Supplier bottlenecks threaten US Navy effort to grow arms stockpiles

WASHINGTON — If U.S. military planners’ worst-case scenario arose in the Pacific — having to defend Taiwan from a Chinese invasion — American military forces would target Chinese amphibious ships.

Without them, according to Mark Cancian, who ran a 2022 wargame for the Center for Strategic and International Studies that examined this exact scenario, China couldn’t invade the neighboring island.

But to sink these amphibs, forces would have to destroy a protective ring of combatants with air defense and anti-submarine capabilities, as well as decoy ships and merchant vessels moving invasion forces and their gear.

U.S. submarines would “rapidly fire everything they have” at the multitude of targets, Cancian said, ”using up torpedoes at a much, much higher rate than the U.S. has expected to do in the past.”

Navy jets, too, would join in — but they’d run out of Long Range Anti-Ship Missiles within days, forcing the aircraft to get ever closer to Chinese ships and planes so shorter-range missiles can reach their targets.

It’s this nightmare scenario that’s driving the Navy to increase its stockpile of key munitions: the LRASM, the MK 48 heavyweight torpedo, the Standard Missile weapons and the Maritime Strike Tomahawk, among others.

Indeed, the service has dramatically increased its weapons spending in the last two years. After slowly ticking up from $3 billion to $4 billion over seven years, Navy weapons spending jumped more than 70% from fiscal 2022 to fiscal 2024, when the service requested $6.9 billion.

But output on production lines remains hampered by supply chain challenges, leaving the Navy with too few of the longest-range and most lethal weapons it would want in a fight.

Large defense contractors say they’ve done their part in recent years to expand their production facilities, hire and train workers, and modernize their processes. But until key suppliers can deliver critical components faster, including rocket motors and electronics, the overall munitions production rate can’t increase.

The Navy included $380 million in its FY24 budget plans to address some of these supply chain bottlenecks, and it kicked off four multiyear procurement contracts to provide stable funding. But industry executives say it will simply take time for troubled suppliers to speed up production.

Certain electronics, for instance, are slowing torpedo production, according to Steve Rigdon, SAIC’s vice president for undersea weapons.

“That is the critical path for a lot of our production,” he told Defense News. “Even if we fixed everything else right now, until we get [the vendor] to increase [its] production, which is something that we’re actively doing right now, we couldn’t increase production.”

Maxing out production

The Navy stopped building torpedoes after the Cold War. Service officials, facing tighter post-war budgets, decided they had a sufficient inventory for a fleet without a real threat.

Missile programs continued, as the Navy upgraded to newer and more capable systems over time — but missile procurement plans often faced outsized cuts during tight budget years, including in the mid-2010s.

Later in the decade, however, when the Defense Department recognized China as a top adversary that would drive the armed services’ planning and spending, the Navy restarted torpedo production.

Increased missile orders followed. For example, the Navy in FY20 projected it would buy 48 LRASMs each year for the foreseeable future. The FY24 budget, in contrast, calls for buying 91, with an increase up to 149 a year by FY28.

But industry struggled to respond.

Vendors on the heavyweight torpedo program needed three years to rework the 1990s-era torpedo design, which was riddled with parts that were no longer available, before they could start production. Missiles manufacturers found they needed faster processes and more testing capacity to keep up with demand.

Frustration among Navy officials grew. Despite increased spending, the service didn’t have more weapons to hang on fighter jet wings and load into ship launchers.

“All this stuff about COVID this, parts, supply chain this — I just don’t really care,” U.S. Fleet Forces Command chief Adm. Daryl Caudle told a crowd of Navy and industry representatives at the Surface Navy Association conference a year ago. “I need [Standard Missile]-6s delivered on time. I need more [torpedoes] delivered on time.”

There have been improvements: Torpedo vendors have moved from redesign into production. Lockheed Martin opened a new missile production facility in June 2022 with a fully robotic paint line and other automated processes to accelerate missile production and increase its output for the Navy and the Air Force. RTX (formerly Raytheon Technologies) expanded its internal test capacity, with new facilities near its Tucson, Arizona, production line and at the Redstone Arsenal test facility in Alabama.

But challenges remain. Navy officials and industry executives say they’re addressing specific bottlenecks in the supply chain, in some cases pursuing a second vendor or spending more government funds to modernize production facilities.

Rear Adm. Fred Pyle, the director of surface warfare on the chief of naval operations’ staff, said the Navy bought many of these weapons at a minimum sustaining rate for years but is now committed to maxing out production lines this year and into the future, which means addressing weak points in the supply chain.

“As we look at the global threat — what we see from China, what we see from Russia, and then the actions being taken in Ukraine — we saw the need to make sure that we get our munition stocks [and] inventories increased,” Pyle told Defense News in a Dec. 7 interview at the Pentagon.

Notably, the Navy pursued multiyear procurement contracts for four different weapons programs in its FY24 budget request: the Standard Missile, the Naval Strike Missile, the Long Range Anti-Ship Missile and the Advanced Medium-Range Air-to-Air Missile.

It also sought $380 million in FY24 to shore up the weapons supply chain, a move previously undertaken to bolster the submarine-industrial base and more recently the surface combatant-industrial base, but not for munitions builders.

Even as the Navy awaits a final FY24 spending bill, Pyle said it’s using existing funds to identify and address problem areas in the supply chain.

“We’re not there yet. But I can tell you the communication lines are open … and I think we’re all marching in the same direction to get to those” higher production levels, Pyle said, adding that he believes the Navy is aware of every remaining bottleneck and is actively resolving them, even if it will take more time to see results.

“We believe we’re procuring the right capability, and now we need to procure it in numbers,” he said.

‘The bottleneck is rocket motors’

The biggest barriers to ramping up production on many of the munitions programs are rocket motors and electronics.

The rocket motor challenge isn’t unique to any one program, Navy officials and industry executives agree.

Rear Adm. Seiko Okano, the program executive officer for integrated warfare systems, said in a Dec. 15 interview that her office is taking a multifaceted approach to helping prime contractors expand capacity, including through improving tooling, shoring up their suppliers and finding second sources of material.

But ultimately “the bottleneck is rocket motors” because so few companies are qualified to build them for the United States, Okano explained. To help, the Navy issued a handful of other transaction agreement contracts to small companies who will learn to build the Mk 72 booster and the Mk 104 dual-thrust rocket motor so prime contractors have more qualified vendors to work with, she added.

In the meantime, the Navy in January announced a public-private partnership at Naval Surface Warfare Center Indian Head Division. The Navy and L3Harris Technologies’ Aerojet Rocketdyne, a key supplier on RTX’s many Navy munitions programs, will collaborate at the Maryland naval base to build solid-rocket motors.

Kim Ernzen, the president of naval power at RTX’s Raytheon division, told Defense News that the firm is being asked to substantially increase its output on certain missile programs, which isn’t possible unless the company can do business with more rocket motor vendors beyond Aerojet Rocketdyne.

On the Standard Missile-6 program, Raytheon’s current contract calls for about 100 missiles a year. Over the course of the next two multiyear contracts, that rate will increase to 150 and eventually 200 a year, Ernzen said.

Navy budget documents call for the purchase of Standard Missile variants to increase from its yearslong annual procurement rate of 125 missiles to 200 by FY26 and then 300 in FY28.

The Navy previously awarded $200 million to specifically increase SM-6 production, and Ernzen said Raytheon used that money to expand its own production and test facilities as well as help some of its suppliers. The rocket motor supply base is the remaining piece needed to make 200 SM-6s annually.

For the Maritime Strike Tomahawk, the Navy wants to double production rates by 2027, Ernzen said.

On the AIM-9X program — which is also in high demand globally as both an air-to-air missile and a surface-to-air weapon that can be used in the National Advanced Surface-to-Air Missile System air defense platform fielded with Ukrainian forces — Raytheon is being asked to grow its production by more than 1,000 missiles a year by 2027, up to 2,500.

‘Easier and faster and cheaper’

Navy leaders expected restarting torpedo production after more than two decades to be a challenge.

Still, “we underestimated the complexity of going back into production,” Rear Adm. Todd Weeks, the program executive officer for undersea warfare systems, said in a Dec. 11 interview.

The Navy farmed out pieces of the design to industry: The guidance and control section, or the front of the torpedo, went to Lockheed Martin. The afterbody/tail cone, or the propulsion system, and the fuel tank went to SAIC. Both were asked to take the 1990s design, spend three years working through the technical data package to identify parts that needed a new manufacturer or required a redesign, and then start building.

Some design issues are now resolved, but Weeks said production hasn’t reached the required pace.

“We are concerned,” he added, pointing to ongoing obsolescence issues as well as supply chain challenges.

He noted his office is working with Program Executive Office Strategic Submarines’ submarine-industrial base team, which has received billions of dollars in recent years to shore up the submarine supply chain.

Weeks is using the submarine-industrial base team’s supplier assessment tools to identify which vendors are driving torpedo production delays. He is then asking the sector to fund torpedo suppliers if they happen to also do work as submarine vendors.

So far, one torpedo supplier has received submarine-industrial base funds to modernize its processes, said SAIC’s Rigdon. The tail cone’s regulator requires a circuit card that was made using 1980s-era soldering techniques, he told Defense News. That regulator had a 110-week lead time.

Rigdon said funding for the submarine-industrial base helps the supplier redesign the tail cone’s regulator using modern electronics that “drastically” cuts down delivery time.

Weeks said torpedo production should get easier with time. Even as Lockheed Martin and SAIC continue to grapple with finding suppliers for a 30-year-old design, the Navy is working on a pair of upgrade programs:

• Mod 8 will overhaul the front section with new sensors and a modern computing architecture. This change should go into production in FY25.
• Mod 9 will overhaul the back section, replacing the propulsion system with an entirely new system for a much greater range. This should go into production in FY28.

“Design for manufacturability is a key part of what we need to be thinking about: How do we make it simpler to build, which will facilitate us to be able to produce them easier and faster and cheaper?” Weeks said.

The need for more

The Navy is already increasing its annual weapons orders, and could increase them more — especially if industry proves it can keep up.

Experts say the need for a larger stockpile is very real.

“Before, coming out of the Cold War, the expectation [was] that wars would be short and regional, so you didn’t need a large magazine because … the major conflict period would not last very long,” said Cancian, a senior adviser at the CSIS think tank’s International Security Program.

Russia’s ongoing invasion of Ukraine has proved that may not be the case.

“We’ve now come to recognize the next war might be great power war, and it could be long,” Cancian said. “Those use up a lot of munitions.”

During the Cold War, submarines were meant to hunt and destroy Soviet submarines. In the think tank’s China-Taiwan wargame, the subs were shooting their torpedoes at amphibious ships, destroyers and more.

“If you’re in the Taiwan Strait with 200 Chinese vessels there, you’re going to use everything,” Cancian said.

Bryan Clark, director of the Center for Defense Concepts and Technology at the Hudson Institute think tank, said the Navy has about 1,300 MK 48 torpedoes and counting as production continues. The submarine fleet would quickly go through hundreds in a fight against China, he noted.

Clark said Chinese ships have sophisticated air defense systems — meaning it would take multiple anti-ship missiles to sink a given Chinese vessel — and the U.S. Navy would rapidly go through its best anti-ship missiles in the opening days of a fight.

Cancian said the Navy and the Air Force have about 150 LRASMs today but would need between 2,000 and 3,000 for a healthy stockpile, according to his research.

Acknowledging the high expenditure rate of munitions in the Russia-Ukraine war, Weeks said “those same trends are going to play out in the undersea — there’s no doubt in my mind — and I think we’re coming to grips with that.”

“If we’ve learned anything from stopping production for 20 years, we realized that we don’t want to ever do that again,” Weeks added. “So we will stay in production.”