By Geoff Fein
While the Navy is taking significant steps to reduce the total ownership cost (TOC) of its aircraft, ships and submarines, the service is also working to examine more closely where it can save money across the enterprise.
Although these efforts are not new, the difference is that the Navy is attempting to put together these efforts in a more organized manner, trying to mainstream them and spread the word on what works, Vice Adm. Kevin McCoy, commander Naval Sea Systems Command (NAVSEA), told Defense Daily recently.
“One of the things Brian (Persons) and I have been working on this year, in particular, one of our strategic items for FY ’10, is to make TOC awareness part of every employee’s job at NAVSEA, and that’s about 60,000 people,” he said.
McCoy and Person, the executive director, NAVSEA, have been looking at, for example, how the organization with such a varied and vast workforce understands what total ownership costs are, what NAVSEA’s expectations are, and the fact that no matter where someone is in NAVSEA they have a role in helping the Navy reduce total ownership cost, McCoy said.
“We have made it part of our specific strategic business plan and in fact this year made it an evaluation criteria, a performance evaluation, of our people,” McCoy said.
Recently, McCoy and Persons honored a group of eight from Naval Surface Warfare Center Dahlgren, Va. Each individual received approximately $3,000 for saving the Navy $300,000 annually, McCoy noted.
“They said, ‘we have a lot of telephones around here that are not in full use. In fact, going around the organization they were able to turn off 1,000 lines,” McCoy noted. “That’s a $300,000 a year savings immediate to the organization.”
McCoy is looking to extend that effort to all of NAVSEA’s field activities.
“That’s a great example of how cost savings opportunities are all around us,” he said. “That was a result of a number of years of reorganizations and movements in the organization, when people went back and said ‘what is our piece of total ownership cost?’ These were not necessarily folks involved in a new acquisition program or anything like that.”
Sean Stackley, assistant secretary of the Navy, research, development and acquisition, has said he wants every NAVSEA engineer to be a cost engineer. McCoy noted.
“I think that goes right to the heart of this whole thing–about what is your obligation when you come to work for the U.S. government everyday? Sure, you have a day job in terms of working on a program or supporting the fleet,” McCoy said “But you also have an obligation to understand where that next level of performance is both in performance as well as in cost reduction.”
McCoy pointed to another effort that led to upgrading ship air conditioning systems instead of buying new units.
“We recognized a group of folks from the Warfare Center in Philadelphia, ship engineering center Philadelphia, who instead of installing new air-conditioning units on a number of our ships said they can actually upgrade the exiting plants for a significant savings,” McCoy said. “And we, in fact, on one class of ships, are going to save $3 million and also reduce procurement time.”
About two years ago McCoy went out to the four public naval shipyards and asked the shipyard commanders if they were king for a day and could change processes that NAVSEA uses to work on the ships in the public shipyards what would they focus on to reduce cost with little risk to the outcome, McCoy said.
“We immediately got 100 suggestions,” he added.
Out of those 100 ideas, NAVSEA took a handful of items to work on, McCoy said.
One of the questions looked at the in-depth process that every time a submarine comes in personnel do some ultrasonic tests to see crack propagation, McCoy said.
“We said, does the data allow us to reduce that inspection or can we look at the frame to hull welds without having to take off some of the coating on submarines, which is an expensive process,” he said.
“Through that process of actually one person asking that question and us doing that rigorous detail and analysis, we were actually able to save about $32 million over the life of 688 submarines by changing our process,” he said.
Persons told Defense Daily it is easy to get caught up in the programmatic part of total ownership cost.
“To me, total ownership cost…you have to make it a real thing. Really, it comes back to everything we do and touch in this command; there is a cost associated to it,” he said. “What I tell people is we have to understand cost everywhere we are at. That starts to accumulate and add up to these total ownership costs you see in programs.
“It starts to drive the paradigm down to people that everything we touch, everything we do, has a cost associated with it, and we have a stewardship responsibility of being mindful about understanding that cost and understanding about how to control those costs,” Persons added.