{"id":65432,"date":"2023-08-04T19:01:32","date_gmt":"2023-08-04T19:01:32","guid":{"rendered":"https:\/\/one.sightlinemg.com\/defensenews\/uncategorized\/2023\/08\/04\/navy-says-destroyer-deal-helps-two-yards-boost-capacity-at-best-pace\/"},"modified":"2026-08-08T00:58:22","modified_gmt":"2026-08-08T00:58:22","slug":"navy-says-destroyer-deal-helps-two-yards-boost-capacity-at-best-pace","status":"publish","type":"post","link":"https:\/\/one.sightlinemg.com\/defensenews\/naval\/2023\/08\/04\/navy-says-destroyer-deal-helps-two-yards-boost-capacity-at-best-pace\/","title":{"rendered":"Navy says destroyer deal helps two yards boost capacity at best pace"},"content":{"rendered":"\n<p class=\"wp-block-paragraph\"><i>This article has been updated to include a comment from HII\u2019s Ingalls Shipbuilding.<\/i><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">WASHINGTON \u2014 The U.S. Navy believes <a href=\"https:\/\/www.defensenews.com\/naval\/2023\/08\/01\/navy-awards-nine-arleigh-burke-destroyers-in-five-year-contracts\/\" target=\"_blank\">a pair of contracts<\/a> it awarded this week for Arleigh Burke-class destroyers \u2014 covering as few as nine and as many as 15 ships over the next five years \u2014 is the best way to help two shipyards recover from challenges and increase their output.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">However, the quantity \u2014 fewer than two per year guaranteed \u2014 stands in contrast to another program with multiyear shipbuilding contracts, the Virginia-class attack submarine program, where the government continues to award industry with more work than it can accommodate to help encourage investments.<\/p>\n\n\n\t<aside class=\"smg-interstitial-link wp-block-smg-interstitial-link\">\n\t\t<a href=\"https:\/\/one.sightlinemg.com\/defensenews\/naval\/2023\/08\/01\/navy-awards-nine-arleigh-burke-destroyers-in-five-year-contracts\/\" class=\"smg-interstitial-link__inner\">\n\t\t\t\t\t\t\t<div class=\"smg-interstitial-link__media\">\n\t\t\t\t\t<img loading=\"lazy\" decoding=\"async\" width=\"300\" height=\"200\" src=\"https:\/\/one.sightlinemg.com\/wp-content\/uploads\/2026\/08\/DDG123_SeaTrials01_RH_10-06-22.jpg.jpg?w=300\" class=\"smg-interstitial-link__image wp-post-image\" alt=\"\" \/>\t\t\t\t<\/div>\n\t\t\t\t\t\t<div class=\"smg-interstitial-link__content\">\n\t\t\t\t<span class=\"smg-interstitial-link__kicker\">Related<\/span>\n\t\t\t\t<h3 class=\"smg-interstitial-link__title\">Navy awards nine Arleigh Burke destroyers in five-year contracts<\/h3>\n\t\t\t\t\t\t\t\t\t<p class=\"smg-interstitial-link__excerpt\">The Navy awarded Ingalls Shipbuilding a contract for six destroyers across 2023 to 2027, and Bath Iron Works a contract for three DDGs.<\/p>\n\t\t\t\t\t\t\t<\/div>\n\t\t<\/a>\n\t<\/aside>\n\t\n\n\n<p class=\"wp-block-paragraph\">The destroyer-industrial base is currently running behind schedule. Navy Secretary Carlos Del Toro previously told Defense News the service is buying two ships a year, but <a href=\"https:\/\/www.defensenews.com\/naval\/2022\/12\/12\/us-navy-secretary-sees-no-need-to-rush-next-gen-destroyer-program\/\">industry is delivering an average of 1.8 annually<\/a>.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The Navy awarded a pair of five-year, multi-ship contracts to the two prime shipbuilders on the program. HII\u2019s Ingalls Shipbuilding will produce six destroyers from fiscal 2023 through fiscal 2027. The work will see two in FY25 and one in each of the fiscal years.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">General Dynamics\u2019 Bath Iron Works will build a ship in FY23, FY24 and FY26.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Those nine ships are the only guarantees to industry, though the contract also covers options for a second ship in FY27 and for a third ship in each fiscal year.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Jay Stefany, the acting assistant secretary of the Navy for research, development and acquisition, told reporters Wednesday he believes the yards\u2019 bids, which led to the Navy picking the 6-3 split, indicated each shipyard knew what its ideal workload would be to get back on track and grow its capacity.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">\u201cThe way it turned out is probably the best way for each of them to grow, so they bid it in a way that would allow them both to grow \u2026 at the right pace for them and their suppliers,\u201d he told Defense News at a media roundtable.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">\u201cThe contract, I think, allows the two companies [and their suppliers] to continue the recovery from COVID and, <a href=\"https:\/\/www.defensenews.com\/breaking-news\/2021\/12\/06\/bath-iron-works-plays-catch-up-on-ship-delivery-after-years-of-upheaval\/\" target=\"_blank\">in Bath\u2019s case<\/a>, the strike from two or three years ago,\u201d he said.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">He added that the workload \u201cdoes allow both companies the best path forward\u201d and to \u201csurge or flex\u201d if the Navy requests or Congress demands more than two ships a year.<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"5408\" height=\"3600\" src=\"\/wp-content\/uploads\/2026\/08\/DDG-125-aft-house-3532-003.jpg.jpg\" alt=\"\" class=\"wp-image-115220\" srcset=\"https:\/\/one.sightlinemg.com\/wp-content\/uploads\/2026\/08\/DDG-125-aft-house-3532-003.jpg.jpg 5408w, https:\/\/one.sightlinemg.com\/wp-content\/uploads\/2026\/08\/DDG-125-aft-house-3532-003.jpg.jpg?resize=300,200 300w, https:\/\/one.sightlinemg.com\/wp-content\/uploads\/2026\/08\/DDG-125-aft-house-3532-003.jpg.jpg?resize=768,511 768w, https:\/\/one.sightlinemg.com\/wp-content\/uploads\/2026\/08\/DDG-125-aft-house-3532-003.jpg.jpg?resize=1024,682 1024w, https:\/\/one.sightlinemg.com\/wp-content\/uploads\/2026\/08\/DDG-125-aft-house-3532-003.jpg.jpg?resize=1536,1022 1536w, https:\/\/one.sightlinemg.com\/wp-content\/uploads\/2026\/08\/DDG-125-aft-house-3532-003.jpg.jpg?resize=2048,1363 2048w\" sizes=\"auto, (max-width: 5408px) 100vw, 5408px\" \/><figcaption class=\"wp-element-caption\">Two cranes were used to lift the 320-ton aft deckhouse onto guided missile destroyer Jack H. Lucas (DDG 125) at Ingalls Shipbuilding in Pascagoula, Miss. Photo by Lance Davis\/HII<\/figcaption><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\">Rear Adm. Tom Anderson, the program executive officer for ships, said the Navy considered each yard\u2019s workload and throughput as it developed a strategy for writing the request for proposals. Both yards submitted offers for a 6-3 split and a 5-4 split for the nine guaranteed ships, as well as offers for all the optional ships.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Anderson, too, said he believes the yards knew what workload would be most efficient, which affected pricing for the two scenarios and the options. The Navy is not releasing information about the price of the ships because any options that are exercised will undergo competition, with Ingalls and Bath allowed to lower their original bids.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Without getting into specifics, Anderson said the bids also revealed how the two yards are looking at their current and future workforce needs. This is the first contract to include a measure passed into law in the FY23 defense policy bill \u2014 Section 122 \u2014 which creates a Navy shipbuilding workforce development special incentive and calls for between 0.25% and 1% of the contract value to fund workforce recruiting and retention measures such as training, housing and bonuses.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Anderson later said the Navy\u2019s confidence in the yards\u2019 performance is increasing as they come out of the pandemic.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">\u201cWe certainly had some challenges with workforce and throughput, but we are seeing improving trends with regards to schedule performance. There are also a number of capital investments that are being made: HII has made their \u2018Shipyard of the Future\u2019 investments, and we\u2019re starting to see payoff in efficiency,\u201d Anderson explained. \u201cAnd Bath Iron Works is undergoing a number of capital improvements, in large part supported by the surface combatant-industrial base funds that Congress has appropriated.\u201d<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">But one expert thinks awarding more work in this multiyear contract would have better helped stabilize the workforce and the supply chain.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Bryan Clark, director of the Center for Defense Concepts and Technology at the Hudson Institute think tank, said only guaranteeing as much work as the yards can comfortably build \u201cmakes sense in that you\u2019re not putting demands on them that they can\u2019t meet\u201d and putting them at risk of delivering late.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">\u201cBut the problem with that logic is, the alternative would be, I\u2019m going to contract with you to do more ships, but I\u2019m going to give you more time. I\u2019m going to give you the money to generate a backlog, and then you can go make the investments necessary to deliver on that backlog. And that\u2019s a way to fund their infrastructure and workforce improvement efforts,\u201d he said.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The submarine-industrial base, with General Dynamics Electric Boat and HII\u2019s Newport News Shipbuilding as the construction yards, is delivering about 1.2 boats a year, despite the Navy buying two annually.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Despite the larger delay in this program, the Navy continues to buy at a steady pace and re-baselined the ship delivery schedules, extending those timelines so the yards aren\u2019t penalized for late deliveries.<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"7360\" height=\"4912\" src=\"\/wp-content\/uploads\/2026\/08\/nj_pressure_hull_complete.jpeg.jpg\" alt=\"\" class=\"wp-image-25689\" srcset=\"https:\/\/one.sightlinemg.com\/wp-content\/uploads\/2026\/08\/nj_pressure_hull_complete.jpeg.jpg 7360w, https:\/\/one.sightlinemg.com\/wp-content\/uploads\/2026\/08\/nj_pressure_hull_complete.jpeg.jpg?resize=300,200 300w, https:\/\/one.sightlinemg.com\/wp-content\/uploads\/2026\/08\/nj_pressure_hull_complete.jpeg.jpg?resize=768,513 768w, https:\/\/one.sightlinemg.com\/wp-content\/uploads\/2026\/08\/nj_pressure_hull_complete.jpeg.jpg?resize=1024,683 1024w, https:\/\/one.sightlinemg.com\/wp-content\/uploads\/2026\/08\/nj_pressure_hull_complete.jpeg.jpg?resize=1536,1025 1536w, https:\/\/one.sightlinemg.com\/wp-content\/uploads\/2026\/08\/nj_pressure_hull_complete.jpeg.jpg?resize=2048,1367 2048w\" sizes=\"auto, (max-width: 7360px) 100vw, 7360px\" \/><figcaption class=\"wp-element-caption\">The Virginia-class submarine New Jersey (SSN 796) reached pressure hull complete in February 2021. The construction milestone signifies that all of the submarine\u2019s hull sections have been joined to form a single, watertight unit. HII photo.<\/figcaption><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\">Clark said this gives the shipbuilders and their suppliers enough cash on hand to invest in infrastructure and workforce to get back to at least two deliveries a year.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">By guaranteeing the destroyer-industrial base fewer than two a year, Clark said, \u201cthen you\u2019re really not incentivizing them to expand their capacity; you\u2019re just making it so that you\u2019re not putting unreasonable demands on them.\u201d<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Clark said he thought Bath might have a maximum production rate between four and five ships in five years, once the company gets back on track \u2014 but awarding just three ships doesn\u2019t help the company get to that better throughput any faster.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">At Ingalls, Clark said there\u2019s a great opportunity to increase destroyer production, if the Navy wanted to. The Mississippi yard is about to wrap up its work on the Coast Guard\u2019s National Security Cutter program, and could move around people and resources to build more destroyers.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">There has been longstanding support from Congress for buying three destroyers a year, but top Pentagon and Navy leaders aren\u2019t interested in budgeting for those ships. Defense Department Comptroller Mike McCord said in March the \u201ctrack record\u201d of industry shows it can\u2019t build three a year. Del Toro, too, cautioned against buying three a year <a href=\"https:\/\/www.defensenews.com\/naval\/2022\/12\/12\/us-navy-secretary-sees-no-need-to-rush-next-gen-destroyer-program\/\">until industry makes investments<\/a> to increase capacity.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">\u201cThat\u2019s true, they don\u2019t have that capacity,\u201d Clark said. \u201cWell, the only way you get there is if you create the demand signal for three destroyers per year. In the submarine force, they\u2019ve created that demand signal for two, two-plus submarines per year, so they\u2019re building to reach that inside the submarine-industrial base. And we just haven\u2019t done the same thing in the surface-industrial base, and there\u2019s sort of this implication that the shipbuilders need to do that with their own money \u2014 build this capacity and have it standing by.\u201d<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">With the U.S. government being the only customer for Bath and Ingalls, Clark noted, they wouldn\u2019t hire the additional workforce unless there was work to perform, leading to a chicken-and-egg situation.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Ingalls Shipbuilding spokeswoman Kimberly Aguillard told Defense News the company believes industry could build a total of three destroyers a year if given \u201ca consistent and timely demand signal.\u201d<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">\u201cEarly notification and long lead time material funding are critical elements to a successful destroyer program so that the destroyer industrial base can do what is necessary to support the cadence of three DDGs a year,\u201d she said.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Clark said he believes awarding all 15 ships upfront but agreeing to longer delivery timelines would have been a better way to incentivize these investments to create greater production capacity and grow the fleet.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">But, he added, the fundamental problem is \u201cthey don\u2019t have the money to pay for more ships.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"<p>But one shipbuilding expert thinks the Navy should have guaranteed more ships in the contract to incentivize workforce and infrastructure 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By:"},"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v26.0 (Yoast SEO v28.1) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>Navy says destroyer deal helps two yards boost capacity at best pace - Defense News<\/title>\n<meta name=\"description\" content=\"But one shipbuilding expert thinks the Navy should have guaranteed more ships in the contract to incentivize workforce and infrastructure investments.\" \/>\n<meta name=\"robots\" content=\"noindex, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Navy says destroyer deal helps two yards boost capacity at best pace\" \/>\n<meta property=\"og:description\" content=\"But one shipbuilding expert thinks the Navy should have guaranteed more ships in the contract to incentivize workforce and infrastructure 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