Zumwalt Ships Face High Risk Of Cost Growth, GAO Says

The cost of two DDG-1000 Zumwalt class destroyers being built for the U.S. Navy faces a “high” risk of growing at least 14 percent and possibly almost twice that, according to a congressional audit.

While an independent Pentagon estimate is 14 percent, or $878 million, cost growth for the first ships in a new class historically has averaged 27 percent, or, in this case, $1.7 billion, according to figures in a Government Accountability Office report.

The amount would be added to the $6.3 billion the Navy projects for the ships being built by General Dynamics Corp. and Northrop Grumman Corp. under a program that initially called for seven ships.

The Navy announced last week it was cutting the program and instead will propose building eight more of the existing DDG-51 class destroyers. This proposal would be in its six-year budget that begins in 2010. The Pentagon said more analysis is needed.

The GAO said that, in the Zumwalt program, “the risk of cost growth is high in part because of the potential for late delivery of key systems and software and difficulties in constructing and integrating sections of the ship.”

In addition, “the full costs of constructing the two lead ships have not been entirely recognized or funded” by Congress, the GAO said in a report to be released tomorrow.

Remaining funds of $560 million “may not be sufficient to buy key components and pay for other work not yet under contract,” the GAO said in its report for Massachusetts Senator Edward Kennedy that was obtained by Bloomberg News. Kennedy is chairman of the Senate Armed Services seapower panel.

Navy spokesman Lieutenant Clay Doss said the service would not comment until the report is officially released.