: 3Q, FY 2011; 
Test schedule delay as of 2013: Q1, FY 2015 (3.3 years); 
Test schedule delay as of 2014: Q2, FY 2016 (1.5 years). 

Dual Band Radar: 
Test schedule as of 2008: 3Q, FY 2010; 
Test schedule delay as of 2013: Q1, FY 2014 (3.5 years); 
Test schedule delay as of 2014: Q2, FY 2015 (1.3 years). 

Source: GAO analysis of Navy data. GAO-15-22. 

[End of figure] 

Following is more information on the status of testing of these key 
technologies. 

AAG: 

Shipboard testing for AAG is scheduled to begin in March 2015, but 
according to the CVN 78 program office, the AAG contractor is 
redesigning equipment on the system's hydraulic braking system by 
adding additional filtration and the shipbuilder is replacing 
associated piping, which will likely delay the start of system testing. 
In addition, the AAG contractor has to complete over 50 modifications 
to the systems before shipboard testing can begin; these modifications 
are needed to address issues identified during developmental testing at 
the land-based test site. As we previously found, AAG experienced 
several failures during land-based testing, which led to redesign and 
modification of several subsystems, most notably the water twisters--a 
device used to absorb energy during an aircraft arrestment. CVN 78 
program officials expressed concerns that the rework cannot be 
completed on time to support the current shipboard test schedule, and 
attribute the delays to the immaturity of AAG when it was installed on 
the ship. 

The shipboard test program is further at risk because additional design 
changes and modifications to the shipboard AAG units remain likely. 
This is because the Navy will now be conducting land-based testing of 
AAG even as shipboard testing is under way. As a result of issues 
discussed above, the Navy further delayed the schedule for land-based 
testing (as shown in figure 2) and changed the test strategy to better 
ensure that it could meet the schedule for testing live aircraft aboard 
the ship. AAG's previous land-based test plan was to sequentially test 
each aircraft type planned for CVN 78 as a simulated load on a jet car 
track.[Footnote 9] After completing jet car track testing for all 
aircraft types, the actual aircraft were to be tested with the AAG 
system on a runway. This strategy allowed for discovery of issues with 
each aircraft type prior to advancing to the next stage of testing. 
However, earlier this year the AAG program office changed its strategy 
so that each aircraft type will be tested sequentially at the jet car 
track and runway sites. Once an aircraft completes both types of 
testing, testers will re-configure the sites to test the next type of 
aircraft, according to AAG program officials. Figure 3 shows the 
difference in AAG test strategies along with the overall ship test 
schedule. The program office plans to complete this revised testing 
approach with the F/A-18 E/F Super Hornet fighter first, as this 
aircraft will be most in use aboard the carrier. 

Figure 3: Comparison of AAG Test Strategies: 

[Refer to PDF for image: timeline] 

CVN 78 shipboard testing: 
Delivery: early FY 2016; 

First shipboard recovery: early FY 2016; 

Integration testing: September 2016 and beyond. 

Advanced Arresting Gear land-based test strategy - 2013: 
All aircraft: Jet car track site testing, FY 2009-March 2013; 

All aircraft: Runway aircraft landing site testing: FY 2013-September 
2014. 

Advanced Arresting Gear land-based test strategy - 2014: 

F/A-18 E/F:
All aircraft: Jet car track site testing, FY 2014-August 2015; 

All aircraft: Runway aircraft landing site testing: FY 2015-February 
2016. 

E-2/C-2: 
All aircraft: Jet car track site testing, FY 2015-March 2016; 

All aircraft: Runway aircraft landing site testing: March 2016-July 
2016. 

F/A-18 C/D: 
All aircraft: Jet car track site testing, FY 2016-May 2016; 

All aircraft: Runway aircraft landing site testing: FY 2016-October 
2016. 

Source: U.S. Navy. GAO-15-22. 

[End of figure] 

While the Navy stated that this change was necessary to ensure that at 
least one aircraft type would be available to certify the system for 
shipboard testing, it further increases the potential for discovering 
issues well past shipboard testing and even ship delivery. 

EMALS: 

The shipbuilder began EMALS activation and shipboard testing activities 
in August 2014, as planned. This is the first time EMALS is being 
operated and tested in a maritime environment, in a multiple catapult 
configuration, using a shared power source, with multiple 
electromagnetic fields. Any additional delays with the EMALS shipboard 
test schedule will directly affect CVN 78's delivery date. 
Specifically, a key aspect of the test program is testing the system's 
launch capabilities by using weighted loads that simulate an aircraft--
referred to as dead-loads--off of the flight deck of the carrier. This 
test must be completed by November 2015, the point at which the 
shipbuilder is scheduled to turn the front of the ship toward the dock 
to begin testing the ship's propulsion system in preparation for 
subsequent sea trials. At the same time, land-based testing for EMALS 
is still on-going and the Navy now anticipates testing will be 
completed during the third quarter of fiscal year 2016. 

DBR: 

Shipboard testing is scheduled to begin in January 2015, but according 
to the CVN 78 program office, the DBR contractor must first make 5 
modifications to the installed radar system prior to its initial 
activation. In particular, the power regulating system needs to be 
modified, which requires removal, modification, and re-installation of 
certain power control modules. Shipbuilder officials told us that any 
delay to the installation of these items will likely affect the DBR 
shipboard test schedule, but according to the DBR program office, 
software and hardware modifications to correct this issue are complete 
and the ship-set units are in production. 

Program officials do not anticipate additional changes to the system's 
hardware prior to commencing shipboard testing, but they do expect 
further software modifications as land-based development testing 
progresses. As a result, there is the risk that additional 
modifications to the shipboard DBR system will be required. In 
addition, land-based testing of the DBR is based on a conglomeration of 
engineering design models that is not representative of the version of 
the radar installed on the ship, which further increases the likelihood 
that shipboard testing will require more time and resources than 
planned. 

Advanced Weapons Elevators: 

Shipboard testing of components to the advanced weapons elevators began 
in February 2012, but testing has not proceeded as planned. As of 
August 2014, the shipbuilder had operated 4 of the ship's 11 weapons 
elevators, but testing delays have occurred due to faulty components 
and software integration challenges, and premature corrosion of 
electrical parts. The shipbuilder has increased the amount of 
construction labor allocated to the weapons elevators in an effort to 
recover from these schedule delays. 

CVN 78's schedule has limited ability to absorb the additional delays 
that appear likely, given the remaining construction and testing risks. 
A delay in the ship's planned March 2016 delivery could result in a 
breach of DOD's acquisition policy. Among other things, a breach would 
require the CVN 78 program manager to seek approval from the Navy and 
DOD to further revise the schedule. Shipbuilder officials maintain that 
they can meet the ship's revised delivery date, but acknowledge that 
the revised shipboard test plan is proving challenging because of 
delays associated with construction and concurrent developmental 
testing of key technologies discussed above. To regain lost schedule, 
the shipbuilder may choose to expend additional labor hours by paying 
workers overtime or hiring subcontracted labor; however, these actions 
would result in additional and unanticipated costs. 

Navy Deferring Work to Post-Delivery, but Funding Not Sufficient to 
Cover All Likely Cost Growth: 

The CVN 78 program's costs are approaching the legislative cost cap 
budget of $12.9 billion, but further cost growth is likely based on 
performance to date as well as ongoing construction, shipboard testing 
and technology development risks. To improve the likelihood of meeting 
the March 2016 delivery date and to compensate for potential cost 
growth, the Navy is (1) removing work from the scope of the 
construction contract and (2) deferring purchase and installation of 
some mission-related systems provided by the government to the 
shipbuilder until after ship delivery. Consequently, completion of CVN 
78 may not occur until years later than initially planned. 

According to the CVN 78 program office, this approach creates a funding 
reserve to cover cost growth due to unknowns in the shipboard test 
program, particularly given that many of the ship's systems are being 
operated and tested for the first time in a maritime environment. 
However, the value of the deferred work may not be adequate to fully 
fund all remaining costs needed to produce an operational ship. Table 2 
shows the type of work being deferred from the current plan to post-
delivery, and the program office's estimated value of the work. As of 
September 2014, program officials said they are still negotiating with 
the shipbuilder on the dollar value of construction labor that it plans 
to descope from CVN 78's construction contract. 

Table 2: CVN 78 Planned Work Deferred to Post-Delivery to Create 
Funding Reserve: 

Types of deferrals: Deferred ship construction scope; 

Status: 367 compartments were removed from the scope of the 
construction contract, such as air wing habitability compartments. 
Deferred scope of work consists of deck coverings, final paint, 
hardware and furniture installation, and some electrical work; 

Estimated value: $36 million. 

Types of deferrals: Deferred correction of deficiencies; 

Status: Correction of certain defects, such as repairs to the magazine 
sprinkling system; 

Estimated value: $32 million. 

Types of deferrals: Deferred installation of mission-related systems; 

Status: Installation of certain systems, including some shipboard 
network equipment and a next generation maritime military satellite 
communications terminal; 

Estimated value: Approximately $28 million for the hull, mechanical, 
and electrical and aviation items. 

Total estimated value of deferred work: Approximately $96 million. 

Source: U.S. Navy. GAO-15-22. 

[End of table] 

The program office plans to use this approximately $96 million reserve 
in the likely event there is additional cost growth above the $12.9 
billion budgeted cost cap. However, given the on-going construction and 
testing risks previously discussed, this cash reserve is unlikely to be 
adequate to cover the entire expected cost growth of the ship. As shown 
in Table 3, the shipbuilder, CVN 78 program office, and the Naval Sea 
Systems Command Cost Engineering Office (the Navy's cost estimators), 
are all forecasting a cost overrun at ship completion ranging from $780 
million to $988 million. According to shipbuilder and CVN 78 program 
office estimates, the program will meet the $12.9 billion legislated 
cost cap and has sufficient funds to cover the anticipated cost 
overruns. If, however, costs increase according to the Naval Sea 
Systems Command Cost Engineering Office's estimate or higher, 
additional funding will be needed above the cash reserve amount. 

Table 3: CVN 78 Construction Contract Estimated Costs at Ship 
Completion: 

Current construction labor cost estimate at ship completion; 

CVN 78 shipbuilder estimate: (April 2014): $4.537 billion; 

CVN 78 program office estimate: (June 2014): $4.641 billion; 

Naval Sea Systems Command Cost Engineering office estimate: (March 
2014): $4.745 billion. 

Estimated construction labor cost overrun at ship completion; 

CVN 78 shipbuilder estimate: (April 2014): $780 million; 

CVN 78 program office estimate: (June 2014): $884 million; 

Naval Sea Systems Command Cost Engineering office estimate: (March 
2014): $988 million. 

Estimated CVN 78 end cost including estimated cost overruns[A]; 

CVN 78 shipbuilder estimate: (April 2014): $12.783 billion; 

CVN 78 program office estimate: (June 2014): $12.887 billion; 

Naval Sea Systems Command Cost Engineering office estimate: (March 
2014): $12.991 billion. 

Estimated CVN 78 end cost less the estimated value of deferred work 
($96 million); 

CVN 78 shipbuilder estimate: (April 2014): $12.687 billion; 

CVN 78 program office estimate: (June 2014): $12.791 billion; 

Naval Sea Systems Command Cost Engineering office estimate: (March 
2014): $12.895 billion. 

Sources: GAO analysis based on Navy and Shipbuilder data. GAO-15-22. 

Note: The current legislative cost cap is $12.9 billion. 

[A] The estimates provided take into account only the effects of 
estimated cost overruns of construction labor and does not include 
other programmatic and construction costs included in the ship's end 
cost. End cost refers to the appropriated funds that are available for 
the construction of the ship. 

[End of table] 

Further, cost and analyses offices within the Office of the Secretary 
of Defense have tracked the ship's costs for several years and report 
that without significant improvements in the program's overall cost 
performance, CVN 78's total costs will likely exceed the program's 
$12.9 billion cost cap by approximately $300 million to $800 
million.[Footnote 10] If costs fall within this range, the Navy will 
need to either defer additional work to post-delivery or request 
funding under the ship's procurement budget line above the $12.9 
billion cap. Under the cost cap legislation, such an action would 
require prior congressional approval. 

To fund work deferred to the post-delivery period in the event of 
unbudgeted cost growth, the CVN 78 program office is considering using 
funding from the Outfitting and Post-Delivery budget account. Program 
officials noted that other Navy shipbuilding programs have also used 
funds from the outfitting and post-delivery accounts to complete 
deferred construction work. Navy officials view this as an approach to 
managing the cost cap. At the same time, however, because the Navy 
considers post-delivery and outfitting activities as "non end-cost" 
items--meaning that funds from this account are not included when 
calculating the total construction cost of the ship--visibility into 
the ship's true construction cost is obscured.[Footnote 11] 

CVN 78 Will Not Demonstrate Key Capabilities Prior to Deployment and 
Faces Continued Post-Delivery Testing Challenges: 

CVN 78 will not demonstrate its required capabilities prior to 
deployment because it cannot achieve certain key requirements according 
to its current test schedule. Specifically, the ship will not have 
demonstrated its increased sortie generation rate (SGR), due to low 
reliability levels of key aircraft launch and recovery systems, and 
required reductions in personnel remain at risk. The Navy expected both 
of these requirements to contribute to greater capability and lower 
costs than Nimitz-class carriers. Further, the ship is likely to face 
operational shortfalls resulting from a ship design that restricts 
accommodations. Finally, tight time frames for post-delivery testing of 
key systems due to aforementioned technology development delays could 
result in the ship deploying without fully tested systems if deployment 
dates remain unchanged. 

CVN 78 Will Not Demonstrate all Key Capabilities Prior to Deployment: 

The Navy's business case for acquiring the Ford-class depended on 
significantly improved capabilities over legacy Nimitz-class carriers, 
specifically an increased SGR and reduced manning profile. The Navy 
anticipated that these capabilities would reduce total ownership costs 
for the ship. Our September 2013 report found several shortfalls in the 
Navy's projections for meeting the SGR and reduced manning 
requirements, and our current work found continuing problems in these 
areas. 

Sortie Generation Rate: 

The Navy used the SGR requirement to help guide ship design, but CVN 78 
will not be able to fully demonstrate this capability before the ship 
is deployment ready. As shown in table 4, CVN 78's SGR requirements are 
higher than the demonstrated performance of the Nimitz-class. 

Table 4: Nimitz-Class and Ford-Class Sortie Generation Rates: 

Sustained[B]: 
Nimitz-class demonstrated SGR[A]: 120; 

Ford-class required SGR: 160. 

Surge[C]: 
Nimitz-class demonstrated SGR[A]: N/A[D]; 

Ford-class required SGR: 270. 

Sources: DOT&E and U.S. Navy. GAO-15-22. 

Notes: 

[A] The Nimitz-class shipbuilding program did not have a sortie 
generation requirement, but DOT&E identified its SGR capability. 

[B] The Ford-class sustained sortie rate requirement is an average 
sortie rate achieved during 12 hours of launching per day sustained 
over 30 days (26 flying and 4 non-flying days). 

[C] The Ford-class surge requirement is an average sortie rate achieved 
during 24-hour operations over 4 continuous days. 

[D] The Nimitz class was not required to demonstrate surge 
capabilities. 

[End of table] 

The increased SGR requirement for the Ford-class reflected earlier DOD 
operational plans to mount campaigns in two theaters simultaneously. 
Under this scenario, a high SGR was essential to quickly achieving 
warfighting objectives, but according to Navy officials, this 
requirement is no longer reflective of current operational plans. 

The Navy plans to demonstrate CVN 78's SGR requirement using a modeling 
and simulation program in 2019, near the end of CVN 78's IOT&E period. 
As the modeling and simulation program continues to mature and develop, 
the Navy, according to the TEMP, plans to collect data from a sustained 
and surge flight operation and then incorporate these data into the 
model. Once this is completed and the model is accredited, the Navy 
will subsequently run a simulation of the full SGR mission. 

Current runs of the model indicate the ship can meet the required 
sustained and surge sortie rates, which Navy and shipbuilding officials 
involved with the modeling and simulation effort explained is primarily 
due to flight deck redesign and not the ship's new aircraft launch and 
recovery technologies. However, ongoing issues with the development of 
EMALS and AAG are resulting in low levels of system reliability that 
will be a barrier to achieving required SGR rates once the model is 
populated with actual data from these technologies. System reliability 
is critical to the carrier's ability to meet the SGR requirement and is 
measured in terms of mean cycles between critical failures, or the 
average number of times each system launches or recovers aircraft 
before experiencing a failure.[Footnote 12] As shown in table 5, the 
most recent available metrics from January 2014 show that EMALS and AAG 
show such low reliability rates that it is unlikely that these systems 
will achieve reliability rates needed to support SGR requirements 
before the demonstration event in 2019 or for years after the ship is 
deployment ready. 

Table 5: Current Reliability Rates for EMALS and AAG Systems: 

System[A]: EMALS - 4 of 4 catapults operating; 
Required reliability[B]: 1,800 cycles; 
Current reliability: n/a; 
Current reliability percentage: n/a. 

System[A]: EMALS - 3 of 4 catapults operating; 
Required reliability[B]: 4,166 cycles; 
Current reliability: 240 cycles; 
Current reliability percentage: 5.8%. 

System[A]: AAG; 
Required reliability[B]: 16,500 cycles; 
Current reliability: 20 cycles; 
Current reliability percentage: 0.01%. 

Source: GAO analysis of DOT&E and U.S. Navy data. GAO-15-22. 

Notes: 

[A] EMALS has two reliability metrics, depending on the number of the 
system's catapults that are operating. 

[B] The Navy measures reliability in terms of mean cycles between 
critical failures. 

[End of table] 

As a result of these systems' low reliability, we questioned the Navy's 
sortie generation requirement in our September 2013 report and 
recommended that the Navy re-examine whether it should maintain this 
requirement or modify it--seeking requirements relief from the Joint 
Requirements Oversight Council if the Navy found it was not 
operationally necessary. DOT&E has also raised questions about the need 
for increased sortie generation. DOT&E analyzed past aircraft carrier 
operations in major conflicts and reported that the CVN 78 SGR 
requirement is well above historical levels. In its January 2014 annual 
report, DOT&E cited the poor reliability of critical systems, such as 
EMALS and AAG, noting that performance of these systems could cause a 
series of delays during flight operations that could make the ship more 
vulnerable to attack. DOT&E plans to assess CVN 78 performance during 
IOT&E by comparing its demonstrated SGR to the demonstrated performance 
of the Nimitz-class carriers. Although the carrier would not meet its 
required capability, DOT&E stated that a demonstrated SGR less than the 
CVN 78 requirement, but equal to or greater than the performance of the 
Nimitz-class, could potentially be acceptable. However, the Navy would 
still be required to obtain approval from the Joint Requirements 
Oversight Council to lower the requirement. 

Reduced Manning and Habitability Requirements: 

Another CVN 78 key performance requirement is a reduced ship's force, 
relative to the Nimitz-class, with the goal of lowering total 
operational costs. "Ship's force" refers to all personnel aboard a 
carrier except those designated as part of the air wing and in certain 
support or other assigned roles. The Navy's reduced manning requirement 
for CVN 78 is a ship's force that has 500 to 900 fewer personnel than 
Nimitz-class carriers. Table 6 compares manning totals for the Nimitz 
class with Ford-class manning projections. 

Table 6: Ship's Manning Totals for Nimitz-and Ford-Class Aircraft 
Carriers as of September 2014: 

Ship's force: 
Nimitz-class (actual): 3,291; 

Ford-class required reduction range: 2,391-2,791; 

CVN 78 projected manning: 2,628. 

Source: U.S. Navy. GAO-15-22. 

Note: While ship's force is the number set forth in the carrier 
requirements, the number of CVN 78 air wing and other embarked 
personnel is also projected to be lower for the Ford class. 

[End of table] 

As of September 2014, the Navy projects a 663-sailor reduction in the 
ship's force, which represents a 163-person margin over the minimum 
required reduction of 500 personnel. But our analysis found that the 
carrier is not likely to achieve this level of reduction and still meet 
its intended capabilities. Key factors contributing to the difficulties 
in meeting the reduced manning requirement include the following: 

* Poor reliability of key systems--including EMALS and AAG--and 
sailors' limited experience in operating these systems in a maritime 
environment, which may require additional personnel. For example, AAG 
will require additional maintenance than planned due to changes to the 
system's hydraulic braking system, according to Navy officials. 

* Additional ship's force personnel will be needed to meet the surge 
SGR of 270 sorties per day, based on the Navy's most recent operational 
test and evaluation force assessment. 

* Additional operational personnel, particularly in the supply 
department, will likely be needed on the ship, according to the CVN 78 
pre-commissioning unit--the crew assigned to the ship while it is under 
construction.[Footnote 13] 

These factors are likely to increase the total number of personnel on 
CVN 78. 

As a reflection of the Navy's confidence in reducing manning on the 
Ford class, the ships were designed with significantly fewer berths 
(4,660) as compared to the Nimitz class to accommodate the ship's 
force, air wing, and all other embarked personnel. However, now the 
number of berthings is fixed and the ship cannot accommodate additional 
manpower without significant design changes. Further, the Navy requires 
new ship designs, including CVN 78, to provide a habitability margin--
a percentage of extra berths above the projected ship's force to 
accommodate potential personnel growth throughout the service life of 
the ship. This margin includes berths as well as support services for 
personnel aboard the ship, such as food and sanitation facilities. 
Given current manning projections and available accommodations, as 
shown in table 7, the Navy recognizes that CVN 78 falls well short of 
meeting its required habitability margin. This required margin is 
equivalent to 10 percent of the ship's force or 263 berths. As a 
result, the CVN 78 program office plans to request a waiver for this 
requirement from the Chief of Naval Operations. 

Table 7: CVN 78 Current Projected Manning and Available Accommodations: 

Ship's force: 
Nimitz-class (actual): 3,291; 

Ford-class required reduction range: 2,391-2,791; 

CVN 78 projected manning: 2,628. 

Source: U.S. Navy. GAO-15-22. 

Note: While ship's force is the number set forth in the carrier 
requirements, the number of CVN 78 air wing and other embarked 
personnel is also projected to be lower for the Ford class. 

Source: U.S. Navy, Commander, Operational Test and Evaluation Force. | 
GAO-15-22: 

Notes: 

[A] Total projected force on CVN 78 equals the ship's force (2,628) 
plus the air wing and other embarked personnel (1,905). 

[B] The number of personnel temporarily on board the ship varies but 
will remain within a minimum estimated range. Such personnel may 
consist of temporary detachments, distinguished visitors, and trainers. 

[End of table] 

In fact, the carrier currently has so few extra berths that it can only 
accommodate a slight increase in personnel. And the Navy's estimated 
accommodation needs do not take into account the likelihood that 
additional personnel will be needed above and beyond the Navy's current 
projected ship's force (2,628 sailors). In addition, spare berthing is 
also used for personnel temporarily assigned to the ship, such as 
inspectors, trainers, or visitors. If CVN 78 must enlarge its ship's 
force as well as accommodate personnel temporarily assigned to the 
ship, it is likely that no actual accommodations would be available. 
Consequently, CVN 78 must be "manning neutral," so that personnel 
coming aboard must be matched by personnel debarking, in accordance 
with the ship's operational needs and personnel specialties. 

This situation is further exacerbated because the Navy will need to 
operate CVN 78 with a greater percentage of its crew than the Nimitz 
class. According to the Navy's most recent (2011) analysis of manning 
options for CVN 78, staffing the ship at less than 100 percent; that 
is, with fewer personnel than the current projected total force of 
4,533, had an adverse effect on quality of life at sea because the crew 
had to perform additional duties or remain on duty for longer periods. 
This manning analysis also found that reducing staffing to 85 percent-
-which is typical for a Nimitz-class ship--compromised ship operations. 
The analysis concluded that careful management of personnel 
specializations will be needed and recommended cross-training personnel 
in key departments to minimize the risk to ship operations. Future 
costs for the ship could also increase if the Navy must eventually 
convert spaces to accommodate additional berthing. 

Changes to Post-Delivery Test Plans Coupled with Key Systems' 
Developmental Delays Could Result in CVN 78 Deploying Without 
Fully Tested Systems: 

The Navy has further compressed post-delivery plans to test CVN 78's 
capabilities and increased concurrency between test phases since our 
last report in September 2013. This means that there will be less time 
for operational testing, which is the Navy's opportunity to test and 
evaluate the ship against realistic conditions before its first 
deployment. 

Revised Test Plan Provides Less Time for Operational Testing: 

As we reported in September 2013, the Navy added in 2012 an additional 
integration test period to the CVN 78 TEMP as recommended by the Deputy 
Assistant Secretary of Defense for DT&E and the Director, DOT&E. This 
integration testing is important because it allows ship systems still 
in development--such as EMALS and AAG--to be tested together in their 
shipboard configuration. In our report, we recommended that the Navy 
adjust its planned post-delivery test schedule to complete this 
integration testing before commencing IOT&E.[Footnote 14] The Navy did 
not agree and overlap between integration testing and IOT&E remains and 
is now longer. This situation constrains the Navy's ability to discover 
and resolve problems during the integration testing phase and before 
beginning IOT&E, which further limits opportunities for the Navy to 
resolve problems discovered during testing and risks additional 
discovery during IOT&E. In addition, the Navy and DOD still have not 
resolved whether CVN 78 will be required to conduct the Full Ship Shock 
Trial for the Ford-class. As we reported last year, the program office 
deferred this testing to the follow-on ship, CVN 79; a strategy that 
did not receive DOT&E approval. According to program officials, final 
determination of whether the trial will be conducted on CVN 78 or CVN 
79 will be made by the Under Secretary of Defense for Acquisition, 
Technology, and Logistics near the end of 2014. 

Since our last report, the Navy doubled the length of the new 
integration testing period, but clarified that this testing also 
includes ongoing developmental testing of key systems, assessment of 
prior test results, and repairs or changes to fix deficiencies 
identified in earlier test periods. In fact, the Navy plans to conduct 
well over a dozen certifications and major ship test events during this 
period. For example, it plans to conduct a total ship survivability 
trial--testing CVN 78's capability to recover from a casualty situation 
and the extent of mission degradation in a realistic operational combat 
environment. If the Navy discovers significant issues during testing, 
or events cause additional delays to testing, it will have to choose 
whether deploy a ship without having fully tested systems or delay 
deployment until testing is complete. 

To help manage this risk, the Navy plans to divide operational testing 
into two phases. According to program officials, this approach will 
allow developmental testing, deficiency correction, and integration 
testing to continue on the mission-related systems installed after ship 
delivery and on those systems that are not required to support the 
first phase of operational testing. The first phase of operational 
testing will focus on testing the ship's ability to accomplish basic 
tasks by stressing the ship's crew, aviation facilities, and the combat 
and mission-related systems installed prior to delivery under realistic 
peacetime operating conditions. The second phase of operational testing 
incorporates embarked strike groups and other detachments that support 
operations and tests CVN 78's ability to conduct major combat 
operations, particularly the tactical employment of the air wing in 
simulated joint, allied, coalition, and strike group environments. The 
goal is to stress CVN 78's aviation, combat and mission-related 
systems, particularly those systems installed after ship delivery. 
Figure 4 shows these changes to the CVN 78 post-delivery test schedule. 

Figure 4: Changes to CVN 78 Post-Delivery Test Schedule Since 2013: 

[Refer to PDF for image: timeline] 

CVN 78 events: 
2013 scheduled delivery: February; 

2014 scheduled delivery: March; 

Deployment ready: January 2019. 

Integration testing: 
2013 Post-delivery test and trials schedule: February 2017-December 
2017; 

2014 Post-delivery test and trials schedule: June 2017-April 2018; 

5 month overlap. 

Initial operational test and evaluation: 
2013 Post-delivery test and trials schedule: June 2017-January 2020; 

2014 Post-delivery test and trials schedule: Phase 1, August 2017-June 
2018 (8 month overlap through April 2018); 
Phase 2: June 2018-October 2019. 

Source: U.S. Navy. GAO-15-22. 

[End of figure] 

The current test schedule is optimistic, with little room for delays 
that may occur as a result of issues identified during the integration 
and operational test phases. Even if the Navy meets the current 
schedule, it will not complete all necessary testing in the time 
remaining before the ship is deployment ready. This issue will be 
further exacerbated if land-based or shipboard testing discussed 
earlier reveals significant problems with the ship's systems, as the 
time needed to address such issues may interfere with the ship's 
integration and operational test phases. Navy officials responsible for 
operational testing stated that they will only conduct operational 
testing when shipboard systems are deemed ready. However, neither the 
CVN 78 program office nor the Navy's operational test personnel know 
how often system testing can be deferred before affecting the schedule 
for operational testing on other systems, particularly given the 
interoperation of systems on a carrier. For example, the DBR supports 
ship combat systems and simultaneously conducts air traffic control. If 
it is not ready to support flight operations in the first segment of 
IOT&E, combat operations in the second segment that also rely on the 
radar are likely to be affected. 

Navy's Ability to Meet CVN 79 Cost Cap Predicated on Ambitious 
Efficiency Gains and Deferring Work until after Ship Delivery: 

To meet the $11.5 billion legislative cost cap for CVN 79, the Navy is 
assuming the shipbuilder will make efficiency gains in construction 
that are unprecedented for aircraft carriers and has proposed a revised 
acquisition strategy for the ship. With shipbuilder prices for CVN 79 
growing beyond the Navy's expectations, the Navy extended the 
construction preparation (CP) contract to allow additional time for the 
shipbuilder to reduce cost risks prior to awarding a construction 
contract. In addition, the Navy's proposed revision to the ship's 
acquisition strategy would reduce a significant amount of work needed 
to make the ship fully operational until after ship delivery. While 
this strategy may enable the Navy to initially achieve the cost cap and 
is allowed under the cost cap provision without the need for 
congressional approval, it also results in transferring the costs of 
planned capability upgrades--previously included in the CVN 79 
baseline--to future maintenance periods to be paid through other (non-
CVN 79 shipbuilding) accounts. 

Current and Historical Performance Suggests Shipbuilder Is Unlikely to 
Achieve Efficiency Gains Needed to Realize Cost Goals: 

The Navy's $11.5 billion cost estimate for CVN 79 is underpinned by the 
assumption that the shipbuilder will significantly lower construction 
costs through realizing efficiency gains. While performance to date has 
been better than that of CVN 78, early indicators suggest that the Navy 
is unlikely to realize anticipated efficiencies at the level necessary 
to meet cost and labor hour reduction goals. In its May 2013 report to 
Congress on CVN 79 program management and cost control measures, the 
Navy stated that 15-25 percent fewer labor hours (about 7 million to 12 
million hours) will be needed to construct CVN 79 as compared to CVN 
78. Although the Navy and shipbuilder continue to look for labor hour 
reduction opportunities, thus far, shipbuilder representatives have 
identified improvements that they stated will save about 800,000 labor 
hours. As we identified in September 2013, many of the proposed labor 
hour reductions are attributed to lessons learned during construction 
of CVN 78 and revising CVN 79's build plan to perform pre-outfitting 
work earlier in the build process. This is because work completed 
earlier in the build process, such as in a shop environment, is more 
efficient and less costly than work done later on the ship where spaces 
are more difficult to maneuver within.[Footnote 15] In addition, the 
shipbuilder's revised build plan consolidates and increases the size of 
superlifts--fabricated units and block assemblies that are grouped 
together and lifted into the dry dock--to form larger sections of the 
ship. Other notable labor hour savings initiatives involve increased 
use of new welding technologies and improved cable installation 
techniques. 

Construction of CVN 79 is still in the initial stages, and most of the 
projected cost savings and labor hour reduction opportunities are in 
structural units and parts of the ship that are not yet under 
construction. However, there are indications that achieving the 
anticipated 7 million to 12 million hour reduction goal will be 
challenging. As of the end of March 2014, the shipbuilder had completed 
fabrication of 205 structural units--about 18 percent of the ship's 
total--with over a hundred more in various stages of fabrication. 
Although the ship is still in the early stages of construction, the 
cumulative labor hour reductions for the completed units fell short of 
the Navy and shipbuilder's expected reduction by about 3.5 percent, as 
shown in figure 5. Program officials stated that while the cumulative 
reduction has not yielded the expected results, a number of the 
structural units were completed prior to the shipbuilder's 
implementation of labor saving initiatives. They further added that 
completed units, more representative of remaining work, have yielded 
approximately a 16 percent reduction in labor hours for fitters and 
welders. 

Figure 5: Comparison of the Planned and Actual Number of Labor Hours 
Required to Complete Advanced Construction Work for the First 205 
Structural Units on CVN 79: 

[Refer to PDF for image: horizontal bar graph] 

CVN 78 actual labor hours: 568,100; 

CVN 79 targeted labor hours: 531,200; 

CVN 79 actual labor hours: 549,100. 

Source: U.S. Navy data. GAO-15-22. 

Note: The data above represents approximately 18 percent of the ship's 
1,128 structural units. 

[End of figure] 

In addition, the shipbuilder's scheduling processes may further limit 
insight into the effectiveness of these initiatives. We evaluated the 
shipbuilder's processes and tools used to plan and schedule work 
against GAO's best practices in scheduling.[Footnote 16] We identified 
scheduling practices that may interfere with the shipbuilder's and 
Navy's ability to accurately manage and monitor the construction 
schedule and the way in which the shipbuilder allocates labor, 
equipment, and material resources. In particular, the shipbuilder's 
enterprise resource management system (which tracks use of labor and 
materials) and master construction schedule (which tracks the time 
required to complete work packages) are stand-alone, independent 
systems, which means that changes in one system are not automatically 
updated in the other. Consequently, the shipbuilder--and subsequently 
the government--lacks real time insight in to whether resources are 
being used according to schedule. This lack of insight limits 
management's ability to effectively respond to delays, thus driving 
inefficiencies into the build process, and also limits the 
shipbuilder's ability to take advantage of opportunities when work is 
completed ahead of schedule. Although the shipyard is transitioning to 
a new scheduling software program, the shipbuilder does not plan to 
revise its existing scheduling and resource management process to 
enable better insight for CVN 79. The legacy scheduling system the 
shipbuilder employed did not allow for data to be exported to the 
government. The new scheduling system has the ability to allow for 
increased Navy oversight since the data are exportable, thus allowing, 
among other things, the ability to independently examine the effects of 
schedule slippage or realism of the shipbuilder's estimated labor 
needs. According to program officials, the Navy intends to incorporate 
this data as a deliverable item in the CVN 79 construction contract. 

Even with the shipbuilder's improvements, reducing construction of CVN 
79 by approximately 7 million to 12 million labor hours as compared to 
CVN 78 would be unprecedented in aircraft carrier construction. As 
shown in table 8, with each successive aircraft carrier build, the 
number of labor hours needed to complete construction has, at most, 
decreased by 9.3 percent as compared to the previous ship (with CVN 69 
compared to CVN 68 accounting for the largest percentage decrease). 
Although CVN 78 and CVN 79 are similar to CVN 68 and CVN 69 in that 
there is a first-to-second ship of a class transition, in most 
instances sizable labor hour reductions only occurred as a result of 
constructing two aircraft carriers though a single contract, rather 
than acquiring the ships individually through separate construction 
contracts as is the case with the Ford class. 

Table 8: Number of Construction Labor Hours Required to Build Aircraft 
Carriers: 

Hull: CVN 68 (Nimitz-class); 
Total labor hours: 34.4 million; 
Labor hour change: 0; 
Percent change: 0; 
Type of ship buy: Single; 
Construction contract award date: March 1967. 

Hull: CVN 69; 
Total labor hours: 31.2 million; 
Labor hour change: -3.2 million; 
Percent change: -9.30%; 
Type of ship buy: Single; 
Construction contract award date: June 1970 . 

Hull: CVN 70; 
Total labor hours: 33.7 million; 
Labor hour change: 2.5 million; 
Percent change: 8.01%; 
Type of ship buy: Single; 
Construction contract award date: April 1974. 

Hull: CVN 71; 
Total labor hours: 40.3 million; 
Labor hour change: 6.6 million; 
Percent change: 19.58%; 
Type of ship buy: Single; 
Construction contract award date: September 1980. 

Hull: CVN 72; 
Total labor hours: 38.0 million; 
Labor hour change: -2.3 million; 
Percent change: -5.71%; 
Type of ship buy: Two; 
Construction contract award date: December 1982. 

Hull: CVN 73; 
Total labor hours: 36.2 million; 
Labor hour change: -1.8 million; 
Percent change: -4.74%; 
Type of ship buy: Two; 
Construction contract award date: December 1982. 

Hull: CVN 74; 
Total labor hours: 33.2 million; 
Labor hour change: -3.0 million; 
Percent change: -8.29%; 
Type of ship buy: Two; 
Construction contract award date: July 1988. 

Hull: CVN 75; 
Total labor hours: 34.4 million; 
Labor hour change: 1.2 million; 
Percent change: 3.61%; 
Type of ship buy: Two; 
Construction contract award date: July 1988. 

Hull: CVN 76; 
Total labor hours: 39.2 million; 
Labor hour change: 4.8 million; 
Percent change: 13.95%; 
Type of ship buy: Single; 
Construction contract award date: December 1994. 

Hull: CVN 77; 
Total labor hours: 45.5 million; 
Labor hour change: 6.3 million; 
Percent change: 16.07%; 
Type of ship buy: Single; 
Construction contract award date: January 2001. 

Hull: CVN 78[A]; (Ford class); 
Total labor hours: 48.5 million; 
Labor hour change: 0; 
Percent change: 0; 
Type of ship buy: Single; 
Construction contract award date: September 2008. 

Hull: CVN 79[B]; 
Total labor hours: 41.2 million to 36.4 million; 
Labor hour change: -7.3 million to -12.1 million; 
Percent change: -15% to -25% (target); 
Type of ship buy: Single; 
Construction contract award date: December 2014 (anticipated). 

Source: GAO analysis of U.S. Navy data. GAO-15-22. 

[A] CVN 78 labor hours are based on the program office's estimated 
construction labor hours at completion and do not include non-recurring 
labor hours, such as design engineering. 

[B] Total hours for CVN 79 and the labor hour change is stated as a 
range of labor hours based on a 15-25 percent reduction from the 
program office's estimated construction labor hours at ship completion. 

[End of table] 

Navy's Revised Acquisition Strategy May Create Near-Term Cost Savings 
but Leads to Uncertainties in Final Ship Costs: 

The Navy planned to award the CVN 79 detail design and construction 
contract in late fiscal year 2013, but subsequently delayed the award 
and extended the construction preparation contract because negotiations 
with the shipbuilder were taking longer than the Navy anticipated. As a 
result, the Navy now intends to award the detail and design contract at 
the end of the first quarter of fiscal year 2015, which program 
officials stated allows sufficient time to negotiate prices and 
demonstrate cost reductions and process improvements that will lead to 
lowering CVN 79's construction costs. In the meantime, more work is now 
being completed under the construction preparation contract, with 
almost 60 percent of the ship's total structural units under the CP 
contract, as shown in table 9 below. According to program officials, 
this work accounts for about 20 percent of the ship's overall 
construction effort. 

Table 9: Scope of Advanced Construction Work under CVN 79 Construction 
Preparation Contract Extension Strategy: 

Acquisition strategy (as of September 2013); 
Planned detail design and construction contract award date: September 
2013; 
Overall construction preparation contract value: $2 billion; 
Number of structural units under contract: 311; 
Percent of total structural units: 28. 

Revised acquisition strategy (March 2014); 
Planned detail design and construction contract award date: December 
2014; 
Overall construction preparation contract value: $3.3 billion; 
Number of structural units under contract: 654; 
Percent of total structural units: 58. 

Source: U.S. Navy data. GAO-15-22. 

[End of table] 

By extending the CP contract, the program office expects that it will 
reduce material costs by 10-20 percent from CVN 78 and prevent late 
deliveries of items, such as valves, that led to significant material 
shortfalls and out-of-sequence construction work and contributed to 
that ship's cost growth, as we noted in our September 2013 report. 
Under the Navy's material procurement strategy, approximately 95 
percent of CVN 79's material to be procured by the shipbuilder was 
under contract as of September 2014. 

In addition, the Navy recently completed an affordability and 
capability review of CVN 79 in an effort to further reduce construction 
costs and shipbuilding requirements to ensure that it could meet the 
$11.5 billion cost cap--which Navy officials stated was otherwise 
unachievable. In response, the Navy plans to (1) institute cost savings 
measures by reducing some work and equipment; (2) revise the 
acquisition strategy to shift more work to post-delivery--including 
installation of mission systems--while still meeting statutory 
requirements for deploying CVN 79; and (3) deliver the ship with the 
same baseline capability as CVN 78--postponing a number of planned 
mission system upgrades and modernizations until future maintenance 
periods. Program officials told us they plan to seek approval to 
initiate these changes at CVN 79's upcoming program review with the 
Office of the Secretary of Defense, which is now scheduled for December 
2014, in advance of the detail design and construction contract award. 

Most notably, the Navy plans to depart from its planned installation of 
DBR on CVN 79, in favor of an alternative radar system, which it 
expects to provide a better technological solution at a lower cost. By 
seeking competitively awarded offers, Navy officials anticipate 
realizing savings of about $180 million for CVN 79.[Footnote 17] Final 
determination of CVN 79's radar solution is not scheduled to occur 
until after March 2015, at least 3 months after the estimated detail 
design and construction contract award. It is around this time that the 
program office anticipates it will solicit proposals from prospective 
bidders. Program officials told us that they intend to work within the 
current design parameters of the ship's island, which they say would 
limit extensive redesign and reconfiguration work to accommodate the 
new radar. While the extent of redesign work is unknown, such a change 
will still result in additional ship construction costs, which could 
offset the Navy's estimate of DBR savings. 

Other cost savings measures are wide ranging and include: 

* eliminating one of the four AAG units planned for the ship (Nimitz-
class carriers have 3 operational arresting units); 

* eliminating redundant equipment requirements such as the ship's 
emergency power unit for the steering gear and spare low pressure air 
compressors; and: 

* modifying test requirements for certain mechanical systems. 

In addition to these cost savings measures, the CVN 79 program office 
is proposing a two-phased approach for ship construction and delivery. 
Although the details of the Navy's revised acquisition strategy 
continue to evolve, the basic premise is that delivery by the 
shipbuilder will consist of only the hull, mechanical and electrical 
aspects of the ship (referred to as phase I), followed by completion of 
remaining construction work and installation of the warfare and 
communications systems during the post-delivery period (referred to as 
phase II). At ship delivery, CVN 79 will have its full propulsion 
capability, as well as the core systems for safe navigation and crew 
safety; and necessary equipment to demonstrate flight deck operations, 
such as EMALS and AAG. All remaining construction work, primarily 
consisting of the procurement and installation of several warfare and 
communications systems, will be completed post-delivery. The program 
office currently plans to maintain the ship's 2023 delivery date, but 
as shown in figure 6, the revised strategy extends the acquisition 
schedule and the ship's deployment ready date by about 15 months. 
Program officials stated that despite this delay in the schedule it 
would still meet the statutorily required minimum number of operational 
aircraft carriers because CVN 79 would still be deployment ready 
shortly after USS Nimitz (CVN 68) is currently slated to retire in 
fiscal year 2025. 

Figure 6: Comparison of CVN 79's September 2013 and October 2014 
Revised Acquisition Schedules: 

2013 acquisition schedule: 
Construction contract award: FY 2015; 
Whole ship construction: FY 2015-FY 2023; 
Sea trials prior to delivery: FY 2023; 
Ship delivery: FY 2023; 
PD - PSA: FY 2023-FY 2026; 
Deployment ready: FY 2026. 

Revised two-phased approach: 
Construction contract award: FY 2015; 
Phase 1: FY 2015-FY 2023; 
Navy decides on alternative radar: FY 2015; 
Sea trials prior to delivery: FY 2023; 
Ship delivery: FY 2023; 
Phase 2: FY 2023-FY 2025; 
Final sea trials: FY 2024; 
PD - PSA: FY 2025-FY 2027; 
Air wing brought onboard: FY 2026; 
Deployment ready: FY 2027. 

PD: Final outfitting and post-delivery activities (including testing); 

PSA: Post shakedown availability; 

Phase 1: Construction of hull, mechanical, and electrical systems for 
safe navigation and limited flight deck demonstration; 

Phase 2: Construction and installation of remaining systems/outfitting. 

Source: GAO analysis of Navy data. GAO-15-22. 

[End of figure] 

As currently planned, the revised strategy, by design, will result in a 
less capable and less complete ship at delivery. According to CVN 79 
program officials, reducing the shipbuilder's scope of work, along with 
a reduction in some construction requirements, will lead to negotiating 
more favorable pricing of the detail design and construction contract. 
In addition, they noted that maintaining the current delivery schedule 
will deliberately allow for a slower pace of construction, thus 
potentially requiring less use of overtime or leased labor. Further, 
program officials state that delaying installation of warfare and 
communications systems--such as those systems with high obsolescence 
risk--can potentially limit procuring equipment that has been surpassed 
by technology advances by the time the ship begins phase II of the 
Navy's revised strategy. Finally, Navy officials believe that adopting 
this approach will enable the program to reduce costs by introducing 
additional competition for the ship's systems and installation work 
after delivery. 

While the two-phased strategy may enable the program to initially stay 
within the legislated cost cap, it will transfer the costs of a number 
of known capability upgrades previously included in the CVN 79 baseline 
to other (non-CVN 79 shipbuilding) accounts.[Footnote 18] As shown in 
table 10, the program office plans to defer installation of a number of 
systems to future maintenance periods. 

Table 10: Planned CVN 79 System Upgrades and Modernizations Deferred 
Until Future Maintenance Periods: 

MK 53 Decoy Launching System: Surface Ship Torpedo Defense System. 

MK 53 Decoy Launching System: Surface Electronic Warfare Improvement 
Program 3. 

MK 53 Decoy Launching System: Joint Strike Fighter-related 
modifications including Joint Precision Approach and Landing System and 
Autonomic Logistics Information System. 

MK 53 Decoy Launching System: MK 38 Machine Gun System. 

Source: U.S. Navy data. GAO-15-22. 

[End of table] 

Based on current estimates, the value of the deferred systems is about 
$200 million - $250 million. Moreover, this strategy will result in 
deferring installation of systems and equipment needed to accommodate 
the carrier variant of the Joint Strike Fighter aircraft (F-35C) until 
fiscal year 2027 at the earliest. 

Further, should construction costs grow above estimates, the Navy may 
subsequently choose to use funding intended for phase II work to pay 
for construction cost increases without increasing the cost cap. The 
Navy would have this option because additional funding through post 
delivery budget accounts are not included in calculating the ship's end 
cost, similar to the aforementioned situation with CVN 78. According to 
Navy officials, this approach allows the program to manage the cost cap 
without seeking statutory authority. 

Conclusions: 

Constructing and delivering an aircraft carrier is a complex 
undertaking. The Ford-class program, in particular, has faced a steep 
challenge due to the development, installation and integration of 
numerous technologies--coupled with optimistic budget and schedule. The 
Ford class is intended to provide significant operational advantages 
over the Nimitz class. However, with about 80 percent of the lead ship 
constructed, the program continues to struggle with construction 
inefficiencies, development issues, testing delays, and reliability 
shortfalls. These are issues that have been mounting for a number of 
years. Now, as the program embarks on its most challenging phase--
shipboard testing--additional cost increases in excess of the $2.3 
billion since 2009 appear likely. To manage this risk, the Navy is 
creating a cost buffer by deferring construction work and installation 
of mission-related systems to the post-delivery period. This strategy 
may provide a funding cushion in the near term, but it may not be 
sufficient to cover all potential cost increases. After raising the 
cost cap several times, the Navy is now managing the cost cap by 
reducing the scope of the delivered ship and is considering paying for 
the deferred scope through a budget account normally used for post-
delivery activities. This contradicts the purpose of the congressional 
cost cap, which is to hold the Navy accountable for the total cost 
estimate for buying a deployable ship. 

Further, after an investment of at least $12.9 billion, CVN 78 may not 
achieve improved operational performance over the Nimitz class of 
aircraft carriers as promised for some time to come. Reliability 
shortfalls and development uncertainties in key Ford-class systems will 
prevent the ship from demonstrating its required sortie generation rate 
before initial deployments. Personnel accommodation restrictions 
resulting from the ship's design has the potential of causing 
operational limitations that the Navy will have to manage closely--a 
constraint that does not exist in the Nimitz class. We previously 
recommended re-assessing these requirements; the Navy agreed that such 
an analysis is appropriate, but one that it would not pursue until the 
conclusion of operational testing. As we previously concluded, waiting 
until this point would be too late to make effective tradeoffs among 
cost, schedule, and performance for follow-on ships. 

As the Navy prepares to award the detail design and construction 
contract for the next Ford-class ship, CVN 79, it is clear that 
achieving the cost cap will be challenging. While the Navy and the 
shipbuilder are working to reduce costs, the Navy's ability to achieve 
the congressional cost cap relies, in part, on deferring planned 
capability improvements until later maintenance periods. From an 
accountability and oversight standpoint, it would be preferable to keep 
the scope of the delivered ship constant--an essential component of a 
baseline--and raise the cost cap accordingly. 

Matter for Congressional Consideration: 

The legislated cost cap for Ford-class aircraft carrier construction 
provides a limit on procurement funds. However, the legislation also 
provides for adjustments to the cost cap. To understand the true cost 
of each Ford-class ship, Congress should consider revising the cost cap 
legislation to ensure that all work included in the initial ship cost 
estimate that is deferred to post-delivery and outfitting account is 
counted against the cost cap. If warranted, the Navy would be required 
to seek statutory authority to increase the cap. 

Recommendations for Executive Action: 

We are not making any new recommendations, but our recommendations from 
our September 2013 report remain valid. 

Agency Comments and Our Evaluation: 

We provided a draft of this report to DOD for comment. In its written 
comments, which are reprinted in appendix III, DOD agreed with much of 
the report but disagreed with our position on cost cap compliance. In 
particular, DOD disagreed that a change in cost cap legislation is 
necessary because it believes all procurement funds are counted toward 
the cost cap. While it is true that the current cost cap legislation 
does require the inclusion of all procurement funds, up to this point 
the Navy has not included funding for outfitting and post delivery 
costs in its end cost estimates. Further, the current legislation 
allows the Navy to make changes to the ships' outfitting and post-
delivery budget accounts without first seeking statutory authority. In 
the event that costs increase above the Navy's current estimates, the 
Navy is considering deferring work until the post-delivery period and 
funding it through the outfitting and post delivery accounts, which 
would limit visibility into the ship's true end cost. Our intention is 
not necessarily, as DOD states, to keep the post-delivery and 
procurement accounts separate, but rather to create a stable cost 
baseline for accountability and oversight purposes. 

DOD also disagreed with our conclusion that constructing CVN 79 within 
the current cost cap might not be achievable, but agreed that it will 
be challenging. DOD stated that the cost cap for CVN 79 is achievable 
largely due to the Navy's two-phased acquisition approach, which is now 
intended to deliver the next carrier with the same capabilities as CVN 
78. We agree that reducing the scope of CVN 79 prior to ship delivery 
should also reduce the cost estimate in the near term. As we noted in 
our report, however, the Navy initially included planned capability 
improvements in CVN 79's baseline estimate. These improvements will now 
occur during a later maintenance period, the costs of which are to be 
shifted to other (non-CVN 79 shipbuilding) accounts at a later date. 
While the Navy's approach to CVN 79's cost estimate may initially 
appear to meet the cost cap, it serves to obscure the ship's true cost. 
As we concluded in the report, from an accountability standpoint, it 
would be preferable to keep the scope of CVN 79 constant and raise the 
cost cap accordingly, if needed. 

In addition, DOD provided technical comments that were incorporated as 
appropriate. These comments included, among others, additional 
information on CVN 78's shipboard test program and the Navy's two-
phased approach to constructing and delivering CVN 79. 

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

If you or your staff have any questions about this report, please 
contact me at (202) 512-4841 or mackinm@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 key contributions to 
this report are listed in appendix IV. 

Signed by: 

Michele Mackin: 
Director: 
Acquisition and Sourcing Management: 

List of Committees: 

The Honorable Carl Levin: 
Chairman: 
The Honorable James M. Inhofe: 
Ranking Member: 
Committee on Armed Services: 
United States Senate: 

The Honorable Howard P. "Buck" McKeon: 
Chairman: 
The Honorable Adam Smith: 
Ranking Member: 
Committee on Armed Services: 
House of Representatives: 

The Honorable Richard J. Durbin: 
Chairman: 
The Honorable Thad Cochran: 
Ranking Member: 
Subcommittee on Defense: 
Committee on Appropriations: 
United States Senate: 

The Honorable Rodney Frelinghuysen: 
Chairman: 
The Honorable Pete Visclosky: 
Ranking Member: 
Subcommittee on Defense: 
Committee on Appropriations: 
House of Representatives: 

[End of section] 

Appendix I: Scope and Methodology: 

This report examines remaining risks in the CVN 78 program since 
September 2013 by assessing: (1) the extent to which CVN 78 will be 
delivered to the Navy within its revised cost and schedule goals; (2) 
if, after delivery, CVN 78 will demonstrate its required capabilities 
through testing before the ship is deployment ready; and (3) the steps 
the Navy is taking to achieve CVN 79 cost goals. 

To identify challenges in delivering the lead ship within current 
budget and schedule estimates, we reviewed Department of Defense (DOD) 
and contractor documents that address technology development efforts 
including test reports and program schedules and briefings. We also 
visited the lead ship of the Ford-class carriers, USS Gerald R. Ford 
(CVN 78), to observe construction progress and improve our 
understanding of the installation progress of the critical technologies 
aboard CVN 78. We evaluated Navy and contractor documents outlining 
cost and schedule parameters for CVN 78 Navy budget submissions, 
contract performance reports, quarterly performance reports, and 
program schedules and briefings. In addition, we reviewed the 
shipbuilder's Earned Value Management data and developed our own cost 
and labor hour estimates at ship completion and compared this with data 
provided by the Navy and shipbuilder. We also relied on our prior work 
evaluating the Ford-class program and shipbuilding best practices to 
supplement the above analyses.[Footnote 19] To further corroborate 
documentary evidence and gather additional information in support of 
our review, we conducted interviews with relevant Navy and contractor 
officials responsible for managing the technology development and 
construction of CVN 78, such as the Program Executive Office, Aircraft 
Carriers; CVN 78 program office; Newport News Shipbuilding (a division 
of Huntington Ingalls Industries); Supervisor of Shipbuilding, 
Conversion, and Repair Newport News Command; Aircraft Launch and 
Recovery program office; and the Program Executive Office, Integrated 
Warfare Systems. We also held discussions with the Naval Sea Systems 
Command's Cost Engineering and Industrial Analysis Division; the 
Defense Contract Management Agency; and the Defense Contract Audit 
Agency. 

To evaluate whether CVN 78 will demonstrate its required capabilities, 
we identified requirements criteria in the Future Aircraft Carrier 
Operational Requirements Document and compared requirements with 
reliability data and reliability growth projections for key systems. We 
also examined the CVN 78 preliminary ship's manning document and 
wargame analysis of planned manning, as well as the Commander, 
Operational Test and Evaluation Force's most recent operational 
assessment for the ship to identify potential manpower shortfalls. To 
evaluate whether the Navy's post-delivery test and evaluation strategy 
will provide timely demonstration of required capabilities, we analyzed 
(1) development schedules and test reports for CVN 78 critical 
technologies; (2) testing reports and operational assessments for CVN 
78; and (3) the Navy's November 2013 revised test and evaluation master 
plan to identify concurrency among development, integration, and 
operational test plans. We corroborated documentary evidence by meeting 
with Navy and contractor officials responsible for developing key 
systems, managing ship testing, and conducting operational testing, 
including the Program Executive Office-Aircraft Carriers, the CVN 78 
program office, Newport News Shipbuilding, the Aircraft Launch and 
Recovery program office, the Navy's land-based test site for EMALS and 
AAG in Lakehurst, N.J., the Program Executive Office for Integrated 
Warfare Systems, Office of the Director, Operational Test and 
Evaluation, Office of the Deputy Assistant Secretary of Defense for 
Developmental Test and Evaluation, the Office of the Commander, Navy 
Operational Test and Evaluation Force, and the Office of the Chief of 
Naval Operations Air Warfare. 

To assess the steps the Navy is taking to achieve CVN 79 cost goals, we 
reviewed our prior work on Ford-class carriers[Footnote 20]; 
shipbuilder data identifying cost savings and labor hour reduction 
opportunities as well as lessons learned from constructing CVN 78; CVN 
79 construction preparation contract and contract extensions; CVN 78 
and CVN 79 labor hour data for completing advanced construction work; 
as well as, CVN 79 construction plans and reports, program briefings, 
and Navy budget submissions. We also conducted an analysis of the 
shipbuilder's scheduling systems and processes that are used for 
constructing CVN 78 and assessed this against GAO's scheduling best 
practices.[Footnote 21] We attempted to conduct a similar analysis of 
CVN 79's schedule. However, the integrated master schedule used for 
construction--that is maintained by the shipbuilder--was not up to date 
and did not reflect the status of advanced construction work at the 
time of our analysis. As a result, we only reviewed the scheduling 
processes that the shipbuilder plans to use for CVN 79. To supplement 
our analysis and gain additional visibility into the Navy's actions for 
ensuring CVN 79 is built within the constraints of the cost cap 
legislation, we reviewed several years of defense authorization acts 
and interviewed officials from the Program Executive Office-Aircraft 
Carriers, CVN 78 program office, CVN 79 and CVN 80 program office; 
Huntington Ingalls Industries, Newport News Shipbuilding; Supervisor of 
Shipbuilding, Conversion, and Repair Newport News Command; Program 
Executive Office, Integrated Warfare Systems; the Office of the Chief 
of Naval Operations Air Warfare Division; and, Naval Sea Systems 
Command's Cost Engineering and Industrial Analysis Division. 

We conducted this performance audit from December 2013 to November 2014 
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. 

[End of section] 

Appendix II: New Technologies Introduced on Ford-Class Ships: 

A number of new technologies are being installed on Ford-class aircraft 
carriers that are designed to increase the ship's capability and lower 
life cycle costs. Below is an overview of these key technologies along 
with the approximate placement on the ship. 

Table 11: New Technologies for the Ford-Class Aircraft Carrier: 

Technology: Dual Band Radar (DBR); 
Description and Capability Improvement: Two systems comprise the DBR: 
(1) Volume search radar (VSR) includes long-range, above-horizon, 
surveillance, and air traffic control capabilities. (2) Multifunction 
radar includes horizon search, surface search and navigation, and 
missile communications. The DBR permits reduced manning and higher 
sortie generation rates aboard CVN 78 via anticipated operational 
availability increases and size reductions to the ship's island. 

Technology: Advanced Arresting Gear (AAG); 
Description and Capability Improvement: AAG recovers current and 
future aircraft and contributes to reduced manning. 

Technology: Electromagnetic Aircraft Launch System (EMALS); 
Description and Capability Improvement: EMALS uses an electrically 
generated moving magnetic field to propel aircraft, which places less 
physical stress on aircraft as compared to steam catapult launchers. 
The system is a contributor to CVN 78's reduced manning, in part 
because of Navy expectations about EMALS's increased operational 
availability. 

Technology: Advanced Weapons Elevators; 
Description and Capability Improvement: These elevators rely on 
electromagnetic fields to move instead of cables. Capability 
improvements include an expected 200 percent greater load capability 
than legacy carrier elevators. Advanced weapons elevators facilitate 
reduced manning and enable higher sortie generation rates. 

Technology: Evolved Sea Sparrow Missile Joint Universal Weapons Link; 
Description and Capability Improvement: This system supports anti-air 
warfare. The system provides the capability to defeat high-density 
raids and facilitates reduced manning aboard the ship. 

Technology: Heavy Underway Replenishment Receiving Station; 
Description and Capability Improvement: This system provides quicker 
shipboard replenishment (supply) than legacy underway replenishment 
systems. The system facilitates F-35C power module replacement and 
higher sortie generation rates for the Ford-class. 

Technology: Plasma Arc Waste Destruction System (PAWDS); 
Description and Capability Improvement: PAWDS uses extreme 
temperatures to convert 6,800 pounds per day of plastic and other 
waste into gaseous emissions. It facilitates reduced manning aboard 
the ship. 

Technology: Nuclear propulsion/electric plant; 
Description and Capability Improvement: The system converts energy 
into electricity, providing a nearly threefold increase in power 
generation over the Nimitz-class plant. The plant design also 
facilitates manning reductions and supports weight and stability 
service life allowances. 

Technology: Reverse Osmosis Desalinization System; 
Description and Capability Improvement: This system desalinates water 
without a steam distribution system, facilitating reduced manning and 
improved weight and stability for the ship. 

Technology: High Strength Toughness Steel (HSLA 115); 
Description and Capability Improvement: HSLA 115 is stronger and 
lighter than legacy ship steel types and comprises the CVN 78 flight 
deck. HSLA 115 improves weight and stability for the ship. 

Technology: High Strength Low Alloy Steel (HSLA 65); 
Description and Capability Improvement: HSLA is stronger and lighter 
than legacy ship steel types and is used in bulkheads as well as deck 
constructions. HSLA 65 improves weight and stability for the ship. 

Source: Navy and contractor documentation. GAO-15-22. 

[End of table] 

Figure 7: Critical Technologies on the Ford-Class Aircraft Carrier: 

[Refer to PDF for image: illustration] 

High strength low alloy steel (HSLA 65); 
High strength toughness steel (HSLA 115); 
Nuclear propulsion and electric plant; 
Electromagnetic aircraft launch system; 
Reverse osmosis desalination system; 
Evolved sea sparrow missile; 
Plasma arc waste destruction system; 
Advanced weapon elevators; 
Heavy underway replenishment; 
Advanced arresting gear; 
Joint precision approach and landing system; 
Multi-function radar: 
* Volume search radar; 
* Dual band radar. 

Source: GAO (presentation); Navy (image). 

[End of figure] 

[End of section] 

Appendix III: Comments from the Department of Defense: 

The Assistant Secretary of Defense: 
Acquisition: 	
3015 Defense Pentagon: 
Washington, DC 20301-3015: 

November 12, 2014: 

Ms. Michele Mackin: 
Director: 
Acquisition and Sourcing Management: 
U.S. Government Accountability Office: 
441 G Street, N.W. 
Washington, DC 20548: 

Dear Ms. Mackin: 

This is the Department of Defense (DoD) Response To The Gao Draft 
Report, Gao-15-22, 'Ford Class Aircraft Carrier: Cost Cap Should 
Include All Costs Required to Complete Ship Construction,' dated 
September 29, 2014 (GAO Code 121183). The Department acknowledges 
receipt of the draft report and notes that it contains no 
recommendations for DoD action as a result of your review. 

The Department agrees with much of the report, but disagrees with 
the conclusions reached by GAO in the areas of CVN 78 lead ship cost 
cap compliance and CVN 79 follow ship cost cap compliance. 

CVN 78 Lead Ship Cost Cap Compliance. GAO states that the Navy cost 
cap strategy contradicts the purpose of the Congressional cost cap, 
which is to hold the Navy accountable for the total cost estimate for 
buying a deployable ship; and that Congress should consider revising 
the cost cap legislation to improve accountability of GERALD R. FORD-
class construction costs by requiring that all work included in the 
initial ship cost estimate is counted against the cost cap. The 
Department disagrees that a change to the legislation is necessary 
because all procurement funds are included in the cost cap 
legislation. However, the Department understands GAO's intention of 
recommending separate budget accounts for post-delivery activities and 
procurement to gain more transparency into cost details. 

CVN 79 Follow Ship Cost Cap Compliance. GAO states that it is already 
clear that the CVN 79 cost cap might not be achievable, that Navy's 
ability to achieve the cost cap relies in part on shifting costs for 
planned capability upgrades to the operational fleet, and that 
efficiency gains needed to achieve the cost cap are unprecedented in 
aircraft carrier construction and will be challenging to achieve. The 
Department disagrees based on the Navy's two-phased approach to 
deliver CVN 79 to the Fleet with CVN 78-like capabilities within the 
legislated SCN cost cap. The Department acknowledges that remaining 
within the cost cap is challenging, but contends that it is achievable. 

The Department appreciates the opportunity to comment on the draft 
report. For further questions concerning this report, please contact 
Mr. James MacStravic, Deputy Assistant Secretary of Defense, Tactical 
Warfare Systems, at james.a.macstravic2.civ@mail.mil or 703-697-9386. 

Sincerely, 

Signed by: 

Katrina McFarland: 

[End of section] 

Appendix IV: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

Michele Mackin, (202) 512-4841 or mackinm@gao.gov: 

Staff Acknowledgments: 

In addition to the contact named above, key contributors to this report 
were Diana Moldafsky, Assistant Director; Christopher E. Kunitz; Brian 
P. Bothwell, Juana S. Collymore, Burns C. Eckert; Laura Greifner; John 
A. Krump; Jean L. McSween; Karen Richey; Jenny Shinn; and Oziel 
Trevino. 

[End of section] 

Footnotes: 

[1] S. Rep. 113-44, at 21-22 (2013). 

[2] GAO, Ford-class Carriers: Lead Ship Testing and Reliability 
Shortfalls Will Limit Initial Fleet Capabilities, GAO-13-396 
(Washington, D.C.: Sept. 5, 2013; and Defense Acquisitions: Navy Faces 
Challenges Constructing the Aircraft Carrier Gerald R. Ford within 
Budget, GAO-07-866 (Washington, D.C.: Aug. 23, 2007). 

[3] The process by which the Navy delivers an aircraft carrier differs 
slightly from a traditional Navy shipbuilding project. During 
construction of nuclear powered ships, including submarines and 
aircraft carriers, the Navy assumes custody of individual compartments 
upon completion by the shipbuilder and the ship's crew subsequently 
begins boarding and training. In contrast, during a non-nuclear Navy 
shipbuilding project the shipbuilder maintains custody of the ship 
until the ship is delivered to the Navy, upon the signing of a Material 
Inspection and Receiving Report. 

[4] 10 U.S.C. § 139 and DOD Directive 5141.02, Subject: Director of 
Operational Test and Evaluation, Feb. 2, 2009. 

[5] Pub. L. No. 109-364, § 122(a)(1) and (a)(2) (2006). Dollars are 
then-year. 

[6] Pub. L. No. 113-66, § 121 (2013). 

[7] GAO-07-866. 

[8] Enacted in December 2013, Section 121 in the National Defense 
Authorization Act for Fiscal Year 2014 increased the cost cap for the 
lead ship (CVN 78) to $12.9 billion. 

[9] The Navy plans for the carrier variant of the Joint Strike Fighter 
(F-35C) to become part of the Ford-class air wing; however, the 
aircraft is not included in the AAG land-based test schedule. 

[10] The range of cost growth is a compilation of estimates by various 
offices within the Office of the Secretary of Defense, including (1) 
Office of the Secretary of Defense, Office of Performance Assessments 
and Root Cause Analyses, CVN 78 earned value management assessment 
(June 2014); (2) Office of the Secretary of Defense, Defense 
Acquisition Executive Summary Program, CVN 78 cost assessment (2013); 
and (3) Office of the Secretary of Defense, Director of Cost Assessment 
& Program Evaluation, CVN 78 cost assessment (2011). 

[11] In the Fiscal Year 2015 President's Budget submission, the Navy 
did not include funding for outfitting and post delivery activities in 
the CVN 78 end cost estimate. CVN 78's current cost cap is set to the 
ship's end cost estimate. 

[12] Different types of "failure" count against systems' reliability 
growth, including errors in software, hardware problems, and any other 
issue that causes EMALS or AAG to fail to launch or arrest a real or 
simulated aircraft. 

[13] The CNV 78 pre-commissioning unit, Naval Air Systems Command, and 
the Navy's Manpower Analysis Center have all identified changes to the 
ship's manning profile, according to Navy officials. Such proposals are 
directed to the CVN 78 program office for review and approval. 

[14] GAO-13-396. 

[15] We discuss this issue further in GAO-13-396. 

[16] GAO, GAO Schedule Assessment Guide: Best Practices for Project 
Schedules, GAO-12-120G (Washington, D.C.: May 2012). 

[17] The CVN 78 program acquired two volume search radars--one 
initially intended for installation on DDG 1000--after the DDG 1000 
program experienced a unit cost breach and removed the volume search 
radar from the baseline design to save costs that it planned to install 
on CVN 78 and CVN 79. The Navy had planned to purchase the 
multifunction radar for CVN 79 and eventually another shipset for CVN 
80. 

[18] For shipbuilding programs, construction is generally funded 
through the Shipbuilding and Conversion, Navy budget account. The Navy 
intends on funding CVN 79's capability upgrades through the Other 
Procurement, Navy budget account. 

[19] GAO-07-866; Best Practices: High Levels of Knowledge at Key Points 
Differentiate Commercial Shipbuilding from Navy Shipbuilding, 
GAO-09-322 (Washington, D.C.: May 13, 2009); GAO-13-396; and Navy 
Shipbuilding: Opportunities Exist to Improve Practices Affecting 
Quality, GAO-14-122 (Washington, D.C.: Nov. 19, 2013). 

[20] GAO-13-396, GAO-07-866. 

[21] GAO-12-120G. 

[End of section] 

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