Pentagon seeks to cut shipbuilding costs

WASHINGTON – The Pentagon has signaled the direction of its shipbuilding program, calling for shared development costs and expansion of a business strategy that puts more burden on the contractor, such as General Dynamics, owner of Bath Iron Works in Maine.

The idea behind the shift is to cut U.S. shipbuilding costs and the time between initial business strategy development and post-delivery customer service, according to the Navy’s Advanced Technology Institute in North Charleston, S.C.

The directive comes as President Bush is outlining his proposed budget for 2001, which emphasizes a leaner, sleeker military armed with “leap-ahead technologies.” While funding for the military is expected to rise significantly – by some $14 billion – the increase is heavily targeted to research and development initiatives, such as this one, and military pay increases.

Use of the new shipbuilding plan could have a dramatic effect on the way business is conducted at the nation’s shipbuilders, from the Electric Boat submarine construction facility at Groton, Conn., to BIW.

Contractors already have complained that the cutback in shipbuilding numbers has the potential to jeopardize some yards.

The decision comes in the aftermath of the Navy’s determination to develop a class of faster, smaller, more powerfully designed ships, including the new destroyers being built at BIW, that will change the shape of the Navy.

In the Reagan administration, just 20 years ago, the goal was a 600-ship fleet. Now, the number is near half that, but with much more wallop.

Shipbuilders such as BIW and its parent, General Dynamics, have until April 18 to shape their final proposals for the Defense Department’s Advanced Shipbuilding Enterprise Program. The winners of the competition likely will have a leg up in bidding for future work, since the technological direction may be supported by the ideas developed in this plan.

Among the areas the Pentagon wants to explore are the latest shipyard production process technologies, business processes, product design and material technologies, system technologies and tooling.

While nonshipbuilders may be involved in developing the road map, the Pentagon will require that the winning ideas include at least one U.S. shipyard in each project, “normally in a leadership role,” the Pentagon said in its announcement of the project. Competitors looking to put forward their best ideas have been invited to South Carolina to discuss the options next week. A contract or set of contracts will be awarded in July.

The research phase will channel $1.7 million into the exploratory work, the agency said, with most of the money being released in the last couple months of this year. Over three years, $5 million is available.

Under the arrangement, published in Commerce Business Daily, the government’s procurement digest, the Pentagon wants to use what is called a technology investment agreement, which means industry must match federal funding dollar for dollar.

The president’s budget says “competitive sourcing and privatization” should be emphasized in the new military.

So to pay for some of the new projects, Bush has promised to set up a new base closure commission to look at the facilities the military needs.

The review by Defense Secretary Donald H. Rumsfeld is expected to include such installations as Brunswick Naval Air Station and the Portsmouth Naval Shipyard.

“It is clear,” the budget document states, “that new rounds of base closures will be necessary to shape the military more effectively.”