(Bloomberg) -- The US Navy mismanaged a program to keep in service 11 older cruisers designed primarily for air defense, “wasting” nearly $2 billion in the process and failing to hold contractors accountable for shoddy work on a broad scale, according to an audit released Tuesday.
The congressionally-mandated report sheds new light on a years-old dispute between Congress and the Navy over whether or when to retire the aging Ticonderoga-class fleet and save, perhaps, billions of dollars.
Lawmakers said the vessels must be modernized and upgraded to increase and sustain the Navy’s firepower. The effort has not gone well, however, stymied by poor planning that squandered money and resulted in vessels that won’t be useful for many more years, according to the audit by the Government Accountability Office.
Overall, “the Navy did not effectively plan the cruiser effort” and “this led to a high volume of unplanned work — 9,000 contract changes — resulting in cost growth and schedule delays,” the GAO said.
The service since 2015, spent $3.7 billion modernizing only seven of the guided-missile cruisers but “only three of the seven ships will complete modernization, and none will gain five years of service life, as intended,” according to the report. The Navy “wasted $1.84 billion modernizing” the other four cruisers that have now been divested, or retired, “prior to deploying,” the GAO added.
“By not extending the service lives of any of the 11 cruisers as planned,” for at least five years, the Navy “will lose 55 years of operational cruisers, compared to its original plans,” it said.
The report outlines additional challenges faced by President-elect Donald Trump’s choice for Navy secretary, John Phelan, a business executive and major donor to Trump’s campaign. These are on top of readiness of the amphibious warfare fleet and major schedule delays with its top submarine programs and restocking air defense missiles.
The Navy’s acquisition head, Nickolas Guertin, in written comments, agreed with GAO recommendations that outlined lessons learned from the cruiser effort that can be applied to future maintenance and upgrade programs.
USS Gettysburg Example
The first Ticonderoga-class cruiser was commissioned in 1983, with each ship estimated to have a 35-year service life. Congress was anticipating extending the life of the 11 vessels about five years each.
One of the three upgraded vessels, the guided missile cruiser USS Gettysburg, was commissioned in 1991 and has undertaken a $600 million overhaul.
But even before its current deployment — with the Harry S Truman Carrier Strike Group in the Middle East — the crew reported issues with parts. The crew also reported propulsion and electric systems have been a concern, the GAO said.
The Navy now says it plans to retire the ship by 2026, according to the GAO, meaning the overhaul failed to extend its service life.
Poor contractor workmanship was pervasive “across the cruiser effort,” the GAO said. The Navy directed the agency not to disclose the names of the contractors who performed the upgrade work at Norfolk, Virginia, and San Diego, California.
One unnamed contractor “performed poor quality work on USS Vicksburg’s sonar dome — a critical element of the anti-Submarine Warfare mission area — resulting in additional cost and schedule delays due to necessary rework,” the GAO said in the audit.
The Navy leadership weakened tools designed to hold contractors accountable for “poor quality work” such as assessing monetary penalties and reduced inspections by almost 50%, “which are a vital tool for overseeing ship repair contracts,” according to the GAO.
“These actions were implemented to maintain strong working relationships with the contractors because of the Navy’s dependence on them to modernize its fleet,” Navy officials told the GAO.
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