Tough Love

The Navy hopes stable demand and closer supervision will right the shipbuilding industry.

In an era of heightened interservice spats over budget shares and rising concerns over an impending budgetary bow wave, Navy leaders stunned the country's few remaining shipbuilders earlier this year when they objected to a congressional handout of more ship dollars in 2008.

For most services, more money for prized programs is a blessing. But Navy officials fear that rushing programs now would force its long-term shipbuilding plan off track, a move that could have potentially disastrous consequences.

Their fears are centered on the anemic shipbuilding industrial base, which has suffered through lean years due to dwindling and often erratic Navy ship orders.

"We're very concerned about the industrial base's limitations," Navy Secretary Donald C. Winter told reporters after testifying before the Senate Defense Appropriations Subcommittee in March. "The need and the availability of funding have got to get matched to the capacity of the industrial base."

At the same time, Winter is taking what analysts call a "tough-love" approach to the industry, whose cost overruns and schedule delays have become an all-too-common phenomenon.

Essentially, Winter has "laid down the gauntlet" and put industry on alert that he will not tolerate the status quo, says Robert O.Work, a senior naval analyst at the Center for Strategic and Budgetary Assessments in Washington.

Work adds that Winter's intent is right, but the spat with the industrial base has become "very adversarial."

Indeed, Winter canceled Lockheed Martin Corp.'s contract for the third Littoral Combat Ship after service officials were unable to agree to a more stringent modified contract because of the ballooning cost of the company's first ship.

Winter also is overseeing a major restructuring of the Marine Corps' Expeditionary Fighting Vehicle program, a General Dynamics sea and land platform that has been plagued by cost hikes and reliability glitches. And he has privately chastised Northrop Grumman Corp. officials for cost and schedule problems with its LPD-17 San Antonio class amphibious ship.

Winter's solution appears to be a multi- pronged approach that includes giving Navy officials more technical authority, improving their ability to set requirements within certain cost frameworks, and giving them better tools to understand and correct problems. For the industry, Winter is pushing officials to produce a quality product that comes in on time and within budget.

For their part, industry officials stress that increasing ship orders and injecting more stability into the Navy's long-term plans is the key to getting the nation's shipbuilders back on track.

Since Adm. Michael G. Mullen, who was confirmed as Joint Chiefs of Staff chairman on Aug. 3, unveiled his long-term shipbuilding plan more than a year ago, the industry has seen some progress in stabilization.

"We definitely give Adm. Mullen high marks in that regard, absolutely," says Cynthia L. Brown, president of the American Shipbuilding Association. "We went through a period of several years where the plan was changing almost quarterly. There was no predictability."

But stability isn't enough. The Navy, which has routinely slashed the number of ships it intends to buy, "cannot have anemic stable production runs," Brown adds. "It has to be larger production runs."