1. Surface Shipbuilding Surface Navy Association RDML Dave Lewis Program Executive Officer, Ships January 17, 2013

2. PEO Ships Shipbuilding Workload Delivered Seven Surface Ships in 2012

3. FY 2013 Milestones JHSV 10 DDG 117-125 MYP DDG 116 JHSV 5 MLP 2 LHA 7 JHSV 6 JHSV 4 DDG 1001 JHSV 5 MLP 2 MLP 2 LPD 27 T-AGS 66 JHSV 3 DDG 1000 MLP 2 JHSV 4 JHSV 2 MLP 1 T-AGS 66 JHSV 3 MLP 2 DDG 1000 T-AGS 66 JHSV 3 JHSV 2 LPD 24 LPD 25 T-AKE 14 MLP 1 JHSV 2 T-AKE 14 LPD 24 MLP 1 LPD 25 JHSV 1 LPD 23 LPD 24 LPD 25 T-AKE 14 LPD 22 DDG 112 JHSV 1 T-AKE 13 LPD 23 *

4. PEO Shipbuilding Initiatives • Cross Program Integration and Commonality • PEO Ships Focus on Common Processes • Common GFE management • Common Pre-Comm Crew Training • Future Common Test and Evaluation • Cross-PEO Commonality Initiatives • Material Procurements • Industrial Process Improvements • Equipment Commonality • Design Translation Commonality

5. Military Price Premium – Generators Commercial to Military Cost Cross Walk Witnessed Testing Hold Points & Process Audits Military Design Reviews Learning Curve Effects Specialized Shock & Vibe Component Assembly Navy Specified Product Documentation Design for Shock & Vibe 32% of Premium 9% of Premium Testing Requirements EMI & Power Quality Components & Materials 59% of Premium Commerical Military Effective Performance (MEP) Procurement Constraints (PC) Procurement Process (PP) Other Military ~3X MEP and PP cause the price premium for generators

6. Military Price Premium – Electric Drives Commercial to Military Cost Cross Walk Procurement Philosophy SDRLs Design Reviews MIL Mandated Sourcing & Learning Curve Effects MEP Purchased Parts – EMI, Power Quality, Shock & Vibration Others 22% of Premium 2% of Premium MEP Testing – EMI, Shock & Vibration, Other NRE Labor 76% of Premium Commerical  Military Effective Performance (MEP) Procurement Constraints (PC) Procurement Process (PP) Military  ~5X MEP and to a lesser extent PP cause the price premium for motors

7. Growth Areas • Condition Based Maintenance (CBM) • “Fix before break” • Re-define Role of In-Service Engineering Agent (ISEA) • Readiness, Logistics and Training in Addition to Engineering • Evolve into ISSA (In-Service Sustainment Agent) • Economics of Shipbuilding • “Whole of industry” view by Navy • Reform Ship Design Process • Modularity at all levels, to include the ship • Manage Pace of Change (i.e. Cycle Time) • Align Budget Process to Meet Needed Cycle Times, Not Vice Versa • ARCI Good Example of a Successful Cycle-Time Management Process

8. Affordability Focus on cost and execution performance and production Focus on mature design plans before start of construction Focus on long-term contracts (MYP, Block Buy) Focus on fixed-price type contracts Active Navy management of material (GFE, CFE) Fee aligned with risk Wholeness Balanced approach to readiness across the spectrum of warfighting mission capabilities New ships and shipboard systems must arrive on the doorstep ready to operate Quality Shipbuilding Focus Areas

9. Questions?