November 23, 2017
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Report: Total cost of three Zumwalts built at Bath Iron Works rose by 43 percent

By Beth Brogan, BDN Staff
Updated:
U.S. Navy photo | BDN
U.S. Navy photo | BDN
Video frame grab showing the future USS Zumwalt (DDG 1000) departing Bath Iron Works marking the beginning of a 3-month journey to its new homeport in San Diego. Crewed by 147 sailors, Zumwalt is the lead ship of a class of next-generation multi-mission destroyers designed to strengthen naval power.

The total estimated cost of the three Zumwalt-class destroyers to be built at Bath Iron Works has increased 43 percent since the third ship was procured, a report to Congress said this week.

The total procurement costs of the first two DDG 1000 destroyers is estimated to be $9.14 billion, with the third anticipated at $3.73 billion, the Congressional Research Office reported.

The total cost, outlined in the fiscal year 2018 budget submission, has grown by nearly $4 billion since the fiscal year 2009 budget, when cost benchmarks for each vessel were set.

Cost overruns have plagued the Zumwalt line since before the first keel was set. The Navy originally planned to replace the Arleigh Burke-class line of destroyers with Zumwalts, but truncated the line and reverted to funding Arleigh Burke-class destroyers after construction costs for the new line dramatically exceeded early estimates.

The Zumwalt “stealth” destroyers, each about 64 percent larger than existing Aegis destroyers and cruisers, will also be delivered to the Navy later than expected.

The first of the line, the USS Zumwalt (DDG 1000) left Bath in September 2016, headed to its homeport of San Diego, and continues to undergo testing and trials, but according to the Oct. 3 report, delivery to the Navy will not take place until May 2018.

Delivery of the future USS Michael Monsoor (DDG 1001), christened in June 2016, is now expected in May 2020, and of the third, the future USS Lyndon B. Johnson (DDG 1002) in December 2021.

Navy analysts on Wednesday said cost increases were unlikely to affect construction of the three destroyers, despite suggestions in the report that Congress examine the cost overrun when determining whether to fund the fiscal year 2018 budget, which includes a request for a new multiyear procurement of Arleigh Burke-class destroyers.

“Any cost estimate was sure to be speculative,” said defense analyst Loren Thompson of the nonprofit Lexington Institute. “The program is so far along. It’s only three ships. They’re just going to cover the cost of completing it.”

“The Navy is too far along in the process for Congress to stop now,” said Jay Korman, senior Navy analyst with the Washington, D.C.-based consulting firm The Avascent Group.

Korman said the report’s suggestion that Congress look into the inaccurate cost estimates is “a critique of the overall acquisition system.”

“Too often, costs are under-estimated until it’s too late and the sunk cost outstrips the incremental cost increases,” Korman said.

The Navy in 2010 blamed the cost overruns on a decision to build no more than three Zumwalts after the program triggered a cost increase limit imposed by the Nunn-McCurdy congressional provision. That caused research and development and other costs originally expected to be spread over 32 ships to be borne by only three.

The Navy then restructured the DDG 1000 program to meet the cost limits, revising testing and evaluation requirements and the radar system, among other changes.

The Navy’s fiscal year 2018 budget request includes $224 million to cover additional costs for the Zumwalt line of destroyers.

It also includes $90.3 million to fund a new multiyear procurement of Arleigh Burke-class destroyers. Bath Iron Works and Huntington Ingalls Industries, the two companies that build the Arleigh Burke-class destroyers for the Navy, are expected to bid on the multiyear contract next year.

Also included is $51.4 million to cover added costs for building previously procured Arleigh Burke-class destroyers and $32.1 million for research and development of the new Flight III air and missile defense radar system.

The estimated cost of the two Arleigh Burke-class destroyers requested as part of the 2018 defense spending plan is $3.5 billion.

A spokesman for Bath Iron Works said the company had no comment on the cost overruns.

Correction: An earlier version of this report misstated the procurement costs for the DDG 1000 destroyers.


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