ERP5 min readNetray Engineering TeamUpdated March 4, 2025

ERP for Defense Shipbuilding and Marine Manufacturing

ERP for defense shipbuilding and marine manufacturing has to manage programs that run five to fifteen years, cost hundreds of millions of dollars, and are audited continuously by the government customer. Work is organized by hull, zone, and block rather than by discrete finished goods, material is often government furnished, cost is reported through earned value management against a contract work breakdown structure, and every system touching covered defense information falls under DFARS 252.204-7012 and CMMC requirements. Generic manufacturing ERP configuration does not survive contact with this environment; the system has to be built around program accounting from the start.

Hull, Zone, and Block Work Breakdown Structures

Ships are built by zone and block, not by assembly tree. A structural block is fabricated, outfitted with piping, electrical, and HVAC while still accessible, then erected and joined. ERP has to model that as a work breakdown structure where cost and schedule roll up by hull, zone, block, and trade, while material demand is planned by block need date rather than by ship delivery date. The common failure is planning material against the ship delivery, which floods early build stages with parts that will not be installed for three years and starves the blocks that are actually being outfitted now.

Structure the WBS by hull, zone, block, and trade so cost and schedule report at the level the program manages
Plan material to block outfitting need dates rather than to ship delivery to avoid multi-year premature staging
Track rework and rip-out separately, since out-of-sequence work is a leading cause of shipbuilding cost growth
Maintain drawing and revision linkage at block level so trades are never working from superseded issue

Earned Value Management and Government Cost Reporting

Major defense contracts require an EVM system compliant with EIA-748 guidelines, with monthly contract performance reports showing budgeted cost of work scheduled, budgeted cost of work performed, and actual cost of work performed by control account. ERP is the source of actual cost, so timekeeping, material issue, and subcontract accrual all have to post to the right control account with the right charge code. A defense shipbuilder failing a DCMA integrated baseline review usually fails on data integrity, not on methodology: labor charged to the wrong control account or actuals lagging the performance report by weeks. Reconcile actuals to the control account structure weekly rather than at month end, since correcting a misallocation after the performance report is submitted is far more expensive.

DFARS, CMMC, and Controlled Unclassified Information

Defense shipbuilders and their suppliers handle controlled unclassified information in nearly every ERP record: drawings, specifications, part descriptions, and supplier data. DFARS 252.204-7012 requires implementation of the NIST SP 800-171 controls, and CMMC assessment requirements are now flowing into contracts across the defense industrial base. The ERP consequence is architectural. Hosting must sit in an authorized boundary, access must be limited to authorized personnel with logging that survives an assessment, and offshore support access must be eliminated rather than restricted by policy. On-premise or dedicated government cloud deployment is common for exactly this reason. Document the boundary and evidence artifacts before an assessment forces the exercise, because retrofitting logging and access control under schedule pressure is significantly more disruptive.

Map ERP data flows against NIST SP 800-171 controls and document the boundary before an assessment forces it
Eliminate offshore administrator and support access to ERP production data, including screen sharing sessions
Enable audit logging on record access and export, since assessors ask for evidence of who accessed what
Flow CUI handling requirements down to suppliers and record their compliance status in the vendor master

Government Furnished Property and Long-Cycle Material

Government furnished equipment and property must be tracked, reported, and reconciled separately from contractor-acquired material, with accountability records that satisfy FAR property administration requirements. At the same time, marine long-lead items such as main propulsion components, reduction gears, and specialty valves can carry lead times of two to four years, which means procurement decisions are made against a schedule baseline that will change several times before installation. ERP must therefore support GFP tracking, long-lead commitment against future hulls, and rescheduling that does not silently orphan committed material. Reconcile government furnished property records at least annually and keep long-lead commitments linked to the hull they support, so a schedule rebaseline reschedules material rather than orphaning it.

How Netray AI Agents Support Defense Shipbuilding Programs

Netray builds AI agents that run entirely on-premise for defense shipbuilders and marine suppliers using SyteLine, CloudSuite Industrial, or Infor LN, so CUI never leaves the accredited boundary. A charge integrity agent reviews labor and material postings against control account rules nightly and flags misallocations before they reach a contract performance report. A material readiness agent compares block outfitting schedules against on-hand and on-order material and produces a shortage list by block rather than by ship. A compliance agent maintains evidence artifacts mapped to NIST SP 800-171 controls so assessment preparation stops being a six-month scramble. Because everything runs inside your accredited boundary, the agents can read program cost and configuration data that could never be sent to an external service.

Frequently Asked Questions

What ERP do defense shipbuilders use for program cost tracking?

Most use a project or program-structured ERP where cost collects against a contract work breakdown structure by control account. Infor LN project accounting and SyteLine with project-linked jobs are both used in the marine supply base. The decisive capability is not the vendor name but whether labor, material, and subcontract actuals post reliably to the correct control account and charge code, because earned value reporting integrity depends entirely on that discipline.

How does CMMC affect ERP hosting for marine defense suppliers?

If your ERP stores controlled unclassified information, and for most defense suppliers it does, the hosting environment falls inside the assessment boundary. That means implementing the NIST SP 800-171 controls, restricting access to authorized personnel with durable audit logging, and eliminating offshore administrator or support access. Many suppliers deploy on-premise or in a dedicated government cloud region because a generic multi-tenant SaaS boundary is difficult to evidence during assessment.

Why is material planning different in shipbuilding?

Because work is organized by block and zone rather than by a single finished assembly. Material must be planned to block outfitting need dates, not to ship delivery, or the yard stages parts three years early while the block currently being outfitted sits short. Long-lead marine items such as reduction gears and propulsion components can take two to four years, so commitments are made against a baseline that will reschedule repeatedly before installation.

Key Takeaways

1Hull, Zone, and Block Work Breakdown Structures: Ships are built by zone and block, not by assembly tree. A structural block is fabricated, outfitted with piping, electrical, and HVAC while still accessible, then erected and joined.
2Earned Value Management and Government Cost Reporting: Major defense contracts require an EVM system compliant with EIA-748 guidelines, with monthly contract performance reports showing budgeted cost of work scheduled, budgeted cost of work performed, and actual cost of work performed by control account. ERP is the source of actual cost, so timekeeping, material issue, and subcontract accrual all have to post to the right control account with the right charge code.
3DFARS, CMMC, and Controlled Unclassified Information: Defense shipbuilders and their suppliers handle controlled unclassified information in nearly every ERP record: drawings, specifications, part descriptions, and supplier data. DFARS 252.204-7012 requires implementation of the NIST SP 800-171 controls, and CMMC assessment requirements are now flowing into contracts across the defense industrial base.

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