WASHINGTON — The U.S. Navy is poised to order 10 more destroyers this year, all of which will be the new Flight III variant that integrates Raytheon’s new AN/SPY-6 air and missile defense radar.

Congress is on the cusp of greenlighting a 10-ship buy that the Navy says saves 10 percent overall, essentially giving the service a free ship over the life of the contract. But 2017 saw a vigorous debate between the shipbuilders (especially from Maine-based Bath Iron Works), some members of Congress and the Navy over questions concerning the Navy’s design progress and how much risk was acceptable for a multiyear contract for this major design overhaul.

Both Huntington Ingalls Industries and Bath Iron Works have signed on to build Flight III DDGs — DDG 125 will be the first one, built at Ingalls in Mississippi, followed by DDG 126 at Bath Iron Works — but questions linger about whether entering into a multiyear contract on what is almost a new class of ship invites delays and cost overruns.

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The ship is being built for the air and missile defense radar, and fitting the system in the design required integrating a new electrical power system and about a 45 percent redesign of the class.

(GAO and U.S. Navy)
(GAO and U.S. Navy)

The Navy thinks it has done everything within its power to reduce the amount of uncertainty, according to Capt. Casey Moton, the DDG 51 program manager, most importantly through detailed 3-D modeling of the ship.

“When I say 3-D modeling, I’m talking about the pipe hangers, or the brackets on the power panels and the foundations for the equipment — I mean it is to the detail that the shipbuilder needed to build,” Moton said. “So we believe that level of maturity is more than sufficient for the builder and the shipyard to do a fixed-price incentive contract. We also think it’s more than sufficient detail to move to a multiyear.”

The Navy is also doing a bunch of testing — the AN/SPY-6 will soon be shipped to the Aegis testing facility in Moorestown, New Jersey, to begin integration with the new Baseline 10 software, Moton said. The back end hardware is already being tested with Baseline 9, he added.

The power and cooling systems are being tested in Hawaii with the AN/SPY-6, and both systems are working well. The major new components of the electrical system, which uses some components from DDG 1000, are being shipped to the Naval Surface Warfare Center in Philadelphia, Pennsylvania, for testing. (Those are the Leonardo DRS power conditioning modules, which convert AC power to DC, and the 4,160-volt gas turbine generators.)

The 3-D modeling is also being applied to the electrical system, Moton said.

“We did a very detailed 3-D model of the electric plant,” Moton said. “So we had already tested that model and we’d already done extensive testing of normal operations, casualty mode if, say, a system goes down.

“We’ve even done battle damage, taking a missile hit and figuring out [how] to restore the plant — we’re built to fight. We’ve already started making adjustments to the control software based on that testing, and that’s even before the first piece of equipment arrives in Philadelphia.”

As it stands today, Ingalls’ Flight III (DDG 125) will be the first to deliver in 2023, followed by Bath’s DDG 126 in 2024. Both of those ships were changes to already contracted ships. Bath will be later, Moton said, because the addition of DDG 127 — slated to be a Flight IIA — pushed its timeline back.

Lingering doubts

Analysts agree the Navy has taken measures to reduce the risk of cost overruns and delays. And yet some still doubt whether moving to a multiyear buy before even one ship gets in the water is a prudent idea.

Bryan McGrath, a retired destroyer skipper and consultant with The Ferrybridge Group, said that despite extensive modeling, the redesign complexity means the shipyards and the Navy don’t have a firm idea of how much the new ship will cost.

“Everyone is just sort of guessing what it will cost,” he asserted. “When the shipyards are bidding on a multiyear on a design that includes as much immaturity as this one does, they have to price that risk.

“One outcome is they overprice the risk and the taxpayers pay, or they underprice the risk and the taxpayers pay, or they get it right. But the reality is that these sort of risk calculations are difficult to get right.”

McGrath said he’s supportive of the program but that it would be best to first build a few to get an accurate idea of the costs.

“I am a big believer in the Flight III DDG and the direction it’s going, but the differences between it and the IIA are considerable. Substantial enough to warrant prudence, and that to me means each shipyard building at least a number of these successfully before we go to a multiyear procurement.”

Failure to do so will likely lead to grumpy exchanges before the Senate Armed Services Committee about cost overruns that were predictable.

“I can see a day where we have the DDG 51 program manager and the assistant secretary of the Navy for research and development called before the SASC, six to 10 years from now to answer for cost overruns that were wholly foreseeable given the risk of moving from a IIA to a Flight III,” McGrath said.

Thomas Callender, a retired submariner and analyst with the Heritage Foundation, acknowledged that bidding a multiyear before a single ship is built is unusual, but he added that the risks were worth the costs.

“The biggest benefit to the multiyear, the block buy, is you get the economy of scale,” Callender argued. “With long-lead items, the builders can buy them ahead of time. And for small vendors, for the subcontractors, it gives them the security to ramp up production. It provides them more security to plan and the Navy gets some additional savings there also.

“The downside is you are buying 10 of them before you even build one, but it’s not like we’re not going to buy them anyway if we don’t do it now.”

Delays in Congress

Doubts aside, the final approval of the Flight III multiyear is hung up in Congress, awaiting passage of the defense appropriations bill. The government is currently operating under a continuing resolution.

The House appropriators have passed its bill, but the Senate is yet to weigh in, save for the Senate Appropriations Committee Chairman Sen. Thad Cochran’s markup, which proposes 10 ships in line with U.S. President Donald Trump’s budget request.

That’s five fewer than was authorized under the 2018 National Defense Authorization Act, which passed in December.

All of this, however, is in flux because nobody actually knows how much money is going to be allotted for defense. And until that top line is established, it’s anyone’s guess what it’s going to be.

The much-touted $700 billion defense bill is nothing more than a congressional wish list until appropriators come up with the cash, which is some ways off pending a spending deal.

The current deal means the government has until Jan. 19 to strike a deal on the budget or another continuing resolution.

If all goes according to plan, Moton said, the award of the multiyear is on track for this summer. In the meantime, Ingalls is slated to begin fabrication of its first Flight III in May, he added.