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May 14, 2020 | International, Naval

DoD asks Congress for a two-sub Columbia-class buy

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WASHINGTON ― The Pentagon is asking Congress for authority to buy two of its new Columbia-class ballistic missile submarines, a potential mega-deal worth as much as $17.7 billion with far-reaching implications for the ailing submarine industrial base.

If approved, the proposal would potentially lower the price by promising General Dynamics a steady stream of work at its shipyard as the Pentagon and its network of suppliers grapple with COVID-19's economic shocks. General Dynamics and the Navy have been negotiating the terms of a two-ship purchase, but nothing can be finalized until Congress authorizes the block buy.

As the House and Senate Armed Services committees ready their drafts of the 2021 National Defense Authorization Act, it's customary for the Defense Department to send legislative proposals for the annual policy bill. It was unclear how Congress will ultimately react to this one, but at least one key lawmaker would “seriously consider” the proposal.

Senate Armed Services Seapower Subcommittee Chairman David Perdue, R-Ga., “certainly supports and has been working toward better business practices in the Department of Defense. He would seriously consider any proposal that achieves cost savings or increases efficiency,” said his spokesperson, Jenni Sweat.

The Columbia-class program is meant to design and build 12 new ballistic missile submarines to replace the Navy's current force of 14 aging Ohio-class boats. The president's budget estimated the cost of the lead Columbia-class sub at $14 billion, the second at $9.3 billion, and total procurement costs for all 12 at $110 billion.

The Navy wants to procure the first Columbia-class boat in fiscal 2021, the second in fiscal 2024, and the remaining 10 at a rate of one per year from 2026 through 2035. The Navy has already spent about $6.2 billion in advanced procurement for the Columbia, which leaves about $8.2 billion remaining for the first boat.

A summary of its new legislative proposal, obtained by Defense News, said the move is intended to “permit the Navy to enter into one block buy contract for up to two Columbia-class submarines (SSBN 826 and SSBN 827), providing industrial base stability, production efficiencies, and cost savings when compared to an annual procurement with options cost estimate.”

Complicating matters is the potential for the coronavirus pandemic to create construction or funding issues that delay SSBN 826's first scheduled patrol in 2031, according to a recent Congressional Research Service report. To boot, it was unclear whether the Navy had accurately projected costs or whether stable funding would be available across the Navy's procurement portfolio.

The Navy is confident the program is on track and negotiations are ongoing in line with what the Navy has previously disclosed, said Capt. Danny Hernandez, spokesman for the Office of the Assistant Secretary of the Navy for Research, Development and Acquisition.

“The Columbia program is on track, it is our top acquisition priority,” Hernandez said in an email. "Per the Navy's Budget Submission, the Navy plans to award a contract modification for construction of the first two Columbia-Class ships as a priced option in FY20.

"Formal option exercise and SSBN 826 construction start are planned for October 2020, following required Congressional authorizations and appropriation of funds.”

This week, the Navy and General Dynamics were still negotiating on the terms of the two-ship buy, but what the ultimate savings would be for contracting for two together was not clear yet, according to a source familiar with the talks. No final deal can be negotiated until Congress has authorized the contract.

Also unclear is how perturbations in the system from the COVID-19 outbreak might impact the supply and labor system, the source said.

Indeed, the potential impact of COVID-19 on an already stressed submarine industrial base is one reason the strategy could be important, said Bryan Clark, a retired submarine officer a senior fellow at the Conservative Hudson Institute think tank.

“There has already been advanced procurement money provided by Congress that has been used to build missile tubes, nuclear reactors and propulsion plants,” Clark said. "But there is a bunch of other equipment on the ship that you would like to buy in quantities: Pumps, valves, fans, a lot of habitability systems.

“If you double the number of ships, you double the number that you buy and maybe you reduce your costs, but more importantly you support your industrial base.”

To date, disruptions to the submarine supplier base and the Electric Boat shipyard have been comparatively mild, two sources familiar with the situation said.

General Dynamics is interested in locking in a larger block buy for the remaining ten boats, and a source familiar with the company's thinking said the precise savings would be clear once the company gets further along with construction of the first boat. The third ship will officially be procured in 2026, so it gives the parties time to understand the program better.

The Navy has been public about its desire to buy the first two submarines as a block but given that it's a new start program, that seemed premature, said Project On Government Oversight military analyst Dan Grazier. He noted that a multi-year procurement, under the law, would require a stable design, while a block buy would not.

“The Navy claims the Columbia's design is much further along in the process than the Ohio was at this point, but the Navy's track record of designing and building ships recently is quite poor," Grazier said.

"The Zumwalts, LCSs, and the Ford-class ships were designed using similar methods and the results have proven to be both costly and disappointing. It would be better to build the first boat and make sure the design actually works as intended because if it doesn't, then the money we save now will actually cost us much more in the future.”

Clark, on the other hand, argued that while early multi-ship buys on new classes of ships are usually a bad idea, Columbia might be a special case where the risks associated with early block buys are sufficiently offset.

“You wouldn't want to do a block buy if you thought the design was going to change significantly, as in you were going to buy one or two hulls and then revise it based on the results of testing or production issues,” Clark said. “On this one, more of the design is more complete so they are confident it is mature.

"And with the experience General Dynamics has with submarine construction, they are confident in their path to build it without significant design changes.”

The Navy is aiming to have more than 80 percent of the Columbia's design complete prior to construction starting later this Fall, double where they were at the start of construction on the lead boat of the Virginia class.

The Columbia class is not the only big-ticket weapons program where the Pentagon is seeking latitude from Congress in pursuit of savings. For the Lockheed-made F-35 Joint Strike Fighter, DoD has separately proposed to use department funds to again bulk buy F-35 components ― “material and equipment” in “economic order quantities,” the proposal synopsis says ― for Lot 15 in fiscal 2021 through Lot 17 in 2023.

Lawmakers have historically been supportive of such moves, and Congress authorized the purchase of F-35 economic order quantity buys in the fiscal 2020 defense policy bill.

In October, the Defense Department and Lockheed finalized a deal for F-35 lots 12, 13 and 14, but the order is structured so that lot 13 and 14 fall under separate contract options, differentiating it from a block buy.

Lt. Gen. Eric Fick, who leads the F-35 program on behalf of the government, has said that arrangement would likely continue over the next several production lots.

"To date, we are pursuing a base-plus-options production contract vehicle for [lots] 15 to 17,” Fick said in March at the McAleese and Associates conference. “The business case that supports a three year multi year has not been there. We have not seen from Lockheed a business case that merits tying up three years of appropriated funds.”

Clarification: The story has been updated to clarify the specific transaction for which the Navy is seeking authority from Congress.

https://www.defensenews.com/congress/2020/05/13/dod-asks-congress-for-columbia-submarine-block-buy/

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  • Contract Awards by US Department of Defense - October 5, 2018

    October 9, 2018 | International, Aerospace, Naval, Land, C4ISR, Security

    Contract Awards by US Department of Defense - October 5, 2018

    AIR FORCE Lockheed Martin Corp., Orlando, Florida, has been awarded a $390,792,959 firm-fixed-price, fixed-price-incentive-fee contract for Joint Air-to-Surface Standoff Missile (JASSM) lot 16 production for 360 JASSM-extended range, three foreign military sales (FMS) separation text vehicles, one FMS flight test vehicle-live fire and tooling and test equipment. Work will be performed in Orlando, Florida, and is expected to be completed by Oct. 31, 2021. This award is the result of a sole-source acquisition. This award uses fiscal 2018 missile procurement funds and FMS funds. Air Force Life Cycle Management Center, Eglin Air Force Base, Florida, is the contracting activity (FA8682-19-C-0009). Applied Defense Solutions Inc., Columbia, Maryland, has been awarded a $7,526,650 fixed-price and cost-reimbursement modification (P00015) to contract FA255017C8002 for non-governmental space situational awareness services. This modification provides for the exercise of an option for an additional quantity of 12 months of services under the basic contract. Work will be performed at Schriever Air Force Base, Colorado, and is expected to be completed by Oct. 18, 2019. No funds are being obligated at the time of award. Total cumulative face value of the contract is $26,458,756. The 50th Contracting Squadron, Schriever Air Force Base, Colorado, is the contracting activity. (Awarded Oct. 4, 2018). CORRECTION: The contract announced on Oct. 4, 2018, to General Atomics Aeronautical Systems Inc., Poway, California, (FA8620-18-F-2365) for $19,446,593 has not awarded. ARMY General Dynamics Land Systems, Sterling Heights, Michigan, was awarded a $366,852,050 modification (0002 04) to contract W56HZV-17-D-B020 for upgrade of Stryker flat-bottom vehicles to the Double V-Hull Engineering Change Proposal 1 configuration. Work will be performed in Sterling Heights, Michigan, with an estimated completion date of April 30, 2021. Fiscal 2018 and 2019 procurement of weapons and tracked vehicle funds in the amount of $366,852,050 were obligated at the time of the award. U.S. Army Contracting Command, Warren, Michigan, is the contracting activity. The Boeing Co., Mesa, Arizona, was awarded a $242,109,170 modification (P00021) to foreign military sales (United Arab Emirates) contract W58RGZ-16-C-0023 for the remanufacture of eight, and procurement of nine new-build Apache AH-64E aircraft. Work will be performed in Mesa, Arizona, with an estimated completion date of Feb. 28, 2023. Fiscal 2010 foreign military sales funds in the amount of $242,109,170 were obligated at the time of the award. U.S. Army Contracting Command, Redstone Arsenal, Alabama, is the contracting activity. Federal Contracting Inc., doing business as Bryan Construction, Colorado Springs, Colorado, was awarded a $52,812,678 firm-fixed-price contract for design and construction of a squadron operations facility and associated operational training facilities at Cannon Air Force Base, New Mexico. Bids were solicited via the internet with 15 received. Work will be performed in Cannon Air Force Base, New Mexico, with an estimated completion date of April 1, 2021. Fiscal 2015 and 2016 military construction funds in the amount of $52,812,678 were obligated at the time of the award. U.S. Army Corps of Engineers, Albuquerque, New Mexico, is the contracting activity (W912PP-19-C-0001). General Dynamics Land Systems, Sterling Heights, Michigan, was awarded a $24,957,920 modification (0001 19) to contract W56HZV-17-D-B020 for upgrade of Stryker flat-bottom vehicles to the Double V-Hull Engineering Change Proposal 1 configuration. Work will be performed in Sterling Heights, Michigan, with an estimated completion date of April 30, 2021. Fiscal 2018 and 2019 procurement of weapons and tracked vehicle funds in the amount of $24,957,920 were obligated at the time of the award. U.S. Army Contracting Command, Warren, Michigan, is the contracting activity. M.R. Pittman Group LLC,* Saint Rose, Louisiana, was awarded a $17,255,645 firm-fixed-price contract for interim closure structure demolition. Bids were solicited via the internet with three received. Work will be performed in New Orleans, Louisiana, with an estimated completion date of May 8, 2020. Fiscal 2014 other procurement (Army) funds in the amount of $17,255,645 were obligated at the time of the award. U.S. Army Corps of Engineers, New Orleans, Louisiana, is the contracting activity (W912P8-19-C-0001). Short-Elliott-Hendrickson Inc., Lacrosse, Wisconsin, was awarded a $19,500,000 firm-fixed-price contract for architect and engineering services for the Fort McCoy, Wisconsin, Department of Public Works. Bids were solicited via the internet with nine received. Work locations and funding will be determined with each order, with an estimated completion date of Oct. 5, 2023. U.S. Army Mission and Installation Contracting Command, Fort McCoy, Wisconsin, is the contracting activity (W911SA-19-D-2001). Keysight Technologies, Englewood, Colorado, was awarded an $8,977,287 firm-fixed-price contract for Oscilloscopes 307/U. Two bids were solicited via the internet with one received. Work locations and funding will be determined with each order, with an estimated completion date of Sept. 28, 2023. U.S. Army Contracting Command, Redstone Arsenal, Alabama, is the contracting activity (W31P4Q-18-D-0081). NAVY Donjon Marine Co. Inc., Hillside, New Jersey, was awarded a maximum value $215,000,000 cost-plus-award-fee, indefinite-delivery/indefinite-quantity contract for salvage related towing, harbor clearance, ocean engineering project and point-to-point towing services. The primary purpose of this contract is to provide services to assist in the performance of salvage of ships, craft, cargo, and other items as tasked (e.g., aircraft, weaponry, equipment); salvage related towing, harbor clearance; and point-to-point towing; and ocean engineering projects in support of the Supervisor of Salvage. Work will be performed along the North and South American East Coast, and is expected to be completed by September 2023. Fiscal 2018 operations and maintenance (Navy) funding in the amount of $50,000 was obligated at the time of award and expired at the end of the fiscal 2018. This contract was competitively procured via the Federal Business Opportunities website, with four offers received. The Naval Sea Systems Command, Washington, District of Columbia, is the contracting activity (N00024-18-D-4307). (Awarded Sept. 28, 2018) SMIT Salvage Americas LLC, Houston, Texas, was awarded a maximum value $215,000,000 cost-plus-award-fee, indefinite-delivery/indefinite-quantity contract for salvage related towing, harbor clearance, ocean engineering project and point-to-point towing services. The primary purpose of this contract is to provide services to assist in the performance of salvage of ships, craft, cargo, and other items as tasked (e.g., aircraft, weaponry, equipment); salvage related towing, harbor clearance; and point-to-point towing; and ocean engineering projects in support of the Supervisor of Salvage, SEA. Work will be performed along the North and South American West Coast, and is expected to be completed by September 2023. Fiscal 2018 operations and maintenance (Navy) funding in the amount of $5,000 was obligated at the time of award and expired at the end of the fiscal 2018. This contract was competitively procured via Federal Business Opportunities website, with one offer received. The Naval Sea Systems Command, Washington, District of Columbia, is the contracting activity (N00024-18-D-4308). (Awarded Sept. 28, 2018) SMIT Singapore PTE LTD, Singapore, was awarded a maximum value $215,000,000 cost-plus-award-fee, indefinite-delivery/indefinite-quantity contract for salvage related towing, harbor clearance, ocean engineering project and point-to-point towing services. The primary purpose of this contract is to provide services to assist in the performance of salvage of ships, craft, cargo, and other items as tasked (e.g., aircraft, weaponry, equipment); salvage related towing, harbor clearance; and point-to-point towing; and ocean engineering projects in support of the Supervisor of Salvage. Work will be performed across the Western Pacific region, and is expected to be completed by September 2023. Fiscal 2018 operations and maintenance (Navy) funding in the amount of $5,000 was obligated at the time of award and expired at the end of the fiscal 2018. This contract was competitively procured via Federal Business Opportunities website, with two offers received. The Naval Sea Systems Command, Washington, District of Columbia, is the contracting activity (N00024-18-D-4309). (Awarded Sept. 28, 2018) PAE Applied Technologies LLC, Arlington, Virginia, is awarded a $24,292,143 cost-plus-award-fee modification to previously-awarded contract (N66604-05-C-1277), increasing the cumulative total value of the contract for operation and maintenance services for the Atlantic Undersea Test and Evaluation Center (AUTEC). AUTEC is the U.S. Navy's large-area, deep-water, undersea test and evaluation range. Underwater research, testing and evaluation of anti-submarine weapons, sonar tracking and communications are the predominant activities conducted at AUTEC. The contractor performs services required to perform AUTEC range operations and maintenance of facilities and range systems. In addition, the contractor is responsible for operating a self-sufficient one-square-mile Navy outpost. This modification increases the total value of the contract to $788,075,722. Work will be performed on Andros Island, Commonwealth of the Bahamas (82 percent); West Palm Beach, Florida (18 percent); and is expected to be completed by September 2019. No contract funds are being obligated at this time. The Naval Undersea Warfare Center Newport Division, Newport, Rhode Island, is the contracting activity. Lockheed Martin Corp., Rotary and Mission Systems, Moorestown, New Jersey, is awarded $8,020,809 for cost-plus-fixed-fee order N6339419F0003 under a previously awarded basic ordering agreement (N6339417G0001) for engineering services in support of land-based test site maintenance, inventory control, diminishing material source efforts, and program management for the Mk 92 fire control system. This order includes options which, if exercised, would bring the cumulative value of this order to $9,276,806. The order combines purchases for the Navy (16 percent); and the governments of Philippines (40 percent); Egypt (20 percent); Saudi Arabia (16 percent); Poland (4 percent); and Taiwan (2 percent). Work will be performed in Huntsville, Alabama (26 percent); Philippines (20 percent); Egypt (17 percent); Moorestown, New Jersey (13 percent); Saudi Arabia (13 percent); Port Hueneme, California (4 percent); Poland (3 percent); Taiwan (2 percent); and Nigeria (2 percent); and is expected to be completed by September 2022. Foreign military sales (other defense agencies) funding in the amount of $2,579,000 will be obligated at time of award and will not expire at the end of the current fiscal year. The Naval Surface Warfare Center, Port Hueneme, California, is the contracting activity. U.S. TRANSPORTATION COMMAND Jacobs Technology Inc., Tampa, Florida, has been awarded a contract modification P00017 on contract HTC711-17-C-D001 in the amount of $18,940,678. This modification provides continued Information Technology Service Management Enterprise support to the U.S. Transportation Command (US TRANSCOM). Work will be performed primarily on-site at Scott Air Force Base, Illinois, and other locations: DISA DECC, St Louis, Missouri; USTRANSCOM Office, Washington District of Columbia; JECC, Norfolk, Virginia; and the Pentagon. The option period of performance is from Oct. 1, 2018, to Sept. 30, 2019. Fiscal 2019 transportation working capital funds operations, operations and maintenance and Defense Health Program funds were obligated at award. This modification brings the total cumulative face value of the contract to $48,981,052 from $30,040,374. U.S. Transportation Command, Directorate of Acquisition, Scott Air Force Base, Illinois, is the contracting activity. DEFENSE LOGISTICS AGENCY Airtronics Inc.,* Tucson, Arizona, has been awarded a maximum $13,644,800 firm-fixed-price, indefinite-quantity contract for aviation cable assemblies. This was a competitive acquisition with three offers received. This is a two-year base contract with a one-year option period. Location of performance is Arizona, with an Oct. 16, 2021, performance completion date. Using military service is Army. Type of appropriation is fiscal 2019 through 2021 defense working capital funds. The contracting activity is Defense Logistics Agency Aviation, Richmond, Virginia (SPE4A619D0001). DCX-CHOL Enterprises, Inc.,* Chatsworth, California, has been awarded a maximum $12,960,000 firm-fixed-price, indefinite-quantity contract for aviation cable assemblies. This was a competitive acquisition with three offers received. This is a two-year base contract with a one-year option period. Location of performance is California, with an Oct. 16, 2021, performance completion date. Using military service Army. The type of appropriation is fiscal 2019 through 2021 defense working capital funds. The contracting activity is Defense Logistics Agency Aviation, Richmond, Virginia (SPE4A619D0002). *Small Business https://dod.defense.gov/News/Contracts/Contract-View/Article/1656310/source/GovDelivery/

  • COVID-19 News: Virus Hurting Army Small Businesses

    May 1, 2020 | International, Aerospace, Naval, Land, C4ISR, Security

    COVID-19 News: Virus Hurting Army Small Businesses

    By Connie Lee The COVID-19 pandemic is putting particular stress on the Army's second- and third-tier suppliers, said the service's secretary April 30. The Army is racing to ensure its manufacturing supply chain is able to stay afloat amid economic challenges posed by the virus, said Ryan McCarthy. “Some of these are small companies [that have] 15,000 people, and you get a couple people sick, you shut the whole company down,” he said during a virtual event hosted by Brookings Institution. The supply chain will "be a challenge for us months and months ahead.” The pandemic is also hurting overseas manufacturing in areas such as Mexico, Europe and East Asia, where the Army has little influence, he noted. The service is working with the State Department to figure out how to keep overseas workers employed and keep the supply chain running, he said. “We are limited in our ability to affect them and get them back to work,” McCarthy said. “It presents challenges that are far beyond our reach and ... influence, so we're going to have some real heart-to-hearts with manufacturers going forward.” Despite these issues, the Army is continuing to prioritize modernization, he said. Army Chief of Staff Gen. James McConville said the service is moving forward with weapons assessments, noting that it was recently able to conduct a successful hypersonic weapons test. As part of its plan to keep up with great power competition, the service is pursuing 31 new signature systems. “Over half of our procurement budget is going towards these new weapon systems,” McCarthy said. “We've got to put them into formation. Much of our iron is 50 years old. That probably is the prime area where we put the most energy.” Meanwhile, the Army is collaborating with other organizations in search of a vaccine. There are 10 to 15 top potential vaccine candidates worldwide that are in various stages of maturity, McCarthy said during a Pentagon briefing the same day. To speed up the timeline, the service plans on investing in the ones that seem to be moving the fastest, he noted. “We can double down and invest in the fastest horse, if you will, in this 15 candidate race, and then that compresses the timeframe that will ultimately get you to the answer and bring a vaccine to life,” he said. “You'll hear ranges on how fast it can go.” Some of these vaccines are currently in human trials, with the bulk of the work slated for summer and early fall, he noted. “It's moving faster than probably any point in history because of the extraordinary collaboration that's going on today,” he said. However, this may involve accepting some risks in the process, McConville noted at the briefing. “You can save time by taking risks,” he said. “You may get ready to produce something, and that horse may not get to the final race and that may not be the most efficient use of money, but by taking risks, you can really move things very, very quickly.” https://www.nationaldefensemagazine.org/articles/2020/4/30/covid-hurting-army-small-businesses

  • Wormuth: US Army can 'no longer defer the big decisions' on its future

    October 12, 2021 | International, Aerospace, Naval, Land, C4ISR, Security

    Wormuth: US Army can 'no longer defer the big decisions' on its future

    The Army will have to make tough decisions in the coming years as it races to modernize and stay prepared for a potential fight with high-end adversaries, Secretary Christine Wormuth said at AUSA.

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