WASHINGTON, DC – Changing the way the Navy awards ship maintenance contracts could improve the way private shipyards finish their jobs on time, said the commanding officer of Naval Sea Systems.
The Navy is exploring ways to develop a mechanism to consolidate maintenance work in awarding maintenance contracts to multiple ships for private shipyards, Vice Admiral Thomas Moore, head of NAVSEA, said during remarks Wednesday at the McAleese and Associates annual defense programs conference.
The Navy wants maintenance to be completed on time and maintenance contractors want predictable workloads so they can properly staff shipyards and order equipment and parts before ships arrive.
“At the end of the day, providing them with lots is the key to successfully delivering them on time,” said Moore.
Awarding contracts to multiple ships provides predictable time frames that the Navy and industry can use in their planning, Moore said. If yards can keep their workforce stable, they can improve efficiency and apply lessons learned to their business processes.
“The industry is rational. That’s what I tell everyone, you don’t make all the decisions they make, but the decisions are always very, very rational, ”Moore said. “As long as you understand what this decision-making is and they need to create value for their shareholders, then generally you can predict what they’re going to do.”
With ship maintenance contracts, the Navy has tried for years to strike the right balance between providing the industry with predictable work and working to keep costs down through competitive bidding.
The Navy moved from cost-plus contracts that gave a single shipyard the equivalent of several years of guaranteed work on a single class of ship, to the use of a fixed-price contract mechanism where shipyards bid on each vessel to be run individually to increase competition for the job and decrease prices.
The desire for multi-vessel contracts exists because the current mechanism does not provide much incentive for yards to invest heavily in their yards if they are unsure of receiving more than one award, Moore said. The challenge is to develop an appropriate pricing mechanism for multiple ship repairs.
“New build is pretty easy because you’re building the same thing every time,” Moore said. “In ship repair, the work package will be a little different every time, so one of the questions is how to price two or three ships on the road.”
The answer, Moore said, could be to tie the contract price to the scheduled hours of work needed to complete a job. The Navy has enough data to anticipate that a vessel that has been in service for a number of years is likely to require early maintenance and upgrades.
“I think what you do is just come up with a certain number of hours of work and a certain distribution of workers, and then we will agree on a labor rate,” Moore said. . “So when it comes time to define a work package, you are already priced (working days at labor rate). “
In the long term, the Navy needs to improve the rate of vessel maintenance and modernization, otherwise it will never acquire a fleet of 355 vessels, Moore said. The Oliver Perry-class frigates were decommissioned primarily because their lethality has decreased, Moore said. Maintenance of ship hulls and mechanical equipment was possible. The ability of the frigates to supply
“It’s not because we didn’t know how to maintain the platforms. The reality was that the combat systems had become redundant, ”said Moore. “I told the [Chief of Naval Operations Adm. Michael Gilday], as long as you are sure the combat systems are relevant, I can promise you on the NAVSEA side of the house, the maintenance side of the house can keep this ship longer. I am very confident to bring them to 45, 50 years old.