United States General Accounting Office

GAO Report to Congressional Committees

December 1996 NEW ATTACK

SUBMARINE

Program Status

G O A

years

1921 - 1996

GAO/NSIAD-97-25

GAO United States

General Accounting Office

Washington, D.C. 20548

National Security and

International Affairs Division

B-272638 

December 3, 1996

Congressional Committees

The Congress, the Department of Defense (DOD), and the Navy agree that

the Navy needs a new attack submarine (NSSN) that is significantly less

costly than the previous class of attack submarines, the Seawolf. However,

the estimated cost of the NSSN program is rising. We evaluated the status of

the NSSN program to identify areas of potential risk for rising costs and to

provide information on the submarines’ potential performance. We

conducted this review under our basic legislative responsibilities and are

addressing it to you because the matter discussed in this report falls within

your Committee’s jurisdiction.

Results in Brief The NSSN program is not likely to meet the objective of producing a

submarine that is significantly less costly than the Seawolf. Based on Navy

estimates for a 30-ship, single shipbuilder program, the Seawolf’s average

acquisition cost was estimated to be about $1.85 billion compared to the

NSSN’s estimate of about $1.5 billion.1 Based on a 30-ship, two shipbuilder

program, the Navy’s current estimated acquisition cost for the fifth ship of

the NSSN class has already risen from about $1.5 billion to about $1.8 billion

as of March 1996. In addition, there is a potential for other cost increases

because of a variety of program risks.

The National Defense Authorization Act for fiscal year 1996, Public

Law 104-106, directed the Navy to accelerate construction of the first two

submarines and to use two shipyards instead of one to build the first four

submarines. According to the Navy, this change has increased the

estimated cost of developing and building 30 NSSNs by $3 billion. Although

we believe the cost categories seem reasonable, we have no basis to agree

or disagree with the total program estimate because the Navy has not

provided support for the costs associated with the individual categories.

Historical evidence shows that some cost increases may occur. The impact

of competition is generally expected to result in decreases in production

costs. Such results will depend on the Navy’s acquisition strategy, which

has not yet been determined.

According to DOD, a $3.8-billion increase in budget authority for the Fiscal

Year 1997-2001 Future Years Defense Plan period will be needed to acquire

two submarines earlier than originally planned as directed by the law.

1

Unless otherwise noted, all costs are in constant 1995 dollars.

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We believe there is a potential for other cost increases because of a variety

of program risks.

• Anticipated changes in the ship’s design or the addition of new

technologies are likely.

• The NSSN command, control, communication, and intelligence (C3I) combat

system development and integration program is highly complex and

optimistic.

• Development of some prototype equipment is concurrent with ship

construction.

• The cost of transferring the submarine’s design from the first to the second

shipbuilder is based on an optimistic estimate that is less than the actual

cost of the last major design transfer.

There is also a divergence of views on the start-up costs for the second

shipbuilder.

DOD and the Navy believe the baseline NSSN satisfies military requirements.

However, in an April 1995 report, the Commander, Operational Test and

Evaluation Force (OPTEVFOR), stated if the NSSN were to just meet design

thresholds for survivability, the NSSN might not be operationally effective

against the most capable threat. He noted that there are too many

variables and unknowns about the systems involved to assess whether the

design will meet the requirements. The Navy is addressing the concerns

raised by this report. OPTEVFOR is currently reassessing the NSSN design for

a program review scheduled in early 1997.

Background According to Navy documents, producing a significantly less costly

submarine would allow the Navy to maintain a force level of 45 to 55

submarines and maintain the current submarine industrial base. The NSSN

program is intended to address the Navy’s requirement for 10 to 12 new

attack submarines by the year 2012 that are as quiet as the Seawolf, but at

lower cost and without compromising military utility. Before design

evaluation, the Chief of Naval Operations set the attributes and

requirements for the NSSN based on the Navy’s prospective need to defeat a

very sophisticated future Russian threat and to operate in littoral (coastal)

areas. The submarine’s attributes and requirements are the NSSN’s major

cost drivers; these include speed, quietness, diving depth, weapons load,

and sensor performance. According to the Navy, the NSSN will be a highly

effective multimission platform capable of performing antisubmarine and

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antisurface ship missions and land attack strikes as well as mine missions,

special operations, battle group support, and surveillance.

During submarine design and development, the Navy initiated several

acquisition reform measures intended to keep costs under control.

According to the Navy, the cost of the submarine will be reduced by about

one third, because of the use of Integrated Product and Process

Development teams, computer-aided design, commercial off-the-shelf

technology, and a performance-based acquisition strategy. The Navy also

claims it can save as much as $100 million per ship by incorporating

lessons learned from previous submarine programs. The savings expected

from these initiatives are included in the Navy’s estimated acquisition cost

for the fifth ship NSSN.

NSSN Costs Have

Risen

Based on Navy estimates for a 30-ship, single shipyard program, the

Seawolf’s average acquisition cost was estimated to be about $1.85 billion

compared to the NSSN’s estimate of about $1.5 billion. Based on a 30-ship,

two shipbuilder program, the Navy’s estimated acquisition cost for the

fifth2

 ship of the NSSN class has already risen from about $1.5 billion to

about $1.8 billion as of March 1996.

According to the Navy, most of the $250 million increase in the estimated

cost of the fifth NSSN is the result of the direction in Public Law 104-106 to

add a second shipbuilder to the program and to accelerate the

procurement of two of the first four submarines. The Navy’s original plan,

approved in May 1995, was to build one ship in fiscal year 1998, a second

ship in fiscal year 2000, and two ships per year beginning in fiscal year

2002—all at Electric Boat Corporation, Groton, Connecticut. The 1-year

gap between construction of the first and second ships, according to Navy

officials, would allow the Navy to “mature” the NSSN design and gain

experience constructing the first ship before beginning construction of the

second ship.

The Navy currently maintains two nuclear-capable shipyards—one to

build submarines (Electric Boat, Groton, Connecticut) and one to build

nuclear-powered aircraft carriers (Newport News Shipbuilding and

Drydock Company, Newport News, Virginia). According to Navy officials,

2

According to Navy documents, the fifth ship cost is used because it provides a convenient reference

point for cost comparisons because the influences of learning and cost improvement have already

occurred. Other programs, such as the Los Angeles attack submarine and the Arleigh Burke destroyer

also used the fifth ship cost for estimating unit costs. The difference between the previous average

acquisition costs of the NSSN and the new fifth ship NSSN cost is estimated to be about $50 million.

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the use of the single contractor to build the NSSN would increase savings by

avoiding overhead and design transfer costs and achieving the benefits of

the experience gained by building 30 ships at one shipyard. The Navy

adopted this strategy in response to a recommendation in DOD’s

Bottom-Up Review to use a single contractor.

However, Public Law 104-106 directed the Navy to start construction of an

NSSN at Newport News Shipbuilding and Drydock Company (Newport

News) in 1999 and submit a plan for building four NSSNs between fiscal

year 1998 and 2001, two of which were to be built by Electric Boat (one in

1998 and one in 2000) and two by Newport News (one in 1999 and one in

2001). The intent of the legislation in introducing competition was to

obtain a cost benefit. The act requires that each of the first four

submarines develop and demonstrate new technologies that will make

each more capable and more affordable than its predecessor.

In its required March 1996 report, DOD indicated it would need an

additional $3.8 billion for fiscal years 1997 through 2001 in shipbuilding

and conversion (SCN) funds to implement the act. Even with this additional

funding, new submarine construction would require about 23 to 38 percent

of the available SCN funds versus the historical 22 to 25 percent. The

additional funding is to build the baseline design only and does not include

funding for new technology insertion or nonrecurring costs related to

design changes. DOD said that it would also need an additional $787 million

in research, development, test, and evaluation funds to accelerate and

develop new technology not included in the current design. According to

DOD and Navy officials, the NSSN, as currently designed, is expected to meet

all requirements for carrying out its missions.

DOD noted in its report that it would be difficult to afford the plan directed

by Public Law 104-106 in the context of other modernization programs.

The Department developed and proposed several alternative construction

schedules that would add a second shipbuilder and lead to competition.

The report states, however, that DOD would face major near-term

affordability issues if it pursued the congressional plan or any of the

alternatives presented in its report.

DOD did not report the individual cost for each of the first four ships, which

we provide in table 1.

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Table 1: NSSN Shipbuilding and

Conversion Costs Then-year dollars in billions

Submarine Cost

1 $3.272

2 2.543

3 2.093

4 2.112

Total $10.020

In addition to construction costs, the Navy estimates it will cost about

$3.8 billion (then-year dollars) to design and develop the NSSN. As a result,

the Navy will spend a total of about $13.8 billion to develop and buy the

first four NSSNs under the revised shipbuilding plan.

Under the strategy to use the two shipbuilders, the Navy estimates that the

cost of the fifth ship of the NSSN class in fiscal year 1995 dollars will rise

from about $1.5 billion to about $1.8 billion as of March 1996. According to

the Navy, this change in strategy will result in increased costs such as

increased overhead and the loss of experience in building both the lead

and follow-on ships when using two shipbuilders and decreased costs

such as lower production costs due to competition. The Navy estimates

that the net effect for the total program is a cost increase of about

$3 billion. Although we believe the cost categories seem reasonable, we

have no basis to agree or disagree with the total program estimate because

the Navy has not provided support for the costs associated with the

individual categories. Historical evidence shows that some cost increases

may occur. The impact of competition is generally expected to result in

decreases in production costs. Such results will depend on the Navy’s

acquisition strategy, which has not yet been determined.

Potential for Cost

Increases for Variety

of Program Reasons

Even without adding a second shipbuilder to the program, there is a

potential for cost increases, because of a variety of program risks. A highly

complex and optimistic C3I system development and integration program,

concurrent system development and ship design and construction, and the

lack of fallback systems in the event a system fails suggest that major cost

increases are likely. Moreover, major systems historically encounter

unforeseen problems during development, resulting in cost increases of

about 20 to 40 percent.3

 Further, the Navy’s estimates for transferring the

design to the second shipbuilder may be understated by hundreds of

3

Weapons Acquisition: A Rare Opportunity for Lasting Change (GAO/NSIAD-93-15, Dec. 1992).

Page 5 GAO/NSIAD-97-25 New Attack Submarine
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millions of dollars. The estimated start-up costs for the second shipbuilder

range from $1 million to $1 billion.

The Congress authorized and appropriated funds for advance procurement

of the first two NSSNs—the 1998 start of construction at Electric Boat and

the 1999 start at Newport News. The National Defense Authorization

Conference Report for fiscal year 1997 modified the House National

Security Committee’s recommended provision, which would have

authorized funds for both shipyards to (1) design improvements for

incorporation into the first four NSSNs and (2) design another new attack

submarine that would be more capable but less costly than the NSSN.

Instead, the National Defense Authorization Act for fiscal year 1997

provides that the shipbuilders can propose any design improvements to

the first four submarines to the Secretary of the Navy. The Secretary will

be required to submit an annual report to the authorization committees on

actions taken on the proposed design improvements. If any shipbuilder

design improvements for the first four submarines are proposed and

accepted, it would further increase the cost of the NSSN program for the

new design work and the technology insertion. A new estimated cost

would need to be determined if another new design is proposed and

accepted. If a new design is proposed and accepted, the estimated cost

would depend on the submarine’s attributes and requirements.

Combat Systems Risks The Navy is developing a C3I combat system that will integrate 

15 subsystems upon delivery to the shipyard. The integration will be at the

system level using an open system architecture. For this integration, the

Navy plans to use new and existing technology, commercial off-the-shelf

(COTS) equipment, and reengineered systems. The ship’s prime contractor

will provide four of the subsystems—exterior communications, interior

communications, nontactical data processing, and ship monitoring. The

government will provide the remaining subsystems, including those for

radar, navigation, navigation data distribution and display, imaging, and

electronics support measures. The government will also provide three

subsystems from a C3I system prime contractor—sonar, combat control,

and architecture and the system-level integration of all subsystems.

In its April 1995 early operational assessment report on the NSSN, OPTEVFOR

considered the C3I open system architecture a high risk because it is a very

extensive and ambitious effort with a very short development and

integration time frame. The report noted that the development schedule is

extremely optimistic for the complexity and scope of the effort. OPTEVFOR

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officials stated that the Navy has never attempted such a large-scale

integration effort on a submarine. While the BSY-1 and BSY-2 systems did

have some level of integration, the NSSN combat system will have to be

totally integrated. Of special concern to these officials were the absence of

an established system design, a new open system architecture being used

for the first time on submarines, network security plans that are still

incomplete, a wide aperture sensor system that is still considered

immature, COTS technology whose military utility and supportability has

yet to be proved, and software development and reuse.

The report noted several areas of risk. Software development and reuse

were rated high risk because of historical problems associated with the

use of COTS real-time database management systems and multisource data

fusion capabilities. Problems with the database management system could

cause significant problems with the combat system. The extremely short

developmental time line, in comparison with the time lines for developing

past C3I systems, specifically the BSY-2, contributes to the risk. The

combat and control system architecture, the command workstation, and

subsystem integration are concepts unique to the NSSN C3I combat control

system. The short developmental time line, incomplete design, and COTS

equipment uncertainties add to the risk.

According to the Navy’s May 1995 NSSN risk assessment, the ship

construction schedule has little flexibility to accommodate unanticipated

development, test, or integration problems or delays in the C3I system

delivery to the shipyard. Traditionally, however, problems have arisen in

developing similar large systems. For example, both the BSY-1 combat

system for the Improved Los Angeles-class and the BSY-2 combat system

for the Seawolf-class submarines had problems that resulted in late

delivery and increased costs. The BSY-2 combat system was to be

delivered in two phases with all of the hardware and 86 percent of the

software in November 1993 and the remaining software in November 1994.

However, the BSY-2 experienced development problems, and the first

phase was not delivered to the shipbuilder until July 1995. The second

phase will not be delivered until after the ship, which was previously

scheduled for delivery to the Navy in October 1996, or 8-1/2 years after the

award of the BSY-2 contract in March 1988.

The NSSN combat system is scheduled to be delivered to the shipyard by

November 2000, about 4-1/2 years after award of the combat system

contract. After delivery of a fully functional C3I system in November 2000,

there will be another 1-1/2 years for integration and testing activity for the

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NSSN lead ship. The total time for development, integration, and tests prior

to ship installation is 6 years, about the same as the original schedule for

the BSY-2. Navy officials believe the schedule is achievable because the

use of COTS hardware and software will reduce the need and time to

develop both hardware and software.

With fleet introduction of the NSSN, the Navy will need to support three

different submarine combat systems—the BSY-1 on the 688I class, the

BSY-2 on the three Seawolfs, and the new NSSN fully integrated C3I system.

This involves separate logistics, training, and life-cycle support programs.

DOD and the Navy believe that the risk associated with the C3I system is low

and noted that significant design maturity has occurred since the

April 1995 OPTEVFOR report, which has mitigated many of the identified

risks. The Navy is currently addressing the concerns raised by the report.

OPTEVFOR will reassess the NSSN for an early 1997 program review and will

issue a follow-up report in December 1996.

Other Areas of Risk According to OPTEVFOR officials, subsystems being developed outside the

NSSN program, such as the photonics mast, for inclusion in the C3I system

also pose a potential problem because any cost increases, technical

problems, or delays in these programs could have a major impact on the

NSSN program.

In addition, the Navy, on the recommendation of industry experts in open

systems, has selected Asynchronous Transfer Mode (ATM) as its

networking technology for integrating the 15 combat subsystems included

in the C3I system. ATM is considered by some to be a maturing

telecommunications technology; the standard-setting bodies4

 and

industries in the telecommunications market have yet to agree on ATM

implementation standards. Even though the Navy will use equipment and

software from the BSY-1 or BSY-2, some subsystem interfaces will have to

be modified to accommodate the new network interface requirements to

achieve interoperability. Meanwhile, any changes to interim ATM standards

could result in additional interface redesign and slow the combat system’s

testing and integration.

According to Navy officials, the standard-setting bodies have agreed to 

47 interface standards, and an additional 21 will be finalized by the end of

4

Telecommunication standards are developed by groups representing industry, government, and

academia that reach consensus on the implementation of technology to achieve interoperability within

the industry.

Page 8 GAO/NSIAD-97-25 New Attack Submarine
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1996. They also stated that the interface standards needed to integrate the

C3I combat system are already well defined. According to Navy officials,

the C3I development schedule includes a “technology refresh” concept that

provides an opportunity to update the C3I system before the system is

delivered to the Navy. Any changes to ATM standards could be

incorporated as part of this process.

In addition to the ATM, the combat system’s lightweight wide aperture

array, which is vital to the ship’s combat system performance, is not yet

under development for use on the NSSN.

Concurrent Development

and the Lack of

Alternatives

The NSSN will use several new technologies and prototype systems that are

being developed concurrently with ship design and construction and for

which the Navy has no alternative technologies available should problems

arise. Failure of any one of these systems would likely result in

performance problems, cost increases, and delays in delivery of the

submarine to the Navy.

An example of a system that could pose a problem is the submarine’s air

conditioning system, which requires the use of a new refrigerant and

design of a new air conditioning unit. This new unit will still be under

development while the ship is being built. The technological challenges

include the size of the unit and achievement of the necessary level of

quietness. Prototype testing will overlap with the construction of the lead

ship, and if problems arise, extensive rework could be necessary. Since

the Navy has no alternatives for this development, such rework could

result in delayed delivery of the submarine to the Navy.

The propulsor (propeller) also presents a major technological challenge.

While the propulsor is being designed for power, speed, and quieting

efficiency, an OPTEVFOR early operational assessment noted that a full-scale

model of the propulsor is needed to determine whether it will meet its

quieting requirements. Because of the concurrent development of the

propulsor and the ship, however, the Navy will have to select a final

propulsor design before full-scale testing is complete. According to the

Program Manager, the results of large-scale testing are promising, but

meeting the propulsor requirements remains a definite technological

challenge.

Another example of a potential problem involves the electronic warfare

support measures (countermeasure surveillance system). Because of other

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Navy priorities, funding for this program was reduced and the program

had to be restructured to meet the needs of the NSSN. According to Navy

program officials, the system will now use COTS and existing systems to

meet the performance and schedule requirements of the NSSN.

The photonics mast program has also been restructured because of a

$10-million increase in cost. A prototype of the mast and its photonics

sensor are currently at sea being tested on the USS Phoenix. According to

the NSSN Program Manager, the NSSN is designed to incorporate a

nonpenetrating imaging (i.e., photonics) system as opposed to the

traditional submarine periscope. If the photonics mast were unavailable,

the Navy would need an alternative sensor that is compatible with the

overall ship design, such as the improved nonpenetrating periscope (INPP),

which is currently being tested on the USS Phoenix. The mast is one of the

systems being developed outside of the NSSN program for the C3I system. If

any problems with sensor performance and delivery arise, there would be

some program impact.

Design Transfer Costs Are

Optimistic

According to program documentation and the Program Manager, the

estimated $2.5 billion (then-year dollars) to build the first Newport News

ship includes $154 million (then-year dollars) to transfer the submarine

design data from Electric Boat to Newport News. However, this cost may

be understated, according to program officials, since the last major design

transfer for a complex ship design between shipyards—for the

DDG-51—cost about $400 million to $500 million. The Program Manager

stated that, while optimistic, the $154-million estimate was based on the

use of integrated product and process development teams, close

coordination between the contractors, and other acquisition reform

initiatives.

Range of Potential Start-up

Costs

There is a range of estimates for start-up costs at Newport News.

According to Navy program officials, costs are estimated to be

$250 million. According to a 1993 U.S. submarine production base report,5

start-up costs at Newport News could range from $607 million to over

$1 billion, depending on the length of time various areas of the shipyard

and submarine production lines have been closed. According to Newport

News officials, the only start-up cost identified to date is $1 millon to

restart the shell and ring assembly area. These officials said that there may

5

The U.S. Submarine Production Base, An Analysis of Cost Schedule and Risk for Selected Force

Structures, Rand, National Defense Research Institute, 1993.

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be other start-up costs but Newport News has only been involved in the

program since February 1996, and it is too early to develop cost estimates

since the scope of the NSSN program is still evolving.

Potential Operational

Effectiveness

According to Navy officials and documents we obtained, the Navy has

traded performance for cost savings. Compared with the Seawolf, the NSSN

is slower, carries fewer weapons, and is less capable in diving depth and

arctic operations. On the other hand, the NSSN is expected to be as quiet as

the Seawolf, will incorporate a vertical launch system and have improved

surveillance as well as special operations characteristics to enhance

littoral warfare capability.

DOD and the Navy believe the baseline NSSN satisfies military requirements.

However, an April 1995 report by the OPTEVFOR Commander expressed

concern that if the NSSN were just to meet design thresholds for

survivability, the NSSN may not be operationally effective against the most

capable threat. The report noted that there were too many variables and

unknowns about the systems involved to assess whether the design will

meet requirements.

The Navy is addressing the concerns raised by that report. OPTEVFOR

officials said they are currently involved in reassessing the NSSN design for

an early 1997 program review and expect to issue a follow-up assessment

in December 1996.

Scope and

Methodology

We reviewed and analyzed Navy and DOD documents and studies and

discussed the status of the new NSSN, Seawolf submarine, and C3I combat

system programs with Navy program officials in Washington, D.C., and at

the Naval Undersea Warfare Center, Newport, Rhode Island. We held

discussions about these programs with representatives from the offices of

the Defense Advanced Research Projects Agency; the Chief of Naval

Operations; the Assistant Secretary of the Navy for Research,

Development, and Acquisition; and the Secretary of Defense. We also

discussed the programs with representatives from Electric Boat

Corporation, Groton, Connecticut, and Newport News Shipbuilding and

Drydock Company, Newport News, Virginia, and the Supervisors of

Shipbuilding at these respective shipyards. In addition, we analyzed the

results of the NSSN’s early operational assessment and discussed the results

with the Commander, Operational Test and Evaluation Force, Norfolk,

Virginia.

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In our cost comparison, we did not calculate any potential benefits that

might result through competitive pressures by introducing a second

shipyard. Although competition, with a resulting cost benefit is possible, it

is by no means certain. Achieving any cost benefit will be determined by

how the Navy implements the acquisition strategy, which has not yet been

determined.

We conducted our review from June 1995 to August 1996 in accordance

with generally accepted government auditing standards.

Agency Comments DOD did not concur with statements in our draft report and said that (1) the

NSSN will not be more costly than the Seawolf; (2) NSSN unit costs will not

continue to rise and significant cost increases should not be expected due

to risk associated with the C3I system or design transfer between the two

shipbuilders; and (3) the NSSN will be able to defeat the most capable

threat.

Regarding costs, DOD said that on a lead ship basis in fiscal year 1998

dollars, the NSSN would be approximately $600 million less than

construction costs of the Seawolf and on a follow-on ship per unit basis,

the NSSN was estimated to cost at least $300 million less in fiscal year 1995

dollars. DOD also said life-cycle costs of the NSSN are expected to be

approximately 15 percent less than those of Seawolf.

We did not evaluate life-cycle costs. In its comments on acquisition costs,

we believe DOD has used inappropriate comparisons that deviate from

previous assessments. First, a lead ship cost comparison is not normally

used because design, start-up, and other related costs are included that

would not be included in follow-on unit ship cost comparisons. For

example, the Navy’s estimate for the construction costs of the lead

Seawolf includes cost increases related to late and incomplete design

drawings, late development and delivery of government-furnished

equipment such as the BSY-2 combat system, welding cracks, and

problems with the torpedo doors. Second, the Navy used a fifth ship

acquisition cost for comparison purposes on both the Los Angeles and

Arleigh Burke class programs. The Navy believes a fifth ship unit cost is

more appropriate for cost comparison because the influences of learning

curves and cost improvements have occurred and can be realistically

reflected in estimated unit costs. Use of a lead ship unit cost basis for

comparisons ignores these influences and is different from the commonly

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accepted practices DOD and the Navy use in unit construction costs for

comparison purposes.

DOD said we used the $1.85-billion average Seawolf cost cited in the Navy’s

NSSN cost and operational effectiveness analysis and that this was the

average cost of the 2nd through 30th Seawolf built at a single shipyard and

expressed in 1995 dollars. We did use this basis to determine the previous

acquisition cost of both the Seawolf and the NSSN. Our comparison of the

average acquisition costs of the Seawolf and the NSSN, under the original

program, is on a comparable basis (30-ship program, single shipbuilder,

and constant 1995 dollars). We then compared the Navy’s cost estimates of

the fifth ship of the NSSN class using a single shipyard and using two

shipyards to show the impact of Public Law 104-106, which significantly

altered the acquisition strategy.

Regarding the risks associated with the combat systems and concurrent

technology development, DOD said that the risk associated with the C3I

system is low and that significant design maturity has occurred since the

April 1995 OPTEVFOR report, which has mitigated many of the identified

risks. In providing a status of the NSSN program, our intent is to identify

areas of risk because experience has shown that integrating new

technologies and concurrent development and production schedules

usually result in cost increases. As we point out in our report, the C3I

system is a highly complex development and integration effort and there is

prototype equipment development concurrent with ship construction. The

Navy’s intent to use COTS items may prove successful, but plans to do so do

not remove risk from the program.

DOD did not concur with our statement that design transfer costs are highly

optimistic. DOD believes that the current estimate is adequate and that it is

not appropriate to use the cost of transferring the design of the DDG-51 to

estimate the cost of transferring the design of the NSSN. Despite the

introduction of more sophisticated technology, we continue to believe that

the Navy’s estimate may be optimistic because the shipyards use different

computer systems. The use of the DDG-51 design transfer as a comparison

is appropriate because it is the most recent major design transfer between

shipyards, albeit through a paper-based process.

Finally, DOD did not concur with our statement that the NSSN has potential

performance limitations. We have modified our presentation regarding the

NSSN’s ability to defeat the most capable threat to clarify the concerns

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raised in the OPTEVFOR report and to present DOD’s and the Navy’s belief

that the baseline NSSN satisfies military requirements.

We have made other changes, as appropriate, based on DOD’s technical

comments. (DOD’s comments are in app. I.)

We are sending copies of this report to the Secretary of the Navy and the

Assistant Secretary of the Navy for Research, Development, and

Acquisition. Upon request, we will make copies available to other

interested parties.

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

questions concerning this report. Major contributors to this report are

listed in appendix II.

Louis J. Rodrigues

Director, Defense

 Acquisitions Issues

Page 14 GAO/NSIAD-97-25 New Attack Submarine
B-272638 

List of Congressional Committees

The Honorable Strom Thurmond

Chairman

The Honorable Sam Nunn

Ranking Minority Member

Committee on Armed Services

Unites States Senate

The Honorable Ted Stevens

Chairman

The Honorable Daniel K. Inouye

Ranking Minority Member

Subcommittee on Defense

Committee on Appropriations

United States Senate

The Honorable Floyd Spence

Chairman

The Honorable Ronald V. Dellums

Ranking Minority Member

Committee on National Security

House of Representatives

The Honorable C. W. Bill Young

Chairman

The Honorable John P. Murtha

Ranking Minority Member

Subcommitttee on National Security

Committee on Appropriations

House of Representatives

Page 15 GAO/NSIAD-97-25 New Attack Submarine
Contents

Letter 1

Appendix I 

Comments From the

Secretary of Defense

18

Appendix II 

Major Contributors to

This Report

20

Table Table 1: NSSN Shipbuilding and Conversion Costs 5

Abbreviations

ATM Asynchronous Transfer Mode

C3I command, control, communication, and intelligence

COTS commercial off-the-shelf

DOD Department of Defense

INPP improved nonpenetrating periscope

NSSN new attack submarine

OPTEVFOR Operational Test and Evaluation Force

SCN shipbuilding and conversion

Page 16 GAO/NSIAD-97-25 New Attack Submarine
Page 17 GAO/NSIAD-97-25 New Attack Submarine
Appendix I 

Comments From the Secretary of Defense

Page 18 GAO/NSIAD-97-25 New Attack Submarine
Appendix I 

Comments From the Secretary of Defense

Page 19 GAO/NSIAD-97-25 New Attack Submarine
Appendix II 

Major Contributors to This Report

National Security and

International Affairs

Division, Washington,

D.C.

Katherine V. Schinasi, Associate Director

Richard J. Price, Assistant Director

Jack G. Perrigo, Jr., Senior Evaluator

New York/Boston

Field Office

Richard E. Silveira, Evaluator-in-Charge

Joseph Rizzo, Jr., Evaluator

(707112) Page 20 GAO/NSIAD-97-25 New Attack Submarine
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