By Emelie Rutherford
The Navy is kicking off a shipbuilding industrial base study to review the capabilities and capacities at U.S. shipyards to better inform the service as it crafts its next budget.
The forthcoming study is intended to “get to the heart” of the question of whether the nation’s six major shipyards will remain viable amid concerns about the Navy potentially having to scale back shipbuilding plans because of possibly rising ship costs, Navy acquisition chief Sean Stackley told lawmakers last week.
Stackley told the House Armed Services Seapower subcommittee that the shipyard analysis is intended to give the service “the most current information with regards to not just the impacts of the Navy program but other work at those shipyards, and what that means in terms of not just their viabilities, but also our costs.”
The study is intended to help the Navy as it crafts the program objective memorandum for fiscal year 2012 (POM ’12), which will project the FY ’12 through FY ’17 budgets.
“When we went through the (FY ’11) budget process this year, a lot of our decisions that were associated with the industrial base were limited in the insights that we had,” Stackley told reporters after the hearing. “So we want to open up with those insights, so that when we go into POM ’12…we have a better fundamental understanding of the issues of the industrial base.”
“The answer’s not going to be just, ‘Let’s understand what the overhead is so that we can ensure we properly fund it,'” he added. “The issue is, ‘Let’s understand what’s driving the overhead so that we can drive it down.’ Let’s understand what’s impacting productivity at the shipyards so that we can improve upon it.”
Thus the report, Stackley said, should be a tool for the Navy to improve affordability and also to reform the shipbuilding program “to ensure that we are safeguarding what we need for an industrial base, near term and far term.”
The study will review the U.S. shipyards’ design and production work, the health of the vendor base, and trends in overhead, productivity, and investment strategies, Stackley said in written testimony.
The service has put together a statement of work for the study and is selecting a team to conduct it, he told reporters. The team should have subject-matter expertise, with an understanding of both shipyards and systems, he said. The group also must have access to the yards and be independent, he added.
“This can’t be just the Navy reporting we need more ships; we understand that,” he said. “We need a degree of independence to come to this, so that when we share the results inside the Navy, with (the Office of the Secretary of Defense) OSD in the budget process, with the Hill, with industry, it has a degree of credibility that people can look and that and say, ‘Yeah, that’s the right answer.'”
The study’s findings will be delivered in phases, with interim conclusions that will support the Navy’s FY ’12 budget process, and a final report that will help when the service’s spending proposal is considered by OSD, he said.
Rep. Roscoe Bartlett (R-Md.) raised industrial-base concerns at the hearing.
“Our shipbuilding plan acknowledges that we will be building just enough ships to sustain our industrial base,” he said. “If the cost of these ships go up, and that may very well be true of the (future) SSBN (next-generation submarine), then we will be building fewer ships.”
Stackley told Bartlett the forthcoming industrial-base study is intended to answer his questions about the viability of the six major shipyards.
He added that when the service puts together a shipbuilding plan it takes a close look at workload curves that show the projected work at all yards building Navy ships. While some shipyards have “a very healthy workload,” he said the Navy is “quite concerned” about “a couple” yards, including General Dynamics‘ [GD] NASSCO shipyard in San Diego.
At last Wednesday’s hearing, Mike Petters, corporate vice president and president of Northrop Grumman Shipbuilding, and David Heebner, executive vice president of Marine Systems at General Dynamics, expressed concerns about the Navy’s shipbuilding plan sustaining their firms’ combined six yards.