The Navy plans to request pricing for an unlimited warranty on its next-generation frigate prior to exercising the first ship option, according to a revised government watchdog report published today.
The Government Accountability Office last month published a report criticizing the service for using a guaranty rather than a warranty in the new shipbuilding program.
In the August report, Stacy Cummings, principal deputy assistant secretary of defense for acquisition enablers, concurred with GAO's recommendation to request pricing data from industry for a warranty, but ostensibly did not agree to implement a change.
The revised report published today includes an omitted page of Cummings' response, where she wrote: "To support the GAO recommendation to request pricing for unlimited warranty, the Navy will request pricing for [an] unlimited warranty before exercising the first ship option and evaluate the business case."GAO noted that warranties provide a greater level of coverage than guaranties. The Navy's current request for proposals would have the shipbuilder pay the costs to correct defects for which it is responsible up to $5 million per ship. After that payout is reached, the government would foot the remaining costs.
If the Navy used a warranty, then the shipbuilder would be monetarily responsible for any defects for which it is at fault.