Navy And Congress Grapple With How To Increase Fleet And Maintain Shipbuilders

Members of Congress and Navy officials grappled this week with how to maintain shipbuilders, lower costs, and increase the size of the Navy towards the 355-ship goal given long timelines and limited shipyards.

During a Tuesday hearing of the House Armed Services Subcommittee on Seapower and Projection Forces, Rep. Mike Conway (R-Texas) inquired about changing carrier increments, noting the Navy’s FY ’19 budget request does not move to accelerate the time between building new aircraft carriers.

The future USS Gerald R. Ford (CVN 78) arrives at Naval Station Norfolk in Virginia on April 14, 2017, after returning from builder's sea trials. (Photo by U.S. Navy)

The future USS Gerald R. Ford (CVN 78) arrives at Naval Station Norfolk in Virginia on April 14, 2017, after returning from builder's sea trials. (Photo by U.S. Navy)

He said Chief of Naval Operation (CNO) Adm. John Richardson earlier mentioned that if the U.S. moves from purchasing carriers every five year to three or four years, that would help increase the fleet and carrier numbers but “the budget does not do that and we’re still in the five years between carriers.”

Assistant Secretary of the Navy for research, development and acquisition (RDA) James Geurts said the Navy is looking at the near-term opportunity of whether they can “combine the buys for CVN-80 and 81, saving money and potentially accelerating some of that capability.”

He said the Navy is studying that now and but is not yet ready to “put that on the table.” The service is working with contractor Huntington Ingalls Industries [HII] to sharpen estimates and “ensure we really understand what that opportunity provides to us.”

The assistant secretary pointed out historically when this was done with the Nimitz-class carriers it was on the order of a 10 percent savings. He said since the Navy is still about halfway through buying work for the first carrier they are still figuring out what future savings are available.

“I think the other thing that’s important is both from a not just dollar perspective but level loading the workforce.”

Beyond immediate savings the Navy is investigating if this can help spur additional savings that bear fruit on future carrier purchases, especially if later carrier buys are pushed closer together.

“And so if you know you’re doing two carriers your return on investment for some of these initiatives, that equation changes and our hope would be we could get costs out so that future carriers would also benefit.”

When pressed by Chairman Rob Wittman (R-Va.) if 10 percent savings for two carriers costing about $12.5 billion each means about $2.5 billion in savings, Geurts said “Yes sir, it depends on when we implement it. I would say somewhere between, certainly over a billion dollars, up to two and a half billion.”

“And then if you were to do a follow-on carrier buy and we were able to take cost out of the carrier as we expect you would get follow-on savings on to those future carriers.”

Geurts told reporters after the hearing that “we’ll work that through the spring. To do that will require authority from Congress. So I anticipate as we work with the shipyards and understand the exact savings possible then we’ll sit down and have a discussion with Congress and if those are attractive both within the department and with Congress then we might go forward with that.”

“So we have not decided to do it. We have not decided not to do it.”

On longer term issues, Vice Adm. William Merz, deputy Chief of Naval Operations for Warfare Systems, said the Navy is also looking at reducing the carrier centers, that is increasing procurement from once ever five years closer to once every three years.

He said the 30-year shipbuilding plan lays out the program of record but also gives a timeline to show what carrier procurement would look like on 3.5-year centers.

Merz said showing that was a way to demonstrate the service’s commitment to try to reach that acquisition rate, but “I’ll tell you that is probably not aggressive enough. Right now on the four year centers we achieve the 12 [concurrently active carrier numbers] in the 2060 timeframe. If we go to three and a half that still only moves it up to the early 2050s.”

He said the Navy is “aggressively looking at that” but “frankly we just didn’t get there in time” for the President’s FY ‘19 budget request.

Merz said the work is ongoing and will give the results of that planning in the next 30-year shipbuilding plan, which the Navy has already started creating.

He also revealed the Navy intends to do another Force Structure Assessment (FSA). The last FSA was completed in late 2016 and was one of the first official documents pushing for a 355-ship fleet (Defense Daily, Dec. 16, 2016).

“We intend to do another FSA with the new National Defense Strategy. There is a series of events that has to happen before we do the FSA, starting with the combatant commanders all the way down to the defense planning guidance that leads us to the scenarios we need to plan for,” Merz said.

He said the service does not expect it to change the total number guide much except on the margins and it will maintain building a bigger Navy than currently exists.

An MH-60 Romeo flying near the USS Freedom (LCS-1). Photo: U.S. Navy

An MH-60 Romeo flying near the USS Freedom (LCS-1). Photo: U.S. Navy

The committee appeared skeptical of the service’s request for only one Littoral Combat Ship in FY ’19 before transitioning to the  guided-missile frigate (FFG(X)) program.

Rep. Bradley Byrne (R-Ala.) noted both LCS shipbuilders, Fincantieri Marinette Marine and Austal USA, have said the FY ’19 request for one Littoral Combat Ship (LCS) will lead to a gap in production that will negatively impact their yards. He pointed out last year LCS Program Executive Officer Rear Adm. John Neagley said the optimal sustaining rate for both shipyards is three ships per year.

Byrne’s district is home to the Austal USA LCS shipyard in Mobile, Ala.

The conflict is that while the yards are optimized at building three ships per year going in to the frigate competition, the Navy’s requirement has held at 32 LCSs. However, in the FY ’18 budget appropriations bill Congress added an additional LCS, so the FY ’19 requested ship would be the 33rd LCS.

Geurts said “certainly one ship a year is not near the optimal rate” but that when the Navy looks at the current work it includes 18 ships in construction. He sees three ships in the FY ’18 budget and one in the FY ’19 budget as four ships over two years.

“I believe it’s at the minimum sustained level so that we will not completely lose the workforce or the workyard.” However, Geurts acknowledged that will likely lead to some work turndown in the yards as the Navy moves towards the frigate downselect.

Byrne pointed out the problem is that the Navy was supposed to transition to FFG(X) in 2018 but “the Navy wasn’t ready” and they need to plan things so these shipyards “don’t crumble on us, because without that you will not have an effective competition for the frigate.”

Guerts disagreed that this would threaten the competition itself “but obviously not operating at optimal production rates will cause some concerns with workers and that workforce will have to spin back up as we make this transition.”

Merz added while he is limited by his validated requirement, “I think we have set the environment in the shipbuilding plan to have the discussion after that requirement’s met, how do we work together with Congress to preserve the industrial base.”

After the hearing Geurts told reporters the Navy decided to purchase a 33rd LCS in FY ’19 as just over their requirement “but that it was absolutely critical, making sure we had both those yards in a position where they could compete fairly for the frigate.”

When asked if the service can give assurances to the LCS yards that if they reduce their workforce because of the FY ’19 budget decision it will not be held against them in the frigate competition, he said “I believe we’re going to set up the competition so it’s fair and equitable.”

The Navy awarded conceptual design (CD) contracts to five ship builders for the FFG(X) last month. This phase lasts for 16 months through June 2019 to mature designs before transitioning to a full detail design and construction (DD&C) competition and award in FY ’20 (Defense Daily, Feb. 16).

Geurts said all the participants will get to see the criteria “and so if there’s issues when they see a criteria obviously that’s what we’ll work before we release our final RFP.”

“But our intent is absolutely not to disadvantage anyone and make sure that it’s a fair, transparent, and credible selection,” he added.

Byrne and Rep. Mike Gallagher (R-Wisc.) said shipyard workforces do not easily spin back up because it years to get the right experienced workforce ready again.

“Whereas some large shipyards might be able to survive that, these two shipyards are small shipyards” and “in fact I think the likelihood is at least one of them won’t survive that,” Byrne said.

Gallagher added in his district, home to the Fincantieri's LCS shipyard, “it’s not as if that ship worker that gets laid off, if one of these shipyards goes under, can go down the street” and “spinning back up is not necessarily as easy as flipping a switch for what it’s worth.”

“I think we all want the same thing. We want to, as you laid out, preserve the defense industrial base, we want to make sure we have as robust a competition for the frigate as humanly possible, learning lessons from the past mistakes that we’ve made, and also get to 355 in as expeditious but also sustainable of a manner as possible."





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