Austal USA President resigns following naval ship inquiry

International shipbuilder Austal has accepted the resignation of its US President Craig Perciavalle following the completion of an investigation into cost escalations of Littoral Combat Ships (pictured) the company is building for the US Navy.

Investigations by US regulatory authorities focused on Austal USA’s write back of work in progress attributable to the LCS program, component procurement and charging and allocation of labour hours.

As of May 2019, nine ships of the class have been commissioned, with four others ordered and under construction at Austal’s yard at Mobile, Alabama.

The company said the investigations had shown that the LCS vessels cost more to construct than originally anticipated due in ‘large part’ to additional costs incurred to meet US Naval vessels Rules.

Austal told investors: “Prior to mid-2016, inaccuracies in Austal USA’s internally generated cost estimates understated the full costs to construct the LCS vessels, which delayed Austal Ltd’s understanding of the magnitude of those costs and the need to change those estimates.

“This overstated the WIP attributable to the LCS program for those periods.”

Austal said the company had identified isolated instances of misallocation of labour hours between vessels.

And the installation of valves on board some vessels did not meet all the required military specifications at the time of procurement.

“Austal and Austal USA are engaging with the relevant regulatory authorities regarding these investigations.

“It is not possible at this stage to predict what action (if any) they may take in relation to these matters.”

Austal and the US Department of Defence are jointly undertaking a $100 million upgrade of the Mobile yard to allow it to build steel as well as aluminium ships.

Picture: Austal/USS Oakland

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