Those Add-On Costs Add Up !

The Navy loudly and proudly announces shipbuilding contracts for seemingly low prices (that’s a relative phrase!) but fails to announce quite as loudly and proudly all the add on and follow up costs to that go into producing an actual delivered, functioning ship.  Here’s a recent example of a contract award for additional post-shakedown work.

“BAE Systems Southeast Shipyards Mayport LLC, Mayport, Florida, was awarded an $11,891,935 cost-plus-award-fee contract for the accomplishment of Post Shakedown Availability (PSA) for one Freedom variant Littoral Combat Ship.  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 $74,741,487.” (1) [emphasis added]

So, in addition to the cost of the hull contract, we can add another $75M (of course the options will be exercised!).  Note that none of this includes other add-ons like Government Furnished Equipment (GFE).

Let’s be fair to the LCS program, this type of additional cost occurs with every ship of every class.  It may be common but it also obscures the true cost of a ship and makes oversight very difficult.

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(1)Defense.gov website, contract listings, 29-Aug-2016

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