The NSSN program is intended to address the Navy’s requirement for 10 to 12 new attack submarines by the year 2012 that are as quiet as the Seawolf, but at lower cost and without compromising military utility. NSSN Costs Have Risen

Based on Navy estimates for a 30-ship, single shipyard program, the Seawolf’s average acquisition cost was estimated to be about $1.85 billion compared to the NSSN’s estimate of about $1.5 billion. Based on a 30-ship, two shipbuilder program, the Navy’s estimated acquisition cost for the fifth ship of the NSSN class has already risen from about $1.5 billion to about $1.8 billion as of March 1996. According to the Navy, most of the $250 million increase in the estimated cost of the fifth NSSN is the result of the direction in Public Law 104-106 to add a second shipbuilder to the program and to accelerate the procurement of two of the first four submarines. Although we believe the cost categories seem reasonable, we have no basis to agree or disagree with the total program estimate because the Navy has not provided support for the costs associated with the individual categories. Potential for Cost Increases for Variety of Program Reasons

Even without adding a second shipbuilder to the program, there is a potential for cost increases, because of a variety of program risks. The estimated start-up costs for the second shipbuilder range from $1 million to $1 billion. If a new design is proposed and accepted, the estimated cost would depend on the submarine’s attributes and requirements. As we point out in our report, the C3I system is a highly complex development and integration effort and there is prototype equipment development concurrent with ship construction. DOD believes that the current estimate is adequate and that it is not appropriate to use the cost of transferring the design of the DDG-51 to estimate the cost of transferring the design of the NSSN.
Why GAO Did This Study

GAO reviewed the status of the Navy's New Attack Submarine (NSSN) Program to identify areas of potential risk for rising costs and to provide information on the submarines' potential performance.

What GAO Found

GAO found that: (1) the NSSN program is not likely to meet the objective of producing a submarine that is significantly less costly than the Seawolf; (2) based on Navy estimates for a 30-ship, single shipbuilder program, the Seawolf's average acquisition cost was estimated to be about $1.85 billion compared to the NSSN's estimate of about $1.5 billion; (3) based on a 30-ship, two shipbuilder program, the Navy's current estimated acquisition cost for the fifth ship of the NSSN class has already risen from about $1.5 billion to about $1.8 billion; (4) Public Law 104-106 directed the Navy to accelerate construction of the first two submarines and to use two shipyards instead of one to build the first four submarines; (5) according to the Navy, this change has increased the estimated cost of developing and building 30 NSSNs by $3 billion; (6) although GAO believes the cost categories seem reasonable, GAO has no basis to agree or disagree with the total program estimate because the Navy has not provided support for the costs associated with the individual categories; (7) according to the Department of Defense, a $3.8-billion increase in budget authority for the Fiscal Year 1997-2001 Future Years Defense Plan period will be needed to acquire two submarines earlier than originally planned as directed by the law; (8) GAO believes there is a potential for other cost increases because of a variety of program risks: (a) anticipated changes in the ship's design or the addition of new technologies are likely; (b) the NSSN command, control, communication, and intelligence combat system development and integration program is highly complex and optimistic; (c) development of some prototype equipment is concurrent with ship construction; and (d) the cost of transferring the submarine's design from the first to the second shipbuilder is based on an optimistic estimate that is less than the actual cost of the last major design transfer; and (9) there is a divergence of views on the start-up costs for the second shipbuilder.