U.S. Navy looks to leverage submarine work to keep costs down

WASHINGTON Thu Apr 10, 2014 10:06pm EDT

The Virginia-class submarine USS Hawaii pulls alongside the submarine tender USS Frank Cable in Subic Bay, in this September 6, 2012 handout photo courtesy of the U.S. Navy. REUTERS/U.S. Navy/Chief Mass Communication Specialist Jennifer L. Walker/Handout

The Virginia-class submarine USS Hawaii pulls alongside the submarine tender USS Frank Cable in Subic Bay, in this September 6, 2012 handout photo courtesy of the U.S. Navy.

Credit: Reuters/U.S. Navy/Chief Mass Communication Specialist Jennifer L. Walker/Handout

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WASHINGTON (Reuters) - The U.S. Navy hopes to save money and time by leveraging industry investments as it replaces its Ohio-class nuclear-armed submarines with the Virginia-class attack submarines now built by General Dynamics Corp and Huntington Ingalls Industries Inc.

Navy chief weapons buyer Sean Stackley told the Senate Armed Services Committee's seapower subcommittee on Thursday that Navy officials were studying ways to drive down the cost of the new submarine, including a combined purchase that would include another batch of Virginia-class submarines.

The first Ohio-class ship will be funded in fiscal 2021, with advanced procurement to begin in 2019.

The congressional Government Accountability Office estimated last month that it would cost $95 billion to develop and build a dozen new submarines to replace the current fleet of Ohio-class ballistic missile submarines as they begin to retire in 2027.

The Navy views the Ohio-class replacement as its biggest priority, but is asking Congress to help find funding from elsewhere in the Pentagon budget, given that the program will eat up the lion's share of the Navy's annual shipbuilding budget from 2021 on.

Stackley said the Navy was also exploring other ways to drive down the cost of the huge new program and ensure that U.S. companies were ready to take on the increased work.

"What we want to do is leverage the volume between the two programs going through the industrial base ... so that we get the affordability we need and hold onto the quality and the schedule performance that we currently enjoy on the Virginia-class program," Stackley told reporters after a hearing about the Navy's shipbuilding budget.

Stackley said the acquisition strategy for the new submarines was still being worked out, including how the work would be divided between General Dynamics and Huntington Ingalls at a time when they will also be building more Virginia-class submarines. He said there was no talk about shifting to just one producer, given the importance of the submarine industrial base.

"Nothing has been decided," Stackley said.

General Dynamics is the prime contractor working on the design of the warships, while Huntington Ingalls is a subcontractor, but that could change when the Navy moves into procurement, Stackley said.

Stackley said the need to invest in facilities, tooling and other equipment for construction of the new submarines would help determine a schedule for the Navy's acquisition strategy since the Navy wanted to avoid having the companies duplicate investments.

"We'll be engaging with industry at the right time," he said. "We're going to build the strategy that best fits the cost, quality and schedule for (building) the Ohio replacement ... and the Virginia-class side-by-side" he said.

(Reporting by Andrea Shalal; Editing by Ken Wills)

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