The prime contractor behind the Pentagon’s top acquisition priority is slowing its rate of producing submarines due to a lack of “major components,” company officials said on Wednesday.
General Dynamics CEO Phebe Novakovic said GD Electric Boat work on the Columbia-class nuclear ballistic missile submarines and the Virginia-class nuclear attack boat would slow to keep pace with a supply chain that’s lagging construction.
“EB continues to be severely impacted by late deliveries from major component suppliers, which has delayed schedules and is continuing to impact costs,” Novakovic said during GD’s Fiscal Year 2024 third quarter earnings call with investors.
“There is no point hurrying portions of the boat only to have to stop and wait increasingly extended periods of time for major components to arrive. It is neither good for the boat over time nor cost. Given the recent projections from the supply chain on deliveries, we need to get our cadence in sync with the supply chain and take costs out of the business if we are to hope to see incremental margin growth.”
She said the slowing of production from EB’s end would not add to the additional delays to the $130 billion Columbia program, now projected to be 12 to 16 months late, USNI News reported in March.
The first boat, District of Columbia (SSBN-826), was originally supposed to deliver in Fiscal Year 2027 for an anticipated first patrol in 2030, but now that delivery is set for FY 2028 at the earliest.
“The supply chain is not getting better at a fast enough rate, as we had hoped. Through our internal efficiency, we have now outpaced them. This is the reality of the post-COVID environment for many of our most important suppliers,” she said.
“Current submarine delivery projections are not incrementally impacted, since they already reflect the anticipated delays from the supply chain. We will, of course, carefully monitor supply chain performance and accelerate our work, should their deliveries to us improve.”
Both Columbia and Virginia-class submarines are built in modular sections between EB’s yard in Groton, Conn., it’s facility in Quonset Point, R.I., and HII’s Newport News Shipbuilding in Virginia. EB builds the central barrel of both types of boats, while Newport News builds the bows and sterns. For Virginia-class submarines, depending on which yard is delivering the boat, the sections are either barged from Connecticut to Virginia or vice versa. For Columbia-class boats, EB is responsible for the final assembly of the submarines at a custom-built building in Groton.
The timing of welding the sections together is reliant on each module being fully outfitted with all of the components it needs to form the submarine. Interrupting that timing adds costs, Novakovic said.
“Our out-of-sequence work on modules weighing thousands of tons is time-consuming and therefore expensive, sometimes up to eight times the cost of in-sequence work. The operating metrics tell us that we have, in fact, increased our productivity to somewhat offset cost,” she said.
While Novakovic did not specify the components that were responsible, USNI News has previously reported that delays to the Columbia program have resulted from holdups with the bow section of the Columbia-class boats, built by HII’s Newport News Shipbuilding, and the turbines that translate steam from the sub’s reactors into electric power, built by Northrop Grumman.
“One of the most significant challenges that we have with Columbia … is actually the late delivery of the turbine generator to Columbia by subcontractor Northrop Grumman,” Secreatary of the Navy Carlos Del Toro told the House Appropriations subcommittee on defense in April.
“That has had a major impact on the Columbia.”
A spokesman for HII declined to comment on late delivery of components. Spokespeople from Northrop Grumman did not immediately respond to a request for comment from USNI News. A spokesperson from Naval Sea Systems Command did not immediately respond to a request for comment from USNI News.
In addition to slowing production on submarines at EB, Novakovic touched on the ongoing contract negotiations between the Navy and GD over 17 future submarines. The shipbuilder is now negotiating the cost of two Fiscal Year 2024 Block V Virginia-class attack boats – Baltimore (SSN-812) and Atlanta (SSN-813) – that have seen almost $2 billion in estimated cost increases since Congress funded $9.34 billion for the purchase. The yard and the Navy are also negotiating contracts for ten Block VI Virginia-class attack boats and five Build II Columba-class boomers.
“I expect that the FY 24 ships that are not yet under contract will happen maybe in the next few months, but I don’t have a good sense of timing for the remainder of their negotiations on Block VI or Build II of Columbia,” she said.
“It’s going to be hard to get those ships under contract… So, we’re going to have to work that with our customer and Congress.”
Much of the increased cost is tied to an increase in worker salaries to keep up with wage inflation that began during the pandemic.
Novakovic did not touch on the ongoing debate between the Navy, shipbuilders, Congress and the White House over a Navy plan that would unlock money tied to individual submarine contracts to create a pool of funds to pay for one-time salary increases to combat inflation. The plan, known as the Shipyard Accountability and Workforce Support, or SAWS, is under discussion on Capitol Hill and in the Pentagon.
