Aircraft Carrier’s Cost Draws U.S. Lawmakers’ Concerns

A House panel expressed concern that costs for the U.S. Navy’s newest aircraft carrier continue to increase, even as lawmakers accepted the service’s request for a $1.1 billion increase in a cost cap imposed by Congress.

The House Armed Services Committee’s seapower panel today said it accepted the Navy’s $1.7 billion proposal for new carriers in the fiscal year that begins Oct. 1 as well as an increase in the maximum total cost of the first vessel, the Gerald R. Ford, to $12.9 billion from $11.8 billion.

The panel “remains concerned about the continued escalation in costs associated” with the Ford “and negative consequences associated with this continued escalation on the entirety of the ship construction accounts,” members said in a statement outlining their decisions on the annual defense authorization measure.

Even before the Navy’s latest request for leeway to spend more, the ship being built by Huntington Ingalls Industries Inc. has become the most expensive U.S. warship. It’s the first of three planned carriers to be built in a program projected by the Navy to cost $42.5 billion.

While the cost cap allows for increases to keep up with inflation, the nonpartisan Congressional Research Service estimates the carrier will cost as much as $600 million more than the Navy’s latest estimate.

Thinner Steel

The cost increase for the Ford results, in part, from “first of class” design and technology, such as the initial use of steel that’s thinner than required and caused delays in material procurement, manufacturing and assembly, according to the Naval Sea Systems Command.

Huntington Ingalls, based in Newport News, Virginia, missed its 2012 target for reducing costs on the Ford, falling short of getting 86 cents of planned work accomplished for every dollar spent, in part because of late component deliveries from subcontractors.

The $12.9 billion includes construction, government furnished equipment needed to run the vessel and launch aircraft and $3.3 billion in one-time design funding applicable to the entire class, the Navy said.

A continuing rise in the carrier’s cost “is unsustainable,” the House panel’s members said, citing the Navy’s 30-year shipbuilding plan, which already calls for an increase in spending to an average of $15.4 billion a year from $10.9 billion next year, partly to replace Ohio-class ballistic missile submarines.

Chairman’s State

The criticism is unusual because the Ford is being built in Virginia, the home state of the seapower subcommittee’s chairman, Republican Representative Randy Forbes.

“We have laid the groundwork to ask difficult questions of the Navy about the cost overruns on the Ford-class aircraft carrier,” Forbes said in a statement.

In the Senate, Senator John McCain, an Arizona Republican, has been a persistent critic of the carrier’s cost increases.

McCain is the top Republican on the Senate Armed Services Committee’s seapower panel, which will consider its version of the defense bill next month. McCain requested a Government Accountability Office review of the program, which is due to be published this year.

The House subcommittee released an outline of its proposal for the naval elements of the defense authorization bill today, 24 hours before meeting to approve it, as is the practice of the Armed Services panels. The full committee is scheduled to act on the subcommittee proposal June 5.

To contact the reporter on this story: Tony Capaccio in Washington at acapaccio@bloomberg.net

To contact the editor responsible for this story: John Walcott at jwalcott9@bloomberg.net

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