Summary: GAO discussed its review of allegations concerning mismanagement and questionable practices in the Trident submarine construction program, specifically: (1) contract payments involving work progress and long leadtime materials; and (2) records destruction. GAO noted that the Navy had urged the contractor to cease practices that would cause early payment of work progress, including: (1) retroactive changes to budget and schedule; (2) overvaluation of the budget allocation for work performed early in the construction cycle; and (3) an overstated labor hour budget for early contract work which resulted in greater reported progress. GAO found, however, that: (1) the practices continued and the contractor claimed 12.6 million hours during a 2-week period in which it actually expended 1.8 million hours; (2) if the Navy had not suspended payments, the budget revision would have resulted in increased progress payments; (3) the Navy continued its practice of deleting payment limitations contained in the contract payment clauses; and (4) excessive authorized funding for advance procurement of long leadtime materials caused significant cost increases. GAO also discussed general records disposal at the Trident project office and found that: (1) the contractor disposed of the records because of space and organizational needs; (2) it could not determine whether retention standards were observed; and (3) there was no evidence that project officials were aware of ongoing investigations of the Trident program during the disposal activity period.
