[Senate Hearing 108-241]
[From the U.S. Government Publishing Office]




                                                 S. Hrg. 108-241, Pt. 2

DEPARTMENT OF DEFENSE AUTHORIZATION FOR APPROPRIATIONS FOR FISCAL YEAR 
                                  2004

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

                                HEARING

                               before the

                      COMMITTEE ON ARMED SERVICES
                          UNITED STATES SENATE

                      ONE HUNDRED EIGHTH CONGRESS

                             FIRST SESSION

                                   ON

                                S. 1050

     TO AUTHORIZE APPROPRIATIONS FOR FISCAL YEAR 2004 FOR MILITARY 
ACTIVITIES OF THE DEPARTMENT OF DEFENSE, FOR MILITARY CONSTRUCTION, AND 
   FOR DEFENSE ACTIVITIES OF THE DEPARTMENT OF ENERGY, TO PRESCRIBE 
PERSONNEL STRENGTHS FOR SUCH FISCAL YEAR FOR THE ARMED FORCES, AND FOR 
                             OTHER PURPOSES

                               ----------                              

                                 PART 2

                                SEAPOWER

                               ----------                              

                             APRIL 1, 2003


         Printed for the use of the Committee on Armed Services


DEPARTMENT OF DEFENSE AUTHORIZATION FOR APPROPRIATIONS FOR FISCAL YEAR 
                         2004--Part 2  SEAPOWER


                                                 S. Hrg. 108-241, Pt. 2

DEPARTMENT OF DEFENSE AUTHORIZATION FOR APPROPRIATIONS FOR FISCAL YEAR 
                                  2004

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

                                HEARING

                               before the

                      COMMITTEE ON ARMED SERVICES
                          UNITED STATES SENATE

                      ONE HUNDRED EIGHTH CONGRESS

                             FIRST SESSION

                                   ON

                                S. 1050

     TO AUTHORIZE APPROPRIATIONS FOR FISCAL YEAR 2004 FOR MILITARY 
ACTIVITIES OF THE DEPARTMENT OF DEFENSE, FOR MILITARY CONSTRUCTION, AND 
   FOR DEFENSE ACTIVITIES OF THE DEPARTMENT OF ENERGY, TO PRESCRIBE 
PERSONNEL STRENGTHS FOR SUCH FISCAL YEAR FOR THE ARMED FORCES, AND FOR 
                             OTHER PURPOSES

                               __________

                                 PART 2

                                SEAPOWER

                               __________

                             APRIL 1, 2003


         Printed for the use of the Committee on Armed Services


                     U.S. GOVERNMENT PRINTING OFFICE
87-324 PDF                 WASHINGTON DC:  2004
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                      COMMITTEE ON ARMED SERVICES

                    JOHN WARNER, Virginia, Chairman

JOHN McCAIN, Arizona                 CARL LEVIN, Michigan
JAMES M. INHOFE, Oklahoma            EDWARD M. KENNEDY, Massachusetts
PAT ROBERTS, Kansas                  ROBERT C. BYRD, West Virginia
WAYNE ALLARD, Colorado               JOSEPH I. LIEBERMAN, Connecticut
JEFF SESSIONS, Alabama               JACK REED, Rhode Island
SUSAN M. COLLINS, Maine              DANIEL K. AKAKA, Hawaii
JOHN ENSIGN, Nevada                  BILL NELSON, Florida
JAMES M. TALENT, Missouri            E. BENJAMIN NELSON, Nebraska
SAXBY CHAMBLISS, Georgia             MARK DAYTON, Minnesota
LINDSEY O. GRAHAM, South Carolina    EVAN BAYH, Indiana
ELIZABETH DOLE, North Carolina       HILLARY RODHAM CLINTON, New York
JOHN CORNYN, Texas                   MARK PRYOR, Arkansas

                    Judith A. Ansley, Staff Director

             Richard D. DeBobes, Democratic Staff Director

                                 ______

                        Subcommittee on Seapower

                  JAMES M. TALENT, Missouri, Chairman

JOHN McCAIN, Arizona                 EDWARD M. KENNEDY, Massachusetts
SUSAN M. COLLINS, Maine              JOSEPH I. LIEBERMAN, Connecticut
LINDSEY O. GRAHAM, South Carolina    JACK REED, Rhode Island

                                  (ii)
?

                            C O N T E N T S

                              ----------                              

                    CHRONOLOGICAL LIST OF WITNESSES
 Navy and Marine Corps Development Priorities, Procurement Priorities, 
                     and Navy Shipbuilding Programs
                             april 1, 2003

                                                                   Page

Clark, Adm. Vernon E., USN, Chief of Naval Operations............     7
Hagee, Gen. Michael W., USMC, Commandant, United States Marine 
  Corps..........................................................    18
Young, Hon. John J., Jr., Assistant Secretary of the Navy for 
  Research, Development, and Acquisition.........................    46
Mullen, Vice Adm. Michael G., USN, Deputy Chief of Naval 
  Operations for Resources, Requirements, and Assessments........    59

                                 (iii)

 
DEPARTMENT OF DEFENSE AUTHORIZATION FOR APPROPRIATIONS FOR FISCAL YEAR 
                                  2004

                              ----------                              


                         TUESDAY, APRIL 1, 2003

                               U.S. Senate,
                          Subcommittee on Seapower,
                               Committee on Armed Services,
                                                    Washington, DC.

 NAVY AND MARINE CORPS DEVELOPMENT PRIORITIES, PROCUREMENT PRIORITIES, 
                     AND NAVY SHIPBUILDING PROGRAMS

    The subcommittee met, pursuant to notice, at 2:33 p.m. in 
room SR-232, Russell Senate Office Building, Senator James M. 
Talent (chairman of the subcommittee) presiding.
    Committee members present: Senators Talent, Warner, 
Collins, Kennedy, and Reed.
    Majority staff member present: Thomas L. MacKenzie, 
professional staff member.
    Minority staff members present: Daniel J. Cox, Jr., 
professional staff member; Creighton Greene, professional staff 
member; and Maren R. Leed, professional staff member.
    Staff assistants present: Michael N. Berger and Andrew 
Kent.
    Committee members' assistants present: James P. Dohoney, 
Jr., assistant to Senator Collins; Lindsey R. Neas, assistant 
to Senator Talent; and Mieke Y. Eoyang, assistant to Senator 
Kennedy.

     OPENING STATEMENT OF SENATOR JAMES M. TALENT, CHAIRMAN

    Senator Talent. We will convene the hearing. I want to 
welcome our distinguished witnesses this afternoon as the 
Seapower Subcommittee meets to consider how the fiscal year 
2004 budget request and the future years defense program (FYDP) 
supports Navy and Marine Corps development and procurement 
priorities in our first panel, with the second panel focusing 
on current and developmental Navy shipbuilding programs.
    I would be remiss, however, if I did not first state my 
support for and gratitude to our men and women in uniform, many 
of whom are in harm's way as they participate in Operation 
Iraqi Freedom, Operation Enduring Freedom, the global war on 
terrorism, and in other outposts throughout the world. Their 
dedication and courage are an inspiration to us all and our 
thoughts and prayers are with them and with their families. I 
especially want to express our sympathy and support for the 
families of those who have lost their lives or been wounded in 
the defense of this great Nation.
    I also want to thank Senator Kennedy, whose leadership on 
this subcommittee has for many years ensured that our Navy and 
Marine Corps team has become the most capable and ready 
maritime expeditionary team in the world. I look forward to 
serving with him in the same bipartisan fashion that this 
subcommittee has been known to practice in the past.
    For our first panel today, we are pleased to have Admiral 
Vernon Clark, the Chief of Naval Operations (CNO), and General 
Michael Hagee, the Commandant of the Marine Corps. Our sailors 
and marines whose training and equipment you are responsible 
for are performing superbly. It is clear that investments in 
force readiness over the last several years have paid off. The 
purpose of this panel, though, is to focus on those things that 
will enable sailors and marines in the decades ahead to 
accomplish their missions equally as well.
    The Department's quadrennial defense review (QDR) issued in 
fiscal year 2001 established certain force structures as, ``the 
baseline from which the Department will develop a transformed 
force for the future.'' The capabilities possessed by this 
force structure were assessed to present moderate operational 
risk, which could be raised to high risk under certain 
combinations of warfighting and smaller scale contingency 
scenarios.
    For the Navy, force structure is 12 aircraft carriers, 12 
amphibious ready groups, 55 attack submarines, and 116 surface 
combatants. For the Marine Corps, this force structure is four 
divisions, four air wings, and four service support groups, 
with three active and one Reserve in each case.
    It should be noted that the force structure supported by 
the fiscal year 2004 budget and the future years defense 
program does, in fact, go below these QDR numbers in certain 
categories. This follows a number of years during the decade of 
the nineties when critical requirements of the QDR were 
underfunded.
    At the same time, the operational tempo of our force is 
extremely high, and world events may require continuing high 
operational tempo in the years ahead. I believe it is critical 
that our shipbuilding rates are increased in light of this 
reality.
    The fiscal year 2004 budget request includes funding for 
seven new ships. This is an important first step, with two more 
ships than were projected last year, but I want to emphasize 
that it is only a first step. The ships that are authorized and 
appropriated for fiscal year 2004 will not be delivered for 
quite a few years. Yet in the near future the Navy is 
accelerating the retirement of older ships, with the fleet 
scheduled to reach a level of only 291 ships in fiscal year 
2006.
    I am aware of the increased capabilities of the ships now 
being developed and built, but I am concerned about the level 
of risk being assumed by decommissioning ships earlier than 
originally planned.
    CNO, your Seapower 21 vision conveys the vision of a Navy 
that will be sea-based, deployed worldwide, operating near 
foreign shores, projecting defense for the United States and 
allied forces, and prepared to strike and remain engaged 
throughout a conflict. This vision is based on the pillars of 
Sea Strike, Sea Shield, and Sea Basing. General Hagee, it is 
this sea-basing concept that appears to be the linchpin for the 
Marines' expeditionary maneuver warfare concept of operations.
    You are both to be congratulated on recent examples of how 
your Services are complementing one another to gain efficiency. 
An example of this is the tactical air integration initiative. 
It is important to gain efficiencies wherever possible to 
maximize the buying power of each taxpayer dollar. It is 
critical, though, to ensure the required increases in readiness 
which are necessary if this initiative is to succeed are fully 
funded.
    Again, Admiral Clark and General Hagee, thank you for 
taking time from your busy schedule to be with us this 
afternoon. I look forward to your testimony. At this point I 
was planning to defer to Senator Kennedy for his opening 
statement, as well as Senator Warner, chairman of our 
committee.
    Senator Warner. Let me state for the record that Senator 
Kennedy is the longest-serving member on the committee now on 
this subcommittee. He has broke my record because I have had 
two terms as chairman and had to pull back from this 
subcommittee. So I shall make a statement after he is finished 
his opening.
    Senator Talent. I recognize the distinguished Senator from 
Massachusetts.

             STATEMENT OF SENATOR EDWARD M. KENNEDY

    Senator Kennedy. Thank you very much. I look back over that 
history. I will never forget, as a young member of this 
committee and with my distinguished colleague there, where we 
went into an important negotiation between Massachusetts and 
the State of Virginia, and out of that negotiation came an 
aircraft carrier for John Warner and I got a band up at Fort 
Evans, just about a year before it was closed. So I always keep 
an eye on that smooth-talking Virginia gentleman who is our 
chairman.
    Senator Talent. Senator, when Massachusetts and Virginia 
get together, there is nothing for the rest of us.
    Senator Kennedy. That is right.
    I want to thank Senator Talent. As he mentioned, we have 
had a good opportunity over a period of years of working very 
closely together in this area in terms of force projection and 
responsibilities in the building of ships in the Navy and the 
Marine Corps. We have worked very closely with the full 
committee, both Republican and Democrat alike. I welcome our 
new chairman in this. I understand from talking to a number of 
our colleagues he has been out working hard in preparation for 
this responsibility and I am looking forward to working very 
closely with him.
    Senator Talent. Thank you.
    Senator Kennedy. As always, it is good to be with an old 
friend who is a tireless chairperson and who has had an 
extraordinary public career. But I do not think there is anyone 
that has been more committed to the Armed Forces of our country 
and the security of our Nation than John Warner. So it is good 
to have him here again with us on this committee.
    Senator Warner. I thank my colleague very much. This is 
against the background, when I was Secretary, I closed the 
Boston Naval Shipyard.
    Senator Kennedy. That was nice, too. [Laughter.]
    Wondering why I am still around, as I listen.
    So in any event, but in a serious way, we want a hearing 
that has the spokespersons for the Navy and the Marine Corps 
here to again express our enormous appreciation and incredible 
thanks to all of those that are under your command and doing so 
much for the interests of our Nation. We may have had some 
differences in the Senate in terms of how we get to where we 
are, but there is absolutely no reservation or hesitancy 
whatsoever in giving all and full and complete support and 
appreciation for the extraordinary efforts that are 
continuously being made and the extraordinary versatility and 
pressure they are under, as well as the courage, bravery, and 
the challenges. Whether it is sandstorms or the heat today that 
is affecting them, we are enormously grateful.
    I want to say that we are enormously concerned on this 
subcommittee in working with the Department of the Navy to 
address some of the very important issues like improvement of 
fire support capability. We will come back to that issue in 
terms of the building and the construction of ships, including 
the organic Marine Corps fire support and Navy shore fire 
support. This has been an ongoing and continuing issue. As for 
the augmenting of our mine countermeasures capability, both for 
sea and on land, we know that there has been some progress 
made, but there have been some recent decisions I would like to 
get some explanation on.
    I want to note for the record that this subcommittee has 
taken the lead on ensuring many of the existing capabilities. 
The hearing will focus on the vision of the Navy and the 
operational concepts for the future and how the budget before 
Congress supports that vision. I continue to believe the 
fundamental problem we must deal with is achieving the proper 
level of modernization to support tomorrow's readiness and with 
the sufficient modernization aimed at the proper objectives. We 
could be faced with the situation of having forces without 
necessary capabilities or we could be in a position of trying 
to support theater combatant commanders' requirements with 
forces that are too small to meet their requirements.
    We all know that our men and women in the Armed Forces will 
respond admirably in any crisis, just as they have been doing 
in support of the operation in Afghanistan and now Iraq. 
However, over the long term, we cannot count on them making up 
for the inadequate shipbuilding investments by asking crews to 
stay out longer, much longer deployments, and less time at home 
with families. This obviously is related to the decisions that 
are going to be made in terms of the reductions in the ships, 
the guided missile destroyers (DDGs) now, with the idea of 
building shipbuilding in the future and the kinds of pressures 
that that is going to be putting on the crews.
    Everyone can agree that we will continue to need strong 
Navy Forces to protect our interests in many sea areas overseas 
and within that context there are a number of investment issues 
we need to consider today.
    So I thank the chairman for calling this hearing and look 
forward to the testimony.
    Senator Talent. I thank the Senator.
    Mr. Chairman.
    Senator Warner. Thank you, Mr. Chairman. You have no idea 
of the importance and the pleasure that you will gain from 
service on this committee, and to start out as chairman in your 
first year in the Senate is a very special, noteworthy 
accomplishment.
    Senator Talent. It is a humbling honor and I am grateful 
for it.
    Senator Warner. I say to my dear friend of so many years, 
Senator Kennedy, I know well your love for the Navy, the love 
for the sea, that of your family, and the long and 
distinguished association with the United States Navy.
    I join the chairman and Senator Kennedy in expressing our 
profound gratitude to the men and women of the Armed Forces, 
particularly those under your respective commands, and how 
magnificently they are performing today. With a sense of 
humility, this subcommittee looks back on its work in providing 
the weapons, the ships, the aircraft, with which they are now 
in the most professional and courageous manner discharging 
their duties on behalf of the cause of freedom.
    But this subcommittee is very proud of our record of a 
quarter of a century that I have been on. We have steadfastly 
stood with the need to modernize the Services. We are very 
proud, certainly, Admiral Clark, of your personal guidance on 
this shipbuilding account.
    I recall several years ago when we did not have the funds 
and you had to make the tough decision to take the equipment 
that you had, whether it is on land, sea, or in the air, and 
put it in first class shape before new acquisitions. That was a 
decision that was received with mixed emotions within the 
uniformed ranks and here in Congress. But you were steadfast, 
and now this year there is a very clear and decisive upturn in 
the procurement accounts for shipbuilding. I think you can take 
a lot of personal credit, which is not your style, but you are 
deserving of a lot of personal credit.
    General Hagee, you follow one of the most distinguished men 
ever to serve as Commandant of the Marine Corps and you will 
indeed add your chapter to the Corps in maintaining it ready, 
well-equipped, and modernized. But throughout history, the 
Corps has always done its very best with perhaps less than the 
best. Perhaps under your watch you can turn that around and get 
just as good equipment as the others.
    I must say, General Hagee, I have just been handed a note, 
a second marine has lost his life from the State of Virginia, 
and you and I have a very special feeling about that.
    Admiral, I want to say about the CVN-21 that you fought 
steadfastly. You have full funding now for scheduled outyears 
2007 and 2008. That, like the predecessor carriers, will be 
constructed at Newport News Shipbuilding, a yard with which I 
have had 33 years of association. I first came to know that 
yard under President at that time Freeman, when I was Under 
Secretary of the Navy beginning in 1969. I think it has turned 
out extraordinarily high quality products through the years and 
will continue to do so under the current administration.
    I have not had the opportunity to talk to a certain 
individual in the Department of Defense who has expressed some 
concerns about the relationship between the Newport News Yard 
and the Department of the Navy, but I intend to do so. But in 
the mean time, I hope you in your remarks can address the issue 
as to whether or not you find any improprieties along those 
lines, because it is important that Congress in its oversight 
capacity address those situations.
    Having said that, I thank you, Mr. Chairman, and the 
ranking member and other members, for indulging my few minutes 
here with this distinguished subcommittee.
    Senator Talent. We are grateful to you for coming by, Mr. 
Chairman. Thank you for those comments.
    Senator Reed, do you have an opening statement?
    Senator Reed. Mr. Chairman, just to thank you for convening 
this hearing. I wish you well as you take on this important 
responsibility. I have a great deal of respect and regard for 
both Admiral Clark and General Hagee and I await their 
testimony eagerly. Thank you and the forces they lead.
    Senator Talent. Thank you, Senator.
    Senator Collins.
    Senator Collins. Thank you, Mr. Chairman.
    First of all, I want to congratulate you on your 
chairmanship and admit for the record that I am insanely 
jealous they picked you rather than I as the chair of the 
Seapower Subcommittee. But I look forward to working very 
closely with you to ensure that our Navy has the resources it 
needs.
    I have enjoyed working with both Admiral Clark and General 
Hagee. I very much appreciate the commitment to much needed 
shipbuilding that is in this budget. General, I want to tell 
you that on Saturday I attended a memorial mass for two marines 
from Maine who lost their lives in the helicopter crash the 
very first days of this conflict. The presence of the marines 
who attended this mass meant so much to the family. When the 
marine presented the folded flag to the mother of the 
helicopter Captain Aubin who was killed, there was just not a 
dry eye in the entire church. It was extremely moving. I know 
that the participation of the marines meant a great deal to the 
family. So I just wanted to pass that on to you.
    Our thoughts are all with the troops in the Persian Gulf 
and we support you wholeheartedly. Thank you.
    [The prepared statement of Senator Collins follows:]

             Prepared Statement by Senator Susan M. Collins

    Thank you Mr. Chairman. As we begin today's hearing, it is 
appropriate for us to take a moment to recognize the courage and 
sacrifice of our forces currently engaged in combat in Iraq. In doing 
so, I also believe that it is important for us to remember that the 
work of this subcommittee is critically important in ensuring that our 
Armed Forces have the resources they need to fight and win our Nation's 
wars. The investments we make today in shipbuilding serve to shape the 
size and capabilities of our fleet for decades to come. That is why I 
have been so troubled in recent years by the dangerously low ship 
construction budgets that have been submitted.
    The fiscal year 2004 budget submission, however, turns the corner 
on shipbuilding. I would like to express my appreciation to all of our 
witnesses today for their hard work in producing this budget. It 
includes over $12 billion for seven ships, including three DDG-51 
destroyers, a Virginia-class submarine, an LPD-17, and three dry cargo 
ships. The fiscal year 2004 budget submission also includes substantial 
investments in the next generation of vessels. It includes over $1 
billion in research and development funding for the DD(X) destroyer, 
and $158 million for the Littoral Combat Ship. These funds, combined 
with the continuing development of the CVN-21 aircraft carrier, will 
help to transform the Navy to deal with threats as they emerge in the 
coming decades.
    Again, I applaud the Navy for including much needed increases in 
the shipbuilding account. However, we must now deal with the legacy 
left behind by years of inadequate funding for ship construction. Even 
with 7 new ships budgeted for fiscal year 2004, our fleet will still 
dip below 300 ships. I have asked our first witness, Admiral Clark, on 
a number of occasions for his views on the proper size of our fleet. As 
recently as February 25 of this year, Admiral Clark has expressed his 
belief that a fleet of 375 ships would adequately meet our national 
security requirements. Clearly, we have a great deal of work to do to 
meet that goal.
    In the coming years, we also face a significant challenge in the 
transition from existing ship programs to the full scale production of 
next generation vessels. In particular, I have very serious concerns 
about the Navy's plan for the procurement of major surface combatants 
after fiscal year 2005. As it current stands, the Navy only plans to 
procure one DD(X) destroyer in fiscal year 2006, and one in fiscal year 
2007. In fiscal year 2008, the Navy would procure two DD(X) destroyers. 
Thus, from fiscal year 2006 through fiscal year 2008, there will be 
only four major surface combatant ship constructions. As our witnesses 
are aware, this is wholly inadequate to sustain our Nation's ship 
construction industrial base.
    I look forward to working with the witnesses on both of today's 
panels on these issues.

    Senator Talent. Thank you, Senator.
    Senator Warner. Would the chair yield to me just a moment 
to clarify something?
    Senator Talent. Sure.
    Senator Warner. For the record, this distinguished Senator 
from Maine would be in that chair had it not been that her peer 
group saw fit to have her be the chairman of a full Senate 
committee, the Government Affairs Committee. Under our rules, 
quite appropriately, we like to distribute the opportunities 
among members. But I did not want you to think that the 
chairman passed you over.
    Senator Collins. Thank you, Mr. Chairman, for that 
clarification.
    Senator Talent. Mr. Chairman, that is yet another reason I 
am grateful for Senator Collins having received that honor. 
[Laughter.]
    Senator Kennedy. We have not accepted those rules. We still 
use old seniority, and I do not want Jack Reed and others to be 
hearing about this. [Laughter.]
    Senator Warner. Mr. Chairman, we have a meeting of the 
Intelligence Committee at this point in time, presided over by 
Senator Roberts, and my attendance is needed there. So I will 
not be present for the testimony.
    Senator Talent. Again, thank you, Mr. Chairman.
    Senator Warner. Thank you for this opportunity.
    Senator Talent. I want to welcome Admiral Clark and General 
Hagee. Admiral Clark, we do not need any long introductions. We 
are waiting to hear your statement and looking forward to it.

    STATEMENT OF ADM. VERNON E. CLARK, USN, CHIEF OF NAVAL 
                           OPERATIONS

    Admiral Clark. Thank you very much, Chairman Talent, 
Chairman Warner, Senator Kennedy, and other distinguished 
members of the committee. It is a privilege to be here with you 
this afternoon and be able to represent the men and women 
serving in the Navy.
    I also want to say that I am absolutely delighted to be 
able to appear along side the Commandant of the Marine Corps, 
my number one joint partner and the leader of a corps that is 
performing brilliantly in the theater of operations and the 
leader of an organization that is bringing the Navy-Marine 
Corps team closer together than we have ever been in our 
history.
    There are those who have served in times past that 
absolutely do not even understand the nature of the 
relationship between the United States Marine Corps and the 
United States Navy. I want to say that I am absolutely honored 
to be able to serve along side an individual like General Mike 
Hagee.
    Of course, we are here today to discuss the investment 
strategy for the future, for fiscal year 2004. Before I do 
that, I just want to bring you up to date, as I did in the full 
committee, and to tell you that today--this morning's number, 
Mr. Chairman--54 percent of our Navy is forward deployed on the 
point. Different mixes are deployed in different ways. Seventy 
percent of the amphibious structure is deployed taking General 
Hagee's marines to the point. Seven of my aircraft carriers are 
deployed. Seventy percent of my air wings are deployed. They 
are on the tip of the spear and they are carrying out the 
President's orders and direction.
    Of course, most of those numbers are engaged in Operation 
Iraqi Freedom, striking the enemy, conducting close air support 
in support of land forces, clearing the sea lanes, bringing in 
supplies and logistics, and protecting our joint coalition 
forces on land and at sea.
    On the day that we commenced hostilities, I sent a note to 
Secretary Rumsfeld and I told him that this Navy today is more 
ready than I have ever seen it in my career. I have never seen 
it this ready. As I indicated before, we have a major piece of 
our Navy forward, proving it every day.
    I would say that the numbers that I cited for you, in my 
experience in previous times that I have served in the Navy our 
ability to surge this kind of force forward absolutely would 
not have been possible. Our readiness would not have been up to 
it.
    I want to say that I appreciate Chairman Warner's comments 
about the investment that the leaders of America have made in 
our readiness. That is the way I phrased it. This body and the 
support of the Seapower Subcommittee made the investments 
possible so that we could be realizing the incredible readiness 
that we are experiencing right now. The result is that we are 
capable, we are on the point, and we have a lethal force and a 
decisive combat force.
    So the challenge for us is, how do we keep it that way? How 
do we sustain the gains in current readiness while focusing on 
the future and transformation? I believe that is the whole 
focus of our time here together.
    Last summer, Mr. Chairman, as you indicated, we laid out a 
vision for the future called Seapower 21. I will not go into 
the details this afternoon, but I have highlighted it in my 
written testimony. I will just say it is about projecting 
offense, Sea Strike; it is about projecting defense, Sea 
Shield; it is about operating from the Sea Base--the largest 
maneuver space on the face of the Earth. That is the world's 
oceans. It is about having the freedom of maneuver, the freedom 
of operations, from the maritime domain.
    Let me just talk briefly about what we are doing in Sea 
Strike as we speak. The front end of Sea Strike is the United 
States Marine Corps and General Hagee will talk about the 
specifics of their contribution. But the leading edge of our 
ability to project offense starts with the partnership between 
the Navy and the Marines, and it could not be more visible than 
it is right now.
    Of course, it is about long-range precision firepower. We 
started this conflict with 1,100 Tomahawk Land Attack Missiles 
(TLAMs) in theater, and of course many of those have been 
expended.
    It is about long-range tactical air (TACAIR). It is about 
time-sensitive joint Air Force and Navy strikes on Iraqi 
leadership.
    It is about Sea Shield. It is about projecting defense. 
Missile defense is not a figment of our imagination. The last 
year we have had an incredible series of successes, a great 
year in test and evaluation and research and development 
leading towards missile defense. I would tell you that one of 
our research and development (R&D) configured platforms has in 
fact been tracking the missiles and has made initial contact on 
some of the missiles that have been shot down by the Patriot 
missile batteries in theater as we speak.
    So it is about output, the joint Army and Navy missile 
defense team. Of course it is about sea basing and exploiting 
that operational independence that I talked about. These are 
just examples.
    This year's investment strategy is committed to building 
toward the vision of tomorrow. I just want to say very briefly 
a few of those platforms that are so important to us. Multi-
mission destroyer (DD(X)) is the heart of our future and our 
family of ships that includes next-generation cruiser (CG(X)) 
and the Littoral Combatant Ship (LCS). It involves incredible 
technological advances and development. Admiral Clark's view is 
that it will frame the future of the Navy for the next 30 
years. It will help determine what our ships are all about.
    The LCS, I believe, is critical to Sea Shield, designed 
from the keel up to dominate the battle space in the near-land 
area--the littorals--built with plug and play technology in 
mind from the beginning, conceived with unmanned vehicles in 
mind on the surface, in the air, and under the surface.
    CVN-21, the first new carrier design in 40 years. I am so 
pleased that this ship and this new development is funded in 
the fiscal year 2004 submit.
    LPD-17, absolutely critical and integral to the Navy-Marine 
Corps partnership, and that supports new Marine capabilities 
like Advanced Amphibious Assault Vehicle (AAAV) and MV-22 and 
the improved Landing Craft Air Cushion (LCAC).
    The Virginia-class submarine, the most advanced multi-
mission submarine ever built anywhere in the world. I mentioned 
missile defense.
    So the question is how do we get there? Well, we have to 
find the resources. So I will just say, as I did before the 
full committee, that I am committed to finding the efficiencies 
so that we are part of the process of discovering the resources 
to create our future.
    I will tell you that I understand that there will be debate 
about some of the judgments and the decisions that we have 
made. There have been tough choices such as the accelerated 
retirement of 11 ships and 70 aircraft and the divestment of 
over 50 systems. I will tell you that the decision to do that 
was difficult. I believe with all of my heart that those were 
the right decisions and I am anxious to discuss them with you.
    We are looking at exciting and innovative ways to capture 
the future and I hope that we get a chance to talk about some 
of them including: innovative manning experiments, Optimum 
Manning, and Sea-Swap, led by the commander of our surface 
forces. Two of the ships involved in those pilot experiments 
have been conducting combat operations in the theater of 
operations. They are happening right now. They are not things 
that we are talking about we are going to do some day. We are 
doing them right now.
    So, Mr. Chairman and subcommittee members, in summary, the 
Navy of the United States of America is ready and it is 
performing. It is forward deployed, it is on scene, it is 
carrying out Operation Iraqi Freedom along with the sister 
services right now. We are focusing on the future while we are 
executing today.
    I just want to say that the young men and women in your 
Nation's Navy are serving with distinction and I am 
extraordinarily proud to be given the opportunity to serve as 
the leader of this institution.
    I do want to thank you. As Chairman Warner said, this 
subcommittee has been involved through the years in significant 
work that has led to the kind of Navy that we have today. I 
want you to know that the men and women in uniform appreciate 
that kind of support and the leadership of this committee.
    Mr. Chairman, I thank you for the chance to be with you 
today and I look forward to your questions.
    [The prepared statement of Admiral Clark follows:]

            Prepared Statement by Adm. Vernon E. Clark, USN

    Mr. Chairman and members of the subcommittee, I appreciate this 
opportunity to appear before you. I am happy to report to you that the 
readiness of today's forces has never been better. The results you've 
seen these last few days represent the return on both the investment--
and the wise judgments--of Congress and the American people in 
providing for our Navy. I speak for the entire fleet in thanking you 
for your exceptional and continuous support.
    In my statements to the full committee, I outlined the Navy's 
overall strategic rationale for this year's proposed budget. In this 
statement, I will focus my comments on issues of particular relevance 
to this subcommittee.

                     YOUR NAVY--TODAY AND TOMORROW

    Today, there are 164 ships on deployment, over half of the Navy; 
this includes 7 of 12 aircraft carriers, and 9 of our 12 big deck 
amphibious ships (LHA/LHD). They are deployed in support of the 
Nation's interests in the Persian Gulf, the Mediterranean, the Indian 
Ocean, and the Western Pacific.
    In addition, over 75 percent of the Military Sealift Command's 
(MSC) total force is operating in direct support of the war on 
terrorism and Operation Iraqi Freedom (OIF). Over 130 ships, including 
all 19 of our newest large, medium-speed, roll-on/roll-off (LMSR) ships 
and all 8 of our fast sealift ships have been activated; when combined 
with other MSC-owned or chartered shipping, MSC has more than 210 ships 
committed to the sealift of the joint team, the replenishment of Navy 
carrier battle groups and amphibious ready groups, and on special 
mission assignments around the globe.
    All of these forces are around the world, around the clock, 
operating with great effect from the vast maneuver area that is the 
world's oceans and seas. As the 21st century continues to unfold, it is 
clear your Navy will continue to be a vital part of America's defense.
    In this age of unpredictability, with transnational terrorists and 
regional aggressors pursuing asymmetric strategies, our Navy's ability 
to sustain a high level of operations and swiftly respond to a broad 
range of scenarios will require naval forces that are widely dispersed, 
fully netted, and seamlessly integrated with joint forces.
    These are the capabilities that are central to our Sea Power 21 
vision--described in my statement before the full committee--and the 
capabilities we are pursuing in this year's budget.

                  OUR FISCAL YEAR 2004 BUDGET REQUEST

    Last year, we made plain that current readiness and manpower were 
our focus and that we would get after future readiness--the ships, 
aircraft, and capabilities needed for tomorrow's Navy--this year.
    We have benefited enormously from the $7.1 billion added to our 
current readiness accounts in the last 3 years. It has produced the 
most ready force in our history, helped us create a surge capability, 
and reduced our immediate operational risk. At the same time, we are 
enjoying the highest retention in our history; our leaders in the fleet 
have helped us dramatically reduce our manning gaps at sea. Without 
question, our focus on these efforts has been a key contributor to both 
our success in the global war on terrorism and in our effort to disarm 
the Iraqi regime.
    This budget request sustains these current readiness and manpower 
gains. More importantly, it brings our guns to bear on our future 
readiness to enhance the Sea Power 21 capabilities that will be core to 
our success: agility, precision, reach, persistence, and decisive 
power.
    Sea Power 21 and the global concept of operations (CONOPs) will 
provide our Nation the kind of innovation and force structure that will 
enable our Navy to operate more effectively as a netted, distributed, 
joint force. Our vision is more than just hardware; it provides the 
framework to organize, integrate, and transform our Navy to realize 
opportunities and navigate the challenges ahead.
    I discussed many of these in my earlier statement to the full 
committee; innovations like our Optimal Manning experiment and Sea-Swap 
programs are part of the Sea Power 21 process, and they are reaping 
benefits already. U.S.S. Milius (DDG-69) for example, achieved a 23-
percent reduction in crew size and focused their combat capability; 
Milius was one of the combatants that dispatched Tomahawk cruise 
missiles in OIF.
    Our Navy-Marine Corps Tactical Aviation Integration plan brings our 
Navy and Marine Corps team closer together, enhancing interoperability 
and teamwork, and at the same time improves our tactical aviation 
affordability for the future. Without question, we will continue these 
kinds of innovations, to improve both our effectiveness and our 
efficiency.
    This year's budget request did involve some tough choices--the 
right choices--to balance our current and future risk and to prepare 
for both today and tomorrow. Sea Power 21 honed our ability to make 
these choices by focusing our investments on both the right 
capabilities--Sea Strike, Sea Shield, and Sea Basing--and against the 
right capability gaps--the tough, near-land environment where potential 
enemies will come after us in the unified battlespace of the future.
    Our direction to Navy leadership was to weigh the risks, divest 
ourselves of programs and systems that did less to enhance our 
warfighting capability, and begin to realize the potential of Sea Power 
21. We looked hard at older systems with lesser capabilities, limited 
growth potential and high operating and support costs and ultimately 
decided to accelerate the retirement of 11 ships and 70 aircraft and 
divest more than 50 systems. We found these preferred accelerated cuts 
in our least capable type-model series would produce $1.2 billion 
across the FYDP for recapitalization, modernization of other platforms, 
and investment in Sea Power 21--without compromising our ability to 
accomplish our missions.
    Accelerating the retirement of the Spruance-class destroyers, the 
baseline one Ticonderoga-class cruisers, and selected Oliver Hazard 
Perry-class frigates was a difficult decision--but the right decision--
and one based on the capabilities needed for both today's and 
tomorrow's threat environment. These ships are significantly less 
capable and survivable in the near-land threat environments we'll see 
in the future. They require additional manning to operate because they 
lack many of the optimal manning technologies of our newer ships. Most 
importantly, they provide either redundant or significantly less 
effective strike and air defense capabilities than our other platforms. 
In every case, continuing to operate these ships for the few years 
remaining in their service lives adds little to our aggregate 
warfighting posture and hampers our ability to move forward with 
critical recapitalization and transformation efforts.
    We recognize that the total number of ships in the inventory has a 
quality all its own; after all, one ship can only be in one place at a 
time. However, as we wargame and analyze the risks inherent in 
tomorrow's threat environments, it is already becoming clear that the 
type and mix of ships in the future fleet is critically important to 
the success of future campaigns--not just for the Navy, but for the 
joint force. Accelerating the retirement of these selected ships adds 
little risk in the near-term, and helps significantly in facilitating 
our transition to the numbers, type, and mix of ships we will require 
for the range of missions we anticipate in the 21st century--reducing 
our future risk.

          INVESTING IN SEA POWER 21--CAPABILITIES TO PROGRAMS

    In this year's budget, there is a clear link between the 
capabilities our Navy needs and the programs in which we are investing. 
Sea Power 21 prescribes a strategy-to-concepts-to-capabilities 
continuum by which our forces will exploit the opportunities that 
precision, reach, and connectivity give us.
    Our fiscal year 2004 submission requests seven new construction 
ships--two more than last year--and several conversions. This 
fundamentally goes to our Sea Basing vision; after all, the fleet is 
the foundation of our ability to project both offensive fires and 
defensive protection. Our immediate fiscal year 2004 investment of 
$12.2 billion in shipbuilding and conversion includes:

         Three Arleigh Burke-class DDGs. These ships, and their 
        robust strike, undersea warfare and Aegis air defense 
        capabilities will be a mainstay of our future Carrier Strike 
        Groups (CSG), Expeditionary Strike Groups (ESG), and Missile 
        Defense Surface Action Groups for many years to come.
         One Virginia-class SSN. The best multi-mission 
        submarine ever built for littoral and regional operations will 
        be configured to conduct mining and mine reconnaissance, 
        unmanned vehicle operations, Special Operations Forces (SOF) 
        insertion/extraction, battle group support, anti-submarine 
        warfare, intelligence-collection and surveillance missions, 
        sea-control, and land attack; vastly improving payload 
        flexibility, connectivity, and joint interoperability for our 
        undersea forces.
         One San Antonio-class LPD for enhanced lift and 
        survivability in our future Expeditionary Strike Groups.
         Two Lewis and Clark-class T-AKEs to sustain our more 
        widely dispersed operating fleet in the future. These ships 
        will include upgraded material handling and transfer systems 
        and multi-purpose convertible cargo holds for dry stores or 
        ammunition. They will be able to double both delivery load 
        weight and rates of transfer.
         The remaining two of four planned SSBN-to-SSGN 
        conversions; to more fully distribute our joint, offensive 
        power with these independent, clandestine strike assets. The 
        first SSGN is expected to be fully operational in fiscal year 
        2007.
         The first ship in our Cruiser Conversion program.
         Service life extension for three Landing Craft Air 
        Cushioned vehicles.

    We are committed to developing the kind of level stream of 
investment in our shipbuilding accounts needed to deliver on our Sea 
Basing structure and Global CONOPs operating vision. Multiyear 
procurement, economic order quantity, and carefully implemented 
incremental funding practices help deliver long-lead materials in a 
cost-effective manner, stabilize the production path, and in our view, 
reduce per unit cost of ships and increase the shipbuilding rate. We 
are leveraging these practices in many of our ship and aircraft 
procurement programs and support their continued use in the future.
    We are also reaching beyond the ships listed above to more fully 
achieve our Sea Power 21 vision. From Langley to Halibut, Nautilus to 
Ticonderoga, the Navy has a legacy of shipbuilding innovation that has 
revolutionized our ships, aircraft, and combat systems--transforming 
our capability. We will capitalize on this kind of innovation in this 
century as well. While I discussed many of these initiatives in my 
earlier testimony to the full committee, there are several key programs 
worth mentioning.
    At the top of our list is the surface combatant family of ships 
centered on the next-generation multi-mission destroyer DD(X), the 
next-generation cruiser (CG(X)), and the Littoral Combat Ship (LCS). 
This powerful combination of ships will provide Joint Force Commanders 
with a robust range of transformational capabilities across the 
spectrum of warfare.
    From the long-range precision strike and volume-fires of DD(X), to 
the overland, theater and strategic ballistic and cruise missile 
defensive reach of the CG(X), to the ability to clear the way for the 
joint force in the tough littoral environment with LCS, the Navy's 
future surface warships will be designed from their keels up to operate 
as critical elements of our dispersed, networked, joint force.
    At the heart of this family is DD(X). As the primary precision 
strike fires provider of the ``family,'' DD(X) will be armed with an 
array of land-attack weapons, Tactical Tomahawk, and the Advanced Gun 
System (AGS) to provide persistent, distributed, long-range, precision 
attack needed in support of our joint forces operating deep inland. It 
is a critical enabler for our Sea Strike vision, which includes the 
Marine Corps' Expeditionary Maneuver Warfare, Ship-to-Objective 
Maneuver, and Operational Maneuver From the Sea concepts.
    DD(X) will take advantage of advanced stealth technologies to be 
less detectable and more survivable to enemy attacks than the ships it 
will replace and will be a key component of future Expeditionary Strike 
Groups. An open architecture, distributed combat system will support a 
``plug and play'' environment in which to operate AGS, an advanced 
vertical launching system and a Multi-Function Radar/Volume Search 
Radar suite. Other features on DD(X) will include an advanced hull 
form, integrated electric drive propulsion, optimal manning, and 
extensive automation.
    Our DD(X) research and development effort is also the baseline that 
will enable us to keep pace with today's rapid technological advances; 
it will spiral promising technologies to both CG(X) and LCS. It will 
also enable us to upgrade in-service Aegis cruisers and destroyers with 
selected leading-edge technologies to ensure this vital core of our 
legacy, multi-mission fleet will maintain operational effectiveness 
throughout their lifetimes and until the DD(X) and CG(X) programs come 
to fruition. In fiscal year 2004, we are committing $1.058 billion in 
Research, Development, Test, and Evaluation, Navy (RDTEN) for further 
development of the electric drive, power grid, and combat system 
components and anticipate the lead ship contract award in fiscal year 
2005.
    The Littoral Combat Ship is our most transformational effort and 
number one budget priority. It will capitalize on emerging unmanned 
vehicle technologies and deliver the focused Sea Shield missions of 
Mine Warfare (MIW), Surface Warfare (SUW), and Anti-Submarine Warfare 
(ASW). It will provide the fast, affordable, focused-mission capability 
that will sustain our access and enhance our ability to establish sea 
superiority not just for our Carrier Strike Groups and Expeditionary 
Strike Groups, but for all the joint logistics, command and control and 
pre-positioned ships that must transit the critical littoral threat 
area to move and support forces ashore.
    Our modeling and wargaming with smaller, fast, highly-maneuverable 
ships that simulate LCS capabilities have produced results that show 
LCS increases our warfighting effectiveness in the littoral 
environment. LCS achieved 70 percent of the ``kills'' during simulated 
choke-point transits and reduced the vulnerability--and losses--of our 
other carrier and expeditionary strike group ships to submarine torpedo 
attack in the littorals. Additionally, LCS ships modeled with mine 
warfare capability provided more effective organic mine warfare support 
than similarly equipped DDGs--especially during opposed scenarios.
    Numerous real-world tests have also been conducted with 
experimental craft to gather tangible data to determine the optimal 
hull form for the LCS. In fiscal year 2004, we are requesting $79 
million for hull form, $66 million for mission module development and 
integration, and $13 million for requirements analysis in RDTEN 
funding. The Integrated Requirements Document has been completed and we 
anticipate beginning construction of the first LCS in 2005.
    We are also investing in other platforms to support Sea Basing of 
the joint force.
    CVN-21 will be the centerpiece of our Carrier Strike Groups in the 
future and is scheduled for delivery in fiscal year 2014. It will 
combine the most critical technology advancements of the CVN(X)-1 and 
CVN(X)-2 programs and deliver them on the CVN(X)-1 schedule we defined 
last year. The fiscal year 2004 budget request provides $1.5 billion in 
RDTEN and advanced procurement for the first CVN-21 and programs for 
split-funded construction beginning in fiscal year 2007.
    Our vision for the Maritime Pre-positioning Force Future (MPF(F)) 
and tomorrow's amphibious force continues to develop into a bright and 
exciting future for the Navy-Marine Corps team. The Joint Forcible 
Entry Operations study and Defense Science Board Sea Basing study will 
help refine our effort and posture us for enhanced sea basing of Navy 
and Marine Corps assets.
    We expect MPF(F) ships to serve a broader operational function than 
current pre-positioned ships, creating greatly expanded operational 
flexibility and effectiveness. We envision a force of ships that will 
enhance the responsiveness of the joint team by the at-sea assembly of 
a Marine Expeditionary Brigade that arrives by high-speed airlift or 
sealift from the United States or forward operating locations or bases. 
These ships will off-load forces, weapons, and supplies selectively 
while remaining far over the horizon, and they will reconstitute ground 
maneuver forces aboard ship after completing assaults deep inland.
    Other advances in sea basing could enable the flow of Marine and 
Army Forces at multiple and probably austere points of entry as a 
coherent, integrated combined arms team capable of concentrating lethal 
combat power rapidly and engaging an adversary upon arrival. The 
ability of the Naval Services to promote the successful transformation 
of deployment practices of the other Services will dramatically improve 
the overall ability of the Joint Force to counter our adversaries' 
strategies of area-denial and/or anti-access.
    We will know more about these requirements in the next year and 
will consider other joint missions like the need for an afloat forward 
staging base, joint command and control ship, and afloat medical 
capabilities for the Joint Force for extended periods as well. We are 
investing in RDTEN to examine the future MPF and perhaps other 
alternative concepts.
    We have incrementally funded LHD-8, the last ship in the LHD-1 
class. It will be the first big deck amphibious ship powered by gas 
turbine propulsion, all-electric auxiliary systems, and a computer-
based Machinery Control System. These changes are expected to realize 
significant lifecycle cost savings and serve as the basis for spiral 
development into the future LHA replacement (LHA(R)) class of ships.
    The near term LHA(R) development effort will be focused on our 
joint forcible entry needs and integrating several new capabilities 
including the Joint Strike Fighter, MV-22 Osprey, and Advanced 
Amphibious Assault Vehicle (AAAV). Our fiscal year 2004 budget request 
of nearly $65 million in RDTEN supports design and procurement of the 
first ship in the class (LHA(R)1) with a planned ship construction 
award in fiscal year 2007. The configuration for remaining ships in the 
class will be deferred until the Joint Forcible Entry Operations study 
is complete.
    Our Sea Shield vision also has particular relevance to this 
subcommittee. Sea Shield is about extending our defenses beyond naval 
forces, to the Joint Force and allies and providing a defensive 
umbrella deep inland. The capabilities needed for Theater Air and 
Missile Defense and Sea/Littoral Control--including anti-submarine 
warfare (ASW), ship self defense, and mine warfare (MIW)--are part of 
our Sea Shield construct. Our budget request and program includes 
significant funding for these capabilities.
    In Theater Air and Missile Defense, we are pursuing technologies 
that will enable us to defeat emerging cruise missile threats and 
ballistic missiles in the boost and ascent phase. This difficult 
mission requires advanced network-centric operations and high levels of 
weapon system technology, seamlessly fused to produce the integrated 
air picture and the engagement profile needed for success. This 
involves:

         Fiscal year 2004 investments include upgrades to the 
        Aegis weapon system and further development of the DD(X) 
        destroyer's volume search radar, the E-2C Advanced Hawkeye 
        (Radar Modernization Program (RMP)) aircraft, and the Extended 
        Range Active Missile (ERAM). Networks will encompass the 
        cooperative engagement capability (CEC) and Link-16 systems and 
        weapons will be the extended range, over-the-horizon, and 
        ballistic missile defense versions of the standard missile, and 
        new models of the advanced medium-range air-to-air missile 
        (AMRAAM).
         Our sea-based missile defense programs experienced 
        tremendous success on the test range during 2002, scoring three 
        hits and conducting three successful tracking events; proving 
        in the near term that Aegis BMD has the ability to destroy 
        ballistic missiles in space and can provide surveillance and 
        cueing of intercontinental class weapons directed at our 
        homeland. We are accelerating work with the Missile Defense 
        Agency (MDA) to deploy initial sea-based ballistic missile 
        defense systems in fiscal year 2004. In partnership with MDA, 
        we will transfer U.S.S. Lake Erie (CG-70) to MDA to facilitate 
        a more robust testing program for missile defense. In turn, MDA 
        is requesting funding to modify a number of Aegis DDGs to 
        bolster homeland defense surveillance; equip a larger number of 
        Aegis combatants with a BMD engagement capability; and acquire 
        a number of SM-3 missile interceptors to provide the capability 
        at sea to intercept short- and medium-range ballistic missiles 
        in the boost and ascent phases of flight. We will build on our 
        successes and develop a vital capability for our Nation by 1 
        October 2004.
         The Ticonderoga-class cruiser conversion program will 
        extend the Aegis combat system's capabilities against projected 
        threats well into the 21st century and, with the DDG-51 
        destroyers, serve as the bridge to the surface combatant family 
        of ships (DD(X), LCS, and CG(X)). The cruisers will provide 
        multi-mission offensive and defensive capabilities, and operate 
        independently or as part of CSG, ESG, and Surface Action Groups 
        (SAG) well into this century. Core to these conversions is 
        installation of the Cooperative Engagement Capability, which 
        enhances and leverages the air defense capability of these 
        ships, and the 5,,/62-caliber Gun System with Extended Range 
        Guided Munitions to be used in support of Sea Strike and Marine 
        warfighting needs. This program is a mid-life upgrade that will 
        provide selected Aegis cruisers with land attack, force 
        protection, and Area Air Defense Commander capability while 
        extending the service life to over 35 years. These converted 
        cruisers will be viable candidates for a ballistic missile 
        defense role. The first conversion begins in fiscal year 2004 
        and our budget requests $194 million.
         The Cooperative Engagement Capability (CEC) will 
        enable battle group and joint task force ships and aircraft to 
        act as a single, geographically dispersed combat system. CEC 
        has demonstrated significantly improved battle force air 
        defense capabilities by integrating multiple sensors into a 
        single, real-time, fire-control-quality composite track 
        picture. In the future, it will integrate airborne radar and 
        IFF sensors into the battle group composite tracking network 
        providing long-range detection and tracking with integrated 
        fire control for improved over-the-horizon battle group air 
        defense. CEC will provide the fleet with greater defense-in-
        depth and the mutual support required to confront the evolving 
        threat of anti-ship cruise missiles and theater ballistic 
        missiles. We anticipate the Block 2 Decision Milestone in April 
        2003 and are requesting $226 million in the fiscal year 2004 
        budget.
         The E-2C Advanced Hawkeye (Radar Modernization 
        Program) will enable our Navy to deploy an unprecedented 
        capacity to conduct defensive air warfare deep inland against 
        cruise missiles and aircraft. The range and overland detection 
        capabilities achieved with the Advanced Hawkeye, combined with 
        the networking of CEC, will expand significantly our ability to 
        defend critical ports, airfields, and Joint Forces ashore--
        initially with Aegis Standard Missiles and F/A-18E/Fs Super 
        Hornets using the Advanced Electronically Scanned Array (AESA) 
        radar and AMRAAM, and ultimately with the next-generation over-
        the-horizon ship-launched ERAM. The fiscal year 2004 budget 
        invests $352 million for continued development and aircraft 
        production begins in fiscal year 2008.
         The ERAM is the next variant of the family of Standard 
        Missiles (SM-2 Blocks III, IIIA, IIIB, Block IV). It marries 
        much of the proven Standard Missile motor with the AMRAAM 
        missile seeker to enable the extension of naval cruise and 
        ballistic missile defense overland. We are requesting $34 
        million in the fiscal year 2004 budget to develop this missile.

    Sea/Littoral Control is central to our ability to assure access and 
freedom of maneuver for Joint Forces moving from the sea to objectives 
inland. We continue to invest in ASW, Ships Self Defense, and MIW 
technologies and programs that will counter surface and subsurface 
threats, such as modern ultra quiet submarines, small, fast surface 
combatants, and an array of floating, moored, and buried mines.
    ASW remains a challenging task, not just in the deep ocean, but 
also in the shallow littoral regions and against modern quiet 
submarines. Programs and technologies that will enhance our warfighting 
effectiveness in this environment include:

         The new MH-60 helicopters, which will carry 
        reconfigurable sensors and weapons customized for the littoral 
        environment, will link their data to the force as they perform 
        anti-mine, anti-submarine, and anti-surface sea control 
        missions. The MH-60R helicopter with its Advanced Low Frequency 
        Sonar will specifically provide improved capability against 
        submarines in the littorals. In fiscal year 2004, we are 
        requesting 6 MH-60R and 13 MH-60S.
         Recapitalizion of our Maritime Patrol capability--
        currently conducted by aging P-3C aircraft--with the 
        Multimission Maritime Aircraft (MMA). MMA will transform the 
        Maritime Patrol/Reconnaissance force by fully integrating 
        manned and unmanned vehicles. In fiscal year 2004, we are 
        requesting $76.2 million in RDTEN funding and anticipate 
        initial operational capability (IOC) in the 2012 timeframe.
         Initial testing of the Surveillance Towed Array Sonar 
        System (SURTASS) Low Frequency Active (LFA) in the Western 
        Pacific has demonstrated detection capability that provides us 
        added assurance that we can deal with the diesel-electric 
        threat as it becomes even quieter, and we have accelerated 
        development of an Advanced Deployable System (ADS) off-board 
        sensor variant, to start in fiscal year 2005, that will 
        eliminate the requirement to cable the system to a shore site.
         Acquiring the Automatic Radar Periscope Detection and 
        Discrimination (ARPDD) system will provide further enhancements 
        to our capability for large area search. Additionally, the 
        capability for our surface combatants to survive attacks from 
        threat torpedoes will be enhanced through the Surface Ship 
        Torpedo Defense effort.
         We will fund the Common Undersea Picture (CUP) to 
        integrate undersea warfare sensors across multiple, dissimilar 
        ASW platforms and nodes for a shared tactical picture. We will 
        begin to outfit carrier strike groups in fiscal year 2005. CUP 
        will greatly enhance our netcentric capability in undersea 
        warfare mission planning, vulnerability assessment, situational 
        awareness, and collaboration.
         Large area ASW cueing and search is supported via 
        funding of the USQ-78B acoustic processor for the P-3C AIP 
        fleet. This enhancement provides the capability for Improved 
        Extended Echo Ranging (IEER) processing which is a high search-
        rate acoustic tool focused on the shallow water, acoustically 
        harsh environment.
         The fiscal year 2004 budget also supports a fiscal 
        year 2006 IOC of Mk 48 Mod 7 Common Broadband Acoustic Sonar 
        System (CBASS) heavyweight torpedo specifically designed for 
        use against advanced diesel submarines employing 
        countermeasures in the difficult littoral environment. Also 
        supported is the fiscal year 2004/2005 IOC of the MK-54 
        Lightweight Torpedo (LWT) for use in shallow waters by 
        helicopter and patrol ASW aircraft against the diesel threat, 
        significantly enhancing littoral capabilities.
         Finally, the success of the Acoustic Rapid COTS 
        Insertion (ARCI) program in providing significant improvement 
        in ASW sensor processing for our submarine force has spawned 
        similar efforts in submarine combat control, communications, 
        and upgrades to the surface fleet's SQQ-89 combat suite. These 
        programs validate the Navy's decision to use commercially 
        available technology to deliver superior performance at less 
        cost.

    We are investing in Ship Self Defense programs and systems that 
will enhance our capability to defeat small and swarming boats. In the 
far-term, we are investing in the LCS to enhance this capability 
dramatically. This includes:

         In the near term, our Navy will continue investment in 
        the Rolling Air Frame Missile and the NATO Evolved Sea Sparrow 
        missile as part of our layered defense against anti-ship cruise 
        missiles.
         The Phalanx Close-in-Weapon System (Block 1B) that 
        will upgrade our current terminal defense capability against 
        anti-ship cruise missiles and high-speed aircraft penetrating 
        outer fleet defensive envelopes. In surface mode, the Block 1B 
        program will defend against small, fast, surface craft and slow 
        flying aircraft and include better sensor support and lethality 
        for close-in engagements. The CIWS Block 1B Upgrade Kit 
        procurement remains a high surface warfare priority.
         The Surface Electronic Warfare Improvement Program 
        (SEWIP), a spiral development effort initiated to provide a 
        robust, full spectrum electronic warfare system following 
        cancellation of the Advanced Integrated Electronic Warfare 
        System in fiscal year 2002. SEWIP will build on the legacy SLQ-
        32 system to field capabilities against next-generation 
        threats.
         Pursuing installation of minor caliber guns on our 
        deploying ships to improve our ability to counteract a small 
        boat threat in the 0 to 8,000 yards range. We soon will install 
        stabilized minor caliber guns on two DDGs. Arming the MH-60R 
        and MH-60S helicopters mentioned above provides an additional 
        layer of lethality against small boat attack.

    We have increased our investment in our Mine Warfare plan; adding 
over $67 million in fiscal year 2004 and $482 million across the FYDP 
since last year's budget. Major changes from last year's plan include 
additional funding for LCS MIW mission modules, Mine Countermeasures 
(MCM) ship diesel engine replacements, MCM ship operations and 
maintenance, and acceleration of assault breaching systems R&D.
    Our MCM certification plan will assure access to naval and Joint 
Forces by defeating the asymmetric mine threat proliferating worldwide. 
It supports our commitment to a dedicated MCM force while 
simultaneously fielding an organic MCM capability to the CSGs beginning 
in 2005. The stealthy and lethal LCS and its MIW module will add new 
dimensions to our ability to counter mines and is the future of our 
organic battle group capability. Currently:

         We are investing in the ship-launched Remote 
        Minehunting System (RMS) for six DDG-51 Flight 2A ships 
        beginning in fiscal year 2005. RMS is also a candidate for the 
        LCS MIW mission module--the future of our organic battle group 
        capability.
         We are also investing in several unmanned undersea 
        vehicle (UUV) systems. The Long-Term Mine Reconnaissance System 
        (LMRS) will provide a covert mine-reconnaissance capability 
        from SSN 688 class submarines and is on track for IOC in fiscal 
        year 2005. The Mission Reconfigurable UUV, an outgrowth of the 
        LMRS program scheduled to begin development in fiscal year 
        2004, will provide ``plug and play'' sensor packages for 
        potential missions such as ISR, Tactical Oceanography, Remote 
        ASW tracking, and monitoring for weapons of mass destruction. 
        The fiscal year 2004 budget invests $82 million in this 
        program.
         We will purchase five organic mine systems to be 
        integrated in the MH-60S helicopter. Additionally, the Rapid 
        Airborne Mine Clearance System (RAMICS), a helicopter-borne gun 
        system, will provide us the capability to neutralize surface 
        and near-surface mines with a special 30mm supercavitating 
        projectile. This projectile is specially designed to penetrate 
        a submerged or surfaced mine casing--causing destruction of the 
        mine. RAMICS IOC is scheduled for fiscal year 2007.

    Sea Strike is about projecting precise, responsive, and persistent 
offensive striking power--in the form of weapons, Marines and Special 
Operations Forces. Three of its critical capability subsets are Time 
Sensitive Strike, Persistent Intelligence, Surveillance, and 
Reconnaissance and Marine Corps Ship-to-Objective Maneuver; these 
capabilities are of particular interest to the subcommittee.
    Time Sensitive Strike investments will enable us to link persistent 
sensors, emerging knowledge enhancement and decisionmaking systems and 
long range precision weapons against an array of targets in ever-
shortening time periods. We are already pursuing investments that will 
greatly reduce our target planning timelines and enhance our striking 
power. This includes:

         The Tactical Tomahawk (TACTOM) Block IV upgrade that 
        preserves the Tomahawk's long-range precision-characteristics 
        and adds an in-flight retargeting capability that will enhance 
        responsiveness and flexibility at a lower total cost than 
        existing variants. The fiscal year 2004 budget requests full 
        rate production under a 5-year multiyear procurement (fiscal 
        year 2004-2008) contract.
         Procurement of Precision-Guided Munitions (PGM) that 
        will continue to be a high priority. Laser Guided Bomb 
        production is currently at maximum rate, the Joint Direct 
        Attack Munition is forecast to meet maximum rate by August 
        2003, and we are increasing our inventory of the Joint Stand 
        Off Weapon and ramping up production of a new variant. Our 
        partnership with the Air Force in several of our munitions 
        programs will continue to help optimize both our inventories 
        and our research and development investment. In fiscal year 
        2004, we are requesting over $911 million.
         The Joint Fires Network (JFN) that will integrate the 
        best elements of three existing systems into a converged joint 
        architecture and automates, coordinates, and correlates the 
        multiple data streams to provide time critical fire control 
        solutions for advanced weapon systems. It reduces the sensor-
        to-shooter timeline from hours to minutes; provides precision 
        targeting data for coastal and deep fire support; and uses data 
        from responsive and persistent ISR assets to improve both the 
        Common Operational Picture and our intelligence preparation of 
        the battlespace. The fiscal year 2004 budget includes $159 
        million for JFN. JFN is at sea in OIF and will continue to 
        serve as a critical building block for our Sea Strike vision 
        and enabled by FORCEnet.

    Persistent Intelligence, Surveillance, and Reconnaissance will be a 
key enabler for both our Sea Strike and Sea Shield capabilities. UUVs, 
discussed earlier, and unmanned air vehicles (UAV) are a key component 
of our ISR future. We are committed to accelerating development of UAVs 
and procuring an operational capability as soon as possible. They will 
provide persistent and comprehensive situational awareness; key to 
projecting both our offensive and defensive power. This includes:

         Two Global Hawk Maritime Demonstration (GHMD) vehicles 
        that will be procured from the Air Force in fiscal year 2005 
        for maritime CONOPs development, sensor technology 
        experimentation, and fleet orientation prior to the 
        introduction of the Broad Area Maritime Surveillance (BAMS) UAV 
        in fiscal year 2009. The BAMS UAV will be a multi-mission ISR 
        system to support strike, signals intelligence, and 
        communications relay while operating independently or in direct 
        collaboration with other assets in the maritime environment. We 
        are requesting $25 million in the fiscal year 2004 budget 
        submit and anticipate IOC in fiscal year 2009. We will also 
        continue our investment in the Unmanned Combat Air Vehicle/Navy 
        (UCAV/N) and have budgeted for two science and technology 
        demonstrators in this request.
         Our renewed interest in the Fire Scout/Naval Vertical 
        Takeoff and Landing Tactical UAV (VTUAV) and will evaluate its 
        utility for LCS and potentially other air capable ships. We 
        will also examine its ability to carry modular mission payloads 
        and operate using the Tactical Control System, and Tactical 
        Common Data Link. It will provide real time information, 
        surveillance, reconnaissance, and targeting, communications 
        relay, and battlefield management.

    Ship to Objective Maneuver: Together with our number one joint 
partner, the United States Marine Corps, we will provide the capability 
to deploy, support, and reconstitute a persistent, operationally 
flexible, expeditionary capability across the spectrum of warfare. 
Currently:

         We are working to ensure that near-, mid-, and long-
        term Naval Surface Fire Support (NSFS) capabilities are met. In 
        the near-term, we anticipate IOC of the Naval Fires Control 
        System (NFCS) to connect ships digitally to ground forces 
        ashore in fiscal year 2004. In the mid-term, the Navy is 
        developing Extended Range Guided Munition (ERGM) and Autonomous 
        Naval Support Round (ANSR) with both systems headed for a 
        ``shoot off'' in fiscal year 2005 to determine which round will 
        provide greater range, lethality, and accuracy and ultimately 
        be incorporated into the Navy's arsenal.
         The Commander, Fleet Force Command and the Office of 
        Naval Research have also taken the lead in experimenting with 
        the electromagnetic rail gun technologies to determine its 
        feasibility and perhaps accelerate this enhancement via the Sea 
        Trial process. We are requesting nearly $35 million in for the 
        ERGM and NFCS alone in fiscal year 2004.

                  CONCLUSION: A COMMITMENT TO VICTORY

    The President has called upon us to ``be ready to strike at a 
moment's notice in any dark corner of the world.'' We are answering 
that call in the global war on terrorism and in the opening salvos of 
Operation Iraqi Freedom. Your support has been critical to our success.
    The fiscal year 2004 budget submission enhances our ability to 
answer this challenge in the years ahead. By investing in our Sea Power 
21 vision, the fiscal year 2004 request balances near term and future 
readiness and risk, charts a course to deliver decisive capabilities, 
and enables our most valuable asset--our people--the means to do the 
mission to the very best of their ability.
    I thank the subcommittee for your continued strong support of our 
Navy and our active, Reserve, and civilian sailors. Working together, I 
am confident that we will be victorious in the global war on terrorism 
and in Operation Iraqi Freedom, leading to a more stable and peaceful 
world.

    Senator Talent. Thank you Admiral, and we appreciate both 
your excellent statement, which will of course go in the 
record, and your excellent summary of it. We will hear General 
Hagee and then have a chance for questions.
    General, thank you for coming and giving us your time this 
afternoon, and we look forward to hearing your statement.

 STATEMENT OF GEN. MICHAEL W. HAGEE, USMC, COMMANDANT, UNITED 
                      STATES MARINE CORPS

    General Hagee. Thank you. Mr. Chairman, Senator Kennedy, 
and distinguished members of this subcommittee, it is truly an 
honor for me to be here to represent your Marine Corps.
    I would like to thank this subcommittee for its strong 
support of the issues and programs that are of vital importance 
to the readiness of your Marine Corps and the Navy-Marine Corps 
team. Along with our sister Services, the Marine Corps 
continues to play a key role in the global war on terrorism, in 
the establishment of stability and security in many of the 
world's trouble spots, and of course in Operation Iraqi 
Freedom. The actions of your marines along with the attached 
Navy corpsmen and Seabees over the past 2 weeks in Iraq attest 
to their morale, their readiness, and warfighting capability 
better than any words I could say today.
    We have 67 percent of our operating forces forward 
deployed. We have almost 80 percent either forward deployed, 
forward stationed, or forward based. They are performing 
magnificently.
    I must add to what the CNO said that we are able to 
accomplish this mission today because of the support and 
funding Congress has provided us over the last couple of years. 
We ask for your continued support and funding in order to 
remain ready for the future.
    Even as we fight the current war, we, along with the Navy, 
are also developing enhanced and, I would say in some cases, 
new operational concepts that will make us even more responsive 
and effective in the future. I would like to spend a few 
minutes discussing one such operational concept, and that is 
Sea Basing. Hopefully this discussion will bring together some 
of the tenets of Seapower 21 and expeditionary maneuver 
warfare.
    As you are well aware, the idea of Sea Basing is not new to 
the Navy-Marine Corps team. From the island-hopping campaign of 
World War II to the more recent non-permissive, non-combatant 
evacuation operations in Africa and the Middle East, we have 
projected combat power ashore from the sea for many years.
    In Operation Enduring Freedom, however, we took this 
concept to another level by projecting a composite force from 
the sea approximately 400 miles inland, securing the airfields 
at Rhino and Kandahar, Afghanistan. The primary command and 
control node remained at sea. However, because of platform 
limitations, we established an intermediate support base ashore 
in a second country.
    Recent and projected technological advances in ship and 
aircraft design, communications, and distribution systems 
provide us the opportunity to move beyond negotiating political 
access or seizing an enemy beachhead in order to build 
sustainment ashore before moving to the objective. In essence, 
we believe we will be able to conduct the initial reception, 
staging, onward movement, and integration that you saw over the 
past 2 or 3 weeks in Kuwait at sea.
    Once ready, the force would maneuver from the sea base to 
the objective, with the majority of its command and control, 
logistics tail, and supporting fires capabilities remaining at 
sea. Such a capability would significantly enhance the Joint 
Force Commander's flexibility and speed by providing him 
options for employing forward-deployed forces independent of 
fixed inland bases, airfields, and ports.
    The CNO and I believe such an operational concept will 
become more important for the Nation as we face a future 
characterized by uncertain and unreliable access to operate 
from or through other nations' territorial space as well as the 
increasing access to lethal, affordable weapons technology and 
sensors that will enable potential adversaries to establish 
access denial strategies.
    This enhanced sea basing operational concept is within 
reach. It rests on four pillars and the CNO has already 
mentioned those four pillars: one, an enhanced command and 
control network that we call FORCEnet; two, a set of offensive 
capabilities we call Sea Strike; three, a set of defensive 
capabilities we call Sea Shield; and four, a set of sustainment 
capabilities we call the Sea Base.
    These capability sets could be expanded or contracted to 
meet a range of operations from peacetime exercises to 
forceable entry of a brigade-sized force. As a national 
capability, Sea Basing would cross service lines and would rely 
on the establishment of standardized interfaces for both 
logistics and communications, so that each Service can plug and 
play with the capabilities it brings to the battlefield.
    I would like to stress that sea basing is not a single 
thing or a single platform. Rather, it is an aggregation of 
capabilities located over the horizon that can support a wide 
range of Joint Force Operations. We believe that this sea 
basing operational concept will provide the joint commander 
freedom of movement by using sea as maneuver space, freedom of 
action by not requiring access, a reduced vulnerability to 
attack, and an increased agility and speed.
    Many programs within the fiscal year 2004 budget proposal 
help us move toward an enhanced sea basing capability. They 
involve platforms that provide flexibility and survivability in 
light of future threats, weapons systems that are lighter or 
more lethal, and research, development, and testing in order to 
identify leap-ahead technologies. Some examples: the LPD-17, 
the LHR replacement development, future maritime pre-
positioning force ships, the Advanced Assault Amphibian 
Vehicle, and the Lightweight 155 all support sea basing.
    The MV-22, the Joint Strike Fighter short-take-off/
vertical-landing (STOVL), the Cobra-Huey upgrades will move us 
closer to an all-vertical air arm where marines take advantage 
of operations from the sea base. Several command and control 
improvements will bolster our capability for interoperable 
joint command and control under the concept of FORCEnet.
    The Littoral Combatant Ship that the CNO just mentioned 
will provide anti-access capabilities with combat systems for 
mine interdiction warfare, anti-sub warfare, and anti-surface 
warfare, while the DD(X) Land Attack Destroyer will provide 
long-range precision and volume naval surface fires to support 
operational maneuver from the sea.
    Other organizational enhancements that your marines are 
working on include TACAIR integration, expeditionary strike 
groups, and Special Operations Command support. These concepts 
promise more efficient and effective operations in some 
critical areas. TACAIR integration of our strike fighter assets 
will build synergy between our Navy and Marine Corps aviation 
communities while saving substantial resources now and beyond 
the FYDP.
    Expeditionary strike groups tie the operations of our 
traditional ARG-MEUs to enhanced naval warfighting platforms to 
give the entire group more survivability, lethality, and 
flexibility with no increase in costs.
    The initial integration of Marine capabilities to support 
Special Operations Command takes advantage of Marine training 
that can relieve some of the burdens on our Special Forces, 
freeing them to concentrate on missions that only they can 
perform.
    As you have seen in Iraq over the past couple of weeks, we 
are ready to support the Nation as part of a Joint Force today. 
We are on solid ground regarding our mission and our future 
direction. We will remain your only sea-based, rotational, 
truly expeditionary combined arms force, ready to answer the 
call as part of an integrated joint force.
    Sir, I look forward to your questions.
    [The prepared statement of General Hagee follows:]

           Prepared Statement by Gen. Michael W. Hagee, USMC

    Chairman Talent, Senator Kennedy, distinguished members of the 
subcommittee; it is my honor to report to you on the state of your 
United States Marine Corps. First, on behalf of all marines, I want to 
thank the committee for your continued support. Your sustained 
commitment to improving the warfighting capabilities of our Nation's 
Armed Forces and to improving the quality of life of our service men 
and women and their families is vital to the security of our Nation, 
especially now, while our Nation is at war.

                            I. INTRODUCTION

    The Navy-Marine Corps team continues to play a key role in the 
global war on terrorism and in the establishment of stability and 
security in many of the world's trouble spots. Marines, both active and 
Reserve, are operating side-by-side in Iraq, as well as in diverse 
locations, from Afghanistan, the Horn of Africa, Turkey, the Georgian 
Republic, Colombia, Guantanamo Bay, and the Philippines. The actions of 
your marines--along with Navy Corpsmen and SeaBees--attest to their 
morale and readiness better than any words I could say here today.
    Marine Corps operations throughout the past year have highlighted 
the versatility and expeditionary nature of our forces. Missions in 
support of Operations Enduring Freedom and Noble Eagle marked the most 
visible accomplishments of our forward-deployed forces. Marine Air 
Control Squadrons continue to provide air control, surveillance, and 
air traffic control support to Operation Enduring Freedom during their 
deployments to the Central Command area of responsibility. Elsewhere, 
the Marine Corps continues to support Operation Joint Forge in the 
Balkans by sending civil affairs teams to Bosnia.
    Even as the Marine Corps saw one of our busiest years in terms of 
operational deployments, participation in realistic, worldwide 
exercises remained critical to supporting the Combatant Commander's 
Theater Security Cooperation Plans and ensuring that we maintained a 
ready and capable force. Over the last year, marines participated in 
more than 200 service, joint, and combined exercises. These included 
live fire, field training, command post, and computer-assisted 
exercises. Participants varied in size from small units to Marine 
Expeditionary Forces. Overseas, Marine Expeditionary Units (Special 
Operations Capable) conducted exercises in Jordan, Italy, Croatia, 
Tunisia, the Philippines, Australia, Thailand, and Kuwait.
    At home, Marine Reserve units were designated as ``on call'' forces 
to support the Federal Emergency Management Agency's role in homeland 
security. In addition, the Marine Corps also conducted numerous 
training operations and internal exercises. This important training 
helps develop individual and unit proficiency and competency. It also 
allows the Marine Corps to examine unit operational skills and ensures 
that each unit has the capabilities required to execute our full range 
of missions.
    The Marine Corps continues to contribute to the Nation's 
counterdrug effort, participating in numerous counterdrug operations in 
support of Joint Task Force Six, Joint Interagency Task Force-East, and 
Joint Interagency Task Force-West. These missions are conducted in the 
Andean region of South America, along the U.S. Southwest border, and in 
several domestic ``hot spots'' that have been designated as High 
Intensity Drug Trafficking Areas. Individual marines and task-organized 
units are assigned to these missions in order to provide support for 
domestic drug-law enforcement throughout the United States, and to 
provide conventional training to military forces in South America that 
execute counter-narcotics missions. Marine operational and intelligence 
teams also support Colombian military efforts to combat narco-
terrorism. Marines of our Reserve Forces have executed the majority of 
these missions.
    Our successes in these global operations and exercises have not 
been achieved alone. We have worked closely alongside the Navy, our 
sister Services, and Federal agencies to realize the true potential of 
joint, interoperable forces in the new environment of 21st century 
warfare. The operational and personnel readiness levels we have been 
able to maintain directly reflect the strong, sustained support of 
Congress in last year's National Defense Authorization and 
Appropriations Acts. In fiscal year 2004, we seek your continued 
support for the President's budget so we can consolidate the gains made 
to date, improve those areas where shortfalls remain, and continue 
transforming the way the Navy-Marine Corps team will fight in the 21st 
century.

                        II. BUILDING ON SUCCESS

    The President's fiscal year 2004 budget, together with your 
support, will provide a strong foundation on which we can continue 
building on our successes. Our focus is on improving our ability to 
operate as an agile, lethal, ready, and effective member of a broader 
Joint Force that takes the complementary capabilities provided by each 
Service, and blends them into an integrated and effective force for 
meeting future challenges.
    Increases in our military personnel accounts have a positive effect 
on the retention of our most valued assets--our marines. Yet, the 
projected trend of personnel costs, especially as they include accruals 
for retirement and health care, are increasing faster than the budget 
used to pay those costs, resulting in increased pressure on our other 
accounts. Given the increasing pressure to modernize and transform the 
force, the Marine Corps is constantly working to identify and assess 
program tradeoffs to enable the most effectively balanced approach 
between competing demands and programs. These tradeoffs occur within a 
larger context of the Department's overall program tradeoff decisions, 
which is driving the Navy and Marine Corps to work more closely than 
ever before in our planning, budgeting, and decisionmaking. An 
additional concern that complicates this process is the sizeable 
unfunded cost of the ongoing global war on terrorism.
    Challenges also arise from the changing realities of our national 
security environment. The Marine Corps is committed to the idea that we 
will fight as an integral part of a joint team. We continue to place 
high priority on interoperability, shared concept development, and 
participation in joint exercises with our sister services. 
Additionally, the security environment now demands that we pay more 
attention to our role in Homeland Defense, our critical infrastructure, 
and force protection--even as we deploy more forces overseas. These 
challenges demand that we balance competing priorities while remaining 
focused on maintaining excellence in warfighting.
Adapting to a Changing, Dynamic World
    While we adapt the advantages of technology to meet the changing 
face of warfare, we draw strength from the unique culture and core 
values that make us marines. We look for innovation in four broad areas 
to address future challenges:

         Transformational technology
         New operational concepts
         Refined organizations
         Better business practices

    Innovative approaches culled from these efforts should provide 
insight into new capabilities that we can adapt for future warfighting. 
In this regard, we are currently engaged in an immediate and critical 
tasking to define how we, along with our partners in the Navy, intend 
to project naval power ashore in the 2015-2025 timeframe. This effort 
requires the intellectual rigor and participation of all the elements 
of our Marine Air-Ground Task Forces and is influencing the entire 
Marine Corps--from our structure and training to the way we will fight 
on future battlefields as an integral component of a Joint Force.
Technology and Experimentation
    The plan for realizing future joint concepts consists of three 
closely related processes: (1) Joint Concept Development, (2) Joint 
Experimentation and Assessment, and (3) Joint Integration and 
Implementation. The overall process is more commonly known as Joint 
Concept Development and Experimentation. In order to ensure support and 
engagement throughout this process, the Marine Corps reorganized to 
establish three Joint Concept Development and Experimentation divisions 
under the cognizance of the Commanding General, Marine Corps Combat 
Development Command. These three organizations are key elements of 
Marine Corps Transformation and enable full Marine Corps involvement in 
Joint Experimentation and Transformation as well as the Navy's Sea 
Trial process for Naval Experimentation and Transformation.
    The Marine Corps Warfighting Laboratory maintains cognizance over 
Marine Corps--specific experimentation--with a focus on the tactical 
level--to develop enhanced warfighting capabilities for the future. 
Technologies and procedures are field tested in experiments conducted 
with the operating forces. In addition, the lab coordinates closely 
with the Office of Naval Research to identify promising technologies 
that support the next generation of warfighting capabilities.
New Concepts and Organizations
    The Marine Corps is streamlining force development from concept to 
acquisition under the Deputy Commandant for Combat Development. Our 
Expeditionary Force Development System is a single system of dynamic 
functions integrated into a process that produces and sustains 
capabilities to meet the needs of the Marine Corps and the combatant 
commanders. The Marine Corps advocates for ground combat, aviation 
combat, command and control, and combat service support, as well as the 
Marine Requirements Oversight Council, are key participants in the 
process. The Expeditionary Force Development System continuously 
examines and evaluates current and emerging concepts and capabilities 
to improve and sustain a modern Marine Corps. The system is compatible 
with and supports naval and joint transformation efforts and integrates 
transformational, modernization, and legacy capabilities and processes. 
This integrated, concept-based driver for transformation is currently 
working on several ideas that will influence the future Marine Corps.
    Expeditionary Strike Groups
    The Marine Corps and Navy are engaged in a series of experiments 
that will explore the Expeditionary Strike Group concept. This concept 
will combine the capabilities of surface action groups, submarines, and 
maritime patrol aircraft with those of Amphibious Ready Groups and 
Marine Expeditionary Units (Special Operations Capable), to provide 
greater combat capabilities to regional combatant commanders. In the 
near future, the Navy-Marine Corps team will conduct a pilot deployment 
on the west coast to test the Expeditionary Strike Group concept. Navy 
combatants have already been incorporated within the existing training 
and deployment cycle of the Amphibious Ready Group. This experiment 
will also allow us to test command-and-control arrangements for the 
Expeditionary Strike Group. It will provide critical information to 
support the future implementation of the concept and highlight any 
needed changes in service doctrine, organization, training, materiel, 
leadership and education, personnel, and facilities.
    Tactical Aviation Integration
    The Navy and Marine Corps team has embarked on a Tactical Aircraft 
(Strike-fighter) Integration plan that will enhance core combat 
capabilities and provide a more potent, cohesive, and affordable 
fighting force. This integration is the culmination of a long-term 
effort to generate greater combat capability from naval fixed-wing 
strike and fighter aircraft, and represents a shared commitment to 
employ the Department of the Navy's resources as judiciously as 
possible. This integration has been ongoing for several years, with 
four Marine Corps F/A-18 Hornet squadrons operating as part of embarked 
carrier air wings. This Navy-Marine Corps effort will guarantee that 
naval aviation will be integrated as never before, and will effectively 
support the Marine Air-Ground Task Force and the joint warfighter. 
Specifically, the integration plan:

         Reinforces our expeditionary ethos;
         Provides a smaller, more capable, more affordable 
        force for the Department of the Navy;
         Integrates Marine strike fighters in 10 Navy Carriers 
        Air Wings;
         Integrates three Navy strike fighter squadrons into 
        the Marine Unit Deployment Program;
         Includes the global sourcing of all DoN strike fighter 
        assets and ensures their support to Marine Air-Ground Task 
        Forces and regional combatant commanders;
         Provides increased combat capability forward; and
         Complements the enhanced seabasing concept.

    A cornerstone of this plan is Department of the Navy funding for 
essential modifications as well as the flight hours and maintenance of 
legacy aircraft to keep them at the highest levels of readiness until 
the Joint Strike Fighter and F/A-18E/F are fully fielded. This requires 
an unwavering commitment to level funding of strike fighter readiness 
across the Department of the Navy. These integration-driven readiness 
levels will allow the Navy-Marine Corps team to surge more aircraft 
than what is possible today.
    Enhanced Networked Seabasing
    Fully networked, forward-deployed naval forces and platforms that 
are integrated into our seabasing capability will provide naval power 
projection for Joint Force Commanders. These forces will use the sea as 
a means of maneuver, enabling a broad range of joint campaign 
operations. Sea-based operations incorporate, integrate, protect, and 
sustain all aspects of naval power projection, from space to the ocean 
floor, from blue water to the littorals and inland--without dependence 
on land bases within the Joint Operating Area. Seabasing will provide 
enhanced capabilities to the naval force, such as rapid force closure, 
phased arrival and assembly at sea, selective offload of equipment 
tailored for individual missions, and force reconstitution for follow-
on employment. The traditional naval qualities of persistence and 
sustainment--enhanced by advanced force-wide networks--underpin the 
staying power and flexibility of the sea base. Naval platforms can stay 
on-station, where they are needed, for extended periods of time. The 
at-sea maneuverability of the seabase, coupled with advanced underway 
replenishment technologies and techniques, will ensure force readiness 
over time.
    Integrated Logistics Capabilities
    The Integrated Logistics Capabilities effort began as a unique 
collection of military, industry, and academic organizations 
collaborating to develop a future vision of Marine Corps logistics 
processes. The product is a set of transformational initiatives that 
will provide better support to the warfighter. The purpose of the 
Integrated Logistics Capabilities concept and process is to implement a 
transformation strategy, based on best practices, that provides the 
framework for the execution of agile, effective logistics support to 
the Marine Air-Ground Task Force, with the focus of streamlining the 
logistics chain.
    Capabilities are being conceptually refined and incrementally 
validated in the Operating Forces as they are identified and 
recommended. An assessment of the Proof-of-Concept, published in 
November 2002 by the Center for Naval Analysis, reflected improved 
supply response time (68 percent reduction in time) and overall repair 
cycle time (33 percent reduction).
    Over both the mid- and long-term, improved combat effectiveness and 
efficiencies in the logistics chain are expected. However, efficiencies 
cannot be fully realized until the people, process, and technology 
changes are applied across the entire operating force. The logistics 
transformation and process modernization, together with the cutting 
edge suite of technologies provided by the Global Combat Support 
System, will greatly enhance the combat capabilities of Marine Forces.
Reestablishment of Air-Naval Gunfire Liaison Companies
    We have validated the requirement to reestablish our Air-Naval 
Gunfire Liaison Companies (ANGLICO). These companies will provide our 
commanders a liaison capability with foreign area expertise to plan, 
coordinate, and employ terminal control of fires in support of joint, 
allied, and coalition forces. ANGLICO will be reestablished with a 
company on each coast, and a separate brigade platoon in Okinawa. Each 
company will have a habitual relationship with the Reserves. Full 
operational capability is expected by late summer 2004.
Marine Corps--U.S. Special Operations Command Initiatives
    Today, 105 marines are filling Special Forces billets around the 
world. In addition to providing the current Chief of Staff to U.S. 
Special Operations Command (USSOCOM), the Marine Corps provides support 
to and ensures interoperability with Special Forces through the actions 
of the SOCOM-Marine Corps Board. That board met twice in 2002 and 
developed initiatives in the areas of Operations, Training and 
Education, Communications/C\4\, Information Operations, Psychological 
Operations, Civil Affairs, Intelligence, Aviation, Future Concepts, and 
Equipment and Technology. One of the initiatives, pursued in 
coordination with the Naval Special Warfare Command, is the Marine 
Corps' first sizeable contribution of forces to the Special Operations 
Command. Consisting of 81 marines and 5 sailors, a detachment has been 
organized, trained, and equipped to conduct special reconnaissance, 
direct action, coalition support, foreign internal defense, and other 
special operations missions, and will begin training at Camp Pendleton, 
California, in June 2003. They will subsequently transfer to the 
operational control of USSOCOM during October 2003, and deploy in April 
2004 as augmentation to a Naval Special Warfare Squadron supporting 
both U.S. Pacific Command and U.S. Central Command.
Better Business Practices
    We continue to seek out and use better business practices to 
achieve greater cost-effectiveness, improve performance, and sharpen 
our focus on our warfighting core competencies. In line with the 
competitive sourcing initiatives in the President's Management Agenda, 
we are increasing emphasis across our Supporting Establishment on 
competing our commercial activities with the private sector. We are 
complementing this initiative with continued development of an 
effective Activity-Based Costing and Management initiative across our 
installations. This allows us to focus on the true cost of various 
functions and services and to develop benchmarks that enable us to 
improve performance and to focus analyses on cost-saving initiatives. 
This will occur both in commercial areas that we compete, and in non-
commercial areas that cannot be competed. Competitions completed to 
date have resulted in saving millions of dollars annually and returning 
almost 900 marines to the operating forces. We will continue to seek 
additional competition candidates. Activity-Based Costing and 
Management initiatives provided our installation commanders with cost 
and performance information that enabled them to save over $37 million 
last year. As we refine our databases, we expect continuing increases 
both in performance and cost effectiveness.
    Through all of the efforts outlined above, the Marine Corps is 
building on today's success. As we build on our current capabilities, 
embrace innovation, and transform to meet the conventional and 
asymmetric threats to U.S. security in the 21st century, we will 
continue to be the Nation's Total Force in Readiness, fielding warriors 
whose unique seabased expeditionary and combined-arms capabilities will 
be critical to success in crisis and conflict. In the process of 
balancing our programs to meet these goals, we will focus on two 
primary objectives: (1) our main effort, maintaining excellence in 
warfighting, and (2) taking care of our marines and families.

                      III. TAKING CARE OF OUR OWN

    Providing for the needs of our marines, their families, and our 
civilian marines remain among our top priorities. The most advanced 
aircraft, ship, or weapons system is of no value without highly-
motivated and well-trained people. People and leadership remain the 
real foundations of the Corps' capabilities. It is important to note 
that the Marine Corps operates as a Total Force, including elements of 
both active and Reserve components. We continue to strengthen the 
exceptional bonds within our Total Force by further integrating the 
Marine Corps Reserve into ongoing operations and training.
Human Resources
    End Strength
    The congressionally authorized increase in Marine Corps end 
strength to 175,000 in response to the global war on terrorism is very 
much appreciated. This increase of 2,400 marines allows us to sustain 
the increased missions associated with the activation of the 4th Marine 
Expeditionary Brigade (Anti-Terrorism), enabling us to replace marines 
in the active units that we ``borrowed'' in standing up the brigade, 
and continue to provide the Nation with a robust, scalable force option 
specifically dedicated to anti-terrorism.
    Recruiting
    Sustaining our ranks with the highest quality young men and women 
is the mission of the Marine Corps Recruiting Command. Recruiting 
Command has consistently accomplished this mission for more than the 
past 7 years for enlisted recruiting and 12 years for officer 
recruiting. These achievements provide the momentum fueling the 
continuous pursuit to improve the recruiting process and enhance the 
quality of life for our recruiters. To continue to attract America's 
finest youth, Recruiting Command has provided recruiters with the best 
tools available to accomplish their mission. The Marine Corps supports 
the National Call to Service Act and continues to work closely with DOD 
in developing an implementation policy. We expect to commence enlisting 
individuals under this program commencing October 1, 2003. The Marine 
Corps Reserve achieved its fiscal year 2002 recruiting goals, accessing 
5,904 non-prior service marines and 4,213 prior service marines. With 
regard to our Reserve component, our most challenging recruiting and 
retention issue is the ability to fill out our Selected Marine Corps 
Reserve units with qualified officers. The Marine Corps recruits 
Reserve officers almost exclusively from the ranks of those who have 
first served a tour as an active duty marine officer.
    While this practice ensures our Selected Marine Corps Reserve unit 
officers have the proven experience, knowledge, and leadership 
abilities when we need it the most--during mobilization--it limits the 
recruiting pool that we can draw from to staff our units. As a result, 
the Selected Reserve currently has a shortage of company grade (Second 
Lieutenant to Captain) officers. We are exploring methods to increase 
the Reserve participation of company grade officers through increased 
recruiting efforts, increased command focus on emphasizing Reserve 
participation upon leaving active duty, and Reserve officer programs 
for qualified enlisted marines. We are also pursuing the legislative 
authority to provide an affiliation bonus to Reserve officers as an 
additional incentive for participation in the Selected Marine Corps 
Reserve.
    Retention
    Retaining the best and the brightest marines has always been a 
major goal of the Marine Corps. The Marine Corps is by design a 
youthful service, however, it is of paramount importance to retain the 
highest quality marines to lead our young force. History has proven 
that leadership in the Staff Noncommissioned Officer ranks has been the 
major contributor to the combat effectiveness of the Marine Corps. The 
Marine Corps has two retention standards. Our First Term Alignment Plan 
has consistently achieved its reenlistment requirements over the past 8 
years. With one-third of the current fiscal year completed, we have 
achieved 87 percent of our first-term retention goal. A look at our 
Subsequent Term Alignment Plan (second tour and beyond) demonstrates 
that we have already retained 51 percent of our goal for this fiscal 
year. Both of these trends indicate healthy continuation rates in our 
career force.
    Current officer retention is at an 18-year high, continuing the 
strong performance of the last 2 years. Despite this positive trend, we 
cannot become complacent. As a Corps, we will continue to target 
specific qualifications and skills through continuation pay. Military 
compensation that is competitive with the private sector provides the 
flexibility required to meet the challenge of maintaining stability in 
manpower planning.
    Marine Corps Reserve--Partners in the Total Force
    It is important to note that the Marine Corps operates as a Total 
Force, including elements of both active and Reserve components. We 
continue to strengthen the exceptional bonds within our Total Force by 
further integrating the Marine Corps Reserve into ongoing training and 
operations. Concurrent with the various initiatives underway to improve 
integration and update capabilities, the Marine Corps Reserve continues 
to support its primary mission of augmentation and reinforcement. 
Reserve units and marines provided over 1.8 million man-days in fiscal 
year 2002. Reserves provided support at all levels within the Marine 
Corps and at Combatant Commands and High-Level Staffs.
    As we enter the 21st century, the overall structure of Marine 
Forces Reserve will retain the current basic structure. However, Marine 
Forces Reserve is currently working to create new capabilities 
identified as part of its comprehensive review. Both as a structural 
and an operational change, Marine Forces Reserve is increasing its 
operational ties with the warfighting commanders by improving lines of 
communication with our operating forces. These increased operational 
ties will improve interoperability, increase training opportunities, 
and enhance the warfighting capabilities of the Total Force.
    Mobilization
    Since the events of September 11, the Marine Corps judiciously 
activated Individual Ready Reserve (IRR) marines in response to both 
internal and joint operational requirements. The Marine Corps has 
maximized the use of individual volunteers to meet these requirements 
primarily in the areas of staff augmentation and force protection. In 
addition, selected Marine Corps units were activated for force 
protection requirements in support of homeland security. Because of 
emerging requirements associated with war on terrorism, we began 
involuntary recall of some of our IRRs on January 17, 2003.
    Stop Loss
    On January 15, 2003, the Marine Corps instituted Stop Loss across 
the Marine Corps to meet the emerging requirements associated with the 
expanding war on terrorism. Stop Loss was initiated to provide unit 
stability/cohesion, maintain unit readiness, meet expanded force 
protection requirements, and to reduce the requirement to active IRR 
personnel. We will continue to make judicious use of this authority and 
continue to discharge marines for humanitarian, physical disability, 
administrative, and disciplinary reasons. We have instructed our 
general officers to continue to use a common sense approach and have 
authorized them to release marines from active duty if it is in the 
best interest of the Marine Corps and the marine.
Education
    Our leaders--especially our noncommissioned officers--throughout 
the entire chain of command have kept the Corps successful and 
victorious. Their sense of responsibility is the cornerstone of our 
hard-earned successes. We will continue to develop leaders who can 
think on their feet, act independently, and succeed. In the future, as 
today, leaders will continue to instill stamina and toughness in each 
individual while simultaneously reinforcing character that values 
honor, integrity, and taking care of our fellow marines--including 
treating each other with dignity and respect. Aggressive and informed 
leadership demands education, training, and mentoring. The importance 
of these key elements cannot be over-emphasized, and we must attend to 
each at every opportunity.
    Marine Corps University has responsibility and authority for the 
planning, coordinating, and overseeing all education for our marines. 
The university is accredited by the Southern Association of Colleges 
and Schools to confer masters' degrees and currently offers a Masters 
of Strategic Studies at the Marine Corps War College, and a Masters of 
Military Studies at the Command and Staff College. The Chairman of the 
Joint Chiefs of Staff currently accredits the War College, Command and 
Staff College, and the College of Continuing Education for Phase I 
Joint Education. The president of the university also exercises command 
authority over the Expeditionary Warfare School and the Staff 
Noncommissioned Officer Academies worldwide. Notable accomplishments 
include Department of Education approval of a Masters of Operational 
Studies at the School of Advanced Warfighting, which is the first step 
toward our third master's degree program.
    Plans for the future include providing coordination and continuity 
through a coherent education plan for all marines. Our goal is to 
develop better warfighting leaders at all levels through an increased 
emphasis on relevant, structured education--at the graduate and 
undergraduate level--through both resident programs and distance 
education. Our intent is to greatly expand beyond the current emphasis 
on field-grade officers to support leadership development throughout 
the training and education continuum from private through general 
officer, and to specifically bring senior non-commissioned officers 
further along the education continuum.
    Our lifelong learning mission is to establish an integrated 
approach to learning; providing marines with one destination for 
enrollment in a college program; access to research tools such as 
books, periodicals, and the Internet; basic skills enhancement; and 
nonresident courses. In the face of a requirement to increase tuition 
assistance from 75 percent to 100 percent of tuition costs, and the 
rate from $187.50 per semester hour to $250 per semester hour, the 
Marine Corps added the necessary funds to expand the tuition assistance 
program in the fiscal year 2004 POM, which provides sustainment until 
fiscal year 2009.
Quality of Life/Quality of Service
    Congressional support for increases in the Basic Allowance for 
Housing, as well as the aggressive Marine Corps use of the Public 
Private Venture (PPV) authority provided by Congress 5 years ago, are 
resulting in dramatic improvements to the housing of our marines and 
their families. Your continued support of our budget to help us achieve 
zero out-of-pocket expenses by fiscal year 2005 is greatly appreciated. 
The condition of other infrastructure, such as our barracks, 
workspaces, and training ranges, are also key factors in overall 
quality of life. While our infrastructure budgets reflect only the 
minimal essential military construction and recapitalization necessary, 
they will allow us to achieve a recapitalization rate of 67 years 
within the FYDP (down from 100 years in fiscal year 1999) and an 
improvement of our facilities readiness by fiscal year 2013.
    We have been aggressively working to reduce the number of marines 
and civilian marines in non-core business areas, reapplying the marines 
to other operational requirements, and looking to optimize the use of 
civil service/contractor support where appropriate. Our track record is 
good. For example, we have reapplied marines in the garrison food 
service and mobile equipment areas back to the operating forces and 
competed a significant number of civilian positions. We will continue 
this process in line with the President's Management Agenda to review 
50 percent of our positions by fiscal year 2008. By ensuring that 
quality of service remains high, we will help maintain our successful 
record of recruitment and retention.
Families
    The Marine Corps is an expeditionary force prepared to deploy on 
short notice to accomplish assigned missions. While we may recruit 
marines, we almost always retain families--it becomes a family decision 
for a marine to stay for an entire career. Because of our expeditionary 
culture, deployment support is provided to marines and their families 
as part of our normal operations, largely through the efforts of Marine 
Corps Community Services. In addition to concerted efforts to improve 
housing and family services, security and support is offered during 
pre-deployment, deployment, and post-deployment phases of our 
operations. The Marine Corps also offers numerous programs focused on 
new parent support and the prevention of domestic violence, as well as 
services and programs for infants, toddlers, children, and teens. The 
Exceptional Family Member Program focuses on assistance to service 
personnel who have a family member with special needs before, during, 
and after Permanent Change of Station Orders.
Safety
    Ensuring a safe command climate and working environment remains a 
critical concern for the Marine Corps. Often, the settings and the work 
our marines do are dangerous, but effective command climates 
continually mitigate those dangers through planning and leadership. Our 
safety programs are integral to force protection and operational 
readiness. Leadership and programming in safety awareness and standards 
are vital to providing marines and their families with a meaningful 
quality of life and service. On the heels of a very successful year 
prior, fiscal year 2002 was a disappointing year for safety in the 
Corps, as we lost more marines to mishaps in fiscal year 2002 than we 
had in any single year for the preceding decade. Our aviation mishap 
rate increased as well (from 1.4 to 3.9 class A mishaps per 100,000 
flight hours).
    These results do not indicate a lack of desire to safeguard 
marines. Rather, several factors were involved that made it 
particularly difficult to prevent mishaps through normal operational 
risk management efforts. Demographically, the Marine Corps is a younger 
force than the other Services (by an average 6 to 8 years), with 
maturity being a contributing factor in many mishaps; however, none of 
these factors are excuses for any failure to avoid preventable mishaps. 
Our leadership at all levels is deeply concerned about the negative 
trend and we are actively involved in multiple efforts to improve 
readiness and save our most precious marines and valuable equipment.

             IV. OUR MAIN EFFORT--EXCELLENCE IN WARFIGHTING

    Marines have a vision for the future, and we are moving forward 
with the modernization and transformation efforts needed to make this 
vision a reality. We fully understand that our vision cannot be 
achieved independent of our sister Services. Each of the Services has 
its own critical role to play in providing for our Nation's collective 
security; however, it is important that each of our contributions be, 
simultaneously, both unique and complementary. In particular, the Corps 
stresses the importance of our key partnership with the Navy. The Navy-
Marine Corps team has never been stronger, nor more necessary for our 
Nation.
    We have stated that our first concern is with the care and 
stewardship of our people. This philosophy extends to the rest of our 
programming in that we focus on procuring the programs and equipment 
that will maximize the abilities of our marines to perform effectively 
in combat. With the foundation of requirements drawn from our emerging 
concepts, the Marine Corps is transforming its warfighting systems and 
assets throughout the elements of our Marine Forces. The following 
examples reflect but a few of our transformation and modernization 
efforts. A more comprehensive description of the Marine Corps' entire 
acquisition program can be found in the publication entitled Marine 
Corps Concepts and Programs 2003.
Training
    We believe the enduring wisdom, ``you train the way you fight.'' 
Because of this, our training exercises are becoming ever more joint 
and combined to provide our marines with the experience they will need 
when called upon to respond to crises--because there is no doubt that 
we will work alongside our sister Services and coalition partners from 
other nations in such circumstances. The Marine Corps Combat Training 
Center at Twentynine Palms, California, focuses on integrated live fire 
and maneuver, as well as combined arms training, and will continue to 
play a central role as our foremost training and testing site for 
Expeditionary Maneuver Warfare. Ongoing initiatives will expand the 
role of the Combat Training Center and transform it into a ``Center of 
Excellence'' that will focus the training efforts across our operating 
forces. The Combat Training Center facilitates and supports the 
development of new concepts and capabilities, thereby reinforcing our 
combat effectiveness, enhancing joint interoperability, and supporting 
DOD transformation efforts.
    The future role of the Combat Training Center will grow beyond its 
current emphasis on battalion-level integrated live fire, combined arms 
training to support expanded training opportunities for all elements 
(ground, air, combat service support, and command) of Marine Air-Ground 
Task Forces up to and including a Marine Expeditionary Brigade. This 
will include: enabling multi-site, distributed training evolutions that 
tie together units from various bases; and investing in technology that 
simultaneously links live, virtual, and constructive training. 
Additionally, improvements to the existing Expeditionary Air Field and 
construction of a large-scale urban training facility are being studied 
as possible ways to enhance training opportunities at Twentynine Palms. 
All of these efforts have the potential to increase the capability of 
our training center to support evolving training requirements, enabling 
the Corps to maintain its focus on uniquely Marine training skills, 
while providing a vehicle to further integrate Marine Corps 
capabilities into those of the Joint Force.
Infrastructure
    Marine Corps infrastructure consists of 15 major bases and stations 
and 185 Reserve facilities in the United States and Japan. In keeping 
with the Corps' expeditionary nature, these installations are 
strategically located near air and seaports of embarkation, and are 
serviced by major truck routes and railheads to allow for the rapid and 
efficient movement of marines and materiel. Recognized as the ``fifth 
element'' of the Marine Air-Ground Task Force because of the close link 
to the operating forces and their operational readiness, the condition 
of the Corps' bases and stations is of vital importance. With the 
ability to train as an integrated force being a fundamental requirement 
of the Corps, infrastructure development planning is designed to 
provide the facilities, training areas, and ranges (both air and 
ground) to accomplish this requirement while minimizing excess and 
redundant capacities. With increasing encroachment pressures and 
constrained fiscal resources, the Marine Corps faces significant 
challenges to provide and maintain a lean and efficient infrastructure 
that fully meets changing mission demands.
    Blount Island Acquisition
    We are committed to undertake the wisest possible course to 
conserve our real property and, when necessary, to acquire any 
additional property that is mission critical. The Blount Island 
facility in Jacksonville, Florida, is a national asset that must be 
acquired to ensure its availability for long-term use. Blount Island's 
peacetime mission of supporting the Maritime Pre-positioning Force is 
vitally important, while its wartime capability of supporting large-
scale logistics sustainment from the continental United States gives it 
strategic significance. The facility will play a vital role in the 
national military strategy as the site for maintenance operations of 
the Maritime Pre-positioning Force for years to come. The Marine Corps 
plans to acquire the Blount Island facility in two phases. Phase 1, 
funded in fiscal year 2000 and fiscal year 2001, is currently in 
progress and will acquire interests in approximately 311 acres of land 
for the primary purpose of ensuring public safety on parcels adjacent 
to the leased central management operational area. Phase 2, planned for 
fiscal year 2004, involves acquisition of the central maintenance 
operational area, consisting of over 1,000 acres.
    Training at Eglin Air Force Base
    With cessation of training at Vieques, Puerto Rico, the established 
training ranges, quality of training support, and proximity to the 
ocean available at Eglin Air Force Base, Florida, can provide Naval 
Expeditionary Forces with an alternative training capability. Eglin's 
capabilities, location, and tenant commands provide the opportunity to 
facilitate joint training between Air Force, Navy, Marine Corps, Army, 
and Special Operations Forces. Development of an expeditionary force 
training capability at Eglin can support the Secretary of Defense's 
vision and direction for training transformation and the development of 
a Joint National Training Capability. This type of training will be 
critical to naval expeditionary combat-readiness.
    The Marine Corps proposes to execute two 10-day training exercises 
with a Marine Expeditionary Unit at Eglin each year. These exercises 
include a variety of scenarios such as amphibious landings, raids, 
mechanized operations, helicopter operations, and live fire and 
maneuver exercises. No final decision on training activities will be 
made until an environmental assessment currently underway is completed. 
The Navy and Marine Corps are actively working to develop and sustain 
cooperative relationships with the local community and the State of 
Florida.
    Encroachment and Environmental Issues
    Encroachment--defined as any deliberative action that can cause the 
loss of, or restrict, the use of land, airspace, frequency, or sea 
maneuver areas--is a serious threat to the operational readiness of the 
Corps. Urban and residential areas now surround many Marine 
installations that were originally remotely situated. This growth is 
often accompanied by pressure for access to Marine Corps resources, or 
demands to curtail Marine Corps operations to make them more compatible 
with surrounding land uses. The Corps' training lands often provide 
excellent habitat for threatened and endangered species, serving as 
islands of biodiversity amid the crush of densely populated urban areas 
that surround many of our installations. The Marine Corps is 
proactively engaged with Federal, State, and local agencies and 
governments, as well as nongovernmental organizations, to provide win-
win solutions to these encroachment pressures, and ensure compatible 
land usage and environmental security without degrading training and 
mission readiness. Unimpeded access to our installations and ranges is 
critical to the Marine Corps remaining America's ``Force in 
Readiness.''
    Our Nation has crafted a strong environmental code of conduct 
structured on a wide range of Federal, State, and local laws and 
regulations. Vague or inflexible environmental requirements, however, 
can present significant challenges for marines performing their primary 
mission. We support ongoing efforts to seek clarity and limited 
flexibility in certain environmental laws, so that we may more 
effectively balance our training requirements with our long-term 
environmental stewardship responsibilities. Our ultimate goal is to 
``fight the way we train,'' while preserving the natural environment. 
Today, marines at all levels perform their jobs with an increased 
awareness of potential environmental impacts. All of our bases and 
stations, for example, have implemented Integrated Natural Resource 
Management Plans and aggressive pollution prevention programs. The hard 
work does not end with these initiatives. The impact of encroachment on 
the Corps' ability to fully utilize its installations are varied and 
require constant vigilance and attention to ensure that operational 
readiness is not diminished.
Command and Control
    Interoperability is the key to improving naval expeditionary 
command and control effectiveness, especially as we begin to integrate 
battlespace sensors residing in our manned and unmanned aerial, space, 
and ground vehicles. This is particularly true as the Marine Corps 
continues to work routinely with a range of government, non-government, 
and international agencies. The command, control, communication, and 
computer (C\4\) end-to-end interoperability of the Global Information 
Grid will serve to enhance our ability to conduct joint, multi-
department, and multi-agency operations through the use of technology, 
standards, architectures, and tools.
    The Marine Corps works closely with the Joint Staff, combatant 
commanders, operating forces, and other Services to ensure that, where 
possible, joint concepts of operations are developed for common 
capabilities. An example of this process is occurring with the 
development of the Joint Tactical Radio System, which combines numerous 
single function programs of current inventories into a single, 
interoperable, joint radio program that will provide secure digital 
communications while enhancing wideband tactical networking.
Intelligence
    Our fiscal year 1996 through fiscal year 2003 enhancements to 
Marine Intelligence Support are paying off during Operation Enduring 
Freedom and the global war on terrorism. Intelligence support organic 
to Marine Forces combined with capabilities from our Marine Corps 
Intelligence Activity in Quantico, Virginia, to provide federated 
production (reachback) support has been validated through current 
operations. Marine Expeditionary Unit's forward deployed with organic 
all-source intelligence collection and production capabilities provide 
current intelligence support to Marine and Special Operations units. 
Our deployed signals intelligence, human intelligence, ground sensor, 
and reconnaissance teams provide the commander current situational 
awareness. All-source intelligence marines have the systems and 
training to integrate organic collection, network with the joint force 
on the ground, and effectively reach back to the Marine Corps 
Intelligence Activity and joint centers at secure locations.
Mobility
    While the global war on terrorism has demonstrated the current 
capabilities of the Navy-Marine Corps team, our continuous 
transformation and modernization efforts hold even greater potential 
for increasing naval power projection capabilities in the future. Many 
of these efforts focus on increased speed, range, payload, and 
flexibility of maneuver units--mobility. This concept includes a vision 
of an all-vertical lift Air Combat Element, with the introduction of 
tiltrotor and short-take-off/vertical-landing (STOVL) aircraft. The 
following initiatives are some of the keys to the achievement of Marine 
Corps operational mobility objectives:
    MV-22 Osprey
    The MV-22 remains the Marine Corps' number one aviation acquisition 
priority. While fulfilling the critical Marine Corps medium lift 
requirement, the MV-22's increased capabilities of range, speed, 
payload, and survivability will generate truly transformational 
tactical and operational opportunities. With the Osprey, Marine Forces 
operating from the sea base will be able to take the best of long-range 
maneuver and strategic surprise, and join it with the best of the 
sustainable forcible-entry capability. Ospreys will replace our aging 
fleets of CH-46E Sea Knight and CH-53D Sea Stallion helicopters.
    KC-130J
    The KC-130J will bring increased capability and mission flexibility 
to the planning table with its satellite communications system, 
survivability, and enhancements in aircraft systems, night systems, and 
rapid ground refueling. The KC-130J is procured as a commercial off-
the-shelf aircraft that is currently in production. We are pursuing a 
multiyear program for purchase with the U.S. Air Force.
    Advanced Amphibious Assault Vehicle
    The Advanced Amphibious Assault Vehicle (AAAV) is the Marine Corps' 
only Acquisition Category 1D program and will be one of the principal 
enablers of the Expeditionary Maneuver Warfare concept. AAAV will 
provide never before realized high-speed land and water maneuver, a 
highly lethal day/night fighting ability, and advanced armor and 
Nuclear-Biological-Chemical protection. This--coupled with a systematic 
integration into emerging service and Joint Command and Control 
networked information, communications, and intelligence architectures--
will provide the Marine Corps with increased operational tempo, 
survivability, and lethality across the spectrum of operations.
    Maritime Pre-positioning Force
    The Maritime Pre-positioning Force (Future) will be the true 
enabler of primarily sea-based operations. When it becomes operational, 
the future Maritime Pre-positioning Force role will expand beyond that 
of today, and will provide a true seabasing capability. In this regard, 
it will serve four functions that the current capability cannot: (1) 
phased at-sea arrival and assembly of units; (2) selective offload of 
equipment and cargo; (3) long-term, sea-based sustainment of the 
landing force; and (4) at-sea reconstitution and redeployment of the 
force. The naval services are exploring several new technology areas 
during the development of Maritime Pre-positioning Force (Future). 
Currently, the Maritime Pre-positioning Force (Future) Program is 
conducting an analysis of alternatives to inform an acquisition 
decision by the Office of the Secretary of Defense.
    High-Speed Vessel (HSV)
    High-speed vessels will enhance the Marine Corps' capability to 
perform a wide range of missions, from providing support to a theater 
security cooperation plan to sustaining long-term operations ashore. 
High-speed vessels can enhance our ability to conduct sea-based 
operations and use the sea as maneuver space. HSVs do not have the 
loitering and forcible entry capabilities of amphibious ships or the 
pre-positioning capacity of our Maritime Pre-positioned Force 
Squadrons. However, their shallow draft, high speed, maneuverability, 
and open architecture make them a valuable link in a seamless logistics 
system that extends from source of supply to the Sea Base and the Joint 
Force, enabling a faster, more responsive, and capable deployment of a 
range of force modules from forward-based ``hubs'' such as Okinawa, or 
from the United States. The Marine Corps is currently testing and 
validating these concepts by employing a high-speed vessel in the 
Pacific theater as a form of strategic lift.
    Power Projection Platforms
    Combined with embarked marines, naval expeditionary warships 
provide the Nation with forward-presence and flexible crisis response 
forces. They also provide a truly unparalleled expeditionary forcible-
entry capability. As part of a joint effort, the Marine Corps will 
remain capable of getting to the fight rapidly in order to decisively 
deter or defeat adversaries who try to impose their will on our country 
or its allies. A fiscally constrained programmatic goal of 12 
Amphibious Ready Groups--one that deliberately accepts increased 
operational risk by attempting to balance force structure with 
available resources--does not change the warfighting requirement to 
lift the Assault Echelons of three Marine Expeditionary Brigades via 
future platforms for amphibious shipping. The Marine Corps supports the 
LPD-17 and a modified LHD-8 (``Plug Plus'') ship design in fiscal year 
2007 and will evaluate the adequacy of the R&D and shipbuilding and 
conversion (SCN) funding for the development of future LHA(R) ships for 
the remainder of the class.
    Mine Countermeasure Capabilities
    Naval expeditionary forces require an effective counter-mine 
warfare capability to open and maintain sea lines of communication and 
to operate within the littoral battle space. This is probably our 
greatest concern when it comes to projecting power in an anti-access 
environment. With respect to mine countermeasures, we require a family 
of capabilities that encompasses mine detection, location, 
neutralization, marking, and data dissemination. Designed to provide an 
organic mine counter-measures capability within operationally 
acceptable timelines and with acceptable levels of operational risk, 
this next generation of systems includes the Advanced Mine Detector, 
the Assault Breacher Vehicle, the Remote Minehunting System, and the 
Long-term Mine Reconnaissance System. Our most critical mine 
countermeasures deficiencies exist in the area near the shoreline 
through the high water mark and beyond, where detection and 
neutralization capabilities are extremely limited. Given the broad 
proliferation of known and unknown mined areas throughout the world, we 
must improve our ability to operate in this exceptionally lethal 
environment. Our intent is to leverage America's strength in technology 
to dramatically improve our ability to locate and avoid or neutralize 
mines and obstacles as necessary, and eventually remove the man from 
the minefield.
Fires and Effects
    With the increased range and speed of expeditionary mobility 
assets, the landward area of influence of naval forces has increased by 
an order of magnitude. Consequently, the Nation requires weapon systems 
with correspondingly greater range, lethality, flexibility, and 
tactical mobility. A range of lethal and non-lethal fire-support 
programs is moving the Corps in that direction. The development and 
acquisition of non-lethal weapons systems will expand the number of 
options available to commanders confronted with situations in which the 
use of deadly force is inappropriate. The Marine Corps is developing a 
robust non-lethal capability that will address the non-lethal core 
requirements of clearing facilities, crowd control, and area denial. 
Additionally, we are enhancing the capabilities with which we can 
affect our adversaries that defy the traditional concept of weapons and 
fire-support means. Technical advances in directed-energy weapons hold 
much promise for future capabilities in this area.
    Joint Strike Fighter
    The Joint Strike Fighter (JSF) is the next-generation strikefighter 
for the Marine Corps, Air Force, and Navy and will replace the Marine 
Corps' AV-8B and F/A-18A/C/Ds. The JSF family of aircraft will include 
a STOVL variant, a conventional take-off and landing (CTOL) variant, 
and an aircraft carrier-capable variant. Commonality between the 
variants will reduce both development and life cycle costs and will 
result in significant savings when compared to the development of three 
separate aircraft. The Marine Corps requires that its STOVL variant be 
able to operate from large-deck amphibious ships, austere sites, and 
forward operating bases. The STOVL Joint Strike Fighter version can use 
from three to five times more airfields around the world than our 
existing conventional take-off and landing aircraft. Moreover, because 
the STOVL variant can operate from both conventional carriers and 
amphibious assault ship decks, it thereby effectively doubles the 
number of platforms available for seabased operations. The advantages 
of a stealthy STOVL strike fighter--capable of taking off from an 
expeditionary base on land or at sea, flying at supersonic cruise, 
accomplishing its mission with advanced sensors and weapons, and then 
returning to its expeditionary site--are dramatic. The STOVL Joint 
Strike Fighter will provide the reliability, survivability, and 
lethality that marines will need in the years ahead, and transform the 
very foundations of naval tactical air power for the 21st century.
    Naval Surface Fire Support
    Our ability to provide fires in support of expeditionary forces 
operations beyond the beach has not kept pace with the dramatic 
increases in mobility. Critical deficiencies currently exist in the 
capability of the Navy to provide all-weather, accurate, lethal, and 
responsive fire support throughout the depth of the littoral in support 
of expeditionary operations. The Marine Corps supports the Navy's near-
term efforts to develop an enhanced naval surface fire support 
capability with the fielding of the 5,,/62-caliber naval gun and the 
development of extended-range munitions. In the far-term, the Marine 
Corps supports the development and fielding of the Advanced Destroyer 
(DD(X)), armed with 155mm Advanced Gun Systems and Land Attack 
Missiles, to fully meet our naval surface fire support requirements. 
Our Nation's expeditionary forces ashore will remain at considerable 
risk for want of suitable sea-based fire support until DD(X) joins the 
fleet in significant numbers.
    Indirect Fire-Support
    A triad of indirect fire-support programs will provide needed 
firepower enhancements for marines in the near- to mid-term. The first 
element of the triad is the Lightweight-155mm (LW-155) towed howitzer 
needed to replace our current M-198 howitzer, which is at the end of 
its service life. The LW-155 is a joint Marine Corps-Army effort that 
will meet or exceed all the requirements of the current system while 
significantly reducing its weight.
    The second element, the High Mobility Artillery Rocket System 
(HIMARS), will deliver very high volumes of rocket artillery in support 
of the ground scheme of maneuver. The HIMARS will provide accurate, 
responsive general support, and general support, reinforcing indirect 
fires at long range, under all weather conditions, and throughout all 
phases of combat operations ashore. It will fire both precision and 
area munitions to a maximum range of 36 miles.
    The Expeditionary Fire Support System, the third system of the 
land-based fire support triad, will accompany marines in any 
expeditionary mode of operation. It will be the primary indirect fire-
support system for the vertical assault element of the ship-to-
objective maneuver force. The Expeditionary Fire Support System, as a 
system, will be internally transportable by helicopter or tiltrotor 
aircraft to allow the greatest range and flexibility of employment for 
our future operations.
    Information Operations
    Defense planners are engaged in studies exploring Information 
Operations as a core military competency, fully integrated into both 
deliberate and crisis action planning. The Marine Corps intends to 
enhance our operational capability in both offensive and defensive 
Information Operations. Marine Corps doctrine and warfighting 
publications are being reviewed and revised to acknowledge Information 
Operations as a core warfighting capability fundamental to all 
operations spanning the spectrum of conflict with equal significance 
during non-combatant and humanitarian operations. We recognize a 
requirement to develop and train an Information Operations career force 
of trained professionals from the ground up in support of joint and 
interagency efforts.
    New Weapons Technologies
    The Corps is particularly interested in adapting truly 
transformational weapon technologies. We have forged partnerships 
throughout the Department of Defense, other agencies, and with industry 
over the past several years in an effort to develop and adapt the most 
hopeful areas of science and technology. Several notable programs with 
promising technologies include: (1) advanced tactical lasers, (2) high-
power microwave, non-lethal active denial systems, (3) free electron 
lasers, (4) electromagnetic guns (rail guns), and (5) common modular 
missiles for aircraft.
Logistics and Combat Service Support
    The Marine Corps logistics' vision is to significantly enhance the 
expeditionary and joint warfighting capabilities of our Operating 
Forces. Key warfighting capabilities encompassed in our future 
concepts--Enhanced Networked Seabasing and Ship-To-Objective-Maneuver--
will be defined by our logistic capabilities and limitations. Hence, we 
are committed to exploring and implementing actions to increase combat 
power, operational versatility, and deployability. The concept of 
focused logistics in Joint Vision 2020 is guiding the Marine Corps as 
we strive to increase the sustained forward-deployed capability of our 
forces. Future force combat service support--and the Marine Corps 
logistics that enables it--will be changing as we shift more of our 
operations to the sea base. At the forefront of this effort is the 
Marine Corps Logistics Campaign Plan that outlines essential objectives 
and tasks based upon overarching Marine Corps, naval, joint, and DOD 
concepts and guidance. Our strategy encompasses four pillars:
    Logistics Information Fusion and C2
    A key to current and emerging warfighting capabilities is a robust 
and responsive logistics information technology capability--one that is 
integrated with our command-and-control architecture and interoperable 
with naval and joint systems. The Global Combat Support System--Marine 
Corps (GCSS-MC) and shared data environment, along with the Common 
Logistics Command and Control System, provide logisticians across the 
Marine Corps with a set of common logistics assessment, planning, and 
execution tools that are interoperable with the common operating 
picture.
    Seamless Distribution
    The single capability that defines Marine Forces in a joint 
environment is its ability to sustain itself over an extended period of 
time. The principal goal is to move from defining sustainment in terms 
of deployable ``days of supply'' to a continuous uninterrupted 
sustainment capability for the force. A key element in achieving this 
is integrating current distribution processes and systems into broader 
naval and joint distribution processes. Achieving this capability will 
not only greatly enhance naval operations, but will be transferable to 
the task of sustaining joint forces and operations.
    Enhanced Equipment Readiness
    The bulk of our logistics effort and associated ``footprint'' is 
driven by its equipment-support activities. The Marine Corps seeks to 
reduce the required level of support for equipment by greatly improving 
the reliability, availability, and maintainability of ground tactical 
equipment.
    Enterprise Integration
    Achieving the emerging warfighting capabilities envisioned by 
future concepts require dynamic shifts in our logistics processes and 
organizations. Leading this effort toward logistics modernization is 
true enterprise integration consisting of GCSS-MC, process 
reengineering, and organizational reform.

                             V. CONCLUSION

    The major challenges confronting the Marine Corps today center on 
organizing, training, and equipping our force to better support Joint 
Force Commanders, now and in the future. The modernization programs and 
the transformational systems that we are pursuing are key to our 
ability to meet the Nation's wartime, crisis, and peacetime 
requirements. We have put into place well-conceived programs addressing 
the needs of our marines and their families, the requirement to enhance 
the current readiness of legacy systems, the critical role 
infrastructure plays in present and future readiness, and the balance 
between modernization and transformation.
    We are focusing on the development of integrated capabilities that, 
when combined with those of our sister Services and Special Operations 
Forces, will effectively meet the challenges of an increasingly varied 
and threatening national security landscape. You can remain justifiably 
proud of what your Marine Corps contributes as America's forward 
engagement and expeditionary combined-arms force. We are grateful for 
the unwavering support you provide in this vitally important work.

    Senator Talent. Thank you, General.
    We have a vote at 3:45, and I want to make sure the 
subcommittee members have a chance to ask questions. I am only 
going to ask one right up front and then defer to Senator 
Kennedy.
    Admiral, I want to thank you for your personal kindnesses 
to me in giving me that really good brief, which took me by the 
hand a little bit, not only a new chairman but a new Senator. 
Your vision is intriguing and powerful. As you mentioned, it 
depends a lot on the Littoral Combat Ships, which as I 
understand there are two parts to that. One is the ship or the 
frame, and then the focus on mission modules. As I look at the 
requirements documents that the Navy has developed so far, it 
seems to me that you are pretty far along in defining what you 
want with the ship and its frame.
    I am concerned about whether you are equally as far along 
in defining the requirements for the modules. I think we know 
what we want them to do and it makes a lot of sense with anti-
submarine warfare and littoral combat. Do you share that 
concern? Are you where you want to be in terms of developing 
the requirements for that module, and are you where you want to 
be in terms of the technical sophistication of it at this 
point?
    Admiral Clark. Mr. Chairman, where I would like to be is 
that I would like to be at the end of a 3-year or a 4-year 
development process, but I am only a year or less into it.
    Senator Talent. Are you where you hoped to be at this 
point? Put it that way.
    Admiral Clark. So what I would say is that I am very 
pleased with the fact that I am sitting here and we are 
discussing a program that we did not submit in the fiscal year 
2003 request. It was clear to me that in dealing with the world 
that we were living in, the LCS platform and its family of 
ships has a capability we need tomorrow.
    I will tell you that I am extraordinarily pleased with the 
progress that we have made. If I had known what I know today 
when we worked on this budget and developed it, I would have 
put it together differently. But I did not know enough yet. 
When Secretary Young comes in panel two to talk to you about 
the things that we have done to bring, to move LCS along, I 
want to say that LCS represents a reform in the acquisition 
process, the spiral development process.
    Here is where I am with LCS. We envision Block Zero 
fundamentally the modules being off-the-shelf existing 
capabilities that we have today. If I had known what I know 
today when I was building this budget and submitted it, I would 
have had more money in the R&D side of this, but I could not 
justify it as we were making the submissions. I did not have 
enough knowledge.
    I do believe that we are absolutely going at this in the 
correct way.
    Senator Talent. Is that the reason the $35 million in 
production money is part of your unfunded priorities?
    Admiral Clark. That is correct. Fundamentally, I need these 
ships to deal with what I believe to be the threat that we face 
in the world where we are operating today and the kind of 
threat that is going to come after us in the first decade or 
two decades of the 21st century, where no navy is going to go 
toe-to-toe with the Navy of the United States of America. They 
are going to come after us asymmetrically, and we have to be 
able to deal with these threats in the near-land arena.
    What I am excited about, though, is the issue you raised. 
This is a sea frame. We are going after the design of this in a 
revolutionary way. I and my successors will not have to come to 
Congress years from now for a mid-life upgrade because this 
approach to ship ownership is going to allow continuous 
upgrades.
    It is the way to develop and create the combat capability. 
I am excited about it.
    Senator Talent. You are saying the whole concept here is 
that the nature of the modules would be such that even if you 
develop the frame ahead of where you develop the module, the 
frame should be able to accommodate whatever you decide to do 
with the module?
    Admiral Clark. That is absolutely correct, and I believe 
that the basic frame has to have fundamental capabilities. It 
must have self-defense capabilities. We ought to be able to 
shoot down missiles, and we have to be able to deal with the 
surface threat. But fundamentally, we have defined what the 
mission is for this ship. General Hagee mentioned them. They 
are areas that this subcommittee is very interested in.
    I believe this is the most significant advance we have seen 
in years is the wet end of mine warfare. I believe that by 
enabling us to go and create the design from the keel up, the 
ability to go after unmanned vehicles in mine warfare and the 
whole undersea warfare area, anti-submarine warfare, in the 
near-land arena, the future is going to absolutely 
revolutionize the way this whole area of warfare is conducted.
    The first step is we have to have the frame as rapidly as 
possible because we have real world threats in the terrorist 
environment that we live in today. We need these capabilities 
with things that we can put on them today, existing off-the-
shelf capability. We need that as rapidly as we can turn the 
product.
    Senator Talent. Thank you, Admiral.
    Senator Kennedy.
    Senator Kennedy. Just continuing along on the LCS modules, 
I understand that the Navy had planned to install the remote 
mine hunting systems on 17 DDG-51 destroyers. Now they are 
focused on the LCS. They have cut the number to six systems for 
the DDGs. The previous plan would give mine countermeasures 
capability to the fleet sooner.
    I am looking at that against the background of what we have 
seen with the HMS Galahad coming on into port over there with 
the presence of mines. It seems to me that we are going to be 
needing this capability. You have the capability. It was all 
set to sort of go. Now we are going to be delayed for a period 
of time, and we are just illustrated in these littoral 
situations in the past days about the importance of that 
capability.
    Admiral Clark. Senator, here is the way we go at this. 
Frankly, the recommendation was made to me said: Boss, we are 
going to do this in LCS; should we proceed with the organic 
commitment that we had made before? I said, ``Absolutely, we 
are going to continue with the commitment for organic mine 
warfare, because we have more development to do here.''
    But, Senator, what I believe is this: an LCS ought to have 
four or five of the RMSs on it. That is what I think it should 
have. So as we put together the program for the next year, this 
will have more definition next year. But one RMS is not enough. 
I envision we will be tailoring these individual platforms, and 
I will tell you that I absolutely see the RMS program growing.
    Senator Kennedy. Mr. Chairman, we are going to be voting at 
3:45 and there are three of us here. So if we get 7 or 8 
minutes, is that okay?
    Senator Talent. Whatever we need.
    Senator Kennedy. We want to be fair. We will try and get it 
within 8 minutes.
    Let me ask you this. Why did it take as long--I do not know 
if the general can tell--for the HMS Galahad to get into port? 
It seemed that it was coming into port and it was outside and 
coming into port, and it seemed to take about 3 days to get on 
into that area with all of the relief. I know what the problems 
are once it got there, but what was that problem and the 
problems with unloading. But what was really the problem? Was 
it removing the mines?
    General Hagee. Actually, it was not removing the mines. In 
fact, I would like to say a couple of words about the mines.
    Senator Kennedy. Good.
    General Hagee. There is a complementary way to attack mines 
and that is what we did in Kuwait.
    Senator Kennedy. This is not when you were using the 
choppers and the chains? I saw them doing that clearing the 
Gulf before out there.
    General Hagee. No, sir.
    Senator Kennedy. One of the great sights, seeing these 
helicopters carrying those chains and the American fleet going 
after.
    General Hagee. This goes back to the idea of Sea Basing and 
speed, sir. When it looked like the Iraqis were going to ignite 
some of the air fields, we launched the attack. Not only did we 
take down the southern oil fields, we also took down the Al Faw 
Peninsula and Umm Qasr. Because it was so fast, what our forces 
did is we actually captured three barges with mines on the 
barges that they were getting ready to lay--that they never 
laid.
    Therefore, we actually got the HMS Galahad in much faster 
than otherwise. Now, the day that she was supposed to leave, we 
actually found a mine, and so we wanted to ensure that the 
harbor was completely clear of mines and that is why there was 
that slight delay.
    Senator Kennedy. Okay. That is helpful, but that capability 
and capacity, if they had not gotten the three barges of mines 
out there, it might have been different.
    Let me come back to the fleet size. We talked--Admiral 
Clark, I appreciated the chance to visit with you--about the 
retiring of the DD-963 destroyers early. We know that they have 
been providing the Tomahawk missiles for the strike missions 
and I think you mentioned that there were alternative ways of 
providing that capability.
    So I looked into that, and of course you mentioned, I 
think, the Aegis cruisers and the destroyers, which have 120 
cells for the cruisers and 90 cells for the destroyers. But 
most of those are the surface to air rather than the Tomahawk 
missiles that were being used into this. So let me come back 
again to this question. Given the need for this capability, 
should we not be holding onto those?
    Then second, given the fact of the overall reduction in 
terms of the number of ships is going to mean more people on 
the ships, I guess, the additional OPTEMPO in terms of people 
going out because you have smaller numbers of ships and so they 
will have to be on base for a longer period of time. You have 
obviously worked that through or thought about that. How much 
pressure is that going to present to the Navy? Obviously, the 
personnel will be willing to do it, but what is your assessment 
over a period of time?
    Admiral Clark. My assessment is, Senator, that I have 
reviewed very carefully the inherent warfighting capability and 
the risks associated with the retirement of this platform. My 
view is, and I think the numbers show, we have significant 
capacity in the vertical launch system (VLS) and we are also, 
part of this budget is the creation of SSGNs, which handle over 
150 Tomahawks apiece. So we do not have a shortage of potential 
missile tubes.
    When I evaluated this whole laydown, it became clear to me 
that it was time to cut this asset loose so we could use those 
resources to reinvest in the future. It is a tough choice, but 
in an open hearing I do not want to get into the specifics of 
why, but I would be glad to submit those for the record if you 
would like.
    But I want to assure you that I have assessed this and I 
believe that the risk is absolutely acceptable.
    With regard to tempo, it becomes a driver for force 
structure. Again, it gets into a classified discussion very 
quickly to talk about each platform and the piece that they 
bring to the challenge.
    But Senator, here is the issue with the legislation that 
was passed last year. The limitation on 116 combatants and then 
the requirement for me to maintain those ships ready to be 
recommissioned and remanned is an expense that I do not believe 
the taxpayers' money needs to be spent on. I believe that 
unless there is a decision made not to allow us to proceed with 
these decommissionings, we need to alter the legislation and I 
need your support. If we are going to take this step, we need 
to take the entire step.
    Senator Kennedy. Let us come back to that and talk with you 
about it. Just in the last bit of time that I have, looking at 
the tradeoffs in firepower on the DD(X), my understanding of 
the effort leading to the point on the DD(X) schedule, 
including all of the analysis done supporting the DDG, 
indicated there were certain threshold capabilities for the two 
parameters. One, the question about the first design being too 
big. Evidently 15,000 tons was too big. The question is whether 
the next platform is going to be too small to be able to 
provide the fire support that is going to be necessary, given 
the fact of the deficiencies we have today and given the fact 
that that extended range, the ERGM, has also been delayed.
    What are we getting ourselves into?
    Admiral Clark. Senator, those decisions will be made by the 
acquisition executive, not by the CNO, and he is going to be in 
panel two. Having said that, I will tell you that the 
breakthrough in DD(X) is the development of the AGS, a system 
that has the potential to fire out to 100 miles. I mean, it is 
unbelievable when I think about it, the way it was when I 
started my career with a 16,000 yard weapon.
    You look at Tomahawk, which will be on that platform. You 
look at the potential for ERGM and ANSR, those two systems that 
are competing with one another. The real breakthrough here is 
going to be volume of fire and precision of fire from a surface 
platform in support of the United States Marine Corps.
    A science and technology (S&T) project on the affordable 
missile has potential for future use. Because this is going to 
be an all-electric ship, it has all the potentials that come 
with the potential of rail gun technology. I believe that what 
we see is an extraordinary bright future here. All of these 
things involve research and development, but all of these are 
well within our grasp and the programs are progressing nicely 
here and the Secretary for Research, Development, and 
Acquisition will be able to address more specifics if you would 
like.
    Senator Kennedy. My time is up. Thank you.
    Senator Talent. Thank you, Senator.
    Senator Collins is next.
    Senator Collins. Thank you, Mr. Chairman.
    Admiral Clark, I want to again reiterate my thanks to you 
for your good work in putting together the budget request for 
this year, and in particular for funding shipbuilding at a 
level that will help to remedy some of the deficiencies of the 
past and put the Navy on the road to recapitalization. There 
are, however, still challenges that face us.
    In particular, I have concerns about the procurement of the 
major surface combatants in the coming years. As I understand 
it, the Navy will cease construction of the DDG-51 destroyers 
after 2005 and only fund four DD(X) destroyers during the 2006 
to 2008 time frame. As you are well aware, to sustain the 
industrial base four vessels over a 3-year period just does not 
make it. It really is totally inadequate.
    At the same time, I think a lesson that we have learned 
from the last couple of years is the Navy is going to continue 
to face increased mission requirements. The problem is still a 
few years off and I realize that, but I think it is critical 
that we start talking about it now. What are your thoughts on 
addressing that gap to make sure that we are sustaining the 
industrial base as we transition from the DDG to the DD(X)?
    Admiral Clark. I believe Secretary Young has done a 
magnificent job of working the industrial base issues and the 
partnerships that have occurred with the ship swap concept and 
has made it a reality, and the support of Congress made those 
moves possible. I think these are all things that are out in 
front of us.
    There are some unknowns, Senator. The first unknown is with 
the advent of missile defense do we have our numbers right? How 
quickly will CG(X) come on line? What will be the impact on 
this for the DDG, the whole numbers of DDGs, and the cruisers 
that we have?
    I will tell you that some of those are unknown at the 
present time and we are going to have to continue to review 
those. I feel good about where we are in the 2004 line. There 
is no doubt about the fact that we are going to have to 
continue to work that, and a major focus as we are working the 
2005 submit now as we are up here talking about 2004. These are 
important issues that we are having to address as we put 
together the next cycle.
    Having said that, it is my conviction that clearly the 
industrial base is a critical issue for the United States Navy. 
What makes our future possible is the industrial base. So these 
numbers in the transition between DDGs and DD(X) have to be 
managed very carefully. So the best answer I can give you is a 
pledge that that will be done from a standpoint of where my 
role in the process in stating the requirements, as opposed to 
the acquisition executive, making the case for a healthy 
industrial base.
    With regard to the outyears, this is the third year that I 
have come and talked to you about the issue of the importance 
of an investment stream that is leveled so that we create 
better partnerships with industry. One of the things that I am 
very proud of in this submission is that you can see that the 
leadership in the Navy Department reaching toward and for the 
goals that we have talked about now. For the third year, we 
need to reach the point where we have at least $12 billion in 
new ship construction so that we can have the kind of Navy that 
we are dreaming about.
    What I am really pleased with is that you see a progression 
and a growth. The growth in this year is not hypothetical. It 
is real. It is not where I want to be yet. We have not reached 
the objective, but we are reaching toward that objective in a 
constructive way. When we have that level investment stream, we 
will be able to partner more effectively with industry so that 
sizing and maintaining the industrial base is going to be a 
much more productive effort.
    Senator Collins. Thank you, Admiral.
    We have talked often that, given the rapidly declining size 
of the fleet, that it is critical that the Navy take every 
opportunity to maximize the life of vessels that can still 
provide useful service. Your unfunded priority list includes 
funds to or requests for funds that would provide for the 
refueling of the SSN-699, the U.S.S. Jacksonville. In the past, 
some people have suggested that the Navy perhaps has been too 
quick to decommission submarines and that has contributed to 
the decreased force structure that we have today.
    What value would the U.S.S. Jacksonville bring to the Navy 
should funding be made available by this subcommittee so that 
it could be refueled as opposed to decommissioned?
    Admiral Clark. This falls, Senator, in the category of 
talking about the tough decisions that a person has to make. 
There are several categories where I had to make judgments like 
this. The recommendation to decommission the Baseline 1 
cruisers was totally and completely an affordability issue. The 
decision to not refuel all of the submarines was an 
affordability issue.
    But this issue and this decision was driven in part by the 
decision also to invest $4 billion in the reconfiguration of 
the Trident submarines and creating SSGNs. So if you go back 
and look at this over time, when I got this job there were five 
submarines that were not in the program to be refueled. So we 
have reached out and we have pulled some of those into the 
category that they are now in program for engineering-refueling 
overhauls.
    So we have made the point about total numbers. I have 
stated often, and before the whole committee you asked me if I 
still believed in 375, and I do believe that that is the right 
objective to reach toward. I am a great believer that 
capability in individual platforms is even more important than 
numbers, but numbers has this quality all of its own. It 
defines the places that you are going to be able to be.
    So Senator, the bottom line is those decisions were made 
because of affordability reasons. I do not have the resources 
to retain those ships or to refuel those submarines.
    Senator Collins. Finally, Admiral Clark, I am going to ask 
you for the record--since I know we want to give our colleague 
from Rhode Island a chance to get his questions in before the 
vote--information on the increasing role of the Navy in missile 
defense. I am very interested in the comments you have made 
both orally and in your written testimony and I would like to 
explore that with you in a written exchange.
    Thank you, Mr. Chairman.
    [The information referred to follows:]

    We are working cooperatively with the Missile Defense Agency (MDA) 
to evolve Navy's participation in ballistic missile defense (BMD). The 
plan to install surveillance and track capability in several DDGs by 
October 1, 2004, is the first operational effort toward this 
cooperation. We are working with MDA to improve on these capabilities 
through a spiral development plan culminating in a capability to 
provide anti-air warfare and BMD capability in Aegis-equipped ships in 
the 2010+ timeframe. Currently, that effort is aimed at in-service 
ships, but we are also looking at options that have the potential for 
applications in new construction ships in the future.

    Senator Talent. I thank the Senator from Maine.
    The Senator from Rhode Island is recognized.
    Senator Reed. Thank you, Mr. Chairman.
    Thank you, gentlemen, for your testimony and for your 
service to the Nation. We appreciate both.
    Both the fleet and the Corps is stretched awfully thin at 
the moment and I just wonder, can you let me and the 
subcommittee know in terms of equipment, because I think the 
personnel will do whatever they are told to do, what is the 
constraining items that you are finding in this deployment and 
this operation? Is the constraint in numbers or design, 
technology, and obsolescence? Admiral Clark?
    Admiral Clark. At the top of the list comes precision 
ordnance. Of course, the issue with Tomahawk is documented. We 
look toward going to full-scale production in 2004, the 
acquisition executive, Secretary Young, perhaps would want to 
address this, but I would just say this about it. The goal, 
especially given now what has gone on in the last couple of 
weeks--and without getting into specific numbers, which you 
would not want me to do because we get into classified issues 
right away--to get more Tomahawks.
    The way the program is designed today, we do not get to 
full capacity until fiscal year 2005, and I do believe there 
are things that could be done to remedy that situation and that 
they ought to be looked at very carefully. So that even though 
we are not at full-scale and we have not gone to production 
yet, we could make the investment that when we are ready to go 
to production we get to capacity much earlier in the period.
    I would say with regard to the rest of the precision 
munitions issues, fundamentally the Nation has made the 
investments as part of the DERF last year and we are in pretty 
good shape. We are reaching toward capacity.
    I will tell you there is one area that I have learned in 
Afghanistan and I have learned here. Boy, I want the Joint 
Strike Fighter (JSF) as fast as I can get it. I am so pleased 
with the way F/A-18E/F is going. This is the first deployment 
for the F/A-18E/F. The combat range of this airplane, 40 to 50 
percent more combat range, major issue; and the ability to get 
to the target area and the drain on the refueling resources, 
because when you have a big operation and large refueling 
requirements. If I had JSF, I could get to the target area 
without ever bothering them.
    What I have learned from this is the investment that we 
have in JSF in this budget is, boy, an incredibly wise thing to 
do. What I have said before, I desperately want the operational 
availability that is present in this aircraft.
    What else I have learned is how desperately I want the 
combat range that is in this aircraft.
    Senator Reed. Can you comment here on the decision to 
suspend launches over Saudi Arabia and other countries of the 
Tomahawk?
    Admiral Clark. I certainly could.
    Senator Reed. What is the problem there? Let me put it that 
way, if you can comment.
    Admiral Clark. Let me just tell you that no combat system 
in the world is a 100-percent system. I will tell you that this 
system is operating, with the data that I have today, better 
than our historic averages.
    With regard to the capability that it has, I can say this: 
that if this system gets lost, it will set down. We had a 
failure in a component in a couple of these systems where that 
happened. That is about what I can say about it. But the 
performance has been improved over previous operations and 
previous numbers.
    Senator Reed. Thank you.
    General Hagee, from the perspective of the Corps?
    General Hagee. Sir, I would like to associate myself with 
Admiral Clark's comments on legacy systems. I, too, would like 
to see the Joint Strike Fighter here. We are flying our assault 
helicopter, the CH-46. I am ashamed to say that some of those 
helicopters that are flying in Iraq I flew in Vietnam, and that 
was a long time ago. So, we need the Osprey.
    But if you set those legacy systems aside, because of the 
funding that both Admiral Clark and I talked about in our 
opening statement that Congress has given us over the past 
couple of years, we are ready to fight today, as you are seeing 
on television. My short-term concern is when this war is over, 
we have to reconstitute, and we have been using our equipment 
and some of the legacy equipment. We have been using it hard 
and it is going to have to be maintained; some of it is going 
to have to be replaced.
    So that is really a larger concern to me than the current 
fight.
    Senator Reed. In effect what you are saying is that you 
will have the perennial tradeoff between reconstituting your 
legacy systems and modernization, and it will be even worse 
after it has been used so aggressively; is that fair?
    General Hagee. That is correct, sir. But facing reality, we 
know that we are going to have to maintain some of these legacy 
systems until the new ones come on.
    Admiral Clark. May I just comment further? I believe that 
that shows the importance of some of the investments that are 
in this budget. For example, the EA-18G, a new program to 
replace EA-6B, is I think vital because of the point you just 
made.
    Can I also add something about Tomahawk?
    Senator Reed. Yes, sir.
    Admiral Clark. The Tomahawk question you raised has been 
said, but let me reiterate. Precision is of utmost importance, 
and we are doing everything we can in the way we conduct this 
operation to make sure that we minimize the potential for 
collateral damage. I would like to say with this system, that 
does not involve just the end point. We have meticulously 
planned these routes so that we could do everything that we 
know how to do to ensure that if there was a problem with the 
system as it was conducting its path in to the target, that it 
would minimize any collateral damage, and so far that has been 
very successful.
    Senator Reed. Just a follow-up question. Does this budget 
reflect those refurbishment costs that you already anticipate?
    General Hagee. No, sir, it does not.
    Admiral Clark. There was no way for us to know about that 
in that submission. Frankly, I do not know how to even 
calculate it right now, to tell you the truth.
    Senator Reed. But I suspect, given the pace of activities 
and the extent of activities, that is going to be a sizable 
number.
    Admiral Clark. I have several teams working the whole issue 
of reconstitution and I am working various options, because I 
do not know when I will be able to start.
    Senator Reed. Mr. Chairman, I think we have a vote coming 
up. Thank you.
    Gentlemen, again thank you. Your forces are performing, as 
we expect, magnificently and we are all very proud of the 
sailors and the marines that are doing the job. My father was a 
sailor and my brother was a marine. I was a soldier. But two 
out of three ain't bad.
    Admiral Clark. We love our United States Army.
    General Hagee. Thank you, Senator.
    Senator Talent. Your family had it pretty well covered. 
Thank you. Thank you, Senator.
    I would just add something to what the Senator from Rhode 
Island said. Really we are all trying to make up for years when 
we never hit the bogie for procurement that you were saying we 
needed in the nineties, and at the same time fight a war, and 
at the same time transform. It is hard. Even with these 
additional investments, it is hard. I admire you two for the 
work that you are doing, and particularly for the vision that 
you have showed, Admiral, with Seapower 21.
    General, let me ask you a couple of questions. I want to 
just get your opinion on how a couple of your programs are 
going. First, AAAV, which is so important to Seapower 21. A 
couple years ago you added a Milestone C, I think, to the 
procurement process, and then last year additional testing 
time, and then this year the budget moves the milestone C back 
a year.
    While on the one hand it does seem that you are actively 
managing, the program has been actively managed to make certain 
that it does not get into any trouble. That is good, but on the 
other hand you have to have questions about whether we are 
going to be able to make operational readiness dates. What is 
your opinion of the technical maturity of the program now? Are 
we going to be ready by fiscal year 2008? When are we supposed 
to be ready?
    General Hagee. The short answer is yes, sir, I am confident 
in it. The longer answer is that there was a number of things. 
One, the development testing was taking longer than we 
originally thought. The actual training of the crew was taking 
longer than we thought. Then the operational testing is a new 
system and we are still in the system development phase; we 
wanted to be sure that we got it right. So we extended the 
testing phase by a year in order to do good development testing 
and robust operational testing.
    I am confident in the system, sir.
    Senator Talent. Are you still confident in the fiscal year 
2008, or is it 2008 for your initial operational capability 
(IOC)?
    General Hagee. That is the correct IOC. Yes, sir, I am 
confident in that.
    Senator Talent. For the record, tell me what is happening 
in your judgment with V-22? Have we resolved the problems? Is 
it moving along the way you would like it to move along?
    General Hagee. Yes, sir, it is. It is really doing 
extremely well. We are about 80 to 85 percent finished with the 
high rate of descent testing and it is performing exactly as 
the model said it would. In fact, the envelope for this 
particular phenomenon is larger than for a normal helicopter. 
In other words, it is safer than a normal helicopter, and it is 
easier to come out of the phenomenon. All you do is you rotate 
the nacelles forward and you fly horizontally and you come out 
of it. It is not quite as easy to come out of the phenomenon if 
you are in a normal helicopter.
    The maintenance and reliability problems that we had back 
around 2000, because of the redesign of the system, the number 
of hours between inspections continues to grow because we see 
no rubbing, no chafing at all. We have conducted operations on 
board the amphibs that went very well, and we are about 80 to 
85 percent complete with the low-speed maneuverability testing 
and that is also coming out very well.
    Senator Talent. So far all systems go?
    General Hagee. All systems go, sir.
    Senator Talent. That is great. That is great news.
    Admiral, let me ask you a question. I have a confidence 
level actually that we are okay. Yet I want to ask you, just 
because there are several things, when you put them together 
you say to yourself, well, maybe I should not have this 
confidence level.
    The QDR force structure is the number of ships. You have 
commented you think that is a moderate risk type scenario. We 
are now below the QDR force structure level and we are also at 
war. You did retire these ships and I think I agree with it. I 
think it was a tough decision, but you have to make those 
decisions.
    But in your judgment, still an acceptable risk level? 
Please comment on why that does not move up the risk level in 
your judgment?
    Admiral Clark. Let me say it like this. The sonar system, 
designed for the deep water, not the near-land area. A towed 
array sonar system in the same, fundamentally the same way. So 
a ship not optimized for the near-land arena. A gun system, a 
conventional gun system that is relatively short-range, 18,000 
yards, 9 miles, does not provide you the reach that you are 
looking for in the future, that we have laid out in the 
investments for the future. A self-defense air defense system, 
but not a defense system that can protect anybody else.
    So when I weigh all of those things, I have plenty of TLAM 
holes. There is not going to be canister and positions to fire 
TLAM, that is not an issue. A much more difficult issue for me 
is the Baseline 1 cruisers, which has an air defense 
capability. That decision was very difficult. But it is not 
mid-life because they are past the mid-life. This one, the 
Baseline 1s, do not have vertical launch in them, and so for 
them to play effectively in the game that we have from the 
future in either the missile defense arena or against the 
threats that we are dealing with for future, we have to put 
significant resources against them and the life expectancy. We 
are not at mid-life, but it is shorter than mid-life.
    That is why I made those judgments. So the Baseline 1 is 
much more difficult than the 963 class. I want to say that I am 
personally wedded to the 963. I commanded the class leader. 
This is hard for me.
    Senator Talent. You are not dumping on these ships. It is 
not like they do not have value, but when you do not have all 
the money you want you have to make these tough decisions.
    Admiral Clark. I have to make those decisions. I could keep 
some of them, but I could not keep them in good conscience and 
look you in the eye and say: This is the best way to spend our 
resources. I want to assure you that I got zero pressure from 
anybody above me in the chain of command for this. This is the 
recommendation of Admiral Clark and the team in the United 
States Navy. This is what we believe collectively is the best 
thing to do.
    Senator Talent. Let me close, unless Senator Collins has 
any additional questions, and I will certainly recognize her 
for any she may have, on a real up beat note. I know you think 
the Sea-Swap program has worked well.
    Admiral Clark. It has worked phenomenally well.
    Senator Talent. Talk about some of the benefits of it and 
tell us how that compares in your judgment with forward home 
porting and the synergy that you see in the future. I mean, I 
do not imagine it is going to be all or nothing at all.
    Admiral Clark. First of all, it was a pilot. In our 
discussions, I told you my view of this, and this is the 
environment I have tried to create in the Navy, is let us 
encourage innovation. The fleet came forward with a proposal on 
how we could fly the Sea-Swap concept. I want to tell you, it 
is their plan, it is their approach. Admiral LaFleur, who is 
the commander of surface forces in the Navy, told me they have 
executed the first swap.
    What it does for us is, I did not have to have the transit 
all the way from San Diego all the way out to the theater of 
operations. It saved us the transit two ways by flying the crew 
out there. So I just multiplied the effective utilization of 
the ship, in effect increased the numbers of ships that I have 
with on-station combat capability.
    The first experience is complete. We are going to learn 
some things from it. But his report to me through the chain of 
command, through Admiral Natter, is that it has worked 
remarkably well.
    Optimum manning is another concept. How are ways that we 
can thin down the manning in our ships by giving them 
technology and other things that will make them more effective? 
The U.S.S. Milius and the Mobile Bay have both been out there. 
I was on Milius in January. What a bright-eyed group of 
innovators. They have cut the manning in that ship by 23 
percent.
    We did not tell them to go do this. We said, where can you 
see areas that we could do this better? But here is one thing I 
want: I want every sailor to have a job full of rewarding job 
content in positions where they can make a difference, and they 
are doing that. It is working well.
    Senator Talent. I thank you both again for your service and 
for your time. I know you are certainly busy and I appreciate 
working with you, and we will continue to do it as we get the 
bill ready.
    Admiral Clark. Mr. Chairman, thank you for the opportunity 
to appear before you today.
    Senator Talent. We appreciate it very much. Thank you.
    I think we will go ahead and recess and I will run and vote 
and come on back, so we do not keep the second panel waiting. 
Thank you all very much. [Recess from 3:50 p.m. to 4:05 p.m.]
    All right, I thank the two distinguished members of the 
second panel for waiting. I was going to try and get your 
statements in anyway while the roll call was pending, but I am 
not sure we could have done it.
    Our guests on the second panel, who we have reshuffled 
because we had to reschedule this--and I appreciate your 
flexibility--are John Young, the Assistant Secretary of the 
Navy, a figure well known to Congress and this committee; and 
Vice Admiral Mike Mullen, the Deputy Chief of Naval Operations 
for Resources, Requirements, and Assessments and thank you both 
for being here.
    I am looking forward to your testimony. Secretary Young, 
please let us have your statement.

 STATEMENT OF HON. JOHN J. YOUNG, JR., ASSISTANT SECRETARY OF 
      THE NAVY FOR RESEARCH, DEVELOPMENT, AND ACQUISITION

    Secretary Young. Mr. Chairman, it is a great honor actually 
to come and talk to you. I think we have a good story to tell, 
so I appreciate your kindness in rescheduling the hearing. I 
have a written statement that I hope will be part of the 
record.
    I recently visited our sailors and marines in the Persian 
Gulf area and I am proud to report to you that the commitment 
that we made and Congress supported in fiscal year 2003 to 
focus our taxpayers' dollars towards improving current 
readiness has yielded strong dividends. Today we have 6 carrier 
battle groups, over 70 ships, and more than 60,000 marines in 
theater who are trained, equipped, and carrying out the 
Nation's will, and our prayers are with them.
    In my testimony to Congress last year, I emphasized that we 
were focused on building a foundation of solid, stable funding 
for our shipbuilding programs while working hard to control 
costs and take a more businesslike approach to these programs. 
While we still have work to do, I am pleased to tell you this 
year that we have made significant progress in all of these 
areas.
    In June, the Navy and two of our principal shipbuilders 
successfully negotiated an unprecedented workload swap 
arrangement in which General Dynamics transferred its four-ship 
LPD-17 construction program to Northrop Grumman Ship Systems in 
exchange for additional DDG-51 work transferred from Northrop 
Grumman. This swap avoided a second lead ship challenge for the 
LPD program, improved the production learning curve, and 
provided production efficiency for the LPD-17 class.
    We estimate the swap will provide savings and cost 
avoidance of at least $473 million for the LPD-17 program. The 
agreement also allows General Dynamics to focus on DDG 
construction, looking ahead to DD(X) opportunities. This deal 
made good business sense for everyone and I must recognize the 
courage and willingness to explore innovative ideas 
demonstrated by General Dynamics, Northrop Grumman, the Navy, 
and the Office of the Secretary of Defense (OSD) leadership 
that were key in making this happen, particularly the essential 
support of Congress in seeing a deal like this through.
    The swap, in conjunction with the DDG multiyear contract, 
has stabilized both DDG and LPD production.
    The fiscal year 2004 budget requests authority to enter 
into a multiyear procurement on the Virginia-class submarine. 
The combination of the DDG-LPD swap, the DDG multiyear, the 
Virginia-class multiyear, plus the funding in the budget for 
CVN-21, T-AKE, and LHD-8 provide a stable, low-rate, new ship 
construction program. The Navy and the Nation can build upon 
this stable foundation in the future.
    We have also worked hard to control costs and avoid prior 
year completion bills. Our focused efforts to reduce change 
orders, to strictly manage ship configuration, and to properly 
fund to realistic cost estimates is paying dividends. The 
fiscal year 2004 to 2009 budget recognizes new prior year 
completion bills of approximately $225 million as compared to 
over $800 million from the fiscal year 2001 budget, $487 
million in fiscal year 2003, and $2.2 billion in fiscal year 
2002.
    A perfect example of our resolve in this area was the 
decision to install the current and very capable combat system 
suite on CVN-77 within the budget, rather than the 
developmental system which was clearly going to generate 
additional prior year costs and likely force late delivery of 
CVN-77. Instead, we will install the new radars when they are 
ready in a spiral modernization effort.
    We are also using new tools, such as broken or stepped 
share lines and incentive fee, to prevent cost growth on future 
contracts.
    In the next 5 years, we will deliver or design the lead 
ship of eight new classes. This clearly shows our commitment to 
providing the most modern and capable warships to our fleet, 
sailors, and marines. Along with improved warfighting 
capability, these new designs allow us to implement fundamental 
changes in the way we man, operate, and maintain our ships.
    DD(X) is the centerpiece of this leap forward. DD(X) is 
being designed to provide our sailors the survivability and 
flexibility of stealth, automation, and electric propulsion. In 
addition to its land attack capability, DD(X)'s dual helo spots 
and stern boat launch will provide new mission response 
options.
    I am pleased to report the DD(X) program is well under way. 
The Navy has worked with our industry partners to forge a 
national team of our country's most capable ship designers and 
combat systems experts dedicated to its success. The DD(X) hull 
and combat systems will also provide a path to the CG(X) 
cruiser, which must be capable against the air, surface, and 
theater ballistic missile defense threats out into the 2050 
timeframe.
    We have also embarked on an exciting initiative to build 
the LCS in an entirely new way, exactly as you heard the CNO 
speak about. With your help last year, we were able to get a 
full 1-year jump on our original schedule. We are currently 
evaluating potential hull forms to use as our ``sea frame.'' 
The LCS sea frame will be designed to accommodate different 
mission modules, allowing us to tailor the capability to the 
fleet's task.
    We plan to develop and purchase the mission modules for LCS 
on a time line that ensures the most current technology is 
installed. Your support of this very innovative approach to 
shipbuilding has been instrumental in our ability to move 
forward so quickly with this ship.
    We have combined many of the advances in our CVNX-1 and 
CVNX-2 programs into the new CVN-21 program, while maintaining 
the CVNX-1 development schedule. This is the first new carrier 
design since 1967 and will introduce such new capabilities as 
the electromagnetic aircraft launching system (EMALS), the pit 
stop concept for improved sortie generation, and enhanced 
survivability, while again reducing manning and maintenance 
requirements.
    We also continue to advance the current and future combat 
value of our existing ships and future ships as we shift to 
open architecture designs, which serve as powerful tools for 
reducing software sustainment costs and increasing commonality. 
Our commitment to develop and field networkcentric systems, 
such as the Cooperative Engagement Capability Block II and the 
Joint Fires Network, further empower our forces by providing 
real-time awareness of the combat situation for our 
warfighters.
    Finally, building on the success of our Standard Missile 3 
(SM-3) tests, we have worked closely with the Missile Defense 
Agency to bring an initial missile defense capability to sea by 
2004 and a more significant capability of up to 20 of our Aegis 
equipped destroyers by 2006. We have provided the dedicated use 
of one of our cruisers as a missile defense test ship and we 
are using the funds originally intended for an MDA test ship to 
develop and implement the SM-3 capability at sea earlier than 
originally planned.
    To enhance our ability to deliver these systems, we have 
reorganized our Program Executive Officer (PEO) structure to 
bring all integrated warfare systems across all surface 
combatants, submarines, aircraft carriers, and amphibious ships 
under a single PEO. We have done the same thing for all our 
C\4\I systems throughout the Navy. Finally, we have 
consolidated all non-nuclear shipbuilding and modernization 
programs under a single PEO for ships to ensure that we take 
maximum advantage of scale with all of our shipbuilders and the 
lessons learned from one program are quickly transfered to 
other programs.
    The fiscal year 2004 budget sustains the enormous strides 
made in personnel and readiness accounts while requesting $11.4 
billion for shipbuilding and modernization. We have increased 
the number of ships from the 5 indicated in the 2003 request to 
7 in the 2004 budget request, resulting in 34 ships under 
contract.
    The fiscal year 2004 budget also includes funds for the 
first Ticonderoga-class cruiser conversion, incremental funding 
for LHD-8, service life extension for three LCACs, and two SSBN 
to SSGN conversions. It requests, as the CNO mentioned, the 
$1.5 billion R&D funds necessary to move forward with CVN-21, 
DD(X), and the LCS programs.
    I believe we have crafted a balanced and properly focused 
budget request that ensures our Nation will have a stable and 
healthy shipbuilding industrial base as well as an efficient 
and appropriately sized infrastructure to support an optional 
force structure. Our Navy-Marine Corps team is the most 
professional and capable naval force in the world. With your 
assistance, we will continue to provide maximum capability for 
our sailors and marines and maximum security for America.
    I thank you again for the opportunity to tell this story to 
you, sir.
    [The prepared statement of Secretary Young follows:]

             Prepared Statement by Hon. John J. Young, Jr.

    Mr. Chairman, distinguished members of the subcommittee, thank you 
for this opportunity to appear before you to discuss the Department of 
the Navy's fiscal year 2004 budget request. I recently visited our 
sailors and marines in the Persian Gulf area, including Kuwait and 
Bahrain, and we can rest assured that our sailors and marines guard our 
freedom with a dedication born from a voluntary commitment to defend 
the ideals of our founding fathers. I am proud to come before you today 
and outline the contribution that we in the Navy and Marine Corps 
acquisition community are making to enable the Department of the Navy 
to field the most capable, mobile, and lethal force since its inception 
over 225 years ago.
    The global war on terrorism has fundamentally changed the national 
debate on defense. To meet this challenge, difficult decisions were 
required to find the optimal mix within the portfolio of naval 
responsibilities, and within that, the shipbuilding acquisition 
objectives of the Department. We have been good stewards for the 
taxpayer by demonstrating creative thinking such as shipbuilding 
workload swaps, R&D funding for lead ships, and split funding for CVN 
21; making sound fiscal decisions including stopping the growth in 
prior year shipbuilding costs; reviewing the need for some of our 
legacy systems; and leveraging these actions to increase the number of 
ships being requested in the fiscal year 2004 budget. By addressing key 
issues such as the cultivation of promising shipbuilding technologies, 
cost effective acquisition of mature platforms and systems, and 
improved maintenance of existing systems we have been able to increase 
the number of ships from the five indicated in last year's budget 
request to seven in the fiscal year 2004 budget request.
    In striving to provide the warfighter with the latest capabilities, 
we have adopted the tenets of Naval Vision 21 and Naval Transformation 
Roadmap 21. In doing this, we have engaged in a full assessment of 
Naval Science and Technology funding to ensure we have addressed all 
technology needs to support these transformation mandates. To this end, 
technology demonstrations are planned using future years defense 
program (FYDP) funds that aim to meet the needs of our forces--
stretching from the ocean floor to the edge of space, and from 
facilities in the United States to the tip of the spear throughout the 
world.
    We are working extensively with industry to make each defense 
dollar go further. For example, the DD(X) team is cultivating the best 
minds in industry to ensure the DD(X) will provide the best ship design 
and ship systems possible. Our efforts however aren't limited to the 
early stages of a program's life cycle. We have recently brokered a 
swap with Northrop Grumman and General Dynamics to align our LPD and 
DDG shipbuilding programs more effectively. The result is a more robust 
and competitive shipbuilding industry with a lowered cost to the 
taxpayer. A true win-win situation. Additionally, we completed a 
disinvestments effort to identify and eliminate those items we carry 
and maintain in inventory that have limited function or application or 
are becoming obsolete and unaffordable. We plan to continue this effort 
to eliminate older systems with limited capabilities that have an 
inordinately high infrastructure cost to supply, train for, and 
support. Finally, we will continue to use multiyear procurements (MYP), 
for example, the proposed Virginia-class submarine MYP, and cost 
effective procurement quantities to help drive down the cost to the 
taxpayer but drive up the support to our sailors and marines.
    Our actions to get the best value reach beyond the Department of 
the Navy. For example, we recently arranged a deal with the Missile 
Defense Agency (MDA) that assigns to them the U.S.S. Lake Erie to test 
sea-based ballistic missile defense. In return MDA will pay for, and 
upgrade, up to 20 Aegis equipped ships with as many as 90 Standard 
Missile 3 (SM 3) weapons to be installed for missile defense. This 
provides a limited sea-based missile defense capability by 2004 and 
greater capability by 2006, well in advance of the plans presented to 
you last year. It is this type of creative thinking that marks the new 
mindset that we are instilling within the Navy's acquisition community.
    In a similar initiative, the Navy has worked in partnership with 
the Air Force to define a joint strategy for developing an unmanned 
combat air vehicle (UCAV). The Air Force and Navy have been able to 
define a common set of requirements while also recognizing the unique 
needs of each Service. This work has allowed definition of a 
competitive acquisition strategy for UCAV and patterned after the 
successful Joint Strike Fighter (JSF) competition. UCAV is a critical 
tool for providing persistent surveillance and combat capability for 
sea based Navy platforms.

                   ENHANCING WARFIGHTING CAPABILITIES

    We are changing and initiating programs to improve the warfighting 
capability of current and future forces. We are seeking joint 
opportunities and options wherever possible in taking these steps.
    One critical initiative is known as Open Architecture. This effort 
will allow all Navy ships to eventually share common computers and 
computer operating systems. Key functions, such as tracking, fire 
control, and navigation, can be software applications that are shared 
among all ships and easily upgraded as discrete software modules. 
Unique software functions can easily be added for ships that need 
special capabilities. We can enhance our competition opportunities by 
allowing all qualified industry partners to offer proposals for writing 
software modules. The DD(X) engineering development modules and planned 
Aegis Combat System and Ship Self Defense System upgrades will be 
combined to achieve the greater goal of an open architecture for all 
Navy ships.
    In addition to moving the Navy into the future of combat systems, 
the DD(X) also moves naval surface combatants to the future of electric 
powered, stealthy, and automated destroyers and cruisers. DD(X) will 
essentially take the next step towards efficiency in the destroyer 
construction process by implementing the design-build process 
successfully applied to Virginia-class and LPD-17 class. Further, the 
Total Ship Computing Environment developed for DD(X) will automate many 
ship systems and damage control functions, allowing the Navy to reduce 
the crew and thus the life cycle operating cost. The DD(X) hull and 
technologies will lead directly to CGX, the cruiser for the air and 
missile defense threat of the future.
    Through the support of Congress, we have gotten an accelerated 
start on the other surface combatant family member, the LCS. LCS will 
allow the Navy to more affordably and effectively conduct mine 
countermeasure, maritime interdiction and anti-surface warfare 
operations, and enhance our capabilities against asymmetric threats. 
LCS also represents a new approach to building ships--where the hull 
will be a flexible ``sea frame''. The sea frame's common computer 
architecture, the ``backbone,'' will enable the sea frame to 
accommodate a variety of mission modules and will provide a path for 
future spiral upgrades to LCS's capabilities. This family of ships will 
be the heart of the Navy's Sea Strike capability until 2050 and beyond.
    With the leadership of Secretary Rumsfeld, the Navy team defined a 
strategy to accelerate and integrate the technologies of CVNX-1 and 
CVNX-2 to yield the CVN-21 design. This ship will provide greater 
sortie generation capability through improved flight deck operational 
concepts. Further, the ship will use automation and survivability 
enhancements to accelerate the manpower reduction goals, providing 
lower operating costs for the fleet.
    Ships alone cannot accomplish missions. First and foremost, we must 
have the unmatched sailors and marines of today's force who turn our 
weapon systems into true warfighting capability. They need the tools 
that expand their reach and improve their effectiveness. The Department 
has taken several truly dramatic steps that will change combat 
capability in this area.
    First, the Extended Range Active Missile (ERAM) provides an active 
missile allowing Navy ships to fire and forget and do so 200 miles 
over-the-horizon using surveillance systems such as the E-2C Advanced 
Hawkeye. ERAM will leverage the significant investment made by the 
Defense Department in the AMRAAM seeker, achieving the goals of 
maintaining jointness and of leveraging past investments wherever 
possible.
    The UCAV will achieve the Chief of Naval Operation's goal of 
persistent airborne surveillance capability combined with effective 
strike capability. The Office of the Secretary of Defense, the Air 
Force, and the Navy have worked together to harmonize requirements for 
UCAV. This partnership will accelerate the delivery of UCAVs for the 
Navy, providing competition and the potential for jointness.
    The Army, Navy, and Air Force are working to join our requirements 
for Intelligence, Surveillance and Reconnaissance (ISR) systems. Navy 
ships are relying to a greater degree than ever on real-time delivery 
of ISR products and the commanders increasingly have the command and 
control tools to act on this information. Achieving a joint strategy in 
this area will accelerate delivery of these systems to our sailors and 
marines while assuring interoperability among the Services for joint 
operations.
    Cooperative Engagement Capability (CEC) systems allow one Navy ship 
to fire on a threat based on the better quality tracking information 
provided from another Navy ship. CEC inherently improves the picture of 
the battlefield for all naval assets. The acquisition team has defined 
a strategy that will more efficiently use limited bandwidth and provide 
CEC-quality situational awareness to all participants in the theater of 
operations.
    These and other tools will ensure that our sailors and marines have 
unmatched capability and technology for the battlefield of the future.

                    CHANGING OUR BUSINESS PRACTICES

    The Department of the Navy remains committed to simplifying the 
acquisition system, streamlining the bureaucratic decisionmaking 
process, and promoting innovation. We are streamlining our regulations 
and instructions to remove unnecessary impediments and provide the 
maximum flexibility to our acquisition workforce consistent with law 
and higher regulation. We are also continuing to take advantage of 
numerous acquisition initiatives to shorten cycle times, leverage 
commercial products and capabilities, and improve the quality of 
equipment being provided to our warfighters. For example, we used 
direct dialogue with industry to accelerate by several months the 
process of defining and selecting the ERAM missile design.
    In an environment where competition is limited, the structure of 
contracts is critical to providing tools for the program manager to use 
in delivering ships and weapons on schedule and within the budget. The 
Department is applying new contract strategies in an effort to focus 
greater attention on cost and schedule. We are implementing broken or 
stepped profit share lines to ensure that the Navy and industry are 
very focused on the cost target and that industry is rewarded for 
beating the target and penalized for exceeding the cost target. 
Further, we are shifting greater portions of fee to be awarded on an 
incentive basis upon accomplishment of critical path tasks. Finally, we 
are weighting fee towards the critical events at the end of a program 
that result in the desired goal--delivery of ships and weapons.
    Evolutionary acquisition techniques show promise in programs such 
as DD(X) and LCS. We are seeking to strictly control requirements at 
each evolution or spiral in order to avoid program churn and associated 
cost growth. Program risk, and cost, can be most effectively managed by 
properly timing the development and introduction of new technologies at 
specific points in the development and production process. The 
extension of this step to production programs means carefully limiting 
changes during the carefully planned production process. We have 
imposed a strict discipline on ourselves that limits change during the 
critical phases of our major shipbuilding programs to stop the growth 
in prior year completion bills. By controlling the scope and timing of 
change in a planned manner, we know what changes will cost and how we 
will install them in the most economical manner.
    The Department is working with industry as a partner across the 
full breadth of our shipbuilding programs. Industry can help us 
identify the best technologies and business practices for Department of 
the Navy programs. Such partnerships have been critical to negotiation 
of the new DDG multiyear contract, to completion of the DDG/LPD swap, 
and to formation of the DD(X) team. For example, the tri-partite 
agreement between Navy, General Dynamics, and Northrop Grumman 
stabilized both our DDG-51 and LPD-17 programs, avoided a ``second lead 
ship'' challenge for the LPD program, dramatically reduced risk and 
provided cost savings on the LPD program, and enhanced stability and 
competitiveness in destroyer construction. Furthermore, the swap 
agreement created a rare opportunity to build LPD-18 and LPD-19 as twin 
ships, providing the additional benefits of near-term cost savings and 
the longer-term benefit of having two ships with one configuration. 
This idea was adapted and applied to the carrier program by taking 
steps to share planning efforts and combine purchasing power on the 
CVN-70 complex overhaul and the CVN-77 new construction.
    The Department also is actively improving its internal business 
practices, including integrating commercial best practices where 
feasible. By improving these practices, we expect to be able to shift 
more dollars into combat capability and quality of service. We believe 
that better information makes for better decisionmaking, both on the 
battlefield and at the budget table. We have four pilot programs in 
place utilizing enterprise resource planning (ERP) which aim to improve 
the quality of information available to our decisionmakers. These pilot 
projects will eliminate dozens of incompatible computer databases and 
the business processes that once supported those databases. ERP should 
produce financial and managerial information that is more complete, 
accurate, and timely. ERP will allow greater efficiency in our ship 
maintenance processes that should in turn deliver more ship 
availability for training or deployment. Our recent focus has been on 
converging the pilot programs to achieve even greater synergy of 
management information across a broader spectrum of the Department, and 
working with the DOD Comptroller to ensure these efforts are advancing 
the uniform business management architecture under development.
    In addition to better information, we need flexible and innovative 
tools to help manage the Department. Some of these tools, such as 
strategic sourcing, are being used already. Furthermore, competition 
helps achieve the best quality support to the sailor and marine at the 
lowest possible cost by introducing the discipline of the marketplace. 
Another approach we are taking to improve logistics support to the 
warfighter and reduce total life cycle system costs is through 
Performance Based Logistics (PBL). This year, all ACAT I & II fielded 
programs and all new programs submitted PBL implementation plans with 
milestones. PBL has been successfully implemented on numerous weapon 
system components (improving capability and lowering costs) and the 
intention is to expand these successes to major weapon systems and 
subsystems. We are also continuing to pursue Depot Maintenance 
Partnerships between the private and public sector. These partnerships 
provide increased capability to our depots while simultaneously 
reducing cost and improving warfighter capability.
    We are working hard to ensure that our sailors and marines get 
needed technology in their hands today, not tomorrow. In areas ranging 
from Forward Looking Infrared upgrades for Marine Corps tanks, to ISR 
tools, to active anti-air warfare missiles, we are seeking greater 
jointness and taking advantage of prior DOD investments in order to 
reduce risk, lower cost, accelerate delivery, and provide greater 
interoperability.

                FOCUSING ON OUR PEOPLE AND ORGANIZATION

    To enable development of new capabilities and facilitate the 
adoption of new business practices, a number of organizational changes 
have been made. Because of the importance of opening the computing 
architectures and sharing combat system development across all ship 
platforms, we established a Deputy Assistant Secretary and a Program 
Executive Officer for Integrated Warfare Systems.
    We also reorganized our business process owners by combining the 
Director of Acquisition and Business Management with the Acquisition 
Reform Office into a single Deputy for Acquisition Management. This new 
office focuses on business policy and implementation and infuses it 
with the innovative thinking and ideas of the office dedicated to 
reforming the way we do business. One of the primary goals of this 
reorganization is to shorten the time it takes new ideas to find their 
way into our acquisition business practices. The Deputy for Acquisition 
Management is directly supporting the DOD effort to streamline the OSD 
policy and processes for major weapon systems embodied in the new DOD 
5000 series directives.
    In order to improve logistics support to the warfighter, we 
established a Deputy for Logistics. The logistics office will 
coordinate efforts to insert logistics considerations early in the 
acquisition process where over 60 percent of the total life cycle costs 
are determined. Equally important, logistical support of our current 
systems is a costly and complex part of today's acquisition management 
task. Finally, the Deputy for Logistics will play an important role in 
guiding the implementation of ERP across the Department.
    In today's environment, many technologies and systems cut across 
program, platform, and systems command boundaries. To leverage the 
expertise within our systems commands and ensure consideration and 
coordination of concepts that cross program boundaries, we created a 
virtual systems command. The systems command commanders will now work 
together to avoid duplication of capability and ensure that we achieve 
integration and interoperability benefits wherever possible within the 
Navy and Marine Corps.
    Equally important, we are reshaping the acquisition workforce to 
concentrate on mission critical functions. These human resource plans 
call for an analysis of key characteristics of the acquisition 
workforce, an assessment and projection of changes in the workforce 
into 2008, and the identification of human resource process shortfalls 
that inhibit the ability to effectively manage this workforce. With the 
advent of civilian personnel ``demonstration'' programs with pay 
banding and the increase in outsourcing of commercial functions, we are 
seeing an emerging workforce that will be compensated based on their 
level of responsibility and contribution. Through enhancements to our 
career development program, which include continuous learning 
activities that augment minimum education, training, and experience 
requirements, we are developing our acquisition professionals to be 
better managers and leaders.

                       INTERNATIONAL COOPERATION

    Cooperation with our allies remains a continued objective from 
which we can leverage our Navy funds and accrue interoperability and 
coalition warfighting capability. Programs such as Evolved Seasparrow 
Missile, which is being developed in cooperation with nine of our 
partners, is proof that cooperation works as demonstrated by recent 
successful firings. The Rolling Airframe Missile program is a further 
testament that cooperation has substantive benefits. We have also 
continued to cooperate with Japan on technology to enhance our SM-3 
missile and reduce development risk and cost. We are continuing our 
strong ties with the U.K. in a number of areas. Efforts are also 
underway to expand our cooperation into area and theater missile 
defense through the eight Navy Maritime Theater Missile Defense Forums. 
Each of these cooperative initiatives is aimed at reducing our costs, 
increasing interoperability, and achieving enhanced coalition 
warfighting capability.

                         SHIPBUILDING PROGRAMS

    Our fiscal year 2004 budget request calls for construction of 7 
ships in fiscal year 2004: 3 DDG-51 class destroyers; 1 Virginia-class 
submarine; 1 San Antonio (LPD-17) class Amphibious Transport Dock ship; 
2 Lewis and Clark (T-AKE) auxiliary cargo and ammunition ships; and 
incremental funding for the fiscal year 2002 LHD 8, resulting in 34 
ships under contract. The fiscal year 2004 budget request represents an 
increase of two ships over the five ships indicated in last year's 
budget request. In addition, we have requested funding for advance 
procurement of the seventh and eighth Virginia-class submarines, for 
advance procurement of CVN-21 and the CVN-70 refueling complex overhaul 
(RCOH), the first Ticonderoga class cruiser conversion and for service 
life extension modifications of three Landing Craft Air Cushion (LCAC) 
craft. The budget request fully commits the Navy to the conversion of 
four Ohio class SSBNs into SSGNs.
Completion of Prior Year Shipbuilding Contracts
    Growth on ship construction contracts has eroded the confidence of 
the DOD and Congress in our estimating, budgeting, and execution 
process for current and future procurements. The Navy is committed to 
restoring the confidence of Congress and building stable programs to 
ensure force structure requirements are sustained.
    Congress provided over $700 million in fiscal year 2002 and almost 
$1.3 billion in fiscal year 2003 to address cost growth for ships 
contracted in 1996-2001. The fiscal year 2004 budget request reflects 
$636 million to address similar shortfalls in order to deliver ships 
authorized and appropriated in 1996-2001. Also visible in the Navy's 
budget request are the known requirements through the FYDP to address 
similar issues for ships appropriated through 2002.
    The Department has taken a number of management actions to mitigate 
the existing condition and to prevent a reoccurrence of the situation 
for ships requested in fiscal year 2004 and future budget submissions. 
To prevent further increases to the Prior Year Cost to Complete funding 
shortfall, the Navy has instituted the following corrective actions:

         In fiscal year 2003 and beyond, shipbuilding programs 
        have been budgeted to independent cost estimates prepared by 
        the Cost Analysis Improvement Group or independent Navy 
        estimate.
         Change order budgeting levels have been established to 
        reflect maturity of respective programs.
         Shipbuilding and Government Furnished Equipment 
        program managers have been directed to limit changes to 
        critical safety issues.
         The Department has reestablished a senior level ship 
        configuration panel to ensure required changes are validated 
        and fully funded.
         We motivated industry cost performance through 
        incentives in fiscal year 2002 and 2003 contracts.
         Prior decisions regarding workload splits among 
        multiple yards have been reevaluated in light of the increased 
        cost of having multiple ``lead'' ships.
         We are implementing more aggressive share lines and 
        positive incentive strategies in new ship construction 
        contracts in a further effort to establish realistic targets 
        and to motivate industry management and performance.

    The swap of DDG-51 and LPD-17 between General Dynamics and Northrop 
Grumman will also alleviate the potential for significant new prior 
year bills and allow the construction of the individual ship classes in 
the most efficient manner. We will continue to pursue innovative 
business approaches like this to reduce the risk of future Prior Year 
Cost to Complete bills.
Surface Combatants
    Arleigh Burke (DDG-51) Class Destroyer
    The fiscal year 2004 budget request includes $3.198 billion for the 
procurement of 3 Arleigh Burke class (DDG-51) destroyers of a 10 ship 
MYP. The additional DDGs in fiscal year 2004 and fiscal year 2005 
facilitate the innovative DDG/LPD swap agreement and increase force 
structure capability. The new 4 year, 10 ship, fiscal year 2002 through 
2005, MYP contract awarded last year has cemented the DDG procurement 
profile and sustains our industry partners as we work toward the 
transition to DD(X) production.
    DD(X) Destroyer
    The Navy competitively awarded the DD(X) design agent and 
technology development contract in April 2002. The winning contractor 
has organized a national team of industry experts to achieve the most 
innovative and cost-effective solutions for development of the DD(X) 
through spiral development of technology and engineering, with 
promising systems being employed on existing platforms and other future 
ship classes. The Department will link the development of the DD(X) 
combat system to the opening of computer architectures in our DDGs, 
CGs, LPDs, and CVNs. This is a critical step for the Department and 
represents an effort to leverage every dollar Congress provides. 
Applying new design--build concepts to DD(X) is critical to improving 
the construction process for destroyers. The DD(X) design will reduce 
manpower requirements. The ship will capitalize on electric drive and 
electrical distribution systems to simplify ship operations, reduce 
maintenance, and enable future upgrades including directed energy 
weapons. The ship will be designed with reduced signature to provide 
the survivability necessary in the future combat environment. These and 
other features will provide more affordable future ship classes in 
terms of both construction and operation.
    Littoral Combat Ship (LCS)
    The LCS will be a networked, agile, stealthy surface combatant 
designed to counter asymmetric littoral threats such as diesel 
submarines, shallow water mines, and small boats through organic manned 
and unmanned vehicles and as part of a network centric battle force. 
The LCS was granted new start authority in the fiscal year 2003 
authorization act and initial program funds were appropriated by 
Congress. The fiscal year 2004 budget request includes $158 million for 
LCS platform and mission system development. The LCS spiral development 
acquisition strategy will support construction of multiple flights of 
focused mission ships with progressive capability improvements. Flight 
0 is comprised of one ship planned for authorization in fiscal year 
2005 (currently budgeted in RDT&E) and one ship planned for 
authorization in fiscal year 2006 (currently budgeted in SCN). Flight 0 
will develop and demonstrate a modular hull design with performance 
attributes needed for new operational concepts in the littoral. The 
solicitation for preliminary design of LCS Flight 0 was released in 
February 2003.
    Ticonderoga (CG-47) Cruiser Conversion Plan
    The fiscal year 2004 budget request includes $194 million for 
systems that will add new mission capabilities and extend the combat 
system service life of the Ticonderoga (CG-47) class. The upgrade of 
these ships will add new, and enhance existing, combat system 
capabilities for land attack, CEC, and Area Air Defense Commander 
missions to improve compatibility in joint and coalition warfare 
environments.
Aircraft Carriers
    Nimitz Class
    In May 2003, we will commission U.S.S. Ronald Reagan (CVN-76), the 
ninth of the Nimitz class of aircraft carriers. Also in 2003, we will 
lay the keel of the tenth, and last, ship in the Nimitz class. That 
ship, recently named the George H.W. Bush (CVN-77), is scheduled for 
delivery in 2008.
    CVN-21 Class
    CVN-21, previously known as CVNX-1, is a fiscal year 2007 ship that 
incorporates many advanced technologies and design changes originally 
slated for CVNX-2. Acceleration of these technologies into the lead 
ship of the class increases warfighting capabilities and reduces life 
cycle costs. CVN-21 now includes: a new propulsion plant; new and 
improved electric plant that provides three times the electrical 
generation capacity of a Nimitz class carrier; Electromagnetic Aircraft 
Launching System; advanced arresting gear; a new integrated warfare 
system; enhanced flight deck; improved weapons handling and aircraft 
servicing efficiency; increased sortie generation rate; improved 
survivability; and allowance for future technologies and additional 
manpower reductions. We are working with our industry partners to 
improve the design-build effort for CVN-21 to allow efficient 
production, earlier delivery, and future technology insertion.
Amphibious Ships and Craft
    LPD-17
    The LPD-17 San Antonio class of amphibious transport dock ships 
represents a critical element of the Navy and Marine Corps future in 
expeditionary warfare. The 12 ships of the San Antonio class will 
functionally replace four classes of amphibious ships. The fiscal year 
2004 budget request includes $1.2 billion to fully fund the 
construction of the sixth ship of the class. Five additional LPD-17s 
are included in the FYDP, with the final ship of the 12 ship class 
planned beyond the FYDP. Current metrics indicate the LPD-17 program 
team is now performing in a predictable and disciplined manner. Detail 
design of the lead ship is completing and fabrication has started on 
over two-thirds of the lead ship construction units. LPD 18 
construction began in February 2002 and LPD-19 construction commenced 
last summer. We plan to award the contract for LPD-21 (U.S.S. New York) 
later this year to honor the victims of the World Trade Center attack.
    LHD-8
    In accordance with congressional direction to incrementally fund 
LHD-8, the fiscal year 2004 budget requests $355 million for continued 
detailed design and construction. LHD-8 will be the first big deck 
amphibious ship that will be powered by gas turbine propulsion and all 
of its auxiliary systems will rely on electricity, rather than steam. 
This change is expected to realize significant lifecycle cost savings.
    LHA(R)
    The fiscal year 2004 budget requests $65 million in R&D for LHA(R), 
a spiral development variant of the LHD-8 known as the Plug Plus, which 
provides a longer and wider platform capable of increased vehicle lift, 
better survivability, and a suitable weight margin. This funding 
supports ship design development, live-fire testing activities, and 
other risk mitigation efforts leading to a planned ship construction 
award in fiscal year 2007.
    Auxiliary Dry Cargo Ammunition Ship (T-AKE)
    The fiscal year 2004 budget request includes $722 million for the 
fifth and sixth ships of this 12 ship T-AKE class. Last summer the 
initial critical design review was conducted for the class design, and 
construction of the lead ship is expected to commence this fall. Lead 
ship delivery is scheduled in fiscal year 2005.
    Landing Craft Air Cushion (LCAC)
    Our fleet LCACs saw dramatically increased operational tempo 
supporting worldwide operations during the past year, underscoring the 
need for the LCAC Service Life Extension Program (SLEP). The program, 
designed to extend the service life of LCACs to 30 years, had several 
notable accomplishments during the past year including:

         ``On schedule-on budget'' delivery of LCAC 44, the 
        first SLEP craft;
         Excellent production progress on the fiscal year 2000 
        and 2001 SLEP craft with delivery scheduled before the end of 
        2003; and
         Contract award for the fiscal year 2002 and 2003 SLEP 
        craft.

    The fiscal year 2004 budget requests $73 million SCN for three 
additional LCAC SLEPs.
Submarine Programs
    Virginia (SSN-774) Class Attack Submarines
    With current construction progressing as scheduled, the fiscal year 
2004 budget request includes $2.5 billion for the sixth ship and 
advance procurement for the seventh and eighth ships of the Virginia 
class. Further, the budget requests permission to enter into a 
multiyear contract to provide program stability and enable substantial 
cost savings. Approximately $400 million in fiscal year 2004 for 
Economic Order Quantity advance procurement in support of a seven-ship, 
fiscal year 2004-2008 MYP is included in the budget request. The 
Virginia class detailed design is complete. The lead ship, the U.S.S. 
Virginia, is over 80 percent complete and early construction has 
validated the effectiveness of the design--build concept. Negotiations 
are underway on the fiscal year 2003 Block Buy contract and the Navy is 
reviewing strategies to optimize the planned MYP.
    SSGN
    The fiscal year 2004 budget request includes over $1.2 billion in 
procurement and R&D for the conversion efforts of the first two Ohio 
class submarines, funding for the Engineered Refueling Overhaul (ERO) 
of the third submarine, and advanced planning for the fourth and final 
ERO and conversion planned to begin in fiscal year 2005. When 
completed, these submarines will provide transformational warfighting 
capability carrying up to 154 Tomahawk cruise missiles, support 
sustained deployed special operating forces, and sustain our submarine 
force structure. The fiscal year 2004 budget request also funds attack 
weapons system procurement. Recently U.S.S. Florida successfully 
launched two Tomahawk missiles from a Multiple All-Up-Round Canister in 
a demonstration and validation (DEMVAL) test. The DEMVAL test confirmed 
that the conversion of SSBNs to SSGNs will work as envisioned with the 
ability to carry Tomahawk cruise missiles and support deployed special 
operating forces. Lastly, we are exploring opportunities for public-
private partnering in this program. The U.S.S. Ohio recently entered 
Puget Sound Naval Shipyard and began its refueling overhaul, the first 
step towards SSGN capability. The acquisition team has developed a 
creative plan to accelerate delivery of SSGNs while working to stagger 
the conversions to allow key workers and managers to apply lessons 
learned to each sequential submarine. The assistance of Congress was 
critical to the signing of the SSGN design contract in September 2002.

                          PRECISION MUNITIONS

Tactical Tomahawk
    Tactical Tomahawk missile begins full rate production in fiscal 
year 2004. Tactical Tomahawk significantly improves performance through 
an improved warhead, fuzing, and navigation improvements. This is 
accomplished at almost half the cost by using innovative manufacturing 
and production techniques. The Tactical Tomahawk completed successful 
developmental test shots from a simulated ground launcher in August 
2002 and an underwater launcher in December 2002. The program 
subsequently awarded a Low Rate Initial Production (LRIP) contract in 
October 2002, and exercised an option for additional missiles in 
January 2003, for a total of 192 missiles. The fiscal year 2004 budget 
requests authority for a fiscal year 2004-fiscal year 2008 MYP.

                         MINE WARFARE PROGRAMS

Organic Airborne Mine Countermeasures
    The fiscal year 2004 President's budget requests funding for a 
variety of airborne mine countermeasure systems that will be employed 
by the MH-60S helicopter as an organic capability. Specific systems 
are:

         AN/AQS-20A Advanced Minehunting Sonar and the Airborne 
        Mine Neutralization System (AMNS) are being developed to 
        counter deeper moored mines and visible bottom mines. The 
        Department is requesting $17.2 million for the AN/AQS-20A to 
        continue system developmental testing and $14.5 million to 
        continue development through critical design reviews on the 
        AMNS.
         The Airborne Laser Mine Detection System (AN/AES-1) 
        and the Rapid Airborne Mine Clearance System (AN/AWS-2) are 
        being developed to counter near surface and floating mines. The 
        Department is requesting $21.9 million to complete 
        developmental testing and award two AN/AES-1 LRIP units. The 
        budget also requests $31.2 million to complete critical design 
        review and begin developmental testing of AN/AWS-2.
         The Organic Airborne and Surface Influence Sweep 
        (OASIS) will counter influence mines not found using hunting 
        systems. The Navy is requesting $14.8 million for completion of 
        critical design review and commencement of development testing.

Long-term Mine Reconnaissance System (LMRS)
    The budget request of $56.5 million will continue LMRS baseline 
development through developmental test and preparation for operational 
testing. The LMRS program also incorporates development of a Mission 
Reconfigurable Unmanned Undersea Vehicle (MRUUV).
Remote Minehunting System
    The Remote Minehunting System (RMS) is being developed as an 
unmanned semi-submersible vehicle to deploy from surface combatants and 
operate remotely over-the-horizon. This new organic minehunting 
capability is to be integrated into DDG-51 Flight IIA (Hull 91-96) 
ships and is being considered for LCS. The Department requested $55.5 
million to complete critical design and continue fabrication of 
Engineering Development Models and to conduct technical evaluation in 
preparation for operational evaluation in fiscal year 2005.

                  INTEGRATED WARFARE SYSTEMS PROGRAMS

Open Architecture Concepts
    The Navy intends to implement open architecture concepts into its 
future ships and current and future combat systems using commercially 
available, widely accepted interface standards to bring commercial 
products from multiple vendors to bear on mission-critical systems. The 
Navy efforts will include leveraging the Hiper-D open architecture 
effort into the DD(X) total ship computing environment and into all 
future ship and submarine system developments. The Navy is integrating 
the command and control and combat systems information flow using open 
specifications and standards and open architecture constructs, in order 
to participate in FORCEnet and other global information networks.
FORCEnet
    Through the FORCEnet concept, the Navy is transforming future and 
existing assets to a joint, netted, distributed, and forward stationed 
force. It will bring an expanded ``toolbox'' of capabilities to the 
joint warfare commander as the Navy participates more and more in 
integrated joint operations. Network centric operations will be the 
foundation of our transformation to the force of the future and the key 
enabler in network centric operations will be the FORCEnet concept. 
FORCEnet is not a system; rather it is the architecture by which we 
will integrate our sensors, networks, decision aids, weapons, and 
warfighters into an adaptive human centered maritime system. FORCEnet 
will allow the Navy, as a part of an integral joint force, to leverage 
legacy and developing capabilities to achieve dominance across the full 
spectrum of warfare missions.
Ship Self-Defense (SSD)
    Ship self-defense is provided by weapon systems and equipment 
related to multiple primary warfare areas; Anti Ship Cruise Missile 
Defense, Surface Warfare, Undersea Warfare, Electronic Warfare, Anti 
Terrorism/Force Protection, Mine Warfare and Command and Control. 
Currently fielded systems allow ships to defend against today's 
threats, while new systems and improvements to existing systems are 
being developed and procured to meet the future stressing threats. The 
Ship Self Defense System (SSDS) forms the centerpiece of future combat 
systems for aircraft carriers and amphibious ships, enabling them to 
pace the increasingly lethal threat. SSDS is the integrator for the 
individual detection and engagement elements of the combat system. An 
open architecture system with automated weapons control doctrine, SSDS 
also integrates with the CEC and the Tactical Data Links. Last year, 
the Navy conducted rigorous land based testing on SSDS Mk 2 Mod 0 at 
the Surface Combat System Center, Wallops Island, in preparation for 
the U.S.S. Nimtz battle group. In May 2002, land based testing was 
transitioned to at sea testing for the Nimitz and the Wallops Island 
facility started to focus on SSDS Mk 2 Mod 1 testing for the U.S.S. 
Ronald Reagan. After Reagan, Wallops will focus on SSDS Mk 2 Mod 2 for 
``first of class'' testing for LPD-17 bringing a revolutionary combat 
capability to the amphibious fleet. The fiscal year 2004 budget 
includes $94 million for the SSDS.
    In addition, we continue to invest in upgrading the detect and 
engage portions of Ship Self Defense programs. The Surface Electronic 
Warfare Improvement Program (SEWIP) is a spiral development effort 
initiated to provide a robust, full spectrum electronic warfare system 
following cancellation of the Advanced Integrated Electronic Warfare 
System. SEWIP will build on the legacy SLQ-32 system to field 
capabilities against next-generation threats. Fiscal year 2004 budget 
includes $53 million for the development of Block 1 electronic warfare 
improvement. The fiscal year 2004 President's budget request includes 
$41 million WPN for the Close-In Weapons System (CIWS) that funds 
procurement, engineering support and installation of Block 1B for eight 
ordnance alteration (ORDALT) kits and upgrades. The eight ORDALT kits 
and upgrades will be combined with kits already onhand for installation 
on 13 ships. Fiscal year 2004 Rolling Airframe Missile (RAM) funding is 
$48 million WPN for Block 1 ORDALT kits, Block 1 Guidance and Control 
section procurements, and 90 missiles. Fiscal year 2004 RAM 
installations will be on five ships. Finally the Evolved Sea Sparrow 
Missile has just completed successful developmental testing on the Self 
Defense Test Ship and remains on schedule for OPEVAL in April aboard 
the U.S.S. Shoup. The fiscal year 2004 budget includes $113 million WPN 
for procurement of 105 missiles, production engineering, and 
performance characterization.
Extended Range Active Missile (ERAM)
    Despite the cancellation of the Standard Missile 2 (SM 2) Block IVA 
in December 2001, the Navy has an existing extended range (ER) AAW 
mission requirement as defined in the 2002 Navy Transformational 
Roadmap. A robust ER AAW missile with engage-on-remote capability 
against overland cruise missiles is key to achieving this requirement, 
providing flexible firepower throughout the battle space utilizing a 
variety of targeting platforms. The Navy's approach to this mission is 
the ERAM, which uses a SM 2 Block IV propulsion stack with an active 
AMRAAM seeker to provide enhanced capabilities. The ERAM approach is a 
low risk, non-developmental item approach and supports an fiscal year 
2010 Initial Operational Capability. The fiscal year 2004 budget 
includes $35 million for ERAM development.
Sea-based Terminal Missile Defense
    The Navy sees a unique requirement for sea-based, terminal 
ballistic missile defense capabilities. The Department of Defense has 
tasked the Navy in conjunction with Missile Defense Agency (MDA), to 
study the requirement of a sea-based, terminal missile defense. The 
Navy acquisition team has identified at least two options for providing 
a Sea-Based Terminal Missile Defense:

         Spirally evolve the ERAM missile to incorporate TBM 
        fuzing and lethality improvements; or
         Evaluate the potential for the extended range PAC-3, 
        known as Pegasus, to integrate with Navy ship systems.

    The recommended approach will depend on the specific threat and 
performance requirements defined, operational need date, and funding 
environment.
Midcourse Missile Defense
    The Navy-MDA team executed three consecutive successful missile 
intercepts utilizing the Aegis Element of the Ballistic Missile Defense 
System culminating in the groundbreaking milestone of a ship-launched 
missile intercepting a target missile during its ascent phase. The 
Aegis BMD element also successfully met all objectives in two ground 
based missile defense tests in late 2002.
Standard Missile
    The fiscal year 2004 budget request for $148.3 million will procure 
75 SM 2 Block IIIB missiles. The budget request will extend missile 
procurement of the remaining 942 missiles through fiscal year 2013 vice 
fiscal year 2008.
Joint Fires Network (JFN)
    A further step forward in Network-Centric Warfare and one of the 
Navy's transformational initiatives is the Joint Fires Network (JFN). 
The fiscal year 2004 budget includes $159 million for JFN. It is the 
interface of the intelligence/surveillance/reconnaissance, target, and 
command and control capabilities of three existing stand-alone systems: 
Joint Services Imagery Processing System--Navy; Global Command and 
Control System--Maritime; and Tactical Exploitation System--Navy. The 
JFN is not a traditional program. The virtual program office works to 
eliminate duplication and retain complementary elements each has to 
offer. In addition, the team that validated the JFN analysis of 
alternatives has continued to support the JFN engineering team in its 
spiral development efforts to interface and converge the various 
functions of the three programs. JFN will serve as a building block for 
the Navy's more extensive FORCEnet concept and is being fielded as part 
of the Department's emergency wartime response to get critical 
capability to the warfighter quickly.
Cooperative Engagement Capability (CEC)
    The fiscal year 2004 budget request includes $160 million for CEC. 
CEC provides a significant step forward in transforming our situational 
awareness of the battle space. CEC's successful completion of OPEVAL 
allows implementation of this capability within the fleet and is a 
major step in developing a network-centric force. This transformational 
program allows one ship to shoot a weapon at a generated target based 
on another ship's firing solution for the first time in naval history. 
CEC is being integrated into our E-2C aircraft and follow-on test and 
evaluation of this added capability is ongoing. CEC is moving forward 
with a solicitation this summer to compete a next generation design 
that will be smaller, more affordable, and more bandwidth efficient 
while providing significantly higher performance and potentially 
supporting joint service use.

                                SUMMARY

    The Navy acquisition team has taken many positive steps during the 
past year. From moving forward with the SSGN design contract to 
initiating the LCS program, the support and direction of Congress has 
been essential to our progress. I am most grateful for the assistance 
of this committee for all of the Department of the Navy's efforts.
    I would report to you today that the shipbuilding program and 
associated industrial base is on the verge of being stabilized, a key 
remaining facet of this is the proposed Virginia-class submarine 
multiyear. The Department will have a chance to manage these programs 
and control cost going forward. This core shipbuilding program can be 
built upon in the future to continue the recapitalization of the Navy 
fleet. Through the use of innovative acquisition initiatives, our 
Nation will have a healthy shipbuilding industrial base and an 
efficient and an appropriately sized infrastructure to support an 
optimal force structure.
    In the end, the ship fleet is a tool of our sailors and marines. 
Today, the Navy and Marine Corps have used all of the ships in that 
fleet to the fullest degree possible, putting combat capability exactly 
where the Nation needs it as part of the Joint Force. Naval forces are 
also forward deployed, providing clear presence and protecting the 
United States' strategic interests. We have the finest naval force in 
the world. With your assistance, we will continue to improve every 
aspect of our business to provide the maximum capability for our 
sailors and marines and the maximum security for America.

    Senator Talent. Thank you. It is a good story.
    Admiral Mullen.

STATEMENT OF VICE ADM. MICHAEL G. MULLEN, USN, DEPUTY CHIEF OF 
 NAVAL OPERATIONS FOR RESOURCES, REQUIREMENTS, AND ASSESSMENTS

    Admiral Mullen. Thank you, Mr. Chairman, and thank you for 
the opportunity to appear before this subcommittee today to 
discuss our United States Navy as a proud member of the Navy 
and Marine Corps team.
    While not asked to testify today, sitting in back of me 
today is Lieutenant General Bob Magnus, who probably knows as 
much about our program as anybody. He is my counterpart in the 
Marine Corps and he worked hard along with us to bring this 
program forward, and I am grateful for that support.
    I would like to express my great appreciation for your 
outstanding and longstanding support, which continues to be 
vital and is at the foundation of our ability to project our 
naval forces to the four corners of the globe.
    Since last year we have been very busy. Your Navy has been 
a continuing participant in the global war on terrorism and 
Operation Enduring Freedom, where we deployed 9 of our 12 
aircraft carriers and 6 of our 12 amphibious ready groups, and 
in recent weeks and months in the buildup and execution of 
Operation Iraqi Freedom, in which 7 of our carriers and 9 of 
our 12 big amphibious ships are also deployed along with, as 
the CNO said, 70 percent of our air wings. Many of our naval 
forces deployed to fight in Operation Enduring Freedom are now 
redeployed to fight in Operation Iraqi Freedom, less than 18 
months later.
    Your Navy now and in the future is a joint, sea-based, 
interoperable, networkcentric, power projection force and 
continues to provide a terrific return on the taxpayers' 
investment. In the last few years, as you have heard and, our 
CNO, Admiral Clark, has made improving our readiness accounts a 
top priority and, with your support, we have achieved the 
highest level of readiness I have seen during my almost 35-year 
career.
    I believe the President's 2004 budget is also transforming 
our Navy. Admiral Clark's comprehensive vision of Seapower 21 
provides a strong framework upon which to build for the future. 
We have had healthy debates in the Pentagon on major issues 
which have centered on the urgency of moving forward and the 
requirement to be able to fight today as well as transform for 
the future.
    I believe Secretary Rumsfeld has created a positive 
atmosphere in which these debates take place and the result has 
been a better program for the Navy and for our Nation. We are 
transforming much more than the equipment we buy. This budget 
supports our ability to continue to transform our most 
important resource, our people. We have adopted a 
transformational new global concept of operations and we are 
looking to reorganize our operational structure from the old 
way of 19 independent striking groups to a new way of 37 
independent striking groups, including carrier striking groups, 
expeditionary strike groups, surface strike, TBMD groups, and 
SSGNs.
    In conjunction with the Missile Defense Agency, we expect 
to field a sea-based missile defense capability in fiscal year 
2004. These changes are exciting and meet head-on the 
challenges of the 21st century in which widely dispersed and 
netted forces with combat capability will become the norm.
    At the heart of this change is the sea base and the concept 
of sea basing, which notionally is a scalable collection of 
joint warfighting capabilities distributed across interoperable 
platforms netted together and sustained from the sea without 
reliance on shore facilities within the joint operations area.
    I also believe we are currently at an important inflexion 
point and decisions this year and in the near years to come 
will determine the capabilities we will have in our Navy and 
our Marine Corps for the next 3 or 4 decades. Our current 
program has eight new classes of ships, as Secretary Young has 
said. They include our future carrier, CVN-21, our 
transformational land attack destroyer, DD(X), which is also 
our R&D centerpiece for the future of surface ships and a 
member of our family of ships, along with our Littoral 
Combatant Ship, the LCS, the LPD-17, and our SSGNs, to just 
name a few.
    We have changed the trend on our recapitalization of our 
Navy and we are compelled to do so to get to the future of 
about 375 ships. To get to that goal, we need to sustain a 
shipbuilding account of 10 to 12 ships a year and about $12 to 
$14 billion a year in constant fiscal year 2003 dollars. We are 
also asking for funds to buy the EA-18 Golf, which the CNO 
mentioned in his testimony, to replace our aging EA-6Bs, funds 
for Joint Strike Fighter, and for the Advanced E-2, all of 
which are critical parts as we move forward.
    In order to recapitalize, we took some near-term risks the 
garner resources for future investment in both ships and 
airplanes. These were particularly tough decisions, but on 
balance calculated to take low to moderate risks now in order 
to avoid high risk in the future.
    In both ships and airplanes, we rely heavily on the private 
sector, especially the national treasures of our industrial 
base. I truly believe we have turned the corner in 
recapitalization and we must continue the trend in future 
budgets.
    In particular, I would like to thank this subcommittee for 
its strong longstanding support in shipbuilding. Without ships, 
we are not much of a Navy. Our priorities continue to be to 
sustain the readiness necessary to fight the global war on 
terrorism, to recapitalize and transform our Navy, to invest in 
our sailors, to improve our networks both in a operational 
sense and in a business sense, and to provide quality training 
both individually and on our training ranges.
    Again, Mr. Chairman, thank you for your continued support 
and I look forward to answering your questions.
    [The joint prepared statement of Admiral Nathman and 
Admiral Mullen follows:]

Joint Prepared Statement by Vice Adm. John Nathman, USN, and Vice Adm. 
                          Michael Mullen, USN

    Mr. Chairman and members of the committee, we appreciate the 
opportunity to appear today. The investment you've made in America's 
Navy has been vital to the Nation's security and your Navy's ability to 
project more power, more protection, and more freedom to the far 
corners of the Earth. Thank you for your exceptional and continuous 
support.

                           I. YOUR NAVY TODAY

    This is a time of tremendous challenge and accomplishment for our 
Navy. Our men and women operating in the air, on and under the sea, and 
on the ground are at the leading edge of the global war on terrorism.
    Today, there are 168 ships deployed, more than half of the Navy, 
providing persistent combat power forward; this includes 7 of 12 
aircraft carriers, and 9 of our 12 big deck amphibious ships (LHA/
LHDs). They are deployed in support of the Nation's interests in the 
Persian Gulf, the Mediterranean, the Indian Ocean, and the Western 
Pacific. Still others are preparing for deployment or continuing 
operations like strategic deterrent and counterdrug patrols in support 
of other national imperatives.

                          II. YOUR FUTURE NAVY

    The 21st century sets the stage for tremendous increases in 
precision, reach, and connectivity, ushering in a new era of joint 
operational effectiveness. We clearly will be able to integrate sea, 
land, air, and space through enhanced network technology to a greater 
extent than ever before. In this new, unified battlespace, the sea will 
provide the vast maneuver area from which to project direct and 
decisive power.
    To navigate the challenges ahead and realize the opportunities, we 
developed this past year a clear, concise vision--Sea Power 21--for 
projecting decisive joint capabilities from the sea. The Chief of Naval 
Operations has already described this vision to you, so we will not 
repeat that description here. But we want to emphasize to you that the 
Sea Power 21 vision will be put into practice through a new global 
concept of operations (CONOPs) to distribute our combat striking power 
to a dispersed, networked fleet. This will optimize our flexible force 
structure and create additional, scaleable, independent operating 
groups capable of responding simultaneously around the world. This 
distribution of assets will take us from 19 independent strike capable 
groups to 37 independent strike capable groups with the full 
implementation of the global CONOPs. Sea Power 21, put into practice 
through the global CONOPs, will provide increased power-projection.
    Integral to Sea Power 21 and to ensuring access to critical corners 
of the globe through operational independence is the Sea Base. The Navy 
and Marine Corps team is working closely to determine the best mix of 
expeditionary ships that will make up the future Sea Base. In addition 
to naval requirements, we will also consider other joint missions that 
may arise such as the need for a joint command ship, hospital ships, 
and an Afloat Forward Staging Base. We will know more about these 
requirements over the next year as we complete ongoing efforts such as 
the Joint Forcible Entry Study and the Defense Science Board Seabasing 
Study. As we begin procurement of MPF(F), LHA(R), DD(X), LCS, MV-22, 
and JSF, we have a unique opportunity to design an entire package of 
capability to support Sea Basing and Expeditionary Maneuver Warfare. We 
are facing a rare inflection point in history with several new ship 
classes coming on line within the next few years. What we decide to 
build today will impact the Navy for the next 30 to 40 years.

          III. CONTEXT FOR OUR FISCAL YEAR 2004 BUDGET REQUEST

    In recent years the Navy improved its readiness by properly funding 
our current readiness accounts, deepening the growth and development of 
our people, and developing innovative operational concepts and 
capabilities.
    We also sharpened our focus on future force structure--to buy the 
ships, aircraft, and the capabilities needed for tomorrow's Navy. At 
the same time, we did not overlook the important gains our focus on 
current readiness made these last few years; it produced the more 
responsive force on deployment today. As a result, we looked hard at 
ways we could balance these priorities and our discretionary 
investments to both satisfy the near-term operational risks and prepare 
for the long-term risks of an uncertain future. This year we made hard 
choices across the fleet to do more to mitigate our future risk while 
sustaining our current readiness gains.
    Our fiscal year 2004 budget request includes an initiative to 
accelerate the retirement of our oldest, least capable, and most 
maintenance-intensive ships, and to apply the savings this decision 
produces toward higher recapitalization priorities. Our preferred 
inactivation timeline would produce $1.2 billion across the FYDP for 
this purpose.
    Accelerating the retirement of the Spruance class destroyers, the 
baseline 1 Aegis cruisers, and selected Oliver Hazard Perry class 
frigates was one of the most difficult decisions we made in building 
this year's budget. Although difficult, we firmly believe it is the 
right decision, one we made only after carefully considering the risks, 
both in the near-term and in the long-term. Current Navy warfighting 
analysis of likely combat scenarios over the next 10 years indicates 
that the warfare missions for surface combatants are not well met by 
Spruance class destroyers, baseline 1 Aegis cruisers and older Perry 
class frigates. In the long term, we need the next generation 
destroyer, DD(X), the next generation cruiser, CG(X) and the Littoral 
Combat Ship to address these missions.
    Fundamentally, we believe aggregate warfighting capability based on 
the type and mix of key weapon systems in the fleet is a better metric 
than the total number of ships when analyzing the risk attendant to 
various force structure options. While it is true that one ship can 
only be one place at a time, and that below a certain threshold the 
total number of ships does matter, our judgment is that the near-term 
retirements we propose do not cross the threshold of unacceptable risk. 
Instead, accelerating the retirement of these selected ships adds 
little risk in the near-term, but helps significantly in facilitating 
our transition to the numbers, type, and mix of ships we will require 
to execute the range of missions we anticipate in the 21st century.
    In assessing the risk of reducing our legacy surface combatant 
inventory, we examined three criteria by which our aggregate 
warfighting capability should be measured: capacity for strike 
missions, performance against submarine and surface ship threats, and 
contribution to air defense.
    Strike warfare capabilities affected by the decommissioning of 
Spruance destroyers are met by the simultaneous commissioning of 
Arleigh Burke class destroyers; the number of Vertical Launch System 
(VLS) cells available in the fleet for Tomahawk by fiscal year 2004 is 
greater than in fiscal year 2001 despite the decommissionings, and it 
rises steadily thereafter. Perry class frigates and baseline 1 Aegis 
cruisers, the oldest in the inventory, have no VLS or Tomahawk 
capability.
    The most effective surface combatant weapon system for anti-
submarine and anti-surface warfare (ASW/ASUW) is the combination of a 
Lamps Mk III helicopter and an Aegis warship. The net result of the 
planned ship decommissionings and Burke class destroyer commissionings 
is to temporarily reduce the total fleet capacity for helicopter 
embarkation, but the number of deck spots for helicopters available 
still exceeds the number of helicopters in the inventory to fill them.
    The ability to maintain a shipboard protective anti-air warfare 
shield over a broad area is best delivered by the Aegis Weapon System 
and the SM-2 Block IIIB VLS missile. Neither the Spruance nor Perry 
class ships are Aegis equipped, and the baseline 1 Aegis cruisers have 
Mark 26 rail launchers which can only shoot older, less capable 
missiles. We are focusing our Cruiser Conversion efforts on upgrading 
the 22 cruisers with VLS for future mission requirements, including 
ballistic missile defense (BMD). The cost of doing this for the 
baseline 1 cruisers is prohibitive.
    In every case, continuing to operate these ships for the few years 
remaining in their useful lives adds little to our aggregate 
warfighting capability while hampering our ability to move forward with 
critical recapitalization efforts.
    We will continue to pursue efficiencies that improve our 
warfighting capability. We are committed to producing the level 
investment stream that will help implement our bold new Navy vision and 
produce the number of future ships, aircraft, and systems we need to 
counter the 21st century threat. Harvesting savings for reinvestment is 
an important part of that effort, and we will continue to examine the 
potential efficiencies while weighing the operational risks, both now 
and in the future.
    This year, we intend to:

         Sustain our current readiness gains to support the 
        global war on terror;
         Deepen the growth and development of our people into 
        the 21st century, high-technology personnel force that is our 
        future; and
         Invest in our bold new Navy vision--Sea Power 21--to 
        recapitalize and transform our force and improve its ability to 
        operate as an agile, lethal, and effective member of our joint, 
        networked warfighting team.

                     IV. INVESTING IN SEA POWER 21

    Our 21st century Navy will be a joint, netted, dispersed power 
projection force and Sea Power 21 is the framework around which our 
Navy will organize, integrate, and transform. It prescribes a strategy-
to-concepts-to-capabilities continuum by which current and future naval 
forces will exploit the opportunity that information dominance and 
rapid, highly accurate, and lethal power projection and defensive 
protection capabilities bring to us.
    We have started to ``turn the corner'' in our ship and aircraft 
recapitalization program. The fiscal year 2004 budget request provides 
funding for seven new construction ships, the final two of four planned 
SSBN-to-SSGN conversions, and the first ship in our Cruiser Conversion 
program. In all, our shipbuilding program includes $12.2 billion, a 
significant increase above last year. The seven new ships include three 
Arleigh Burke class (DDG-51) destroyers, one Virginia class (SSN 774) 
fast attack submarine, one San Antonio class (LPD-17) amphibious 
transport dock, and two Lewis and Clark class (T-AKE) dry cargo and 
ammunition ships.
    Additionally, we invest more than $1.5 billion for R&D in 
transformational shipbuilding programs such as CVN-21, DD(X), LCS, and 
SSGN, discussed later in this statement. Each of these platforms will 
bring to the force unique capabilities focused on distinctly different 
mission sets. They will complement each other, and each will enhance 
the others' ability to accomplish its primary mission. Pressing ahead 
with all of these programs is essential to recapitalizing the fleet 
with the right mix of future capabilities.
    Demonstrating Navy's commitment to stabilizing the shipbuilding 
program and industrial base, the fiscal year 2004 budget presents a 
plan for multiyear procurement for Virginia class SSN. In addition to 
the MYP strategies in place for DDG-51 and requested for Virginia 
class, we plan on funding the lead DD(X) and LCS in RDTEN funds 
beginning in fiscal year 2005 and split funding CVN-21 over 2 years 
beginning in fiscal year 2007. We are committed to the continued 
pursuit of alternative funding strategies to both stabilize the 
shipbuilding accounts and increase the shipbuilding rate while 
maintaining fiscal responsibility and doing things that make sense.
    The following describes the core capabilities, and our investments 
in our highest priority programs supporting our vision of a 21st 
century Navy.
Surface Combatants
    The 2001 Quadrennial Defense Review Report stated the importance of 
projecting and sustaining U.S. forces in ``distant anti-access'' 
environments. Accomplishing this critical operational goal requires a 
broad range of capabilities, and the naval capabilities required are 
best provided by a ``family of ships.'' Although warships are multi-
mission by necessity, each member of the family of ships is optimized 
to perform a key function: DD(X) for delivery of precision strike and 
volume fires to support assured access and maneuver warfare; CG(X) to 
create and maintain air superiority over the joint force at sea and on 
land; and LCS to operate closer to shore to deny the enemy the use of 
anti-access weapons such as mines and submarines against our forces.
    The fiscal year 2004 budget request includes funding for DD(X) and 
LCS. CG(X) development will begin in the future, and, as a descendant 
of the DD(X) program, it will share with DD(X) a common, more stealthy 
hull form and propulsion architecture. That architecture includes an 
integrated all-electric power system that is more efficient and 
survivable than today's ships', and provides more power capacity for 
future weapons. DD(X) and CG(X) will also use many of the same 
transformational technologies to reduce crew size and operating and 
support costs.

     DD(X). The DD(X) advanced multi-mission destroyer is the 
centerpiece of our future surface combatant ``family of ships.'' It 
will bring revolutionary improvements to precision strike and joint 
fires. The fiscal year 2004 budget request includes R&D funding of more 
than $1 billion for design, development, and testing leading to 
procurement of the lead ship in fiscal year 2005. This investment is 
vital and it is the most critical component for the shipbuilding 
technology base of the future. Transformational and leap ahead 
technologies include an integrated power system and electric drive; the 
Advanced Gun System with high rate of fire and magazine capability; the 
new Multi-Function Radar/Volume Search Radar suite; optimal manning 
through advanced system automation, stealth through reduced acoustic, 
magnetic, IR, and radar cross-section signature; and enhanced 
survivability through automated damage control and fire protection 
systems. Unless we systematically reduce the crew size of our future 
ships, we can't get to the future. DD(X) leads the way. Armed with an 
array of land attack weapons it will provide persistent, distributed 
offensive fires in support of joint forces ashore, including our number 
one joint partner, the United States Marine Corps. The capacity in both 
hull form and integrated electric power system will allow us to spiral 
its development to CG(X), a critical future component of sea based 
missile defense.
     Littoral Combat Ship (LCS). The Chief of Naval Operation's 
number one budget priority, the LCS is the next member of our surface 
combatant ``family of ships.'' The fiscal year 2004 budget includes 
$158 million to accelerate development and construction of nine LCS in 
the FYDP, key to ramping surface force structure to global CONOPs 
levels outside the FYDP. It will be the first Navy ship to separate 
capability from hull form and provide a robust, affordable, focused-
mission warship to enhance our ability to establish sea superiority. A 
networked, lethal, small, fast, stealthy, and highly maneuverable ship, 
LCS will be designed from the keel up as a focused mission ship capable 
of employing manned and unmanned mission modules to counter some of the 
most challenging anti-access threats our naval forces may encounter 
close to shore--mines, quiet diesel submarines and small, fast, armed 
boats.
    Mission module development will focus on identifying and 
integrating systems with technical maturity that will provide proven 
warfighting capability for the first flight LCS. These potentially 
include off board systems that will increase LCS sensor and weapons 
reach such as Vertical Takeoff UAV, Remote Minehunting System, Spartan 
Scout ACTD, Long-term Mine Reconnaissance System and Advanced 
Deployable System. Integration of these systems, in addition to the 
installed core systems, will provide LCS combat capability in the 
focused mission areas of Mine Warfare, Anti-Submarine Warfare, and 
Anti-Surface Warfare. Through the spiral development process, we will 
combine improved legacy systems and next generation systems to provide 
ever-increasing capability for follow on LCS flights.
    Last year, we continued experimenting with a range of innovative 
hull forms, and Congress supported us so we could get the program 
moving this year, avoiding a critical 1-year delay. The fiscal year 
2004 effort will be aimed at defining requirements, improving our 
knowledge base for selecting an LCS design, and beginning mission 
module development. We will capitalize on DOD initiatives, spiral 
development, and new acquisition methods to streamline the acquisition 
process, and begin construction of the first LCS by 2005.
     CG Conversion. The fiscal year 2004 budget includes $194 
million for the first Cruiser Conversion. The Cruiser Conversion 
Program is a mid-life upgrade for our existing AEGIS cruisers that will 
ensure modern, relevant combat capability well into this century and 
against evolving threats. These warships will provide enhanced land 
attack and area air defense to the Joint Force Commander. Core to these 
conversions is installation of the Cooperative Engagement Capability, 
which enhances and leverages the air defense capability of these ships, 
and the 5,,/62 Gun System with Extended Range Guided Munitions to be 
used in support of the Marine Corps Ship-to-Objective-Maneuver 
doctrine. These converted cruisers will also be available for 
integration into ballistic missile defense missions as that capability 
matures.
     DDG-51. Three Arleigh Burke class (DDG-51) destroyers are 
being procured in fiscal year 2004 with the $3.2 billion requested as 
part of the MYP of 10 DDG-51 ships over the period fiscal year 2002 
through fiscal year 2005. The Navy and its two principal DDG builders 
successfully negotiated a workload swap arrangement in June 2002 in 
which General Dynamics' Bath Iron Works will transfer LPD-17 ship 
construction work to Northrup Grumman Ship Systems in exchange for 
additional DDG-51 work. This arrangement will optimize production 
efficiencies and stabilize workload at all shipyards building DDG-51 
and LPD-17 class ships.
Amphibious Ships
     LPD-17. The fiscal year 2004 budget provides full funding 
of $1.2 billion to procure the sixth ship of this planned 12-ship 
class. LPD-17 functionally replaces LPD 4, LSD 36, LKA 113, and LST 
1179 classes of amphibious ships for embarking, transporting, and 
landing elements of a Marine landing force in an assault by 
helicopters, MV-22s, landing craft, and amphibious vehicles. This 
program is on track and represents a critical contribution to the 
Marine Corps' amphibious lift requirements.
     LHD-8. The fiscal year 2004 budget requests $355 million 
additional incremental funding for LHD-8, a modified repeat of previous 
LHDs. LHD-8, with introduction of gas turbine propulsion, all-electric 
auxiliaries, and a new electrical distribution and computer based 
Machinery Control System will replace one of the aging Tarawa (LHA) 
class ships in 2007.
     LHA Replacement (LHA(R)). LHA(R) is a spiral development 
ship construction program designed to field a far more capable 
replacement (in conjunction with LHD 8) for the five Tarawa class ships 
that begin reaching end of service life in 2011. LHA(R) will provide a 
longer and wider platform capable of increased vehicle lift, and will 
have better survivability and weight margin. The fiscal year 2004 
budget request of $65 million provides funds for R&D supporting fiscal 
year 2007 procurement of the lead ship.
    While we are building LPD-17 and replacements for the Tarawa class 
ships, it is important that we have a robust sustainment program for 
the amphibious ships currently in the fleet. The LPD-4 Class Extended 
Sustainment program, started in fiscal year 2003, will be completed on 
6 of the 11 aging ships by fiscal year 2006 and addresses maintenance 
and operational readiness concerns. It is not designed to provide 
additional capabilities or combat systems enhancements. Average cost is 
$73 million per hull based on existing configurations. These ships will 
ultimately be relieved by the last six LPD-17s by 2015 at an average 
age of 41.5 years. The LHA-1 Midlife program completes in fiscal year 
2008 and will ensure that maintenance and readiness concerns are 
addressed. The LHAs do not have future growth for JSF or significant 
weight additions as the limiting draft at full load has been reached. 
The first LHA is scheduled to be replaced by LHD-8 in fiscal year 2007 
and the last hull will be relieved in fiscal year 2022 by the LHA(R)s 
with an average class age of about 40 years.
Aircraft Carriers
     CVN-21. We are fulfilling the President's stated goal to 
``skip a generation'' of technology and have accelerated 
transformational technologies from the CVNX development plan into CVN-
21. The fiscal year 2004 budget request provides $1.5 billion in RDT&E 
and advanced procurement for the first CVN-21 and programs for split-
funded construction beginning in fiscal year 2007. The transformational 
technologies include a new electrical generation and distribution 
system providing a 300-percent increase in available electrical power, 
improved flight deck design with Electro-Magnetic Aircraft Launching 
System and Advanced Arresting Gear, improved sortie generation, 
enhanced survivability, reduced manning, and incorporation of a 
flexible infrastructure that will allow the insertion of new 
capabilities as they evolve. CVN-21 will be the centerpiece of our 
future carrier strike capability when it enters active service in 2014.
Submarines
     Virginia-class submarine (SSN 774). The first ship of this 
class will deliver in June 2004. This class will supplement Los 
Angeles-class (SSN 688) attack submarines and improve submarine force 
capability for multi-mission littoral operations including ISR, special 
operations, mine warfare, conventional strike anti-submarine, and anti-
surface missions. The Virginia class is designed to accommodate new 
technologies, including an array of unmanned vehicles and will be an 
integral part of our joint, networked, dispersed fleet of the 21st 
century. The fiscal year 2004 budget request of $2.5 billion includes 
funding for Economic Order Quantity supporting plans for a MYP 
contract.
     SSGN Conversions. We have requested two additional 
conversions in fiscal year 2004; these ships will be configured to 
carry more than 150 Tomahawk missiles, enabling covert, large-volume 
strike. The SSGN will also have the capability to support Special 
Operations Forces for an extended period, providing clandestine 
insertion and retrieval by lockout chamber, dry deck shelters or the 
Advanced Seal Delivery System, and they will be arrayed with a variety 
of unmanned systems to enhance the Joint Force Commander's knowledge of 
the battlespace. We will leverage the existing Trident submarine 
infrastructure to optimize their on-station time. The first two ships, 
the U.S.S. Ohio and U.S.S. Florida, begin refueling overhaul this year, 
Ohio in Puget Sound Naval Shipyard and Florida in Norfolk Naval 
Shipyard. U.S.S. Michigan and U.S.S. Georgia will begin their 
conversion in fiscal year 2004, and we expect this capability to be 
operational for the first SSGN in fiscal year 2007. But we are already 
experimenting with the capabilities this new ship will offer.
    The recent Sea Trial experiment, ``Giant Shadow,'' explored how a 
network of forces, including special warfare forces, and various 
unmanned aerial, underwater and ground vehicles and sensors could be 
used to provide surveillance, collect real-time intelligence, and 
develop and launch a time critical strike in support of the Joint Force 
Commander. This included the first vertical launch of a UUV, testing of 
nuclear-biological-chemical sensors, and the insertion of SEALs from 
one of the submarines we will convert to an SSGN.
    In conjunction with Giant Shadow, the U.S.S. Florida successfully 
launched two Tomahawk missiles, confirming the ability to launch a 
Tomahawk from a configuration similar to the tightly packed cluster of 
Tomahawk All-Up-Rounds (AUR) we will use in the SSGN.
Maritime Pre-positioning Forces
     Maritime Pre-positioning Force Future (MPF(F)). The fiscal 
year 2004 budget request includes $4 million in preliminary R&D funding 
for MPF(F) leading to procurement of the first ship in fiscal year 
2008. MPF(F) ships will serve a broader operational function than 
current pre-positioned ships, creating greatly expanded operational 
flexibility and effectiveness. We envision a force of ships that will 
enhance the responsiveness of the joint team by the phased at-sea 
assembly of the sea-based echelon of a Marine Expeditionary Brigade. 
These ships will off-load forces, weapons, and supplies selectively 
while remaining far over the horizon, and they will reconstitute ground 
maneuver forces aboard ship after completing assaults deep inland. They 
will sustain in-theater logistics, command and control, and medical 
capabilities for the joint force for extended periods as well.
Combat Logistics Force Ships
     Lewis and Clark Class Auxiliary Dry Cargo Ammunition Ship 
(T-AKE). The widely dispersed nature of future operations and the 
growing emphasis on sea-basing of joint capabilities will be supported 
by newer, more capable additional combat logistics force ships such as 
the T-AKE Cargo and Ammunition Combat Support supply ships. The fiscal 
year 2004 funding of $722 million procures the fifth and sixth ships of 
the class to continue recapitalization of our support fleet. Delivery 
of the lead ship is expected in 2005. These ships will be crewed by 
Military Sealift Command (MSC) civilian mariners and constructed to 
meet ABS class/USCG certification. Enhanced capabilities in these ships 
will include greater capacities and upgraded material handling and 
transfer systems over the aging T-AFS and T-AE class ships being phased 
out. The T-AKE class will be built with multipurpose convertible cargo 
holds for dry stores and/or ammunition that will provide greater 
flexibility to tailor loads to meet changing operational requirements. 
A 12,000-pound Heavy UNREP system will double both delivery load weight 
and throughput rates of transfer, as well as increase the safe 
operating separation of the ships conducting replenishment. An 
innovative electric drive propulsion system will provide increased 
electric power for auxiliary power needs.
Science and Technology
    Our science and technology (S&T) investment of $1.6 billion in 
fiscal year 2004 continues to focus on maintaining a broad S&T base. 
The S&T program seeks to inspire and guide innovation that will provide 
technology-based options for future Navy and Marine Corps capabilities. 
It addresses areas from oceanography, advanced materials, sensors, and 
robotics; from biomedical science and technology; from electronics, 
surveillance, and neurotechnology and information science; from 
advanced combat systems to other technologies for ships, submarines, 
aircraft, and ground vehicles; and from concept-based experimentation 
conducted to enhance warfighting excellence. Our S&T drawing board 
includes projects related to next generation surface ships; unmanned 
aerial vehicles; underwater weapons; and, combat casualty treatment. 
Approximately 10 percent of the DoN S&T investment is budgeted for U.S. 
Joint Forces Command experimentation requirements.
    The fiscal year 2004 budget request devotes a significant amount of 
resources toward four critical areas: Anti-submarine Warfare, Mine 
Warfare, Ship Self Defense, and Air and Missile Defense; to assure 
access in the future.
Anti-Submarine Warfare (ASW)
    The fiscal year 2004 budget request supports improvements in ASW. 
The Improved Extended Echo-Ranging is incorporated into the USQ-78B 
Acoustic Processor, which will improve large area acoustic search 
capability on our Maritime Patrol Aircraft. Initial testing of the 
SURTASS Low Frequency Active (LFA) in the Western Pacific has 
demonstrated detection capability that provides us added assurance that 
we can deal with the diesel-electric threat as it becomes even quieter, 
and we have accelerated development of an Advanced Deployable System 
(ADS) off-board sensor variant, to start in fiscal year 2005, that will 
eliminate the requirement to cable the system to a shore site. The 
fiscal year 2004 budget also supports a fiscal year 2006 IOC of Mk 48 
Mod 7 Common Broadband Acoustic Sonar System (CBASS) Heavyweight 
Torpedo specifically designed for use against advanced diesel 
submarines employing countermeasures in the difficult littoral 
environment. The MH-60R helicopter with its Advanced Low Frequency 
Sonar will provide an improved capability against submarines in the 
littorals. Acquiring the airborne Automatic Periscope Detection and 
Discrimination system will provide further enhancements to our 
capability for large area search. Additionally, the capability for our 
surface combatants to survive attacks from threat torpedoes will be 
enhanced through the Surface Ship Torpedo Defense system. The success 
of the truly open architecture Acoustic Rapid COTS Insertion (A-RCI) 
program in providing significant improvement in ASW sensor processing 
for our submarine force has spawned similar efforts in submarine combat 
control, communications, and upgrades to the surface fleet's SQQ-89 
combat suite. These programs validate the Navy's decision to use 
commercially available technology to deliver superior performance at 
less cost.
Mine Warfare (MIW)
    The fiscal year 2004 budget continues the development and 
acquisition of the Long-Term Mine Reconnaissance System (LMRS), which 
is on track for a fiscal year 2005 IOC on the Los Angeles class and 
will be incorporated on the Virginia class as it delivers. LMRS will 
provide a clandestine reconnaissance capability for mines and mine-like 
objects. The fiscal year 2004 budget also includes funding for the 
development and acquisition of the Remote Mine-hunting System (RMS), a 
surface ship--launched and recovered semi-submersible vehicle. RMS has 
a fiscal year 2005 IOC with near-term fielding planned for DDGs 91-96. 
RMS also is a strong candidate for future deployment on the LCS. To 
meet the Department's goal of an organic mine warfare capability by 
fiscal year 2005, the fiscal year 2004 budget continues the development 
and integration of five Organic Mine Subsystems into the MH-60S 
platform.
    The MH-60S ``Knighthawk'', the Navy's newest Multi-Mission Combat 
Helicopter, has been identified as one of the two platforms that enable 
the Naval Helicopter Concept of Operations for the 21st century. 
Partnered with the MH-60R, the MH-60S will enable maximum combat 
efficiency across a spectrum of warfighting tasks centered on the Armed 
Helicopter and Airborne Mine Countermeasures configurations. These 
missions place great reliance on the lethality of weapons systems 
brought to bear on a threat to our Nation's access to littoral waters. 
Through enhanced lethality of helicopter borne weapons systems, an 
asymmetric disruption of naval operations can be thwarted without the 
use of fixed wing based aircraft or the air combat element of the 
Marine Expeditionary Unit. In addition to operating from today's 
current inventory of combatant ships, the MH-60S will interface with 
the Maritime Pre-positioning ship of the future (MPF), the LCS, and the 
High Speed Vessel (HSV). As we develop these platforms and concepts, 
the MH-60S will be tailored, through spiral acquisition, to meet the 
capabilities required of the Joint Theater Commander. The fiscal year 
2004 budget includes $431 million for 13 helicopters and other 
equipment required to transition to the new airframe.
Ship Self-Defense
    We continue to invest in upgrading our Ship Self-Defense programs. 
Fiscal year 2004 funding covers the spectrum from electronic 
countermeasures to missiles to guns. The SEWIP is a spiral development 
effort initiated to provide a robust, full spectrum electronic warfare 
system following cancellation of the Advanced Integrated Electronic 
Warfare System in fiscal year 2002. SEWIP will build on the legacy SLQ-
32 system to field capabilities against next-generation threats. The 
current budget expands procurement of the Close-in Weapons System, 
Block 1B. The internationally procured Rolling Air Frame Missile and 
the NATO Evolved Sea Sparrow Missile will provide ship self-defense 
against anti-ship cruise missiles as part of a layered defense. 
Additionally, we are pursuing installation of minor caliber guns on our 
deploying ships to improve our ability to counteract a small boat 
threat in the 0 to 8,000 yards range. We soon will install stabilized 
minor caliber guns on two DDGs. Additionally, arming MH-60R and MH-60S 
helicopters that deploy on surface combatants provides an addition 
layer of lethality against a small boat attack.
Air and Missile Defense
    Our Navy is poised to contribute significantly in fielding initial 
sea-based missile defense capabilities to meet the near-term ballistic 
missile threat to our homeland, our deployed forces, and our friends 
and allies and we are working closely with the Missile Defense Agency 
(MDA) to that end. U.S.S. Lake Erie will be transferred to MDA to 
facilitate a more robust testing program for missile defense. In turn, 
MDA is requesting funds to upgrade three AEGIS guided missile 
destroyers (DDG) for ICBM surveillance and tracking duties and 
procurement of up to 20 standard missile interceptors to help us 
provide a limited at sea capability to intercept short- and medium-
range ballistic missiles in the boost and ascent phases of flight. Our 
sea-based missile defense programs experienced tremendous success on 
the test range during 2002, and we look forward to building on these 
successes and developing a vital capability for our Nation.
    The fiscal year 2004 budget requests $35 million to develop the 
Extended Range Active Missile (ERAM). ERAM will enable over-the-horizon 
engagements against the most advanced anti-ship and land attack cruise 
missiles, and represents an important step in projecting area defense 
landward from the sea.
    The fiscal year 2004 budget also includes $29.7 million to begin in 
earnest the conversion of the Aegis combat systems to an open 
architecture (OA) design. In fiscal year 2004, we will begin the 
development of standards and functional architecture, building the 
Engineering Design Model of the computing environment, and validation 
and testing of common applications with the eventual goal of migrating 
legacy and new systems to OA condition. Based on mainstream commercial 
off-the-shelf (COTS) technologies and systems, converting to OA can 
avoid the high cost of maintaining and upgrading multiple legacy 
computing systems that quickly become obsolete and are not responsive 
to changes in warfighting requirements. Legacy computing systems have 
reached the upper bounds of processing capability and will be unable to 
accomplish the processing required for near-term and future complex 
missions, including BMD. With a COTS-based architecture, there will be 
minimal system changes as either warfare requirements or underlying 
commercial computing technologies change over the life of a platform.
Precision-Guided Munitions
    Precision-guided munitions receive continued investment in our 
fiscal year 2004 request with emphasis on increasing our inventory 
levels. Joint Direct Attack Munition (JDAM) production rate has been 
tripled with $277 million requested for procurement of 12,300 Navy JDAM 
kits in fiscal year 2004 and $139 million was requested for 429 Joint 
Stand-Off Weapons. Laser Guided Bomb (LGB) kit procurement will 
continue with 5,000 to 6,000 LGB kits planned each year from fiscal 
year 2004 to 2006. We are also commencing full rate production under a 
proposed multiyear procurement for the Tactical Tomahawk (TACTOM) 
missile with 267 missiles requested in fiscal year 2004. Our 
partnership with the Air Force in several of our munitions programs 
will continue to help us optimize both our inventories and our research 
and development investment.
    Employment of PGMs from aircraft requires precision targeting 
information, and the budget request includes funding for two noteworthy 
systems in this regard. First, the Multifunctional Information 
Distribution System (MIDS) provides secure, jam-resistant, high-
throughput digital data link for voice and data to F/A-18 aircraft. It 
supports positive identification, precise location, situational 
awareness, sensor-to-shooter coordination, and reduction of fratricide 
between U.S. and allied aircraft, maritime and ground forces. This 
system is included in F/A-18E/Fs and a retrofit item for F/A-18C/D 
aircraft. The MIDS system is currently deployed with two Super Hornet 
squadrons aboard U.S.S. Nimitz.
    Second, the active Electronically Scanned Array Radar system to be 
installed on naval tactical aircraft dramatically improves lethality in 
both air-to-air and air-to-ground scenarios. It has three times greater 
air-to-air target detection capability and optimized air-to-ground 
modes for multi-target identification. The fiscal year 2004 budget 
request of $117 million supports a system IOC in fiscal year 2006.
    FORCEnet is the enabler of the foregoing capabilities, and the 
operational construct and architectural framework for naval warfare in 
the joint, information age. It will allow systems, functions, and 
missions to be aligned to transform situational awareness, enable rapid 
mission planning, accelerate speed of decisions, and allow naval forces 
to greatly distribute its combat power in the unified, joint 
battlespace. It puts the theory of network centric warfare into 
practice. Programs that will enable the future force to be more 
networked, highly adaptive, human-centric, integrated, and enhance 
speed of command include:
     Cooperative Engagement Capability. The fiscal year 2004 
budget request includes $160 million for Cooperative Engagement 
Capability (CEC). CEC provides a significant step forward in 
transforming our situational awareness of the battle space. This 
transformational program allows one ship to shoot a weapon at a 
generated target based on another ship's firing solution for the first 
time in naval history. The first squadron of CEC equipped E-2C Hawkeyes 
is currently deployed with the Nimitz Battle Group. The new variant of 
CEC that will be competed this summer is a next generation design that 
will be smaller, more affordable, and more bandwidth efficient while 
providing significantly higher performance and potentially supporting 
joint service use.
     E-2C Advanced Hawkeye Radar Modernization Program. E-2 
Advanced Hawkeye (AHE) program will modernize the E-2 weapons system by 
replacing the current radar and other aircraft system components to 
improve nearly every facet of tactical air operations. The modernized 
weapons system will be designed to maintain open ocean capability while 
adding transformational surveillance and Theater Air and Missile 
Defense capabilities against emerging air threats in the high clutter 
and jamming environment. The advanced Hawkeye will be a critical 
contributor to Naval Integrated Fire Control-Counter Air, and to Sea 
Strike and Shield. The fiscal year 2004 budgets over $350 million for 
continued development with first production planned for fiscal year 
2008.
    Combining the capabilities of CEC on Aegis ships and E-2C Advanced 
Hawkeye aircraft with the ERAM described earlier creates a capability 
package called Navy Integrated Fire Control-Counter Air (NIFC-CA). The 
over-the-horizon air directed surface-to-air missile capability against 
challenging targets that NIFC-CA will provide will dramatically improve 
the joint air defense capability.
     Unmanned Air Vehicles (UAV). We increased our commitment 
to a focused array of unmanned air vehicles that will support and 
enhance all missions with persistent, distributed, netted sensors. We 
are initiating the Broad Area Maritime Surveillance (BAMS) UAV this 
year to develop a persistent, multi-mission platform capable of 
surveillance and reconnaissance of maritime and land targets, 
communications relay and some intelligence collection. Additionally, we 
have requested funding for development, testing, and experimentation of 
Fire Scout, a Global Hawk Maritime demonstration, and an Unmanned 
Combat Aerial Vehicle--Navy (UCAV-N) demonstration vehicle.
     Joint Fires Network. A further step forward in Network-
Centric Warfare and one of the Navy's transformational initiatives is 
the Joint Fires Network (JFN). The JFN integrates the best elements of 
three existing systems, Global Command and Control System-Maritime 
(GCCS-M); Joint Service Imagery Processing System-Navy (JSIPS-N); and 
Tactical Exploitation System-Navy (TES-N), into a converged joint 
architecture. JFN automates, coordinates, and correlates the processing 
of multiple tactical data streams from various intelligence, 
surveillance, and reconnaissance (ISR) sources to provide time critical 
fire control solutions for advanced weapon systems. JFN provides the 
maritime and joint tactical commander the ability to quickly target and 
re-target precision weapons, enhancing their overall effectiveness and 
lethality. JFN supports Sea Strike and Sea Basing by reducing the 
sensor to shooter timeline from hours to minutes; providing precision 
targeting data for coastal and deep fire support; and the use of ISR 
data from responsive and persistent ISR assets to improve both the 
Common Operational Picture and Intelligence Preparation of the 
battlespace. The fiscal year 2004 budget includes $159 million for JFN. 
JFN will serve as a critical building block for the FORCEnet concept.

                             V. CONCLUSION

    With your help, we are significantly improving our Navy. We will 
continue our culture of readiness and our commitment to developing our 
people while we recapitalize and transform our force. Your future Navy 
will be joint, dispersed, and netted, and we will accomplish this 
improvement in warfighting capability while still pursuing those 
efficiencies that make us good stewards of the public's funds. The 
Chief of Naval Operations has made it plain that mission accomplishment 
means both warfighting effectiveness and resourcefulness
    The fiscal year 2004 budget request reflects these priorities. It 
focuses on the right thing--ensuring future naval combat readiness. To 
recapitalize, we need to sustain the MYP of DDG-51 class destroyers and 
initiate MYP for Virginia class submarines. To transform to meet future 
threats, we need to keep DD(X) on track, move ahead on LCS and LCS 
mission modules, execute the CVN-21 acquisition strategy and complete 
the development of SSGN. Also, we must define the right mix of 
Expeditionary Warfare ships. We thank the committee for your continued 
strong support of our Navy, our sailors, and our civilian shipmates. 
Working together, we are confident we will make our great Navy even 
better.

    Senator Talent. Thank you, Admiral Mullen.
    I see the Senator from Rhode Island has returned and I 
think that kind of faithfulness justifies immediate 
recognition, so I am going to recognize Senator Reed.
    Senator Reed. Am I being punished for being prompt, Mr. 
Chairman? No? Thank you very much for your courtesy.
    Mr. Secretary and Admiral, thank you again for your 
testimony. Let me first begin by asking whether you can give me 
and the committee an update on the conversion program, the SSGN 
conversion program.
    Secretary Young. The SSGN conversion? The Ohio was inducted 
into Puget Sound Naval Shipyard on schedule and so the work on 
it is progressing in the very early phases, but going very 
well. The fiscal year 2004 budget requests the funds needed to 
execute the four-ship program less an amount we need to try to 
work, and we are working through, on a reprogramming right now. 
We have built a program structure that puts about 6 months 
stagger between each conversion and a strategy that uses 
Electric Boat as the overall conversion manager. This will 
allow them to gain some learning advantage by moving key people 
between those conversions.
    So we have a very aggressive, as you well know, and fast-
paced program, but we have been allowed to build a structure 
that tries to seek some learning curve benefit and opportunity 
for efficiency. So I am optimistic and we are off to a good 
start.
    Senator Reed. Great.
    With respect to the amphibious forces, I understand that 
the model is a 12-ship amphibious ready group able to lift 
simultaneously 2\1/2\ MPDs?
    Admiral Mullen. Yes, sir. I think it is a very important 
question and important to reiterate the overall requirement. I 
talked about the 19 independent strike groups and the new 
global concept moving to 37. That is based on 12 carrier strike 
groups, 12 expeditionary strike groups, which would include the 
kind of amphibious capability we have today in our ARGs, in 
addition to additional surface combatants and submarines in 
order to give them some more punch and some more striking 
power, and that the requirement in particular for LPD-17 of 12 
is still one we very strongly support.
    Secretary Young. That is, if I could?
    Senator Reed. Yes, sir.
    Secretary Young. The program that is laid in place. Albeit 
there is some slippage in the budget, and that is an issue we 
will take a look at. Building out those 12 LPDs efficiently is 
important both from an acquisition point of view and from the 
strike group point of view. This is because they replace ships 
that will be easily approaching or exceeding 40 years old by 
the time we get the LPDs out there.
    Senator Reed. Let me understand it, since I am more 
comfortable with tanks than ships. But we are building the 
eighth Wasp-class LHD, is that correct?
    Admiral Mullen. Yes, sir.
    Senator Reed. Then we have five Tarawa-class ships to 
comprise the ARG at the moment, is that correct?
    Admiral Mullen. Yes.
    Senator Reed. The five Tarawa-class ships are rather old, 
about 35 years or so, and there is an issue about how do we 
continue this transition, particularly with the introduction of 
some of the Osprey aircraft, stability of the ships? Are those 
questions that you are considering?
    Admiral Mullen. Yes, sir.
    Senator Reed. As I understand it, there is a study going 
under way to try to determine how best to deal with this whole 
issue of reaching that 12-ship ARG. Can you talk about some of 
the options and your thinking at the moment about what should 
be done, building additional Wasp-class ships, designing a new 
ship, etcetera? Where are we in that process, Admiral?
    Admiral Mullen. I will certainly let Secretary Young talk 
about the acquisition side of this, but from the overall 
program standpoint and as we approach it, as LHD-8 comes in the 
first Tarawa will be retired, the intent is not to go above 12 
in that regard.
    In the 2007 column of the budget, we have a ship called 
LHAR, which is essentially put in there to start to address 
some of the issues you raise, in particular the flight deck 
space. So it is not an LHD-8. It will be LHD-8-like, except it 
will be both longer and it will have a plug in it which will 
allow us to accommodate that additional deck space, if you 
will.
    We essentially started to put these ships out in 4- or 5-
year increments to replace the first five as they reach their 
full service life. The next one to come after that is not in 
the budget right now. It is in the fiscal year 2010 timeframe. 
A lot of the both internal study and also the study to which I 
think you are referring, is this joint forcible entry study, in 
which we are participating to look at creating options. We have 
not gotten to the point, Senator Reed, where we have created 
the options yet. We are really at the point where we have 
blessed the scenarios because we have good data on four 
different scenarios.
    The idea of that, though, is to run those scenarios from a 
warfighting standpoint and see what the needs are and see where 
those studies point us with respect to options in the future. 
That gets us to the warfighting capability that is going to be 
existent in the future expeditionary strike group when that 
fiscal year 2010 ship starts to take more form.
    Senator Reed. Thank you, Admiral.
    Mr. Secretary, can you talk about the Virginia-class 
submarine program? You are asking, I think, this year for a 
multiyear procurement and frankly in order, from our 
perspective, to maintain the recommended number of submarines 
in the fleet we have to begin to be more aggressive in our 
procurement. That is the point I begin with.
    But can you talk about the multiyear in terms of the cost 
profiles you are seeing right now in the multiyear?
    Secretary Young. I would say a couple things. The Virginia-
class program, for one, has gone very well. I am sure you have 
monitored it very closely. The design is basically complete. 
The first submarine is 82 percent built, the second submarine, 
the SSN 775, is 71 percent done, and down the line. We have 
made excellent progress with the program.
    In years past there was a decision both from an efficient 
way to build the submarine which allocated the work between the 
two yards and from an industrial base point of view to allocate 
the work between the two shipyards. So it has been a very thin 
production base, but they have done a reasonable job.
    I make that point to say a couple of things. One, I would 
tell you, going back several years when the program was set up, 
it was set up to leverage the SSN-21 Seawolf class. The design-
build tools have come together very well and the schedules that 
were laid out as many as 10 years ago have been met to within 
months. The reactor core was within a month, the pressure hull 
was within 3 months. We have operated the turbine generators 
and the main engines 3 years prior to going to sea, and there 
is a land-based test site to test the combat system, which has 
been under way since 1996.
    We have a lot of confidence to come to you with a 
multiyear. Then I would approach that from another side and say 
from an industrial base point of view and from a requirements 
point of view, we really need to build at least one submarine a 
year. Once you know you have to do that, the most efficient way 
to do that and the tool we need to try to get control of the 
annual escalation in material prices and labor prices is a 
multiyear. So we can lock in some stable agreements with our 
vendor base.
    I really believe we need that multiyear tool. I think there 
is adequate progress to justify it. It is not the traditional 
scheme. You would probably like to have a delivered submarine, 
but the industrial base situation we live with and the need to 
stabilize that base and stabilize the prices, I think very much 
the two together, justify taking the risk and taking the step 
forward and executing a multiyear procurement.
    Senator Reed. So you see it from the standpoint of not only 
requirements, but efficiency?
    Secretary Young. Yes, sir, absolutely.
    Senator Reed. Thank you, Mr. Secretary.
    Thank you, Admiral Mullen. Thank you very much.
    Mr. Chairman, thanks.
    Senator Talent. I thank the Senator from Rhode Island. I am 
certainly also a supporter of multiyear funding and greatly 
admired the CNO's emphasis on stability in funding, and 
multiyear procurement is obviously one of the ways to achieve 
that.
    I do not think, at the same time, that we can ignore some 
of the cost problems that we have had with the Virginia-class 
submarine. In view of that and the fact we do not have a 
submarine in the water yet, are you telling me you have 
confidence that the Title 10 criteria have been met for a 
multiyear?
    Secretary Young. I believe we have excellent design 
stability in the program. I believe we know what the program 
costs are and we are submitting a new acquisition program 
baseline that recognizes those costs. I think critical to 
controlling those costs and not having further growth is the 
multiyear procurement tool. So I believe the criteria can be 
met to justify authorization of the multiyear contract or 
authorization.
    Senator Talent. I am not saying you are wrong with that. I 
am just saying that, given the problems that we have had from a 
cost profile standpoint, it is going to require I think very 
active management, careful watching, because we do not want to 
be in a situation where we discredit this important tool, 
multiyear funding, by not getting the costs under control.
    I say this as a supporter of the program.
    Secretary Young. I think that is exactly true. Sir, to that 
point, we have also recently set up an executive committee 
almost like V-22 to go and implement some of those management 
discipline tools, maintain control of the configuration, ensure 
that progress is being made. Program decisions are elevated to 
the highest levels, so that you can indeed deliver to schedule 
and cost.
    We are working to put in place those tools, because I could 
not agree more strongly with your comment. Multiyears have been 
a successful tool in building people's confidence in schedule 
and cost, and we need to preserve that.
    Senator Talent. To be fair, some of this cost overrun, as 
we all know, is not the shipbuilder's fault. There are 
mitigating factors here. It reminds me a little bit of when 
Bill Perry took the C-17 in hand and ended up with a great 
aircraft.
    I wanted to make that point and I appreciate your comment 
on it. Admiral, if you have anything you want to say, feel free 
to jump in on that.
    Admiral Mullen. I just have to reinforce the comment you 
made about what the CNO has discussed. Stabilizing these two 
accounts, both the aircraft account and the shipbuilding 
account, is a very high priority for us. There are lots--over 
the years that has been a very difficult challenge because they 
are such big accounts and we have, many of us, myself included, 
have over the years had a habit of reaching in there to make 
other things balance and trying to figure it out later on.
    We are working hard to turn that corner so that we leave 
those accounts alone. I have watched Secretary Young for the 
last year and a half and the senior Navy leadership really work 
hard to try to stabilize it, and in the long run I think that 
is really what is going to give us a healthy Navy in the 
future.
    Senator Talent. Yes, and I think we all have to just agree 
that we are going to forfeit that unbridled discretion to reach 
in those pots of money every year as the whim moves us. I am 
certainly willing to stand up for that here on the Hill. We 
just have to have active management of programs that have had 
some concerns.
    I want to follow up on a question Senator Kennedy asked 
regarding the Advanced Gun System for the DD(X). The CNO said 
he was confident it would meet the Marine Corps' requirements 
for both rate and volume of fire, and I was pleased to hear 
that. Mr. Secretary, there is a reevaluation of the performance 
parameters for DD(X) under way now. Is that Advanced Gun System 
part of that reevaluation? Is it being considered for 
downsizing and, if so, how would that affect the Marine Corps' 
requirements that Senator Kennedy asked the CNO about?
    Secretary Young. I think to best answer the question, I 
would take a step back and say, that as we move forward this 
ship is very important to the Navy. It will be both the land 
attack destroyer fighting for the Navy out to the 2050 
timeframe and then it is the platform that hopefully will 
enable CG(X), without significant additional investment other 
than the radars and sensors for it.
    It is worth taking some time to look at the requirements 
and make sure we have them right. The Advanced Gun System you 
mentioned is a significant driver in the size of that ship. As 
you are even more familiar than I with airplanes, size, weight 
and cost tend to have a correlation. So it is worth taking some 
time and making sure we have the requirements right, because 
the fire support requirement is substantial.
    Do we need to execute all of that requirement by having a 
very large magazine on the ship, because that and the guns 
drive the size of the ship. Or do we need a better resupply 
concept for that ship, so that we resupply it with rounds and 
there are two ships firing? So we are sitting down and looking 
at the operational doctrine, which brings the operational Navy 
to the table--looking at the acquisition side in terms of what 
we can do with the size and volume we have--and trying to make 
sure we also build a ship that is not exceedingly dense, 
because I think it is one of the cost factors in DDGs today, 
which is a smaller, but a very dense ship, which drives an 
intensity, if you will, into increased labor and the cost of 
the ship.
    Therefore, we are taking another look at both the 
requirements side and then what the acquisition side can 
deliver to make sure we have it right as we get ready to move 
to the next important step of designing and locking the ship.
    Senator Talent. Is it fair to say then that in this 
reevaluation you are looking at the Advanced Gun System, being 
open-minded about it, if you will, in no way retreating, 
though, from the need to meet the Marines' requirement for 
naval gun support?
    Secretary Young. I believe that is exactly true, the right 
way to say it. In fact, I hesitate to elaborate, but we want to 
make sure we have the rate of fire right as well as the weight 
of the projectile right. So it is a full-spectrum look. Are we 
going to put enough warhead on the target? It is clear that 
ERGM and the 5-inch 62 caliber gun take a step in that 
direction. That step--we are revalidating--is still not quite 
enough and people are growingly convinced that you have to have 
the Advanced Gun System and proceed with that.
    We need this work also to inform us about what we would 
expect from a rail gun, because that may be a future tool to 
get even more range and a higher rate of fire. I believe it is 
worthwhile. We owe it to you to make sure we have relooked all 
the system choices and we feel confident about the path that is 
going to be both the path to AGS and then an element of this 
will be the path to the future in terms of rail gun and what 
technology investments we make in S&T.
    Senator Talent. Admiral, Tomahawk missile inventory. I know 
the inventory is low and needs to be resupplied. You seem to be 
committed to doing that through block 4 procurement rather than 
conversion of the older variants. Do I have that right and do 
you want to comment on that?
    Admiral Mullen. Yes, sir. I have said, and I have been 
involved in the Tomahawk business for a few years, that the 
inventory, while it has recently increased because of in great 
part tremendous support here on the Hill is fragile.
    We are in the second big remanufacture effort right now to 
remanufacture older missiles into what we call block 3 missiles 
as we speak. Where the CNO is on this, and Secretary Young and 
I have discussed this at reasonable length and the CNO talked 
about it in his testimony, is we really believe we need to move 
forward, do the block 4 Tactical Tomahawk, bring that to bear. 
One of the great success stories in my view of Tomahawk has 
been over the years a pretty rigorous testing system. We have 
rung that missile out with a very healthy test program, so we 
need to honor the law and the needs of the acquisition system 
to bring the new missile through that.
    The remaining missiles that we have to remanufacture are 
exorbitantly expensive to do so, at the estimate is $1.6-$1.7 
million a missile. So it is our conviction we need to move 
forward, not go back to that last group of missiles, which are 
very old and basically just shells that we would have to make 
new missiles out of.
    We would like to ramp up--and I think Secretary Young can 
speak to the details of this--as early as we can, as quickly as 
we can, from a capacity of on the order of about 38 a month to 
50 a month and make the acquisition strategy work. Once we have 
reached, as the CNO said, full rate production, buy as many as 
we can.
    Secretary Young. If I could, Mr. Chairman, I believe 
Admiral Mullen said it exactly right. Because of the condition 
of the missiles that remain to be remanufactured and because to 
do the remanufactures that have been done to date efficiently 
we bought out some of the parts, therefore we would have to go 
back and requalify sources and do some re-engineering on pieces 
of it. So the best you do is get additional remanufactured 
missiles out of this group at a fairly high price and 24 months 
from now you can, for significantly less money, over the same 
time frame of getting about 300 more remanufactured missiles, 
get 300 Tactical Tomahawk on close to the same schedule, maybe 
not quite as fast, but close, or even closer if we are willing 
to take some risk in this area. This is an area where, because 
of the war, we may want to take some risk and buy Tactical 
Tomahawks.
    The three tests have gone almost flawlessly to date and all 
the basic parameters have been demonstrated. This is not a 
brand new system where we are re-inventing the wheel. This is a 
system where we are re-engineering the parts to bring the cost 
down and doing so very well. The new Tactical Tomahawks are 
going to be on the order of $569,000 a copy. That is the 
promise.
    So we would like to work aggressively to step up that 
production rate faster and to a higher level as soon as 
possible as the most efficient way to get more missiles and 
replace the fact that we have burned through the inventory 
here.
    Senator Talent. You have mentioned several times, this 
constant emphasis, which I really appreciate, on rolling up 
your sleeves and getting involved in the details of these 
programs, discovering efficiencies, making dollars go further, 
and making the tough choices. I appreciate what you have done 
working with our partners in the shipyards to begin revising 
those manufacturing processes so they can get the same 
efficiencies.
    I know that we have made progress in that area and I know 
that that is a result of a partnership, but a lot of it is the 
initiative that has come from your offices, and I want to 
compliment you on that.
    Do you want to comment on how that is going? I mean, you 
have referred to it a little bit, but do you have any comments 
you want to make?
    Secretary Young. I appreciate the opportunity to say a 
couple of brief things. Again, some of it is because of my 
awareness of your background and what you have seen. The 
shipyards have been very aggressive in embracing lean 
manufacturing. You can go to Avondale and see what used to be a 
very messy workspace now efficiently lined up so the distance 
traveled by the workforce is minimized, and the tools are there 
for them to do the job. You see the same thing at Ingalls, and 
you see the same thing at Bath when you visit the shipyards.
    Newport News has implemented an Enterprise Resource 
Program, which the Navy on its own is also trying to implement 
across our enterprise. So you manage your supply chain, you 
know when the parts are there, and they are properly scheduled 
for use. So I think your point is well taken.
    The key step that we are enforcing is discipline in the 
design and manufacturing process. We have a fund. We are 
strictly controlling the design changes we want to implement in 
the ship, and letting the yard plan to build that ship in 
accordance with an approved configuration, and not create 
churn, because our accounting systems and budgeting process are 
not amenable to the delay and disruption that you inevitably 
put in when you decide to change something on the waterfront.
    Those are the steps we have taken to stop generating prior 
year completion bills as well as be more efficient in our new 
build program. The shipyards are taking a lot of initiative on 
their own.
    Senator Talent. I ought to visit because it is exciting to 
watch as manufacturers do that. You are right, I do have some 
history of that with TACAIR, and I am certain that they are and 
I hope that they are inculcating that concept all the way 
through the workforce. In other words, a lot of this comes from 
the guys and gals on the line who are doing this work. Once 
they get that sense that the top leadership is committed to the 
updating and this lean manufacturing, it is amazing what they 
will come up with. It might be a good opportunity or a good 
subject for me to visit.
    Let me close with how I started to get your comments on how 
LCS is doing and particularly the modules. You were here when I 
asked the CNO about this. I really support this idea and I have 
caught his vision, and your vision for this. First of all, the 
whole concept is ambitious. You have a frame of a ship and then 
you are going to put modules in it and pull them out as you 
change the mission for that particular ship. Mr. Secretary, and 
then maybe Admiral Mullen, if you would comment on if you have 
had any estimate of costs or range of costs for the modules 
that you have available at this time?
    Secretary Young. I think that last discussion is important. 
When we make decisions to change a combat system or other 
equipment, a lot of times you have to go into the ship and the 
yard or on the waterfront and change the foundations and other 
things to land it. So to give credit, I think Secretary England 
and I talked through some of this in the beginning with the CNO 
and he brought his vision to bear.
    But I hope that sea frame is something like this room, 
where there are throughout the room regular drops for power, 
communications, cooling, and the things you need, so that you 
see this in today's ships. You go on a DDG, you will see a lot 
of laptops that have been brought on board. I believe we can, 
in the future, bring the combat system aboard as laptops and 
test it at a land-based site and implement it on that.
    So we need most importantly to have a sea frame that has 
space and it has ride qualities so that in this littoral 
environment the sailors are comfortable performing their 
mission. We need to focus on getting a ship that is about the 
right size. Given we know, as the CNO said, we want RMS on 
board and a certain amount of air defense capability. We can 
roughly allocate those budgets, if you will, to the ship, focus 
on getting the hull right so we can get the speed and the 
stability we need, and then make sure the combat systems going 
forward try to conform to that space, hopefully to have more 
than enough margin so we have some growth margin.
    The same thing was done in F/A-18E/F. You built a big 
enough airframe to have margin space to bring additional combat 
systems on board. We will try to put some margin in that sea 
frame so we do not find ourselves constrained in that regard.
    Admiral Mullen. Sir, a couple of recent data points that I 
think are really important. This is a warship and we talk about 
it in a lot of terms. But the CNO first and foremost reminds us 
that this is a warship we are fielding to be able to get in the 
ring and stay in the ring, win while we are there, and do some 
missions that are very challenging for us right now such as in 
the mine warfare area, the diesel submarine area, as well as 
the surface ship defense or both attack and defense, if you 
will, where other ships cannot go because we do not have them 
in numbers or we are restricted to get them in that close in 
certain environments.
    The issue of modularity has come up and what does that 
mean. I think this is a part of the CNO's vision as well as how 
both Secretary England and Secretary Young talk about this. The 
CNO was overseas in a European country not too long ago that 
has a small navy and he watched inside 15 minutes a 76-
millimeter gun, which is the same size gun we have on our 
Guided-Missile Frigates (FFGs), essentially from the time the 
clock started until it was doing firing checks was about 15 
minutes, from being on the pier to putting it on the ship.
    Now, to me that concept or that modularity with a very 
capable gun, if you will, or whatever we are going to bring in 
these modules is really what we are after, to be able to hook 
up into the capability, water, air, heat, power, those things, 
cooling, that Secretary Young mentioned a second ago.
    So we are excited about it. It is moving quickly and 
certainly what he said is true. A year ago, we did not know 
enough to properly budget for the modules. The way we answer 
that is to take some of the off-the-shelf stuff--he used the 
example of several RMSs in the mine warfare area on an LCS, for 
example. There are other off-the-shelf technologies that would 
go to the first two.
    Not unlike moving it quickly with the money we have in it 
this year, which we got great help over here for, we need to do 
the same thing in the modules, which is why we have asked for 
it in the unfunded program list. It really is risk reduction 
money to get us to what it is going to be in the 2007-2008 time 
frame.
    Senator Talent. That $35 million is really pretty important 
to you?
    Admiral Mullen. Yes, sir, it is in that regard.
    Senator Talent. That is part of the record; I see this 
really as the crossroads of the whole Seapower 21 vision. One 
of the reasons I am asking so many questions about it is I have 
a feeling if I can understand it better then I am going to see 
the direction that you all are trying to go with this thing and 
we are going to make a lot of progress on this in the 2 years 
that I am chairing this subcommittee. So I want to really 
partner with you on it.
    I interrupted you.
    Admiral Mullen. No, sir. That was essentially what I had to 
say.
    Back to the land attack destroyer, one of the initiatives 
there, while it is the technology center for our R&D base for 
surface ships, which 3 or 4 years ago was virtually 
nonexistent, that is why that money that is over here right now 
in R&D on DD(X) is so important to us, because clearly it is 
going to develop the DD(X) technologies. But it will spin to 
LCS and CG(X). In my view, if we do it right, it will spin to 
just about any seagoing vessel, submarine, or aircraft carrier 
that we build. That is one piece, the volume of fires and 
precision that the CNO talked about, which is critical. In the 
armored world, the 155-round is what does it. The 5-inch round 
that we have right now as we explore this over time is not the 
one that was able to answer the mail, even with the increased 
precision that clearly the technology brings now.
    The other piece of that is DD(X) is going to be manned with 
a very small number, a third of the crew typically that we have 
had on a destroyer, and that has forced a major investment in 
technology, if you will, to support that. That will spin off to 
LCS so it will be properly manned at a very small number, we 
think. We do not know what that number is yet.
    The whole idea is we want the cost of both the modules and 
the ship to be absolute minimum. It cannot approach the billion 
dollars a year we are talking about right now in DDGs, for 
instance. It has to be well below half of that in my view.
    Senator Talent. Well, that is because this is how you are 
going to meet the need for surface combatant vessels, is it 
not?
    Admiral Mullen. Yes, sir, clearly.
    Senator Talent. I mean, I am really intrigued and attracted 
by the ambition of this and I do intend to follow it carefully 
with you and to be supportive of your efforts in it. You are 
right, a few years ago we would have said you are trying to 
square the circle, build a ship with multi-mission capabilities 
that you can easily and quickly modify to perform a number of 
different functions, fitting in with a Sea-Basing concept that 
you are also still developing, and doing all that at a rock 
bottom price. A few years ago I would have said you cannot do 
it, but I think you guys probably can do it.
    Maybe that is a good note on which to end the hearing. Let 
me just make certain that I have not neglected to ask anything 
that people are panting to have me ask.
    Thank you all for coming and we will adjourn the hearing.
    [Questions for the record with answers supplied follow:]

             Questions Submitted by Senator James M. Talent

                  BENEFITS OF ``SEA-SWAP'' EXPERIMENT

    1. Senator Talent. Admiral Clark, in your written statement, you 
note the Navy's Sea-Swap program and that benefits are being realized 
from this program. What are examples of these benefits?
    Admiral Clark. The intent of the Sea-Swap program is to improve the 
Navy's forward presence and employability without a corresponding 
increase in force structure. The Navy has two ships, U.S.S. Fletcher 
and U.S.S. Higgins, operating forward as part of the Sea-Swap 
initiative. By rotating crews to the ship rather than changing ships, 
Fletcher and Higgins are providing longer on-station times while 
maintaining our personnel tempo goals.

    2. Senator Talent. Admiral Clark, how do the benefits of the Sea-
Swap program compare with the benefits of forward homeporting of Navy 
ships in foreign ports, such as Yokuska, Japan?
    Admiral Clark. Our forward deployed naval forces homeported in the 
Western Pacific, the Persian Gulf, and in the Mediterranean, allow us 
to respond rapidly to crises and provide theater security cooperation 
in that theater of operations. Strategic cooperation, particularly with 
the host nation, forward maintenance capability, and shortened lines of 
supply are all benefits of forward homeporting. Similarly, Sea-Swap 
attempts to improve our forward engagement, but without permanent 
basing in the forward theaters. The Sea-Swap initiative is starting out 
with two ships as a pilot program to measure and evaluate the benefits 
versus the costs of the program.

    3. Senator Talent. Admiral Clark, are Sea-Swap and forward 
homeporting programs mutually exclusive or is there a synergy between 
the two programs that realizes a larger benefit for the Navy? Please 
cite examples.
    Admiral Clark. Sea-Swap and forward homeporting are not mutually 
exclusive. Through both programs we are attempting to get a greater 
percentage of immediately employable, flexible naval forces forward. 
Our forward based ships operate predominately in the Western Pacific, 
while Sea-Swap ships are currently employed in the U.S. Central Command 
theater of operation. The benefits of forward homeporting ships are 
routinely demonstrated through operations and exercises with nations of 
the Western Pacific region and in their rapid response to the Persian 
Gulf during Operations Enduring Freedom and Iraqi Freedom. The Sea-Swap 
program is still in its infancy and we are in the process of evaluating 
its effectiveness.
                                 ______
                                 
            Questions Submitted by Senator Susan M. Collins

                            MISSILE DEFENSE

    4. Senator Collins. Admiral Clark, in your testimony, you mention 
the increasing role of the Navy in missile defense. You highlight the 
recent success that the Navy has had in testing, which included scoring 
three hits and conducting three successful tracking events. Certainly, 
that track record stands out among the family of missile defense 
systems being developed across the Department of Defense. I believe 
that the Navy will become an even larger player in missile defense in 
the coming years. Already, the Missile Defense Agency (MDA) is 
requesting funding to equip a number of DDGs for surveillance purposes. 
As more of the DDG-51 vessels are integrated into missile defense, it 
will add to the already considerable requirements we place on our 
destroyers. How do you envision the role of the surface fleet 
developing in missile defense and what are the possible implications 
for shipbuilding?
    Admiral Clark. We are working cooperatively with the MDA to evolve 
Navy's participation in ballistic missile defense (BMD). The plan to 
install surveillance and track capability in several DDGs by October 1, 
2004 is the first operational effort toward this cooperation. We are 
working with MDA to improve on these capabilities through a spiral 
development plan culminating in a capability to provide Anti-Air 
Warfare and BMD capability in Aegis-equipped ships in the 2010+ 
timeframe. Currently, that effort is aimed at in-service ships, but we 
are also looking at options that have the potential for applications in 
new construction ships in the future.

                                 DDG-51

    5. Senator Collins. Admiral Clark, I want to thank you personally 
for your good work in putting together the fiscal year 2004 budget 
submission. In the past, you have made commitments to me that 
shipbuilding funds would be restored to a level that would help to put 
the Navy on the road to recapitalization. You have kept that 
commitment. However, there are still challenges ahead. In particular, I 
have concerns about the procurement of major surface combatants in the 
coming years. As it currently stands, the Navy will cease construction 
of DDG-51 destroyers after 2005, and only fund four DD(X) destroyers 
during the 2006 to 2008 timeframe. To sustain the industrial base, four 
vessels over a 3-year period is wholly inadequate. At the same time, 
the Navy will continued to be faced with increasing missions. In 
particular, it is becoming evident that major surface combatants will 
be playing a significant, and growing, role in missile defense. While 
this problem is still a few years off, it is critical that we begin to 
deal with it. Are you committed to addressing this issue?
    Admiral Clark. The Navy is committed to restoring shipbuilding 
funds to a level that will put us on the road to recapitalization as 
reflected in the fiscal year 2004 President's budget request. The 
Navy's ship recapitalization program and corresponding budget for 
fiscal year 2004 is ``turning the corner'' on previous budgets and will 
continue to increase across the Future Years Defense Program, ramping 
to levels needed to recapitalize the fleet to meet future warfighting 
requirements. In the near term, the recently awarded 10 ship DDG-51 
multiyear contract and workload exchange agreement between Bath Iron 
Works and Northrop Grumman will optimize production efficiencies and 
help stabilize workload at both shipyards. To meet the needs of our 
future Navy, including missile defense, we must rapidly transition from 
legacy programs such as DDG-51 to transformational programs such as 
DD(X), Littoral Combat Ship, and CG(X).

    6. Senator Collins. Admiral Clark, do you have any initial thoughts 
about major surface combatant construction in the coming years?
    Admiral Clark. In addition to completing procurement of 62 Arleigh 
Burke (DDG-51) class destroyers in fiscal year 2005, Navy is investing 
significant resources over the next several years to develop, design, 
and construct the LCS and DD(X), two of the three members of the 
surface combatant family of ships. Both the lead LCS and DD(X) are 
funded in RDT&E recognizing the managed risk associated with key 
systems included in these new start transformational shipbuilding 
programs.
    In line with recent DOD initiatives to streamline the acquisition 
process, the Navy has placed LCS on a fast track to begin construction 
no later than fiscal year 2005. Starting the LCS program in fiscal year 
2003 affords an opportunity to employ innovative spiral development and 
acquisition methods from the keel up. Collaboration between the Navy 
and the U.S. Coast Guard Deepwater program and with allied nations with 
experience in littoral operations will facilitate cost effective 
development and procurement of the LCS and its associated mission 
capability modules. The Cruiser Conversion Program will bring critical 
mid-life capability improvements to our first class of Aegis equipped 
ships.
    The DD(X) research and development effort will enable the Navy to 
keep pace with today's rapid technological advances, spiraling 
promising technologies to both CG(X)--the third member of the family of 
ships--and LCS. It will also enable the Navy to upgrade in-service 
Aegis equipped cruisers and destroyers with selected leading edge 
technologies to maintain operational effectiveness of the legacy, 
multi-mission fleet.

                          U.S.S. JACKSONVILLE

    7. Senator Collins. Admiral Clark, with a rapidly declining fleet, 
it is critical that the Navy take every opportunity to maximize the 
life of vessels that still can provide useful service. The Navy has 
recently provided Congress with its Fiscal Year 2004 Unfunded Priority 
List. On that list is funding that would provide for the refueling of 
SSN-699, the U.S.S. Jacksonville. This refueling would take place at 
Kittery-Portsmouth Naval Shipyard. In the past, I believe that the Navy 
has perhaps been too quick to decommission submarines, which has in 
part led to the decreased force structure we have today. What value 
would the U.S.S. Jacksonville bring to the Navy should funding be made 
available to refuel it, as opposed to decommissioning the vessel?
    Admiral Clark. The expected warfighting benefit to be derived from 
the U.S.S. Jacksonville ERO in fiscal year 2004 is the availability of 
an additional SSN 688 class submarine raising SSN force level from 54 
to 55 to meet minimum warfighting requirements.
    The 2001 QDR sets the moderate risk SSN force level at 55. 
Similarly, the 1999 Chairman, Joint Chiefs of Staff Study reached the 
conclusion that below 55 SSNs leaves the Department with insufficient 
capability to respond to urgent critical demands without gapping other 
requirements of high national interest. Navy studies since 1999 have 
identified the warfighting requirement of SSNs as 55. Current SSN force 
level is 54 ships.
    The investment in Jacksonville's refueling will add 10 years of 
life and force structure to the force.
                                 ______
                                 
            Questions Submitted by Senator Edward M. Kennedy

                     EFFECT OF DECLINING FLEET SIZE

    8. Senator Kennedy. Admiral Clark, this budget includes cutting the 
Navy fleet size below 300 ships in fiscal year 2004. At a time when we 
are deploying the fleet more and asking our people to spend greater 
periods of time away from home, this would appear to be moving in the 
wrong direction. More specifically, the plan involves retiring the rest 
of the DD-963 destroyers early. What will be the effect on operating 
tempo for the remaining ships and crews in the surface combatant fleet?
    Admiral Clark. The Navy maintains a 2-year surface combatant 
deployment schedule. The current schedule keeps the surface combatant 
fleet within the CNO's operating tempo guidelines while allowing these 
reductions in fleet size. The Navy is committed to keeping deploying 
units within operating tempo guidelines.

    9. Senator Kennedy. Admiral Clark, aren't you, by the actions in 
this budget, asking Navy personnel to make even greater sacrifices?
    Admiral Clark. We constantly evaluate our manpower needs to ensure 
we have the right number of people, with the right training and the 
right experience levels, to man our ships, squadrons, and shore 
stations within established fiscal constraints.
    The high-tech, inherently more capable, platforms we continue to 
integrate into the fleet in the 21st century present opportunities to 
accomplish more, without placing undue or unacceptable burdens on our 
men and women. The retirement of the DD-963 class will allow the 
recapitalization necessary to integrate less manpower intensive 
platforms that will have even greater warfighting capabilities. We are 
ever mindful of the effects on our sailors of excessive operational and 
personnel tempo. Accordingly, we continue in our efforts to ensure the 
pace of operations and time spent away from home are not adversely 
impacting their morale or their ability to perform in the same 
outstanding fashion we've observed since the onset of the global war on 
terrorism.
    To be sure, a smaller Navy cannot be in as many places as a larger 
Navy. The Department must effectively manage operational tempo issues.
    Considering all the issues, I believe retirement of the DD-963 
destroyers is the correct course of action.

  dd(x) capability alternatives and effects on fire support capability
    10. Senator Kennedy. Secretary Young, you mentioned during the 
hearing that the Navy is analyzing alternatives for the level of 
capabilities in the DD(X) program. I fear that this may be related to 
some arbitrary goal for the displacement of the ship. You also 
mentioned that you are considering alternatives involving rate-of-fire 
and the magazine volumes. The analytical efforts leading to this point 
in the DD(X) schedule, including all of the analysis done to support 
the original DD-21 program, determined that there were certain 
threshold capabilities for these two parameters.
    Certainly, the Navy might be able to compensate for smaller 
magazine sizes by conducting more frequent underway replenishment 
operations, but this could include adding requirements for additional 
auxiliary ships. It would appear that the only way to compensate for a 
smaller rate-of-fire would be to increase the number of DD(X) 
destroyers or other vessels in the force supporting the same set of 
fire missions. Requiring more ships for the set of fire support 
missions could be a lot more expensive than letting the analysis 
determine the size of the ship. Is someone setting some arbitrary goal 
for displacement of DD(X)?
    Secretary Young. No. The Navy is in the process of analyzing 
alternatives to meet requirements for: Marine Corps fire support, DD(X) 
multi-mission capapility, and the projected CG(X). The analysis spans a 
range of threshold and objective values for various systems including 
trading requirements such as the number of guns, magazine volume, and 
number of VLS cells, against ship design features, including 
displacement. Considerations in this review include current and 
proposed operational concepts and employment options for DD(X) under 
Sea Power 21. The Navy would like to spiral CG(X) from the same hull 
built for DD(X). This would reduce nonrecurring engineering cost, life 
cycle cost, technical documentation, and provide a common hull for 40-
50 ships of the DD(X) and CG(X) class.

    11. Senator Kennedy. Secretary Young, will any Navy review of 
alternatives to the previously-derived threshold requirements include 
assessing fully-ascribed costs such as: (1) needing to provide 
additional or different auxiliary ships; or (2) buying a larger number 
of DD(X) destroyers or other vessels to satisfy the set of required 
missions?
    Secratary Young. Although not specifically addressed in the ongoing 
review of alternatives for DD(X), the Navy is studying various force 
architectures including additional or different auxiliary ships and 
platforms to support the future logistics needs and Sea Basing concept 
of operations for the Navy and Joint Forces. Other studies, such as the 
recently completed Secretary of Defense Shipbuilding study and ongoing 
Joint Forcible Entry Operations Study, are examining various force 
architectures which include notional organic capabilities of DD(X) and 
the means to sustain DD(X) and other surface combatants to support 
future forcible entry concepts. Although a final decision on the 
configuration and size of DD(X) has not been made, it will ultimately 
be balanced against operational concepts and force structure 
considerations, including other platforms, necessary to meet the 
Department's warfighting requirements.

                          LITTORAL COMBAT SHIP

    12. Senator Kennedy. Secretary Young, I understand the concept of 
the LCS, the Navy intends to employ this vessel in contested waters 
close to shore. By certain accounts, the Navy's acquisition strategy is 
to rely on contractors to provide ship designs that are to be built to 
standards established by the American Bureau of Shipping (ABS). As I 
understand it, ABS publishes standards for commercial vessels, but does 
not encompass all of the survivability considerations that we normally 
expect from a Navy combatant. Will these vessels be built to the 
regular Navy damage control standards?
    Secretary Young. LCS will be built to the Navy damage control 
standards. The February 28, 2003, Preliminary Design Interim 
Requirements Document specifies that LCS will meet the requirements of 
OPNAVINST 9070.1, Survivability Policy for Surface Ships of the U.S. 
Navy.

    13. Senator Kennedy. Admiral Clark, if these ships were not to be 
built to normal combatant damage control standards, why would you find 
it acceptable to place these crews at greater risk with less built-in 
survivability?
    Admiral Clark. As specified in the LCS Flight Zero Preliminary 
Design Interim Requirements Document, the ship will be built to normal 
combatant damage control standards in accordance with OPNAVINST 9070.1, 
Survivability Policy for Surface Ships of the U.S. Navy.

                     STUDIES INSTEAD OF INVESTMENT

    14. Senator Kennedy. Admiral Clark, I notice that the Navy's 
shipbuilding plan does not include the 12th and last planned ship of 
the LPD-17 class. I understand that the Defense Department is 
conducting a so-called ``Forcible Entry Capability Study'' that might 
have some bearing on the make-up of amphibious fleet. I also understand 
that the Defense Department is conducting an ``Undersea Superiority 
Study'' that may change objectives for attack submarine force levels. I 
note that the rate of submarine construction increases to two boats per 
year in fiscal year 2007, consistent with plans to meet requirements 
established in the previous JCS review of submarine requirements. Why 
does the Navy's budget drop the last LPD-17 out of the shipbuilding 
plan, perhaps anticipating some different guidance from one study, when 
the attack submarine plan does not appear to presume the outcome of the 
other study process?
    Admiral Clark. The Navy has not changed its requirement for 12 LPD-
17 class ships. Relative to the 2003 plan, the fiscal year 2004 
President's budget request procures the same number of ships through 
fiscal year 2007 and continues the 2003 plan by procuring one ship per 
year in fiscal year 2008 and fiscal year 2009. The 12th and last 
planned ship of the class can be expected to be procured beyond the 
current future years defense program. While studies such as the 
Forcible Entry Study will explore various force structure alternatives 
including Naval Expeditionary Strike Groups (ESG) and Expeditionary 
Strike Forces (ESF), and Amphibious and Maritime Pre-positioning Force 
ships, at this time there is no plan to alter the program of record to 
acquire 12 ships.

            EFFECTS OF PERTURBATIONS IN THE LPD-17 SCHEDULE

    15. Senator Kennedy. Admiral Clark, the shipbuilding profile in the 
Future Years Defense Program (FYDP) shows a gap in LPD-17 production in 
fiscal 2005. Has the Navy assessed the effect of this projected gap in 
production on procurement costs for these ships?
    Admiral Clark. Yes. The Navy and Northrop Grumman Ship Systems 
estimate of known LPD-17 program cost increases are expected to be 
approximately $80-$100 million due to the impact of the fiscal year 
2005 procurement gap. There could be additional risks to the program's 
cost, schedule, and vendor base depending on how the industry addresses 
this procurement gap.

    16. Senator Kennedy. Admiral Clark, delays in producing LPD-17 
vessels will probably mean that the Navy will have to keep ships with 
higher operating costs for longer than planned. For example, the 12 
LPD-17 ships are supposed to replace a larger number of older ships, 
and in the process, reduce demands for personnel by roughly two-thirds. 
How is delaying introduction of the LPD-17 program consistent with the 
Navy's efforts to get operating and support costs under control?
    Admiral Clark. A number of the ships that the LPD-17 class replaces 
have already been retired. Keeping the remaining older ships around 
does increase our operating and support costs. Compared to the 
President's fiscal year 2003 budget, the President's fiscal year 2004 
budget delays the LPD-17 class deliveries by only three ship years. 
Although undesirable, this delay was necessary in order to balance all 
Navy programs in the FYDP.

                         DDG-51 AND LPD-17 SWAP

    17. Senator Kennedy. Admiral Clark, based on the latest information 
on the agreement to transfer workload for DDG-51 destroyers and LPD-17 
amphibious transport docks between Bath Iron Works and Avondale/
Ingalls, what effects on total costs of the two programs have you 
experienced?
    Admiral Clark. The workload transfer was expected to save the Navy 
funding on the LPD-17 program by consolidating all LPD-17 work at 
Northrup Grumman Ship Systems, Inc. (Avondale/Ingalls). However, near 
term DDG-51 costs were expected to increase due to higher labor costs 
at Bath Iron Works. The net effect was estimated as a $200 million cost 
savings to the Navy, plus intangible cost avoidances across both 
programs. The projected savings are reflected as part of the fiscal 
year 2004 President's budget request. The work associated with the 
initial ships (DDG 102 and LPD 19) has been transferred. Actual costs 
to date on the DDG-51 and LPD-17 programs are supporting the initial 
swap savings estimates.

            ADDING DEMANDS TO UNDERFUNDED SHIPBUILDING PLAN

    18. Senator Kennedy. Admiral Clark, this subcommittee has taken a 
prominent role in pointing out that the Navy has not been buying a 
sufficient number of ships to recapitalize the current fleet. The 
shipbuilding plan in this budget has finally begun to address this 
situation, but the quantities are increased in the outyears by plans to 
build nine relatively cheaper LCSs. As I understand your Sea Power 21 
vision, the Navy's view is that: (1) LCS would be additive to the 316 
ship fleet supported by the Quadrennial Defense Review; and (2) LCSs 
are not designed to replace any current vessels. Can we afford to start 
a new class of ships that really does not modernize any current part of 
the fleet when we are not buying enough ships to recapitalize the 
current fleet?
    Admiral Clark. Currently, no ships in the fleet can be modernized 
at any cost to deliver LCS like capabilities. To meet the requirements 
of the new Defense Strategy, Global Concept of Operations, and future 
global threats, Navy must invest now in the LCS. A new, focused-mission 
ship, LCS will provide the fast, affordable, and reconfigurable 
capability that will sustain access and enhance the Navy's ability to 
establish sea superiority for our Carrier Strike Groups, Expeditionary 
Strike Groups, and joint logistics, command and control and pre-
positioned ships that must transit the critical littoral threat area to 
move and support forces ashore. Funding LCS is not at the expense of 
other equally important plans to recapitalize the current fleet. In 
addition to 9 LCS, Navy plans to procure 43 ships through fiscal year 
2009 including an aircraft carrier, 9 fast attack submarines, 14 multi-
mission destroyers, 7 amphibious assault ships including 1 large deck 
ship replacement, 9 logistics ships, and 3 pre-positioning ships. 
Additionally, Navy is funding various nuclear refueling overhauls, 
conversions, and small craft replacement or service life extensions.

    19. Senator Kennedy. Admiral Clark, in that context, I would note 
that maintaining the current fleet of roughly 300 ships requires that 
the Navy build 8-10 ships per year over the long-term, while 
maintaining a fleet of 375 ships would require building roughly 9-12 
ships per year. Expanding the fleet to 375 in 10 years would require 
building roughly 16-18 ships per year. Given the recent shipbuilding 
procurement experience (5-7 ships per year), it hardly seems likely 
that the Navy can afford to achieve these production rates without 
making major reductions elsewhere. These actions could include having 
to retire existing combatant ships early and substitute the smaller, 
less capable LCS ships for them. Are there major portions of the 
current fleet that the Navy will not need under the Navy's new 
operating concepts?
    Admiral Clark. A fleet of approximately 375 ships is required to 
fully implement the new Defense Strategy and Global Concept of 
Operations. This force will consist of a combination of current fleet 
assets as well as future ship classes. To achieve a fleet of this size 
and capability requires both near- and long-term commitments. In the 
near-term, Navy is committed to funding transformational shipbuilding 
programs. To do so, Navy is decommissioning some older, less capable 
and more maintenance intensive ships such as Spruance (DD-963) class 
destroyers and Oliver Hazard Perry (FFG 7) class frigates and applying 
those savings to help finance the transition to the numbers, type, and 
mix of ships required to execute the range of missions anticipated in 
the 21st century.

    20. Senator Kennedy. Admiral Clark, isn't the addition of the LCS 
program going to be at the expense of modernizing some part of the 
existing fleet when the Navy has not been able to allocate sufficient 
funding to recapitalize the fleet?
    Admiral Clark. The LCS program is not funded at the expense of 
other essential plans to recapitalize and modernize the current fleet. 
The Navy's ship recapitalization program and corresponding budget for 
fiscal year 2004 is ``turning the corner'' on previous budgets and will 
continue to increase across the FYDP, ramping to levels needed to 
recapitalize the fleet to meet current and future warfighting 
requirements. In addition to 9 LCSs, Navy plans to procure 43 ships 
through fiscal year 2009. In addition to new ship construction, the 
Cruiser Conversion, SSGN Conversion, and other funded fleet improvement 
programs such as nuclear ship refueling overhauls represent parallel 
efforts to upgrade our current capabilities, while investing in 
transformational initiatives like LCS, which will provide capability 
into the future.

    21. Senator Kennedy. Admiral Clark, when would you expect that the 
Navy would be able to achieve the transformation of the fleet as 
envisioned in Sea Power 21?
    Admiral Clark. In order for Sea Power 21 to meet the key goals as 
outlined by the Quadrennial Defense Review and National Security 
Strategy, and as operationalized by the Navy's Global Concept of 
Operations, shipbuilding procurement rates must reach a rate of 
approximately 12 ships per year through the next 20 years to meet the 
375 battle force ship requirement.

                 SEA-BASED MISSILE DEFENSE REQUIREMENTS

    22. Senator Kennedy. Secretary Young, the administration's draft 
plans for expanded intercontinental-range ballistic missile defense 
include looking to sea-based defenses. Your prepared statement 
indicates that the Navy and MDA have signed an agreement relating to 
the Navy's contributing ships to cover MDA missions. The Navy seems 
split over this matter, with some advocating a greater Navy role in 
missile defenses, other than the Navy theater defense programs, and 
others who are concerned over the impact this new mission could have on 
the number of ships available to the fleet for conventional missions. 
What are the details of the MDA-Navy agreement on contributing ships to 
cover MDA missions?
    Secretary Young. The Navy is in process of assigning U.S.S. Lake 
Erie (CG-70) to the MDA as a dedicated ballistic missile defense 
testing platform. This action allows the MDA testing program to proceed 
unabated by the delay and expense that would be involved in modifying 
an older Aegis-equipped cruiser to accomplish the testing mission, and 
demonstrates the Navy's firm commitment to missile defense as a core 
mission. In January 2003, OSD directed that the assignment of Lake Erie 
to the MDA should occur. OSD also directed MDA to procure Standard 
Missile-3 missiles and Ballistic Missile Defense (BMD) upgrade ship 
sets to facilitate an early deployment of Navy missile defense 
capability. A Memorandum of Understanding is currently in staffing 
which will stipulate the Lake Erie cost sharing arrangement, 
administrative actions and other operational details between Navy and 
the MDA. We expect the actual ship transfer to occur summer 2003.
    Regarding other ships that may be allocated to BMD, the Navy is 
working closely with MDA and the appropriate combatant commanders to 
develop an efficient operational concept for Navy participation in the 
BMD system. This work began last fall and accelerated with the issuance 
of National Security Presidential Directive 23, which stated the 
President's intent to deploy ballistic missile defenses in 2004 and 
2005. The concept of operations for the Navy's role in the initial 
defensive operations capability has not been finalized by the U.S. 
Strategic Command. The details of ship availabilities, impact upon 
other Navy deployments, and the opportunity costs of this new mission 
have yet to be fully determined.

    23. Senator Kennedy. Admiral Mullen, what are your views of the 
effect that using Navy ships for testing intercontinental-range 
ballistic missile defenses or deploying them for MDA missions would 
have on the availability of ships for covering existing missions?
    Admiral Mullen. The Navy is supportive of MDA in their efforts to 
rapidly field effective ballistic missile defenses for the homeland. 
Effective testing is key to that goal and we are in process of 
assigning U.S.S. Lake Erie (CG70) to MDA as a dedicated ballistic 
missile defense testing platform. As Admiral Clark testified to the 
SASC in February, this action allows the MDA testing program to proceed 
unabated by the delay and expense that would be involved in modifying 
an older Aegis-equipped cruiser to accomplish the testing mission and 
demonstrates the Navy's firm commitment to missile defense as a core 
mission. Although the concept of operations for missile defense has not 
yet been completed by the U.S. Strategic Command, it's clear that the 
number of ships involved in the ballistic missile defense mission will 
have some opportunity cost vis-a-vis existing Navy missions. It's our 
sense at this early juncture that the multi-mission character of our 
Aegis ships will enable us to support this new mission assignment 
without an undue impact on the Navy missions that are currently extant.

    24. Senator Kennedy. Admiral Mullen, in the near-term, how would 
the Navy propose to meet forward deployment commitments and assume any 
additional such duties without breaking operational tempo guidelines?
    Admiral Mullen. The Navy uses a process called Global Naval Force 
Presence Policy (GNFPP) to balance the deployment requirements for our 
Carrier Strike Groups and Expeditionary Strike Groups. Through the 
GNFPP process the Navy, in coordination with the Joint Staff and 
combatant commanders, develops a schedule to meet the forward deployed 
requirements and keep the deploying units within operational tempo 
guidelines.
    Theater security and deterrence posture is currently under review 
by the Joint Staff and it is unclear what the requirement will be for 
the Navy, but we fully expect to maintain rotational presence in the 
four strategic hubs described by the Defense Strategy. The requirement 
to provide surface combatants in support of missile defense is an 
emerging requirement that the Navy is prepared to support. Future 
schedules developed within the GNFPP process account for additional 
surface combatant requirements to support missile defense and will 
continue to be adjusted to support this evolving requirement.
    At the same time we plan to preserve a global surge capability to 
meet critical warfighting and engagement requirements for the combatant 
commanders. In order to fulfill those commitments, the Navy is rapidly 
transitioning to a global concept of operations--supported by the fleet 
response plan--that fundamentally changes how we will provide combat 
capability forward. Analysis of potential adversary capabilities allows 
us to modify the way we provide deterrence--moving from a Carrier 
Battle Groups (CVBG) centric construct to one where we make more 
efficient use of our expeditionary forces. By providing broader 
capability with the same force structure, we will minimize the impact 
on personnel and operational tempo, while still maintaining the ability 
to surge sufficient combat power in the event of major conflict. 
Maintenance and training schedules for returning Carrier and 
Expeditionary Strike Groups are being adjusted to maximize operational 
availability, and deployment schedules are being adjusted to provide 
rotational presence and quality of life.

                           TOMAHAWK MISSILES

    25. Senator Kennedy. Secretary Young, you and Admiral Mullen 
referred to the higher costs of refurbishing the remaining Tomahawk 
missiles that have not already been slated for Block III conversion. 
One of the issues you raised was that many of these missiles had 
already been cannibalized for parts to support converting other 
missiles to the Block III configuration. Presumably, this would not 
have been the case for missiles with nuclear warheads (TLAM-N) that had 
been reserved for Strategic Command requirements. Has the Department 
identified a planned retirement date for the TLAM-N?
    Secretary Young. The Navy was directed in 1991 to remove all 
surface-launched nuclear Tomahawk missiles from active inventory. These 
surface nuclear Tomahawk missiles were released in 2002 for use in the 
Remanufacture II program. Submarine torpedo-tube-launched nuclear 
Tomahawk missiles remain in the active inventory due to strategic 
requirements. These missiles have not been cannibalized or included in 
any remanufacture program. During the FYDP, there is no planned 
retirement date for submarine TLAM-Ns.

    26. Senator Kennedy. Secretary Young, if these TLAM-N missiles were 
released to the Navy for other uses, how much would converting them to 
Block III configuration cost?
    Secretary Young. If the TLAM-N missiles were released to the Navy 
for remanufacture, the estimated cost to convert 183 TLAM-N missiles to 
Block III configuration would be $312 million, which would include 
$1.53 million per missile and a one-time non-recurring cost of $32.4 
million. However, as Tactical Tomahawk (Block IV) missiles began low 
rate initial production in fiscal year 2002, and will be in full rate 
production in fiscal year 2004, it would be more cost effective to 
increase procurement quantities of the more capable Block IV missile 
than to pay significantly more to convert the older TLAM-N missiles to 
Block III configuration.

    [Whereupon, at 4:53 p.m., the subcommittee adjourned.]

                                 
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