The Navy is building the most technologically advanced surface combatants in history at Bath Iron Works in Maine. It is a challenging program, and this week the service disclosed that the cost of constructing three “Zumwalt-class” warships has increased $450 million in the last year. The cost of the program is still only about 1% above the baseline set in 2011. However, at least one account of the reasons for the cost rise blamed performance problems at the shipyard, and that is simply not true. Bath Iron Works is only responsible for a small fraction of the cost escalation. The bigger culprit appears to be a Navy decision to make itself the lead system integrator on the ships, an acquisition strategy that has led to costly delays in delivering key items to the yard. Since the shipyard doesn’t have direct oversight of the biggest suppliers, it can’t be blamed for the cost consequences of the resulting schedule slippage. I have written a commentary for Forbes here.
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