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Contracts - Awards

BMD in Bunches: The USN’s Multi-Year Destroyer Contract, FY 2013 – 2017

Modernized DDG-51 Flight IIA

Modern Flight IIAs
(click to view full)

September 3/15: The Missile Defense Agency is lessening its ambitions external link for the number of ships that will be equipped with ballistic missile defense to 39 from 48. Between the Navy buying fewer, more expensive ships and opting not to staff ships in drydock with BMD-qualified crews, the number 39 seemed more realistic, if further away from the commanders’ request of 70.

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DDG 110 & MH-60S(click to view full) Technically, the Ticonderoga Class cruisers sit at the pinnacle of the US Navy’s surface combatant fleet. They’re no longer being built, however, and the growing preponderance of Arleigh Burke Class destroyers in missile defense roles is beginning to push them to the fore. A proposed Flight III design with a much-improved radar set will complete that transformation. The USA’s FY 2013 budget documents include a proposed $16.189 billion Multi-Year Procurement deal for 9 destroyers from FY 2013 – 2017: DDGs 117 – 125, with the award split between General Dynamics Bath Iron Works and Huntington Ingalls Industries. The buy intends to include both existing Flight IIA ship designs, and new Flight IIIs. The MYP, and Flight III [youtube:v=616guIzmyGw] AMDR engagementclick for video Under the multi-year deal, 1 of 2 FY 2016 ships (DDG 123), and both FY 2017 ships (DDG 124-125), will “incorporate Flight III capability,” but not their core AMDR-S radars themselves, which will be bought as separate items. Each ship takes about 4 years to build. The installation of the radar and other associated systems will be funded as an Engineering Change Proposal (ECP), so it doesn’t affect multi-year pricing. Otherwise, […]
USS William P. Lawrence & MH-60S helo

DDG 110 & MH-60S
(click to view full)

Technically, the Ticonderoga Class cruisers sit at the pinnacle of the US Navy’s surface combatant fleet. They’re no longer being built, however, and the growing preponderance of Arleigh Burke Class destroyers in missile defense roles is beginning to push them to the fore. A proposed Flight III design with a much-improved radar set will complete that transformation.

The USA’s FY 2013 budget documents include a proposed $16.189 billion Multi-Year Procurement deal for 9 destroyers from FY 2013 – 2017: DDGs 117 – 125, with the award split between General Dynamics Bath Iron Works and Huntington Ingalls Industries. The buy intends to include both existing Flight IIA ship designs, and new Flight IIIs.

The MYP, and Flight III

[youtube:v=616guIzmyGw]

AMDR engagement
click for video

Under the multi-year deal, 1 of 2 FY 2016 ships (DDG 123), and both FY 2017 ships (DDG 124-125), will “incorporate Flight III capability,” but not their core AMDR-S radars themselves, which will be bought as separate items. Each ship takes about 4 years to build. The installation of the radar and other associated systems will be funded as an Engineering Change Proposal (ECP), so it doesn’t affect multi-year pricing. Otherwise, the Navy wouldn’t be able to show enough savings to justify a multi-year buy under US laws.

The Flight III ECP won’t be awarded until the Flight III Milestone Decision Authority approves the DDG 123-125 configuration, which is still in flux beyond the core radar and AEGIS BMD combat system. There will be some changes to electrical power generation, and the weight and balance of the new radar and cooling elements could force structural alternations to the ship and superstructure. The timing of the Flight III configuration approval will affect costs, because refits are always much more expensive than installing new systems and designs during initial ship construction.

The truth is, the ECP approach is less than honest. Instead, a fully honest alternative would have meant buying the ships without the multi-year deal’s projected savings of $1.538 billion, at a time when Navy budgets are very tight. It would probably have cut overall period buys by 2 destroyers, and shifted some money elsewhere. That would have left the Navy without 2 key combatants, as the frigate-sized Littoral Combat Ship that sits below the Arleigh Burkes in USN force structure is more of a support ship than a serious combat vessel. This approach would also have placed 2 fewer BMD-capable ships into the fleet. So the Navy made their submission, and Congress chose to go along.

One area that gets less attention than it should is power generation. DID has covered associated research into Hybrid-Electric Drive modifications, which could substantially improve the DDG 51’s anemic 7.5 – 9.0 MW of generated electrical power, but current plans for Flight III ships involve just 12 MW limits. That may help power a radar like AMDR, but it’s far outclassed by smaller modern platforms like Spain & Australia’s AEGIS frigates (40+ MW), Franch FREMM frigates (32 MW), etc. It’s also well short of the 15-30 MW required to operate advanced weapons like 32MJ railguns in an air defense role, or to comfortably supply 200+ MW lasers.

Contracts and Key Events

AHDS

NGC AHDS
(click to view full)

One thing to notice while reading these is that ship construction contracts don’t include important equipment like guns, radar, combat systems, missile launchers, etc. Those are bought independently as “Government Furnished Equipment,” though ship construction contracts do pay to have that equipment installed in the ships. The multi-year Aegis system contract in this article is just the beginning; indeed, those “ancillary” contracts make up the largest portion of a DDG 51 destroyer’s total cost, which USN budget documents place at an average of about $1.8 billion between FY 2014 – 2018.

Note that separate DID articles already exist for AEGIS Ballistic Missile Defense, and for the AMDR radar program that sits at the core of DDG-51 Flight III.

FY 2014-2015

Modernized DDG-51 Flight IIA

Modern Flight IIAs
(click to view full)

September 3/15: The Missile Defense Agency is lessening its ambitions for the number of ships that will be equipped with ballistic missile defense to 39 from 48. Between the Navy buying fewer, more expensive ships and opting not to staff ships in drydock with BMD-qualified crews, the number 39 seemed more realistic, if further away from the commanders’ request of 70.

April 14/15: The Navy needs more missile defense assets, according to the Chief of Naval Operations Adm. Jon Greenert. The number of BMD ships required in 2016 to meet operational demand is expected to double, to 77.

June 8/14: Industrial. The Navy, HII, GD-BIW and Congress are all entangled in a ship allocation controversy, as a result of a 2002 MoU that shifted work on 3 LPD-17 ships to Northrop Grumman (now HII), in return for corresponding destroyer awards to GD Bath Iron Works.

Everything was fine until Congress began placing funding in the proposed FY 2015 budget budget for a 12th LPD 28 ship. If that goes ahead, does HII have to take away one of its destroyers under this multi-year contract, and give it to GD-BIW? Bath Iron Works says absolutely, yes, and we consider that legally binding. HII says that GD-BIW winning construction of DDG 116 as an extra ship, via competitive bid, satisfies the terms as their 4th extra destroyer. The Navy says “we didn’t want LPD 28, leave us alone.” The lawyers say “job security!” Sources: Defense News, “Fallout From 12th LPD: Fine Print in Old Deal Could Cost Yard a Destroyer”.

April 8/14: CRS Report. The latest iteration of “Navy DDG-51 and DDG-1000 Destroyer Programs: Background and Issues for Congress” offers a greater focus on the DDG-51 Flight III destroyers, along with 2 key issues for the design. CRS reports aren’t made public directly, so it took until May for public copies to appear.

One issue is whether AMDR development can be completed, and the 1st radar delivered, in time to support a ship ordered in FY 2016. AMDR-S entered system development 6 months late due to protests, and software development “will require a significant effort.” Because the Flight III is structured as an ECP change within this multi-year contract, the Navy can choose to delay issuing the ECP, shifting the start of Flight III procurement to FY 2017 – or even outside the multi-year contract entirely.

The 2nd big issue is electric power. Even the reduced 14′ AMDR-S envisaged for Flight III will require more power, and the US Navy is becoming more and more convinced that high power-draw weapons like 100-300 kW lasers and electro-magnetic railguns are necessary to maintain affordable defense and offense. Unfortunately, power generation seems likely to remain a problem for the Flight IIIs. This has already played a role in forcing initial use of the lower-draw AN/APQ-9B+ as Flight III’s initial X-band radar, and creates big questions around the ships’ growth margin. It also creates a risk that Flight III ships would become obsolete early in their service lives, leaving the US Navy with either a fleet that’s either ill-equipped and expensive or vastly reduced in size:

“The written testimony of the Chief of Naval Operations (CNO) before the House Armed Services Committee on February 16, 2012, and before the Defense subcommittee of the House Appropriations Committee on March 1, 2012, stated that the Flight III design would use an all-electric propulsion system…. The written testimony of the CNO before the Defense subcommittee of the Senate Appropriations Committee on March 7, 2012, and before the Senate Armed Services Committee on March 15, 2012, omitted the reference to the Flight III DDG-51 being equipped with an all-electric propulsion system. In response to a question from CRS about the change in the testimony, the Navy informed CRS on March 15, 2012, that the statement in the earlier testimony was an error, and that the Flight III DDG-51 will likely not be equipped with an all-electric propulsion system.

….the Flight III DDG-51 will not feature a fully restored growth margin, will not be equipped with an integrated electric drive system or other technologies that could provide ample electrical power for supporting future electrically powered weapons, and will not incorporate features for substantially reducing ship crew size or for otherwise reducing ship O&S costs substantially below that of Flight IIA DDG- 51s.”

March 14/14: FY14. US NAVSEA in Washington, DC announces its awards for the year.

HII in Pascagoula, MS receives $681.4 million: $602 million exercises an option for 1 DDG 51 Flight IIA destroyer that will become DDG 119, then there’s $79.4 million in advance procurement funding for the FY 2016-2017 ships. HII’s work will be performed in Pascagoula, MS (56.3%); Cincinnati, OH (6.9%); Walpole, MA (4.5%); York, PA (1.9%); Camden, NJ (1.4%); Erie, PA (1.3%); Charlottesville, VA (1%), and other locations less than 1% (26.7%), and all construction under the contract is expected to be completed by July 2023 (N00024-13-C-2307).

Bath Iron Works in Bath, ME receives $722 million: a $642.6 million contract modification exercises an options for 1 DDG 51 Flight IIA Class destroyer that will become DDG 120, then there’s $79.4 million in advance procurement funding for the FY 2016-2017 ships. BIW’s work will be performed in Bath, ME (58.1%); Cincinnati, OH (6.5%); Walpole, MA (4.5%); South Portland, ME (2%); York, PA (1.9%); Charlottesville, VA (1.8%); Coatesville, PA (1.7%); Erie, PA (1%), and other locations less than 1% (22.5%). $100 million will expire at the end of the current fiscal year, on Sept 30/14, and all construction under the contract is expected to be completed by July 2023 (N00024-13-C-2305).

Readers may recall that the multi-year deal (q.v. June 3/13) did not contemplate a contract for BIW this year. In January 2014, however, the Senate passed a spending bill that included $100 million to allow BIW to begin planning for construction of their optional 5th DDG-51 destroyer. The Navy exercised that option early in this contract set, bringing GD-BIW to 5-ship parity with HII. HII expects to begin fabrication for DDG 117 Paul Ignatius in Q3 2014, as the first ship of the multi-year contract. No word yet on DDG 118 at BIW, but it shouldn’t be far behind. Sources: Pentagon DefenseLINK | US NAVSEA, “Fiscal 2014 DDG 51 Destroyer Contract Awards Announced” | HII, “Ingalls Shipbuilding Awarded $602 Million Destroyer Contract” | GD-BIW, “Navy Awards General Dynamics Bath Iron Works $643 Million Construction Contract for DDG 51 Class Destroyer” | Bangor Daily News, “Bath Iron Works gets nod for fifth destroyer”.

[youtube:v=aMSEtDDyVoo]

Aegis

Dec 27/13: Aegis. Lockheed Martin Mission Systems and Training in Moorestown, NJ receives a multi-year $574.5 million firm-fixed-price contract for Aegis MK 7 equipment sets. All confirmed orders will be used in destroyer production and refits (DDG 117 – 123), but there’s 1 option that can be used for Poland’s Aegis Ashore complex, along with associated engineering services. Lockheed Martin confirms that the core of all sets will be Aegis Baseline 9, which includes missile defense features.

$308.4 million in FY 2013 shipbuilding funds is committed immediately, to enable advance buys in bulk. Work will be performed in Moorestown, NJ (85.5%); Clearwater, FL (13.1%); and Akron, OH (1.4%), and is expected to be complete by September 2021. As one would expect, this is a sole source contract under 10 U.SC 2304(c)(1). US NAVSEA in Washington Navy Yard, Washington, DC manages the contract (N00024-14-C-5114). See also Lockheed Martin, Jan 7/14 release.

Aegis MYP contract

Oct 18/13: CBO Report. The Congressional Budget Office publishes “An Analysis of the Navy’s Fiscal Year 2014 Shipbuilding Plan“. With respect to AMDR:

“Adding the AMDR [to the DDG-51 design] so that it could operate effectively would require increasing the amount of electrical power and cooling available on a Flight III. With those changes and associated increases in the ship’s displacement, a DDG-51 Flight III destroyer would cost about $300 million, or about 20 percent, more than a new Flight IIA destroyer, CBO estimates. Thus, the average cost per ship [for Flight III DDG-51s] would be $1.9 billion…. Most of the decrease for the Flight III can be attributed to updated information on the cost of incorporating the AMDR into the Flight III configuration. The cost of the AMDR itself, according to the Navy, has declined steadily through the development program, and the Department of Defense’s Cost Analysis and Program Evaluation (CAPE) office concurs in the reduced estimate…. Considerable uncertainty remains in the DDG-51 Flight III program, however.”

Expected Flight III costs

FY 2012 – 2013

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AEGIS BMD
click for video

June 3/13: MYP. US Naval Sea Systems Command in Washington, DC issues its fixed-price incentive fee shipbuilder contracts for the multi-year buy. DDGs 117 – 122 will all have Aegis Ballistic Missile Defense capability pre-installed, while DDGs 123 – 125 will be Flight III ships with the new Air & Missile Defense Radar (AMDR) dual-band radar. An option could also finance the Flight III destroyer DDG 126.

Huntington Ingalls Inc. in Pascagoula, MS wins $3.33 billion for 5 ships: 1 each year from FY 2013-2017. Options for engineering change proposals, design budgeting requirements and post-delivery availabilities could bring the cumulative value to $3.386 billion.

Work will be performed in Pascagoula, MS (56.3%), Cincinnati, OH (6.9%), Walpole, MA (4.5%), York, PA (1.9%), Camden, NJ (1.4%), Erie, PA (1.3%), Charlottesville, VA (1%), and other locations below 1% (total 26.7%), and is expected to be complete by July 2023 (N00024-13-C-2307).

Bath Iron Works in Bath, ME wins $2.843 billion for 4 ships: 1 in FY 2013, and 1 per year from 2015-2017. This contract includes options for construction of a 10th DDG 51 class ship under the contract, plus engineering change proposals, design budgeting requirements and post-delivery availabilities. If all options are exercised, it could bring their total to $3.53 billion.

Work will be performed in Bath/Brunswick, Maine (58.9%), Cincinnati, OH (6.4%), Walpole, MA (4.4%), South Portland, ME (2%), York, PA (1.9%), Charlottesville, VA (1.8%), Coatesville, PA (1.7%), Erie, PA (1%), and other locations below 1% (total 21.9%), and is expected to be completed by July 2023 (N00024-13-C-2305).

Even with all options awarded to both shipbuilders, the maximum award is $6.916 billion, out of the MYP program’s total $16.189 billion. Or about 42.7% of the budget. That’s within the normal range for a warship.

Finally, note that in order to avoid blowing up the budget and making the ships ineligible for a multi-year buy under US laws, the Navy offers the transparent dodge that all ships are Flight IIA ships, while all Flight III R&D and changes will be “Engineering Change Proposals” (ECP) outside of the budget. Their current claim is that the overall design impact will be similar to those introduced in the FY 1998 – 2001 MYP, which replaced Lockheed Martin’s SPY-1D radar with the SPY-1D(V) variant from the 3rd ship (DDG 91) onward. That seems to be more than a bit of a stretch, but Congress agreed to go along with it. Time will tell. See also: US Navy | GD BIW [PDF] | HII.

Destroyer MYP contract

Feb 13/12: FY 2013 budget & MYP terms. The USA’s FY 2013 budget documents include a proposed $16.189 billion Multi-Year Procurement deal for 9 destroyers from FY 2013 – 2017: DDGs 117 – 125, with the award split between General Dynamics Bath Iron Works and Huntington Ingalls Industries. Before destroyer orders ended in FY 2005, 24 Flight IIA destroyers had been bought under 2 multi-year contracts, so this is a return to standard practice after the FY 2010 – 2013 restart.

Claimed savings are $1.538 billion, or about 8.7%. Somewhat surprisingly, supply chain bulk buys are expected to save just $152 million, while more efficient pre-production planning and a stable long-term workload that allow better processes and training are expected to save $530 million (planning & design) and $810 million (manufacturing).

The Flight III ECP contracts will not be awarded until the Flight III Milestone Decision Authority approves the configuration. The base Flight IIA dimensions and hull form won’t change, but the topside deckhouse that mounts the radars etc. will change to accommodate the AMDR-S radar (and, according to subsequent revelations, the SPQ-9B X-band radar topside), plus unspecified upgraded power and cooling systems. Key components like the LM2500 propulsion gas turbines, Mk.41 Vertical Launch System, Mk.45 127mm naval gun, Mk.15 Phalanx 20mm CIWS, AN/SQQ-89 Undersea Warfare System, and Tactical Tomahawk Weapon Control System will also remain unchanged, but that list leaves key items like the combat system open for discussion.

Additional Readings

* US Navy – PEO Ships DDG 51.

* Globalsecurity.org – DDG-51 Arleigh Burke-class. Very good set of information includes ship tables.

* General Dynamics Bath Iron Works – Arleigh Burke (DDG 51) Class.

* HII – U.S. Navy Destroyers.

* DID – Serious Dollars for AEGIS Ballistic Missile Defense (BMD). Includes a record of every intercept test.

* DID – AMDR: Raytheon is Building the USN’s Next Dual-Band Radar. Key to Flight III.

* DID – US Destroyers Get a HED: More Power to Them! Hybrid-Electric Drive, likely to be key to AMDR. American DDG 51 destroyers are way behind other countries’ comparable air defense ships, whose modern systems produce far more power.

News & Views

* CSBA (Nov 17/14) – Commanding the Seas: A Plan to Reinvigorate U.S. Navy Surface Warfare (incl. full PDF). Notes the 12 MW limit for Flight III destroyers, and lays out a doctrine that will be very difficult for the currently-envisioned Flight III to achieve.

* US CRS (April 8/14, #RL32109) – Navy DDG-51 and DDG-1000 Destroyer Programs: Background and Issues for Congress.

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