United States Government Accountability Office

GAO Report to the Subcommittee on 

Seapower, Committee on Armed 

Services, U.S. Senate 

DEFENSE 

ACQUISITIONS 

Cost to Deliver 

Zumwalt-Class 

Destroyers Likely to 

Exceed Budget 

July 2008 

 

GAO-08-804 
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

July 2008 

DEFENSE ACQUISITIONS

Cost to Deliver Zumwalt-Class Destroyers Likely to 

Exceed Budget 

Highlights of GAO-08-804, a report to 

Subcommittee on Seapower, Committee 

on Armed Services, U.S. Senate 

From the outset, DDG 1000 has faced a steep challenge framed by technical 

sophistication, demanding mission requirements, and a somewhat unforgiving

schedule. The Navy conceived a thoughtful strategy to meet these demands 

and has had success with several technologies and its design approach. Yet, 

the program did not proceed as planned and the Navy recently realigned the

construction schedule for the first two ships to provide more time to finish 

key systems and software. Still, the Navy will produce—and in some cases 

install—key systems on the ship before fully demonstrating and testing them. 

Software development has proven challenging; the Navy certified the most 

recent software release before it met about half of its requirements. At this 

point—the first year of a 6-year construction schedule for the lead ships—the 

Navy may have exhausted its options for solving future problems without 

adding money and time. 

The Navy expects to achieve a greater degree of design maturity before 

starting construction than has been the case on previous surface combatant 

programs. To meet this goal, the Navy will be pressed to complete a large 

amount of design work by October 2008 when construction will begin. From 

August 2007 through May 2008, the shipbuilders finished work on 16 of the 100 

design “zones” that make up the ship, leaving 84 zones to finish the final 

design phases in the 5 months leading up to the start of construction. 

Both shipyards that will build DDG 1000 are preparing for construction 

through facility enhancements and production improvements. However,

uncertainty remains. The ship’s deckhouse will be built primarily from 

composite rather than steel and the shipbuilder is still refining the process for 

large scale composite manufacturing and assembly. Workforce instability 

could also prevent shipbuilders from fully realizing expected efficiencies. 

The full costs of constructing the two lead ships have not been entirely 

recognized or funded. The risk of cost growth is high in part because of the 

potential for late delivery of key systems and software and difficulties in 

constructing and integrating sections of the ship, like the deckhouse. 

Remaining funds may not be sufficient to buy key components and pay for 

other work not yet under contract. The Navy has already requested funding 

for a third ship and plans to contract for this ship with options for four more

ships in fiscal year 2009. The Navy will not have enough data then on the 

actual costs of the lead ships to develop realistic prices for follow-on ships. 

As currently planned, all ships will be under contract and all but one under 

construction before the Department of Defense holds the production 

milestone review in 2013. 

In October 2008, the U.S. Navy will 

begin construction of the first of

two lead DDG 1000 Zumwalt-class 

destroyers—at an expected cost of

$6.3 billion. Given the history of 

cost growth on shipbuilding

programs, as well as the Navy’s 

request for approval of a third ship, 

GAO was asked to assess the 

progress of the program. GAO

examined (1) whether key systems 

can be delivered on time and work 

as intended (2) design maturity (3) 

shipyard readiness and (4) whether 

lead and follow-on DDG 1000 ships 

can be built within budget. To

accomplish this, our work included

analysis of schedules, ship progress

reviews and cost estimates;

interviews with Navy and other 

officials; and our own past work.

What GAO Recommends

GAO is recommending 

• the design be completed before

starting ship construction,

• award of contracts for the third 

ship be delayed until costs of 

the lead ship are better 

understood, and 

• the production milestone 

review be held before 

contracts for the third ship are

awarded.

The Department of Defense

concurred or partially concurred 

with the first and third 

recommendations. It did not agree 

to delay the third ship, citing 

potential cost and other impacts.

This report also contains a matter 

for congressional consideration 

aimed at providing additional 

insight into the program. 

To view the full product, including the scope 

and methodology, click on GAO-08-804. 

For more information, contact Paul Francis at 

(202) 512-4841 or francisp@gao.gov. 
Contents 

Letter 1

Results in Brief 2 

Background 5

Delays in Technology and Software Development Pose Risk to 

Successful Program Execution 10 

The Navy Is Emphasizing a Mature Design on DDG 1000, but 

Timely Completion Will Be Challenging 21 

Despite Planned Improvements, Shipyard Facility, Labor, and 

Manufacturing Issues Could Affect Construction of the Lead 

Ships 30

Actual Costs of Ships Will Likely Exceed Budget 36 

Conclusions 43

Recommendations for Executive Action 44 

Matter for Congressional Consideration 45 

Agency Comments and Our Evaluation 45 

Appendix I Objectives, Scope, and Methodology 47 

Appendix II Comments from the Department of Defense 50 

Appendix III Major Events in the Development of DDG 1000 54 

Appendix IV GAO Contact and Staff Acknowledgments 55 

Tables 

Table 1: DDG 1000 Critical Technologies 7 

Table 2: Prototype Development and Results 8 

Table 3: Challenges Faced by Shipbuilders in Meeting Detail Design 

Schedule 24

Table 4: Design Activities at Stages of Zone Progress 27 

Table 5: Unfunded Lead Ship Expenses 38 

Page i GAO-08-804 Defense Acquisitions
Figures 

Figure 1: DDG 1000 Destroyer Currently in Development 6 

Figure 2: DDG 1000 Lead Ship Schedule 12 

Figure 3: Integrated Power System Schedule 13 

Figure 4: Dual Band Radar Schedule 14 

Figure 5: Total Ship Computing Environment Schedule 19 

Figure 6: Total Ship Computing Environment Releases 20 

Figure 7: DDG 1000 Detail Design Process 22 

Figure 8: Detail Design Schedule Performance 25 

Figure 9: Zone Milestone Review Progress (as of March 2008) 28 

Figure 10: Northrop Grumman Shipbuilding Productivity 

Constructing DDG 51 Class (as of January 2008) 31 

Figure 11: DDG 1000 Oversight, Ship Contract Award, and 

Construction Events after Milestone B 42 

Abbreviations 

DOD Department of Defense 

RDT&E Research, Development, Test, and Evaluation 

This is a work of the U.S. government and is not subject to copyright protection in the 

United States. It may be reproduced and distributed in its entirety without further 

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reproduce this material separately. 

Page ii GAO-08-804 Defense Acquisitions
United States Government Accountability Office

Washington, DC 20548 

July 31, 2008

The Honorable Edward M. Kennedy 

Chairman 

The Honorable Mel Martinez 

Ranking Member 

Subcommittee on Seapower 

Committee on Armed Services 

United States Senate 

The Honorable Edward M. Kennedy 

Chairman 

The Honorable Mel Martinez 

Ranking Member 

Subcommittee on Seapower 

Committee on Armed Services 

United States Senate 

The U.S. Navy aims to begin construction of the first lead Zumwalt-class 

destroyer (DDG 1000) this year—a major step in its shift to the next 

generation of warships. DDG 1000 is a multimission surface ship designed

to provide advanced land attack capability and contribute to military 

dominance in the shallow coastal waters known as the littorals. To meet 

its objectives, DDG 1000 will employ a revolutionary hull design (known 

as the tumble-home form) and an array of cutting-edge technologies, 

including a missile launch system lined in the ship’s hull, an advanced gun 

system that fires long-range precision-guided munitions, and highly 

capable sensors integrated into the sides of a deckhouse made primarily of 

composite material—not steel. Many of these innovations contribute to 

making DDG 1000 significantly less detectable than current ships. The 

Navy plans to achieve these advances while also reducing the crew size to 

less than half of the predecessor Arleigh Burke-class destroyer (DDG 51) 

through extensive computer automation. The Navy is investing 

significantly in the DDG 1000 program—almost $9 billion in research and

development and almost $20 billion to design and deliver the seven ships 

of the class.

The U.S. Navy aims to begin construction of the first lead Zumwalt-class 

destroyer (DDG 1000) this year—a major step in its shift to the next 

generation of warships. DDG 1000 is a multimission surface ship designed

to provide advanced land attack capability and contribute to military 

dominance in the shallow coastal waters known as the littorals. To meet 

its objectives, DDG 1000 will employ a revolutionary hull design (known 

as the tumble-home form) and an array of cutting-edge technologies, 

including a missile launch system lined in the ship’s hull, an advanced gun 

system that fires long-range precision-guided munitions, and highly 

capable sensors integrated into the sides of a deckhouse made primarily of 

composite material—not steel. Many of these innovations contribute to 

making DDG 1000 significantly less detectable than current ships. The 

Navy plans to achieve these advances while also reducing the crew size to 

less than half of the predecessor Arleigh Burke-class destroyer (DDG 51) 

through extensive computer automation. The Navy is investing 

significantly in the DDG 1000 program—almost $9 billion in research and

development and almost $20 billion to design and deliver the seven ships 

of the class.

Given the challenges associated with developing, designing, and 

constructing a ship as complex as DDG 1000—including the potential for

cost growth, you asked us to examine the program’s progress, particularly 

in light of the start of construction of the two lead ships (DDG 1000 and 

DDG 1001) and the Navy’s request for authorization of the third ship (DDG 

1002) in its fiscal year 2009 budget. Specifically, we assessed (1) the Navy’s 

ability to deliver key systems when needed to support lead ship

construction and whether these systems will work as intended, (2) the 

level of design maturity and the obstacles to completing the ship’s design 

as planned, (3) the shipyards’ readiness to build DDG 1000, and, finally, (4) 

the challenges of building the ships (lead and follow-ons) within budget. 

Given the challenges associated with developing, designing, and 

constructing a ship as complex as DDG 1000—including the potential for

cost growth, you asked us to examine the program’s progress, particularly 

in light of the start of construction of the two lead ships (DDG 1000 and 

DDG 1001) and the Navy’s request for authorization of the third ship (DDG 

1002) in its fiscal year 2009 budget. Specifically, we assessed (1) the Navy’s 

ability to deliver key systems when needed to support lead ship

construction and whether these systems will work as intended, (2) the 

level of design maturity and the obstacles to completing the ship’s design 

as planned, (3) the shipyards’ readiness to build DDG 1000, and, finally, (4) 

the challenges of building the ships (lead and follow-ons) within budget. 

Page 1 GAO-08-804 Defense Acquisitions
To address the first objective, we analyzed key documents, including test

plans, test reports, and production schedules and supplemented our 

analysis by visiting contractors and test sites where the ship’s major 

systems are being developed and tested. To assess design maturity and 

obstacles to completing the ship’s design, we examined the Navy’s plans 

and guidelines for design management and evaluated the program’s design 

progress. We analyzed design maturity metrics captured in the program’s 

integrated master schedule and assessed design performance by analyzing

shipbuilder cost performance reports. To examine shipyard readiness, we 

reviewed key shipyard data, including past construction performance and 

facility improvement and investment plans. Finally, we examined ship 

costs by analyzing the budget, Navy and independent cost estimates, and 

contractor costs. To address all of the above objectives, we held 

discussions and attended briefings with the Office of the Secretary of 

Defense, Navy, and DDG 1000 program officials; contractors for the 

mission systems; and the shipbuilders. We conducted this performance 

audit from September 2007 to July 2008 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. Appendix I further discusses our scope and methodology. 

A recent decision to restructure and add 1 year to the program’s schedule 

will provide more time to produce and test key combat systems that will 

be installed on the lead ships, but calls for doing more work later in 

construction and after ship delivery. The Navy planned to demonstrate the 

capabilities of production-representative units of the ship’s major systems 

before installation, an approach aimed at minimizing cost and schedule 

risk on the lead ship. It has been able to do so for a number of systems. 

The restructure does not delay the completion of the hull, mechanical, and 

electrical systems but does delay verifying the performance of the 

integrated power system, the dual band radar, and software before 

producing—and in some cases installing—them on the ship. Specifically: 

Results in Brief 

• Land-based testing of the integrated power system will not finish until 

2011, over a year after units are installed on the first ship. 

• Delays in land-based testing have slipped installation of the dual band 

radar by at least 3 years. Moreover, the Navy will not demonstrate the 

full-power output of the radar needed to meet requirements until after 

testing of the first production unit sometime after 2010. 

Page 2 GAO-08-804 Defense Acquisitions
• Software development—crucial to the automation that enables reduced 

manning of the ship—has proved challenging. For the most recent 

software release, the contractor had difficulty coding the ship’s 

command and control component. The Navy certified the release 

without it meeting about half of the software system requirements, 

moving work to later releases. Yet the most challenging phases of 

software development lie ahead. Delays would disrupt plans for 

activating the ship’s critical systems, as well as its combat systems. 

The DDG 1000 program is positioned to achieve a greater degree of design

maturity before starting construction than has been the case on previous 

surface combatant programs. However, the shipbuilders may face 

challenges completing the later, more complex phases of design on 

schedule. Since August 2007, the shipbuilders finished work for 

approximately 16 of 100 zones (the individual units that make up the ship’s 

design). The shipbuilders believe that they will complete another 84 design 

zones by October 2008, when construction of the first ship begins. 

According to the shipbuilders, a revised schedule allows them to complete 

design tasks more efficiently. However, delays in the delivery of final 

technical information for the ship’s key systems could prevent the 

shipbuilders from completing the design according to plan. If the 

shipbuilders cannot achieve their design goals according to plan, the 

program may experience design-related cost growth as have previous 

shipbuilding programs. 

Although the shipbuilders are preparing for construction of the lead ships 

by investing in facilities, uncertainty remains. Both shipyards are 

preparing for DDG 1000 construction through facility enhancements and 

production improvements that they believe will increase efficiency. For 

example, one shipbuilder is building a facility to produce larger steel 

panels. The other shipbuilder built a new facility that will allow 

construction of DDG 1000 from fewer, larger units. However, achieving the 

full benefit of these improvements will depend in part on successful 

execution of the shipbuilders’ optimal construction strategy—which 

includes the right mix of facilities, workforce, and manufacturing 

capability. Continued labor instability and potential problems 

manufacturing the deckhouse could lead to increases in the amount of 

work involved in lead ship construction. Because DDG 1000 requires a 

new manufacturing method, projected efficiencies may not be fully 

realized on the lead ships. In particular, the facility that will manufacture 

the composite deckhouse was damaged by Hurricane Katrina, and the 

shipbuilder is still refining the process for large-scale composite 

Page 3 GAO-08-804 Defense Acquisitions
manufacturing and assembly. Problems discovered during construction 

would likely disrupt the ship’s construction sequence. 

Costs of the DDG 1000 ships are likely to exceed current budgets because 

the true costs necessary to deliver fully operational ships have not been 

fully recognized or funded.1

 The lead ships are at risk of cost growth for a 

number of reasons—including late delivery or problems with the 

performance of key systems or issues constructing or integrating sections

of the ship. For example, if composite manufacturing for the deckhouse 

takes longer than expected, ship construction would be delayed and costs 

associated with manufacturing as well as integrating the deckhouse would 

likely rise. Since there is little margin in the budget, Navy officials have

said that funds reserved for buying components of the dual band radar and 

certain communications antennas in later fiscal years may be needed to

support ship construction. If this occurs, additional funds would need to

be approved in fiscal year 2010 or later. The Navy has requested funding 

for the third ship and plans to contract for this ship with options for 

follow-on ships during fiscal year 2009. By this time, the Navy will have 

limited data on actual costs for the lead ships and their combat systems. 

Finally, the program’s production decision is slated for 2014—after all but 

one ship is under construction. Thus, its timing does not allow for insight 

that could better inform decision makers about follow-on ship costs. 

We are making recommendations to the Secretary of Defense aimed at 

reducing risk in the DDG 1000 program by (1) requiring that the ship’s 

detail design is completed as planned before the start of construction and 

(2) deferring contract award for follow-on ships until the costs of the lead 

ship are better understood. We are also recommending that the program 

hold a Milestone C review in advance of awarding a contract for the third 

ship. The Department of Defense (DOD) agreed with our first 

recommendation, reiterating the importance of achieving design maturity. 

DOD did not agree to hold a Milestone C review, stating that such a review 

would not provide any additional benefit for the program. We believe that 

a milestone review provides a consistent framework and documentation 

that will help decision makers recognize and make any needed 

adjustments to the program. 

 1

 Current budgets refer to the Navy’s fiscal year 2009 President’s budget submission for the

DDG 1000 program. 

Page 4 GAO-08-804 Defense Acquisitions
DOD also did not agree with our recommendation to defer the contract 

award for the follow-on ships, stating that such as delay will impact 

warfighting capability gaps, cost, and the shipbuilding industrial base. We 

note that the Navy and DOD are currently considering canceling the third

and follow-on ships. This notwithstanding, we believe that the risks of 

prematurely awarding follow-on ship contracts are considerably higher 

than any potential cost increase or industrial base effects that could occur 

as a result of delaying funding for a follow-on ship. 

Given the risk of cost growth in the program, this report also contains a 

matter for congressional consideration to provide more insight into 

potential cost increases as the DDG 1000 program progresses. 

The Zumwalt-class destroyers are designed as multimission surface 

combatant ships to provide advanced land attack capability to support 

forces ashore and contribute to military dominance in shallow coastal 

water environments. Along with nine new ship classes over the next 5 

years, the Zumwalt-class destroyers are part of the Navy’s planned shift to

the next generation of warships intended to complete future mission 

objectives. The Navy will take ownership of the first two Zumwalt-class 

destroyers—DDG 1000 and DDG 1001—in 2013 and 2014, respectively. 

Figure 1 depicts an artist’s rendition of the Zumwalt-class ship (commonly 

referred to as DDG 1000). 

Background 

Page 5 GAO-08-804 Defense Acquisitions
Figure 1: DDG 1000 Destroyer Currently in Development 

Source: Navy.

The DDG 1000 program has been framed by challenging multimission 

requirements, resultant numerous technologies, and a tight construction 

schedule driven by shipyard workloads. The Navy’s acquisition strategy 

for DDG 1000 has changed significantly since the initial concept for the 

ship in 1997. Over its development cycle, the cost of the DDG 1000 

program has increased considerably, while the quantities have been 

reduced. Currently, the Navy plans for a class of seven ships. The 

Congress has limited the procurement cost of the fifth ship to $2.3 billion, 

plus adjustments for inflation and other factors.2 For a more complete 

accounting of DDG 1000 program events see appendix III. 

 2

 National Defense Authorization Act for Fiscal Year 2006, Pub. L. No. 109-163, Div. A § 123

(2006). 

Page 6 GAO-08-804 Defense Acquisitions
Detail design and construction of DDG 1000 was preceded by a technology 

development phase that continues today. The Navy sees DDG 1000 as the 

technology driver for the fleet and a bridge to future ship capability. The 

Navy plans to incorporate 12 new technologies to meet the ship’s 

demanding requirements. To reduce program risk and demonstrate the 

ship’s technologies, the Navy planned to build and test 10 prototypes 

(referred to as engineering development models) representing the ship’s

most critical subsystems. Table 1 describes the prototypes. 

Technology Development 

Approach 

Table 1: DDG 1000 Critical Technologies

System Description

Advanced gun system Will provide long-range fire support for forces ashore through the use of unmanned 

operations and the long-range land attack projectile. 

Integrated deckhouse and apertures A composite structure that integrates apertures of radar and communications systems. 

Dual band radar Horizon and volume search improved for performance in adverse environments. 

Integrated power system Power system that integrates power generation, propulsion, and power distribution and 

management. 

Total ship computing environment Provides single computing environment for all ship systems to speed command while 

reducing manning. 

Peripheral vertical launch system Multipurpose missile launch system located on the periphery of the ship to reduce damage to 

ship systems. 

Integrated undersea warfare system System for mine avoidance and submarine warfare with automated software to reduce 

workload. 

Infrared mock-up Seeks to reduce ship’s heat signature in multiple areas. 

Hull form Designed to significantly reduce radar cross section. 

Autonomic fire suppression system Intended to reduce crew size by providing a fully automated response to fires. 

Source: Navy data. 

Prototype development and testing helped to give the Navy confidence in a 

technology’s ability to operate as intended. For example, the Navy 

successfully demonstrated the advanced gun system through initial guided

flight and testing on land. In other cases, such as for the integrated power 

system, tests brought to light technical problems that the Navy was able to

address by going to an alternate technology. However, not all prototypes 

were completed as planned and development continues even as the Navy

prepares for construction of the lead ships. Table 2 provides a status of 

DDG 1000 prototype development efforts. 

Page 7 GAO-08-804 Defense Acquisitions
Table 2: Prototype Development and Results 

Technology Results

Advanced gun system Verified gun and magazine response time, rate of fire, range, and pallet unloading rate, and 

demonstrated complete firing sequence during 2004 through 2005. Separate flight tests 

demonstrated the long-range land attack projectile munitions to be used by the gun. The gun and 

munitions were not tested together because of test facility limitations. 

Autonomic fire suppression

system 

Successfully tested on two Navy test ships during 2004 through 2005. Demonstrated system’s 

ability to detect damage and control fires in specific ship environments. With these tests, the Navy 

designated this technology as fully mature at critical design review. 

Integrated deckhouse and 

apertures 

An integrated deckhouse test article was tested in 2005 for radar cross section and to verify that 

signals from apertures do not interfere with one another. Fire and shock testing of a large-scale 

test article to verify deckhouse strength was postponed because of uncertainties about the 

composite material’s strength and safety as well as facility delays. This test is currently scheduled 

to be completed by late 2008, and, if it is successful, the deckhouse will be considered fully mature 

following analysis of the test. 

Dual band radar Multifunction radar proved clutter rejection and firm track range—key functions required for 

demonstration—during land-based and at-sea tests from 2004 through 2006; the radar was 

designated as fully mature following these tests. Volume search radar encountered difficulties with 

transmit-receive unit; “string” tests demonstrated radar at lower power output than required in 2007 

after 1-year delay. Tests of the fully assembled dual band radar were delayed almost 2 years and 

are currently planned to begin in 2009. 

Integrated power system Turbine generators were factory tested in 2004 and 2005. Permanent magnet motor failed 2005 

tests and was replaced by its backup, the advanced induction motor, which was then successfully 

tested at land-based facility in 2005, allowing the program to pass Milestone B. 

Total ship computing 

environment 

First three releases—24 percent of total code—were successfully developed during 2003 through 

2005. These releases included critical computing infrastructure functionality needed for the total 

ship computing environment, as well as limited ship mission functionality.

Peripheral vertical launch 

system/MK57 vertical launch 

system 

The 2004 test resulted in destruction of the test article, requiring redesign. A second test in 2005 

replicated the same conditions with the new design and materials and was successful. Restrained 

firing tests—proving that the enclosure and launcher can survive an explosion—were postponed 

and successfully performed in 2006. 

Integrated undersea warfare 

system (acoustic sensor suite 

element) 

Array interference tests were conducted in 2004 at the Navy’s Seneca Lake test facility. In 2005, 

the Navy verified mine avoidance capability during at-sea tests and automated submarine warfare 

detection and tracking in lab tests, and designated the technology as fully mature by late 2005. 

Infrared signature mock-ups At-sea materials and panel tests followed by design tests were conducted in 2004. Design tradeoffs for performance, weight, and cost led to changes in infrared materials used to reduce ship’s 

heat signature. A sheeting water system for the hull was replaced with an alternate system. 

Hull form Scale models were tested during 2004 thorough 2005 for factors like resistance, propeller

efficiency, and capsize probability. Scale model tests in 2006 led to design changes to reinforce the 

hull and deckhouse. Tests continued into 2007 and 2008 and further development is planned 

through 2015 to develop a “safe operating envelope” to help safely operate the ship in high sea 

states. 

Source: GAO analysis of Navy and contractor data. 

Detail Design and 

Construction 

The Navy awarded contracts for detail design in August 2006 and 

negotiated contract modifications for construction of two lead ships in 

Page 8 GAO-08-804 Defense Acquisitions
February 2008. Construction of the first ship is scheduled to begin in 

October 2008, followed by the second ship in September 2009. 

To build a ship efficiently and stay within budget, the lead ships need to be

constructed following an optimal construction sequence. This costefficient approach calls for designing and building the ship in modules, 

maximizing the amount of construction, test, and outfitting completed in

shipyard shops and in the dry dock while minimizing work to be 

performed once the ship is in the water, which tends to be costlier than 

tasks on land. This sequence is outlined in the shipbuilders’ integrated 

master schedule, which links all of the detailed construction tasks based 

on key event dates. Shipbuilders try to install the ship’s systems in order to 

take advantage of construction efficiencies. If equipment is not ready in 

time for installation, the shipbuilder will have to work around the missing

equipment. Once units are installed, access to internal ship compartments 

becomes more difficult. Additional labor hours may be needed because 

spaces will be less accessible and equipment may require more time for 

installation. 

Contracting Strategy The Navy’s approach to the DDG 1000 program is complex. Since 2006 the 

Navy has been managing the DDG 1000 program through contracts with 

four different prime contractors—two shipbuilders are jointly designing 

and constructing the ships and two system developers are providing 

combat, communications, and weapon systems as well as the software 

that will operate and integrate these systems: 

• Bath Iron Works is designing the fore and aft of the ship, equaling 

about 50 percent of the individual design units of the ship, known as 

design zones. This includes the distributive systems—such as cables 

and pipes—that pass through the zones. Bath Iron Works will build the 

first lead ship (DDG 1000) and will build the forward middle section to 

be integrated on the second lead ship (DDG 1001). 

• Northrop Grumman Shipbuilding is designing the deckhouse and ship 

center (50 percent of the design zones), including the distributive 

systems that pass through the zones. Northrop Grumman Shipbuilding 

will build the deckhouse (at its composite facility in Gulfport, 

Mississippi), hangar, and aft launch system sections to be integrated on 

DDG 1000 and all ships in the class. Northrop Grumman Shipbuilding 

will also build the second lead ship (DDG 1001). 

• Raytheon is providing most of the ships’ electronic systems (combat 

and communications), including development of the radars and 

antennas. Raytheon is also responsible for developing the ship’s 

Page 9 GAO-08-804 Defense Acquisitions
software system (known as the total ship computing environment)—

including defining requirements, design, code, test, and integration. 

• BAE is responsible for development, design, testing, and production of 

the advanced gun system, including gun, automated magazine, and 

long-range land attack munitions. 

Under this contracting arrangement, the Navy is essentially acting as the 

overall program integrator. Since the shipyards are sharing the design of 

the ship equally, the Navy manages the overall ship configuration and 

ensures that the ship’s baseline design is aligned across all of the 

contracts. All of the products produced by the program’s prime 

contractors (including the major systems, as well as sections of the ship) 

are government-furnished equipment—meaning equipment purchased by 

the Navy for installation and integration on the ship. As such, the Navy is 

responsible for the receipt of sections of the ship (such as the deckhouse 

or mid-fore body) from one shipbuilder and the delivery to the other 

shipbuilder for integration with the rest of the ship. As a result, the Navy is

also responsible for managing the thousands of interface points between 

the ship’s sections to ensure that they are correctly defined.

Although recent restructuring of the program allows more time for 

producing, installing, and testing key combat systems and the software 

that supports these systems, it calls for doing more work later in 

construction and after ship delivery. While additional time is beneficial, 

unexpected difficulties in producing systems or getting them to operate as 

expected would likely result in additional delays and increased costs. 

Some key systems, including the dual band radar, have not been fully 

demonstrated as planned. The integrated power system will be produced 

and installed before land-based testing is complete. This approach 

increases the risk that problems discovered during testing will require 

expensive rework to incorporate fixes later on. The most challenging 

phases of the software development—crucial to the automation that 

enables reduced manning of the ship—lie ahead, presaged by problems 

encountered in testing the most recent software release. Delays in 

software delivery would disrupt plans for activating the ship’s critical 

systems as well as its combat systems and delay delivery of the ship and 

its combat systems to the Navy. 

Delays in Technology 

and Software 

Development Pose 

Risk to Successful 

Program Execution 

Page 10 GAO-08-804 Defense Acquisitions
Until recently, Navy plans called for delivery of the first ship in 2012, with 

initial fielding of the ship (known as initial operational capability) in 2014.

According to this schedule, the shipbuilders would begin construction of 

the first ship in 2008. According to the Navy, this was an important step in 

managing shipyard workloads as starting later would have caused 

shipyard workload to drop too low. In order to reduce the risk of cost 

growth and schedule delay during construction, the Navy planned to 

demonstrate mature systems before installation on the lead ship. To meet 

this schedule the Navy laid out a two-stage approach to maturing the key 

systems. First, the Navy planned to build and test almost all of its 10 

prototypes of the key systems before beginning detail design of the ship 

and, second, planned to transition from development of prototypes to 

systems integration test and qualification of production units after the 

program’s critical design review in 2005. While this approach was 

successful on several key systems, the Navy has not been able to develop

all key systems as planned—some prototypes still have not completed 

testing. The Navy chose to move forward into detail design of the ship 

before demonstrating all technologies. In fact, the Navy continues to shift 

work—in the form of testing, developing software, integrating subsystems, 

and actual fabrication—until later stages of design and even ship 

construction. In these stages, the cost of work and delays is much higher 

and the schedule less forgiving than in earlier stages of the program. 

Recent Adjustments 

Provide Additional Time, 

but Many Events Need to 

Come Together for

Success 

Following negotiations of the contract modifications for constructing the 

lead ships, the Navy realigned the program’s schedule. While the timing of

the start of ship construction remains roughly the same, the Navy changed

the definition of what constitutes ship delivery. Rather than delivering a 

fully mission-capable ship, the Navy stated that it will take ownership of 

just the vessel and its mechanical and electrical systems—including the 

power system—in April 2013.

3

 At that point, the Navy will have activated 

and tested the power, mechanical, and electrical systems aboard ship. 

Under the restructured schedule, the Navy will delay work that typically 

occurs during construction until after the ship is initially delivered. 

Specifically, the Navy will light off—that is activate and shipboard test—

the combat systems, including the radars, antennas, guns, and the missile 

launch systems, in May 2013—more than 2 years later than originally 

planned (see fig. 2). Following combat systems light-off, the Navy will 

 3

 The Navy describes the delivery in April 2013 as transfer of ownership and hull delivery;

for purposes of this report, we refer to this as initial delivery. We use the term final delivery

to indicate when ship construction is complete—including the installation and integration 

of the combat systems. 

Page 11 GAO-08-804 Defense Acquisitions
begin acceptance trials of the combat systems—inspecting these systems 

and noting any deficiencies that should be corrected. Only at the 

conclusion of combat system acceptance trials in February 2014 will all of

the ship’s systems be fully integrated and final ship delivery complete. 

Figure 2: DDG 1000 Lead Ship Schedule 

Calendar year 2007 2008 2009 2010 2011 2012 2013 2014 2015

Construction start

Ship light-off

Final acceptance trials

Final delivery

Initial operating capability

Schedule as of 2005 program start

Schedule as of May 2008

Source: GAO analysis based on Navy data.

Combat systems light-off

According to the Navy, conducting light-off in phases allows the program 

to test and verify the ship’s major systems, in particular the integrated 

power system, in isolation before conducting simultaneous tests with the 

combat and communication systems. Navy officials stated that this 

approach will help to reduce the risk that problems with the ship’s 

systems, such as power load or cooling, could damage the combat 

systems. By delaying these events until after delivery of the vessel, the 

Navy is using this time to test, produce, and install key combat systems, as 

well as the software that supports these systems. 

Although this approach gives the Navy additional time to mature the ship’s 

combat systems before installation, it may limit its ability to address any 

problems that may occur as a result of light-off and shipboard testing. 

Since the Navy will only test and inspect the hull prior to taking ownership 

of the vessel, it will not have a full understanding of how the ship operates

as a complete and integrated system until after final shipboard testing of 

the combat systems in 2014. Moreover, final delivery of all the ship’s 

software will now occur right before final acceptance trials—compressing

Page 12 GAO-08-804 Defense Acquisitions
the time to address any integration problems prior to initial operation of

the ship. 

The Navy Will Not 

Demonstrate All Key 

Systems Prior to 

Producing and in Some 

Cases Installing These 

Systems 

Because of delays in the development of several ship systems, particularly

the integrated power system, the dual band radar and the electronic 

surveillance system, the Navy will not demonstrate integrated systems 

before installing them on the lead DDG 1000 ship, increasing the risk that 

problems discovered during testing will require expensive and/or timeconsuming rework to incorporate fixes later on. 

The integrated power system will centrally generate and distribute power 

for all ship functions, allowing greater flexibility in power use. While the 

Navy has demonstrated the basic capability of the power generation and 

distribution systems, tests of a complete integrated power system with the 

control system will not occur until 2011—nearly 3 years later than planned 

(see fig. 3). 

Integrated Power System 

Figure 3: Integrated Power System Schedule 

Calendar year 2007 2008 2009 2010 2011 2012 2013 2014 2015

Construction start

Integrated power system land-based

test complete

Ship light-off

Combat systems light-off

Final acceptance trials

Final delivery

Schedule as of 2005 program start

Schedule as of May 2008

Source: GAO analysis based on Navy data.

Install integrated power system

Page 13 GAO-08-804 Defense Acquisitions
The Navy initially planned to verify power system performance through 

integration tests with the first production unit at a land-based test facility 

in 2008 before installing the power system on DDG 1000. However, delays 

in developing the ship’s software led the Navy to postpone integration 

tests by over a year. To deliver the power system on time to meet the 

shipyard’s schedule, the Navy will buy a power system intended for the 

third ship and use this unit in upcoming tests. As a result, the integrated 

power system will not be demonstrated until the completion of land-based 

tests that will occur over a year after the power systems have been 

produced and installed on the two lead ships. 

The dual band radar is made up of two major radar systems, the 

multifunction radar and the volume search radar. Development and testing

of the multifunction radar have progressed further than for the volume 

search radar. Through testing on land and at sea, the Navy demonstrated 

the multifunction radar’s key functions. In contrast, the volume search 

radar experienced difficulties during development that still continue. 

Land-based demonstrations of the volume search radar prototype and the 

integrated dual band radar originally planned to be done before starting 

ship construction will not be completed until 2010—almost 2 years later 

(see fig. 4). 

Dual Band Radar 

Figure 4: Dual Band Radar Schedule

Calendar year 2007 2008 2009 2010 2011 2012 2013 2014 2015

Construction start

Volume search radar land-based test complete

Install dual band radar

Install multifunction radar

Install volume search radar (TBD)

Ship light-off

Combat systems light-off

Schedule as of 2005 program start

Schedule as of May 2008

Source: GAO analysis based on Navy data.

Dual band radar land-based test complete

Page 14 GAO-08-804 Defense Acquisitions
Development difficulties center on the radar’s radome and transmitreceive units. The contractor has not yet successfully manufactured the 

volume search radar’s radome—a composite shield of exceptional size and 

manufacturing complexity—that is necessary to meet radar stealth 

requirements. The first radome constructed for the volume search radar 

prototype experienced cracking and delaminating problems stemming 

from a faulty design. After conducting analysis to determine the root 

cause, the contractor’s second attempt in late 2007 appeared to have 

solved the initial problems, but new internal cracks were noted, 

apparently caused by machining difficulties. The Navy is now funding a 

parallel effort with a second manufacturing source—one that supplied the 

radome for the much smaller multifunction radar—and will make a 

decision on the path forward after a June 2008 review. Upcoming landbased tests will be conducted without a radome, and a replacement will 

not be available until the first production unit of the volume search radar 

is tested at the factory. 

The transmit-receive units—the individual radiating elements that are the

essence of the volume search radar—experienced failures during 

component testing, never reliably operating at the voltage needed to meet 

range requirements despite multiple design iterations and different 

suppliers. According to the contractor, the latest test results from January 

2008 met performance requirements, but subsequent tests revealed a new 

issue concerning the heat generated by a component of the transmitreceive unit. The Navy believes that the voltage problem has been resolved

and that the fix has been validated in recent tests. However, land-based 

tests of the volume search radar prototype and the integrated dual band 

radar will not incorporate the redesigned transmit-receive unit and will not

demonstrate the higher-voltage output necessary to meet ship 

requirements. The contractor does not anticipate testing the volume 

search radar at the necessary voltage until it produces and tests the first 

unit at the factory. 

Problems with the volume search radar and in constructing the land-based 

test facility delayed and compressed the production schedule for the dual 

band radar. Land-based testing of the volume search radar started late and 

is scheduled to be complete in May 2009. Following the conclusion of 

these tests, the volume search radar and multifunction radar prototypes 

will be integrated and tested with their enabling software at the same landbased facility in 2010. However, the multifunction radar will have been 

produced and delivered to the lead shipyard before the integrated tests are 

completed. This concurrency introduces additional risk if problems are 

discovered during testing and components require rework or replacement. 

Page 15 GAO-08-804 Defense Acquisitions
Moreover, delays have led officials to plan for installation of the volume 

search radar when the first ship is already afloat, a more expensive 

approach than the original plan of installing the radar as the deckhouse is

being completed at the Gulfport facility. Meeting this schedule will also be 

a challenge; the Navy recently decided to postpone contracting for the 

major components of the volume search radar until 2010 or later. 

The Navy has not decided on the electronic surveillance system. This 

system is part of the deckhouse and will now be installed separately after 

the first lead ship is initially delivered. The electronic surveillance system 

provides passive threat detection for ship self-defense and is essential for 

ship deployment. Existing systems cannot be used because they do not 

meet the ship’s radar cross section requirements. The Navy is hoping to 

utilize one of two ongoing Navy research and development activities, the 

multifunction electronic warfare system or the surface electronic warfare 

improvement plan, but does not currently know when these activities will

be completed. Meanwhile, in order to complete deckhouse design, the 

Navy has allocated space for the electronic surveillance system. The final 

deckhouse will be delivered with placeholders until a final system is 

purchased and installed. Continued uncertainty about the electronic 

surveillance system could ultimately delay ship deployment. 

Electronic Surveillance System 

Software Development 

Faces Challenges and May 

Not Keep Pace with Ship 

Integration and Test 

Schedule 

Achieving a high degree of computer automation is crucial to realizing 

DDG 1000’s required manning reductions. Given the risks associated with

the ship’s software system, referred to as the total ship computing 

environment, the Navy initially planned to develop and demonstrate all 

software functionality over 1-year prior to ship light-off, when the ship’s 

systems are turned on for the first time. As a result of changes in the 

software development schedule, the Navy eliminated this margin. Until 

recently, the Navy was able to keep pace with its development schedule, 

successfully completing the first three software releases. However, the 

Navy is now entering the complex phases of software development, which 

have proven challenging.

The magnitude and complexity of DDG 1000 software development is 

unprecedented in Navy ships. Rather than having numerous stand-alone 

systems, each operated by several sailors, the total ship computing 

environment will automate and integrate many ship functions. Program 

officials estimate that the total ship computing environment will consist of 

14 million to 16 million lines of code—including about 7 million lines of 

new and modified code developed in incremental software blocks, 

currently described as six releases and one spiral. It will be the single most 

important enabler of the ship’s reduced manning requirement. If the ship’s

Page 16 GAO-08-804 Defense Acquisitions
software does not work as intended, crew size would need to be increased 

to make up for any lack of automation. 

With release 4, initial functionality of the major ship systems was 

introduced. While the contractor successfully developed and delivered the 

first three software releases, it encountered significant problems 

developing release 4. The contractor delivered release 4 without meeting 

all requirements and deferred work to release 5, mainly because of issues 

coding the ship’s command and control component—the heart of the 

ship’s decision-making suite. Problems discovered in this release, coupled 

with the deferred work, may signify larger software issues that could 

disrupt the development of releases 5 and 6 and prevent the timely 

delivery of software to meet the ship’s schedule.

In fact, the Navy certified release 4 without having met about half of the 

release’s software system requirements. Specifically, approximately 32 

percent failed acceptance tests and another 15 percent were not tested in 

this release.4

 According to the contractor, the main problem area was the 

command and control component, which represents over one-third of 

release 4 code. This component repeatedly slipped internal development 

milestones because of an inability to meet recovery requirements, 

essentially, the need for software to automatically restart and resume 

mission activities in the event of a failure. The Navy believes that the 

causes of the recovery failures are well understood and that fixes to these 

problems will be incorporated early in release 5 development. However, 

officials from the Defense Contract Management Agency and the Navy’s 

Operational Test and Evaluation Force believe that the problem is more 

complicated—the recovery failures were largely driven by problems 

achieving timely data communication through the JavaTM

 programming 

language5

 used for much of the ship’s software,6 and were only discovered 

late in release 4 integration tests when the command and control software 

was integrated with the rest of release 4 code. The contractor has also 

 4

 The system requirements are made up of 978 verification items, of which nearly 40 

percent either failed acceptance tests or were not tested in this release. 

5

 JAVA is a trademark or registered trademark of Sun Microsystems, Inc. in the United 

States and other countries. 

6

 The Defense Contract Management Agency provides contract management and 

surveillance. The Navy’s Operational Test and Evaluation Force provides independent

evaluation of the operational effectiveness and suitability of Navy programs. These 

agencies provide periodic, independent evaluations of the DDG 1000 program’s progress. 

Page 17 GAO-08-804 Defense Acquisitions
recognized that Java performance problems contributed to the recovery 

failures. The program has had data communication difficulties with this 

programming language since 2003. 

Initial comments from the Navy’s certification panel7

 for release 4 gave the 

program high marks in several areas, including identifying errors early and 

building a strong validation and verification capability. At the same time, 

the certification panel commented that the functionality in the next release 

will present challenges. 

In order to mitigate program risk, the Navy’s initial plan from 2005 

envisioned developing all ship software by 2010—approximately 1 year 

before ship light-off. This schedule would give developers time to conduct

integration tests to verify that the software would work with the ship’s 

mechanical and electrical systems as well as combat systems before lightoff. If any software problems were discovered during testing, the program 

would have had time to incorporate software fixes before and after ship 

light-off—but well before delivery. The Navy still plans to conduct 

integration tests with the ship’s software at land-based test facilities. 

However, as a result of five software schedule revisions over the last 2-1/2 

years, the Navy now plans to complete delivery of the software later in the 

ship’s build sequence, as shown in figure 5. 

 7

 The certification panel is made up of technical experts from within the Navy. 

Page 18 GAO-08-804 Defense Acquisitions
Figure 5: Total Ship Computing Environment Schedule

Source: GAO analysis based on Navy and contractor data.

Ship 

light-off

Combat systems

light-off

Calendar year 2007 2008 2009 2010 2011 2012 2013 2014 2015

Release 4

Release 5

Release 6

Spiral (in draft)

Release 4

Release 5

Release 6

Spiral

Program start

2005

Today

2008

Construction

start

Construction

start

Ship and 

combat systems

light-off

Final 

acceptance 

trials

Final 

acceptance 

trials

Final

delivery

Final

delivery

Initial operating

capability

Initial operating

capability

Release 6, which contains critical engineering control system software, 

has been delayed by 28 months and will now arrive in 2012, nearly 1 year 

after ship light-off in 2011 when the ship’s power and electrical 

components are turned on and tested on board the ship. While the 

engineering control system software will be tested with the power system 

at a land-based test facility in the months prior to ship light-off, the 

software will not yet be integrated with the rest of release 6 code at this 

time. Instead, the Navy plans to conduct ship light-off using interim 

engineering control system software while concurrently integrating the 

code into release 6. If problems are discovered in the engineering control 

system software during release 6 testing, not only could ship light-off be 

delayed but ultimately delivery of the ship could be delayed as well. 

Moreover, as early as the program’s 2005 critical design review, the Navy 

recognized that all software code needed to meet requirements would not 

be completed within the six releases. Instead, the Navy added another 

block, or “spiral,” of software development. According to the Navy, 

approximately 25 percent of the total software effort will be developed 

outside of the six software releases. As figure 6 illustrates, a number of 

important ship functions will not be integrated with the total ship 

computing environment within the six releases. 

Page 19 GAO-08-804 Defense Acquisitions
Figure 6: Total Ship Computing Environment Releases 

0 200 400 600 800 1,000 1,200 1,400 1,600

Electronic

surveillance

Antiterror/

force

protection

Guns, missiles,

and weapons

control

Acoustic

sensors

and decoys

Dual band

radar

External

communications

antennas

Network and

infrastructure

Power and

ship control

system

Command

and control

Support,

training,

and testing

Capability

Thousand equivalent lines of code

Source: GAO analysis based on Navy and contractor data.

Spiral

Releases 4-6

100%

100%

32%

13%

2%

4%

12%

4%

68% developed in spiral

For example, software that automates the electronic surveillance and 

antiterror/force protection systems will be integrated into the ship’s 

software after the ship has already been initially delivered.8

 This software,

as well as the final software spiral will not be installed until shortly before 

combat systems light-off. Further, in 2005, the Navy’s Operational Test and 

 8

The antiterror/force protection requirement was added in 2005, after the Congress 

required the Navy to protect ships from close-range terror attacks such as the one on USS 

Cole in Yemen in 2000. 

Page 20 GAO-08-804 Defense Acquisitions
Evaluation Force raised concerns that the Navy would increase the risk 

that critical defects may go undetected until after the ship is delivered by

sacrificing software integration testing for the sake of schedule—concerns

that continue to be raised in current assessments of the program. The 

contractor has reduced software integration test runs by 20 percent in 

release 4 through consolidating test procedures in an effort to save costs.

The Navy, however, believes that this approach appropriately balances 

these risks and states that these reductions avoid redundant testing. 

The Navy recognizes the need to mature DDG 1000’s design before 

beginning ship construction and plans to have a more complete design 

than previous surface combatant programs. The Navy finished the initial 

phases of design development, and the shipbuilders are currently 

developing the individual zones of the ship’s design. However, the program 

faces challenges completing the core of detail design: product modeling of

the ship’s zones. In March 2008 the shipbuilders revised the design 

schedule to better manage the design work remaining. While the 

shipbuilders believe they can finish the design of most of the ship’s zones 

by the start of ship construction, there are a number of challenges in 

meeting this schedule. In particular, delays in the development of the 

ship’s key systems could impede completion of the design and eventually 

interfere with DDG 1000 construction. If the delays continue, the 

shipbuilders may not finish all modeling prior to the start of lead-ship 

construction, placing the program at greater risk for costly rework and 

out-of-sequence work during construction. 

The Navy aims to have 85 percent of all detail and manufacturing drawings 

complete by the start of lead ship construction—significantly more than in 

previous surface ship programs. In contrast, the DDG 51 program had only 

20 percent of necessary design and manufacturing products finished 

before the start of construction, and the first Littoral Combat Ship (LCS 1) 

had less than 25 percent complete. According to the Navy, the DDG 1000 

program is modeling the Virginia-class submarine program that had its 

design matured prior to the start of construction, thereby reducing cost 

growth related to design immaturity.

The Navy Is 

Emphasizing a Mature 

Design on DDG 1000, 

but Timely 

Completion Will Be 

Challenging 

The Navy Is Emphasizing 

Greater Design Maturity 

Prior to Starting 

Construction Than in 

Previous Shipbuilding 

Programs 

The DDG 1000 program has already completed most of the initial two 

phases of the ship’s design (see fig. 7). 

Page 21 GAO-08-804 Defense Acquisitions
Figure 7: DDG 1000 Detail Design Process

engineering 

s

a

hip'

nd de

Define

s initi

sign

s

al F s

Arr

e

hip 

qu

e

a

a

ipment 

nge

s

ch zone

ys

s

tem

 m

a

a

s

nd 

jor 

 in F three-dimen

Fin

de

modeling

a

sign with 

lizes the 

sional F Converts the 

design to 

two-dimensional 

graphics for 

production

X

Functional 

design

Transition 

design

Two-dimensional 

production 

extraction

Zone/nonzone 

detail design

Source: Navy and shipbuilder data.

Since 2007, the shipbuilders have been using a computer-aided design 

product model to work on the details of the 100 individual zones that 

constitute the ship, the heart of detail design.9

 The product model is shared

between both shipbuilders and provides transparency in the designs at 

both shipyards, as well as access to the Navy to conduct design reviews. 

The product model generates a detail design, allowing engineers to 

visualize spaces and test the design. This validates elements of the design

prior to construction, thereby avoiding potentially costly rework. 

During product modeling, the designers finalize the interfaces between 

zones, complete the design for shipwide cables and pipes, and add all 

detail necessary to support manufacturing of the ship. The Navy assesses 

the progress of each zone when it is 50, 70, and 90 percent complete with 

product modeling. At these critical reviews, the Navy and other 

stakeholders review the zone design as it progresses and provide input to 

ensure that the design meets specifications. At the completion of zone 

design, the design is converted to drawings used for construction.10

 9

 The product model uses a shared server managed by Northrop Grumman Shipbuilding

with contract requirements for equal server availability at both shipyards. 

10 The two-dimensional drawings include build strategies, construction drawings, and final 

lists of needed construction materials. 

Page 22 GAO-08-804 Defense Acquisitions
Following the construction contract negotiations, the Navy revised the 

detail design schedule to better ensure that the design was largely 

complete by the ship’s final production readiness review in October 2008.

According to the shipbuilders, the revised schedule moved design work to 

fit a more achievable timeline and realigned work to recognize that the 

first ship would be built at Bath Iron Works rather than Northrop 

Grumman Shipbuilding as initially planned. The program aims to have all 

but 15 design zones essentially finished with product modeling by 

construction start in October 2008, which should help to mitigate the risk 

of the design-related cost growth that has occurred in shipbuilding 

programs. 

Shipbuilders Experienced 

Design Delays Early in 

Product Modeling 

Thus far, the Navy has not been able to meet its initial detail design 

schedule. The Navy aimed to have essentially completed 82 zones by 

March 2008, but only finished 12. The Navy and shipbuilders have cited a 

number of causes for these schedule delays, discussed in detail in table 3. 

Page 23 GAO-08-804 Defense Acquisitions
Table 3: Challenges Faced by Shipbuilders in Meeting Detail Design Schedule 

Challenge Description

Latency and stability issues with the 

design tool 

The modeling software has not been able to efficiently accommodate the complexity of the 

design because of the large volume of information it generates. Problems with the modeling 

software have delayed detail design. For at least 7 months, computer downtime at one 

shipyard consistently resulted in the loss of at least an hour of work per person per day 

because of system failures, inconsistent software behaviors, and more than double the 

anticipated time taken for data to be stored in the database. Since some of the problems are 

due to the complexity in the design, the shipbuilder estimates that the unfavorable 

performance with the design tool will likely continue to negatively affect the design schedule 

as modeling complexity increases. As the models grow in complexity and size they will 

continue to stress the system. The shipbuilders believe that they are taking actions to 

improve the latency in the design tool; these actions include software upgrades, hardware 

upgrades, and process improvements. 

Understaffing at one shipyard One shipyard experienced slow hiring during the beginning of the detail design phase, and it 

had to outsource some engineering tasks because of its inability to hire. 

Delays incorporating changes to the 

design specifications 

The product modeling tool allowed shipbuilders to discover design problems early in design 

development, but any changes that altered the ship’s specifications required formal Navy

approval. In addition, a number of interfaces for key systems were not available during initial 

design phases, so the shipbuilders had to use surrogate data where information did not exist. 

As the systems matured, any space, weight, power, or cooling changes also required formal 

Navy approval. The process to receive Navy approval and incorporate the changes into the 

design took longer than anticipated—sometimes as long as 4 to 6 months. 

Missing technical Information for 

library parts 

Late technical diagrams and calculations delayed interface specifications and space 

dimensions needed for the shipbuilders to issue final library parts—the individual pieces of

equipment and material within the design zones. The shipbuilders had to create temporary

library parts when none existed in order to proceed with ship design products. 

Source: GAO analysis of shipbuilder data. 

Cost performance reports from both shipyards indicate that until the 

recent schedule revision, the shipbuilders have not been able to complete

the product modeling work as planned. Performance in product modeling 

is a leading indicator for the overall detail design effort for two reasons. 

First, product modeling in zone design accounts for almost half of the total 

planned labor hours in the detail design contract. Second, of the remaining 

labor hours in detail design, about 65 percent are planned as “level-ofeffort” tasks, for which performance equals scheduled tasks and no 

schedule variances can occur.11

 11 These tasks are general or supportive in nature and do not produce definite end products

or results. Performance of these tasks is not an accurate gauge of the overall design effort; 

since level-of-effort tasks assume that staff will attain expected results, performance equals

the scheduled cost for those tasks and no schedule variances can appear to occur. See

Department of Defense (DOD) Earned Value Management Implementation Guide § 2.2.3.4.3 

(Oct. 2006). 

Page 24 GAO-08-804 Defense Acquisitions
Using data from cost performance reports, we analyzed the shipbuilders’ 

schedule performance in product modeling according to a schedule 

performance index that measures the value of the work completed against 

the work scheduled (see fig. 8). If a schedule performance index is less 

than 1.00, then less than a dollar’s worth of work has been completed 

compared with a dollar’s worth of the work that was scheduled.12 Over a 7-

month period, the Navy received an average of less than 84 cents worth of 

scheduled work for every dollar planned. 

Figure 8: Detail Design Schedule Performance 

0

0.72

0.74

0.76

0.78

0.80

0.82

0.84

0.86

0.88

0.90

Sept. Oct. Nov. Dec. Jan. Feb. Mar.

Schedule performance index

Source: GAO analysis of shipbuilder data.

Note: The shipbuilders believe that performance is understated because work done on changes had 

not been recognized in the baseline. 

The shipbuilders believe that the March 2008 revised schedule will enable 

them to complete the design according the new schedule. While the 

progress of the product design model itself has not changed, the revised 

schedule has realigned the planned work more closely with actual 

progress, which explains the improvement in the performance index from 

February to March 2008. A revised schedule will only show a temporary 

improvement unless it is backed up with sustained progress. Thus, if the 

 12 For example, if the scheduled work for a period of time included the tasks leading up to a 

90 percent review but not all of these tasks were actually completed during this period, the 

scheduled performance index would be less than one. 

Page 25 GAO-08-804 Defense Acquisitions
shipbuilders cannot complete design work according to the new schedule, 

performance will again erode. 

The Shipbuilders Will Face 

Challenges Completing the 

Design to Meet the 

Construction Schedule 

The shipbuilders will face challenges completing the final complex 

product modeling stages according to the Navy’s plan. The program is now 

entering the more difficult final product modeling phases—when the 

details of the design must be finalized to support constructing the ship. 

Most design zones have passed the 50 percent milestone review, and 

shipbuilders are now primarily working on the design activities that occur 

when the zone is from 50 to 90 percent complete. As shown in table 4, the 

second half of zone product modeling contains more detailed design tasks; 

in addition to completing all interfaces, detailed system arrangements, and 

pipe and cable routing, the shipbuilders must finalize and incorporate all 

outstanding data from the key systems. When the zone is 90 percent 

complete it is considered essentially finished with detail design—all prior 

review actions must have been incorporated into the design and the zone 

must be completely outfitted and considered ready for production. 

Page 26 GAO-08-804 Defense Acquisitions
Table 4: Design Activities at Stages of Zone Progress 

Percentage

complete 

Required design activities 

50 percent Major arrangements, primary structure, major distributive systems

• Passageways have been defined 

• Foundational design is complete 

• Major arrangements are defined 

70 percent Remaining distributive systems 

• Distributive systems are routed

• Large-size pipe work and cableways are identified and 

modeled 

• Hull items are modeled 

• Removal routes are known 

• Penetration requirements for system interfaces are updated

90 percent Essentially complete model content 

• Any remaining distributive systems are fully completed 

• Design zone is completely outfitted 

• One hundred percent of all critical system information is 

delivered

• All interfaces are defined 

• Formal handoff for final quality assurance check before 

production 

Source: Navy and shipbuilder data. 

The shipbuilders have had difficulty completing these tasks. In some 

cases, they did not anticipate the substantial amount of work required 

after 70 percent of the zone was complete. As shown in figure 9, since 

starting zone design in August 2007, 70 fewer zones than initially planned 

had passed the 90 percent review by March 2008.

Page 27 GAO-08-804 Defense Acquisitions
Figure 9: Zone Milestone Review Progress (as of March 2008) 

Number of zones complete

Source: GAO analysis of shipbuilder and Navy data.

0

20 40 60 80 100

90% Review

70% Review

50% Review

Actual reviews complete

Remaining reviews

Original plan

Despite revising the design schedule, the shipbuilders still have a 

significant amount of design work to complete in a short amount of time. 

The shipbuilders now aim to complete product modeling in 84 additional 

design zones by October 2008 to meet the Navy’s current schedule.13 This 

could be a difficult goal to meet, since the shipbuilders already delayed the 

same tasks for most design zones by an average of more than 4 months 

and now have a compressed amount of time in which to complete the final 

tasks needed in order to meet the target dates for production.

The Navy is required to deliver technical information to the shipbuilder, 

including cooling and power needs, space and weight requirements, and 

electrical interface data of various technology-dependent systems. Without 

this information, the shipbuilder cannot complete the design of the ship. 

Because key systems are in development at the same time as the 

shipbuilders are working on the detail design, the technical information 

needed for design has not been available when needed and the design 

schedule may continue to slip if there are delays in the delivery of 

Key System Delays Could 

Impede Final Design Phases 

 13 As of May 2, 2008, the Navy had completed 16 out of the 100 design zones.

Page 28 GAO-08-804 Defense Acquisitions
technical information. Since some of the ship’s key systems were still 

immature when detail design began, much specific technical information 

was not yet known and only general parameters, such as space and weight 

requirements, could be established. In order to meet the overall ship 

schedule, the Navy developed a system of incremental “drops” of 

technology information, in which the shipbuilders and contractors 

exchange data requirements of increasing complexity at specific times to 

support design development. However, the development schedule for 

some key systems has already slipped, resulting in late drops of technical 

information to the shipbuilders and delays to the design schedule. For 

example, most design zones have been affected by missing interface data

for cables that are attached to key systems. Further delays in completing 

tests for critical systems, such as the dual band radar, could continue to 

delay the delivery of technical information about these systems to the 

shipbuilders. If delays occur, the shipbuilders may not be able to complete

the design zones as planned. 

Some of DDG 1000’s key systems, such as the integrated power system 

and dual band radar have not completed testing. Problems discovered in 

testing may lead to redesign, which could result in changes to sections of 

the ship. For example, testing using models revealed weaknesses in the 

ship’s hull form in extreme sea conditions. According to Navy officials, 

this led to design changes with additional stiffeners added to the ship for 

increased stability. In addition, since the Navy has not defined the 

electronic warfare system, its final interfaces with the ship are not yet 

known. While the shipbuilders have space reserved for the system, its 

specifications may change once its physical characteristics are defined. As 

the technologies continue to mature, these changes and subsequent delays

could continue. 

If the shipbuilders cannot achieve their design goals according to plan, the

program may experience the same design-related cost growth that has 

been common in other shipbuilding programs.14 Programs that did design 

work concurrently with construction were later forced to conduct work 

out of sequence, devote additional labor hours responding to design 

changes, or perform rework at the shipyard. For example, CVN 77, the 

final aircraft carrier of the Nimitz class, required concurrent design, 

Design Maturity Is Essential to 

Achieving Program’s Cost 

Goals 

 14 See GAO, Defense Acquisitions: Improved Management Practices Could Help Minimize 

Cost Growth in Navy Shipbuilding Programs, GAO-05-183 (Washington, D.C.: Feb. 28, 

2005) and Defense Acquisitions: Realistic Business Cases Needed to Execute Navy

Shipbuilding Programs, GAO-07-943T (Washington, D.C.: July 24, 2007). 

Page 29 GAO-08-804 Defense Acquisitions
planning, and production activities. Additional labor hours were spent 

responding to design changes, which ultimately affected cost and 

schedule. Similarly, when construction of DDG 91 and DDG 92 began, 

critical technologies were not mature and significant details of the design 

had not been captured. As a result, workers were required to make 

significant structural changes to 26 of the ship’s 90 design zones. In 

contrast, the DDG 1000 program is planning to essentially complete detail

design before beginning construction, but faces much work ahead to 

achieve this goal. Moreover, development of key systems such as the dual

band radar and integrated power system will continue well into

construction, creating the risk of costly design changes later. 

Although the Navy and the shipbuilders are attempting to reduce the risks 

associated with lead ship construction, considerable uncertainty remains. 

Both shipyards are preparing for DDG 1000 construction through facility 

enhancements and production improvements that they believe will 

increase efficiency. In order to balance the risk associated with 

constructing the lead ships, the shipyards are building test units designed 

by each other’s yard. While these efforts will certainly build confidence, 

executing the plan will be challenging. In order to deliver DDG 1000 with 

its promised capabilities and within planned costs, the shipbuilders need 

to successfully execute the optimum construction sequence—which 

includes the right mix of facilities, workforce, and manufacturing 

capability. Continued labor instability and potential problems 

manufacturing the deckhouse could lead to increases in the amount of 

work involved in lead ship construction. 

In order to balance the risk associated with constructing the lead ships, 

the Navy and the shipbuilders are taking steps to prepare for construction. 

Investments in upgraded facilities, production pilots, and new design 

features are expected to make DDG 1000 easier to construct than previous 

ships. 

Both shipbuilders have invested in new facilities that the companies 

believe will improve efficiency during DDG 1000 construction. At 

Northrop Grumman Shipbuilding, many of the shipyard’s facilities were 

damaged or destroyed by Hurricane Katrina and ships under construction 

in the yard and labor productivity were affected, including construction of 

the DDG 51 class (see fig. 10). While estimates indicate that performance 

has not yet returned to pre-Katrina levels for all DDG 51s currently under 

Despite Planned 

Improvements,

Shipyard Facility,

Labor, and 

Manufacturing Issues 

Could Affect 

Construction of the 

Lead Ships 

Shipbuilders Expect 

Investments in Facilities 

and New Design Features 

to Improve Efficiency 

during Construction of 

DDG 1000 

Page 30 GAO-08-804 Defense Acquisitions
construction, the shipbuilder believes that reductions in labor hours will 

be achieved with construction of its final DDG 51-class ship (see fig. 10).15

Figure 10: Northrop Grumman Shipbuilding Productivity Constructing DDG 51

Class (as of January 2008) 

Source: Navy data. 

91 93 95 97 98 100 103 105 107 110

Labor hours

DDG 51 class

Hurricane Katrina

Estimated

Northrop Grumman Shipbuilding

Note: Actual labor hours are not computed because data may be proprietary. 

According to Navy officials, the shipbuilder is taking advantage of 

opportunities to improve its facilities as it rebuilds and repairs the 

shipyard. Expansion of the facility where the shipbuilder manufactures 

steel panels and other upgrades is underway. The shipbuilder expects to 

first use these facilities to construct a DDG 1000 test unit in June 2008. 

At Bath Iron Works, a new facility known as the Ultra Hall and a new 

transportation process will allow the shipbuilder to assemble larger 

manufacturing units than its prior processes. The facility was finished in 

February 2008, and the shipbuilder believes that efficiencies will be 

 15 According to the shipbuilder, DDG 51-class ships currently under construction include 

103, 105, 107, and 110.

Page 31 GAO-08-804 Defense Acquisitions
achieved on construction of its last three DDG 51-class ships. These ships 

are expected to be erected from just 11 units compared with the 43 units 

that were erected to build the first DDG 51. Bath Iron Works plans to erect 

DDG 1000 from 9 units—2 fewer units than the shipbuilder’s final DDG 51 

ship—which is significantly smaller than DDG 1000. 

The Navy and the shipbuilders have recognized that building DDG 1000 

using a design shared between shipbuilders carries some risk, and initiated 

measures to build confidence in preparation for ship construction. The 

shipbuilders will construct units to test production processes and 

demonstrate capability to build the other shipyard’s design. The test 

units—called advanced machinery blocks—are intended to demonstrate 

detail design and production processes, material costs, and craft labor 

actual costs. While these demonstrations are important tests of DDG 

1000’s build strategy, the shipbuilders are not scheduled to complete all 

units until November and December 2008, after they plan to start lead ship

construction. 

In addition, the shipbuilders and the Navy expect a number of new design

features will improve the producibility of DDG 1000 compared to that of 

previous ships built: 

• Increased rafted machinery. Machinery will be assembled into a 

single module (raft) and the raft will be installed on board the ship, 

instead of attaching individual pieces of machinery directly inside the 

ship. This allows pre-outfitting and test and supports more efficient 

installation; a 9,500 labor hour reduction is expected. 

• Increased deck height. Three-meter deck height allows for less 

congested outfitting with straighter pipe runs and fewer holes for 

distributed systems, as well as an easier prefabrication process. 

• Bundled distributed systems. Use of cableways allows work to be 

done in the shops instead of on board the ship. In conjunction with 

increased deck height, the bundling reduces interferences with ship 

structure; a 46,000 labor hour reduction is expected. 

Page 32 GAO-08-804 Defense Acquisitions
While capital investments and new design features may result in improved 

construction efficiency, achieving the full benefit of shipyard 

improvements will depend on successful execution of the optimal 

construction sequence, which must be supported by facilities that can 

manage construction capacity and new manufacturing methods. Labor 

instability at the shipyards and uncertainties associated with 

manufacturing the new composite deckhouse may affect execution of an 

optimum construction sequence. 

Shipbuilders emphasize that an experienced and stable workforce leads to

better quality, higher productivity, and ultimately lower production costs. 

However, if current workforce trends continue, cost and schedule targets 

for the construction of DDG 1000 may be affected. 

Shipyard Labor Instability 

and Difficulty in 

Manufacturing the 

Composite Deckhouse 

Could Disrupt the Ship’s

Optimum Construction 

Sequence 

Labor Instability

Bath Iron Works is a smaller yard, highly dependent on the DDG 51 class. 

Therefore, the company has less flexibility to absorb workload shifts 

before needing to initiate layoffs. A number of its most experienced 

workers are nearing retirement and, thus, if laid off would be less likely to 

return to the shipyard when business conditions improve. 

Northrop Grumman Shipbuilding has made progress in recovering from 

the effects of Hurricane Katrina, but the shipyard continues to struggle 

with worker attendance and attrition rates—resulting in a less 

experienced and less efficient workforce. Trends in attendance and 

attrition at the Northrop Grumman shipyard have moved in a positive 

direction; average attendance is up from 34 to 36 hours per week and

average monthly attrition rate has improved from 1.7 to 1.0 since 2006. 

Nevertheless, the workforce is still working at less than 40 hours a week 

on average and the shipbuilder continues to compete for critical craft 

labor with rebuilding activities in the region.16 Less experienced workers 

require more time to complete tasks with additional labor hours spent on 

rework. If workforce instability continues, DDG 1000 construction 

performance will likely be affected, ultimately leading to higher labor 

hours and increased costs. 

Furthermore, Northrop Grumman Shipbuilding may not have enough

workers to meet its demand. Including DDG 1000, the shipbuilder will 

 16 According to the shipbuilder, the composite facility—located in Gulfport, Mississippi—

can compete more effectively in the area economy for workers because it is airconditioned, providing a favorable environment. 

Page 33 GAO-08-804 Defense Acquisitions
have at least nine hulls (from five different programs) in its shipyard when 

construction of DDG 1001 is scheduled to begin in September 2009. The 

choices the shipbuilder will have to make to balance its workload could

have negative affects on DDG 1000 construction. In order to manage its 

construction schedule, Northrop Grumman may choose to make greater 

use of overtime hours, though in the past, programs that have made 

significant use of overtime faced additional cost increases because 

overtime rates are higher than normal hourly wages. The shipbuilder could 

also decide to outsource work in order to meet demand. Last fall, the 

shipbuilder (with approval from the Navy) moved construction of portions 

of the LHA 6 amphibious assault ship from Pascagoula to Northrop 

Grumman Newport News, illustrating a challenge to managing existing 

work in the yard. 

The DDG 1000 composite deckhouse design requires an expanded 

manufacturing capacity and a new manufacturing method that is not yet 

fully mature. While the Gulfport facility has manufactured composite for 

several Navy ship classes, the combination of materials that will be used 

on DDG 1000 is unique.17 Moreover, the shipbuilder has never built a 

composite structure to the scale of the deckhouse before. Finalizing 

deckhouse manufacturing and assembly processes and ensuring that 

rigorous quality controls are in place are essential to constructing and 

delivering the deckhouse as planned.

Composite Deckhouse

Manufacturing 

The Gulfport facility was severely affected by Hurricane Katrina and 

repairs have been extensive. In addition, facility upgrades are necessary to

meet DDG 1000 demand. Because of the size of the deckhouse, a large new

bay is needed for assembly. Facility and machinery upgrades necessary to 

construct and assemble the deckhouse are not all scheduled to be 

complete until March 2010—over a year after the start of construction of 

the first deckhouse. Northrop Grumman Shipbuilding expects to complete 

efforts by the time the upgrades are needed in the deckhouse construction 

schedule. However, if difficulties with composite manufacturing occur, the 

deckhouses may not be delivered to the shipyards on time, disrupting the 

construction sequence of the ships. 

 17 The facility has previously manufactured the hulls of decommissioned Osprey-class

coastal mine hunters and the mast for a Spruance-class destroyer, and is currently 

manufacturing the masts for the San Antonio-class amphibious ships (LPD 17). 

Page 34 GAO-08-804 Defense Acquisitions
Northrop Grumman Shipbuilding has yet to finalize deckhouse 

manufacturing and assembly processes. Research and development efforts 

were undertaken to assess the feasibility of using composite material in 

the deckhouse. A number of test articles were built, including a section of 

the deckhouse that was full scale and one face (side) of the deckhouse 

that represented the most complex panel. Development efforts continue as 

the shipbuilder has been changing the manufacturing processes for 

deckhouse production and manufacturing test articles to validate them. 

These include 

• changes to the formula of resin that binds the composite material to 

improve flow, 

• reduction in panel thickness to meet weight specifications, and 

• determination of processes to join composite panels together and join 

them with the steel foundation of the deckhouse.18

Process changes are being validated through production and inspection of

a series of test units, culminating with the construction test, and 

inspection of a large-scale prototype. According to the shipbuilder, this 

prototype is being manufactured to the same thickness and other 

specifications of the deckhouse. The Navy will not have final validation of 

the manufacturing processes for deckhouse construction until after 

construction, inspection, and shock testing of the large-scale prototype. 

However, test and inspection activities are not scheduled for completion 

until after the deckhouse production readiness review in September 2008.

Problems discovered during testing and inspection may require additional 

changes to manufacturing methods. Further, the shipbuilder has not 

finalized the quality assurance standards for production of composite 

panels manufactured for DDG 1000. The shipbuilder is adapting the quality 

assurance processes from those established for the manufacturing and 

assembling of composite masts for the San Antonio-class ships. However, 

since the composite materials used differ, the shipbuilder may need to

develop alternative tests or inspection methods to ensure that quality 

standards are rigorous enough for DDG 1000.19 For example, the 

shipbuilder recently traced apparent panel defects back to errors in 

 18 The method for joining composite to steel is particularly important. A joint that uses

fasteners only carries risk because properties of the carbon fiber and fasteners may lead to

corrosion and the fasteners are expensive. 

19 While both are composite, the DDG 1000 deckhouse contains carbon fiber instead of

fabric and a core of balsa wood throughout instead of foam and other materials. 

Page 35 GAO-08-804 Defense Acquisitions
calibrating ultrasonic testing equipment, rather than the panels 

themselves. Results from testing the large-scale prototype will provide the 

shipbuilder a final opportunity to refine its quality assurance process prior 

to actually starting to manufacture panels for the DDG 1000 deckhouse. 

The deckhouse represents the Navy’s first experience with composite 

material at this large of a scale, and the Navy’s quality assurance 

procedures are still being developed. The Supervisor of Shipbuilding—the 

Navy’s technical oversight located at the shipyard—recently hired 

additional staff with composite experience, and quality assurance training

has just gotten underway. 

The Navy recognizes the challenges of deckhouse manufacturing and the 

importance of the deckhouse to achieving overall ship construction. 

Importantly, the contractor is able to earn a special incentive fee for 

deckhouse construction and delivery, but the criteria and metrics for 

awarding the fee were not included in the contract and have yet to be

established.

Costs of the DDG 1000 ships are likely to exceed the Navy’s fiscal year 

2009 budget. In particular, the total cost to deliver a fully operational ship 

has not been fully recognized or funded. There is little margin in the 

budget to fund any cost increases that could occur during construction of 

the lead ships. However, cost growth during lead ship construction 

appears likely given technology, design, and construction risks. 

Independent estimates are higher than the Navy’s budget. The Navy does 

not have adequate funding reserves for these contingencies. Funding 

problems will not be known until well after the shipyards begin 

construction of the lead ships. This is particularly true under the 

restructured program that has moved key events later in the schedule. 

However, the Navy has already requested funding for the third ship in this 

fiscal year, with plans to compete and award a contract as early as January 

2009, including options to build the remaining four ships. At that time, the

Navy will not have enough data on actual lead ship construction 

performance to confidently price the costs of the follow-on ships. By 

negotiating prices for the follow-on ships prior to understanding lead ship 

construction performance, the Navy risks cost growth that will require 

offsets in the budget in future fiscal years. With the program’s production 

decision milestone scheduled for 2014—after the award of contracts for all 

of the follow-on ships—decision makers will miss an important 

opportunity to reevaluate whether DDG 1000 still meets the Navy’s needs.

Actual Costs of Ships 

Will Likely Exceed 

Budget 

Page 36 GAO-08-804 Defense Acquisitions
Based on the contracted costs for construction of the lead ships, the 

remaining budget is not sufficient to pay for cost growth that will likely 

occur. The Navy estimates a total shipbuilding budget of $6.3 billion, 

including almost $2.4 billion for the ships’ combat systems, $2.6 billion for 

building the lead ships, $910 million for detail design, $216 million for 

other costs (including acquisition support), and $258 million for change 

orders—that is, funding to compensate for unknowns during design and 

construction. The Navy already recognizes that there is no additional 

funding in the budget to pay for any unanticipated costs. 

Construction of the lead ships will likely be challenging and the risk of 

cost growth is high. If key systems are delivered late or do not function as

planned, additional labor hours will be needed to work around missing 

systems or will be spent reworking defective components. Further, the 

shipbuilders may have difficulties manufacturing unique ship components. 

For example, if composite manufacturing for the deckhouse takes longer 

than expected, ship construction could be delayed and costs associated 

with manufacturing will likely rise. Added to this are the challenges of 

integrating sections of the ship built in separate shipyards. Since the Navy

is responsible for the delivery of government-furnished equipment, the 

Navy will bear the costs if there are schedule delays that affect another 

contractor. However, these problems will not surface until well after the 

shipyards have begun construction of the lead ships. 

Our prior work has shown that cost growth for recent lead ships has been

on the order of 27 percent—partly because the total effort needed to build 

new designs and incorporate new technologies is not yet understood. With 

ships as expensive as DDG 1000, even a small percentage of cost growth 

could lead to the need for hundreds of millions of dollars in additional 

funding. 

As of June 2008, the Navy has approximately $363 million in unobligated

funds to cover its outstanding costs and manage any cost growth. Even 

without cost growth, this appears inadequate to fund work necessary to 

complete the two lead ships. Table 5 summarizes costs that still need to be 

funded. 

Construction Funds Leave 

Little Margin for Cost 

Growth and Do Not 

Include All Work 

Necessary for Fully 

Operational Ships

Lead Ship Costs Appear Likely 

to Increase Given Risks 

Some Costs Will Not Be 

Budgeted until Later in the 

Construction Phase 

Page 37 GAO-08-804 Defense Acquisitions
Table 5: Unfunded Lead Ship Expenses 

Expense Status Estimated value 

Deferred ship construction

scope 

Work removed from scope of construction contract to stay within construction 

budget. Since this work is necessary to meet ship specifications, the Navy 

plans to perform and fund work sometime after the lead ships are delivered. 

Includes the following: 

• Windows and enclosures for certain sensors

• Special hull treatment 

• Deck coverings that comply with the ship’s radar cross section requirements 

• Secondary hull sheathing 

• Anchor handling system 

$85 million

Contract price adjustments Construction contracts structured to allow price adjustments based on future 

events that were considered largely outside of the shipbuilders’ control. 

Adjustments reduced the shipbuilders’ risk premium allowing a lower initial

contract price. Includes the following: 

• Shifts in future workload 

• Escalations in future rates 

• Changes in the price of raw materials, such as steel and copper 

Not available

Deferred procurement of 

select combat systems 

Purchase and installation are not yet under contract for the following systems : 

• Volume search radar aperture and other components 

• Vertical launch system electronics, cell adapters, uptakes, and junction 

boxes 

• Thirty-four external communications antennas and apertures per ship 

The contractor estimate of these costs is approximately $763 million; the Navy 

estimates approximately $200 million for both ships. 

Deferred activation of 

combat systems 

Funds also not obligated toward light-off and final shipboard testing of the 

combat systems. The Navy estimates as much as $64 million for both ships, 

including about $4 million in costs for activation to be provided to the 

shipbuilders. Contractor and shipbuilder estimates may be higher. 

$264 million to $767 

million

Source: GAO analysis of Navy and contractor data. 

Partly to ensure that there was enough funding available in the budget to 

cover the costs of building the lead ships, the Navy negotiated contracts 

with the shipbuilders that shifted costs or removed planned work from the 

scope of lead ship construction and reduced the risk contingency in the 

shipbuilders’ initial proposals. For example, the Navy stated that it shifted 

in excess of $100 million associated with fabrication of the peripheral 

Page 38 GAO-08-804 Defense Acquisitions
vertical launch system from the scope of ship construction and funded this 

work separately using research and development funding.20

The Navy has not contracted or funded work associated with activating—

and in some cases purchasing and installing—many of the ship’s key 

systems. The Navy plans to leave funding uncommitted in order to create a 

cash reserve to pay for any cost increases that may occur during 

construction of the lead ships. Officials stated that by not committing all 

available funding, the Navy will be able to more quickly divert resources if 

problems occur during construction—thus avoiding disruptions to 

construction while it obtains additional funding. Even before ship 

construction is under way, the Navy does not have adequate reserves to 

pay for work that has been deferred, is not under contract, or is only 

partially funded. The Navy has $363 million in funding remaining for the 

two lead ships. However, the Navy’s known obligations for the lead ships 

range from $349 million to $852 million. The main discrepancy is the 

current estimated cost of the combat systems. The Navy has estimated the 

cost of the combat system to be around $200 million, while the 

contractor’s estimate is over $760 million. If the agreed-on cost

approaches the contractor’s estimate, the Navy will not have enough in its 

remaining funds to cover the cost. To the extent that the lead ships 

experience cost growth beyond what is already known, more funding will 

be needed to produce operational ships. Funds could be provided through 

additional funding to the ships’ budget line or, once the ship is initially 

delivered, using outfitting and post-delivery funding. After delivery, the 

Navy could also use other types of funds such as support equipment and 

materials funding that are accounted for separately—outside of the ship’s 

end cost.21

 20 By shifting these costs the Navy stated that it could use research, development, test, and 

evaluation (RDT&E) funding instead of procurement funding. However, this may lead to 

increases in the RDT&E budget. 

21 This is known as Other Procurement, Navy. 

Page 39 GAO-08-804 Defense Acquisitions
Cost uncertainty is high for new classes of ships—including early followons.22 Cost estimates become more certain only as actual costs begin to 

replace earlier estimates. While the budgets for DDG 1000 ships benefit 

from a better understanding of class design, lengthy ship construction 

timelines have led the Navy to request authorization for follow-on ships 

without sufficient understanding to provide confidence in the lead ships’

true cost. 

Estimate for the Third Ship 

Will Not Reflect 

Knowledge Gained from 

Construction of the Lead 

Ships 

Since the lead ships are not yet under construction, the Navy derives the 

budget for construction of the follow-on ships from cost estimates of the 

two lead ships, not actual costs. The Navy initially developed these 

estimates in 2005 in support of the program’s Milestone B decision,23

updating its current budget submissions to account for inflation changes 

and residual effects of Hurricane Katrina. The Navy based its construction 

estimate largely on the experiences of the DDG 51 class—the most closely 

related ship class, adjusting these costs to account for systems unique to 

DDG 1000 construction and adding a premium for building the lead ships.24

Independent cost analysts within DOD estimate that another $878 million 

will be needed to build the lead ships. The cost of follow-on ship 

construction is based on the lead ship estimate adjusted downward to 

account for assumed efficiency gains through building each successive 

ship at the shipyard. As a result, achieving the budget for the follow-on 

ships depends on achieving lead ship costs—which appears unlikely. 

Navy analyses indicate the potential for cost growth on follow-on ships. 

The Navy conducted risk and uncertainty analyses to measure the 

probability of cost growth and established a 50 percent confidence level

for the budgets of the follow-on ships, recognizing that there is only a 50 

percent chance that these ships will achieve their estimated costs. 

Independent cost analysts within DOD also estimate higher ship 

construction costs. According to this estimate, an additional $2.3 billion in 

total construction costs across all five follow-on ships may be needed. 

 22 Recently, the Navy discussed canceling the remaining five ships of the class with 

members of the Congress.

23 A Milestone B decision represents DOD’s commitment to design and develop a system. 

The Milestone B estimate was also updated to reflect the decision to procure two lead

ships. 

24 Cost analysts adjusted the estimate to account for the integrated power system, 

peripheral vertical launch system, and composite deckhouse.

Page 40 GAO-08-804 Defense Acquisitions
The Navy plans to contract for the follow-on ships before little if any

knowledge of actual cost is gained on construction of the lead ships. The 

Navy intends to compete the award for construction of the next five ships 

between Bath Iron Works and Northrop Grumman Shipbuilding, with the 

winning shipyard receiving the larger quantity of ships. Under this 

approach, the Navy would award fixed-price-type contracts for the third 

ship (DDG 1002), with priced options for the construction of the remaining 

four ships. Based on the current schedule, the Navy would award followon ship contracts as early as January 2009. At that time, Bath Iron Works 

will have demonstrated less than 3 months of construction experience and 

Northrop Grumman Shipbuilding’s lead ship will not have even begun 

construction. If the schedule for construction of the lead ships slips 

further into fiscal year 2009 and fiscal year 2010, neither shipyard will have 

demonstrated construction experience prior to contract award. The Navy

will not have production cost trends from either shipbuilder until late 

fiscal year 2009, at the earliest. Consequently, the Navy will have little 

information on both shipyards’ construction performance on which to 

base not only the cost of the third ship, but that of the remaining followons. We have previously reported that negotiating prices for follow-on 

ships prior to gaining knowledge of lead ship construction costs 

contributes to cost growth on follow-on ships.25

Timing of Production 

Decision Milestone Does 

Not Allow for Meaningful 

Oversight of Follow-on 

Ship Costs 

A Milestone C decision review is intended to represent DOD’s commitment 

to producing a system. However, in the DDG 1000 program, this review is 

currently scheduled for 2014 after all ship contracts are awarded and 

follow-on ship construction is well under way (see fig. 11). Thus, it will 

have no decision to consider. 

 25 See GAO-05-183, p. 23. 

Page 41 GAO-08-804 Defense Acquisitions
Figure 11: DDG 1000 Oversight, Ship Contract Award, and Construction Events after Milestone B 

Milestone B Milestone C 

Program review

Ship contract award

Ship start fabrication

2006 2007 2008 2010 2011 2012 2013 2014 2015 2009

Source: Navy data.

In most weapon system programs, a Milestone C decision review occurs in 

advance of awarding contracts to begin production.

26 At this review, the 

Under Secretary of Defense (Acquisition, Technology & Logistics) 

authorizes the program to begin producing an initial quantity of units 

(known as low rate initial production). In the DDG 1000 program, the 

Milestone B decision essentially authorized detail design as well as 

production. While the Navy anticipates an annual program review with 

decision makers within DOD, these reviews do not have the same rigor as 

that associated with a milestone review. Typically, entrance into Milestone 

C requires that programs prove that they have appropriate knowledge to 

begin production, which includes demonstrating that 

• manufacturing processes are under control, 

• software capability is mature, 

• the system is affordable throughout its life cycle, and 

• the system is realistically funded. 

In preparation for the milestone, programs submit documents for well 

over 10 information requirements, including documentation of readiness 

for production and updated independent cost estimates. Such documents 

are intended to help demonstrate that the product (in this case a ship) can 

be produced within cost and according to requirements. As a result of the 

program’s schedule for DDG 1000, decision makers will not have the 

advantage of the knowledge gained through these analyses at the time the 

next five ships are authorized, lessening decision makers’ ability to 

 26 In most shipbuilding programs, authorization for production of the lead ship occurs at

Milestone B.

Page 42 GAO-08-804 Defense Acquisitions
recognize and make any needed adjustments in the remainder of the 

program. Officials from DOD point out that Milestone C for ships is 

normally scheduled after the lead ship passes operational testing. In the 

case of the DDG 1000, the point occurs in fiscal year 2014 after all key 

acquisition commitments for the class will be made. DOD acquisition 

guidance (DOD 5000.2) does not prohibit shipbuilding programs from

holding Milestone C earlier in the production phase. 

The DDG 1000 program has from the outset faced a steep challenge 

framed by demanding mission requirements, stealth requirements, less 

than half the manning levels of predecessor destroyers, and a split 

construction schedule planned around managing the shipbuilders’ 

workload needs. These requirements translated into significant technical 

and design challenges. To meet these multiple and somewhat conflicting 

demands, the Navy conceived a thoughtful acquisition strategy to (1) 

develop key systems, (2) mature the design before starting to build the 

ship, and (3) facilitate advance preparation at the shipyards for 

construction of the lead ships. As the program progressed, the Navy 

achieved developmental successes and made a number of adroit decisions, 

such as switching to a more mature power system and changing its 

contracting strategy. Several of the ship’s key systems that depended on 

new technologies were successfully demonstrated. The design approach,

while not yet completed, has already produced more design knowledge 

than on the LPD 17 and LCS-class ships. Several construction innovations

have been sponsored at each of the shipyards. 

Conclusions 

Yet at this point—the first year of a 6-year construction schedule for lead

ships—the Navy may have exhausted its options for solving DDG 1000’s 

potential problems without adding time and money. Recently, the Navy 

deferred some key efforts, such as demonstrating the combat systems, to 

later in the construction schedule. While the rescheduling provides 

benefits with regard to testing the ship systems separately from the 

mission systems, it was also a necessity given that the power generation

system, the dual band radar, and the ship’s software are each taking longer 

than planned. While these may be pragmatic decisions to solve problems 

while minimizing schedule delays, they are also compromises to original 

plans that called for systems to be tested before installation. It is not the 

problems themselves that are of concern, as they are to be expected. 

Rather, the fact that these compromises are already being made before 

construction has begun suggests that there is very little margin for solving 

future problems. Given DDG 1000’s complexity and unique features, along 

Page 43 GAO-08-804 Defense Acquisitions
with the design work, testing, and actual construction experience yet to 

come, the discovery of future problems is likely. 

Similarly, the $6.3 billion the Navy has budgeted for the two lead ships 

provides little margin for error and is likely to be inadequate to cover the 

cost of the first two ships. Cost growth during construction for lead ships 

has historically been about 27 percent, and an independent estimate 

already projects the cost of the two lead ships to be $878 million higher 

than the Navy’s budget. Moreover, the Navy’s redefinition of ship delivery, 

including the deferral of combat system work until later in the 

construction schedule, will delay realization of actual costs and may make 

it difficult to reconcile the $6.3 billion budget with the actual cost of the 

ships. 

The risks associated with the lead DDG 1000 ships should not carry over 

to the follow-on ships. While a legitimate debate can be had on how much 

knowledge should be gained on lead ships before contracting for follow-on 

ships, in our view, it is not debatable that the current plan to contract for 

the five remaining DDG 1000s in January 2009 is too soon.27 Very little 

construction experience will have been gained at that point to inform the 

cost estimates for the follow-on ships. At the very least, a review by the 

Office of the Secretary of Defense, with the same quality of information 

normally available at a Milestone C decision, is warranted before the 

commitment and the pricing are set for follow-on ships. 

We recommend that the Secretary of Defense take the following three 

actions: 

• Require the Navy to complete product modeling of the ship’s design to 

the level currently planned before the start of construction. 

Recommendations for 

Executive Action 

• Defer contract award for follow-on ships until the Navy has completed 

a substantial amount of construction on the lead ships. 

• Hold the Milestone C review in advance of awarding a contract for the 

third ship. 

 27 Recently, the Navy discussed canceling the remaining five ships of the class with 

members of the Congress.

Page 44 GAO-08-804 Defense Acquisitions
To provide insight into the potential for cost growth as the program 

progresses, the Congress may want to consider requiring the Navy to 

report on (1) the current production and testing schedule for systems 

necessary to meet ship light-off, ship delivery, and combat system 

activation; (2) any changes to this schedule, particularly with the dual 

band radar and the total ship computing environment; and (3) the cost 

impact of these changes if the schedule is maintained and if the schedule

is stretched out. 

Regarding our recommendation to require the Navy to complete product 

modeling of the ship’s design to the level currently planned before the 

start of ship construction, DOD reiterated that the plan is to be 

approximately 85 percent complete and noted that this is a higher 

percentage of design completion than any other surface warship. We agree 

that the Navy’s plan is good, but a plan does not mean actual attainment. 

The Department should be prepared to react should the program’s actual 

performance lag behind planned performance. 

Matter for 

Congressional 

Consideration 

Agency Comments 

and Our Evaluation 

Regarding our recommendation that the Department hold the Milestone C 

review in advance of awarding a contract for the third ship, DOD stated 

that a review by the Defense Acquisition Executive is necessary prior to 

awarding a contract for construction of the third ship, but does not agree 

that a Milestone C review provides any additional benefit for the program. 

According to DOD, the Milestone C review will only occur after the lead 

ships complete operational testing and only if additional ships above the 

current seven ships are added. While DOD acquisition policy provides 

some flexibility for shipbuilding programs, the policy applying to most 

major defense acquisitions calls for the Milestone C review to authorize 

production of low rate initial quantities. Annual program reviews will 

certainly enhance program knowledge, but they do not provide the 

consistent framework and documentation that a Milestone C review would 

provide, such as an updated independent cost estimate. Nonetheless, it is 

the quality of the review rather than its title that is important. Thus, the 

review that precedes awarding the contract for the third ship should 

provide the framework and documentation of the caliber that a milestone 

carries. 

DOD did not agree with our recommendation to defer contract award for 

follow-on ships until a substantial amount of construction on the lead

ships has been completed. DOD stated that delaying contract award and 

subsequent procurement of the third and follow-on ships will impact 

warfighting capability gaps, cost, and the shipbuilding industrial base. We 

Page 45 GAO-08-804 Defense Acquisitions
note that the Navy and DOD are currently considering canceling the third

and follow-on ships. This notwithstanding, we believe that the risks of 

prematurely awarding follow-on ship contracts are considerably higher 

than any potential cost increase that could occur as a result of delaying

funding for a follow-on ship. Industrial base effects have likely been offset 

by the later-than-planned construction start of the lead ships. Moreover, 

the Navy does not plan to start construction of the third ship before fiscal

year 2010 and advanced procurement for its long-lead items has already 

been funded. The program is moving toward lead ship construction with 

significant uncertainties. In the past, it has proven costly to award 

contracts for construction of follow-on ships with little or no actual 

performance data on the lead ship—especially on a ship that includes so

many “firsts” in shipbuilding. With such limited construction planned by

contract award, the shipbuilders cannot incorporate lessons learned from 

the first ship to inform—and reduce the risk premium in—their estimates 

of follow-on ship costs. 

DOD’s written comments are reprinted in appendix II. The Department 

also provided technical comments, which were incorporated into the 

report as appropriate. 

We are sending copies of this report to the Secretary of Defense, the 

Secretary of the Navy, and interested congressional committees. Copies 

will also be made available to others on request. In addition, the report will 

be available at no charge on GAO’s Web site at http://www.gao.gov. 

If you or your staff have any questions concerning this report, please 

contact me at (202) 512-4841 or francisp@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 IV. 

Paul L. Francis 

Director 

Acquisition and Sourcing Management 

Page 46 GAO-08-804 Defense Acquisitions
Appendix I: Objectives, Scope, and Appendix I: Objectives, Scope, and Methodology 

Methodology 

This report assesses 

1. the Navy’s ability to deliver key systems when needed to support lead 

ship construction and whether these systems will work as intended, 

2. the level of design maturity and the obstacles to completing the ship’s 

design as planned, 

3. the shipyards’ readiness to build DDG 1000, and

4. the challenges of building the ships (lead and follow-ons) within 

budget. 

To address the first objective, we reviewed technology development plans, 

scope and schedules and compared these against similar documentation 

for 2005 when the Navy held its Critical Design Review and milestone 

review. We also analyzed test plans and schedules as well as test reports to 

determine progress in demonstrating key systems. 

We also assessed the degree of testing and hardware and software 

integration planned prior to installation and identified areas of testing and

installation concurrency. We analyzed, among other documents, DDG 1000 

Cost Analysis Requirements Description, DDG 1000 Program Review 

briefings, technology test plans and reports, software development 

schedules, critical design review findings, risk matrixes, Defense Contract 

Management Agency reports, and contractor cost performance reports for 

key technologies. To supplement our analysis, we visited contractors and 

test sites where the ship’s major technologies are being developed and 

tested. 

To address the second objective, we reviewed the Navy’s plans and 

guidelines for design management and completion, evaluated the design 

progress and schedule, and assessed impacts of the product model on that 

progress, including schedule delinquencies and key dates. We applied 

established earned value management techniques to data captured in the 

shipbuilders’ cost performance reports in order to evaluate design 

performance to date. Further, we analyzed variance reports that 

accompany the cost performance reports in order to understand the 

drivers of schedule delays. We compared DDG 1000’s design process with 

our knowledge-based acquisition methodology and past work on 

shipbuilding programs. We analyzed and compared DDG 1000 design 

metrics with the experience of previous shipbuilding programs, 

particularly the DDG 51 class and the Virginia-class submarine. In 

conducting our analysis, we examined key documents, including the 

Page 47 GAO-08-804 Defense Acquisitions
Appendix I: Objectives, Scope, and 

Methodology 

Integrated Master Schedule, Configuration Management Plan, and 

Supervisor of Shipbuilding, Conversion and Repair’s reports. 

To address the third objective, we reviewed key shipyard performance 

data. We examined recent cost performance reports for the DDG 51 class 

under construction at both shipyards. We reviewed key indicators of labor 

productivity, including data on Northrop Grumman Shipbuilding’s 

progress in recovering its labor and facilities from the effects of Hurricane 

Katrina. We examined both shipyards’ plans and progress improving 

facilities to meet the schedule and manufacturing capacity required to 

construct DDG 1000. Among other documents, we reviewed facility 

improvement schedules compared with construction schedules, labor 

metrics, shipbuilder cost performance reports, contract documentation, 

and Supervisor of Shipbuilding, Conversion and Repair reports. To 

supplement our analysis we visited both shipyards and toured their 

facilities. 

To address the fourth objective, we examined the Navy’s budget request 

and cost estimates for the ships in the class. We analyzed the Navy’s cost 

estimates by examining the Program Life Cycle Cost Estimate and updates 

to that estimate since the Milestone B decision in 2005. We compared the 

Navy’s cost estimates with estimates from the Department of Defense’s 

independent cost analysts. We assessed the potential for lead ship cost 

growth by analyzing the program’s current budget obligations by budget 

element and contract for each of DDG 1000’s prime contractors. We 

compared total contract estimates of the total cost to complete the ship 

with the program’s total remaining funding. Further, we analyzed the 

shipbuilders’ contracts and the Navy’s business clearance memorandums 

to understand the scope and cost of lead ship construction. We evaluated 

follow-on ship costs by analyzing the program’s acquisition strategy. We

compared DDG 1000’s strategy with DOD acquisition policy and guidance 

and our past work on shipbuilding cost growth. 

In conducting our analysis, we held discussions and attended briefings 

with the shipbuilders and contractors responsible for DDG 1000 

development; as well as officials from the Naval Sea Systems Command, 

including the DDG 1000 Program Office; Program Executive Office, 

Integrated Warfare Systems; Program Executive Office for Ships; Ship 

Design Integration and Engineering Division; Cost Engineering and 

Industrial Analysis Division; Contracts Division; Naval Surface Warfare 

Center, Carderock in Pennsylvania and Maryland; Supervisor of 

Shipbuilding, Conversion and Repair, Gulf Coast; and Supervisor of 

Shipbuilding, Conversion and Repair, Bath. In addition, we interviewed 

Page 48 GAO-08-804 Defense Acquisitions
Appendix I: Objectives, Scope, and 

Methodology 

officials from the Navy’s Commander of Operational Test and Evaluation

Force and DOD’s Cost Analysis Improvement Group; Defense Contract 

Audit Agency in Bath, Maine and Pascagoula, Mississippi; and Defense 

Contract Management Agency in Tewksbury, Massachusetts, and Fort 

Snelling, Minnesota. 

We conducted this performance audit from September 2007 to July 2008 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. 

Page 49 GAO-08-804 Defense Acquisitions
Appendix II: Comments from the Department Appendix II: Comments from the Department of Defense 

of Defense 

Note: Page numbers in 

the draft report may differ 

from those in this report. 

Page 50 GAO-08-804 Defense Acquisitions
Appendix II: Comments from the Department 

of Defense 

Page 51 GAO-08-804 Defense Acquisitions
Appendix II: Comments from the Department 

of Defense 

Page 52 GAO-08-804 Defense Acquisitions
Appendix II: Comments from the Department 

of Defense 

Page 53 GAO-08-804 Defense Acquisitions
Appendix III: Major Events in the Appendix III: Major Events in the Development of DDG 1000 

Development of DDG 1000 

Year Events

1994 • Navy identifies need for a new 21st century surface combatant (SC 21) to provide naval surface fire support. 

1997 • Plans for DD 21 include 32 ships with an average unit cost not to exceed $921million (FY 1996 dollars) and an initial 

operating capability of fiscal year 2008. 

2001 • DD 21 program restructured to emphasize technology development and affordability and renamed DD(X). 

2002 • DD(X) program starts Preliminary Design/Development. 

• Navy completes its review of requirements for future surface combatants and recommends a force structure of 16 

DD(X) each with 2 advanced gun systems, 900 land attack munitions, and 96 missile cells. 

• Navy recognizes the need for an additional $7.6 billion to complete DD(X) technology development, testing, and 

evaluation efforts. 

2004 • Program restructured to include 8 ships, an average unit cost not to exceed $2.6 billion (FY 1996 dollars) and an initial 

operating capability of fiscal year 2013. 

• DD(X) program completes its preliminary design review, initiating system design. 

2005 • Navy approves a quantity of 10 ships, an average unit cost not to exceed $3.1 billion (FY 1996 dollars) and an initial 

operating capability of fiscal year 2014. 

• The Congress prohibits the Navy from a “Winner Take All” competition in Emergency Supplemental Appropriations Act. 

• Milestone B review approves system development and demonstration and approves Navy’s strategy for purchasing dual 

lead ships. 

2006 • Navy outlines its 30-year shipbuilding plan and lists quantity of seven DD(X) destroyers. 

• Navy re-names DD(X) program DDG 1000-class destroyer and confirms that the first ship in the class, DDG 1000, is to 

be named the Zumwalt, in honor of Admiral Elmo R. Zumwalt, the Chief of Naval operations from 1970 to 1974. 

• The Congress authorizes split funding of two lead ships but states that procurement cannot exceed $6.53 billion. 

• Navy awards dual lead detail design contracts to Northrop Grumman Shipbuilding and Bath Iron Works. 

2007 • Navy resequences construction of the first lead ship from Northrop Grumman Shipbuilding to Bath Iron Works. 

2008 • Navy negotiated construction contract modifications with shipbuilders (February 14, 2008).

• DDG 1000 construction start (currently scheduled for October 2008). 

• Contract modification with Raytheon for production of key systems for lead ships (estimated definitization August 2008). 

2009 • Navy plans to compete and award construction contract award for the ship with priced options for fiscal year 2010 

through 2013 ships. 

• DDG 1001 construction start (currently scheduled for September 2009). 

2013 • DDG 1000 initial delivery (April 2013). 

2014 • DDG 1000 final ship delivery. 

• DDG 1001 delivery (May 2014). 

2015 • Initial operating capability (March 2015). 

Source: Navy data. 

Page 54 GAO-08-804 Defense Acquisitions
Appendix IV: 

A

GAO Contact and Staff 

cknowledgments 

Page 55 GAO-08-804

Appendix IV: GAO Contact and Staff 

Acknowledgments 

Paul L. Francis, (202) 512-4841 or francisp@gao.gov

In addition to the contact named above, key contributors to this report 

were Karen Zuckerstein, Assistant Director; Marie P. Ahearn; Erin Carson; 

Raj Chitikila; Diana Moldafsky; and Gwyneth B. Woolwine. 

Defense Acquisitions

GAO Contact 

Acknowledgements 

(120672) 
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