Navy’s Enterprise-Doris Miller carrier contract offers gains to suppliers and taxpayers

Over the past two months, watching the price of copper climb by nearly $1 a pound to just under $4.50 — a 26% rise — Phil Jiannine says he can tell the Navy’s decision to make a two-ship buy for the carriers Enterprise and Doris Miller will be a good deal for taxpayers.

He is the sales director at W&O Supply in Norfolk — one of the more than 2,000 companies in 46 states that, along with thousands of workers at Newport News Shipbuilding, have a big stake in what Congress decides about how much money to spend on building and overhauling aircraft carriers. For those companies, their top priority now is to encourage Congress to appropriate the $2.3 billion necessary to keep work on the Enterprise-Doris Miller contract on track next year.

“It really helps with predictability and cost savings,” said Lisa Dante Papini, president of Dante Valve in Norfolk, the firm her father led into manufacturing the military-specification safety devices that keep ships’ pipes and boilers from blowing up.

Like Jiannine, Papini took the risk of putting down a lot of money to buy all the material — in her firm’s case, mainly stainless steel and bronze — she’d need once she knew she’d won the contract to supply all the pressure valves for the two carriers.

Announcing the two-ship, $14.9 billion contract in 2019, the Navy said ordering two at a time would save more than $4 billion. The total cost of the two ships, including earlier design and engineering work, advanced purchase of materials and components and key systems such as the electromagnetic catapult and arresting gear and radar, is $23.7 billion, Navy budget documents show.

“One contract for construction of the two ships will enable the shipbuilder flexibility to best employ its skilled workforce to design once and build twice for unprecedented labor reductions,” then-Secretary of the Navy Richard V. Spencer said.

“It provides stability into the year 2032 for our workforce and for our supplier businesses across the United States,” shipyard president Jennifer Boykin said after the contract award.

After four decades on the waterfront, starting as an apprentice at NORSHIPCO, that stability is something Jiannine can appreciate.

“Shipyard work is skilled — and it’s hard,” he said. “If you have a layoff, you lose that talent, for good. They’ll go somewhere else.”

The pipe fittings his firm makes begin with testing the quality of the copper-nickel alloys it uses, and require skilled employees to use metal bending machinery and dyes to form the basic shapes of the elbows, connectors and other fittings that ships’ piping systems need. Once the basic shape is made, machinists use their lathes and milling machines to finish parts that will fit tightly — and that won’t burst even at pressures 3½ times their rated strength.

There are several tests along the way — W&O has a staff of testing specialists dedicated entirely to Navy work.

Machinists at Dante Valve, some of whom have worked on the company’s trademark pressure valves for four decades, make each one to order, Papini said.

“They’re all individual — different specifications that we have to meet,” she said.

But while each is different, having the two-ship contract in hand means knowing how many will be needed and what standard each will have to meet. In turn, that means being able to plan when Dante’s machinists will do what in order to keep the shipyard’s work on track, she said.

Being able to plan means more efficient production — less need for the overtime or last-minute change orders, she said.

That’s in addition to the 13% savings she’s already realized because she bought all the steel and bronze Dante would need upfront, in 2020.

“There’s no cost growth coming from that,” she said. Looking ahead, she thinks savings will amount to an additional 18 to 20% over the next five years.

The two-ship contract, calling for Enterprise to be delivered in 2028 and the Doris Miller in 2032, promises stability to businesses that has one more key benefit, Jiannine said.

By extending the period of time during which he knew he’d have work to do, the two-ship deal reduced the company’s risk when spending money on materials and tools to do the job.

And with less risk, it was easier to accept a lower profit margin — that, in turn, helped W&O make the winning low bid in the competition for the carrier work, he said.

“In business, we all want to make money ... but when you see the news and there’s a carrier there, knowing that you had a part in it, that makes you proud.”

Dave Ress, 757-247-4535, dress@dailypress.com