The reason its the number one priority is because of the ships i have today about a third of them are under control in a pure sight availability. So to the extent we dont get them out on time it causes a great deal of stress on the force. There was a this where a reporter said the u. S. Navy for the first time did not have an Aircraft Carrier at sea for the First Time Since world war i. Part of that is because it took 13 months. So it wasnt lost to me when i came into the job a year ago that sees the ability to get it out on time. It is critically important. So back to my original comment. One, we need more people, clearly. It cant be only about the people. There are a couple of other things well have to do here. I have to have the capacity to do the work. I have to figure out ways to train the work force. Kids today are coming in. They learned differently than we learned. The typical time line to get a worker from the time they can go down and do something useful on the ship was about five years. Well have to make an investment than we are getting it today. Many of our shipyards, some of them are several hundred years old. A lot of them designed to build ships in the early part of the 20th century. They are really not set up to handle maintenance the way it should be. We typically make investments. The Industry Standard is about 10 to 15 years less than that. So we have got to go make a concerted effort. How do we set our yards up . We have to be willing to make investments going forward. Finally, you have probably heard kevin talk about this many years ago. We have to talk the entire Industrial Base into account here. So we have a lot of challenges ahead of us. I think i am very encouraged at where we are headed. We have the resources that we need. Well start delivering ships and sub marines on time. Well take a look at how to expand the service life of the ships that we have. I think when you combine those things together and add that into the build strategy that we have a viable path to get to 355 and get there sooner than by building new. With that i will conclude my remarks and have a seat here and ill be happy to take any questions you might have. Thank you. Well start with a few discussions and have plenty of interaction. You mentioned you can go back all of those 18 or whatever you said you worked on and it was probably there on the first one and probably there today. One thing that sticks out is that the it made it more available for tasking. You eluded to the report and didnt mention it by name. Have we caught up enough . I mean back in 2008, 2009 corrections were put in place. It strikes me from a maintenance standpoint and from a need for modernization things are tightly wrapped and its pretty tough to catch up. How caught up are we . I think its a challenging scenario. I think they would tell you the recent trends this is a graded vent. Yes. This is an okay pass. So i think we closed the gap. Its one of those things, if you dont maintain the funding that you can rapidly lose the edge that you had i think its particularly important. They put maintenance at the front for a reason. You have to get the maintenance done. We are all for doing that. It was designed really so to provide more force. Youll hear them talk about reset the force, provide and its also meant to provide surge capacity. I think we havent tapped into the surge piece of it. We are likely to see more use if an Aircraft Carrier once she is in a 36 month cycle i think we are going to go look at it. We will go get the use out of the platforms. As you go use the platforms you consumed the service life. It circles back to the point of the beginning. Make the forces available then we have got to make it even more important to go do to maintenance. Theres a direct correlation between how much you use them and how much maintenance you have to do. One of the interesting things we have found even though the total number didnt change dramatically we found that 40 more deploy days than we had before. It is kind of like running your car to church we were running the car across country so we had to do more maintenance on it. So you mentioned that. Thank you for that. The shipyards and the need to he capital size. You can go up to see buildings that are over 100 years old. So if thats important is there money budgeted for the recap . You mentioned you have maintenance money. Are you allowed to apply that to upgrades to the facility and capacity you have . Yeah. One of the things i have had very serious discussions and defense committees have been open about having a discussion about providing more flexibility on some controls on the use of that money to make some of the investments we need. On the same side, you know, the budget is always relative to the rest of the budget theres a number of other elements and one of those is making necessary investments and welding machines and providing shops and stuff. If you go and get your work done that flows the material and flows the work into the ship better than we do today. So while we dont make the investments we need to make today its pretty clear. We make the we meet the 6 threshold that is mandated by congress but well have to take a serious look at what it takes to go invest in these shipyards particularly if we will grow the size of the fleet. It can handle the 275 ships. If youre talking shops and to handle 355 ship navy you have a completely different issue. I agree. So there because lot of people expecting a little bit more. It was the same nur number of ships than in the previous administrations budget. Are there things you have looking at and are there things industry should be looking at as you lay in from 355. So 18 is kind of a readiness year. What should they be looking at . I think we kind of laid out where we want to head. I would tell industry, you know, the key is we want to keep production lines going. But it will be a combination of continuing to build and then innovating and figuring out how we can build quicker for the next set of ships that will come down. And on the surface side of the house we have a number of ongoing efforts that i think well yield dividends going forward. Well continue to make the case on the budget side of the house for the resources necessary to get that done. We are laying out a compelling case and what it will cost going forward. You mention capacity in terms of people and you mentioned dusting off the one shipyard concept. Are we seeing strain in competing for the same people . A couple of observations is what we found with this sequester, fiscal cliff and some of the wild swings is when you went back and try today find that person with that skill set either werent there or you had too paid more. You were still a little short ton government side are we seating ourselves on this and is there a better way to do this . You know, we do compete with other resources. We tend to lose the work force short term. The question, can we get the work force necessary to go build the ship that is we need and do the maintenance . The answer is yes. They had 27,500 workers. It was up in the 30 thousands. So we have to interest people to do the same. We do compete for some of those people. In the short term some of them, we grab people they would like to have and vice versa. If we know we will grow the size of the force when i talk to the leaders of industry they are not worried they can grow their work force and im not worried that we are going to have a problem growing the size of the Naval Shipyards as well. We have a good plan out there and well be able to press on with that going forward. Last question before we open it up to the audience. You mejsed that the good news is we have have a big bump up in operations and maintenance money whats the next big thing from a prioritization standpoint, where do you need the most . If they would spend that next dollar if he got the 19. 8 billion, what is the next dollar go to . Yeah. I think, you know, in my lane on the maintenance side of the house it goes into investing in the shipyards, making the investments necessary to make the work force more productive. You know, theres an expectation from the fleet that well give you all of this money. We want you to deliver things on time. Once you get the work force and you have the work force we need. One of the challenges we faced today is we added over the last six to seven years, half the people have been there less than five years. We have to go train them so they can become more productive. The expectation is correct, which is hey, i will give you the dollars but i have got to at the end of the day i need dollars to build planes and weapons as well. Once its there i expect you to figure out how to do a mandate availability for 230,000 mandates, for example. I think thats the challenge that we face going forward. So my next dollar would go into investments in the physical plan to make them more productive so we can ultimately start tipping that budget over a little bit and let those resources go somewhere elsewhere they are needed. Okay. Lets open it up. Well have a few folks here. We can call on you. Sidney, you get the first question. Good to see you both again. You said interesting things if we invest in maintenance and extending the lives of our current ships we can get there a lot faster. Thats big return on that. I would love you to walk through some of the details and numbers on that. How much life are we getting out of what ships . Can every get another five years or much more across and so forth . Yeah. We are not going to go back, but i sympathy the study looked at the basically from 53 or 54. How much service life can you get . At least five more years. We have taken a look at it. Extremely low risk. We have kind of looked at it. I think you can at least get it out to its next dry docking. The key is do the maintenance you need to do and have some capability you would like to have. You know, today thats baseline 9. So i think its a relatively low risk proposition. Running the numbers you can probably shave 10 to 15 years off of what it would take you to get to 355 if youre willing to consider the entire fleet in that set. They dont see anything that would prohibit us from extending the service life of the ships. Do the maintenance so they are combat relative going forward. I think its pretty straightforward. I will say on the side of the house we dont have as much Knowledge Based on that and how they react over time. We have seen some of the challenges with just the alumin aluminum. So im not willing to lean forward yet on how far we could get the aluminum hole ships but on the steel hold side of the ship theres no technical issue going longer. The sub marine force is pretty well understood how long we can take those out based on issues with safely operating. Can i jump in here and ask you to hit one far minute on cyber . Could you talk about the special efforts to become cyber compliant and secure . That is great. I probably should have mentioned that in some of my remarks. I would say as part of this effort it is a key piece of that. Im responsible for all all of the combat systems from a cyber per specificive. We have to stay out in front of that. The reality is our ships and sub marines, theres not one that doesnt have, you know, its not heavily invested in software and computers. Even i just came from the trials its great stuff. All of that has computers associated with it. The cyber piece is not just dont hack into my email or get into my credit card. It goes a lot further than that today. So we have a big focus on how to manage this going forward. Have you had to bring on new folks to deal with that . Yeah. We have a chief Information Officer now. We have grown the size of my work force there. A lot of cyber folks are in the engineering director. We have a Cyber Council i meet with monthly. We are working closely here on that. So yeah, we are as we grow and we would have to grow if we grow the size of the force and we are looking closely at that. Thats key point. You had your hand up earlier. By was wondering if it would come as a result of or if it would take some maybe rethinking how you approached the processes, how you kind of innovate the proceed youdures. Yeah. One, if you have ever been you know, i use ingles after hurricane katrina. It was a terrible blow to the gulf coast but when they had the opportunity to go rebuild and kind of rethink how they laid things out you can look how they are doing. They knocking it out of the park. I think one of the things, we tend to be a conservative organization on how we use technology. There is great technology. There is Security Issues that would allow us to be more protective at the deck plait. So thats lot of opportunity that goes well beyond adding people to the shipyards. Yeah. We get there we venn clully. We do things when i started back in 1981 i never would have imagi imagined this is the way people learn and i think we are missing a great opportunity to get better quicker. Yes. Right here in the front on the end there. Hi. Could you be more specific about what youre assessing in terms of investments and people and when do you anticipate the study to wrap up . Is it something that the navy is doing on its own accord . It is not congressionally manda mandated. The Congress Kind of asked us to a plan. We are kind of sticking with that plan today. They showed that to me. I was very interested in that. We made an investment to go do the same thing, to do something thats an industrial engineer and go map out. Where do people have to walk to to get their work done and where if you were to optimize that what would you do . So a combination of that and Capital Improvements on the facilities in terms of welding machines and then the last piece of that is as we go to block five, you know, the sub marines wont fit in a lot of existing dry docks. So we have a long Term Investment plan that includes the dry docks and then the facilities investments necessary to get there. Its not cheap. We are talking, you know, probably over the next 30 years, you know, an investment on the order of 3 to 4 billion. It is kind of must haves. The second piece of that is where im competing to nak investments necessary so that plan, yes, we have the basic outlines of it. I owe an answer back in the fall and well finish up with full details in probably february is what i told them of february is today 2017 . Yes. In february of next year. Is well lay out where we need to go. Im having that th conversation as well. They are very supportive and want to help. Ill move it over here, sir. Hi. Im mike stone. Hi. You talked a little bit about delivery and keeping costs down. I wanted to understand how much time they would need with a foreign design in terms of survivability systems and breaking it down. You know, i dont think it matters where the design comes from in terms of whoever develops the design in terms of how long it would take us to evaluate it. You know, i think the thought is here ongoing forward with the future is that it will be a competitive environment across a broad spectrum. We could consider a foreign design as part of that competition. We havent gotten to that point yet. It wont take them any longer unless i have to translate it from german to dutch to do the analysis in terms of the survivabili survivability. I dont think theres any time difference. Okay. This gentleman right here on the end. Pass your mike. Thank you. It is half by through. I was wondering, are they designed and if so, would there be like a gap between them going in . Yeah. Ford will have the ford class designed for feeling as well. It would have gone to light and we looked, you know, what it would take and i think we concluded, while feasible it did make sense. If you keep it for 50 years you have to bring it in to a midlife ov overhaul anyway. So we will refuel. So ford delivers yesterday so her first would be in 2040. Add 23 year to that lets see, the last one, she will be around until 2057. So i never do math in public will be in 2030. So yeah, there will be a little bit of a gap between well have to address that. There will be a lot going on at the same time. I suspect it will counter balance if youre shipbuilding in the 2040, 2050 time frame. It would counter balance some of the work. Okay. Over here on the right. Good morning. A lot of what you spoke about this morning sounds like a huge data problem and in a lot of ways particularly when it comes to two data sets. I see one being stuff coming off whether it be rolls royce. We have a huge amount that comes off that fly through the sky on a commercial level all around the world. It provides a really inciteful way. That is commercial application. There is a lot that can come off the ship that where the custodian is the u. S. Navy and you may have information coming off or equipment that is owned by the oem. If youre trying to bring this information together and gain incites from it how do you see handling that . We have a lot of data coming all of our ships today. We have been up to General Electric to see what they are doing and what they have call digital twins in making decisions. So i have, you know, i have a system called the ingrative system. We have had the ability to collect data for years. We have the ability to collect vibration data and temperatures and stuff. We absolutely have to take a step forward. They are absolutely driving us to figure out how to make better decisions going forward. Its across a whole host of different applications in my world. How do you make better decisions about what type of maintenance do you do . The navy needs to own the date to so we is make innovative decisions on what we need to do. Okay. Up here well get you a mic. Are you concerned it will seat into new builds . Well, clearly like a car they do take a little more maintenance but you have to recognize youll have a higher cost. If you go into this thinking you can grow to size of the fleet by 80 ships and your costs are not going to go up jouf got a problem. They have not higher. Part of the way that you can keep those costs under control is to make a condition sis tent investment and do the maintenance throughout the life of the ship. What we have found is when you do the maintenance consistently that you dont get you dont get any major anomalies. When you dont then you have problems. The classic example is when we transitioned from what we call today the Maintenance Plan most of the carriers got a complex to kind of reset them. So if you were to look at how many she would have had she had it done than the first could have had in the first three coming in and so we had a very challenges overhaul, not surprising. I think you got to yes, it will cost you a little bit more and we have to factor that into our plans be you the key is consistent application of the Maintenance Plan