This slipped by me during the summer but better late than never. As reported in multiple sources including the United States Naval Institute (1), contracts have been awarded for construction of nine Burke class DDGs. As announced, five of the ships will be built by Huntington Ingalls (HII) for $3.3B and four will be built by Bath Iron Works (BIW) for $2.8B.
Now, what’s wrong with this picture? It’s the unit price. The HII contract claims to be able to build Burkes for $660M each and the BIW contract claims $700M each. I’m sorry but that’s not even remotely realistic. That’s about the same amount as an LCS with a module (if there were any modules!). According to Wiki (admittedly a suspect source) the unit cost for DDGs 113-115 was $1.8B. A 2012 Congressional Research Service report states that two FY13 Burkes would cost $1.6B each (2). The report further states that proposed Multi-Year Procurement (MYP) contracts would save 8.4% and yet the announced contracts represent around a whopping 60% decrease over previous prices!! Does anyone believe that’s real? Further, the FY14 SCN budget document shows prices for Burkes as $1.5B - $2.0B depending on year and quantity and I don’t even believe those numbers.
So, what do the announced contracts represent? Clearly, a complete, fully outfitted DDG cannot be built for that amount. I have no idea what the contracts represent. For some time, now, the Navy has been playing accounting games that border on fraud and this is clearly more of the same. They’re obviously trying to give the impression that ships are far cheaper than they really are. Hey, we all understand good PR and positive spin but we also understand out and out lies and deception. The Navy is afraid that if the true costs were known, Congress would balk at providing funding and with good reason!
Do any of you have an explanation for these contracts?
All of this is why we get into arguments about the true costs of the LCS or any other ship or aircraft. It makes it very difficult to be a well informed citizen.
(2) Congressional Research Service, “Navy DDG-51 and DDG-1000 Destroyer
Programs: Background and Issues for Congress”, Ronald O'Rourke,
August 10, 2012