keynote address : keynote address & plenary session

ASNE Day 2000 Keynote Address G.1 Plenary Session

Mr. Paul A. Schneider

Keynote Address Thursday, May 18,2000 Mr. Paul A. Schneider Princ+al Deputy Assistant Secretary of the Navy (RDA)

r. Schneider began his career in 1965 at the Portsmouth Naval Shipyard where he was a Project Engineer assigned to the Submarine Propulsion and Auxiliary Machinery Branch and Waterfront Design

Liaison office. From 1966 to 1977, he was a Project Engineer in the Bureau of Ships Submarine Overhaul and Maintenance Program and SSN Submarine Ship Acquisition Project. His next assignments were in the TRIDENT Submarine Acquisition Project starting as a Project Engineer for Ship Design, and then as Director, Research, Development, Test and Evaluation Division. During this period, he was a Program Manager for a submarine advanced technology program and for the submarine design portion of the US/UK TRIDENT Submarine Program.

From 1981 to February 1986, he was the Deputy Director of NAVSEA's Auxiliary Systems Subgroup in the Engineering Directorate where he was responsible for the design and engineering of surface ship and submarine piping, heating ventilation and air conditioning systems and auxiliary machinery, including environmental pollution control and aircraft carrier fire fighting systems.

From March 1986 to March 1991, he was the Executive Director of the Amphibious, Auxiliary, Mine and Sealift Ships Directorate (SEA 93), where he was responsible for the design, acquisition and life cycle support of these ships. During this period, he was also a Program Manager for a highly classi- fied program. From March 1991 to December 1994, he was the Executive Director of the Surface Ship Directorate (SEA 91) where his responsibilities were expanded to include aircraft carriers and in-service surface combatants and the Navy's diving and salvage program. In October 1994, he was selected to be the Executive Director and Senior Civilian of the Naval Sea Systems Command, the Navy's largest shore organization. In July 1998, he assumed his present position.

Mr. Schneider holds a degree in Engineering and is a member of ASNE, the Society of Naval Architects and Marine Engineers (SNAME) , the Association of Scientists and Engineers (ASE), the Navy League, and the Naval Institute. He served on the ASNE Flagship Section Council and was the President of ASE.

Mr. Schneider has received numerous awards and citations including the Department of Defense Distinguished Civilian Service Award, Navy Distinguished Civilian Service Award, Navy Superior Civilian Service Award and Presidential Distinguished and Meritorious Executive Rank Award.

NAVAL ENGINEERS JOURNAL SEPTEMBER 2000 41

Keynote Address and Plenary Session

Keynote Address: Mr. Schneider noted that the last decade has been a time of unprecedented change. In the ten years since the end of the Cold War, the focus of maritime warfare has shifted from the open ocean to operations in the littorals, which affects military operations ashore, at any time and in any place. He said that we are all familiar with the crises of the past few years and the role the Navy has played in them. At a time when forcestruc- ture has decreased, the op tempo of the fleet has increased. He said the fundamental change we’re undergoing requires much more intimate cooperation between our forces afloat and our forces ashore; the cornerstone of our mission as we see it today is to be an expeditionary force in readiness, a force that is ready and capable of settling regional conflicts quickly, and decisively.

Mr. Schneider stated that the capability that makes today’s Navy and Marine Corps team so formidable is really a direct result of our investment in research and development, and our ability to take the output from those research and development efforts and transition them into major acquisition programs. S i c e challenges to our national interests clearly still exist our naval forces are really critical to providing the capability and the stability for other democracies to grow. To do this, he said, we must continue our legacy of innova- tion that marked, in his view, the 20th century as a naval century.

He noted that we’re still going to have third world countries and terrorists to deal with, who will continue to challenge our interests with terrorism, piracy, the threat of chemical and biological weapons, and urban warfare. He said that part of the military solution to this threat is technology. He cited past examples, such as precision guided munitions, AEGIS, stealth technology for minimizing ship signatures and future develop ment, such as space assets, improved sensors, unmanned aerial vehicles, unmanned undersea vehicles, and a host of other technologies. Those are the technologies, he said, we’re going to adapt and incorpc- rate that will revolutionize 21st century warfare.

Mr. Schneider gave the DD-21 as an excellent example of how we’re applying technology to our post-Cold War mission. By not focusing on just a gray hull and a propulsion system, he believes its been shown with the DD-21 that we can transition from designing a ship to designing a total system architecture, where the ship’s mission, not its systems, determines the design decisions.

He observed that affordability is a prominent issue, and in a budget constrained environment, it becomes even more important. He said we’re looking at ship building to save money across the life cycle, not just during the construction process. He noted that while many initiatives are in place to reduce total ownership costs, one of the biggest hurdles we have is to figure out how to change the financial system and the con- tracting system in order to embrace this change as a fundamental way of doing business. He thiiks we are in the middle of a fundamental change in investment strategy and we are only now realiziig how to make a fundamental change in how we’re going to invest money upfront in order to reap a benefit that we may not see for 10 to 15 years, or in the case of a ship, over its thirty-year life cycle.

Mr. Schneider maintains that the cycle time of technology is a major concern. He noted that the expected life span of cruisers and destroyers is about 25 to 30 years, typical amphibious or supply ships are usually kept more than thirty-five years, and aircraft carriers must last fifty years or more. He observed that even as far back as World War 11, our ships became obsolete if the combat systems were not upgraded every 12 to 15 years, while now the time scale for technological evolu- tion is 18 to 24 months for computers and much shorter for microelectronics. He said we’re working to design our ships and submarines in ways to insert this technology as it is developed, and trying to do this affordably. As an example he cited the goal for the Viginia class submarine to refresh the combat systems at delivery and at various points through the ship’s life cycle by using the open system architecture that has been employed on that platform. While this takes much more upfront investment, he said we reap the dividends across the ship’s life cycle in terms of both affordability and capability. Coincidentally, he said, we’re also striving to gain access to the explosion of new technology emerging from the commercial sec- tor, while simultaneously forging new alliances with companies that have had little previous interest in defense procurements. We are assimilating their technology, we’re using their tools, and we’re incorporating their successful business practices, he said.

Mr. Schneider declared that our Sailors and our Marines are our most precious resource and our great- est asset. To enhance the effectiveness of this resource, Secretary of the Navy Richard Danzig has worked hard to improve the quality of life, for example, by assisting personnel in getting college credit for Navy experience; by substantially decreasing the number of vacant billets; and by increasing the budgets for

42 SEPTEMBER 2000 NAVAL ENGINEERS JOURNAL

Keynole Address and Plenary Session

spare parts with the idea that job satisfaction is closely linked to fixing things with the right tools and the right parts. Additional measures cited were smart work initiatives, such as contractor preservation teams and advanced coatings, and assignment of repair availabili- ties to homeports, wherever possible. A stated primary objective is to continue to work to shift maintenance away from the sailor to the shop and the shore.

In that vein, he said, we have also embarked on the installation of smart ship technologies. The success of Yorktown has lead to an expansion of this program throughout the fleet. He noted that all twenty-seven ships of the Ticonderoga class are programmed for installation and a parallel effort for the fifty-eight ships of the Arleigh Burke class is underway. A smart ship prototype installation on the USS Rushmore has been completed, launching the smart gator program, and the smart carrier program is on track for initia- tion, he said.

”THE CAPABILITY THAT MAKES TODAY’S

NAVY AND MARINE CORPS TEAM SO

FORMIDABLE IS REALLY A DIRECT RESULT

OF OUR INVESTMENT IN RESEARCH AND

DEVELOPMENT AND OUR ABILITY TO TAKE THE OUTPUT FROM THOSE

RESEARCH AND DEVELOPMENT EFFORTS

AND TRANSITION THEM INTO MAJOR

ACQUISITION PROGRAMS.”

Mr. Schneider then reviewed the status of the Navy‘s ship and aircraft building programs making the following assessments: He referred to the DDG51 as a remarkable ship and the Navy‘s largest surface ship program, which will remain so for the near future. He said the new Flight 11-A configuration will make these ships more capable in the littorals than any other combatant in the world. He said that although these platforms are truly formidable, we look to future modification such as the latest version of the AEGIS radar system, the Area Theater Ballistic Missile Defense System, Cooperative Engagement, a 5”/62 gun firing the extended range guided munitions (ERGM) , and a remote mine hunting system. Looking past the DDG 51, the DD-21 Land Attack Destroyer will be a multi- mission surface combatant that’s tailored for land attack and maritime dominance. It’s going to be armed

with an array of land attack weapons that will provide precise firepower at long ranges in support of marine forces ashore.

Looking at the carriers, he said the Navy is making a substantial investment. What we have, he said, “is an evolutionary aircraft carrier strategy to develop the next generation of carriers. It begins with the CVN-77, the tenth ship of the Nimitz class. That ship will serve as a bridge to the next generation of aircraft carriers, which we designate CVNX. Our RD&T efforts have been focused on a new, fully integrated combat system, and we have many other development efforts underway that are looking at reducing the total ownership costs. The CVNX class will use a multi-ship process for inserting the new technologies that will enhance war fighting while dramatically reducing the total ownership costs. Again, this is a big, big dollar investment”

In the submarine area, he said, “the Seawolf submarine class program has now delivered the first two ships. They are the quietest, stealthiest, the most maneuver- able submarines in the world. These two ships can operate in any region and deny the opposition from operating in key open ocean and littoral areas. The third and the last ship of the Seawolfclass, the SSN-23, is approximately 2/3 complete. It is having a special modification with additional volume that will accomme date advanced technology for Navy special warfare, tactical surveillance, and mine warfare operations.” As for the future, he said the next generation of submarine, the Virginia class, is really the first submarine that has been designed since the end of the Cold War. He noted that it will improve on almost every operational charac- teristic of Seawolf; including stealth, special warfare, littoral warfare, surveillance, and mission flexibility, but for roughly twenty-five percent less cost.

With regard to amphibious ships, he noted that the LPD-17 class is underway. There are twelve ships planned for that program, which will ultimately replace forty-one ships, some of which have already been taken out of service. He observed that this plan will not only modernize our amphibious forces, but also result in significant manpower and life cycle cost savings. He stated that the 2001 budget request that is currently on the Hill includes funding for the 5th and 6th ships of this twelveship program. The design of this class is underway and is approximately, he believed, fifty percent complete. Lead ship construction is expected to start very soon.

Finally, he commented that several of our supply ships have been in service for more than thiity years. He remarked that “we plan to replace these aging ammuni-



tion and dry store ships with a TADCX, Auxiliary Dry Cargo vessel. This year we requested funding for a sec- ond ship of the class. We estimate the class will be twelve ships. One of the most difficult decisions that we have is trying to make an investment decision bal- anced between what we want to buy new and what we can use in terms of the existing service life that’s left in the ship. That’s a very difficult balance. We must take advantage of the tremendous service life that is left in our existing platforms, and that’s really kind of like the underlying theme of our modernization strategy.”

He said other strategies include plans to upgrade the CG-47 class combat systems for Theater Ballistic Missile Defense, and the Land Attack mission for s u b marines and carriers. He said it is planned to refuel rather than decommission several 688 class s u b marines and shift to an incremental maintenance plan to extend the life of the carrier fleet.

Mr. Schneider observed that platform design must be driven by the intended function of the platform. As examples, he cited the special needs of the F/A-18 E/F Super Hornet program, the Joint Strike Fighter, EA-6B surveillance aircraft, and the V-22 Osprey, as well as LCACs and AAAVs

Mr. Schneider noted that the Navy is also a major player in ballistic missile defense, stating that the Theater Ballistic Missile Defense System takes advantage of sea room and ship mobility. It provides a defense in-depth from the threat of theater ballistic mi+ sile attack for the U. S. and for its Allies.

Mr. Schneider said the Secretary of the Navy has emphasized his concern for how Sailors and Marines work, live, and fight. He said this emphasis has raised some very significant challenges. For example, he noted “that reducing the CVNX-2 crew size by 1,500 sailors means dramatic changes in how we keep this ship running day-today. This presents challenges for damage control, as well as many other facets of day-today operation. It means that logistic and repair processes will be more closely linked to other ships and shore facilities much more so than they are now.“

He continued, “for how we live, it means that for the LPD-17 we can’t spend as much on manpower as we spent in the past. We have to take a look at those func- tions using automation to replace them, as well as a fundamental look-see at our manning philosophy, and that’s where the interface with the uniformed operators is absolutely key. That’s the start in terms of the first ship, the LPD-17, the challenges for the DD-21 are even more significant.”

For how we fight, he said, “it means our weapons and communication systems have to be flexible, but manageable. Our network-centric warfare capability must be significantly refined. The theater commander must be confident that he has the highest quality information in order to make a smart tactical decision. The capability we are demanding for these new platforms will come only if their systems and features are completely integrated. The old stovepipe design method is not going to work. It’s absolutely essential that we design and build ships with a total system architecture.”

Mr. Schneider emphasized that missions and not systems define ship design decisions. It also means, that because we have a large modernization program for existing platforms, we take advantage of the processes we refine and develop for the new ships and apply them to the older ships as we go through the modernization phases through the rest of their l ie. He said, “I think that although American ship yards and marine suppliers have come a long way in improving technology and processes for advanced ship construction, we have to continually strive to improve. We want, and the country needs, a competitive self-sustaining shipbuilding industry that is not solely reliant on Navy ship construction.”

After noting that our Shipbuilding rates are targeted for 8 to 10 ships per year and that we’re at the lower end of the range today, he expressed the hope that MAIUTECH Advanced Shipbuilding Enterprise (MARITECH M E ) will enable the industry to speak with one voice on the technological changes impeding US. shipbuilding competitiveness. MARITECH ASE is an unprecedented collaboration in the United States shipbuilding industry among small and large shipyards that are involved in commercial and Navy ship construction and repair. MARITECH is looking at business process technologies, system and shipyard production process technologies, product design and material technologies, and tools and facilities. Mr. Schneider said it took significant effort by government and industry in partnership to make it happen. He said, “I applaud the management of industry for joining forces on the technological front, recognizing that we have a business environment that’s very tight, for the good of the industry, and really for the good of the nation, and I’m really optimistic that this effort will help establish international competitiveness for U. S. ship yards abroad, and reduce the cost of warships to the Navy. I trust that the industry’s strategic vision is gen- uine. I’m personally excited by the overall industry response to this new approach, and I encourage even



greater participation in the future. As we continue to take part in the promise of global prosperity, we will likely find the Navy and Marine Corps increasingly involved in small regional conflicts. To contain these conflicts, to stop them early, or if possible, to deter them completely we will need every advantage that technology and engineering can provide.”

Mr. Schneider concluded, ‘We’re not just building ships anymore, we’re building ships and systems together. We’re addressing capabilities. We’re looking at the whole life cycle to address cost, and we’re working in the direction of-and I know this word is used a lot, but I don’t know of a better word-seamless interoperability. And that means not just among the systems and equipment we provide, but also with the other ser- vices and our Allies. We have to work to do this without breaking the bank. Some of the major challenges we have are finding breakthroughs in affordability, dramatically reducing the acquisition cycle time, bringing commercial practices to Naval systems, and providing the best system solutions to satisfy the requirements of our customer, who is the war fighter. We live in a time when change is the norm-change in technology, in budgets, in strategies, in how we work, and in how we in government partner with industry. We’re never going to return to what people refer to as the good old days. Instead, we’re really moving to a brighter future. How will we get there? Well, there is no book, there is no roadmap or chart on which our course has been plotted. Instead it is going to take dedicated, innovative people who have ideas, who are committed to succeed, and are willing to properly challenge the fundamental practices and institutions we have today. And that is our job, yours and mine.”

A QUESTION FROM THE FLOOR: ‘You mentioned that your target is 8 to 10 ship acquisi- tions per yeax Some of us who have done the math say that will end up with the Nu y under 200 ships. What is your response to that?

MR. SCHNEIDER’S RESPONSE: ‘Well, let’s put it this way. What’s kind of funny about the number count is this, we count a carrier with a minesweeper, and a destroyer, and an amphib, and so we try and stay away from the 8 to 10 only because it’s a notional number. The general feeling is that if we stick to the high end, the ten, with the right mix of ships, it provides the kind of capability we need in order to do the mission. The real problem is with the

low end. We can’t get to the 9 to 10. I’ve seen several different ways people calculate the math. The bottom line is we don’t get enough money and that’s based on the fact that when you take a look at the bills the Navy has to pay, they are really significant.” Mr. Schneider observed that, over the years, money has come out of O&MN to fund new construction ships and new aircraft with the result that fleet maintenance has been underfunded, steaming and flying hours have been reduced, the condition of many bases has deterio- rated, and sufficient money has not been put into increasing the quality of life of military personnel. He said that “if we’re really serious about protecting our resource, the Sailors, we need to pay some bills that we haven’t paid in the past. On balance, I think the Department has acted very responsibly as each of us would act in our own lives. The problem is, there’s just no money. And when you operate with the guid- ance that we get from the Administration that goes on down through the Department of Defense in terms of what our top line is, you figure out what bills you have to pay and do the best you can. But we’re not there, and no matter how you run the numbers we’re at the low end of the range.”

Panel Discussion: National Shipbuilding Research Program (NSRP) Following Mr. Schneider‘s Keynote Address, a panel was assembled to discuss the efforts of the National Shipbuilding Research Program (NSRP) to focus ship building research and development to achieve the preservation and revitalization of the shipbuilding industrial base by helping to make construction of U. S. warships more affordable and the U. S. shipbuilding industry competitive in the world market.

MODERATOR: Harvey Walpert, Chairman, NSRP Executive Control Board and Vice President, Bender Shipbuilding.

Mr. Walpert provided an overview of NSRP and MARITECH ASE. He said NSRP used to be the vehicle for funding discreet R&D projects of a normally narrow scope, and in recent years, up until 1998, funding was extremely limited, and the projects, while very important and useful, were also limited. MARITECH, he said, was started in 1993 and brought funds to shipbuilding research to begin the efforts of forming a global competitive industry. He stated that in 1998 the Executive



Control Board (ECB) of the N S e at the Navy‘s urging and with the support of the top leadership of the ship yards, established a collaboration. He emphasized that “...the key word here-and I’ll mention it several times-is ‘collaboration,’ the yards working together for a common goal: increased competitiveness worldwide and reduced cost of Navy ships.

He said major changes from the original MARITECH program include the development of a strategic investment plan, which guides the nature of proposals that are requested from industry to use MARITECH funding, and two shipyards have been added to the original nine.

Mr. Walpert urged all to remember that a primary goal of MARITECH is to improve warship affordability. He said, “Our collaboration has expanded far beyond the technology areas.. . . We’re involved in specification rationalization. We’re involved in finding new ways that we can do business with the government and its ship builders. How we can get more ships ... within the same constrained budget. Our focus again, is on collaboration and projects that benefit multiple segments of the industry.”

He noted in closing that, ‘We are an investment, not an expense. We leverage the industry contribution; we leverage the government contribution in equal parts, so that for every dollar the government spends, it gets two dollars back in research. But our continued achieve ment is dependent on adequate funding, and we’re looking for $20 million a year. We keep looking, but we haven’t found it yet.”

MICHAEL C. HAMMES, Deputy Assistant Secretary of the Navy, Ship Programs Mr. Hammes initially addressed the benefits derived from MARITECH ASE. He said it started out in 1993, tending to be a lot of robust projects to try to bring commercial programs, big programs, big opportunities to U.S. shipbuilders large and small. He said, “Some of it has paid off and some of it has not. We’ve got a lot of indirect benefits from MARITECH ASE. Ingalls will be building cruise ships soon. The initial work they did, design concepts, mock-ups of staterooms, etc., was done with MARITECH funding. The Navy will get at least $50 million of overhead absorption savings when those ships are built. Just from those two cruise ships at IngallS.”

He also cited the unsuccessful Newport News venture into the commercial market of tankers. However, he

”IT IS GOING TO BE VERY DIFFICULT WITH

THE BUDGET ENVIRONMENT WE HAVE,

MAINTAINING A 300 SHIP NAVY. BASED

ON THE DOLLAR PROJECTIONS OF THE

FUTURE AND THE PRESSURES ON OUR

OWN INTERNAL BUDGETS, IF THOSE STAY

THE SAME, WE‘RE NOT BUILDING EIGHT

SHIPS A YEAR IN THE FUTURE. ”

said, the Navy saved $70 to $80 million documented by DCA in overhead absorption because of that program.

Further, he said, NASSCO is building vehicle carriers for the Department of Transportation (DOT) and there will be money saved there through absorption. Money will also be saved, he said, from some tankers at Avondale that were designed with MARITECH, or at least the initial concept design was done with MARITECH. He said, “MARITECH funding is really, almost like venture capital in a sense. Some of it is, and some of it’s not. But it is taking risks in some areas that will be a payoff. And we’re starting to see some of the benefits of the payoff.”

Mr. Hammes continued, “So, those of us who have insight across the board, crossing a lot of programs, understand the leverages we’re getting out of MARITECH ASE. The difficulty is making it visible. The difficulty is supporting a budget that has to com- pete with fleet maintenance, other programs, and war fighting requirements.. . . The program used to be funded at $40 million a year, declined to $20 million, and is less than that this year at a little less than $10 million. ... Now, that’s a threat to everyone out there in this business, including the vendors. Because one of the big opportunities we see also with the MARITECH p r e gram is we see teaming between big and small yards and vendors. If you look at what a lot of the small yards are doing, it’s the vendor or the equipment provider or the process provider who is really driving the concept with the shipyard. The shipyard will eventually be the user. These things are significant, especially to these small yards that can’t afford to share all the cost to do this, and significant in that the industry gets to share them. We’re seeing more and more projects oriented to repair and maintenance of commercial ships, which has a direct application to the maintenance of Navy ships. So, our budget is extremely important, we all know that,

46 SEPTEMBER 2000 NAVAL E N G I N E E R S J O U R N A L


but this program’s budget is in trouble. We’re having great difficulty maintaining it.

In response to a question from the floor relative to the Navy’s goal of 300 commissioned ships, Mr. Hammes said, ‘We’re not building a 300 ship Navy. We have 300 ships, and will have 300 ships for a while, but we’re going to have to get that curve back up and it has been right at the bottom of eight, and dipping below eight. It hasn’t gone anywhere close to twelve. So, if you’ve got to ramp u p a n d 812 is a heck of a range, particularly if you stick a submarine in there that costs $2 billion, 812 has a big budget impact. The real issue is the dollars and the mix of ships. Included in the eight ships we’ve been buying are mainly lower mix ships. We haven’t hit the CVNX yet, we really haven’t ramped up any new attack submarine, and we’re on the tail end of some p r e duction programs like DDG, where the costs are benefi- cial on the tail and not the front.

So, it‘s going to be a real challenge ... we’re recapitilizat- ing new platforms. It is going to be very difficult with the budget environment we have, maintaining a 300 ship Navy. Based on the dollar projections of the future and the pressures on our own internal budgets, if those stay the same, we’re not building eight ships in the future. We’re going to be building less than eight ships, and even if you have built eight ships, we have built lower than that in the past, we wouldn’t hit 300 ships. We would drop below 300 ships in the future by building eight. And the financial projections we have thus far indi- cate that we’re not even going to be able to build eight. We maintain and try to build eight, try to show that in our profile, and we go to great lengths to do that, but there’s just not enough money in our budget to do that on a continued basis, unless something changes and the Navy gets more total top authority and funding.”

MICHAEL TONER, Past Chair, NSRP ECP and President of General Dynamics, Electric Boat Division Mr. Toner stated that the key issues in building s u b marines or surface ships are “affordability” and “collab oration.” He said affordability is relative to the amount of dollars that are available to the shipbuilding industry to work with, and they’re really fixed. He said it‘s really up to the industry to be able to decide how it‘s going to spend that money and to try to give the Navy more ships for that shipbuilding dollar. The other piece, he said, is collaboration. He said, “It became fairly obvious, at least to me, as we started down this path that if we couldn’t collaborate and work together, and with the limited amount of funds that were available, we weren’t

going to succeed. We at Electric Boat think this is the right way to go, and we’re very fortunate to have a number of folks that agree with me when we put together the collaboration in the 1997 timeframe.”

He said EBs commitment is really based on the basic idea that the collaboration itself will focus the R&D dollar. With the process that’s been in place, he said, “ the R&D investment allows us to take out some redundancy and to build some efficiencies into it. The process we put into place to accomplish that ... and how we select a project, is all geared toward that fundamental thrust, which is to eliminate redundancy and maxi- mize efficiencies.”

Mr. Toner recounted that in April of 1997 the ECB was made up of nine shipyards, the six large yards and three medium sized yards, when the collaboration was put together. He said, “It was a little bit like herding cats and it was odd - it didn’t feel right for a number of pee ple, but to their credit and to the folks that worked it, we put it together. That process eventually evolved to a strategic investment plan which talked over a fiveyear period of an investment on the order of $200 million from the government and an equal investment by the individual yards. We were very concerned about that number. We thought at that particular time that if we were going to be sharing our ideas, the government ought to take a bigger bite of that particular apple since they were going to be the beneficiaries. We were really concerned about how much cost-share we could get. It was really not to worry. Today our cost-share is almost 2 to 1-the companies have really ponied up the dollars to match whatever the government puts up, and exceeds it at some points.”

He continued, “There are some interesting processes in place. One in particular that EB and a number of other yards are working on is the integrated shipbuilding environment. That‘s another buzzword, if you will, for data transfer between shipyards; the all-important effort of taking a design from the drafting computer and getting it to the shipyard, so that the guys and gals that build the ships can perform their tasks. The work orders-the things that they need to go do their job on a day-today basis and thereby build efficiencies into the process. This program is extremely important from my perspective because the issue out of it is that we’ve got to slowly break the paradigm that the tool that happens to come along the path really isn’t the hub. The hub of the process is really the process itself. How do you con- duct a design? What do you do for your financials? What do you do for your environmental maintenance relative to material control? And certification, cofigura-



tion control, how do you go about doing it? That process that allows us to share-and that’s a big word-across the industry, will drive us to the most efficient process to design and ultimately to build our ships. And therefore go back to the price of trying to pull some of these shipbuilding dollars out of the budget and put them into more ships, so we can move up to the upper end of that curve. It’s a tall order. It’s a major order, but the leveraging that this program gives us, allows this exchange to take place. And in this particular task that’s going on right now, it’s about a $35 million task; about $17 million from the government, $18 million share from industry, and it is starting to work.”

Mr. Toner concluded by emphasizing how the program affords NAVSEA the opportunity to leverage the ideas developed by industry. He said the common goal is “to reduce the cost of our ships, and therefore get us more ships. He said, “the PEOs need to understand more of what that opportunity is, and that $20 million which really isn’t a line item budget should be an investment. It‘s an investment by the government in our industry. And I thii we’re worth it. The challenge for us going forward is to stay the course. The shipyards need to stay where they are, to continue to support, continue to give the effort necessary to improve our processes. The challenge to the Navy is to find some way to continue to fund these processes. I think they will. I know with Admiral Nanos’ support we have a very powerful ally with us going forward. We in industry need to recog- nize that, and to continue to support this program. I’m sure we will. I know Electric Boat will, and I know the yards that have signed the Articles of Collaboration are certainly four score behind it.”

ROLAND WEBB, Member NSRP ECB and President and COO of Todd Pacific Mr. Webb advised that Todd has traditionally been a repair yard although periodically during its 100 year history it has engaged in Shipbuilding efforts. Mr. Webb said he was hired by Todd in the early ‘90s to manage their shipbuilding program; MARITECH was then used as a vehicle to rejuvenate the company’s shipbuilding skills. With technical and management assistance funded through MARITECH, Todd began working at the problem.

He said, “It wasn’t a roaring success. We hadn’t built ships in ten years, and we had forgotten a lot about it. At that time, the Navy represented seven percent of Todd’s business, and we went through a period of pri- marily being a new construction yard. We managed to construct new ferries for Washington State, and at the

end of the game they were satisfactorily built, although not financially successful. But at the end of that time, this is 1997 just when MARITECH ASE really got going under its revitalized situation, we were faced with kind of a unique situation in this country. We were in a marketplace where the Navy was growing compared to everywhere else in the country. We were faced with a situation where years ago Todd was predominantly a Navy yard, we had gone into a commercial world, we learned how to survive in a commercial world, and now we were once more gravitating toward Navy work. The milestone we set for ourselves was to not drive our commercial customers away. You’ve all heard the story, commercial customers don’t’ want to go where the Navy is; different processes, etc. So our measure of success is still whether we can competitively bid and repair a 1Wfoot tug in a dry dock, besides working on an AOE with the same people that can go to Bremerton and work on an aircraft carrier.”

Mr. Webb observed that the challenge can’t be solved solely by high-tech gadgetry; it’s a problem of management. He said that he learned from the Japanese that you have to remove all the excuses for people not to work. And this means controlling material. He said that when all is said and done, “it’s about management, it‘s about basic business principles, and basic responsibilities, and accountability.”

He said Todd has used their MARITECH ASE grants and the resulting lessons learned from foreign ship builders to become commercially competitive in their regional marketplace. He said, ‘We had no illusions about being competitive in the worldwide marketplace against China or whatever, but in our West Coast commercial marketplace, we had to be competitive. We couldn’t lose that competitiveness when we became predominantly a larger and larger Navy repairer. We will not consider ourselves a success if we are doing just Navy repair work, the commercial customers will leave the yard because we made our processes too complex, too erroneous, too costly, and therefore they do not want to come to our shipyard. If we can keep the balance, we’ll be successful. We’re doing that through what we consider to be very simple investments, still sup ported through MARITECH ASE. The basic principle is . . . really about keeping your workplace tidy. It‘s really about organizing your work. It‘s not about having some silver bullet to cut your man hours and time in half overnight, because you use laser burning equipment At the same time we’re investing in fancy bits and pieces of material where they can really save money, but none of that removes the responsibility to manage your work. Those messages flow out to people like



yourselves, the engineers, that design the ships that someday, somebody will have to repair. Remember that they’ve got to be repaired.”

“Remember they’ve got to be kept simple,” he continued. ‘They’ve got to be repaired by people who more and more in the future are going to be less and less capable. The huge baby boomer population that most of us represent, is going through the pipeline at an enormous rate. And what are we replacing that with? We can’t get kids that want to be an apprentice in a ship yard. The types of people we can hire to do the labor are people who don’t complete high school, who don’t get hired by the high-tech industry, and you have to teach on the job, and they’re not necessarily going to be

“[SHIPS HAVE] GOT TO BE REPAIRED BY

PEOPLE WHO MORE AND MORE IN THE

FUTURE ARE GOING TO BE LESS AND

LESS CAPABLE. THE HUGE BABY BOOMER

POPULATION THAT MOST OF US REPRE-

SENT, IS GOING THROUGH THE PIPELINE

AT AN ENORMOUS RATE. AND WHAT ARE

WE REPLACING THAT WITH? WE CAN’T

GET KIDS THAT WANT TO BE AN APPREN-

TICE IN A SHIPYARD.”

as skilled as maybe our generation is, or the genera- tions before us.” He reiterated that despite high-tech working tools, maintaining ships has to be kept “...simple, simple, simple; otherwise it’s just going to get too expensive for the Navy to afford.”

He also noted that the achievement of IS0 9001 certification was only the start of the story. He said, “the story I hear more and more from people around here, that nobody really appreciates the club, or the tool, or the lever, or whatever word you want to use, that IS0 does really represent And we’ve had our eyes opened s u b stantially after having that certificate for two years that if you live up to it, and you really do believe in it, you’re going to have a continuous process tool that is a regu- lated tool that you can’t avoid. If you hide behind a little plaque on the wall, then well, you’ve wasted your time and your money. And I believe that is something that the whole industry faces; it certainly is flowing from the Navy-the demand for an ISO-like system, but you’ve got to believe in i t

Mr.Webb’s final comments were on safety in the ship yards. “My shipyard,” he said, “is no better than most. A few years ago when we really started to look at ourselves, our incident rate.. . we were way above the average. The average of the shipyards. I said, “. . .well there’s a nice manageable target, let’s get below the average.” Well, we’ve done that. We’ve gotten below the average. Cut millions of dollars a year out of our little company’s Worker’s Comp bill. We now compare ourselves to a normal manufacturing business in this country, not an overseas manufacturing business. We’re five times worse than the average manufacturing business, and we are below the average in this industry (ship yards), for our safety performance. ...So none of us in this industry really have any kind of a safety record we can be proud of. ... It comes back to the engineers and a lot of the customer driven things that drive the way we work.. . . There’s a major initiative going on and this is the beauty of MARITECH, it’s expanding far beyond studies of what‘s a better paint system, and how to make faster welding machines and lasers, it’s going into business practices. When you make a lot of excuses for shipyards to say that3 the way the Navy is telling us to do the work, instead of telling us what you want done, don’t tell us how to do it; you remove our excuse to hide behind it, and that‘s going to flow into all sorts of aspects, one of which is safety.. . . All that to me is going to flow from MARITECH because of the beauty of the collaboration, the ability to sit with people like Electric Boat or Newport News on one end of the spec- trum, or little old Todd out in Seattle, and we sit there and say we’re all dealing with the same thing. We have to reinvent the business model, but manage the details at a real fundamental management level.”

MICHAEL POWELL, Vice Chair of NSRP ECB and Director of Engineering at Newport News Shipbuilding Mr. Powell noted that he had been in the shipbuilding business before and after the establishment of the NSRP process, and he guaranteed that the new way is a lot better. He characterized the old process as one in which competition between shipbuilders was para- mount, but he believes that today the competition is not the other shipbuilders but the competition “from the other seekers of money that provide national security.” And the key to successful competition is the collaborative process. He cited as examples of this process, the development of processes with roots in NSRP projects to ensure the control of accuracy in assembling modu- lar hull components such as the bulbous bow on the



CVN-76 and developing piping part families to standard- ize pipe fabrication and assembly on CVN-77.

Mr. Powell said that “it is not the Executive Control Board, in spite of our presence on this panel, that really has made NSRP work. The real strength is in the panels themselves that make up the strategic investment plan, the state-of-the-art reports that are issued yearly, the workshops that are conducted periodically.’’ He listed a number of panels that contribute, in areas such as business process, information systems, facilities and tooling, environmental, product design and materials, crosscut initiatives crossing several lines like training and human interface type issues, shipyard production processes, surface preparation and coatings, and welding. He said that more information was available from www.NSWorg.

He also said that ‘There are other thiigs that this kind of collaborative effort does. It fosters better government and industry collaboration as well, not just collaboration among the yards.. . . The fact that collaborative effort is underway has allowed OSHA to feel comfortable with saying I’m not going to impose guidelines on you. You people are working towards it; that‘s better than my telling you what you have to do. Let‘s see how this works out. That‘s a very good payoff for this kind of collaboration.”

And finally he commented on Ebusiness. He noted “the integrated shipbuilding environment work that is going on. The interoperability of those different kinds of CAD systems, those different kinds of data management systems, is somethiig we, and the Navy, need. They’ve got to be able to get to the trends in production data, the trends in financial data in different yards, but they can’t be hampered by having to deal with 10, 11,12,13 different programs. We need to have good intra-operability. We also need to work at the frontend of the process and the supply chain. And that’s an area where many of us have worked together, it’s one where we specifically have gotten some benefits. We have dealt with the ship building suppliers on electronic commerce . . .taking the old processes away of write a requisition, you get a pur- chase order out, you get bids back, you evaluate the bids, you get material in, and then they send an invoice, then you pay the invoice. Well, you can do that all a lot better electronically and we’ve worked collaboratively to do that. We also have worked in the make-buy decision- making process. It really gets down to much more intel- ligent outsourcing in order to get costs out of the process.”

He said, “ The one thiig that is necessary to keep all this going, however, is funding. And the funding levels

as we’ve told you, have not been as high as we’d like them to be, but I thiik if we all support this we can per- haps get the word out that this sort of thing really does need to be funded, at a level to keep it robust.

VICE ADMIRAL G. PETER NANOS, JR., USN, Commander, Naval Sea Systems Command Admiral Nanos joined his predecessors in stressing that we are not maintaining and cannot maintain a 300 ship Navy unless something changes. He said that the hope that national priorities will change and create a windfall of construction dollars is fantasy. He said the Navy is not recapitalizing itself and the ultimate result will be a further decrease in the number of ships with a concomi- tant weakening of the nation’s defensive readiness. He said, ‘There are a lot of people that will say to you ‘gee, we’ve got to be more efficient. We’ve got to save SCN dollars.’ That’s not the problem. The problem is we need to spend every SCN dollar that we have. The prob lem is we need to get to a position where we are recapitalizing the Navy, and we need to do it withii what I thiik are going to be relatively fixed resources.”

Admiral Nanos said he has had the opportunity to visit European shipyards in the recent past and was impressed by the degree of technology insertion, but was dismayed in comparing the advanced state of their processes with those with which he was familiar back home. Subsequently, on a visit to the Gulf Coast, he was relieved to discover that much of the same technology existed in smaller, commercial yards of that area.

Admiral Nanos rationalized that “...the solution to our problem with shipbuilding is really withii our grasp within this country. Why aren’t we getting there? Well, I thiik one of the reasons.. .is that we in the United States Navy have taken a laissez-faire attitude toward the American shipbuilding industry. We have grown up in an environment where we feel, I think or have come to feel, that all we have to do is put it out for bids and hold a competition, and somehow the world will take care of itself. That whatever contract we write in whatever form, somehow industry will respond and oh, by the way, it is up to them to figure this all out, and bring the right costeffective solutions. And industry needs to stand up and ... make investments, and make it all well, and well just dole out the money and that will be the end of it.”

He continued “I’m here to tell you that’s not going to happen. And the reason is a business reason, surpris- ingly enough. Look at what our major commercial ven-


Keynote Address and Plenary Sesslon

dors are making in their marketplaces today. You talk to a lot of companies; they won’t talk to you unless their profit margins are over 1(112%. Why? They can’t attract capital unless their profit margins are over 1@12%. What in general do we pay for in fee or profit ... for one of our cost plus vehicles? The weighted guidelines usually stall out somewhere between 7%, 896,996. The return on investment in our business, in an economic environment, is just not there to attract large amounts of American capital. So, then the question is how is this going to get done? The marketplace is not going to be there for the United States Navy, because the United States Navy‘s business is not big enough to excite the

“THERE ARE A LOT OF PEOPLE THAT WILL

SAY TO YOU ‘GEE, WE’VE GOT TO BE MORE EFFICIENT. WE’VE GOT TO SAVE

SCN DOLLARS.’ THAT‘S NOT THE PROB-

LEM. THE PROBLEM IS WE NEED TO

SPEND EVERY SCN DOLLAR THAT WE HAVE. THE PROBLEM IS WE NEED TO GET TO A POSITION WHERE WE ARE RECAPI-

TALIZING THE NAVY, AND WE NEED TO DO IT WITHIN WHAT I THINK ARE GOING

TO BE RELATIVELY FIXED RESOURCES.”

kind of interest that has been excited, for example, in the computer industry.”

Admiral Nanos said the Navy has to start thinking about the shipbuilding industry, if we are really serious about recapitalizing. He said, “I believe what we have to do is start thinking seriously about our part of this partnership and what we need to do, and that is the first point about MARITECH ASE that’s important. It provides a vehicle where we on the Navy side, with our partners in industry, can take ownership of our part of the responsibility of recapitalizing the Navy. And hold a broad range of discussions and gain understanding of what is required to transform the industry, so that within our current rate of spending, we can increase the number of ships we’re going to build.” He said that we won’t know whether we can reach our goal of recapital- ization unless we try.

He said the purpose of MARITECH ASE is to motivate all the players to start moving in the same direction, if we are to have a Navy, not to mention a viable commercial industry. Secondly he said, “It provides a collabora-

tive forum where we can really deal with the emerging technologies, and make sure that we - from our stand- point in the Navy - provide an opportunity for these technologies to be broadly disbursed in industry. The agreement is that what we work on in ASE is there for all of industry and is there for all the collaborators and not for proprietary purposes. And there is just so much that needs to be done in that arena in terms of increa* ing productivity.”

Admiral Nanos concluded that the message is that this is an important place for the United States Navy to invest its resources for the following reasons: because we need those technologies; because we get 2-1 for every dollar we put in, and because it puts us, the Navy, in a position of establishing leadership. He said, “I believe that.. .earnest money, that commitment, as much as anything else, is what is going to sustain us. The day when we can ignore our industry, I believe is over.”

Admiral Nanos in summation said that besides technology we must come to grips with the business process. He said, ‘Today our business model in terms of how our industry accrues profits is one of profits based on revenue. We have not set up a business model for ship building where the rewards of the shipbuilder are tied to productivity and throughput. If a shipbuilder could take the resources we gave him over a five year period and build an extra ship, he would not get a penny of extra profit on his bottom line for building an extra ship for the United States Navy. I think that is something we have to thiink about very carefully. We have to start thinking carefully about how we drive our industry in terms of how we spend our money. Very, very simple. This is a capitalist society. We are all driven by profit. We are all driven by return on investment, and we need to make sure we are sending the right message by how we reward our contractors. So, I t h i i the reform that we have to undergo has got to start at the top. F i t of all, we in the Navy have to be committed to the MARITECH process and ASE. We have to be committed to our shipbuilding industry. We have to provide leadership. We have to examine how we do business to make sure we’re sending the right message, and we’re providing the right opportunity for profit, and we link the profit of our shipbuilders to what we want for an out- come. The ASE process is critical because through it we get to focus on the investments we mutually have to make with industry in order to get the final result we need: the modern warships we need to sustain the Navy.” ?k


MIT’s Naval Construction and Engineering Program Celebrates 1 0 0 ~ ~ ANNIVERSARY

The Naval Construction and Engineering Program (XIII-A) at the Massachusetts Institute of Technology (MIT) will celebrate its 100th anniversary 18-20 April, 2001. The celebration observes the Program history,

the more than 1,300 graduates, and their contributions to naval ship design.

n August 1897, Chief Naval Constructor, Commodore Philip I Hichbom requested MIT develop and

offer a three-year course of study for the professional training of naval constructors. The Institute favorably responded and a course of study was agreed upon. In 1901 three graduates of the U.S. Naval Academy, Ensigns Ferguson, McEntee, and Spilman, began the course of study under the direction of Professor William Hovgaard.

Professor Hovgaard graduated in 1877 from the Naval Academy in Copenhagen and served in the Danish Royal Navy. He was sent to the Royal Naval College in Greenwich, England in 1883, at the rank of Lieutenant, to study warship construction. He graduated from its three-year course in 1886 and the next year saw the publication of his first book, Submarine Boats. In 1901, at the rank of Commander, he came to the United States to continue his study of submarines and was asked by Secretary of the Navy John D. Long to take charge of the new course for naval constructors at MIT. Hovgaard resigned from the Danish Navy at the rank of Captain in 1905 but remained head of the new Course XIII-A until 1933, when he retired as a professor emeritus. During his tenure, Professor Hovgaard taught several hundred naval officers and authored several important text- books, among them Structural Design of Warships, General Design of Warships, and Modem History of Warships.

In the early years, officers sent to the course were attached to the Navy Yard in Charlestown, Massachusetts, and were regis- tered as regular MIT students. The faculty maintained close relationships with the Chief Constructor in Washington, DC and the constructors and top civilian staff at Navy Yard and Fore River Ship and Engine Company in Quincy. This served two purposes: the constructors would know the instruction at MIT was being adapted to the needs of the ser-

vice; and the faculty could use the work under construction at both yards to illustrate classroom instruction. The course schedule was arranged to permit the students to spend one afternoon a week at the Navy Yard to become familiar with methods of administration and similar matters.

The course for naval constructors differed from regular Course XUI studies in that it was more intensive, more advanced, and a large amount of attention was given to warship design. The increased time assigned made it possible to devote more attention to marine engines and marine steam turbines and also devote an extended amount of time to electrical engineering. The course pre-sup- posed a general knowledge of warships and seamanship, of life on board ship, of service in the Navy, and of the installation and use of artillery and torpedoes.

Since World War I, instructors of the XIII-A curriculum have been commissioned U S . Navy officers. Professor Henry H.W. Keith was commissioned a Lieutenant Commander in the Corps of Naval Constructors during World War I. Instructor Harold Lamer held a naval com- mission and retired at the rank of Captain. From 1910 to 1945 course XIII-A relied on long-term instructors such as Professor Hovgaard (I901 - 1933). Captain Keith ( 19 10 - 1945) and Captain Henry Rossell (1931 - 1946). In 1945 the U.S. Navy’s Bureau of Ships inaugurated the practice of detailing two active duty officers as profes- sors for two- to three-year terms.

Today, the graduate program in Naval Construction and Engineering is intended for active duty officers in the U.S. Navy, U.S. Coast Guard, and foreign navies who have been designated for specialization in the design, construction, and repair of naval ships. The curriculum prepares students for careers in ship design and construction and is sponsored by Commander, Naval Sea Systems Command. The course

of study consists of a two-year program leading to a Master of Science degree in Naval Architecture and Marine Engineering, or a three-year program leading to the degree of Naval Engineer. The principle objective of the two-and three- year programs is to provide a broad, graduate level technical education to prepare students for a career as a professional naval engineer. In addition to concentrating in hydrodynamics, structures, and design, the curricula provide an. appreciation for total ship engineering in a manner not covered by specialists in mechanical, electrical, structural, or nuclear engineering. This approach provides an academic back- ground for individuals who will later par- ticipate in the concept formulation, acquisition, design,construction/ modernization, maintenance, and industrial support of large-scale ship system programs.

The XIII-A curriculum emphasizes ship design through a sequence of five courses. The final course, Project in New Construction Naval Ship Design, is a ship design course that, combined with the student’s thesis, represents the culmination of the three-year program. The ship design project provides each student the opportunity to develop an original concept design of a navy ship. Students are required to obtain a sponsor for their project who is interested in conducting a study. The major objectives of the project include: a) application of naval architecture and ship design education to a complete concept design process; b) application of the MIT technical education to at least one area of detailed engineering (structures, hydrodynamics, signatures...); c) contribution to existing MIT XIII-A design tools; and d) application of at least one new technology. In addition to this project, students also write a thesis directed toward research that supports the needs of the Navy or the Coast Guard.

The anniversary celebration I S scheduledfor 18-20 April 2001. The current celebration schedule is as follows: Wednesday, 18 April - Evening reception

Thursday, 19 April - Talks on technological change and the U.S. Navy Student poster session. Panel discussion on the future of naval ship design educational opportunities and research. Gala dinner - guest speakers MIT President and

Adm. Skip Bowman, Director of Naval Nuclear Propulsion. Friday, 20 April - Course XIII-A students present research work in ship design and graduate degree theses.

Saturday, zi April - program is extended for Year Groups to meet and rekindle old friendships.

For more information visit the MIT XIII-A Centennial Celebration website at

Contact Capt. Chip McCord at (617) 253-4341 or [email protected]. www.web.mit .edu/i3a/iooth/

keynote address : keynote address & plenary session

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