This story has been updated to include a statement from the Navy.
The Navy’s cost estimate for the lead ship in its new ballistic-missile submarine program grew by $637 million over the last year, according to the service’s Fiscal Year 2022 budget submission.
The estimated price for the future USS Columbia (SSBN-826), the lead ship in the class of 12 ballistic-missile submarines, is now $15.03 billion, compared to a $14.39 billion estimate in the FY 2021 submission, according to budget justification documents released late last week.
Much of the growth is due to an increase in planning costs, which went up by nearly $550 million, according to the documents. The planning costs associated with the first ship in the class went from $6.007 billion in FY 2021 to approximately $6.558 billion in the FY 2022 request.
The Navy shipbuilding account’s budget justification book attributed the cost increase “to updated program cost estimate” caused by the shipbuilder’s performance.
Following an “in progress review” into the class, the Navy refined the requirements for the program to adjust to an estimate of the lead boat’s cost from the Pentagon’s Office of Cost Assessment and Program Evaluation (CAPE) and a 2020 cost assessment from the part of Naval Sea Systems Command’s engineering directorate that performs cost evaluations, according to the documents.
“Estimate updates were primarily driven by updates to shipyard construction performance and material escalation,” the budget books read.
Basic construction costs for the lead ship also increased by approximately $133 million – from $5.164 billion in FY 2021 to $5.297 billion in FY 2022. Ordnance costs decreased from $660.034 million in FY 2021 to $564.115 in FY 2022, rounding out the overall cost increase.
General Dynamics Electric Boat, the prime contractor for the Columbia-class boats, declined to comment when asked for an explanation behind the cost increase. After this story was published, a Navy spokesperson told USNI News in a statement that the cost of the first boat grew due to a new estimate.
“The budget increase is a result of the Navy funding the program to the most recent independent cost estimate,” said Lt. Cmdr. Stephanie Turo. “Ordnance costs were anticipated early in the project based on a best estimation at that time. The decrease was caused by vendor prices coming in lower than estimated.”
In January, the Government Accountability Office expressed concerns that the Columbia program was at risk of delays and cost overruns due to planning holdups at Electric Boat, USNI News previously reported.
“Electric Boat has generally not met its planned design schedule for the lead submarine due, in large part, to persistent inefficiencies associated with its new software-based design tool. The tool integrates new capabilities, such as some enhancements to material ordering and cable routing. The tool was also expected to reduce the average hours needed to complete design disclosures by almost half of the time required for the Virginia class program. The program and shipbuilder expected these capabilities to enable greater efficiencies than previously possible,” GAO wrote in the report.
“However, problems with the tool’s software prevented the program from fully realizing these efficiencies. Consequently, Electric Boat is behind schedule in producing key design products—design disclosures and work instructions—and as a result, is experiencing delays in ordering materials needed to support the construction schedule. These delays, in turn, led to cost increases as the shipbuilder requires additional work hours to complete design products.”
Remarks in the service’s budget books describing the cost increase say that “[m]ajor deltas in [Columbia] caused by shipbuilder performance (Plans and Basic), material escalation (Basic) accounting for class construction startup efforts split between SSBN-826 and SSBN-827 (Basic), Ordnance and Other; these reflect the updated program cost estimate.”
USNI News understands that many of the planning costs for a lead ship are one-time expenses, including design work, that are not necessarily indicative of costs for follow-on ships. For example, while the estimate for Columbia is now approximately $15 billion, the Navy’s most recent cost estimate for the second boat is about $9.3 billion. The FY 2022 submission did not include a Future Years Defense Program (FYDP) five-year outlook, so the $9.3 billion figure is from the FY 2021 submission.
The Columbia-class program – which recapitalizes the sea-based leg of the U.S. nuclear triad – is the Navy’s top acquisition priority.
Seeking to justify the Navy’s FY 2022 shipbuilding request, which is only asking for one destroyer compared to the projected two in last year’s five-year outlook, a Navy official pointed to the Columbia-class program’s importance.
Delaying the purchase of the second destroyer “was absolutely an affordability question, where the goal of the department was to balance the first priority, which was investment in Columbia [ballistic missile submarine] recapitalization,” Rear Adm. John Gumbleton, the Navy’s deputy assistant secretary for budget, told reporters last week during a briefing at the Pentagon.
The Navy has very little margin for the Columbia program’s schedule and is under a time crunch to replace the 14 aging Ohio-class ballistic-missile submarines.
But GAO said in its report that the design tool issue could affect the shipbuilder’s capacity to meet the schedule for the lead boat in the class.
“Electric Boat faces persistent problems with its design tool leading to cost increases and schedule delays during the design phase,” GAO wrote.
“Late completion of design products threatens to impede construction progress and indicates challenges in the Columbia class program’s ability to achieve the lead submarine’s construction schedule.”