When Naval Shipyards Split the Baby: What Makes It Work?

by admin on August 12, 2013

NNS-HIIWith the Navy’s stunning elimination of the DDG-1000 composite deckhouse and the subsequent handoff of all Huntington-Ingalls DDG-1000 work to Bath Ironworks, a bigger story has gone un-discussed–what makes the Navy’s preference for shipyard work-share–a model that helped the Virginia Class Submarine become a major procurement success–actually work?

For the uninitiated, the Navy’s work-share concept is deceptively simple.  By splitting work between shipyards, each shipbuilding program attracts a wider base of political support, and two (or more) of America’s struggling naval shipyards stay busy.  The Navy gets to keep the industrial base active, preserving potential surge capability, retaining key specialties and so forth.  And with production scattered, the Navy also mitigates against a catastrophe–if one partnering shipyard was impacted by an earthquake or hurricane, the second could serve as a backup.

This type of work-share model comes together quite well in the Virginia Class submarine program.  It is a good split–Newport News Shipbuilding builds the stern, habitability and machinery spaces, torpedo room, sail and bow, while Electric Boat–the sole Virginia Class prime–builds the engine room and control room.  Both yards work on the reactor plant and alternate on the final assembly, vessel test, outfit and delivery piece.  Modules are shipped to the final assembly site (see the photo above), and the program–despite some early hiccups–is meeting price, meeting schedule, and is likely to get more and more boats added into the original 30-boat program-of-record.

Things did not go as smoothly for the DDG-1000–a program that was looking to replicate the Virginia Class shared-production success story.  From this week’s great (but paywalled) Inside the Navy article by Megan Eckstine (in what is probably the best discussion of the DDG-1000 deckhouse fiasco to date), DDG-1000 Program Manager Capt. Jim Downey is quoted at length, in what could be described as a stinging rebuke of the Navy’s work-share model.  Captain Downey had problems with the deckhouse shipping process, saying that the ten-day transit of the deckhouse from the Gulf Coast to Maine turned into nearly a month-long adventure.  He had issues with fabrication strategy, saying that Bath could leverage savings by building the deckhouse in a more cost-effective fashion (in pieces rather than as a whole), and then he says this:

“There’s complexities of building these systems at different primes, especially in the ship side, and you do partial testing — in electrical circuits, you check out that circuit of cable but you don’t have the power source,” Downey offered as an example of complications the program faces with DDG-1000 and 1001 that will not be an issue for DDG-1002. “When they test the wiring for the ship mission center, the cabling, right now the work stations aren’t there. They’re there once we’ve landed at BIW. It will eliminate some partial testing as well as eliminates that major lift with the cranes and the movement of the ship, again depending on how BIW builds it.”

It all just seems really harsh.  I mean, transit issues?  Come on!  The deckhouse had the misfortune of running right into Hurricane Sandy (the deckhouse arrived at Bath in November of 2012, and Hurricane Sandy hit the East Coast in late October 2012), so that’s really a unique (albeit blood-pressure-raising) happenstance–it’s not something you bust up a program over.  Now, that is not meant to deny that Huntington-Ingalls’ cost was a real factor in the Navy’s course correction. General Dynamic’s win with a steel alternative deckhouse will cost taxpayers a measly $212 Million–compare that number with HII’s tasty $1.4-Billion dollar DDG-1000/1001 composite fabrication contract–and I can see why a Program Manager might end up needing to vent a bit.

But cost is one thing.  After reading the Captain’s quote from the Inside the Navy interview, it just seems like the technical/engineering coordination didn’t work.

With the Virginia Class, the technical/engineering basis for coordination was strong.  I mean, look at how the two shipyards were given appropriate incentives to support the program as a whole  (they either built the Virginia Class or they built nothing).  On top of that, the two shipyards were given strong fiscal incentives to cut costs/schedule (again, a forcing function for prompt, no-baloney technical/engineering collaboration). And, finally, the team was set up by the Pentagon to enjoy positive program momentum–it is far easier to foster teamwork within a program that enjoys stability and incentivized “awards” upon meeting cost/schedule benchmarks.

On the operational side, the two sub yards did things right. They picked a responsible, “buck-stops-here” prime (Bath Ironworks) and communicated clearly and often–communication that likely benefitted from the submarine communities’ apatite for solid engineering–which leads, in turn, to solid technical coordination and execution (things like IT-system uniformity, good shared testing practices, tighter production tolerances, and ultimately better production quality).  The two yards also leveraged expertise in a rational, equitable way (Newport News was good a complex shapes, so they got things like main ballast tanks, while Electric Boat, better equipped to make midbody pressure hull units, got that work.). Both shipyards were confident that they would get 50% of the work.  And finally, both yards were familiar with modules and were both aware of the challenges of module transport between production sites.

In the DDG-1000 case, the Navy started with an odd, 4-prime contractor arrangement, and the Navy itself really didn’t commit to the program–it stood aside and watched the planned 32-hull DDG-1000 program shrink to a mere three hulls.  Also, over time, the work-share shifted from a clear 50/50 split to sprawl into an odd agreement where Huntington-Ingalls gave Bath Ironworks most of DDG-1000 in exchange for obtaining a greater piece of the future DDG-51 restart.  That was the final blow–With no clear program leader and one of the two key two yards distracted–measuring how their performance (or lack thereof) might impact their future DDG-51 buys–it is easy to see how the DDG-1000’s teaming performance would then unravel.

Hopefully the Navy has learned a few lessons.  And hopefully we will see a little more discussion on what makes a work-share collaboration thrive and prosper–because, with the Virginia Class submarine, the Navy and nation is getting a good deal.  And the DDG-1000?  We shall see…

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