A recent Pentagon report questioning the reliability of cost and progress reports supplied by Bath Iron Works does not appear to be raising many red flags for the Navy or among Pentagon observers.
The Defense Contract Management Agency said in a recent assessment that it had “no confidence” in the reliability of the cost, scheduling and other data being supplied by BIW to the Defense Department for the Zumwalt-class destroyers under construction at the shipyard. The agency’s assessment, first reported Thursday by Bloomberg News, said General Dynamics-owned BIW had not shown it had adequately addressed more than 50 deficiencies identified in a 2011 review of the shipyard’s reporting.
Navy and BIW officials have both said the shipyard addressed most of those problems. Workers at BIW are finalizing construction and testing of the first Zumwalt-class destroyer, the USS Zumwalt, but the ship’s delivery date has slipped more than a year and the cost of building the three ships has risen more than 30 percent since fiscal year 2009, according to a recent Congressional Research Service report.
U.S. Sen. Susan Collins, R-Maine, said she was concerned about the report but also said she has “a lot of confidence in BIW.”
Collins explained that construction of the first-ever Zumwalt destroyer – a 600-foot-long “stealth” warship with a price tag exceeding $4 billion – was different from other contracts because the U.S. Navy took on the role of integrator, which is essentially general contractor.
“If there are problems with the data, that’s partly the fault of the Navy,” Collins said. “Obviously, we want the data to be accurate but I feel confident that when the ship is delivered, the Navy will be satisfied. It’s the most advanced destroyer in the world and I’m proud that it was built at BIW.”
The Defense Contract Management Agency is a division of the Pentagon tasked with helping ensure that government contractors are delivering their products or services on time, on budget and at expected levels of quality. The agency has a staff of nearly 12,000 responsible for roughly 345,000 Defense Department contracts as of June 2015, according to its website.
Loren Thompson, a naval analyst who is chief operating officer at The Lexington Institute think tank in Virginia, said he does not see the recent report on BIW being a major issue for the shipyard.
“There are a handful of watchdog agencies at the Pentagon … that are engaged in hyper-regulation of the defense industry, and by that I mean very minuscule and meticulous analysis of their performance,” Thompson said. “And these agencies are never happy with the performance at a site.”
Thompson added that the Pentagon itself cannot meet the record-keeping and reporting requirements placed upon contractors.
“Bath is a much more tightly run place than the Department of Defense is,” Thompson said. “Anybody who knows the shipyard would trust their data more than the Pentagon’s.”
The agency’s most recent report on BIW raises questions about the shipyard’s progress in addressing the 56 serious deficiencies in cost and schedule projections for the Zumwalt-class destroyer program first identified in 2011.
A spokesman for the agency said Friday that he could not supply more information on the most recent review – such as whether it was a routine update or had been requested by the Navy – before next week.
A Navy spokeswoman was still checking Friday on whether the report by the Defense Contract Management Agency can be released publicly because it likely contains proprietary information for the shipyard. However, she reiterated that BIW has made progress addressing the deficiencies since a correction plan was agreed upon in 2013.
“The Navy has been working with (General Dynamics-Bath Iron Works) to improve the overall effectiveness of its EVM System and resolve the outstanding deficiencies documented in the 2012 (corrective action report) and in subsequent communications,” Navy Capt. Thurraya Kent wrote in a statement, referring to the Earned Value Management System. “The Navy continues to monitor GDBIW’s EVM performance and will take appropriate action to ensure the Navy receives useful cost and schedule projections from GDBIW.”
Likewise, BIW officials said they had resolved 49 of the 56 issues and were awaiting Navy approval of the final seven.
Shipyard spokesman Matt Wickenheiser said the company would not elaborate on specific steps taken to correct the deficiencies.
U.S. Sen. Angus King, I-Maine, expressed confidence in BIW’s workforce.
“The U.S. Navy and Bath Iron Works have both stated that the vast majority of identified issues have been resolved and that they are working closely together to address the few that remain,” he said in a statement Friday evening. “I continue to have complete confidence that the Navy and BIW are working diligently and cooperatively to ensure that the Zumwalt is prepared for sea trials, which are expected to occur next month.”
Gregory Sanders, a fellow at the Washington, D.C.-based think tank the Center for Strategic and International Studies who analyzes defense contractor spending, said the Defense Contract Management Agency is “part of the process” and provides advice to the Pentagon on contractor performance. But that work is different from the often-critical reviews done by government inspector general offices, he said.
Sanders said the Pentagon “always has a range of opinions” and that the Navy appears satisfied with their own systems for monitoring contracting. But the report could lead to increased skepticism for future projects, particularly outside of the Navy.
“That confidence could be regained if the DCMA’s concerns are resolved,” Sanders wrote in an email. “The bigger question is that this signals that there is a risk of cost escalation or further delays. Since we’re not that far from the completion date of the first ship, there may be another shoe to drop in the near future. That can have larger consequences.”
Staff Writer Eric Russell contributed to this report.
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