U.S. Navy Shipbuilding Out of Control

The final cost of the U.S. Navy's newest ship, the amphibious transport "San Antonio," was supposed to have been about $830 million. But the final cost of the ship is expected to reach $1.85 billion.

Admiral Michael Mullen, Chief of Naval Operations, has gone after executives at Northrop Grumman Corp for the cost overruns and their poor performance building the San Antonio. "I personally have engaged the company at senior levels," Mullen said, "and have been assured that they know they didn't do that well" and that they should not repeat the poor performance. "That assurance is important to me."

The San Antonio, also known by the designation LPD-17, is the first of 12 sister ships in its class. The ship has been troubled by major construction deficiencies, including poor wiring, inadequate ventilation, corrosion, safety problems throughout and "poor construction and craftsmanship standards."

The Navy later accepted the ship, despite criticizing its builders for being two years late and more than $400 million over budget. It was built initially at Avondale Shipyard in New Orleans, but Northrop Grumman acquired Avondale and Ingalls Shipbuilding in Pascagoula, Mississippi, in 2002.

The Navy is having trouble controlling costs on other shipbuilding projects as well. According to the Government Accountability Office, costs have surged a combined $1.1 billion on aircraft carriers, submarines and destroyers already in production in the past dozen years.

Costs also are climbing for ships on the drawing boards. The Navy plans to spend as much as $3 billion each for a new class of destroyers and $13 billion each for new aircraft carriers, prices that have caused sticker shock on Capitol Hill.

"I never thought I'd live so long as to see a destroyer that costs $2 billion or $3 billion, aircraft carriers at $13 billion-plus," Sen. John McCain, R-Ariz., said last week. "These are staggering numbers."

"In the past 10 to 15 years, the cost escalation has been astronomical," McCain told Mullen at a Senate Armed Services Committee hearing on the Navy's proposed budget.