BATH, Maine — A defense industry website reported Wednesday that unnamed Navy officials blame “performance issues” at Bath Iron Works for the $450 million cost overrun for construction of the three Zumwalt-class guided missile destroyers at the Maine shipyard.
A March 10 report from the Congressional Research Service notes that the Navy’s latest budget submission estimates the construction cost of the three “stealth” destroyers at $12.74 billion, up 3.7 percent from the Fiscal Year 2016 submission of $12.29 billion.
The new estimated total cost of the three Zumwalt destroyers, including research and development, is $22.5 billion, USNI reported.
But defense industry analysts on Wednesday said the cost increase was more likely due to the Navy opting to act as lead systems integrator for Zumwalt construction instead of charging BIW with the job of managing the ship’s multiple systems built by a variety of vendors including Raytheon, which is building the combat systems.
Furthermore, analysts said the first ship in any class — particularly “the most revolutionary warship currently being built anywhere in the world” — experiences cost overruns due to a “learning curve.”
Citing “several Navy and congressional sources,” USNI News, a publication of the U.S. Naval Institute, which is not affiliated with the Navy, reported, “the cost was in large part due to the performance of the shipyard in completing the construction of the Zumwalts — which feature a complex first-of-type integrated power system that has proved harder-than-expected for the Navy and BIW to build and test.”
But the only named source in the article, Navy Research, Acquisition and Development spokeswoman Capt. Thurraya Kent, told USNI, “DDG-1000 remains well within the program baseline.”
Matt Wickenheiser, spokesman for BIW, on Wednesday referred to the comment he gave USNI: “General Dynamics Bath Iron Works, the Navy and other Navy contractors have successfully completed DDG-1000’s alpha and builder’s trials and continue to work toward acceptance trials, to be followed by delivery.”
According to Loren Thompson, chief operating officer of the nonprofit Lexington Institute, a defense industry analyst, many of the “performance problems” resulted from the Navy providing various components of the ships to BIW.
“Every time any of the military services decides to be the systems integrator, things go awry,” Thompson said. “The problem is the typical Navy executive doesn’t understand program administration as well as the shipyard does. It probably would have made more sense to leave that role to the shipyard.”
Jay Korman, senior Navy analyst with the Washington, D.C.-based consulting firm The Avascent Group, said Wednesday that cost increases for a new ship class shouldn’t surprise anyone. He suggested that critics blame the original cost estimators instead of BIW.
“Almost without exception, every new-build Navy ship experiences similar if not worse cost increases,” Korman said. “The fundamental fact is that there is a learning curve to building the first ship of any class. Normally you realize the cost benefits after the fourth or fifth ship of a class, but guess what? This is a three-ship build and they’re just not going to get the cost efficiencies.”
Korman said the original cost estimators deserve some of the blame for the overrun.
“When the program cost was originally established, I think a lot of folks in the business immediately scratched their heads and said, ‘It’s going to be a lot higher than that.’ And it was.”
Thompson said the Navy opted to have BIW build all three Zumwalt-class destroyers “because it didn’t believe anybody else could do as good a job.”
Thompson pointed to complaints during the past year by U.S. Sen. John McCain, a Republican from Arizona, about cost overruns on the Ford class of aircraft carriers being built by Huntington Ingalls Industries in Newport News, Virginia.
“If you’ve got dissimilar ships being built in dissimilar yards, maybe the problem isn’t the shipyards,” he said. “If Bath Iron Works can’t integrate the ship at a reasonable cost, then who could? It was sent to Bath because the Navy knew that was their best bet.”
Kent, of the Navy, did not immediately return a phone call on Wednesday.