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

Updated: Dec. 18, 12:33 p.m. ET.

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, GAO wrote, “wasted $1.84 billion” on four cruisers that never deployed again.

“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.”

"The Department of the Navy concurred with the GAO's recommendations in the report and, as identified in the responses, is applying lessons learned to future maintenance and modernization efforts,” Lt. (j.g.) Utsav Trivedi told Defense One.

Both Congress and the Navy bear some fault for the debacle, according to Mark Cancian, a senior adviser at the Center for Strategic and International Studies.

“I would say the report misses the big issue, which is that the Navy and Congress disagreed about the ships, right?” Cancian told Defense One. “They had to perform for Congress, even though their heart wasn’t in it and they didn’t really intend to carry it through.”

On the other hand, of course, Congress directs the Navy, “and if Congress tells the Navy to do something, they should do it and not not drag their feet and try to subvert it, which is basically what they did,” he said.

Year after year, the Navy complied with the requirement to modernize, but they also asked in each budget request to just retire the cruisers. 

Cancian said the Nacy, would have preferred to use that money to buy more upgraded destroyers. In the end, the amount it wasted is roughly equivalent to the cost of one Arleigh Burke Flight III ship. 

Either way, the Navy would still be down ships, which undermines Congress’ preference for a larger ship count.

In the future, Cancian said, Congress should put some more guardrails in place when it’s asking a service to do something they’ve openly objected to.

“They could have periodic GAO reports, you could have quarterly reports – there are a lot of things you could do,” Cancian said.