The reasons for these cost increases rely heavily on the
quality of the budget of the materials and the way the
contracts are formulated. The first four Virginia class
submarines' materials cost budget was $132 million lower
than actual price quotes that were received by vendors and
subcontractors. For the Nimitz class aircraft carriers, the
materials cost budget was based on an incomplete materials
list. Why? The reason again lies in the types of contract
that are negotiated between the shipyards and the Navy.
Since shipyards know that they will be reimbursed for
change orders in contracts or price increases for high
value specialized items, they underbudget their cost