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On 20 February 2008, Admiral Robert D. Reilly, USN, Commander of Military Sealift Command
addressed the Navy League of the United States. The following is excerpted from Admiral Reilly’s
remarks.
Military Sealift Command is essentially a $3 billion maritime operating company. On any given day, I
have 100 ships in full operational status across 22 different times zones. They are government owned and
operated ships, they are government-owned, contractor-operated ships and some of them are leased to me
and those are contractor-operated ships. I work in partnership with the Maritime Administration so on any
given day, I count about 180 ships in inventory either in reduced operational status or in full operational
status. I also conduct operations where I will hire on the open market U.S, flag vessels in accordance with
our cargo preference laws or work with the Army and USTRANSCOM to help move goods and services
to the war fighter.
If you look at what MSC does, we are sort of a single mission focused force provider. In the Navy
there are a number of force providers - - the surface warfare enterprise which includes your surface
warfare providers and your amphibious ships. There is the naval aviation enterprise, which are your
carriers and naval aviation across the realm of fixed wing and rotary operations. We have our undersea
warfare community which includes our fleet ballistic submarines and our attack submarines. We also have
our special operations community with our Navy SEALs. We have what was known as the Riverine
Force, which we now call the Naval Expeditionary Combatant Command to help us with our brown water
operations. So, a full spectrum of operations and Military Sealift Command is the warfare support
provider for all these entities.
Most of us who grew up in the Navy envision Military Sealift Command as the oiler that showed up
over the horizon to provide you fuel to top off your tanks and food for your reefer decks and occasionally
some new ordinance. Our mission set has expanded dramatically over the last three decades.
One of the reasons it has [been able to expand] is that we have continued to embrace the commercial
maritime model that is reflective of our national maritime industry. Admiral Vern Clark said about five
years ago that if we were a Fortune 500 business, we would probably be going bankrupt because at the
end of the day [we do not know] what are our personnel costs, what are our IT costs, what are our
maintenance costs and, at the end of the day, why we are always struggling to find money to build new
ships and new aircraft. There is a business dynamic which everybody in this country knows you have to
foster, otherwise you are not going to be able to compete. Our market is the worldwide security
environment and [success in that market depends upon] whether or not we can be in the right place at the
right time to meet our nation's vital interests.
Accordingly, in the United States Navy, we have undergone somewhat of a business revolution over
the course of the last seven years. I'm not sure if the term Navy Enterprise Alignment is something that
resonates with you but we have learned from industry to be more efficient and more effective in terms of
the product that we deliver to our warfighting customers and that is warfighting readiness.
Part of this is the information age but part of this is knowing: what your assets are: what your fleet of
ships is; what it costs to operate them; what kind of capability they can deliver; what your budget is and
how you execute it over the year; and what you think you are going to need for the next year and some of
those expenses across your cost drivers.
[There is also the need to make] sure you understand your customers' needs so that you deliver him
the capability [he or she needs] in this very critical time sensitive environment. You can all go on CNBC
or the Bloomberg channel and see where information about how a company is operating speaks to the
need to keep customers involved. The quarterly and the annual financial reports that are used to support
investing in a particular company, that dialog you have with your customer - - we have set that up in the
Navy. We looked to find that CIO to provide that IT infrastructure and a CEO, be it a three star Navy
admiral being in charge of the Surface Warfare Enterprise or me in charge of the Logistics Enterprise, to
harness that effect so that we can understand what it costs, move out smartly and continue to deliver
capability in an MSC fleet that continues to grow.
The Naval Enterprise construct begins at the Chief of Naval Operations, works down through
Washington, D.C. down into the Fleet. It goes through the Commander US Fleet Forces and Commander
Pacific Fleet and all the way down through warfare providers to get down to the customers so we can
deliver a capability at the right readiness at the right cost, so that we can not only provide our forces, the
wherewithal to execute their mission, but also so we can look to the future to decide how we re-capitalize
the Navy.
Under our U.S. Transportation Command hat, we are involved in what is known as "distribution
process ownership business change." Some people would call that the Fed-Ex effect. You know, when it
absolutely positively has to get there on time. It involves how you get it to the warfighter in the most
effective, timely and accurate manner; how you maintain intransit visibility and how you manage the
supply chain. So, we are learning from industry because we know that this business costs money and it
costs a lot of taxpayers' money.
We are a highly matrixed organization in these days of information technology. I actually have three
bosses. I used to work directly for the Chief of Naval Operations. About a year ago, I was assigned to
Commander U.S. Fleet Forces Command down in Norfolk, Virginia to get me closer to my customer. My
customer, obviously, is the Fleet.
I also remain the naval component commander for U.S. Transportation Command under General
Schwartz. Both myself and the Maritime Administration work to provide that sealift component for our
warfighters. 90 to 95 percent of the goods and services - - the equipment - - arrives by sea. 90 to 95
percent of the people arrive by air. We have to marry them up to deliver that kind of fighting effect to
deliver the goods.
I also have a third boss, the Assistant Secretary of the Navy for Research, Development and
Acquisition, who provides me a contract warrant. He allows me to go out and find those innovative
maritime solutions to work that strategic partnership with our maritime industry. For example, upwards of
85 percent of the maintenance on my fleet is done in U.S. ship yards. I count on U.S. shipyards to help
bring me new ships and it is a never-ending drumbeat.
If you look across my roughly 8.600 employees in the Sealift Command, 85 percent of those
employees are underway at sea. The remainder are my shore infrastructure that handle command and
control, execution and my program management. My strategic center of gravity at Military Sealift
Command is the U.S. merchant mariner. I directly employ up to 5,000 licensed U.S. merchant mariners
to man my government-owned, government operated ships. Through my operating contracts, I employ
roughly another 1,600 U.S. merchant mariners and that is to support the day-to-day sustainment
operations across Military Sealift Command. At times of crisis when we need to do an OIF-type of
evolution, the Maritime Administration and MSC team to activate our strategic sealift forces, our gray
hulled platforms, but we also count commercial capacity to help move the goods and services to the
warfighter at the onset of combat operations and to support increased sustainment operations over the
duration.
All of you are familiar with the fact that we provide a float logistics capability to our carrier strike
groups and to our expeditionary strike groups. Those are our Navy oilers, our Navy ammunition ships.
Over the course of the last 30 years, the Navy has turned over platforms that were traditionally operated
by Sailors to MSC because they are more in keeping with a commercial operating model - - single
mission, single focus.
What are some of the new changes to the MSC fleet and where are we headed in the future? First,
some of you may recall that years ago we had a number of ammunition ships, AEs, and AFSs, our combat
store ships. Fifteen years ago, we embarked on an acquisition strategy to merge the capability on those
ships and the end result is the new dry cargo ammunition ship that T-AKE, the Lewis and Clark class.
Our first Lewis and Clark vessel just returned from its first deployment where it set some records in terms
of cargo delivery. So, this is a hybrid ammunition and stores ship. It also carries cargo fuel and we are
finding it is a great new fit. We have got in the budget nine of these ships. They are named after
explorers. We are going to Christen number six and the next will be the U.S. Naval Ship AMELIA
ERHART (T-AKE 6).
[MSC is also providing civilian mariners to help man some of the ships in the Fleet.] For the Sixth
Fleet command ship [USS MOUNT WHITNEY (LCC 20)], we provide mariners to handle the deck and
engineering functions while a cadre of military provide the command and control functions. We just
started to send civilian mariners aboard USS EMORY S. LAND (AS 39). She is one of two submarine
tenders, the LAND and USS FRANK CABLE (AS 40), both of which will be going through some much
needed maintenance upgrades and deploying back out to the Fleet with civil service mariners in the
engineering and deck departments and a cadre of military experts running the nuclear repair facility.
Again, we are taking advantage of the commercial business model. We are focusing in on the core
expertise of our merchant mariners. We keep them at sea a little bit longer than our Sailors who have a
sea shore rotation. They are focused and honed in on building their subject matter expertise. We pay
them wages that are competitive with prevailing industry wages.
You may recall in the 1970s, President Carter directed that we create three squadrons of forward
deployed afloat war reserve stockpiles. These are contractor-owned, contractor-operated vessels for the
most part that contain Army and Marine Corps and Air Force and a little bit of Navy war reserve stocks -
- everything from rolling stock to ammunition to hospital beds. We are evolving the model to what is
called the Maritime Prepositioning Force Future Concept to recognize the fact that our technology is
changing. Things like the V-22 Osprey require a bigger footprint. Armored Humvees and mine-resistant
ambush protected vehicles AMRAPs are a little bit heavier and they require more deck space so we have
to evolve our maritime prepositioning force to reflect those technology changes. [We plan to use] T-
AKEs 10 through 14 to support the new MPFS future squadrons.
[We may also build] a couple of more LMSRs (Large Medium Speed Roll-on Roll-off vessels). The
existing vessels were built in the 90s based upon Gulf War I lessons learned. The best anecdote about the
size and capability of these vessels comes from one of my predecessors, Admiral Gordon Holder. If the
Russian Army had had an LMSR on the Volga River during the Battle of Stalingrad, they could have
stored every tank they had in the battle in the one ship. If you look since the beginning of OIF or since the
beginning of the Global War on Terror after 911, MSC, the TRANSCOM team, commercial industry
have moved so much roll-on, roll-off cargo that it would fit a supply train that stretched from Washington
DC past Las Vegas. That's what it takes to support our forces in the field in these kinds of operations.
We are up to about 16,000 Olympic size swimming pools in terms of the amount of petroleum products
delivered.
We have entered into a contract in connection with the re-capitalization of our Jones Act tanker fleet
to have a U.S. commercial company build two additional ones for us and then lease them back to us for
operations. We have found that we can do that much cheaper. If we can rely on commercial activity, if it
remains commercially viable to support our national economic interests then we can count on it on times
of need. We have a great underpinning there that protects U.S. mariner jobs and protects our defense
requirements and takes us into the future.
The Joint High Speed Vessel is a program where we are looking to provide intra-theater lift. Inter-
theater, from one theater to another, is traditionally strategic sealift but [this program involves] how you
move goods and services in the Western Pacific or down in the Caribbean. We have found this can be
facilitated if we go down the road to building what is known as the Joint High Speed Vessel. We currently
have one of these vessels under hire, USS SWIFT (HSV 2). There is also the WESTPAC EXPRESS
which the Marines operate in the Western Pacific. We are going to put another charter out as a bridge
pending the procurement of seven or eight Joint High Speed Vessels for the Navy and the Army.
Our hospital ships have become pretty visible symbol of American diplomacy, generosity and
assistance over the course of the last five years. We initially deployed the hospital ship USNS MERCY
(T-AH 19) in response to the tsunami in Indonesia. That together with the USS ABRAHAM LINCOLN
carrier strike group provided much needed humanitarian assistance. The Commander Pacific Fleet got the
hospital ship underway the following year to return to some of those areas to continue the humanitarian
assistance work and she got underway with non-government doctors and dentists and optometrists from
Project Hope and Project Smile. USNS COMFORT (T-AH 20) just got back from a four month
deployment down in the Caribbean where it stopped at 12 countries, treated upwards of 92,000 patients,
handed out over 25,000 pairs of eye glasses to people that had never had a pair of eyeglasses before, went
ashore to do infrastructure improvements. They did everything from veterinary services to fixing people's
ailments that they never expected to get fixed in their lifetimes. Tremendous delivery of what we would
call a non-kinetic effect. To deliver that kind of effect in the far reaches of the world lets people know that
there is a different side to America than what you see on five minute sound bites on Algecera. We now
are looking at deploying one hospital ship per year for upwards of a six month deployment [on this type of
mission]. So, the future of the hospital ships is pretty fascinating. They are tankers that were converted
in 1976. The only downside to those particular ships is that they draw upwards of 33 feet of draft and it
is hard to get it into the nooks and crannies.
In many ways, Military Sealift Command's mission remains enduring but I will tell you that we are a
growth industry. We are a growth industry because DOD's mission is continuing to evolve and we in the
Navy [must] maintain an effective fighting force to handle major combat operations of the like similar to
Operation Iraqi Freedom and address new non-traditional significant threats. I'm here to tell you that
Military Sealift Command continues to support that mission along with our partners such as the Maritime
Administration, our global maritime infrastructure and our national maritime infrastructure.
addressed the Navy League of the United States. The following is excerpted from Admiral Reilly’s
remarks.
Military Sealift Command is essentially a $3 billion maritime operating company. On any given day, I
have 100 ships in full operational status across 22 different times zones. They are government owned and
operated ships, they are government-owned, contractor-operated ships and some of them are leased to me
and those are contractor-operated ships. I work in partnership with the Maritime Administration so on any
given day, I count about 180 ships in inventory either in reduced operational status or in full operational
status. I also conduct operations where I will hire on the open market U.S, flag vessels in accordance with
our cargo preference laws or work with the Army and USTRANSCOM to help move goods and services
to the war fighter.
If you look at what MSC does, we are sort of a single mission focused force provider. In the Navy
there are a number of force providers - - the surface warfare enterprise which includes your surface
warfare providers and your amphibious ships. There is the naval aviation enterprise, which are your
carriers and naval aviation across the realm of fixed wing and rotary operations. We have our undersea
warfare community which includes our fleet ballistic submarines and our attack submarines. We also have
our special operations community with our Navy SEALs. We have what was known as the Riverine
Force, which we now call the Naval Expeditionary Combatant Command to help us with our brown water
operations. So, a full spectrum of operations and Military Sealift Command is the warfare support
provider for all these entities.
Most of us who grew up in the Navy envision Military Sealift Command as the oiler that showed up
over the horizon to provide you fuel to top off your tanks and food for your reefer decks and occasionally
some new ordinance. Our mission set has expanded dramatically over the last three decades.
One of the reasons it has [been able to expand] is that we have continued to embrace the commercial
maritime model that is reflective of our national maritime industry. Admiral Vern Clark said about five
years ago that if we were a Fortune 500 business, we would probably be going bankrupt because at the
end of the day [we do not know] what are our personnel costs, what are our IT costs, what are our
maintenance costs and, at the end of the day, why we are always struggling to find money to build new
ships and new aircraft. There is a business dynamic which everybody in this country knows you have to
foster, otherwise you are not going to be able to compete. Our market is the worldwide security
environment and [success in that market depends upon] whether or not we can be in the right place at the
right time to meet our nation's vital interests.
Accordingly, in the United States Navy, we have undergone somewhat of a business revolution over
the course of the last seven years. I'm not sure if the term Navy Enterprise Alignment is something that
resonates with you but we have learned from industry to be more efficient and more effective in terms of
the product that we deliver to our warfighting customers and that is warfighting readiness.
Part of this is the information age but part of this is knowing: what your assets are: what your fleet of
ships is; what it costs to operate them; what kind of capability they can deliver; what your budget is and
how you execute it over the year; and what you think you are going to need for the next year and some of
those expenses across your cost drivers.
[There is also the need to make] sure you understand your customers' needs so that you deliver him
the capability [he or she needs] in this very critical time sensitive environment. You can all go on CNBC
or the Bloomberg channel and see where information about how a company is operating speaks to the
need to keep customers involved. The quarterly and the annual financial reports that are used to support
investing in a particular company, that dialog you have with your customer - - we have set that up in the
Navy. We looked to find that CIO to provide that IT infrastructure and a CEO, be it a three star Navy
admiral being in charge of the Surface Warfare Enterprise or me in charge of the Logistics Enterprise, to
harness that effect so that we can understand what it costs, move out smartly and continue to deliver
capability in an MSC fleet that continues to grow.
The Naval Enterprise construct begins at the Chief of Naval Operations, works down through
Washington, D.C. down into the Fleet. It goes through the Commander US Fleet Forces and Commander
Pacific Fleet and all the way down through warfare providers to get down to the customers so we can
deliver a capability at the right readiness at the right cost, so that we can not only provide our forces, the
wherewithal to execute their mission, but also so we can look to the future to decide how we re-capitalize
the Navy.
Under our U.S. Transportation Command hat, we are involved in what is known as "distribution
process ownership business change." Some people would call that the Fed-Ex effect. You know, when it
absolutely positively has to get there on time. It involves how you get it to the warfighter in the most
effective, timely and accurate manner; how you maintain intransit visibility and how you manage the
supply chain. So, we are learning from industry because we know that this business costs money and it
costs a lot of taxpayers' money.
We are a highly matrixed organization in these days of information technology. I actually have three
bosses. I used to work directly for the Chief of Naval Operations. About a year ago, I was assigned to
Commander U.S. Fleet Forces Command down in Norfolk, Virginia to get me closer to my customer. My
customer, obviously, is the Fleet.
I also remain the naval component commander for U.S. Transportation Command under General
Schwartz. Both myself and the Maritime Administration work to provide that sealift component for our
warfighters. 90 to 95 percent of the goods and services - - the equipment - - arrives by sea. 90 to 95
percent of the people arrive by air. We have to marry them up to deliver that kind of fighting effect to
deliver the goods.
I also have a third boss, the Assistant Secretary of the Navy for Research, Development and
Acquisition, who provides me a contract warrant. He allows me to go out and find those innovative
maritime solutions to work that strategic partnership with our maritime industry. For example, upwards of
85 percent of the maintenance on my fleet is done in U.S. ship yards. I count on U.S. shipyards to help
bring me new ships and it is a never-ending drumbeat.
If you look across my roughly 8.600 employees in the Sealift Command, 85 percent of those
employees are underway at sea. The remainder are my shore infrastructure that handle command and
control, execution and my program management. My strategic center of gravity at Military Sealift
Command is the U.S. merchant mariner. I directly employ up to 5,000 licensed U.S. merchant mariners
to man my government-owned, government operated ships. Through my operating contracts, I employ
roughly another 1,600 U.S. merchant mariners and that is to support the day-to-day sustainment
operations across Military Sealift Command. At times of crisis when we need to do an OIF-type of
evolution, the Maritime Administration and MSC team to activate our strategic sealift forces, our gray
hulled platforms, but we also count commercial capacity to help move the goods and services to the
warfighter at the onset of combat operations and to support increased sustainment operations over the
duration.
All of you are familiar with the fact that we provide a float logistics capability to our carrier strike
groups and to our expeditionary strike groups. Those are our Navy oilers, our Navy ammunition ships.
Over the course of the last 30 years, the Navy has turned over platforms that were traditionally operated
by Sailors to MSC because they are more in keeping with a commercial operating model - - single
mission, single focus.
What are some of the new changes to the MSC fleet and where are we headed in the future? First,
some of you may recall that years ago we had a number of ammunition ships, AEs, and AFSs, our combat
store ships. Fifteen years ago, we embarked on an acquisition strategy to merge the capability on those
ships and the end result is the new dry cargo ammunition ship that T-AKE, the Lewis and Clark class.
Our first Lewis and Clark vessel just returned from its first deployment where it set some records in terms
of cargo delivery. So, this is a hybrid ammunition and stores ship. It also carries cargo fuel and we are
finding it is a great new fit. We have got in the budget nine of these ships. They are named after
explorers. We are going to Christen number six and the next will be the U.S. Naval Ship AMELIA
ERHART (T-AKE 6).
[MSC is also providing civilian mariners to help man some of the ships in the Fleet.] For the Sixth
Fleet command ship [USS MOUNT WHITNEY (LCC 20)], we provide mariners to handle the deck and
engineering functions while a cadre of military provide the command and control functions. We just
started to send civilian mariners aboard USS EMORY S. LAND (AS 39). She is one of two submarine
tenders, the LAND and USS FRANK CABLE (AS 40), both of which will be going through some much
needed maintenance upgrades and deploying back out to the Fleet with civil service mariners in the
engineering and deck departments and a cadre of military experts running the nuclear repair facility.
Again, we are taking advantage of the commercial business model. We are focusing in on the core
expertise of our merchant mariners. We keep them at sea a little bit longer than our Sailors who have a
sea shore rotation. They are focused and honed in on building their subject matter expertise. We pay
them wages that are competitive with prevailing industry wages.
You may recall in the 1970s, President Carter directed that we create three squadrons of forward
deployed afloat war reserve stockpiles. These are contractor-owned, contractor-operated vessels for the
most part that contain Army and Marine Corps and Air Force and a little bit of Navy war reserve stocks -
- everything from rolling stock to ammunition to hospital beds. We are evolving the model to what is
called the Maritime Prepositioning Force Future Concept to recognize the fact that our technology is
changing. Things like the V-22 Osprey require a bigger footprint. Armored Humvees and mine-resistant
ambush protected vehicles AMRAPs are a little bit heavier and they require more deck space so we have
to evolve our maritime prepositioning force to reflect those technology changes. [We plan to use] T-
AKEs 10 through 14 to support the new MPFS future squadrons.
[We may also build] a couple of more LMSRs (Large Medium Speed Roll-on Roll-off vessels). The
existing vessels were built in the 90s based upon Gulf War I lessons learned. The best anecdote about the
size and capability of these vessels comes from one of my predecessors, Admiral Gordon Holder. If the
Russian Army had had an LMSR on the Volga River during the Battle of Stalingrad, they could have
stored every tank they had in the battle in the one ship. If you look since the beginning of OIF or since the
beginning of the Global War on Terror after 911, MSC, the TRANSCOM team, commercial industry
have moved so much roll-on, roll-off cargo that it would fit a supply train that stretched from Washington
DC past Las Vegas. That's what it takes to support our forces in the field in these kinds of operations.
We are up to about 16,000 Olympic size swimming pools in terms of the amount of petroleum products
delivered.
We have entered into a contract in connection with the re-capitalization of our Jones Act tanker fleet
to have a U.S. commercial company build two additional ones for us and then lease them back to us for
operations. We have found that we can do that much cheaper. If we can rely on commercial activity, if it
remains commercially viable to support our national economic interests then we can count on it on times
of need. We have a great underpinning there that protects U.S. mariner jobs and protects our defense
requirements and takes us into the future.
The Joint High Speed Vessel is a program where we are looking to provide intra-theater lift. Inter-
theater, from one theater to another, is traditionally strategic sealift but [this program involves] how you
move goods and services in the Western Pacific or down in the Caribbean. We have found this can be
facilitated if we go down the road to building what is known as the Joint High Speed Vessel. We currently
have one of these vessels under hire, USS SWIFT (HSV 2). There is also the WESTPAC EXPRESS
which the Marines operate in the Western Pacific. We are going to put another charter out as a bridge
pending the procurement of seven or eight Joint High Speed Vessels for the Navy and the Army.
Our hospital ships have become pretty visible symbol of American diplomacy, generosity and
assistance over the course of the last five years. We initially deployed the hospital ship USNS MERCY
(T-AH 19) in response to the tsunami in Indonesia. That together with the USS ABRAHAM LINCOLN
carrier strike group provided much needed humanitarian assistance. The Commander Pacific Fleet got the
hospital ship underway the following year to return to some of those areas to continue the humanitarian
assistance work and she got underway with non-government doctors and dentists and optometrists from
Project Hope and Project Smile. USNS COMFORT (T-AH 20) just got back from a four month
deployment down in the Caribbean where it stopped at 12 countries, treated upwards of 92,000 patients,
handed out over 25,000 pairs of eye glasses to people that had never had a pair of eyeglasses before, went
ashore to do infrastructure improvements. They did everything from veterinary services to fixing people's
ailments that they never expected to get fixed in their lifetimes. Tremendous delivery of what we would
call a non-kinetic effect. To deliver that kind of effect in the far reaches of the world lets people know that
there is a different side to America than what you see on five minute sound bites on Algecera. We now
are looking at deploying one hospital ship per year for upwards of a six month deployment [on this type of
mission]. So, the future of the hospital ships is pretty fascinating. They are tankers that were converted
in 1976. The only downside to those particular ships is that they draw upwards of 33 feet of draft and it
is hard to get it into the nooks and crannies.
In many ways, Military Sealift Command's mission remains enduring but I will tell you that we are a
growth industry. We are a growth industry because DOD's mission is continuing to evolve and we in the
Navy [must] maintain an effective fighting force to handle major combat operations of the like similar to
Operation Iraqi Freedom and address new non-traditional significant threats. I'm here to tell you that
Military Sealift Command continues to support that mission along with our partners such as the Maritime
Administration, our global maritime infrastructure and our national maritime infrastructure.
SUPPLYING THE WORLDWIDE
SECURITY MARKET
ADMIRAL ROBERT D. REILLY,
COMMANDER MILITARY SEALIFT
COMMAND ON APPLYING BUSINESS
CONCEPTS IN THE NAVY’S LOGISTIC
OPERATION.
Edited by Richard H. Wagner
(Originally published by the Navy League of the United
States, New York Council in The Log, Spring 2008).
SECURITY MARKET
ADMIRAL ROBERT D. REILLY,
COMMANDER MILITARY SEALIFT
COMMAND ON APPLYING BUSINESS
CONCEPTS IN THE NAVY’S LOGISTIC
OPERATION.
Edited by Richard H. Wagner
(Originally published by the Navy League of the United
States, New York Council in The Log, Spring 2008).
| Its all about ships and more |
