The first Columbia class submarine is due for delivery to the Navy in 2027. It plans to spend more than a hundred billion dollars for a dozen of them. Delays in this scale of program are inevitable. In fact, sub number one is already late. Yet the Navy, auditors say, lacks a statistical schedule risk analysis to go along with the program. And that means it may not have enough insight into the whole program. To share details, the Director of Contracting and National Security Acquisitions at the Government Accountability Office, Shelby Oakley, joined the Federal Drive with Tom Temin.

Interview transcript:

Tom Temin And this is really one of the central programs of the Defense Department, you might say, this new class of nuclear subs. It goes along with the Virginia, but this is a new type of vessel correct?

Shelby Oakley This is our replacement for the the sea leg of the nuclear triad. It’s a key aspect of our nuclear deterrence posture within the United States. And it’s the number one acquisition priority of the Navy.

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Tom Temin And you found a key program best practice missing from how Navy is managing it?

Shelby Oakley Yeah, I mean, I think one of the things that we have said for a long time about this program is that it is so large and it’s so complex and important to be delivered on time that having the types of analysis that would help you understand what your risks are and what the challenges are that you might face and what the cause is of some of the challenges that you are facing would enable you to make better decisions, to buy down risk and take action to address those things before they become major problems. And we’ve just found that the Navy has not done that with regard to its schedule.

Tom Temin And what has been the cause of some of the delays already? I mean, this thing, nothing ever gets delivered on time. And this is an immensely complex vessel. And so what what’s been the problem so far?

Shelby Oakley That the design of the ship has been a challenge. And so being able to kind of pump out the design products and being able to deliver documentation to the team of folks that build these things to be able to have paper on hand, to be able to say, here’s the steps I need to take to build this thing has just been like less efficient than they expected. The other challenge that the program has continued to face is that from a lack of supply base, the industrial base for submarines and shipbuilding in general has really atrophied over the past 20 plus years. And the Navy has been focused on trying to build back up this supply base so that it can meet the needs. And I think the Columbia class program is one of the ones that has experienced some of those challenges of single or sole source suppliers, folks that typically would have done the types of work that they require for these subs just not being around anymore. And so having to really focus on that. And then there’s workforce challenges as well. When you’re scaling up this giant new program, Colombia class program, at the same time that you’re trying to build Virginia class submarines as well, as you mentioned, that requires a pretty significant workforce. And that’s just not in existence right now. So these builders in the Navy have had to focus on building up those workforces to be able to meet the needs for these programs. And that’s an ongoing process.

Tom Temin And who is the single prime contractor for Columbia?

Shelby Oakley Electric Boat is the prime contractor for the Columbia class program, and they’re partnered with Newport News down in Virginia to be able to kind of deliver key aspects of the submarine up to Electric Boat.

Tom Temin So in that sense, we have a sole source for nuclear submarines in the United States.

Shelby Oakley Two builders, two builders for nuclear submarines, nuclear ships in general. So I think that that’s kind of the other key, right, is that these are the only game in town. And so the Navy really needs to work with them to ensure that they’re successful. And that’s what they’ve been doing. They’ve been trying to kind of build up that expertise, expertise and that capability and capacity and work with these companies to be able to do that so that we can get the submarines that we need when we need them.

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Tom Temin Right. And the backdrop to all this is that the Navy needs this capability. The United States needs this capability, because, as you say, it’s one of the triads in deterrence. In fact, with some of the talk in Congress and some of the backdrop yakking, there might not even be a triad, but rather a dyad. And so the submarines will definitely be part of it, regardless of whatever else they cancel at some point, should they do so.

Shelby Oakley We’re really experiencing the outcomes of delaying decisions to recapitalize the nuclear triad that happened over a number of years. So you’re mentioning the Sentinel program, which has a lot of challenges itself right now, but we’re also building new bombers. And with this  program, all three legs are being recapitalized at the same time. And that’s a huge cost and that’s a huge risk to us if we aren’t able to achieve that. And so hopefully we’re able to overcome a lot of these challenges and get these programs out.

Tom Temin We are speaking with Shelby Oakley. She’s director of contracting and national security acquisitions at the GAO. What are you recommending the Navy actually do to get this program a little bit more predictable?

Shelby Oakley So we made a number of recommendations to the Navy. Well, first off, we’ve been doing this work for six-plus years now, and we’ve made a slew of recommendations to the Navy over the years related to the Columbia class program. So a couple of things that we focused on this year were that looking at the costs, the program costs and asking the program to revise its cost estimate to actually include identified risks, like things that they know that are already on the docket for likely-to-happen. And then really reflect in the cost estimate where we’ve seen historical trends of performance. So don’t assume that all of a sudden everything’s going to get super efficient and we’re going to overcome everything. Actually reflect reality. So we definitely have that. We want them to take a look at what are the root causes of the cost and schedule impacts that have occurred so far. That’s an analysis that the Navy hasn’t done. And so we want them to understand what those root causes are to be able to then take corrective action. There’s a lot of money – this isn’t something we’ve talked about – but the Navy and the Department of Defense are spending a lot of money to shore up that supplier base for the Columbia class program. And so Electric Boat has a pot of money to be able to dole out to suppliers to help them improve and make the necessary investments that they need to. But the thing that we found is that they don’t really track or have a mechanism to say “is what we’re investing in actually leading to increased production efficiency?” And so we really want them to understand what return on investment are we getting from these investments, which are pretty significant. And then finally, one of the ways in which the contractors are trying to keep up with some of their capacity challenges is that they’re outsourcing a lot of work that they normally would have done in-house. So that means giving it to another contractor to do. The problem with that is, is that the Navy’s quality oversight really focuses on the prime contractor and the work that they do. And so with all this kind of high risk critical work being outsourced from the prime contractor, we want the Navy to think about for their quality oversight people — the “snoop ship” is what it’s called — do they have the resources necessary and do they have the oversight in place necessary to be able to oversee work that’s going on outside of that prime contractor? So we made some recommendations related to that.

Tom Temin Yeah. Sounds almost like the 737 where they outsourced the whole plane almost to somebody else and then ended up buying back that supplier. Crazy stuff. And expensive. Is there a sense in the Navy of those areas that are most critical in terms of the lack in the supply base? I mean, where is it? Is it in the propulsion, the nuclear end of things? Is it in the firing, the missiles end of things, or what is it?

Shelby Oakley It’s all across the board. I mean, it’s basic stuff, like forgings. A lot of capability that is necessary for building large structures and that kind of thing are some of the things that are a challenge. And so you might think, it’s all these complex things that are super technical. But no, it it’s like basic things that are required to be able to build a ship that’s significant. And so those are some of the things that they’ve been investing in.

Tom Temin And it sounds like this could have a life cycle effect cost-wise on the entire program, because with all of this, it sounds like improvisation really to get the first one built, that the second, third and fourth could be a lot different from number one, which means training and replacement costs and support costs all go up over the life cycle because number three doesn’t look anything like number one when you take off the panels.

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Shelby Oakley Well, hopefully that’s not the case. I mean, I hope the design is pretty stable as they’re going forward. I think what the challenge is, though, I have two points to make about this. With the lack of analysis that they’re doing, our own analysis is showing that the lead submarine construction costs — just the lead submarine construction costs — are going to be nearly five times larger than what the Navy is saying and six times more than what Electric Boat is saying. And so when you think about predicting what the outcomes are on the program our expectation is it’s going to get a lot worse. And so they haven’t even hit the hardest part of lead ship construction. I think what that what the Navy needs to be able to do is think about how they can stem that type of issue on future construction for those submarines.

Tom Temin Are you saying then that instead of just throw out a number $1 billion, it’s going to be $5 or $6 billion for copy one or probably multiples of that, but that’s the ratio you’re talking.

Shelby Oakley Notionally. The Navy has deemed kind of the exact numbers as sensitive information. And so that’s why we kind of stick with the five times larger or six times larger. But in the report, we say hundreds of millions of dollars more for leadership construction that the taxpayer is going to be responsible for.

Tom Temin Briefly, what is the status of ship number one? Is it identifiable? I mean, could you walk by it and say, that’s a submarine? Or is it just a bunch of pieces at this point?

Shelby Oakley It’s about 60% complete at this point. And so you can definitely see things and you can see things coming together. But I think that’s really why we think it’s so critical for them to have this analysis in place, because they’re entering the most complex phase, the final assembly and test phase, where they’re going to take these big super modules of the segments of the submarine and start bringing them together and testing them and making sure that they kind of work together. And I think that’s where you end up running into some challenges that you need to be able to mitigate at that point. And so while we hope — and I guess the other point that I would say to kind of hammer this home, is that to be able to adjust to some of the challenges that they’ve faced already, they’re doing things that are less than optimal. If you have delayed deliveries of something, you’re like, we expect it this year, it didn’t come. Now we need to move it here. That’s going to be tricky because we’ll have concurrency. We have other things that we’re working on. And so I think the Navy’s really at this point, Electric Boat’s really at this point where it’s not the most efficient approach to construction that they had intended.

Tom Temin And they have to hope that the bolts lined up with the holes when they put the whole thing together.

Shelby Oakley True.

Tom Temin Basic, but you can’t count on it.

Shelby Oakley Yeah, exactly.

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