Congress' sub-building plan wastes $3 billion, GAO says '95 decision splits program to benefit shipyard in Va.


WASHINGTON -- Taxpayers will pay at least $3 billion more for a new class of attack submarines because Congress agreed to allow Newport News Shipbuilding to build some of them, a General Accounting Office report says.

Congress' 1995 decision to overturn Pentagon policy and share construction work between Newport News and Electric Boat of Groton, Conn., will make it impossible to achieve the new class's chief goal: a submarine cheaper and more capable than the cutting-edge Seawolf, the investigative arm of Congress says in a report to be released next week.

While the $3 billion cost increase seems slight for a $60 billion, 30-sub program that could span 20 years, the GAO said miscalculations in the development of Congress' sub plan and the accelerated pace of construction it mandates will cause a budget crunch in the short term.

Among the miscalculations, the GAO says, is the Navy's claim that it will cost $154 million to transfer the sub design from Electric Boat -- which originally was to build all of the new subs -- to Newport News. Similar transfers have cost as much as $400 million to $500 million, the report says.

Also, the start-up costs at Newport News -- the equipment and facilities it will have to configure to accommodate the new sub -- are estimated at $250 million but could climb as high as $1 billion, the report says.

To build the first four subs as quickly as Congress is demanding, nearly $4 billion will have to be added to a shrinking defense

budget over the next five years. Such an increase will mean that submarines, which usually consume about a quarter of the Navy's shipbuilding budget, will require one-third of it or more, potentially siphoning funds away from other ships and weapon systems.

Congress' demand that the Navy aggressively investigate new technologies for the subs will require an additional $787 million in research and development through 2001, even though the Navy says the subs already incorporate all of the technologies needed to meet future threats.

The GAO said program delays could drive costs even higher because the construction schedule is too tight and the assumptions it makes about some of the new technologies are too optimistic. Many of the submarine's systems, such as a mast that would replace the traditional periscope with an imaging system, have not been fully developed, and the Navy has no fall-back plan if they fail, the report says.

Virginia lawmakers, who pushed to change the sub policy on Newport News' behalf, disputed the report's findings, saying it fails to take into account how a competition between the two yards sometime after 2002 should drive down the cost of the subs.

The Defense Department also disputed the report's major findings, insisting that the sub would be cheaper and more advanced than the Seawolf.

Shipyard officials had not seen the report Tuesday and had no immediate comment, a spokesman said.

"The conclusions defy the orthodox wisdom and the normal common sense of competition," said Rep. Herbert H. Bateman, a Republican from Newport News.

Sen. John W. Warner, the chief architect of the congressional sub plan, along with Bateman, said he does not expect the new report to reignite the fight over subs. "The Virginia delegation has been wrestling this octopus for two years," Warner said. "I do not think this report is going to turn around the legislation we enacted."

The GAO said it did not try to calculate what effect a competition between the two yards will have on the program's cost because it is uncertain whether there will be a competition or, if there is, what kind of savings it might produce.

The GAO report is the latest in a series of assaults on the sub

program Congress devised to help Newport News. In March, the Defense Department released its own report, drawing many of the same conclusions -- that the program would be more expensive, not cheaper, with two yards, and that millions would be wasted re-examining technologies that have been considered and rejected.

The Virginia delegation pushed to change the sub plan after the Pentagon announced it would give all future sub work to Electric Boat, effectively shutting Newport News out of the business. In 1995, lawmakers won approval of a plan that shared the work. It required that Newport News be given sub contracts in 1999 and 2001; Electric Boat would get them in 1998 and 2000. The two yards would compete after that.

Though defense officials said they would adhere to Congress' wishes, they did not fund Newport News' submarine in their 1997 budget request, forcing local lawmakers to spend much of this year fighting to add $500 million to the budget.

Pub Date: 11/29/96

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