Lower Ohio-Class Replacement Cost Tied To VA-Class Multiyear Deal: Could Achieve 8 To 15 Percent Savings

Inside the Navy
May 17, 2013

The Navy must have a multiyear contracting arrangement involving both the Virginia-class submarine and Ohio-class replacement submarine programs in order to achieve significant cost savings across both ship classes, particularly if the service expects to hit a $4.9-billion target for the Ohio replacement effort, a service official told Inside the Navy last week.
The programs will be able to leverage cost savings by buying common components. Examples include common hydraulic valves, air valves and pumps, Rear. Adm. David Johnson, program executive officer for submarines, said May 15 during an interview at Washington Navy Yard.
The Virginia Payload Module gives the Navy an opportunity to achieve cost savings by buying missile tubes for both the Ohio replacement program and the Virginia-class program at the same time. The missile tubes in the module and the Ohio-class replacement sub are similar, but not the same, Johnson said. However, 80 missile tubes could be added for the module on top of the 241 missile tubes the service must buy for the Ohio replacement program, which would increase quantity and lower cost across the vendor base, he stated.
The service will build Ohio-class replacement subs from fiscal year 2021 to FY-35. Virginia-class submarines are being built until FY-33, Johnson said.
The Ohio-class replacement program will undergo a systems requirement review in FY-14 which will confirm the program is ready for detailed design, he said.
In order for the Navy to achieve its $4.9-billion cost target (calculated in FY-10 dollars) for the Ohio-class submarine program, the joint multiyear deal for both ship classes must take place, Johnson stated.
"That will take some work with Congress," Johnson said. "We have briefed this concept before [congressional] staffers for about three years now."
Buying subs smartly in a multiyear contract is the same approach the Navy took for the Virginia-class sub program with its "two for four in '12," slogan, which was an effort the service sought to shave $400 million off the price tag in order to buy two subs for $4 billion in FY-05 dollars by 2012.
The service will not have the procurement volume nor gain the benefit of economic order quantity material if both submarine classes do not have multiyear contracts, Johnson stated.
"It seems good value for the government to come into a multiyear to go forward and reduce the costs not just for Ohio replacements but for Virginias at the same time," he said.
A multiyear contract can save the Navy anywhere from about 8 to 15 percent collectively across the two ship classes, Johnson said.
"Sometime in 2018, we need to have thought through this and add to the Virginia contract that will allow you to gain some of the economic benefits from the Ohio that will happen in FY-21," he stated. "Those details still need to be worked out."
During a May 8 Senate Armed Services seapower subcommittee hearing, Sean Stackley, assistant secretary of the Navy for research, development and acquisition, unveiled a new cost for the Virginia Payload Module, placing it at between $360 to $380 million calendar year 2010 dollars.
The plan is for the module to be part of the Virginia-class submarine Block V buy. The Navy continues doing design work on the module and the cost will continue to be defined. Early estimates predicted VPM to cost $500 million, Johnson said.
The Navy lowered the cost estimate by limiting requirements for the VPM by focusing strictly on launching the Tomahawk missile, he stated.
The service is also looking at different module variants to reduce cost. For example, shrinking VPM from 97-feet to 62-feet may reduce cost, Johnson said.
"We're looking at all options to try to make sure we do this as affordably as we can," he stated.
The Navy continues to negotiate a cost target for VPM and the service will complete its threshold objectives this summer, Johnson said.
The module could also launch large-diameter unmanned undersea vehicles by using a universal launch and recovery module. Other kinetic or non-kinetic payloads could be added in the future, Johnson said.
"The limit on the Virginia tubes is the depth, it's not the width," he stated. "It's not as tall as an SSGN tube so the payloads have to be tailored a bit to fit in there."
The Navy will buy the VPM when a projected submarine shortfall reaches its peak, which will add capacity as Los Angeles-class submarines retire, Rear Adm. Barry Bruner, then-undersea warfare division director, said during the Naval Submarine League's annual symposium last October.
Bruner's office is working with the Navy's special operations forces community on what capabilities are needed when it comes to the VPM.
"As the SSGNs begin to go away in 2026 and they're all gone by the end of 2028, [it is important] that we have the ability to support the SEALS in their fight in whatever that fight would be," he said.