Future fleet: inefficient shipbuilding jeopardizes Navy's expansion goals.

The Navy owns 277 ships, but somehow manages to keep 551 different engines in its inventory. It has a fleet of 57 submarines, but maintains an array of 161 periscopes and masts.

Such inefficiencies partly explain why the cost of buying and maintaining ships has spiraled out of control. At a time when the Navy is seeking to begin a major expansion of the fleet--from 277 to 313 ships--these wasteful practices do not help.

"It's been a problem for 20 years," said Vice Adm. Paul Sullivan, head of the Naval Sea Systems Command.

Unless the Navy soon finds ways to build and operate ships less expensively, the planned expansion may be tough to achieve, Sullivan told a conference of the American Society of Naval Engineers.

"We've all heard the drumbeat of 313 ships," he said. "But there's all kinds of challenges to that."

The Navy will need to increase its annual spending on shipbuilding from about $10 billion currently to at least $15 billion, or as much as $22 billion, in order to reach 313 ships within the next three decades, according to the Congressional Budget Office.

That will require shifting funds from other Navy accounts, such as operations, maintenance or possibly aircraft procurement.

Sullivan said he would prefer to not see a budgetary "dogfight" between ships and aircraft. Instead, the Navy should seriously tackle the inefficiencies in current ship programs to help generate the funds for future ship construction.

The Navy's aviation planners already have reduced costs by billions of dollars simply by consolidating types and models of aircraft and weapons, Sullivan said. "The Navy has to go down the same road with ships."

In the ship world, he noted, "We have lots of baselines." The current fleet has 29 ship models. There are plans to reduce that number to 27 by 2020, but that is not nearly enough, Sullivan said. "There is potential to neck down to nine ship models," although he warned that the goal is rather unrealistic. "Can we get down to nine ship types? Probably not. But we have to make progress toward that goal."

Then there is the proliferation of machinery. Besides the 551 engine variants, the Navy keeps a staggering inventory that includes 7,325 different motors, 36,979 types of valves, 268 air-conditioning unit models, 443 categories of generators--and the list goes on.

That wealth of equipment may have been justified back in the Cold War, when the Navy had a fleet of more than 600 ships. Much of that hardware would not be needed if the Navy standardized more components across the fleet, Sullivan said. "We need more commonality." The Navy would benefit from building ships that can more easily be tailored to various missions, he said. That only makes sense because the Navy is unlikely to be able to accurately forecast what it will need in future conflicts. "Since our predictive capability isn't all that great, how about we build a fleet that's adaptable, as opposed to a fleet that's 100 percent effective for 20 percent of the threats?"

As much as the Navy prides itself of the advanced technology it has been able to install on ships, it cannot afford to design intricate components that may or may not provide a significant advantage over lower-cost commercial parts. Today it costs $300 million to $2 billion to design a new ship. "We love spending on R&D," said Sullivan.

A case in point is the ongoing effort to design a more energy efficient hybrid-electric propulsion plant for future ships. The Navy currently has three different electric-drive technologies that are being tested or installed on new ships--permanent magnet motors, advanced induction motors and superconducting motors.

While each of these propulsion systems contributes some fuel savings, they are saddling the Navy with the cost of operating and maintaining three different motors. "That's great for experimentation, but we need to bring it down, said Sullivan. "I don't want to proliferate more electric power configurations."

Standardizing ship components can be a huge money saver when one considers most of the cost of ship construction comes from materials, said Rear Adm. Charles H. Goddard, who oversees the procurement of ships.

"Everyone focuses on labor and overhead," but materials in fact account for 57 percent of what a shipyard spends to build a ship, he said. Goddard's office has launched several "pilot programs" to homogenize components and eventually cut down on the number of ship models, he said. "We are looking at reducing baselines."

A fleet with fewer ship types and models gives the Navy a better chance to boost its procurement accounts for next-generation ships, Goddard said. "With an aging fleet, the cost of maintaining ships goes up faster. Balancing that with the ramp-up of new ships will be the hardest problem the Navy will face in the next 15 years."

The amount of money needed to operate and maintain the fleet has been steadily increasing as a share of the Navy's budget, said Robert Work, a military analyst at the Center for Strategic and Budgetary Assessments. "Achieving the 313-ship target would require that these costs be frozen at current levels, and then rise only enough to keep pace with inflation," Work said.

So far, however, the rhetoric about standardization and commonality has not spurred much change in the way shipyards build vessels.

"We talk a lot about working together but we are not working together to do these things," said Philip A. Ted, president of Northrop Grumman ship systems.

The new class of amphibious vessels that the company is building in Pascagoula, Miss., offers an opportunity to apply more "systems commonality," Ted said at the conference. "If we define this as a requirement and restrain our appetite for change, we can see the cost of ships in real dollars go down. It can be done ... We need to create change in our habits."

The thinking in the Navy today is that ships don't operate in isolation but rather as part of a "mix and match" network, said Work. In that context, it would make sense to build standard hulls that could be employed by multiple ship classes. Standardized components, as suggested by Sullivan, is not the model currently followed in the ships that are under construction, Work noted.

"They have to think this through," he said. "You could easily get down to a small number of ship types and have mission modules and combat systems."

The modular approach to shipbuilding will be tested in the littoral combat ship, which is still in the development phase and could begin production as early as 2010.

The DDG-1000 destroyer and the CG-X cruiser--both in early stages of design and development--will be the last "non modular" ships and each is expected to cost between $2 billion and $4 billion. Work believes the Navy should scrap these two vessels and build a new combatant class using a common hull and propulsion system, in a fashion comparable to the way the Navy built its successful Arleigh Burke DDG destroyers and cruisers.

"Everyone agrees that they have to do business differently in the future," Work said. The standardized hulls would be able to accept a range of mission modules consisting of sensors and weapons.

The 313-ship plan includes a surface combatant fleet of 143 ships--seven DDG-1000s, 19 CG-Xs, 62 DDGs or follow-on DDG(X)s and 55 littoral combat ships.

Another potential hitch in the fleet-expansion plan is the Navy's historical tendency to retire ships before they reach the end of their service life, said Work. The 313-ship blueprint is based on getting 35 years out of the ship. "Typically they don't keep them that long," Work said.

The oldest Cold War ships were among the first ships to be decommissioned in the 1990s drawdown, so the most current maintenance planning data is based on a period when the average surface warship was retired with only 16 to 28 years of service, according to Work. "Even during the Cold War, when maintaining high ship counts was a key institutional goal, most surface combatants served no longer than 25 to 29 years. The current generation of surface warfare officers therefore has little idea what it will take to keep surface combatants combat-ready and effective during the last five to 10 years of a long and arduous 35-year service life."