During a midyear review of 2019 budget spending, the Navy found it had more than $3 billion in emergency costs that needed to be covered, including nearly $1 billion for ship depot maintenance. There is at the very least nearly $1 billion in unfunded ship repair, meaning the fleet will need to find money or defer to later dates.
That move could have a cascading effect that means other ships may not get the full maintenance packages they need, putting pressure on an already beleaguered ship maintenance system. The shortages come in a year that saw a $750 billion defense budget. That means that while the Navy should be toasting its good financial fortunes, it will instead be scrambling to find money to fix its ships.
Budget cuts are forcing the Navy to take a fleetwide look and identify what issues are most important — a triage process that ensures that some issues that could be addressed in scheduled maintenance availabilities today will instead be pushed off and become more expensive in the future.
The Navy is also hitting capacity at both its public and private shipyards and is having to defer maintenance simply because there is no room at the yards.
The problem is exacerbated by a reduction in the overall amount of money Congress allows for the Pentagon to reshuffle in any given year without having to go ask lawmakers for new legislation and new authorities in that year. In years past, the DoD had $4.5 billion of authority to reshuffle money. In 2018, that was reduced to $4.25 billion; and in 2019, the year that’s causing the problems, that was reduced to $4 billion.
For the Navy’s beleaguered maintenance accounts, the fiscal mess plays out this way: Growth work discovered during maintenance periods combined with insufficient capacity at the shipyards caused maintenance budgets to run over by almost $1 billion. The Navy points to the reduced cap authority as a primary driver in the situation, as well as a series of unplanned expenses.
The Navy’s ability to maintain its attack submarines has been strained in recent years, as the shipyards are overwhelmed with work on the Ohio-class ballistic missile submarines and the Nimitz-class aircraft carriers, with Los Angeles- and Virginia-class attack subs being the lowest priority work.
These SSNs have often seen delayed inductions or delays once in the shipyard due to the workforce being tied up with higher-priority availabilities. As a result, the Navy a couple of years ago tried to send some of this work out to industry but those two yards saw their own delays and cost-overruns with USS Helena SSN-725 and USS Montpelier SSN-765.
Navy has framed the problem as one of basic workforce skill and program management that arose as the private yards tried to reconstitute an in-house repair capability.
But many of the challenges arose when the yard tried to take on repair work without the same benefits of lessons learned and advanced planning that the public yards have access to. Both sides, however, are committed to doing better and hope to continue performing submarine maintenance for years to come.
Delays with Helena had led to delays in the ongoing USS Columbus SSN-762 availability now and the expected upcoming availability of USS Boise SSN-764 there in 2020.
“What we’re trying to do at the shipyard is to help them … establish a workforce, to regain some proficiency, get better at the planning. We’ve actually offered up resources from the public shipyards to go down and help them, from a lead maintenance activity perspective and project management perspective,”
“There’s some basic fundamental blocking and tackling that they’ve got to get better at, and the shipyard recognizes that. We would like to keep them in the submarine maintenance business for the long-haul for a number of reasons.
Shipyards are “getting better. We’re close to delivering Helena. Columbus will be undocking probably sometime in near future, and then we’ll get Boise in there as well. So they’re making improvements. We’d certainly like to see the pace of that increase, and we’re working pretty closely with them because we need them to be successful.”
The shipyard has extensive experience with submarines – to build all the Navy’s subs – and with repair work – conducting aircraft carrier mid-life overhauls at the shipyard and sending personnel to repair yards and bases around the world to work on carriers and subs. Doing submarine repair work at the shipyard, though, is something that hasn’t been done since since a decade ago.
“We did reconstitute a workforce and facilities here in the yard to pick up some of the submarine maintenance where the naval shipyards found themselves with a heavy workload.”
“We did stand that team up pretty rapidly and picked up Helena. Subsequent to Helena, which we’re looking to complete early next year, we have the Columbus in the yard, and that’s an engineered overhaul. So we have been fortunate to have really great support from the Navy on their experiences in submarine fleet support and maintenance.
We’ve had good communications and had solid teamwork on opportunities to learn from one another and continuously improve, and they’ve shared a lot with us and we’ve shared a lot in return to try to provide the best outcome possible for all of us, for the Navy, for the nation, to get these boats back out in the fleet where we all want them.”
But much of that sharing didn’t start until after Helena was in the yard and overran its docking selected restricted availability that was set to last 6 months. Helena is expected to come out of the yard nearly two years late.
The shipyard has deep experience in hiring and training the right personnel, investing in the right facilities and tools and managing programs to be successful; similarly, the DoD/industry team has long ago learned the lessons that contracting and planning have to be done early, and materials have to be on hand at the beginning of the work period to be successful.
And yet, the shipyard did not have access to the right information for early planning or materials acquisition ahead of starting Helena in the same way that the four public yards would have, setting up a difficult first-in-a-decade private sub repair.
For example, the shipyards have a “contingent material list” of items that should be kept on hand in case they are needed. This covers items not in the official work scope but that have arisen in past maintenance availabilities often enough that it’s common knowledge within the Navy that the materials should be on hand so as to avoid delays if emergent work arises. The shipyard did not have that list before Helena was inducted into its docking availability, leading to some delays as the contractor had to pause while material was ordered and eventually delivered.
Navy has access to more information than the shipyards on ship conditions and work scope than the yards do. That information can’t always be shared due to rules related to competitively contracting out the maintenance work, but the Navy and the private yards have worked diligently recently to find ways to award contracts earlier, conduct more thorough planning earlier, assemble better materials lists, and other steps to ensure better outcomes: chiefly, on-time and on-budget deliveries back to the fleet. Those lessons could likely be applied to contractors bidding for submarine repair work to see similar improvements in performance.
The shipyard learned a lot about expected and emergent work, as well as expected and emergent testing, that will be required for future work on Los Angeles-class SSNs. These lessons learned the hard way, plus information recently shared by the Navy, should set the yard up for greater success in upcoming availabilities, including the Boise engineered overhaul that will start as soon as Columbus finishes.
“The lessons from Helena, where they apply, and certainly from Columbus are very significantly deployed into the Boise plans,” The shipyard is looking for opportunities to team company and Navy personnel and share lessons learned to ensure significant improvement in the next availability.
Despite the challenges with these first LA-class availabilities, the shipyard is committed to continuing this work with the Navy and achieving better outcomes.
“Our efforts to support the Navy maintenance community includes continued execution and support of ship maintenance on-site around the world at naval shipyards and naval bases, and the more recent reconstitution of the resources and capabilities to perform submarine maintenance work at our shipyard.
If the shipyard can bounce back from these two challenging maintenance availabilities, it appears the workload will become more manageable. The shipyard has determined its best workload would be one availability right after the next, heel to toe, rather than having two boats in at once as was inadvertently the case with Helena and Columbus.
Additionally, as the Los Angeles-class submarines near the end of their service life, after a few more LA-class jobs the workload would likely switch over to the newer Virginia-class submarines.
“That would be something we would expect to execute very, very well because we know the boats; they’re earlier in their life, so their material condition is a little bit more completely known; the supply base is out there for new construction and available; we are executing the post-shakedown availabilities. So it’s likely that we’ll see transition into mostly, if not all, Virginia-class boats after a couple more 688s.”
Having already invested in capital improvements and the standup and training of a large team to do submarine repair work, we’re in this business for the long haul. It’s an area that we know the Navy needs support from us on, and it’s work that we want to provide support to for years into the future.”
Navy shipyards infrastructure in need of major improvements so a series of major modernization projects are being kicked off at Shipyards where equipment is aging and projects are being completed late.
Shipyard officials say the on-time delivery and modernization efforts are continuing. Shipyard has broken ground on more than $80 million worth of projects, including a paint and sandblasting facility. The Navy also announced a contract for a dry dock overhaul project of 150 million dollars.
The shipyard is moving in the right direction with upgrades and improved workflows. “These infrastructure projects are critical to the shipyard's effort to meet mission requirements and return vessels to the fleet.”
The shipyard also has hired many workers over recent years, in line with hiring trends at all of the yards, but new workers are not as efficient as experienced workers who are retiring out of the workforce.
The Navy might be failing to properly estimate the cost and time necessary to complete the upgrades. The Navy understands the concerns and is working to complete a full infrastructure survey and to create a computer model to ensure its projections are accurate.
More than $200 million worth of projects that have been in the works for years are taking shape at the Shipyard, promising to boost efficiency and continue the modernization of the shipyard. Navy needs to speed shipyard improvements in the face of a massive backlog of projects.
Because of growing demands on the fleet, it's important to minimize the length of repairs and maintenance in shipyards. And equipment is aging beyond the expected life at the shipyards.
The contract for the drydock is crucial. The improvements will allow Los Angeles-class attack submarines to float into the dry dock without a buoyancy system. It will also allow the dry dock to accommodate newer Virginia-class submarines.
The Navy's Shipyard Optimization Plan, created to address deficiencies and an aging infrastructure, calls for $21 billion worth of investment in public shipyards over the next 20 years.
It’s estimated to take at least 20 years to clear the backlogs at naval shipyards -- having grown by 40 percent over five years -- connecting directly to the need for expanded workload capacity and expedited processes.
“Training on a more modern plant design provides a major upgrade and equips our sailors with a reliable platform for the years ahead, which is key to ensuring maximum effectiveness across the Fleet.”
1. Few opportunities for growth without increasing market share or expand foreign sales despite tough competition and export controls.
2. Cash flow, long a strength of defense industry now sub par for most
3. Consolidations create higher liabilities for some defense firms, resulting in lower market value
4. Market capitalisation of defense companies subject to significant losses even beyond those of most other older firms.
5. Innovative R&D down and R&D profits were sharply constrained by dated DoD approach of having the companies “get well on production.”
6. Key personnel leaving defense firms or retiring while the recruitment and
retention of high-quality technical talents becoming more difficult
7. Integrating different operating styles of the acquired companies as well as their product lines.
8. Reducing costs by eliminating facilities and personnel in order to achieve the
returns that had been forecasted to justify making the acquisitions.
9. Capturing additional market share or new business to sustain growth rates.
10. Making decisions about how to enable new concepts of operations and capability for warfighters and improved business operations