OVERVIEW OF NAVAL SHIPYARD s QUALITY, INNOVATION AND PRODUCTIVITY IMPROVEMENT EFFORTS

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CVN 68 CVN 77 OVERVIEW OF NAVAL SHIPYARD s QUALITY, INNOVATION AND PRODUCTIVITY IMPROVEMENT EFFORTS SSGN/BN LA Class Virginia & Sea Wolf 1

Naval Shipyard Quality Program Manual (QPM) Background: Issued in early 1980s to meet Quality Standard MIL-Q-9858. Updated in 1999 to address and comply with a ANSI/ISO/ASQ Q9001 International Quality Standard. QPM focus is on ten program processes that interact with many functional organizations Technical Document and Configuration Management Control Material Control Laboratory and Calibration of Measuring and Test Equipment Control Corrective and Preventive Action Procurement Quality Control Process Controls Inspection and Verification Audit Program Training Program Surveillance Inspection

NAVSEA/Naval Shipyard Key Quality Processes AVAILABILITY WORK PACKAGE CUSTOMER SHIP TECHNICAL REVIEW TECHNICAL DIRECTION (TASK GROUP INSTRUCTIONS) OVERSIGHT TEST CONTROL WORK READINESS WORK CERTIFICATION WORK CONTROL WORKMANSHIP (WORK EXECUTION)

Managing and Measuring the Effectiveness of Naval Shipyard s Quality Program NAVSEA/Shipyard jointly developed Corporate Quality Performance System for seven key processes. Discrepancy data is collected, categorized, quantified by severity levels and analyzed for trends and quality performance metrics. Shipyard has developed a self assessment program. each internal functional area establishes desired goals, metrics used to measure performance, performs analysis to validate data collection for trend analysis and issues requiring corrective/preventive action and continuous improvement strategies. Shipyard uses audit and surveillance inspection programs to monitor compliance with technical and process procedures.

Naval Shipyards (NSYs) NSYs improvement timeline 80s 90s 2000s Current - Quality Circles (QC) - Leadership Education And Development (LEAD) Training - Total Quality Leadership (TQL) - Cumbersome Work Practice (CWP) NSYs have always expended and continue to expend considerable effort on productivity improvement Over 350 major local initiatives/year Over 30 corporate initiatives - Learning Organization (LO) - Continuous Process Improvement (CPI) & Lean - Community of Practice (CoP) - Warfare Center Engagement Drive For Process Improvement Is Part Of NSY Culture 5

Innovation Approach In NSYs Lean Lessons learned, Hitkit New Technology Insertion Cumbersome Work Practice Task Force Sub Team 1, Carrier Team 1 Product Line Tools & Methods Mil Con, OPN, SRM Collaboration w/ industry (NSRP) Utilize Warfare Center Resources Aligned Efforts Path to Excellence Behaviors & Relationships Lean Thinking Learning Organization (LO) Communities of Practice (CoP) Knowledge Management Seven Habits Leadership & Communication Current State Future State Plan/Vision 6

Continuous Process Improvement Cycle in NSYs 7

Major Performance Initiatives Product Line Management (PLM) Integrated work teams (production with support codes) responsible for planning and executing work using Lean principles. o Teams perform the same type of work across multiple projects/availabilities within project schedules. o Teams are stable and designed to improve coordination of work and eliminate handoffs between trades (transactional waste). 8

Innovation Initiatives Warfare Center Engagement PSNS&IMF Visit in December 2014 51 Items identified for potential Warfare Center assistance Some quick wins ; others long term Focusing on strategic 7 innovation items PHNS&IMF Visit in July 2015 PNS & NNSY to be scheduled for later in the year Rapid Prototyping/Moonshine Design and development capabilities to meet unique needs Workforce generated ideas to improve efficiency and worker quality of life Ergonomic Innovations Mechanical Assist Arms Industrial Human Augmentation System (ihas) New Technology Insertion Ex 1) Laser ablation for coating removal Ex 2) Improved blast respirator hood Ex 3) Exploring robotics for coating removal and inspection 9

Naval shipyards originally built for ship construction. Many buildings from the shipbuilding era are still in use. Not configured for ship repair processes. Dispersed workforce and not efficient for current demands and operations. The hub concept realigns processes and infrastructure for more efficient product line maintenance. FY12 National Defense Authorization Act required Navy to submit to Congress the plan to address the facility and infrastructure requirements at each NSY due to history of under investment in this area. The plan submitted focused on continuous mission effectiveness of NSYs by focusing on five key areas: (1) Maintain drydock certification, (2) Eliminate mission essential facility maintenance backlog, (3) Remediate seismic deficiencies, (4) Centralize maintenance operations for product lines in specific waterfront areas of the naval shipyards, & (5) Improve utility system reliability. Fully Funded Infrastructure: April 2013 Report to Congress On Investment Plan for The Modernization of NSYs 10

IT Transition Strategy 11

BACK UP SLIDES

Innovation and Productivity Improvements In NSYs Major Performance Initiatives Continuous Training & Development (CTD) Communities of Practice (CoP) Product Line Management (PLM) Learning Organization (LO) Innovation and Cumbersome Work Practice Examples Carrier Team 1 (CT1) & Submarine Team 1 (ST1) Major Initiatives Infrastructure Modernization for Efficiency Information Technology (IT) Productivity Enhancer Various Corporate and Local Productivity Improvement Efforts at NSYs Execution Barriers 13

Various Corporate and Local Productivity Improvements in NSYs Initiative Previous Process Current Process Benefits % Improved Efficiency UT for Weld Inspection Radiographic Testing (RT) Phased Array Ultrasonic Testing (UT) Achieved 4968 mandays (MD) capacity across 10 CVN availabilities 90% MDs reduction Paint Receipt Inspection Paints required 8 test to be performed Requirement changed to allow shipyards to use paint with manufacturer provided QA data In CY14, estimated cost avoidance of $227k/yr 44% cost avoidance Spray Shields Eliminated 1000 spray shields per (LA CL requirement) submarine needed to project lagged joints NAVSEA changed the LA CL standard to VA CL standard, which eliminated >700 shields Cost Avoidance of $35K per availability 70% cost avoidance Job readiness Cell/ POU Lost material and duplication of ordering Tool, material, & consumable were kitted for the mechanic in execution cells & at point of use (POU) Achieved 0.15 increase in CP. IKE FY11 CP of.79 to the FY12 BUSH CP of.94 16% CP improvement ICCP Testing Jig Using old Impressed Current Cathodic Protection (ICCP) Testing jig design Improved testing jig design-more efficient design, using cheaper material for VA CL Old design $39,727 New Design - $1,374 97% cost avoidance Generic I&C Improvement Complex nuclear Shipalt production work with rad exposure, 19,977 MDs on USS NIMITZ Reduced process cycle time and reduced exposure using lean principles, 15,583 MDs on USS RONALD REAGAN 4,394 MD reduction, OT reduced from 21% to 13.5%, exposure reduction 8,605mrem & 5,804 fewer RC hours. 22% MDs reduction CVN Shafting System and processes that supported CVN Shafting was grossly inefficient and was identified as a hold up to undocking. A strategic approach was taken to focus value stream analysis on the executable work breakdown structure across five job summaries supporting CVN Shafting 1,836 MD & 5.9 ave CU duration on USS RONALD REAGAN 1,541 MDs & 4.1 ave CU duration on USS STENNIS 16% MDs reduction Safety Draft Marker Adjusting AFT safety draft marks on upper rudder of submarines afloat suspended workers in crane-rigged personnel basket Upper rudder Safety Draft Marker is autonomous and adjustable from the pier by wireless remote control Old design $46,140 New Design - $34,813 25% cost avoidance Contractor Conversion 28 IT contractors were used to support various NSY IT positions Added government overhead FTEs to support the contractor billet Achieved cost reduction of $750K per year (reduction of IT support costs) 18% cost avoidance Hull & Back-up (H&Bu) Valve Timely maintenance of H&Bu were identified as a key contributor to undocking for Trident EROs Minimize personnel churn which degraded the building up of proficiency, took action on improvement initiatives Reduced 100 MDs per valve, Improved CPs: MMP1.89, MMP2.92, MMP3 1.16 & MMP4 1.33 33% CP improvement 14

Infrastructure Modernization for Efficiency Norfolk Naval Shipyard P527 Submarine Maintenance Pierside Facility (Pier 3) P258 Submarine Maintenance Execution Facility P526 CVN Maintenance Facility Portsmouth Naval Shipyard P293 Consolidate Paint and Blast Facilities P294 Mechanical Shops Consolidation, B80 P352 Dry Dock 1 Pure water & Emergency Response Facility P356 Electrical & Pipe Temp Service Consolidation Puget Sound Naval Shipyard & IMF P431 Dry Dock 6 Modernization & Utility /Site Improvements P417 Abrasive Blast And Paint Work Center P410 Hazmat/Waste Handling Facility Consolidation Pearl Harbor Naval Shipyard & IMF P036 Welding School Shop Consolidation P227 Submarine Maintenance Pier Modernization P035 Submarine Project Support Offices (BLDG 1670) P290 Ship/Submarine Training Center Expected Improvement: Developing Maintenance hubs will realign processes, infrastructure, people, and tools/materials will help gain efficiency. Maintenance hubs approved by SECNAV, April 2013 Navy Report to Congress On Investment Plan for The Modernization of Naval Shipyards 15

Execution Top 4 Barriers The top 4 barriers for execution performance not meeting execution guidance: Personnel Readiness: - Resource to workload imbalance - Shipyard performance is not where it should be - Inexperienced Workforce - Support functions needed for efficient & effective maintenance project execution have not grown over time Improve Productivity: - Rate of process improvement is not overcoming counter forces - Improving rotatable pools and in stock material would assist project execution - Instability / churn in avail work packages Information Technology & Infrastructure - Shore based maintenance IT & infrastructure has been historically underfunded, underresourced, and intermittently addressed Improve Planning: - Divergence between NSY planning estimates and Corporate Planning Estimates, new work, late Ship's Force work integration, and/or NSY performance issues - Availability work packages are consistently exceeding the programmed avail notional 16