May 14, 2020 | International, Naval
By: Joe Gould , David B. Larter , and Valerie Insinna
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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September 20, 2019 | International, Land
By: Sebastian Sprenger COLOGNE, Germany — The defense chiefs of France, Belgium and Cyprus have signed an agreement to pursue a common anti-tank missile meant for wider adoption in Europe — an effort that puts the spotlight once again on accusations of protectionism in defense programs here. The three defense ministers inked the cooperation deal for the Beyond-Line-of-Sight Land Battlefield missile project on the sidelines of a meeting of European defense chiefs in Helsinki, Finland, in late August. The goal is to develop a new “family” of missiles for integration on an “extensive variety of platforms,” according to the official project description. It would be operated by a “dedicated users' club” under a common European doctrine for such weapons. Pan-European missile company MBDA has claimed the project as its own since officials announced it under the Permanent Structured Cooperation framework, or PESCO, in fall 2018. The vendor wants to sell its Missile Moyenne Portée, or MMP, to other armies besides the French, eyeing a far-reaching partnership with Belgium on ground vehicles as a potential avenue. Aside from being handed a potentially lucrative market on the continent, products or concepts picked as PESCO leads can win sizable funding contributions from common coffers like the envisioned €13 billion (U.S. $14 billion) European Defence Fund, or EDF. MBDA executives have danced around the question of how they came to be the quasi-incumbent for the missile project, arguing that the company is the only eligible manufacturer because the weapon is wholly developed and made in Europe. At the same time, company officials coyly painted the selection of the MMP weapon as a decision still up in the air. That is because there is a formal solicitation process under the European Defence Industrial Development Programme with a closing date of Sept. 20. The process envisions weapons trials sometime in 2020 or 2021 funded by the European Union, according to an MBDA spokesman. “The next step is that we hope to achieve this trial campaign and demonstrate the capability to inform future acquisitions from European nations,” the spokesman told Defense News. The problem is, however, that several other European nations already have a different weapon in their arsenals: a variant of the Spike missile, made by Israel's Rafael and sold in Europe by Germany-based Eurospike. Over the summer, Estonia moved to buy the weapon under a €40 million deal, becoming what Rafael said is the 19th user within NATO and the EU. Germany, which seeks to drive Europe's new defense posture alongside France, also relies on Spike — both the man-portable and the vehicle-mounted variants. Eurospike officials at the DSEI defense trade expo in London, England, last week complained about being left out of the nascent European missile program. While the Spike weapon is entirely produced in Germany, it is based on Israeli technology, resulting in what one company executive in London estimated to be an overall ratio of roughly 70 percent European and 30 percent Israeli. According to still-emerging rules for access to European defense projects, only members of the European Economic Area are eligible for EDF funding and collaboration-inducing mechanisms promised by PESCO. As it stands, Britain — after it leaves the EU — and its wares likely would be in, but the Israel connection means the Spike missile is out. For now, Eurospike officials said they are closely watching the process. “I can't imagine that they will just take the market by storm,” one executive said of MBDA and its missile offering. With its industrial infighting, the anti-tank weapons serve as something of a test case for whether common projects set up under EU auspices can truly serve the purpose of increasing collaboration among member states. Industry insiders suggest that the raft of existing PESCO efforts — covering everything from battlefield communications to future naval platforms to ground vehicles — comes with a built-in potential for turf battles. In the end, it seems a good number of PESCO projects come with a vendor team pushing a specific product under the banner or European unity. And as the dust of Euro enthusiasm settles, insiders say, vendors that weren't part of the initial project considerations are bound to find out that defense cooperation on the continent is also about winners and losers. https://www.defensenews.com/global/europe/2019/09/19/tank-killing-missile-tests-europe-first-weapons-policy/