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GAO: Civilians better at buying ships than Navy

The Navy could learn a lot from the way merchant shippers and cruise lines build ships, according to a May congressional report that found many ways in which the government’s shipbuilding didn’t measure up to the standards of the civilian sector.

Navy shipbuilding has more technical risk, is costlier and is less efficient than commercial shipbuilding, said the report by the Government Accountability Office. These problems are caused by Navy officials’ willingness to go forward with projects when requirements aren’t locked down, key technology isn’t ready and construction isn’t disciplined.

“[C]ost, schedule, and performance risk in the program resides primarily with the government,” the GAO inspectors wrote. “This risk often translates into cost growth and schedule delays, as lingering technology immaturity destabilizes design development for the ship, and subsequent design changes produce inefficient work sequencing and rework during construction.”

The Navy also consistently underestimates how much it will cost to build the ships it wants, inspectors wrote.

A table showed that each new ship class of the past decade has come in at least 10 percent over budget. The closest to the Navy’s original estimate was the dry cargo and ammunition ship Lewis and Clark, at 10 percent over its original cost. The worst offenders were the littoral combat ships Freedom and Independence, which came in at 193 percent and 147 percent over cost, respectively. Independence, built with a different hull form from Freedom and still unfinished, is scheduled to be commissioned this fall.

Unlike the Navy, most shippers and cruise lines only agree to build ships once requirements have been settled and ships’ designs are complete, GAO found.

In contrast to the eight over-budget Navy ships, GAO profiled five class-leading commercial ships, all of which were built on time and on budget. These included a 145,000-ton cruise ship and 170,000-ton container ship — both the largest of their kind when they were built — and the world’s first cruise ship with Azipod propulsion, which, despite problems during its shakedown, still was delivered four days early.

The report acknowledges that the different priorities of Navy and commercial ship owners have led to the different states of shipbuilding in each. Cruise lines and merchant shippers can select builders around the world to build relatively uncomplicated vessels, but the Navy can choose only from U.S. yards.

Still, the Navy should do a better job setting firm requirements for the ships it wants, be realistic about incorporating untested new technology into its designs and award more fixed-price contracts, GAO concluded.