WASHINGTON — The U.S. Navy and the Defense Department used the fiscal 2024 budget request to double down on asymmetric advantages over rivals like Russia and China.
For the Navy, that took the form of missiles, submarines and unmanned systems.
More recently, however, Bill LaPlante, the undersecretary of defense for acquisition and sustainment, has said developing and prototyping these high-end systems is important, but not the end game.
Research and development “without procurement, production, is interesting — but doesn’t really matter,” he said in September at the Air and Space Forces Association’s annual conference, leaving the audience with the message: “production, production, production.”
Two weeks later, he told another audience, “production is what matters, and everything else follows from that.”
Jay Stefany, the acting assistant secretary of the Navy for research, development and acquisition, sat down with Defense News to discuss what this focus on production looks like for the Navy, what the service’s contracting arm is up to, and more.
This interview was edited for length and clarity.
What are your top priorities for fiscal 2024?
Production in a number of places: certainly where we need to expand our production capacity to meet demand, like in the submarine world, or in some of our munitions programs where we’ve been at a minimum rate for decades and now we need to expand to meet global needs. So there’s the expansion of production capability.
We have programs that are about to go into production, and we want to make sure that goes as smoothly as possible: frigate comes to mind, MQ-25 is another one. I want to get them started in their production mode, get that good foundation going.
Then there’s getting commercial technology where it can be used to meet a warfighting requirement — which some can, some can’t —but where it can, let’s get into a case where we’re actually going to go build a bunch of that and get it out there quickly. We’ve experimented with it; let’s go from experimentation to actually fielding, where it meets a fleet gap or requirement.
What commercial technology are you considering for use by the fleet?
Certainly some of the non-warfighting unmanned capabilities, either undersea or on the sea, gliders and things that sense the environment and provide back environmental sensing.
But I’m also looking at where we can bring additive manufacturing capability or new technology into ship repair or submarine repair, which is just as important as getting that technology where it can be used on the warfighting side.
For example: “Hey, Carnival cruise line, how do you use technology to repair your cruise ships and get them in and out on time?” Which they do very well, and maybe we can use some of that technology in our repair world.
How do issues like inflation and labor affect the broader issue of production?
The focus would be: Is the workforce there? Do we have the material there to actually sustain production? Do we have a sustained capability coming in from the suppliers? Do we actually have the production plans that we’ve proved work?
The workforce today is less experienced because of the generational shift, so we actually need better documentation of what they’re doing in their work instructions, whether it’s paper or whether that’s on an iPad.
So those would be the three main things: Do we have the right documentation for the right workforce matched up? And then, do we have the material to continue doing it, as opposed to starting and waiting?
You also serve as the F-35 acquisition authority, in addition to your job as Navy acquisition chief. The fighter jet has faced production delays this year due to challenges with the Technology Refresh-3 upgrade. How are you solving the TR-3 problems and getting the production line ready to deliver aircraft again?
TR-3 would be the hardware and software suite upgrade that then would allow for some of the higher-end processing capabilities that would come in a Block 4 capability package. The TR-3 upgrades were supposed to go to the aircraft that are delivering this year. There are lots of developmental issues going forward; we’re actually now in the flight test area. Lockheed Martin has maybe 10% to 15% of the flight tests done that are required.
The software has all the capability in it. But getting some of those critical metrics to the maturity level so that we can go do those flight tests has been the most recent holdup.
The flight test program we expect to be completed — at least to the point where we are confident in the outcome and can start accepting aircraft again — in March or April at the earliest, maybe more like June at the latest. That’s kind of your bracket of when we’re looking to start accepting aircraft, with either the flight test program complete, or at least complete enough that we’re confident the last piece of it will get done.
Are you expecting a domino effect on aircraft deliveries?
It will probably take six to nine months to catch up. It’s not like: “OK, the software works. Now we’re going to deliver 100 airplanes tomorrow.” We have to work our way through the final delivery process as well as the new ones coming on.
How are you and the F-35 Joint Program Office working through some of the ongoing F-35 readiness issues as part of the so-called war on readiness?
Program Executive Officer Lt. Gen. Michael Schmidt has a really good approach in what he calls a war on readiness, and he actually created a top 10 list of degraders of all three models. It turns out perhaps the top five of those 10 are the same in all three models [the “A” model the Air Force flies, the “B” model the Marine Corps flies, and the “C” model the Marine Corps and Navy fly]. So going after those first — canopies, the electro-optical [distributed aperture system] — those come to mind. But he’s targeting those that go across all models first.
And then looking at the [operational- and intermediate-level] maintenance that are done, are there things we can have sailors and Marines out there doing to keep the engines on the wing longer? Or for whatever it is that’s degrading: “Hey, if I changed my [operational]-level maintenance, I can get more life.” In the engines, we saw that was a case where, by doing a little more out in the field, we could significantly reduce the number of engines that had to come off and go back to the depot. It’s that kind of mentality going forward, and the identification of it and actually having some money to go work on those things, which the JPO does have in this year’s budget. I expect to see all three mission-capable rates go up noticeably.
What contracting initiatives are on your plate?
One of the things that we started with under [former Navy acquisition chief Hondo] Geurts, and we’ve continued, is the idea that we would like to obligate more money each year with fewer contracting actions in order to free up time for our contracting officers and our program team to actually do more bigger-picture, strategic stuff, as opposed to the more transactional stuff.
This past year, $151 billion worth of obligations, which is the most we’ve ever done in contracting or obligating money. Contracting actions are getting lower and lower, and we’ve hit the lowest number of contracting actions [since this effort began in FY20] at 199,000. So the idea of more work done with fewer contracting actions — that’s one.
We’re also seeing a trend in the contracting officer world of higher attrition [than other parts of the workforce]. It’s a hard thing to do. Navy Secretary Carlos Del Toro has encouraged us to look at ways to retain that workforce. It’s not so much recruiting them; it’s that once they get up to speed, it is just hard work, and we need to make opportunities for them to want to stay.
We also had a record year for small business contracting. So of the [small business-eligible portion of the total spending in FY23], $20 billion of that was direct to small business prime contractors.
And then there’s more innovative contracting, like other transaction authorities. [In FY22], we were at about a billion dollars of other transaction authorities. In FY23, we ended up at $2.7 billion. So a large increase in how much we are using — and a 59% increase in the actual number of OTAs.
Megan Eckstein is the naval warfare reporter at Defense News. She has covered military news since 2009, with a focus on U.S. Navy and Marine Corps operations, acquisition programs and budgets. She has reported from four geographic fleets and is happiest when she’s filing stories from a ship. Megan is a University of Maryland alumna.