National Ship Repair Industry Conference

In March of this year members of the ship repair association board attended the National Ship Repair Industry Conference (NSRIC) in Washington DC. This annual event is an opportunity for all five regional ship repair associations and the Shipbuilders Council of America to listen to and interact with Navy leadership and our elected representatives. The following two articles were contributed by members of our board.

Navy Day by David Jack

David is a retired Submarine Engineering Repair Limited Duty Officer with over 35 years of ship engineering and repair experience. He is the northwest Area Manager for Q.E.D. Systems, Inc., a local engineering and technical services contractor primarily supporting the U.S. Navy. He has served on the PSSRA Board of Directors since its inception and has been the association President for two consecutive terms.

The National Ship Repair Industry Conference was held on March 4 through March 7 at the Embassy Suites, Crystal City, in Washington DC. This is a premier industry event held annually to bring together the five ship repair associations from across the nation at a common forum to hear from senior Navy leaders and key elected representatives, on matters of great importance to us all. As this event has gained in significance, the support from the Navy has grown as well. This year was no exception.

For “Navy Day” 2013, we were privileged to hear from the honorable Ray Mabus Jr., Secretary of the Navy; Vice Admiral McCoy, Commander Naval Sea Systems Command; Vice Admiral Burke, Deputy Chief of Naval Operations Warfare Systems (N9); Rear Admiral Rowden, Director, Surface Warfare (N96); Rear Admiral Shannon, Deputy Commander for Surface Warfare (SEA 21), Rear Admiral (Lower Half) Gale, Commander Navy Regional Maintenance Command and Mr. Albert Curry, USCG Deputy Assistant Commandant for Engineering and Logistics.

Following is a brief summation of comments given by each speaker (in order of appearance):

Rear Admiral (Lower Half) David Gale: Admiral Gale led off the day with comments that would frame most of the discussion for the rest of the day…budget impacts of the continuing resolution and sequestration. He stated that sequestration recovery poses significant challenges for both government and industry. He commented that whether availabilities will be cancelled or not remains to be seen, but that with each passing day, they become less and less certain.

Specific sequestration impacts he highlighted included – potential loss or deferral of ship availabilities, government hiring freeze/restrictions, overall maintenance budget reductions and the loss of Navy Civil Service billets. He then reviewed his “6 Big Rocks” plan which has served as the foundation of his approach to overhauling the RMC processes. He stated to the audience that he remains steadfast in his approach and plan. He is emphasizing compliance with Fleet and NAVSEA policy with regard to maintenance planning and execution mile stones. RMC focus remains high on the approach to critical work. They (RMC) are breaking some new ground on “Request for Contract Change (RCC)” process changes. They are working with industry and SECNAV office on better ways to manage and execute growth work. This includes looking at historical growth work seen in similar availabilities and potentially adding this in “up front” as part of the availability work package. He is also working with industry through the Integrated Project Teams to gain input into risk management improvements. He emphasized the continued support from industry for key safety and work controls programs including Work Authorization (WAF) and Danger Tag-out (DTO). He briefly covered regional workloads but only highlighted the ports of San Diego and Norfolk; stating both ports were at 200% workload capacity.

Honorable Ray Mabus Jr: Secretary Mabus opened up with a “perspective statement” claiming that if “the Navy were a standalone company, they would be the second largest corporation in the world.” He then commented on the men and women serving the Navy, stating that they were his “top priority.” He talked about the Navy’s role in maintaining peace around the globe, and highlighted the point that “at the end of the day, our partners and allies depend upon us to be there for them.” In order to support the commitments we have made to them, a forward presence is needed. This provided a great lead-in to comments regarding force structure and new construction. He stated that “since 911, the Navy is down from 316 ships to 278. Efforts are being undertaken to rebuild the fleet. Since 2010, the Navy has put 43 ships under contract for new construction. He believes that the Navy is on track to get to a 300 ship total by the end of this decade. In order to achieve this objective, the maintenance practices must be rigorously followed. He discussed NAVSEA efforts to develop base work packages for ship classes and how this will help to better understand, fund and execute maintenance requirements. Next he talked about the relationship between the Navy and its ship builders. He stated that the Navy owes industry three things, stable designs, mature technology and transparency and reliability in the specifications. He provided insight into the steps the Navy had taken to slow spending in response to the $4.6B hit they had taken as a result of the continuing resolution (CR). With sequestration, they were anticipating another $4.2B cut. He mapped out some of the key cuts he had directed if sequestration takes effect such as, delay of CVN72 RCOH, shutting down of Carrier Air Wing 2, followed by three additional air wings if sequestration continues; early return of DDG 86; cancellation of USNS COMFORT deployment; and mandated line item cuts. He stated that sequestration will affect every new build and each availability. Repairs to USS MIAMI and USS PORTER have been delayed. His main priority is to preserve support for forward deployed and deploying forces. He spoke on shipyard worker furloughs which could potentially become effective on April 26th. He commented that the “effects of sequestration are real” and “they are not going unnoticed by our enemies.” He emphasized that the nation needs to focus on a balanced approach, and that the damages caused by sequestration will take a long time to repair. He closed by saying that “he has every confidence that no matter what happens, we will make it though and will continue to be the best at what we do because we have the best people.” He labeled the Navy and USMC “America’s Away Team.”

Vice Admiral Kevin McCoy: Admiral McCoy’s opening remarks were on the great progress made in surface ship maintenance over the past seven years. He stated that in 2006, the Navy had 29 surface ships that NAVSEA tied to the pier due to structural integrity concerns. Since that time, NAVSEA has initiated several key measures to improve visibility, tracking and maintenance practices to ensure that the readiness and material condition is known on all ships. He talked about the importance of the partnership with industry in getting the needed work done. He stated that he considers himself to be a “chief defender” of the ship repair industry which accomplishes $3.5B in repairs annually for the Navy. His focus then shifted to budget issues. He started by stating that 20% of the Navy’s ship maintenance costs are not in the budget. Even though the requirement is fully funded, the funding is inadequate to meet actual repair costs. In the past the “gap” has been closed with supplemental funding provided to support the wars in Afghanistan and Iraq. He stated that the Navy’s goal of 304 ships by the end of the decade will only happen if the Navy current fleet is maintained to the end of its design service life. He stated that the maintenance budget has been increased by about $1B per year to help “buy down” a portion of the backlog created in surface ship maintenance requirements due to past maintenance deferrals. He then shifted gears and went into efforts within the RMC, echoing many of the comments made previously by Admiral Gale. He re-emphasized the need for the RMCs, Ships Force and industry to work together to bring needed improvements to the WAF and DTO processes. He also talked about a need for increased diligence in fire prevention onboard Navy vessels. Toward this end, NAVSEA has published a new Fire Safety and Prevention Manual which is due out early summer time frame.

Rear Admiral Thomas Rowden: Admiral Rowden opened his remarks with a brief on the areas of responsibility and authority of his office (N96). This office is responsible for surface ship maintenance, modernization, man power, training and new ship procurement. He supports the “wholeness of the fleet.” He presented a “resetting” slide that displayed the Navy efforts to buy back the backlog of maintenance created over the past 20 years. The reset will help current fleet assets make it to design service life by going after and fixing deep material readiness concerns like tank and hull structure. He went through the work definition/requirement process; highlighting the Surface Ship Engineered Operating Cycle (SSEOC) instruction to be signed out soon. This instruction creates a marriage between the fleet and N96 with regard to funding availabilities in order to support life cycle planning (LCP). He discussed how the realignment at OPNAV enhances wholeness. He talked about how development of rigorous requirements strengthens execution of the maintenance. The new governance added by his office provides transparency and the new processes being generated provide for better information exchange.

Rear Admiral James Shannon: Admiral Shannon began his remarks with an overview of how he views the role of his office in relation to NAVSEA and the RMCs. He stated that his office represents NAVSEA as a “second tier” organization, functioning similar to a PEO. He oversees about $40B in funding authority. His described his job as “to help the “commanders”, NAVSEA and the RMCs. His focus has been on changing the surface maintenance culture on the water front. He is overseeing the revitalization of the “I” level shops and efforts to retrain ship’s force personnel in basic and advanced maintenance practices. He restated the Navy’s concern for surface ship maintenance was focused on efforts to get ships to their design service life. “Meeting projected service life is vital and the maintenance community is working hand in hand to implement effective tools and processes to ensure our ships achieve this.” He emphasized that the operational tempo for Navy ships is much higher than it has been in the past, and that there has been no corresponding increase in maintenance requirements. This is hurting and breaking our ships. He commented that four things influence maintenance: the technical requirement (must be fixed), the operational requirement, modernization strategy and contracting strategy (limit variables). Next he covered pre-availability planning, stating that it matters most. Better planning enables better cost/schedule performance. Insufficient planning leads to deferrals and elevated risks. The uncontrolled deferral of assessments and repairs (most prevalent in 2008) resulted in degraded systems and unplanned funding needs. He concluded his presentation stating that “a disciplined engineering process leads to improved readiness and increased service life.”

Vice Admiral William Burke: Admiral Burke’s opening comments were about the “realignment within “big Navy” and how this was good for a downward trending budget environment.” He stated that it allows for a decision making process that contributes to the wholeness of Navy warfare. He also remarked that this alignment had been used previously (prior to the turn of the century). He talked about the budget, stating that in FY15, they had done a good job of protecting and supporting the maintenance requirements. He said that the Navy is working to reduce the total cost of ownership, commenting specifically on rising fuel costs. Fuel prices have risen 400% in the last ten years. He remarked that his office is working on new technologies that will return savings to the Navy. He also talked about how the Navy is using “simulators” to improve training for pilots and ship handlers. He said that this approach is reducing actual flying and steaming hours while maintaining high proficiency levels and saving considerable costs. A point that really surprised me was that one flying hour costs $20,000! He also commented on the critical need to see that ships get to their expected service life in order to maintain the force structure needed to support the Navy mission. He echoed Admiral Shannon’s comments about restoring the waterfront, putting more trained and capable sailors back on ships and the Navy’s focus on the RMCs. He stated that improvements needed to be made in acquisition and management of spare parts for ships. This presents a funding challenge that they are reviewing. He also said that getting sailors to the ships sooner is needed and that they are working on improving training to support this effort. Lastly he spoke on the new SURFMEPP organization and its importance in improving the engineering rigor in order to support life cycle sustainment efforts and development of standardized maintenance requirements.

Mr. Albert Curry: Mr. Curry opened his remarks with an overview of the Coast Guard force structure, highlighting the many ships, boats and air craft that they must maintain. He stated that their biggest challenge was to maintain mission readiness within the current constrained budget environment. He talked about the development of the Surface Force Logistics Center describing how their efforts to streamline their operations and maintenance processes has resulted in a “one stop shop” for product line management of maintenance requirements. This has help to reduce the cost of maintenance and improved the quality of work completed. He stressed that the product line management approach is strengthening maintenance metrics, providing better response to operational priorities and provides enterprise level contracting. He pointed out that most of the Coast Guards assets are BEYOND their service life and that their focus is on rebuilding the aging fleet. He talked about new Off Shore Patrol Cutter (OPC) and National Security Cutter (NSC) build programs and how these new ships will be critical to the Coast Guards ability to support tomorrow’s mission needs. He mentioned that the USCGC POLAR STAR was undergoing a $35 M reactivation availability at Vigor Shipyards. Overall, his presentation impressed me with the success the USCG is realizing in maintaining an aged and at times obsolete fleet in a downward trending fiscal climate.

Navy Budget Challenges by Jim Taylor

Jim Taylor is a retired Rear Admiral with a strong maintenance background. He served as a shipyard commander at Norfolk Naval Shipyard and as Maintenance Officer on the Pacific Fleet Commander’s staff. He learned the ins and outs of budgeting while serving a tour in DC on the Chief of Naval Operations staff. His full bio can be seen here.

It was no surprise to any of the attendees that concern for the effects of a year long Continuing Resolution (CR) and the added impact of Sequestration dominated the conversation of almost every speaker and panel.

Much has been written and broadcast about the reasons behind the political decisions that got us here so I will focus on what “here ” means for the Navy. At the beginning of the fiscal year last October, the Navy was directed to spend at a rate that assumed it would get a 2013 budget and there would be no sequestration. As a result, no reductions were taken in the 1st or 2nd quarters of the fiscal year. Once no budget was passed, Navy and the other services found themselves having to absorb the entire 2013 budget cuts in the last 6 months of the year. These cuts were painful enough when there was an entire year across which to spread them. With only 6 months to work with, Navy has to basically cancel almost every ship and shore activity which it has the legal authority to do. The magnitude of Navy’s problem is as follows:

The CR limits Navy spending to FY 12 levels + .6%. Adding the reductions required by Sequestration, the potential cuts faced by Navy over the last 6 months range from $540M to almost $1B, depending on what baseline is used.

Sequestration cuts are unbalanced. The defense discretionary budget is only 16% of total government spending but takes 49.5% of all sequestration cuts. Non-Defense discretionary cuts are 35.1% and mandatory government spending such as entitlements, which are 63.8% of all government spending, take 14.4% of sequestration cuts.

Aircraft carriers, submarines and deploying surface ships will be given priority. Navy shipyard workload reductions will be limited by the number of furlough days approved. The easiest action the Navy can take is to cancel surface ship availabilities and that is what they have done. The effect is being felt most in our 2 largest ports, Norfolk and San Diego, but we can’t be sure that there won’t be another shoe to drop. We will all feel the impact in one way or another.

I also had the opportunity to attend the American Society of Naval Engineers ASNE Day 2013 in Washington DC. The theme was “Engineering America’s Maritime Dominance” and we heard from Navy leaders and program developers on their vision for our 21st century Navy. One of the major themes was the challenge to find ways to reduce the cost of new ships and systems. These programs all face similar budget challenges to those discussed above although they do not have FY13 cuts as severe as ship maintenance because of the way their long term contracts are written. There are some exciting technologies coming down the pike for Navy, including a long range rail gun, next generation unmanned vehicles and broader use of lasers. One system of immediate interest is Ballistic Missile Defense (BMD). North Korea’s recent actions have put a spotlight on this capability. VADM James Syring now heads this defense program which includes Air Force, Army and Navy systems. I learned we have a more robust joint capability than I had imagined. We have netted together space, ship and shore sensors and have the ability to defend ourselves and our allies from the present threat. The next generation of systems are under development and, if we continue to fund this work, will deliver a dramatically improved capability. As we see the continued drive by rogue nations to develop nuclear capabilities, in my opinion, BMD looks like the one system we need to support at all costs.

I think we all recognize that we need to cut our defense budget as part of a broader effort to get our nation’s finances on a more solid footing. The key is to make wise choices on where to cut and how much. The present approach is the worst solution I can imagine to accomplish this task.

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