WASHINGTON – One of the U.S. Navy’s first major projects under a 20-year shipyard modernization effort is facing cost-overruns and schedule slips, an unexpected circumstance which the Navy is hoping to learn from as it continues through the $20-billion Shipyard Infrastructure Optimization Program.

Though the Navy is predominately in a planning phase of program, generating computer models of its four public shipyards and simulating what various layouts and improvements might do for productivity, some recapitalization work is already beginning. A new multi-mission dry dock at the Portsmouth Naval Shipyard in Maine will be among the first new construction projects as part of the program. The plan calls for taking the four yards – the oldest being 254 years old – and converting them into modern, efficient facilities that can repair the Navy’s newest and biggest platforms.

The dry dock at Portsmouth is particularly important because it will enable the submarine-only repair yard to perform work on the Virginia-class attack submarine, which it can’t do with its current dry docks.

Chief of Naval Operations Adm. Mike Gilday confirmed today that the effort had hit a snag, partly because of the COVID-19 pandemic and partly because the Navy underestimated the complexity of the project.

“We saw significant growth in cost for lumber, for cement and for steel, and that’s been pretty steady through the pandemic, although it’s beginning to level off now. I think construction companies have had the same challenges. The initial estimate was done two years ago, and so that was a factor,” he told Sen. Jeanne Shaheen, D-N.H., during a June 22 Senate Armed Services Committee hearing.

“More importantly was the complexity of that work,” he said. “We are now bringing in industry before we make the [cost] estimates so that we have a better-informed idea of the complexity of the job. As an example, at Portsmouth, it makes more sense for the contractor to do the foundational work with respect to the fabrication and then to ship it down to the site, rather than to do it in the shipyard.”

The Navy asked for $225 million in its fiscal 2022 unfunded priorities list – a set of spending items that are important to the service but were not included in the Pentagon- and White House-approved budget request to Congress – to support the Portsmouth dry dock and keeping the project on schedule.

“It is my number one unfunded on the list,” Gilday said.

The unfunded priorities list said the project would support Los Angeles-class and Virginia-class subs, allowing as many as three boats to be docked out of the water at once.

“Bids for this project were received in March 2021 and contractor proposals exceeded programmed funding. Based on the submitted schedule and cost projections, an additional $225M in funding keeps the project on schedule and ensures work continues during the second year of construction,” the document adds.

During a separate June 9 hearing in the House Armed Services Readiness Subcommittee, Vice Chief of Naval Operations Adm. Bill Lescher told lawmakers that only one bid was received.

“We also saw that we didn’t have the competition that we would have expected. And it’s a well proven unhappy fact when you come down to a single bidder for these types of projects, there’s a price premium,” he said. “So I’ve asked our Naval Facilities team to take a very hard look at that, this being a learning organization. This project is still in negotiation, but then we have to bring that insight into what that means for our five-year plan as well and adjust and adapt.”

Shaheen noted during her exchange with Gilday that the first Virginia-class submarine maintenance availability at Portsmouth was scheduled for 2026; Gilday confirmed that and added, “I am committed to keeping that project on track for that very reason.”

Sen. Mazie Hirono, D-Hawaii, asked about the project during the hearing as well. The Pearl Harbor Naval Shipyard and Intermediate Maintenance Facility is expected to begin work on a similar multi-mission dry dock in FY23, and she wanted to know how the Navy would avoid the same challenges from Maine.

That shipyard “is at the top of our priority list as we go into the FY23 budget build for [military construction],” Gilday told her. “We’re about to have a conference with industry out in Hawaii early next month to get a better understanding of the scope, the estimate, and we think right now that that project is probably in the six to seven-year timeframe based on the phasing, but we would like to get rolling as soon as possible in that effort.”

Lescher, in his HASC hearing, said the FY22 budget request includes $830 million for optimization program, with some money going to planning but with the bulk of the funding going to two dry docks: the one in Portsmouth and another at Norfolk Naval Shipyard in Virginia. In the next five years, he said, six dry dock projects will begin work, with total investments over $4 billion.

Megan Eckstein is the naval warfare reporter at Defense News. She has covered military news since 2009, with a focus on U.S. Navy and Marine Corps operations, acquisition programs and budgets. She has reported from four geographic fleets and is happiest when she’s filing stories from a ship. Megan is a University of Maryland alumna.

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