If Secretary of Defense Robert Gates and his new acquisition chief Dr. Ashton Carter are serious about acquisition reform they should look closely at the experience of the Virginia-class nuclear attack submarine program. Although relatively early in the production run, the program is already delivering boats eight months ahead of schedule while reducing costs by a half billion dollars per boat. The efforts to reduce costs have led to innovative design work that improved both the way the Virginia-class is being built and the capabilities of the finished product. This program has been so successful that starting in FY 2011, the Navy can afford to build two submarines every year. Recently, it was reported that the program had reduced annual operating costs for the deployed Virginia-class boats by some 20 percent.
The Virginia-class program has implemented a set of structured and measured innovations to reduce costs including construction performance improvements, redesign for affordability, and a multi-year procurement contract with incentives for cost and schedule improvements. In the words of the Chief of Naval Operations, Admiral Gary Roughead: “I consider Virginia Class cost reduction efforts a model for all our ships, submarines, and aircraft.”
Kudos must go to the two companies that together build the Virginia-class: General Dynamics and Northrop Grumman. The two companies each build half of every submarine. Rather than increasing costs, this arrangement has produced a friendly rivalry that has contributed to lowering them. Kudos also must go to Admiral William Hilarides, PEO for submarines, for his innovative leadership and for forging an effective government-private sector team.
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