NASSCO’s $4 billion tanker build program for the Navy faces cost overruns and delays

A roughly $4 billion effort by San Diego-based General Dynamics-NASSCO to build six critically needed Navy supply ships is at least $85.2 million over budget and has taken a year or more behind, according to a new report from the Congressional Research Service.

The nonpartisan agency attributes the problem to everything from the flooding of a dry dock at NASSCO, which affected the shipyard’s ability to build ships, to unspecified performance issues, inflation and the pandemic.

The cost overrun is about $5 million higher than contained in a General Accounting Office review last year and comes as the Navy struggles to get enough money from Congress to meet its long-term goal. term to increase the number of manned ships to 355 from 296.

In the short term, the service wants to withdraw several ships to save money. Its latest budget request, for the 2023 financial year, provides for a reduction in the fleet of 12 vessels.

The Navy is also struggling to maintain its fuel supply chain. Pollution concerns recently led the Navy to announce it was closing its aging and leak-prone Red Hill fuel depot in Hawaii, which has long been used by West Coast-based warships traveling between the mainland and the Western Pacific, the Indian Ocean and the Middle East. Is. Last year, about 14,000 gallons of jet fuel spilled into Honolulu-area water supplies, displacing thousands of service members and their families.

NASSCO is a crucial contractor, not only for the navy, but also for the commercial market. It is well known for repairing a wide variety of naval vessels and for designing and building Navy support and auxiliary vessels as well as commercial cargo carriers and tankers. Some work is flowing, in part because NASSCO is the last remaining major shipbuilder on the West Coast.

The shipyard has been contracted to build the navy’s first six John Lewis-class tankers, a new type of ship that transfers fuel and other essentials to vessels operating at sea. The class, which could eventually number 20 ships , is named after the late Congressman and civil rights leader John Lewis, who died in 2020.

The company built and launched the first two ships, John Lewis and Harvey Milk. But the CRS report says the cost of the John Lewis rose to $759.4 million, a jump from $85.2 million. And the GAO report suggests that overruns have occurred on milk.

The construction schedules are also very far apart at the site.

“The Navy said in July 2021 that the delivery date for (John Lewis) had been moved from June 2021 to March 2022 due to the (dry)dock incident, late delivery of equipment materials and of the need for repair or rework on other parts of the vessel,” the CRS report states.

Newly built ships undergo a long period of testing before being officially delivered to the Navy and prepared for operational use. The process can take years.

NASSCO said Thursday that the John Lewis had not yet been delivered. It is not known when the transition will take place.

CRS said the official delivery dates of the Harvey Milk and the other four ships – Earl Warren, Robert F. Kennedy, Lucy Stone and Sojourner Truth – have been delayed by 12 to 15 months.

The Warren will be christened and launched this fall. The Kennedy is currently under construction.

NASSCO said in a statement Thursday that the company, which has about 3,500 workers, “has and continues to promote its ability to build ships on time and in many cases under budget.

“However, the T-AO class has been under construction during one of the toughest pandemics of our generation and we are proud of the dedication our highly skilled workforce has shown over the past 2.5 years. to meet the challenges that COVID-19 has constantly presented. ”

Cost overruns and delays are not unusual.

The Gerald R. Ford aircraft carrier was originally expected to cost around $10.5 billion. The final price will be at least $13.3 billion. The development of the ship – which incorporates several new technologies – is years behind schedule and it has yet to proceed with its first deployment.

The Navy has just begun work on the first of its new Constellation-class frigates. But the expected cost has already skyrocketed. The Congressional Budget Office said in late 2020 that the first 10 frigates would cost at least $12.3 billion, about 40% more than an earlier Navy estimate.

Such increases represent a major funding problem for the Navy, which wishes to significantly expand and diversify its fleet. The plan calls for building fewer large ships, more small ships, and relying on a significant number of unmanned ships.

Navy officials say this “distributed” fleet would allow the service to perform better around the world, especially in situations involving potential conflict with Russia, China and North Korea.

Creating such a fleet would cost $25.3 to $32.7 billion per year over a 30-year period.

Budget demands are already so tight that the Navy and Pentagon have yet to decide whether to underwrite a seventh Lewis-class ship this year. NASSCO is expected to be the prime contractor when the vessel is built.

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