Navy Readiness OverviewNavy Readiness Overview

Pat Tamburrino, Jr. ADCNO for Fleet Readiness & Logistics

February 2010

The Cost of the Navy We Operate

The Fiscal Challenge

1953 End Korean War

1966 Vietnam War

1973 Vietnam Withdrawal

End of Cold War

1990-91 Gulf War I

9/11/01Al Qaeda Attacks

2003Gulf War II

Source: Library for Integrated Learning and Technology, Illinois State

Note: Outlays lag budget reductions by about 2-4 years

Constant$FY06

Historical trends support

a likely decrease in

funding

National Defense OutlaysFY00 ($B)

50

150

250

350

1952 1964 1976 1988 2000 2012

450

2015?

1953 End Korean War

1966 Vietnam War

1973 Vietnam Withdrawal

End of Cold War

1990-91 Gulf War I

9/11/01Al Qaeda Attacks

2003Gulf War II

Source: Library for Integrated Learning and Technology, Illinois State

Note: Outlays lag budget reductions by about 2-4 years

Constant$FY06

Historical trends support

a likely decrease in

funding

National Defense OutlaysFY00 ($B)

50

150

250

350

1952 1964 1976 1988 2000 2012

450

2015?

• The Fiscal challenges facing the Navy are well-documented

• We are a Nation fighting two wars

• The demand for Naval Forces from COCOMs continues unabated

• Resources of all types are precious commodities

Navy Insufficiently Resourced To Meet COCOM Demand

The New Normal

• Less than 25% of Navy at sea

– 2 of 12 CV / CVNs deployed

• zero capable of surge

• Minimal boots-on-the-ground

– Naval Support Activity, Bahrain

• Expeditionary Forces

– EOD supporting maritime mission only

– Naval Construction Force peacetime training / deployment

– minimal maritime security, logistics and training

Sept. 11, 2001 No OCO Funding Partial OCO Funding

• 14+ ships in Theater

• 24,000+ Navy personnel

– 10K afloat

– 14K ashore, including IAs

• Close Air Support & Recon

• 46% of OIF/OEF TACAIR

• Airborne Electronic Attack

– 75% in OIF / 100% in OEF

• Mobile Ashore Support Terminal (C4I, HA/DR)

• Provin. Reconstr. Teams

• SEABEE Regiment

– C2 Joint Eng. Force (RC South)

– 2 SEABEE Battalions

– OEF construction of FOBs

• 22 EOD Detachments

– Route Clearance & Forensics

– Iraqi Police training

• Riverine (Haditha Dam)

– 6500 Km waterway security

• Maritime Security Ops

– Anti-Piracy, VBSS, NEO, Oil Platforms, Umm Qasr

• Customs, Civil Affairs

• 143 of 285 ships/subs U/W

– 5 CVNs / 3 Large Decks

– 17 attack subs

• 3 CSGs deployed, plus:

– 3 surge capable in 30 days

– 1 surge capable in 90 days

• CENTCOM commitments

• Independent Deployers

– 50+ Exercises: Pacific / Africa Partnerships, RIMPAC, UNITAS, Foal Eagle, Talisman Sabre, Cobra Gold, Provide Promise / Comfort, etc.

• Global Maritime Security

• Sea Control, Deterrence

• Theater Security Cooperation

– counter-IED

– building partnerships

• HA/DR (131 projects)

– Indonesia Tsunami Relief

– Pakistan Earthquake

• Expeditionary Guard, Training, Combat Readiness Commands

CENTCOM Theater

F L E E T R E S P O N S E P L A N (

July 1, 2003 )

*Includes $281M NECC OCO requirement.

**Includes $106M Aviation Depot and $967M FHP OCO requirement.

Maintain (to ESL)

Aviation Depot Maint $1,789

Ship Maintenance $6,373M

NECC $572M

Support Accounts $2,439M

• Targets and T&E Ranges $798M

• Aviation Support $1,066B

• Ship Maintenance Support /

Logistics Support $575M

$18.0B $20.8B $24.7B

Afloat Readiness

Train

Ship Operations $313M

Flying Hour Program $1,492M

NECC $295M

Support Accounts $715M

• Fleet Training $172M

• Training Ranges $282M

• CNMOC $229M

• Ship Operations Support $31M

3+1+1 $3.6B / $24.4B Ship Ops $1,365M

NECC $289M*

FHP $1,979B**

Safety of Operations

Ship Operations $1,375M

Flying Hour Program

$5,447M

Cost to......Own …Own and Train …Own, Train and

Employ 3+2+1

Maintain Total $11.2B SOO Total $6.8B Train Total $2.8B

3+2+1 $3.9B / $24.7B Ship Ops $1,455M

NECC $322M*

FHP $2,192**

* NECC Ao of 40+38+33 is equivalent to 3+2+1 and is RFF driven

Maintain the Force

EOD $196M

NCD $230M

RIVERINE $40M

MESF $76M

ELSG $11M

MDSU $10M

Non-Ao Units $9M (MCASTCOM, NEIC, COMCAM LANT)

Maintain Total $572M

NECC

40+38+33* $322M / $1,189M

EOD $6M

NCD $10M

RIVERINE $1M

MESF $5M

ELSG $7M

MDSU $4M

Train the Force

EOD $91M

NCD $114M

RIVERINE $21M

MESF $47M

ELSG $10M

MDSU $5M

Non-Ao Units $7M (MCASTCOM, NEIC, COMCAM LANT)

Train Total $295M

40+19+16 $289M / $1,156M

EOD $76M

NCD $133M

RIVERINE $25M

MESF $43M

ELSG $3M

MDSU $4M

Non-Ao Units $5M

(MCASTCOM, NEIC, COMCAM LANT)

Cost to......Own …Own and Train …Own, Train and

Employ 40+38+33 *

$0.6B $0.9B $1.2B

Facility Life-Cycle

Must Fund Each Dimension For All Facilities to Reach Full Service Life

AN OIL DEPLETION TIMETABLE

Recreated from Fortune Magazine 29 Sep 08 Original information from BP p.l.c. “Statistical Review of World Energy”

How long until the oil runs out? That’s a tricky question. Reliable information on oil reserves isn’t easy to come by – it’s sometimes shrouded in secrecy and often disputed. (Simmons believes Middle Eastern reserve numbers are highly inflated.) One view comes courtesy of BP’s respected “Statistical Review of World Energy,” which the oil giant has been publishing annually for 57 years based on data gathered from government sources, industry journals, and independent estimates. The chart at left shows a country-by-country breakdown of how things look right now.

Affording the Cost of the Navy We’re Building

Bottom Line Up Front

Trends in the “cost to own and operate” the Fleet point to an unaffordable future

• Everyone of us must proactively drive to continuously reduce total life cycle costs

Today’s fiscal environment demands that every dollar invested in sustaining today’s Navy & building tomorrow’s

Navy be spent effectively and efficiently

Operational concepts should inform design & integration of

ship hull, weapons, and communications systems, mission

modules, manning and training plans, and infrastructure

requirements. We must understand how these factors,

individually, and as a whole, impact the life cycle cost of our

Surface Fleet.

- CNO letter of 3 AUG 09

Refresher - What is the Total Ownership Cost (TOC)?

“Total Ownership Cost” includes all manning and maintenance associated with

research, development, procurement, training, operation, logistical support, and disposal of an individual weapon system,

including the total supporting infrastructure that plans, manages, and executes that

weapon system program over its full life. It also includes the cost of requirements for common support items and systems that

are incurred because of introduction of that weapon system.

Cradle to Grave Direct Platform Costs

Production & Deployment

Operations & Support

B B C C

TOTAL OWNERSHIP COST CHALLENGES

Production Development O&S 62% 31% 7%

NOW

Engineering & Manufacturing Development Manufacturing Development

Engineering &

Cost, Technical, and Programmatic Uncertainty NOW

Ability to Influence TOC Decreases Over Time

SIGNIFICANT UPWARD PRESSURES ON TOTAL OWNERSHIP COSTS

PROGRAM FUNDING LEVEL

MATERIAL COST INCREASES

LABOR COST INCREASES – PENSION LIABILITY

Three Primary TOC Challenges

1. Life Cycle Costs are set early

– Understanding & influencing the cost drivers is essential

– Need to increase the focus on TOC at every decision point

2. The majority of the 2020 Battle Force exists today

– Platforms must achieve their Expected Service Life

– 222 of today’s 285 ships are required in 2020

3. Life cycle costs of next generation systems must be more fully understood

– Increased fidelity of sustainment strategies is essential

– The F-35 Challenge is representative of the future

Challenge #1: Life Cycle Costs Are Set Early

Functional

Solution Analysis

Concept

Refinement

Technology

Development

System Development &

Demonstration

Production &Deployment

Operations & Support

CD A B

FRP DR

C DRR IOC FOC

UCAS

CG(X)

AH1Z BAMS

P8

E2D

JSF (STOVL)

DDG-1000

LHA6

EA18G

VTUAV (Firescout)

LCS LHD8

CVN78

H46

LPD4

F/A-18 C

CVN68

F/A-18E/F

P3

EA6B

E2C

CVN63

UH1Y

MH60 (R\S)

MV22

DDG51

LPD17

SSN774

Weapon Systems Profile… Most Platforms Post-Milestone B… Significant Cost Already Locked In

A B

80% of Life Cycle costs have been determined

80

LC

C C

um

ula

tive

%

Life Cycle costs actually

expended

CH53K

PLATFORM FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 AIRCRAFT CARRIER TYPE 11 11 11 11 11 10 10 11 11 11 11 12 12

SUBMARINE 71 72 71 71 72 73 71 70 67 68 67 68 66

SURFACE COMBATANT 107 111 113 112 111 109 105 102 106 110 115 116 122

AMPHIBIOUS WARFARE SHIP 32 31 32 34 34 33 33 33 33 33 32 32 31

COMBAT LOGISTICS TYPE 30 31 31 30 32 32 33 33 33 33 33 33 33

SEA BASING 0 0 0 0 0 1 1 3 4 4 6 9 9

COMMAND AND SUPPORT 17 17 17 17 17 19 20 22 24 27 30 30 32

MINE WARFARE 14 14 14 14 14 14 14 14 14 13 13 11 10 282 287 289 289 291 291 287 288 292 299 307 311 315

PLANNING ONLY

Challenge #2 - Majority Of 2020+ Battle Force Exists Today

Key Issues • 222 of the 285 Platforms in commission today will be in the 2020 Battle Force • Essential that we identify/exploit efficiencies/opportunities to reduce

costs • SYSCOM work to date outstanding! Need to accelerate and press

harder!

Challenge # 3 - Life Cycle Costs Of Next Generation Systems Must Be More Fully Understood

0

5

10

15

20

25

30

2010 2015 2020 2025 2030

TY

($B

)

PB09 Funding

Projected Shortfall

Aviation, Ship, & Sub Operation and Maintenance

Requirement vs. PB09 Funding

FY

Affording the Cost of the Navy We’re Building

–

Courses of Action

Integrating Affordability into Policy Gate Review/Program Health Process

• Improved Emphasis on Affordability, Sustainment, and TOC

• In Early Gates (i.e. Gates 1 – 4)

– Emphasis on Understanding Projected Costs and Drivers

– Early Cost Containment / Cost Reduction Strategy Discussion

• In Later Gates (i.e. Gates 5 and beyond)

– Emphasis on Life Cycle Sustainment Strategy supported by Life Cycle Funding Profile

– Assessment of Cost Reduction Strategies Against Projection

– Review Affordability in Context of Allocated Resources

Incorporated into Feb 2010 SECNAVINST 5000.2E release

ACQUISITION PROCESS TOTAL OWNERSHIP COST REVIEWED

PHASE I PHASE II PHASE III PHASE IV

MDD MS-A

SFR

PDR

PDR

SRR1

SRR2

ITR ASR

Technology Demonstration

Technology Development

Prototypes

MS-B

Engineering & Manufacturing Development

CDR

TRR

FRR

SVR/ PRR

MS-C

MSA SRTD SATD EMD

DoD 5000.2 (Old)

SRR

SFR

PDR

CDR

TRR

FRR

MS-B MDD IOC

Engineering & Manufacturing Development

Technology Development

ITR ASR

CA 2 wks

Production & Deployment

MS-A

MS-C

MSA TD EMD

SVR/PRR

Production & Deployment

> 10-15 YEARS

PASS 1 PASS 2

GATES GATES 3 4 5 2 1 3 4 5 6 6.1 2 1

DoD 5000.2 (New)

Materiel Solution Analysis

Materiel Solution Analysis

3 6.4 2 6.3 1 6.2

TOTAL OWNERSHIP COST REVIEWED AT EACH GATE

Measuring TOC Forecasts Against Performance

• Improved forecasting capability

• Improved “scoring” capability

• Innovative sustainment strategies

What is Required?

What Data Sources Capture Cost Reduction Performance?

## $

## $

## $

## $

## $

## $

## $

RDT&E

A B C IOC FOC

$$

FYDP $$

LRIP

Remaining LC FYs $$ by Year

FRP – Qty/Period

Note any life - cycle assumption changes

CURRENT TOC ESTIMATE DATE

FY# FY## FY# # FY## FY## FY##

PROCUREMENT

MILCON

MPN

OM

MP

CURRENT SCP

Prior Yrs Spent

LAST GATE SCP/ ESTIMATE

$$

M/T

Y

TOC

OBJECTIVE

## $

## $

## $

## $

## $

## $

## $

RDT&E

A A B B C C IOC IOC FOC FOC

$$

FYDP $$

LRIP

Remaining LC FYs $$ by Year

FRP – Qty/Period

Note any life - cycle assumption changes

CURRENT TOC ESTIMATE DATE

FY# FY## FY# # FY## FY## FY##

PROCUREMENT

MILCON

MPN

OM

MP

CURRENT SCP

Prior Yrs Spent

LAST GATE SCP/ ESTIMATE

$$

M/T

Y

TOC

OBJECTIVE

Affordability Initiatives Process

Key Characteristics:

• Continuous across POM and PR cycles; not a one-time event

• Integrated with N8 ISPP Development process

• Inclusive of the Providers and Resource Sponsors

• VCNO/ASN(RDA) ensure integrity of the process via Provider Forum

• N4 executive agent for the process; coordinates initial initiative screening and maintains repository

FY2010 FY2011 FY2012 FY2013

Select

Implement

Further Develop

Deferred

Plan

POM-12

Select

Implement

Further Develop

Deferred

Plan

Select

Implement

Further Develop

Deferred

Plan

Select

Implement

Further Develop

Deferred

Plan

PR13

POM-14

PR15

POM 12 Selection Process: • Key screening criteria:

Investment, Benefit and Timing • All required investments and

potential benefits (across ROs) considered

• No TOA Decrements until VCNO/N8 agreement

• Reflect risk in TOA adjustments

22

Process Overview

28-Mar-10 For Official Use Only

Institutionalize Process to Continuously Identify and Pursue Cost Reduction Opportunities

NAVAIR

NAVSEA

SPAWAR

NAVSUP

CNIC/ NAVFAC

Category 1 In Progress

Category 2 Proposed:

Ready

Category 3 Proposed Not Ready

Technically Mature?

Category 4 Ideas

Not Screened

To be tracked in affordability initiatives repository

Source of Initiative/Idea

Assigned Category

Not Screened

$0 Required Investment

$ Required Investment

N

Initiatives also segmented by

“product-related” and “process-related”

Y

High confidence in savings?

Parking Lot A

Requires greater

technical maturity

Parking Lot B

Needs improvement in

savings confidence

N

Hybrid ROI*/

Payback

FYDP ROI/

Payback

Life Cycle ROI/

Payback

ROI Analysis ROI

Comparison

Initiatives scored within the Top 15 in

all three ROI analysis categories

Y

Screen #1 Screen #2

Screen #3

54

44 32

13 10 12

(472 Initiatives)

(28)

(129)

(106)

(209)

*Hybrid ROI/Payback = 60% FYDP/40% Life Cycle

SYSCOM Projects – Making a Difference

• MH-60S Early Investments in Reliability

– LCC reduced ~ 83%...by investment in component reliability

• System Standardization Efforts

– Reducing variation in shipboard systems - an opportunity for $800M+ in savings

• Implementing Open Architecture

– Parallel effort to System Standardization Efforts

• Performance Based Logistics

– Leveraging to reduce backlog and increase parts availability

• Common Submarine Radio Room

– $770M cost avoidance for submarines

– Looking to expand to surface combatants

• Virginia Class

– Driving to a specific affordability goal

Way Ahead

• Think well past the POM/PR…Create and exploit every opportunity to reduce cost

• Develop Catalog of Initiatives that Reduce TOC

- Build Base of Unfunded Affordability Initiatives with ROI Potential

• Develop TOC Performance Capture Methodology

- Identify Data Sources with Fidelity to Facilitate Senior Leadership Decision Making

"I think it is irresponsible on my part simply because of something that may appear important in the near term to deliver something to my Navy that years or a decade later will be problematic to operate because of the cost.“ -CNO

Questions

HH-60H MH-60S

$6.6M Spent on Reliability

What Changed

Components (APUC in $ thousand) MFBHR = Mean Flying Hours Between Removal

APUC = Average Production Unit Cost

Reliability Change

(50 Percent Improvement) 2.4 Hrs. MFHBR 3.6 Hrs. MFHBR

Acquisition Strategy Early Investment In Reliability

$592.3M $107.2M

Investments in Reliability reduces the logistics footprint…dramatically reducing life cycle costs

Est. 20-yr LCC $M FY03

(LCC reduced by ~ 83 percent)

Commonality Results Summary

NAVSEA piloted industry commonality approaches that demonstrated both a reduction in number of equipment designs and TOC savings

NAVSEA Commonality Pilots Results Summary

System

Sub - Systems

in Scope

Variant Reduction Opportunity Projected TOC Benefits (3)

Current # of

Variants # of

Recommended Variants

% Reduction in Variants

TOC Benefits ($M )

% TOC Benefits (% of Spend)

Machinery Control Systems (1)

• Workstations • PLC Cards • VME Cards • UPS Units

• 24 • 63 • 58 • 18

• 8 • 31 • 14 • 5

• 67% • 51% • 76% • 72%

$59 M - $80 M (over 7 years)

22% - 30%

Fluid Systems (1) • Centrifugal Pumps – Seawater and Freshwater

• 240 • 116 • 52% $105 M (over 20 years)

11%

Interior Communications (Voice

Systems) (1)

• PBXs • ICTs • CAAS • Telephone Terminals

• 45 • 3 • 7 • 6

• 4 • 2 • 1 • 1

• 91% • 33% • 86% • 83%

$272 M (over 20 years)

14%

Compressed Air Systems (2) • Air Compressors

• Reducing Manifolds • 37 • 291

• 7 • 112

• 81% • 62%

$130 M (over 25 years) 23%

Lighting and Generator Controls Systems (2)

• Lighting Fixtures • Voltage Regulators • Governor Controls

• 117 • 39 • 9

• 57 (prelim.) • <3 ( prelim.) • 3 (prelim.)

• 51% (prelim.) • 92% ( prelim.) • 67% (prelim.)

$250.4M (over 30 years) TBD

Climate Control Systems • Vaneaxial Fans • 192 • 43 • 78%

(preliminary) Commodities contract

being developed TBD

Total Lifecycle Benefits Opportunity $816 M - $837 M 16%

System

Sub - Systems

in Scope

Variant Reduction Opportunity Projected TOC Benefits (3)

Current # of

Variants # of

Recommended Variants

% Reduction in Variants

TOC Benefits ($M )

% TOC Benefits (% of Spend)

Machinery Control Systems (1)

• Workstations • PLC Cards • VME Cards • UPS Units

• 24 • 63 • 58 • 18

• 8 • 31 • 14 • 5

• 67% • 51% • 76% • 72%

$59 M - $80 M (over 7 years)

22% - 30%

Fluid Systems (1) • Centrifugal Pumps – Seawater and Freshwater

• 240 • 116 • 52% $105 M (over 20 years)

11%

Interior Communications (Voice

Systems) (1)

• PBXs • ICTs • CAAS • Telephone Terminals

• 45 • 3 • 7 • 6

• 4 • 2 • 1 • 1

• 91% • 33% • 86% • 83%

$272 M (over 20 years)

14%

Compressed Air Systems (2) • Air Compressors

• Reducing Manifolds • 37 • 291

• 7 • 112

• 81% • 62%

$130 M (over 25 years) 23%

Lighting and Generator Controls Systems (2)

• Lighting Fixtures • Voltage Regulators • Governor Controls

• 117 • 39 • 9

• 57 (prelim.) • <3 ( prelim.) • 3 (prelim.)

• 51% (prelim.) • 92% ( prelim.) • 67% (prelim.)

$250.4M (over 30 years) TBD

Climate Control Systems • Vaneaxial Fans • 192 • 43 • 78%

(preliminary) Commodities contract

being developed TBD

Total LCC Benefits $816 M - $837 M 16%

Performance Based Logistics (PBLs)

•• Navy buys comprehensive performance Navy buys comprehensive performance packagepackage…… not individual partsnot individual parts

•• Multiple yearMultiple year, , longlong--term agreementsterm agreements •• Incentivize contractor investmentIncentivize contractor investment……

improve reliabilityimprove reliability…… reduce reduce consumptionconsumption

•• Early Early PBLsPBLs more like Performance more like Performance Based Supply contractsBased Supply contracts

PBLs Increase Readiness, Improve Reliability, & Reduce TOC

PB

L R

ep

air

ab

les

P

erf

orm

an

ce

Reduced Backorders

40K to

13K

Reduced B\O Avg Age

271 days

to 189 days

Reduced B\Os >180 days

17K to 4K

Increased Availability

70% to

78%

Increased PBL Program

$35M Obs to

$1,156M Obs

199

8 -

2008

RESULTSRESULTS

Risk Shifts Risk Shifts from from GovGov’’tt to to

Vendor for Vendor for

ObsolescenceObsolescence, , ReliabilityReliability, ,

Surge Surge & & moremore

Acquisition Strategy… F/A-18 Support Example

PBL At Earliest Opportunity Maximizes Reduction of LCC and Inventory Investment

PBL At Earliest Opportunity Maximizes Reduction of LCC and Inventory Investment

Sustainment Through Over 20 PBLs

F/A-18 Integrated Readiness Support Teaming (FIRST) PBL

• 5 year, $955M award to Boeing

• Cost plus initially… fixed price today

• Contract covers 73% of aircraft

• Covers all E/F parts & ILS elements

• Multiple funding

� NWCF, APN, DWCF, FMS

• Improved response times lead to reduced investment

• Supports the E/A-18G Growler as well

F404 GE

APU *Honeywell

Tires * Michelin

F414 Fleet

Support

/C&A

ARC 210 * Rockwell

SMUGGE

CAINSII* NGC

ALR-67v3 *Raytheon

Support Equipment *

Multiple OEMs

EIBUGE

TBD

SMS *GE

ALQ-126B *BAE/Jax

AMC*General

Dynamics

AESA BoeingSep 09

Turbines Honeywell

TBD

SHARPRaytheon

TBD

Fuel Control *

Honeywell

HUD/DDI Rockwell

F414 Depot Component

GE

GCU GE

Apr 10

Litening *NGCTBD

ATFLIRRaytheon

TBD

FIRST Boeing

F404 GE

APU *Honeywell

Tires * Michelin

F414 Fleet

Support

/C&A

ARC 210 * Rockwell

SMUGGE

CAINSII* NGC

ALR-67v3 *Raytheon

Support Equipment *

Multiple OEMs

EIBUGE

TBD

SMS *GE

ALQ-126B *BAE/Jax

AMC*General

Dynamics

AESA BoeingSep 09

Turbines Honeywell

TBD

SHARPRaytheon

TBD

Fuel Control *

Honeywell

HUD/DDI Rockwell

F414 Depot Component

GE

GCU GE

Apr 10

Litening *NGCTBD

ATFLIRRaytheon

TBD

FIRST Boeing

Common Radio Room (CRR)

Seawolf

Au

tom

ate

d

Rad

io R

oo

m

Au

tom

ate

d

Rad

io R

oo

m

Mission Need

Ship Classes Targeted

Unique New Construction

Solutions

Sustainable Common Solution

Virginia

SSBN

Los Angeles

External Comms System (ECS)

Integrated Radio Room (IRR)

Manual radio control

DDG 51

LCS 1

LCS 2

DDG 1000

Lockheed Martin

General Dynamics

Raytheon

Common Radio Room (CRR)

SSGN

Manual radio control

Integrated Radio Room (IRR)

TOC Savings / Potential

• S/W development, sustainment, and accreditation

• Test & Integration processes

• Training pipelines

Eliminated multiple:

• S/W development, sustainment, and accreditation

• Test & Integration processes

• Training pipelines

Eliminate multiple:

Possible Elimination

~3 billets/ship

PEO Subs

PEO Ships

Common Submarine

Radio Room

(CSRR)

$700M

Cost Avoidance

Automated Radio Communications (ARC)

Opportunity to Extend Common Suites to C4I

$94M

$2.0 B

$2.4 B 8 Ship MYP Contract (Block III) Transition to 2/yr VA in a MYP contract with EOQ material buys

Anticipated to achieve savings of $200M per hull

No further initial investment required to achieve this savings

Confidence this savings can be delivered is high

Design for

Cost Reduction

Capability Neutral ~$500-600M $100M $106M

Capability Reduction N/A N/A N/A

$106M

$2.2 B

$2.1 B

Proposed Potential Realized Investment /ship /ship

Chart is not to scale

Data as of Dec 2008

Realized Savings per Hull to Date

$200M

Proposed Potential Realized Investment /ship /ship

Target is $2B (FY05$) by FY12

VA Class Cost Reduction Status

*Note - Investments in Construction Performance (Build Plan/Span Reduction/ Producibility/LEAN) were part of, and funded through, the design for cost reduction effort.

Construction Performance

Capital Expenditures (CAPEX) $90M $20M $12.7M

Build Plan/Span Reduction/ Producibility/LEAN *See Note $80M $43.8M

NPES Initial Outfit $10M $40M $37.5M

Navy’s Dashboard for VIRGINIA Class Cost Reduction

• 15 deployments starting with the ship delivered 2015 (SSN785)

• Data from first EDSRAs (2012-2014) into engineering decisions

• Data from O&I level maintenance

• Data from sea operations, including deployments

• May require changes to Block III Technical Baseline Letter

• Reduced depot availability to 36 months

• Reduction in TOC – TBD • Against 2009 baseline (expanded class)

• Average acquisition costs of Block IV ships will be no greater than the average cost of Block III ships (adjusted for inflation)

VA Class Cost Reduction Status (cont’d)

Display (H/W)

Processing System (H/W)

Operating System

Middleware

Competition to develop

Common S/W Components

and Capabilities

within Objective

Architecture

COTS Computing Systems

Separate Contracts

Platform System Engineering Agent (PSEA)

CurrentCurrent--Platform Based DevelopmentPlatform Based Development FutureFuture--Capability Based DevelopmentCapability Based Development

PSEAPSEA

SBSB

PSEAPSEA

PYPY

PSEAPSEA

PYPY

TTWCS

CS IntegratorCS Integrator

Prime Sys Prime Sys IntegInteg

SEWIP

SQQ-89

ADDC

Aegis Mk 7

CIWS

CS IntegratorCS Integrator

Ship BuilderShip Builder

SEWIP

ATC

GUNS

SSDS

CS IntegratorCS Integrator

Ship BuilderShip Builder

Other ESM

MIW

Other C&D

Common

Asset Library

Many Vendors

Many Current Systems Have Their Own Sensor Control, Decide / Assess, Track

Management, and Weapon Control Function

…

…

Planning Yard

Decouple H/W from S/W

H/W System Engineering & Component /

Capability Competition

Systems Engineering Model Based on OA that Utilizes Standards-based Interfaces to Network and improves commonality and functionality

Ship Builder

SUW

UV Control

External Comms Domain

Display Domain

Vehicle Control Domain

Track Mgmt Domain

Comm Control Domain

Infrastructure Domain

Sensor Mgmt Domain

Weapon Mgmt Domain

Ship Control Domain

Support Domain

Implementing Open Architecture Third-Party Surface Combat Systems Development