Shipyard President: We Are Driving Cost Out of New Carrier

Oct. 27, 2013 – 03:55PM   |


NEWPORT NEWS, VA. — The most expensive ship now under construction for the US Navy is the nuclear aircraft carrier Gerald R. Ford (CVN 78). Representing the first entirely new carrier design since the 1960s, the ship’s cost has risen more than 22 percent since construction was authorized in 2008 and is projected to hit $12.8 billion by the time it’s delivered in 2016.

Ford’s design embodies a number of new and untried technologies, chief among them new launch and recovery systems for aircraft and a new dual-band radar system. The Navy and Congress were aware at the time of authorization that a high level of risk was attached to perfecting each technology on time and on budget, and delays have contributed to the cost growth.

The Government Accountability Office (GAO) is a long-time critic of the CVN 78 program, and its reports have garnered considerable attention from analysts and other observers. A recent GAO report recommended slowing production of the next carrier, the John F. Kennedy (CVN 79), until costs on the first ship are better understood. But the shipbuilders at Newport News Shipbuilding bristle at many of the criticisms.

Matt Mulherin, president of the shipyard, addressed the carrier issue during an interview Oct. 22.

“There is a view out there that a typical first-of-class ship has over 30 percent cost growth over the baseline. Today we are at 22 percent. I am not saying that I am happy with that, but I think we have done an awfully good job of controlling the costs.

“I think this ship is going together well — we are seeing the value of the product model, we are seeing the technologies that we were responsible for putting together [coming] to operational status. I know we are going to meet all the key performance parameters for the pieces of the ship that we’re driving to. I feel very good about the ship.”

Q. One of the chief worries about the ship’s construction was over the testing and delivery of the new electromagnetic aircraft launch system (EMALS), an item developed by the Navy and furnished to you for installation. Has that caused problems?

A. “Some of the government-furnished equipment — the EMALS, the advanced arresting gear — have been a challenge. But, with EMALS, I have all of the hardware inside the ship … the catapults are coming together. We are on our plan on that stuff. Now are we going to have integration challenges? I think you would be a fool to say we are not going to. I tell you that is what we do; that is what we do well. We understand how this stuff works. I have had people up at [Joint Base McGuire-Dix-Lakehurst, N.J.] operating this stuff; they are qualified shooters. They are up there doing the test program so they know it quite well.

“So I feel pretty good about the fact that we are going to be able to bring this stuff all together. We are going to deliver, in 2016, a Gerald R. Ford that is a ready round. It is able to shoot [aircraft]; it is able to catch; it is going to have all its phased array antennas working. We are not far off our plan — we were supposed to launch this thing in July, and here we are four months late. That was to a date we set over 10 years ago. I wish I was on the plan, but I do not think we are in a terrible place. I think this has been a great ship, I really do, and I think it will be.”

Q. Citing the cost growth, the GAO warned recently that additional increases could come from “shipbuilder underperformance.”

A. “I know it is a lot of dollars, and 22 percent cost growth is a lot of money,” Mulherin said. “I think we are being good stewards of the taxpayers’ dollars as we are driving to deliver to the Navy the ship they want. I do not know that people really recognize that we pay attention to that. I get penalized for that cost growth. I am making these decisions trying to figure out how I drive to the least cost, and because that is in my best interest as well.

“I think we are going to see a different position for CVN 79, where that ship is going to go together better; it is going to be less cost — but building an aircraft carrier is an expensive thing.

“Everybody is going to be forced to go back to the requirements and say if I really need to drive costs out of here, what can I do? That is where we are as we get ready for CVN 79. I think we all have to look in our own houses and say how do we drive cost down? I have to do that; the Navy has to do that. That is where we are, but at least the Navy recognizes that the least cost for CVN 79 is if I stay on that plan for building the ship. Because we have laid out the most efficient build plan.

“We are being very effective; we are still implementing things; there is no end to what we are trying to do to drive costs out of this thing. We know we are in a position where none of us want to be. We are going to great lengths to try to figure out how we [become] much more efficient and how we build Kennedy.”

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