A Tale Of Two Submarines:
Why Government Projects Cost So Much
Wednesday, February 27, 2002
“A Tale Of Two Submarines”
A case study in two equal-mission vehicles that cost a hundred times
different. The Lockheed DSRV and the Vickers VOL-L1 submersibles.
In the mid 1960s, the U.S. Navy decided to upgrade its capability to rescue crewmen from a stricken submarine. The McCann diving bell had been in service for over 30 years and had severe operational drawbacks. A new program to develop a submersible that would perform far better was started. The Navy contracted with Lockheed Missiles and Space, and the two Deep Submergence Rescue Vehicles were created. The first DSRV was built for $41 million  . The two DSRVs performed well in trials (they have never been called to do their primary mission) and are still in service today.
A decade later, the British Royal Navy decided it also wanted such a capability, but did not have the money to commission copies of the US Navy boats. So the Royal Navy went to Vickers Oceonics (now part of British Aerospace) who were in the business of supporting North Sea oil drilling operations with manned submersibles. Vickers and the Royal Navy agreed to have a new boat built that would serve commercial purposes in everyday life and be reconfigured for the occasional Royal Navy rescue mission. (One could argue that such a dual-purpose boat would be more expensive than a simpler, single purpose boat.) Vickers contracted construction to a U.S. company that built commercial oil field submersibles, Perry Oceanographics. The boat performed well as the Vickers VOL-L1 for both commercial oil drilling support and occasional practice rescue operations for the Navy. Perry’s sale price was $750K including profit  .
Why $41 million for DSRV-1 and less than $1 million for the VOL-L1? They perform the same mission, though details are different. DSRV is bigger and dives somewhat deeper, but these are small differences. The author firmly believes the difference lies in the types of organizations that designed and built the boats. DSRV was started assuming a particular cost, and the program lived up to expectations. The government customer and its traditional contractors all agreed on the size and scope of the job before starting. The Perry boat came from a different world; a world of commercial profit and loss, a world where getting the job done is the primary requirement. Perry was in the business of building similar boats at the rate of about one per year for the previous decade.
The author spent four years designing prototype and one-of-a-kind things for the U.S. Navy as an employee of Westinghouse Ocean Research and Engineering Center in Annapolis, MD. I then went to Perry Oceanographics and spent six years doing similar things for the commercial world. I believe that a similar difference exists between the current space launch industry and what could be done if cost and mission performance were the real priorities.
 Trillo, R.L. (ed.), Jane’s Ocean Technology, 3rd Edition, pg 37, 1978.
 Trillo, R.L. (ed.), Jane’s Ocean Technology, 3rd Edition, pg 98, 1978.