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Driving Cost Out of Submarine Production Booz Allen’s innovative approach to boat building is helping the US Navy be ready for what’s next. The US Navy’s Virginia Class submarine is the nation’s only nuclear submarine in production. It is designed for the Navy’s evolving post-Cold War requirements and performs a variety of missions aimed at countering both conventional and irregular warfare threats. The affordability of these ships was a key concern to the Navy in order to realize the goal of procuring 30-plus submarines at the rate of two per year through 2020. To support that goal, the Navy set an aggressive target cost of $2 billion per submarine, which represented a 20 percent cost reduction.
General Dynamics’ Electric Boat Division (EB), the prime contractor, brought on Booz Allen Hamilton to develop a comprehensive, long-term strategy for achieving budget and acquisition objectives. Booz Allen Vice President Mike Jones talked with boozallen.com about the project. boozallen.com: This sounds like a complex project with a lot of moving parts. What was the production environment like? Jones: Besides the budgetary mandate, there was also a new, joint production arrangement between EB and Northrop Grumman Shipbuilding. Each company’s shipyard builds portions of each boat and then the yards take turns assembling the final boat. It’s a departure from traditional Navy submarine construction. boozallen.com: And required a new approach to reach the Navy’s aggressive goals. Jones: Yes, EB brought Booz Allen on to develop a comprehensive, long-term strategy for permanently reducing costs per boat. We all knew this program would require fresh perspectives and innovative thinking. Just as the subs themselves were being built jointly, we also worked very closely with both the Navy and EB to develop a new approach that we call Design for Affordability (DFA). boozallen.com: How does DFA work? Jones: DFA uses a holistic process that looks at the Inherent, Structural, Systemic, and Realized (ISSR) costs and leverages Booz Allen’s experience across numerous industries. For this project, we created broad teams to support each ISSR area. Then within this framework, we established cross-functional teams in each cost reduction area. In this way, we were able organize over 200 people on a joint team of Electric Boat, Northrop Grumman, and the Navy to attack inherent and structural program costs in all major design and ship construction areas, including alternative technical solutions, schedule, acquisition strategies, commodity sourcing, organizational structure, and labor efficiency. This approach resulted in over 250 ideas that have driven cost out of the Virginia class. boozallen.com: Besides calling on Booz Allen’s automotive and shipbuilding industry know how, this project must have required skill in numerous other areas, as well. Jones: Absolutely. The Booz Allen team included Aerospace & Defense, Supply Chain & Logistics, and Economic & Business Analysis professionals. Each group brought specific areas of expertise to the project, such as specific sourcing, scheduling, design, and innovation. In addition, we brought to the project thorough, proven experience in innovation and change management and strong knowledge of the Navy based on years of supporting their mission. boozallen.com: What was the outcome of this project? Jones: This was only a 10-month project, but we were able to deliver results to the Navy that will benefit them for many years. We were able to help the Navy, Electric Boat, Northrop Grumman Shipbuilding develop a course of action that fundamentally transformed the entire submarine acquisition process, from design to sea trials. The impact over the program’s lifecycle is $3.8 billion in reduced acquisition costs. And the processes that were initiated for this program are now being used in other shipbuilding and weapons systems programs to help meet those target costs as well as extending the approach into the entire lifecycle. story posted July 16, 2008
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