Captain R. J. Eustace

September 10, 1974

in reference (b), and subject to the matters indicated in enclosure (1) to reference (a), it might be possible to achieve delivery of CVAN68 as early as late March, 1975.

The Company is committed to doing all that it reasonably can to accelerate performance to this date, and the Nuclear Power Directorate is also committed to this effort, as well as representatives of Bettis. To achieve this objective, however, we will need immediate attention and action with regard particularly to the matters indicated in enclosure (1). As you are aware, we are proceeding.

The foregoing includes the changes that are identified in enclosure (2), for further work in areas under the cognizance of the Nuclear Power Directorate. We are examining the other changes which we have previously identified to you as achievable by May 10 in reference (a), and we will advise promptly which of these can or cannot be accomplished by an accelerated date.

Our previous request for provisional adjustments and other equitable relief, by reference (a), remains.

The prospect of holding optional work to a minimum, including reasonable implementation of the completed ship concept, is very encouraging. This will enhance earliest possible delivery. However, our overall assessment still holds that we are presently entitled to deliver as late as July because of existing governmentcaused delays. If we are not successful in meeting the date to which we strive, the already indicated diminution of additional work will improve our ability to accomplish the previously targeted May delivery.

The Navy's recent approach with regard to the problem of NIMITZ delivery is most constructive and we hope that you will find this plan consistent with our mutual best interest.

ENCLOSURE (1)

UNDERLYING CONDITIONS CONTROLLING ACCELERATION OF
DELIVERY OF CVAN68 (NON-NUCLEAR) (9-3-74)

1.

2.

3.

4.

5.

6.

Goverment provide a dry dock from 2 February 1975 through 15 February 1975
and assurance that NNSY will accomplish its work within that period (Newport News
work is estimated at 1 week duration).

Reduction of a 5 week period to correct items between Preliminary Acceptance
Trial and Delivery to a 9 day period.

A single combined trial in lieu of separate Builder's Trials and Preliminary
Acceptance Trial.

No changes unless mandatory for safe operation of the ship, and if any, to be issued on an unpriced basis so as to expedite initiation of work.

Compartment acceptance essentially completed by 20 December 1975 so that the crew can move aboard on 6 January 1975.

Prompt furnishing by the Government of remaining spares, technical manuals,
technical and other approval actions.

Subject: Construction of Aircraft Carriers CVAN68, CVAN69 and CVN70, Our Hulls 594, 599 and 611

Dear Captain Eustace:

This letter is in reply to your inquiry of 20 August 1974 concerning Modification AE15 (HMR 311) under Contract N00024-67-C-0325 for CVAN68/69 and CVN70. As we have previously advised your staff by our letter of July 24, 1974, we expect to complete developing the scope of work involved in the execution of this HMR and to submit a proposal for performance of that scope of work by September 30, 1974. This work is being monitored and expedited jointly, and the coordinated information concerning the status of the work is being made available thru weekly progress meetings and otherwise to your staff representatives.

The proposal will separate Modification AE15 from the general problem of responsibility for the delay of CVAN68 and CVAN69 in accordance with your request.

The non-contractual standards of proof evolve around Navy Procurement Circular #31 dealing with contractor claims, dated 21 March 1973, and the implementation of it.

We will expect the fulfillment of your assurance of fair and proper compensation for the work performed under Modification AE15.

SUPERVISOR OF SHIPBUILDING, CONVERSION AND REPAIR, USN

NEWPORT NEWS, VIRGINIA 23607

IN REPLY REFER TO

CVAN68/69/70/4330
Ser 100-208

19 Sept 74

Mr. John P. Diesel

President and Chief Executive Officer

Newport News Shipbuilding and Dry Dock Company
Newport News, Virginia 23607

Subject: Modification No. AE15 (IMR 331) for Main Coolant
Stop Valves and Modification No. 1018 (HMR 81) for
Delay in Deliveries under Contract N00024-67-C-0325 -
Construction of CVAN68, CVAN69 and CVN70

Dear Fr. Diesel,

1. On July 16, 1974, Mr. F. H. Creech responded to my predeges-
sor's July 8, 1974 letter to you regarding Modification No. AE15
(HR 331) for main coolant stop valves under the contract for
construction of the CVAN68, CVAN69 and CVN70. Mr. Creech signed
two letters dated July 16 on this matter, one concerning Modi-
fication No. AE15 itself and the other addressing the general
problem of delay in delivery of CVAN68 and CVAN69. My letter to
you of 20 August 1974 replied to the former. The purpose of
this letter is to reply to the latter. In addition, Mr. Creech's
letter of August 15, 1974 has been received and will be the
subject of separate correspondence.

2. My predecessor's letter to you of 8 July 1974, referring to Mr. Creech's letter of June 28, 1974 which submitted a proposal for accomplishing the main coolant stop valve work authorized by HMR 331 stated:

'Hir. Creech's proposal for proceeding with the work on
HAR331 suggests use of management decisions to control
the rate of performance of HMR331 so as to extend ship
delivery schedules and increase costs in an apparent
attempt to put pressure on the Government to accept
financial responsibility for all delays even though the
Company has not shown entitlement."

Mr. Creech's letter of July 16 referring to this statement states :

"I am, indeed, trying to put pressure on the Government to
accept financial responsibility for all delays on this ves-
sel. ¡lowever, it is misleading to state that the Company
has not shown entitlement. We have considered that the
Government has fully accepted the fact that reactor plant