Positives for the industry include “the availability of cash assets, the low level of market concentration of total contract award dollars, the relatively low share of total contract award dollars received by foreign contractors, and the high level of capital expenditures.
The defense industrial base struggles with deteriorating conditions for industrial security and the availability and cost of skilled labor and materials.
Navy looks are several dimensions including: market competition; cost and availability of skilled labor and critical materials; demand for defense goods and services; investment and productivity in the innovation system; threats to industrial security; supply chain performance; political and regulatory activity; and industrial surge capacity.
"Our ability to counter that is our own industrial base and our ability to provide our warfighters with the greatest capability — the training and the resources they need to continue to win the fights we put them in."
Threats to information security are a major risk for industrial supply chains. Companies rely on the production, manipulation, transaction and distribution of information, meaning that vulnerabilities can threaten production capabilities, service deliveries and the integrity of rewards for innovation.
“The proliferation of information security vulnerabilities forces industrial supply chain managers to continuously adapt to a dynamic threat. Accordingly, information security threats constitute an enduring source of costs as companies invest in measures to prevent or recover from information system breaches and disasters.”
“Industry supply chains today experience lengthening cash conversion cycles and a declining average rate of inventory turnover as they invest in new inventory to fulfill the rising demand for defense goods and services.
Well performing factors in this dimension include schedule management and cost management, but poor factors include contract failure, financial performance and inventory management.
Shipyards are struggling to adjust to two Virginia-class submarines per year, and Navy is preparing to integrate an 84-foot section into new hulls called the Virginia Payload Module, which will triple the current capacity of Tomahawk missiles to 40 per ship. The service might also expand to three Virginia-class subs in certain years. And, above all, in 2021 the Navy plans to buy its first Columbia-class submarine, a boat more than double the size of a Virginia class.
Between 1997 and 2016, production of submarines dropped by 80 percent, and there were several years where the Navy purchased no new subs. The result was a more than 80 percent drop in the number of suppliers in what’s known as the submarine industrial base,
The mounting pressure on both a diminished supplier base and a green workforce being trained and expanded in real time as the Navy increases the workload has caused delays for the Virginia-class program, once renowned for delivering boats early and under budget.
Additionally, welding problems on new missile tubes have eaten into the schedule buffer the Navy built in for Columbia. The service needs the variant on patrol in 2031 to avoid dropping below the 10 subs required to maintain a constant strategic deterrent.
Contract delivery for the 10-ship Block V Virginia-class attack submarine has been subject to a lot of talk and little agreement between the service and the two shipbuilders.
“We’re asking a lot of the submarine industrial base right now to continue with Virginia, two to three per year including that payload module, and deliver Columbia. “That’s an industrial base that has a lot on their plate right now. And their workforce is going through a transformation.
Some of the problems, such as the subpar welding on missile tubes from the Navy thinks it can resolve with improved oversight of contractors.
“You can’t take a lot of the skill sets for granted. “We’ve had some welding issues. We’ve got to be on that. It’s a lot closer oversight as we educate this new team. It’s not just the welders and other skills; it’s: ‘Well, who were the managers of that. What should they be looking out for?’
The workforce issues are threatening to mar the Columbia program before it really gets off the starting blocks next year.
The program — which the Navy has said for most of this decade is its top shipbuilding priority — is likely to see its $115 billion price tag fall short of what’s required, because the Navy inadequately accounted for the labor hours necessary to complete the boat.
The discovery of a significant quality control issue at the very outset of fabrication of Columbia injects uncertainty in a program that already has little room for delays.
“The Columbia program is on track, but there is so little margin in that program. You’ve got to build that margin in. And we did: We built that margin in, but a lot of it has been eaten up by one unexpected thing or another. So we’re still on track, but a lot the margin is gone.
“We’ve got to build that margin back, and we’ve got a plan — we’ve set some pretty aggressive goals for that. We’re going to build the lead ship of that class in the same time we built the lead ship of Virginia. And it’s two-and-a-half times the size. But we’ve learned a lot about shipbuilding, so the design will be a lot more complete than Virginia was at the start. There is a tremendous amount of oversight where we think the risks are, the known knowns.
“But there is going to be something in testing, it’s a super complex system. So we just need to be driving hard to build margin. We said in the ‘Design for Maintaining Maritime Superiority 2.0’ ‘Deliver it as fast as you can. Whatever Initial Operating Capability we set for ourselves, let’s not take any comfort in that. Let’s just keep retiring risk as fast as we can. Get that thing out to sea as fast as we can.’ Because if we get into that risk retirement mindset, that’s what will happen.
Navy is months behind schedule getting its latest batch of Virginia-class attack subs under contract, and no resolution appears imminent — leading to mounting concerns that delays on the Virginia will affect the Navy’s top acquisition priority, the Columbia-class submarine
Intended to integrate acoustic upgrades and an 84-foot section for additional strike missile tubes, the delayed contract for the Block V Virginias have instead turned into just the latest warning sign that all is not well in Virginia-land, as schedules have slipped and at least one of the builders is now bleeding profits. Furthermore, it’s unclear what the Navy’s buying profile for Block V will be, which is subject to both contract negotiations and Congressional action.
The concern over Virginia delays, however, are less about Virginia, which is still a strong performing program — especially when compared with other programs such as the Ford-class carrier — but are more driven by the potential for compounding issues bleeding over into the Columbia-class. Both submarines will be drawing on the same workforce and supplier base, which is already showing signs of strain.
The Navy says the delays are part of ongoing negotiations and that the schedule should not be affected further since the Navy has already contracted for long-lead time materials, but with the first Columbia expected to be ordered in 2021, the service is facing the reality that it lacks a clear idea of the future of the Virginia program when it is preparing to launch Columbia.
The delays center on the integration of the Virginia payload module and just how many the Navy intends to buy. Until this year, the public plan was for Virginia Block V to be a 10-ship class, where the first boat would integrate the acoustic upgrades but the follow-on boats would all integrate the VPM, which is designed to triple the Virginia’s Tomahawk payload capacity to 40 per hull. When the Pentagon’s 2020 budget request dropped , the plan changed, with the total buy expanded to 11 hulls with eight VPM boats.
The builder was laying the groundwork for the original plan, which the Navy had already purchased long-lead material toward. The confusion over just how many VPMs the Navy intends to buy has been a major sticking point in the negotiations, The number of VPMs could still end up as either eight or seven, or potentially even fewer.
Complicating matters further is that Congress has yet to weigh in on the fate of the 11th Block V boat, which would mean buying three Virginia’s in one year, and some on Capitol Hill have voiced skepticism that the industrial base can support that.
Navy continues to work closely with the program team and industry on negotiating a Block V Multi-Year procurement contract that will be affordable, executable and supports the industrial base and Navy wants to ensure we are maximizing the use of funding while at the same time striving for an acceptable level of design and program risk.
“Additionally, during this period, the Navy is continuing to fund the shipbuilder for long lead time materials and pre-construction efforts to ensure submarine work continues at the shipyards and with the supplier base.”
With uncertainty looming about the future of the Virginia class, questions remain about whether that will bleed into Columbia, creating schedule risk that Navy leaders have said for years was untenable.
“These yards are integrated. When you start messing with the other program on a short-notice basis, you risk the yards being able to deliver on time and at cost for multiple programs.
“In a sense you risk the worst of both worlds: You risk further perturbations in the Virginia class, and at the same time risk not being able to get Columbia out on time.”
The setbacks seem to be compounding for the Virginia program. Welding issues on missile tubes destined for the Virginia Payload Module and the Columbia-class ballistic missile submarine program have eaten into the schedule margin for both programs. And issues with the supplier base as well as the labor force have caused schedule delays.
Growing the Virginia-class program from one submarine per year to two submarines per year, which started with the budget in FY11, has put increasing strain on a diminished submarine supplier base, which has put pressure on schedules as the shipyards wait for parts.
Profit loss stemmed from labor force issues that resulted from a year-long delay in the Navy contracting for the carrier George Washington’s mid-life refueling and overhaul. The delay caused contractor to lay off about 1,200 employees, which drew off workforce from the Virginia program because of labor union rules that say that the most recent hires must be laid off first.
Those rules forced contractor to lay off workers who were working on the Virginia program, who in turn were then snapped up by other yards; so new employees then had to be trained for the Virginia work.
Class-wide, Virginia is looking at four-to-seven month delays for delivery, which drives up labor costs.
Getting the Virginia program back on schedule is a top priority. “Especially when you’re a in a serial production line like we are with the Virginia-class. “If you start to have issues with schedule it does start to affect the synchronization of the line.
Congress has sought to ease the strain on the supplier base by offering money to help smaller vendors expand to meet demand and the need to be proactive with any problems that might arise from the competing demands on the industrial base.
Time spent waiting for parts is already starting to take a toll on ship construction schedules. Added to delays created by a green workforce taking more time than a more experienced workforce to complete the same work.
Without major advances in shipyard tools, Navy runs the risk of not having enough boats to execute its continuous strategic deterrent regime.
1. Separates materiel item into its component parts
2. Makes connections between parts clear
3. Coordinates tasks to be completed, both to each other and to end product
4. Impacts planning and assignment of technical responsibilities
5. Ensures contractors are not constrained in meeting item requirements
6. Assists in tracking status of engineering efforts
7. Assists in tracking status of resource allocations
8. Assists in tracking status of, cost estimates
9. Assists in tracking status of expenditures
10. Assists in tracking status of technical performance