Technology Investment Agreement (TIA) 2004-401:

1. SHIPWAY Technology Investment Agreement (TIA) 2004-401: Developing Lean Best Practice (Value Stream Focused Standard Work Elements) for Naval New Construction and Ship Repair Business & Information Processes Category B Data – Government Purpose Rights Distribution authorized to project participants and NSRP ASE Program representatives. Further distribution is prohibited.

2. Outbrief Agenda • Value Stream Definition and Boundaries • Current State Analysis and Observations • Current State Map • Issues and Concerns • Vision • Future State Map • Benefits Highlights • Implementation Plan

3. Self Maintenance Value Stream Self Maintenance Value Stream • Definition – This process is focused on the maintenance and repair of TRF equipment so that it is always in a ready for use state whether in a shops / waterfront / all other. • Purpose – To ensure that there are no delays or interruptions due to equipment maintenance. • Current Method – BOS Contractor, IPE, CM JCNs and Service Routine actions to react when equipment fails • Outcome – A defined process that will be use to manage TRF Self maintenance work. • Value Stream Boundaries (in/out) – From equipment failure to repair or replacement. TRF Equipment in Constant Use • Value Stream Owner – C300

4. TRF Self Maintenance Analysis • FY04 – 197,000 hours of Self Maintenance • FY05 – 149,000 hours of Self Maintenance • Self = TRF • Maintenance = Mfg and Repair (10%) + Service Routines (90%). • Mfg and Repair = Build a new fixture and maintaining same items. • Service Routines = Minor work, autonomous maintenance, idle time, load propane, sharpen cutting tools, equipment repairs • FY05 – 47,820 hours in Production Support (IPE and Minor Property Maintenance)

5. TRF Self Maintenance Analysis Current Ownership • C360 – Electrical, mechanical, AC&R • Fix as Fail – Trouble Reports • Preventative – PM Cards • C106 – Spec and Purchase • C300 Support Equipment Ownership • No active ownership of BSE

12. Observations • The 38A Cofferdam (1999) – charge line is always open for performing ongoing repairs – 2335 hours on a 2kilo. • 11A cofferdam (1996) 2 kilo – box of parts for 253 hours of effort. • 31A - N2 Trailer Test/Set Rel VLV (2002) - Never received the valve so work could not be performed – 26 hours. • 11A - Food Chute (1998) charged 103 hours to date – no evidence of work or future intention to work due to work priorities. • 11A Process Improvements such as building die racks are charged to 11A Equipment Repair (239 hrs), this is not Equip Repair. • LET Dog House, LET Cofferdams, Race Tracks, Spiral Stair Case and other BSE is at the waterfront needing attention (Significant rust and a safety issues). Maintenance is not worked due to a low priority. “Why not outsource the maintenance so that it is always ready for use and does not interrupt ship board work”. • Items that should be a 2kilo are often charged to a SR. • Most shops use Service Routines as a catch-all for shop activities (e.g. shop cleanup, Five S).

13. Observations • Tool room activity – 3 FTE waiting for things to do. • 31A – Sharpen Cutting Tools – 3 FTE waiting for things to sharpen. Consumable tool bits are sharpened, when asked, why not throw the bits away, the answer was “what would we do for a job”. • Current manufacturing backlog (9 years for a cofferdam and 7 years for a food chute) is not decreasing. SSGN overseas availabilities will only increase the manufacturing demands. Using TRF resources is not feasible and maintenance issues will multiply. • When area supervisors are asked about what is charged to Service Routines, the answer was “overhead”.

14. Current State Map

15. Current State Map

16. Current State Map

17. Issues and Concerns • The maintenance of the waterfront submarine support equipment is a low priority for TRF. The replacement and repair of these items only occurs when there is an equipment failure or an impact to an avail. High cost / High risk. • No Ownership. No Active involvement in Maintaining Equipment. Response only occurs when something fails. No accountability to complete work and close AWRs. Budgets are not in place for owners to maintain equipment. • The TRF Self Maintenance expenditure represents 1/10th of the capacity of the TRF (One boats worth of annual maintenance requirements). The vast majority of TRF Self Maintenance production expenditures are charged to performing service routines. It is unclear as to what was accomplished for the hours expended. • There is little analysis and accountability for the TRF Self Maintenance SR man hour expenditures which leads to inaccuracies in determining shop resource requirements. • There is no visibility or audit capability to what was accomplishment for hours expended on Service Routines.

18. Issues and Concerns • There is no senior civilian oversight for working the maintenance plan priorities between production requirements and maintenance needs. • Purchased Material lost due manufacturing / repairs never accomplished. • 06B is not charged to Self Maintenance. Total TRF equipment maintenance costs are not summarized. • No agreed upon and workable process for outsourcing work (and associated budget). • There are two budgets (C300 / C400) to accomplish maintenance on the same TRF equipment. • There is no limit or consequence to Service Routine overcharge (budgets). • To maximize Productivity Index, always charge to a JCN. There is a system in place to record and track non-production shop requirements (JON) but this charging lowers the shop’s PI. • There is no incentive to identify over manning in a shop.

19. Vision • There is a single point of responsibility for the procurement, manufacturing and maintenance of TRF facilities and equipment. • Maintenance includes IPE and minor property, Submarine Support Equipment (e.g. LET House, Spiral Staircase), shop support equipment (e.g. racks, fixtures), and facilities maintenance to be either repaired or replaced. This includes the necessary resources to manage equipment maintenance. • Manufacturing of TRF Support Equipment includes the responsibility for constructing items to satisfy new production requirements (SSGN unique items) and process improvements needs (shop racks, fixtures, tables) from lean events or critiques. • Procurement of TRF Equipment includes the spec and purchasing of equipment needed to support TRF Refits and ERPs. • When an operation is complete, the equipment used is inspected and restored to full operating capability prior to staging for future use. • For Submarine Waterfront Equipment (BSE), there is ownership and accountability so that it is always in a ready for use condition. There are resources for achieving this ready for use state.

20. Vision • Service Routine • Service Routines are used to manage routine/recurring direct work (small, minor, non technical work). • The Service Routine list is rationalized down to the minimal right accounts (appropriate SR for specific shops). • Service Routines are reviewed for effective estimates and proper charging so that JCNs and JONs are accurate. This is reviewed periodically and corrective action is taken for variances. • JON • JONs are used to accumulate overhead charges and spread this indirect work over the costs of a department and the TRF business base. • For the production shops, this includes training, Five S, Qualification/Certs, Nuc production support, shop cleanup, idle time. • The accurate charging to a JON will allow for capacity and demand management.

21. Vision • Direct Work • Direct activity related to Submarine Refit/ERP is charged to the appropriate AWR. This includes worksite/jobsite/machine cleanup, autonomous maintenance, production setup, restocking, retooling. • The accurate charging to direct accounts will improve TRF’s ability to forecast work and effectively manage resources. • The skilled worker is utilized for complex critical submarine work, not on non-complex industrial work. • All production equipment repair and maintenance is performed by C360 unless specifically called out in a 2kilo/JCN. • “Sharpening Cutting Tools” SR should be combined with the tool room. There is no production delay or production efficiency loss due to equipment availability.

22. Future State Map

23. Future State Map

24. Future State Map

25. Service Routine Analysis

26. Service Routine Analysis

27. Service Routine Analysis • FY06 YTD = 22531 Hours • From Analysis, there can be a 73% Reduction in SR Hours • FY05 = 134,000 Hours • If applied to FY05, SR would have been 35,862 Hours. This is a return of 100,000 hours of charging something other than an SR.

28. Benefit Highlights • There is no production delay or interruption to production work since Submarine Support Equipment is inspected and restored to full operating capability prior to staging for future use. • Increased Customer satisfaction from TRF Refit readiness and support. • Skilled workers are utilized for complex critical submarine work, not on non-complex industrial work. • TRF Equipment Maintenance can be managed from a single list and budget. • There is clear ownership for the maintenance function. • Better accounting of production resource hours for improved forecasting and decision making. • Elimination of Submarine Equipment Maintenance backlog.

29. Implementation Plan • Obtain TRF Buy In • Resolve Outsourcing Issues with Bargaining Unit • Reorganize and Assign Ownership • Standup the Equipment Maintenance Organization • Rationalization Service Routine Accounts • Inventory all Equipment and BSE • Budget Development and Funding Stream Alignment • Perform Training • Future State Process and Rules • SR, JON and CM JCN use • IPE Maintenance Role • Accurate Charging Requirements and Benefits • Address Current Backlog • Institutionalize Monitor and Control Process