The Navy intends for Ford-class nuclear-powered aircraft carriers to serve as premier forward assets for crisis response and provide early striking power during major combat operations. The Ford-class is expected to feature a number of improvements over existing aircraft carriers that the Navy believes will improve the combat capability of the carrier fleet while simultaneously reducing acquisition and life cycle costs. These improvements include the following: increased sortie generation rates for the aircraft being deployed from the carrier, a near threefold increase in electrical generating capability, increased operational availability, and increased service life margins for weight and stability to support future configuration changes to the ship over its expected 50-year service life. To facilitate these capability and efficiency gains, the Navy is developing 13 new, critical technologies for installation on Ford-class carriers. For example, the ship includes a new electromagnetic aircraft launch system (EMALS) to propel aircraft off the ship, an advanced arresting gear to recover the aircraft, and an improved anti-aircraft missile system. It also includes a new dual band radar, which integrates two radars operating on different frequency bands to provide air traffic control, ship self-defense, and other capabilities. Other technologies are intended to improve the ship’s propulsion, supply (replenishment), water generation, and waste disposal systems. Aside from their own intrinsic capabilities, these technologies are also intended to permit the Navy to implement favorable design features into the ship. Key design features include an enlarged flight deck; a smaller, aft-positioned island with fewer rotating radars than Nimitz-class carriers; and a track-based, flexible infrastructure system that allows ship compartments to be easily reconfigured to support changing missions over time. The Navy is managing these technology development activities across several different program offices and contractors, using quarterly integrated product team meetings to track progress. Figure 1 highlights the location of the 13 critical technologies on the ship. The Navy’s strategy for acquiring a new class of carriers has changed from its initial concept. Initially, the Navy employed an evolutionary acquisition strategy, with technology improvements planned to be introduced gradually with each successive carrier. The Navy established the CVN(X) program in 1998 in support of this concept. Under the CVN(X) program, introduction of new technologies would be spread over three ships, beginning with the final Nimitz-class carrier, CVN 77, which was authorized in fiscal year 2001 to begin construction, and continuing over two, new design CVN(X) class carriers. In 2002, however, DOD decided to restructure the CVN(X) program (renamed as CVN 21) and accelerated plans for introducing new technologies on the first ship of the new class. To support this acceleration, in 2004 the Navy increased its planned research, development, test, and evaluation funding for the program from $2.3 billion to $4.3 billion.Navy named the lead ship of the program (CVN 78) Gerald R. Ford, thus initiating the Ford class. In 2006, the Secretary of the Due to their vast size and complexity, aircraft carriers require funding for design, long-lead materials (such as nuclear propulsion plant components), and construction over many years. To accomplish these activities, the Navy awards contracts for two phases of construction— construction preparation and detail design and construction— underpinned by advance procurement and procurement funding. Additional funding, termed “cost to complete” funding, may be needed to cover unexpected cost growth that occurs during construction. Figure 2 outlines the Navy’s budgeting and contracting strategies for the Ford class. As indicated in the figure, construction preparation contracts can be awarded several years after advance procurement funds are in place, to allow for procurement of long-lead materials. In September 2008, the Navy awarded a $4.9 billion cost-reimbursement contract for detail design and construction of CVN 78 to Newport News Shipbuilding. Cost-reimbursement contracts, also known as cost-plus contracts, provide for payment of allowable incurred costs, to the extent prescribed in the contract. This contract type places most of the risk on the government, which may pay more than budgeted should incurred costs be more than expected when the contract is signed. The Navy expects to largely repeat the lead ship design for CVN 79, with minor modifications, and to construct that ship under a fixed-price incentive contract with the shipbuilder. Fixed-price incentive contracts place increased risk on the contractor, which generally bears some responsibility for increased costs of performance, including full responsibility once the contract’s ceiling is exceeded. These contracts include a negotiated target cost, target profit, and a formula for sharing the risk of cost overruns between the buyer and the seller (sometimes referred to as a shareline). Upon completion of performance, if the costs incurred by the contractor have exceeded the target cost, then application of the formula results in the contractor receiving a profit that is less than the target profit, and may result in a net loss for the contractor. The Navy has not yet determined the design parameters and contract type for CVN 80. Congress has previously expressed concern about Ford-class carrier costs. The John Warner National Defense Authorization Act for Fiscal Year 2007 included a provision that established (1) a procurement cost cap for CVN 78 of $10.5 billion, plus adjustments for inflation and other factors, and (2) a procurement cost cap for subsequent Ford-class carriers of $8.1 billion each, plus adjustments for inflation and other factors. Further, in August 2007, we reported that delays in Ford class technology development could increase lead ship construction costs and lead to potential reductions in capability at delivery. In addition, we found that although the Navy had made considerable progress maturing CVN 78’s design, significant schedule pressures in development of the ship’s critical technologies could impede completion of the detailed phases of design and potentially disrupt construction. We also found that the Navy’s cost estimate used to develop the CVN 78 budget was optimistic. We recommended actions to improve the realism of the CVN 78 budget estimate, improve the Navy’s cost surveillance capability, and schedule carrier-specific tests of the dual band radar. The Navy addressed some, but not all, of our recommendations. As is typical for all ships, Ford-class carrier construction is conducted over several phases: Block fabrication: Metal plates are welded together into elements called blocks. Blocks are the basic building units for a ship, and when completed they will form completed or partial compartments, including accommodation spaces, engine rooms, and storage areas. Assembly and outfitting of blocks: Blocks are generally outfitted with pipes, brackets for machinery or cabling, ladders, and any other equipment that may be available for installation at this early stage of construction. This allows a block to be installed as a completed unit when it is welded to the hull of the ship. Installing equipment at the block stage of construction is preferable because access to spaces is not limited by doors or machinery, unlike at later phases. Block erection: Blocks are welded together to form grand blocks, which are then erected with other grand blocks in a drydock. Launch: Once the ship is watertight and the decision is made to launch—or float the ship in water—the ship is then towed into a quay or dock area where final outfitting and testing of machinery and equipment such as main engines will occur. Afterwards, the ship embarks on sea trials where performance is evaluated against the contractually required specifications and overall quality is assessed. Delivery: Following sea trials, the shipyard delivers the ship to the buyer (Navy). Commissioning: Following delivery, the act or ceremony of commissioning a ship marks its entry into active service. DOD acquisition policy requires major defense acquisition programs, including shipbuilding programs, to execute and complete developmental testing, reliability growth testing, initial operational test and evaluation (IOT&E), and live-fire testing activities: Developmental testing is intended to assist in the maturation of products, product elements, or manufacturing or support processes. For ship technologies, developmental testing typically includes robust land-based testing activities prior to introducing the technology to a maritime environment. Reliability growth testing is an integral part of the systems engineering process for a weapon system. Simply stated, reliability is the ability of a system and its parts to perform its mission without failure, degradation, or demand on the support system under a prescribed set of conditions. Program managers are responsible for developing reliability growth curves for weapon systems, which outline a series of intermediate goals that are tracked through test and evaluation events until minimum reliability requirements are satisfied. In addition, program managers and operational test agencies are responsible for assessing and reporting on the reliability growth required for a system to achieve its minimum reliability requirements during IOT&E. The Navy measures reliability for key CVN 78 systems in terms of mean (average) time between failures and average number of cycles between critical mission failures. IOT&E—a major component of operational testing—is intended to assess a weapon system’s capability in a realistic environment when maintained and operated by sailors, subjected to routine wear-and- tear, and employed in combat conditions against a simulated enemy who fights back. During this test phase, the ship is exposed to as many actual operational scenarios as possible—a process that reveals the weapon system’s capabilities under stress. IOT&E for CVN 78 will take place after the shipbuilder completes construction and delivers the ship to the Navy. Live-fire testing provides timely assessment of the survivability and/or lethality of a weapon system as it progresses through its design and development. For ships, two major components of this testing are the full-ship shock trial and total ship survivability trial. The Navy defines a full-ship shock trial as an at-sea trial conducted to identify any unknown weakness in the ability of the ship to withstand specified levels of shock from underwater explosions.