is looking to leverage its expertise working on U.S. Navy cruisers and destroyers to develop relationships in Spain in the wake of the Pentagon’s plans to base four destroyers in Rota.
“We’re trying to position ourselves with the Spanish shipyards in the area and with the Navy to execute maintenance on those ships,” says Russell Tjepkema, vice president and general manager of BAE’s Norfolk, Va., ship repair yard.
BAE has a lot to offer, Tjepkema notes; for the past seven years the company has been one of the prime multi-ship, multi-option (MSMO) contractors for maintaining and modernizing the Navy’s major surface combatants, including destroyers and cruisers.
“I don’t think the Navy wants to lose our experience,” Tjepkema says. “While we can’t bring work force over [to Spain], we can bring over our program managerial experience.”
The MSMO contracts are broken down by homeport and ship class, and include all maintenance, repair and modernization needed for ship readiness and sustainment, including the integration of third-party modernization work. The contracts are switching from award-fee to incentive-fee structures, with a the primary focus still on cost performance.
Performance is key. As Tjepkema points out, if his yards fail to do the job correctly or affordably, the Navy can always not to renew the contract.
Consolidating so much work under one contract for such long periods and fee structures has generated some criticism but, proponents say, the stability of such a contract enables the prime contractor to build up a solid body of knowledge about the ships and its needs, crucial for developing long-term maintenance plans.
“We become the subject experts,” Tjepkema says. “I have my man right there with the captain. We can help them identify what’s broken, and when it comes to prioritizing, we can help them with that. It gives [the] Navy one-stop shopping, not only for maintenance, but for modernization.”
As a prime for a MSMO contract, BAE is responsible not only for doing the basic or extended maintenance, but also for integrating modernization and other work into the ship availability.
For example, BAE performed some of the work needed for upgrades on the USS Wasp amphibious ship for the Joint Strike Fighter.
Without the MSMO structure, the Navy would have to negotiate fixed-price contracts for the different vessel work. Not only could that be more expensive, but also MSMO contractors like BAE would have less incentive to invest in research for some of the work. BAE, for example, has invested in research and development to repair the extensive aluminum cracking that the Navy has suffered on its warships, particularly the deckhouses of its cruiser fleet.
“As the superstructure sits in [the] Sun and gets chlorides and salt, there are impacts,” Tjepkema says. “It changes the characteristics of the aluminum and makes it difficult to weld on.“We’ve done a lot of R&D for this with the MSMO contract.” Aluminum welding for a warship is no easy task he says. “It is akin to nuclear welding.”