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Good morning, it’s great to be back with the Submarine League and I want to start by thanking many of you who have helped us through the last month or so after the Washington Navy Yard shootings. The contractors around M Street, that have hosted displaced PEOs and contracts folks and technical folks, we really appreciate everything you’ve done for us and made it possible for us to stay in business for the last month and a half. First and foremost we had to take care of the families. That’s a job that really will never stop. Those twelve families are our twelve families. Second, taking care of the workforce. I encourage you when talking to people who were in the building, or who were associated with folks who were in the building, continue to ask them how they’re doing. I’ve grown very used to looking people in the eye and saying, ‘how are you doing?’ and when you get that vacant stare, or you get them looking at their shoes, that’s a time to probe into that and find out what’s really going on. Finally it is getting everybody back to work. If I learned anything from 9/11, it is that work which gives you a reason to get up and get away from the TV and do the things that are important in your life it helps that healing process. So that’s probably been the biggest challenge and I’ll talk about that here in just a few minutes.

One of the things you may have noticed is about week three of the recovery effort; we issued our Strategic Business Plan. We’ve been working on that strategic business plan since before I took over. We did a canvas of the stakeholders, the industrial base, and the health and welfare of our maintenance facilities and looked at what we really want to work on for the next five years. The previous strategic business plan, which was a 2008-2013 product, had actually expired. Timing was pretty good. We looked at it and asked if it was worth issuing. A bunch of good engineers made a list and ticked them off and so we decided that the plan was a pretty good idea.

Then for the strategic business plan, we picked three broad areas. They had to have taglines, nothing quite as catching as two for four in twelve but we tried pretty hard on that. The first one really is designed to stand alone. It’s All About the Ships. It’s something I’ve been fond of saying many, many, many times. Especially when people start saying “… it’s not about the platforms it’s about the network,” or ” … it’s about the system of systems.” Well, I would just argue that everything the Navy does for the nation gets to the point of effectiveness on a ship. So we build networks, but those networks go on ships to get to the fight. We build missiles, they go on ships. We build airplanes, they go on ships. So in that sense it is all about the ships. Those platforms, those two hundred and eighty four ships that make up our current Navy, are the capital investment that we put all those tax dollars against, and are the things most important to preserve as we look forward.

I know you have had some discussion about the financial environment. I look at it in the long haul. I came in the Navy in the seventies and it was pretty bad. Destroyers in Norfolk were tied up. We had race riots and ships that couldn’t get underway. We kind of pulled out of that. The eighties build up, six hundred ships, let’s go beat the Russians. Throughout the eighties … tear down that wall, well then they did. The budget tipped over and we spent most of the nineties going down. About the end of the nineties, boy we had gone pretty far down, so we probably thought about coming up. After 9/11 we spent all the two thousands going up … So by my calculations, we’re in year three of a ten year downsize. That’s my look at it. So all of this, ” … we’re gonna fix it this year,” and ” … it’s gonna get better next year”– I doubt it.

This is what it’s gonna be like, we’re gonna fight through this for four or five years. Hopefully that’s what will happen. Because what normally pulls us out of one of those downturns is something really bad in the world. I actually believe that this just forms the framework upon which you have to build your business plan. That’s reality, that’s what we have to work towards.

In the context of It’s All About the Ships, that means that for the ones we have in our hands we have to figure out how to get every possible operational day out of them. For the ones which we are building, we have to build them with absolute precision with respect to executing the programs. In that sense I think we’re in pretty good shape from the new construction perspective. All the things that we wrote, all those articles over the last few years about the LPD-17, the Littoral Combat Ships, etc., most of those ships are in serial production. We’re in multi-year procurement for pretty much everything that’s on the docket; for the DDG-1000, three ships are bought. The big deck ships are periodic ships, kind of in that five year time hoorah. A four to five year build horizon and we don’t really ever get to serial production on those. Each one ends up being, by its nature, a unique challenge as workforce tum-over makes our learning curve struggle to bridge a five year time between building one and building the next one.

So the build program is actually what we need for the kind of a time period we’ re in. If you’re on a downsize, you need to be in serial production on cost effective ships. You need to be pumping them out. Making doughnuts like I always tell my friend Dave Johnson go make some good doughnuts. It is very, very important that we execute those acquisition programs with precision.

The other two hundred and eighty four ships though, are ones that we want to keep in the force. We want to keep them up and running and the challenges there are fairly daunting. We had spent most of the nineties I’ll say not doing our maintenance in those challenging financial times. I would exempt the submarines and in some ways the aviation parts of the aircraft carriers; they got the maintenance they had to have to be able to safely take human beings into the air and under the water. For the rest of the fleet, however, we spent a lot of time figuring out how to not do maintenance we knew we needed to do. We spent the end of the nineties and the beginnings of the two thousands buying much of that back, and to a great measure we have reestablished the technical basis upon which we are maintaining our surface ships.

We are on a pretty good path to resource that maintenance and make those ships get out to the end of their service lives. I give Kevin McCoy a lot of credit for having put us on that stable path, getting the surface maintenance business back up and running. Establishing an industrial base that can do that maintenance and in reality, getting to the technical understanding of the ships and how they’re aging, what needs to be fixed, where we can take some risk … and that ends up being really the essence of what that first part of the business plan is. Those two hundred and eighty four ships and caring for them. That means for the surface ships, understanding the technical baselines, planning and executing those availabilities.

For submarines and aircraft carriers that means resourcing our public shipyards to the level that they need to execute the maintenance in front of them. Those public shipyards, like everything else in the budget over the past couple years, have been underfunded and the manning has reflected what we saw in the nineties. Throughout the nineties and the early two thousands we fought to buy back lost submarine days. We had these famous charts we used to put up at briefings like this. We counted the three or four submarines we lost each year due to delays in the public shipyards. We are marching right back down that path. Under-resourced in the public shipyards by more than a thousand people, and as a result, submarines are languishing in those yards and Phil yells at me pretty much every day for ” … how come my ships aren’t back at sea?” So those challenges are right in front of us. That is day job work of the entirety of the NAVSEA organization and so we’re off working on it.

The second broad area is something that I have believed since I was a program manager. Really I think I understood it before that but program management is really what brought it out. It is very difficult to be technically excellent, but we’re really good at it. There is a technical excellence in our ships, in our Navy, in the industrial workforce, a technical excellence that is undeniable. Most countries come to us for help in that area. The judiciousness and I use the CNO’s word, a lot of people ask, what does that mean? What does judiciousness mean? I really think of it as okay, it is my money, and I am going to go btty something for myself, how wo11ld I spend it? And when I talk to the workforce I say, look those are our tax dollars and that is our Navy. I make a good argument that the Navy is as important to the nation today as it has been at any time since ’45, that as we have recognized that Alexander was correct, land war in Asia is a really bad idea. The reliance on our Navy and reliance on it around the world, whether it be out in the Western Pacific, three or four problematic countries that Phil spends all his time with around the Indian Ocean and even into the Mediterranean, which has become an incredible hot spot of Naval activity. There are three sites that have Navy ships on station doing the nation’s business. And so, the judiciousness part of that is it is easy to be technically excellent compared to being technically excellent and judicious, and for my technical workforce, that is a tremendous challenge.

Look, I want the very best that the nation can get, but I also need it to be affordable in the context of keeping enough ships at sea and having the money to do the few recapitalization things that have to be done over the next few years. Figuring out how to put that into words, I am always looking for examples of how to characterize that, where is the balance point? How do we make sure it is focused on the overawing challenge through 2080 and be affordable in the context of a fifteen or sixteen billion dollars a year ship building program. That is a challenge of the first order. It really does fully represent the challenge that is there, and in it we have to recognize we have been fairly judicious to now, and I will use the summary and example of the extension of the maintenance period as to the use of submarines. Pat Brady, Mike Jabaley, and many of you, spent a lot of time to get us from five and six year centers for big maintenance fails, all the way out to ten and twelve years. Well, there are some seams starting to show in that, and I will just give you one example of how close to the margins we can be at times. A standard Ohio class uses about 900 thousand turns a month on its propeller shaft and an SSGN uses about l. l million turns. We missed that math when we calculated the periodicity for our SSGN, and we have a couple of shafts on SSGNs that are a little bit past where we are comfortable with them operating, and when you do the math on that, you say, whoops, I think we might have gone a little bit too far there. There are indications that we know how to do this, but we have to be really careful because we are going to go places that we have not been before. We are going to take systems and stretch them and find out how far we can really go between these major maintenance periods. I think that those challenges, putting those in front of a technical workforce who feel personally liable for the decisions they make and who will be held accountable if those decisions tum out badly in fleet operations and get them to take those risks, and they got to know that certainly their commander has their back and really that is the essence of what that discussion is about.

The third topic that is in there is sort of a no-brainer, a Culture of Affordability. How do we take that and permeate it into the entirety of the organization and have everybody thinking that way as we execute our business. Culture is the hardest of things to change, and so we have to lead by example and provide plenty of opportunity to show how that all works. I will just give you one example. I know there was a lot of discussion at last year’s conference about the MIAMI fire. Ultimately, we decided to decommission MIAMI instead of overhauling it. I would tell you that without sequestrations and continuing resolutions, I think we would be repairing MIAMI right now. The financial condition we were in when we decided to repair it and the financial condition we find ourselves in today are completely different, but that decision is taken. MIAMI is on the road to decommissioning and that is a sad day for the nation, as she had five deployments left in her, but the other thing that comes out of that is we forgot how to fight big fires, particularly in our ship yards and maintenance depots. That is where you have a ship that is mostly shut down, a crew that is mostly not on board, and a hodgepodge of activities responsible for helping put fires out, whether it be federal firefighters, firefighters from out of town, the ship’s force that is around, the shipyard that is around. Learning those lessons and trying to figure out what to do with all that has been a significant challenge, and we wrote a new manual.

Many of you know the 6010 manual and all the things that brought to ship safety in big maintenance avail-abilities. Well we wrote an 8010 manual for fire safety, and I think Admiral McCoy intended to sign it before he left but he did not. It is a big book on my desk, and I looked at it at my first opportunity. The first question I asked the entirety of my organization was how much does it cost? I think ultimately there are two main things that have to be done to make sure we do not have another MIAMI. First, we have to drill. We all know this, right? If you make a plan and then you make everybody show up, put in realistic conditions and show that you can actually put it out. That is not show up with one hose, pressurize it and call it done. That is spending an hour and a half hauling five or six hoses around with all the organizations collaborating to make it happen. It costs about a million dollars to run one of those drills in a public or a private yard. That is a lot of money, but it is a must do. It is an unequivocal need. You have to do that or else you will not be able to put out the fire.

The other one is that you have to be able to monitor the ship when it is minimally manned and there are fire causing activities that could be going on. You have a roving watch on board with maybe a Maneuvering Room watch stander and a couple of hot work sites, that is being at your most dangerous, and so in that condition you either need to put people on board or you need to put monitoring devices so that if a fire, smoke, pestilence breaks out that you have some indication and you can take action and respond to it quickly. So, figuring out how to take that manual, which is a very, very expensive manual, and as I tell the organization, look the day I sign that manual, those costs are sunk. They are sunk in every ship building contract. They are sunk in every maintenance availability, public or private, and they are gone. You will never calculate them again once we sign that manual, so we are going to go figure out exactly what it costs, stare that baby in the face, and say, yup we are going to pay those costs. We are going to make it happen. That is one of the examples I would use with the workforce about how we have a culture of affordability and it brings in that need for technical excellence and judiciousness. You have to do the things that are most important, but have to do them in a way that makes a difference. If you are
doing it just to make yourself feel good, you should not be doing it, especially if it costs money.

I will stop there on the business plan and just talk for a couple of minutes about the recovery. I know I got a lot of questions last night and again I appreciate all of the outpouring of both help and your support, which I appreciate. Many of you have sent me notes and sent my organization things. I really appreciate that. It is going to take us a while, and I’ll try to give you a sense of what that is about. The old building, I do not like really calling it by its number anymore because it will not have a number when we are done, seats about 2700 people, a little over half of the Naval Sea Systems Command,. The other half is in a couple of buildings. You have been in them, 20 I, where Team Sub and Team Carriers live, 176, where a lot of the design and engineering folks live, and then a couple of outbuildings, but more than half reside in that old building. The building, as a result of what went on that day and the subsequent recovery actions, is in pretty bad shape. Not to belabor the point too much, but the thing started at 8: 15 and it was 2:30 before the FBI declared that there wasn’t a second shooter. Actually it was much more difficult than you might think. I’ll just give you a couple facts because it helps me to understand it. One of the people who were killed was still breathing and one of his coworkers got him out of the building in spite of being locked down. He convinced the policeman to take him out to a hospital. The policeman was only allowed, because of jurisdiction, to take him as far as the Metro station. So they dropped him off on the sidewalk waiting for an ambulance to show up and Kisan died on the sidewalk at the Metro station on M Street. The other is that the guy that runs our steam plant, Ken Proctor, was out by the back door a little bit away from it, the shooter got to the back door and we think he could have left potentially, opened the back door, there was Ken, Ken started running and he shot him and killed him from a hundred and sixty feet with a 9mm, unbelievable, not possible. And so Ken died out in the alleyway behind the building. The shooter is up on the third floor, there’s a body in the alley and a body out on M Street so they assumed there was a second shooter until they could prove otherwise. You can get a distinct appreciation of that if you’ve been in that building. You’ve probably not been on all five floors and have not been to the entirety of each of the floors. It is a rabbit warren; a very complicated building. They blew open every door if it didn’t have a window and if it had a window they broke the window and opened the door. They cleared every single room on all five floors. The building is in pretty bad shape. The second part of it is, there’s a whole bunch of my work force that is not that interested in going back in it and having it look the way it looks. So as we learned from the folks from the various things like this that have happened around the country, you have to change it at least. You go to Sandy Hook and they’re razing the entire school. We can’t, we need to be back in that building. I think the Secretary of the Navy said it pretty well, “Our ships get hurt all the time, and we put them back together.” So this is our work, we’ll put it back together, but it is going to take us quite awhile.

I know that many of you are very interested in our intent for working as you need contracts and need to get back at the business of supporting our Navy. Fortuitously, the Coast Guard moved out of their old headquarters building at Buzzard Point which is just to the east of National Defense University the Saturday after the shooting. That building will sit about 2700 people. It’s in pretty good shape although there are some floors that have not seen human occupancy in a couple years so they have to be cleaned up, but I think within six weeks or so we will be predominantly up and running in our alternate headquarters at Buzzard Point. We’ll probably be in that condition for at least a year while we go through the process of turning the old building into either the Joshua Humphrey’s Building or the W. Lawrence Building, don’t give up the ship, I kind of like that one. Joshua Humphrey, if you’ve read Six Frigates, that’s an interesting choice of a person to pick. The early US Navy bought six frigates, and sent them to six different yards. They built them all different ways and contracted each one individually, that may not actually be the best way.

shooting. This is the part probably where my chest swells with pride at what people have done. NMCI computers with their cards at their house and contractor facilities, double stuffed, triple stuffed desks over in building 20 I and SSP and CNIC. In that last two weeks we did 1.6 billion dollars in contract awards. Now we did that using the distributed power of the Supervisors of Shipbuilding, etc., but also a lot of folks from headquarters. We were worried. That week I told the CNO there was potential that we would have five hundred million dollars we could not execute in end of year funds and expiring end of year funds. We burned that down to five million dollars. It was an unbelievable accomplishment by Maggie Maguire and her team. The LPD-25 completed acceptance trials as first LPD 17 with no discrepancy cards, clean ship, great fit and finish, we signed the DD-250 the eighteenth. The crew moved aboard and that ship is going to be ready to fight pretty fast. I think that really punctuates the journey we’ve been on to get the LPD 17 class in the right place and it is in the right place. LCS-4, the CORONADO was delivered, SPEARHEAD, JHSV-1, completed her initial test and evaluation, MONTFORD POINT, MLP-1, completed final contract trials, that means the crew is on board and it’s fully up and functioning. Second MLP was launched, NORTH DAKOTA was floated off and FORD got water on the hull for the first time; great job, floated level, a little heavy but that’s good, right, we talked about that. MILWAUKEE, the third ship of the Freedom side of the LCS class is ready for christening and launch in a short period of time. A lot of ships there, if you go into the portfolio, several successful missile shots including the first integrated fire control, counter air missile success which was an E2, an Aegis destroyer and a missile that was handed off between the two, incredible series of events. I could not be more proud of our organization’s ability to operate under adverse conditions. I can’t wait to see what they can do when we’re back together again.

If I have any time left I’d be happy to take a couple questions now. Thank you all.

Yes, my question is, during this time of fiscal frugality, is the Navy taking measures to develop its cyber warfare capabilities to protect itself from cyber attacks? We know the existence of open sources of the computer virus developed by BAE for the air force in which the attacker can become system administrator of an enemy computer and control the weapon system. So what measures are we taking? If you could comment something on that, thank you.

That’s a great question. The essence of the question is cyber defense and what are we doing? And it really spans the gamut. I would tell you that I spend twenty percent of my day on that topic. Accreditation of ship and ship systems to insure because most everything we have on ships now connects in some way to other electronic systems that make them vulnerable. Our shore based networks, including our unclassified but protected network which is the target of several countries who would like to have all the information that’s on there, the designs of our ships and airplanes, etc. That is a full time job, we are committing extensive resources to it, and a lot of management attention because ultimately these things are difficult. I think what we’ve come to recognize is if you have a well-engineered network, it’s pretty defensible.

One of our biggest challenges is in making sure it is aligned in accordance with how it was designed. Now, this is where the innovative nature of people and the discipline required to be defensible conflict with each other. Some of you like computers, most of you probably don’t, but watch your kids or your IT people like, “How did you do that?” “Well I know the back door to the thing.” And so what we found predominantly is that our biggest problems are getting people to operate the networks the way they were designed, and when you do that you find out they’re not as flexible, you can’t use your Blackberry to do hyper text, the computer can’t connect to public websites other than ones that are accredited. We all bridle at that. “Wait, how is it possible at home I can do that?” Well at home you’re not trying to protect the design of an aircraft carrier or an airplane or a submarine. And so I think that ultimately it’s a combination of well-designed networks operated correctly by people who have discipline. When you write that formula down that is a pretty tough formula but we are working on that every day. Like I said, probably 20% of my executive bandwidth is on that. Thank you for that question. That is a great question.

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