The Navy wants industry’s help to reduce sustainment costs

Most Department of the Navy (DON) programs cost more to sustain and operate than to buy, so reducing those costs is a good way to free up money to expand capability. We invite our industry partners to join us in this effort.

One key component to lowering sustainability cost is access to the technical data required to maintain our advanced weapons platforms. When the DON’s General Counsel convened the Taxpayer Advocacy Project two years ago to identify legal tools to protect DON interests in acquisition and sustainment, the team noted that obtaining the technical data for certain aircraft programs would help facilitate cost reductions.

In the past, the major components of an aircraft acquisition contract were price per aircraft and number of aircraft; requiring delivery of technical data to support the aircraft was typically of secondary importance to leadership and, if included at all, subject to sub-optimal terms for the DON. Not anymore. The DON’s contracting workforce now has leadership’s clear guidance that acquiring technical data rights is a “must have” in our acquisition contracts.

Not surprisingly, this came as unwelcome news to several aircraft manufacturers with subsidiaries that the DON has been constrained to hire for maintenance that we could not do ourselves due to lack of technical data. Indeed, this shift in the DON’s approach has led to very protracted negotiations in recent multi-billion-dollar purchases of two types of tactical aircraft. In each buy, we were able to secure terms that will ensure delivery of the technical data needed to maintain hundreds of new and previously acquired aircraft less expensively for decades to come.

We will not hesitate to use legal means to enforce such terms, as exemplified by a recent achievement by the acquisition arm of the Marine Corps. In that instance, a manufacturer of a new generation of tactical equipment took the position that it need not provide several dozen technical data packages necessary to maintain the equipment—even though this was required by their contract. After the Marine Corps indicated it intended to exercise its legal right to withhold 10 percent of the overall contract price until the data was delivered—a nine-figure sum—the contractor yielded and delivered all of the data sought by the Marine Corps. 

While all this has been encouraging, the DON needs to do better on shipbuilding and ship maintenance—and I know it. Among other initiatives, the Taxpayer Advocacy Project team is scrutinizing whether industry is investing its fair share alongside the DON in the defense industrial base and a critical subset, the submarine industrial base. While we respect corporate leaders’ right to manage their financial affairs, it is important to question the wisdom of prioritizing shareholder dividends and stock buybacks over necessary investments in underfunded shipyards and delayed shipbuilding programs. As we assess where to direct the many taxpayer dollars that Congress has appropriated to support and grow the industrial base, we are more closely scrutinizing what contractors are saying to the DON, their shareholders, and the public about their own cash and investments.

Another General Counsel initiative takes aim at individuals—not just their companies—who engage in fraud or poor performance in connection with DON contracts. The DON’s Suspension and Debarment Officer has long had the authority to suspend or outright bar such companies.  The new initiative, PINACL (for Promoting Individual Accountability), intends to drill deeper into the circumstances of such misconduct to identify—and hold accountable—the specific employees who actually engaged in the misconduct. The goal is to reduce such misconduct by putting in jeopardy the employment of people who might be tempted to engage in it.

Yet another initiative relates to the Contractor Performance Assessment Reporting System, essentially a report card on how each contractor has delivered on its contracts with the DON. I have directed our contracting officers and acquisition attorneys to bring heightened vigor and accuracy to the process, to ensure that our award selection process properly weighs the past performance—good or bad—of those competing for our contracts. 

One of my enduring priorities for the DON is improving strategic partnerships, and that includes partnership with our defense contractors. I call on all of our players, including our defense contractors and Congress, to continue to make our DON the most lethal and innovative in the world.

Carlos Del Toro is the 78th Secretary of the Navy.