Brian Bradley
NS&D Monitor
2/27/2015
Huntington Ingalls Industries (HII) is prepared to boost spending on its Newport News, Va., shipyard to support Ohio-class Replacement (ORP) development as the parallel procurement timelines of that program and Virginia-class submarine are expected to require greater capital expenditures, HII CEO Mike Petters said last week. “As the submarine industrial base tries to figure out how to support the Virginia class and Ohio Replacement programs at the same time, there is going to be need for capital investment at Newport News to support that,” he said during HII’s Fourth Quarter of Fiscal Year 2014 earnings call. “And we stand ready to go make those investments.”
HII and Electric Boat are more than halfway through a shared five-year $1.8 billion contract to integrate and analyze engineering, evaluate should-costs, do concept design studies, employ cost reduction initiatives, develop and integrate technology, manufacture and assemble full-scale prototypes, develop shipbuilder and vendor components and technology, and design and develop the joint U.S. Navy/U.K. Common Missile Compartment that will support the ORP and the U.K.’s Successor-class ballistic missile submarine. Naval Sea Systems Command (NAVSEA) awarded the contract on Dec. 21, 2012, and work is slated to finish by September 2017. Huntington Ingalls is doing 7 percent of the work at its Newport News shipyard.
‘Investing Against’ the Future
Petters added that his company plans to invest in competitive posture as a surge in Navy contracting is expected over the next 20 to 25 years, with work on the ORP anticipated to ramp up. Jack Evans, NAVSEA Deputy Director for Naval Warfare and ORP Executive Officer, told NS&D Monitor in November that the command’s next direct contract for the program is a detail/design contract with future-year options for building the first ship.
That contract will chart Milestone B, the Defense Department classification for the Engineering and Manufacturing Development acquisition phase. “It is a major national construction effort and the entire submarine industrial base will be involved in trying to produce that program at the same time that it’s still producing the Virginia-class program,” Petters said. “But our expectation is that there will be a whole lot of discussions going forward about what’s the most optimal way for the submarine industrial base at the national submarine base to produce the nation’s demand for submarines. And so we expect that that will be played out over the next couple of years.” ORP production is expected to start in 2021, with the first boat deployed in 2031.
Submarines Contribute to Increased Newport News Earnings
Higher revenues in submarines and energy partially drove $154 million and $58 million increases for the full year and Fourth Quarter of FY 2014, respectively, up from approximately $4.4 billion and $1.21 billion during the previous year’s corresponding periods, according to an HII press release. Assistant Secretary of the Navy for Research, Development and Acquisition Sean Stackley on Feb. 25 told the House Armed Services Subcommittee on Seapower and Projection Forces that his service was studying how to simultaneously build the Ohio Replacement and Virginia Payload Module without impacting their procurement schedules. The Navy expects to release the study in the March-April timeframe.
