prompt_front: You are given two reports by the government agency.



Question: Write a one-page summary of the report 1.



Report 2: Medicare is one of four principal health-insurance programs administered by CMS; it provides health insurance for persons aged 65 and over, certain individuals with disabilities, and individuals with end-stage renal disease  See table 1 for information about Medicare’s component programs  Medicare is the largest CMS program, at $702 billion in fiscal year 2017  As discussed earlier, according to CBO, Medicare outlays are projected to rise to $1 5 trillion in 2028 (see fig  1)  Fraud involves obtaining something of value through willful misrepresentation  There are no reliable estimates of the extent of fraud in the Medicare program, or in the health-care industry as a whole  By its very nature, fraud is difficult to detect, as those involved are engaged in intentional deception  Further, potential fraud cases must be identified, investigated, prosecuted, and adjudicated—resulting in a conviction— before fraud can be established  As I mentioned earlier, we designated Medicare as a high-risk program in 1990 because its size, scope, and complexity make it vulnerable to fraud, waste, and abuse  Similarly, the Office of Management and Budget (OMB) designated all parts of Medicare a “high priority” program because they each report $750 million or more in improper payments in a given year  We also highlighted challenges associated with duplicative payments in Medicare in our annual report on duplication and opportunities for cost savings in federal programs  Improper payments are a significant risk to the Medicare program and may include payments made as a result of fraud  However, I would note that improper payments are not a proxy for the amount of fraud or extent of fraud risk in a particular program as improper payment measurement does not specifically identify or estimate such payments due to fraud  Improper payments are those that are either made in an incorrect amount (overpayments and underpayments) or those that should not have been made at all  Our December 2017 report found that CMS manages its fraud risks as part of a broader program-integrity approach working with a broad array of stakeholders  CMS’s program-integrity approach includes efforts to address waste, abuse, and improper payments as well as fraud across its four principal programs  In Medicare, CMS collaborates with contractors, health-insurance plans, and law-enforcement and other agencies to carry out its program-integrity responsibilities  According to CMS officials, this broader program-integrity approach can help the agency develop control activities to address multiple sources of improper payments, including fraud  According to federal standards and guidance, executive-branch agency managers are responsible for managing fraud risks and implementing practices for combating those risks  Federal internal control standards call for agency management officials to assess the internal and external risks their entities face as they seek to achieve their objectives  The standards state that as part of this overall assessment, management should consider the potential for fraud when identifying, analyzing, and responding to risks  Risk management is a formal and disciplined practice for addressing risk and reducing it to an acceptable level  In July 2015, GAO issued the Fraud Risk Framework, which provides a comprehensive set of key components and leading practices that serve as a guide for agency managers to use when developing efforts to combat fraud in a strategic, risk-based way  The Fraud Risk Framework describes leading practices in four components: commit, assess, design and implement, and evaluate and adapt, as depicted in figure 2  The Fraud Reduction and Data Analytics Act of 2015, enacted in June 2016, requires OMB to establish guidelines for federal agencies to create controls to identify and assess fraud risks and design and implement antifraud control activities  The act further requires OMB to incorporate the leading practices from the Fraud Risk Framework in the guidelines  In July 2016, OMB published guidance about enterprise risk management and internal controls in federal executive departments and agencies  Among other things, this guidance affirms that managers should adhere to the leading practices identified in the Fraud Risk Framework  Further, the act requires federal agencies to submit to Congress a progress report each year for 3 consecutive years on the implementation of the controls established under OMB guidelines, among other things  CMS’s antifraud efforts partially aligned with the Fraud Risk Framework  Consistent with the framework, CMS has demonstrated commitment to combating fraud by creating a dedicated entity to lead antifraud efforts  It has also taken steps to establish a culture conducive to fraud risk management, although it could expand its antifraud training to include all employees  CMS has taken some steps to identify fraud risks in Medicare; however, it has not conducted a fraud risk assessment or developed a risk-based antifraud strategy for Medicare as defined in the Fraud Risk Framework  CMS has established monitoring and evaluation mechanisms for its program-integrity control activities that, if aligned with a risk-based antifraud strategy, could enhance the effectiveness of fraud risk management in Medicare  The commit component of the Fraud Risk Framework calls for an agency to commit to combating fraud by creating an organizational culture and structure conducive to fraud risk management  This component includes establishing a dedicated entity to lead fraud risk management activities  Within CMS, the Center for Program Integrity (CPI) serves as the dedicated entity for fraud, waste, and abuse issues in Medicare, which is consistent with the Fraud Risk Framework  CPI was established in 2010, in response to a November 2009 Executive Order on reducing improper payments and eliminating waste in federal programs  This formalized role, according to CMS officials, elevated the status of program-integrity efforts, which previously were carried out by other parts of CMS  As an executive-level Center—on the same level with five other executive-level Centers at CMS, such as the Center for Medicare—CPI has a direct reporting line to executive-level management at CMS  The Fraud Risk Framework identifies a direct reporting line to senior-level managers within the agency as a leading practice  According to CMS officials, this elevated organizational status offers CPI heightened visibility across CMS, attention by CMS executive leadership, and involvement in executive-level conversations  The commit component of the Fraud Risk Framework also includes creating an organizational culture to combat fraud at all levels of the agency  Consistent with the Fraud Risk Framework, CMS has promoted an antifraud culture by, for example, coordinating with internal and external stakeholders  Consistent with leading practices in the Fraud Risk Framework to involve all levels of the agency in setting an antifraud tone, CPI has worked collaboratively with other CMS Centers  In addition to engaging executive-level officials of other CMS Centers through the Program Integrity Board, CPI has worked collaboratively with other Centers within CMS to incorporate antifraud features into new program design or policy development and established regular communication at the staff level  For example: Center for Medicare and Medicaid Innovation (CMMI)  When developing the Medicare Diabetes Prevention Program, CMMI officials told us they worked with CPI’s Provider Enrollment and Oversight Group and Governance Management Group to develop risk-based screening procedures for entities that would enroll in Medicare to provide diabetes-prevention services, among other activities  The program was expanded nationally in 2016, and CMS determined that an entity may enroll in Medicare as a program supplier if it satisfies enrollment requirements, including that the supplier must pass existing high categorical risk-level screening requirements  Center for Medicare (CM)  In addition to building safeguards into programs and developing policies, CM officials told us that there are several standing meetings, on monthly, biweekly, and weekly bases, between groups within CM and CPI that discuss issues related to provider enrollment, FFS operations, and contractor management  A senior CM official also told us that there are ad hoc meetings taking place between CM and CPI: “We interact multiple times daily at different levels of the organization  Working closely is just a regular part of our business ” CMS has also demonstrated its commitment to addressing fraud, waste, and abuse to its stakeholders  Representatives of CMS’s extensive stakeholder network whom we interviewed—contractors and officials from public and private entities—generally recognized the agency’s commitment to combating fraud  In our interviews with stakeholders, officials observed CMS’s increased commitment over time to address fraud, waste, and abuse and cited examples of specific CMS actions  CMS contractors told us that CMS’s commitment to combating fraud is incorporated into contractual requirements, such as requiring (1) data analysis for potential fraud leads and (2) fraud-awareness training for providers  Officials from entities that are members of the Healthcare Fraud Prevention Partnership (HFPP), specifically, a health-insurance plan and the National Health Care Anti-Fraud Association, added that CMS’s effort to establish the HFPP and its ongoing collaboration and information sharing reflect CMS’s commitment to combat fraud in Medicare  The Fraud Risk Framework identifies training as one way of demonstrating an agency’s commitment to combating fraud  Training and education intended to increase fraud awareness among stakeholders, managers, and employees serve as a preventive measure to help create a culture of integrity and compliance within the agency  The Fraud Risk Framework discusses requiring all employees to attend training upon hiring and on an ongoing basis thereafter  To increase awareness of fraud risks in Medicare, CMS offers and requires training for stakeholder groups such as providers, beneficiaries, and health-insurance plans  Specifically, through its National Training Program and Medicare Learning Network, CMS makes available training materials on combating Medicare fraud, waste, and abuse  These materials help to identify and report fraud, waste, and abuse in CMS programs and are geared toward providers, beneficiaries, as well as trainers and other stakeholders  Separately, CMS requires health- insurance plans working with CMS to provide annual fraud, waste, and abuse training to their employees  However, CMS does not offer or require similar fraud-awareness training for the majority of its workforce  For a relatively small portion of its overall workforce—specifically, contracting officer representatives who are responsible for certain aspects of the acquisition function—CMS requires completion of fraud and abuse prevention training every 2 years  According to CMS, 638 of its contracting officer representatives (or about 10 percent of its overall workforce) completed such training in 2016 and 2017  Although CMS offers fraud-awareness training to others, the agency does not require fraud-awareness training for new hires or on a regular basis for all employees because the agency has focused on providing process-based internal controls training for its employees  While fraud-awareness training for contracting officer representatives is an important step in helping to promote fraud risk management, fraud- awareness training specific to CMS programs would be beneficial for all employees  Such training would not only be consistent with what CMS offers to or requires of its stakeholders and some of its employees, but would also help to keep the agency’s entire workforce continuously aware of fraud risks and examples of known fraud schemes, such as those identified in successful HHS OIG investigations  Such training would also keep employees informed as they administer CMS programs or develop agency policies and procedures  Considering the vulnerability of Medicare and Medicaid programs to fraud, waste, and abuse, without regular required training CMS cannot be assured that its workforce of over 6,000 employees is continuously aware of risks facing its programs  In our December 2017 report, we recommended that the Administrator of CMS provide fraud-awareness training relevant to risks facing CMS programs and require new hires to undergo such training and all employees to undergo training on a recurring basis  In its March 2018 letter to GAO, HHS stated that CMS is in the process of developing Fraud, Waste, and Abuse Training for all new employees, to be presented at CMS New Employee Orientations  Additionally, CMS is also developing training to be completed by current CMS employees on an annual basis  As of July 2018, this recommendation remains open  The assess component of the Fraud Risk Framework calls for federal managers to plan regular fraud risk assessments and to assess risks to determine a fraud risk profile  Identifying fraud risks is one of the steps included in the Fraud Risk Framework for assessing risks to determine a fraud risk profile  In our December 2017 report, we discussed several examples of steps CMS has taken to identify fraud risks as well as control activities that target areas the agency has designated as higher risk within Medicare, including specific provider types and specific geographic locations  These examples include data analytics to assist investigations in Medicare FFS, including Medicare’s Fraud Prevention System (FPS ), prior authorization for Medicare FFS services or supplies, revised provider screening and enrollment processes for Medicare FFS, and temporary provider enrollment moratoriums for certain providers and geographic areas for Medicare FFS  CMS officials told us that CPI initially focused on developing control activities for Medicare FFS and consider these activities to be the most mature of all CPI efforts to address fraud risks  CMS Has Not Conducted a Fraud Risk Assessment for Medicare The assess component of the Fraud Risk Framework calls for federal managers to plan regular fraud risk assessments and assess risks to determine a fraud risk profile  Furthermore, federal internal control standards call for agency management to assess the internal and external risks their entities face as they seek to achieve their objectives  The standards state that, as part of this overall assessment, management should consider the potential for fraud when identifying, analyzing, and responding to risks  The Fraud Risk Framework states that, in planning the fraud risk assessment, effective managers tailor the fraud risk assessment to the program by, among other things, identifying appropriate tools, methods, and sources for gathering information about fraud risks and involving relevant stakeholders in the assessment process  Fraud risk assessments that align with the Fraud Risk Framework involve (1) identifying inherent fraud risks affecting the program, (2) assessing the likelihood and impact of those fraud risks, (3) determining fraud risk tolerance, (4) examining the suitability of existing fraud controls and prioritizing residual fraud risks, and (5) documenting the results (see fig  3)  Although CMS had identified some fraud risks posed by providers in Medicare FFS, the agency had not conducted a fraud risk assessment for the Medicare program as a whole  Such a risk assessment would provide the detailed information and insights needed to create a fraud risk profile, which, in turn, is the basis for creating an antifraud strategy  According to CMS officials, CMS had not conducted a fraud risk assessment for Medicare because, within CPI’s broader approach of preventing and eliminating improper payments, its focus has been on addressing specific vulnerabilities among provider groups that have shown themselves particularly prone to fraud, waste, and abuse  With this approach, however, it is unlikely that CMS will be able to design and implement the most-appropriate control activities to respond to the full portfolio of fraud risks  A fraud risk assessment consists of discrete activities that build upon each other  Specifically: Identifying inherent fraud risks affecting the program  As discussed earlier, CMS took steps to identify fraud risks  However, CMS has not used a process to identify inherent fraud risks from the universe of potential vulnerabilities facing Medicare, including threats from various sources  According to CPI officials, most of the agency’s fraud control activities are focused on fraud risks posed by providers  The Fraud Risk Framework discusses fully considering inherent fraud risks from internal and external sources in light of fraud risk factors such as incentives, opportunities, and rationalization to commit fraud  For example, according to CMS officials, the inherent design of the Medicare Part C program may pose fraud risks that are challenging to detect  A fraud risk assessment would help CMS identify all sources of fraudulent behaviors, beyond threats posed by providers, such as those posed by health-insurance plans, contractors, or employees  Assessing the likelihood and impact of fraud risks and determining fraud risk tolerance  CMS has taken steps to prioritize fraud risks in some areas, but it had not assessed the likelihood or impact of fraud risks or determined fraud risk tolerance across all parts of Medicare  Assessing the likelihood and impact of inherent fraud risks would involve consideration of the impact of fraud risks on program finances, reputation, and compliance  Without assessing the likelihood and impact of risks in Medicare or internally determining which fraud risks may fall under the tolerance threshold, CMS cannot be certain that it is aware of the most-significant fraud risks facing this program and what risks it is willing to tolerate based on the program’s size and complexity  Examining the suitability of existing fraud controls and prioritizing residual fraud risks  CMS had not assessed existing control activities or prioritized residual fraud risks  According to the Fraud Risk Framework, managers may consider the extent to which existing control activities—whether focused on prevention, detection, or response—mitigate the likelihood and impact of inherent risks and whether the remaining risks exceed managers’ tolerance  This analysis would help CMS to prioritize residual risks and to determine mitigation approaches  For example, CMS had not established preventive fraud control activities in Medicare Part C  Using a fraud risk assessment for Medicare Part C and closely examining existing fraud control activities and residual risks, CMS could be better positioned to address fraud risks facing this growing program and develop preventive control activities  Furthermore, without assessing existing fraud control activities and prioritizing residual fraud risks, CMS cannot be assured that its current control activities are addressing the most-significant risks  Such analysis would also help CMS determine whether additional, preferably preventive, fraud controls are needed to mitigate residual risks, make adjustments to existing control activities, and potentially scale back or remove control activities that are addressing tolerable fraud risks  Documenting the risk-assessment results in a fraud risk profile  CMS had not developed a fraud risk profile that documents key findings and conclusions of the fraud risk assessment  According to the Fraud Risk Framework, the risk profile can also help agencies decide how to allocate resources to respond to residual fraud risks  Given the large size and complexity of Medicare, a documented fraud risk profile could support CMS’s resource-allocation decisions as well as facilitate the transfer of knowledge and continuity across CMS staff and changing administrations  Senior CPI officials told us that the agency plans to start a fraud risk assessment for Medicare after it completes a separate fraud risk assessment of the federally facilitated marketplace  This fraud risk assessment for the federally facilitated marketplace eligibility and enrollment process is being conducted in response to a recommendation we made in February 2016  In April 2017, CPI officials told us that this fraud risk assessment was largely completed, although in September 2017 CPI officials told us that the assessment was undergoing agency review  CPI officials told us that they have informed CM officials that there will be future fraud risk assessments for Medicare; however, they could not provide estimated timelines or plans for conducting such assessments, such as the order or programmatic scope of the assessments  Once completed, CMS could use the federally facilitated marketplace fraud risk assessment and apply any lessons learned when planning for and designing fraud risk assessments for Medicare  According to the Fraud Risk Framework, factors such as size, resources, maturity of the agency or program, and experience in managing risks can influence how the entity plans the fraud risk assessment  Additionally, effective managers tailor the fraud risk assessment to the program when planning for it  The large scale and complexity of Medicare as well as time and resources involved in conducting a fraud risk assessment underscore the importance of a well-planned and tailored approach to identifying the assessment’s programmatic scope  Planning and tailoring may involve decisions to conduct a fraud risk assessment for Medicare as a whole or divided into several subassessments to reflect their various component parts (e g , Medicare Part C)  CMS’s existing fraud risk identification efforts as well as communication channels with stakeholders could serve as a foundation for developing a fraud risk assessment for Medicare  The leading practices identified in the Fraud Risk Framework discuss the importance of identifying appropriate tools, methods, and sources for gathering information about fraud risks and involving relevant stakeholders in the assessment process  CMS’s fraud risk identification efforts discussed earlier could provide key information about fraud risks and their likelihood and impact  Furthermore, existing relationships and communication channels across CMS and its extensive network of stakeholders could support building a comprehensive understanding of known and potential fraud risks for the purposes of a fraud risk assessment  For example, the fraud vulnerabilities identified through data analysis and information sharing with health-insurance plans, law-enforcement organizations, and contractors could inform a fraud risk assessment  CPI’s Command Center missions—facilitated collaboration sessions that bring together experts from various disciplines to improve the processes for fraud prevention in Medicare—could bring together experts to identify potential or emerging fraud vulnerabilities or to brainstorm approaches to mitigate residual fraud risks  As CMS makes plans to move forward with a fraud risk assessment for Medicare, it will be important to consider the frequency with which the fraud risk assessment would need to be updated  While, according to the Fraud Risk Framework, the time intervals between updates can vary based on the programmatic and operating environment, assessing fraud risks on an ongoing basis is important to ensure that control activities are continuously addressing fraud risks  The constantly evolving fraud schemes, the size of the programs in terms of beneficiaries and expenditures, as well as continual changes in Medicare—such as development of innovative payment models and increasing managed- care enrollment—call for constant vigilance and regular updates to the fraud risk assessment  In our December 2017 report we recommended that the Administrator of CMS conduct fraud risk assessments for Medicare and Medicaid to include respective fraud risk profiles and plans for regularly updating the assessments and profiles  In its March 2018 letter to GAO, HHS stated that it is currently evaluating its options with regards to implementing this recommendation  As of July 2018, the recommendation remains open  The design and implement component of the Fraud Risk Framework calls for federal managers to design and implement a strategy with specific control activities to mitigate assessed fraud risks and collaborate to help ensure effective implementation  According to the Fraud Risk Framework, effective managers develop and document an antifraud strategy that describes the program’s approach for addressing the prioritized fraud risks identified during the fraud risk assessment, also referred to as a risk-based antifraud strategy  A risk- based antifraud strategy describes existing fraud control activities as well as any new fraud control activities a program may adopt to address residual fraud risks  In developing a strategy and antifraud control activities, effective managers focus on fraud prevention over detection, develop a plan for responding to identified instances of fraud, establish collaborative relationships with stakeholders, and create incentives to help effectively implement the strategy  Additionally, as part of a documented strategy, management identifies roles and responsibilities of those involved in fraud risk management activities; describes control activities as well as plans for monitoring and evaluation; creates timelines; and communicates the antifraud strategy to employees and stakeholders, among other things  As discussed earlier, CMS had some control activities in place to identify fraud risk in Medicare, particularly in the FFS program  However, CMS had not developed and documented a risk-based antifraud strategy to guide its design and implementation of new antifraud activities and to better align and coordinate its existing activities to ensure it is targeting and mitigating the most-significant fraud risks  Antifraud strategy  CMS officials told us that CPI does not have a documented risk-based antifraud strategy  Although CMS has developed several documents that describe efforts to address fraud, the agency had not developed a risk-based antifraud strategy for Medicare because, as discussed earlier, it had not conducted a fraud risk assessment that would serve as a foundation for such strategy  In 2016, CPI identified five strategic objectives for program integrity, which include antifraud elements and an emphasis on prevention  However, according to CMS officials, these objectives were identified from discussions with CMS leadership and various stakeholders and not through a fraud risk assessment process to identify inherent fraud risks from the universe of potential vulnerabilities, as described earlier and called for in the leading practices  These strategic objectives were presented at an antifraud conference in 2016, but were not announced publicly until the release of the Annual Report to Congress on the Medicare and Medicaid Integrity Programs for Fiscal Year 2015 in June 2017  Stakeholder relationships and communication  CMS has established relationships and communicated with stakeholders, but, without an antifraud strategy, stakeholders we spoke with lacked a common understanding of CMS’s strategic approach  Prior work on practices that can help federal agencies collaborate effectively calls for a strategy that is shared with stakeholders to promote trust and understanding  Once an antifraud strategy is developed, the Fraud Risk Framework calls for managers to collaborate to ensure effective implementation  Although some CMS stakeholders were able to describe various CMS program- integrity priorities and activities, such as home health being a fraud risk priority, the stakeholders could not communicate, articulate, or cite a common CMS strategic approach to address fraud risks in its programs  Incentives  The Fraud Risk Framework discusses creating incentives to help ensure effective implementation of the antifraud strategy once it is developed  Currently, some incentives within stakeholder relationships may complicate CMS’s antifraud efforts  Among contractors, CMS encourages information sharing through conferences and workshops; however, competition for CMS business among contractors can be a disincentive to information sharing  CMS officials acknowledged this concern and said that they expect contractors to share information related to fraud schemes, outcomes of investigations, and tips for addressing fraud, but not proprietary information such as algorithms to risk-score providers  Without developing and documenting an antifraud strategy based on a fraud risk assessment, as called for in the design and implement component of the Fraud Risk Framework, CMS cannot ensure that it has a coordinated approach to address the range of fraud risks and to appropriately target and allocate resources for the most-significant risks  Considering fraud risks to which Medicare is most vulnerable, in light of the malicious intent of those who aim to exploit the programs, would help CMS to examine its current control activities and potentially design new ones with recognition of fraudulent behavior it aims to prevent  This focus on fraud is distinct from a broader view of program integrity and improper payments by considering the intentions and incentives of those who aim to deceive rather than well-intentioned providers who make mistakes  Also, continued growth of the program, such as growth of Medicare Part C, calls for consideration of preventive fraud control activities across the entire network of entities involved  Furthermore, considering the large size and complexity of Medicare and the extensive stakeholder network involved in managing fraud in the program, a strategic approach to managing fraud risks within the programs is essential to ensure that a number of existing control activities and numerous stakeholder relationships and incentives are being aligned to produce desired results  Once developed, an antifraud strategy that is clearly articulated to various CMS stakeholders would help CMS to address fraud risks in a more coordinated and deliberate fashion  Thinking strategically about existing control activities, resources, tools, and information systems could help CMS to leverage resources while continuing to integrate Medicare program-integrity efforts along functional lines  A strategic approach grounded in a comprehensive assessment of fraud risks could also help CMS to identify future enhancements for existing control activities, such as new preventive capabilities for its Fraud Prevention System (FPS) or additional fraud factors in provider enrollment and revalidation, such as provider risk-scoring, to stay in step with evolving fraud risks  CMS Has Established Monitoring and Evaluation Mechanisms That Could Inform a Risk-Based Antifraud Strategy for Medicare The evaluate and adapt component of the Fraud Risk Framework calls for federal managers to evaluate outcomes using a risk-based approach and adapt activities to improve fraud risk management  Furthermore, according to federal internal control standards, managers should establish and operate monitoring activities to monitor the internal control system and evaluate the results, which may be compared against an established baseline  Ongoing monitoring and periodic evaluations provide assurances to managers that they are effectively preventing, detecting, and responding to potential fraud  CMS has established monitoring and evaluation mechanisms for its program-integrity activities that it could incorporate into an antifraud strategy  As described in the Fraud Risk Framework, agencies can gather information on the short-term or intermediate outcomes of some antifraud initiatives, which may be more readily measured  For example, CMS has developed some performance measures to provide a basis for monitoring its progress towards meeting the program-integrity goals set in the HHS Strategic Plan and Annual Performance Plan  Specifically, CMS measures whether it is meeting its goal of “increasing the percentage of Medicare FFS providers and suppliers identified as high risk that receive an administrative action ” CMS does not set specific antifraud goals for other parts of Medicare; other CMS performance measures relate to measuring or reducing improper payments in the various parts of Medicare  CMS uses return-on-investment and savings estimates to measure the effectiveness of its Medicare program-integrity activities and FPS  For example, CMS uses return-on-investment to measure the effectiveness of FPS and, in response to a recommendation we made in 2012, CMS developed outcome-based performance targets and milestones for FPS  CMS has also conducted individual evaluations of its program-integrity activities, such as an interim evaluation of the prior-authorization demonstration for power mobility devices that began in 2012 and is currently implemented in 19 states  Commensurate with greater maturity of control activities in Medicare FFS compared to other parts of Medicare and Medicaid, monitoring and evaluation activities for Medicare Parts C and D and Medicaid are more limited  For example, CMS calculates savings for its program-integrity activities in Medicare Parts C and D, but not a full return-on-investment  CMS officials told us that calculating costs for specific activities is challenging because of overlapping activities among contractors  CMS officials said they continue to refine methods and develop new savings estimates for additional program-integrity activities  According to the Fraud Risk Framework, effective managers develop a strategy and evaluate outcomes using a risk-based approach  In developing an effective strategy and antifraud activities, managers consider the benefits and costs of control activities  Ongoing monitoring and periodic evaluations provide reasonable assurance to managers that they are effectively preventing, detecting, and responding to potential fraud  Monitoring and evaluation activities can also support managers’ decisions about allocating resources, and help them to demonstrate their continued commitment to effectively managing fraud risks  As CMS takes steps to develop an antifraud strategy, it could include plans for refining and building on existing methods such as return-on- investment or savings measures, and setting appropriate targets to evaluate the effectiveness of all of CMS’s antifraud efforts  Such a strategy would help CMS to efficiently allocate program-integrity resources and to ensure that the agency is effectively preventing, detecting, and responding to potential fraud  For example, while doing so would involve challenges, CMS’s strategy could detail plans to advance efforts to measure a potential fraud rate through baseline and periodic measures  Fraud-rate measurement efforts could also inform risk assessment activities, identify currently unknown fraud risks, align resources to priority risks, and develop effective outcome metrics for antifraud controls  Such a strategy would also help CMS ensure that it has effective performance measures in place to assess its antifraud efforts beyond those related to providers in Medicare FFS, and establish appropriate targets to measure the agency’s progress in addressing fraud risks  In our December 2017 report we recommended that the Administrator of CMS should, using the results of the fraud risk assessments for Medicare, create, document, implement, and communicate an antifraud strategy that is aligned with and responsive to regularly assessed fraud risks  This strategy should include an approach for monitoring and evaluation  In its March 2018 letter to GAO, HHS stated that it is currently evaluating its options with regards to implementing this recommendation  As of July 2018, the recommendation remains open  Chairman Jenkins and Ranking Member Lewis, this concludes my prepared statement  I look forward to the subcommittee’s questions  If you or your staff have any questions concerning this testimony, please contact Seto J  Bagdoyan, who may be reached at (202) 512-6722 or bagdoyans@gao gov  Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this statement  Other individuals who made key contributions to this testimony include Tonita Gillich (Assistant Director), Irina Carnevale (Analyst-in- Charge), Colin Fallon, Scott Hiromoto, and Maria McMullen  Improper Payments: Actions and Guidance Could Help Address Issues and Inconsistencies in Estimation Processes  GAO-18-377  Washington, D C : May 31, 2018  Medicare: CMS Should Take Actions to Continue Prior Authorization Efforts to Reduce Spending  GAO-18-341  Washington, D C : April 20, 2018  Medicare and Medicaid: CMS Needs to Fully Align Its Antifraud Efforts with the Fraud Risk Framework  GAO-18-88  Washington, D C : December 5, 2017  Medicare: CMS Fraud Prevention System Uses Claims Analysis to Address Fraud  GAO-17-710  Washington, D C : August 30, 2017  Medicare Advantage Program Integrity: CMS’s Efforts to Ensure Proper Payments and Identify and Recover Improper Payments  GAO-17-761T  Washington, D C : July 19, 2017  Medicare Provider Education: Oversight of Efforts to Reduce Improper Billing Needs Improvement  GAO-17-290  Washington, D C : March 10, 2017  High-Risk Series: Progress on Many High-Risk Areas, While Substantial Efforts Needed on Others  GAO-17-317  Washington, D C : February 15, 2017  Medicare Advantage: Limited Progress Made to Validate Encounter Data Used to Ensure Proper Payments  GAO-17-223  Washington, D C : January 17, 2017  Medicare: Initial Results of Revised Process to Screen Providers and Suppliers, and Need for Objectives and Performance Measures  GAO-17-42  Washington, D C : November 15, 2016  Medicare: Claim Review Programs Could Be Improved with Additional Prepayment Reviews and Better Data  GAO-16-394  Washington, D C : April 13, 2016  Medicare Advantage: Fundamental Improvements Needed in CMS’s Effort to Recover Substantial Amounts of Improper Payments  GAO-16- 76  Washington, D C : April 8, 2016  Health Care Fraud: Information on Most Common Schemes and the Likely Effect of Smart Cards  GAO-16-216  Washington, D C : January 22, 2016  A Framework for Managing Fraud Risks in Federal Programs  GAO-15-593SP  Washington, D C : July 28, 2015  Medicare Program Integrity: Increased Oversight and Guidance Could Improve Effectiveness and Efficiency of Postpayment Claims Reviews  GAO-14-474  Washington, D C : July 18, 2014  Medicare Fraud Prevention: CMS Has Implemented a Predictive Analytics System, but Needs to Define Measures to Determine Its Effectiveness  GAO-13-104  Washington, D C : October 15, 2012  This is a work of the U S  government and is not subject to copyright protection in the United States  The published product may be reproduced and distributed in its entirety without further permission from GAO  However, because this work may contain copyrighted images or other material, permission from the copyright holder may be necessary if you wish to reproduce this material separately 
Report 2:  The program has begun phase three, including approving 19 percent of Boeing’s phase three reports  Program Requirements  While the program manager told us that all of the requirements contribute to the safety of the commercial systems, safety officials are required to approve a subset of these requirements  Examples of requirements approved by safety officials include the ability to leave the spacecraft in an emergency or to abort a launch  When a contractor is ready for NASA to verify that it has met a requirement, the contractor submits data for NASA to review through a verification closure notice  We define “safety-specific notices” as those requiring safety officials’ approval  As shown in table 2, as of March 2018, the program had approved 2 percent of Boeing’s safety-specific notices and 0 percent of SpaceX’s safety-specific notices  Testing  The program also requires testing to verify and validate the crew transportation system  Agency officials emphasized the importance of testing to safety, stating that testing reduces uncertainty about a system’s performance and can uncover unknown problems  As noted above, both contractors will be conducting an uncrewed and a crewed flight test prior to being certified  While a certain level of risk needs to be accepted to conduct human spaceflight, these flight tests help to mitigate this risk by validating the integrated performance of the hardware and software  Agency and program officials stated that the contractors’ flight tests are critical evidence to support certification of a safe and reliable system  As evidenced by the data above, the program still has a significant amount of work ahead with respect to approving certification packages and closing hazard reports and verification closure notices  We have previously found that the program’s workload was an emerging schedule risk, and the contractors have continued to express concern about program officials’ ability to process and approve certification paperwork in a timely manner  Workload has also been a concern for two of NASA’s independent review organizations  For example, the Aerospace Safety Advisory Panel noted in its January 2018 annual report that the sheer volume of work that remains for the program in terms of closing hazard reports and verification closure notices is significant  In addition, the program’s safety and mission assurance office identified the upcoming bow wave of work in a shrinking time period as a top risk to achieving certification  One mechanism the program put in place to assess the overall safety of each spacecraft—loss of crew—has been a focus of the Aerospace Safety Advisory Panel, Members of Congress, our prior work, and the program itself  Loss of crew captures the probability of death or permanent disability to one or more crew members  It has received a lot of attention, in part, because it has been a top risk for the program since 2015  Specifically, the program has been concerned that neither contractor would be able to meet the contract requirement of a 1 in 270 probability of incurring loss of crew  We identified two key concerns with how NASA is using the loss of crew metric: (1) inconsistent approaches to assess the loss of crew metric and (2) no identified plan to share lessons learned about using the loss of crew metric as a safety threshold  A loss of crew value is generated through a probabilistic safety analysis, which models scenarios that could result in the loss of crew using various inputs  According to the program’s analysis, the probability of on-orbit debris damaging the vehicle has the greatest effect on a loss of crew value  This probability is informed by an orbital debris (debris) model, which was updated in 2014, after the loss of crew requirement was established  The updated debris model makes it harder to meet a loss of crew value, in part, because the modeling environment where the contractors’ systems will operate has changed  For example, the updated model includes a larger span of orbit, greater range of debris sizes, and the addition of material density classifications, which were not included in the former model  Further, the probabilistic safety analysis may include operational mitigations, such as on-orbit inspections that would include using cameras on the ISS to visually survey the spacecraft for damage, which, according to officials, makes it easier to meet a loss of crew value  NASA describes the probabilistic safety analysis as a powerful tool that should be used as part of the overall risk management process to ensure the risk associated with development and operation of a system is understood, evaluated, managed, and mitigated  However, we found differences in the approaches that officials plan to use to assess loss of crew as well as in the loss of crew value being measured that could limit the usefulness of this tool  Agency Certification  The agency certification review for each contractor will include an assessment of whether its crew transportation system meets a loss of crew threshold of 1 in 150 for missions to the ISS, which is based on a May 2011 safety memo from the Office of Safety and Mission Assurance  A loss of crew value with a higher denominator, such as 1 in 270, is harder to meet than with a lower denominator, such as 1 in 150  According to the Chief of the Office of Safety and Mission Assurance, he will assess the 1 in 150 threshold using a probabilistic safety analysis that includes the updated debris model and operational mitigations, such as the on- orbit inspections cited above  Program Office  According to program officials, they will assess whether either contractor meets a 1 in 270 loss of crew value based on a probabilistic safety analysis using the former debris model (not the updated model) and not including operational mitigations  Contracting Officer  According to the contracting officer, each contractor’s loss of crew requirement is 1 in 270 without including operational mitigations  The contracting officer stated that SpaceX’s contract requirement uses the updated debris model in the probabilistic safety analysis, whereas Boeing’s contract requirement uses the former debris model in the probabilistic safety analysis  Program’s Chief Safety and Mission Assurance Officer  According to the program’s chief safety and mission assurance officer, he will conduct a probabilistic safety analysis using the updated debris model and will not include operational mitigations to assess whether each contractor meets a 1 in 200 loss of crew value  This loss of crew value stems from a program update that occurred after the initial contracts were signed  These different approaches are summarized in table 3 below  Agency policy requires human spaceflight programs to set a safety threshold, which NASA did for the Commercial Crew Program when it identified the 1 in 150 loss of crew threshold in the May 2011 safety memo  Subsequently, the program set more rigorous loss of crew values in contract and program documents  NASA also updated the debris model, which we previously noted makes it more difficult to meet a loss of crew value  As a result, NASA does not have a consistent approach for how to incorporate key inputs to the probabilistic safety analysis, including changes to the debris model  Instead, the risk tolerance that NASA is accepting with loss of crew varies based upon which entity is presenting the results of its probabilistic safety analysis  For example, it is possible that the program’s assessment will determine that neither contractor will meet the 1 in 270 contract requirement, but that the agency’s assessment will determine that the contractors meet the 1 in 150 agency certification value because that analysis will include operational mitigations  Or the program’s assessment could determine that Boeing meets the 1 in 270 contractual loss of crew requirement, but the agency’s assessment may determine that Boeing does not meet the 1 in 150 agency certification value because that analysis will use the updated debris model  Federal internal controls state that agency management should define objectives clearly to enable the identification of risks and define risk tolerances  Specifically, management should define risk tolerances in specific and measurable terms, so they are clearly stated and can be measured  In this case, because there will be multiple analyses conducted using different inputs, NASA risks not clearly capturing or documenting, in a coherent manner, its overall risk tolerance with respect to loss of crew before a final decision must be made on whether to certify either crew transportation system  Moreover, capturing the challenges and lessons learned from using the loss of crew metric is critical, particularly because agency officials told us that this is the first time this metric has been used as a safety threshold  Also, there are different viewpoints about the utility of the metric as a safety threshold across the agency  The program manager repeatedly told us that loss of crew is best used as a design tool  For example, program officials told us that both contractors incorporated additional orbital debris shielding into their designs to mitigate the orbital debris risk and improve their loss of crew values  In addition, the Aerospace Safety Advisory Panel reported in 2018 that loss of crew should not be viewed as an absolute measure of actual risk during operations  However, the May 2011 agency safety memo states that a breach of the loss of crew threshold would initiate a termination review of the Commercial Crew Program, which is a more strict application of the loss of crew metric  Both program and safety officials told us that, after the agency certification is complete and lessons learned are available to be compiled, sharing those lessons learned across NASA would be a good idea given the complexities associated with assessing the loss of crew metric  As of April 2018, however, agency officials said they did not have a plan for loss of crew knowledge-sharing  We have previously found that lessons learned provide a powerful method of sharing good ideas for improving work processes, facility or equipment design and operation, quality, safety, and cost-effectiveness  Further, according to NASA’s Knowledge Policy on Program and Projects, which is managed through the Office of the Chief Engineer, a principle of each center and mission directorate’s knowledge strategy is that knowledge is the cornerstone of NASA’s ability to achieve mission success  The policy acknowledges that NASA faces continuous challenges in using what it knows effectively  These challenges include, but are not limited to, enabling the identification and flow of knowledge across organizational boundaries; preserving knowledge at risk of being lost; and providing means for individuals, teams, and the organization to learn from experiences  If NASA does not capture lessons learned from the Commercial Crew Program on using the loss of crew requirement to set a program’s safety threshold and whether it met the agency’s intended goal, future programs will not be able to benefit from the knowledge gained from this multibillion dollar investment  NASA’s governance model prescribes a management structure that employs checks and balances among key organizations to ensure that decisions have the benefit of different points of view and are not made in isolation  As part of this structure, NASA established the technical authority process as a system of checks and balances to provide independent oversight of programs and projects in support of safety and mission success through the selection of specific individuals with delegated levels of authority  The technical authority process has been used in other parts of the government for acquisitions, including the Department of Defense and Department of Homeland Security  The Commercial Crew Program is organizationally connected to three technical authorities within NASA: the Office of the Chief Engineer technical authority, the Office of Chief Health and Medical technical authority, and the Office of Safety and Mission Assurance (safety) technical authority  The safety technical authority is responsible for ensuring from an independent standpoint that the program’s products and processes satisfy NASA’s safety, reliability, and mission assurance policies  The NASA safety technical authority has delegated authority through the Kennedy Space Center Director to the Chief Safety and Mission Assurance Officer for the Commercial Crew Program  We have previously reviewed how NASA has organized its technical authorities for its Exploration Systems Development organization—an organization that oversees the development of the Space Launch System, Orion crew capsule, and associated ground systems that have the goal of extending human presence beyond low-Earth orbit  In October 2017, we found that the Exploration Systems Development organization had established an organizational structure in which the technical authorities for engineering and safety and mission assurance were dual hatted simultaneously in programmatic positions  We found that having the same individual simultaneously fill both a technical authority role and a program role created an environment of competing interests, where the technical authority’s ability to impartially and objectively assess the programs while at the same time acting on behalf of the Exploration Systems Development organization in programmatic capacities may be subject to impairments  We found that this was in contrast to a recommendation from the Columbia Accident Investigation Board report—the result of an in-depth assessment of the technical and organizational causes of the 2003 Space Shuttle Columbia accident—for NASA to establish a technical authority to serve independently of the Space Shuttle program, so that employees would not feel hampered to bring forward safety concerns or disagreements with programmatic decisions  The board’s findings that led to this recommendation included a broken safety culture in which it was difficult for minority and dissenting opinions to percolate up through the hierarchy; dual center and programmatic roles vested in one person that had confused lines of authority, responsibility, and accountability and made the oversight process susceptible to conflicts of interest; and oversight personnel in positions within the program, increasing the risk that these staffs’ perspectives would be hindered by too much familiarity with the programs they were overseeing  In October 2017, we recommended that the division no longer dual hat two individuals who had both programmatic and technical authority responsibilities  As of April 2018, NASA had taken steps to separate the engineering technical authority position from the programmatic position, and NASA’s Chief of Safety and Mission Assurance said he planned to separate the safety position but had not yet completed that action  The Commercial Crew Program employs a similar structure to the Exploration Systems Development organization in that the safety technical authority is dual hatted simultaneously in a programmatic position as the Commercial Crew Program’s Safety and Mission Assurance Manager  According to the program’s safety technical authority, in his programmatic role for the program, he helps set priorities for safety issues, including how staff will be utilized to meet those priorities  In the technical authority role, he provides independent oversight in support of safety and mission success  In his dual-hatted role, this official will be responsible for endorsing the program’s certification recommendations in two different capacities: as the technical authority and as a program authority  As a result, this structure relies on the same individual to completely separate two roles—one to manage the Commercial Crew Program’s safety issues within programmatic cost and schedule constraints, and the other to assess the same issues in an independent oversight role  While the Commercial Crew Program may have an additional level of separation between the safety technical authority and the program’s involvement in the design of commercial systems due to its shared assurance model with the commercial providers, the Commercial Crew Program still maintains a structure where one individual simultaneously serves in both technical authority and programmatic roles  Figure 5 describes some of the conflicting roles and responsibilities of this official in his two different positions  During our review, officials cited several factors in support of a dual- hatted approach: The safety technical authority retains independence because his technical authority reporting path and performance reviews are not under the purview of the Commercial Crew Program chain of command  Due to the Commercial Crew Program’s shared assurance model with commercial providers, the program is operating in a quality assurance role that provides an additional level of separation between the safety technical authority and the program’s involvement in the design of commercial systems  For safety decisions involving cost and schedule where the individual who is dual hatted with both technical authority and programmatic responsibilities may feel conflicted, he stated that he would discuss these matters with his management to validate the logic behind his decision  There are cost and knowledge efficiencies gained from one individual serving in both programmatic and safety technical authority capacities  NASA’s Chief of Safety and Mission Assurance stated that he has great confidence in the individual currently serving in the dual hatted role for the Commercial Crew Program, but acknowledged there is inherent conflict even with the program’s shared assurance model  In December 2017, he stated that, based on our previous work and current discussions, he intends to decouple the programmatic and technical authority responsibilities for the Commercial Crew Program but had not done so as of April 2018  Federal internal control standards state that an agency should design control activities to achieve objectives and respond to risks, which includes segregation of key duties and responsibilities to reduce the risk of error, misuse, or fraud  By overlapping technical authority and programmatic responsibilities, NASA will continue to run the risk of creating an environment of competing interests for the Commercial Crew Program’s safety technical authority  NASA’s Commercial Crew Program is a multibillion dollar effort to facilitate the commercial development of a crew transportation system that can end the United States’ reliance on Russia to maintain an uninterrupted presence on the ISS  Boeing and SpaceX continue to make progress developing a capability to fly to the ISS, but both have continued to experience delays  Program analysis indicates risks of further delays in each contractor’s current schedule, but NASA has not provided that information to Congress in its routine briefings  Without this information, Congress does not know the full extent of potential delays to inform decision making  Additional delays could also disrupt U S  access to the ISS  While NASA is working on potential solutions, there is no contingency plan in place to address this potential gap  Without a viable contingency plan, NASA puts at risk achievement of the U S  goal and objective for the ISS  NASA must balance safety with acceptable risk for human spaceflight  As part of the certification process for each contractor’s spacecraft, NASA has developed one key safety metric, loss of crew  However, the complicated nature of this metric is further muddled by the inconsistent approaches being used across NASA about what inputs to be considered  As a result, there is no clear articulation of what level of risk NASA will accept with respect to this program  In addition, NASA does not have plans to capture lessons learned from how the Commercial Crew Program has used this metric to assess safety and is missing an opportunity to capture this knowledge for future human spaceflight programs  Finally, a space program’s management and oversight approach is an integral part of ensuring that human spaceflight is as safe and successful as possible  Independence of the program management and oversight functions is key to achieving the balance between safety and success  The Commercial Crew Program’s approach, however, burdens the safety technical authority with both programmatic and independent technical authority responsibilities  As a result, NASA has limited assurance that independence can be maintained as part of its institutional process to ensure safety and success  We are making the following five recommendations to NASA: The NASA Associate Administrator for Human Exploration and Operations should direct the Commercial Crew Program to include the results of its schedule risk analysis in its mandatory quarterly reports to Congress  (Recommendation 1) The NASA Administrator should develop and maintain a contingency plan for ensuring a presence on the ISS until a Commercial Crew Program contractor is certified  (Recommendation 2) The NASA Administrator should direct the Chief of Safety and Mission Assurance, the NASA Associate Administrator for Human Exploration and Operations, the Commercial Crew Program Manager, and the Commercial Crew Program Contracting Officer to collectively determine and document before the agency certification review how the agency will determine its risk tolerance level with respect to loss of crew  (Recommendation 3) After completing the agency certification review, NASA’s Chief Engineer and Chief of Safety and Mission Assurance, with support from the NASA Associate Administrator for Human Exploration and Operations and the Commercial Crew Program Manager, should document lessons learned related to loss of crew as a safety threshold for future crewed spaceflight missions, given the complexity of the metric  (Recommendation 4) The NASA Chief of Safety and Mission Assurance should restructure the technical authority within the Commercial Crew Program to ensure that the technical authority for the Office of Safety and Mission Assurance is no longer dual hatted with programmatic and independent technical authority responsibilities  (Recommendation 5) We provided a draft of this report to NASA for review and comment  NASA provided written comments that are reprinted in appendix II  In its response, NASA concurred with three of our recommendations, did not concur with one, and partially concurred with another  NASA concurred with our recommendation to develop and maintain a contingency plan to ensure a U S  presence on the ISS and expects to take action to close this recommendation by the end of December 2018  NASA concurred with our recommendation to document lessons learned related to the loss of crew requirement and expects to take action to close this recommendation by the end of May 2019  NASA concurred with our recommendation to restructure the safety technical authority so that it is no longer dual hatted with programmatic and independent technical authority responsibilities  NASA expects to take action to close this recommendation by the end of August 2018  NASA did not concur with our recommendation that the Commercial Crew Program should include the results of its schedule risk analysis in its quarterly reports to Congress  NASA stated that it uses the contractors’ schedules as a baseline to provide qualitative statements in the NASA summary that accompanies each contractor’s quarterly reports to Congress  NASA believes that this approach is appropriate and is in accordance with the explanatory statement accompanying the Consolidated and Further Continuing Appropriations Act, 2015  NASA also stated that it will be working to ensure that the contractors’ schedules and the program’s internal assessments sync up as the program gets closer to launch  As a result, NASA explained that there will not be a requirement for a detailed NASA assessment, because the contractors’ schedule will either match NASA’s analysis or NASA will discuss its position as it has done in previous reports to Congress  We continue to believe the recommendation is valid because the program’s schedule risk analysis would provide Congress with valuable insight into potential delays, which are likely  Both contractors have repeatedly stated that their schedules are aggressive and that the dates are ambitious  As a result, we found that the contractors frequently delay dates for key events  For example, Boeing has delayed its certification milestone by 17 months and SpaceX by 22 months since the original schedules were established  The program’s recent schedule risk analysis indicates that more delays to certification are likely, but that information is not presented to Congress in NASA’s quarterly reports  Without this information, Congress does not know the full extent of potential delays to inform decision making  NASA partially concurred with our recommendation that the Chief of Safety and Mission Assurance, the NASA Associate Administrator for Human Exploration and Operations, the Commercial Crew Program Manager, and the Commercial Crew Program Contracting Officer should collectively determine and document how the agency will determine its risk tolerance level with respect to loss of crew before the agency certification review  In its response, NASA stated that it documented the agency’s risk tolerance level with respect to loss of crew for the program in its May 2011 safety memo  Further, NASA stated that it documented the requirement to limit risks to the loss of crew in a certification requirements document  NASA stated that ultimately the Commercial Crew Program is accountable for ensuring that the contractors’ systems meet the loss of crew value in this certification requirements document, which is a loss of crew value of 1 in 270  If a contractor’s system cannot meet that loss of crew value, or any other requirement, the program will request a waiver as part of the human rating certification process to ensure transparency  NASA acknowledged in its response that the existence of multiple documents defining residual risk requirements and an agency threshold for loss of crew can be confusing  NASA’s response, however, does not address our finding that it does not have a consistent approach for how to incorporate key inputs, including which debris model should be used or whether to include operational mitigations  NASA stated that it had taken action to address this recommendation; however, NASA did not outline any steps it took to resolve the concern that the risk tolerance for the loss of crew requirement depends on which entity is presenting the results of its analysis  We continue to believe that, before the agency certification review, the key parties must collectively determine how the agency will determine its risk tolerance with respect to loss of crew  We believe this approach will reduce confusion and increase transparency  We are sending copies of this report to NASA Administrator and interested congressional committees  In addition, the report is available at no charge on the GAO website at http://www gao gov  If you or your staff have any questions about this report, please contact me at (202)512-4841 or chaplainc@gao gov  Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report  GAO staff who made major contributions to this report are listed in appendix III  The objectives of our review were to assess (1) the extent to which the contractors have made progress towards meeting the National Aeronautics and Space Administration’s (NASA) certification requirements and NASA’s plans to help ensure continued access to the International Space Station (ISS); and (2) how NASA’s certification process addresses safety of the contractors’ crew transportation systems  To assess the contractors’ progress towards certification, we obtained and reviewed program and contractor documents, including monthly and quarterly updates from April 2017 through May 2018  We interviewed program and contractor officials to discuss the contractors’ recent progress, including upcoming events and any expected delays, and to understand technical risks, potential consequences, and planned mitigation activities  To identify total delays to date, we compared original contract schedules to Boeing and SpaceX’s calendar year 2018 first quarter proposed schedules, which are the most recent  Based on our review of program and contractor documents, we defined the contractors’ key events as: the uncrewed and crewed flight tests, the design certification reviews for each of those flights, and the certification milestone  We selected the two flight tests for each contractor as key events because they are intended to test key system capabilities, including the ability to launch, dock with the ISS, and return safely to Earth  We selected the design certification reviews because they verify the contractors’ crew transportation systems’ capability to safely approach, dock, mate, and depart from the ISS, among other requirements  We selected the certification milestone because it determines whether the crew transportation system meets the Commercial Crew Program’s requirements  To determine the extent to which contractors have delayed these key events over time, we analyzed the contractors’ schedule data from the 13 quarterly progress reports to date, from first quarter 2015 through first quarter calendar year 2018  We also obtained the results of the program’s April 2018 schedule risk analysis  We presented the schedule analysis range from the end of the month of the earliest possible completion date to the end of the month of the latest possible completion date  We reviewed the program’s Congressional requirements to report on cost, schedule, and technical status  Finally, to assess the potential effects of any certification delays on NASA’s access to ISS, we reviewed NASA’s contracts with Boeing and the Russian Federal Space Agency for transportation on the Soyuz vehicle  We interviewed officials from the ISS program and NASA’s Human Exploration and Operations Mission Directorate to determine if the agency had developed contingency plans to mitigate the effects of any certification delays on its access to the ISS  To assess how NASA’s certification process addresses safety of the contractors’ crew transportation systems, we reviewed agency safety policies, program plans, and contract documents to identify what safety assessments were required of the program, which safety factors would be considered in certification reviews, and when certification approval would be granted  We also interviewed program officials and the contractors about their safety policies and procedures as well as about the certification process  We identified the loss of crew requirements for the program and the contractors, and interviewed program and agency officials to determine how loss of crew would be assessed and considered throughout the certification process  To gain a broader understanding of the relative importance of loss of crew, we reviewed NASA safety policies, prior GAO reports, and annual reports from the Aerospace Safety Advisory Panel  To determine how the Orbital Debris Engineering Model (ORDEM) was updated and to assess differences between the former and updated models, we reviewed NASA documentation about the ORDEM 2000 and ORDEM 3 0 models and obtained information about the models from NASA’s Orbital Debris Program Office  To assess the program’s progress in closing requirements, including those requirements specifically related to safety, we reviewed program data for each contractor on contract requirements and closure status  We limited this analysis to requirements included in the CCT-REQ-1130 ISS Crew Transportation and Services Requirements Document because these requirements are verified by the Commercial Crew Program, whereas requirements contained within SSP 50808 ISS to Commercial Orbital Transportation Services Interface Requirements Document are managed by the ISS Transportation and Integration Office  We classified requirements as “safety-specific” when the program’s Office of Safety and Mission Assurance was listed as a verification closure notice signatory (i e , approver)  We then analyzed the program’s data to determine how many verification closure notices had been approved for all requirements and for the subset of safety-specific requirements  We reviewed program and agency documentation, such as organizational charts, program plans, and safety policies as well as interviewed program and agency officials, to determine the role of the safety and mission assurance technical authority in the program  We also reviewed the 2003 Columbia Accident Investigation Board’s Report’s findings and recommendations related to culture and organizational management of human spaceflight programs  We reviewed annual briefings and reports and met with representatives from two organizations that provide NASA with independent assessments of the program, the program’s standing review board and the Aerospace Safety Advisory Panel, to gain their perspectives on the contractor’s progress and how NASA addresses safety in its certification process  We also met with representatives from the National Transportation Safety Board and three experts with background on safety in human spaceflight in order to increase our contextual understanding of the role of safety in human spaceflight missions  We conducted this performance audit from April 2017 to July 2018 in accordance with generally accepted government auditing standards  Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives  We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives  Cristina T  Chaplain, (202) 512-4841 or chaplainc@gao gov  In addition to the contact named above, Molly Traci, Assistant Director; Kazue Chinen; Lorraine Ettaro; Lisa Fisher; Laura Greifner; Kurt Gurka; Miranda Riemer; Juli Steinhouse; Roxanna T  Sun; Hai Tran; Kristin Van Wychen; and Alyssa Weir made significant contributions to this report 

ground_truth: CVN-78, CVN-79, CVN-80, and CVN-81 are the first four ships in the Navy's new Gerald R. Ford (CVN-78) class of nuclear-powered aircraft carriers (CVNs). CVN-78 (Gerald R. Ford) was procured in FY2008. The Navy's proposed FY2020 budget estimates the ship's procurement cost at $13,084.0 million (i.e., about $13.1 billion) in then-year dollars. The ship received advance procurement (AP) funding in FY2001-FY2007 and was fully funded in FY2008-FY2011 using congressionally authorized four-year incremental funding. To help cover cost growth on the ship, the ship received an additional $1,394.9 million in FY2014-FY2016 and FY2018 cost-to-complete procurement funding. The ship was delivered to the Navy on May 31, 2017, and was commissioned into service on July 22, 2017. The Navy is currently working to complete construction, testing, and certification of the ship's 11 weapons elevators. CVN-79 (John F. Kennedy) was procured in FY2013. The Navy's proposed FY2020 budget estimates the ship's procurement cost at $11,327.4 million (i.e., about $11.3 billion) in then-year dollars. The ship received AP funding in FY2007-FY2012, and was fully funded in FY2013-FY2018 using congressionally authorized six-year incremental funding. The ship is scheduled for delivery to the Navy in September 2024. CVN-80 (Enterprise) and CVN-81 (not yet named) are being procured under a two-ship block buy contract that was authorized by Section 121(a)(2) of the John S. McCain National Defense Authorization Act for Fiscal Year 2019 (H.R. 5515/P.L. 115-232 of August 13, 2018). The provision permitted the Navy to add CVN-81 to the existing contract for building CVN-80 after the Department of Defense (DOD) made certain certifications to Congress. DOD made the certifications on December 31, 2018, and the Navy announced the award of the contract on January 31, 2019. Compared to the estimated procurement costs for CVN-80 and CVN-81 in the Navy's FY2019 budget submission, the Navy estimates under its FY2020 budget submission that the two-ship block buy contract will reduce the cost of CVN-80 by $246.6 million and the cost of CVN-81 by $2,637.3 million, for a combined reduction of $2,883.9 million (i.e., about $2.9 billion). Using higher estimated baseline costs for CVN-80 and CVN-81 taken from a December 2017 Navy business case analysis, the Navy estimates under its FY2020 budget submission that the two-ship contract will reduce the cost of CVN-80 by $770.9 million and the cost of CVN-81 by $3,086.3 million, for a combined reduction of $3,857.2 million (i.e., about $3.9 billion). CVN-80 was procured in FY2018. The Navy's proposed FY2020 budget estimates the ship's procurement cost at $12,335.1 million (i.e., about $12.3 billion) in then-year dollars. The ship received AP funding in FY2016 and FY2017, and the Navy plans to fully fund the ship in FY2018-FY2025 using incremental funding authorized by Section 121(c) of P.L. 115-232. The Navy's proposed FY2020 budget requests $1,062.0 million in procurement funding for the ship. The ship is scheduled for delivery to the Navy in March 2028. Prior to the awarding of the two-ship block buy contract, CVN-81 was scheduled to be procured in FY2023. Following the awarding of the two-ship block buy contract, the Navy has chosen to show CVN-81 in its FY2020 budget submission as a ship to be procured in FY2020 (as opposed to a ship that was procured in FY2019). The Navy's FY2020 budget submission estimates the ship's procurement cost at $12,450.7 million (i.e., about $12.5 billion) in then-year dollars. The Navy plans to fully fund the ship beginning in FY2019 and extending beyond FY2026 using incremental funding authorized by Section 121(c) of P.L. 115-232. The Navy's proposed FY2020 budget requests $1,285.0 million in procurement funding for the ship. The ship is scheduled for delivery to the Navy in February 2032. The Navy's FY2020 budget submission proposed to not fund the mid-life nuclear refueling overhaul (called a Refueling Complex Overhaul, or RCOH) for the aircraft carrier CVN-75 (Harry S. Truman), and to instead retire the ship around FY2024 and also deactivate one of the Navy's carrier air wings at about the same time. On April 30, 2019, however, the Administration announced that it was effectively withdrawing this proposal from the Navy's FY2020 budget submission. The Administration now supports funding the CVN-75 RCOH and keeping CVN-75 (and by implication its associated air wing) in service past FY2024. Oversight issues for Congress for the CVN-78 program include the following: DOD's decision to show CVN-81 in its FY2020 budget submission as a ship to be procured in FY2020, instead of a ship that was procured in FY2019; the Navy's decision, as part of its FY2020 budget submission, to not accelerate the scheduled procurement of CVN-82 from FY2028 to an earlier fiscal year; whether to approve, reject, or modify the Navy's FY2020 procurement funding request for the CVN-78 program; the date for achieving the Navy's 12-ship force-level goal for aircraft carriers; cost growth in the CVN-78 program, Navy efforts to stem that growth, and Navy efforts to manage costs so as to stay within the program's cost caps; Navy efforts to complete the construction, testing, and certification of the weapons elevators on CVN-78; additional CVN-78 program issues that were raised in a December 2018 report from the Department of Defense's (DOD's) Director of Operational Test and Evaluation (DOT&E); additional CVN-78 program issues that were raised in a May 2019 Government Accountability Office (GAO) report on DOD weapon systems; whether the Navy should shift at some point from procuring large-deck, nuclear-powered carriers like the CVN-78 class to procuring smaller aircraft carriers.

prompt_front: You are given two reports by the government agency.



Question: Write a one-page summary of the report 2.

Report 1: This report provides background information and potential oversight issues for Congress on the Gerald R  Ford (CVN-78) class aircraft carrier program  The Navy's proposed FY2019 budget requests a total of $2,347 million (i e , about $2 3 billion) in procurement funding for the CVN-78 program  Congress's decisions on the CVN-78 program could substantially affect Navy capabilities and funding requirements and the shipbuilding industrial base  The Navy's FY2020 budget submission also proposed to not fund the mid-life nuclear refueling overhaul (called a Refueling Complex Overhaul, or RCOH) for the aircraft carrier CVN-75 ( Harry S  Truman ), and to instead retire the ship around FY2024 and also deactivate one of the Navy's carrier air wings at about the same time  On April 30, 2019, however, the Administration announced that it was effectively withdrawing this proposal from the Navy's FY2020 budget submission  The Administration now supports funding the CVN-75 RCOH and keeping CVN-75 (and by implication its associated air wing) in service past FY2024  For additional discussion of this withdrawn budget proposal, see Appendix A   For an overview of the strategic and budgetary context in which the CVN-78 class program and other Navy shipbuilding programs may be considered, see CRS Report RL32665, Navy Force Structure and Shipbuilding Plans: Background and Issues for Congress , by Ronald O'Rourke  The Navy's current aircraft carrier force consists of 11 nuclear-powered ships, including 10 Nimitz-class ships (CVNs 68 through 77) that entered service between 1975 and 2009, and one Gerald R  Ford (CVN-78) class ship that was commissioned into service on July 22, 2017  10 U S C  8062(b) requires the Navy to maintain a force of not less than 11 operational aircraft carriers  The requirement for the Navy to maintain not less than a certain number of operational aircraft carriers was established by Section 126 of the FY2006 National Defense Authorization Act ( H R  1815 / P L  109-163 of January 6, 2006), which set the number at 12 carriers  The requirement was changed from 12 carriers to 11 carriers by Section 1011(a) of the FY2007 John Warner National Defense Authorization Act ( H R  5122 / P L  109-364 of October 17, 2006)  10 U S C  8062(e), which was added by Section 1042 of the FY2017 National Defense Authorization Act ( S  2943 / P L  114-328 of December 23, 2016), requires the Navy to maintain a minimum of nine carrier air wings  In December 2016, the Navy released a force-level goal for achieving and maintaining a fleet of 355 ships, including 12 aircraft carriers —one more than the minimum of 11 carriers required by 10 U S C  8062(b)  This was the first Navy force-level goal to call for 12 (rather than 11) carriers since a 2002-2004 Navy force-level goal for a fleet of 375 ships  Given the time needed to build a carrier and the projected retirement dates of existing carriers, increasing the carrier force from 11 ships to 12 ships on a sustained basis would take a number of years: Procuring carriers on 3-year centers—that is, procuring one carrier every three years—would achieve a 12-carrier force on a sustained basis by about 2030, unless the service lives of one or more existing carriers were substantially extended  Procuring carriers on 3 5-year centers (i e , a combination of 3- and 4-year centers) would achieve a 12-carrier force on a sustained basis no earlier than about 2034, unless the service lives of one or more existing carriers were substantially extended  Procuring carriers on 4-year centers would achieve a 12-carrier force on a sustained basis by about 2063—almost 30 years later than under 3 5-year centers—unless the service lives of one or more existing carriers were substantially extended  Under the Navy's FY2020 30-year shipbuilding plan, as under the Navy's FY2019 30-year shipbuilding plan, carrier procurement would shift from 5-year centers to 4-year centers after the procurement of CVN-82 in FY2028, and a 12-carrier force would be achieved on a sustained basis in the 2060s  The projected size of the carrier force in the Navy's FY2020 30-year (FY2020-FY2049) shipbuilding plan reflected the Navy's now-withdrawn FY2020 budget proposal to not fund the RCOH for the aircraft carrier CVN-75 ( Harry S  Truman ), and to instead retire the ship around FY2024  With the withdrawal of this budget proposal, the projected size of the carrier force is now, for the period FY2022-FY2047, one ship higher than what is shown in the Navy's FY2020 budget submission  The newly adjusted force-level projection, reflecting the withdrawal of the proposal to retire CVN-75 around FY2024, is as follows: The force is projected to include 11 ships in FY2020-FY2021, 12 ships in FY2022-FY2024, 11 ships in FY2025-FY2026, 10 ships in FY2027, 11 ships in FY2028-FY2039, 10 ships in FY2040, 11 ships in FY2041, 10 ships in FY2042-FY2044, 11 ships in FY2045, 10 ships in FY2046-FY2047, 9 ships in FY2048, and 10 ships in FY2049  Under incremental funding, some of the funding needed to fully fund a ship is provided in one or more years after the year in which the ship is procured  In recent years, Congress has authorized DOD to use incremental funding for procuring certain Navy ships, most notably aircraft carriers: Section 121 of the FY2007 John Warner National Defense Authorization Act ( H R  5122 / P L  109-364 of October 17, 2006) granted the Navy the authority to use four-year incremental funding for CVNs 78, 79, and 80  Under this authority, the Navy could fully fund each of these ships over a four-year period that includes the ship's year of procurement and three subsequent years  Section 124 of the FY2012 National Defense Authorization Act ( H R  1540 / P L  112-81 of December 31, 2011) amended Section 121 of P L  109-364 to grant the Navy the authority to use five-year incremental funding for CVNs 78, 79, and 80  Since CVN-78 was fully funded in FY2008-FY2011, the provision in practice applied to CVNs 79 and 80  Section 121 of the FY2013 National Defense Authorization Act ( H R  4310 / P L  112-239 of January 2, 2013) amended Section 121 of P L  109-364 to grant the Navy the authority to use six-year incremental funding for CVNs 78, 79, and 80  Since CVN-78 was fully funded in FY2008-FY2011, the provision in practice applies to CVNs 79 and 80  Section 121(c) of the John S  McCain National Defense Authorization Act for Fiscal Year 2019 ( H R  5515 / P L  115-232 of August 13, 2018) authorized incremental funding to be used for making payments under the two-ship block buy contract for the construction of CVN-80 and CVN-81  This provision does not limit the total number of years across which incremental funding may be used to procure either ship  All U S  aircraft carriers procured since FY1958 have been built by Huntington Ingalls Industries/Newport News Shipbuilding (HII/NNS), of Newport News, VA  HII/NNS is the only U S  shipyard that can build large-deck, nuclear-powered aircraft carriers  The aircraft carrier construction industrial base also includes roughly 2,000 supplier firms in 46 states  The Gerald R  Ford (CVN-78) class carrier design ( Figure 1 ) is the successor to the Nimitz -class carrier design  The Ford -class design uses the basic Nimitz -class hull form but incorporates several improvements, including features permitting the ship to generate more aircraft sorties per day, more electrical power for supporting ship systems, and features permitting the ship to be operated by several hundred fewer sailors than a Nimitz -class ship, reducing 50-year life-cycle operating and support (O&S) costs for each ship by about $4 billion compared to the Nimitz -class design, the Navy estimates  Navy plans call for procuring at least four Ford-class carriers—CVN-78, CVN-79, CVN-80, and CVN-81  CVN-78, which was named Gerald R  Ford in 2007, was procured in FY2008  The Navy's proposed FY2020 budget estimates the ship's procurement cost at $13,084 0 million (i e , about $13 1 billion) in then-year dollars  The ship received advance procurement (AP) funding in FY2001-FY2007 and was fully funded in FY2008-FY2011 using congressionally authorized four-year incremental funding  To help cover cost growth on the ship, the ship received an additional $1,394 9 million in FY2014-FY2016 and FY2018 cost-to-complete procurement funding  (This $1,394 9 million is included in the above-mentioned estimated procurement cost of $13,084 0 million ) The ship was delivered to the Navy on May 31, 2017, and was commissioned into service on July 22, 2017  The Navy is currently working to complete construction, testing, and certification of the ship's 11 weapons elevators  CVN-79, which was named John F  Kennedy on May 29, 2011, was procured in FY2013  The Navy's proposed FY2020 budget estimates the ship's procurement cost at $11,327 4 million (i e , about $11 3 billion) in then-year dollars  The ship received AP funding in FY2007-FY2012, and was fully funded in FY2013-FY2018 using congressionally authorized six-year incremental funding  The ship is being built with an improved shipyard fabrication and assembly process that incorporates lessons learned from the construction of CVN-78  A key aim of this improved process is to substantially reduce the real (i e , inflation-adjusted) construction cost of CVN-79 compared to that of CVN-78  CVN-79 is scheduled for delivery to the Navy in September 2024  CVN-80 ( Enterprise ) and CVN-81 (not yet named) are being procured under a two-ship block buy contract that was authorized by Section 121(a)(2) of the John S  McCain National Defense Authorization Act for Fiscal Year 2019 ( H R  5515 / P L  115-232 of August 13, 2018)  The provision permitted the Navy to add CVN-81 to the existing contract for building CVN-80 after the Department of Defense (DOD) made certain certifications to Congress  DOD made the certifications on December 31, 2018, and the Navy announced the award of the contract on January 31, 2019  Compared to the estimated procurement costs for CVN-80 and CVN-81 in the Navy's FY2019 budget submission, the Navy estimates under its FY2020 budget submission that the two-ship block buy contract will reduce the cost of CVN-80 by $246 6 million and the cost of CVN-81 by $2,637 3 million, for a combined reduction of $2,883 9 million (i e , about $2 9 billion)  (DOD characterizes the combined reduction as "nearly $3 billion " ) Using higher estimated baseline costs for CVN-80 and CVN-81 taken from a December 2017 Navy business case analysis, the Navy estimates under its FY2020 budget submission that the two-ship contract will reduce the cost of CVN-80 by $770 9 million and the cost of CVN-81 by $3,086 3 million, for a combined reduction of $3,857 2 million (i e , about $3 9 billion)  (DOD characterizes the combined reduction as $4 billion ) These figures are all expressed in then-year dollars, meaning dollars that are not adjusted for inflation  Regarding the difference between a savings of about $2 9 billion from the figures in the Navy's FY2019 budget submission and a savings of about $3 9 billion from the December 2017 Navy business case analysis, a February 5, 2019, press report quoted a Navy spokesman as stating that the Navy's FY2019 budget submission "already accounted for at least $1B [$1 billion] of potential savings, a two-CVN buy would save an additional $3B [$3 billion] " This suggests that the Navy, in preparing its FY2019 budget submission, may have anticipated that it would receive from Congress authority for implementing some kind of combined purchase (such as, perhaps, a combined purchase of materials) for CVN-80 and CVN-81  For additional background information on the two-ship block buy contract, see Appendix B   CVN-80, which was named Enterprise on December 1, 2012, was procured in FY2018  The Navy's proposed FY2020 budget estimates the ship's procurement cost at $12,335 1 million (i e , about $12 3 billion) in then-year dollars  The ship received AP funding in FY2016 and FY2017, and the Navy plans to fully fund the ship in FY2018-FY2025 using incremental funding authorized by Section 121(c) of P L  115-232   The Navy's proposed FY2020 budget requests $1,062 0 million in procurement funding for the ship  The ship is scheduled for delivery to the Navy in March 2028  Prior to the awarding of the two-ship block buy contract, CVN-81, which has not yet been named, was scheduled to be procured in FY2023  Following the awarding of the two-ship block buy contract, the Navy has chosen to show CVN-81 in its FY2020 budget submission as a ship to be procured in FY2020 (as opposed to a ship that was procured in FY2019)  The Navy's FY2020 budget submission estimates the ship's procurement cost at $12,450 7 million (i e , about $12 5 billion) in then-year dollars  The Navy plans to fully fund the ship beginning in FY2019 and extending beyond FY2026 using incremental funding authorized by Section 121(c) of P L  115-232   The Navy's proposed FY2020 budget requests $1,285 0 million in procurement funding for the ship  The ship is scheduled for delivery to the Navy in February 2032  Table 1 shows procurement funding for CVNs 78, 79, 80, and 81 through FY2026+ (meaning FY2026 and some number of years after FY2026)  Congress has established procurement cost caps for CVN-78 class aircraft carriers: Section 122 of the FY2007 John Warner National Defense Authorization Act ( H R  5122 / P L  109-364 of October 17, 2006) established a procurement cost cap for CVN-78 of $10 5 billion, plus adjustments for inflation and other factors, and a procurement cost cap for subsequent Ford-class carriers of $8 1 billion each, plus adjustments for inflation and other factors  The conference report ( H Rept  109-702 of September 29, 2006) on P L  109-364 discusses Section 122 on pages 551-552  Section 121 of the FY2014 National Defense Authorization Act ( H R  3304 / P L  113-66 of December 26, 2013) amended the procurement cost cap for the CVN-78 program to provide a revised cap of $12,887 0 million for CVN-78 and a revised cap of $11,498 0 million for each follow-on ship in the program, plus adjustments for inflation and other factors (including an additional factor not included in original cost cap)  Section 122 of the FY2016 National Defense Authorization Act ( S  1356 / P L  114-92 of November 25, 2015) further amended the cost cap for the CVN-78 program to provide a revised cap of $11,398 0 million for each follow-on ship in the program, plus adjustment for inflation and other factors, and with a new provision stating that, if during construction of CVN-79, the Chief of Naval Operations determines that measures required to complete the ship within the revised cost cap shall result in an unacceptable reduction to the ship's operational capability, the Secretary of the Navy may increase the CVN-79 cost cap by up to $100 million (i e , to $11 498 billion)  If such an action is taken, the Navy is to adhere to the notification requirements specified in the cost cap legislation  Section 121(a) of the FY2018 National Defense Authorization Act ( H R  2810 / P L  115-91 of December 12, 2017) further amended the cost cap for the CVN-78 program to provide a revised cap of $12,568 0 million for CVN-80 and subsequent ships in the program, plus adjustment for inflation and other factors  (The cap for CVN-79 was kept at $11,398 0 million, plus adjustment for inflation and other factors ) The provision also amended the basis for adjusting the caps for inflation, and excluded certain costs from being counted against the caps  In an August 2, 2017, letter to the congressional defense committees, then-Acting Secretary of the Navy Sean Stackley notified the committees that under subsection (b)(7) of Section 122 of P L  114-92 as amended by Section 121 of P L  113-66 —a subsection allowing increases to the cost cap for CVN-78 for "the amounts of increases or decreases in costs of that ship that are attributable solely to an urgent and unforeseen requirement identified as a result of the shipboard test program"—he had increased the cost cap for CVN-78 by $20 million, to $12,907 0 million  In a May 8, 2018, letter to the congressional defense committees, Secretary of the Navy Richard Spencer notified the committees that under subsections (b)(6) and (b)(7) of Section 122 of P L  114-92 as amended by Section 121 of P L  113-66 —subsections allowing increases to the cost cap for CVN-78 for "the amounts of increases or decreases to cost required to correct deficiencies that may affect the safety of the ship and personnel or otherwise preclude the ship from safe operation and crew certification" and for "the amounts of increases or decreases in costs of CVN 78 that are attributable solely to an urgent and unforeseen requirement identified as a result of the shipboard test program," respectively—he had increased the cost cap for CVN-78 by $120 million, to $13,027 million  Table 2 shows changes in the estimated procurement costs of CVNs 78, 79, 80, and 81 since the budget submission for FY2008—the year of procurement for CVN-78  The Navy's FY2020 budget submission proposed to not fund the mid-life nuclear refueling overhaul (called a Refueling Complex Overhaul, or RCOH) for the aircraft carrier CVN-75 ( Harry S  Truman ), and to instead retire the ship around FY2024 and also deactivate one of the Navy's carrier air wings at about the same time  On April 30, 2019, however, the Administration announced that it was effectively withdrawing this proposal from the Navy's FY2020 budget submission  The Administration now supports funding the CVN-75 RCOH and keeping CVN-75 (and by implication its associated air wing) in service past FY2024  For additional discussion of this withdrawn budget proposal, see Appendix A   One issue for Congress concerns DOD's decision to show CVN-81 in its FY2020 budget submission as a ship to be procured in FY2020, instead of a ship that was procured in FY2019  Grounds for showing CVN-81 as a ship that was procured in FY2019 would include the following: Within Section 121 of the John S  McCain National Defense Authorization Act for Fiscal Year 2019 ( H R  5515 / P L  115-232 of August 13, 2018)—the provision that authorized the two-ship block buy contract for CVN-80 and CVN-81—subsection (a)(1) specifically authorizes a contract for the procurement of CVN-81 "beginning with the fiscal year 2019 program year " The header for subsection (a)(1) is "Procurement Authorized " Consistent with Section 121(a)(1), the funding table for the Navy's shipbuilding account in the conference report ( H Rept  115-874 of July 25, 2018) on H R  5515 shows a quantity of "1" in line 002 of the FY2019 SCN (Shipbuilding and Conversion, Navy) appropriation account  Line 002 is the line item for procurement (not advance procurement [AP]) funding for the CVN-78 program  A notation in the table for line 002 states that the procurement funding authorized for this line item is for "Authorize CVN81—One ship " The funding table does not authorize any funding for line 003 of the FY2019 SCN account—the line item for AP funding for the CVN-78 program  (AP funding is funding for the procurement of a ship to be procured in a future fiscal year ) Consistent with the two above points, the paragraph in the FY2019 DOD appropriations act (Division A of H R  6157 / P L  115-245 of September 28, 2018) that makes appropriations for the SCN account makes procurement (not AP) appropriations for the CVN-78 program  This paragraph also states that "the funds made available by this Act for the Carrier Replacement Program (CVN-80) may be available to modify or enter into a new contract for the procurement of a Ford-class aircraft carrier designated CVN–81 pursuant to section 121 of the John S  McCain National Defense Authorization Act for Fiscal Year 2019 " Consistent with this bill language, the funding table for the SCN account in the joint explanatory statement for H R  6157 shows that this funding was provided for line 2 of the FY2019 SCN account (CVN-78 program procurement funding), not line 3 of the FY2019 SCN account (CVN-78 program AP funding)  Consistent with all of the above points (and as reflected in Table 1 of this CRS report), the Navy's FY2020 budget submission shows the $618 million in FY2019 funding for CVN-81 as full funding (meaning funding for a procured ship), rather than AP funding (meaning funding for a ship to be procured in a future fiscal year)  DOD's decision to show CVN-81 in its FY2020 budget submission as a ship to be procured in FY2020, instead of a ship that was procured in FY2019, affects the comparison of numbers of ships procured in FY2019 and FY2020  If DOD had decided to show CVN-81 in its FY2020 budget submission as a ship that was procured in FY2019, then the total number of ships procured in FY2019 would be 14, and the total number requested for FY2020 would be 11—3 ships, or 21%, fewer than the FY2019 total of 14  Showing CVN-81 in the FY2020 budget submission as an FY2020 ship changes the FY2019 and FY2020 totals to 13 ships and 12 ships, respectively, making number FY2020 closer to the FY2019 number  DOD's decision to show CVN-81 in its FY2020 budget submission as a ship to be procured in FY2020, instead of a ship that was procured in FY2019, also affects the aircraft carrier procurement profile shown in the Navy's FY2020 30-year (FY2020-FY2049) 30-year shipbuilding plan  If DOD had decided to show CVN-81 in its FY2020 budget submission as a ship that was procured in FY2019, the ship-procurement table in the 30-year plan would show the procurement of no carriers for the first eight years (FY2020-FY2027) of the 30-year period  Showing CVN-81 in the FY2020 budget submission as an FY2020 ship changes the presentation to show the procurement of an aircraft carrier in the first year of the 30-year period  Potential oversight questions for Congress include the following: Compliance with c ongressional intent   Is DOD's decision to show CVN-81 as a ship to be procured in FY2020, rather than as a ship that was procured in FY2019, consistent with congressional intent as shown in bill and report language for P L  115-232 and P L  115-245 ? Can DOD's decision be viewed as a challenge to Congress's Article 1 power to authorize and appropriate funds for the construction of Navy ships? If DOD's decision regarding the year of procurement for CVN-81 is accepted, would this set a precedent for the executive branch regarding its future compliance with Congressional decisions for authorizing and funding of other federal programs? Executability of FY2019 procurement funds for CVN-81  FY2019 SCN-account funding for the CVN-78 program was appropriated by Congress, and shows in the Navy's FY2020 budget-justification books, as procurement funding (meaning funding for one or more procured ships) rather than AP funding (meaning funding for one or more ships to be procured in a future fiscal year)  If CVN-81 is accepted as a ship to be procured in FY2020, what implications, if any, might that have for the executability of the $618 million in FY2019 procurement (as opposed to AP) funds for CVN-81 shown in the Navy's FY2020 budget submission (as reflected in Table 1 of this CRS report)? Executability of CVN-81 during portion of FY2020 under a CR  Navy officials have testified that if the Navy operates under a continuing resolution (CR) for some part of FY2020, then absent a special legislative provision in the CR known as an anomaly, the Navy during that period likely would not be able to proceed with CVN-81, because CRs typically prevent year-to-year quantity increases in procurement programs, and treating CVN-81 as a ship to be procured in FY2020 would mean that the CVN-78 program would have a year-to-year quantity increase of zero ships in FY2019 followed by one ship in FY2020  If work on CVN-81 were to not proceed for some part of FY2020 because the Navy during that period were to operate under a CR, what impact would that have on the implementation and status of the two-ship contract for building CVN-80 and CVN-81? FY2019 and FY2020 numbers of ships procured and 30-year shipbuilding plan  What effect, if any, did considerations regarding the comparison of numbers of ships procured in FY2019 and FY2020 and the aircraft carrier procurement profile during the initial years of the 30-year shipbuilding plan have on DOD's decision to show CVN-81 in its FY2020 budget submission as a ship to be procured in FY2020, instead of a ship that was procured in FY2019? Treatment in FY2020 legislation  Since P L  115-232 shows CVN-81 as authorized in FY2019, how should the House and Senate Armed Services committees act on the request in the Navy's FY2020 budget submission to authorize an aircraft carrier in FY2020? If the FY2020 national defense authorization act authorizes the procurement of an aircraft carrier in FY2020, and the authorization for the procurement of an aircraft carrier in FY2019 were not rescinded, would that create confusion as to whether the ship being authorized in FY2020 was CVN-81 or CVN-82, the latter being a ship currently planned for procurement in FY2028? If the FY2019 authorization for CVN-81 were rescinded, what implications, if any, would that have for the implementation of Section 121 of P L  115-232 , including the award of the two-carrier contract on January 31, 2019 (i e , during FY2019)? Another issue for Congress concerns the Navy's decision, as part of its FY2020 budget submission, to not accelerate the scheduled procurement of CVN-82 from FY2028 to an earlier fiscal year  The Navy's FY2020 budget submission shows that, as a result of the two-carrier contract, the scheduled delivery date for CVN-81 has been accelerated by seven months, to February 2032, compared to September 2032 in the Navy's FY2019 budget submission  The scheduled year of procurement for CVN-82 has not been changed—in the Navy's FY2020 budget submission, it shows as a ship to be procured in FY2028, as it did in the Navy's FY2019 budget submission  The accelerated delivery date for CVN-81, combined with the unchanged year of procurement for CVN-82, suggests that the interval between the construction of CVN-81 and construction of CVN-82 has been increased by something like seven months  Other things held equal, this increased interval could result in increased loss of learning in shifting from construction of CVN-81 to construction of CVN-82, and possibly in reduced spreading of shipyard fixed overhead costs during the construction of CVN-82  Both of these effects could increase the procurement cost of CVN-82  Potential oversight questions for Congress include the following: What impact, if any, will the accelerated delivery of CVN-81 under the two-carrier contract, combined with the unchanged year of procurement for CVN-82, have on the procurement cost of CVN-82? How might the procurement cost of CVN-82 change in real (i e , inflation-adjusted) terms if its year of procurement were accelerated to an earlier year, such as FY2027? Another issue for Congress is whether to approve, reject, or modify the Navy's FY2020 procurement funding requests for CVN-78 program  In assessing this question, Congress could consider various factors, including whether the Navy has properly scheduled and accurately priced the work it is proposing to do on the CVN-78 program in FY2020, particularly in the context of implementing the two-carrier contract for CVN-80 and CVN-81  Another issue for Congress concerns the date for achieving the Navy's 12-ship force-level goal for aircraft carriers  As noted earlier, under the Navy's FY2020 30-year shipbuilding plan, carrier procurement would shift from 5-year centers to 4-year centers after the procurement of CVN-82 in FY2028, and a 12-carrier force would be achieved on a sustained basis in the 2060s  As also noted earlier, shifting carrier procurement to 3- or 3 5-year centers could achieve a 12-carrier fleet as soon as the 2030s, unless the service lives of one or more existing carriers were substantially extended  Other things held equal, procuring carriers on 3- or 3 5-year centers rather than 4-year centers would increase Navy funding requirements during the period of the 30-year shipbuilding plan for procuring aircraft carriers and for operating and supporting a 12-carrier force rather than a force of 11 or fewer carriers  For the past several years, cost growth in the CVN-78 program, Navy efforts to stem that growth, and Navy efforts to manage costs so as to stay within the program's cost caps have been continuing oversight issues for Congress on the CVN-78 program  As shown in Table 2 , the estimated procurement costs of CVN-78, CVN-79, and CVN-80 have grown 24 7%, 23 2%, and 15 1%, respectively, since the submission of the FY2008 budget  Cost growth on CVN-78 required the Navy to program $1,394 9 million in cost-to-complete procurement funding for the ship in FY2014-FY2016 and FY2018 (see Table 1 )  As also shown in Table 2 , however, cost growth on CVN-78, CVN-79, and CVN-80 more or less stopped in FY2013 and FY2014: while the estimated cost of CVN-78 grew considerably between the FY2008 budget (the budget in which CVN-78 was procured) and the FY2014 budget, since the FY2014 budget, it has grown by only a small amount (about 2%); while the estimated cost of CVN-79 grew considerably between the FY2008 budget and the FY2013 budget (in part because the procurement date for the ship was deferred by one year in the FY2010 budget), since the FY2013 budget it has declined by a small amount (less than 1%); and while the estimated cost of CVN-80 grew considerably between the FY2008 budget and the FY2013 budget (in part because the procurement date for the ship was deferred by two years in the FY2010 budget), since the FY2013 budget it has declined by about 11%  Section 128 of the FY2016 National Defense Authorization Act ( S  1356 / P L  114-92 of November 25, 2015) states the following: SEC  128  Limitation on availability of funds for U S S  John F  Kennedy (CVN–79)  (a) Limitation —Of the funds authorized to be appropriated by this Act or otherwise made available for fiscal year 2016 for procurement for the U S S  John F  Kennedy (CVN–79), $100,000,000 may not be obligated or expended until the date on which the Secretary of the Navy submits to the congressional defense committees the certification under subsection (b)(1) or the notification under paragraph (2) of such subsection, as the case may be, and the reports under subsections (c) and (d)     (c) Report on costs relating to CVN–79 and CVN–80 — (1) IN GENERAL —Not later than 90 days after the date of the enactment of this Act, the Secretary of the Navy shall submit to the congressional defense committees a report that evaluates cost issues related to the U S S  John F  Kennedy (CVN–79) and the U S S  Enterprise (CVN–80)  (2) ELEMENTS —The report under paragraph (1) shall include the following: (A) Options to achieve ship end cost of no more than $10,000,000,000  (B) Options to freeze the design of CVN–79 for CVN–80, with exceptions only for changes due to full ship shock trials or other significant test and evaluation results  (C) Options to reduce the plans cost for CVN–80 to less than 50 percent of the CVN–79 plans cost  (D) Options to transition all non-nuclear Government-furnished equipment, including launch and arresting equipment, to contractor-furnished equipment  (E) Options to build the ships at the most economic pace, such as four years between ships  (F) A business case analysis for the Enterprise Air Search Radar modification to CVN–79 and CVN–80  (G) A business case analysis for the two-phase CVN–79 delivery proposal and impact on fleet deployments  Section 126 of the FY2017 National Defense Authorization Act ( S  2943 / P L  114-328 of December 23, 2016) states the following: SEC  126  Limitation on availability of funds for procurement of U S S  Enterprise (CVN–80)  (a) Limitation —Of the funds authorized to be appropriated by this Act or otherwise made available for fiscal year 2017 for advance procurement or procurement for the U S S  Enterprise (CVN–80), not more than 25 percent may be obligated or expended until the date on which the Secretary of the Navy and the Chief of Naval Operations jointly submit to the congressional defense committees the report under subsection (b)  (b) Initial report on CVN–79 and CVN–80 —Not later than December 1, 2016, the Secretary of the Navy and the Chief of Naval Operations shall jointly submit to the congressional defense committees a report that includes a description of actions that may be carried out (including de-scoping requirements, if necessary) to achieve a ship end cost of— (1) not more than $12,000,000,000 for the CVN–80; and (2) not more than $11,000,000,000 for the U S S  John F  Kennedy (CVN–79)  (c) Annual report on CVN–79 and CVN–80 — (1) IN GENERAL —Together with the budget of the President for each fiscal year through fiscal year 2021 (as submitted to Congress under section 1105(a) of title 31, United States Code) the Secretary of the Navy and the Chief of Naval Operations shall submit a report on the efforts of the Navy to achieve the ship end costs described in subsection (b) for the CVN–79 and CVN–80  (2) ELEMENTS —The report under paragraph (1) shall include, with respect to the procurement of the CVN–79 and the CVN–80, the following: (A) A description of the progress made toward achieving the ship end costs described in subsection (b), including realized cost savings  (B) A description of low value-added or unnecessary elements of program cost that have been reduced or eliminated  (C) Cost savings estimates for current and planned initiatives  (D) A schedule that includes— (i) a plan for spending with phasing of key obligations and outlays; (ii) decision points describing when savings may be realized; and (iii) key events that must occur to execute initiatives and achieve savings  (E) Instances of lower Government estimates used in contract negotiations  (F) A description of risks that may result from achieving the procurement end costs specified in subsection (b)  (G) A description of incentives or rewards provided or planned to be provided to prime contractors for meeting the procurement end costs specified in subsection (b)  Section 121(b) of the FY2018 National Defense Authorization Act ( H R  2810 / P L  115-91 of December 12, 2017) states the following: SEC  121  Aircraft carriers      (b) Waiver on limitation of availability of funds for CVN–79 —The Secretary of Defense may waive subsections (a) and (b) of section 128 of the National Defense Authorization Act for Fiscal Year 2016 (Public Law 114–92; 129 Stat  751) after a period of 60 days has elapsed following the date on which the Secretary submits to the congressional defense committees a written notification of the intent of the Secretary to issue such a waiver  The Secretary shall include in any such notification the following: (1) The rationale of the Secretary for issuing the waiver  (2) The revised test and evaluation master plan that describes when full ship shock trials will be held on Ford-class aircraft carriers  (3) A certification that the Secretary has analyzed and accepted the operational risk of the U S S  Gerald R  Ford deploying without having conducted full ship shock trials, and that the Secretary has not delegated the decision to issue such waiver  Sources of risk of cost growth on CVN-78 included, among other things, certain new systems to be installed on CVN-78 whose development, if delayed, could delay the completion of the ship  These systems included a new type of aircraft catapult called the Electromagnetic Launch System (EMALS), a new aircraft arresting system called the Advanced Arresting Gear (AAG), and the ship's primary radar, called the Dual Band Radar (DBR)  Congress has followed these and other sources of risk of cost growth for years  In July 2016, the DOD Inspector General issued a report critical of the Navy's management of the AAG development effort  In January 2017, it was reported that after conducting a review of potential alternative systems, the Navy had decided to continue stay with its plan to install EMALs and AAG on the first three Ford-class carriers  Section 125 of the FY2017 National Defense Authorization Act ( S  2943 / P L  114-328 of December 23, 2016) limited the availability of funds for the AAG program until certain conditions are met  Navy officials have stated that they are working to control the cost of CVN-79 by equipping the ship with a less expensive primary radar, by turning down opportunities to add features to the ship that would have made the ship more capable than CVN-78 but would also have increased CVN-79's cost, and by using a build strategy for the ship that incorporates improvements over the build strategy that was used for CVN-78  These build-strategy improvements, Navy officials have said, include the following items, among others: achieving a higher percentage of outfitting of ship modules before modules are stacked together to form the ship; achieving "learning inside the ship," which means producing similar-looking ship modules in an assembly line-like series, so as to achieve improved production learning curve benefits in the production of these modules; and more economical ordering of parts and materials including greater use of batch ordering of parts and materials, as opposed to ordering parts and materials on an individual basis as each is needed  For additional background information on cost growth in the CVN-78 program, Navy efforts to stem that growth, and Navy efforts to manage costs so as to stay within the program's cost caps, see Appendix C and Appendix D   Another oversight issue for Congress concerns Navy efforts to complete the construction, testing, and certification of the weapons elevators on CVN-78  (The ship's weapons elevators transport missiles and bombs from the ship's weapon magazines to the ship's flight deck, so that they can be loaded onto aircraft that are getting ready to take off from the ship ) A November 2, 2018, press report states the following: The $13 billion Gerald R  Ford aircraft carrier, the U S  Navy's costliest warship, was delivered last year without elevators needed to lift bombs from below deck magazines for loading on fighter jets  Previously undisclosed problems with the 11 elevators for the ship built by Huntington Ingalls Industries Inc  add to long-standing reliability and technical problems with two other core systems—the electromagnetic system to launch planes and the arresting gear to catch them when they land  The Advanced Weapons Elevators, which are moved by magnets rather than cables, were supposed to be installed by the vessel's original delivery date in May 2017  Instead, final installation was delayed by problems including four instances of unsafe "uncommanded movements" since 2015, according to the Navy  While progress was being made on the carrier's other flawed systems, the elevator is "our Achilles heel," Navy Secretary Richard Spencer told reporters in August without providing details     The Navy says that the first carrier will be fully combat-capable, including the elevators, by July—the end of its current 12-month pier-side shakedown period in Virginia  Navy weapons buyer James Geurts cited what he called "considerable progress" on the Ford, including on the elevators, in a July 6 memo to Pentagon acquisition head Ellen Lord  The Navy in May requested permission from Congress in May to increase the Ford's cost cap by $120 million, partly to fix elevator issues "to preclude any effect on the safety of the ship and personnel " The safety issues related to the uncommanded movements, the Navy said in an email     Beci Brenton, a spokeswoman for Newport News, Virginia-based Huntington Ingalls, said "all the elevators are installed " She said the weapons elevator is among "the most advanced technologies being incorporated into" the carrier and "its completion has been delayed due to a number of first-in-class issues," Brenton said  "We are committed to working through the remaining technical challenges," she said  William Couch, a spokesman for the Naval Sea Systems Command, said the elevators are "in varying levels of construction and testing " Six are far enough along to be operated by the shipbuilder, and testing has started on two of those, he said  All 11 "should have been completed and delivered with the ship delivery," according to Couch  He said the contractor has corrected "all issues," including the "four uncommanded movements over the last three years that were discovered during the building, operational grooming, or testing phases "    A November 2010 program on PBS's "Nova" science series extolled the "Elevator of Tomorrow" being developed by Federal Equipment Co , a Cincinnati-based subcontractor to Huntington Ingalls  Doug Ridenour, president of Federal Equipment Co , said the elevator's key technologies "have been consistently demonstrated for years" in a test unit in the company's plant and any programming or software-related issues have been fixed  But "shipboard integration involves many other technology insertions not controlled by" his company, he said  At a November 27, 2018, hearing on Navy shipbuilding programs before the Seapower subcommittee of the Senate Armed Services Committee, the following exchange occurred: SENATOR TIM KAINE (continuing): There have been challenges with the advanced weapons elevators on the CVN, some of the technical difficult[ies] seem similar to those that were experienced earlier on both the [aircraft] launch and arresting systems  I think that the Navy put together independent review teams to tackle those issues and provide solutions  Are we at a point where that may be needed on the weapons elevators or are we in a position where we think the progress on the weapons elevators is satisfactory? JAMES F  GEURTS, ASSISTANT SECRETARY OF THE NAVY FOR RESEARCH, DEVELOPMENT AND ACQUISITION: Yes, sir  So there are 11 weapons elevators [and] each one of them we have to produce, test and then certify  The first two of those have been produced, the first one's been through test and certification  The second one is about 94 percent through test  We are making progress to get through all of the elevators during this availability  I am likely to do an independent review team not on the immediate construction for CVN-78 but looking at the longer-term sustainability, resilience, reliability to make sure we are in a position to support those elevators for the long term, that we've got all of the training and all of the reliability built into those  We've done so many independent reviews for the [CVN-]78 elevator design as they are so we won't do one on the current efforts on [CVN-]78  We've got a dedicated team working our way through those issues  KAINE: And is your timing on that testing and certification on [CVN-]78—you have this 12-month period where you are testing—[do] you think you will get through the testing and certification of all of the 11 elevators in that year one? GEURTS: My current assessment is we will get through all of the production and much of the testing  We may have some of the certification issues to go  I am watching it very closely and we will keep you and your staff informed on progress there  A December 5, 2018, press report stated the following: The Navy plans to complete installation and testing of the 11 elevators before the Ford completes its post-delivery shakedown phase in July, Captain Danny Hernandez, a Navy spokesman, said in an email  Six will also be certified for use by then, but five won't be completed until after July, he said  "A dedicated team is engaged on these efforts and will accelerate this certification work and schedule where feasible," he said  Huntington spokeswoman Beci Brenton said via email that company officials had a "very productive meeting" with Inhofe that included both the elevators and benefits of a two-carrier contract  The elevator's completion "has been delayed due to a number of first-in-class issues associated with the first-time installation, integration and test of this new technology," she said  "However, we are making substantial substantial progress in resolving the remaining technical challenges " A January 6, 2019, press report stated the following: The Navy Secretary has committed that the service and its industry partners will have working weapons elevators on aircraft carrier USS Gerald R  Ford (CVN-78) by the end of the summer—and the secretary's job is now on the line over that issue  The Navy accepted delivery of the first-in-class carrier and commissioned it into the fleet without any functioning weapons elevators  The carrier is now in its post-shakedown availability at builder Newport News Shipbuilding, after spending a year at sea running the ship to discover any potential flaws  Though the Navy already said the elevators would be addressed during this PSA period, the stakes are now higher: Navy Secretary Richard V  Spencer told President Donald Trump that the elevators would be installed and working by the time the carrier returns to sea, or else the president can use his famous "you're fired" line on the service secretary  Spencer said this morning at an event hosted by the Center for a New American Security that he spoke to Trump at length last month at the Army-Navy football game in Philadelphia  "I asked him to stick his hand out; he stuck his hand out  I said, let's do this like corporate America  I shook his hand and said, the elevators will be ready to go when she pulls out or you can fire me," Spencer said, adding that someone had to take accountability over the ongoing elevator challenges  "We're going to get it done  I know I'm going to get it done  I haven't been fired yet by anyone; being fired by the president really isn't on the top of my list "    The elevator issue has plagued the carrier for years, even if it garnered less attention than other high-profile new technologies on the carrier, such as the new Electromagnetic Aircraft Launch System (EMALS) and the Advanced Arresting Gear, both of which had their own fair share of technical problems  In 2016, the late Sen  John McCain (R-Ariz ), who then chaired the Senate Armed Services Committee, railed against the Ford-class program, noting that Ford was already overdue to be delivered to the Navy and still was facing ongoing technical difficulties  "The Navy's announcement of another two-month delay in the delivery of CVN-78 further demonstrates that key systems still have not demonstrated expected performance  The advanced arresting gear (AAG) cannot recover airplanes  Advanced weapons elevators cannot lift munitions  The dual-band radar cannot integrate two radar bands  Even if everything goes according to the Navy's plan, CVN-78 will be delivered with multiple systems unproven," McCain said in a July 2016 hearing  A month later the Pentagon announced a 60-day review of the Ford program, with a specific focus on five technology areas, including the elevators  Ford ultimately delivered to the Navy in June 2017 and commissioned a month later, still without working weapons elevators  In July 2018, when Ford entered PSA, the Navy said the maintenance availability had been extended from a planned eight months to a full year, to accommodate both the typical work that arises in PSA but also deferred work such as the construction and installation of weapons elevators and an upgrade to the AAG, whose technical challenges greatly contributed to the delayed delivery and commissioning of the ship  A January 16, 2019, press report stated the following: The Navy's newest aircraft carrier, USS Gerald R  Ford (CVN 78), closed out 2018 on a high note with the acceptance of the ship's first advanced weapons elevator (AWE), setting the tone for more positive developments in the year ahead  AWE Upper Stage #1 was turned over to the ship on Dec  21, following testing and certification by engineers at Huntington Ingalls Industries-Newport News Shipbuilding, where the ship is currently working through its post-shakedown availability (PSA)  The acceptance marks a major milestone for the ship and the Ford-class of aircraft carriers to follow     Though the first elevator has been accepted, work still remains on the remaining 10  Currently, all shipboard installation and testing activities of the AWEs are due to be completed prior to the end of Ford's PSA, scheduled for July  However, some remaining certification documentation will be performed for five of the 11 elevators after PSA completion  A March 6, 2019, press report stated the following: Nearly one month following the acceptance of its first advanced weapons elevator (AWE), the Navy's newest aircraft carrier, USS Gerald R  Ford (CVN 78), has accepted its second  AWE Upper Stage #3 was turned over to the ship February 14, following testing and certification by engineers at Huntington Ingalls Industries-Newport News Shipbuilding (NNS), where the ship is currently working through its post-shakedown availability (PSA)  According to Ford's Weapons Officer, Cmdr  Joe Thompson, acceptance of the second AWE offers an opportunity for Ford Sailors to become acquainted with the equipment during the PSA  "This gives us more time to learn and become subject matter experts," explained Thompson  "All of us are learning on brand new systems and brand new concepts  This acceptance gives us the opportunity to have that 'run time' on the physical aspects of the elevator, but also in evaluating the technical manuals, and learning the maintenance required to keep them operational " With two elevators in hand, Thompson explained that Sailors training on these new systems will be able to apply the lessons learned from the first elevator, Upper Stage #1, and apply them to Upper Stage #3, thereby streamlining the learning process and lessening the learning curve  "This is going to allow us to progress faster," he explained  "As we get smarter on one, we move on to the next and apply the lessons learned not only with regard to elevator operation, but also in the testing and certification, and maintenance processes "… Acceptance of the elevator was accelerated due to a merging of the test programs between NNS and the Naval Surface Warfare Center (NSWC), which removed redundant steps and moved certification up by 10 days  The team has identified other areas where redundancy can be removed to make the acceptance timelines more efficient  Another oversight issue for Congress concerns CVN-78 program issues raised in a December 2018 report from DOD's Director, Operational Test and Evaluation (DOT&E)—DOT&E's annual report for FY2018  Regarding the CVN-78 program, the report stated the following in part: Assessment • The delays in the ship development and initial trials pushed both phases of initial operational testing until FY21 and FY22  The delay in the ship's delivery and development added approximately 2 years to the timeline  As noted in previous annual reports, the CVN 78 test schedule has been aggressive, and the development of EMALS [Electromagnetic Aircraft Launch System], AAG [Advanced Arresting gear], AWE [Advanced Weapons Elevator], DBR [Dual Band Radar], and the Integrated Warfare System delayed the ship's first deployment to FY22  Reliability • Four of CVN 78's new systems stand out as being critical to flight operations: EMALS, AAG, DBR, and AWEs  Overall, the poor reliability demonstrated by AAG and EMALS and the uncertain reliability of DBR and AWEs could delay CVN 78 IOT&E [Initial Operational Test and Evaluation]  The Navy continues to test all four of these systems in their shipboard configurations aboard CVN 78  Reliability estimates derived from test data for EMALS and AAG are discussed in following subsections  For DBR and AWE, only engineering reliability estimates have been provided  EMALS • Testing to date involved 747 shipboard launches and demonstrated EMALS capability to launch aircraft planned for the CVN 78 Air Wing  • Through the first 747 shipboard launches, EMALS suffered 10 critical failures  This is well below the requirement of 4,166 Mean Cycles Between Critical Failures, where a cycle represents the launch of one aircraft  • The reliability concerns are exacerbated by the fact that the crew cannot readily electrically isolate EMALS components during flight operations due to the shared nature of the Energy Storage Groups and Power Conversion Subsystem inverters onboard CVN 78  The process for electrically isolating equipment is time-consuming; spinning down the EMALS motor/generators takes 1 5 hours by itself  The inability to readily electrically isolate equipment precludes EMALS maintenance during flight operations  AAG • Testing to date included 763 attempted shipboard landings and demonstrated AAG capability to recover aircraft planned for the CVN 78 air wing  • The Program Office redesigned major components that did not meet system specifications during land-based testing  Through the first 763 attempted shipboard landings, AAG suffered 10 operational mission failures (which includes one failure of the barricade system)  This reliability estimate falls well below the re-baselined reliability growth curve and well below the requirement of 16,500 Mean Cycles Between Operational Mission Failures, where a cycle represents the recovery of one aircraft  • The reliability concerns are magnified by the current AAG design that does not allow electrical isolation of the Power Conditioning Subsystem equipment from high power buses, limiting corrective maintenance on below-deck equipment during flight operations  Combat System • Results of SBDT [sea-based developmental testing] events indicate good SSDS [ship self-defense system] performance in scheduling and launching simulated RAMs [Rolling Airframe Missiles] and ESSMs [Evolved Sea Sparrow Missiles], as well as scheduling DBR directives for ESSM acquisition and target illumination  Insufficient interoperability testing with a CEC [Cooperative Engagement Capability] network and Link 16 prevents an estimate of performance in this area  It is unknown if the integration problems between SSDS and Surface Electronic Warfare Improvement Program (SEWIP) Block 2 identified during engineering testing at Wallops Island have been resolved because SEWIP Block 2 was not installed on the ship during these SBDT events  • CVN 78's combat system testing on the SDTS [self-defense test ship] is at risk due to schedule constraints, lack of funding, and insufficient planned developmental testing  DBR • Throughout the five CVN 78 SBDTs, DBR was plagued by extraneous false and close-in dual tracks adversely affecting its performance  • Integration of the DBR electronic protection capabilities remains incomplete and unfunded  With modern threats, a lack of electronic protection places the ship in a high-risk scenario if deployed to combat  • The Navy analysis noted that DBR performance needs to be improved to support carrier air traffic control center certification  Sortie Generation Rate • CVN 78 is unlikely to achieve its SGR [sortie generation rate] requirement  The target threshold is based on unrealistic assumptions including fair weather and unlimited visibility, and that aircraft emergencies, failures of shipboard equipment, ship maneuvers, and manning shortfalls will not affect flight operations  During the 2013 operational assessment, DOT&E conducted an analysis of past aircraft carrier operations in major conflicts  The analysis concludes that the CVN 78 SGR requirement is well above historical levels  • DOT&E plans to assess CVN 78 performance during IOT&E by comparing it to the SGR requirement as well as to the demonstrated performance of the Nimitz-class carriers  • Poor reliability of key systems that support sortie generation on CVN 78 could cause a cascading series of delays during flight operations that would affect CVN 78's ability to generate sorties  The poor or unknown reliability of these critical subsystems represents the most risk to the successful completion of CVN 78 IOT&E  Manning • Based on current expected manning, the berthing capacity for officers and enlisted will be exceeded by approximately 100 personnel with some variability in the estimates  This also leaves no room for extra personnel during inspections, exercises, or routine face-to-face turnovers  • Planned ship manning requires filling 100 percent of the billets  This is not the Navy's standard practice on other ships, and the personnel and training systems may not be able to support 100 percent manning  Additionally, workload estimates for the many new technologies such as catapults, arresting gear, radar, and weapons and aircraft elevators are not yet well understood  Electromagnetic Compatibility • Developmental testing identified significant EMI [electromagnetic interference] and radiation hazard problems  The Navy continues to characterize and develop mitigation plans for the problems, but some operational limitations and restrictions are expected to persist into IOT&E and deployment  The Navy will need to develop capability assessments at differring levels of system utilization in order for commanders to make informed decisions on system employment  Live Fire Test & Evaluation • The vulnerability of CVN 78's many new critical systems to underwater threat-induced shock is unknown  The program plans to complete shock testing on EMALS, AAG, and the AWE components during CY19, but because of a scarcity of systems, shock testing of DBR components lags and will likely not be completed before the FSSTs [full ship shock trials]  • The Vulnerability Assessment Report provides an assessment of the ship's survivability to air-delivered threat engagements  The classified findings in the report identify the specific equipment that most frequently would lead to mission capability loss  In FY19, the Navy is scheduled to deliver additional report volumes that will assess vulnerability to underwater threats and compliance with Operational Requirements Document survivability criteria  Recommendations The Navy should: 1  Provide schedule, funding, and an execution strategy for assessing SGR  This strategy should specify which testing will be accomplished live, a process for accrediting the Seabasing/Seastrike Aviation Model for operational testing, and a method for comparing CVN 78 performance with that of the Nimitz class  2  Continue to characterize the electromagnetic environment onboard CVN 78 and develop operating procedures to maximize system effectiveness and maintain safety  As applicable, the Navy should utilize the lessons learned from CVN 78 to inform design modifications for CVN 79 and future carriers  3  Develop and implement DBR electronic protection to enhance ship survivability against modern threats  4  Submit an updated TEMP  Another oversight issue for Congress concerns CVN-78 program issues raised in the 2019 edition of the Government Accountability Office's (GAO's) annual report surveying selected DOD weapon acquisition programs  Some of these issues raised by GAO overlap with issues discussed in previous sections of this CRS report  Regarding the CVN-78 program, the report stated the following: Technology Maturity, Design Stability, and Production Readiness The Navy accepted delivery of the lead ship, CVN 78, in May 2017 despite challenges related to immature technologies and struggles to demonstrate the reliability of mature systems  The Navy reports that 10 of the Ford Class's 12 critical technologies are fully mature—the advanced arresting gear (AAG) and one of the ship's missile systems are not yet mature  The advanced weapons elevators are among the systems deemed mature by the Navy; however, according to Navy officials, only 2 of the 11 elevators installed on the ship can bring munitions to the flight deck—a key element of operational flights  The shipbuilder is working to correct the system during its first post-delivery maintenance period, now scheduled to end in October 2019, and the Navy plans to create a land-based site to test the elevators, which will come at an additional cost  Shipboard testing is ongoing for several critical systems and could delay future operational testing  Those systems include the electromagnetic aircraft launch system (EMALS), AAG, and dual band radar (DBR)  Although the Navy is testing EMALS and AAG on the ship with aircraft, the reliability of those systems remains a concern  If these systems cannot function safely, CVN 78 will not demonstrate it can rapidly deploy aircraft—a key requirement for these carriers  Recent shipboard testing revealed that the Navy is struggling to get DBR to operate as planned  Moreover, DBR poses a greater radiation hazard to personnel and systems on an aircraft carrier than the Navy anticipated, which could restrict certain types of flight operations  The remaining challenges the Navy faces in maturing CVN 78's critical technologies could lead to their redesign or replacement on later ships  This would include CVN 79, which is currently 55 percent complete, as well as the third and fourth ships, CVNs 80 and 81  CVN 79 repeats the CVN 78 design with some modifications and replaces DBR with the Enterprise Air Surveillance Radar (EASR), which is in development  The Navy does not identify this new system as a critical technology in the Ford Class program because it derives from the pre-existing Air and Missile Defense Radar (AMDR) program  However, EASR is a different size and performs a different mission than the AMDR systems, which are designed for destroyers  Therefore, EASR may still require design and development efforts to function on the carrier  The Navy plans to procure two EASR units for CVNs 79 and 80 and install the CVN 79 unit during that ship's second phase of delivery  CVNs 80 and 81 will repeat the design of CVN 79  Other Program Issues CVN 78's procurement costs increased by 23 percent over its initial cost cap and as a result of continuing technical deficiencies, the Navy may still require more funding to complete this ship  The Navy increased the current $12 9 billion cost cap for CVN 78 by $120 million in May 2018 to account for additional post-delivery work, but added work and cost changes may result in an additional cost increase  Costs for CVN 79 are also likely to increase as a result of optimistic cost and labor targets, putting the ship at risk of exceeding its $11 4 billion cost cap  The CVN 79 cost estimate assumes unprecedented construction efficiency—labor hours will be 18 percent lower than CVN 78  However, our analysis shows the shipbuilder is not meeting this goal and is unlikely to improve performance enough to meet cost and labor targets  Congress raised the cost cap for CVN 80 and later ships to $12 6 billion and approved the Navy's plans to buy two carriers—CVNs 80 and 81—at the same time, based on the shipbuilder's estimate that this strategy will save the Navy over $2 billion  However, it is unclear whether the Navy can meet this cost cap, even with the estimated savings from a two-ship buy, because it assumes further reductions in subsystem costs, construction change orders, and labor hours  The Navy projects a further reduction in labor hours compared to CVN 79—about 25 percent fewer labor hours than CVN 78—will contribute to cost savings for these ships  The program office indicated that it does not separately track or report information on software development to integrate the various subsystems of the ship  These subsystems include CVN 78's combat control systems, which rely on integrating systems through software intensive development  Program Office Comments We provided a draft of this assessment to the program office for review and comment  The program office provided technical comments, which we incorporated where appropriate  The program office stated that, in July 2018, CVN 78 entered a year-long maintenance period  It also said that, as of February 2019, two advanced weapons elevators are operating, and it continues to improve developmental system reliability  The program also stated that, with CVN 79 construction 55 percent complete, shipbuilder cost performance remains stable, but slightly below the level needed to achieve production labor hour reduction targets  The program stated that the shipbuilder continues to work through the effects of material shortfalls that disrupted performance  The program said that the Navy plans to deliver a complete, deployable ship as scheduled and within the cost cap to maintain an 11-carrier fleet  The program office also stated that the Navy awarded the CVN 80/81 procurement contract in January 2019 and expects to save $4 billion, compared to if it had purchased each ship individually  According to the program, the contract limits the Navy's liability and incentivizes the shipyard's best performance  Another oversight issue for Congress is whether the Navy should shift at some point from procuring large-deck, nuclear-powered carriers like the CVN-78 class to procuring smaller aircraft carriers  The issue has been studied periodically by the Navy and other observers over the years  To cite one example, the Navy studied the question in deciding on the aircraft carrier design that would follow the Nimitz (CVN-68) class  Advocates of smaller carriers argue that they are individually less expensive to procure, that the Navy might be able to employ competition between shipyards in their procurement (something that the Navy cannot do with large-deck, nuclear-powered carriers like the CVN-78 class, because only one U S  shipyard, HII/NNS, can build aircraft carriers of that size), and that today's aircraft carriers concentrate much of the Navy's striking power into a relatively small number of expensive platforms that adversaries could focus on attacking in time of war  Supporters of large-deck, nuclear-powered carriers argue that smaller carriers, though individually less expensive to procure, are less cost-effective in terms of dollars spent per aircraft embarked or aircraft sorties that can be generated, that it might be possible to use competition in procuring certain materials and components for large-deck, nuclear-powered aircraft carriers, and that smaller carriers, though perhaps affordable in larger numbers, would be individually less survivable in time of war than large-deck, nuclear-powered carriers  At a March 18, 2015, hearing on Navy shipbuilding programs before the Seapower subcommittee of the Senate Armed Services Committee, the Navy testified that it had initiated a new study on the question  At the hearing, the following exchange occurred: SENATOR JOHN MCCAIN, CHAIRMAN, SENATE ARMED SERVICES COMMITTEE, ATTENDING EX OFFICIO: And you are looking at additional options to the large aircraft carrier as we know it  SEAN STACKLEY, ASSISTANT SECRETARY OF THE NAVY FOR RESEARCH, DEVELOPMENT,AND ACQUISITION: We've initiated a study and I think you've discussed this with the CNO [Chief of Naval Operations] and that's with the frontend of that study  Yes, sir  Later in the hearing, the following exchange occurred: SENATOR ROGER WICKER, CHAIRMAN, SEAPOWER SUBCOMMITTEE: Well, Senator McCain expressed concern about competition [in Navy shipbuilding programs]  And I think that was with, in regard to aircraft carriers  SEAN J  STACKLEY, ASSISTANT SECRETARY OF THE NAVY FOR RESEARCH, DEVELOPMENT,AND ACQUISITION: Yes, Sir  WICKER: Would you care to respond to that? STACKLEY: He made a generic comment that we need competition to help control cost in our programs and we are absolutely in agreement there  With specific regards to the aircraft carrier, we have been asked and we are following suit to conduct a study to look at alternatives to the Nimitz and Ford class size and type of aircraft carriers, to see if it make sense  We've done this in the past  We're not going to simply break out prior studies, dust them off and resubmit it  We're taking a hard look to see is there—is there a sweet spot, something different other than today's 100,000 ton carrier that would make sense to provide the power projection that we need, that we get today from our aircraft carriers, but at the same time put us in a more affordable position for providing that capability  WICKER: OK  But right now, he's—he's made a correct factual statement with regard to the lack of competition  STACKLEY: Yes, Sir  There is—yes, there is no other shipyard in the world that has the ability to construct a Ford or a Nimitz nuclear aircraft carrier other than what we have in Newport News and the capital investment to do that is prohibitive to set up a second source, so obviously we are—we are content, not with the lack of competition, but we are content with knowing that we're only going to have one builder for our aircraft carriers  On March 20, 2015, the Navy provided the following additional statement to the press: As indicated in testimony, the Navy has an ongoing study to explore the possible composition of our future large deck aviation ship force, including carriers  There is a historical precedent for these type[s] of exploratory studies as we look for efficiencies and ways to improve our war fighting capabilities  This study will reflect our continued commitment to reducing costs across all platforms by matching capabilities to projected threats and Also [sic] seeks to identify acquisition strategies that promote competition in naval ship construction  While I can't comment on an ongoing study, what I can tell you is that the results will be used to inform future shipbuilding budget submissions and efforts, beyond what is currently planned  Section 128 of the FY2016 National Defense Authorization Act ( S  1356 / P L  114-92 of November 25, 2015) states the following: SEC  128  Limitation on availability of funds for U S S  John F  Kennedy (CVN–79)  (a) Limitation —Of the funds authorized to be appropriated by this Act or otherwise made available for fiscal year 2016 for procurement for the U S S  John F  Kennedy (CVN–79), $100,000,000 may not be obligated or expended until the date on which the Secretary of the Navy submits to the congressional defense committees the certification under subsection (b)(1) or the notification under paragraph (2) of such subsection, as the case may be, and the reports under subsections (c) and (d)     (d) Report on future development — (1) IN GENERAL —Not later than April 1, 2016, the Secretary of the Navy shall submit to the congressional defense committees a report on potential requirements, capabilities, and alternatives for the future development of aircraft carriers that would replace or supplement the CVN–78 class aircraft carrier  (2) ELEMENTS —The report under paragraph (1) shall include the following: (A) A description of fleet, sea-based tactical aviation capability requirements for a range of operational scenarios beginning in the 2025 timeframe  (B) A description of alternative aircraft carrier designs that meet the requirements described under subparagraph (A)  (C) A description of nuclear and non-nuclear propulsion options  (D) A description of tonnage options ranging from less than 20,000 tons to greater than 100,000 tons  (E) Requirements for unmanned systems integration from inception  (F) Developmental, procurement, and lifecycle cost assessment of alternatives  (G) A notional acquisition strategy for the development and construction of alternatives  (H) A description of shipbuilding industrial base considerations and a plan to ensure opportunity for competition among alternatives  (I) A description of funding and timing considerations related to developing the Annual Long-Range Plan for Construction of Naval Vessels required under section 231 of title 10, United States Code  The report required by Section 128(d) of P L  114-92 , which was conducted for the Navy by the RAND Corporation, was delivered to the congressional defense committees in classified form in July 2016  An unclassified version of the report was then prepared and issued in 2017 as a publicly released RAND report  The executive summary of that report states the following (emphasis as in original): We analyzed the feasibility of adopting four aircraft carrier concept variants as follow-ons to the Ford-class carrier following USS Enterprise (CVN 80) or the as-yet-unnamed CVN 81  Among these options are two large-deck carrier platforms that would retain the capability to launch and recover fixed-wing aircraft using an on-deck catapult and arresting gear system and two smaller carrier platforms capable of supporting only short takeoff and vertical landing (STVOL) aircraft  Specifically, the four concept variants are as follows: • a follow-on variant continuing the current 100,000-ton Ford-class carrier but with two life-of-the-ship reactors and other equipment and system changes to reduce cost (we refer to this design concept as CVN 8X) • a 70,000-ton USS Forrestal–size carrier with an updated flight deck and hybrid nuclear-powered integrated propulsion plant with capability to embark the current large integrated air wing but with reduced sortie generation capability, survivability, and endurance compared with the Ford class (we refer to this design concept as CVN LX) • a 43,000-ton variant of the USS America–class, fossil fuel–powered and arranged to support only STOVL operations but at a higher tempo than the current LHA 6 (USS America) (we refer to this design concept as CV LX)  This variant would incorporate the larger ship's beam excursion the Navy examined in the LHA 8–class flight 1 studies  • a 20,000-ton variant that will resemble escort carriers that some allied navies currently operate (we refer to this design concept as CV EX)  Similar to the 43,000-ton variant, it will be conventionally powered and will operate STOVL aircraft     Our analyses of the carrier variants illuminated capability shortfalls in some instances  Our overall findings are as follows: • The CVN 8X, the descoped Ford-class carrier, offers similar warfighting capability to that of the Ford-class carrier today  There might be opportunities to reduce costs by eliminating costly features that only marginally improve capability, but similar tradeoffs are likely to be made in the current program as well  • The CVN LX concept variant offers an integrated, current air wing with capabilities near current levels but with less organic mission endurance for weapons and aviation fuel  It will not generate the same SGR as the Ford-class carrier, but this is not a significant limitation for stressing warfighting scenarios  It will be less survivable in some environments and have less redundancy than the Ford program-of-record ship, and these factors might drive different operation concepts  Although we do not characterize the impact of decreased survivability, this is an important limitation that will have to be weighed against the potential cost savings  The major means of reducing cost is through engineering redundancy, speed, and air wing fuel capacity, and these could affect mobility and theater closure  • The concept variant CV LX, which is a version of the LHA 6 platforms, might be a low-risk, alternative pathway for the Navy to reduce carrier costs if such a variant were procured in greater numbers than the current carrier shipbuilding plan; our analysis suggests a two-to-one replacement  Over the long term, however, as the current carrier force is retired, the CV LX would not be a viable option for the eventual carrier force unless displaced capabilities were reassigned to new aircraft or platforms in the joint force, which would be costly  This platform would be feasible for a subset of carrier missions but, even for those missions, could require an increase in the number of platforms  This concept variant might, if procured in sufficient numbers, eventually enable the Navy to reduce the number of Ford-class carriers in the overall force structure, but more-extensive analysis of missions, operations, and basing of such a variant and the supported air combat element is required  • The smallest concept variants reviewed, the CV EX 20,000-ton sea-based platforms, do not provide either a significant capacity or an integrated air wing and, thus, force reliance on other legacy platforms or land-based assets to provide key elements of capability—in particular, AEW  As a result, this concept variant is not really a replacement for current aircraft carrier capability and would require other platforms, aircraft, weapons, and capabilities in the joint force  These platforms would be a viable pathway only in broad fleet architecture transformation providing a narrow mission set, perhaps regionally, and would require extensive analysis  Given that such a concept variant is not a viable replacement for an aircraft carrier, such analysis would be required to see whether any adjustment on the current aircraft carrier program would be feasible     The overall results of our cost comparison are as follows: • The descoped Ford-class carrier, the CVN 8X, might generate fewer sorties than the current key performance parameter values for the Ford class and might have only incremental reduction in overall platform cost   The analysis examining cost reduction with transition to a life-of-the-ship reactor, such that being done on submarine programs, does not appear to be cost effective  Between the developmental costs and a reduced service life, there is little cost advantage in this variant  • The CVN LX concept would allow considerable savings across the ship's service life and appears to be a viable alternative to consider for further concept exploration   Construction costs would be lower; design changes and life-cycle costs would reflect the lessons already applied in the Ford class  The reliance on hybrid drive with fewer mechanical parts than legacy platforms is likely to further reduce maintenance cost  However, CVN LX would be a new design that would require a significant investment in nonrecurring engineering in the near term to allow timely delivery in the 2030s  • CV LX, although it requires a larger force structure to maintain air capabilities, might still reduce overall construction costs if large carrier numbers were reduced  But, as described in the report, reducing carrier numbers with the resulting loss of capability should not be pursued without extensive further analysis for all displaced missions in the joint force execution of warfighting scenarios and, potentially, regional basing and narrowly focused missions for these platforms  Any cost savings would likely be offset to an unknown degree by requirements for additional systems to mitigate loss of capability associated with this variant  • CV EX, the smallest variant, is not a practical variant at all without considerable revision of the Navy warfighting concept of operations  Although the same is to a degree true with CV LX, the impact of an even larger number of low-sortie ships with small and limited air wings is even more pronounced with this variant  CV EX has all of the shortfalls of CV LX and will pose even greater issues of mutual support and logistics sustainment     Conclusions Our analysis points to potential options for replacing the Nimitz-class carrier as these ships reach expected service life that have lower procurement costs than the Ford-class carriers  However, most of these options come with reduced capability that might require changes in the concept of operations to deliver sea-based aircraft capability comparable to that of carriers in the fleet today  If a new platform is introduced in the mid-2030s, the Navy's force structure will still contain a large legacy force of Nimitz- and Ford-class carriers, at least until the mid-2050 time frame, which might lower the risks of introducing a new carrier for some period of time  But, ultimately, if a new carrier variant is selected, it will define the carrier force and constitute the supported capability available to the Navy  Capability shortfalls can be mitigated, to some degree, with changes in operational concepts or by adding additional platforms to the force structure—which introduces additional cost that might offset anticipated cost savings  In addition, if the Navy stops procuring large-deck nuclear carriers, the ability to reconstitute the industrial base at some time in the future comes with substantial risk  Although SGR [sortie generation rate] was a central variable in comparing the carrier variants, our analysis suggests that there is room to make trade-offs in aircraft sortie rate capacity between the Ford-class carrier and a lower-cost platform  However, it is important to consider that, whatever threats complicate carrier operations, they might even more significantly affect land-based tactical air operations  Carriers can move; have defensive support from escorts; can readily replenish; and might, in fact, be more survivable than their land-based counterparts  This is an important factor for Congress and the Department of Defense to consider before a trade-off is made to give up the supported air wing sortie generation capacity in the overall sea-based force  The question of whether to shift to smaller aircraft carriers was also addressed in three studies on future fleet architecture that were required by Section 1067 of the FY2016 National Defense Authorization Act ( S  1356 / P L  114-92 of November 25, 2015)  These three studies are discussed in more detail in another CRS report  A February 15, 2019, press report stated the following: Under Secretary of the Navy Thomas Modly said now that the Navy found a way to build two new Gerald R  Ford-class aircraft carriers while saving money it is starting to look at future carrier procurement, which might be very different … Modly said Secretary of the Navy Richard Spencer sees $13 billion carriers as not sustainable going forward and the service will be looking at ways to further reduce costs or keep the carrier capabilities more affordable in future ship procurements  "There was general conclusion that those two for sure would be built" and once that was determined "that was going to happen," Modly said during the AFCEA West 2019 conference here [in San Diego] … After the CVN-80 and -81 [procurement] decision was made, "I think a lot of derivative decisions still need to be made  So the secretary [Spencer] would like to take a look at 'O K  now that we made that decision, and that second one that comes will be in quite a few years from now, we need to start thinking now about what's the next one look like '" Modly told reporters they are asking questions like "Is it going to be advanced as this one? Or is it going to be smaller or are we going to buy two smaller ones or maybe shift air power to other forms of delivery  And we don't know the answers of that but we're looking at this " An earlier oversight issue for Congress for the CVN-78 program was whether to conduct the shock trial for the CVN-78 class in the near term, on the lead ship in the class, or years later, on the second ship in the class  For background information on that issue, see Appendix E   Table 3 summarizes congressional action on the FY2020 procurement funding request for the CVN-78 program  As shown in Table 1 , of the $2,347 0 million requested for FY2020, $1,062 million is for CVN-80 and $1,285 million is for CVN-81  Appendix A  Withdrawn Proposal to Not Fund CVN-75 RCOH The Navy's FY2020 budget submission proposed to not fund the mid-life nuclear refueling overhaul (called a Refueling Complex Overhaul, or RCOH) for the aircraft carrier CVN-75 ( Harry S  Truman ), and to instead retire the ship around FY2024 and also deactivate one of the Navy's carrier air wings at about the same time  On April 30, 2019, however, the Administration announced that it was effectively withdrawing this proposal from the Navy's FY2020 budget submission  The Administration now supports funding the CVN-75 RCOH and keeping CVN-75 (and by implication its associated air wing) in service past FY2024  This appendix presents, for reference purposes, additional background information on this withdrawn budget proposal  Following the Administration's April 30 withdrawal of its proposal to not fund the CVN-75 RCOH, the Navy states that the CVN-75 RCOH can no longer begin in FY2024, as planned prior to the Navy's FY2020 budget submission, because the Navy spent the months prior to April 30 planning for the ship's deactivation rather than for giving it an RCOH  As a result, the Navy states, the CVN-75 will now begin a year later, in FY2025  As a consequence of this one-year shift in the schedule for the RCOH, the Navy states, the funding stream for the CVN-75 shown in Table A-1 will also now shift one year to the right, and the CVN-75 RCOH can be reinstated without any funding in FY2020, because FY2020 is now effectively the same as FY2019 in Table A-1   Performing an RCOH on a carrier is needed for the carrier to be able to operate for the second half of its intended 50-year service life  Not performing an RCOH on CVN-75 would mean that, instead of remaining in service for the second half of its intended 50-year service life, the ship would be decommissioned, permanently removed from service, and eventually dismantled  (CVN-75 was commissioned into service on July 25, 1998, and will be 26 years old in 2024 ) The Navy's FY2020 budget submission shows that, for the period FY2022-FY2047, this would have reduced the size of the carrier force by one ship compared to what it would otherwise be  More specifically, the Navy's FY2020 30-year (FY2020-FY2049) shipbuilding plan, reflecting the proposal to not fund the CVN-75 RCOH, projected that the carrier force would remain at 11 ships through FY2024, decline to 10 ships in FY2025, and remain at 10 ships for the remainder of the 30-year period, except for a few years (FY2027, FY2040, FY2042-FY2044, and FY2046-FY2048) when it would temporarily decline to 9 ships  Consequently, beginning in FY2025 and extending through the end of the 30-year period, the carrier force would not be in compliance with the requirement under 10 U S C  8062(b) for the Navy to maintain a force of not less than 11 operational aircraft carriers  As an associated action, the Navy's FY2020 budget submission also proposed deactivating one of the Navy's carrier air wings around FY2024  This would reduce the number of carrier air wings from nine to eight, meaning that the Navy beginning around FY2024 would no longer be in compliance with the requirement under 10 U S C  8062(e) to maintain a minimum of nine carrier air wings  Table A-1 shows funding for the CVN-75 RCOH in the Navy's FY2019 budget submission  As shown in the table, the estimated total cost of the CVN-75 RCOH in the FY2019 budget submission was $5,578 million (i e , about $5 6 billion)  The figure of about $5 6 billion shown in Table A-1 does not include the cost of the two nuclear fuel cores that would be installed as part of the RCOH  (CVN-75, like all Nimitz-class carriers, has two nuclear reactors, each of which would receive a new fuel core as part of an RCOH ) Fuel cores for aircraft carrier RCOHs are procured through the Other Procurement, Navy (OPN) appropriation account  The Navy states that it procured the cores for the CVN-75 RCOH—one of them in FY2008 and the other in FY2011—for a total cost of about $538 million  Adding this $538 million cost to the total cost shown in Table A-1 would increase the total estimated cost of the CVN-75 RCOH to about $6 1 billion  The fuel cores for the planned future RCOHs for CVN-76 and CVN-77 (the final two Nimitz-class carriers) have also been procured—the CVN-76 RCOH cores were funded in FY2012 and FY2013, and the CVN-77 RCOH cores were funded in FY2015 and FY2019  Thus, if CVN-75 were to not receive an RCOH, and if it were not possible or cost effective to rescind the funding for the core funded in FY2019, then two of the six Nimitz-class fuel cores that have been procured since FY2008 for anticipated use in RCOHs would not in the end be used in an RCOH and would in effect become surplus to the RCOH effort  The Navy indicated that if that were to occur, these two cores would be placed in storage for potential future use as emergency replacement cores for a Nimitz-class ship until all Nimitz-class ships complete their service lives  If CVN-75 were to not receive an RCOH and is instead be decommissioned, the savings from not funding the RCOH would be partially offset by the cost to deactivate and dismantle CVN-75  The Navy estimated the cost to deactivate and dismantle CVN-75 at about $1 5 billion  The initial increments of this approximate $1 5-billion cost would have occurred in FY2023 ($130 3 million) and FY2024 ($247 2 million)  The estimated net savings from not funding the RCOH and instead deactivating and dismantling the ship would thus have been about $4 1 billion (i e , about $5 6 billion less about $1 5 billion)  The Navy stated that there would also be 20 to 25 years of additional annual savings of about $1 billion per year in the form of avoided annual operation and support (O&S) costs for CVN-75 and the deactivated carrier air wing  DOD officials reportedly wanted to redirect the estimated net RCOH-related savings of about $4 1 billion and the estimated recurring savings of about $1 billion per year to Navy investments for technologies that will add to future Navy capabilities  RCOHs are done primarily by Huntington Ingalls Industries/Newport News Shipbuilding (HII/NNS) in Newport News, VA, and form a significant part of HII/NNS's business base, along with construction of new nuclear-powered aircraft carriers and construction of new nuclear-powered submarines  RCOHs in recent years have been scheduled in a more-or-less heel-to-toe fashion at HII/NNS—when one RCOH is done, the next one is scheduled to begin soon thereafter  RCOHs are done in a particular dry dock at HII/NNS, so a carrier undergoing an RCOH in that dry dock must be ready to depart the dry dock before the following carrier can be moved into the dry dock for its RCOH  Until it was withdrawn, the proposal in the Navy's FY2020 budget submission to not fund CVN-75's RCOH and instead decommission the ship (and a carrier air wing) raised a number of potential oversight issues for Congress, including the following: Compliance with congressional direction  The central purposes of 10 U S C  8062(b) and 8062(e) are to act as mandates to the executive branch to support a force of not less than 11 carriers and a minimum of 9 carrier air wings in executive branch planning  They represent directions from Congress for the Navy to provide the funding needed to maintain an 11-carrier, 9-carrier-air-wing force, regardless of limitations on the Navy's overall budget or other considerations  A proposed budget from the Navy that is inconsistent with these provisions might thus be viewed as a challenge to Congress's Article 1 power to set policy and to determine the composition of federal spending (i e , Congress's constitutional power of the purse)  If DOD were to treat the requirements in 10 U S C  8062(b) and 8062(e) as optional matters rather than mandates, would this create a precedent for the executive branch to treat similar provisions in the U S  Code as optional matters rather than mandates? For example, would it create a precedent for DOD, if it so desired, to begin treating as an optional matter the long-standing requirement in 10 U S C  8063(a) that the Marine Corps "shall be so organized as to include not less than three combat divisions and three air wings, and such other land combat, aviation, and other services as may be organic therein?" If the executive branch were to begin treating statutory provisions like 10 U S C  8062(b) and 8062(e) as optional matters rather than mandates, what implications might this have for policy and program execution, for Congress's power to legislatively establish policy and program goals, and for Congress's power of the purse? Alternative capabilities to be funded ; net impact on Navy capabilities   What were OSD's plans for redirecting the savings associated with deactivating CVN-75 and a carrier air wing around FY2024? What types of capabilities would have been created or maintained by these redirected funds? How would these capabilities compare in nature and timing to the capabilities that are to be provided by the continued operation of CVN-75 and the carrier air wing? Taking these factors into account, what would have been the net operational impact for the Navy of deactivating CVN-75 and a carrier air wing around FY2024 and redirecting the resulting savings toward these other investments? Requirement for 12-carrier force  The Navy's 2016 Force Structure Assessment (FSA) led to a Navy force-level requirement for a fleet of 355 ships that includes 12 aircraft carriers  OSD allowed the Navy to present that FSA to the Congress, and to program shipbuilding and other actions in support of achieving the 355-ship force-level goal  OSD did not publicly object to the FSA's 12-carrier requirement (or any other part of the 355-ship force-level goal)  What was the analytical basis for an action that would reduce the size of the carrier from 11 to 10, instead of helping it to eventually increase from 11 to 12? Next Force Structure Assessment (FSA)  The Navy states that it is currently conducting a new FSA as the successor to the 2016 FSA, and that this new FSA is to be completed by the end of 2019  This new FSA could change the 355-ship figure, the planned mix of ships, or both  Did the Navy's proposal to not fund the CVN-75 RCOH, and thereby reduce the carrier force from 11 ships to 10 ships, prejudge the outcome of the new FSA? Would the new FSA be tainted by the knowledge that the Navy had already proposed reducing the carrier force to 10 ships? How well could the analysts performing the new FSA have avoided being influenced by the Navy's proposed action? Was the Navy prepared to go ahead with the CVN-75 RCOH if the new FSA concludes that there is a requirement for 11 or more carriers? Likelihood of need for emergency replacement cores  How likely was it that the Nimitz-class program would need to use an emergency replacement set of fuel cores during the remainder of the Nimitz-class life cycle? What set of circumstances might lead to a need for an emergency replacement set of fuel cores? How often have such circumstances previously arisen for a nuclear-powered U S  Navy ship whose fuel cores are intended to be sufficient for powering the ship for at least one-half of its expected service life? Given the assessed likelihood of the Nimitz-class program needing to use an emergency replacement set of fuel cores during the remainder of the Nimitz-class life cycle, what would have been the government's resulting return on investment of the several hundred million dollars used to procure the two fuel cores that would be placed in storage? Acting Secretary of Defense  The proposal to not fund the CVN-75 RCOH and to deactivate a carrier air wing represented a notable change from prior DOD force-structure planning and budgeting  Was it appropriate for such a change to be proposed by DOD during a time when DOD has an acting Secretary of Defense rather than a Secretary who was confirmed specifically for that position? Impact on industrial base and cost of other work  What would have been the impact on HII/NNS and the other parts of the aircraft carrier industrial base if CVN-75 were inactivated rather than given an RCOH? What impact, if any, would this have had on the cost of other work performed at HII/NNS and other parts of the aircraft carrier industrial base during these years, and on the eventual cost of the CVN-76 RCOH? For further reference, it can be noted that the Navy's FY2015 budget submission proposed not funding the RCOH for the aircraft carrier CVN-73 ( George Washington )  The proposal raised oversight issues for Congress broadly similar to those listed above  Congress, in acting on the Navy's proposed FY2015 budget, rejected the proposal to not fund CVN-73's RCOH  The RCOH was funded and is currently underway  Appendix B  Background Information on Two-Ship Block Buy for CVN-80 and CVN-81 This appendix presents additional background information on the two-ship block buy contract for CVN-80 and CVN-81  The option for procuring two CVN-78 class carriers under a two-ship block buy contract had been discussed in this CRS report since April 2012  In earlier years, the discussion focused on the option of using a block buy contract for procuring CVN-79 and CVN-80  In more recent years, interest among policymakers focused on the option of using a block buy contract for procuring CVN-80 and CVN-81  On March 19, 2018, the Navy released a request for proposal (RFP) to Huntington Ingalls Industries/Newport News Shipbuilding (HII/NNS) regarding a two-ship buy of some kind for CVN-80 and CVN-81  A March 20, 2018, Navy News Service report stated the following: The Navy released a CVN 80/81 two-ship buy Request for Proposal (RFP) to Huntington Ingalls Industries—Newport News Shipbuilding (HII-NNS) March 19 to further define the cost savings achievable with a two-ship buy  With lethality and affordability a top priority, the Navy has been working with HII-NNS over the last several months to estimate the total savings associated with procuring CVN 80 and CVN 81 as a two-ship buy  "In keeping with the National Defense Strategy, the Navy developed an acquisition strategy to combine the CVN 80 and CVN 81 procurements to better achieve the Department's objectives of building a more lethal force with greater performance and affordability," said James F  Geurts, Assistant Secretary of the Navy, Research Development and Acquisition  "This opportunity for a two-ship contract is dependent on significant savings that the shipbuilding industry and government must demonstrate  The Navy is requesting a proposal from HII-NNS in order to evaluate whether we can achieve significant savings " The two-ship buy is a contracting strategy the Navy has effectively used in the 1980s to procure Nimitz-class aircraft carriers and achieved significant acquisition cost savings compared to contracting for the ships individually  While the CVN 80/81 two-ship buy negotiations transpire, the Navy is pursuing contracting actions necessary to continue CVN 80 fabrication in fiscal year (FY) 2018 and preserve the current schedule  The Navy plans to award the CVN 80 construction contract in early FY 2019 as a two-ship buy pending Congressional approval and achieving significant savings  Section 121(a)(2) of the John S  McCain National Defense Authorization Act for Fiscal Year 2019 ( H R  5515 / P L  115-232 of August 13, 2018) permitted the Navy, after the Department of Defense (DOD) made certain certifications to Congress, to add CVN-81 to the existing contract for building CVN-80  DOD provided the required certification on December 31, 2018  On January 31, 2019, the Navy announced that it had awarded a two-ship fixed-price incentive (firm target) (FPIF) contract for CVN-80 and CVN-81 to HII/NNS  The two-ship contract for CVN-80 and CVN-81 can be viewed as a block buy contract because the two ships are being procured in different fiscal years (CVN-80 was procured in FY2018 and CVN-81 is shown in the Navy's FY2020 budget submission as a ship procured in FY2020)  The Navy's previous two-ship aircraft carrier procurements occurred in FY1983 (for CVN-72 and CVN-73) and FY1988 (for CVN-74 and CVN-75)  In each of those two earlier cases, however, the two ships were fully funded within a single fiscal year, making each of these cases a simple two-ship purchase (akin, for example, to procuring two Virginia-class attack submarines or two DDG-51 class destroyers in a given fiscal year) rather than a two-ship block buy (i e , a contract spanning the procurement of end items procured across more than one fiscal year)  Compared to DOD's estimate that the two-ship block buy contract for CVN-80 and CVN-81 would produce savings of $3 9 billion (as measured from estimated costs for the two ships in the December 2017 Navy business case analysis), DOD states that "the Department of Defense's Office of Cost Assessment and Program Evaluation (CAPE) developed an Independent Estimate of Savings for the two-ship procurement and forecast savings of $3 1 billion ([in] Then-Year [dollars]), or approximately 11 percent     The primary differences between [the] CAPE and Navy estimates of savings are in Government Furnished Equipment and production change orders " Within the total estimated combined reduction in cost, HII/NNS reportedly expects to save up to $1 6 billion in contractor-furnished equipment  A November 2018 DOD report to Congress that was submitted as an attachment to DOD's December 31, 2018, certification stated the following regarding the sources of cost reduction for the two-ship contract: The CVN 80 and CVN 81 two-ship buy expands and improves upon the affordability initiatives identified in the Annual Report on Cost Reduction Efforts for JOHN F  KENNEDY (CVN 79) and ENTERPRISE (CVN 80) as required by section 126(c) of the National Defense Authorization Act for Fiscal Year 2017 ( P L  114-328 )  Production saving initiatives for single-ship buys included use of unit families in construction, pre-outfitting and complex assemblies which move work to a more efficient workspace environment, reduction in the number of superlifts, and facility investments which improve the shipbuilder trade effectiveness  A two-ship buy assumes four years between ship deliveries which allows more schedule overlap, and therefore more shop-level and assembly-level production efficiencies than two single-ship buys  Procuring two ships to a single technical baseline reduces the requirement for engineering labor hours when compared to single-ship estimates  The ability to rollover production support engineering and planning products maximizes savings while recognizing the minimum amount of engineering labor necessary to address obsolescence and regulatory changes on CVN 81  The two-ship agreement with the shipbuilder achieves a 55 percent reduction in construction support engineering hours on CVN 81 and greater than 18 percent reduction in production support and planning hours compared to single ship procurements  The two-ship procurement strategy allows for serial production opportunities that promote tangible learning and reduced shop and machine set-up times  It allows for efficient use of production facilities, re-use of production jigs and fixtures, and level loading of key trades  The continuity of work allows for reductions in supervision, services and support costs  The result of these efficiencies is a production man-hours step down that is equivalent to an 82 percent learning curve since CVN 79  Key to achieving these production efficiencies is Integrated Digital Shipbuilding (iDS)  The Navy's Research, Development, Test, and Evaluation (RDT&E) and the shipbuilder's investment in iDS, totaling $631 million, will reduce the amount of production effort required to build FORD Class carriers  The two-ship buy will accelerate the benefits of this approach  The ability to immediately use the capability on CVN 81 would lead to a further reduction in touch labor and services in affected value streams  The two-ship agreement with the shipbuilder represents a production man-hours reduction of over seven percent based on iDS efficiencies  Contractual authority for two ships allows the shipbuilder to maximize economic order quantity material procurement  This allows more efficient ordering and scheduling of material deliveries and will promote efficiencies through earlier ordering, single negotiations, vendor quotes, and cross program purchase orders  These efficiencies are expected to reduce material costs by about six percent more when compared to single-ship estimates  Improved material management and flexibility will prevent costly production delays  Furthermore, this provides stability within the nuclear industrial base, de-risking the COLUMBIA and VIRGINIA Class programs  The two-ship buy would provide economic stability to approximately 130,000 workers across 46 States within the industrial base  Change order requirements are likewise reduced as Government Furnished Equipment (GFE) providers will employ planning and procurement strategies based on the common technical baseline that minimize configuration changes that must be incorporated on the follow ship  Change order budget allocations have been reduced over 25 percent based on two-ship strategies  In addition to the discrete savings achieved with the shipbuilder, the two-ship procurement authority provides our partner GFE providers a similar opportunity to negotiate economic order quantity savings and achieve cross program savings when compared to single-ship estimates  An April 16, 2018, press report stated the following: If the Navy decides to buy aircraft carriers CVN-80 and 81 together, Newport News Shipbuilding will be able to maintain a steady workload that supports between 23,000 and 25,000 workers at the Virginia yard for the next decade or so, the shipyard president told reporters last week  Part of the appeal of buying the two carriers together is that the Navy would also buy them a bit closer together: the ships would be centered about three-and-a-half or four years apart, instead of the five-year centers for recent carrier acquisition, Newport News Shipbuilding President Jennifer Boykin told reporters  Boykin said the closer ship construction centers would allow her to avoid a "labor valley" where the workforce levels would dip down after one ship and then have to come back up, which is disruptive for employees and costly for the company  If this two-carrier buy goes through, the company would avoid the labor valley altogether and ensure stability in its workforce, Boykin said in a company media briefing at the Navy League's Sea Air Space 2018 symposium  That workforce stability contributes to an expected $1 6 billion in savings on the two-carrier buy from Newport News Shipbuilding's portion of the work alone, not including government-furnished equipment     Boykin said four main things contribute to the expected $1 6 billion in savings from the two-carrier buy  First, "if you don't have the workforce valley, there's a labor efficiency that represents savings " Second, "if you buy two at once, my engineering team doesn't have to produce two technical baselines, two sets of technical products; they only have to produce one, and the applicability is to both, so there's savings there  When we come through the planning, the build plan of how we plan to build the ship, the planning organization only has to put out one plan and the applicability is to both, so there's savings there " The third savings is a value of money over time issue, she said, and fourth is economic order quantity savings throughout the entire supply chain  Discussions of the option of using a block buy contract for procuring carriers have focused on using it to procure two carriers in part because carriers have been procured on five-year centers, meaning that two carriers could be included in a block-buy contract spanning six years—the same number of years originally planned for the two block buy contracts that were used to procure mnay of the Navy's Littoral Combat Ships  It can be noted, however, that there is no statutory limit on the number of years that a block buy contract can cover, and that the LCS block buy contracts were subsequently amended to cover LCSs procured in a seventh year  This, and the possibility of procuring carriers on 3- or 3 5-year centers, raises the possibility of using a block buy contract to procure three aircraft carriers: For example, if procurement of aircraft carriers were shifted to 3- or 3 5-year centers, a block buy contract for procuring CVN-80, CVN-81, and CVN-82 could span seven years (with the first ship procured in FY2018, and the third ship procured in FY2024) or eight years (with the first ship procured in FY2018 and the third ship procured in FY2025)  The percentage cost reduction possible under a three-ship block buy contract could be greater than that possible under a two-ship block buy contract, but the offsetting issue of reducing congressional flexibility for changing aircraft carrier procurement plans in coming years in response to changing strategic or budgetary circumstances could also be greater  Appendix C  Cost Growth and Managing Costs Within Program Cost Caps This appendix presents additional background information on cost growth in the CVN-78 program, Navy efforts to stem that growth, and Navy efforts to manage costs so as to stay within the program's cost caps  October 2018 CBO Report An October 2018 CBO report on the potential cost of the Navy's 30-year shipbuilding plan states the following regarding the CVN-78 program: The Navy's current estimate of the total cost of the Gerald R  Ford , the lead ship of the CVN-78 class, is $13 0 billion in nominal dollars appropriated over the period from 2001 to 2018, an amount that is equal to the cost cap set in law  CBO used the Navy's inflation index for naval shipbuilding to convert that figure to $15 5 billion in 2018 dollars, or 23 percent more than the corresponding estimate when the ship was first authorized in 2008  Neither the Navy's nor CBO's estimate includes the $5 billion in research and development costs that apply to the entire class  Because construction of the lead ship is finished, CBO used the Navy's estimate for that ship to estimate the cost of successive ships in the class  But not all of the cost risk has been eliminated; in particular, the ship's power systems and advanced arresting gear (the system used to recover fixed-wing aircraft landing on the ship) are not yet working properly  It is not clear how much those problems will cost to fix, but current Navy estimates suggest that it will be several tens of millions of dollars or more  CBO does not have enough information to estimate those final repair costs  The next carrier after the CVN-78 will be the CVN-79, the John F  Kennedy   Funding for that ship began in 2007, the Congress officially authorized its construction in 2013, and the planned appropriations for it were completed in 2018  The shipbuilder expects to complete construction of the CVN-79 in 2024 and deploy it for the first time in 2026  The Navy estimates that the ship will cost $11 3 billion in nominal dollars (or $11 6 billion in 2018 dollars)  The Navy's selected acquisition report on the CVN-79 states that "the Navy and shipbuilder have made fundamental changes in the manner in which the CVN 79 will be built to incorporate lessons learned from CVN 78 and eliminate the key contributors to cost performance challenges realized in the construction of CVN 78 " Nevertheless, the Navy informed CBO that there is a greater than 60 percent chance that the ship's final cost will be more than the current estimate  Although CBO expects the Navy to achieve a considerable cost reduction in the CVN-79 compared with the CVN-78, as is typical with the second ship of a class, CBO's estimate is higher than the Navy's  Specifically, CBO estimates that the ship will cost $11 7 billion in nominal dollars (or $12 0 billion in 2018 dollars), about 4 percent more than the Navy's estimate  In 2018, the Congress authorized the third carrier of the class, the Enterprise (CVN-80)  Appropriations for that ship began in 2016 and are expected to be complete by 2023  The Navy estimates that the ship will cost $12 6 billion in nominal dollars (or $11 5 billion in 2018 dollars)  However, as with CVN-79, the Navy told CBO that there is a greater than 60 percent chance that the ship's final cost will be more than the current estimate  CBO estimates that the ship will cost $13 0 billion in nominal dollars (or $11 8 billion in 2018 dollars), about 3 percent more than the Navy's estimate  The Navy estimates an average cost of $12 4 billion (in 2018 dollars) for the 7 carriers (CVN-81 through CVN-87) in the 2019 shipbuilding plan  CBO's estimate is $12 8 billion per ship     The gap between the estimates has narrowed since the 2017 plan: The Navy's has increased by $500 million per ship, and CBO's has dropped by $200 million per ship  It is not clear why the Navy's estimates increased, but CBO's estimates fell mainly because the agency projects somewhat less growth in real costs of the shipbuilding industry in future years  August 2018 Press Report An August 17, 2018, press report states the following: Huntington Ingalls Industries Inc , the sole U S  builder of aircraft carriers, continues to fall short of the Navy's demand to cut labor expenses to stay within an $11 39 billion cost cap mandated by Congress on the second in a new class of warships  With about 47 percent of construction complete on the USS John F  Kennedy, Navy figures show the contractor isn't yet meeting the goal it negotiated with the service: reducing labor hours by 18 percent from the first carrier, the USS Gerald Ford     It took about 49 million hours of labor to build the Ford, according to the U S  Government Accountability Office  The Navy's goal for the Kennedy is to reduce that to about 40 million hours  Huntington Ingalls's performance "remains stable at approximately 16 percent" less, William Couch, spokesman for the Naval Sea Systems Command, said in an email  He said "key production milestones and the ship's preliminary acceptance date remain on track" and there are "ample opportunities" for improvement "with nearly four years until contract delivery and over 70 percent of assembly work" remaining on the vessel's superstructure  But the Pentagon's naval warfare division, which reports to Ellen Lord, the Defense Department's chief weapons buyer, is less sanguine  It said in a July assessment that Huntington Ingalls "is unlikely to fully recover the needed 18 percent" reduction     On the effort to meet the 18 percent labor-hour reduction for the Kennedy, the Navy's program manager "assesses that although difficult, the shipbuilder can still attain" it, Couch said  Beci Brenton, a spokeswoman for Newport News, Virginia-based Huntington Ingalls, said "we are seeing the benefits associated with significant build strategy changes and incorporation of lessons learned" from the first vessel  Brenton said "the current production performance" is 16 percent less than the Ford's estimate at the time of contract award for the second vessel but the reduction is 17 percent when compared with the first vessel's current cost     But Shelby Oakley, a director with the GAO who monitors Navy shipbuilding, said "with so much of the program underway, it is unlikely that the Navy will regain efficiency " In later phases of a shipbuilding contract, she said, "performance typically degrades, not improves " It's also "unclear how the lessons learned" from the first ship "could help regain efficiency when they are already baked in to the Navy's overly optimistic estimate for the program," she said  June 2018 Press Report A June 19, 2018, press report stated the following: Huntington Ingalls Industries Inc  is asking General Electric Co  to compensate it for damage caused by flawed workmanship during installation of propulsion system components on the U S  Navy's $13 billion aircraft carrier Gerald R  Ford  The problem, which forced the most expensive U S  warship back to port in January, has yet to be fully resolved although the carrier is once again at sea     Huntington Ingalls, a shipbuilder based in Newport News, Virginia, "has notified the original manufacturer of the shipyard's intent to seek compensation," Naval Sea Systems Command spokesman William Couch said in an email  Beci Brenton, a spokeswoman for Huntington said, "We continue to work with appropriate stakeholders to support resolution of this situation " Perry Bradley, a spokesman for Boston-based GE, said "we're not going to comment on specifics other than to say" that "GE is working closely with" Huntington's Newport News Shipyard unit and "the U S  Navy to resolve the issue "    The episode in January was the second failure in less than a year with a "main thrust bearing" that's part of the carrier's propulsion system  The first occurred in April 2017, during sea trials a month before the vessel's delivery  The ship has been sailing in a shakedown period to test systems and work out bugs  It's now scheduled to be ready for initial combat duty in 2022  The Navy's carrier program office said in an assessment that an inspection of the carrier's four main thrust bearings after the January failure revealed "machining errors" by GE workers at a Lynn, Massachusetts, facility during the original manufacturing as "the actual root cause " The bearing overheated, the Navy said in a March 8 memo to Congress, and "after securing the equipment to prevent damage, the ship safely returned to port " A failure review board is identifying "modifications required to preclude recurrence," it said  The bearing is one of four that transfers thrust from the ship's four propeller shafts  "The costs associated with repairing" the thrust bearings "are currently being assessed" and "this will include recovery of costs from the manufacturer of the Main Reduction Gear, General Electric (Lynn), as appropriate," the Navy said in the memo  Couch said the Navy doesn't expect similar propulsion problems with the next vessel in the class, the John F  Kennedy, because a different manufacturer made that carrier's propulsion train components  "Any propulsion train deficiencies identified" with the Ford "will be corrected and implemented" in "future ships of the class as necessary," he said  May 2018 Press Report A May 11, 2018, press report stated the following: The Navy's costliest vessel ever just got pricer, breaching a $12 9 billion cap set by Congress by $120 million, the service told lawmakers this week  The extra money for the U S S  Gerald R  Ford built by Huntington Ingalls Industries Inc  is needed to replace faulty propulsion components damaged in a January failure, extend the vessel's post-delivery repair phase to 12 months from the original eight months and correct deficiencies with the "Advanced Weapons Elevators" used to move munitions from deep in the ship to the deck  The elevators on the ship, designated CVN 78, need to be fixed "to preclude any effect on the safety of the ship and personnel," the Naval Sea Systems Command said in a statement to Bloomberg News on Friday  "Once the adjustment is executed, the cost for CVN 78 will stand at $13 027" billion, the Navy said  In addition to informing Congress that the spending lid has been breached, the Navy will have to let lawmakers know how it will shift funds to make up the difference  Navy officials didn't disclose the propulsion failure or elevator problems during budget hearings before Congress in recent weeks, and House and Senate lawmakers didn't ask about it     The Ford's propulsion system and elevator flaws are separate from reliability issues on its troubled aircraft launch and recovery systems  After its delivery last May, the ship operated for 70 days and completed 747 shipboard aircraft launches and recoveries, exceeding the goal of about 400, the Navy said  None of the 11 weapons elevators are operational but at least two are being used for testing "to identify many of the remaining developmental issues for this first-of-class system," the Navy has said  The command said all 11 elevators "should have been complete and delivered with the ship delivery" in May 2017  April 2018 Press Report An April 16, 2018, press report stated the following: Huntington Ingalls Industries' Newport News Shipbuilding President Jennifer Boykin provided an update on the various stages of construction on several major Navy shipbuilding programs during the Navy League's Sea Air Space Expo last week  The future USS John F  Kennedy (CVN-79) is about 43 percent complete, with launch planned for the fourth quarter of 2019 and delivery set for 2022  Boykin said the company has achieved about 75 percent of the ship erected and they are on track for an 18 percent man-hour budget reduction  Boykin provided these updates during a press briefing at the conference  Boykin revealed that undocking of CVN-79 in the fourth quarter of 2019 will occur three months earlier than originally planned  September 2017 Press Report A September 26, 2017, press report states the following: Huntington Ingalls Industries Inc  is falling short of a U S  Navy goal to reduce hours of labor on the second ship in the new Ford class of aircraft carriers in a drive to reduce costs, according to service documents  With 34 percent of construction complete on the USS John F  Kennedy, Huntington Ingalls estimates it will be able to reduce labor hours by 16 percent from the hours needed to construct the first vessel, the Gerald R  Ford  That's less than the 17 percent reduction reported at the end of last year and the 18 percent goal the Navy negotiated in the primary construction contract for the carrier  The "recent degradation in cost performance stems largely from the delayed availability of certain categories of material," such as pipe fittings, controllers, actuators and valves, according to the Navy's annual report on the program and updated figures obtained by Bloomberg News     "We acknowledge that the cost reduction target for CVN-79," relative to the first carrier, "is challenging," Huntington Ingalls spokeswoman Beci Brenton said in an email, referring to the Kennedy by its Navy designation  "While it is still early in the ship's schedule, we are seeing positive results from" new initiatives to keep costs in check, she said     Navy Secretary Richard Spencer told reporters last week that he will stay involved in monitoring the CVN-79's construction trends  "This is my personal approach—the CEO has to be involved " A close watch is required "because there are so many moving parts and so many opportunities to do things in a more efficient manner," Spencer said  The Navy has been working with the contractors "to mitigate technical risks and impacts of late material," Navy spokesman Victor Chen in an email  "The overall volume of late material items and associated impact to construction performance is declining  The Navy has hired third-party experts who are working collaboratively with the shipbuilder to identify manufacturing opportunities for efficiency gains" and to assist in implementing improvements     The 18 percent reduction in labor hours was "quite optimistic" from the start, Michele Mackin, a Government Accountability Office director who oversees its shipbuilding assessments, said in an email  "Even based on that assumption, the $11 4 billion cost cap was unlikely to be met," she said  "If those labor-hour efficiencies are in fact not materializing, costs will go higher  Also, "with the ship being over 30 percent complete, it's unlikely the shipbuilder can get back enough efficiencies to further reduce labor hours—the more complicated work is yet to come," she said  June 2017 Navy Testimony At a June 15, 2017, hearing before the Senate Armed Services Committee on the Department of the Navy's proposed FY2018 budget, the following exchange occurred: SENATOR JOHN MCCAIN (CHAIRMAN) (continuing): Secretary Stackley, the Navy broached a cost cap for CVN-78  Do you believe that it has? SEAN STACKLEY, ACTING SECRETARY OF THE NAVY: Sir, right now our estimate for CVN-78, we're trying to hold it within the $12 887 billion number that was established several years ago  We have included a $20 million [procurement funding] request in this budget pending our determination regarding repairs that required for the    MCCAIN: Is that a breach of Nunn-McCurdy? STACKLEY: Not at this point in time, sir, we're continuing to evaluate whether that additional funding will be required  We're doing everything we can to stay within the existing cap and we'll keep Congress informed as we complete our post-delivery assessment  MCCAIN: Problem is we haven't been informed  So either you bust the cap and breach Nunn-McCurdy—Nunn-McCurdy or you notify us  You haven't done either one  STACKLEY: Sir, we've been submitting monthly reports regarding the carrier, we've alerted the concern regarding the repairs that are being required for the motor turbine generator set and we've acknowledged the risk associated with those repairs  However, what we're trying to do is not incur those costs, avoid cost by other means, and as of right now we're not ready to trip that cost cap  MCCAIN: Well, it's either not allowable or it's allowable  It's not allowable, then you take a certain course of action  If it's allowable then you're required to notify Congress  You have done neither  STACKLEY: If we need to incur those costs, they will be allowable costs  We're trying to avoid that at this stage of time, sir  MCCAIN: I agree, but we were supposed to be notified—OK  I can tell you that you are either in violation of Nunn-McCurdy or you are in violation of the requirement that we be notified  You have done neither  There's two scenarios  STACKLEY: Sir, we have not broached the cost cap  If it becomes apparent that we'll need to go above the cost cap, we will notify Congress within—within the terms that you all have established  MCCAIN: OK  Well, I'll get it to you in writing but you still haven't answered the question because when there's a $20 million cost overrun, it's either allowable and then we have to be notified in one way  If it's not allowable, Nunn-McCurdy is—is reached  But anyway, maybe you can give us a more satisfactory explanation in writing, Mr  Secretary  June 2017 GAO Report A June 2017 GAO report states the following: The cost estimate for the second Ford-Class aircraft carrier, CVN 79, is not reliable and does not address lessons learned from the performance of the lead ship, CVN 78  As a result, the estimate does not demonstrate that the program can meet its $11 4 billion cost cap  Cost growth for the lead ship was driven by challenges with technology development, design, and construction, compounded by an optimistic budget estimate  Instead of learning from the mistakes of CVN 78, the Navy developed an estimate for CVN 79 that assumes a reduction in labor hours needed to construct the ship that is unprecedented in the past 50 years of aircraft carrier construction     After developing the program estimate, the Navy negotiated 18 percent fewer labor hours for CVN 79 than were required for CVN 78  CVN 79's estimate is optimistic compared to the labor hour reductions calculated in independent cost reviews conducted in 2015 by the Naval Center for Cost Analysis and the Office of Cost Assessment and Program Evaluation  Navy analysis shows that the CVN 79 cost estimate may not sufficiently account for program risks, with the current budget likely insufficient to complete ship construction  The Navy's current reporting mechanisms, such as budget requests and annual acquisition reports to Congress, provide limited insight into the overall Ford Class program and individual ship costs  For example, the program requests funding for each ship before that ship obtains an independent cost estimate  During an 11-year period prior to 2015, no independent cost estimate was conducted for any of the Ford class ships; however, the program received over $15 billion in funding  In addition, the program's Selected Acquisition Reports (SAR)—annual cost, status, and performance reports to Congress—provide only aggregate program cost for all three ships currently in the class, a practice that limits transparency into individual ship costs  As a result, Congress has diminished ability to oversee one of the most expensive programs in the defense portfolio  February 2016 Navy Testimony The Navy testified in 2016 that The Navy is committed to delivering the lead ship of the class, Gerald R Ford (CVN 78) within the $12 887 billion congressional cost cap  Sustained efforts to identify cost reductions and drive improved cost and schedule performance on this first-of-class aircraft carrier have resulted in highly stable cost performance since 2011  Based on lessons learned on CVN 78, the approach to carrier construction has undergone an extensive affordability review and the Navy and the shipbuilder have made significant changes on CVN 79 to reduce the cost to build the ship  The benefits of these changes in build strategy and resolution of first-of-class impacts experienced on CVN 78 are evident in early production labor metrics on CVN 79  These efforts are ongoing and additional process improvements continue to be identified  Alongside the Navy's efforts to reduce the cost to build CVN 79, the FY 2016 National Defense Authorization Act reduced the cost cap for follow ships in the CVN 78 class from $11,498 million to $11,398 million  To this end, the Navy has further emphasized stability in requirements, design, schedule, and budget, in order to drive further improvement to CVN 79 cost  The FY 2017 President's Budget requests funding for the most efficient build strategy for this ship and we look for Congress' full support of this request to enable CVN 79 procurement at the lowest possible cost         The Navy will deliver the CVN 79 within the cost cap using a two-phased strategy wherein select ship systems and compartments that are more efficiently completed at a later stage of construction - to avoid obsolescence or to leverage competition or the use of experienced installation teams - will be scheduled for completion in the ship's second phase of production and test  Enterprise (CVN 80) began construction planning and long lead time material procurement in January 2016 and construction is scheduled to begin in 2018  The FY 2017 President's Budget request re-phases CVN 80 funding to support a more efficient production profile, critical to performance, below the cost cap  CVN 80 planning and construction will continue to leverage class lessons learned to achieve cost and risk reduction, including efforts to accelerate production work to earlier phases of construction, where work is more cost efficient  October 2015 Senate Armed Services Committee Hearing Cost growth and other issues in the CVN-78 program were reviewed at an October 1, 2015, hearing before the Senate Armed Services Committee  Below are excerpts from the prepared statements of the witnesses at the hearing  OSD ASD Testimony The prepared statement of the Assistant Secretary of Defense (Acquisition) within the Office of the Secretary of Defense (OSD) states the following in part: By 2000, the CVN(X) Acquisition Strategy that had been proposed by the Navy was an evolutionary, three-step development of the capabilities planned for the CVN  This evolutionary strategy intending to mature technology and align risk with affordability originally involved using the last ship of the CVN 68 NIMITZ Class, USS GEORGE H  W  BUSH (CVN 77), as the starting point for insertion of some near term technology improvements including information network technology and the new Dual Band Radar (DBR) system from the DD(X) (now DDG 1000) program, to create an integrated warfare system that combined the ship's combat system and air wing mission planning functions  However, the then incoming Secretary of Defense Donald Rumsfeld in 2002 directed re-examination of the CVN program, among others, to reduce the overall spend of the department and increase the speed of delivery to the warfighters  As a result of the SECDEF's direction, the Navy proposed to remove the evolutionary approach and included a new and enlarged flight deck, an increased allowance for future technologies (including electric weapons), and an additional manpower reduction of 500 to 800 fewer sailors to operate  On December 12, 2002, a Program Decision Memorandum approved by then Deputy Secretary of Defense Paul Wolfowitz codified this Navy proposal and gave this direction back to the DOD enterprise  The ship was renamed the CVN-21 to highlight these changes  By Milestone B in April 2004, the Navy had evaluated the technologies intended for three ships, removed some of them, and consolidated the remaining ones into a single step of capability improvement on the lead ship  The new plan acknowledged technological, cost, and schedule challenges were being put on a single ship, but assessed this was achievable  The Acting USD AT&L (Michael Wynne) at that milestone also directed the Navy to use a hybrid of the Service Cost Position and Independent Cost Estimate (ICE) to baseline the program funding in lieu of the ICE, (although one can easily argue even the ICE was optimistic given these imposed circumstances)  By 2004, DOD and Congressional leadership had lost confidence in the acquisition system, and Deputy Secretary of Defense Gordon England established the Defense Acquisition Performance Assessment (DAPA) panel to conduct a sweeping and integrated assessment of "every aspect" of acquisition  The result was the discovery that the Industrial Base had consolidated, that excessive oversight and complex acquisition processes were cost and schedule drivers, and a focus on requirements stability was key to containing costs  From this, a review of the requirements of the CVN resulted in a revised and solidified "single ship" Operational Requirements Document (ORD) for the FORD Class as defined today, with the CVN 78 as lead ship  On the heels of a delay because of the budgetary constraints in 2006, the start of the construction of CVN 78 was delayed until 2008, but the schedule for delivery was held constant, further compounding risks and costs  The Navy's testimony covers these technical and schedule risks and concurrency challenges well  By 2009, this Committee had issued a floor statement in support of the Weapon Systems Acquisition Reform Act (WSARA)  Congress was now united in its pursuit of acquisition reform and, in concert, USD AT&L re-issued and updated the Department of Defense's acquisition instruction (DoDI 5000 2) in 2008  WSARA included strengthening of the 'Nunn-McCurdy" process with requires DOD to report to Congress when cost growth on a major program breaches a critical cost growth threshold  This legislation required a root-cause assessment of the program and assumed program termination within 60 days of notification unless DOD certified in writing that the program remained essential to national security  WSARA had real impact on the CVN 78, as by 2008 and 2009 the results of all the previous decisions were instantiated in growth of cost and schedule  Then USD AT&L John Young required the Navy to provide a list of descoping efforts and directed the Navy to have an off-ramp back to steam catapults if the Electromagnetic Aircraft Launching System (EMALS) remained a problem for the program  He also directed an independent review of all of the CVN 78 technologies by a Defense Support Team (DST)  Prior to the DST, the Navy had chartered a Program Assessment Review (PAR) with USD (AT&L) participation of EMALS/Advanced Arresting Gear (AAG) versus steam  One of the key PAR findings was converting the EMALS and AAG production contracts to firm, fixed price contracts to cap cost growth and imposed negative incentives for late delivery  The Dual Band Radar (DBR) cost and risk growth was a decision by-product of the DDG 1000 program Nunn-McCurdy critical unit cost breach in 2010  Faced with a need to reduce cost on the DDG 1000 program and the resultant curtailment of the program, the expectation of development costs being borne by the DDG 1000 program was no longer the case and all of the costs associated with the S-band element development and a higher share of the X-band element then had to be supported by the CVN 78 program  The design problems encountered with AAG development have had the most deleterious effects on CVN 78 construction of any of the three major advanced technologies including EMALS and DBR  Our view of AAG is that these engineering design problems are now in the past and although delivery of several critical components have been delayed, the system will achieve its needed capabilities before undergoing final operational testing prior to deployment of the ship  Again, reliability growth is a concern, but this cannot be improved until a fully functional system is installed and operating at the Lakehurst, New Jersey land based test site, and on board CVN 78  With the 2010 introduction by then USD AT&L Ashton Carter (now in its third iteration by under USD AT&L Frank Kendall) of the continuous process improvement initiative that was founded in best business practices and WSARA called "Better Buying Power," the CVN underwent affordability, "Should Cost," and requirements assessment  Navy's use of the "Gate" process has stabilized the cost growth and reset good business practices  However, there is still much to do  We are in the testing phase of program execution prior to deployment and we had been concerned about the timing of the Full Ship Shock Trial (FSST)  After balancing the operational and technical risks, the Department decided to execute FSST on CVN 78 prior to deployment  EMALS and AAG are also a concern with regard to final operational testing stemming from the development difficulties that each experienced  The Navy still needs to complete a significant amount of land-based testing to enable certification of the systems to launch and recover the full range of aircraft that it is required to operate under both normal and emergency conditions  This land-based testing is planned to complete before the final at-sea operational testing for these systems begins     USD AT&L continues to work with Navy to tailor the program and ensure appropriate oversight at both the Navy Staff level as well as OSD  Our review of the Navy's plan for maintaining control of the cost for CVN 79 included an understanding of the application of lessons learned from the construction of CVN 78 along with the application of a more efficient construction plan for the ship including introduction of competition where possible  We have established an excellent relationship with the Navy to work together to change process and policies that have impacted the ability of the program to succeed, to include revitalizing the acquisition workforce and their skills  We are confident in the Navy's plan for CVN 79 and CVN 80 and, as such, Under Secretary Kendall recently authorized the Navy to enter into the detail design and construction phase for CVN 79 and to enter into advanced procurement for long lead time materials for CVN 80 construction  OSD and the Navy are committed to delivering CVN 79 within the limits of the cost cap legislated for this ship  OSD DOT&E Testimony The prepared statement of the Director, Operational Test & Evaluation (DOT&E), within OSD states the following in part: The Navy intends to deliver CVN 78 early in calendar year 2016, and to begin initial operational test and evaluation (IOT&E) in late calendar year 2017  However, the Navy is in the process of developing a new schedule, so some dates may change  Based on the current schedule, between now and the beginning of IOT&E, the CVN 78 program is proceeding on an aggressive schedule to finish development, testing, troubleshooting, and correction of deficiencies for a number of new, complex systems critical to the warfighting capabilities of the ship  Low or unknown reliability and performance of the Advanced Arresting Gear (AAG), the Electromagnetic Aircraft Launch System (EMALS), the Dual Band Radar (DBR), and the Advanced Weapons Elevators (AWE) are significant risks to a successful IOT&E and first deployment, as well as to achieving the life-cycle cost reductions the Navy has estimated will accrue for the Ford-class carriers  The maturity of these systems is generally not at the level that would be desired at this stage in the program; for example, the CVN 78 test program is revealing problems with the DBR typical of discoveries in early developmental testing  Nonetheless, AAG, EMALS, DBR, and AWE equipment is being installed on CVN 78, and in some cases, is undergoing shipboard checkout  Consequently, any significant issues that testing discovers before CVN 78's schedule-driven IOT&E and deployment will be difficult, or perhaps impossible, to address  Resolving the uncertainties in the reliability and performance of these systems is critical to CVN 78's primary function of conducting combat operations  CVN 78 has design features intended to enhance its ability to launch, recover, and service aircraft  EMALS and AAG are key systems planned to provide new capabilities for launching and recovering aircraft that are heavier and lighter than typically operated on Nimitz-class carriers  DBR is intended to enhance radar coverage on CVN 78 in support of air traffic control and ship self-defense  DBR is planned to reduce some of the known sensor limitations on Nimitz-class carriers that utilize legacy radars  The data currently available to my office indicate EMALS is unlikely to achieve the Navy's reliability requirements  (The Navy indicates EMALS reliability is above its current growth curve, which is true; however, that growth curve was revised in 2013, based on poor demonstrated performance, to achieve EMALS reliability on CVN 78 a factor of 15 below the Navy's goal ) I have no current data regarding DBR or AWE reliability, and data regarding the reliability of the re-designed AAG are also not available  (Poor AAG reliability in developmental testing led to the need to re-design components of that system ) In addition, performance problems with these systems are continuing to be discovered  If the current schedule for conducting the ship's IOT&E and first deployment remain unchanged, reliability and performance shortfalls could degrade CVN 78's ability to conduct flight operations  Due to known problems with current aircraft carrier combat systems, there is significant risk CVN 78 will not achieve its self-defense requirements  Although the CVN 78 design incorporates several combat system improvements relative to the Nimitz-class, these improvements (if achieved) are unlikely to correct all of the known shortfalls  Testing on other ships with similar combat systems has highlighted deficiencies in weapon employment timelines, sensor coverage, system track management, and deficiencies with the recommended engagement tactics  Most of these limitations are likely to affect CVN 78 and I continue to view this as a significant risk to the CVN 78's ability to defend itself against attacks by the challenging anti-ship cruise missile and other threats proliferating worldwide  The Navy's previous decision to renege on its original commitment to conduct the Full Ship Shock Trial (FSST) on CVN 78 before her first deployment would have put CVN 78 at risk in combat operations  This decision was reversed in August 2015 by the Deputy Secretary of Defense  Historically, FSSTs for new ship classes have identified for the first time numerous mission-critical failures the Navy had to address to ensure the new ships were survivable in combat  We can expect that CVN 78's FSST results will have significant and substantial implications on future carriers in the Ford-class and any subsequent new class of carriers  I also have concerns with manning and berthing on CVN 78  The Navy designed CVN 78 to have reduced manning to reduce life-cycle costs, but Navy analyses of manning on CVN 78 have identified problems in manning and berthing  These problems are similar to those seen on other recent ship classes such as DDG 1000 and the Littoral Combat Ship (LCS)     There are significant risks to the successful completion of the CVN 78 IOT&E and the ship's subsequent deployment due to known performance problems and the low or unknown reliability of key systems  For AAG, EMALS, AWE and DBR, systems that are essential to the primary missions of the ship, these problems, if uncorrected, are likely to affect CVN 78's ability to conduct effective flight operations and to defend itself in combat  The CVN 78 test schedule leaves little or no time to fix problems discovered in developmental testing before IOT&E begins that could cause program delays  In the current program schedule, major developmental test events overlap IOT&E  This overlap increases the likelihood problems will be discovered during CVN 78's IOT&E, with the attendant risk to the successful completion of that testing and to the ship's first deployment  The inevitable lessons we will learn from the CVN 78 FSST will have significant implications for CVN 78 combat operations, as well as for the construction of future carriers incorporating the ship's advanced systems; therefore, the FSST should be conducted on CVN 78 as soon as it is feasible to do so  Navy Testimony The prepared statement of the Navy witnesses at the hearing states the following in part: In June 2000, the Department of Defense (DOD) approved a three-ship evolutionary acquisition approach starting with the last NIMITZ Class carrier (CVN 77) and the next two carriers CVNX1 (later CVN 78) and CVNX2 (later CVN 79)  This approach recognized the significant risk of concurrently developing and integrating new technologies into a new ship design incrementally as follows: • The design focus for the evolutionary CVN 77 was to combine information network technology with a new suite of multifunction radars from the DDG 1000 program to transform the ship's combat systems and the air wing's mission planning process into an integrated warfare system  • The design focus for the evolutionary CVNX1 (future CVN 78) was a new Hull, Mechanical and Electrical (HM&E) architecture within a NIMITZ Class hull that included a new reactor plant design, increased electrical generating capacity, new zonal electrical distribution, and new electrical systems to replace steam auxiliaries under a redesigned flight deck employing new Electromagnetic Aircraft Launch System (EMALS) catapults together with aircraft ordnance and fueling "pit-stops"  Design goals for achieving reduced manning and improved maintainability were also defined  • The design focus for the evolutionary CVNX2 (future CVN 79) was a potential "clean-sheet" design to "open the aperture" for capturing new but immature technologies such as the Advanced Arresting Gear (AAG) and Advanced Weapons Elevators (AWE) that would be ready in time for the third ship in the series; and thereby permit the experience gained from design and construction of the first two ships (CVN 77 and CVN 78) to be applied to the third ship (CVN 79)  Early in the last decade, however, a significant push was made within DOD for a more transformational approach to delivering warfighting capability  As a result, in 2002, DOD altered the program acquisition strategy by transitioning to the new aircraft carrier class in a single transformational leap vice an incremental three ship strategy  Under the revised strategy, CVN 77 reverted back to a "modified-repeat" NIMITZ Class design to minimize risk and construction costs, while delaying the integrated warfare system to CVN 78  Further, due to budget constraints, CVN 78 would start construction a year later (in 2007) with a NIMITZ Class hull form but would entail a major re-design to accommodate all the new technologies from the three ship evolutionary technology insertion plan  This leap ahead in a single ship was captured in a revised Operational Requirements Document (ORD) in 2004, which defined a new baseline that is the FORD Class today, with CVN 78 as the lead ship  The program entered system development and demonstration, containing the shift to a single ship acquisition strategy  The start of CVN 78 construction was then delayed by an additional year until 2008 due to budget constraints  As a result, the traditional serial evolution of technology development, ship concept design, detail design, and construction – including a total of 23 developmental systems incorporating new technologies originally planned across CVN 77, CVNX1, CVNX2 - were compressed and overlapped within the program baseline for the CVN 78  Today, the Navy is confronting the impacts of this compression and concurrency, as well as changes to assumptions made in the program planning more than a decade ago     Given the lengthy design, development, and build span associated with major warships, there is a certain amount of overlap or concurrency that occurs between the development of new systems to be delivered with the first ship, the design information for those new systems, and actual construction  Since this overlap poses cost and schedule risk for the lead ship of the class, program management activities are directed at mitigating this overlap to the maximum extent practicable  In the case of the FORD Class, the incorporation of 23 developmental systems at various levels of technical maturity (including EMALS, AAG, DBR, AWE, new propulsion plant, integrated control systems) significantly compounded the inherent challenges associated with accomplishing the first new aircraft carrier design in 40-years  The cumulative impact of this high degree of concurrency significantly exceeded the risk attributed to any single new system or risk issue and ultimately manifested itself in terms of delay and cost growth in each element of program execution; development, design, material procurement (government and contractor), and construction     Shipbuilder actions to resolve first-of-class issues retired much of the schedule risks to launch, but at an unstable cost  First-of-class construction and material delays led the Navy to revise the launch date in March 2013 from July 2013 to November 2013  Nevertheless, the four-month delay in launch allowed increased outfitting and ship construction that were most economically done prior to ship launch, such as completion of blasting and coating operations for all tanks and voids, installation of the six DBR arrays, and increased installations of cable piping, ventilation, electrical boxes, bulkheads and equipment foundations  As a result, CVN 78 launched at 70 percent complete and 77,000 tons displacement – the highest levels yet achieved in aircraft carrier construction  This high state of completion at launch enabled improved outfitting, compartment completion, an efficient transition into the shipboard test program, and the on-time completion of key milestones such as crew move aboard  With the advent of the shipboard test program, first time energization and grooming of new systems have required more time than originally planned  As a result, the Navy expects the sea trial schedule to be delayed about six to eight weeks  The exact impact on ship delivery will be determined based on the results of these trials  The Navy expects no schedule delays to CVN 78 operational testing and deployability due to the sea trials delay and is managing schedule delays within the $12 887 billion cost cap  Additionally, at delivery, AAG will not have completed its shipboard test program  The program has not been able to fully mitigate the effect of a two-year delay in AAG equipment deliveries to the ship  All AAG equipment has been delivered to the ship and will be fully installed on CVN 78 at delivery  The AAG shipboard test and certification program will complete in time to support aircraft launch and recovery operations in summer 2016     The Navy, in coordination with the shipbuilder and major component providers, implemented a series of actions and initiatives in the management and oversight of CVN 78 that crossed the full span of contracting, design, material procurement, GFE, production planning, production management and oversight  The Secretary of the Navy directed a detailed review of the CVN 78 program build plan to improve end-to-end aircraft carrier design, material procurement, production planning, build and test, the results of which are providing benefit across all carriers  These corrective measures include: • CVN 78 design was converted from a 'level of effort, fixed fee' contract to a completion contract with a firm target and incentive fee  Shipbuilder cost performance has been on-target or better since this contract change  • CVN 78 construction fee was reduced, consistent with contract provisions  However, the shipbuilder remains incentivized by the contract shareline to improve upon current cost performance  • Contract design changes are under strict control; authorized only for safety, damage control, and mission-degrading deficiencies  • Following a detailed "Nunn-McCurdy-like" review in 2008-2009, the Navy converted the EMALS and AAG production contract to a firm, fixed price contract, capping cost growth to each system  • In 2011, Naval Sea Systems Command completed a review of carrier specifications with the shipbuilder, removing or improving upon overly burdensome or unneeded specifications that impose unnecessary cost on the program  Periodic reviews continue  Much of the impact to cost performance was attributable to shipbuilder and government material cost overruns  The Navy and shipbuilder have made significant improvements upon material ordering and delivery to the shipyard to mitigate the significant impact of material delays on production performance  These actions include: • The Navy and shipbuilder instituted optimal material procurement strategies and best practices (structuring procurements to achieve quantity discounts, dual-sourcing to improve schedule performance and leveraging competitive opportunities) from outside supply chain management experts  • The shipbuilder assigned engineering and material sourcing personnel to each of their key vendors to expedite component qualifications and delivery to the shipyard  • The shipbuilder inventoried all excess material procured on CVN 78 for transfer to CVN 79  • The Program Executive Officer (Carriers) has conducted quarterly Flag-level GFE summits to drive cost reduction opportunities and ensure on-time delivery of required equipment and design information to the shipbuilder  The CVN 78 build plan, consistent with the NIMITZ Class, had focused foremost on completion of structural and critical path work to support launching the ship on-schedule  Achieving the program's cost improvement targets required that CVN 78 increase its level of completion at launch, from 60 percent to 70 percent  To achieve this and drive greater focus on system completion: • The Navy fostered a collaborative build process review by the shipbuilder with other Tier 1 private shipyards in order to benchmark its performance and identify fundamental changes that are yielding marked improvement  • The shipbuilder established specific launch metrics by system and increased staffing for waterfront engineering and material expediters to support meeting those metrics  This ultimately delayed launch, but drove up pre-outfitting to the highest levels for CVN new construction which has helped stabilize cost and improve test program and compartment completion performance relative to CVN 77  • The shipbuilder linked all of these processes within a detailed integrated master schedule that has provided greater visibility to performance and greater ability to control cost and schedule performance across the shipbuilding disciplines  These initiatives, which summarize a more detailed list of actions being implemented and tracked as a result of the end-to-end review, were accompanied by important management changes  • In 2011, the Navy assigned a second tour Flag Officer with considerable carrier operations, construction, and program management experience as the new Program Executive Officer (PEO)  • The new PEO established a separate Program Office, PMS 379, to focus exclusively on CVN 79 and CVN 80, which enables the lead ship Program Office, PMS 378, to focus on cost control, schedule performance and the delivery of CVN 78  • In 2012, the shipbuilder assigned a new Vice President in charge of CVN 78, a new Vice President in charge of material management and purchasing, and a number of new general ship foremen to strengthen CVN 78 performance  • The new PEO and shipyard president began conducting bi-weekly launch readiness reviews focused on cost performance, critical path issues and accomplishment of the targets for launch completion  These bi-weekly reviews will continue through delivery  • Assistant Secretary of the Navy (Research, Development, and Acquisition) (ASN (RD&A)) conducts quarterly reviews of program progress and performance with the PEO and shipbuilder to ensure that all that can be done to improve on cost performance is being done  The series of actions taken by the Navy and the shipbuilder are achieving the desired effect of arresting cost growth, establishing stability, and have resulted in no changes in the Government's estimate at completion over the past four years  The Department of the Navy is continuing efforts to identify cost reductions, drive improved cost and schedule performance, and manage change  The Navy has established a rigorous process with the shipbuilder that analyzes each contract change request to approve only those change categories allowed within the 2010 ASN(RD&A) change order management guidance  This guidance only allows changes for safety, contractual defects, testing and trial deficiencies, statutory and regulatory changes that are accompanied by funding and value engineering change proposals with instant contract savings  While the historical average for contractual change level is approximately 10 percent of the construction cost for the lead ship of a new class, CVN 78 has maintained a change order budget of less than four percent to date despite the high degree of concurrent design and development  Finally, the Navy has identified certain areas of the ship whose completion is not required for delivery, such as berthing spaces for the aviation detachment, and has removed this work from the shipbuilder's contract  This deferred work will be completed within the ship's budgeted end cost and is included within the $12,887 million cost estimate  By performing this deferred work in the post-delivery period using CVN 78 end cost funding, it can be competed and accomplished at lower cost and risk to the overall ship delivery schedule     The CVN 79 cost cap was established in 2006 and adjusted by the Secretary of the Navy in 2013, primarily to address inflation between 2006 and 2013 plus $325 million of the allowed increase for non-recurring engineering to incorporate design improvements for the CVN 78 Class construction  The Navy and the shipbuilder conducted an extensive affordability review of carrier construction and made significant changes to deliver CVN 79 at the lowest possible cost  These changes are focused on eliminating the largest impacts to cost performance identified during the construction of CVN 78 as well as furthering improvements in future carrier construction  The Navy outlined cost savings initiatives in its Report to Congress in May, 2013, and is executing according to plan  Stability in requirements, design, schedule, and budget, are essential to controlling and improving CVN 79 cost, and therefore is of highest priority for the program  Requirements for CVN 79 were "locked down" prior to the commencement of CVN 79 construction  The technical baseline and allocated budget for these requirements were agreed to by the Chief of Naval Operations and ASN(RD&A) and further changes to the baseline require their approval, which ensures design stability and increases effectiveness during production  At the time of construction contract award, CVN 79 has 100 percent of the design product model complete (compared to 65 percent for CVN 78) and 80 percent of initial drawings released  Further, CVN 79 construction benefits from the maturation of virtually all new technologies inserted on CVN 78  In the case of EMALS and AAG, the system design and procurement costs are understood, and CVN 79 leverages CVN 78 lessons learned     A completed FORD Class design enabled the shipbuilder to fully understand the "whole ship" bill of materials for CVN 79 construction and to more effectively manage the procurement of those materials with the knowledge of material lead times and qualified sources accrued from CVN 78 construction  The shipbuilder is able to order ship-set quantities of material, with attendant cost benefits, and to ensure CVN 79 material will arrive on time to support construction need  Extensive improvements have been put in place for CVN 79 material procurement to drive both cost reductions associated with more efficient procurement strategies and production labor improvements associated with improved material availability  Improved material availability is also a critical enabler to many construction efficiency improvements in CVN 79  The shipbuilder has developed an entirely new material procurement and management strategy for CVN 79  This new strategy consists of eight separate initiatives     The shipbuilder and the Navy have performed a comprehensive review of the build strategy and processes used in construction of CVN 78 Class aircraft carriers as well as consulted with other Navy shipbuilders on best practices  As a result, the shipbuilder has identified and implemented a number of changes in the way they build aircraft carriers, with a dedicated focus on executing construction activities where they can most efficiently be performed  The CVN 79 build sequence installs 20 percent more parts in shop, and 30 percent more parts on the final assembly platen, as compared to CVN 78  This work will result in an increase in pre-outfitting and work being pulled to earlier stages in the construction process where it is most efficiently accomplished     In conjunction with the Navy and the shipbuilder's comprehensive review of the build strategy and processes used in construction of CVN 78 Class aircraft carriers, a number of design changes were identified that would result in more affordable construction  Some of these design changes were derived from lessons learned in the construction of CVN 78 and others seek to further simplify the construction process and drive cost down     In addition to the major focus discussed above, the shipbuilder continues to implement capital improvements to facilities that serve to reduce risk and improve productivity     To enhance CVN 79 build efficiency and affordability, the Navy is implementing a two-phase delivery plan  The two-phase strategy will allow the basic ship to be constructed and tested in the most efficient manner by the shipbuilder (Phase I) while enabling select ship systems and compartments to be completed in Phase II, where the work can be completed more affordably through competition or the use of skilled installation teams     The CVN 80 planning and construction will continue to leverage class lessons learned in the effort to achieve cost and risk reduction for remaining FORD Class ships  The CVN 80 strategy seeks to improve on CVN 79 efforts to frontload as much work as possible to the earliest phases of construction, where work is both predictable and more cost efficient     While delivery of the first-of-class FORD has involved challenges, those challenges are being addressed and this aircraft carrier class will provide great value to our Nation with unprecedented and greatly needed warfighting capability at overall lower total ownership cost than a NIMITZ Class CVN  The Navy has taken major steps to stem the tide of increasing costs and drive affordability into carrier acquisition  GAO Testimony The prepared statement of the GAO witness at the hearing states the following in part: The Ford-class aircraft carrier's lead ship began construction with an unrealistic business case  A sound business case balances the necessary resources and knowledge needed to transform a chosen concept into a product  Yet in 2007, GAO found that CVN 78 costs were underestimated and critical technologies were immature—key risks that would impair delivering CVN 78 at cost, on-time, and with its planned capabilities  The ship and its business case were nonetheless approved  Over the past 8 years, the business case has predictably decayed in the form of cost growth, testing delays, and reduced capability—in essence, getting less for more  Today, CVN 78 is more than $2 billion over its initial budget  Land-based tests of key technologies have been deferred by years while the ship's construction schedule has largely held fast  The CVN 78 is unlikely to achieve promised aircraft launch and recovery rates as key systems are unreliable  The ship must complete its final, more complex, construction phase concurrent with key test events  While problems are likely to be encountered, there is no margin for the unexpected  Additional costs are likely  Similarly, the business case for CVN 79 is not realistic  The Navy recently awarded a construction contract for CVN 79 which it believes will allow the program to achieve the current $11 5 billion legislative cost cap  Clearly, CVN 79 should cost less than CVN 78, as it will incorporate lessons learned on construction sequencing and other efficiencies  While it may cost less than its predecessor, CVN 79 is likely to cost more than estimated  As GAO found in November 2014, the Navy's strategy to achieve the cost cap relies on optimistic assumptions of construction efficiencies and cost savings—including unprecedented reductions in labor hours, shifting work until after ship delivery, and delivering the ship with the same baseline capability as CVN 78 by postponing planned mission system upgrades and modernizations until future maintenance periods  Today, with CVN 78 over 92 percent complete as it reaches delivery in May 2016, and the CVN 79 on contract, the ability to exercise oversight and make course corrections is limited  Yet, it is not too late to examine the carrier's acquisition history to illustrate the dynamics of shipbuilding—and weapon system—acquisition and the challenges they pose to acquisition reform  The carrier's problems are by no means unique; rather, they are quite typical of weapon systems  Such outcomes persist despite acquisition reforms the Department of Defense and Congress have put forward—such as realistic estimating and "fly before buy " Competition with other programs for funding creates pressures to overpromise performance at unrealistic costs and schedules  These incentives are more powerful than policies to follow best acquisition practices and oversight tools  Moreover, the budget process provides incentives for programs to be funded before sufficient knowledge is available to make key decisions  Complementing these incentives is a marketplace characterized by a single buyer, low volume, and limited number of major sources  The decades-old culture of undue optimism when starting programs is not the consequence of a broken process, but rather of a process in equilibrium that rewards unrealistic business cases and, thus, devalues sound practices  July 2015 Press Report A July 2, 2015, press report states the following: The Navy plans to spend $25 million per year beginning in 2017 as a way to invest in lowering the cost of building the services' new Ford-class aircraft carriers, service officials said  "We will use this design for affordability to make new improvements in cost cutting technologies that will go into our ships," said Rear Adm  Michael Manazir, Director, Air Warfare     "We just awarded a contract to buy long lead item materials [for CVN-79] and lay out an allocated budget for each of the components of that ship  We want to build the ship in the most efficient manner possible," Rear Adm  Thomas Moore, Program Executive Officer, Carriers, said  Navy leaders say the service is making positive strides regarding the cost of construction for the USS Kennedy and plans to stay within the congressional cost cap of $11 498 billion     The $25 million design for affordability initiative is aimed at helping to uncover innovative shipbuilding techniques and strategies that will accomplish this and lower costs  Moore said the goal of the program is to, among other things, remove $500 million from the cost of the third Ford-class carrier, the USS Enterprise, CVN 80  "It is finding a million here and a million there and eventually that is how you get a billion dollars out of the ship from (CVN) 78 to (CVN) 79  The goal is to get another $500 million out of CVN 80  The $25 million dollars is a pretty prudent investment if we can continue to drive the cost of this class of ship down," Moore told reporters recently  Moore explained that part of the goal is to get to the point where a Ford-class carrier can be built for the same amount of man-hours it took to build their predecessor ships, the Nimitz-class carriers  "We want to get back to the goal of being able to build it for historical Nimitz class levels in terms of man hours for a ship that is significantly more capable and more complex to build," Moore added  The money will invest in new approaches and explore the processes that a shipyard can use to build the ship, Moore added  "They've made a significant investment in these new welding machines  These new welding machines allow the welder to use different configurations  This has significantly improved the throughput that the shipyard has," Moore said, citing an example of the kind of thing the funds would be used for  The funds will also look into whether new coatings for the ship or welding techniques can be used and whether millions of feet of electrical cabling can be installed in a more efficient manner, Moore added  Other cost saving efforts assisted by the funding include the increased use of complex assemblies, common integrated work packages, automated plate marking, weapons elevator door re-design and vertical build strategies, Navy officials said  Shipbuilders could also use a new strategy of having work crews stay on the same kind of work for several weeks at a time in order to increase efficiency, Moore said  Also, some of the construction work done on the USS Ford while it was in dry dock is now being done in workshops and other areas to improve the building process, he added  June 2015 Press Reports A June 29, 2015, press report states the following: Newport News Shipbuilding will see cost reduction on the order of 18 percent fewer man hours overall from the first Ford-class aircraft carrier to the second, according to a company representative  Ken Mahler, Newport News vice president of Navy programs, touted the shipyard's cost savings on the John F  Kennedy (CVN-79) during a June 15 interview with Inside the Navy   This reduction was facilitated by the investments the shipyard is making in carrier construction, as well as lessons learned from the first ship, the Gerald R  Ford (CVN-78), which will deliver next year  A June 23, 2015, press report states the following: The Pentagon's cost-assessment office now says the Navy's second aircraft carrier in a new class will exceed a congressionally mandated cost cap by $235 million  That's down from an April estimate that the USS John F  Kennedy, the second warship in the new Ford class, would bust a $11 498 billion cap set by lawmakers by $370 million  The Navy maintains that it can deliver the ship within the congressional limit  "The original figure was a draft based on preliminary information," Navy Commander Bill Urban, a spokesman for the Pentagon's Cost Assessment and Program Evaluation office, said in an e-mail  As better information, such as updated labor rates, became available, the office "revised its estimate to a more accurate number," he said  A June 15, 2015, press report states the following: [Rear Admiral Tom] Moore [program executive officer for aircraft carriers]  said the program would save a billion dollars by decreasing the man hours needed to construct the ship by 18 percent from CVN-78 to 79—down to about 44 million manhours  He said this reduction is only a first step in taking cost ouot of the carrier program  The future Enterprise (CVN-80) will take about 4 million manhours out, or another 10 percent reduction, for a savings of about $500 million  But beyond seeking ways to take cost out, the contract itself reduces the risk to the government, Moore said  "The main construction of the ship is now in a fixed price environment, so that switchover really limits the government's liability," he said  Without getting into specific dollar amounts due to business sensitivities, Moore explained that "this is the lowest target fee we've ever had on any CVN new construction  Look at tghe shape of the share [government-contractor cost] share lines, because the share lines at the end of the day are a measure of risk  So where we'd like to get quickly to [a] 50/50 [share line], in past carrier contracts we've been out at 85/15, 90/10—which basically means for every dollar over [the target cost figure, up to the ceiling cost figure], the government picks up 85 cents on the dollar  And this contract very quickly gets to 50/50  The other thing is ceiling price—on a fixed-price contract, the ceiling price is the government's maximum liability  And on this particular contract, again, it is the lowest ceiling price we've ever had [for a CVN] " February 2015 Navy Testimony At a February 25, 2015, hearing on Department of the Navy acquisition programs, Department of the Navy officials testified the following: The Navy is committed to delivering CVN 78 within the $12 887 billion Congressional cost cap  Sustained efforts to identify cost reductions and drive improved cost and schedule on this first-of-class aircraft carrier have resulted in highly stable performance since 2011  Parallel efforts by the Navy and shipbuilder are driving down and stabilizing aircraft carrier construction costs for the future John F Kennedy (CVN 79) and estimates for the future Enterprise (CVN 80)  As a result of the lessons learned on CVN 78, the approach to carrier construction has undergone an extensive affordability review  The Navy and the shipbuilder have made significant changes on CVN 79 to reduce the cost to build the ship as detailed in the 2013 CVN 79 report to Congress  The benefits of these changes in build strategy and resolution of first-of-class impacts on CVN 79 are evident in metrics showing significantly reduced man-hours for completed work from CVN 78  These efforts are ongoing and additional process improvements continue to be identified  The Navy extended the CVN 79 construction preparation contract into 2015 to enable continuation of ongoing planning, construction, and material procurement while capturing lessons learned associated with lead ship construction and early test results  The continued negotiations of the detail design and construction (DD&C) contract afford an opportunity to incorporate further construction process improvements and cost reduction efforts  Award of the DD&C contract is expected in third quarter FY 2015  This will be a fixed price-type contract  Additionally, the Navy will deliver the CVN 79 using a two-phased strategy  This enables select ship systems and compartments to be completed in a second phase, wherein the work can be completed more efficiently through competition or the use of skilled installation teams responsible for these activities  This approach, key to delivering CVN 79 at the lowest cost, also enables the Navy to procure and install shipboard electronic systems at the latest date possible  The FY 2014 NDAA adjusted the CVN 79 and follow ships cost cap to $11,498 million to account for economic inflation and non-recurring engineering for incorporation of lead ship lessons learned and design changes to improve affordability  In transitioning from first-of-class to first follow ships, the Navy has maintained Ford class requirements and the design is highly stable  Similarly, we have imposed strict interval controls to drive changes to the way we do business in order to ensure CVN 79 is delivered below the cost cap  To this same end, the FY 2016 President's Budget request aligns funding to the most efficient build strategy for this ship and we look for Congress' full support of this request to enable CVN 79 to be procured at the lowest possible cost  Enterprise (CVN 80) will begin long lead time material procurement in FY 2016  The FY 2016 request re-phases CVN 80 closer to the optimal profile, therefore reducing the overall ship cost  The Navy will continue to investigate and will incorporate further cost reduction initiatives, engineering efficiencies, and lessons learned from CVN 78 and CVN 79  Future cost estimates for CVN 80 will be updated for these future efficiencies as they are identified  May 2013 Navy Testimony In its prepared statement for a May 8, 2013, hearing on Navy shipbuilding programs before the Seapower subcommittee of the Senate Armed Services Committee, the Navy stated that In 2011, the Navy identified spiraling cost growth [on CVN-78] associated with first of class non-recurring design, contractor and government furnished equipment, and ship production issues on the lead ship  The Navy completed an end-to-end review of CVN 78 construction in December 2011 and, with the shipbuilder, implemented a series of corrective actions to stem, and to the extent possible, reverse these trends  While cost performance has stabilized, incurred cost growth is irreversible     As a result of lessons learned on CVN 78, the approach to carrier construction has undergone an extensive affordability review; and the Navy and the shipbuilder have made significant changes on CVN 79 that will reduce the cost to build the ship  CVN 79 construction will start with a complete design, firm requirements, and material economically procured and on hand in support of production need  The ship's build schedule also provides for increased completion levels at each stage of construction with resulting improved production efficiencies     Inarguably, this new class of aircraft carrier brings forward tremendous capability and life-cycle cost advantages compared to the NIMITZ-class it will replace  However, the design, development and construction efforts required to overcome the technical challenges inherent to these advanced capabilities have significantly impacted cost performance on the lead ship  The Navy continues implementing actions from the 2012 detailed review of the FORD-Class build plan to control cost and improve performance across lead and follow ship contracts  This effort, taken in conjunction with a series of corrective actions with the shipbuilder on the lead ship, will not recover costs to original targets for GERALD R  FORD [CVN-78], but should improve performance on the lead ship while fully benefitting CVN 79 and following ships of the class  In the discussion portion of the hearing, Sean Stackley, the Assistant Secretary of the Navy for Research, Development and Acquisition (i e , the Navy's acquisition executive), testified that First, the cost growth on the CVN-78 is unacceptable  The cost growth dates back in time to the very basic concepts that went into take in the Nimitz-class and doing a total redesign of the Nimitz class to get to a level of capability and to reduce operating and support cost for the future carrier  Far too much risk was carried into the design of the first of the Ford-class  Cost growth stems to the design was moving at the time production started  The vendor base that was responsible for delivering new components and material to support the ship production was (inaudible) with new developments in the vendor base and production plan do not account for the material ordering difficulties, the material delivery difficulties and some of the challenges associated with building a whole new design compared to the Nimitz     Sir, for CVN-79, we have—we have held up the expenditures on CVN-79 as we go through the details of—one, ensuring that the design of the 78 is complete and repeated for the 79s [sic] that we start with a clean design  Two, we're going through the material procurement  We brought a third party into assessment material-buying practices at Newport News to bring down the cost of material  And we're metering out the dollars for buying material until it hits the objectives that we're setting for CVN-79 through rewriting the build plan on CVN-79  If you take a look at how the 78 is being constructed, far too much work is being accomplished late in the build cycle  So we are rewriting the build plan for CVN-79, do more work in the shops where it's more efficient, more work in the buildings where it's more efficient, less work in the dry dock, less work on the water  And then we're going after the rates—the labor rates and the investments needed by the shipbuilder to achieve these efficiencies  Later in the hearing, Stackley testified that the history in shipbuilding is since you don't have a prototype for a new ship, the first of class referred to as the lead ship is your prototype  And so you carry a lot of risk into the construction of that first of class  Also, given the nature that there's a lengthy design development and build span associated with ships, so there is a certain amount of overlap or concurrency that occurs between the development of new systems that need to be delivered with the first ship, the incorporation of the design of those new systems and the actual construction  And so to the extent that there is change in a new ship class then the risk goes up accordingly  In the case of the CVN-78, the degree of change compared to the Nimitz was fairly extraordinary all for good reasons, good intentions, increased capability, increased survivability, significant reduction in operating and support costs  So there was a determination that will take on this risk in order to get those benefits, and the case of the CVN-78, those risks are driving a lot of the cost growth on the lead ship  When you think about the follow ships, now you've got a stable design, now your vendor base has got a production line going to support the production  Now you've got a build plan and a workforce that has climbed up on the learning curve to drive cost down  So you can look at—you can look at virtually every shipbuilding program and you'll see a significant drop-off in cost from that first of class to the follow ships  And then you look for a stable learning curve to take over in the longer term production of a ship class  Carriers are unique for a number of reasons, one of which we don't have an annual procurement of carriers  They're spread out over a five and, in fact, in the case of 78 as much as seven-year period  So in order to achieve that learning, there are additional challenges associated with achieving that learning  And so we're going at it very deliberately on the CVN-79 through the build plan with the shipbuilder to hit the line that we've got to have—the cost reductions that we've got to have on the follow ships of the class  March 2013 Navy Report A March 2013 report to Congress on the Navy's plan for building CVN-79 that was released to the public on May 16, 2013, states the following in its executive summary: As a result of the lessons learned on CVN 78, the approach to carrier construction has undergone an extensive affordability review and the Navy and the shipbuilder have made significant changes on CVN 79 that will significantly reduce the cost to build the ship  These include four key construction areas: —CVN 79 construction will start with a complete design and a complete bill of material —CVN 79 construction will start with a firm set of stable requirements —CVN 79 construction will start with the development complete on a host of new technologies inserted on CVN 78 ranging from the Electromagnetic Aircraft Launch System (EMALS), the Dual Band Radar, and the reactor plant, to key valves in systems throughout the ship —CVN 79 construction will start with an 'optimal build' plan that emphasizes the completion of work and ship outfitting as early as possible in the construction process to optimize cost and ultimately schedule performance  In addition to these fundamentals, the Navy and the shipbuilder are tackling cost through a series of other changes that when taken over the entire carrier will have a significant impact on construction costs  The Navy has also imposed cost targets and is aggressively pursuing cost reduction initiatives in its government furnished systems  A detailed accounting of these actions is included in this report  The actions discussed in this report are expected to reduce the material cost of CVN 79 by 10-20% in real terms from CVN 78, to reduce the number of man-hours required to build the CVN 79 by 15-25% from CVN 78, and to reduce the cost of government furnished systems by 5-10% in real terms from CVN 78  For the full text of the Navy's report, see the Appendix D   March 2012 Navy Letter to Senator McCain Secretary of the Navy Ray Mabus, in a letter with attachment sent in late March 2012 to Senator John McCain on controlling cost growth in CVN-78, stated the following: Dear Senator McCain: Thank you for your letter of March 21, 2012, regarding the first-of-class aircraft carrier, GERALD R  FORD (CVN 78)  Few major programs carry greater importance or greater impact on national security, and no other major program comprises greater scale and complexity than the Navy's nuclear aircraft carrier program  Accordingly, successful execution of this program carries the highest priority within the Department of the Navy  I have shared in the past my concern when I took office and learned the full magnitude of new technologies and design change being brought to the FORD  Requirements drawn up more than a decade prior for this capital ship drove development of a new reactor plant, propulsion system, electric plant and power distribution system, first of kind electromagnetic aircraft launching system, advanced arresting gear, integrated warfare system including a new radar and communications suite, air conditioning plant, weapons elevators, topside design, survivability improvements, and all new interior arrangements  CVN 78 is a near-total redesign of the NIMITZ Class she replaces  Further, these major developments, which were to be incrementally introduced in the program, were directed in 2002 to be integrated into CVN 78 in a single step  Today we are confronting the cost impacts of these decisions made more than a decade ago  In my August 29, 2011 letter, I provided details regarding these cost impacts  At that time, I reported the current estimate for the Navy's share of the shipbuilder's construction overrun, $690 million, and described that I had directed an end-to-end review to identify the changes necessary to improve cost for carrier design, material procurement, planning, build and test  The attached white paper provides the findings of that review and the steps we are taking to drive affordability into the remaining CVN 78 construction effort  Pending the results of these efforts, the Navy has included the 'fact of life' portion of the stated overrun in the Fiscal Year 2013 President's Budget request  The review also highlighted the compounding effects of applying traditional carrier build planning to a radically new design; the challenges inherent to low-rate, sole-source carrier procurement; and the impact of external economic factors accrued over 15 years of CVN 78 procurement—all within the framework of cost-plus contracts  The outlined approach for ensuring CVN 79 and follow ship affordability focuses equally upon tackling these issues while applying the many lessons learned in the course of CVN 78 procurement  As always, if I may be of further assistance, please let me know  Sincerely, [signed] Ray Mabus Attachment: As stated Copy to: The Honorable Carl Levin, Chairman [Attachment] Improving Cost Performance on CVN 78 CVN 78 is nearing 40 percent completion  Cost growth to-date is attributable to increases in design, contractor furnished material, government furnished material (notably, the Electromagnetic Aircraft Launching System (EMALS), Advanced Arresting Gear (AAG), and the Dual Band Radar (DBR)), and production labor performance  To achieve the best case outcome, the program must execute with zero additional cost growth in design and material procurement, and must improve production performance  The Navy and the shipbuilder have implemented a series of actions and initiatives in the management and oversight of CVN 78 that cross the full span of contracting, design, material procurement, government furnished equipment, production planning, production, management and oversight  CVN 78 is being procured within a framework of cost-plus contracts  Within this framework, however, the recent series of action taken by the Navy to improve contract effectiveness are achieving the desired effect of incentivizing improved cost performance and reducing government exposure to further cost growth  CVN 78 design has been converted from a 'level of effort, fixed fee' contract to a completion contract with a firm target and incentive fee  Shipbuilder cost performance has been on-target or better since this contract was changed  CVN 78 construction fee has been retracted, consistent with contract performance  However, the shipbuilder is incentivized by the contract shareline to improve upon current performance to meet agreed-to cost goals  Contract design changes are under strict control; authorized only for safety, damage control, mission-degrading deficiencies, or similar  Adjudicated changes have been contained to less than 1 percent of contract target price  The Navy converted the EMALS and AAG production contract to a firm, fixed price contract, capping cost growth to that system and imposing negative incentives for late delivery  Naval Sea Systems Command is performing a review of carrier specifications with the shipbuilder, removing or improving upon overly burdensome or unneeded specifications that impose unnecessary cost on the program  The single largest impact to cost performance to-date has been contractor and government material cost overruns  These issues trace to lead ship complexity and CVN 78 concurrency, but they also point to inadequate accountability for carrier material procurement, primarily during the ship's advance procurement period (2002-2008)  These effects cannot be reversed on CVN 78, but it is essential to improve upon material delivery to the shipyard to mitigate the significant impact of material delays on production performance  Equally important, the systemic material procurement deficiencies must be corrected for CVN 79  To this end, the Navy and shipbuilder have taken the following actions  The Navy has employed outside supply chain management experts to develop optimal material procurement strategies  The Navy and the shipbuilder are reviewing remaining material requirements to employ these best practices (structuring procurements to achieve quantity discounts, dual-sourcing to improve schedule performance and leverage competitive opportunities, etc )  The shipbuilder has assigned engineering and material sourcing personnel to each of their key vendors to expedite component qualifications and delivery to the shipyard  The shipbuilder is inventorying all excess material procured on CVN 78 for transfer to CVN 79 (cost reduction to CVN 78), as applicable  The Program Executive Officer (Carriers) is conducting quarterly flag-level government furnished equipment summits to drive cost reduction opportunities and ensure on-time delivery of required equipment and design information to the shipbuilder  The most important finding regarding CVN 78 remaining cost is that the CVN 78 build plan, consistent with the NIMITZ class, focuses foremost on completion of structural and critical path work to support launching the ship on-schedule  This emphasis on structure comes at the expense of completing ship systems, outfitting, and furnishing early in the build process and results in costly, labor-intensive system completion activity during later; more costly stages of production  Achieving the program's cost improvement targets will require that CVN 78 increase its level of completion at launch, from current estimate of 60 percent to no less than 65 percent  To achieve this goal and drive greater focus on system completion: the Navy fostered a collaborative build process review by the shipbuilder with other Tier 1 private shipyards in order to benchmark its performance arid identify fundamental changes that would yield marked improvement; the shipbuilder has established specific launch metrics by system (foundations, machinery, piping, power panels, vent duct, lighting, etc ) and increased staffing for waterfront engineering and material expediters to support meeting these metrics; the shipbuilder has linked all of these processes within a detailed integrated master schedule, providing greater visibility to current performance and greater ability to control future cost and schedule performance across the shipbuilding disciplines; the Navy and shipbuilder are conducting Unit Readiness Reviews of CVN 78 erection units to ensure that the outfitted condition of each hull unit being lifted into the dry-dock contains the proper level of outfitting  These initiatives, which summarize a more detailed list of actions being implemented and tracked as result of the end-to-end review, are accompanied by important management changes  The shipbuilder has assigned a new Vice President in charge of CVN 78, a new Vice President in charge of material management and purchasing, and a number of new general shop foreman to strengthen CVN 78 performance  The Navy has assigned a second tour Flag Officer with considerable carrier operations, construction, and program management experience as the new Program-Executive Officer (PEO)  The PEO and shipyard president conduct bi-weekly launch readiness reviews focusing on cost performance, critical path issues and accomplishment of the target for launch completion  The Assistant Secretary of the Navy (Research, Development, and Acquisition) conducts a monthly review of program progress and performance with the PEO and shipbuilder, bringing to bear the full weight of the Department, as needed, to ensure that all that can be done to improve on cost performance is being done  Early production performance improvements can be traced directly to these actions, however, significant further improvement is required  To this end, the Navy is conducting a line-by-line review of all 'cost to-go' on CVN 78 to identify further opportunity to reduce cost and to mitigate risk  Improving Cost Performance on CVN 79 CVN 79 Advance Procurement commenced in 2007 with early construction activities following in 2011  Authorization for CVN 79 procurement is requested in Fiscal Year 2013 President's Budget request with the first year of incremental funding  Two years have been added to the CVN 79 production schedule in this budget request, afforded by the fact that CVN 79 will replace CVN 68 when she inactivates  To improve affordability for CVN 79, the Navy plans to leverage this added time by introducing a fundamental change to the carrier procurement approach and a corresponding shift to the carrier build plan, while incorporating CVN 78 lessons learned  The two principal 'documents' which the Navy and shipbuilder must ensure are correct and complete at the outset of CVN 79 procurement are the design and the build plan  Design is governed by rules in place that no changes will be considered for the follow ship except changes necessary to correct design deficiencies on the lead ship, fact of life changes to correct obsolescence issues, or changes that will result in reduced cost for the follow ship  Exceptions to these rules must be approved by the JROC, or designee  Accordingly, the Navy is requesting procurement authority for CVN 79 with the Design Product Model complete and construction drawings approximately 95 percent complete (compared to approximately 30 percent complete at time of lead ship authorization)  As well, first article testing and certification will be complete for virtually all major new equipments introduced in the FORD Class  At this point in time, the shipbuilder has developed a complete bill of material for CVN 79  The Navy is working with the shipbuilder to ensure that the contractor's material estimates are in-line with Navy 'should cost' estimates; eliminating non-recurring costs embedded in lead ship material, validating quantities, validating escalation indices, incorporating lead ship lessons learned  The Navy has increased its oversight of contractor furnished material procurement, ensuring that material procurement is competed (where competition is available); that it is fixed priced; that commodities are bundled to leverage economic order quantity opportunities; and that the vendor base capacity and schedule for receipt supports the optimal build plan being developed for production  In total, the high level of design maturity and material certification provides a stable technical baseline for material procurement cost and schedule performance, which are critical to developing and executing an improved, reliable build plan  In order to significantly improve production labor performance, based on timely receipt of design and material, the Navy and shipbuilder are reviewing and implementing changes to the CVN 79 build plan and affected facilities  The guiding principles are: maximize planned work in the shops and early stages of construction; revise sequence of structural unit construction to maximize learning curve performance through 'families of units' and work cells; incorporate design changes to improve FORD Class producibility; increase the size of erection units to eliminate disruptive unit breaks and improve unit alignment and fairness; increase outfitting levels for assembled units prior to erection in the dry-dock; increase overall ship completion levels at each key event  The shipbuilder is working on detailed plans for facility improvements that will improve productivity, and the Navy will consider incentives for capital improvements that would provide targeted return on investment, such as: increasing the amount of temporary and permanent covered work areas; adding ramps and service towers for improved access to work sites and the dry-dock; increasing lift capacity to enable construction of larger, more fully outfitted super-lifts: An incremental improvement to carrier construction cost will fall short of the improvement necessary to ensure affordability for CVN 79 and follow ships  Accordingly, the shipbuilder has established aggressive targets for CVN 79 to drive the game-changing improvements needed for carrier construction  These targets include: 75 percent Complete at Launch (15 percent> [i e , 15 percent greater than] FORD); 85-90 percent of cable pulled prior to Launch (25-30 percent> FORD); 30 percent increase in front-end shop work (piping details, foundations, etc); All structural unit hot work complete prior to blast and paint; 25 percent increase to work package throughput; 100 percent of material available for all work packages in accordance with the integrated master schedule; zero delinquent engineering and planning products; resolution of engineering problems in < 8 [i e , less than 8] hours  In parallel with efforts to improve shipbuilder costs, the PEO is establishing equally aggressive targets to reduce the cost of government furnished equipment for CVN 79; working equipment item by equipment item with an objective to reduce overall GFE costs by ~$500 million  Likewise, the Naval Sea Systems Command is committed to continuing its ongoing effort to identify specification changes that could significantly reduce cost without compromising safety and technical rigor  The output of these efforts comprises the optimal build plan for CVN 79 and follow, and will be incorporated in the detail design and construction baseline for CVN 79  CVN 79 will be procured using a fixed price incentive contract  Appendix D  March 2013 Navy Report to Congress on Construction Plan for CVN-79 This appendix reprints a March 2013 Navy report to Congress on the Navy's construction plan for CVN-79  Appendix E  Shock Trial An earlier oversight issue for Congress for the CVN-78 program was whether to conduct the shock trial for the CVN-78 class in the near term, on the lead ship in the class, or years later, on the second ship in the class  This appendix presents background information on that issue  A shock trial, known formally as a full ship shock trial (FSST) and sometimes called a shock test, is a test of the combat survivability of the design of a new class of ships  A shock trial involves setting off one or more controlled underwater charges near the ship being tested, and then measuring the ship's response to the underwater shock caused by the explosions  The test is intended to verify the ability of the ship's structure and internal systems to withstand shocks caused by enemy weapons, and to reveal any changes that need to be made to the design of the ship's structure or its internal systems to meet the ship's intended survivability standard  Shock trials are nominally to be performed on the lead ship in a new class of ships, but there have also been cases where the shock trial for a new class was done on one of the subsequent ships in the class  The question of whether to conduct the shock trial for the CVN-78 class in the near term, on the lead ship in the class, or years later, on the second ship in the class, has been a matter of disagreement at times between the Navy and the office of the Secretary of Defense (OSD)  The Navy has wanted to perform the shock trial on the second ship in the class, because performing it on the lead ship in the class, the Navy has argued, will cause a significant delay in the first deployment of the lead ship, effectively delaying the return of the carrier force to an 11-ship force level and increasing the operational strain on the other 10 carriers  The Navy has argued that the risks of delaying the shock trial on the CVN-78 to the second ship in the class are acceptable, because the CVN-78 class hull design is based on the Nimitz (CVN-68) class aircraft carrier hull design, whose survivability against shocks is understood, because systems incorporated into the CVN-78 design have been shock tested at the individual component level, and because computer modeling can simulate how the CVN-78 design as a whole will respond to shocks  OSD has argued that the risks of delaying the CVN-78 class shock trial to the second ship in the class are not acceptable, because the CVN-78 design is the first new U S  aircraft carrier design in four decades; because the CVN-78 design has many internal design differences compared to the CVN-68 design, including new systems not present in the CVN-68 class design; and because computer modeling can only do so much to confirm how a complex new platform, such as an aircraft carrier and all its internal systems, will respond to shocks  The risk of delaying the shock trial, OSD has argued, outweighs the desire to avoid a delay in the first deployment of the lead ship in the class  OSD in 2015 directed the Navy to plan for conducting a shock trial on the lead ship  The Navy complied with this direction but has also sought to revisit the issue with OSD  The issue of the shock trial for the CVN-78 class has been a matter of legislative activity—see the provisions shown earlier in " Recent Related Legislative Provisions ," particularly the most recent such provision, Section 121(b) of the FY2018 National Defense Authorization Act ( H R  2810 / P L  115-91 of December 12, 2017)  An April 5, 2018, press report states the following: The Pentagon's No  2 civilian has said the Navy should perform shock-testing soon to determine how well its new $12 9 billion aircraft carrier—the costliest warship ever—could withstand an attack, affirming the service's recent decision to back down from a plan for delay  "We agree with your view that a test in normal sequence is more prudent and pragmatic," Deputy Defense Secretary Patrick Shanahan said in a newly released March 26 letter to Senate Armed Services Committee Chairman John McCain  The Arizona Republican and Senator Jack Reed, the panel's top Democrat, pressed for the shock-testing to go ahead as originally planned  James Guerts, the Navy's chiefs weapons buyer, told reporters last month that the Navy was acquiescing to the testing after initially asking Defense Secretary James Mattis to delay it for at least six years  In its push to maintain an 11-carrier fleet, the Navy wanted to wait and perform the test on a second carrier in the class rather than on the USS Gerald Ford 


Report 2:  The program has begun phase three, including approving 19 percent of Boeing’s phase three reports  Program Requirements  While the program manager told us that all of the requirements contribute to the safety of the commercial systems, safety officials are required to approve a subset of these requirements  Examples of requirements approved by safety officials include the ability to leave the spacecraft in an emergency or to abort a launch  When a contractor is ready for NASA to verify that it has met a requirement, the contractor submits data for NASA to review through a verification closure notice  We define “safety-specific notices” as those requiring safety officials’ approval  As shown in table 2, as of March 2018, the program had approved 2 percent of Boeing’s safety-specific notices and 0 percent of SpaceX’s safety-specific notices  Testing  The program also requires testing to verify and validate the crew transportation system  Agency officials emphasized the importance of testing to safety, stating that testing reduces uncertainty about a system’s performance and can uncover unknown problems  As noted above, both contractors will be conducting an uncrewed and a crewed flight test prior to being certified  While a certain level of risk needs to be accepted to conduct human spaceflight, these flight tests help to mitigate this risk by validating the integrated performance of the hardware and software  Agency and program officials stated that the contractors’ flight tests are critical evidence to support certification of a safe and reliable system  As evidenced by the data above, the program still has a significant amount of work ahead with respect to approving certification packages and closing hazard reports and verification closure notices  We have previously found that the program’s workload was an emerging schedule risk, and the contractors have continued to express concern about program officials’ ability to process and approve certification paperwork in a timely manner  Workload has also been a concern for two of NASA’s independent review organizations  For example, the Aerospace Safety Advisory Panel noted in its January 2018 annual report that the sheer volume of work that remains for the program in terms of closing hazard reports and verification closure notices is significant  In addition, the program’s safety and mission assurance office identified the upcoming bow wave of work in a shrinking time period as a top risk to achieving certification  One mechanism the program put in place to assess the overall safety of each spacecraft—loss of crew—has been a focus of the Aerospace Safety Advisory Panel, Members of Congress, our prior work, and the program itself  Loss of crew captures the probability of death or permanent disability to one or more crew members  It has received a lot of attention, in part, because it has been a top risk for the program since 2015  Specifically, the program has been concerned that neither contractor would be able to meet the contract requirement of a 1 in 270 probability of incurring loss of crew  We identified two key concerns with how NASA is using the loss of crew metric: (1) inconsistent approaches to assess the loss of crew metric and (2) no identified plan to share lessons learned about using the loss of crew metric as a safety threshold  A loss of crew value is generated through a probabilistic safety analysis, which models scenarios that could result in the loss of crew using various inputs  According to the program’s analysis, the probability of on-orbit debris damaging the vehicle has the greatest effect on a loss of crew value  This probability is informed by an orbital debris (debris) model, which was updated in 2014, after the loss of crew requirement was established  The updated debris model makes it harder to meet a loss of crew value, in part, because the modeling environment where the contractors’ systems will operate has changed  For example, the updated model includes a larger span of orbit, greater range of debris sizes, and the addition of material density classifications, which were not included in the former model  Further, the probabilistic safety analysis may include operational mitigations, such as on-orbit inspections that would include using cameras on the ISS to visually survey the spacecraft for damage, which, according to officials, makes it easier to meet a loss of crew value  NASA describes the probabilistic safety analysis as a powerful tool that should be used as part of the overall risk management process to ensure the risk associated with development and operation of a system is understood, evaluated, managed, and mitigated  However, we found differences in the approaches that officials plan to use to assess loss of crew as well as in the loss of crew value being measured that could limit the usefulness of this tool  Agency Certification  The agency certification review for each contractor will include an assessment of whether its crew transportation system meets a loss of crew threshold of 1 in 150 for missions to the ISS, which is based on a May 2011 safety memo from the Office of Safety and Mission Assurance  A loss of crew value with a higher denominator, such as 1 in 270, is harder to meet than with a lower denominator, such as 1 in 150  According to the Chief of the Office of Safety and Mission Assurance, he will assess the 1 in 150 threshold using a probabilistic safety analysis that includes the updated debris model and operational mitigations, such as the on- orbit inspections cited above  Program Office  According to program officials, they will assess whether either contractor meets a 1 in 270 loss of crew value based on a probabilistic safety analysis using the former debris model (not the updated model) and not including operational mitigations  Contracting Officer  According to the contracting officer, each contractor’s loss of crew requirement is 1 in 270 without including operational mitigations  The contracting officer stated that SpaceX’s contract requirement uses the updated debris model in the probabilistic safety analysis, whereas Boeing’s contract requirement uses the former debris model in the probabilistic safety analysis  Program’s Chief Safety and Mission Assurance Officer  According to the program’s chief safety and mission assurance officer, he will conduct a probabilistic safety analysis using the updated debris model and will not include operational mitigations to assess whether each contractor meets a 1 in 200 loss of crew value  This loss of crew value stems from a program update that occurred after the initial contracts were signed  These different approaches are summarized in table 3 below  Agency policy requires human spaceflight programs to set a safety threshold, which NASA did for the Commercial Crew Program when it identified the 1 in 150 loss of crew threshold in the May 2011 safety memo  Subsequently, the program set more rigorous loss of crew values in contract and program documents  NASA also updated the debris model, which we previously noted makes it more difficult to meet a loss of crew value  As a result, NASA does not have a consistent approach for how to incorporate key inputs to the probabilistic safety analysis, including changes to the debris model  Instead, the risk tolerance that NASA is accepting with loss of crew varies based upon which entity is presenting the results of its probabilistic safety analysis  For example, it is possible that the program’s assessment will determine that neither contractor will meet the 1 in 270 contract requirement, but that the agency’s assessment will determine that the contractors meet the 1 in 150 agency certification value because that analysis will include operational mitigations  Or the program’s assessment could determine that Boeing meets the 1 in 270 contractual loss of crew requirement, but the agency’s assessment may determine that Boeing does not meet the 1 in 150 agency certification value because that analysis will use the updated debris model  Federal internal controls state that agency management should define objectives clearly to enable the identification of risks and define risk tolerances  Specifically, management should define risk tolerances in specific and measurable terms, so they are clearly stated and can be measured  In this case, because there will be multiple analyses conducted using different inputs, NASA risks not clearly capturing or documenting, in a coherent manner, its overall risk tolerance with respect to loss of crew before a final decision must be made on whether to certify either crew transportation system  Moreover, capturing the challenges and lessons learned from using the loss of crew metric is critical, particularly because agency officials told us that this is the first time this metric has been used as a safety threshold  Also, there are different viewpoints about the utility of the metric as a safety threshold across the agency  The program manager repeatedly told us that loss of crew is best used as a design tool  For example, program officials told us that both contractors incorporated additional orbital debris shielding into their designs to mitigate the orbital debris risk and improve their loss of crew values  In addition, the Aerospace Safety Advisory Panel reported in 2018 that loss of crew should not be viewed as an absolute measure of actual risk during operations  However, the May 2011 agency safety memo states that a breach of the loss of crew threshold would initiate a termination review of the Commercial Crew Program, which is a more strict application of the loss of crew metric  Both program and safety officials told us that, after the agency certification is complete and lessons learned are available to be compiled, sharing those lessons learned across NASA would be a good idea given the complexities associated with assessing the loss of crew metric  As of April 2018, however, agency officials said they did not have a plan for loss of crew knowledge-sharing  We have previously found that lessons learned provide a powerful method of sharing good ideas for improving work processes, facility or equipment design and operation, quality, safety, and cost-effectiveness  Further, according to NASA’s Knowledge Policy on Program and Projects, which is managed through the Office of the Chief Engineer, a principle of each center and mission directorate’s knowledge strategy is that knowledge is the cornerstone of NASA’s ability to achieve mission success  The policy acknowledges that NASA faces continuous challenges in using what it knows effectively  These challenges include, but are not limited to, enabling the identification and flow of knowledge across organizational boundaries; preserving knowledge at risk of being lost; and providing means for individuals, teams, and the organization to learn from experiences  If NASA does not capture lessons learned from the Commercial Crew Program on using the loss of crew requirement to set a program’s safety threshold and whether it met the agency’s intended goal, future programs will not be able to benefit from the knowledge gained from this multibillion dollar investment  NASA’s governance model prescribes a management structure that employs checks and balances among key organizations to ensure that decisions have the benefit of different points of view and are not made in isolation  As part of this structure, NASA established the technical authority process as a system of checks and balances to provide independent oversight of programs and projects in support of safety and mission success through the selection of specific individuals with delegated levels of authority  The technical authority process has been used in other parts of the government for acquisitions, including the Department of Defense and Department of Homeland Security  The Commercial Crew Program is organizationally connected to three technical authorities within NASA: the Office of the Chief Engineer technical authority, the Office of Chief Health and Medical technical authority, and the Office of Safety and Mission Assurance (safety) technical authority  The safety technical authority is responsible for ensuring from an independent standpoint that the program’s products and processes satisfy NASA’s safety, reliability, and mission assurance policies  The NASA safety technical authority has delegated authority through the Kennedy Space Center Director to the Chief Safety and Mission Assurance Officer for the Commercial Crew Program  We have previously reviewed how NASA has organized its technical authorities for its Exploration Systems Development organization—an organization that oversees the development of the Space Launch System, Orion crew capsule, and associated ground systems that have the goal of extending human presence beyond low-Earth orbit  In October 2017, we found that the Exploration Systems Development organization had established an organizational structure in which the technical authorities for engineering and safety and mission assurance were dual hatted simultaneously in programmatic positions  We found that having the same individual simultaneously fill both a technical authority role and a program role created an environment of competing interests, where the technical authority’s ability to impartially and objectively assess the programs while at the same time acting on behalf of the Exploration Systems Development organization in programmatic capacities may be subject to impairments  We found that this was in contrast to a recommendation from the Columbia Accident Investigation Board report—the result of an in-depth assessment of the technical and organizational causes of the 2003 Space Shuttle Columbia accident—for NASA to establish a technical authority to serve independently of the Space Shuttle program, so that employees would not feel hampered to bring forward safety concerns or disagreements with programmatic decisions  The board’s findings that led to this recommendation included a broken safety culture in which it was difficult for minority and dissenting opinions to percolate up through the hierarchy; dual center and programmatic roles vested in one person that had confused lines of authority, responsibility, and accountability and made the oversight process susceptible to conflicts of interest; and oversight personnel in positions within the program, increasing the risk that these staffs’ perspectives would be hindered by too much familiarity with the programs they were overseeing  In October 2017, we recommended that the division no longer dual hat two individuals who had both programmatic and technical authority responsibilities  As of April 2018, NASA had taken steps to separate the engineering technical authority position from the programmatic position, and NASA’s Chief of Safety and Mission Assurance said he planned to separate the safety position but had not yet completed that action  The Commercial Crew Program employs a similar structure to the Exploration Systems Development organization in that the safety technical authority is dual hatted simultaneously in a programmatic position as the Commercial Crew Program’s Safety and Mission Assurance Manager  According to the program’s safety technical authority, in his programmatic role for the program, he helps set priorities for safety issues, including how staff will be utilized to meet those priorities  In the technical authority role, he provides independent oversight in support of safety and mission success  In his dual-hatted role, this official will be responsible for endorsing the program’s certification recommendations in two different capacities: as the technical authority and as a program authority  As a result, this structure relies on the same individual to completely separate two roles—one to manage the Commercial Crew Program’s safety issues within programmatic cost and schedule constraints, and the other to assess the same issues in an independent oversight role  While the Commercial Crew Program may have an additional level of separation between the safety technical authority and the program’s involvement in the design of commercial systems due to its shared assurance model with the commercial providers, the Commercial Crew Program still maintains a structure where one individual simultaneously serves in both technical authority and programmatic roles  Figure 5 describes some of the conflicting roles and responsibilities of this official in his two different positions  During our review, officials cited several factors in support of a dual- hatted approach: The safety technical authority retains independence because his technical authority reporting path and performance reviews are not under the purview of the Commercial Crew Program chain of command  Due to the Commercial Crew Program’s shared assurance model with commercial providers, the program is operating in a quality assurance role that provides an additional level of separation between the safety technical authority and the program’s involvement in the design of commercial systems  For safety decisions involving cost and schedule where the individual who is dual hatted with both technical authority and programmatic responsibilities may feel conflicted, he stated that he would discuss these matters with his management to validate the logic behind his decision  There are cost and knowledge efficiencies gained from one individual serving in both programmatic and safety technical authority capacities  NASA’s Chief of Safety and Mission Assurance stated that he has great confidence in the individual currently serving in the dual hatted role for the Commercial Crew Program, but acknowledged there is inherent conflict even with the program’s shared assurance model  In December 2017, he stated that, based on our previous work and current discussions, he intends to decouple the programmatic and technical authority responsibilities for the Commercial Crew Program but had not done so as of April 2018  Federal internal control standards state that an agency should design control activities to achieve objectives and respond to risks, which includes segregation of key duties and responsibilities to reduce the risk of error, misuse, or fraud  By overlapping technical authority and programmatic responsibilities, NASA will continue to run the risk of creating an environment of competing interests for the Commercial Crew Program’s safety technical authority  NASA’s Commercial Crew Program is a multibillion dollar effort to facilitate the commercial development of a crew transportation system that can end the United States’ reliance on Russia to maintain an uninterrupted presence on the ISS  Boeing and SpaceX continue to make progress developing a capability to fly to the ISS, but both have continued to experience delays  Program analysis indicates risks of further delays in each contractor’s current schedule, but NASA has not provided that information to Congress in its routine briefings  Without this information, Congress does not know the full extent of potential delays to inform decision making  Additional delays could also disrupt U S  access to the ISS  While NASA is working on potential solutions, there is no contingency plan in place to address this potential gap  Without a viable contingency plan, NASA puts at risk achievement of the U S  goal and objective for the ISS  NASA must balance safety with acceptable risk for human spaceflight  As part of the certification process for each contractor’s spacecraft, NASA has developed one key safety metric, loss of crew  However, the complicated nature of this metric is further muddled by the inconsistent approaches being used across NASA about what inputs to be considered  As a result, there is no clear articulation of what level of risk NASA will accept with respect to this program  In addition, NASA does not have plans to capture lessons learned from how the Commercial Crew Program has used this metric to assess safety and is missing an opportunity to capture this knowledge for future human spaceflight programs  Finally, a space program’s management and oversight approach is an integral part of ensuring that human spaceflight is as safe and successful as possible  Independence of the program management and oversight functions is key to achieving the balance between safety and success  The Commercial Crew Program’s approach, however, burdens the safety technical authority with both programmatic and independent technical authority responsibilities  As a result, NASA has limited assurance that independence can be maintained as part of its institutional process to ensure safety and success  We are making the following five recommendations to NASA: The NASA Associate Administrator for Human Exploration and Operations should direct the Commercial Crew Program to include the results of its schedule risk analysis in its mandatory quarterly reports to Congress  (Recommendation 1) The NASA Administrator should develop and maintain a contingency plan for ensuring a presence on the ISS until a Commercial Crew Program contractor is certified  (Recommendation 2) The NASA Administrator should direct the Chief of Safety and Mission Assurance, the NASA Associate Administrator for Human Exploration and Operations, the Commercial Crew Program Manager, and the Commercial Crew Program Contracting Officer to collectively determine and document before the agency certification review how the agency will determine its risk tolerance level with respect to loss of crew  (Recommendation 3) After completing the agency certification review, NASA’s Chief Engineer and Chief of Safety and Mission Assurance, with support from the NASA Associate Administrator for Human Exploration and Operations and the Commercial Crew Program Manager, should document lessons learned related to loss of crew as a safety threshold for future crewed spaceflight missions, given the complexity of the metric  (Recommendation 4) The NASA Chief of Safety and Mission Assurance should restructure the technical authority within the Commercial Crew Program to ensure that the technical authority for the Office of Safety and Mission Assurance is no longer dual hatted with programmatic and independent technical authority responsibilities  (Recommendation 5) We provided a draft of this report to NASA for review and comment  NASA provided written comments that are reprinted in appendix II  In its response, NASA concurred with three of our recommendations, did not concur with one, and partially concurred with another  NASA concurred with our recommendation to develop and maintain a contingency plan to ensure a U S  presence on the ISS and expects to take action to close this recommendation by the end of December 2018  NASA concurred with our recommendation to document lessons learned related to the loss of crew requirement and expects to take action to close this recommendation by the end of May 2019  NASA concurred with our recommendation to restructure the safety technical authority so that it is no longer dual hatted with programmatic and independent technical authority responsibilities  NASA expects to take action to close this recommendation by the end of August 2018  NASA did not concur with our recommendation that the Commercial Crew Program should include the results of its schedule risk analysis in its quarterly reports to Congress  NASA stated that it uses the contractors’ schedules as a baseline to provide qualitative statements in the NASA summary that accompanies each contractor’s quarterly reports to Congress  NASA believes that this approach is appropriate and is in accordance with the explanatory statement accompanying the Consolidated and Further Continuing Appropriations Act, 2015  NASA also stated that it will be working to ensure that the contractors’ schedules and the program’s internal assessments sync up as the program gets closer to launch  As a result, NASA explained that there will not be a requirement for a detailed NASA assessment, because the contractors’ schedule will either match NASA’s analysis or NASA will discuss its position as it has done in previous reports to Congress  We continue to believe the recommendation is valid because the program’s schedule risk analysis would provide Congress with valuable insight into potential delays, which are likely  Both contractors have repeatedly stated that their schedules are aggressive and that the dates are ambitious  As a result, we found that the contractors frequently delay dates for key events  For example, Boeing has delayed its certification milestone by 17 months and SpaceX by 22 months since the original schedules were established  The program’s recent schedule risk analysis indicates that more delays to certification are likely, but that information is not presented to Congress in NASA’s quarterly reports  Without this information, Congress does not know the full extent of potential delays to inform decision making  NASA partially concurred with our recommendation that the Chief of Safety and Mission Assurance, the NASA Associate Administrator for Human Exploration and Operations, the Commercial Crew Program Manager, and the Commercial Crew Program Contracting Officer should collectively determine and document how the agency will determine its risk tolerance level with respect to loss of crew before the agency certification review  In its response, NASA stated that it documented the agency’s risk tolerance level with respect to loss of crew for the program in its May 2011 safety memo  Further, NASA stated that it documented the requirement to limit risks to the loss of crew in a certification requirements document  NASA stated that ultimately the Commercial Crew Program is accountable for ensuring that the contractors’ systems meet the loss of crew value in this certification requirements document, which is a loss of crew value of 1 in 270  If a contractor’s system cannot meet that loss of crew value, or any other requirement, the program will request a waiver as part of the human rating certification process to ensure transparency  NASA acknowledged in its response that the existence of multiple documents defining residual risk requirements and an agency threshold for loss of crew can be confusing  NASA’s response, however, does not address our finding that it does not have a consistent approach for how to incorporate key inputs, including which debris model should be used or whether to include operational mitigations  NASA stated that it had taken action to address this recommendation; however, NASA did not outline any steps it took to resolve the concern that the risk tolerance for the loss of crew requirement depends on which entity is presenting the results of its analysis  We continue to believe that, before the agency certification review, the key parties must collectively determine how the agency will determine its risk tolerance with respect to loss of crew  We believe this approach will reduce confusion and increase transparency  We are sending copies of this report to NASA Administrator and interested congressional committees  In addition, the report is available at no charge on the GAO website at http://www gao gov  If you or your staff have any questions about this report, please contact me at (202)512-4841 or chaplainc@gao gov  Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report  GAO staff who made major contributions to this report are listed in appendix III  The objectives of our review were to assess (1) the extent to which the contractors have made progress towards meeting the National Aeronautics and Space Administration’s (NASA) certification requirements and NASA’s plans to help ensure continued access to the International Space Station (ISS); and (2) how NASA’s certification process addresses safety of the contractors’ crew transportation systems  To assess the contractors’ progress towards certification, we obtained and reviewed program and contractor documents, including monthly and quarterly updates from April 2017 through May 2018  We interviewed program and contractor officials to discuss the contractors’ recent progress, including upcoming events and any expected delays, and to understand technical risks, potential consequences, and planned mitigation activities  To identify total delays to date, we compared original contract schedules to Boeing and SpaceX’s calendar year 2018 first quarter proposed schedules, which are the most recent  Based on our review of program and contractor documents, we defined the contractors’ key events as: the uncrewed and crewed flight tests, the design certification reviews for each of those flights, and the certification milestone  We selected the two flight tests for each contractor as key events because they are intended to test key system capabilities, including the ability to launch, dock with the ISS, and return safely to Earth  We selected the design certification reviews because they verify the contractors’ crew transportation systems’ capability to safely approach, dock, mate, and depart from the ISS, among other requirements  We selected the certification milestone because it determines whether the crew transportation system meets the Commercial Crew Program’s requirements  To determine the extent to which contractors have delayed these key events over time, we analyzed the contractors’ schedule data from the 13 quarterly progress reports to date, from first quarter 2015 through first quarter calendar year 2018  We also obtained the results of the program’s April 2018 schedule risk analysis  We presented the schedule analysis range from the end of the month of the earliest possible completion date to the end of the month of the latest possible completion date  We reviewed the program’s Congressional requirements to report on cost, schedule, and technical status  Finally, to assess the potential effects of any certification delays on NASA’s access to ISS, we reviewed NASA’s contracts with Boeing and the Russian Federal Space Agency for transportation on the Soyuz vehicle  We interviewed officials from the ISS program and NASA’s Human Exploration and Operations Mission Directorate to determine if the agency had developed contingency plans to mitigate the effects of any certification delays on its access to the ISS  To assess how NASA’s certification process addresses safety of the contractors’ crew transportation systems, we reviewed agency safety policies, program plans, and contract documents to identify what safety assessments were required of the program, which safety factors would be considered in certification reviews, and when certification approval would be granted  We also interviewed program officials and the contractors about their safety policies and procedures as well as about the certification process  We identified the loss of crew requirements for the program and the contractors, and interviewed program and agency officials to determine how loss of crew would be assessed and considered throughout the certification process  To gain a broader understanding of the relative importance of loss of crew, we reviewed NASA safety policies, prior GAO reports, and annual reports from the Aerospace Safety Advisory Panel  To determine how the Orbital Debris Engineering Model (ORDEM) was updated and to assess differences between the former and updated models, we reviewed NASA documentation about the ORDEM 2000 and ORDEM 3 0 models and obtained information about the models from NASA’s Orbital Debris Program Office  To assess the program’s progress in closing requirements, including those requirements specifically related to safety, we reviewed program data for each contractor on contract requirements and closure status  We limited this analysis to requirements included in the CCT-REQ-1130 ISS Crew Transportation and Services Requirements Document because these requirements are verified by the Commercial Crew Program, whereas requirements contained within SSP 50808 ISS to Commercial Orbital Transportation Services Interface Requirements Document are managed by the ISS Transportation and Integration Office  We classified requirements as “safety-specific” when the program’s Office of Safety and Mission Assurance was listed as a verification closure notice signatory (i e , approver)  We then analyzed the program’s data to determine how many verification closure notices had been approved for all requirements and for the subset of safety-specific requirements  We reviewed program and agency documentation, such as organizational charts, program plans, and safety policies as well as interviewed program and agency officials, to determine the role of the safety and mission assurance technical authority in the program  We also reviewed the 2003 Columbia Accident Investigation Board’s Report’s findings and recommendations related to culture and organizational management of human spaceflight programs  We reviewed annual briefings and reports and met with representatives from two organizations that provide NASA with independent assessments of the program, the program’s standing review board and the Aerospace Safety Advisory Panel, to gain their perspectives on the contractor’s progress and how NASA addresses safety in its certification process  We also met with representatives from the National Transportation Safety Board and three experts with background on safety in human spaceflight in order to increase our contextual understanding of the role of safety in human spaceflight missions  We conducted this performance audit from April 2017 to July 2018 in accordance with generally accepted government auditing standards  Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives  We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives  Cristina T  Chaplain, (202) 512-4841 or chaplainc@gao gov  In addition to the contact named above, Molly Traci, Assistant Director; Kazue Chinen; Lorraine Ettaro; Lisa Fisher; Laura Greifner; Kurt Gurka; Miranda Riemer; Juli Steinhouse; Roxanna T  Sun; Hai Tran; Kristin Van Wychen; and Alyssa Weir made significant contributions to this report 

ground_truth: Medicare covered over 58 million people in 2017 and has wide-ranging impact on the health-care sector and the overall U.S. economy. However, the billions of dollars in Medicare outlays as well as program complexity make it susceptible to improper payments, including fraud. Although there are no reliable estimates of fraud in Medicare, in fiscal year 2017 improper payments for Medicare were estimated at about $52 billion. Further, about $1.4 billion was returned to Medicare Trust Funds in fiscal year 2017 as a result of recoveries, fines, and asset forfeitures. In December 2017, GAO issued a report examining how CMS managed its fraud risks overall and particularly the extent to which its efforts in the Medicare and Medicaid programs aligned with GAO's Framework. This testimony, based on that report, discusses the extent to which CMS's management of fraud risks in Medicare aligns with the Framework. For the report, GAO reviewed CMS policies and interviewed officials and external stakeholders. In its December 2017 report, GAO found that the Centers for Medicare & Medicaid Services' (CMS) antifraud efforts for Medicare partially align with GAO's 2015 A Framework for Managing Fraud Risks in Federal Programs (Framework). The Fraud Reduction and Data Analytics Act of 2015 required OMB to incorporate leading practices identified in this Framework in its guidance to agencies on addressing fraud risks. Consistent with the Framework, GAO determined that CMS had demonstrated commitment to combating fraud by creating a dedicated entity to lead antifraud efforts; the Center for Program Integrity (CPI) serves as this entity for fraud, waste, and abuse issues in Medicare. CMS also promoted an antifraud culture by, for example, coordinating with internal stakeholders to incorporate antifraud features into new program design. To increase awareness of fraud risks in Medicare, CMS offered and required training for stakeholder groups such as providers of medical services, but it did not offer or require similar fraud-awareness training for most of its workforce. CMS took some steps to identify fraud risks in Medicare; however, it had not conducted a fraud risk assessment or designed and implemented a risk-based antifraud strategy for Medicare as defined in the Framework. CMS identified fraud risks through control activities that target areas the agency designated as higher risk within Medicare, including specific provider types, such as home health agencies. Building on earlier steps and conducting a fraud risk assessment, consistent with the Framework, would provide the detailed information and insights needed to create a fraud risk profile, which, in turn, is the basis for creating an antifraud strategy. CMS established monitoring and evaluation mechanisms for its program-integrity control activities that, if aligned with an antifraud strategy, could enhance the effectiveness of fraud risk management in Medicare. For example, CMS used return-on-investment and savings estimates to measure the effectiveness of its Medicare program-integrity activities. In developing an antifraud strategy, consistent with the Framework, CMS could include plans for refining and building on existing methods such as return-on-investment, to evaluate the effectiveness of all of its antifraud efforts. In its December 2017 report, GAO made three recommendations, namely that CMS (1) require and provide fraud-awareness training to its employees; (2) conduct fraud risk assessments; and (3) create an antifraud strategy for Medicare, including an approach for evaluation. The Department of Health and Human Services agreed with these recommendations and reportedly is evaluating options to implement them. Accordingly, the recommendations remain open.