Designing and Buying Warships: France, Great Britain, and the United States

By Larrie Ferreiro

The Political and Economic Fabric

Table 1 illustrates naval force levels for the three nations. 1 The U.S. defense budget for 1993 was $298 billion—far greater than that of France ($43 billion) or Britain ($34 billion) for the same year—and its naval forces are an order of magnitude larger. 2 The sheer scale of the U.S. force helps explains some of the differences in the way it purchases arms.

 

Table 1: Abbreviated Naval Order of Battle, 1994

 

Britain

France

United States

Personnel

49,000

64,000

516,000

Marines

7,400

47,500

176,600

Aircraft Carriers

3 VSTOL

2 CTOL

11 CTOL

Combatants

49

49

113

Amphibious

8

4

39

Replenishment

14

5

75

Submarines

16

18

101

The U.S. Congress intervenes in the defense budget to a far greater extent than do the British or French Parliaments, which set overall spending levels but rarely take issue with individual items. The U.S. Congress reviews the defense budget extensively, and often restructures it significantly before approving it and appropriating funds. 3 Because of this line-item oversight, U.S. arms programs tend to be somewhat volatile in their funding levels and schedules, which has exasperated more than one European joint-program partner confronted at the last minute by U.S. funding cuts or "Buy American" provisions.

Acquisition strategy is, to a great extent, a function of a nation's political economy. France's is predominantly socialist. with a history of state-directed industrial policy that goes back to Jean-Baptiste Colbert, who instituted a strong mercantilist policy to reform France's industry under Louis XIV. Many of its large industries are state-owned; the government accounts for half the gross domestic product and employs 25% of the workforce. 4 It is arguably the only country of the three in which government workers are held in high esteem (the French term fonctionnaire lends a sense of productivity not found in the English term bureaucrat). Most defense companies are either directly under state control (such as DCN) or have the French government as full or majority shareholders (Aerospatiale), so that defense planning is coordinated with industrial plans. France is committed to privatization of its defense industrial sector, although downsizing has yet to result in sweeping changes to its acquisition agencies.

The United States long has been a market economy, with only one-third of its gross domestic product publicly generated, and only 15% of its workforce employed as civil servants. 5 It generally has maintained a hands-off attitude to defense-industrial planning because the sheer size of its military historically has allowed competition. Post-Cold War downsizing, however, has forced companies to consolidate or restructure with breathtaking speed; in some sectors, only one firm is left standing. By comparison, downsizing has left Department of Defense acquisition agencies reduced in scope, but not fundamentally different in terms of overall structure or mission; there has been no consolidation of agencies in the manner of industry.

Great Britain can be characterized as a "born-again" market economy; in the post-Thatcher era, it has been privatizing national industries with a zeal unmatched in Europe. It also has reinvented its government agencies, heading them up with chief executive officers, allowing them more control of their budgets and business practices, and subjecting them to performance reviews. The Ministry of Defence not only has consolidated its acquisition agencies, it has overhauled their mission-not merely divesting them of industrial activities (e.g., dockyards), but also transferring assessment and acceptance of risk to the private sector. 6

Acquisition Agencies

In the British and French Ministries of Defense, the procurement agency is separate from the operational organization, supplies all three services, and is headed by a civilian. This arrangement establishes a clear customer-supplier relationship. The U.S. Defense Department, in contrast, has a separate procurement agency for each service. Although the Assistant Secretary of the Navy for Research, Development & Acquisition—a civilian—is responsible for procurement, the technical acquisition support agency, the Naval Sea Systems Command, is headed by an admiral and is actually part of the Chief of Naval Operations staff. Although the customer-supplier distinction is less clear, the presence of naval officers in the acquisition process ensures customer feedback.

Britain's joint Procurement Executive is relatively new, having been formed in 1992, while DGA ( Delegation General pour l'Armement ) has been France's single agent since 1961. One of the obvious advantages of a single procurement agency for all the services is that it has more clout in ensuring equipment commonality. In the case of France, both its Air Force and Navy are buying Rafale fighters, and its Crotale antimissile system is common to both the Navy and Army.

France and Britain historically have had a strong acquisition corps. In France, the Armament Engineers are hired upon entry into one of a dozen or so Ministryfunded schools, during which time they are considered in-service and receive a stipend. In the United Kingdom, the Defence Engineering Service hires people just after university; those in the naval service may be sent to obtain a Master's degree and later join the Royal Corps of Naval Constructors. The United States recently has created a Defense Professional Acquisition Corps for in-service personnel, but its members have yet to receive the same level of recognition as a French Armament Engineer or a British Constructor. French and British engineers and managers change posts every three to seven years, while their U.S. counterparts stay in one position much longer. Consequently, French and British personnel typically have a broad view, while the Americans are more focused.

The French and British agencies recently have broken the mold by hiring new directors from outside their professional corps, and have put enormous emphasis on commercial experience and business practices. Jean-Yves Helmer, the current head of DGA, formerly was director of the automobile division of Peugeot-Citroen, 7 while the British Chief of Defence Procurement, Sir Robert Walmsley, was recruited by an executive headhunter. 8

Ship Design and Acquisition Bureaus 9

Britain's Procurement Executive at Abbey Wood, outside Bristol, is divided into a dozen "business units," all reporting directly to the Chief of Defence Procurement; there are no separate heads for Army, Navy, and Air Force procurement. Naval systems are procured under the Director General Submarines, Director General Surface Ships, and Chief Strategic Systems, which together employ 2,500 people. These are devoted almost entirely to project management and contract oversight; the contractors do the design engineering. The Directorate of Naval Architecture and Future Projects—about 130 engineers—under Director General Submarines, sets standards and conducts early-stage tradeoff studies, but does not perform ship design per se. As part of their risk-transfer philosophy, only companies certified in accordance with ISO 9000—the internationally accepted standard for quality assurance certification—may compete for contracts.

In France, the Direction des Constructions Navales (DCN) is a vertically integrated ship design and construction organization, employing 23,000 people; its agencies include design engineering, marketing, equipment manufacturing, e.g., propulsion plants, and shipyards. In 1994, it was the world's tenth-largest defense firm. 10 Ship design is the responsibility of the 600 engineers in DCN Ingenierie (DCN Ing), headquartered in Paris, with combat system design management in Toulon. As part of a strategy to become more competitive in the European and world markets, DCN is pursuing full ISO 9000 certification. 11

In the U.S. Navy, ship programs are managed by the Naval Sea Systems Command and the Program Executive Offices located in Arlington, Virginia, with 3,700 personnel total. The Systems Command actually holds the U.S. Navy's technical responsibility for ship design, primarily through the 600 engineers in its Engineering Directorate, although extensive support is provided by its Warfare Centers (of which the Carderock Division has been certified in accordance with ISO 9000 in several areas).

Ship Acquisition Strategy and the Design Process

Britain and France are at the two ends of the acquisition spectrum—the former contracts out the entire program, the latter does it all in-house—and the United States is somewhere in the middle. Figure 1 compares the three approaches. 12,13 While the successive stages are broadly similar across the board, the biggest difference is the point at which each Navy turns over technical responsibility to industry. The United Kingdom passes on that control the earliest, just after requirements are set; France does it much later-control is passed to the yards only after the technical package is fairly complete. In the United States, technical responsibility is shared between government and industry for a large portion of the process. The following summarizes the various approaches:

Britain —After preliminary ship tradeoff studies by the Directorate of Naval Architecture and Future Projects, the naval staff develops a staff target. At this point, the official project begins and the government gets out of ship design business. Initial contracts for Combined Operational Effectiveness and Investment Appraisal (COEIA) studies are let to several industry teams and evaluated by the relevant project office. The naval staff uses these to issue a firm staff requirement, forming the basis for the competitive design-and-build contract, which the project office oversees through award and completion. (Based on recent experience with HMS Ocean , the new helicopter carrier, the current amphibious assault ship (LPD) contract was awarded non-competitively.)

France —DCN Ing begins early-stage studies on requests originating from the naval staff and forwarded through the Programs Directorate. It also can initiate new concepts and lobby the staff to consider them. Once exploratory requirements have been set, the formal program begins, in which DCN Ing establishes a design team with other DCN agencies. After sufficient definition, the design is passed to the appropriate DCN shipyard for development and construction. The design remains within DCN during the entire process. Based on the La Fayette frigate experience, recent changes will direct more cost and operational effectiveness analyses and enact "semi-contracts" between DCN and the DGA Programs Directorate.

United States —Compared with French or British practice, the U.S. approach is much more cautious. The first studies ask if there is a mission to perform. Once a mission need has been identified, a team of Naval Sea Systems Command Engineers, sometimes in concert with industry, perform a cost and operational effectiveness analysis (COEA), generating anywhere from 10 to 200 additional studies. Milestone I (program approval) is passed with the acceptance of operational requirements. The program office sets up a series of integrated product teams, composed of engineers from government and several industrial consortia. Although these consortia later will compete for the contract award, the atmosphere is one of cooperation and shared objectives. After production approval is granted, a competitive contract is awarded and the winner takes over detail design and construction (based on the recent LPD17 experience.) 14

Historical Experience Compared

Until the 1960s, the U.S. Navy designed its ships in-house, and even built some of them at naval shipyards. In the late 1960s, it experimented with the total package procurement concept, under which the Navy produced a set of performance requirements, which were then opened to competition; a single firm walked away the winner of the entire design and construction package. The concept was used for the Spruance (DD-963) and Tarawa (LHA-1) classes, both won by Litton Industries. It is tempting, but wrong, to compare these with current French and British strategies, because the underlying reasons are different.

In the first instance, and like most other navies until the 1960s, the U.S. Navy kept the technical lead for design in-house, partly because there was little pressure to move it to private industry, which was awash in merchant ship contracts. The implication was that the U.S. Navy would not be primus inter pares if industry were in charge, so it was preferable to keep technical responsibility where it could be controlled. The current situation in France is almost the opposite; the lack of commercial work is seen as one reason to retain the national warship-building capability in-house, to avoid the risk of losing it. In fact, the defense shipyards are now taking on commercial work to keep solvent. (DCN Lorient, for example, is building high-speed ferries in conjunction with a commercial yard, Leroux et Lotz.) 15

Comparing the United States with Great Britain, total package procurement was invoked by the U.S. Navy in the belief that competition was the best way of obtaining a cost-effective product. 16 To reduce risk, shipyards were compelled to use U.S. Navy standards in order to win the contract, which in turn made the Navy partly responsible for the technical package. The aim of the current British system, by contrast, is to transfer that risk entirely to private industry, regardless of whether the award is competed (competitive award is, however, the preferred option). Put another way, the aim of total package procurement was to get cost down, even if it meant adopting some of the technical risk; the aim of the British system is to transfer the risk entirely, even if it means paying extra for someone else to take it.

Research and Development

Both the United Kingdom and France have joint research and development (R&D) agencies to avoid duplication, spread costs, and share technologies among the services. In France, the Directorate for R&D and Test Centers works for all three services and controls tests and trials. Both ship model tests and full-scale trials, as an example, fall under the same directorate.

In the United Kingdom, the Defence Evaluation and Research Agency is a semi-autonomous agency, overseen by the Defence Research Committee but contracted from the Program Executive. The agency incorporates all R&D facilities for the three services, including, for example, the Haslar towing tank, which is privately managed. One reason for the agency's semi-autonomous charter is to allow it to obtain outside work, both commercial and for military export, to help defray costs.

In the United States, each service has its own R&D facilities. In the case of the Naval Sea Systems Command, the Warfare Centers are responsible for surface ship and underwater systems technologies. Other commands have laboratories that concentrate electronics, aircraft systems, etc., while basic research is performed through the Naval Research Laboratories. Although the R&D centers report to different commands, they coordinate their activities with each other for major acquisition programs.

In-Service Fleet Support

In both France and Britain, fleet support is managed by the naval operations organization, not by the procurement offices; design engineers are not involved day-to-day with fleet maintenance and overhaul, except in the case of major refits. In the United States, however, the Systems Command is charged with both acquisition and in-fleet support, which requires its engineers to divide their time between new-ship projects and fleet upkeep. The advantage of the British and French system is that acquisition and in-service engineering each has a single customer, which eliminates the tug-of-war as to which has priority, today's fleet—or tomorrow's. There is, however, less continuity cradle-to-grave. The advantage of the U.S. system is an improved ability to incorporate lessons learned into new ships; but because in-service fleet problems invariably are more urgent than new-ship design, acquisition programs are often given lower priority by the engineers and management.

The Export Market

Although the United States remains the world's largest arms seller, the French government has the most active state policy regarding naval systems export. A state-owned private company, DCN International, is charged with promoting naval export and international collaboration for DCN. Export design is done within DCN itself; its engineers often work on both export projects and French Navy programs. Yet DCN does not view this as interfering with its main customer, the French Navy; rather, the firm sees the export market as an integral part of retaining its in-house capability and employment, as well as making its own engineers more aware of cost and deadlines, so that DCN becomes a better supplier for its own Navy.

In Great Britain and the United States, exports of new systems are initiated almost purely from the private sector. In the United Kingdom, the Program Executive's Defence Export Services is responsible for actively promoting sales of British products abroad. The U.S. government does not, as a rule, actively support arms sales abroad, and its overall approach is more ambivalent than in France or Great Britain—both the executive branch and the congress review arms sales to decide if, in the aggregate, they are in the best interests of the United States. 17

Britain, France and the United States all have re-examined their warship design and acquisition process in the wake of downsizing, and developed different approaches based largely on each nation's political and economic makeup. One country's system is not necessarily better, nor would it necessarily function as well if wholly transplanted. In fact, the systems are still evolving; the U.S. Arsenal Ship program, as well as France and Britain's approach to the Horizon frigate program, represent quite different approaches to those described here. Still, there are elements of each system which any acquisition agency should consider:

  • Joint acquisition agencies and R&D establishments, separate from operations, have shown themselves to be efficient; they provide clear customer-supplier relationships.
  • A professional acquisition corps should have a strong identity, and periodic rotation of positions is vital in broadening experience.
  • ISO 9000 certification clearly is a coming requirement for ship design organizations.
  • Both government and industry engineers bring something to the design process, and they work surprisingly well together when given the opportunity.
  • Separate acquisition and fleet support organizations help eliminate the problem of divided loyalties among its engineers, which is often at the expense of new-ship design.
  • Export and commercial work can coexist within a naval ship design organization, and even bring benefits to the Navy in the form of more client-oriented engineers.

1 Jane's Fighting Ships, 1994.

2 The Economist, 10 June 1995, p. 11.

3 Lt.Col. Charles Houston, "France, Germany, United Kingdom, United States Acquisition Process Comparison Defense systems Management College lecture, academic year 1993-1994.

4 Organization for Economic Cooperation and Development, "National Accounts," Paris 1995, p. 44.

5 Ibid., p. 45.

6 Dr. Peter Lidgett, "Anglo-French Collaboration and Procurement of naval systems, International Naval Engineering Conference 92.

7 Le Monde, 28 March 1996, p. 9.

8 The Economist, 25 November 1995, p. 9.

9 All personnel figures are approximate for 1995.

10 The Economist, 13 January 1996, p. 17.

11 DCN evolutions. June 1996, (synthesis of DCN Working Group report).

12 Patrick Cahill and Howard Bunch. "A Comparative Study of US and Foreign Naval Acquisition, Design and Construction Policy and Practices," Journal of Ship Production, August 1996, pp. 178-188.

13 Lidgett, op. cit.

14 Capt. Barry Tibbits, USN (Ret.) and Robert G. Keane, Jr., "Making Ship Design Everybody's Job." Naval Engineers Journal, May 1995, pp. 283-301.

15 Le Telegramme de Brest, 19 September 1996, p. 1.

16 Dr. Robert S. Johnson, "The Changing Nature of US Navy Ship Design Process," Naval Engineers Journal, April 1980, pp. 88-112.

17 Houston, op. cit.

Mr. Ferreiro is a senior naval architect at the Naval Sea Systems Command-Naval Surface Warfare Center Carderock, Maryland. He recently completed a two year exchange assignment at DCN Ingenierie in Paris. In 1986 he obtained his MSc from the British Naval Constructors’ program at University College London. He has written and lectured internationally on comparative naval architecture.

 

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