![]() GAO also leveraged prior GAO reports and best practices guides. GAO interviewed Navy and other defense officials, and conducted industry site visits to each shipyard participating in FFG(X) conceptual design activities. GAO reviewed requirements, acquisition, design, and cost-related documentation. This report addresses, among other things, the FFG(X) acquisition approach and contracting plans. The House report accompanying the National Defense Authorization Act for Fiscal Year 2019 included a provision for GAO to review the FFG(X) program. The program is expected to cost over $20 billion for 20 ships. ![]() DOD approved FFG(X) requirements in February 2019.The Navy plans for a competitive contract award to support final FFG(X) design and construction. With FFG(X), the Navy intends to deliver a multi-mission ship that will provide anti-surface, anti-submarine, and air warfare capabilities. In response to the shortcomings of the Navy's Littoral Combat Ship program and evolving threats, the Navy began the FFG(X) program. The FFG(X) request for proposal offers the Navy an opportunity to solicit pricing for a warranty to assess the cost-effectiveness of the different mechanisms to address ship defects. GAO also found the use of a warranty in commercial shipbuilding and certain Coast Guard ships improves cost and quality outcomes by requiring the shipbuilders to pay to repair defects. GAO found in March 2016 that the use of a guaranty did not help improve cost or quality outcomes for the ships reviewed. The Navy's planned use of guarantees helps ensure the FFG(X) shipbuilder is responsible for correcting defects up to a point, but guarantees generally do not provide the same level of coverage as warranties. The Navy provided no analysis to support these claims and has not demonstrated why the use of warranties is not a viable option. However, Navy officials discounted the potential use of a warranty-another mechanism to address the correction of shipbuilder defects-stating that their use could negatively affect shipbuilding cost and reduce competition for the contract award. The Navy also plans to require that each ship has a minimum guaranty of $5 million to correct shipbuilder-responsible defects identified in the 18 months following ship delivery. This is a notable departure from prior Navy surface combatant programs that used higher-risk cost-reimbursement contracts for lead ship construction. The Navy plans to use a fixed-price incentive contract for FFG(X) detail design and construction. Timeline of FFG(X) Program Key Cost and Design Knowledge and Budgeting Activities GAO-identified best practices call for requisite cost knowledge to be available to inform resource decisions and contract awards. ![]() Specifically, they stated that this estimate will not be finalized until the Navy communicates to them which FFG(X) design is expected to receive the contract award. Department of Defense (DOD) cost estimators told GAO the timeline for completing the independent cost estimate is uncertain. ![]() As shown in the figure, however, the Navy has requested funding for the FFG(X) lead ship even though it has yet to complete key cost estimation activites, such as an independent cost estimate, to validate the credibility of cost expectations. The Navy also streamlined the FFG(X) acquisition approach in an effort to accelerate the timeline for delivering the ships to the fleet. The Navy undertook a conceptual design phase for the FFG(X) Guided Missile Frigate program that enabled industry to inform FFG(X) requirements, identify opportunities for cost savings, and mature different ship designs.
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