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MASAD-82-27 1 (1982-03-26)

handle is hein.gao/gaobabdec0001 and id is 1 raw text is: COMPTROLLER GENERAL OF THE UNITED STATES WASHINGTON D C. 48 B-206847 MARCH 96.1982 IltETRICTED _ No, to be released outsidO the en1rAl 2 - AtsOiltl3 Ofi c o ¢ * J' ! *aproval The Honorable JblitbU l4iM Co~I:; Chairman, Committee on Armed Services United States Senate V The Honorable Joseph P. Addabbo Chairman, Subcommittee on Defense Committee on Appropriations House of Representatives Subject: Request to Fully Fund Two Nuclear Aircraft Carriers in Fiscal Year 1983 (MASAD-82-27) Your letters of February 5, and February 9, 1982, requested that we review the Navy's proposal for fully funding two nuclear aircraft carriers in fiscal year 1983 to determine if their pro- jected improved delivery schedule and cost avoidance estimate are achievable. We found the improved delivery of 22 months is reasonable under the assumptions made by the Navy and can be achieved if certain events happen as planned. The Navy's estimate of the cost avoidance of $754 million, or 10 percent of the esti- mated cost, is reasonable based on our analysis of their cost estimating assumptions and techniques. However, when the interest costs associated with the funding differences are considered and these differences are expressed in terms of their present value, the claimed cost avoidance is reduced or even negated. This con- sideration does not account, in dollar terms, for the value of the early delivery made possible by the multiship approach. In conducting this review, we obtained and analyzed data related to the delivery and cost estimates and interviewed personnel in the Office of the Secretary of Defense; the Navy; Office of Management and Budget; Congressional Budget Office; and the contractor, Newport News Shipbuilding Company. We also used some economic analysis techniques to attempt to determine the economic effects of the funding alternatives. We analyzed this information to determine if the Navy's schedule and cost avoidance projections are achievable. Because of the time con- straints, we were not able to verify the accuracy of the improved schedule and cost avoidance in detail; however, we did review the reasonableness of the underlying assumptions on which these projections are based. (951703) _ fd3<_ 118205

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