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Road to 350: What Does the US Navy Do Anyway?

Hair Warrior

Well-Known Member
Contributor
I get it, and I think we're all saying the same thing. RDT&E costs are expensive, necessary, planned for, and often go down over time in a program. Our RDT&E is part of what gives warfighters the decisive edge on the battlespace. But if we only ever build 2 or 3 Zumwalts, then cease production, the per unit cost remains high. Also, DoD acquisition uses plenty of management buzz words - that's where I learned them, incl. an org with 3 ACAT I programs.
 
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robav8r

Well-Known Member
None
Contributor
I get it, and I think we're all saying the same thing. RDT&E costs are expensive, necessary, planned for, and often go down over time in a program. Our RDT&E is part of what gives warfighters the decisive edge on the battlespace. But if we only ever build 2 or 3 Zumwalts, then cease production, the per unit cost remains high. Also, DoD acquisition uses plenty of management buzz words - that's where I learned them, incl. an org with 3 ACAT I programs.
HW - if you don't mind, what is your background wrt the above?
 

DanMa1156

Is it baseball season yet?
pilot
Contributor
You could "fix" it through a Wall Street technique known as dollar-cost averaging. Buy one ship at $100, the second at $90, and the third at $80, and you've just lowered your average price per unit by 10% overall on a 3 ship procurement.

It's a risky acquisition strategy that requires an all-in mentality coupled with big budgets, minimal redesign, and successful follow-through to generate cost efficiencies... which isn't always a guarantee. We're doing it right now with the F-35.

This is not what dollar cost averaging is, even on Wall Street. What you're getting at is that R&D is a sunk cost no matter how many you buy. When you count that sunk cost in the total cost of purchase, it "looks" like you're getting a cheaper version, but the money spent is actually just greater with each successive purpose. When you're talking about reducing costs for producing in mass quantities (which I think you are kind of alluding to, maybe?) you're talking about a different concept called "economy of scale," which... maybe, but you have to buy a lot to get there.

Separately, the Navy budgets (or... attempts to) for operations and maintenance costs (sometimes that cost is in the announced "program" cost). The more you buy, the higher that cost.
 

BigRed389

Registered User
None
I get it, and I think we're all saying the same thing. RDT&E costs are expensive, necessary, planned for, and often go down over time in a program. Our RDT&E is part of what gives warfighters the decisive edge on the battlespace. But if we only ever build 2 or 3 Zumwalts, then cease production, the per unit cost remains high. Also, DoD acquisition uses plenty of management buzz words - that's where I learned them, incl. an org with 3 ACAT I programs.

OK, so here's the issue. The problem identified is that DOD sucks at cost estimation of large programs (ie ACAT I).

You have suggested you can use "dollar cost averaging" - which you still haven't explained how that would actually be implemented - to lower the RDT&E costs.
Or how JSF is using "dollar cost averaging."

Building more Zumwalts wouldn't have fixed anything. There is a very good reason the PM (who moved on to be a 3 star) for that program recommended cutting it off.

Simply lowering the per unit cost is only one metric, and there is a reason reports to Congress track many more cost metrics...precisely to prevent shady PMs from pulling off that kind of bullshit.

Some of us on this board do have acquisition experience, so feel free to be more specific on how your solutions would actually work.
 

Hair Warrior

Well-Known Member
Contributor
Okay. The cost to build the first Zumwalt was $3.8B. If the Navy stopped there, the per unit cost is $3.8B. But we built a second ship in the class at $2.8B, bringing the per unit average cost down to $3.3B each, due to non-recurring engineering (NRE) & design costs. The 3rd Z class DDG will cost $2.4B, bringing the per unit cost even lower.

That is the same principle as dollar cost averaging. So the Navy can "recoup" Z's high RDT&E costs by buying more than just a trio of the class (and restraining itself from design tweaks on successive builds). It's a "fix" insomuch as you double down on past acq decisions and throw more money at the program. It also assumes continuous process improvement and sound program mgmt practices (almost always a standard contractual req't with the defense vendors) to shave time and dollars on later builds.

The first JSF off the production line cost more than the last Raptor (at ~$122M), causing an uproar. The new cost estimates for the JSF have the A variant under $100M per unit for the first time, due to decreasing production costs. A brand new F-35A today (~$91M) is almost as cheap as a brand new 4th Gen (~$85M) if you went out and bought it today.

Ref:

"The total procurement cost for [the DDG-1000 program] includes $3.8 billion for DDG 1000, $2.8 billion for DDG-1001, and $2.4 billion for DDG-1002. The balance of the procurement costs include $3.8B for non-recurring engineering (NRE) and $400 million for post-delivery and outfitting, totaling $13.2B,” read the statement from Navy Research, Acquisition and Development spokeswoman Capt. Thurraya Kent."

https://news.usni.org/2016/04/06/na...ete-zumwalt-class-due-to-shipyard-performance
 
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Pags

N/A
pilot
Okay. The cost to build the first Zumwalt was $3.8B. If the Navy stopped there, the per unit cost is $3.8B. But we built a second ship in the class at $2.8B, bringing the per unit average cost down to $3.3B each, due to non-recurring engineering (NRE) & design costs. The 3rd Z class DDG will cost $2.4B, bringing the per unit cost even lower.

That is the same principle as dollar cost averaging. So the Navy can "recoup" Z's high RDT&E costs by buying more than just a trio of the class (and restraining itself from design tweaks on successive builds). It's a "fix" insomuch as you double down on past acq decisions and throw more money at the program. It also assumes continuous process improvement and sound program mgmt practices (almost always a standard contractual req't with the defense vendors) to shave time and dollars on later builds.

The first JSF off the production line cost more than the last Raptor (at ~$122M), causing an uproar. The new cost estimates for the JSF have the A variant under $100M per unit for the first time, due to decreasing production costs.

Ref:

"The total procurement cost for [the DDG-1000 program] includes $3.8 billion for DDG 1000, $2.8 billion for DDG-1001, and $2.4 billion for DDG-1002. The balance of the procurement costs include $3.8B for non-recurring engineering (NRE) and $400 million for post-delivery and outfitting, totaling $13.2B,” read the statement from Navy Research, Acquisition and Development spokeswoman Capt. Thurraya Kent."

https://news.usni.org/2016/04/06/na...ete-zumwalt-class-due-to-shipyard-performance
And the USN and DoD do that. Buying a whole grunch of the same widgets will result in a lower cost/widget. But the solution to saving money is not to buy a lot of them. Buying a lot of them just gets you a better return on your RDT&E investment. It does nothing to reduce your RDT&E costs (which will drive your per unit cost). It also does nothing to help accurately predict how much a program is going to cost nor does it control the final cost of a program which is the question you were trying to answer when you got caught up in buzzwords.
 

BigRed389

Registered User
None
And the USN and DoD do that. Buying a whole grunch of the same widgets will result in a lower cost/widget. But the solution to saving money is not to buy a lot of them. Buying a lot of them just gets you a better return on your RDT&E investment. It does nothing to reduce your RDT&E costs (which will drive your per unit cost). It also does nothing to help accurately predict how much a program is going to cost nor does it control the final cost of a program which is the question you were trying to answer when you got caught up in buzzwords.

Exactly. Like we've been saying over and over, if you fuck up RDT&E and bust your budget there, you can't just buy a whole bunch more to bring unit cost down to call it a win.

In reality, if you bust the RDT&E budget badly, you're jeopardizing your program or other programs.
Either you end up cutting total number of units you can buy, because you cut into what was expected to be spent on procurement, or you screw over some other program that needs money.

Okay. The cost to build the first Zumwalt was $3.8B. If the Navy stopped there, the per unit cost is $3.8B. But we built a second ship in the class at $2.8B, bringing the per unit average cost down to $3.3B each, due to non-recurring engineering (NRE) & design costs. The 3rd Z class DDG will cost $2.4B, bringing the per unit cost even lower.

That is the same principle as dollar cost averaging. So the Navy can "recoup" Z's high RDT&E costs by buying more than just a trio of the class (and restraining itself from design tweaks on successive builds). It's a "fix" insomuch as you double down on past acq decisions and throw more money at the program. It also assumes continuous process improvement and sound program mgmt practices (almost always a standard contractual req't with the defense vendors) to shave time and dollars on later builds.

That's not dollar cost averaging. That's CPI, learning curve theory, and .

Dollar cost averaging is spending a fixed amount at defined time intervals, regardless of stock price. Not "spending less over time."

Zumwalt is a broken class. Simply buying more wouldn't fix anything. It is not even remotely close to a deployable, and would need significantly MORE R&D to get it up to par. It's essentially where JSF was before it got its bailout...except Zumwalt wasn't "too big to fail."
 

Hair Warrior

Well-Known Member
Contributor
Rgr. Thanks for clarifying, sir!

Non-rhetorical question: If the Z is maybe not the answer, and the LCS is having its share of problems too, where should the Navy/NAVSEA put its (scarce) surface combatant modernization dollars?
 

Pags

N/A
pilot
Rgr. Thanks for clarifying, sir!

Non-rhetorical question: If the Z is maybe not the answer, and the LCS is having its share of problems too, where should the Navy/NAVSEA put its (scarce) surface combatant modernization dollars?
It's got to fix DDG-1000 and LCS and then not screw it away with the Fast Frigate. USN has go to do what it can with what it has.
 

BigRed389

Registered User
None
Rgr. Thanks for clarifying, sir!

Non-rhetorical question: If the Z is maybe not the answer, and the LCS is having its share of problems too, where should the Navy/NAVSEA put its (scarce) surface combatant modernization dollars?

A rough sketch already exists.

DDG-51 modernization of older Baselines and new builds of Flight III (new radar, new EW) and a new Frigate.
New Frigate will probably be similar to other Frigates out there, self defense AAW, long range ASCMs, ASW helo and sensors.

So...fairly conservative on RDT&E (only touching stuff we know is well within realm of feasibility) then pumping it out in significant quantities.
 

azguy

Well-Known Member
None
...where should the Navy/NAVSEA put its (scarce) surface combatant modernization dollars?

As BigRed already opined, Flt III DDG and LCS. The Burke is a proven sea frame; add in the next-gen radar (SPY-6) and the latest and greatest AEGIS baseline, then plug and play all the new and coming-soon gucci ASW, SUW, EW, and Comms sensors and weapons and you've got a good way ahead for our next "upper-tier" surface combatant. Then, we need to make the best of LCS; pick one hull and go with it. Make smart investments to bring the ASW and MIW mission modules to a true fruition; strap on an ASCM. That gives us a solid lower-tier combatant, basically a true replacement for the 1980s-era Perry FFG.

@Pags disagree that we need to somehow "fix" DDG-1000. That class is a test bed, period. I want them to fail, fail fast, and fail a lot, so that we can refine all of their new tech and plug those lessons into planning for our next combatant (probably the follow-on to Flt III DDG).
 

Randy Daytona

Cold War Relic
pilot
Super Moderator
@Pags disagree that we need to somehow "fix" DDG-1000. That class is a test bed, period. I want them to fail, fail fast, and fail a lot, so that we can refine all of their new tech and plug those lessons into planning for our next combatant (probably the follow-on to Flt III DDG).

I think you mean this (at the 2:35 mark). "Failed, Failed, Impressively Failed!"

 

Pags

N/A
pilot
As BigRed already opined, Flt III DDG and LCS. The Burke is a proven sea frame; add in the next-gen radar (SPY-6) and the latest and greatest AEGIS baseline, then plug and play all the new and coming-soon gucci ASW, SUW, EW, and Comms sensors and weapons and you've got a good way ahead for our next "upper-tier" surface combatant. Then, we need to make the best of LCS; pick one hull and go with it. Make smart investments to bring the ASW and MIW mission modules to a true fruition; strap on an ASCM. That gives us a solid lower-tier combatant, basically a true replacement for the 1980s-era Perry FFG.

@Pags disagree that we need to somehow "fix" DDG-1000. That class is a test bed, period. I want them to fail, fail fast, and fail a lot, so that we can refine all of their new tech and plug those lessons into planning for our next combatant (probably the follow-on to Flt III DDG).
I don't know much about all of the failings of DDG-1000 but to relegate over $10bil worth of boats to floating test beds is wasteful when the fleet needs surface combatants.

But the NAVSEA T&E folks do need more test hulls like the self defense test ship and better labs for LCS/DDG-1000 like the AEGIS program has. Otherwise they're left fighting for hulls with the fleet.
 

azguy

Well-Known Member
None
I don't know much about all of the failings of DDG-1000 but to relegate over $10bil worth of boats to floating test beds is wasteful when the fleet needs surface combatants.

I think it's more like $12B, but either way... To clarify, those three ships will be lethal, they will bring combat power to bear, and they will deploy. So they're not "test ships" like the self-defense test ship you mention. That said, DDG-1000 has long been envisioned as a small sample size of future combatants from which we can learn. Frankly, I think it's genius; definitely beats building a whole "Flight 1" of ships that are riddled with issues and borderline combat ineffective...LCS...JSF(?)...

But the NAVSEA T&E folks do need more test hulls like the self defense test ship and better labs for LCS/DDG-1000 like the AEGIS program has. Otherwise they're left fighting for hulls with the fleet.

Totally agree.
 

BigRed389

Registered User
None
I don't know much about all of the failings of DDG-1000 but to relegate over $10bil worth of boats to floating test beds is wasteful when the fleet needs surface combatants.

But the NAVSEA T&E folks do need more test hulls like the self defense test ship and better labs for LCS/DDG-1000 like the AEGIS program has. Otherwise they're left fighting for hulls with the fleet.

SDTS isn't really a "test hull." It's a weapons and sensors proving hull...we can mix and match the loadout to what we want to test. Recently that's been the SSDS suite, and now it'll probably shift over to proof out DDG Flight III combat systems.
And the land based labs used by AEGIS are mostly multi-purpose, there's no reason DDG-1000 or LCS couldn't make use (and DDG-1000 has previously for its radar tests).

AEGIS doesn't get away from fighting for hulls with the Fleet either. But it's "important" enough that they get a designated non-deploying...but deployable if we need to "test princess."
Right now it's JPJ, but before that it was Lake Erie (the BMD shooter that did the SM-3 satellite kill then got a CO fired for a shipboard goat when they went back to being a real operational asset again).
And that's probably pretty a good comparison to what DDG-1000 will end up doing...and eventually maybe like Seawolf.

And remember, we even had a big deck amphib (Wasp) for years as designated non-deploying F-35B test bitch.

So there's a long history of Fleet assets being relegated to test long-term.

DDG-1000's challenge is that pumping in a lot of R&D to get it up to par with a late model DDG-51 is a lot of money for a little operational return. At best we'd clone DDG-51 capabilities...which basically only gives us 3 more DDG-51 like ships. I'm not sure where they're drawing the line for its capabilities, but that's the tradeoff we need to balance.
As an at sea test platform to mature technology for use in a next gen surface combatant would be ideal. SDTS cannot replicate the electrical plant capabilities of DDG-1000.
 
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