“The Navy’s second-highest-ranking officer signaled Monday that troubled weapons programs will fall victim to the budgetary ax as the service tries to spend its money more wisely.
“During a speech at the Center for Strategic and International Studies, Adm. Jonathan Greenert, vice chief of naval operations, said the termination of inefficient or ineffective programs will be one part of the service’s so-called wholeness reviews of its plans, priorities, and budgets.
“If the Navy determines ‘we’re just not going to get there’ with a program, the service will kill it and redirect the funding to higher-priority items, Greenert told an audience that included several defense industry executives.
“Greenert’s statement comes as the Navy tries to grapple with how to update and grow its 288-ship fleet in an era of fiscal constraints for a Defense Department that has grown accustomed to huge budgetary increases each year.
“He did not name any possible targets for cuts, but his comments will serve as a warning for a shipbuilding industry that has struggled at times to keep ambitious programs on track. Indeed, many naval programs — including the Littoral Combat Ship shallow-water vessel, which the service considers integral to its future — have had significant cost and schedule problems that have required the Navy to revamp its plans to get the project back on track.
“But possible program terminations are just one part of a broader effort within the Navy to carry out a department-wide order from Defense Secretary Robert Gates to rid the services’ budgets of unnecessary costs.
“The Navy, Greenert said, sees multiyear procurement deals for mature programs as a way to cut costs. Typically, such a long-term commitment to a program must generate at least 10 percent in cost savings. Congress recently approved a $5.3 billion multiyear deal with Boeing for 124 F/A-18 fighter and electronic attack aircraft for the Navy, which the Pentagon estimates will save $600 million.
“The Navy also wants to better focus its research and development efforts to ensure that investments there are aligned with the service’s plans and needs, Greenert said.
“In addition, he said the Navy wants to rely more heavily on fixed-price contracts, which put more of a burden on industry to stick to cost targets.”
I played highlights of Adm. Greenert’s presentation in the first hour of the show today. You can hear the entire presentation by clicking on the audio link. You can learn more about the event by clicking here.