Summary
The Advanced SEAL Delivery System (ASDS) is a hybrid combatant submersible providing clandestine delivery and extraction of Navy SEALs and equipment in high-threat environments. The first ASDS has had significant performance issues and has cost, to date, over $885 million. In May 2006, Congress requested that GAO review ASDS. This report examines (1) how the Navy managed ASDS risks through its contracts and (2) the status of major technical issues and program restructuring.
The Navy did not effectively oversee the contracts to maintain, repair, and upgrade the ASDS and failed to hold the prime contractor accountable for results. The Navy took responsibility for correcting the boat's deficiencies while continuing to pay the costs and fees of the prime contractor under cost reimbursable contracts to execute the corrections. Before accepting the boat, the Navy went to sources other than the prime contractor to obtain better designs for the propeller and battery and then paid the prime contractor to install them. When the Navy accepted the ASDS in 2003 in an "as is" condition, it relieved the contractor from having to take any additional actions to correct known problems. Since then, the U.S. Special Operations Command has continued to invest millions of dollars to fix existing problems and address new ones in an attempt to make the boat operational. In making this additional investment, the Navy entered into contracts with the prime contractor that provided little incentive to control costs, authorized work before reaching agreement on the scope and price of the work to be performed, and failed to finalize the terms of the work within required time frames. Meanwhile, the contractor's performance continued to be poor, often exceeding initial estimates for the time and cost required to perform the work. ASDS officials took actions over the past 2 years to address these issues, but acknowledge that it is too early to determine the effectiveness of more recent actions to incentivize the contractor's performance. Continuing problems with the existing ASDS led to the Department of Defense's (DOD) April 2006 decision to cancel plans to buy additional ASDS boats, establish an improvement program for the in-service ASDS, and conduct an assessment of alternative material solutions to fulfill remaining operational requirements. The problems have seriously degraded the boat's reliability and performance, and the boat is only available for limited operational use. The results of these improvement and assessment efforts are expected to provide DOD the knowledge needed to determine whether ASDS's reliability can be improved cost-effectively to make ASDS an operational asset and whether an alternative development program is needed to meet the remaining operational requirements. A program decision is planned in mid-2008, after the ASDS improvement program and assessment of alternate material solutions are completed.
Recommendations
Our recommendations from this work are listed below with a Contact for more information. Status will change
from "In process" to "Implemented" or "Not implemented" based on our follow up work.
Director:
Team:
Phone:
Paul L. Francis
Government Accountability Office: Acquisition and Sourcing Management
(202) 512-2811
Recommendations for Executive Action
Recommendation: In order to prevent the government from accepting additional undue risks and expense on ASDS, the Secretary of Defense should establish acceptable cost, schedule, and performance criteria, based on fully defined scopes of work, and assess the boat's ability to meet these criteria at the Phase 1 and Phase 2 critical systems reviews and at the management reviews. If, by the time of the program decision in mid-2008, ASDS does not meet acceptable cost, schedule, or performance criteria, the Secretary of Defense should discontinue the effort and not proceed with further tests.
Agency Affected: Department of Defense
Status: In process
Comments: DOD partially concurred. DOD agrees that there needs to be acceptable cost, schedule, and performance criteria. The Navy and Commander, USSOCOM have developed a management plan that adequately details evaluation criteria and establishes routine management program reviews with off ramps. It is at these reviews, rather than solely at the completion of the critical systems reviews (CSR), that future program status will be determined.
Recommendation: In order to prevent the government from accepting additional undue risks and expense on ASDS, the Secretary of Defense should ensure that, if the review results meet acceptable cost, schedule, and performance criteria, the design changes resulting from the Phase 1 critical systems review essential for demonstrating ASDS reliability and maintainability be incorporated in sufficient time to be tested under operational conditions prior to the planned mid-2008 decision on how to best meet special operations forces' requirements.
Agency Affected: Department of Defense
Status: In process
Comments: DOD partially concurred. The department takes issue with the word "any" in the first sentence. There are identified design changes (e.g. hydro-dynamic mitigation) that will not be complete by the mid-2008 decision due to the time it takes to develop, build, install, and test. The decision on which critical systems reviews (CSR) design changes are implemented and installed will depend on the relative improvement expected, scope of the effort needed, as well as available time and funding. Testing might be accomplished without some recommended improvements being made to gauge progress and acceptability of the vehicle and to support an overall program decision. Additionally, unforeseen program issues could result in a decision to discontinue the ASDS effort without any additional operational testing.
Recommendation: In order to prevent the government from accepting additional undue risks and expense on ASDS, the Secretary of Defense should require the Navy to include provisions in the ASDS contracting strategy chosen when the existing basic ordering agreement expires that (1) appropriately balance risk between the government and the contractor through the contract types selected, (2) incentivize the contractor's performance and promote accountability for achieving desired outcomes by properly structuring the award and incentive fees, and (3) provide the kind of management and oversight of the program necessary to hold the contractor accountable for performance.
Agency Affected: Department of Defense
Status: In process
Comments: DOD concurs with this recommendation. The Department intends to continue the maximized use of incentivized contract efforts to conduct Phase 2 critical systems reviews (CSR) and implementation of reliability improvements to ASDS-1. The incentivized performance will balance risk and promote accountability. Senior department personnel will continue to manage and oversee the program through these phases.
