‘Navy wasted $1.84 billion’: GAO slams cruiser-rehab effort

The Navy never wanted to modernize its Ticonderoga guided-missile cruisers, preferring to spend the money on newer ships and technology. But lawmakers balked at losing hulls and missile tubes, and ordered the service to refit some of its remaining cruisers to serve several more years. 

Then the Navy botched it, according to a new report by the Government Accountability Office. 

Over a decade, the service spent $3.7 billion on a poorly planned, inconsistently managed effort that “wasted $1.84 billion” on four cruisers that never deployed again, GAO wrote.

“The Navy did not effectively plan the cruiser effort. This led to a high volume of unplanned work–9,000 contract changes–resulting in cost growth and schedule delays. The Navy has yet to identify the root causes of unplanned work or develop and codify root cause mitigation strategies to prevent poor planning from similarly affecting future surface ship modernization efforts,” the report said. “Further, weakened quality assurance tools restricted the Navy’s ability to hold contractors accountable for poor quality work.”

The saga began in 2012, when the Navy proposed to retire seven cruisers before their designed end of service. Congress rejected that pitch, and several successive ones. In 2015, the Navy got underway on a plan to refit 11 cruisers over a decade. By 2017, that plan had been pared to seven ships. Four of those ships—Hue City, Anzio, Cowpens, and Vicksburg—consumed $1.84 billion in repair and refit work, and then were decommissioned without ever deploying again.

Now, just three cruisers are slated to emerge from an effort that ate a total of $3.7 billion between 2015 and 2023: Gettysburg, Chosin, and Cape St. George. None will actually gain the planned five years of service life, the report said.

So what went wrong? GAO, which interviewed more than 100 Navy officials, found several problems, including:

• “The Navy did not develop key program planning and oversight tools and documents for the cruiser modernization effort, such as an acquisition strategy, independent cost estimate, risk management plan, baseline, and Navy program oversight meetings.”
• “Despite widespread instances of poor-quality work during the cruiser modernization effort, NAVSEA senior leadership discouraged RMCs [Regional Maintenance Centers] and contracting officials from fully using key quality assurance tools to maintain the industrial base and a positive working relationship with the ship repair industry.”
• “Even though the Navy used more than $2 billion of procurement funding for cruiser modernization, it did not implement planning and oversight tools typical of high dollar major defense acquisition programs following the major capability acquisition pathways because it is not an acquisition program.”

The GAO report offers six recommendations for the Navy, all of which service officials concurred with in their official responses. These include: 

• Naval Sea Systems Command should require NAVSEA 21 “to consider requiring that future large-scale modernization and maintenance efforts implement planning and oversight tools used in acquisition programs.” 
• The “ownership of vessels should not be transferred from the fleet to NAVSEA for major modernization efforts.”

The report concludes: “While it is too late to salvage the cruiser modernization effort, failure to learn critical lessons poses risk to the future of the Navy’s surface fleet as it begins significant modernization efforts for other ship classes.”