Defense analysts: Navy unlikely to scuttle destroyer under construction at BIW

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BATH — Despite a national report Monday that the Pentagon will consider canceling construction of a $7.5 billion Zumwalt destroyer under construction at Bath Iron Works, defense industry analysts say such action is unlikely, particularly because the secretary of the Navy reportedly committed to building the ship last week.

The new Zumwalt line of “stealth destroyers,” all three of which are being built in Bath, has been plagued with cost overruns and production delays, mostly related to the need to work out bugs with new weaponry and guidance systems.

The Zumwalt line was originally introduced to replace the Arleigh Burke class of destroyers, which the Navy has used since the 1980s. However, when cost projections for the Zumwalt line spiked, the Navy chose to stop the Zumwalt line at three ships and restart construction of Arleigh Burke-class destroyers.

Despite those problems, additional Zumwalts beyond the three will likely be considered, according to Loren Thompson of The Lexington Institute, a nonprofit defense analysis organization based in Arlington, Virginia.

All three Zumwalts are in different phases of construction at Bath Iron Works, which Thompson has said is “the most efficient shipbuilder in the Western Hemisphere.”

“If I had to bet, I would say all three Zumwalts will be built, and eventually the Navy will consider buying additional vessels,” Thompson said by phone Monday morning.

According to Tony Capaccio of Bloomberg, a Defense Department briefing document dated Aug. 25 states that the Pentagon’s cost-assessment office would “review in the next few weeks” whether to cancel the future USS Lyndon B. Johnson, the third of three Zumwalt destroyers that is already well under construction at the Bath shipyard. The review would come as part of planning for the fiscal year 2017 budget.

Jay Korman of The Avascent Group, another defense industry consultant, also expressed doubts that the Navy would kill the third Zumwalt. He said such reviews, even of aircraft carriers already under construction, are not unusual as the Navy looks to cut costs without degrading capabilities. In fact, he said the Navy likely already reviews the Zumwalt line each year.

“They do this all the time,” Korman said. “The question is whether anything else has changed with the dynamics between the yards and the Navy, the strategic rationale of the ship, to justify cutting the third one … I haven’t seen anything so material that would tell me all of a sudden they’re willing to absorb the cancellation costs of getting rid of the third ship.”

According to Thompson, Navy Assistant Secretary for Acquisition Sean Stackley “is out of money” and can’t fully cover the cost of the shipbuilding program, so Stackley is searching for cuts.

Construction of the first DDG-1000 has been slower than anticipated. It’s slated for completion in May 2016, about 20 months later than initially expected, according to Bloomberg. And the overall cost of the three-ships has increased by 37 percent, to $12.3 billion, since 2009, according to the Congressional Research Office.

But Thompson said the Bath shipyard is not to blame for the delays, and instead, the Navy likely contributed to slower construction because it served as the “final integrator” – like a general contractor – for the ship, instead of BIW.

“The Navy is putting together the pieces, and it’s just not going as well as it should have,” he said. “The bottom line is the Navy is probably too involved in the final assembly of the Zumwalt.”

Thompson pointed to a Politico story published earlier this month in which Secretary  Ray Mabus said the Navy was committed to completing the full line of Zumwalts.

“In the near term, they will pose some issues,” Mabus told Politico. “But I’m confident that the Navy and Bath can work our way through it to get to that end state.”

“If you were going to make a decision to not have all three, that decision should have been made a long time ago,” Mabus told Politico. “Now, it’s probably as expensive to cancel as it is to build it, just because of the way the contract is written and the way the material is bought, the infrastructure put in – that sort of stuff.”

“I don’t think the ship is going to be canceled,” Thompson said. “I think when the Navy looks at the industrial base impact of canceling the third ship, they will decide to build it.”

“Canceling the third ship in the Zumwalt class makes no sense at all,” U.S. Rep. Chellie Pingree, D-Maine, said Monday in a statement. “The first ship in a new class is always the most expensive, and then the cost goes down as more are built, so canceling the third ship would actually be canceling the one that is the most cost-effective. In addition, the fact that it’s already under construction means pulling the plug now would be a total waste of taxpayer dollars.“

In a joint statement, Maine’s U.S. Sens. Susan Collins and Angus King referred to Mabus’ comments and said, “We take him at his word.”

“If Pentagon officials are contemplating the cancellation of this ship at the eleventh hour and when it is already more than 40 percent complete, it would be a policy and financial mistake that would weaken the Navy’s fleet, degrade the manufacturing industrial base upon which our country’s security depends, and would not save money at this stage due to cancellation and other contractual fees,” the statement said.

A General Dynamics spokeswoman declined to comment for the Bloomberg story, and on Monday, BIW spokesman Matt Wickenheiser said the company had no comment on the report.

Two of the three Zumwalt-class stealth destroyers under construction at Bath Iron Works, left and right, along with an Arleigh Burke-class destroyer in between.