Well, since we couldn't indulge in humor, let's try the grim reality of budgets …
As we’ve often documented, the Navy is brilliant at one thing and that is obscuring true ship construction costs with practices such as:
- Incomplete delivery
- Phased delivery
- Government Furnished Equipment
- Post-delivery outfitting
- R&D funds for construction
- Warranty costs
- Post-commissioning ‘refits’ that are used to complete initial construction
The problem for naval observers is that it’s very hard to pin down the magnitude and type of these costs and even harder to figure out which specific ships the costs are assigned to. Here’s an example from the FY23 President’s Budget highlights document:
Cost-to-Complete funding for prior year shipbuilding $1.3B across all programs.[1]
That’s $1.3B (that’s billion !) of unspecified costs added to the construction costs of unspecified ships. That’s for just this coming year. Given that we’re reduced to building around five significant ships per year (not counting tugs, salvage ships, patrol boats, etc.), that works out to around $260M per ship in additional costs that should be included in construction cost totals but aren’t. It makes oversight difficult, doesn’t it?
[1]Department of the Navy, FY 2023 President’s Budget, p.8
Thats not an insignificant sum!! Id love to drown the Navy in FOIA requests, backed by legal judgements in order to see where the money goes!!! Its long past time to find out what Adm Spewkrap and his cohorts are doing...
ReplyDeleteRemember that the DoD is the one government department that has never had its finances successfully audited. So, your FOIA requests can't be responded to since the data isn't available. It's not that they aren't telling you, it's that they don't know themselves!
Deletehttps://www.npr.org/2021/05/19/997961646/the-pentagon-has-never-passed-an-audit-some-senators-want-to-change-that
https://federalnewsnetwork.com/defense-main/2021/05/dod-targets-2028-for-first-clean-financial-statement-audit/
"audited"
DeleteDon't be confused by the failure to have a clean audit. They know exactly what they spent money on. There's a purchase order for every item, big or small. Where they fail the audit is in accounting for the inventory levels and locations, movement of parts, overseas/foreign expenditures, and things like that. But the mundane purchasing ... they know that to the penny.
The ghosts of the $600 toilet seats are back. Oversight and transparency.
ReplyDeleteYeah but they really are comfortable. I write most of my posts on the 'throne'!
DeleteI'd like to sell the Navy Business managers a house that is "complete". Don't these people live in the real world?
ReplyDeleteAs someone who made my living as an auditor for several years after getting off active duty, I would say that what they need is somewhat different from a normal audit. As ComNavOps correctly notes, they can tick and tie every item to a purchase order and the required paper trail.
ReplyDeleteWhat they need is more what would be called in the industry a management review, which would evaluate their entire system of controls and the prudence of their management decisions.
More than these, there are lots of hidden costs. For instance, in order to get supports from certain Congressmen, some parts need to be made in certain places which have no economic sense. They need to employ certain low skill union members. They also have to purchase some parts from companies with outrageous prices because of undertable deals.
ReplyDelete