U.S. Navy design for affordability

Streamlined design costs for a large U.S. nuclear shipbuilder

Situation

In September 2005, the Chief of Naval Operations (CNO), Admiral Michael Mullen, challenged his acquisition community to reduce Virginia-class submarine construction cost by 20% as a condition to double production by FY12 to a two-per-year rate within a $4B budget, known as “2 for 4 in 12”.

The aggressive size of the cost reduction and short timeframe required an innovative approach to cover all aspects of cost in a comprehensive but rapid manner.

How we helped

click to enlarge

This graphic was originally published by Booz & Company in 2013.

Strategy& worked with the prime contractor and the United States Navy to create and implement a plan to fundamentally and permanently reduce costs for the Virginia, leveraging Strategy&’s Inherent, Structural, Systemic, and Realized (ISSR) cost framework to attack all major cost.

Strategy& helped organize and orchestrate the cost reduction effort involving hundreds of people in joint teams of prime contractor, supplier, and U.S. Navy personnel.

Results

The ship cost targets were achieved, leading congress to increase production by 100% from 1 to 2 submarines per year.

The Virginia program has become a positive example of U.S. Navy ship acquisition at a time when other DoD programs are experiencing major difficulties.