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Thanks John. I would love to acknowledge all of my mentors who are here. And about half of this crowd had some hand in getting me to this point in my career. So I thank you all for everything you did for me and apologize for any of my shortcomings, which are legend. I will also note that the standing room only crowd has departed, so I thank Admiral Richardson for setting me up that way. That was very good. I think you all will be very proud of me. Yesterday I found myself nominated to go speak at a Strike symposium, a Long-Range Strike symposium. As I prepared for it, okay, well I’m a pump kicking shipbuilder, why did they ask me? So at the beginning of my presentation, I told them that I actually had the long-range strike badge, the Navy’s long-range strike badge. I said a few feet at thousands of miles is pretty good. It’s even better when it’s a nuclear weapon, and so that did get a laugh out of them. I won’t try to put it back on my uniform like I did there, but you all would’ve been proud of me on that day.

It is really good though to be in front of a crowd like this and in front of the people who I’ve grown up with, who have committed many, many years of hard work to let our Submarine Force be successful. And I thank you all very much for this opportunity. In the conversations I have around town, I always end up the first question being how are you doing, how are your people doing? So I’ll just go right at that. It’s a question that I very much appreciate and one, of course, I work on every day. Just a couple weeks ago, we celebrated the one year anniversary of our tragedy at the Navy Yard. And it was a wonderful day as it turned for Joshua Humphreys who designed the six frigates. The six frigates were critical to the success in the War of 1812, really to the foundation of the U.S. Navy. His heirs have reached out to us. A great-great-great grandson will be there for the dedication of the building. And the crew of the Constitution has said they’d like to come down and be part of it. So we’ll have the crew of the Constitution. What a great way to close out the celebration of the War of 1812.

We are also taking the time to help people get ready to go back in. As the building has been under construction, we’ve been giving out pictures and showing what the new deck is going to look like. We’ve worked with the contractor and arranged tours.

And so in between shifts in the building, a lot of the workforce has already been in. That has gone well, and people are really beginning the process of facing moving back in there. And you just have to remember, we evacuated that day, and most of them haven’t been back in since. It was a crime scene for more than a month. And so it’ll be almost a year-and-a-half between when they left and when they go back in. So we’re very mindful of that, and I do appreciate everybody who asks. I encourage you to ask my workforce, as you meet people from NAVSEA, ask them how they’re doing. Ask them if they’re ready to go back in. I’d very much appreciate that. Because I think they actually like talking about it. We found, of course, that talking about it is what helps you get through all that stuff.

So what I’d really like to give you then is the state of play of NAVSEA from the Submarine Forces perspective. Three broad lines of effort. First is the research and development and support work that goes on at the Undersea Warfare Centers. Many of you know that Admiral Dave Duryea just retired after being a really great Commander of the Naval Undersea Warfare Center. He’s been relieved by Mike Jabaley. The Undersea Warfare Centers have really done a great job of keeping all the programs in line, and keeping the research and development, technology and sensors and weapons, advanced payloads like unmanned vehicles, all those on a good trajectory. I’ll just tell you that part of the business is going pretty well. And our alignment to the Submarine Forces strategic initiatives is good. I think they are really doing a great job of supporting that.

On the program side, building new ships, I think Dave Johnson has got that one well covered. I’ve seen his pitch. It’s one that I’m very proud of. Of course, I had a small hand in helping that program be on the solid footing. And I’ll let him go through the submarine construction program, Ohio Replacement design, the torpedo restart, the warfare federated systems, the ARCI and BYG-1 programs, which are all very healthy and doing very well.

And so then the last part of the portfolio from a Submarine Force perspective is maintenance. And that’s an area where frankly, we are in a tail chase. I’ve been out there a little bit lately.

Many of us have been working on making it better. But it’s relatively explicable how we got in a tail chase, so I’ll just spend a minute to tell you. Most of the nuclear repair work in the Navy is done at the public shipyards. Some amounts are done at EB and Newport News, but the predominance is done at the four public shipyards. That nuclear workload, sort of while we weren’t looking, went on a pretty steady upward ramp. You say wait a second, the fleets’ the same size it was, what’s the deal? Well, three factors, broadly. We did not have 11 nuclear aircraft carriers until the commissioning of the BUSH. We were building up the nuclear aircraft carrier force all through those years. Each one that comes online adds to that level of carrier maintenance. The second is, we started refueling the boomers. We had almost no refuelings going on before 2001 when we inducted Ohio to start her refueling. And so we are in a steady drumbeat of four boomers in the two big yards undergoing their refueling. And the third is that we really only bring, thanks to a lot of work by many of you and guys like Pat Brady, we only bring the SSN force into the shipyard twice in its life.

The first one, was called DMP (Depot Maintenance Period), the second one was called an EOH, engineered overhaul. Those EOHs started up and are in full swing. Of course we’re in the part of the force that was built at three and four a year. That’s what’s going to cause our force structure problems out in the mid ‘20s. And so those three factors, increasing EOH workload, submarine refuelings and carrier force, generate an increasing demand on the
workforce of those public yards at a time when the perfect storm occurred; sequestration. This resulted in a hiring freeze, and that hiring freeze was technically only for a couple of months, but it was almost nine months between when they told us to stop hiring before I got permission to bring the first new workman. And that’s just not hiring for attrition, that’s not hiring at all.

And so we found ourselves down almost 2,000 people, compared to a workforce of 30,000. 2,000 people behind on an increasing workload. And not surprisingly, things start to go long. It’s a fixed asset, and again, we work to ameliorate it. But that workforce, that great workforce is relatively a fixed asset and they fell behind. It started to show first on the attack submarines. Attack submarines, in our big yards, are significantly behind, and we will not catch those schedules back up.

It’s begun to show on the ballistic missile force, which is a big problem. Admiral Haney, the Strategic Force Commander, if he were here, would be yelling at me. He does regularly. This problem is also very important to the conversation that we just had with Admiral Richardson about the boomer force of the future. Because we’re counting on the force that we have now and those ships that need to be out there on patrol.

Even on the aircraft carriers, as many of you saw the article, we just rescheduled to switch two aircraft carriers, because the one that’s in Norfolk Naval shipyard is just not going to get out on time to meet its deployment schedule.

And so I find myself in that tail chase and obviously a lot of hard work ahead. I will not be at the dinner tonight, and I will not be at the luncheon tomorrow because I will be down in Norfolk Naval shipyard, not surprisingly, working on that. Our plans are well along, but there’s lots to do, significant amount of management focus of course, and I’ll lead from the front on that one. We are hiring. Really since the hiring freeze came off in early ’14, we have been hiring in the two big yards, and even in the smaller yards, at about the maximum rate that we can hire, and we have begun to see, of course, the strains on the hiring base.

In Norfolk, where Newport News is hiring, the Supervisor of Shipbuilding is hiring, the regional maintenance center is hiring, and Norfolk Naval Shipyard is hiring. It’s pretty hard to find someone who’s done a little bit of welding in their youth, to sign up and be a welder, and electricians, et cetera. And so we find ourselves in that challenge. That hiring, of course, results in a relatively green workforce. Our on-boarding and apprentice programs are how we get a worker ready to go paint the fastest possible way, weld the fastest possible way, fit pipe, pull cable, all the very complex things necessary to be done in those complex availibilities. That is the day job work for my team, and we’re trying to gather the very best from the apprentice schools that the shipbuilders and everywhere else we can find them. And then of course, we have not been famous for maintaining our bases, and our shipyards are just like that.

Over the last few years as budgets have tightened, we have continued to reduce gradually, the sustainment funding to all bases including the shipyards. And not surprisingly, the buildings are getting old, and we have significant infrastructure tail to go work on. There has been commitment recently to up our game on that and bring those infrastructure pieces to a better state, for better training, for better repair work, for better shops. And I think it very much parallels the shipbuilders’ experience over the last few years, with a hesitancy to commit to the kind of infrastructure improvements, to really get those activities to a modern state. Then of course, the other answer is to look for opportunities to move work into the private sector.

I think on any given day, there’s 100 to 200 people out of Newport News, maybe even more, sent to work at my four public shipyards. More out of Electric Boat working at least at the East Coast yards and some to the West Coast yards. And then we continue to look for opportunities to exercise the commercial, the private sector repair base, which although we probably don’t have enough work to make it proficient, we need it to be capable in those cases where we accidentally break a submarine that doesn’t fit into the shipyards, which we do occasionally, that they’re ready to do that maintenance and we do look for opportunities to do that.

There is one point, which is a conversation we’re beginning to have with Admiral Connor. There is a piece I think that we can look to, a resource that’s not normally thought of at least recently, nin the ship’s crews that are in the shipyards, and I know this is a sensitive topic. They’ll be throwing rotten eggs at me here shortly.

But what I observed, and what I observed when I was in command of USS KEY WEST was some projects went really well, and some projects didn’t go that well, and many times you can connect it directly to the engagement of the ship’s leadership team and the crew in the maintenance. Our principal job while the ships are in the shipyard, at least for the last 10 years, has been to go train for your war fighting mission and let those ship repair guys go do it. But if I go back into my history in 1985 at Puget Sound Naval shipyard, we were standing fire watches, we had a full load of ship’s force maintenance, we participated in every part of the test program. And so one of the ideas that’s out there is I need to at least normalize the ship’s engagement in these availabilities, because it is clear to me, as I watch it, that there is a disparity between ships getting the exact same resource. And that could be connected to the ship’s engagement in that maintenance. And so I look forward to that conversation. And I use this friendly audience because I know you won’t throw me out immediately. So that’s the sort of the baseline where I think we stand with respect to Submarine Force.

There is a new area. Many of you have heard me start to talk about it. We have just recently revised the strategic business plan, in fact, it’s not even published yet, to reflect a growing threat, and I know you hate to hear the words cybersecurity, but it’s cybersecurity from a slightly different perspective. We all know and hear sort of every day about the threats to our networks. Some of our vendors have had challenges there, some of our large industrial activities; the government has had its networks under fairly continuous probing and attack, careful to use that word, attack, from various places around the world.

What we’ve begun to recognize, and so there’s a lot of work going on there, a lot of the government’s activity is going out there to protect those networks and to figure out how to extend that protection to our industrial base. The threat vector that I want to talk about is not that one, it is the threat to our control systems.

And we’re just now starting to hear the inklings of it. And I’ll give you a very simple example of what I’m talking about. I think it was now 10 weeks ago, some young, enterprising hacker, decided to take the project for himself to get into the OnStar system, the satellite system that talks to a car, and get through OnStar into the chip that’s operating a 2013 vehicle. You say, okay, so my radio’s not going to work and my navigation system will be kind of messed up. Well, not exactly. When you crawl down and look at the gas pedal in that car, there’s no linkage
to a carburetor or a fuel injector, it’s a sensor that sends a signal to that chip. So you go look for the master cylinder on the back of the firewall, nope. Again, another sensor that goes all the way to the brakes. And so he was able to hack through OnStar, get into a car and activate the brakes from his desk. So you say, well, that’s a
car, you know, how…Okay, so we think of ourselves as we’ve got a nice hard shell around our ships and all that crypto and all those fancy things. Not so fast.

Many of the diesel engines in our Navy have a chip that runs Windows XP. But you’re okay, because it’s just in the control of the diesel. Well, not exactly. We really like the data coming off it to be able to display it around the ship and keep track of what’s going on with the diesel. So it’s in the machinery control system. Whew, well, at least it’s not off the ship. Well, not so fast. We really like to have that data off the ship so that somebody off the ship can do the trend analysis and tell you when the bearings are going bad and when you need to change the oil. And so it’s on an unclassified network in one of my warfare centers undergoing data analysis and it got off the ship automatically.

Okay, we’re just like that car, just like it. Now there’s some things that we can do relatively quickly to provide reasonable security to those systems, but ultimately, we’re going to have to decide, and that’s really what this is about, is that our control systems need to be built to be secure in this environment, which will be the way it is for the rest of time. We’ve opened a new era of warfare and it ain’t going back in the tube. It’s not. And so while we take the time to design our systems to be able to be
secure, we’ve got some work to do.

The pillars of what we’re going to do in the short term, is (1), get people, get them the clearances and get them the training, so they even know what we’re talking about. The National Institute of Standards actually has done a good job of developing standards for what you do for information systems and what you do for control systems, industrial control systems. That standard lets you know very clearly that this is harder than just I.T. systems. When you’re doing an I.T. system and your screen blanks, you don’t get your email for a couple of hours, it’s a nuisance. When the primary logic controller of your gas turbine or your diesel shuts down, you’ve got a real problem. And so patching one and the other and how you go and do that and how you protect it, those are all very, very important. So people, clearances and training. We have a specs and standards issue, but somebody’s got to write those specs and standards so I can give them to the vendors and the shipbuilders and say put this in those systems so they’re built right from the beginning. And then of course, we’re going to come through how we’re going to say that’s safe, that’s not safe, if you’re allowed to operate that or connect it, or you can’t operate that and connect it. So we have a lot of work to do on that. That’s a growing area. It’s an area you’ll hear more about. And I’ll tell you because you’re also my industrial base. This is going to be something that touches pretty much everybody.

There’s some really simple things, in what I call cyber hygiene. If you have a USB port on your computer that is not disabled, that’s open, then you can plug in any device. A sailor looking for a place to plug his cell phone in and get the text from his wife, is the biggest insider threat you got. He violates every piece of security from every piece of crypto by plugging that phone into that USB port. So those kinds of things, what I’ll call cyber hygiene, we just have to get on those and we’re working to go get those things out. I want to close with a final thought; and I’ll pose it as a juxtaposition. It comes out to me every day. The juxtaposition is made between compliance and innovation. We can make a clear case in this business for both. The case for compliance is because we have nuclear weapons, we have nuclear reactors, we have enough explosives to blow the ship up; being operated by a bunch of 20 year-olds. That’s a case for compliance, all right.

The case for innovation is made because of the Chinese Submarine Force, the Russian Submarine Force, the Indian Submarine Force, undersea sensors, new weapons, better and better surface sonars, et cetera. And so we find ourselves in that juxtaposition and the answer’s has to be both. You cannot operate submarines out of San Diego and Honolulu and Norfolk without compliance. And we cannot possibly be successful without innovation. And so this is where I think the CNO’s words, bold and accountable leadership apply. Bold in that you’re innovative, accountable in that you’ve taken into place your compliance. I know that this is the leadership that knows how to do this. I see those challenges in front of us and they’re clear. And they have to happen without somebody tossing you a bunch of bull.

Thank you all very much.

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