This post has been updated to clarify comments from Matt Paxton on government oversight in shipyards.
The Navy’s culture of risk aversion is preventing the service from delivering new construction ships and performing repair work in a timely fashion, the president of the Shipbuilding Council of America told the House Armed Services Committee Wednesday.
As a customer the Navy has become “more bureaucratic and more risk averse” in building ships, Matthew Paxton testified. That culture applies to classes ranging from aircraft carriers and ballistic missile submarines to as auxiliaries
Although Wednesday’s hearing was devoted to broad defense industrial base issues, many of the members’ questions centered on shipbuilding, repair and workforce, with a focus on last session’s bipartisan-supported SHIPS bill to revitalize domestic commercial shipbuilding and the maritime sector. The bill will likely be re-introduced this spring.
“We should have a national maritime strategy that stitches together the industrial base with our Nary, our Coast Guard, our merchant marine. The SHIPS Act does all those things,” Paxton said.
The effort touches on recent comments by Defense Secretary Pete Hegseth earlier this month.
“We need to vastly increase our ability to build ships and submarines. Not just for ourselves, but to honor obligations to our allies as well, and we will do that,” Hegseth told NATO allies in Germany.
To meet the submarine requirement for both the United States and Australia under the Australia-United Kingdom-United States agreement [AUKUS], American shipyards need to produce 2.33 submarines per year. General Dynamics Electric Boat and HII Newport News Shipbuilding are delivering 1.2 per year. The last Biden administration budget request only listed one Virginia-class sub.
Paxton highlighted the level of oversight in shipyards.
“Anecdotally, I can see this on the ground – for example, I was recently in a shipyard where
the ratio of shipyard workers to NAVSEA oversight was 16 to 1 and in another [smaller] shipyard… had a 2 to 1 ratio,” reads Paxton’s written testimony.
“In any objective view this is simply not efficient and overly burdensome.”
In terms of new construction, the Navy’s design changes hamper the ability to build ships, Paxton wrote in his prepared remarks.
“On the Landing Ship Medium (LSM) where five concept design studies were awarded to industry in 2021 with the Navy requesting industry use a parent design, with evolving modifications through a series of impact studies. As with FFG(X), the Navy continued to add requirements, including shock and firefighting systems, which drove the cost of the ships well above the $150 million average initially estimated by the Navy. What examples like these demonstrate is that by the time the contract is awarded, industry is already operating at a loss,” he wrote in the remarks.
“There’s a constant churn” in Navy requested changes, especially in building auxiliaries sometimes built in the shipyard where the vessel is under construction, he told the panel.
Paxton called for a partnership with the Navy in building ships rather than a competition among shipyards for contracts.
“The emphasis on ‘competition’ comes at the expense of partnering with industry, understanding and utilizing best practices and ultimately completing successful acquisition programs,” he said.
Eric Fanning, president of the Aerospace Industry Association, and David Norquist, president of the National Defense Industrial Association told the committee that similar conditions of changing requirements and start-stop-start-again production exist across the board in the defense industrial base.
The witnesses added demand signals on what’s needed routinely change through “strategic pauses and sequestration.” Other hurdles for industry include contracts taking 300 or more days to be signed and then stymied by Congress’ failure to pass budgets on time, squeezing small firms and putting additional pressure on the supply chain.
Looking at this year’s budget request, which has yet to be passed, Paxton said the use of continuing resolutions is “agonizing for industry.” Fanning added the CRs “create extra stress” on an already stretched supply chain.
The current CR expires March 14.
In addition, since the COVID-19 pandemic, there has been a “greening of the workforce” as older, more skilled workers retired or sought employment elsewhere, the three said.
“That the pinch-point,” Paxton said. “We’ve been on a peacetime footing for decades. China and others have massively invested in their industrial base, building military capable right next to their commercial vessels.”
The Navy, through targeted investments, has had success recently in rebuilding the skilled workforce required in shipyards, Fanning said.
“That’s a model we can spread across the industrial base,” he said.
When all the factors from continuing resolutions to change work orders are combined, these “are strong disincentives” to doing business with the Defense Department, Fanning said.
