Marine - DEFENCE MANAGEMENT JOURNAL, Issue 40
An Astute approach
When Astute – the first of the UK's new nuclear powered attack submarines (SSNs), said to be its largest, most powerful and technologically advanced – enters the Royal Navy after reaching contract acceptance later this year, it will mark a major milestone in a huge and highly complex engineering design and manufacturing project. It will also mark the start of a programme of lifelong in-service support and maintenance, culminating ultimately in disposal.
In design and construction terms, Astute has been cited by the MOD as arguably the UK's most challenging engineering project, and 'more complex than the space shuttle', involving more than 7,000 design drawings and 10,000 separate design and engineering requirements. Its nuclear power plant is more complex than a power station. The nuclear reactor and turbines are capable of generating tens of megawatts of power and, particularly importantly in through life support terms, the reactor is designed not to require refuelling for the whole of the submarine's 25-plus year life. Certainly, much attention has focused on the engineering, combat system and tactical weapons system advances incorporated into Astute to provide unprecedented capability (and indeed, associated costs). But what of through life support for these highly complex future attack submarines – that critical phase during which the majority of whole life costs are borne?
For effective and cost-efficient through life support management of this new SSN class, a range of key factors come into play, from maximising on and maintaining leading edge facilities, through to the contracting approach.
To start with the arguably obvious, maximising on existing maintenance facilities or assets to minimise overheads is evidently crucial, but remains worthy of mention. Measures such as optimising dock utilisation and resource smoothing are good examples. While docks are usually dedicated to either surface warships or submarines due to the different infrastructure and support systems (safety systems, water cooling and others) required for each, the use of a single dock for both – though a major planning and logistics exercise, particularly in ensuring the effective integration of the complex nuclear submarine and surface ship maintenance procedures and planning processes – can generate valuable cost-efficiencies. Such an initiative successfully implemented late last year, for example, saw amphibious helicopter carrier HMS Ocean enter dock at Babcock Marine's Devonport Royal Dockyard within four hours of nuclear powered attack submarine HMS Turbulent having left the same dock.
Equally, ensuring that manpower resource requirements for both ship and submarine support are carefully planned and co-ordinated can give cost benefits to both the ship and submarine programmes. If these can be arranged together to avoid large manpower peaks and troughs, the cost of labour supply can be significantly cheaper.
This sharing of both physical assets and manpower resource could become a dominant feature of Astute class support, as there will be significantly fewer submarines in future and a gap in SSN refitting from 2009, when the last Trafalgar class refit finishes, to the first Astute long overhaul period in the early 2020s.
A further fundamental factor in the through life support programme is the infrastructure and facilities to support these new submarines, and indeed those currently in service during their operational lifespan, and ensuring that this is fully up-to-date and represents leading edge design and technology in order to optimise long-term cost-efficiency, as well as capability.
Babcock Marine's Devonport facilities, for example, underwent a major upgrade between 1997 and 2002, and a Future Nuclear Facilities (FNF) programme is currently under way under a partnering agreement with the MOD. This involves both a project to provide a fleet time docking facility within the submarine refit complex, plus a recently confirmed investment of more than £150m for a world class low level defuelling facility expected to be in operational use by 2012. Meanwhile, its Clyde facilities are the subject of substantial infrastructure investment, with work under way on a new £200m floating jetty capable of berthing the new Astute class submarines, to be operated by Babcock Marine following installation and commissioning later this year. Once these investments are complete, the aim should be to undertake through life maintenance without need for further large capital investment. Cleverly adapting assets and support equipment already used for the Trafalgar and Vanguard classes will be key to keep infrastructure costs to a minimum.
A pivotal element in optimising through life support management for the future attack submarines, however, lies in contractual arrangements. Drawing on experience from a number of Best Practice in-service support models, both from within the defence community and outside it, a number of improvements and innovations in contracting style can be implemented to ensure optimised availability, quality and cost-efficiency, with a move to through life performance-based contracting at platform level. Given that the submarine support budget is due to reduce over the next five years, this is particularly critical. Future submarine support centred on output performance-based contracting would be focused primarily on submarine availability when required, plus factors such as whether the asset performed, maintenance is delivered to plan, quality and safety are being maintained, and costs are reducing.
The principle is not new. Performance-based contracting has been shown in other industries to achieve better results (British Airways, and London Underground to mention two), and other MOD contracts have also ably demonstrated the benefits, including the Harrier and Tornado fast jets, T996 naval radar, and Survey/River class OPVs.
Performance-based contracting in future submarine support would address a number of the inherent flaws in current contracting approaches, to bring significant efficiency and effectiveness benefits. Principal among the issues to be addressed is the need to reflect desired outcome performance (which existing contractual measures do not – there being no availability or in-service performance indicators and little opportunity for meaningful trend analysis). Further, there is a need for reporting consistency for major maintenance activities (currently each Long Overhaul Period (LOP) and Revalidation and Maintenance Period (RAMP) has a unique set of performance metrics and reports), and effective incentive mechanisms (those currently applied are ineffective in driving improved performance).
Importantly, in contrast to existing contracting approaches in submarine support, a key attribute of performance-based contracting is that it is centred on outcome, namely whether the asset was available for the task when required, and how well it performed the task. Further, output contracts are proactive rather than reactive (will the asset be available for future tasks when required, for example, and how can performance shortfalls be avoided in future?). Significantly, these long-term (usually at least five years) contracts are aligned throughout the supply chain with a common line of sight and risk sharing where appropriate, and are set against a benchmark. They are also effectively incentivised, with payments made against the customer's requirements for performance (with mechanisms to fund increased profit via efficiency savings, for instance, and profit 'at risk' against performance). This results in a 'win-win' for both industry and the end customer, with cost reduction, improved performance and increased profit all directly linked.
Further advantages can include additional 'assurance' measures, such as how many safety or quality lapses have been raised, what level of spares availability is being achieved, and are milestones being attained (which should be treated as shared information rather than key performance indicators). Interestingly, output contracting is often considered a notable advantage to the customer, particularly MOD Integrated Project Teams, in terms of budgetary assurance and discussions with the Treasury as, for example, any cuts can be more effectively translated into reduced outputs.
A number of key characteristics are vital to the success of these output-based contracting arrangements, including partnering relationships, with teams often co-located at point of delivery. A notable part of this process is in the 'letting go of something' by both sides to establish the trust relationship and ensure interest alignment of all players in solving the ultimate customer's problem, as well as removal of the blame culture. Similarly, open sharing of information is crucial, and management information systems (MIS) management and federation must be given sufficient attention and investment.
Application of performance-based contracting to future submarine support is, of course, dependent on having a clearly defined requirement. Whether the asset was available when required, for example, can be evaluated in terms of adherence to the Navy Plan (Fleet Operating Schedule), whether four are ready for sea at any one time, and/or the percentage of non-maintenance days. Asset performance can be evaluated in terms of operational defect (OPDEF) frequency and duration, while delivery of maintenance to plan can be measured against milestone adherence, for instance. Equally, monitoring whether cost reductions are being achieved could be based on the cost per boat available day, total A-class support costs, and/or savings vs. baseline costs.
Importantly, research into the MOD and wider industry examples of performance-based contracting at platform level reveals that significant cost savings can be achieved. In the case of the fast jets support model, Integrated Project Team costs are reported to have reduced from £711m in 2001-2 to £328m in 2006-7, while the 996 naval radar model guarantees a 20% cost reduction, and the British Airways model has seen the cost base halved in less than 10 years. A generic figure of over 20% savings emerges from the through life platform level output performance-based projects studied.
The time to invest in new processes, systems and management capability to maximise the results possible from a performance-based contracting approach is now. Entry of the Astute class into service presents the first opportunity for over 15 years, since the Vanguard class was introduced, to re-design support arrangements to maximise availability of the submarines to the fleet, as well as minimising costs to the MOD.
In short, the application of performance-based contracting could represent a major advance in optimised in-service support for the new Astute class. Coupled with other key factors ranging from the elimination of the need for costly and time consuming reactor refuelling in the Astute class (compared to current SSNs, which see refuelling operations undertaken twice during their lifespan), and greater building in of through life cost of ownership considerations reported in Astute boat 4 and follow-ons, to the critical importance of having the most up-to-date fully maintained maintenance facilities – there are very real opportunities to ensure availability improvements for a continuous at-sea deterrent, efficiently and effectively supported via a sustainable enterprise, while offering the required significant cost reductions.