This post has been updated to include information from a press briefing by Acting Secretary of the Navy Thomas Modly and Chief of Naval Operations Adm. Mike Gilday, as well as additional information from industry.
THE PENTAGON – The Navy and the Pentagon are trying to help the defense industrial base stay viable and productive during the coronavirus outbreak while also ensuring workers are kept safe and healthy.
Amid conflicting guidance from federal, state and local officials about the extent of stay-home orders and other measures to slow the spread of COVID-19, Defense Department leadership put out a string of memos foot-stomping that the defense industrial base (DIB) is considered a critical infrastructure sector and should be kept open when and where possible during the current outbreak.
“Consistent with the President’s guidelines: ‘If you work in a critical infrastructure industry, as defined by the Department of Homeland Security, you have a special responsibility to maintain your normal work schedule,’” notes a March 20 memo signed by Under Secretary of Defense for Acquisition and Sustainment Ellen Lord.
“The Essential Critical Infrastructure Workforce for the DIB includes workers who support the essential products and services required to meet national security commitments to the Federal Government and the U.S. Military.”
Assistant Secretary of the Navy for Research, Development and Acquisition James Geurts similarly reached out to industry, sending the major shipyards a letter asking for balance between keeping workers safe and keeping ship construction on track.
“During this time of national response to the COVID-19 pandemic, I would like to emphasize the importance of employee health and safety as well as reemphasize the importance of the ship construction and repair efforts you and your suppliers perform to the national defense. Delivering or redelivering our ships to the fleet is a national need that is unwavering and crucial to our national security,” Geurts wrote in a March 19 letter to major prime contractors.
“Given the mission essential functions you perform, while ensuring the safety and well-being of the workforce, I cannot stress enough the importance of accomplishing the mission, and notifying the Government of any impediments that are considered likely to interfere with timely accomplishment of the mission.
Geurts’ spokesman, Capt. Danny Hernandez, told USNI News that the assistant secretary has been in constant talks with industry about what barriers to production could come up during this time of pandemic and economic downturn, and cash flow has been among the major issues discussed.
“Mr. Geurts has an open dialog with industry leadership to discuss health of the workforce and meeting the mission. Key topics in these discussions have included health of the workforce, cash flow and the supplier base, all essential to what industry and our nation needs during this period,” he said.
“The team is sharing best practices for delivering ships and aircraft to the Fleet, while also discussing CDC measures to protect the workforce. Working together has enabled the Navy to apply resources to the highest priority efforts to ensure we are maximizing readiness for the Navy. Health and safety, as well as the mission of ship construction and repair efforts, is critical to our national security.”
To address cash flow, the Defense Department announced Friday that progress payments to contractors would be increased from 80 percent to 90 percent for large contractors and from 90 percent to 95 percent for small companies. Typically the contractors can be paid monthly for costs incurred, at a less-than-full rate so that they must finish the work and receive the remaining payment at the end. In this time, though, with worries about being able to pay staff and continue to buy parts even while the pandemic worsens, the Pentagon has agreed to pay more cash each month and hold on to the less for final payment.
Geurts noted in a separate March 20 memo that “it is imperative we keep the Nation’s, and the Navy’s, defense industrial base from going into extremis during the current COVID-19 crisis. A key element of this is to ensure companies, and in particular the underlying suppliers, remain solvent and available to support the Navy.”
The memo adds that program executive offices and the program offices under them should reduce the retentions and withholds to the lowest amount possible under those new DoD guidelines, pay all settled requests for an equitable adjustment (REAs) immediately and resolve any remaining REAs quickly, ensure those government employees involved in processing payments to contractors are deemed mission essential and are working during this time, and accelerate negotiations on future work to keep money flowing to prime contractors and their lower-tier suppliers.
Vice Adm. Tom Moore, the head of Naval Sea Systems Command, added in his own memo on March 20 that “NAVSEA continues to emphasize performance, particularly completion of mission essential and emergency tasks by both government and industry” and that he was also looking to engage with industry and hear any ideas that could keep companies from getting in extremis. He also noted the need to follow CDC recommendations such as social distancing and teleworking, limiting travel and other measures that can impede work, and he asked for open communication on struggles in this environment as well as to be notified if there are any COVID-19 illnesses at NAVSEA contractors or their suppliers.
Navy Leadership Prioritizing On-Time Delivery
Top Navy leadership today made clear that they want to keep workers at Navy and industry production and repair yards healthy, but they also want to ensure that ships and aircraft are delivering to the fleet on time.
“We rely particularly on our shipyards and our depots, both the ones that are part of the Navy infrastructure, but also part of the commercial industrial base – we need them to continue to operate because you can’t lose those skills, we have to keep them maintained,” Acting Secretary of the Navy Thomas Modly told USNI News today in a press briefing at the Pentagon.
“We’ve been very clear and very consistent in talking to our commercial partners, particularly the Assistant Secretary of the Navy Geurts, he talks to the shipyard CEOs on a daily basis to make sure that they’re understanding what our objectives are. We’ve been very clear with them: we are also concerned about the health of their people, we don’t want them putting them at risk, either, but we just need to be aware of what they’re doing in that regard so that we can adjust our expectations about what they can deliver and when they can deliver.”
Chief of Naval Operations Adm. Mike Gilday added at the press briefing that the large prime contractors were creating their own task forces to look at the COVID-19 pandemic situation and understand the effects to their suppliers and their own production lines and where risk exists over the next year or so. The Navy could then look at that risk and understand how to prioritize the work that needs to be done. For example, if a supplier of parts for destroyer maintenance availabilities has its production interrupted during the pandemic and can’t produce enough parts for all the DDGs in maintenance, the Navy could look across all repair facilities and prioritize which ships needed to get the parts and which could afford a delay.
Modly said later in the press briefing that, for the time being, “as far as production capacity, to date we haven’t seen any sort of perturbations in that right now, but we are anticipating that there will be, and we’re looking at what that might cost with respect to helping the shipyards maintain their viability if they have to slow down and miss certain production milestones.”
Hernandez, the Navy spokesman, told USNI News after the briefing that two ships will skip their commissioning ceremonies but will begin fleet operations as a means of minimizing the impact to fleet readiness.
“Regretfully due to public health safety and restrictions of large public events, the commissioning ceremonies for PCU Delaware and PCU Vermont were canceled for 4 April and 18 April, 2020, respectively. The commissioning of both ships will take place administratively and the ships will begin normal operations with the Fleet. We greatly value the support of all those who were planning to attend and we will look for a future opportunity to commemorate this special event with the sponsor, crew, and commissioning committee,” he said.
Large prime contractors are also working to strike that balance between taking seriously workers’ health concerns and the need to keep critical work on schedule. Shipyard presidents have been sending messages to the workforce and posting videos online to reassure employees, keep them updated on positive COVID-19 diagnoses and more.
Dirk Lesko, the president of General Dynamics’ Bath Iron Works in Maine, told the workforce in a memo that: “We remain open because the President of the United States and the United States Navy has mandated that we do so – that the work we do is so essential to the defense of our nation that we must not shut down. As a designated ‘Critical Infrastructure Industry,’ our response to COVID-19 must focus on health and safety to the greatest extent possible, measured against the backdrop of supporting our nation’s defense. In that sense, BIW employees are similar to the employees of life sustaining businesses that remain open, from grocery stores to health care facilities, who continue to work and follow CDC guidance to safeguard against the risk of virus transmission. I deeply appreciate the efforts of so many BIW employees to come to work under such trying circumstances.”
Lesko also updated the workers on the status of a positive diagnosis in a BIW employee.
“Where people have been infected, there is a suspicion of infection, or present a higher risk of exposure, we have taken decisive action to quarantine and monitor employees, and we have increased our cleaning of facilities using the best available guidance from federal, state and local authorities coupled with common sense. For our colleague who tested positive, this individual has not been at work for 10 days and will remain off-site as will those employees who have been in close contact. For this case, we worked directly with the Maine CDC to take the necessary cleaning and sanitizing actions to reduce transmission potential, and immediately contacted any of our affected employees who are now staying home for a 14-day self monitoring period,” he wrote.
A letter from GD NASSCO President Dave Carver also addresses the mission-essential label, saying that “we will remain open in accordance with the President’s guidance, which specifically identifies the defense industrial base as being among the critical infrastructure industries having a ‘special responsibility’ to maintain a normal work schedule during the global novel coronavirus (COVID-19) pandemic. As a defense contractor, we cannot unilaterally refuse to perform our government contracts or discontinue operations, and because of this, we do not have the discretion to shut down.”
To keep employees safe during this time, NASSCO has added more than 100 temporary hand-washing stations around the shipyard, issued a letter for employees to carry with them in case they were stopped by law enforcement for violating any stay-home measures in place by state or local governments, and other measures posted publicly on the NASSCO website.
At GD’s Electric Boat shipyard in Connecticut and Rhode Island, yard president Kevin Graney assured that limiting non-essential activities like the gym, maximizing telecommuting, increasing cleaning facilities, and allowing flexibility in taking time off were all helping keep the workforce safe. No COVID cases had been discovered among the two facilities’ workforces as of March 23’s message to employees.
“Today the New London facility began operating on two shifts to decrease density in that building: first shift is working from 6 a.m. to 2 p.m.; second shift is working from 4 p.m. to 12 a.m. I visited Quonset Point and our New London facilities today to see for myself how we are adapting. Overall, I saw my co-workers doing what already makes EB a special place, adjusting to what I consider to be our new normal with as positive an attitude as possible given these uncertain times. Thank you for your cooperation,” Graney wrote.
“We continue to evolve how we’re working in the Groton shipyard and at Quonset Point to ensure people maintain safe distances from each other whenever possible. And we continue to encourage members of the leadership team to optimize remote work arrangements with their teams where practical.”
At Huntington Ingalls Industries, which owns the Newport News Shipbuilding yard in Virginia and the Ingalls Shipbuilding yard in Mississippi, spokeswoman Beci Brenton told USNI News that “we have been identified as a critical and mission-essential industry that supports the critical needs of our nation. Those needs have not changed and this was recognized by the Department of Homeland Security, the Department of Defense and the U.S. Navy. The memos from Ms. Lord and Mr. Geurts reiterated this and we appreciate their recognition and support for our nation’s major shipyards, including Ingalls and Newport News, as well as a supply chain of more than 5000 companies nationwide. Staying operational continues that important support which extends to our thousands of suppliers in nearly every state. We’re committed to continuing to do this important work while continuing to safeguard our workforce. Importantly, staying operational also will help propel the economic recovery for our country that will be vital to each and every American.”