Bolstered by an effort that saved millions of maintenance dollars, the surface warfare community is squeezing costs across the board

Vice Adm. Terrance T. Etnyre is commander, Naval Surface Forces, with responsibility for ensuring surface ships across the fleet are properly trained, maintained and crewed. He has been vice commander of the Naval Sea Systems Command and commander, Naval Surface Force, U.S. Atlantic Fleet. Etnyre currently has collateral duties as commander, Surface Forces, Pacific Fleet.

Vice Adm. Paul E. Sullivan is commander, Naval Sea Systems Command (NAVSEA), which engineers, builds and supports Navy ships and combat systems. A former program manager for the Seawolf and Virginia classes of submarines, he was NAVSEA’s deputy commander for Ship Design Integration and Engineering from 2001–2005.

Maj. Gen. Gordon C. Nash is director of the Expeditionary Warfare Division for the chief of naval operations with strategic planning responsibilities for amphibious lift, mine warfare, naval fire support and related missions. A former deputy commander of Marine Corps Forces, Atlantic, he has been commander, Joint Warfighting Center, and director of Joint Training for the U.S. Joint Forces Command.

Rear Adm. Barry McCullough is director, Surface Warfare, for the chief of naval operations with planning responsibilities for all facets of surface warfare. He has been commander of the cruiser USS Normandy; director for Strategy and Analysis, J5, at the U.S. Joint Forces Command; and commander, Naval Surface Group, Middle Pacific.

Seapower Associate Publisher Stephen R. Pietropaoli and Editor in Chief Richard C. Barnard were moderators.

Launched in October, the Surface Warfare Enterprise is the newest of the corporate models being established throughout the Navy to eliminate redundancies, improve communications across naval agencies and commands, and drive costs down. However, the surface warfare community is not starting from zero. Its cost-control drive is based in part on ShipMain, the successful effort begun in the fall of 2002 to eliminate duplication throughout the Navy’s maintenance programs.

Created by Naval Surface Force, Pacific, and NAVSEA, the ShipMain concept relied on cross-functional teams to find and eliminate inefficiencies and redundancies in maintenance planning. The teams simplified the maintenance team for each ship in the Navy, bringing together the individuals and agencies that once separately handled various steps in the process. The teams included, for example, each ship’s port engineer and the ship maintenance and material officer. Three years of tedious work and an array of changes, such as the elimination of voluminous data entry forms, produced cost savings estimated at $700 million over six years.

Surface warfare officials now are bringing that kind of planning and efficiency to all their operations, ranging from shipbuilding to deployments. The first step, said Etnyre, is to close down the managerial “stovepipes,” a euphemism for the lack of communications across the parts of an organization that create barriers to teamwork.

“Many well-meaning people committed to the nation and the Navy were making decisions and spending money on the surface Navy,” he said. “However, we did not have a process to focus our efforts, which resulted in stovepipes and miscommunications.”

The Surface Warfare Enterprise will bring “our enterprise leaders to one table” and foster the development of disciplined cost control processes, Etnyre said.

The initiative is led by a 21-person board of directors that encompasses the Navy offices involved in planning, budgeting and managing the elements of surface warfare. Seapower invited the board’s top officials to participate in a Seapower forum, a discussion of vital issues of the day.

One of your goals is to reap the savings necessary to help pay for the future Navy. Where are good places to find substantial savings and how much do you believe you can conserve?

ETNYRE: Anecdotally, if you talk to people who do this kind of thing for a living, they end up seeing gains of 15-20 percent. That could be in people or dollars. It could be in processes or time. There are lots of things it could be.

Where do you look? Well, we already did it in ShipMain, which has been going on for years. It was an enterprise approach. We got everyone together involved in ship maintenance and figured out where the inefficiencies were, and threw them out. A lot of it, by the way, was in the way we planned for maintenance. We saved $700 million across the future-years defense plan. So there are some real savings that we’ve already achieved by taking an enterprise approach.

But why now? Other parts of the Navy have been doing things like this for years.

SULLIVAN: Because of a confluence of things. The Navy has gotten smaller. The money’s gotten tighter. We’re fighting a war. We have to be more efficient. The only way we can do this is to start acting as a team instead of sitting in our stovepipes the way we were before.

Do you have examples of what happens when individuals involved with a project manage from stovepipes?

ETNYRE: There are tons of them. Months ago, I began asking some questions about how we were doing on bringing the Littoral Combat Ship (LCS) to the waterfront. “When is it coming? Where are the support facilities? Where is it going to go?” The answer I kept getting was, “We’re working on it.” It became clear that the units working on the LCS were going off in different directions.

I said, “OK, stop.” And we stood up what I would call a mini-enterprise effort — the LCS Oversight Board — which oversees all of the issues associated with manning, training, equipping and maintaining the LCS. Our first meeting was a real eye-opener. We had one part of the organization that was very surprised to find that the number of people on that ship would be far fewer than what we had on frigates or destroyers. I said, “Where have you been?” This was in June of [2005]. That’s the kind of thing I’m talking about.

In every one of these stovepipes, people were doing good things, but they weren’t aligned. If you’re not aligned, you can’t bring your resources to bear efficiently. You bring people together and you find that department “A” is doing a study on something, and three other departments also are doing studies. And it’s the same study! That’s good for the people doing the studies, but not for us spending the resources four times.

SULLIVAN: In ShipMain, we looked at the modernization process end-to-end and discovered we had about 25,000 ship alterations in the database. When we got through cleaning them all out, we wound up with about 5,000 or 6,000. They were all prioritized. We now know where we are spending our money because we were more efficient and transparent, and that enabled us to give some funding back to the sponsors in that process.

How will the sailors in the fleet feel the impact of the Surface Warfare Enterprise?

NASH: It brings operational integration of, for example, the ship self-defense systems and command-and-control capabilities. We ensure the things we may be putting on an amphib are compatible with the gear on a surface warfare ship. When they are aggregated together in an Expeditionary Strike Group, we have combative compatibility. Besides looking at percentages and fiscal responsibility, the Surface Warfare Enterprise is all about warfighting and ensuring that we remain the world’s greatest Navy.

Will this help control requirements, which is one of the biggest challenges in cost control?

ETNYRE: That’s one of the things the LCS Oversight Board is helping us do right now. In the past, we had 10-15 years to think about what we wanted a ship to be. If we didn’t like it, we tweaked it and it didn’t cost a lot of money. Well, the LCS was built in less than five years from concept to completion.

Now people are coming in and saying, “Gee, we ought to add this; we ought to add that.” At the LCS Oversight Board, one of our cardinal rules is we’re not changing anything. We stay focused on key performance parameters. The bottom line is we got what we asked for, so let’s stick with it.

I feel like we have better cost tools than ever before. We now can do sensitivity analysis on adding and subtracting features of a ship. Once a design is set and you’re in the detail design and construction phase, it’s very difficult to make changes. Even pulling things out costs money because you have to change drawings, and every time you touch a drawing, the cash register rings.

What are your top priorities over the next 18 months?

SULLIVAN: You can’t do strategic cost management as a fine art until you have a very, very good handle on all of the people, products, processes and finances involved. We have to define the boundaries of the Surface Warfare Enterprise. How much money is in the personnel development chain, the ship construction chain, the ship maintenance chain and the operational deployment chain? How much money is really under the purview of this enterprise? How many people are in this enterprise?

It’s not just the sailors on the ships. It’s the sailors and the civilians in the shore infrastructure. It’s folks in the Pentagon. It’s the people in the warfare centers developing the weapons of tomorrow that will be deployed on ships down the road. These are among the reasons why we have three teams on the Surface Warfare Enterprise Board of Directors, for personnel readiness, strategic financial management, and sustainment and modernization.

ETNYRE: In the end, we want to improve our productivity. I can do that in two ways: change the numerator, i.e., deliver more warships for the same cost; or change the denominator and deliver the same number of warships for less cost. In either case, I drive up productivity.

When will we see results in the form of real savings generated by your change?

SULLIVAN: You’ve already seen results. ShipMain started three years ago. It was a very, very tough, long and complex process. It really was a prototype. If you look at the board of directors for ShipMain, it’s largely reflected in the board of directors for the Surface Warfare Enterprise. Hundreds of millions of dollars have already been saved.

What is the best example of cost avoidance or cost savings that you got out of ShipMain?

McCULLOUGH: We saved a large piece of that $700 million in both intermediate-level maintenance and depot-level maintenance. We weren’t planning right.

SULLIVAN: We streamlined the planning process, turned it over to the [ships’] commanding officers, put some stability into ship availabilities and created the multiship, multi-option contracts [that foster long-term relationships with vendors and place more flexibility in the hands of Navy agencies]. We better understand the requirements for maintenance, and we’re doing it in a streamlined fashion.

So you anticipate the same level of results from the Surface Warfare Enterprise?

SULLIVAN: Yes, we do. I have an interesting view of the progress under way, since I’m involved with aircraft carriers, submarines and surface ships. I sit in on three of the five warfighter enterprises in the Navy. The Naval Aviation Enterprise paid all of its fuel billing increase this year with the savings generated from its improved efficiency. It was over $100 million.

They’ve been at this for five years. The good news is that the other four enterprises have been able to piggyback on all of the lessons learned from the Naval Aviation Enterprise. There are different characters in each enterprise, but, fundamentally, all are moving in the same direction.

McCULLOUGH: The [chief of naval operations] has said that we don’t have enough ships, because we have 280 or so. He’s looking at some number greater than that. You start cutting ship classes, Adm. Mullen’s not onboard with that right now. We were going to decommission the FFGs [frigates], but we pulled that off the table. Now, the last FFG goes out in about 2019. Adm. Etnyre’s enterprise is off the ground and running, and I think it will save us a lot of money. Ultimately, the size of the fleet is going to be made by saving classes of ships, not by taking them out.