United States General Accounting Office

GAO Report to Congressional Requesters

October 1994 NAVY SHIPS

Lessons of Prior

Programs May Reduce

New Attack Submarine

Cost Increases and

Delays

GAO/NSIAD-95-4

GAO United States

General Accounting Office

Washington, D.C. 20548

National Security and

International Affairs Division

B-257866 

October 20, 1994

The Honorable Edward M. Kennedy

Chairman, Subcommittee on Regional

 Defense and Contingency Forces

Committee on Armed Services

United States Senate

The Honorable John Conyers, Jr.

Chairman, Legislation and National

 Security Subcommittee

Committee on Government Operations

House of Representatives

As you requested, we assessed the Navy’s plans to incorporate lessons

learned from prior submarine programs, particularly the Seawolf SSN-21

program into the design and construction of the NSSN, a new class of

nuclear-powered attack submarine. According to the Navy, the NSSN is to

be smaller, less costly and less capable than the Navy’s Seawolf

submarine; it will also be expected to perform a variety of missions.

Several factors make the NSSN both an excellent opportunity and a

challenge for the Navy to control acquisition costs and to improve the

quality of the design and construction process. These factors are (1) a

reduced antisubmarine warfare threat, which has resulted from the

breakup of the former Soviet Union; (2) the U.S. defense budget, which

has been more tightly constrained each year; and (3) the early stages of the

NSSN acquisition cycle, which allow an agency to apply lessons of past

programs to future programs.

Background Believing that high Seawolf submarine program costs would lead to

inadequate force levels, the Department of Defense (DOD), in October 1991,

established a requirement for a more affordable new attack submarine.

According to the Navy, the NSSN’s estimated displacement weight will be

about 7,100 tons, 2,000 tons less than the Seawolf’s. The NSSN’s missions

include battlegroup support, covert strike warfare, covert intelligence,

special warfare, covert mine warfare, antisubmarine warfare, and

antisurface warfare operating in both open ocean and littoral (coastal)

areas.

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B-257866 

In August 1992, the Defense Acquisition Board authorized the Navy to

initiate concept exploration and definition (milestone 0) studies. A project

office was established to set out the basic design and to develop an

acquisition strategy that included the schedule of detail design and

production. The Navy initially planned for the Board to approve the NSSN

acquisition strategy in August 1993, as part of the milestone I decision to

enter the demonstration and validation phase. However, the milestone I

meeting slipped until January 1994. That meeting resulted in requesting the

Navy to perform additional studies and analyses. These were completed

and submitted to the Board.

On August 1, 1994, the Board approved milestone I, and on August 18,

1994, issued an Acquisition Decision Memorandum. The memorandum

directed the Navy to submit an updated documentation package for the

Board’s approval within 60 days. The package is to include an acquisition

strategy report, reflecting the Navy’s plan to initiate detail design and lead

ship construction at Electric Boat. The Board also directed the Navy to

initiate (1) advanced procurement of the lead ship’s nuclear reactor in

fiscal year 1996 and (2) lead ship construction in fiscal year 1998. Further,

the Board directed the Navy to update the submarine’s combat system

acquisition strategy to reflect “a significant degree of private sector

involvement in planning an open system architecture,” which contains

commercially available hardware and software that meet broad industry

standards.

A September 1993 cost and operational effectiveness analysis prepared by

the Center for Naval Analysis estimated the cost for comparison purposes

of procuring 30 NSSNs and procuring 30 Seawolf submarines at 1 ship per

year. In constant fiscal year 1994 dollars, the procurement cost for the

NSSN was about $45 billion ($1.5 billion each) and for the Seawolf about

$56 billion ($1.9 billion each).

Results in Brief The Navy may be able to avoid some design and construction costs and

schedule delays by applying the following five management lessons from

prior submarine construction programs, which we have distilled from the

reports of our reviews over the past decade: (1) contracting with a single

shipyard to both design and construct the lead submarine, (2) delaying

lead ship construction until the ship’s design is substantially mature,

(3) strengthening the specification development and approval process,

(4) identifying critical components and supply vendors early in the

program, and (5) reducing submarine combat system development risks.

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B-257866 

While the Navy’s project manager has said that he intends to incorporate

these management lessons into the program’s acquisition strategy, the

extent to which they will be applied cannot be assessed until DOD approves

the strategy and makes it public for evaluation.

The Navy has evaluated a number of technical lessons learned from past

submarine construction programs and has approved plans to incorporate

some of them in the NSSN program. The Navy estimates that NSSN

procurement cost savings from these lessons could range from $90 million

to $100 million.

Because of the importance of applying both management and technical

lessons, we believe the formal DOD approved acquisition strategy should

explicitly address how the Navy will avoid repeating the problems of prior

programs.

Applying Management

Lessons May Reduce

Costs and Avoid

Schedule Delays

By incorporating management lessons into the NSSN program, the Navy

may avoid repeating many of the problems that caused Seawolf detail

design and lead ship construction cost increases and schedule delays. In

recognition of Seawolf problems, the NSSN project manager told us he

intends, subject to DOD approval, to incorporate the five management

lessons into the multibillion dollar NSSN program. However, because of

the absence of a DOD approved acquisition strategy, the extent to which the

NSSN acquisition strategy will include these lessons cannot be assessed

now.

Use a Single Shipyard to

Design and Construct the

Lead Submarine

Under the split design/construction strategy used for the Seawolf program,

Tenneco’s Newport News Shipbuilding and Drydock Company was

responsible for the overall design and detail design of the submarine’s

forward end, while General Dynamics’ Electric Boat Division was

responsible for designing the submarine’s aft end and for constructing the

SSN-21 and the SSN-22. The split design approach, with a requirement that

design data be suitable for use at either shipyard, was originally instituted

to instill competition for building 29 SSN-21 class submarines. This

approach, which required additional time and resources as well as a high

degree of coordination between the two shipbuilders, caused design and

construction cost increases and additional time to approve design data

and to resolve design drawing problems.

Page 3 GAO/NSIAD-95-4 Navy Ships
B-257866 

Electric Boat, to construct the SSN-21, still had to convert Newport News

Shipyard’s generic design data into Electric Boat specific work packages

(instructions and materials). According to Seawolf program office

officials, the two shipyards were unwilling to open their operations to one

another. In addition, the Navy’s Seawolf program office occasionally had

to mediate the resolution of design drawing problems between the two

shipyards. Confusion between the two shipyards over design drawing

delivery schedules was one factor that led to late delivery of design

drawings to Electric Boat, the shipbuilder, in 1990 and in the first 6 months

of 1991.

A Seawolf program office official noted that the Seawolf program office

has learned that having one shipbuilder design and construct the

submarine can save time and money. The August NSSN Acquisition

Decision Memorandum shows that one shipyard will design and build the

lead NSSN.

Delay Lead Ship

Construction Until Design

Matures

The high degree of concurrent development and lead ship construction

caused cost increases on Seawolf. The Navy awarded Newport News

Shipbuilding the overall Seawolf detail design contract in April 1987.

Construction of the first Seawolf, the SSN-21, started in October 1989, with

delivery originally scheduled for May 1995.

In some cases, this concurrency required developing and issuing drawings

before system designs were fully mature. Although this approach provided

the shipbuilder with design data earlier, it also caused a higher degree of

design rework and, in some cases, construction rework. For example, the

Navy’s data requirement lists developed during the early phase of Seawolf

design were based, as was the case with prior submarine efforts, on

providing the shipbuilder with engineering drawings as the basis for

performing construction tasks. It was later discovered that because

Seawolf submarines required a significantly greater level of modular

construction and outfitting, new and more detailed sectional construction

drawings were needed to initiate modular construction tasks. As a result,

in June 1990, 8 months after SSN-21 construction started and about 

37 months after detail design started, the Navy rebaselined and increased

Newport News’ original $303 million detail design contract by $168 million.

The rebaselining was for Newport News to prepare and to provide Electric

Boat with more detail design data and incorporate final submarine

specifications into the detail design.

Page 4 GAO/NSIAD-95-4 Navy Ships
B-257866 

A September 1993 NSSN cost and operational effectiveness analysis found

that an additional investment of between $105 million and $175 million in

research and development funds to review the NSSN’s specifications and

to complete design before lead ship construction contract award could

reduce procurement costs by $141 million to $173 million per ship.

Starting lead NSSN ship construction with a more mature detail design

could result in a more cost-effective and efficient approach than that used

under the Seawolf submarine program. In June 1994, the NSSN project

manager stated that the Navy plans to begin lead NSSN construction when

the detail design matures. However, lead ship construction will still begin

in fiscal year 1998, despite the 1-year slip of milestone I. Under the current

NSSN schedule, detail design is scheduled to begin in July 1995, with lead

ship construction beginning about 27 months later in October 1997.

However, we question whether the detail design will be mature enough to

avoid repeating similar problems the Navy experienced with the Seawolf

program. The Seawolf program experienced design and construction

rework, significant cost increases, and schedule delays, despite a 30-month

interval between starting detail design and lead ship

(SSN-21) construction.

Strengthen Specification

Development and Approval

Process

Deficient government specifications for welding HY-100 strength steel1

have increased SSN-21 construction costs and have delayed the

submarine’s delivery from May 1995 until May 1996. In June 1991, Electric

Boat experienced problems welding this new steel. As a result, Electric

Boat notified the Navy that it had discovered weld cracks where two hull

rings were joined together. Further investigation revealed additional

unacceptable welds on the SSN-21’s pressure hull and on at least 21

government-and contractor-furnished items. By August 1991, all HY-100

welding had been stopped.

The chemical composition of the welding metal, among other things, had

resulted in cracking and unacceptable metal yield strengths and ductility.

Ultimately, however, the welding cracks were traced to deficient

government HY-100 welding specifications. Electric Boat and the Navy

took corrective action; all welding resumed by December 1991. As a result

of this problem, the Navy paid Electric Boat $77.8 million (in then-year

dollars) to fix the cracks. It also caused a 1-year delay in the SSN-21’s

delivery.

1

HY-100, a high-yield steel used to construct the SSN-21’s pressure hull, allows the submarine to

achieve deeper diving depths. Prior to the Seawolf program, a U.S. submarine’s pressure hull was

constructed using primarily HY-80 strength steel.

Page 5 GAO/NSIAD-95-4 Navy Ships
B-257866 

During the determination of defective government specifications, the

Commander, Naval Sea Systems Command, requested an independent

assessment of the system for developing, preparing, and approving

specifications. The assessment, completed in March 1992, showed that

weaknesses in developing and qualifying specifications were caused by a

lack of management priority and oversight, inadequate and untimely

availability of funds, and a shortage of personnel needed to develop and

update specifications. In addition, the assessment showed that only

39 percent of the specification parameters were supported by historical

performance data and less than 5 percent of the parameters were

supported by test data.

The NSSN project manager said he plans to incorporate a review process

that supports developing specifications. In addition, he indicated that the

Navy plans to work with critical NSSN vendors early during design to

coordinate specifications, including revisions, whenever necessary.

Moreover, according to the NSSN project manager, the NSSN, to the

extent possible, will incorporate existing systems and components from

prior submarine programs and off-the-shelf, commercially available

technology. Nevertheless, some existing systems may require varying

degrees of reengineering for installation into the NSSN.

Earlier Identification of

Critical Components and

Supply Vendors

DOD has identified the decline of the submarine industrial base and the

resulting uncertainty surrounding submarine component vendors as key

factors contributing to Seawolf cost and schedule delays.

Early identification of critical components and supply vendors can help

determine whether to buy or manufacture some components in-house and

can help reduce potential procurement problems. For the SSN-21, Electric

Boat had to manufacture certain systems and components that it was

originally planning to buy. This was due either to a lack of qualified

vendors or the cost and schedule risks inherent in using a vendor for

complex components that were under development (i.e., the weapons

storage and handling system). Collectively, the absence of sufficient

vendors contributed to Seawolf design and construction cost increases

and schedule delays.

The Navy’s March 1992 assessment showed an apparent incomplete

coordination with industry and inadequate notification to and consultation

with industry regarding major changes in Seawolf specifications as

required by the Naval Sea System Command’s specification process. The

Page 6 GAO/NSIAD-95-4 Navy Ships
B-257866 

assessment also showed that vendors were generally dissatisfied with

government feedback to their comments during specification development

and modification.

According to the NSSN project manager, Electric Boat will identify and

obtain critical suppliers earlier than was done on the Seawolf program. To

improve coordination with vendors and to identify issues that can affect

the NSSN’s design and construction, Electric Boat has assembled a team

of 100 designers, construction trade people, and key vendors. However,

the commitment to and the success of this effort will not be assessable

until a later phase of design.

Reduce Combat System

Development Risks

The Navy experienced problems developing the AN/BSY-1 combat system2

 for the Improved SSN-688 class submarine and the AN/BSY-2 combat

system for the Seawolf submarine. Because the time to correct AN/BSY-1

combat system design and development problems was insufficient, the

AN/BSY-1 became the major factor in delays to the Improved SSN-688

construction program. These problems resulted in an additional

$82 million in contract costs for five Improved SSN-688s. In addition, the

first nine Improved SSN-688s equipped with AN/BSY-1 systems were

delivered to the Navy an average of 17 months late.

The AN/BSY-2 combat system scheduled for installation on the SSN-21

experienced cost increases and schedule delays. Changes to the system’s

design caused a portion of the submarine to be redesigned at an additional

cost.3

 The Navy originally provided Newport News with general space and

weight information for the system that the shipyard used to begin

designing its portion of the Seawolf. The Navy later provided the shipyard

with more specific information that caused considerable redesign of the

submarine and increased design costs, according to Newport News.

The Navy estimated in August 1994 that system development would cost

$123 million more than the original contract target cost of $1 billion. Our

November 1992 report4

 showed that delivery of the system’s first phase

capabilities (all hardware and the majority of software) had been delayed

from its original November 1993 delivery to between late March and June

1994. Because the HY-100 welding crack problem delayed the submarine’s

2

A submarine combat system detects, classifies, localizes, tracks, and destroys enemy targets.

3

Status of SSN-21 Ship Construction Program (GAO/NSIAD-90-163, Apr. 19, 1990).

4

Status of SSN-21 Design and Lead Ship Construction Program (GAO/NSIAD-93-34, Nov. 17, 1992).

Page 7 GAO/NSIAD-95-4 Navy Ships
B-257866 

delivery 1 year, until May 1996, the Navy revised the AN/BSY-2 system’s

first phase delivery to February 1995. According to a February 1994

Defense Acquisition Executive Summary prepared by the Seawolf program

office, maintaining the AN/BSY-2 software development schedule to

support lead ship delivery remains a challenge. The AN/BSY-2 hardware is

complete and ready for delivery to Electric Boat.

To reduce combat system cost, schedule, and technical risks the Navy

encountered developing the systems for the Improved SSN-688

(AN/BSY-1) and Seawolf (AN/BSY-2) class submarines, the NSSN project

manager stated that whenever possible, the NSSN’s combat system will be

developed using what he termed an open systems architecture, which

consists of commercial, off-the-shelf hardware and software. The

Acquisition Decision Memorandum specifies a combat system acquisition

strategy that involves “a significant degree of private sector involvement in

planning an open system architecture.” Nevertheless, some existing

systems may require varying degrees of reengineering for installation into

the NSSN.

Applying Technical

Lessons May Save

Millions of Dollars

The NSSN project office compiled a database that identified about 1,350

primarily technical lessons from prior Navy programs. Electric Boat,

Newport News, and other Navy organizations provided the input for this

database. Personnel transferring into the NSSN project office from earlier

submarine programs also provided some lessons. After consolidating

duplicate lessons, the Navy reduced the database to 954 lessons. The

NSSN project office’s evaluation process is ongoing, and new lessons are

added to the database periodically.

Of these 954 lessons, 290 had been approved for incorporation into the

NSSN design as of May 1994. Examples of approved lessons are

(1) centralizing the ship’s service hydraulic power plant, (2) simplifying

the ship’s deck design, and (3) simplifying the ship’s pipe hangers. These

three lessons are expected to save over $10 million in acquisition costs.

The Navy estimates that NSSN savings from all approved lessons could

range from $90 million to $100 million. However, because individual

lessons’ costs can offset each other, savings must be assessed on a

lesson-by-lesson basis. The potential exists for additional savings because

the project office has not completed its review of almost 600 lessons. (See

table 1 for status of the lessons.)

Page 8 GAO/NSIAD-95-4 Navy Ships
B-257866 

Table 1: Navy’s Disposition of

Technical Lessons Learned as of

April 1994

Status Number of lessons

Approved for incorporation

into NSSN design 290

Deferred until a later stage of development 84

Open until additional 

reviews are completed 504

Rejected for NSSN purposes 76

Total 954

The NSSN’s project manager noted that the Navy plans to incorporate the

290 technical lessons into the submarine’s preliminary design during the

submarine’s demonstration and validation phase.

Recommendation To allow an assessment of how the Navy will avoid a repetition of past

problems, we recommend that the Secretary of Defense ensure that the

formal NSSN acquisition strategy explicitly documents how the Navy is to

address and incorporate the management and technical lessons from prior

submarine programs.

Agency Comments

and Our Evaluation

In commenting on a draft of this report, DOD generally concurred with the

report and indicated that the Navy intended to apply the lessons learned

from the prior programs. However, DOD did not believe it was necessary to

explicitly document in a formal acquisition strategy how the Navy is to

address and incorporate those lessons. DOD stated it was confident the

current process provides adequate emphasis on lessons learned from prior

programs.

After considering DOD’s position, we continue to believe that

implementation of our recommendation is warranted. This is a multibillion

dollar program; the lessons that should have been learned have already

been identified; therefore, it seems that documenting how they are to be

incorporated is merely a completion of the cycle—a way of better assuring

that the Navy avoids a repetition of cost and scheduling difficulties.

Further, we believe such documentation will serve as a valuable tool for

guiding the implementation of the program.

DOD comments are presented in their entirety in appendix I. DOD’s

suggestions for improving the clarity of the report have been incorporated

in the text where appropriate.

Page 9 GAO/NSIAD-95-4 Navy Ships
B-257866 

Scope and

Methodology

To determine the types of experiences the Navy should apply to the NSSN

effort, we reviewed our prior products on the SSN-21, SSN-688, Trident,

the combat systems, and other organizations’ reports on lessons learned.

We held discussions with Navy program officials for the Seawolf program,

the AN/BSY-1 and the AN/BSY-2 combat system programs, and the

SSN-688 and the Trident submarine programs. We held discussions with

the Supervisors of Shipbuilding in Groton, Connecticut, and with Naval

Undersea Warfare Center officials in Newport, Rhode Island. We also held

discussions with Navy officials responsible for planning the NSSN’s

development in Washington, D.C.

We reviewed the NSSN project office’s database of technical lessons

learned experiences or suggestions and reviewed and analyzed Navy

studies and assessments. We obtained, reviewed, and assessed suggestions

provided by Electric Boat, Groton, Connecticut; and Newport News

Shipbuilding, Newport News, Virginia. Electric Boat provided more

detailed information on views on selected lessons learned that should be

applied to the NSSN program, but Newport News Shipbuilding did not

because of other business pressures.

We conducted our review from June 1993 to June 1994 in accordance with

generally accepted government auditing standards.

We are sending copies of this report to the Secretaries of Defense and the

Navy and to congressional oversight committees. We will also make copies

available to others upon request.

Please contact me at (202) 512-4841 if you or your staff have any questions

concerning this report. The major contributors to this report are listed in

appendix II.

Brad Hathaway

Associate Director, Systems Development

 and Production Issues

Page 10 GAO/NSIAD-95-4 Navy Ships
Page 11 GAO/NSIAD-95-4 Navy Ships
Contents

Letter 1

Appendix I 

Comments From the

Department of

Defense

14

Appendix II 

Major Contributors to

This Report

17

List of SSN-21

GAO-Related Products

Since 1991

18

Table Table 1: Navy’s Disposition of Technical Lessons Learned as of

April 1994

9

Abbreviations

DOD Department of Defense

Page 12 GAO/NSIAD-95-4 Navy Ships
Page 13 GAO/NSIAD-95-4 Navy Ships
Appendix I 

Comments From the Department of Defense

Page 14 GAO/NSIAD-95-4 Navy Ships
Appendix I 

Comments From the Department of Defense

Page 15 GAO/NSIAD-95-4 Navy Ships
Appendix I 

Comments From the Department of Defense

Now on p. 9.

Page 16 GAO/NSIAD-95-4 Navy Ships
Appendix II 

Major Contributors to This Report

National Security and

International Affairs

Division, Washington,

D.C.

John D’Esopo

David Fisher

Boston Regional

Office

Jeffrey Rose

Ralph Tavares

Alson Castonguay

Page 17 GAO/NSIAD-95-4 Navy Ships
List of SSN-21 GAO-Related Products Since

1991

GAO has performed work on the Seawolf program since 1985. The

following chronology presents products issued since 1991.

• Navy Ships: Seawolf Cost Increases and Schedule Delays Continue

(GAO/NSIAD-94-201BR, June 30, 1994).

• Navy Ships: Problems Continue to Plague the Seawolf Submarine Program

(GAO/NSIAD-93-171, Aug. 4, 1993).

• Navy Ships: Plans and Anticipated Liabilities to Terminate SSN-21

Program Contracts (GAO/NSIAD-93-32BR, Nov. 27, 1992).

• Navy Ships: Status of SSN-21 Design and Lead Ship Construction Program

(GAO/NSIAD-93-34, Nov. 17, 1992).

• SSN-21, Seawolf Contract Terminations (GAO/NSIAD-93-41R, Nov. 6, 1992).

• Navy Shipbuilding: Effects of Reduced SSN-21 Procurement Rates on

Industrial Base and Cost of Program (GAO/NSIAD-92-140, Apr. 8, 1992).

• Submarine Combat System: BSY-2 Development Risks Must Be Addressed

and Production Schedule Reassessed (GAO/IMTEC-91-30, Aug. 22, 1991).

• Submarine Combat System: Status of Selected Technical Risks in the

BSY-2 Development (GAO/IMTEC-91-46BR, May 24, 1991).

• A May 24, 1991, letter to Representative Herbert H. Bateman discussing

cost projections of several SSN-21 procurement scenarios.

(707017) Page 18 GAO/NSIAD-95-4 Navy Ships
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