```

[Senate Hearing 114-210]
[From the U.S. Government Publishing Office]

                                                        S. Hrg. 114-210

             BEST PRACTICES AT PUBLIC AND PRIVATE SHIPYARDS

=======================================================================

                                HEARING

                               before the

            SUBCOMMITTEE ON READINESS AND MANAGEMENT SUPPORT

                                 of the

                      COMMITTEE ON ARMED SERVICES
                          UNITED STATES SENATE

                    ONE HUNDRED FOURTEENTH CONGRESS

                             FIRST SESSION

                               __________

                             JULY 29, 2015

                               __________

         Printed for the use of the Committee on Armed Services

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

         Available via the World Wide Web: http://www.fdsys.gov

                               __________

                         U.S. GOVERNMENT PUBLISHING OFFICE 

99-569 PDF                     WASHINGTON : 2016 
-----------------------------------------------------------------------
  For sale by the Superintendent of Documents, U.S. Government Publishing 
  Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; 
         DC area (202) 512-1800 Fax: (202) 512-2104 Mail: Stop IDCC, 
                          Washington, DC 20402-0001

  

                      COMMITTEE ON ARMED SERVICES

                     JOHN McCAIN, Arizona, Chairman

JAMES M. INHOFE, Oklahoma            JACK REED, Rhode Island
JEFF SESSIONS, Alabama               BILL NELSON, Florida
ROGER F. WICKER, Mississippi         CLAIRE McCASKILL, Missouri
KELLY AYOTTE, New Hampshire          JOE MANCHIN III, West Virginia
DEB FISCHER, Nebraska                JEANNE SHAHEEN, New Hampshire
TOM COTTON, Arkansas                 KIRSTEN E. GILLIBRAND, New York
MIKE ROUNDS, South Dakota            RICHARD BLUMENTHAL, Connecticut
JONI ERNST, Iowa                     JOE DONNELLY, Indiana
THOM TILLIS, North Carolina          MAZIE K. HIRONO, Hawaii
DAN SULLIVAN, Alaska                 TIM KAINE, Virginia
MIKE LEE, Utah                       ANGUS S. KING, JR., Maine
LINDSEY GRAHAM, South Carolina       MARTIN HEINRICH, New Mexico
TED CRUZ, Texas

                   Christian D. Brose, Staff Director

               Elizabeth L. King, Minority Staff Director

                                 ______

            Subcommittee on Readiness and Management Support

                 KELLY AYOTTE, New Hampshire, Chairman

JAMES M. INHOFE, Oklahoma            TIM KAINE, Virginia
DEB FISCHER, Nebraska                CLAIRE McCASKILL, Missouri
MIKE ROUNDS, South Dakota            JEANNE SHAHEEN, New Hampshire
JONI ERNST, Iowa                     MAZIE K. HIRONO, Hawaii
MIKE LEE, Utah                       MARTIN HEINRICH, New Mexico

                                  (ii)

  

                            C O N T E N T S

                               __________

                             july 29, 2015

                                                                   Page

Best Practices at Public and Private Shipyards...................     1

Bagley, Ray, Vice President of Trades Operations for Newport News 
  Shipbuilding...................................................     5
O'Connor, Paul R., President of the Metal Trades Council at 
  Portsmouth Naval Shipyard......................................    12

                                 (iii)
 
             BEST PRACTICES AT PUBLIC AND PRIVATE SHIPYARDS

                              ----------                              

                        WEDNESDAY, JULY 29, 2015

                            U.S. Senate    
                  Subcommittee on Readiness
                             and Management Support
                                Committee on Armed Services
                                                   Washington, D.C.
    The subcommittee met, pursuant to notice, at 2:34 p.m. in 
room SR-232A, Russell Senate Office Building, Senator Kelly 
Ayotte (chairman of the subcommittee) presiding.
    Committee members present: Senators Ayotte, Rounds, Ernst, 
Shaheen, Hirono, Kaine, and King.

           OPENING STATEMENT OF SENATOR KELLY AYOTTE

    Senator Ayotte [presiding]. Good afternoon. This hearing of 
the Subcommittee on Readiness and Management Support will come 
to order. It's a pleasure to convene this hearing with Senator 
Kaine, the Ranking Member of this Subcommittee.
    I want to welcome Mr. Bagley and Mr. O'Connor, who I--whom 
I will both introduce in a moment. Thank you both for being 
here.
    The topic of today's hearing is Best Practices at Our 
Shipyards. Our Nation's private and public shipyards 
manufacture and maintain the Navy's ships and submarines. While 
the workers at these shipyards are largely civilians, they play 
a critical role in protecting and defending our country. 
Combatant commanders and the men and women of the United States 
Navy look to the workers at our shipyards to provide them 
technologically advanced, reliable, safe, and combat-ready 
ships and submarines. To fulfill this essential function, 
shipyards must constantly reassess practices to promote 
efficiency, performance, and responsible stewardship of our tax 
dollars. This requires identifying best practices, assessing 
their impact on performance, and ensuring those best practices 
are institutionalized and shared.
    In addition to private shipyards, like Newport News, our 
Nation has four public shipyards. Each of these public 
shipyards plays an indispensable role in sustaining our 
Nation's naval readiness, but I'm particularly proud of the 
Portsmouth Naval Shipyard. Portsmouth Naval Shipyard is the 
Navy's Center of Excellence for fast-attack nuclear-powered 
submarine maintenance, modernization, and repair. That is more 
than just words. The skilled and dedicated workers at 
Portsmouth have proven with their performance and their 
consistent track record of completing projects ahead of 
schedule and under budget. Here are just a few examples:
    In April of last year, the workers at Portsmouth Naval 
Shipyard safely undocked the USS Topeka 20 days ahead of 
schedule, following an engineered overhaul.
    In June, following a maintenance availability, the workers 
at Portsmouth Naval Shipyard returned the USS California to the 
fleet 14 days ahead of schedule.
    In September, Portsmouth Naval Shipyard delivered the USS 
Springfield back to the fleet ahead of schedule and under 
budget.
    The excellent performance by the workers at Portsmouth 
continues with their current work on the USS Alexandria, which 
is on track to meet its scheduled completion date. The workers 
at Portsmouth have continued to perform at this high level 
while already hiring approximately 680 new workers this fiscal 
year. This amazing track record of accomplishment is due, in 
large part, to the labor/management collaboration at 
Portsmouth, the Renewal of Shipyards Values and Pride, or RSVP 
Program, and the Declaration of Excellence. At their root, as 
our witnesses know well, programs like these are successful 
because they promote labor/management collaboration, empower 
the workforce, and create a culture that values high standards 
and continuous learning. These efforts have resulted in 
tangible best practices that have improved performance and 
saved time and money, getting submarines back to the fleet 
sooner.
    The Navy has recognized this topnotch performance at 
Portsmouth and the long-term need for the shipyard, as 
evidenced by the Navy's strong investment in recent years in 
infrastructure at the shipyard, including its continued 
commitment to project P-266, the Structural Workshops 
Consolidation.
    In order to understand and share best practices at our 
public and private shipyards, we are joined this afternoon by 
two distinguished and incredibly experienced witnesses.
    Mr. Ray Bagley is the Vice President of Trades Operations 
for Newport News Shipbuilding. He is responsible for production 
labor resources and processes, plant engineering and 
maintenance, waterfront support services, training in 
structural design, and the Apprentice School. Mr. Bagley has 
worked at Newport News Shipbuilding since 1974.
    Mr. Paul O'Connor is President of the Metal Trades Council 
at Portsmouth Naval Shipyard, representing 2500 tradesmen and 
women at the shipyard. His career spans 40 years at Portsmouth 
Naval Shipyard, including work as a journeyman electrician, 
performing maintenance and modernization work on the Navy's 
nuclear-powered submarines. Mr. O'Connor is an active member of 
the Naval Sea Systems Command, or NAVSEA, Labor Management 
Partnership. I deeply appreciate having the opportunity to meet 
with and work with Mr. O'Connor for many years now, his 
leadership at the shipyard.
    I deeply appreciate both witnesses' willingness to come and 
appear before our committee today. I would also note that Mr. 
Steven Fahey, a nuclear production manager at Portsmouth Naval 
Shipyard, was scheduled to testify, and was eager to be here. 
Unfortunately, at the last minute, he was called away on an 
assignment. But, in a tangible demonstration of the labor/
management collaboration at Portsmouth Naval Shipyard that has 
resulted in such strong performance, Mr. Fahey has submitted a 
written statement for the record.
    If there are no objections, I request that this statement 
be submitted for the record. Thank you.
    [The prepared statement of Mr. Fahey follows:]

Prepared Statement by Mr. Stephen B. Fahey, Nuclear Production Manager 
                      at Portsmouth Naval Shipyard
    Chair Ayotte and Ranking Member Kaine, thank you for calling this 
hearing on shipyard best practices. I regret that my responsibilities 
preclude me from testifying, but I am honored to provide this testimony 
regarding the practices we have recently applied at the Portsmouth 
Naval Shipyard to improve our performance.
    Portsmouth Naval Shipyard has been supporting our Navy and our 
Nation for over two hundred and fifteen years. In the periods of 
greatest challenge, we have provided leadership and innovation 
necessary to overcome obstacles and provide impeccable excellence and 
quality. For example, in 1944, the shipyard built 32 fleet submarines 
to support our war efforts for World War II. For perspective, the most 
submarines the shipyard had produced in one year were four in the pre-
war years.
    Building on this proud history, management and labor at Portsmouth 
Naval Shipyard have been collaborating for years in support of 
productivity improvements, process innovations and development of our 
people. As with any relationship, there are challenges for the 
management and labor team to face every day, but through commitment, 
transparency, courage and confidence, trust develops. This trust is the 
currency leading to shared success.
    As the Declaration of Independence provided the ideals that drove 
the development of this great nation, management and labor developed 
and signed a Declaration of Excellence on July 4th, 2012. This document 
established our shared vision and ``marked the beginning of our next 
two hundred years of continued outstanding service to the citizens of 
our Nation.'' It established our values, beliefs, attitudes, and 
behaviors in pursuit of the perfect ``shipyard worker'' and ``shipyard 
workday''. We learned that when we could look past our differences and 
our individual self-interests, and focused on our common shared 
interests in support of our people, our Ships Force partners, and our 
Nation, we achieve great things.
    Every day our Declaration of Excellence serves as our compass to 
ensure we focus on the continuous pursuit of excellence. We are 
utilizing state of the art Learning Centers to develop our people and 
continue to work on creative ways to engage our workers hearts and 
minds in achieving mastery of our craft.
    Thank you again for calling this hearing and for the opportunity to 
provide this written testimony.

    Senator Ayotte. I would now like to call on our Ranking 
Member, Senator Kaine, for his opening remarks. I would like to 
thank Senator Kaine for collaborating with me on this important 
hearing.

                 STATEMENT OF SENATOR TIM KAINE

    Senator Kaine. Absolutely. Well, thank you, Madam Chair. 
Thanks, to Senator Rounds, for being here, and to our 
witnesses. I'm very excited about this.
    Sometimes, you'll run into people who will say that they 
worry that American manufacturing is dead or declining. 
Whenever I hear that, I say, ``Come with me to see American 
workers who build and manufacture the largest items on the 
planet, a nuclear aircraft carrier. Come and talk to our 
shipbuilders and ship-repairers,'' and you're going to be 
convinced, not only is American manufacturing not dead, but 
you're going to be convinced that these shipbuilders and 
repairers are really doing amazing work.
    It's amazing work. It's important to recognize it. It's 
also important not to take it for granted. We live in an 
environment with budget sequester and all kinds of other 
uncertainties, where, if we're not careful, we can impact the 
current, and especially the future, workforce that we need to 
do this important work.
    I'm so glad that Senator Ayotte wanted to have this 
hearing, you know, readiness on public and private shipyards. 
But, it's not about the yard, it's about the builders and the 
repairers.
    In Virginia, we have a great public shipyard in Norfolk. We 
have the spectacular private shipyard in Newport News. We have 
ship-repairers, large and very small. You know, the Ship 
Repairers Association of Virginia, hundreds of members. Senator 
Ayotte is facing the same kind of reality on the ground in her 
State. This is a huge and important task to do this important 
work to keep our country safe. What we want to learn today is 
best practices, things that we should do more of, and things 
that we should be--if there are warning signs or things we 
should be aware of and--we need to know that, too.
    The reason I'm so happy to have Mr. Bagley here is not only 
because of the great work that is done, in terms of the 
shipbuilding and submarine-building at the shipyard. This 
Saturday is a big day, the launch of the USS John Warner, which 
was a Virginia-class sub that's ready to be launched out of the 
Norfolk base this Saturday. It seems like there's always 
something being christened, or a keel being laid, or a launch.
    But, in addition to the end product, I think what the 
Huntington-Ingalls Shipyard at Newport News has done very, very 
well, that we can take a lesson on within shipbuilding more 
broadly, is the spectacular apprenticeship program that has 
been in place for a century. Mr. Bagley, as part of his 
responsibilities, has that apprentice program as one of his 
areas of--I mean, he came through the apprenticeship program as 
a painter, beginning in 1974, but now has it as one of his 
areas of supervision.
    This is an--a remarkably important thing for us to 
understand. The more we understand about it--New York Times 
recently had an article about apprenticeship programs, and 
focused on the apprenticeship program in Newport News--it 
offers some lessons, more broadly--to keep this industry 
strong, but, more broadly, in terms of how we should do 
education work in the country, how we should look at the 
spectrum of educational opportunities.
    So, I'm interested to learn today what we need to do to 
keep our shipbuilder and -repair industry strong, but also the 
techniques that are used in the apprenticeship school, and how 
we might apply them to others.
    The last thing I'll do is, I'll tell one story. I went with 
Senator King, last October, to India. We asked--I guess not a 
lot of folks ask to do this--we wanted to go visit their 
shipyard. Now, they have a shipyard that builds carriers. They 
have a shipyard in Mumbai that builds surfer ships that are not 
carriers and subs. Senator King, obviously, is very familiar 
with the Portsmouth Shipyard, very familiar with Bath Iron 
Works. I'm very familiar with the Virginia operations. We 
wanted to see how an ally did it. We went to the Mazagon Docks 
Shipyard in Mumbai, and the degree of pride of the workers 
there, and how excited they were to show us what they were 
doing, it's just hard to put it into words. They were so 
excited that a delegation from the United States Senate wanted 
to come and see what they had. We were really impressed with 
that pride. But, boy, the more we saw, the more we were even 
more impressed with what we see and what we do here. I actually 
think a delegation from the Indian shipbuilding industry is 
coming to visit some American shipyards in about 2 and a half 
weeks, which is great, because I think that partnerships is 
strong. We do it better than anybody in the world. Of course 
people want to come and learn how we do it. But, we shouldn't 
take it for granted, and we need to learn what we can do to 
keep this industry strong.
    So, Madam Chair, very, very happy to be here today with 
these witnesses.
    Senator Ayotte: Thank you so much, Senator Kaine.
    I would like to now call on our first witness, Mr. Ray 
Bagley, who is Vice President of Trade Operations for Newport 
News Shipbuilding, for your opening remarks.
    Mr. Bagley.

 STATEMENT OF RAY BAGLEY, VICE PRESIDENT OF TRADES OPERATIONS 
                 FOR NEWPORT NEWS SHIPBUILDING

    Mr. Bagley. First, I'd like to start by saying good 
afternoon and thank you, Madam Chair Ayotte, Senator Kaine, and 
to the other distinguished members of the Subcommittee on 
Readiness and Management Support.
    You know, I've got to say that, for me, it is truly beyond 
my expression, so I'll just use words that I can best describe 
it. I'm delighted, excited just to be able to sit before you 
today and just to talk about some of the things that our 
industry is doing, specifically--down to the Apprentice School, 
specifically.
    My name is Ray Bagley. Again, I am the Vice President of 
Trades Operations at Newport News Shipbuilding, which is a 
division of Huntington-Ingalls based in Newport News, Virginia. 
Part of my job as--has already been fore stated, and I consider 
it to be the most critical part of my job, is to provide and 
prepare a capable production and maintenance workforce to 
perform all the critical work that we do to serve our U.S. 
Navy. So, that is a tremendous pleasure and a privilege. With 
that comes another important element to be able to perform 
that, is training.
    So, I would like to ask--I do have a written statement 
that, if it's appropriate, Madam Chair, to have permission to 
just read my statement.
    Senator Ayotte. Yes.
    Mr. Bagley. Thank you.
    Forgive this, what I will call, I will say, a umbrella 
approach, if I may. I want to just talk about our Huntington-
Ingalls Industries. If you bear with me, I'll try to get 
through this as fast as I can. But, I want to talk about the 
industry, because it's appropriate, just to put it in 
perspective, to say that we are grateful for our country 
because we're able to be able to provide jobs by way of having 
what I call a revenue--yearly revenue of 6.8 million and, of 
course, a current backlog of around 24 billion. Between all of 
our, I will say, subsidiaries, we actually employ around 38,000 
people. Of that 38,000, greater than 50 percent are our 
craftmen and women who actually turn the wrench on the job. 
That's the way we like to say it. Not to belittle or make small 
of it, but it lets them know that people like myself, we truly 
work for our workers who are on the deck plate. We stretch from 
States like Virginia, of course, Mississippi, California, 
Louisiana, Texas, and Colorado. Of course, you know, we are a--
in our employment of our people, we put a lot of emphasis on 
hiring our veterans. I think, currently, man total, we are up 
to around better than 5,000 veterans.
    So, we also provide a wide variety of products and services 
to the commercial, I will say, energy industry--this is some of 
our new endeavors--and other Government customers, including 
Department of Energy. So, we are looking for other avenues to 
continue to grow our business. I'll elaborate, as I get to my 
closing, why this is so important to us.
    As you can see, we have a corporate slogan--I think it's 
pretty widely known--``Hard stuff done right.'' When you think 
about everything that, Senator Kaine, you have actually stated 
about the products that we build and the magnitude of their 
size, that is truly what we believe, and it is committed to our 
goal. It's a commitment to our people, our communities, and, 
more importantly, our country.
    So, today I want to talk about Newport News Shipbuilding as 
the sole designer and builder and refueler of U.S. Navy 
aircraft carriers. We are one of two providers of the U.S. 
nuclear-power submarines. The ships we build, they do some of 
our country most important work, from, you know, taking on a 
fight, wherever we need to take on one, to the point of 
providing humanitarian efforts throughout this great world. 
Nothing--you know, I will say, when I see a carrier come on 
television, I grab all of my family in the house--I'm at the 
age now where I'm into my grandchildren stage--I become like a 
kid. I start shouting, jumping up and down. They look at 
granddad, like, ``What is going on?'' I say, ``You've got to 
get in here, you've got to get in here,'' because it's only, 
like, 3 minutes when they play that clip on the news. We see 
one of our products giving humanitarian efforts, flying in 
supplies to places that have suffered, you know, a catastrophe 
or something like that, nothing makes me feel any more prouder 
to be a shipbuilder.
    So, with that, I want to speak about the importance--the 
reason why I'm here--of a fully developed and productive 
workforce. Two things I want to highlight is, we invest heavily 
in workforce development. Just to give you the idea of the 
magnitude, yearly we spend in excess of $80 million in our 
training. That training covers a variety of things that we do. 
Apprentice School is one of them. But, also, in that, we invest 
in our capital funds. We take our capital funds, invest in 
things like new technology. We look at, How can we get better 
products in, markups, anything that would help our craftsmen 
and women, that, when they go out to execute their work, they 
ready to execute to give us the best quality, to operate in the 
most safe way, and to give us a product that we can be the best 
for the taxpayers' money, under cost, and certainly on 
schedule.
    So, the workforce community that we're talking about, we do 
look at the workforce investment boards. We coordinate with 
school districts, community colleges, certainly in the area of 
Virginia, and we are focused on bringing world-class CTE 
[career and technical education] high schools to our region.
    We annually perform 75,000 training events on the 
waterfront. That number excludes the Apprentice School. As ship 
technologies have advanced, as with the Ford-class carriers, 
our internal training has also had to advance. For the Ford, we 
had to develop 50 new production training courses to provide 
the needed skills and knowledge to our workforce. We are up to 
the task and the challenges that lie ahead.
    As a company, we believe so strongly in our technical 
training and capabilities that we are actively exploring and 
offering these training services to commercial non-shipbuilding 
clients to assist with their workforce development, as well.
    Now, let's talk about the Apprentice School. I am very 
proud to say that I am responsible for overseeing the 
Apprentice School at Newport News Shipbuilding. In addition, 
I'm very proud to say that I am a graduate of the Apprentice 
School, some 36 years ago. The Apprentice School provided me an 
education and opened doors to experiences and opportunities, as 
I look back, that I don't think I would have otherwise gotten. 
So, today it serves as an excellent example of how intense 
career and technical education can prepare students for high 
skilled, in-demand careers through a combination of rigorous 
academic and real-world experiences with the potential to 
change the course of lives of the people who actually have this 
experience. In fact, it actually changed my life.
    In less than 4 years, the Apprentice School will have the 
opportunity to celebrate centennial celebration of 100 years. 
So, when you think about how Newport News feel about the 
Apprentice School, that's an investment we started back in 
1919. Even though we've seen the company go through various ups 
and downs, various, you know, valley experiences and back up 
the mountains, we've never forsaken the value of the Apprentice 
School to be there to help train our men and women to be 
excellent in what they do.
    So, the Apprentice School for Newport News, we have three 
pillars that we love to bring students in and perfect them in. 
Those three pillars are craftsmanship, scholarship, and 
leadership.
    In respect to craftsmanship, each apprentice follows a 
specifically designed and preapproved work rotation that 
ensures that experience and competence in relevant aspects of 
their chosen trade. The apprentices are evaluated by their 
craft instructors, and they receive a shop grade based on their 
quality, their safety, their work habits, initiatives, and 
their demonstrated leadership abilities. As apprentices mature 
through their apprenticeship, they advance from being a entry-
level helper to a full-fledged mechanic. That's pretty 
phenomenal, to be--to turn out that product in approximately 4 
years.
    The second pillar: scholarship. One-hundred percent of 
academic courses of our curriculum, which we call the ``world-
class shipbuilding,'' are taught by our own faculty, who holds 
the same academic credentials as those required by colleges and 
universities. We currently have articulations agreement with 10 
colleges and universities, and regularly work collaboratively 
with centers of learning. One example, Webb Institute, Old 
Dominion University, Thomas Nelson Community College, and 
certainly Tidewater Community College. We now have apprentices 
that offer an associate's degree. Now, with Old Dominion, we 
have the opportunity to offer a bachelor's degree in 
engineering, which has been one of my--our most recent programs 
that we have stood up. These relationships that remain--or, 
excuse me, that the integrity and quality of education at the 
Apprentice School remain excellent and provides a seamless 
transfer of credits, which ensures a continuing education that, 
if the student wanted to pursue their education beyond 
Apprentice School, all of those credits will go along with 
them, and count.
    All graduates will complete a Certificate of Apprenticeship 
in their specific trade. Those who advance to one of eight 
optional advanced programs will graduate with an associate's 
degree and, in some cases, as I stated, a bachelor's degree in 
engineering. One-hundred percent of our programs are registered 
with the Virginia Apprenticeship Council and recognized by the 
U.S. Department of Labor. We also are accredited, and have been 
for the past 32 years.
    The last pillar is leadership. Shipbuilding leadership is 
learned through increasingly challenging assignments and 
opportunities. So, we create opportunity through leadership. We 
develop professional societies. We have student organizations. 
We have intercollegiate athletic programs.
    One of our premier leadership program is what we call 
iLead. That program was based off of the United States Naval 
Academy. There are nine leadership principles. We team those 
principles up with successful leaders in Newport News. Students 
are challenged academically and vocationally to master those 
principles.
    A second one of our leadership programs is what we call 
Front line FAST. FAST is the acronym for Foreman Accelerated 
Skills Training. The reason why this one is so important to us 
is, we had people coming out of the Apprentice School, and, 
instead of wanting to stay on the waterfront, they were taking 
jobs that would take them off the waterfront. So, we target a 
specific program that will train our apprentices with specific 
skills that, when they come out, they would be ready to hit the 
deck plate as a first-line foreman. That has been very 
successful for us.
    Opportunities. Within the past 10 years, we reestablished 
apprenticeships in patternmaking and molder, and we introduced 
new programs, such as dimensional control, nuclear tests, 
marine engineering, and modeling and simulization. The 
Apprentice School is responsive, not only to meet the demands 
of Newport News, but what we try to do is anticipate what their 
future demands will be. We realize that the world is changing. 
It has changed a lot for Newport News. Certainly we are active 
business partners with the Senate CTE Caucus in fostering 
technical education needs for American workers. At Newport 
News, we have graduated 10,000 apprentices, and that is a 
testament to our career in technical education. Forty-four 
percent of our graduated apprentice are in production 
management. Well, let me just change that. Our production 
management consists of 44 percent of apprentices. So, 
therefore, when we look at it, we have 4,000 people each year--
4,000 plus, in fact--that submit applications to enter into our 
apprenticeship program. Out of that 4,000, or 4,500 plus, we 
end up only hiring 230. So, we get the chance to really take 
some very, very good students that are coming in. The 
Apprentice School, for one reason, can be an alternative for 
people who may not--for students who may not want to go to 
college, and they want to choose another path. Also, we are 
able to pick up students that have gone to college and have 
gotten their bachelor's, and when they--they are looking for a 
job, jobs are hard to find. So, we target those particular 
students, as well, and they come in with a different skill set. 
At least they have gone through that experience, so there's a 
certain level of maturity that they bring into the company 
with. So, again, we are able to pick what I'll call the cream 
of the crop.
    Of the 800 current students that we have in the program, 
you would notice that we've actually had interviews with FOX 
News, articles were written on Apprentice School. Most 
recently, there was an article written about the Apprentice 
School in the New York Times. I've got to tell you, when we see 
those articles, it is very humbling for the craft instructors, 
for the apprentices that come in. Instead of the pride that 
rises up in a negative way, it's a very humble pride that we 
are very proud of what we are able to do.
    The Apprentice School is an investment. As I shared with 
you, we spend a lot of money. But, it's an investment that we 
have to make. It's an investment in our people. It's an 
investment in our company. It's an investment in our local 
regional area. It's an investment in our State. Of course, as 
you go up, it's an investment in our Nation. So, there is a tie 
with the Apprentice School and what we do in Newport News that 
stretches across this United States of America.
    Workload challenges. I'll conclude with this one. The best 
way to develop shipbuilders is to continually allow them to 
build ships; meaning, provide them the workload to continue to 
learn and exercise their craft. This is also the best and most 
efficient way to build ships. Unfortunately--and this is no 
news--Newport News Shipbuilding will be facing what we call a 
multiyear workload gap that's coming up in the near future. We 
get concerned, because we need those non-apprentices to be able 
to complement our apprentices so both of them get the benefit 
to grow and learn, and to give our Nation the best product 
ever.
    But, I want to say, by--I'll conclude by saying, even 
though we are facing this valley, I want to let everyone know 
that the Apprentice School has a commitment to remain strong. 
We have a commitment to keep our accreditation high, to be 
reputable. We have a commitment that, when we ride through this 
valley and come out on the other side, we will have produced 
the leaders that are ready to lead us into the next future.
    So, thank you very much, and thank you for your time.
    [The prepared statement of Mr. Bagley follows:]

                  Prepared Statement by Mr. Ray Bagley
                              introduction
    Good afternoon and thank you. Chairwoman Ayotte, Ranking member 
Kaine and distinguished members of the subcommittee on Readiness and 
Management Support. I am delighted to represent Newport News 
Shipbuilding in today's discussion. I want to thank the subcommittee 
for the invitation to share my thoughts with you today.
    My name is Ray Bagley. I am the Vice President of Trades Operations 
at Newport News Shipbuilding which is a division of Huntington 
IngallsIndustries based in Newport News, Virginia. Part of my job is to 
provide and prepare a capable production and maintenance workforce to 
perform our work--that includes training them.
                   general information about hii/nns
    Huntington Ingalls Industries is an American Fortune 500 company 
with $6.8 billion in annual revenues and a work backlog of more than 
$24 billion.
    We employ almost 38,000 workers at our facilities in Virginia, 
Mississippi, California, Louisiana, Texas, and Colorado. Among these 
are more than 15,000 craftsmen. We employ more than 5,500 veterans. 
Many of our employees are third, fourth, and fifth-generation 
shipbuilders, and we have more than 1,000 ``Master Shipbuilders'' 
employees with 40 or more years of continuous service to the company. 
Of which I am one.
    We also provide a wide variety of products and services to the 
commercial energy industry and other Government customers, including 
the Department of Energy. We continuously grow our business in similar 
marketplaces.
    As you can see, we do difficult work. Our corporate slogan is 
``Hard Stuff Done Right''--and we're committed to that goal and to our 
people, our communities and our country.
                     general information about nns
    Today, Newport News Shipbuilding is the sole designer, builder and 
refueler of U.S. Navy aircraft carriers and one of two providers of 
U.S. Navy nuclear powered submarines. The ships we build do some of our 
country's most important work. Simply put, there is no other place in 
the world capable of doing the work we do. It is my privilege and honor 
to call myself a Newport News Shipbuilder and alumnus of the Apprentice 
School, and to work alongside the finest group of shipbuilders in the 
world where I still learn something new and exciting every day.
                     hii/nns workforce development
    I want to speak about the importance of a fully developed, 
productive workforce. We invest heavily in workforce development, 
expending over $80 million annually in various types of training, 
Apprentice School, Night School, and Tuition Reimbursement programs 
that prepare our workforce to be effective in the important job of 
building and repairing our Country's Navy ships. We continue to invest 
precious capital funds to modernize our training facilities with state-
of-the-art technology, and with real world, Production mock-ups that 
allow our workers to learn production crafts in a safe, controlled 
environment. Especially through The Apprentice School, we partner with 
State and local officials and education providers to jointly build a 
workforce and a community. We are actively involved with the Workforce 
Investment Boards, School Districts and Community Colleges in our area 
of Virginia. We are focused on bringing world-class CTE High Schools to 
the region.
    We annually perform 75,000 training events on the waterfront, and 
that number excludes the Apprentice School. Welding is a critical skill 
for America and for Shipbuilding. We maintain 130 welding booths that 
facilitates the instruction of hundreds of Welders on the precise, 
intricate processes needed for our ships. As ship's Technologies have 
advanced, as with FORD class aircraft carriers, our internal training 
has also had to advance. For the FORD, we had to develop over 50 new 
production training courses to provide the needed skills and knowledge 
to our workforce. We are up to the tasks and challenges that lie ahead.
    As a company we believe so strongly in our technical training 
strengths and capabilities that we are actively exploring offering 
these training services to commercial, non-shipbuilding clients to 
assist with their workforce development.
    All of the above is done with safety and safety training in mind. 
We value our employees above all else and will not compromise on 
maintaining a safe and healthy work environment for them.
                       the nns apprentice school
    I am proud to say that I am also responsible for overseeing The 
Apprentice School at Newport News Shipbuilding. I'm especially proud 
given that I graduated from the school some 36 years ago. The 
Apprentice School provided me an education and opened doors to 
experiences and opportunities. Today, it serves as an excellent example 
of how intense Career and Technical Education can prepare students for 
highly skilled, in demand careers through a combination of rigorous 
academics, and real world experiences with a potential to change the 
course of their lives, as it has done for me.
    In less than four years, The Apprentice School will celebrate its 
Centennial Celebration of 100 years. From the first week as an 
apprentice, students begin on-the-job training under the watchful eye 
of a Craft Instructor. Soon thereafter, apprentices also begin a 
rigorous academic curriculum as well as trade related education related 
to their specific trade. To round out each apprentice, they are offered 
additional opportunities to develop and mature their leadership skills 
through extracurricular activities including intercollegiate athletics, 
professional societies, and student organizations. Their experiences 
vary and can take from four to eight years, but during that duration 
The Apprentice School relentlessly focuses on developing students in 
``Craftsmanship, Scholarship and Leadership''. Those pillars contribute 
to the success of Newport News Shipbuilding by providing a continuous 
supply of graduates who are prepared to lead the industry in their 
chosen field of specialization.
                             craftsmanship
    In respect to Craftsmanship, we believe this to be a core 
requirement of every apprentice. At Newport News, all apprentices begin 
their careers in one of 19 individual trades. Each apprentice follows a 
specifically designed and pre-approved work rotation plan that ensures 
experience and competence in relevant aspects of their chosen trade. 
Apprentices are evaluated monthly by their craft Instructors and 
receive a shop grade based on their quality of work, safety, work 
habits, initiative and demonstrated leadership. As apprentices mature 
through their apprenticeship, they advance from entry level helper to 
lead mechanic. It is this journey where apprentices transform from a 
willing follower to a humble leader.
                              scholarship
    In respect to Scholarship, it too serves as an important pillar of 
The Apprentice School. One hundred percent of academic courses of our 
Core Curriculum, World Class Shipbuilding, are taught by our own 
faculty members who hold the same academic credentials as those 
required by colleges and universities. Our academic faculty has 
graduate degrees including mathematics, physics, naval architecture or 
marine engineering and currently include four PhD's and three doctoral 
candidates. They bring a wealth of life experiences coming from various 
branches of the United States military, the business community or 
education. We currently have articulation agreements with 10 colleges 
and universities and regularly work collaboratively with centers of 
learning including Webb Institute, The College of William and Mary, Old 
Dominion University, Thomas Nelson Community College located in Hampton 
Va., and Tidewater Community College located in Virginia Beach Va. We 
now have Apprenticeships that offer an Associate's degree and now with 
Old Dominion University, a Bachelor's Degree in Engineering. These 
relationships ensure that the integrity and quality of education at The 
Apprentice School remains excellent and provides a seamless transfer of 
credit and continuing education opportunities for apprentices as they 
continue to pursue their academic interests.
    All graduates will complete with a certificate of apprenticeship in 
their trade and those who advance to one of eight optional advance 
programs, including cost estimator, designer, modeling and simulation 
and production planning, will graduate with an associate's degree and 
in some cases, a bachelor degree in Engineering. One hundred percent of 
our programs are registered with The Virginia Apprenticeship Council 
and recognized by the US Department of Labor. We are also accredited 
and have been for the past 32 years by the Accrediting Commission of 
the Council of Occupational Education, a national accrediting agency 
based in Atlanta, Georgia.
                               leadership
    We also hold Leadership as a core competency, a pillar of The 
Apprentice School. Shipbuilding leadership is learned through 
increasingly challenging assignments and opportunity. So we create 
opportunity through leadership development programs, professional 
societies, student organizations and intercollegiate athletics.
    Our premier leadership program is iLead which was benchmarked at 
the United States Naval Academy. Based on nine leadership principles 
and highly successful leaders at Newport News, students are challenged 
academically and vocationally to master those principles. Frontline 
FAST, short for Foreman Accelerated Skills Training, has also become 
ingrained in the development of successful leaders at the school. This 
program develops high performing apprentices for frontline supervisor 
positions through blended approach of craft competencies, leadership 
practices and coaching.
    Our philosophy at The Apprentice School is we create opportunities 
for apprentices to grow and polish their leadership skills outside of 
the shipbuilding production environment. Student government, 
professional societies and community service are all important 
components of growth and maturity. So student chapters of professional 
societies: Society of Naval Architects and Marine Engineers, Society of 
Manufacturing Engineers and a student Chapter of Jaycees, the first 
collegiate chapter formed in the United States, are examples of that 
investment.
    Intercollegiate athletics have been a part of The Apprentice School 
since it formally began in 1919. Today, we field six varsity programs 
including golf, football, wrestling, men's and women's basketball and 
baseball. By the way, we just won the USCAA National Small College 
Championship in baseball.
                             opportunities
    Within the past 10 years, we re-established apprenticeships in 
patternmaker and molder and introduced new programs in dimensional 
control or precise measurement, nuclear test, marine engineering and 
modeling and simulation. The Apprentice School is responsive not only 
to meet the demands of Newport News Shipbuilding but to anticipate 
them.
    The world is changing and Newport News Shipbuilding is active with 
other businesses, as supported by the Senate's CTE Caucus in fostering 
technical education needs for American workers. At Newport News 
Shipbuilding, some 10,000 graduates of The Apprentice School are a 
testament to career and technical education. Forty four percent of the 
entire production management team are graduates of The Apprentice 
School. Annually, some 4,000 people inquire about attending The 
Apprentice School and being selected for one of the approximately 230 
openings. Of our 800 students, over half of those selected today have 
attended college. FOX News recently ran a segment about the school 
titled ``Beyond The Dream'' and The New York Times also recently 
highlighted The Apprentice School in an article titled A new Look at 
Apprenticeships. As Mr. Mike Petters, President of Huntington Ingalls 
Industries says, ``Do you take someone to the end of the pier and push 
them off to see if they can swim, or do you give them swimming 
lessons?'' We prefer swimming lessons and The Apprentice School is that 
investment. An investment in our people; an investment in our company; 
and an investment in our country.
                       workload challenges ahead
    The best way to develop Shipbuilders is continually allow them to 
build ships, meaning, provide them the workload to continue to learn 
and exercise their craft. This is also the best and most efficient way 
to build ships. Unfortunately, we are quickly approaching a multi-year 
workload gap that will likely impact the continued learning of workers 
in several crafts. It is important that the potential impacts or 
workload valleys need to be fully understood, as we communicated to 
Deputy Assistant Secretary of the Navy for Ship Programs in the 
November Shipbuilding Industrial Base Report. Perhaps this is a topic 
at a different hearing or setting. We are committed to keep our 
Apprentice program strong and develop leaders for the challenges ahead.
    Thank you for the opportunity to address you here today and I look 
forward to any questions you may have.

    Senator Ayotte. Thank you, Mr. Bagley.
    I would now like to introduce our second witness, Mr. Paul 
O'Connor, President of the Metal Trades Council at the 
Portsmouth Naval Shipyard.
    Mr. O'Connor.

 STATEMENT OF PAUL R. O'CONNOR, PRESIDENT OF THE METAL TRADES 
              COUNCIL AT PORTSMOUTH NAVAL SHIPYARD

    Mr. O'Connor. Thank you. Chair Ayotte and Ranking Member 
Kaine and other distinguished members, thank you for this 
opportunity to speak, to give testimony at this subcommittee 
today.
    I have submitted a longer written statement, so I can speak 
a shorter statement to open. I would ask that my written 
statement be submitted for the official record.
    Senator Ayotte. Absolutely.
    Mr. O'Connor. Thank you.
    Before I begin, I need to say a couple of things. First of 
all, if Steve Fahey was here beside me, he'd say the same 
things I'm saying, because, at our shipyard, we value our 
labor/management relationship, we value collaboration, we value 
working together, because you can accomplish so much more when 
we work together.
    I also want to say that I had to chuckle when Mr. Bagley 
was talking about aircraft carriers--seeing an aircraft 
carrier, and how he feels about that, and bringing his family, 
``There's an aircraft carrier.'' Well, I was at the movies last 
month with my daughter, and, before the movie started, there 
was a commercial that came on, on the screen, a Navy 
commercial, and a submarine breached. So, I yell out, 
``Submarines.'' My daughter was embarrassed, but I thought it 
was awesome.
    [Laughter.]
    Mr. O'Connor. So, what you will be hearing from me today--
there'll be a few recurring themes. One is, men and women at 
the jobsite have the best ideas on creating efficiencies at the 
jobsite. One of the things to do at the shipyard is, we want to 
spread our philosophies of workforce engagement throughout the 
entire Federal sector. We have a lot of dignitaries come to the 
shipyard. Senators--many Senators come to our shipyard. The 
Secretary of Labor was at our shipyard. Vice President Biden 
has been there. Many admirals. Many, many dignitaries come to 
our shipyard to see how we do business. I tell them all, we--
men and women at the jobsite have the best ideas on creating 
efficiencies at the jobsite. They all nod their heads, like we 
all did when I said it in this room. The fact of the matter is, 
in too many industries, that isn't the reality. The reality is, 
a handful of individuals are the idea people, and kind of what 
they say goes. So, what we're doing at Portsmouth is truly 
listening to our workforce. We want their ideas--the men and 
women at the jobsite.
    I'll also talk more than once about our performance. 
Maximum performance requires maximum workforce engagement. We 
want--at our shipyard, there are about 6,000 men and women--we 
want 6,000 men and women engaged at our shipyard in the daily 
operations of our business. For each man and woman who feels 
disenfranchised, we further reduce the likelihood that we will 
reach our fullest potential. So, we want everyone engaged.
    Finally, I've already said it, we can accomplish so much 
more when we all work together. Again, it sounds so simple, but 
it's so easy to find reasons or excuses to not work together, 
to not listen to someone. We're trying to work past that at the 
Portsmouth Naval Shipyard.
    I will talk with some granularity about specific 
initiatives that we have ongoing at Portsmouth that are really 
having a positive impact on our performance and our engagement 
of the workforce. But, more than the individual initiatives, 
the most important thing we've done at our shipyard since we've 
begun these initiatives in 2010 is listen to our workforce. I 
mean, that is absolutely the most important thing we've done, 
because all of the initiatives that we will talk about came 
from the men and women doing the work. None of what you will 
hear today would have happened had we not listened to the 
workforce. It's that important to us. You want to engage your 
workforce, you listen to them. You listen to their ideas. You 
act on their ideas. You create positive feedback, quality 
feedback. That's what it's all about for us.
    So, like I said, our shipyard has about 6,000 men and 
women. Imagine 6,000 men and women coming to work in the 
morning, knowing their voices will be heard, and what that 
means for each one of them, you know, and what that means for 
our shipyard. For each of them on their way in to work, you 
know, how does it feel, right through to the end of the day, 
when they go back to bed? You know, it's a whole new 
environment when you wake up and you know your voice is going 
to be heard. Beyond that, imagine embedding those same 
philosophies throughout the DOD [Department of Defense]. 
Imagine 800,000 men and women coming to work, knowing their 
voices will be heard, and the positive impact that can have on 
performance.
    So, we begin our workforce engagement initiatives in 2010 
after a few years of flat performance. None of the performance 
enhancement initiatives that we implemented in those few years 
were having any major effect, or really no effect at all. So, 
in 2010, a handful of shipyard leaders--there were six labor 
leaders and six management leaders--got together and we tried 
to figure out what we could do to maybe get performance going a 
little bit faster, a little bit better.
    We came up with a program called RSVP, Renewal of Shipyard 
Values and Pride. We thought that if we could align values, 
that might improve performance. Our business model was heavily 
focused on schedule, which you'd think that would be the way to 
run the business, but, quite frankly, when the focus is only 
the schedule, bad behaviors can infiltrate, and it becomes a 
negative element. We thought, you know, align our values, and 
let's see where that takes us.
    So, we began these RSVP sessions with our workforce. We 
bring them in, like, maybe 100 at a time into our auditorium, 
and we talk about shipyard history. Mostly we wanted to listen 
to the workforce, hear what they had to say. We offered a 
scenario: ``Today is a perfect shipyard day, and you are the 
perfect shipyard employee. What does that look like to you? 
What does it mean when you get up in the morning, when you're 
coming to work, when you get your job and you're briefed from 
your supervisor? What does it look like when you get your 
tooling, your materials, and you go to the boat to do your job? 
What does it look like when you interact with other mechanics, 
other tradesmen and women or managers?'' The comments were 
amazing, they were eye-opening. There was very little focus on 
schedule and process. Our workforce talked about values, 
beliefs, attitudes, behaviors. They wanted a greater sense of 
ownership in the day-to-day operations of our shipyard. They 
talked about integrity, trust, respect, and dignity at the 
jobsite. You know, and we were hoping to be able to align 
values. What our workforce showed us was that they had their 
values aligned, they knew what they wanted, and we hadn't been 
listening.
    So, now we're listening. It's making a huge difference. 
What began in 2010 as a vision between a handful of shipyard 
leaders has grown in 5 years to the initiatives that have 
grasped the hearts and minds of our workforce. We have American 
leaders in industry turning their heads, paying attention to 
what we're doing in Portsmouth. You know, we're doing 
incredible things. Quite frankly, in the process, our 
performance has vaulted.
    So, I will save the rest of my statements, probably as I 
answer questions.
    Again, I want to thank you, Madam Chair and Senator Kaine, 
and thank you for being here and letting me testify today.
    [The prepared statement of Mr. O'Connor follows:]

               Prepared Statement by Mr. Paul R. O'Connor
    Chair Ayotte and Ranking Member Kaine, as well as other 
distinguished members of the subcommittee, thank you for the 
opportunity to testify on shipyard best practices.
    I admire this subcommittee's goals of identifying public and 
private shipyard best practices, assessing the impact of those 
practices on performance, and encouraging their dissemination across 
the Department of Defense.
    I believe Portsmouth Naval Shipyard has pioneered several best 
practices that have improved performance there and can do the same 
elsewhere.
    In 2010, in order to improve performance at Portsmouth Naval 
Shipyard, a joint Labor/Management (L/M) team initiated the Renewal of 
Shipyard Values and Pride (RSVP) program. Up until that point, our 
shipyard business model focused primarily on schedule and process. Our 
collective goal was to reinvigorate our workforce by focusing on 
values. Of course, we did not ignore schedule and process. We simply 
believed aligning values creates the greatest opportunity for success.
    Through a series of RSVP sessions, our L/M team introduced most of 
our workforce to our value-based construct with the understanding that 
our values form our beliefs which drive our attitudes, behaviors, and 
actions. We believe if we get the values ``right,'' we will ultimately 
improve performance.
    In these RSVP sessions we offered one basic premise: Today is the 
perfect shipyard day and you are the perfect shipyard employee . . . 
what does that look like to you? We logged every comment, every idea, 
and every frustration. The message from our workforce was loud and 
clear. Their driving concerns were value-based not schedule/process-
based. They wanted their voices heard. They also wanted a greater 
understanding of how their individual pieces fit into the greater 
shipyard picture. It was not enough to know, myopically, what their 
specific job was for the day. They wanted to know how that job fit into 
the general overhaul and how the overhaul fit into the shipyard's 
larger maintenance program. The more we understand of the `big 
picture,' the more likely we are to catch inconsistencies at the 
jobsite and within our purview. Our workforce wanted more ownership in 
the shipyard. Up until now, we had made them responsible and 
accountable without ownership (responsibility and accountability with 
no buy-in). Our workforce wanted a greater sense of trust, respect, 
dignity, and integrity.
    With all this information, the volumes of comments and ideas 
expressed by our workforce through RSVP, our L/M team began drafting 
the document, a collective shipyard vision which became known as our 
Declaration of Excellence (DoE). The DoE was truly inspired, drafted, 
and, ultimately, validated by our shipyard workforce. Our DoE focuses 
on values, beliefs, attitudes, and behaviors. It speaks of teaching and 
learning. I can learn as much from a new employee as that employee can 
learn from me. Our DoE speaks of respect, trust, integrity, and 
dignity, both personally and as teams. Our DoE empowers our workforce 
to stand-up and speak-up while focusing on professionalism and 
civility. Our DoE is our shipyard vision, as well as the foundation of 
a collaborative, value-based business model.
    As a result of our shipyard's RSVP sessions, our L/M team developed 
two primary tenets to guide our way forward:
    1.  Men and women at the jobsite have the best ideas on creating 
efficiency at the jobsite. Although everyone nods in agreement, 
historically, throughout industry, only a handful of senior managers 
are considered the `idea folks.' If you want to engage a workforce 
quickly and effectively, listen to their ideas, act on them, and 
provide quality feedback. Our shipyard employs approximately 6,000 men 
and women. Imagine 6,000 men and women coming to work every day knowing 
their voices will be heard and what that means for each of them and our 
shipyard from the moment they get up in the morning, to when they go to 
bed at night. Now, embed that philosophy throughout DOD. Imagine 
800,000 men and women coming to work knowing their voices will be 
heard.
    2.  Maximum performance requires maximum workforce engagement. For 
each employee not engaged, for each employee we leave behind, we limit 
our performance potential. When we engage a workforce, we engage their 
hearts, as well as their minds.
    During the RSVP sessions, our workforce came up with some amazing 
ideas. Here are two examples:
    1.  Learning Centers--Our workforce has developed elaborate 
Learning Centers (mock-ups) which allow new employees the opportunity 
to learn their trade and experienced employees the opportunity to 
`brush-up' on a job in a safe environment. These Learning Centers are 
actual submarine components removed from de-commissioned submarines and 
assembled in our trade's shops. These Learning Centers allow trades and 
assist-trades to work together in coordination, preparing for specific 
jobs on our submarines. These Learning Centers are helping create a 
synergy between trades and support codes (i.e. engineers, sailors, 
inspectors, etc.). Our structural shop has built a Learning Center, 
which is a full scale replica of a section of a lower-level 688 Class 
submarine machinery space. Our Painter/Blasters have put together a 
Learning Center consisting of a series of enclosed tanks cut from 
decommissioned submarines. Learning Centers are popping-up all around 
our shipyard helping to create camaraderie, as well as efficiency. 
Prior to the concept of Learning Centers, our new employees' first 
experience on actual submarine components and/or submarine compartments 
was on the submarine. When a new employee makes a mistake in a Learning 
Center, it is a learning moment. When a new employee makes that same 
learning mistake on a submarine, it is re-work, resulting in delays and 
cost growth. Up until the wide-spread inception of our Learning 
Centers, we could train employees only when jobs were scheduled on 
submarines and only on those submarines needing that specific work. Our 
Learning Centers have reduced training time, in some cases, from years 
down to weeks. The Learning Centers have created an engaged, 
collaborative, skilled, and productive workforce, while reducing 
training time and re-work.
    2.  Material Control Mechanics--A Material Control Mechanic (MCM) 
will locate, procure, and pre-stage tooling and material for numerous 
jobs within the trades. As a trades mechanic, once I brief my job with 
my supervisor, I walk 50 feet to my shop's MCM staging area, locate the 
bin associated with my job, take the tooling and material, and proceed 
to my jobsite. Prior to the inception of the MCM, each trades mechanic 
was responsible for finding their own tooling and material throughout 
the shipyard before heading to the jobsite--this was time-consuming and 
frustrating.
    These two ideas--Learning Centers and MCM's--are estimated at 
saving our shipyard $5 million annually. That is the value of an 
engaged workforce. These ideas only exist because we listened to our 
workforce. This point cannot be overstated and must not be undervalued. 
The most important aspect of all our workforce engagement initiatives 
is this: We listen to our workforce.
    Our L/M team has developed a robust, employee-focused Ideas 
Program. This Ideas Program is a joint L/M initiative with labor and 
management co-leads in all trades shops. We have Idea Boards throughout 
the shipyard. If you have an idea, you put it on the board. As the idea 
originator, you are kept actively engaged with the idea throughout the 
process. This program is proving to be quite successful. Our L/M team 
sees the actual ideas as a secondary benefit. The primary benefit is 
this: once an employee engages in ideas, he or she will most likely be 
engaged in all aspects of our shipyard organization.
    Prior to the inception of our shipyard's RSVP Program, our 
performance was flat with many projects, our submarine overhauls over 
budget or behind schedule. Since 2012, and since our RSVP initiatives 
have gained traction, all our projects have been `In-The-Green', which 
means on budget and on schedule. In that timeframe, most of our 
projects have been under budget, ahead of schedule, or both. The only 
significant change in that timeframe has been our workforce engagement 
initiatives. Coupling the Learning Centers and the MCM program with a 
newly designed Ideas Program has helped to re-invigorate our shipyard 
workforce. Our focus on collaboration and inclusion is helping to break 
down barriers which have existed for decades, barriers built by 
perpetuating archaic stereotypes and barriers built into our work 
processes and practices.
    We are not talking about a few process changes. We are talking 
about a significant cultural shift, a shift which fosters creativity 
and collaboration where we are all empowered to stand-up and speak-up, 
to think out-of-the-box, to teach-and-learn with intent, to be 
reliable, respectful, civil, and professional.
                              what's next?
    Our current initiative, Portsmouth Pride, Respect, and Ownership 
(PRO), is designed to further engage our workforce by connecting-the-
dots since our initial rollout of RSVP. It also introduces our newest 
employees to our collaborative process, our focus on trust, respect, 
integrity, and dignity at the jobsite, and our expectation of teaching 
and learning with intent. This initiative will be ongoing, continually 
striving to reach the ideals and vision of our DoE.
    We are currently working with the Naval Sea Systems Command 
(NAVSEA) Labor/Management Partnership Forum to promote our DoE 
philosophies throughout the NAVSEA maintenance community. As co-chairs 
of this partnership forum, Admiral Hilarides (Commander of NAVSEA) and 
Ron Ault (Metal Trades Dept, AFL-CIO) continue to work with our 
shipyard, introducing and fostering our vision enterprise-wide.
    A parallel initiative (New Beginnings) exists within DOD, an 
unprecedented collaboration of Labor and Management. In 2011, thirty 
federal sector labor leaders joined thirty federal sector managers to 
create, develop, and recommend improvements within three arenas of 
DOD's federal personnel system: Performance Management, Hiring 
Flexibilities, and Awards. These sixty men and women represented a 
cultural and professional cross-section of DOD's organizational 
structure. Our desire and intent to collaborate drove a value-based 
focus within the three arenas. As a member of this initiative, I could 
not help but realize the obvious; our value-based focus was in concert 
with our Portsmouth Naval Shipyard workforce engagement initiatives. 
Both initiatives require, promote, and embed philosophical elements to 
achieve the necessary cultural shift in order to maximize their 
greatest potential.
    At this point, we are less than one year away from our initial 
roll-out of DOD's adopted changes recommended by our New Beginnings 
joint L/M teams. Our guiding body, the DOD Roundtable (the highest 
level L/M partnership forum in DOD), has been involved from the start 
and has matured into a highly functional, highly collaborative, working 
forum.
    I see this initiative as a means of advancing an overdue and much-
needed cultural shift in DOD.
                               conclusion
    While we have made tremendous progress at Portsmouth Naval Shipyard 
and our performance has been strong, our work continues. Cultural 
change does not occur overnight. Yet, what began as a vision for a 
handful of shipyard leaders (both Labor and Management) back in 2010 
has grown in five years to grasp the hearts and minds of our workforce 
and has turned the heads of America's leaders of industry, both Labor 
and Management in both the public and private sectors. The success of 
our workforce engagement initiatives can be measured by our 
performance. We are shifting from a fear-based business model to a 
value-based business model and that transition is making all the 
difference. Working collaboratively compels individuals to develop 
relationships breaking down those self-created, self-imposed barriers. 
The Portsmouth Naval Shipyard is the U.S. Naval Maintenance Enterprise 
Performance Standard-Bearer. Imagine where our shipyard will lead our 
Navy when all 6,000 of us at the Portsmouth Naval Shipyard understand, 
exemplify, and promote the values of our DoE. Further, I envision our 
DoE philosophies spread across all of DOD and throughout the entire 
Federal Sector. Through collaboration, with vision, our initiatives 
will transform the way our Government does business.
    It will take a lot of hard work but let me be very clear. Our 
shipyard is a federal, nuclear, military facility. It is difficult to 
find a more rigid, hierarchal-managerial construct than that. If we can 
do it, everyone can do it. We can accomplish so much more when we all 
work together. The Portsmouth Naval Shipyard will lead our Nation as we 
lead our Navy towards a more successful future.
    Thank you again for the opportunity to testify before this 
subcommittee.

    Senator Ayotte. Well, thank you, Mr. O'Connor.
    I want to thank both of you for being here. Now I think 
we'll all ask you questions.
    I wanted to start, Mr. O'Connor, with--I know that each 
member at--at your desk, you have what's called the 
``Declaration of Excellence.'' Can you tell us what the 
Declaration of Excellence is and how you put this together, 
between labor and management, and how it translates into the 
everyday work done at the shipyard?
    Mr. O'Connor. I can. The Declaration of Excellence--all 
that information we got from the workforce in RSVP sessions, 
the--you know, the values and all the mountains of data they 
supplied us--the 12 of us who began this process, we went off-
yard with all this information, and we spent a week organizing 
the information from the workforce. We ended up putting it into 
a document, our Declaration of Excellence. All the words, all 
the thoughts and the values in the Declaration of Excellence 
came from our workforce through RSVP. You may--you might think 
that this document bears some resemblance to another famous 
Declaration. That was done with intent. You know, we focus on 
history--our shipyard history, our national history. Right down 
to--we had the same number of delegates sign our Declaration 
that signed the Declaration of Independence.
    Senator Ayotte. You have it posted at the shipyard.
    Mr. O'Connor. We have it posted all over the shipyard, 
yeah. It is a vision for our shipyard that--if you really--
you'll notice there are--there is no current today's lingo, 
buzzwords, on--business models. It's all value-based language. 
We talk about trust, respect, dignity, integrity. We talk about 
teaching and learning. That's really important. The--you think 
about it. I can learn as much from a first-year apprentice as 
that apprentice can learn from me. It's all about diversity, 
open-mindedness, working together. The document itself, the 56 
signatures, some of them are senior managers, some of them are 
senior labor, and many of them are tradesmen and engineers--
tradesmen and women and engineers. Our shipyard commander 
signed the Declaration, as well.
    So, it truly is a document that was inspired, drafted, and 
validated by our workforce. It's not just a document. You know, 
it could just be a piece of paper up on the wall if that's what 
we wanted, but that's not the case. We have a three-pronged 
philosophy with our Declaration:
    Prong number one is to embed the philosophies of our 
Declaration into our existing work documents, our shipyard 
strategic plan, and even into our technical work documents. You 
know, talk about teaching and learning and trust, respect, 
professionalism, civility, all of it. Embed it into our 
documents to institutionalize the language.
    The second prong is to turn ideas and thoughts into action. 
That's critical. I talked about that with our workforce's 
ideas--you know, listen to what they say, act on those ideas, 
and give them positive feedback. Because ideas and thoughts 
without action are just ideas and thoughts.
    The third prong is, spread the philosophies of our 
Declaration beyond the gates of our shipyard. I'm here. 
Wherever I go, I talk about the Declaration of Excellence, I 
talk about RSVP, I talk about workforce engagement, 
collaboration. Wherever I go, I get rave reviews, because it 
just makes sense. It's hard. You know, it's an easy concept, 
but it's really hard work. It's relationships. It's the hard 
stuff.
    I've already said, you know, my personal vision is, we can 
spread our philosophies beyond the gates of our shipyard. We 
can do that. I want to do that. I want to help do that. Not 
just in NAVSEA, not just in DOD, but throughout the entire 
Federal sector. I mean, imagine if we could embed philosophies 
of trust, respect, dignity, integrity, teaching and learning, 
civility, professionalism throughout the entire Federal sector. 
Imagine how many people are in the Federal sector. I don't 
know. But, imagine that they all get up in the morning and come 
to work knowing their voices will be heard. What an impact that 
will have. We can transform the way our Government does 
business. We're doing it at the shipyard at a small scale, 
relatively speak. Our performance has vaulted because of our 
engagement initiatives, because we're listening to our 
workforce, we're valuing their knowledge and their 
understanding, and we're utilizing their skills in a way that 
we haven't in the past. It's making all the difference. I 
sincerely believe that we can transform our Government. We want 
to help. We want to be a part of that.
    Senator Ayotte. Thank you for sharing that. As I hear you 
speak here, I think about--these are--would be very good values 
in the Congress, as well. So----
    Mr. O'Connor. Oh, I was----
    Senator Ayotte.--thank you----
    Mr. O'Connor.--going to mention that.
    Senator Ayotte.--thank you for sharing----
    [Laughter.]
    Senator Ayotte. Thank you for sharing that.
    I now want to turn it over for an opportunity for Senator 
Kaine to ask questions. Thank you.
    Senator Kaine. Thank you, Madam Chair. I'd like to put in 
the record, first--we've talked about this New York Times 
piece. Mr. Bagley testified to it. July 13, 2015, title, ``A 
New Look at Apprenticeships as a Path to the Middle Class,'' 
and it really focuses upon this apprenticeship program that was 
founded in 1919, and others. But, if we could put that in the 
record, I would appreciate it.
    Senator Ayotte. Absolutely.
    [The information referred to follows:]

      a new look at apprenticeships as a path to the middle class
    New York Times, July 13, 2015
    Nelson D. Schwartz
    NEWPORT NEWS, VA--With its gleaming classrooms, sports teams and 
even a pep squad, the Apprentice School that serves the enormous Navy 
shipyard here bears little resemblance to a traditional vocational 
education program.
    And that is exactly the point. While the cheerleaders may double as 
trainee pipe fitters, electricians and insulators, on weekends they're 
no different from college students anywhere as they shout for the 
Apprentice School Builders on the sidelines.
    But instead of accumulating tens of thousands of dollars in student 
debt, Apprentice School students are paid an annual salary of $54,000 
by the final year of the four-year program, and upon graduation are 
guaranteed a job with Huntington Ingalls Industries, the military 
contractor that owns Newport News Shipbuilding.
    ``There's a hunger among young people for good, well-paying jobs 
that don't require an expensive four-year degree,'' said Sarah 
Steinberg, vice president for global philanthropy at JPMorgan Chase. 
``The Apprentice School is the gold standard of what a high-quality 
apprenticeship program can be.''
    Long regarded by parents, students and many educators as an off 
ramp from the college track, apprenticeships are getting a fresh look 
in many quarters. The idea has recently captured the attention of 
several presidential candidates from both parties, with employer-
oriented apprentice programs increasingly seen as a way to appeal to 
anxious Americans looking for an alternative route to a secure middle-
income job.
    Last month, Hillary Rodham Clinton proposed a plan that would offer 
companies a $1,500 tax credit for each apprenticeship slot they fill. 
In a speech laying out his economic plan on Tuesday, Senator Marco 
Rubio of Florida, a Republican primary contender, vowed to expand 
apprenticeships and vocational training if he makes it to the White 
House.
    Wisconsin's Republican governor, Scott Walker, who formally entered 
the presidential primary race on Monday, has promoted apprenticeships 
in his state and increased funding for them even as he has cut aid to 
Wisconsin's vaunted university system.
    ``We know this works,'' said Thomas E. Perez, the labor secretary, 
describing how big companies have long trained young people in Germany, 
which has 40 apprentices per 1,000 workers, compared to about three per 
1,000 in the United States. ``It's not hard to figure out why the 
Germans have a youth unemployment rate that is half what it is here.''
    But there is a downside to the innovative approach used at the 
Apprentice School in combining skills-based education, a college-like 
experience and a virtually free ride for its nearly 800 students (even 
class rings and textbooks are covered): This approach has been rarely 
duplicated elsewhere.
    Despite prominent mentions by President Obama in several State of 
the Union addresses and bipartisan support in Congress, apprenticeship 
programs have struggled to gain a foothold among employers.
    Furthermore, the programs were devastated by the sharp losses in 
manufacturing and construction jobs that started with the last 
recession.
    Between 2007 and 2013, the number of active apprentices in the 
United States fell by over one-third, from about 451,000 to just under 
288,000, according to Labor Department data. In 2014, that number 
increased for the first time since the recession, rising by 27,000.
    Now, Mr. Perez has set a goal of doubling enrollment by 2018.
    In late June, he traveled to North Carolina, where he was joined by 
two local Republican members of Congress, to spotlight Washington's 
efforts to expand apprenticeships, including $100 million in new grants 
to be awarded this autumn.
    In Mooresville, touring the factory floor and giving a speech at 
Ameritech Die & Mold, which has teamed with local high schools and a 
nearby community college to recruit and train its apprentices, Mr. 
Perez said what was needed was not simply more Government financing or 
new private-sector programs.
    ``At the educational level, we need a comprehensive strategy to 
change the hearts and minds of parents,'' Mr. Perez told the audience, 
which included several parents of current Ameritech apprentices. 
``There are highly selective, four-year colleges that are easier to get 
into than many apprenticeship programs.''
    The Apprentice School gets more than 4,000 applicants for about 230 
spots annually, giving it an admission rate about equivalent to that of 
Harvard.
    Perhaps the greatest reason that students and their parents are 
showing more interest in apprenticeships is the financial equation. 
While the typical graduate from a four-year private college in 2014 
left campus with a debt load of $31,000 and started work earning about 
$45,000 a year, Apprentice School students emerge debt free and can 
make nearly $10,000 more in their first job.
    Other programs are equally promising. For Ameritech workers like 
Shane Harmon, who completed an apprenticeship there in 2012 and earned 
an associate degree at Central Piedmont Community College as part of 
the program, a middle-class lifestyle is already within reach.
    Many of his high school friends who have graduated from college are 
back home living with their parents, Mr. Harmon said. By contrast, at 
age 23, he already owns a home, has no student debt and is paid $18 an 
hour.
    ``I didn't want to sit in a classroom for four years, not knowing 
if I'd have a job,'' he said. ``I'm a hands-on guy.''
    The trade-offs between college and an apprenticeship inevitably 
raise one of the thorniest educational and economic issues today: Who 
should or should not go to college.
    When the former Pennsylvania senator Rick Santorum, a Republican 
presidential contender in 2012 who has begun a long-shot campaign 
again, brought up the question during his last primary bid, he was 
mocked in some quarters.
    And economic data clearly shows that most holders of bachelor's 
degrees will earn far more over the course of their working lives than 
typical high school graduates with technical training, and more than 
recipients of associate's degrees.
    But that's not the real issue for many young people, said Mike 
Petters, chief executive of Huntington Ingalls, which owns and 
financially supports the Apprentice School.
    ``If you're in the two-thirds of Americans that don't have a 
college degree, how do you feel if someone says to be a success, you 
have to have it?'' Mr. Petters said. ``It shouldn't be a requirement 
for a middle-class life. We have people in our organization who don't 
and are great, who've raised families and had great lives.''
    It is not necessarily an either-or proposition, according to the 
director of the Apprentice School, Everett Jordan. A new partnership 
between the Apprentice School and Old Dominion University in nearby 
Norfolk, Va., allows apprentices to earn a bachelor's degree in five to 
eight years, paid for by Huntington Ingalls.
    Mr. Jordan, himself a 1977 graduate of the Apprentice School, notes 
that other alumni have gone on to earn degrees in medicine, business 
and other fields, or served as top executives at Huntington Ingalls. Of 
the current crop, he estimates about 85 percent will eventually take on 
more senior salaried positions at the company.
    But however much Mr. Everett and other administrators try to make 
the Apprentice School resemble a traditional college, its connection to 
a military contractor means that in some ways it resembles a top 
military academy like West Point more than a typical university. For 
many people, that is a plus.
    For example, students receive training in dining etiquette, how to 
buy a house and how to prepare for job interviews.
    Similarly, having a dedicated customer with very deep pockets--the 
Pentagon--enables Huntington Ingalls to cover the $270,000 cost of 
training each apprentice.
    ``The skilled worker is a public good,'' said Mr. Petters, who 
occasionally sounds more like Mayor Bill de Blasio of New York City and 
other liberal politicians than an otherwise conservative corporate 
executive. ``Do you give kids swimming lessons or do you take them and 
throw them off the end of pier and see if they can swim? We believe in 
swimming lessons.''
    He added: ``The Apprentice School has been and will forever be the 
centerpiece of what we do here. I know there's a red-state view and a 
blue-state view. This is a shipbuilder's view.''
    A version of this article appears in print on July 14, 2015, on 
page B1 of the New York edition with the headline: Rising Appeal of 
Apprenticeship.

    Senator Kaine. I was struck, Mr. Bagley, in your testimony, 
about the investment that your company makes. The New York 
Times article said, for somebody to go through the 
apprenticeship program, start to finish, $270,000 of training. 
That's what that program costs. If I--if my staff correctly did 
the quick math, you indicated about 80 million a year in 
training in the company. You said 38,000 employees. I think 
that's about $2,100 a year of training per employee. So, that's 
a big investment in training--$270,000 to train an apprentice, 
and then, thereafter, for as long as you're there, $2,100 a 
year to train.
    Do you think this is pretty common in the industry, on the 
private-sector side? I'm sure you'll say you guys are the best 
at it, but is this a pretty common thing, to focus this much 
resources on training?
    Mr. Bagley. Senator Kaine, most humbly, I'm not going to 
refrain from saying that we're the best.
    [Laughter.]
    Mr. Bagley. But, I will say that--I will say that all 
industry are under the pressure for costs--to reduce costs. 
But, for us, it goes without saying, we've had many 
conversations about how we spend our money. The apprenticeship 
program, and the amount of money we invest in our students, it 
comes on the table. But, because of the passion that I have in 
being around or a member of the table or the staff that this 
conversation takes place, it's one of those conversations where 
I stand, if it's by myself standing, and say that we have to do 
this. I believe--and this is what I tell my peers--is that it 
is a return on the investment. What I spend today, I may not 
see that return until a couple, three, or four years down the 
road, but I have to be so committed to that investment, and, 
instead of a product, I'm investing in human capital.
    So, if I do that investment correctly--and I like what Mr. 
O'Connor say--and bring along this employee as an engaged 
employee, when this employee comes out of the apprenticeship 
program at a minimum of 4 years--and this is where the $270,000 
came up--when you consider their wages and all of their 
benefits and the 2--you know, the books and things that we 
purchase, the only thing it costs them is just 2 percent--just 
what we call association fees. That's a small price to pay with 
the investment that we're making.
    Some would say, ``Why will you put that much into a person, 
when they could leave you?'' Because we don't put any 
restraints or--there is no back end, say, that you have to give 
us 5 years of employment after we make this investment in you. 
But, because we believe in the individual and we invest in the 
intellect and inspiration of the heart of that person, we're 
willing to take that risk. As such, I can look back 10 years of 
apprentices graduating, and we are up into 80 percent. If I 
will go even deeper, say 15 years back, we still in the high-
70s percent.
    Senator Kaine. Master--at the shipyard, master shipbuilders 
are those with 40-plus, and there's a lot of master 
shipbuilders--
    Mr. Bagley. Yes, sir.
    Senator Kaine.--who have come out of the school. If--well, 
let's see, you started in 1974, so you're getting pretty close.
    Mr. Bagley. I am one.
    Senator Kaine. Yeah.
    The thing--I think it's interesting, the last point you 
make about the apprenticeship program. Apprentices are on the 
waterfront, 44 percent of your management is apprentices, but, 
because you don't have a requirement that you stay, a lot of 
the apprentice graduates are working in the public shipyard 
over in Norfolk, or working in private ship repairs all over 
the Hampton Roads area. So, this training program and the 
investment that the company is really populating the entire 
shipbuilding industry, which is of benefit to the Navy and to 
the mission that we're performing.
    Mr. Bagley. So, when you think about--I think the earlier 
comment, Madam Chair, she talked about the cooperation between 
private and public sector. So, even this investment--it's not 
said a whole lot, but it helps us even in that area, because, 
when we dispatch people to these other--just, say, a public 
shipyard, there is some benefit, because it comes back. We have 
a face that we can relate to. We have somebody who understands 
our business. They can help us with the dialogue, the language. 
It's just a win-win.
    Senator Kaine. Last thing I'll ask real quickly is the 
consistency point. You talked about Newport News has been 
describing--Senator Wicker and I were visiting, early last 
week--about sort of a work valley that's coming up. You know, 
you're doing new construction, you're doing refuels on the 
carriers, you kind of schedule them all in and try to have as, 
you know, minimal amount of downtime. You know, this is a--I'm 
preaching to the choir, among everybody here--but, sequester 
and budgetary uncertainty makes that much more challenging. The 
more certainty that we provide to our public and private 
shipyards, the more you can then structure the work so that 
you're not peaking and valleying and hiring people and having 
to lay them off.
    Mr. Bagley. That is so important.
    Senator Kaine. I know that that--as you're looking at that 
valley, the good news is, a few years out, you've got another 
mountain that you're going to climb. That's great. But, that 
does impose a challenge on this workforce, and you hope that 
they don't just completely leave and move to another area or 
something when we're in this valley period. We will do our best 
to provide as much certainty as we can.
    Mr. Bagley. Thank you, sir.
    Senator Ayotte. Senator Ernst.
    Senator Ernst. Thank you, Madam Chair, Senator Kaine, very 
much.
    Thank you, gentlemen, for being here today. I really do 
appreciate it.
    As you may know, we don't have any shipyards in Iowa, so--
--
    [Laughter.]
    Senator Ernst.--so, I appreciate all of you that do. It--as 
Senator Kaine said, that we need to make sure that we have a 
viable workforce that is there supporting our men and women in 
uniform. So, your mission is extremely important, and we do 
need to find ways that we can keep that workforce engaged. We 
may not have a shipyard, but, between Iowa and Illinois, we 
have Rock Island Arsenal, which goes through some of these 
difficulties, as well, as we look at up-armament for different 
types of vehicles and so forth. So, some similarities there. 
That's about where it ends. But, thank you again for being 
here.
    I do want to commend Senator Ayotte for holding this 
hearing, because it is an important issue, and one that we 
don't typically talk about as being so vital to our national 
security. So, thank you for doing that. She has been very 
active as an advocate for our military men and women and for 
the issues that you have been facing.
    She's talked to me a lot, off the side, about some 
construction projects that have been ongoing--the unmanned 
underwater vehicles, which are very vital to national 
security--and also in taking care of servicemembers. There had 
been an issue at Portsmouth with the young sailors that were 
housed there at one point, and they had, I think it was--with 
their housing--it was substandard. So, they were moved into 
better facilities after her attention to that issue. So, again, 
just want to commend her for doing that.
    But, I was--thank you for your Declaration of Excellence 
and your discussion about the qualities that your workers are 
bringing to these Navy shipyards. I think that's important. 
It's fascinating for someone like me that has not spent time 
near ships. But, if you could expound a little bit on your 
Declaration of Excellence. Mr. Bagley, if you could talk about 
this, as well. But, what are some of the most important 
shipyard best practices--the best practices--what can you take 
away from what you've learned which may be helpful to arsenals, 
such as I said--you know, our Rock Island Arsenal--and 
ammunition plants? So, if you would just share some best 
practices, please.
    Mr. O'Connor. Well, there's--we're doing a lot, so--the 
most important thing, like I said, is listening to the 
workforce and getting their ideas. We have three initiatives 
ongoing right now that are really making a huge difference in 
our performance. One is learning centers. Learning centers, 
they're mockups, but they're sophisticated mockups, 
sophisticated learning centers. I'm not really sure how that 
would apply----
    Senator Ernst. Is that for building of ships and----
    Mr. O'Connor. It's for----
    Senator Ernst.--learning different techniques, or is it 
more for----
    Mr. O'Connor. It's----
    Senator Ernst.--civilian workforces----
    Mr. O'Connor. Well, for us, it's our workforce getting 
trained--our new folks being trained on a, like, simulation 
submarine component or location. We have--like, one of our 
learning centers is an actual full-scale replica of a lower-
level machinery space, the 688-class submarine. Our new 
employees can go down onto this learning center, and, in actual 
sub conditions, they can work on components, and they can learn 
the trade. That's--all trades can do that.
    The value is, you know, if you make a mistake in that 
learning center, it's a learning moment. But, before we had 
these learning centers, the only way to actually get the--that 
experience of submarine work was on submarines. You make that 
same learning mistake on a submarine, it's rework. Very 
expensive. So, the value is, you can learn, you can make 
mistakes in a safe environment, so you don't make those 
mistakes on the boat. It also works for teamwork, collaborating 
on larger jobs.
    Senator Ernst. I think that's fantastic. Actually, I think 
that can be applied to any workforce, probably----
    Mr. O'Connor. It can.
    Senator Ernst.--in any situation.
    Mr. O'Connor. It absolutely can, yeah.
    Senator Ernst. Yeah.
    Mr. Bagley, did you have any thoughts?
    Mr. Bagley. Yeah. I would like to start by saying that I 
was thinking about what Mr. O'Connor said earlier. You know, it 
sounds simple, but I will say, the greatest thing that both 
public and private is learning is, when it comes to our people, 
for years we've had a paradigm where all the thinking comes 
from the top, and it flows down, versus going to the deck 
plate, the people who actually produce the product, and allow 
them to have that environment where they feel comfortable with 
sharing their opinion; and then, once they share their opinion, 
leaders act on their opinion, they provide them feedback. We do 
not, per se, have what's called a ``Declaration,'' but what we 
do have in common is, we both believe, I will say, equally 
about engagement and the power of having an engaged team. We 
have, certainly for the last--I will say, since 2006--
approached this area, and we've been growing every year with 
having a way to be able to measure the engagement of our 
people. But, again, we have--I'm going to say we've left the 
gate, but we are no--we do not see the finish line in sight 
yet. But, it's a path that we must travel, and I think, 
equally, that we can bring value, you know, to our taxpayer and 
also to the product that we're building.
    The other thing that I would say is, I think about sharing. 
We do have a methodology where we share between shipyards, 
mostly from, I will say, the nuclear-type work. When things 
happen in various yards, there is a sharing of information. We 
take that information and we take a look at how we run our 
business, and, based on that information, we look at what type 
of lessons learned we can gain from it, and then we implement 
in--that into our training. Quite the same thing happened on 
our end.
    So, from that standpoint, it's a lot of good sharing. Bill 
De Karlovich, who's sitting in the back of me, he's my training 
director, and he has the opportunity to go to various public 
yards, whether it be Portsmouth, Norfolk Naval, or Puget, and 
get a chance to speak with people of--you know, in his field. 
We've already started a lot of changing of information with 
training gaps. So, we, again--we are actually dispatching 
people through what we call fleet support work, people to 
Norfolk Naval, people out to Puget. Sometimes we speak 
different languages. So, his job has been to go before us and 
find out how do we fill that gap, so, when those people go out 
to the West Coast, they can hit the ground running and be able 
to produce a product.
    Senator Ernst. That's fantastic.
    Thank you, gentlemen, very much.
    Thank you, Ms. Chair.
    Senator Ayotte. Thank you.
    I wanted to call on Senator Hirono. As you know, Hawaii has 
an important shipyard, as well, that often cooperates with our 
shipyard. So, thank you, Senator Hirono.
    Senator Hirono. Thank you, Madam Chair and Ranking Member 
Kaine, for this hearing.
    As the Ranking Member on the Seapower Subcommittee, I have 
a deep appreciation of the importance of shipbuilding and our 
shipyards to what we do in the Armed Services area. So, it was 
great to have the two of you. Listening to you, Mr. Bagley, 
thank you very much, to your company, for the investment that 
you make in your people. Mr. O'Connor, it was great to know 
that you've implemented, listening to the people at the--the 
men and women at the jobsite, to really enable them to be 
invested in what they're doing.
    Yes, we do have a very important shipyard in Hawaii. So, 
Madam Chair, I would like to take a part of my 5 minutes to 
make a statement about our shipyard and what we're doing there.
    I mean, clearly, our shipyards are essential to sustaining 
our fleets and ensuring the readiness of our forces to meet the 
challenges that our Nation faces around the world. The men and 
women and servicemembers who work in all four of our public 
shipyards--that would be Pearl Harbor Naval Shipyard, 
Portsmouth Naval Shipyard, the Puget Sound Naval Shipyard, 
Norfolk Naval Shipyard--as well as our private shipyards, are 
invaluable to the success of our sea services. I want to extend 
my heartfelt thanks and aloha to all of them.
    Like a lot of our military communities, they have to cope 
with doing more with less. They have to worry about whether the 
budget resources will be there next year, or not. Yet, through 
all of these disruptions and issues, the shipyards must 
continue to be capable of providing the services our fleets 
require. I have visited with the men and women at the Pearl 
Harbor Naval Shipyard numerous times. It's always a good 
reminder of why eliminating sequester is so important.
    I know that we traditionally try to squeeze more efficiency 
out of organizations as resources decline. The shipyards are no 
different. Best practices, cost-effective operations are of 
vital importance. An ever-dangerous world and competition for 
limited resources demand it.
    I would like to share with the committee some of the great 
results that we are experiencing at the Pearl Harbor Shipyard. 
The team at our shipyard is on track to complete the largest 
quantity of work since the late 1980s, when the shipyard had 
about 30 percent more employees. The workload is expected to 
top over 738,000 resource days. In comparison, their workload 
from 2012, 2013, and 2014 were 706,000, 679,000, and 690,000 
resource days, respectively. So, they are doing so much more 
with fewer people. In fact, the shipyard has reached the 
highest workload, as well as produced the greatest output in 
the past 25 years. The shipyard has become a learning 
organization. They have developed high competency levels, 
trust, a shared vision, teamwork, and problem-solving skills to 
create an outstanding and efficient work environment.
    The results of our shipyard's learning organization journey 
is a tremendous increase in productive capacity or the ability 
to create increased output with the existing resources in the 
mission of repairing the Navy vessels.
    Their success in working as a team has resulted in the 
recent online delivery of the USS Greenville while continuing 
to work the lowest injury rate amongst the four public 
shipyards. I know, Mr. O'Connor, that you are probably seeing 
these kinds of results at your shipyard because of the things 
that you are doing, but I commend you for what you're doing. In 
fact, you said that the--you want to share the experiences at 
your shipyard. One of the ways in doing that is to be here to 
testify, but are there some other things that you're doing to 
enable other shipyards to gain from your best-practices model?
    Mr. O'Connor. Yes. Let me first say that we are not in 
competition with the other public shipyards.
    Senator Hirono. That's good, because we're all in it 
together.
    Mr. O'Connor. That's correct. That's absolutely right.
    Senator Hirono. Yes.
    Mr. O'Connor. That's how we look at it.
    Senator Hirono. Exactly.
    Mr. O'Connor. We--I think the most effective labor/
management partnership forum that I'm involved with is the 
NAVSEA Labor/Management Forum. That partnership actually turns 
ideas into action. We began the initiative back in 2010, and we 
called it ``Take Back an Hour of the Workday.'' All four public 
shipyards went off and did different things. That's good, that 
we've all done things.
    I've also said, you know, part of our Declaration talks 
about learning and teaching. We can teach other shipyards. They 
can teach us just as well. We need to share information. The 
NAVSEA labor partnership is a means to that end. We use that--
well, we don't use--we utilize that partnership to spread 
information among the four shipyards. That's one of the ways 
that we get information out. And----
    Senator Hirono. Do you think the communication and the 
sharing of best practices is occurring in the way you'd like 
it----
    Mr. O'Connor. No.
    Senator Hirono.--among the four shipyards?
    Mr. O'Connor. Not as efficiently, no, it is not. And----
    Senator Hirono. So, what--how do you think we can improve 
that capacity--capability?
    Mr. O'Connor. Boy. More emphasis, more focus. If we meet 
more often, set up some means of communication, you know, for 
the four public shipyards. One thing that happens at those 
forums sometimes is, there will be a labor rep, but maybe not a 
manager rep.
    What we do at Portsmouth is, whenever we go to the 
partnership meetings to talk about our initiatives, I insist 
that we do it, labor and management together. Steve Fahey, who 
would have been here today, goes to these partnership meetings 
with me, and, together, we brief our initiatives. I would like 
to see more collaboration, from all public shipyards, between 
labor and management. You know, that would go a long way, I 
think. Even--but, it's has to--it has to begin there. You know? 
You have to develop the relationships before you start 
developing the workforce, really.
    We have initiatives ongoing that, if we just took those 
initiatives and plopped them into another shipyard, there would 
be a benefit, but not as big a benefit as if the workforce came 
up with them on their own, and had their own ideas, their own 
thoughts, and their own way of doing their business. That's 
what it's all about. You know, and----
    Senator Hirono. Thank----
    Mr. O'Connor.--that's really a hard thing to try to spread, 
but that's what we want to do.
    Senator Hirono. Thank you, Mr. O'Connor, for being so clear 
as to where the initiatives really should start, is listening 
to your people. So----
    Mr. O'Connor. Yeah.
    Senator Hirono. Thank you, Madam Chair.
    Mr. O'Connor. Thank you.
    Senator Ayotte. Thank you.
    I also wanted to call on Senator King and Senator Shaheen, 
both of whom are tremendous fans of the Portsmouth Naval 
Shipyard.
    If I could call on Senator King.
    Senator King. Thank you, Madam Chair. Thank you for 
inviting me to this hearing, although I'm on Armed Services, 
not on this subcommittee.
    Mr. O'Connor, I'll start with a question that I figure I 
have a 50-50 chance of getting a--the right answer to. Do you 
live in New Hampshire or Maine?
    [Laughter.]
    Mr. O'Connor. The right answer is New Hampshire, sir.
    Senator King. My condolences.
    [Laughter.]
    Senator King. I figured it was--I had a shot on it, didn't 
I? But----
    I love this Declaration of Excellence. That is an 
extraordinary document. I note that your signature is right in 
the same place that John Hancock's signature is, on the other--
I don't know whether that was on purpose, but----
    Mr. O'Connor. I signed first.
    Senator King. I----
    Mr. O'Connor. I signed first, so----
    Senator King. I compliment you. You're the John Hancock of 
this agreement.
    Let me ask about how this came about. Was there always a 
culture of cooperation and collaboration at the Portsmouth 
Naval Shipyard, or is that something that has evolved in recent 
years?
    Mr. O'Connor. Well, it's actually, in earnest, I would say 
18-19 years. Back in the mid-'90s, or early '90s, we went 
through three rounds of base closures and three subsequent 
rounds of layoffs. Our workforce went from 9,000 down to 3,000. 
We really weren't doing a very good job. How could we? We had a 
workload for 9,000 people, but a workforce of 3,000.
    So, back then, a handful of, again, labor and management 
leaders got together and said, ``If we can't find a better way 
to do business''--because, back then, you know, it was 
confrontational, it was adversarial--``If we can't find a 
better way, then we will not survive as a shipyard.''
    Senator King. So, this was a joint realization.
    Mr. O'Connor. Yes.
    Senator King. Did you go off somewhere and meet at a hotel 
or--how did this happen? This is unusual.
    Mr. O'Connor. It is, yeah. We just started talking at the 
shipyard. Early on, it was really difficult. You know, we were 
mocked. Openly mocked. But, as more and more people saw the 
value in what we were doing, and our persistence in what we 
were doing, more people kind of--you know.
    Senator King. But, I take it that your union is still a 
union and still negotiates and still has differences and 
grievances. It's not like you've become part of management.
    Mr. O'Connor. That is correct.
    [Laughter.]
    Mr. O'Connor. For the record, that is correct.
    [Laughter.]
    Senator King. I thought I'd get you--give you a chance to 
get that on the record.
    Mr. O'Connor. Yeah.
    But, that--can I----
    Senator King. Yeah, please.
    Mr. O'Connor.--respond to that? That's a very good point.
    I refer to that as a business maturity. We do not let the 
smaller issues interfere with the bigger picture. We--you know, 
we don't lock out on meetings, we don't throw the baby out with 
the bath water. We can deal with grievances as grievances, and 
not as a complete failure of our vision as a shipyard.
    Senator King. Would you say you have buy-in from your 
members? Is this a leadership-led initiative, or do you have 
rank-and-file--do the rank-and-file at the yard buy into this 
concept?
    Mr. O'Connor. Yes. But, like I said earlier, our--the RSVP 
program, from where we got all the information for the 
Declaration, was a volunteer program. We didn't force anybody 
to go to those sessions. Yet, we got three-quarters of our 
workforce through those sessions. So, the document itself, the 
information came from the workforce. The signatures on the 
document are labor, management, and the workforce.
    So, everybody--I need to make this really clear. We don't 
have 6,000 men and women on our shipyard right now who have 
bought into the Declaration, who believe in workforce 
engagement. But, we have the lion's share of the workforce 
right now. You know, our vision is to have everyone involved.
    Senator King. I can testify to the effectiveness of the 
learning centers. I--on the mockup, I learned how hard it is to 
weld.
    Mr. O'Connor. Oh, yeah?
    Senator King. Fortunately, I wasn't welding a real 
submarine.
    [Laughter.]
    Senator King. So, I----
    Mr. O'Connor. I concur.
    Senator King.--I admire what you're doing.
    Well, I want to thank both of you for coming, because what 
you're doing is what we have to do. You talked to Senator Kaine 
about budgets and sequester. We hope to relieve the sequester, 
but, long-term, we're going to be in tight budget situations, 
and we have to be able to meet the country's needs, given the 
resources that we have. Productivity is really--is--that's 
going to be the whole answer, it seems to me.
    So, thank you, gentlemen, both, for joining us.
    Thank you, Madam Chair.
    Senator Ayotte: Thank you, Senator King.
    Senator Shaheen.
    Senator Shaheen. Well, thank you, Madam Chair and Senator 
Kaine, for holding this hearing.
    Mr. Bagley, you will excuse Senator King, Senator Ayotte, 
and I for focusing on the Portsmouth Naval Shipyard, but it's 
our shipyard, and we are very proud of it.
    It's so nice to be able to welcome Paul O'Connor to the 
committee today.
    Senator King. It's in Maine, by the way, Mr. Bagley.
    [Laughter.]
    Senator Shaheen. It is in Maine, but it has tremendous 
workers from both New Hampshire and Maine.
    [Laughter.]
    Senator Shaheen. A few from Massachusetts, too, so we're 
happy to have all of them.
    I want to follow up on Senator King's point about the 
Declaration of Excellence, because, as you pointed out, it is 
really unique, I think, and serves as a model, not just for the 
shipyard, but, I think, for all of Federal agencies. If we 
could get everybody to buy into this kind of a Declaration of 
Excellence for what we want to accomplish in each of our 
agencies, I think it would--we would be more successful as a 
Federal Government.
    I also think it's important to point out, as you did, that 
this is one of the reasons that the shipyard was on the last 
BRAC [Base Realignment and Closure] closing list, and then was 
taken off. Because, when people actually went in and looked at 
what you were doing, the productivity at the yard, the 
importance of your contribution to national security, it was--
there was a recognition that this was a shipyard we needed to 
keep open. So, I congratulate you and everybody at the yard, 
not just for the Declaration of Excellence, but, also, one of 
the other things that I've been very interested in are the 
energy efficiency efforts within the Navy. The shipyard has 
also been recognized as--for its innovation and energy 
efficiency measures.
    But, I want to go to the issue that we're all concerned 
about, and that is what happens with sequestration. Not only 
what happens at our public shipyards, but our private 
shipyards. One of the challenges we're facing--I know we're 
facing in Portsmouth, and I would guess you might be facing it 
too, Mr. Bagley, is, ``How do we keep talented people working 
at our shipyards?'' We need a higher percentage of engineers of 
STEM [science, technology, engineering, and math] graduates. 
It's one of the challenges we face in the workforce throughout 
the country. As people are looking at the uncertainty that 
sequestration presents, can you talk, Mr. O'Connor and then Mr. 
Bagley, about the impact that that's having on the workforce 
and what you're seeing, and the need for us to address 
sequestration?
    So, Paul, would you begin?
    Mr. O'Connor. Okay. Boy, oh, boy, it's a big question.
    We have seven separate chains of command on our shipyard, 
and not all seven were impacted equally with sequestration. The 
Navy, DOD, ruled that the shipyard, the NAVSEA portion of 
Portsmouth Naval Shipyard, the island, would not be impacted by 
sequestration. So, we all came to work.
    The other chains of command, they were still impacted by 
sequestration. We had men and women who worked side by side; 
some, the other chains of command, were forced to stay home, 
under sequestration, and lost their pay. Others were coming to 
work because they're a different chain of command. You know, 
the morale, the damage to the morale of our workforce when, for 
no apparent reason other than a super-committee couldn't reach 
decisions, they're out of work. That's really difficult. The 
impact--it's not as severe, but it does have an impact on the 
people who don't get furloughed, you know, because, ``Are we 
next? Will we be furloughed, you know, when sequestration is 
reenacted in''--on October 1st, I believe, right? Yeah. Take 
away the whole national security aspect of it, take away all of 
that, and you're left with--in the middle of trying to engage 
our workforce and create this synergy, this collaboration, this 
unprecedented desire for our workforce to work together, we 
have to deal with the threat of being kicked off the job, sent 
home, for no real good reason. That's hard to deal with.
    Now, we're hard workers, like anybody else. I--we get a bad 
rap. Federal employees get a bad rap. We don't deserve it. We 
are the most efficient, proficient workforce in our Nation in 
the business of nuclear submarine maintenance and 
modernization. We're the best there is. It's painful to--quite 
frankly, to listen to the wrangling and the rhetoric that is 
behind the decision to furlough our workforce.
    Senator Shaheen. Thank you.
    I'm out of time.
    Senator Ayotte: I wanted to follow up on the issue of 
hiring that we heard from both of you, but thinking about this 
workforce issue that Senator Shaheen talked about, making sure 
that we have, you know, the best workforce. I certainly share 
the concerns about sequester as a negative morale force in many 
ways, and not good way to do business. But, I know the shipyard 
right now is--has already hired 680 new workers, and is hiring 
some more. Because of the log that you have and the work that 
you need to do, in terms of the important work on our attack 
submarine fleet--and we heard a lot from Mr. Bagley about the--
their apprentice program--How is the shipyard doing, in terms 
of recruiting people? How do you get that many new people 
trained up and also bought into what you're doing with the 
Declaration of Excellence?
    Mr. O'Connor. Well, we hire between 1- and 200 apprentices 
every year. This year, we're hiring a lot of other tradesmen 
and women and engineers. We will have hired almost 800 new 
employees this fiscal year alone by the end of September. 
That's a huge number. That's almost one-fifth of our wage-
creating workforce, of our trades workforce.
    So, we didn't begin these learning centers, which are 
actually increasing our proficiency and efficiency, and 
shrinking the time it takes to bring a new employee up to speed 
in the trades--we didn't do that because we knew we were going 
to be hiring 800 people in fiscal year 2015. We did it because 
it was the right thing to do. The timing couldn't be better. 
You know, we're getting these new employees up to speed, and 
that's a result of men and women with vision doing what is the 
right thing to do, not because of an immediate need but because 
of a long-term goal. That's a big--the learning centers--again, 
they came from the workforce. It was their ideas. They're the 
ones who are helping to shape the new workforce. We are getting 
those new folks up to speed, qualified more quickly with just--
you know, just at high a skill level now as back, you know, 
years ago. So, that's the--that's pretty exciting.
    Senator Ayotte: Thank you.
    I'm going to allow others, if they have followup questions.
    Senator Kaine.
    Senator Kaine. Just one. This will be kind of a comment, 
really, by--maybe more of a closing comment. I just want to go 
back to Mr. Bagley.
    Your stats, about 4,500 applications for 240 
apprenticeships, almost 20-to-1. I went to the University of 
Missouri. I tell you, it wasn't 20-to-1. I mean, I think the--
it was a lot less competitive to get into University of 
Missouri when I was going than your shipyard today. That's what 
points out, I think, a real disharmony in the way we do 
education.
    We had a Budget Committee hearing a couple of years back, 
and Secretary Duncan, Arne Duncan, Education Secretary, was 
there, and he was--he mentioned in his testimony that our 
higher education attainment as a Nation is slipping, that the 
number of Americans with postsecondary degrees was number one 
in the world 20 years ago, now we're number 15 in the world. 
So, I asked him this question. I used you as an example. I 
said, ``Here's a question. I don't know if it's terminology or 
policy. It might be both. If someone graduates from high 
school, and they're one of the 4,500 who apply and one of the 
240 who get in, and they do an apprenticeship program at the 
shipyard, and, when they finish, they go to work, and they have 
a fantastic career.'' This path to middle-class success that 
the New York Times is talking about. ``Do we count that person 
as somebody who has a postsecondary degree, or not?'' Secretary 
Duncan said, ``I don't think we do. I said, ``Then you've got a 
terminology problem and a policy problem.''
    We still don't treat career and technical education as if 
it's valued. If you're in the military now, you get a tuition-
assistance benefit, with the approval of your CO [commanding 
officer]. It can be up to $4,500 a year. You can use it for a 
community college course, you can use it at a 4-year college. 
You can't use it to take the American Welding Society 
Certification Exam. Three-hundred dollars. We'll give you 
$4,500 to get a sociology degree. We will not give you $300 to 
pass the American Welding Society Certification Exam.
    Pell Grants. We were just talking about a bill we've got 
going in today. Pell Grants, higher-ed institutions, but not 
short-term career and technical programs that are highly 
qualified, verified, fully accredited, that are going to help 
somebody have a great middle-class lifestyle. We still treat, 
in the educational world, career and technical education and 
apprenticeships as if it's not equally valuable to a college 
degree, when your program equips your people to have an 
earnings potential over the life that is, in many instances, 
much higher than what somebody with a college degree has.
    So, I really value what you do for our Nation's security, 
but I really think the model--and it's not like you guys are 
some newfangled thing; you're celebrating your 100th 
anniversary in 2019--the model that you have, which has been 
right there before us, right in front our face for 100 years, 
we still don't fully account for it in the spectrum of what 
American educational success is. I do--I love things like this 
New York Times article, and I love the fact that you're able to 
come testify, because I hope we broaden our view a little bit 
about what educational success is. You're helping us do that by 
being here today. I appreciate it.
    Senator Ayotte. Senator Shaheen.
    Senator Shaheen. Well, thank you. I'm--I wanted to follow 
up a little more on the challenge of getting STEM graduates, 
which also speaks to the issue that you're raising, Senator 
Kaine, and also what the potential for additional cuts does to 
our ability to attract those people with that--those skills 
that we need.
    Again, Mr. Bagley, Paul, could you all speak to that? What 
are you seeing with respect to hiring ability when there's 
uncertainty around what's going to happen with contracts for 
the shipyard and with future funding? It's true, I think, also, 
at Huntington-Ingalls.
    So, you want to go first, Mr. Bagley?
    Mr. Bagley: Yeah, I'll try.
    I will say, based on where we are in our current 
conditions, we are more concerned with, ``How do we prepare for 
coming back up the valley?'' You know, I guess we're projecting 
maybe 17-18 months, just roughly, from here. So, how do we take 
what I call, you know, the cornerstone, a significant piece of 
our business that we're not going to affect, and allow the 
apprenticeship program and the leaders who we're producing out 
of that, along with our training organization to set us up, 
that we're ready to come back up and take whoever is out there 
that we choose to hire, and hopefully, as we have in the past, 
certainly the most recent 5 to 6 years, we'll have the quality 
of people to hire that can, not only come in and have the 
physical attribute, but that intellectual attribute that can 
help us with the training, that we're going to have leaders to 
give them to come up that power curve a whole lot quicker?
    So, that's really our strategy. I suspect we're going to 
still be pretty selective in who we're going to be able to 
hire. So, when we consider the technology, when we consider 
how--How do we be proactive and anticipate the future rather 
than letting the future come and take us, like sequestration, 
you know, what that may do to us?--what we're trying to focus 
on is, What are the things we can control? That's where we're 
putting our energy. Then, the things that we can't control, we 
are acknowledging those, but we are telling the people that 
we've got a team of folks, you know, up here in D.C., working 
with Senators and et cetera, to help change that. But, we do 
have a significant piece in our hands that we can control our 
own destiny.
    So, that's where I'm asking the leadership, the workers--
let's put our energy there. At the end of the day, we can feel 
good about--that we fought a good fight, because we're going to 
stand tall. Now, will we have all the team members possibly on 
the team? Maybe not. But, the ones who are there, we're going 
to reset the business. This is what we're looking at now. How 
do we reset the business for the future? In resetting this 
business, we have to get leaner, we have to get more 
productivity, we have to prepare for the unknowns, but, yet the 
things that we do know, that's where we're going to put a lot 
of our energy.
    Senator Shaheen. Thank you.
    Paul, as you're looking at an aging workforce at the 
shipyard, what kind of challenges does the uncertainty of 
sequestration present as you're looking at all the people that 
need to be hired over the next couple of years?
    Mr. O'Connor. Well, historically, you know, when the 
budgets are cut, the first things that get cut are outreach, 
training--you know, we try to focus on the core mission. Not 
that training isn't core, but, you know, if we have to cut 
somewhere, that's, historically, where they cut.
    The--it's a tough question, because our people--like, 
during sequestration, our outreach people were cut. It was 
ended, officially. Zero budget. That didn't stop the men and 
women at our shipyard who volunteer on a regular basis from 
continuing to volunteer, to spend their own money, you know, to 
help these kids that were in the programs that they were 
involved in. We--our outreach program goes out to colleges, 
high schools, and middle schools. We're not going to let those 
kids down. But, we shouldn't have to bear the cost out of our 
own pockets because of sequestration.
    Senator Shaheen. Well, and I certainly agree that the 
volunteer efforts on behalf of the shipyard for programs like 
Sea Perch that really gets kids excited about----
    Mr. O'Connor. Oh, they do. It's a great program.
    Senator Shaheen.--work in fields that are going to 
ultimately going to be important to the shipyard, are critical. 
I was thinking more of whether, as you're looking at hiring 
people, the challenges of bringing somebody on when there's 
uncertainty about whether the funding's going to be there for 
the jobs at the shipyard. That's----
    Mr. O'Connor. We had to freeze our hiring.
    Senator Shaheen. Yeah.
    Mr. O'Connor. It was that simple. We had to freeze. So--
which has an impact on our performance, because our workload 
didn't freeze.
    Senator Shaheen. Right.
    Mr. O'Connor. Just the workforce. So, yeah, that's a huge 
issue.
    Senator Shaheen. Thank you.
    Thank you both.
    Senator Ayotte. I want to thank both of you for being here 
today and for the important and excellent work being done at 
Newport News and the Portsmouth Naval Shipyard, defending our 
Nation, because we couldn't defend the country and our Nation 
without the incredible work done at both our public and private 
shipyards. So, I hope you'll pass on our gratitude to your 
workforce. I think we learned some valuable, important 
information.
    Certainly, Mr. Bagley, what you're doing in the private 
sector and the importance of--of course, I fully agree with 
Senator Kaine, the importance of career and technical education 
in valuing what's being done, in terms of our manufacturing 
workforce and the incredible skill set they have.
    Mr. O'Connor, the lesson that the Declaration of Excellence 
and the work--the important and very good relationship between 
labor and management at Portsmouth Naval Shipyard, and how we 
can use those examples across the Federal workforce.
    So, I thank you both for being here, and for all--and all 
the members that were here today. Appreciate it.
    [Whereupon, at 4:05 p.m., the hearing was adjourned.]

                                 [all]
```