image caption follows  

(above) USS Hawaii (SSN-776) prior to rollout at General Dynamics Electric Boat. Photo by General Dynamics Electric Boat  

by Capt. Dave Johnson, USN and Lt. j.g. Dustin Muniz, USNR

Building a Fleet for the Future

The task of building and maintaining a properly sized navy is complicated by the significant construction time and cost of modern naval vessels. It requires looking into the future to predict what the Nation will need and balancing that with what the Nation can afford. The Navy has a 30-Year Shipbuilding plan that is designed to provide for a balanced fleet of 313 ships. This battle force is designed to provide the best mix of capabilities to meet the projected 2020 threat while assuming a reasonable level of risk. The Navy’s shipbuilding plan balances requirements, affordability, and stability (for both the shipbuilders and Navy budgets).

The Navy has determined that a properly balanced 313–ship fleet contains 48 attack submarines. The current fleet is largely composed of Los Angeles-class submarines, but these start to reach their end of life in the next decade and will be decommissioned at a rate of about three per year. The submarines of the Virginia-class are taking their place, the first naval vessel designed for the post-Cold War world. But the current build rate of one Virginia-class submarine per year will not support a force of 48 attack submarines. The 2006 Quadrennial Defense Review recommended that the Navy “return to a steady-state production of two attack submarines per year not later than 2012 while achieving an average per hull procurement cost objective of $2.0 billion [fiscal year 2005 dollars].” The Navy’s shipbuilding plan stipulates exactly that, allocating $4.0 billion (fiscal year 2005 dollars) for the purchase of two Virginia-class attack submarines per year starting in fiscal year 2012.

Two For Four In Twelve

This cost goal has become known as “Two for Four in Twelve,” two Virginia-class submarines per year for $4 billion (fiscal year 2005 $) per year in fiscal year 2012. The Navy’s Virginia-class program office (PMS 450), the shipbuilders (General Dynamics Electric Boat and Northrop Grumman Newport News), and the numerous other companies that support submarine production have been striving together to meet this goal. In order to meet the requirements enumerated above, costs must be reduced by one-sixth. Cost reduction efforts have branched into three specific areas: procurement rate, capability-neutral design changes, and construction performance.

image caption follows
image caption follows
Hawaii’s sail being added to hull section North Carolina (SSN-777) hull section
Photos by General Dynamics Electric Boat

Capability-Neutral Design Changes

Sometimes a redesign of a system can take advantage of new technology to provide similar levels of performance at reduced levels of cost. There are several proposals for these types of capability-neutral design changes being considered. Two of the most notable include the Large Aperture Bow (LAB) array and the Payload Integration Module (PIM). The forward spherical sonar array on a submarine is large and expensive. Each hull penetration must be inspected and declared seaworthy by the Submarine Safety and Quality Assurance Division (SUBSAFE). The LAB array would replace the forward sonar sphere. It would be a “wet” sonar system with less expensive components that require less maintenance, last longer, and are less complicated to install.

The LAB array has the potential to reduce costs by about $15 million (FY05$) per submarine. The LAB array would also free up space near the front of the submarine for the PIM. The PIM takes advantage of the modularity of the Virginia-class submarine, one of its key, revolutionary design criteria. A successor to the Vertical Launch System (VLS), the PIM potentially could serve as a modularized, mission configurable weapons bay. Like the LAB array, the PIM would function outside the pressure hull. The PIM has the potential to reduce costs by up to $20 million (FY05$) per ship.

To date, capability-neutral design cost reductions have realized about $5 million (FY05$) in savings.

image caption follows
Hawaii moved outdoors for the first time. Photo by General Dynamics Electric Boat.

Construction Performance

Increasing the efficiency of Virginia-class manufacturing and construction processes leads to significant monetary savings. PMS 450 has identified numerous methods by which the Navy can reduce construction costs. Already there have been tremendous gains in performance over the lead ships. USS Hawaii (SSN-776) was a rarity, delivered on the original contract delivery date. North Carolina (SSN-777) is slated to do the same. New Hampshire (SSN-778), the fifth Virginia-class submarine, is projected to be delivered up to six months early. Furthermore, both Hawaii and North Carolina are expected to take 15 percent fewer man-hours to construct than the lead ships.

By shortening the construction time of a submarine from seven years to five years, the fixed costs of construction go down. Reduced construction costs alone have the potential to save the Navy and taxpayers up to $100 million (FY05$) in costs, and some of these reductions are already being achieved. Northrop Grumman Newport News-built North Carolina is projected to take 10 months fewer to construct than Texas, the first Virginia-class submarine built by that shipyard.

By changing designs and processes so that it is easier and more efficient to construct submarines, cost reductions in production can be achieved. Over 80 production improvements have been implemented, with a savings of over 65,000 man-hours.

Additionally, the teaming arrangement between Northrop Grumman Newport News and Electric Boat specifies that each company must do half of the work on each submarine. By adjusting the teaming arrangement so that submarines can be built more efficiently between the two shipyards, $25 to $50 million (FY05$) could be saved.

Capital Expenditures (CAPEX) are a unique form of investment that can lead to cost reductions, and they are part of the current five-year MYP contract. As an incentive to the contract, the Navy funds certain projects submitted by the shipyards that are intended to reduce construction costs. Initial funding is 50 percent of the cost of the project. If the project is completed and results in cost savings, the Navy reimburses the shipbuilder for the remaining 50 percent of the CAPEX outlay. This allows the shipbuilder to modernize its facilities and reduce costs at the same time. Currently, five CAPEX projects have been approved. One of the most significant is the Quonset Point Hull Coating Facility. An initial investment of $9.4 million is expected to yield a savings of 1,306 man-hours of construction work for each submarine, a total savings of $71 million over the life of the Virginia-class program.

Approximately $23 million (FY05$) has been saved through construction performance cost reduction efforts.

The Way Ahead

A year after plans to eliminate $400 million (FY05$) from the cost of each Virginia-class submarine were announced, over half of the cost savings have been directly targeted, and plans to target the remaining costs are under development. Commenting on PMS 450’s progress to date, Rear Adm. William Hilarides (PEO Submarines) notes that, “The Virginia-class program is a mature program, and one that was originally designed with cost effectiveness in mind. In order to reduce costs on this program, we have to change the way we build submarines, and that’s what we’re doing with the program. I have every confidence that we can meet this goal.” The early fruits of the cost reduction plan are expected to be achieved throughout 2007. And as further components of the plan are implemented, the Virginia-class submarine program will continue to adapt to provide the best possible platform to the Navy for the best possible price.

Capt. Johnson is the Program Manager for the Virginia-class submarine program (PMS 450).

Lt. j.g. Muniz is a Navy Reservist and an analyst with Alion Science and Technology in Washington, D.C.

image caption follows
Texas returns from Alpha Trials
Photo by Northrup Grumman Newport News


image of the cover