Navy’s Holy Grail: An ‘Affordable’ Ship

By Sandra I. Erwin
The trend lines are all going the wrong way. The price tags of Navy ships keep ascending as the number of vessels in the fleet takes a dive.
This is hardly a revelation. Navy leaders have consistently been grilled by lawmakers on Capitol Hill over the years about this issue. But the numbers have now become sufficiently alarming thatofficials are calling for drastic changes in the way the Navy buys ships.
With budget cuts on the horizon, there is mounting urgency to tackle this problem, said Rear Adm. Thomas S. Rowden, director of the Navy’s surface warfare division.
“We, the Navy, as a team, need to think a lot about this,” Bowden told an audience of Navy officers and contractors Jan. 15 at the annual conference of the Surface Navy Association in Arlington, Va.
“We need an affordable ship,” Rowden said.
Ship inflation is posing an existential threat to the Navy, he suggested. Unless the Navy can turn this around, it will not have the “fleet that we need to defend our country and do the required missions for combatant commanders and fleet commanders,” Rowden said.
The good news, he offered, is that the Navy has a “robust building program” under way for surface ships, including the construction of new Arleigh-Burke DDG-51 destroyers, amphibious vessels, the DDG-1000 land-attack ship, and two variants of the Littoral Combat Ship. But to sustain the current fleet of 187 surface vessels, more ships will need to be built than the Navy can currently afford.
“We are going in the wrong direction,” Rowden said.
Navy leaders have spent months hunkered down in meetings, in search of answers. They have concluded that the only way to build affordable ships is to set mandatory schedule and cost targets that manufacturers will be contractually obligated to meet.
“We need to make cost and schedule a ‘key performance parameter,’” said Rowden. KPP is a Pentagon procurement term for an “absolute must” in a weapon system. Most Navy ships, at least the most complex warships, have been built with open-ended schedules and cost estimates so designs can be changed to satisfy emerging requirements. As a result, most ships are delivered years behind schedule and at a significantly higher price than had been originally estimated.
That business model is no longer sustainable, Rowden said. “We have to set cost and schedule as KPPs if we want to deliver an affordable ship.”
This will be easier said than done, however. To be able to establish firm price and schedule goals, Navy buyers will need to agree on a basic design that will not require costly modifications after a contract has been signed. “I have to lay down requirements for that ship that drive a stable design, and then hand them to the shipbuilders.”
This concept is being strongly advocated by Rear Adm. Dave Lewis, program executive officer for Navy ships. “This is a new way to think about shipbuilding,” Rowden said.
A central tenet of an affordable ship is to decouple the hull from the warfare systems, he said. That is the approach the Navy adopted for the Littoral Combat Ship. It allows the shipyards to focus on building hulls at efficient rates and to include “interfaces” in those hulls so multiple sensors and weapons can be plugged in, depending on the mission. The LCS will have three mission packages: mine countermeasures, surface warfare and anti-submarine warfare.
Within the Navy, there is a growing understanding that modular ship construction is the only way to avert soaring costs, but it remains to be seen whether the concept can be applied to combat ships other than LCS, such as large destroyers and amphibious warfare vessels.
One concern is whether the Navy has adequate systems-engineering talent in-house to write the specifications for a ship that will be in service for decades.
“We have to think about what is going to be required in weight, power, cooling, space,” Rowden said. “We have to think hard about it.” Decoupling the hull from combat systems means more expertise is needed on how to write “interface control documents,” he said. An ICD is a systems engineering term that describes how to connect subsystems to the main system, and vice versa.
“I tip my hat to those who worked on the ICD for LCS,” Rowden said. “That document is a decade old and it has had one minor change. That is what we need to get to the affordable ship.”
The Navy will need to bolster its engineering skills to make this work, he said. “I think the Navy needs to be the integrator between the combat systems and the ship,” he said, “Do we have the expertise and organization? I don’t know. But if we don’t, by golly, we are going to have to go get it.”
The Marine Corps, which relies on the Navy to acquire amphibious ships for its operations, is championing the idea of affordable ships. The Corps has said it needs 33 amphibious ships but currently has 29. If prices don’t start coming down, that fleet might continue to shrink.
Officials are evaluating options for the successor to the current LPD 17 San Antonio-class amphibious transport ships, which have experienced growing pains over the past decade, with significant delays and cost increases. Under a project called LX-R, the Navy and Marine Corps are “looking at everything” from a commercial hull to a variant of the current LPD, said Marine Corps Maj. Gen. Timothy C. Hanifen, director of the Navy’s expeditionary warfare division.
“Everything is on the table,” he said at the Surface Navy Association conference. “Affordability will be decision driver for these ships. The manufacturer of the San Antonio class, Huntington Ingalls, is proposing an LPD 17 “Flight II” that would be slightly smaller, adaptable to multiple missions and less expensive than current ships, according to Huntington Ingalls CEO Mike Petters.He said the Navy would be able to take advantage of a “hot” LPD production line.
Navy analysts, meanwhile, remain skeptical about promises of lower ship costs.
“The planned size of the Navy, the rate of Navy ship procurement, and the prospective affordability of the Navy’s shipbuilding plans have been matters of concern for congressional defense committees for the past several years,” wrote Ronald O'Rourke, specialist in naval affairs at the Congressional Research Service.
The Navy’s proposed fiscal year 2013 budget requests funding for the procurement of 10 new ships — one Gerald R. Ford (CVN-78) class aircraft carrier; two Virginia-class attack submarines, two DDG-51 class Aegis destroyers, four Littoral Combat Ships and one Joint High Speed Vessel.
The 2013-2017 shipbuilding plan, O’Rourke pointed out in a July report, contains 41 ships. That is a 25 percent drop from the 55 ships in the 2012-2016 plan, and a 28 percent decline from the 57 ships that were planned two years earlier.
Of the 16 ships no longer planned for 2013-FY2017, O’Rourke said, nine were eliminated from the Navy’s shipbuilding plan and seven were deferred to years beyond 2017.
The Navy’s fiscal year 2013 30-year shipbuilding plan, he noted, does not include enough ships to “fully support all elements of the Navy’s 310-316 ship goal over the long run.” The Congressional Budget Office calculated that the plan would cost an average of $20 billion per year in 2012 dollars to implement, or about 19 percent more than the Navy estimated, O’Rourke said. “Some of the difference between CBO’s estimate and the Navy’s estimate, particularly in the latter years of the plan, is due to a difference between CBO and the Navy in how to treat inflation in Navy shipbuilding.”
Photo Credit: Navy/Thinkstock

Topics: Procurement, Defense Department, Shipbuilding, Surface Ships

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