Costs, delays surface again for new attack submarines.

• Author: Kennedy, Harold
• Position: Cover Story

Just a year after U.S. Navy officials assured Congress that they had taken steps to stem rising costs and production delays for the newest family of nuclear-powered attack submarines, they now concede that problems may not have gone away.

The first ship in the Virginia class, SSN 774, will cost about $42 million more than expected--a 2 percent increase--and the delivery date has slipped from June to October, according to the Navy.

The second vessel in the class, the Texas (SSN 775), is facing a possible cost overrun of $141.5 million--a 6.4 percent increase--and a six-month delay in delivery, from June to December 2005.

The Navy attributed these problems to "first-of-class construction issues encountered during final assembly and testing" and "unanticipated labor issues" at the two shipyards building the vessels, General Dynamics Electric Boat, of Groton, Conn., and Northrop Grumman Newport News, of Newport News, Va.

As a result of these issues, cost estimates for the first four subs in the class currently are running $419 million higher than expected, Navy spokesperson Lt. Pauline Pimentel told National Defense. To deal with the overrun, the Navy plans to ask Congress for authority to reallocate funds from its fiscal year 2004 and 2005 budget. At the moment, the Navy does not anticipate a need for additional funds, she said.

The Navy in 1998 awarded the Electric Boat and Newport News companies--the only ones in the United States that build nuclear submarines--a $4.2 billion contract to construct the first four boats.

Under the contract, the two firms are equal partners. Each shipbuilder constructs designated parts of each submarine, then alternates final assembly, outfitting and delivery of every other ship.

Electric Boat has assembled the Virginia, which was scheduled to begin sea trials in late July. Commissioning--when she receives her USS designation and joins the fleet--now is set for October 23 at Naval Station Norfolk, Va.

The Texas is being constructed at Newport News. (related story p. 43) Problems with the Texas "have been exacerbated by Northrop Grumman Newport News' decade-long hiatus from submarine construction," the Navy said in a prepared statement.

Both Electric Boat and Newport News declined to comment on the Navy statement. These latest cost increases and delays come after a series of contract modifications designed to moderate them.

Capt. John S. Heffron, the Virginia-class program manager at the Naval Sea Systems Command, in Washington, D.C., told National Defense that his program...