New US Subs Running $17 Billion Over Budget, Lawmaker Says
(Bloomberg) -- The Navy’s new Virginia-class submarines are projected to run $17 billion over their planned budget through 2030, a problem emblematic of a crisis in the program, the House’s top lawmaker on defense spending disclosed.
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“It’s clear that the Navy and shipbuilders have known about this shortfall for at least 18 months” but “Congress was notified just two weeks ago,” Representative Ken Calvert, chairman of the House defense appropriations subcommittee, said in remarks released Thursday before a classified hearing with Navy Secretary Carlos Del Toro.
The program for a new generation of nuclear-powered subs being manufactured by General Dynamics Corp. and HII “has slipped two to three years” behind schedule “and is experiencing extraordinary cost growth,” Calvert said. The $17 billion shortfall will increase the program’s projected $184 billion total cost if the Navy can’t close the gap by finding ways to cut expenditures.
Several Navy ship programs, including the Virginia class, “are in crisis,” he said. Calvert, a California Republican and usually an enthusiastic supporter of defense programs, lambasted the Navy for what he called a lack of candor in disclosing problems and for poor metrics in overseeing multibillion-dollar programs.
“It’s not clear to me that anyone has accurate information about the trajectory of any shipbuilding program other than the program executive officers — and since they switch out every two years, the options for long-term accountability are limited,” Calvert said. “For too long, this committee has been put in a position of asking what the Navy is hiding behind the curtain. It’s time to pull down the curtain altogether,” he said.
The Navy said in a statement after the hearing that Del Toro “has been advocating for improvements to the maritime industrial base, and to increase funding to ensure the Navy meets its acquisition objectives.”
To demonstrate fiscal responsibility, the Navy has set up “an independent Naval Cost Agency to improve cost estimations and created a Maritime Industrial Base program to manage the funding supporting the industrial base,” according to the statement. The Navy said it’s working to improve ship design processes and investing in modern facilities.
General Dynamics spokes Jeff Davis declined to comment Friday. A representative for HII said the company would comment before House members on Friday.
The Virginia-class submarine is armed with both torpedoes and land-attack missiles and, starting later this year, with anti-ship Tomahawk cruise missiles. The vessels are intended to give the US a crucial advantage in any conflict with China.
“The $17 billion, which is the latest revelation of cost growth on submarines, is at the center of discussions” about a new proposal recently brought to the Hill that’s intended to restructure submarine funding for covering such growth and “investing in the submarine construction industrial base,” said Ronald O’Rourke, Congressional Research Service naval analyst.
Aukus Risk
Overall, delivery dates for Virginia-class subs are running an estimated 24 to 36 months past the contracted dates, according to the Navy’s 45-day ship review released in April. General Dynamics and HII are supposed to be completing two submarines a year but instead are averaging the completion of one plus 20% of the work building a second sub. The Navy projects the contractors won’t hit the two-a-year rate until by 2028.
The Virginia-class delays could undermine the Aukus partnership involving the US, Australia and the UK if they aren’t reversed soon.
Under the Aukus agreement, starting in about 2032 the US Navy is supposed to sell Australia the first of as many as five existing or new Virginia-class subs. Those vessels would fill a gap until delivery in the late 2030s of the first new vessels to be built in the UK and Australia with technology from the US and UK.
(Updates with analyst quote in 10th paragraph.)
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