The US Government Accountability Office (GAO) has submitted a scathing report to Congress on the poor performance of the US shipbuilding industry, highlighting potential challenges for Australia as the government embarks on its own national shipbuilding strategy.
The report opens with a blunt message: “The US Navy set a goal in 2007 for a fleet of 330 ships. Since then, the Navy has fallen 50 ships short, gone $11 billion over budget, experienced many years of schedule delays, and delivered ships with less capability and lower quality than expected.
“These poor outcomes persist because policy and processes enable the Navy to deviate from shipbuilding best practices.”
The report comes as the US Navy prepares to undertake its most significant size increase in 30 years with acquisitions including Columbia-class ballistic missile submarines and a new range of guided missile frigates under the FFG-X program. The authors examined the last 10 years of US naval shipbuilding, concluding that programs “have often not achieved their cost, schedule, quality, and performance goals”.
“While poor outcomes are more acute with the first ships of the class, follow-on ships also often do not meet expected outcomes.”
The report notes that ships frequently overrun budgets by up to 80 per cent and fall short of schedule expectations (sometimes by more than two years). As a result, the US Navy “routinely accepts delivery of ships with large numbers of uncorrected deficiencies”.
The Freedom LCS variant, for example, is unable to meet the 3,500 nautical mile range requirement. The report also singled out Austal’s Independence-class ships for being unable to meet the speed requirement of 40-50 knots.
Performance issues on other ships include “catastrophic propulsion system failures, issues with the engineering control system, and electrical distribution problems including the total loss of electrical power”.
The report argues that the problems start with “an imbalance between the resources planned to execute these programs and the capabilities the Navy seeks to acquire”.
“This imbalance forms during the pursuit to fund lead ship construction, when competitive pressures to get funding for the program are high and many aspects of the program remain unknown,” the report continues.
“During this process, the Navy often initiates shipbuilding programs with weak business cases that over-promise capability.
“Shipbuilding programs come under pressure to control growing costs and schedules, often by changing planned quality and performance goals. By the time these pressures are realised and acted upon, multiple ships are often under construction, resulting in disruptions throughout the ship class.”
The report is a stark warning of the potential pitfalls for Australia’s shipbuilding program, particularly after an ANAO report identified ‘high to extreme risk’ for the submarine, frigate, and OPV builds.
“Key risks relate to the delivery of expected capability, program cost, ability to meet program schedules, and management of the industrial base,” ANAO stated.
These are exactly the same issues that now plague the US fleet. Defence and government would be wise to learn from the painful mistakes of others before RAN finds itself adrift on ships with no power and less capability than planned.