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Navy Struggles to Fund SSBN(X), Destroyers, and cost overruns on CVN 78

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"Sen. McCain Slams $2.5B Carrier Cost Increase; Navy Struggles To Fund SSBN-X, Destroyers"
By Sydney J. Freedberg Jr. on May 08, 2013 at 1:22 PM

Source:
http://breakingdefense.com/2013/05/08/sen-mccain-slams-2-5b-carrier-cost-increase-navy-struggles-to-fund-ssbn-x-destroyers/

CAPITOL HILL: It’s been a rough 48 hours for the US Navy. Yesterday, the Littoral Combat Ship was battered by House appropriators and questioned by a leaked report. Today it was the Senate Armed Service seapower subcommittee’s turn to grill the Navy about its aircraft carrier and submarine programs. While the automatic 10-year budget cuts known as sequestration played a major role in the budget hearing — as always these days — what was particularly striking was how much long-term trouble the Navy’s shipbuilding plan is in even if the sequester does go away.

“We have a $2.5 billion cost overrun on an aircraft carrier,” fumed the inimitable Sen. John McCain. The Navy’s next-generation nuclear carrier, the CVN-78 Gerald R. Ford under construction at Huntingon-Ingalls’ Newport News shipyard in Virginia, is now estimated to cost almost $13 billion. “Newport News is the only game in town, nobody else builds aircraft carriers,” a visibly irate McCain continued, so how do you force them to cut costs when there’s no competition? “What can we do, what can we do, to prevent this kind of cost overrun which… is unacceptable when we have a terribly damaged economy?” he said.

“The cost growth on the CVN-78 is unacceptable,” agreed the Navy’s Assistant Secretary for procurement, Sean Stackley. “Far too much risk was carried over into the design of the Ford class,” he said, and the Navy’s working to make construction more efficient on both the Ford and the follow-on carrier, CVN-79 John F. Kennedy.

“I don’t think some of us would have voted for it if we had known” how high the costs would rise, McCain grumbled.

Such cost overruns are a self-inflicted wound entirely separate from the sequester. But it’s not as if sequester doesn’t make everything worse. Stackley said the automatic cuts took $1.7 billion out of the 2013 shipbuilding budget but the Navy was able to buffer the impact by using unexpended funds from past years and delaying some items to future years; if sequester continues into 2014, he said, “we have pulled all of the margin out” and there’ll be no cushion left.

Already, the Navy is stretching painfully to cut a contract for a bulk buy of 10 DDG-51 Arleigh Burke destroyers instead of nine: Congress provided adequate money, but sequester wiped out $560 million of that. Even after reshuffling funds among accounts, said Stackley, “for that tenth destroyer, we’re about $300 million short.”

Sequestration is also already hitting the federal workforce, including the government shipyards that do most of the fleet’s regular repair work. Hiring and overtime freezes are tightening already overloaded schedules. Repairs will be delayed if the shipyard workers are included in what is expected to be a Defense Department-wide furlough of federal civilians, although Stackley said the Navy hoped to get them an exemption.

Beyond these 2013 and 2014 problems, however – even beyond the 10-year valley of death that is the sequestration – the Navy has a serious shortfall entirely independent of sequestration. The big problem is that the SSBN(X), the replacement for the current Ohio-class nuclear missile submarines, is staggeringly expensive.

The Navy has brought the cost estimate down from $7 billion for each SSBN(X) to $5.6 billion — and even has a goal of $4.9 billion — but “that by itself does not bring the shipbuilding plan within the reach of affordability,” Stackley told the committee. “You have to go back to the period of the eighties when we were building the 600 ship Navy to see those budget levels…. That is beyond our shipbuilding TOA [total obligation authority] by any method of extrapolation.”

To fit SSBN(X) in the budget the Navy either needs nearly $20 billion a year for new ships – almost twice the current figure – or must cut back every other program. That’s the kind of thing the Navy is supposed to address in its 30-year shipbuilding plan, but as McCain snarled today and as House Seapower chairman Randy Forbes protested earlier, the Pentagon is late getting its homework to Congress. Stackley said he hopes to “hand deliver” it to the Hill next week.

SSBN(X) is the 30-year-plan’s biggest problem, but it’s hardly the only one, not even with submarines. The Navy’s attack submarine fleet will shrink below the 48 boats commanders say they require because old Los Angles-class subs and Ohio-derived SSGN guided-missile subs are retiring faster than the new Virginia class can replace them. What’s more, a planned “Virginia Payload Module” to increase the Virginias’ arsenal of non-nuclear missiles (thus making up for the loss of the SSGNs) will add an estimated $360 million to $380 million per sub, additional expenses that Stackley acknowledged are “not included” in the 30-year plan.

No wonder, then, that Stackley fended off a push from Mississippi Sen. Roger Wicker for the fleet to buy an additional San Antonio-class amphibious warfare vessel from his home-state shipyard, Huntington-Ingalls’s namesake Ingalls, Miss. Facility. Adding a 12th San Antonio – in Navy shorthand called an LPD-17 – to the planned production run would go beyond the Navy’s requirement for 11, Stackley said, and while the Navy will next turn to replacing its LSD-type amphibious ships, those are smaller and less expensive vessels.

“The LPD-17 is more ship than the ship that we need,” said Stackley. “We’ve got to get that ship’s cost [down] into the box associated with the LXR,” the Navy name for the LSD replacement. Huntington-Ingalls has, however, proposed a lower-cost variant of the San Antonio design it’s calling LPD Flight II.

Amidst all this incoming fire, the controversial Littoral Combat Ship did not quite sail through unscathed, although it avoided the heavy fire attracted by larger vessels. “We need to fix it or find something else,” said McCain, saying the LCS had not yet “demonstrated adequate performance” and that “I read the Navy’s own analysts have about 10 percent confidence in the estimate to operate and support.” (That’s a story we broke here yesterday).

The LCS is under budget for now, Stackley replied, “but sequestration pulled the margins out of those budgets” too. As for the crucial “modules” that arm the ship for specific missions, the first two of those – the mine-clearing module and the full version of the anti-small-boat module of which a partial version is now in Singapore – will probably be delayed by the sequester into 2015, he added.
 

Evil Flower

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Blaming the design for carrying too much risk sounds like BS to me. Of course if you're only left with a single contractor to go to, you have no leverage against him jacking up the price.
 

sferrin

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Nils_D said:
Blaming the design for carrying too much risk sounds like BS to me. Of course if you're only left with a single contractor to go to, you have no leverage against him jacking up the price.
You think it's expensive now try supporting TWO manufacturers capable of building CVNs.
 

BioLuminescentLamprey

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McCain can be a bit of a political opportunist and although the procurement process is seriously flawed, I really doubt he will back his words with any kind of meaningful actions. Sen. McCain has done this multiple times with other platforms as they ran over budget. A pretty standard political maneuver. Surely, the cost overruns will be ameliorated substantially by future iterations of the Ford...? What do our resident blackshoes and Naval enthusiasts know about the reasons behind the overruns? Are they justifiable? They certainly seem enormous...but what else is new?
 

bobbymike

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During the last State of the Union Obama proposed increasing non-defense discretionary spending by 100's of billions there is money if we choose our priorities.
 

F-14D

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One has to wonder how much of the overrun is due to measuring in then-year -rather than constant- dollars, requirements changes, stretchouts (Newport News warned years ago that slowing the pace at which we build carriers will add literally billions to the cost of each CVN), non-recurring surprises in building the first of a class.... and oh yeah, how close this is to NNSY's original estimate what the cost of the first FORD would be rather than the budget-driven number the Navy announced.

As Nils said, once we made the decision to keep only one yard, and the necessary docks, with the capability to build carriers we put ourselves in a situation that could come back to bite us
 

bobbymike

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https://news.usni.org/2016/05/23/newport-news-smart-shipyard

Should save 15%?
 

bobbymike

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bobbymike

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CBO report

 

donnage99

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meanwhile china is building 5 cruiser class larger than our backbone destroyers a year, a completely new amphibious assault ship class, aircraft carrier on top of smaller frigates destroyers etc.

Doesn't take a genius to understand that we are dumping alot more money for a lot less value. The same can be said about the rest of the West. Maybe we should get rid of private industries when it comes to military hardware, which would cut down on the acquisition process, less lawsuits, which leads to less red tapes maybe, etc. while still promoting competition by having multiple state companies.
 

sferrin

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Maybe we should get rid of private industries when it comes to military hardware, which would cut down on the acquisition process, less lawsuits, which leads to less red tapes maybe, etc. while still promoting competition by having multiple state companies.
Yeah, let's be more like NASA and less like SpaceX. If you want to complain about inefficiency, there's plenty to be pissed about, but most of it is due to budget shenanigans and general lack of a plan. Can you say, "Zumwalt"? I knew you could.
 

bobbymike

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We used to spend 6.5% of GDP on average or $1.4 Trillion that’s $700 billion more than today.

We buy less cause our buying power has been cut in half. In a $22 trillion economy we should be able to double or even triple the acquisition budget.
 

donnage99

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Yeah, let's be more like NASA and less like SpaceX. If you want to complain about inefficiency, there's plenty to be pissed about, but most of it is due to budget shenanigans and general lack of a plan. Can you say, "Zumwalt"? I knew you could.
I'm just wondering out loud. Obviously state owned has its own headaches. If it's really bad I don't know how the chinese are spinning us out of our chair. As for your example, SpaceX is an outlier. If you look at comparable programs by Boeing, Lockmart = not great. Anecdotal example aside, let's look at common trend in modern time - govt not knowing what it wants, bureaucracy created by the threats of lawsuits and to prevent "not really knowing what it wants" program moving forward, and a very unhealthy and unethical industry that create over optimistic projections and then lobbying govt to renegotiate when cost overrun and delay occurs. The not-knowing-what-it-want is unavoidable as changing time = changing requirements, human prediction cannot keep up with human ingenuity. An effective model is one where program can be erected and killed quickly. Without fear of lawsuits, bureaucracy can be leaned down. A shorter development cycle can narrow down the not-knowing-what-it-want. Holding companies accountable for cost delay and overrun is also easier. China does this with its state owned companies, without technology propriety, transfer of technology and personale are very fluid.
 

Foo Fighter

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What China has and the west does not is a mostly stable regime. The one party state does not have to concern itself about different military spending prioroties within a multi party system. This multi party system causes huge changes in direction which massively messes up any cohesive military planning especially when it comes to replacing equipment. Can this mess be accounted for currently? No. Can we build into defence spending some kind of security plan? Unlikely. Will defence be compromised because of this? Very likely so if we are going to seriously face off a resurgent China.
 

Hood

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I am no expert on the Chinese system, but it seems that have managed a rather more streamlined approach than the USA or the USSR for that matter in terms of state planning.
There does not seem to be serious overlap or duplication of effort, the aircraft industry has several large blocs but they seem to be doing their specialised thing and not duplicating each other's work in the main. Probably not good in the long-run to stimulate new technical approaches but it seems to be paying dividends.

In terms of warship design, its how things used to be done in the West until the 1970s-80s when slowly all warship design was passed into the hands of commercial companies. Since then things have seemed to be in a muddle (for the RN and USN anyway).
 

Foo Fighter

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Not forgetting that a mess of China's R&D is paid for by the US and the rest of us. That must save a bundle of time AND money. Let alone duplicated effort.
 

donnage99

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I think a good case study is the acquisition of USMC expeditionary fighting vehicle (AFV) and chinese type 05 amphibious armored vehicle both aimed at over horizon assault capability. The result was the complete cancellation on US part, while China successfully fielded and continuously upgrade type 05 into different specialized roles.
 

In_A_Dream

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The threat isn't big enough yet to justify a necessary build up to counter China because Chinese strategy dictates to not emphasize a strong military build up but the use of subversive and clever tactics as to not tip off their competitor (the US) that they are seeking to overtake them. Unfortunately for China, the cat's out of the bag now. They could very well change course and engage in a more open military build up, time will tell.

Prior to America's involvement in World War 2, American monopolies were fueling the rise of Hitler's Nazi Germany via natural resources, much like American companies today have helped fuel China's rise. The only difference is, America's putting a clamp on it before China becomes an overwhelming force. We also were massively behind the 8-ball in terms of having the industrial capacity to compete with the Nazis. That's my current worry as China's industrial capacity is continuing to expand (especially for ship delivery).

Will the Red Scare become a reality again to get the public behind a strong military build up?
 
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