WASHINGTON — The U.S. Navy wants to help industry address economic challenges but plans to hold them accountable to cost and schedule, the service’s undersecretary said.
Erik Raven also said Wednesday that high inflation rates are affecting spending plans for fiscal 2023, which begins Oct. 1, and could affect future years.
“If you look at even the FY23 budget, there [are] numbers in there for cost to complete; that basically means where Congress has given us a certain amount of money to buy ships, and for a variety of reasons, whether it’s supply chain, whether it’s just the vicissitudes of the world, the cost has increased,” Raven said at the Defense News Conference. “And so we’re starting to see some cost-to-complete impacts creeping into not only ‘23 but future years’ budgets.”
Raven said labor has been the most constraining factor for the defense-industrial base, and the Navy wants to partner with industry and steer Americans toward a career in defense manufacturing.
He added, however, that contractors must take on the responsibility of managing their own supply chains — another challenge in today’s economy.
“We need industry to perform to what they’ve promised, and we need to hold them accountable. But also we need to work with industry to understand the stressors that are on their plate. Workforce is a concern across the defense-industrial base. The ability to manage supply chains is an issue that touches all across the defense-industrial base. At the Navy, we are prepared to be partners with industry to help solve some of those problems, but we also have to have accountability,” the undersecretary said.
Raven, who was sworn into the job in April, said Navy leadership is trying to better understand industrial base challenges across the board, rather than looking at those of single ship classes or weapons programs. With many common vendors across multiple programs, he said it is important the program executive officers and leadership seek holistic solutions.
Raven added that, along with Navy Secretary Carlos Del Toro, he is kicking off an industry engagement effort to understand challenges and the service’s authorities to help address them as the FY24 budget request approaches.
Raven made clear the Navy is trying to do a better job at sending the right demand signals for industry and for its own organic ship repair yards. Generally, he said, the 30-year shipbuilding plan released this spring did well outlining the Navy’s purchasing plans over the next five years, and offered ideas for what longer-term efforts could look like based on different fiscal and security environment factors.
But on ship repair, he said, “sometimes we can point to industry and say, ‘We have a contract with you and need you to perform,’ and hold them accountable for some of the delays in ship maintenance. And other times we need to focus the attention on ourselves. And one of the ways where we can do better ourselves — and the Navy has really embraced over the last year — is getting a better handle of what the requirements are for ship maintenance periods.”
“We need to be able to have contracts in place well before the ship arrives at the pier, with a good understanding of what needs to be accomplished in a particular maintenance period. And that helps level set us on both what the financial requirements are, what the cost of any particular availability is; [and] getting industry aligned to be able to support that, [or] if it’s our public shipyards making sure we have that capacity to execute those availability in an efficient fashion. So this is an area where we do need to perform better, and part of that is looking at ourselves and part of that is working with industry,” Raven continued.
Looking ahead to FY24, Raven said similar prioritizations would carry through from the last year or two: a focus on near-term readiness, then adding lethality to the fleet through modernization and new weapons, and then adding capacity where it’s fiscally possible.
He mentioned several important but expensive new programs set to start in the next decade — the DDG(X) destroyer, the SSN(X) attack submarine and the Next Generation Air Dominance family of fighter systems — and he acknowledged the Navy is taking a hard look at its needs and what it could afford.
“With the National Defense Strategy being published earlier this year, we’re looking at how our Navy programs support [Defense Secretary Lloyd] Austin’s plans for how our joint force needs to support our nation in future conflicts,” Raven said, referring to March 28, when a classified version of the strategy was provided to Congress and an unclassified fact sheet to the public.
“And so we’re also doing those deep dives into all those future programs that I mentioned earlier, and we’re in the process of making tough choices. We have to achieve all this within fiscal constraints.”
Megan Eckstein is the naval warfare reporter at Defense News. She has covered military news since 2009, with a focus on U.S. Navy and Marine Corps operations, acquisition programs and budgets. She has reported from four geographic fleets and is happiest when she’s filing stories from a ship. Megan is a University of Maryland alumna.