By Geoff Fein

While it seems much of the focus on the Navy these days is on the volatility in shipbuilding, the Navy is delivering between six and seven ships a year, has one of two new ships in tests and has a number of new design ships either in construction or in the early stages of production, a top Navy official said.

There is no one magic bullet to fixing shipbuilding, Vice Adm. Paul Sullivan, commander Naval Sea Systems Command (NAVSEA), told Defense Daily earlier this week.

“It’s shipbuilders doing more capital investment in their processes, people and facilities, to become more efficient,” Sullivan said.

In the 1960s, U.S. shipbuilders were on top of the heap. In 2000 and beyond, it’s the Asian shipbuilders that are far more efficient, Sullivan added. “I would say northern Europe is also still more efficient than we are.

“It’s the profit margins in our contracts, but I will tell you the contractors have a right to make a profit otherwise why would they be in business,” he said. “Should they be 15 percent, 10 percent, 5 percent? What’s the risk that they take on versus the government?”

Building warships is a risky business, Sullivan noted, so what is the appropriate profit margin there?

“What’s the government doing from a contract action technical authority view point that drives cost?

Sullivan is retiring from the Navy today after a distinguished career that saw him serve as program manager for the Seawolf-class and Virginia-class submarine programs as well as leading NAVSEA since July 2005

Rear Adm. Kevin McCoy, chief engineer, Naval Systems Engineering Directorate, Naval Sea Systems Command, will take over as commander of NAVSEA.

Sullivan noted that McCoy will lead a project looking at the impact of the Naval Vessel Rules (NVR) on the Littoral Combat Ship (LCS) program.

“It did drive some cost into that. It wasn’t the entire reason for the cost increase. Probably 10-15 percent of the cost increase was driven by the rules being imposed on the shipbuilder,” Sullivan said. “Some of those were safety of life. I am not apologetic about it, but it does drive cost. Military ships cost more than commercial ships. One thing we can do is make choices to go commercial.”

For example, Sullivan pointed to the Joint High Speed Vessel (JHSV).

“We actually held up the acquisition plan for that while we had our argument over what were the military performance characteristics of that ship and why couldn’t we become more and more commercial on that ship,” he said. “Other than fire fighting, communications, and safety of life, that’s a commercial ship. That solicitation went out basically commercial because it doesn’t have to be military.

“So wherever you can you should back off as long as you are making sure you are keeping the sailors safe,” Sullivan added.

Another factor in the high cost of building warships, Sullivan said, is the cost of materials.

“The cost of steel went up, the cost of copper went up, the cost of nickel went up, the cost of computer chips went up. In some cases people got really burned by that,” he said. “The T-AKE program, which is a very steel, and piping, and cable intensive ship, they really got hit hard by the cost of commodities. And there is not a whole lot you can do about that. But some of the things we are investigating, [for example] can we block buy materials?”

For example, could shipbuilders buy their steel together, Sullivan asked. “Is it an anti-trust violation? Maybe, but can we go work on some legislative proposals? Can we get them to go work together to pool their order for steel? Would it make a difference?”

The steel that the shipbuilding industry in the United States consumes is such a small piece of the world’s steel production, he noted. “Even joined together they may not have enough clout. Maybe not in steel, but maybe in pumps or piping or valves or electrical components they may have enough pull.”

But then the Navy would have to design ships to be able to accommodate that, Sullivan added. “That would be a new standard of commonality we would have to work on.”

Aside from the discussions about cutting down the thousands of different valves and pumps the Navy uses, the Navy has also looked at the feasibility of going to common hull configurations.

Sullivan said that is being looked at as the Navy builds its next command ship.

“[Rear] Adm. [Charles] Goddard [former Program Executive Officer Ships] counted up 29 different type model ships. We could probably get away with 12. That would be pretty good. So my next target for that one is the command ship,” Sullivan said.

The Navy has to replace its current fleet of Amphibious Command Ships, the USS Blue Ridge (LCC-19) and the USS Mount Whitney (LCC-20). Sullivan said the replacement ship will likely be either a San Antonio-class amphibious ship or a Lewis and Clarke-class T-AKE transport.

“You have the hot production line…[you] do the minimum amount of modification it takes so we have minimum modification studies over in the OPNAV staff to go work those,” he said. “Since the command ship is close to being in harm’s way, they may pick the ship with the more military performance which would be LPD-17. But they have this trade–T-AKEs are a lot cheaper. So what’s the right one?”

Still, with all the shipbuilding issues that have surfaced since Sullivan took over the helm of NAVSEA, he doesn’t think it is as bad as portrayed. “But don’t want to be Pollyanna and say we don’t have problems.”

“We are in an extraordinary time of many, many young shipbuilding programs. The first of a class ship is very, very difficult. I have done it a couple of times personally and it’s just incredibly hard to get the first of a class built,” he said. “We beat ourselves up for inadequate cost estimating, we beat ourselves up for inadequate planning, but frankly I don’t believe there is anything more complicated on the face of the Earth than a U.S. Navy warship. It is a pretty darn tough business.”

Although several programs are into serial production, Sullivan noted that the Virginia-class submarine program has yet to deliver the fifth boat of the class. It’s the same for the T-AKE transport ships, he added.

“We have delivered an aircraft carrier since 2003. All aircraft carriers are lead ships in my mind. LHD-8…same thing…lead ship…it has a completely new machinery plant and way more cabling on that ship, which matters,” Sullivan said.

And the Navy is pursuing two lead ships in its LCS program, he added.

NAVSEA headquarters is trying to run all those first of class programs having faced cuts of 51 percent since 1992, Sullivan said. “That matters.”

“Our Supervisors of Shipbuilding [were] cut 50 percent since 1992, and [they are] 20-30 percent undermanned according to a validated model for how many people they ought to have. We are fixing that.”

The only ship the Navy is in stable long-term production, where they have gone down the learning curve, is the DDG-51 class, Sullivan said. “And we are about to restart that. And since we are restarting that, the price of the lead ship of the second DDG-51 is going to way up.

“We are into some tough stuff…add that all up we are into some tough times. Will it get better, I think so. Our design tools are getting better, and [there have been] fewer number of changes on our ships,” Sullivan said. “If we can stabilize the work force and stabilize the shipbuilding program…it won’t solve everything but it will get better. The question is, is it going to get enough better so that we can really afford the 313 ship Navy?”