McCain: Cost Overruns On Programs Undermine Sequestration Pleas | Inside the Navy

By Olga Belogolova

The Navy’s inability to control costs on a number of programs, such as the $2 billion cost overrun for the service’s newest aircraft carrier, Gerald R. Ford (CVN-78), undermine the arguments of service officials when they come to Capitol Hill to sound the alarm on sequestration, Sen. John McCain (R-AZ) said last week.

“It harms. It does great damage to the argument that they make of how damaging sequestration is, when they don’t get these cost overruns under control,” McCain told reporters outside a Senate Armed Services Committee hearing on sequestration last week.

During the hearing, the service chiefs once again testified to the detrimental effects of ongoing across-the-board budget cuts.

Among other things, Chief of Naval Operations Adm. Jonathan Greenert told lawmakers that sequestration will particularly hit the Navy’s investment accounts, forcing it to “cancel the planned procurement of Virginia Class submarine, a littoral combat ship and an afloat-forward staging base ship, and we will be forced to delay the delivery of the next aircraft carrier, the Ford, and delay the midlife overhaul of the aircraft carrier George Washington. Also we’ll have to cancel procurement of at least 11 tactical aircraft.”

“I share all of your views, but you’ve left out a couple of items. One of them is the continued cost overruns of our weapons systems,” McCain said to the service chiefs during the hearing.

Greenert said that the Navy would need another $500 million to finish the Ford carrier, a program that is already more than $2 billion over its original contract, which pegged the initial cost of the Ford at $10.5 billion. The Ford carrier was christened on November 9 in Newport News, VA and is about 70 percent complete, according to the Navy.

But the cost growth of the Ford program, one of several programs where the Navy has seen overruns, is of particular concern to Congress.

“Has anybody been fired from their job as a result of a $2 billion cost overrun of an aircraft carrier?” McCain asked Greenert, to which he responded that he did not know.

“There wasn’t anybody. That’s why he said he didn’t know . . . because there wasn’t anybody fired,” McCain told reporters after leaving the hearing room.

“Look, it’s a disgrace. All they had to do was take the previous carrier and stop experimenting. It was the classic — ‘well, let’s try this and we’ll install this, but we haven’t tested it out completely, but this is a good idea — it was no reins on the cost,” McCain went on.

Greenert and the other service chiefs can’t truly come before Congress and lament sequestration if they are not controlling costs, McCain said, arguing that Greenert can’t say the Ford program needs $500 million more to complete, without mentioning that it is already $2 billion over.

“You know what two billion dollars can do for the state of Arizona?” McCain asked rhetorically.

“There’s nothing you can do. That’s the problem. That’s why when you don’t fire anybody, there’s no retribution, there’s nobody that’s held responsible. Then of course they’re going to continue that practice. Although, they say that they have been making some improvements . . . ” he told reporters.

Earlier last week, Program Executive Officer for Aircraft Carriers Rear Adm. Thomas Moore characterized conversations with Congress about the program as tense.

Speaking to reporters at a roundtable at Washington Navy Yard November 5, Moore said that he is constantly reassuring Congress that the carrier program is now on track.

“Obviously the Congress is doing their job providing proper oversight here and they have legitimate concerns about the cost of the ship and what we’re using the taxpayer dollars to do,” he said. “I’ve been in the job for two years and I probably have spent an awful lot of time talking to all four of the defense committees about what we are doing to manage the cost of 78.”

Moore told reporters last week that the Navy is now essentially trying to keep the cost of the Ford carrier under the current estimate of $12.9 billion and simultaneously working to find savings for the next ship — the CVN-79 Kennedy carrier.

“We’ve certainly are conveying all of that to the Hill” he said. “And then, while they have concerns about 78, what they really want to know at this point is ‘OK, we understand you are where you are, we don’t want the cost to go up anymore but, you know, what we want to make sure is that you can come in here and tell us that you have a plan going forward to drive the cost down on Kennedy.'” he explained.

Moore said conversations with Congress have been “open and transparent,” as the Navy has aimed to reassure lawmakers that they are trying to “live within the budgets that they give us.”
“I wouldn’t characterize them as friendly conversations,” he added.

After the sequestration hearing, Greenert said that the Navy now must implement lessons learned during the design and construction of the Ford carrier.

“Regrettably, the overruns have occurred and so what we need to do is find out what are the lessons learned and what have we done and what are we going to do about the next carrier,” he told reporters.

Greenert said that some of those lessons include making sure the design is complete ahead of building, making sure the Navy doesn’t make too many changes during the construction process and buying equipment sooner, among other lessons.

“All these things we’ve learned and we’ve got to not relearn them in the follow-on and that’s time and that’s money and that’s really critical,” he said.

Greenert told reporters that he will be watching the construction of the next carrier very closely and will jump in when he sees an opportunity or need to cut costs.

“If we see something that’s getting more and more and more expensive in its development — Do we really? How bad do we need this? What are we willing to give up? — And work to that. Because if we don’t do that, they work to the work order, they work to the requirements,” he said of the builder.

Some of these cost savings could come in capability, Greenert explained, saying that there might be some opportunity to cut costs by making up for certain capabilities with similarly capable aircraft or other ships in a carrier strike group.

via McCain: Cost Overruns On Programs Undermine Sequestration Pleas | Inside the Navy