HII CEO: Two-carrier buy should be authorized, appropriated in FY-19 to reap savings

By Lee Hudson / May 31, 2018 at 11:47 AM

If Congress authorizes and appropriates funding in fiscal year 2019 for a two-aircraft-carrier buy, the military will save money in the supply chain, according to Huntington Ingalls Industries' chief executive.

Mike Petters said at a conference hosted by Bernstein in New York that the authorization and appropriations process for the two-carrier buy would have produced more savings if it occurred last year.

"In the best of both worlds, we'd already have this contract in hand," he said May 30. "The fact that we're going down this path now, I think, is a win because 12, 15 months ago it was not on the radar."

Inside Defense reported last month Newport News Shipbuilding estimated a two-carrier buy would save the Navy roughly $1.6 billion in commercially furnished equipment.

Petters said this week that allowing industry to build aircraft carriers every three or four years, instead of five to six years as it does today, would be more efficient and stabilize both the workforce and supply base.

He noted this is the first time in 30 years the United States has proposed a multiship procurement of aircraft carriers, calling now the "most exciting shipbuilding environment in 30 years."

In March, Navy acquisition executive Hondo Geurts told reporters that, in keeping with the National Defense Strategy, the service developed an acquisition plan to combine CVN-80 and CVN-81 procurements.

The Navy's FY-19 budget request seeks funding for both CVN-80 and CVN-81. The service awarded the initial contract to NNS for CVN-80 in May 2016.

The service intends to buy the carriers, but is still weighing the procurement strategy, Geurts said.

"I see savings coming from multiple different areas: One will be reduction in labor, one will be more efficient suppliers [because] they can build in a bulk quantity, and then the third is we'll have a very similar design for both so we can really improve the learning as we continue to build more carriers," he said.

If the multiyear approach appears to be a good deal for the government, the Navy will have the contracting strategy finalized by the end of the calendar year.

"We would need congressional support and congressional language, so I would assume that would work through the summer enactment cycle into early fall," he said.

The Navy would need statutory relief from Congress to incrementally fund CVN-80 and CVN-81 at the same time. "It's similar to what we did in the 80's in the Reagan era," Geurts said.