Navy Could Lower DDG-1000 Cost Even Further By Building Two A Year, Official Says

Defense Daily, March 31, 2008

By Geoff Fein

Although the current plan for seven DDG-1000 class combat ships will see the construction price drop to almost $2.3 billion by the fifth ship, a Navy official said he could get the per hull cost even lower if he could build two a year.

"I could get to the $2 billion range, or lower...absolutely," Capt. Jim Syring, DDG-1000 program manager told Defense Daily in a recent interview

"Because I am suffering from the [DDG-51] line coming down, and frankly I am the only game in town up north, and I am having to pay all that overhead. [Bath Iron Works is] doing great work in terms of getting their man hours down, but you got a fixed overhead rate absorption issue...fact...that needs to be carried and when you can spread that between two ships it gets a lot better, a lot better," he said. "Two is better than one in terms of overhead."

While it seems unlikely, in the current budget environment, that Syring will ever get to build two DDG-1000s in a single year, that has not stopped the Navy from finding ways to keep cost growth out of the ship.

DDG-1000 is the Navy's high tech surface combatant. Armed with advanced radars and sonar, gun systems, the ability to launch a variety of missiles, and a unique new hull form, the Zumwalt class ship is being designed and built to provide surface fire support for Marines ashore, defend sea base operations, and intercept enemy aircraft and missiles at far greater ranges than any ship in today's Navy is capable of, Syring said.

Last month, General Dynamics' [GD] Bath Iron Works in Maine and Northrop Grumman's Pascagoula, Miss. shipyard were both awarded construction contracts under the Navy's dual lead ship acquisition effort. Bath Iron Works will build DDG-1000 and Northrop Grumman's Mississippi yard will build DDG-1001. The Navy is currently working on the acquisition strategy for the third ship of the class, DDG-1002.

But while the capabilities of the ship are impressive, much of the attention from lawmakers, defense analysts and critics of the program has focused on cost.

The Navy has stood firm in its assessment that it can build DDG-1000 and -1001 for $3.16 billion each.

"In PB '07 we are $3.3 billion for [the] lead ship. In PB '08 we are $3.185 billion because we drove some capability to threshold and we were able to remove some cost from the ship," Syring said. "Right now [we are] at $3.16 billion which is the budget, and is the current estimate across the contracts of what these ships are going to cost.

"There [are] a lot of checks in the block that I have in terms of confidence in that number," he added.

For follow-on costs, Syring said the fifth DDG-1000, in FY '09 dollars, will cost $2.3 billion.

"An independent Navy estimate says if we were to buy a single DDG-51, it would be $2.1 billion in FY '09. So for all that capability across every mission area, I say that's a great value for that capability," he said.

Prior to the contract award in mid February, questions arose regarding the state of DDG-1000's design. Concerns were raised that awarding construction contracts at this time might lead to significant cost increases.

But Syring pointed out that DDG-1000 is further along in design at construction contract award, than any previous surface combatant.

"I am 55 percent complete on detailed design, I am nearly 100 percent on mission system design. I am in production on the mission systems. The ships are under contract," he said.

DDG-51 had zero percent of its detail design complete at contract award and only 20 percent compete by beginning of fabrication, according to the Navy. The Littoral Combat Ship had zero percent complete at time of contract award and less than 25 percent at start of fabrication. DDG-1000 will have 85 percent of its design complete at start of fabrication, according to Syring.

Another area of concern for the Navy is the issue of requirements creep. Chief of Naval Operations Adm. Roughead is constantly reminding officials and lawmakers that the service has to curb its appetite for requirements.

But with a ship that will be multi-mission, from anti-aircraft and anti- missile defense to surface fire support, the desire to add on more requirements is a concern. Syring, however, points out that the program is making every effort to refrain from adding more to the ship.

The DDG-1000 program has been very lucky to have had the guidance of former Navy acquisition chief (and now the Pentagon's top weapons buyer) John Young, as well as a resource sponsor who has helped drive back to threshold in terms of keeping the cost of the ship down, Syring said. "I have been very lucky that they haven't [placed] any additional requirements into the ship."

Last week Syring asked his staff how many class-one changes...changes to design, the program had in the queue.

For other ship programs it can be in the hundreds, if not thousands, he added. "I have two in the queue at this point...two. And I probably won't do either one of those until PSA (Post Shakedown Availability)."