Navy To Request Ohio Replacement Program Milestone B Decision This Summer
By Megan Eckstein
US Naval Institute
July 8, 2016
WASHINGTON, D.C. — The Navy will present an updated Ohio Replacement Program cost estimate to the Defense Department later this summer and seek approval to move into detailed design and engineering work, the Program Executive Officer for Submarines said today.
The new ballistic missile submarine program will request a Milestone B decision from the Pentagon’s acquisition chief and the Defense Acquisition Board, and “coincident with that, we’re also producing a new cost estimate,” Rear Adm. Michael Jabaley said at an event co-hosted by the Center for Strategic and International Studies and the U.S. Naval Institute. He said the Navy is still working through this component cost position, of the lifecycle cost estimate, and is awaiting final approval of that dollar figure before presenting to the DAB.
A 2014 cost estimate put the program’s average follow-ship cost — ships two through 12, not including the typically most-expensive lead ship – at $5.2 billion, squarely in between the mandatory threshold of $5.6 billion and the target objective of $4.9 billion. Jabaley added that the 2014 cost estimate put the non-recurring costs – engineering work and building facilities to produce the subs – at $17.4 billion. Updated figures will be publicly released after the DAB approves the Milestone B decision, he said.
Jabaley said he views it as his responsibility to not only control costs for ORP but to actively seek ways to reduce cost.
“We need other ships beyond submarines. If I can’t control cost on the Ohio Replacement Program, we can’t build as many surface ships and attack submarines as we would like,” he said.
On the cost control side, he told reporters after the event that the Navy is talking to prime contractor General Dynamics Electric Boat about ways to reduce lifecycle costs for the program.
“We will aim to strongly incentivize cost reduction as a part of this detail design contract because, as everyone in acquisition knows, the time to reduce the cost of construction and ownership of the platform is as early in design as you can get it, and with the detail design contract starting later this year we have to incentivize that cost reduction now,” he said.
After releasing a request for proposals on Jan. 4 and receiving a response back on May 20, the Navy and Electric Boat are “in a very intensive review cycle right now” and will engage in “hardcore negotiations later this summer” in the hopes of signing a detail design contract by this fall.
“My goal is to award the contract by the beginning of the fiscal year, October 1,” Jabaley told reporters.
“It will be a challenge to get it done by then, just based on the timing, but I would say that the contract award process has our highest attention.”
On the cost reduction side, Jabaley said the Navy and industry are developing a Submarines Unified Build Strategy (SUBS) to find efficiencies in materiel acquisition and ship construction schedules between ORP and the Virginia-class attack submarines. Electric Boat and Newport News Shipbuilding are the only two yards that build both programs – and Newport News is the only yard that builds aircraft carriers – so between the three ship classes there could be opportunities to order common parts in larger quantities to achieve savings for example.