U. S. GENERAI, ACCGU.

NTXNG OFFXE SG STUDY --

DEPARTMENT OF THENAVY

FEBRUARY 1973

Page SUMMARY CHAPTER 1 Eistory Responsibdities Scope 2 WEAPON SYSTEM STATUS System cost experience Possible aaddl0nal program COSTS Economic escalation -Design-to-cost concept Program funalng Contract data System performance experience System schedule eqenence Relationship to other ships Selected Acqtisdion Reporting COST ESTIMATING AND PROGRESS MEXWREMENT Ship cost-estlmting FwBJ. year 1973 budget and January 1972 estmates Lead ship costs Follow-on ship costs June 1972 estima.te Independent cost reviews Progress Measurement Current efforts Future efforts 15 16 17 1.7 18 23. 22 23 23
25

26 27 27 27 28
;:

32

APPENDIX I Allowance for price escalation acquisition cost estmates in progmm 39

ABBREXIATIONS PF Patrol Frzgate Review Council -

DSARC Defense Systems Acquisition CNO GAO Chief of Naval Operations General Accounting Office

SUMMARY PATROL FRIGATE SYSTEM DESCRIPTION AND STATUS The Patrol escort ships. Frigate Its (P!?) sell mission be a new class of rmssile-equipped Navy amphblous and surface

primary

wLU be to protect

and supply antxhipplng

ships and mercantile rmssiles.

convoys against

enemy sudmarlnes

As of January 1973, the PF was designed to be 440 feet displace 3,500 tons, miles to have a sustained speed of 28 knots, The skup will

long,

to

and to have accommodate

4,500 nautxal

endurance at 20 knots.

a crew of 185 personnel. The ship will 40,000 shaft reversible be driven It -by two gas turbine will have one shaft engines, aggregating

horsepower. pitch propeller.

and a controllable

The PF's weapons will the surface-to-surface two torpedo tubes.

include

the STANDARDnnssile

for

air

defense,

HARPOON rmsslle, The STANDARDrmsslle control

the OTO Melara 76111m gun, and and gun will system. with be directed by

a computerized control system. unit

MK-92 Mod 2 fire

The HARPOON fire control

wLU work in conJunction will utilize

the MK-92 Mod 2 fire

Both missiles

the same launcher. two LAMPS helicopters. anti-submarme warfare long-range The

The ship till helicopter provides

be capable

of supporting long-range provides

the ship with It

weapon delivery targeting

capability.

also the ship's

information target

for the HARPOON rmsslle. detection system, equipment includes radars (AN/SPS-49, path sonar

The shzp's MK-92 Mod 2 fire (AN/SQS-505 >.

control

and AN/SPS-55)

and a direct

AS of January 1973, the PF program was in the ship system design phase. Maine; The contractors are the Bath Iron Works Corporation, Seattle, Washington. Bath,

and the Todd Shipyards,

Bath Iron Works are to ensure slupbullding Also, Todd

has been designated that

as the lead shipyard. will

Todd Shipyards with general builder.-

the &up design plans rather

be compatible for

practice, Shipyards

than optimized that

one particular

are to insure

adequate cost comparisons slvpbullder is available

are available if requxed.

and a knowledgeable COMING EVF3JTS

second lead

In June 1973, the Navy plans contract for construction

to award a cost-plus-lncentlve-fee

of the lead ship to the Bath Iron Works. Renew Council (DSARC)

In February is scheduled

1975, the Defense Systems Acquisition to decide whether to approve follow-on testing of the propulsion for

ship production.

Data from integrated land-based DSARC sites

and weapon systems at consideration by the

is supposed to be available decision. If follow-on

in making this

production contractors.

is approved,

the Navy plans to have the ships built SYSTEM COST EXPERIENCE As of June 30, 1972, the estimated

by three

cost of the l?F prograxn was This amount is an estxmate of

$3,134 million
increase

for the construction

of 50 ships.

of $402.5 rmllion

over the January 1972 planning was due to (1) the inclusion escalation

$2,731.5 rmllion.
fitting utilxzation characterlstlcs, system equipment

The increase costs, price

of outand planned

and post-dellvery of revised

(2) recomputing

indices,

(3) changes in the ship's

to retain test a slvp sate.

and (4) a Navy declslon permanently

set of combat

at the land-based

The estimate includes the cost of detection except the ILAMPS helicopter. missiles,

equipment and weapons

The estmate does not include the cost of

torpedoes, and zrmnunitlon. were prepared by the PF proJect office. They

The cost estates

include

separate computations for the lead ship and for the follow-on The eskmates were based upon cost experience for - other destroyer _ in the complexity of the systems and

ships.

programs adjusted for differences inflationary effects.

The Office of the Chief of Naval Operations (CNO) more than the

prepared an Independent estzmate which was only $6 rmllion

project

offlee's

June 1972 estimate.

The Office of the CNOstated that

the methodology of its percent.

estimate 1s accurate wLthln plus or minus 10

--

Although the estimates were based on data available the General Accounting Office gained in detailed necessary to rense additional (GAO)believes that,

at the time, 1s

as experience

ship deszgn and lead shLp construction, the estimates.

it may be in possible

GAOhas noted $75 milllon

program costs.

These costs are for weapons and equipment The Navy

the &up may need but -wLil not get during new construction. has made weight and space reservations

on the slvp for these items. data link

The items are the Phalanx Close-in WeaponSystem, a digital system, and mecharmcal stablllzers. Program funding

As of June 30, 1972, the FF program had received development funding totaling $9.3 rmllion milllon
$12.6 rmlkon--$3.3

million

in appropriated Of this

funds and

reprogrammed from other projects.

amount, $9.7

had been obligated and $2.5 rmLlli.on expended.

-3-

Contract data In April totaling 1972, the Navy awarded two cost-plus-fixed-fee for ship system design support. contracts

$5 rmlllon

One contract was

awarded to the Bath Iron Works and the other was awarded to Todd Shipyards In October 1972, the Navy awarded a letter-contract ceiling tion, for combat system integration Long Island, New York. mth a $12 million

services to the Sperrjr Rand Corpora-

SYSTEM PEKFORMANCE EXPERIENCE The PP'S planned length is 420 feet, 3,400 tons. the ship's primarily and planned displacement is increases were noted an These resulted

As of June 30, 1972, only slight

length and weight from the planning estimate.

from modifying the ship to accommodatea second LAMPS helicopter

and refinements to the ship weight estimate. SYSTEM SCHSDULE EXPERIENCE As of September 1972, there had been no maJor schedule slippages on the program. Award of the first 1975. follow-on ship production contracts is

planned for April for June 1977.

Delivery of the lead ship to the Navy is planned

The LAMPS@K-III) operational until

helicopter

for the PF is not scheduled to be of the lead ship. This helicopter will

after delivery A Navy official

be a new airframe.

informed us that the lead ship is LAMPS helicopter. However,

being designed to accommodatethe existing the Navy stated that the new @K-III) to fit within the Pl?design envelope.

helicopter

is being constrained

The other weapon systems are scheduled to be available prior dehvery of the PF to the fleet. The systems identified

to

by the Nav;r as system and the

having high schedule ruks

are the MK-92 Ilod 2 fire system.

control

computer software 3ntegration

RELATIONSHIP TO OTKER SHIPS The Navy plans to deploy the PF Tnth existing destroyer escort shxps and ltith

such as the DE-1052 class, with the new DO-963 class destroyer, the proposed Sea Control Shxp.

ComparedFnth the DE-1052 escort, the FF ~n-ll be comparable in length, 600 tons lighter, one knot faster in sustained sp-eed, identxal The DE-1052

in endurance speed, and accommodate75 fewer personnel. has a single shaft 35,000 horsepower steam engine. The PF and the DE-1052 are Intended to operate mth, of, forces other than fast carrier the command and control of the PF will capablllty strike forces,

and In support

According to the Navy, warfare capability .

and the anti-air

be superaor to the DE-1052 because the PJ? 1s designed with required to counter the an-Lx-&upping rrnssile threat The Navy stated that the DE-1052 class was to counter the

the fast reaction

to the protected force.

designed in the early 1960s wxth a primary capability Soviet submarine and has only self-protection missiles. According to the Navy, the DD-963 will with superior be a larger

against anti-shipping

and faster and anti-

slvp

endurance, sea keeping, command and control,

submarine warfare capabilities

because It is designed to operate with task forces. It will also provide

and in support of our fast carrier fire support for amphibious forces.

The proposed Sea Control Slvp will short takeoff and landing azrcraft.

carry helicopters

and vertical/

SELEXCTED ACQUISITIOT\T REPORTING The PF program was not on the SAR system as of September 30, 1972. In view of the estrmated program cost, GAObelieves 1t should be on the

MATTERS FOR COl?TSIDE~TION Design-to-cost concept unit cost ceillngson new

DODhas adopted the policy of setting weapon systems. The ceiling

is intended to result

in the acquisition needs only.

of simpler and lower costing weapons which meet essential This new approach is known as the "design-to-cost"

concept. _ of

The design to cost concept is being applied to the acqvusition the PF. The CNOhas placed a ceilmg dollars follow-on that if excluding shipbuilder ships. of $45 rmllion in fiscal

year 1973

escalation

on the average cost of the 49 January 1972 planning estimate

The Navy indicated

in its

progra;m costs were escalated to the planned procurement years, cost for follow-on ships would be $51.5 million. They

the average unit

GAOnoted that certain include million (1) $4.5 million for additional

costs are not covered by the ceihng. and post-delivery, (2) $2.8

for outflttlng escalation,

(3) $.7 rKUi.on for ship characteristics

These amounts

changes, and (4) $.2 million represent the difference estimates. The inclusion

for test and evaluation.

between the January 1972 and the June 1972 cost of these costs would increase the estimated

average follow-on

ship cost to $59.7 miXLion. concept, the Navy has stated such performance can be obta;Lned

In commenting on the design-to-cost that i.twXllbuy within ms&mra performance if

the cost ceiling.

The Navy has stated also that if the cost of

obtaining maximum performance LS too hi@., a lower costing product that meets essential requirements will be bought.

-6-

With respect to the Navy's statement that it will

buy maximum GAObelieves

performance If it can be obtaned. within the cost ceiling, that, as an alternative,

the Navy should consider reducing the ceiling '?3msapproach appears to be more concept which is to needs

and buying only essentxLL performance. consistent rnth the intent

of the design-to-cost

acquire simpler and lower costing weapons that meet essential Ol;lly*

The Congress may wish to discuss these matters wxth the Navy. plans to review the design-to-cost Fiscal Year 1974 funds Funds for construction ye=- 1973. follow-on fiscal of the lead &up were made available concept in fiscal year 1974.

GAO

in fiscal

In February 1975, the DSARC is to decide whether to approve shz~p production. It appears, therefore, that substant~sl

year 197% funds will

not be required for the program. year funds for production of follow-on ships, the testing

Fzscal Year 1975 and later Before funds are coetted

Congress should obtain information

as to whether the integrated

of the ship's propulsion and weapon systems at land-based sites has been successfbl. In considering any request for funds to install data link the Close-an on

WeaponSystem, the digital

system, and mechanical stabilizers

the ship, the Congress should be informed as to whether these items are needed in order to meet essential performance requirements or whether these

items wall provide maxxaum performance. AGENCY COMMENTS A draft of the staff study was renewed by Navy officials associated

wxth the managementof this program and commentswere coordanated at the The Navy's comments are incorporated as appropriate. ! As far as we know there are no residual differences in fact, "Vblr" c nr:"rvpc*r\ Headquarters level.

CHAPTER 1 INTRODUCTION The PF ~111 be a new destroyer deploy ship In the late for 1970s. It ship class the Navy intends low-cost United that to

1s to be a relatively unrestricted the Navy stated

escort

the purpose of maintalnlng sea lanes. In addition,

essential

States use of - it should fulfill

the continuing The ship's in protection tary

need to replace mlsslon

retiring

World War II destroyers. existing and planned escorts groups, against and mlli-

1s to supplement forces,

of amphibious convoys. threats. capabllity

underway replenish operate according forces

and mercantile and air

The ship will Specif-lcally,

enemy surface, ~111

subsurface, provide shlpping

to the Navy, it against mlsslle. long, to

Increased mlsslle

to defend escorted

the antl-

and especially

the submarme-launched

As of January 1973, the PF was designed to be 440 feet displace 3,500 tons, miles to have a sustained speed of 28 knots,

and to have

4,500 nautical

endurance at 20 knots.

The ship ~111 accommodate a

crew of 185 personnel.-The ship will 40,000 shaft verslble pitch be driven by two gas turbine engines, aggregating re-

horsepower. propeller.

It ~~11 have one shaft

and a controllable

The PF's weapons will the surface-to-surface torpedo puterized will tubes.

Include

the STANDARDMissile the OTO Melara and gun will system.

for

air

defense,

HARPOON mrsslle,

76m& gun, and two by a comcontrol system. unit

The STANDARDmlsslle control with

be dlrected

MK-92 Mod 2 fire

The HARPOON fire control

work in conJunction

the MK-92 Mod 2 fire -8-

Both missiles

will

utilize

the same launcher, two LAMPS helicopters. war-

The ship will The helicopter

be capable of supporting the ship with It

provides

long range anti-submarlne provides also

fare weapon delivery range targeting The ship's (AN/SPS-49, direct

capability. for

informatlon target

the HARPOON mrssile. equipment system, Includes

the ship's long- radars

detectlon

MK-92 Mod 2 fire

control

and AN/SPS-55) and a

path sonar (AN/SQS-505).

T'hs is the first ship.

report prepared by GAOon the status of the 32' from Its inception through

It discusses the program's actxvltles Certain activities

June 30, 1972: EISTORY

beyond June 30 are also hscussed.

The Navy recognized a need to provide low-cost capable escort shiss for proteCtion as a result new threats of non-carrier naval forces and mercantile convoys The and

of two form&able

developments In eneq capability. rmssile capability

include an increasing anti-shipping

a continued vlcrease in deployment of long-range attack submaLznes. In order to maintain control non-carrier was identified of the seas, the Navy has stated that convoys must be protected. This

forces &nd mercantile in a high-level

Navy study called Project Sixty.

Project Sixty,

requested by the CNO, was conducted by the ProJect The study group stated

Sixty study group during July to September 1970. that Soviet naval forces on the world's power and that ths threat necessitates

oceans have become a dominant greater U.S. naval presence.

The study showed that increasing U.S. dependence on ocean-borne shzppzng of vital resources into this country makes the increasxng Soviet threat

even more immediate. new shipbuilding

It concluded that the Navy would have to take some to provide adequate defense of essential

initiatives

sea lanes of transport

-&.ich could be accomplished through construction

of large numbers of small and inexpensive escorts. .

- 10 -

In and

Septcnber I ty
for tltc m ii

1970 of

the

CXO Inltlntcd of

a study

to shrp

eYcmx.nc \Arch
a

the ~-~ld
decl.s1011

dcs:pn !JC

fcasxbl!

a pew class
mlss,on. S Cll~Tt3tL~'i~

dcstroycr-t-;pc
The CKO strcssrd
1.4~

optrmlzcd reGard:n*;
for

Iimitf~d Slllp'

that

1X W preparzng

SI T C

nccdcd

wlthln

18 month<

use In

the

Navy

s fkture

I.

budget cxamlne

submissions.
lower-cost fiscal CW alternatIves - , year 1975 xncluclcd

this DD-963

study before

Lhe CR0 gvantcd reachrng Study t txh,

to

to

the

d dcclslon provided of

rcgardlnz by the opcratlons of features of $45

destroyer (1) (2) to

pei-

fundIng. mlsslon

g11 dance and

general possible

concept (3)

statcmcnts, and to options

chnrecterlstlcs, arid (4)

a range constraint the

be tonsldered, ship. znd He also the

a cost that

$50 mllllon bo kept software relatrvely

systems

lnrllcatcd complc.~

ec~u~pwr~t hardware

should and

s1mplc,

USC of

lntegratrd

be avoi.dt;d. In January Generally,

the $40

1971

t?tc

CEO srta~ apprlscd the feasibLLlty wlthln of conceptual the of

of

tie

resJ1

ts

cf

thqs jn The

study.

ILL conf armed to $50 m~lLlo? clsht varlatrons

designzng

a skp

range

guldancc dcsJ..gns to further

provldG!d. and

study commence-

cons) ment and phase

dercd of dcslgn

new shop phase also

recommended explore

d comprehcnslvc details.

mlsslon conceptual operstronal

The study which the the xncluded

establlshecl of

a plan speclflc

for

dcveloptncnt for Into status.

prcparatxon

requirements to in proceed project

new s1~1.p~ conceptual

YrOJeCt.

The CNO cpprovcd . phase and estab!] were to:

t ne reccmmendatlon shed the Yatrol Trl:,atc

ob~cct~vc:~

-ll-

1.

Define

ship

characleristlcs size and

and performance

rrqulrcmcnts mlsslon

to rcqulrcs!ents.

rnlnuxllze ship
2. 3. F,stmate Produce total the

cost con5lst.c
costs. with the

nt

with

program PFs at

accuracy. program cost _

or below

eslxmates.
Concurrent the &Duty

--~
the of CNOs Defense approval indicated ship Ihc to of the the be built of
PrOJE!Ct

wllh

Pk prbJect, Navy should

- -expedltc for been a unit briefed and

Secretary

actlon
cost by the of

on a new desrgn escort about CNO in icr $50 naI.Lror,. September new, 1970

In quantity Defense Sixty had

Secretary

rcgardrng escort the that antI tha

flndlngs

the need

inexpensive the CNO sekctcd IIc drtcrmlncd antls:lb,oal

shrps. ship -type, weapons, ship sensors, dcslgn warfare, would In phac,c and be

In Hay 1971 propulsxon

usc<i

system.

one corrllilon air , and of to

incorporating regard, different It

me,

surface

this
that perform

b-as assumed ship types mlssion. than

at would It

bcglnnxng

the conceptual
most economically that of any

be required was fcund, by the

the desirea
galned

however, added ship costs cost of the

cost

sovlngs

was more

offset

specialization, of $45

The CNO also millron rn fiscal threshola were

u111t SlZC

establ;shed year of 1373 3,400

a follow-on dollars tons. were unit exclusive

threshold

shipbullder cost to would and

escalation SLYC conthe the ncbT

rend a size
stralnts

Before

established, --and hence

studrhs the

conducted

determine produce

shlp'L

cost - -vhlch

maximumimprovement to escort force effectiveness. that any changes in the ship's characterxstlcs, thresholds, would require his approval.

The CNOspecified even witkun established

RESPONSIBILITIES Primary responsibility for the managementof the Patrol Frigate Project Office,

Project has been delegated to the PF Ship Acquisition

Instruction Naval Ship Systems Command. Under Naval Ship Systems Command 5430.101, dated August 1971, the project responsible total manager's maJor task is to be

for the development and procurement of the ship and to assure for ship acquisitions level, assigned to bun.

ship systemsintegration

the Chief of Naval -_ M&terial has established the Major Surface Combatant Shxps l?roJect Office. According to Naval Material the project Command Instruction

At the next higher organizational

5430.49A, dated Jul$ 1972,

control, organization

manager 1s responsible for the planning, direction, of aXL effort within the Chief of Naval Material The PF 1s one of the

a;nd integration relating

to major surface combatant ships.

six ships classified

as a major surface combatant ship. assault

The other five

ships are the landing helicopter destroyer -or fleet

@HA) ship, the Spruance class carrier (CVAN), the

(DD-963)) the nuclear-powered aircraft

escorts (DLGN, DC), and the Sea Control Ship. has been established prxmary

Within the Office of the CNO, a program coordinator in the Ship Acquisition and Improvement Dxvlsion.

The coordinator's

responslblllties on all poxnt ship SCOPZ aspects of contact of

xncludc> the with shop the

serving

as the

prlnclpa1. servln;; Coamend

advlsor as the on all

to , CNOs

the slnglc

CW

acqu~slt~on, Naval PInterra the

aspecLs cor#xuct~on.

of

the

acqulsltlon,

and r oqrtorlrg _-

progress

of ship

Znformatlon reports at the on Lh1.s progr3.m ar,d other offlce and 1~s obtalned records , and by revle\llng by intervlewlng

plans, offlclals of the He

, correspondence system pioJect Yavy,

, rntcrmcdlate the Off Ice and but supyortlng mllltary threat Involve the

and hlghcr OF the procedures not-make Secrc tary and

co?unands of

Department evaluated to or the audits to

01 the managemerit decxslonmaklng of (1) the

Defense. related analyses Fe made (2) DO

polzcles process,

cbntrols

we did
prOJrCt

dctaxled

basic as%5~

data the

documents, or the technclogy, in

attclqpt technologxal they were

devclo;, khl I e

approarhcs bexng made.

, or

(3)

ourselves

declslons

14

CHAPTIX 2 -WCAPUI\: SYSTi:hS ST --1TUS The lietr%l

design ax.larded Bath SeRttle) asslstnnce
produr~b~

Frigate

shop

proSran

1 s currently In F.pr11

In

the

ship the

systrm Havy

phase

of the acquxiltlon
for shop system

process. design

1972,

contracts !:orks-

cupport Todd

LO Tao shipbuliuers-ShIpyards to provide thel\Tavy and Corporatlcn,

Iron

Corporation,

Bath,

Maine ; and were phase

Washrngton, during the

The contracts ship on e system design

awarded for ship

c?tslgn used

valldatron InformatIon

11.L.y lnformatl

Accoralngly desrgn and rn

, we have contracts

avaxlable the t Navys

at

the

ship

award planning txre bzclrne

date

to

cstablrsh for by the

cost, The cost in January

schedule, ests~tcs 1972 as

performance thla of

esixmates developed valrdatlon.

p?X3gl-CUll. the Pavy

xnformatlon the shrp

part

SecreLary and

of

Defense of

authorized a lead fundIng shop, for be placed

the

Navy

to

proceed test sltcs ~tcms.

x:lth

development procurement,
It 1~8s

construction procurcmcnt

land-based long lead-time

and

advance that prior Defense

stles+d testing

particular to

emphasrs

on satisfactory

weapon

system

a fuil-scale also requested

productron that perlodlc

go-ahead.

The Deputy Secretary revlew5

of

manqwrnr~nt

shov the Navy1 $

The CNO approved the Pakrol October 1972. Accordmg

Frigate

Shxps

characterlstlcs

in

to the ProJect

Manager, a formJ.

ship acquisltlon

@an has not been prepared

but should be avmlable

by March 1973. I

Our renew of the program's status as of June 30, 1972, showed that the Patrol Frzgate skup has experienced Increases In its end other changes sxnce its mceptlon. cost estxnates

Detaxls of the program's cost,

schedule, and performance are presented below. SYSTEM COSTEXPERIZENCE The Navy's estimated program acqulsltlon cost for the -Patrol for the

Frxgate ship program as of June 30, 1972, was $3,134 million acquisxtion of 50 &ups.
over

Tkus program cost reflects

an mcrease of

$402.5 rmllion rnillxon.

the January 1972 planning estimate of $2,731.5

Our review of the $402.5 million was attributed 1, to the following.

Lncrease showed that the amount -of outflttlng

A $221.1rmll~on and post-delivery escalation

increase due to the inclusion cost for 50 ships.

Thx amount Includes

of $50.1million.

The planning estimate did not

include these costs because estimates were not available. 2. A $136.4 million increase to to other escalation. This

increase is the result for follow-on 3* A $34.3 million and equipment.

of a recomputation of escalatxon

&up construction. increase due to changes in the skup's characteristics These changes are dxscussed In more detaxl on

page19 of this report.

4.

A $10.7 rmllzon increase due to recent emphaseson test and evaluation requirements. The Navy decided to retain a skup

set of combat system equspme test site.

the land-based

The above costs estimates torpedoes, Possible for

identifzed

for the Patrol

Frigate

do not include (2) rmsszles,

(1) IAMPS helicopters

and supporting costs.

equipment,

and ammunition, additional

and (3) personnel

program costs to the above, we noted other These costs, costs which could increase $75 mzlkon,

In addition

the cost of the program. are for after equipment fleet and/or

which amount to at least

systems which are planned to go on the ship instead of during construction. In this respect,

introduction

we found that Close-in stabilizers

the Navy is considering

the installation

of the Phalanx

Weapon System, a digital on each ship.

data link

system and mechanical

We were informed

by Navy officials

that

these items were not included

in program costs because no definite l-lams on the ship, has provided With respect instaXl.mg that weight

comunitment has been made to put these has been made, we found the Navy on the ship for these items. we found the Navy is ships. We found, also,

Whde no comnitment end space reservations data link

to the digital this

system,

system on other ship stabilizers

guxded missile Irere installed

mechanical

on the DE-1052 destroyer

escorts. Econorolc escalation The Navy has included about $514 mLUion for price escalation of $187 Accordlny: year

in the June 30, 1972, program costs. million over the escalation included

TIXLS is an increase in the planning

estimate.

to a Navy official,

the increase of fxxxl

1s attributed

to (1) using fiscal escalation

1974 as a base instead applicable esc;tlat.Lon to outfitting for Increased

year 1973, (2) including costs,

and post-delLvery

and (3) adding chractcristx:,.

costs due to changes in the shipls

---

The $514 mu. ion escclatlon of the progrm. contracts, lb

this

amount is the total

budgeted for the Lfcz

regard escalation 1s mcluded for (1) skpmilldcr's costs,

post-dellvery

-(2) other shipbmldcr's outfitting and

(3) support end other program

costs. Contract escalat.Lon

costs, and (4)

was computed using Bureau of Labor Statistics inckces and learning curves for material and labor based on a basic construction target cost excluclmg profit. EscaXatlon for other shpbuilder costs, support and other progr~z usmg DOD-approved

costs, and outfittmg

pr03ec-hon

and post deLivery vas cow-ted

indices. -

Appendix I shorn a schedule of price escelatlon for the progrm. Design-to-cost cOnce73-t; on new

DODhas adopted the polz~cy of setting umt cost ceilings weapon sys&ms. The ceilmg 1s mteuded to result

m the acqu?.sltlon of

simpler and loTier costing weaponswhich meet essential needs 0nJ.y. This new approach is knom as the "desZ.gn-to-cost" concept. The design-to-cost concept is being applsed to the acquisitron of $45 mlllon in fzcal of

the PF. The CNOhas placed a ceilrng dollars follow-on excluding shiibmlder ships.

year 1973

escalation on the average cost of the 49

The Navy indicated in Its Jmuary 1972 planrung estimate

that if prograz~ costs were escalated to the planned procuremnt years, the average unit cost for foIlloTs-on ships would be $51.5 million. m0 m-ted that cerkn include (3) $)+.5 mllion costs are not covered by the ceiling. for outfitting and post-dekvery, (2) $2.8 They

mL&.on for additlonti

escGz2ation, (3) $.7 mll~on

for ckp charactcristlcs These

changes, and (4) $.2 mXL~on for test <andevaluation. amounts rs?rusent the dlifcrrncc between the

---

Jtuwuy

1372 and June 1972 cost estmpates.

The inclusion of these costs ship cost to $59.7 rmlllon.

increases the estirxkcd

average follow-on

In the DD-963 =d LH4 progrm, by establishng specl -fx

the IYavydevelopment process becan

nission and perfomancc requirements and then

designing the ship to meet these requirements. _ Thx approach, hoT;ever, was modified for the FE in that skp perforce was influenced, on It. the to a

large extent, by the cost of systems being installed Our renew shoxredthat m its Navy is not pl=ng

contracts for ship construction, define or establish total l!Iavy officials informed us the

to conkactuaLly

performance or mssion capabilities.

Government wxll accest primary responslbikty

therefore,

for the ship's design and,

performance.

We found two e:cz&es xhere perforzxnce degradations could occur in the E' for a period of tizne as a result
In one instance,

of equipment substltutlons.

a change :Tas made in ,f;he stip design to provide mstead of the one orlginall;r planned.

capabxllty As a result

for tlro LXX3 helicopters

of the cost increases resultmg

from this design ch3;ng;e,

the AK/SQQ-23sonar &xnned for the ship had to be given up for a lesscostly direct path .U/SQS-505 type sonar. considerably less ca?a'Cllty electronic
The AN/SW-505 sonar also has

than the AK/S@23 sonar.

Sirmlarly , the

countermeasures equpment was changed from the more capable

and more costly ~~3-8 to KLR-1,

--

Navy offxials capablllty was offset

unformed us that

substituting

equxpment Fnth less provxded by the second of the LAMl?S until

by the added capability however, that

LAME hehcopter. helicopter at least It planned

We note,

the version

for the PF is not scheduled to be available the lead slmp has been delivered that performance tradeoffs

3 years after appears,

to the fleet. have been made informed us that

therefore,

in order to maintain tradeoffs

the cost goals.

A Navy official

can be made during

the design phase, but these options phase. of this study, the Navy advised nor that in a

decrease during

the construction

In coxmm&xng on a draft design to cost program, impetus "if xilz "if and there neither

performance

cost 1s the main The Navy stated that

1s a balancing

between the two.

maxxxm performance contract for

ca;n be obtained

~n"chin the cost target,

the Navy

and h~,"UJ l?lzxJmm perfor&?anec . rr 'I?=e Nay enttils costs so high that to carry

atided that be at

ma&mum performance

the Bavy sell out its

unable to purchase the numbers necessary sea, then a tradeoff cheaper product With respect if it will

rmssions that the

may be made - but not to the extent not perform adequately,"

to the Navy's comment that wL-thin the cost target,

It wLLl buy maxxmum perforrznce we believe that, as an

can be obtained

alternate-ve, a lesser intent costing cost,

the Navy should conszder buying only essentaal Thxs approach appears to be more consistent concept which is to acqurc needs only.

perfo1?mnce C;: wxth the

of the design-to-cost weapons that

simpler

and lower

meet cssentxCl

In v,

we believe

t2la.t measures should be Imnplemented to control It appears too early, however, to assess the this purpose.

the cost of weapon systems. effectxvcness

of the dcslgn-to-cost

concept I'or accomplasting

Before attempts are made to assess the effectiveness further study is warranted.

of this

concept,

This study shcxlld consider matters such as in the ceiling, (2) controls on operating

the (1) co&s appropriate for Inclusion needed to assure the ceiling

LS not exceeded, (3) effect

and other costs not covered by the ceiling, and (4) impact on military -effectiveness of sacrificing performance in order to meet the cost ceiling. GAOplans to review the design-to-cost
1974 l

concept m fuxal

year

Program f'undlng As of June 30, 1972, the PF program had received development funding totting million
$12.6 million--$3.3

rmlllon

in approprzaked fknds and $9.3

reprogrwmed fro?r other proJects by the Navy. Of tbz~s amount, had been obligated and $2.5 rmlllon through fiscal had been expended.

$9.7 rmlfion

Funds progr-ed

year 1973 are as follows-

Fiscal Year 1972 and prior years tilllons Development Procurement Construction Total
$12.6

Fiscal year 1973 $ $ 1.5

191.5

-o-o$12.6

-o$193.0

- 21 -

Contract data As of June 30, 1972, two cost-plus awarded foi; irmtial milLon, fixed-fee contracts had been valued at $3.2 Bath, Maine;

work on the RF. One contract,

was arrarded to the Bath Iron Works Corporation, valued at $1.8 milLon, Seattle, Waslangton.

and a second contract, Shipyards Corporation,

was awarded to the Todd Both contracts include

ship system design support relating of the PP.

to the Nav;r's planrmng and design

As of September 1972, changes to the Bath contract increased Its value by $.4 million increased its primarily to $3.6 milLon, and changes to the Todd contract The changes

value by $ .3 million

to $2.1miUlon.

represent an dension

of tune to complete shp design support

and the addition

of selected design tasks. contract for combat system integration Great Neck, Long Island,

On October 10, i-972, a letter

was awarded to the Sperry Rand Corporation, NewYork. The contract totaled

$8.8 mLUon tii-th an estimated ceiling

price of $21~.8mil.lion. aas as a cost-tme

The contract 1s expected to be defllvtized

contract by February 1973. Todd

Ei 5
z z I-=5

Bath Iron Works has been designated as the lead shlpyard.

Shpyards are to insure that the deslCn plc.ns KLXLbe compatible Tn-th general sl=pbuildlng builder. practices, rather than optunized for one particular

Also, Todd Shpyards are to insure that adequate cost comparisons is available

are available and that a knoirledgeable second lead shlpbullder if required.

In June 1973, the Navy plans to award a cost-plus-incentive-fee contract to Bath Iron Works for construction follow-on built ship construction of the lec~d slup. If

1s approved, the Navy plans to have tllc ships - 32 -

in three chlpy,y:~rds.

The PF's characteristics and the June 30, 1972, estmate changes are shown below. Performance Size : Length Weight Weight Endurance Speed Crew A project the result official stated (full load) (light ship) charactcristzc

between the Januxty 1972 planning showed only slight changes.

estimate

These

Plammg

estimate

June 1972 es-k-ate

feet 3,400 tons 2,280 tons

=k!O

440 feet 3,500 tons 2,400 tons 4,500 at 20 knots 28 knots 185

4,500 at 20 knots 28 185

knots

the above changes in size were prmarLLy iv0 L4X.E helicopters estmate. x~3tead

of zodimng

tke sh~.p to include to the ship weight

of one and refinements SySm

S%EDUI& EXPE3IEISCE The PF program schedule has not experienced any significant slippage

as of June 30, 1972, -Estimated 1977 and for the fix-t milestones follow-on

delivers ship,

date for the lead ship is June October 1978. Major progran estmxte

as of June 30, 1972, compared to their

planning

are shorn belolr: Event Lead Ship contract award system February February Plmning April estimate -June 1372 esti?m:e

1973 1975
1975 of follow-on

June 1973
February February ships. 1975

Combat and propulszon integmtlon test DSAX! II?

1.375

"To decide whether to approve production

Event Fxrst folloir-on ships contract Lead ship delivery First follow ' award

--

Planning

estimate 1975

June 1972 estlm~te April

February

1975

June 1977
August 1978 desired for-the

Jum 1977
October 1978 ship is not scheduled This hellcopter the lead

ship delzvery

The LAMPS (MK-III) to be operational w5XL be a new air until frame.

helzxopter after

delivery

of the lead ship. stated,

A Navy official

however, that

ship is being designed to accommodate the existing Navy stated within that the new (MN-III) helicopter

LAMPS. However, the to fit

is being constrained

the PF design envelope. The STANDARDrmssile is presently operational. The HLlRPOON missile The OTO Melara

is scheduled

to be available

for use on the lead ship. in April

76m gun is scheduled to be available

fir control system is scheduled

1976. The MK-92 Mod 2

in September 1974. schedule risks Include integration, generators It States capabllxly, system is a the

for dellvery

Systems identified (1) MK-92 Mod 2 fire

by the Navy as having control system,

(2) computer software system,

(3) OTO Melara 76m gun, (4) propulsion

The M-K-92 Mod 2 is the heart foreign gun control

and (5) diesel combat system. to United firing

of the ship's

system ?-bJch is being converted the addition

specifications.

T2us involves

of a missile

change to a new computer,

and adoption missiles.

of a target

LLlxminat~ng

to work wxth Canltialr warfare The Navy considers fire control

the schedule risk

associated

ln'ch the MK-32 Mod 2 6

system as hq-$.

The MC-92 program appears to be at least June lg$r. schcdulc. slippage proluscd A Navy official stated, CL the

months bchznd the orlpnal however, schcdulc that

3 months of this

has been absorbed through delz~vcr~cs do not ~copardi~c

rcslzLgnmcnt and that

The computer sof%ware integration and involves fire control.

schedule rusk is considered programs and the MK-92

high

making the coxmnandand control system programs function system, and the diesel tee&Cal

together. generator problems

The OTO Melara 76mmgun, are considered low schedule

the propulsion risk items. rx5ks.

In our opinion,

could be a cause of the schcdul

REIATIOYSXIP TO OTXZR SKIPS The Navy plans to deploy the PY Tnth existing shps such as the DE-1052 class, the proposed Sea Control tnth Ship. the PI? KU

destroyer

escort

the new DD-963 class destroyer,

and with

Compared with the DE-1052 escort, length, 600 tons-lxghter,

be comparable In speed, identical The DE-1052

one knot faster

in sustained

in endurance speed, and accommodate 75 fewer personnel.

has a single shaft 35,000 horseposrer steam engme. to operate with, forces.

The X??and the DG1052 are intended of, forces other than fast and the anti-axr carrier warfare strike

and in support

The command and control

capability

capabibty

of the PF wz~ll be superior reaction required The

to the DE-1052 because the PF 1s designed wxth the fast to counter the antL-&upping missile threat

to the protected

force.

DE-1052 class to counter shipping

sTas designed in the early

1960s with

a prxmary capablllty against antl-

the Soviet miss3lcs.

submarine and has only self-protection

According with

to the Navy, the DD-963 wKlJ. be a larger sea keeping, command and control,

and faster and anti-

ship

s?lperzor endurance,

submarine warfare and in support fire support for

capabLlxtics

because it task

LS designed to operate with forces. It wLLl ,&so provide

of our fast axghbaous

carrxer forces.

-25-

pq

I.

#Ff

The E's and the DD-$%3sare partml The proposed Sea Control Ship will takeoff forces, and landing aircraft. underway replenlshuent

replacements for World War II carry hellcopters

ships.

and vetilcd/slloe mphlblous

Its mLssion will

be to protect

groups, merchant convoys, and other nav&L carriers. The DD-963 proGram 1s in scheduled for October
to the fleet

units not protected by aircraft

The DE-1052 progrm 1s nearing completion.early stwes of production with fxrst 1974.
The first Sea Control

shop delivery

Ship 1s not scheduled for delivery

before May 1978. SEL;EC!~ ACQUISITIOr;r RXPORTING The PF progrm was not mcluded in the DODSelected Acqulsitlon System as of September 30, 1972. GAObelieves it Reportmg

In mew of the estimated program cost,

should be on the SARsystem.

going

changr

q and

tt,~t

the

only

ava~lat~l~ to this ($5.7 the cost

contractor ore 1wZnary rnforxiti0n l!lth estlrrztes arc being

cost, design

schcauie, work
of thr

or

pel forrlsnce
on small i.!lc! ship

inforrlstlon IJe did of funds not

was related excmanc

b=cc\ubc respect are to

rela%lvel-j

mount

lnvolvcd that

nj Illort). $*ost plans

Wvy r:ore Dctns.ls

internal dcflnftxed, of these

plCnirlg, and r:nttcrs

me found progrcln are

ship

becoming

management belorV.

flnalrzcd.

drscusscd

The Navy fiscal year

has

prepared budget

Patrol SIAXUX~O~,

Frigate its

cost &wary

estwares 1912

for bascllnc

its valldntlon

:f/-\

changes in the fiscal

planning ~st~~~~dtc s.

year 1973 budget and the Jmgary

Sixth respect to the June 1372

1972 cstwlatc, rle fours

prcpu lng
below.

thcs e est1,7ltes

and

their

validity

and ~,ealcncsscs

are

dlscusscd

Fiscal \c?r :973 budrnt -m--11_-Jarludrv 19; 2 cst1r- I es -In the Congrcss, ship progrrii Prcs~dcnts J;lnu,?ry cost

and

fl--cal 1972, $.?731.5

year the

1973 Xavy

budCct

sutm~sslon the ?atrol

to

the

dated

indicated

Frlgatc the bosrc

wotild

mrlllon.

At

t.hn son-c tlmc,

clstirna~s Estimating comput

g0rics

tvrc

prepaLec.!

by ttc

liaval

Ship 1, the

Systems

Coamards

Costused cost ship fxtorc, on shrps procurement and rqcluding cor,ts. ln cntc-

An,jlysis thcsfs
(1) plans

Branch

(cstlmator cons2 dercd

The methodology following (2) (4) ship basic

Trig
2

es tlmztcs and

other

dcslgn

dnvclopmc,lt, equipment, for the the basrc buildlrtg lead

construzct~on, and were (53 other

(3) costs.

Government-furnlshcd Cost to rstimc?tes reflect involves all the

program

and follow. Frigate ship

separately Thrs of ships

computed philosophy ship

Patrol a lead

phi105r*phy. in the cost

this ~uld

programs for only

one-time, basic and the lead

non-recurrrng ship construction, suPport. follow-on ship

Follow-09

include equIpTent,

costs

Goverr~~ent-furnlshcd . assumptxons and cost Lead ----I e~:irirat~s sT73~ costs

Thk? COStS

escelatlon, to compute

proglaq a:lJ

Tlw

methods art

used

dlscusscd

belou.

for

pl,KIs

and design pltpalatlon, prcparatlon, management. DD-963 and

devtl,opn+nt mock-ups, training, Costs DE-1052 scope, were class

rncltde

shrp

cirsLgn, shop plans upon

drawings and

devc lop -%ent nnd test sites

ror se LC~UC:IO~I, test and other

lasxl-based

preparzltion, I cost experlcncc

and pro~eot of were the

essentially destroyer and

based / I program:. lnflcti(onnry I

Adjustments ef fccks. L! major costs providca

Err~inm~1ln~

rwm

for

assnxd

complexity,

cost calculated

for

the

lead

shrp estimator

is

It5 I from

bas:c ship

construction. weight estimates

Those t I

~ett by

by the Ship

the

Nt-,a1

Er:D:nccring ship

Center

(!kgln?er?iz for

Center length; 1

1.

The

Center

used

as inpat

characteristics

beam,

g~*ovurbwLi and each (2) other of equipment. the follo&.Ang

(3) The scvcn

Li &.I -JI1
wight was then co~r~putcr!

total

estln

ted

for hull, au~ilialy

construction plant, (4) and

rndev

r\efght and

groups: control, and

(11 (5)

propulsion, (61

electrrcnl

command

systems,

outfitting

furnrshlngs,

(71 weapons

supporting

ordnance

systems.

The estimator and group determIned based 1;tbor

used

the

Engineering

Centers costs

estimated per
ton

ship for

vei$tL

man-hours

and maccrrnl cost-cstznctjn,

each

w~lgl~t

on \leighL-orrtntcd from estimates program. costs charges of

relatlonshlps and matcrlal to from compute the

developed costs production of East, these AddIfor the and Gulf and

essentially DD-963

labor

man-hour used

destroyer

The rates were for

engineering _ West Coast the estimator

and labor shIpyardallowed for :l>c

obtalned f Iscal of year

a composite

1973. for

3Cn computing weight priced Overhead f;om East, growth. as a \fas Gulf,

costs,

a margln design

I.0 percent xrvlces weight KS

t tonally percentage at

_ costs of

and other ship and

were .,,.o~ps.

seven

l)bsLC costs

cstabllshcd
and /

72 percent Coast

~~ labcx. shlpyard pracuremcnt

determIned was set at

West

charges, for shed rstrmztor.

ProfiL lead ship.

12 percent

Lo reflect I 3

sole-source

Governn\ent-fLrn3 ,
sollclted

cqulp qsnt Equioment

costs

were for

ohtalncd

frnm

prlci radars, I thr i Elcctronrcs i

lists

Sy G-c

costs -*erc , I

ciectxonlcs, Eron the

propulsLon Engincrllng

51 b tc rns , nnd g,c?>rator Center;

f1rc
COTlTUitlC3tl@ll

costs

obtnlndd
Costs

cquipf>cnt guns, and

fK0m le

Command ; and coqts f ran

contrtil

s)sten,

nlssi

lrunchrng

sy5 terns 1

the

O-dnancr

Cormznd.

allowances changes for future were

for

all lncludcd

the

above In the

growth cost. changes

items

except

for by the

future

charactcrlsticr allowances CNO

As dlrected were not

ChO, cost and the

characteristics

established,

Lead by the

s!\lp

otnel offlcc

costs and

fnclddc Lhc

subroqtlactor Center.

efforts They

admlnlstered rncll~dc pls~s top for lcvcl

plcj~cct

EnglncerIcg scheduling, coats

overview various

rcqulrentcnts, shop program

milesLor,c areas. and lh requlrelqrrtt costs

and program
efforts

OF ih2s.e tasls

LCTP estxr,ltes bv tlc, plojcct

on a level-cf-effort * 0fP:ce and were

provldcd

based

upon

fro5

prctlous

ties troyer

yrograps.

sltlpyard construLt~on

L!CSL,~Y and throubll that t11rfx!

scrvlcc dclrvcry

coTts of

required the last

LO sunport chip, b*lild the cost foilol

follow-on lrlcls dew lop -on shlbs.

ship d on Co5tS

the basis

shrpbulldcrs

1 ould

programs

p-14 ~,cre

drvlded coiqlted

equally basic

among

all

follow-on costs

shops. for the foilorr-on

The catlmdtol

construction

95 percent

for

inbor

and

98 perccr,t

for

m2tcrial

costs.

CCJStS,

tl,r

cstimtor

o~~rmed

n margin f sh+d at

oi

8 pcrcrnt of

for
the

wcighl. labor COLLS assumed rult.lyeal sms estabkshed follow-on in tlx shoos, samr bull/ also fol at

growth.
and that

I Uvcrhcnd

L,LZ: establ Eros

90 percent nbote.

was dctcrn>fned
three

tht? con~posrt. r--0lvc of eight

cihe cs trmator

shrpv:trds blocks to reflect

-w*l1rl,

compatltively

an)arded, Proflc of
the

contracr 10 perccrl,

s in

mostly

ships

each.

compctitlvr cquLpp[nt shrp. and Program orb-xnce

procurcmenl. costs facto1 growth leea were s costs and ship. In half

C~~crnnent-furnlsl~cd
mazxcr GS the

dctermlned for

lead

electronics, l*ere costs

mecflcnicol/electrical determlncd
change

csczlation However, and futllrc the norr~l that snip desqn. for the

In orders changes

the ~erc were

same manner redxcd rot has ih>

as the

approyimately rncluded, Only the of

half of

characterallowance changes that zhkssc

jstrcs
for

change lx nwic ill

alders durzng

ased

bccdu?e ctlon

Iravy plans the lezd ship

most and

will

corfstrl lrl the

chanE;rss for given futura in

be incfuckd charactezxstlcc the lead shrp and sh>pr, ship

follow-on

An al 1 ownncc same reason

rhani;>s costs. costs

II&S deleted

Follow-on the shrpyards bu11d

other were unddr

include on the

Englneerlrg assumptron baocd

Gnter :hnt

suppdrt
I

of

csti=ated vultlqenr

three

sh:uvJrclr, frori /

~+oul+
previous

contrz:?s , appear current,

the lend

on coszs

destroyer
SOilx

programs. AIL;) cost es:~mntcs hlstorlcal,

tr~tilOllgh

to how

bxn

thorollghll cost 1 be p clacls

coqputcd valucs/fnctors, or
mg3mcslng

based

on extc.nslvc

and proJected cst lri~ate the to

t-c !Jnvy consldcrs

qua!rty rrtl:xte but

shJp

11

ccnsidcrs

F01!0>*-0 Ll ship !

lxxausc fin%:

it ship

does

not

represent

a complete ship October, bSellne 1974.

cngznecrlrg for the

solution follow-on

for
shxrJs

the

bdsL line.

A final
until

will
June

not IJP cvnllablc

1072 --I- eC;ttnatE. In July 1972, Plan for lQ72 two the

Chlcf the Patrol

oi

l?avnl Frlgete

flaterjal \lhlch

approved shobeu

an Advanced estxmsted progray

Procu,cpent costs

as of Jung

to bo $3,134 million,
esL,matcs,

8n imr+%prepal t?d this

An e,*plnnatroll off lcrals

of $402.5 nilll:m estlmatt!

oE th3 Ed pect

over the prcvlous

the sate nranncr

lhe
dlscus,ed.

Iitivy

In
lrcnase th14

?> previously

appeas s 01 pcqy 16 of thrs

repclrt

havy

do not

the

fxcal

year

1975

budget

preparations.

s I

Independent In the system

cost -- reviews past, cost G110 hqs noted cstir~atcs that wele not independent being revletds condllctcd. of

x~dnon the

We f9urtd

delivery Analysis

costs was only Group offxial

$6 million stated that

less

than its

estimate.

A Resource a

the estimate

was developed using

RAND Corporation data for destroyer that

ship costing

model based on hlsrorlcal

Navy shipbuilding stated program

programs back to World War II.

He further

the Group computed the average follow-up shop cost _cost from this data and from the PF's characteristics. Accordmg to this offlczal, the only weight, lnformatlon

and total \ provided

by the

pro3ect

office

was the ship's for

propulsion

system characteristics, He stated

crew size, that this , j estimating

and costs

the electronxs

and ordnance equipment. was the model's

cost data was used because this area. The assumptrons plan,

weakest costthe follow-

used r_n the model regarding rates, labor

on shlpbulldlng learning curves,

the overhead and proflt

and material were the same

and change orders allowances offxe's. DOD lndlces

(3.5 percent)

as the proJect According estimate

were used to compute escalatron. Group's report, costs the Rand Model wlthln I I 1 ord&s, plus

to the Resource Analysis and post-dellvery

less outflttlng

1s accurate

or minus 10 percent. Using the traditlonal Resource Analysis the project instituted office's conflguratlon allowance of 8 percent for chage

the

Group prepared estimate. controls

an estimate hccordlng

that was $83 mllllop

more than

to the Navy, however,

make the 3.5 percent

recently I change factor

appear reasonable. PROGRESS PiCASURLXLXT Our revlcw was limited Internal to the techniques and contract used to coordinate efforts {and monitor i and to the man-

the Navy's current agement actions

ship dcslgn

which

the proJect

manaecr Il)lans to use after i

1 of awarp I

We noted managing
meetings

the ship
(2)

prlncipsl :ystcm pexludic 0S E~claf

ma-qcmcn design svstc~ that phase status staff

teChTliqUES

used program

by the are (1)

Navy staff

for

the
and

of

the reports.

We were are the major

lnFon,lcd

by

a project devrce to This

offzcc
beiwccn

n,cctin~: Navy

comn~unic~~t~o~s

p?JCCt

oirlce fxtual that: oiIfrce for that

and othcx InformatIon

ond contractor the

officials status.

obtaxn oIflcxa1 1.

t~mcly

apd

regardlng

progrdms

SLated

Internal

pro~ccL staff Insure cctlon ard

meetings the comporcnt all pI.oJcct and other are Xt between these

are

held

,.~eckly

fcr

kv
meetings

managers. olflce related t\e people

The staff arc aware

of Tht hrs

current manascrf cc3pot-L

items

lniorr,ztlon. manager ~zo-~cct dl;g future and

s meetings t n,mG&$ ,s . polar-y, establzshed. are held

proJect

meetxgs

baa~c regal

manajcpenC, tasks
7.

plan~lry,,

and guidance

arc

Weehly

me&.trngs

with

the

Engineerin

Center.

4. I

The ChO 51 [,ro$iI~ pro;lcct the offrcta

coordinator offlclclc to

meets discuss prlnary

frequently

with as it affects

F~O~~OXI St&us purpose is

highest

Natty

1cvel~;o

l%e

to exchan2c

infol,nation, 5. hr-~kly mwtinql; are

putTpOSe

held

rlfth

the

shipbuilders
iIIfO~~~tl.OKI.

project

mnnnytirs.

The ;Jrin\ary Apart from staff biwrcklyi prinary or monthly shrp desagn

1s t0 CXCh?g@ meetings, the proJ<ct reports -- and the from

office

receives

weehly,

status egcnt Center

t\ e Eng~~crlr~g support blheekly on spa& dcs:gn b&gets Ilsts, major report

Center--the contractors. management control for drcwrngs, trelght, summnry, Informatll>n shop

ttVo design subq1t.s inforrnatlon

The Englnecrlng infomation <combat space system and power reports ani

currently

llhl ch Include communication

diagrams, master sur~ry

requirements, requlrerrcnt

oqulpmcnt for each status to

8 manning task. on the action Ills

*and a flncnclal Is ampliflcd r7hlch if

by sabmlttnl the proJcct D Center report report

of

a sleekly uses

bczslc

desi&n zedlrectlon

manager

recornrend

or plovioe /

requlrcd

The EngrnccrIng <submit program. a monthly This

and

the the (1)

partnczpatlng desl:,n total phase crsts of

ahrpbulldind the shrp for

contractors acqulsltlon tht!

I

during Includes

zncur.rcd

month CW~;JLP~P tl

of the lcport and csltimntcd fund, required bj contract work, (21 stn~us of the work lncluorng rdtntlFrc;tlon ,problems rcvlcws potcntlal , cny unresolved CrLtrcal actron or IIlaJOr being cost fIndings token, (31

line item to of szgniilccnt resulting Fdentlfzcatlon or from r

formal of

) nfld any corrective develop-lcnts which

may have

) schedule,

I techn~~cnl

as of f!inoo

Segeerk!vr varisnccs

19 ?2 shot,cd no slcniflcpnt rcrortt$L erc edcquatcly

sLhcdulc

crplnlned

or cob t varlanct s. and documcntcd O sup,)ort rnfortxatlon

It
were

sP&l d DC noted,
not ahard,?d until

hot~evtr,
Apr11

1hat bccaurcc the dcslgn

1972, nva~labil~ty of

contLncts
was

FLI~W-TF. efforts -WC were Acquisitlor out the life tnforncd Plan of wxll the by a project be the program. chengcs the the
pro~cct

. offlcc prosrrm klhrch to offlclal that the Ship through

pxlmary The plan 1s erpected

manncement ~111
DC

document updated by

anp7jklLly March 1973. that contrxtcrs

to eflcct Ths will plan

program outLrncs by

!)e completed s and other th&

rcportlng

requlrcrcnt to control

tcchnlqucs of

be used

manager the flsn Navy. ~~11

actlvitles

and t;lither

rowands

wIthIn

3ne Shxp picms shrp, for for crtch

Pcqu~sltron oi ti 2 Fhree

be supplerc.entcd rnanzgcnreilt These Controls discussed

by more

dctaxlcd gn, ~111 to 1 cad bc used be

program

pilases--icsl plans tcchnlqces

62-d follow-on c&y-to-day by the Shop design at dlffcwnt

sh~ p production, management proJcc guldanceo are

aetalled and below,

enplvcd

t ~~anager rrlll.

I changes be controlled In the acqulsltlon by t,+o groups cycle. 1,~ that 14111

function

stages

Patrol I

and derrdc

03 desxgd

soiutlons

recommended

ty

thci

design

teams

I during

A second

group,

thi- _Patrol or disapprove design dellvery in

fr~[,clce spcclfic baselrnc schedules, for

Configuarntion changes includrng and the

Control or adclitlons to wf 11

Board,r*lll the affect This latest

approve dacumentcd cost,

changes data IrZc of

whrch

contract Board Ship wrI.1 prc;rsn manager will that

requxrcments. the program. by the control \ the total shr.p

plans.

remain

operation

project group program lhc grotp

costs will In a number to the other clement control

be monrtored of ways. In cost

and corltrollcd one way, cs?lmatcs a cost for

be cstablxhcd reflect amon exh The- cost breakdown irdependcnt

maintain shop

latest thlnss of

conflguratlon dollar can prepare the

and program budgets and rrithin level the

wi 11, that
I

, allocate program ~111 formIng

detcrmrrc
the budget

the group

be achlevcd program basis for

2nd

contract
cow!lnacnt's

work

structures cost

cstin3t.e. Ship Thl, ad costs, ta us that the Cx,t Aajustmont RCVICI~ ail1 be cost4 cost; m-Lo 1 I acqui,sItion at a

3n another per-for-red
to du:e,

vay,

a quarterly office.
to

b;r t1-p pro,ect

L3stlmxed costs

~evief* the

br 11 sh3w program latest estimak3. be formal~zkd Comptroll.er. the shop

coq~letc,

--

coru~le-kion report and

PrOJCCt

corqs-red sukx.t,ed officrnls contractors

1;1$h budgeted se7--anndlly Informed wrfl

and rrill Ka\y

during to

phase, 7000.17, in

the

be rcqulrcd E:xasuremnnt w:ll lnd

lmplcmcnt fol have also Selected

D3D Instruction lrr,,l-d

cntitlcd April
1972.

Ferforxnce

Tne shlpburlders structure separdttly

constructron mana,+?mcnt

LOL k br >akcio+ln control sy5tcrl5

I rIcqur;rtron,l I to furnish a shop I ~dcntlfy exl sting n,odlf icat

f ram propnsrd

I ions
i

to

Ijuring the with dated cost, down of contractors

construct30n, submit

--

the

project cost entitled will rotated also cost

m?nngcr

will

ctso repclts

require
in

thdt

monthly 7000.8,

pcrfornancc Coct include to provide rm+ct, problems, thr the cffccts and

cornpli,ance ,I1 ,

DOD Instruction April-I, and 1970.

Pcrfor.rancc informution contractors cal ly of program

Report

The rcpqrt perIorrrancr It signlflcant will

on technical work Zlcntificatlon management status

dccrsrons. the projccL

schedule itecrs. having to

for

brcuk-

structure

problems tclken

actions
inIorruatlon

resolve use to

exlstirrg and

rn making reports monthly the

validating by the reports Tlrc

reports

managernext

In addition

submxtted progress

ccntraczors, from ~~11 ship the

manager of

~111

recerve at

Navys

supcrvlsor inf ormatzon schcoules. CCXI~EI~IIC~S ~~11

shlp~u~ld~.ng

shlpyards. allocation that buzider of ard

provrde

required lk Vlll prov~dc E;ffectxng Partlczpents shipb,ir.ldcr

to monator were also ted

matcrlal ;_nTorr,ed rjt the

and

construction pcogrcss f-onfercnces

quarterly s shzpyards the

procuctlon 0 Th-

b2 cmdbc

3 thorou$ production ~111 , the

evaiuatlon schedules Include cog&ant of otncr

program tlmcly

and

resolve of

problems the ship.

completlor, cf

rcprcsrntztrves supervisor msterrol of

thr?. project

office, and, as appr<)prxte,

shlpbulldlng and of

reprcsentctlves ectlvlCleso Because could

It

commands,

Nctvy supply I I I sl.ngcs, WC

the

program the

1s only cffcctlvcncss pror,ratll rhry

xn Its
of

early the

plonnlng above-stated tl zst!

not

evaluate to us cr;zrg,c tI3t and

seems to

as the Glen

develops,

proreduxcs, , proccdules will

begi,)

cctn 1~2 pzoprly

cvcluatcd.

12

perccl-c

- (note al

16

prrcen%c

dAccording to the ?Tavy, the inforxmt1on presented herein 1s based. on d&a developed as SCN budget submssxons. In the case of the lead ship, cost type contracts will be used making xt vi.rtu,aUy mpossible m the ftitum to spec~fiT;zUy identxii the coxtributlon of escalation as a sepraze elemzx 01 ~0s~. GAG L:lle-ies tha, b0 a5SiSt L ill cant, dllJ& program c~sis the Ilavy s,,ould at~emp t to Identify escalation as a separate cost elernerdi There my ne a need to develop procedures for domg tbls where cost type comracts are involved