The US Navy acknowledged last week that it had often failed to properly run multibillion-dollar shipbuilding programs and vowed to improve.
Navy leaders told a panel of the House of Representatives Armed Forces Committee that they were committed to stepped-up oversight, aggressive cost-reduction and enhanced competition at all levels of the industry, Reuters reports.
“We are seeking to impose stability,” said Sean Stackley, the Navy’s assistant secretary for research, development and acquisition. “We do not have a good track record here.”
The Navy did not particularly criticize Northrop Grumman Corp nor General Dynamics Corp, which between them own the nation’s six major shipyards.
But it said ship costs were rising faster than its total budget, and that affordability was its most pressing challenge.
At stake are plans for a 313-ship Navy by 2019, up from 283 currently.
Fuelling costs are low-rate production, limited competition, increased system complexity, frequent changes to Navy shipbuilding plans and tweaks to requirements and design, the Navy said.
In addition, in “even our most mature programs, we have experienced cost growth as a result of performance shortfalls and quality escapes,” Stackley added in written testimony with Vice Admiral Kevin McCoy, commander of the Naval Sea Systems Command.
They did not spell out what they meant by quality “escapes.”
Stackley singled out three programs as strong performers: DDG-51 guided-missile destroyers, Virginia-class nuclear submarines and T-AKE dry cargo/ammunition ships. General Dynamics is the prime contractor on all of these.
Each, Stackley told the Seapower subcommittee, was capitalizing on a long stable production line something most Navy shipbuilding programs have not enjoyed, subject to politics and congressional purse-strings.
The Navy vowed to “rebuild” its acquisition work force, continue a trend toward greater fixed-price contracts and said it would “continue to explore use of block buys and multi-year procurements” as ship classes mature.
Rep. Gene Taylor, the Mississippi Democrat who chairs the panel, said failure to curb shipbuilding costs could sink the Navy’s hopes to build the 313-ship fleet.
“If we cannot get these shipbuilding costs under control, we will never again have the number of ships the CNO (chief of naval operations) needs to perform all the tasks that we as a nation ask,” he said in a prepared statement.
The program to build a “littoral” combat ship for coastal waters, of which the Navy hopes to buy 55, is a “disaster,” with surging costs, Taylor added.
“I am not sure the Congress is willing to go forward with that program unless significant progress is made on cost control,” he said. “And I do mean significant.”
C. Michael Petters, president of Northrop Grumman’s shipbuilding sector, testified that buying ships one at a time, as Congress typically does, was the “antithesis” of the most efficient way to build them.
David Heebner, executive vice president of General Dynamics’ Marine Systems business unit, also said stability of requirements was key to affordability.
In 2008, shipbuilding accounted for $5.6 billion (about R43 billion), or about 19 % of General Dynamic’s overall revenues. For Northrop, it was also about $5.6 billion, or 18 %.
The House approved on Thursday $15.8 billion (about R122) for the procurement of 10 Navy ships including one DDG-51 Guided Missile Destroyer; one SSN-774 attack submarine; two intra-theater connector ships; and two T-AKE Dry Cargo/Ammunition Ships.
The ships are part of a $636 billon (about R4949 billon) defence funding bill for fiscal 2010, which starts Oct. 1.