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Saturday, January 7, 2012

Well, What Do You Know, Another DoD Cost Overrun

The Gerald R. Ford, the lead ship in the first new US carrier class in 35 years is seriously over budget:

The Navy has estimated a worst-case cost overrun of as much as $1.1 billion for the aircraft carrier Gerald R. Ford, the service's most expensive warship.

The carrier is being built in Newport News by Huntington Ingalls Industries under a cost-plus, incentive-fee contract in which the Navy pays for most of the overruns. Even so, the service's efforts to control expenses may put the company's $579.2 million profit at risk, according to the Navy.

A review of the carrier's rising costs began in August after the Navy's program manager indicated that the "most likely" overrun had risen to $884.7 million, or about 17 percent over the contract's target price of $5.16 billion. That's up from a $650 million overrun estimated in April, according to internal Navy figures made available to Bloomberg News. The worst-case assessment would be about 21 percent over the target.
I would suggest, given the record of the DoD, as well as the well documented issues with getting its new Electromagnetic Aircraft Launch System (EMALS) catapult, that the worst case assessment is at least 10% below the final overrun.

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