By Geoff Fein
The Chief of Naval Operations (CNO) said he is happy with the Navy’s fiscal year 2011 budget, but the service continues to deal with both the rising cost of maintaining its fleet as well as the total ownership costs (TOC) of its aviation and ship assets.
Within any organization there is always the challenge of balancing competing requirements with finite resources and the how personnel within the organization handle it, Adm. Gary Roughead told Defense Daily yesterday.
“I was very pleased, as I was with what we did in FY ’10, and in other things, just with the tone that the staff here approached it [with],” he said. “The cooperation and collaboration among the leadership and staff…that was a positive.”
The Navy fared quite well in the FY ’11 budget, Roughead noted.
“If you look at our shipbuilding account, we are continuing down the path we envisioned last year where we wanted to get the DDG-51s restarted so we can address BMD issues, integrated air and missile defense issues and some of the ASW capabilities that we want to field,” he said.
The Navy will build a LHA-R and will add another Joint High Speed Vessel to the mix of ships, Roughead said.
Additionally, the Navy is expected this summer to select one of two designs for its Littoral Combat Ship (LCS). Two of the first 10 ships proposed under the revised acquisition plan will be built in FY ’11, he added.
“We are clearly on the right path with moving toward downselect that we could start to generate capacity, but generate it in a very affordable way,” Roughead said.
Aviation programs are also moving along, even with the challenges the Joint Strike Fighter (JSF) has faced, he added.
“JSF is a topic that will continue to occupy our attention, and leadership, into the future,” Roughead said.
He is content with the Navy’s decisions on the Unmanned Combat Air Systems program. “I am very pleased with where we are going with that.”
The area that Roughead said is very important to him, in the near-term, is the significant increase by percentage of what would normally be expected in the Navy’s operation and maintenance (O&M) accounts.
For FY ’11, the Navy is seeking $46.2 billion for O&M, according to the budget. Of that amount, $11 billion is for ship operations.
“We are bumping those [amounts] up because we are readjusting our O&M funding to the way the fleet is being used and the wear that is being put on the fleet,” Roughead said. “As I go forward in my testimony, I will be making the case you are seeing what would be a higher than normal increase in O&M funding but that is realigning O&M to where O&M needs to be for the Navy.”
Roughead also would have liked to have put more money against some of the infrastructure, he said. “But budgets are about budgeting, and I tend to approach the service budget as I do my personnel budget. You can’t have everything you want. You have to figure out where your priorities are,” he added.
“But I really do believe we balanced it out quite nicely for today and tomorrow,” Roughead said.
For the fleet of tomorrow, the Navy will need to get control of total ownership cost (TOC), he said.
“When we talk about total ownership cost, (there is) a lot of pressure from me and the Navy to get our heads around that. But this is not something we have habitually done in the past…learning how to do it,” Roughead explained. “We are starting to do some examinations of how do you really get your head around…[the] methodologies that we are after.”
Naval Sea Systems Command, Roughead said, hired costing people during a recent job fair in Detroit. “There were some people who needed work up there. They had skills we normally have not pursued, some experiences and talent that we have not pursued. We have brought them in so they can help us get kind of a look at how do you position yourself? How do you set yourself up to make the right decisions, what are the decisions points you have to make?”
He noted that the news about the JSF total ownership cost issues was one of the initial forays into looking at how the Navy get its arms around this problem at a working level.
“I am pleased that people are starting to get into it,” Roughead added. “But we are just wading into this whole issue of TOC as a way of envisioning our future.”
But questions about the importance total ownership cost plays in the Navy surfaced last week with the release of the LCS request for proposals. Some people questioned the seemingly lack of importance that total ownership cost would play in the selection process.
“We all know we had cost growth in the procurement of LCS, but when you talk about TOC for LCS and, I don’t care what variant you are talking about, the biggest driver for TOC is really people,” he said. “The fact you are driving around a ship of that size with the number of people on it, you already made a huge turn into eating into TOC.”
Included in that are investments made in automation and some of the human engineering that’s on LCS, he added. “To say we haven’t taken a bite into TOC of a ship of that size and that capability I think doesn’t take in the full picture of what we are talking about.”
“As we look at other facets of TOC, there are still the normal operations and operational patterns that have yet to be determined,” he said. “And once we get some of that run time underneath our belt, we can start to talk about some of the other TOC issues.”