HII [HII] is pushing for the Navy to procure aircraft carriers with a strategy it dubs 2-3-4: two ship carrier block buys with three years of advance procurement (AP) and four years between ship procurement.
According to a Newport News Shipbuilding executive, the company believes this strategy is needed to sustain a “stable, predictable and consistent cadence” of carriers with the company’s industrial base, the executive told reporters Monday ahead of the Surface Navy Association annual symposium.
The executive said the two-ship buys at once help reduce cost via economic order quantity procurement of materials and “injects predictability and stability into the industrial base, and also enables an optimized ‘plan once, bill twice’ strategy.”
He also argued having at least three years of AP funding addresses the “current realities of extended supply base lead times, enables supplier competition as well as reduces scheduled risk of sequence critical material.”
The four-year build intervals are also needed, the company said, because that helps minimize peaks and valleys in the workforce and help maintain a pace to keep the Navy at 11 operational carriers.
Currently, the Navy bought future Ford-class carriers CVN-80 and 81 in a two-ship buy in 2019 order to save billions of dollars.
However, the official admitted CVN-81 has not reaped “the full benefits of optimum two ship buy procurement strategy” because it did not start in that way. Initially, CVN-81 was planned to be bought separately, 6.5 years after CVN-80.
The executive said that change in procurement strategy combined with the impact of the COVID-19 pandemic “[have] exacerbated the impact on the supply base…and CVN-80’s construction schedule.”
However, the executive said CVN-81 is still on schedule, largely due to material procurement authority and shortened build intervals enabled by the two-ship contract.
HII said CVN-81 is at 80 percent material committed, and argued if it was procured as a single buy, they would only be at 40 percent.
The executive underscored at least three years of AP funding “addresses current realities of extended supply base lead times, enables supplier competition as well as reduces scheduled risk of sequence critical material.”
Separately, HII said the four-year build intervals help eliminate peaks and valleys in the trained workforce and would help the Navy maintain 11 operational aircraft carriers.
The executive also argued stability, predictability and consistency between carrier contracts is also “very critical” to the carrier production rate.
However, he said recent reports suggesting the Navy may consider delaying procurement of CVN-82 due to delays in CVN-80 “is extremely disappointing.”
The executive warned any further widening of carrier production intervals “is something that could break momentum of a rebuilding carrier production line and have a detrimental impact on the entire nuclear shipbuilding industry, including submarine construction.”
HII’s submarine work could be affected, he said, because “more than half of our suppliers support both aircraft carrier and submarine construction.”
The executive said CVN-82 was previously projected to be procured in 2028, six years after CVN-81, and the industrial base has been planning around that timeline.
“The Navy signaling a further delay of CVN-82 to 2029, or even worse to 2030, would merely exacerbate this impact on an already fragile industrial base.”
The executive said the current FY 2024 budget request plans for CVN-82 to have two years of advanced procurement starting in 2028, but he argued rather than delaying procurement the AP work should start in 2025 to allow three years of advanced procurement.
“The reality is we need that moved back to the left a year. 2025 is when we need to start buying AP material from our long-lead time suppliers. We believe that with that, in discussions with the ACIBC, that that is where we kind of hit the sweet spot with the supply base.”
The executive argued buying carriers more than four years apart and pushing back CVN-82 risks adding stress to the industrial base such that “nearly half of our suppliers that provide critical long lead time material already risk going cold.”
HII said analysis by the Aircraft Carrier Industrial Base Coalition (ACIBC), an industry group, suggests delaying CVN-82 would lead to supplier workforce layoffs, increased costs, and suppliers ultimately deprioritizing military shipbuilding.
The Newport News executive said supplier production going cold runs the gamut from specific supplier company production lines going cold and HII having to replace that supply with a different option to entire suppliers getting out of the aircraft carrier business entirely.
“The reality is many of our major suppliers are incumbent suppliers and sole source suppliers. That’s no different in aircraft carriers as it is in submarines.”
He said if HII’s 2-3-4 strategy was adopted by the government that will allow more competition, encouraging more companies in industry to enter the nuclear vessel industrial base.