With little certainty in the Pentagon's amphibious warship procurement plans, the builders and suppliers that produce these ships are holding their breath as they wait for Congress to complete fiscal year 2024 spending legislation and the Navy to provide a clear shipbuilding forecast.
As workforce and supply chain challenges abound across the domestic shipbuilding industry, many companies in the amphibious warship supply chain are retaining excess production capacity as they wait for the government to send them more work, according to the results of a recent survey conducted by the Amphibious Warship Industrial Base Coalition, an industry group representing these companies.
“I think for the most part, we’re underutilized. And I think that's what the survey results bear out is that the majority of the companies feel that they have more capacity to deliver, should the work be there,” AWIBC Chairman Paul Roden told Inside Defense.
“We’re pretty much waiting to see from the Navy,” he continued. “I know that there's a requirement for a new shipbuilding plan [and] we're optimistic that Congress has been so strongly advocating for these ships, I think, mainly due to the fact that the Marine Corps commandant has said this is what's necessary.”
The Navy’s FY-23 and FY-24 budget requests looked to halt procurement of Flight II San Antonio-class amphibious warships, a move that service officials have described as a ‘strategic pause’ to study the LPD line and evaluate cost-reduction options.
But Marine Corps leaders say this pause is a strategic blunder that delays the fielding of a critical platform and impairs service readiness. The Marine Corps listed the latest San Antonio ship, LPD-33, as its top unfunded priority after the Navy excluded the vessel from its FY-24 budget request.
After years of schedule uncertainty, the nation’s primary amphibious warship builder has grown accustomed to operating without a long-term procurement forecast, according to HII President and CEO Chris Kastner.
HII’s Ingalls Shipbuilding has not had clear procurement headlights on the LPD line since the John P. Murtha (LPD-26) was put on contract in 2011, Kastner told reporters earlier this month. The company has not yet been briefed on the results of the Navy’s latest study of the LPD line, he said.
“Amphibs have historically been on the dividing line, from a priority standpoint for the Navy,” Kastner said. “When you think about Navy priorities, it's historically been -- before Columbia-class [submarines] -- aircraft carriers, submarines, destroyers or surface combatants, and then amphibs [are] like the dividing line from a budget standpoint.”
“So, we've been in the position of supporting it every year and now it's really broadly supported by the Navy, by the Marines, by the Congress and by law with 31 amphibs,” he continued. “We understand the process and the realities of supporting every year, it's something we've been able to do, and we'll continue to do that.”
Lawmakers weigh in with NDAA
The FY-24 National Defense Authorization Act, signed into law in December, authorizes $1 billion in incremental funding for advance procurement and construction of LPD-33. But although the NDAA authorizes these funds, Congress must include appropriation dollars for LPD-33 in its yet-to-be-passed spending package before any funding for the vessel is allocated.
While an early version of the Senate’s spending bill looks to add $500 million in advance procurement funding for LPD-33, the House version excludes the vessel. For now, the Pentagon is operating under a continuing resolution in the absence of fresh appropriations legislation, with lawmakers moving to extend stop-gap funding until March 8.
“We're grateful that the authorizers added $1 billion in increased incremental funding for LPD-33 and especially their authority to award the contract with incremental funds. We think that'd be very helpful,” Roden said. “What's also encouraging about the NDAA is Congress appears very serious about the 30-year shipbuilding plan that meets the statutory requirements for 31 amphibs.”
Over the past year, the Navy has bucked a legal mandate enacted in the FY-23 NDAA requiring the service to maintain an amphibious fleet of at least 31 L-class vessels. The Navy’s latest 30-year shipbuilding plan, released publicly in April, would keep amphibious warship numbers below the 31-vessel minimum for the duration of the next three decades.
To force the Navy to comply with this mandate, this year’s NDAA contains a provision that will withhold 50% of the service’s operations and maintenance funding until it submits a new 30-year shipbuilding plan meeting the 31-vessel mandate.
Not included in the final NDAA is a separate provision proposed by Senate lawmakers that would have required the Navy to ensure 24 amphibious vessels were continuously ready for global deployment. After the Senate advanced this force availability provision in its version of the policy bill, the Biden administration came out in opposition to the measure.
In a July statement of administration policy, the White House argued the mandate would “require delaying other necessary maintenance, modernization, and repair activities, resulting in fewer and less-capable ships ready for operational tasking and severely limiting options to maintain and improve the force.”
Although lawmakers dropped the proposal from the final bill, they did include a provision giving the Marine Corps commandant greater say in the establishment of amphibious ship requirements and another instructing the Navy to provide semiannual briefings on the operational status of the amphibious fleet.
The NDAA also prevents the Navy from retiring three ageing Whidbey Island-class amphibious ships: Germantown (LSD-42), Gunston Hall (LSD-44) and Tortuga (LSD-46).
A murky prognosis for a vulnerable supply chain
For industry, the result of this back-and-forth between Congress, the Pentagon, Navy and Marine Corps is a total lack of certainty on when the government will buy more amphibious vessels, making it difficult for companies to make business decisions with an eye to the future.
Of 150 U.S. companies polled in AWIBC’s November 2023 survey, nearly 70% said the most helpful thing the government can do is provide a predictable procurement schedule via block buys and multiyear procurement contracts.
Industry’s pleas for schedule stability are not new. For years, shipbuilders and suppliers have called for two-year construction "centers" for LPDs and four-year "centers" for America-class amphibious assault ships. These clearly defined build intervals would allow companies to plan and maintain consistent inventory and workforce levels to avoid peaks and valleys, Roden said.
Almost four-in-10 of the suppliers surveyed reported that they would be forced to reduce their workforce if build schedules are extended. More than half indicated an extended build schedule would significantly increase production costs.
Many of the 614 companies represented by AWIBC are wholly dependent on Navy and Coast Guard shipbuilding programs. “There's no other need for some of these components that are put on to U.S. warships. It's not like there's a commercial market for a lot of these components,” Roden said.
The survey also indicates that many of these companies are sole-source suppliers, meaning a single company is the only established producer of a particular ship component. Additionally, 58% of survey respondents indicated they are dependent on single producers of key raw materials.
According to Roden, who works for Wisconsin-based engine and ship component maker Fairbanks Morse Defense in addition to his role as AWIBC chairman, this scarcity of producers is a serious vulnerability throughout the supply chain, caused partially by inconsistent demand from the Pentagon.
“A lot of companies, like ours, are single-source suppliers to the shipbuilding industrial base. We supply to submarines, we've supplied to amphibs, carriers, and I believe that there's many companies like us in that category,” he said. “So, impacts on the amphib program are likely to impact submarine programs, carrier programs and the entire shipbuilding industry.”