Post-Delivery Construction Costs for LCS

Here’s another interesting budget item.  Read it and then we’ll discuss it.

“BAE Systems San Diego Ship Repair, San Diego, California, is being awarded a $15,589,527 cost-plus-award-fee contract for the accomplishment of post shakedown availabilities (PSA) for USS Detroit (LCS-7) and USS Montgomery (LCS-8).  The PSA encompasses all of the manpower, support services, material, non-standard equipment and associated technical data and documentation required to prepare for and accomplish the PSA.  The work to be performed will include correction of government responsible trial card deficiencies; new work identified between custody transfer and the time of PSA; and incorporation of approved engineering changes that were not incorporated during the construction period which are not otherwise the building yard's responsibility under the ship construction contract.  This contract includes options which, if exercised, would bring the cumulative value of this contract to $103,999,092. “

This is showing the hidden costs of ship construction that the Navy is engaging in more and more frequently.  The Navy is deferring portions of construction to the PSA and other post-delivery periods as a means to fraudulentlyartificially contain and obscure legitimate construction costs.  This contract is somewhere between $15M - $104M for two ships that were supposed to have been delivered complete.

Note the type of work.

“The work to be performed will include correction of government responsible trial card deficiencies; new work identified between custody transfer and the time of PSA; and incorporation of approved engineering changes that were not incorporated during the construction period which are not otherwise the building yard's responsibility under the ship construction contract. “

PSA's are supposed to be for the purpose of correcting deficiencies revealed in trials.  They are not supposed to be used for deferred construction.  You can bet the LCS supporters (both of them) will not include this cost in their construction cost claims.

This is relatively small money for these ships.  The major one is the Ford which is having significant construction deferred until post-delivery because they’ve bumped up against the Congressionally mandated cost cap and this is how they’re getting around it.

This practice is disgusting and is, unfortunately, becoming more and more common.

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