For Donald Winter, the 74th secretary of the Navy, retirement means being responsible for about 900,000 people and a budget in excess of $125 billion. The former Northrop Grumman executive views his stint as the Navy’s top civilian as the “third act” in his life: giving back by serving his government. And he has a challenging task of finding balance between the Navy’s current and future needs. In that process, he is not afraid to get tough with the shipbuilding industry. Few expected him to cancel two contracts for the Navy’s much-coveted Littoral Combat Ship program because of escalating costs.
Q: There has been a lot of criticism about the escalating cost of shipbuilding. What should the industry do better, and how should the Navy go about it better?
Industry has got to make investments and we do have a challenge. With this industrial consolidation that has occurred over the last several years, there is less competition. In many of the programs, there is really only one source of supply, and under such circumstances it is difficult to convince industry to make investments, but we need to do that.
It bothers me to go around the world and see countries who have production capability that far exceeds ours from the standpoint of modern production technology and equipment.
Q: What are they doing differently that the U.S. shipbuilders are not doing?
I think that is a question we still need to work through and one that I am trying to really come to grips with here. The British have been a little bit more forceful about insisting on certain capabilities, agreements, demonstrations by industry before they proceeded with programs.
They have been perhaps more willing than we have to leverage the authority of the government. There is a lot of potential power within the Department of Defense if we wanted to exercise it. We are not as hard negotiators, perhaps, as we should be.
Q: What is the future of the Littoral Combat Ship program, and how do you plan to restructure it?
Actually, we are back to the core of LCS. We are talking about a new class of ship and our basis of understanding is not as good. This is a whole new class of vessels. We are trying to buy 55 of them. There is a lot of value in getting the configuration right and … setting the stage for cost-effective production. It’s going to take us a little bit more time to get to the first half a dozen LCSs, but I think in the end focusing on getting those first two hulls in the water, getting them to sea trial, to combat trials, getting a real understanding of what we want and getting some competitive proposals on how to produce these, will put us in very good stead of long-term production of these vessels.
Q:There has been talk in Congress, in particular from Rep. John Murtha (D-Pa.), about a competition to involve other shipbuilders, smaller shipbuilders. Is it something you have also been thinking of?
Yes. There is value in having multiple sources of supply. When you are talking about large numbers, it’s not clear that you really want to have only one source of supply, so there is a lot of opportunity here. Those other yards are also going to have to be willing to make investments.
Q: What area do you think will be essential to have cemented into the budget in 2009?
We need to ensure the balance in the budget. I do worry about having the proper balance, and that is everything from the operations and maintenance and personnel accounts to the investment accounts. And within the investment accounts, we have to ensure that we have proper balance there. We’ve spent a lot of time and effort trying to make sure that we have the right integrated capability for the future.
Q: The Navy in the next five years will face some converging priorities, both with shipbuilding and aviation. How are you trying to figure how to pay for all of that in an uncertain budget environment?
That is a good example of the balance that I am talking about. This can’t be an issue of shipbuilding versus aviation. We need both. The Navy revolves around its fleet, and the fleet to a great extent revolves around its aviation component.
Q: What are some of the big-picture lessons the Navy learned in the Iraq and the Afghanistan operations?
It has become very evident for us that you cannot focus on any specific threat or challenge and try to design the future Navy around that specific issue. It’s a very diverse set of issues.
Whether you are dealing with the difficulties of providing tactical air support halfway around the world with limited dependency on overseas basing or whether you are trying to do riverine support, dealing with pirates and terrorists in the North Arabian Gulf, it’s a growing spectrum of issues. The assets that we’re talking about using to deal with them are very long-lived assets.
Q: How do you see the state of the Marine Corps at this point?
I think the Marine Corps is actually doing pretty well. We need to grow the Marine Corps. I think we’ve come to the conclusion that 202,000 end strength is a better place to be at given the various ways in which we want to be able to use the Marines, but we are actually finding it doable in terms of being able to recruit and train the Marines that we want.
Q: What specific skills did you bring from your experience in industry to this position?
One of the unique experiences I bring to this position is that of having been a general manager in industry, responsible for profit and loss. Quite frankly, that provides a very different perspective in terms of the overall business process: what industry looks at, how they go ahead and prepare bids, teaming arrangements, bid prices, bid structures … things of that nature, investment arguments.
I perceive there to be an imbalance between industry and the Pentagon. Industry understands the Pentagon fairly well. We do not have the corresponding understanding of industry. There are only a handful of us, half a dozen or less, who have had senior management positions in industry, who have seen how industry really operates and understand how to assess industry — what to believe, what not to believe, how to provide risk analysis on what you are told.