    [Senate Hearing 109-22]
    [From the U.S. Government Publishing Office]

                                                      S. Hrg. 109-22, Pt. 2

    DEPARTMENT OF DEFENSE AUTHORIZATION FOR APPROPRIATIONS FOR FISCAL YEAR
                                      2006

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

                                    HEARINGS

                                   before the

                          COMMITTEE ON ARMED SERVICES
                              UNITED STATES SENATE

                           ONE HUNDRED NINTH CONGRESS

                                 FIRST SESSION

                                       ON

                                    S. 1042

         TO AUTHORIZE APPROPRIATIONS FOR FISCAL YEAR 2006 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 12 AND 19, 2005

             Printed for the use of the Committee on Armed Services

                                   ----------
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    21-103 PDF                       WASHINGTON : 2005

    For sale by the Superintendent of Documents, U.S. Government Printing
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    Washington, DC 20402-0001

                          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
    JEFF SESSIONS, Alabama               JOSEPH I. LIEBERMAN, Connecticut
    SUSAN M. COLLINS, Maine              JACK REED, Rhode Island
    JOHN ENSIGN, Nevada                  DANIEL K. AKAKA, Hawaii
    JAMES M. TALENT, Missouri            BILL NELSON, Florida
    SAXBY CHAMBLISS, Georgia             E. BENJAMIN NELSON, Nebraska
    LINDSEY O. GRAHAM, South Carolina    MARK DAYTON, Minnesota
    ELIZABETH DOLE, North Carolina       EVAN BAYH, Indiana
    JOHN CORNYN, Texas                   HILLARY RODHAM CLINTON, New York
    JOHN THUNE, South Dakota

                        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
    SAXBY CHAMBLISS, Georgia             JACK REED, Rhode Island

                                      (ii)

                                C O N T E N T S

                                  ----------

                        CHRONOLOGICAL LIST OF WITNESSES
                  Navy Shipbuilding and Industrial Base Status
                                 april 12, 2005

                                                                       Page
    Clark, ADM Vernon E., USN, Chief of Naval Operations.............     4
    Toner, Michael W., Executive Vice President--Marine Systems,
      General Dynamics Corporation...................................    22
    Dur, Philip A., Ph.D., President, Northrop Grumman Ship Systems..    43
    O'Rourke, Ronald, National Defense Specialist, Congressional
      Research Service...............................................    50

        United States Marine Corps Ground and Rotary Wing Programs and
                                   Seabasing
                                 april 19, 2005

    Young, Hon. John J., Jr., Assistant Secretary of the Navy for
      Research, Development, and Acquisition.........................    99
    Sestak, VADM Joseph A., Jr., USN, Deputy Chief of Naval
      Operations for Warfare Requirements and Programs...............   118
    Magnus, Lt. Gen. Robert, USMC, Deputy Commandant for Programs and
      Resources; Accompanied by Lt. Gen. James N. Mattis, USMC,
      Deputy Commandant for Combat Development.......................   127

                                     (iii)

    DEPARTMENT OF DEFENSE AUTHORIZATION FOR APPROPRIATIONS FOR FISCAL YEAR
                                      2006

                                  ----------

                            TUESDAY, APRIL 12, 2005

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

                  NAVY SHIPBUILDING AND INDUSTRIAL BASE STATUS

        The subcommittee met, pursuant to notice, at 4:00 p.m. in
    room SR-232A, Russell Senate Office Building, Senator James M.
    Talent (chairman of the subcommittee) presiding.
        Committee members present: Senators Talent, Collins,
    Lieberman, and Reed.
        Majority staff members present: Gregory T. Kiley,
    professional staff member; and Thomas L. MacKenzie,
    professional staff member.
        Minority staff member present: Creighton Greene,
    professional staff member.
        Staff assistants present: Alison E. Brill and Benjamin L.
    Rubin.
        Committee members' assistants present: Mackenzie M. Eaglen,
    assistant to Senator Collins; Lindsey R. Neas, assistant to
    Senator Talent; Frederick M. Downey, assistant to Senator
    Lieberman; and William K. Sutey, assistant to Senator Bill
    Nelson.

         OPENING STATEMENT OF SENATOR JAMES M. TALENT, CHAIRMAN

        Senator Talent. The subcommittee will come to order. I am
    going to start my opening statement. I expect Senator Kennedy
    will arrive while I am giving it and, given the lateness of the
    hour and the fact we were interrupted with a vote, in order to
    maximize your time, Admiral, I will just go ahead and convene
    the subcommittee and we will begin.
        The subcommittee meets today in open session to receive
    testimony on shipbuilding and on the shipbuilding industrial
    base. We have just left a very informative closed session with
    the Chief of Naval Operations, Admiral Vernon Clark, who has
    been kind enough to give us more time today as the first
    panelist in this open hearing. Thank you again, Admiral, for
    taking time out of your busy schedule to be here.
        In our second panel this afternoon we have: Michael Toner,
    the Executive Vice President of Marine Systems for General
    Dynamics; Dr. Philip Dur, the President of Northrop Grumman
    Ship Systems; and Ronald O'Rourke, a recognized expert on naval
    matters from the Congressional Research Service (CRS). I want
    to thank those gentlemen as well for being here this afternoon.
        This is an extremely important hearing and the issues are
    complex. There has been a tremendous amount of rhetoric
    surrounding the shipbuilding budget this year. There is no
    doubt that there are significant budgetary pressures on the
    Department of the Navy. Those pressures have certainly driven
    some of the decisions that have been made, such as slipping the
    delivery of CVN-21 and reducing the production rates of surface
    combatants and submarines.
        The overarching issue, however, budget pressures aside, is
    what is the size and composition of the Navy that we need.
    Having read the written testimony from members of our second
    panel, I think we will find that what the shipbuilding industry
    needs first and foremost is stability. The first step in
    achieving that stability in the industry is to lay out a plan.
    The second step would be to stick to it.
        The interim Navy plan delivered last month was, in the
    words of Mr. O'Rourke from our second panel in his written
    testimony, ``not a plan but a 30-year projection of potential
    Navy force levels,'' from which potential annual shipbuilding
    rates can only be partially inferred. No one argues that plans
    should remain unchanged, but they should not change each and
    every year. Mr. Toner points out in his written testimony that
    the procurement plan for a Virginia-class submarine has changed
    12 times in the last 10 years. The procurement plan for DD(X)
    has been no more stable.
        As far as what the size and shape of the Navy should be,
    the last plan on which there was consensus was the 2001
    Quadrennial Defense Review (QDR). By statute, this review is
    required to outline what is required to execute the national
    military strategy with no more than moderate risk. In 2001, for
    the Navy that resulted in a force that included: 12 aircraft
    carriers, 10 active and 1 Reserve air wings, 12 amphibious
    ready groups, 55 attack submarines, 108 Active and 8 Reserve
    surface combatants.
        Two years ago, to support Sea Strike, Sea Shield, and Sea
    Basing pillars or the Sea Power 21 vision, a force structure of
    375 ships was postulated, which would have included 12 carriers
    strike groups, 12 expeditionary strike groups, 9 strike or
    missile defense surface action groups, and 4 guided missile
    submarines for strike and Special Operations Forces.
        Certainly the Navy has made great strides in trying to do
    more with less. Experimentation with Sea Swap to increase a
    ship's forward presence, implementation of the fleet response
    plan to provide presence with a purpose, and integration of the
    Navy and Marine Corps tactical aviation forces all have
    contributed to providing more naval combat power for every tax
    dollar spent. These efficiencies are noteworthy, but it is my
    belief that efficiencies can go only so far before risk and
    perhaps unacceptable risk to the national security is
    introduced.
        Our ships and aircraft have more capability than ever
    before in history. The requirements process is now defined in
    terms of capabilities rather than threats and I think that is
    largely appropriate. But even the most capable ship or airplane
    is of little use if it is not in the right place at the right
    time.
        Perhaps the problem since the end of the Cold War has been
    in defining the threat. An article for the New York Times just
    last week, on April 8, stated that ``China is quietly
    challenging America's reach in the western Pacific by
    concentrating strategically on conventional forces,'' and that
    in the worst case in a Taiwan crisis, Pentagon officials say
    that any delay in American aircraft carriers reaching the
    island would mean that the United States would initially depend
    on fighter jets and bombers based in Guam and Okinawa, while
    Chinese forces could use their amphibious ships to go back and
    forth across the narrow Taiwan Strait.
        With China's acquisition of modern surface ships,
    submarines, and aircraft, combined with the fact that naval
    forces would be critical to having a chance of success in such
    a scenario, perhaps it is time to start thinking about what
    level of naval power is required to deter a potential threat.
        I keep coming back to something that has been repeatedly
    stated by officials in and out of uniform in testimony before
    this subcommittee: numbers count. Capability is important,
    maybe more important than we used to think it was, but numbers
    count, and the numbers are moving in the wrong direction.
        I also think that in a world where the threat is not as
    defined as it was during the Cold War numbers may count even
    more, especially for the Navy since transit times are so long
    and most of the world is still covered by oceans. Increased
    capabilities are needed, to be certain, but so are increased
    numbers. If resources prevent that, then maybe more resources
    are needed.
        There is a new national military strategy and a new QDR
    that has been started. Hopefully, it will take into account
    both the capabilities and numbers that will be required across
    the spectrum of warfare globally and to deter first and defeat
    if necessary.
        That is the end of my opening statement. If everybody will
    stand by just a second. Now I understand why Senator Kennedy is
    not here. Another vote has been called. Let me recess the
    subcommittee for just a second, and I am going to talk to you,
    Admiral, about your time. So we will just stand in recess for a
    minute. [Recess from 4:08 p.m. to 4:09 p.m.]
        I am going to go vote and then we will continue in recess
    and we will come back and open this subcommittee hearing.
    [Recess from 4:10 p.m. to 4:16 p.m.]
        Senator Collins [presiding]. The subcommittee will come to
    order.
        Admiral Clark, you know very well that I have always wanted
    to be the chairman of the Seapower Subcommittee, and for the
    next few moments until Senator Talent arrives I am going to
    assume that role with his permission. I hope that does not fill
    you with apprehension in any way.
        Admiral, you and I have worked together for many years now
    and I very much appreciate the contributions that you have made
    in service to your country. I have been very concerned about
    the shipbuilding budget, especially this year, but also
    previous years when I felt shipbuilding was underfunded. You
    and I have talked many times about a shipbuilding budget that
    should be in the neighborhood of $10 billion to $12 billion a
    year in order to keep us on track. We did a little better for a
    few years, but now, unfortunately, we seem to be going
    backward.
        I understand the budget constraints. You were very frank
    about that when last you testified before the full committee. I
    am very concerned in particular about the reduction in the
    number of DD(X)s, particularly since you have testified that
    the military requirements have not changed, that you still see
    a need for about a dozen. That suggests to me that the answer
    is for us to explore alternative ways of funding ships, ways
    that would recognize that trying to fully fund a DD(X) in 1
    year may not be the best approach.
        I know you tried, and I completely supported you, last year
    to construct the first DD(X) in the research and development
    (R&D) account, and we have talked about other ways. Could you
    elaborate on funding mechanisms that you believe would allow us
    to build more ships and would be a more effective and efficient
    way for reaching goals that I know we both share?

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

        Admiral Clark. Thank you, Senator. I very much appreciate
    the chance to take on that issue because I believe that really
    is the issue in front of the subcommittee today. Do you have a
    copy of my statement? Did I give you one?
        Senator Collins. I do have it.
        Admiral Clark. So, if we could, I would like to answer the
    question by going to page 11 and looking at the chart there,
    figure 7, if you will.
        Senator Collins. Yes, thank you.
        Admiral Clark. Figure 7 proposes a level funding approach
    to shipbuilding. In the early part of my statement I talk about
    the requirement for us to deal with shipbuilding as a national
    investment issue and I believe that is what is required.
        Also, earlier in the written statement I have a graph that
    talks to and shows the investment level that we have witnessed
    in real terms over the course of the last 15 years. So I
    believe that what we are facing here is a couple of issues. The
    first one is the level of funding and the second one is the
    methodologies that we are using to get the funding
    accomplished.
        In figure 7, there is no number on the vertical column, and
    we could talk about various levels, and so I took the numbers
    out of the platforms also. But I had the staff work up what
    would happen if the Nation said, Okay, we are going to spend X
    every year. The methodology would be that we would be given the
    tools to manage inside that fixed amount that I believe would
    greatly, in my discussions with the shipbuilders, help them to
    figure out what they are supposed to do.
        A study was just completed recently by National Defense
    University in the shipbuilding industry. The results of the
    study point out that there are a number of issues that affect
    the shipbuilding industry. One of the realities is that we have
    more capacity than we are certainly burning up by buying the
    numbers of ships that we are.
        In order for them to properly size themselves, they do have
    to know where they are going. Chairman Talent in his opening
    statement talked about the requirement for stability and I
    understand that and appreciate it and would very much like to
    be in that kind of position. So this chart represents to me
    what it is we have to do. Not only do we have to have a level
    income stream, we have to have the rules and regulations that
    allow us to operate inside that level income or investment
    stream. What that means is we ought to use any tool that we
    think would make it work better.
        When I appeared before the full committee, I asked the
    chair to bring the shipbuilding industry in here, have them
    talk about their perspective of this. I cannot give their
    perspective. But I have talked to them and I understand what
    their issues are with second and third order supply chains, and
    the current methodology simply is not meeting our needs. How
    long do we have to watch this happen to come to the conclusion
    that it is not meeting our need?
        So what you see there is the top section, the carrier. The
    carrier now takes a number that would eat up the entire annual
    investment that we have made over the last 15 years and then
    some if we are going to buy a carrier in a given year. What
    people do not even imagine when they see this is what it does
    to the rest of my budget and the rest of my program. It takes
    divots of ineffectiveness and inefficiency out of the rest of
    my programs to try to do those kinds of things.
        That means that I have to have authorities and tools that
    allow me to fund the activity inside a balancing kind of a line
    that gives you a fixed investment stream.
        Senator, I believe the bottom line is you cannot have the
    Navy of your dreams with the mechanisms that we are using and
    have used for the last 15 years, and something like this has to
    be done. If this is not the perfect answer, I am willing to
    look at any other option. I have put forward split funding. I
    have put forward advanced approps and incremental
    appropriations in the old R&D program.
        By the way, you mentioned DD(X). By my estimates--and I am
    not the acquisition czar, so I will not attest that these are
    perfect--but the requirement and the result of the
    congressional action last year and then the resulting budgetary
    action that we have had to take as a result has cost that first
    ship something in the tune of $380 million, $390 million. We
    still do not have the ship. So this is not the way to do it.
        Senator Collins. Admiral, I think your point is an
    excellent one. This not only is an inefficient way, the current
    approach, to shipbuilding, but it also ultimately costs us more
    money.
        Admiral Clark. It does.
        Senator Collins. That is what is particularly frustrating
    about the approach. It is not good for the Navy; it is not good
    for the shipbuilders; it is not good for our national security;
    and it is more costly to the taxpayers.
        If I could summarize your answer, your testimony, and our
    previous discussions, it seems to me what you are advocating is
    a multi-year approach, level funding so that we do not have
    these huge peaks and valleys, an even workload, which helps the
    industrial base retain those skills that are so important, and
    a dependable funding stream.
        One of the problems, which the chairman has alluded to and
    you have echoed, is the instability in funding is very
    difficult for the shipbuilders to deal with, for the Navy to
    deal with. But I think your point is excellent, that ultimately
    it gets us fewer ships and it costs us more money.
        Mr. Chairman, I know how hard you have worked on this issue
    and I hope that we can come up with a better approach for
    shipbuilding that meets the goals and uses the attributes that
    the Chief of Naval Operations (CNO) has suggested. I want to
    commend your leadership on this because you have worked very
    hard.
        I do have one other question, but I know I am no longer the
    chairman now that you have returned. So I will give back my
    time.
        Senator Talent [presiding]. I am willing, if Senator
    Kennedy has not returned, to go right to you after this. We are
    doing this to some degree on the fly, but I wanted to give the
    Admiral a chance to actually give a statement if you want to,
    and perhaps you could pull out the parts that you think are the
    most important and give those. Then if Senator Kennedy has not
    returned, I will be happy to go to you for your questions,
    Senator Collins.
        Admiral Clark. Thank you, Mr. Chairman. Let me just briefly
    say a couple of things. First, I do appreciate the fact that
    you are having this hearing. I believe that this is very, very
    important. I believe it is important for the Navy. I believe it
    is important for industry. Ultimately, I believe that makes it
    very important for America. Certainly it is of great importance
    to the Navy.
        I believe that the question of the industrial base and the
    state of shipbuilding is something that the United States
    should be concerned about. I said in the hearing with the full
    committee that I believe this to be a national security issue,
    and I want to reinforce this point. We are a maritime nation
    still. Even though the world is getting smaller and
    globalization is changing the way the economy works and all of
    those pieces, we are still an island nation.
        The economy's dependence upon safety on the seas is
    absolutely without question. We know that well over 95 percent
    of the international product moves by sea and over 80 percent
    of the value. This is not hypothetical. This is not mythical.
    This is reality, and we need to confront reality and understand
    what the requirement is for us to be able to command the seas.
        I want to make this point. We have worked hard inside the
    Navy to present an approach where we were trying to do our
    part. The budget that is before you and the cumulative savings
    over the time I have been the CNO are now over $50 billion. We
    have tried to do our part to run this Navy more effectively and
    more efficiently.
        The fact remains that I am losing buying power, and I am
    losing buying power in the segment of the industry that my
    future depends upon. So as I said in the written statement, our
    shipbuilding priorities must in my view reflect the changing
    strategic environment that we see.
        The requirement for more speed and agility in the future.
    That said, in my written statement I bring up again the issue
    of escalating costs and the loss of my buying power, and that
    is what I think makes this hearing so important.
        I believe that the greatest risk that we face is the
    spiraling cost of our product. Now, it goes without saying that
    our product today is better than it has ever been, and I want
    to make no bones about it. Unapologetically, I tell you that I
    am bringing recommendations up here to buy the best stuff I
    know how to buy for the sons and daughters of America. We are
    investing in capabilities that will make the long-term cost of
    our Navy much lower. In other words, the operating costs for
    these platforms are significantly less than the platforms that
    they are replacing.
        So that leads me to this; I believe that we have to form
    partnerships with Congress, with industry, and with the Navy
    that regain our buying power. I believe that we have to pursue
    acquisition reform. I believe that it is time for us to analyze
    the structure that we have. Let us have the courage to see if
    our system is serving us well. It is hard for me to imagine
    that we would come to the conclusion that the methodologies
    that we are using are working well for us.
        It is clear to me that if we do not do this, find these
    better mechanisms to help build the ships and submarines of the
    future, that we cannot build the Navy that we believe we need
    in the 21st century. I also believe that there is no stand-
    alone single point solution. In other words, if the solution
    today became to incrementally fund a product in fiscal year
    2006 without the wherewithal for me to deal with the
    incremental funding challenges that would exist when we did a
    series of new starts in 2006, I cannot stand that kind of
    approach to budgeting either.
        My written statement includes a notional chart that is I
    believe very important, and it shows how level funding can more
    efficiently create and sustain a Navy between 260 and 325
    ships. Mr. Chairman, I would love to get into your question
    about the exact numbers, whether it is 325, 260, or 375, and I
    think that that would be a worthwhile discussion.
        I do advocate that we take on an approach that uses any
    funding mechanism we can figure out how to use, that will
    advantage the industry, make it more competitive, allow us to
    attack costs at every segment of the production process.
        Finally, I believe that anything that we do must be done in
    partnership with the industry and that we should do everything
    possible to improve our ability to efficiently produce ships.
    For that reason, I congratulate you, Mr. Chairman, for making
    them part of this hearing today, and I look forward to your
    questions.
        [The prepared statement of Admiral Clark follows:]
                   Prepared Statement by ADM Vern Clark, USN
        Mr. Chairman and members of the Committee, I want to express my
    gratitude on behalf of the men and women of your Navy for holding these
    hearings. These marvelous Americans--Active and Reserve, uniformed and
    civilian--will continue to make this nation proud as they take the
    fight to today's enemy, while steadily transforming our institution to
    meet tomorrow's challenges. Our ability to attract, train, and retain
    them is a testament to the health of our Service and an indicator of
    our proper heading as we chart our course into the future. It is also
    important that we provide them with every advantage--especially
    regarding the ships they operate--to fight and win.
            i. shaping our navy for the future strategic environment
        Our force structure was previously built to fight two major theater
    wars. However, the strategic landscape is vastly different today, and
    this change requires additional capabilities to accommodate a wide
    array of missions (Figure 1). The dependence of our world on the seas,
    coupled with the growing challenge for all nations to ensure access in
    a future conflict, will emphasize the need for a decisive maritime
    capability able to excel in an increasingly joint environment. Emphasis
    on the littorals and the global nature of the terrorist threat will
    demand the ability to strike where and when required. Therefore the
    maritime domain will increase in importance as a key maneuver space for
    U.S. military forces.
        We will continue to face the requirement to deal with traditional
    warfighting challenges on the high seas and ashore. We must also
    address the growing 21st century realities of increasing scope and
    scale of small-scale contingencies, such as stability operations and
    peacekeeping requirements, and the need to extend combat capability to
    deeper and longer ranges inland. The future will demand the ability to
    confront irregular, catastrophic, and disruptive challenges that are
    being introduced today and will grow over time.
    Strategic Challenges
        To meet these challenges, we must improve our strategic speed to
    move significant, joint combat power anywhere around the globe. U.S.
    military force must be immediately employable and rapidly deployable,
    seizing and maintaining the initiative in any fight, anywhere.
        Second, we must continue to develop ``precision.'' As precision
    weaponry becomes commonplace throughout the joint force, we must
    develop concepts of operation and doctrine to maximize these powerful
    capabilities.
        Third, we must establish an ``unblinking eye'' above and throughout
    the battlespace. Technological leaps in miniaturization have begun to
    make possible an increasing array of unmanned sensors, along with the
    communications networks and command and control (C2) capacity to yield
    pervasive awareness of the battlespace.

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        We must also continue to develop the fullest measure of joint
    interdependence. We are more effective as a fighting force, and more
    efficient with taxpayer dollars, when service missions and doctrine are
    designed from the start to be fully integrated.

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Strategic Necessities: Speed & Agility
        Speed and agility are the attributes that will define our
    operational success. The importance of these qualities extends to the
    very foundations of our institution, whether we're talking about our
    personnel system, the size and adaptability of our technological and
    industrial bases, the design and function of our supporting
    infrastructure, or the financial planning necessary to put combat power
    to sea. Speed and agility, while defining our operational response,
    also need to characterize our acquisition process. We must find new and
    better ways to develop and field emerging technologies. The cycle in
    which this occurs needs to be measured in months not years.
        The drive to increase our speed and agility means increasing the
    operational availability of our forces. It means developing a base
    structure to ensure that we are best positioned to win. It means
    challenging the total joint force to be light enough, and possess the
    required sustainability, to deliver adaptive capability packages on
    shorter timelines.
    Force Capabilities
        The number of ships in the Fleet is important. But it is no longer
    the only, nor the most meaningful, measure of combat capability. Just
    as the number of people is no longer the primary yardstick by which we
    measure the strength or productivity of an organization, the number of
    ships is not the only way to gauge the Navy's health or combat
    capability. The capabilities of the Fleet and its location around the
    world are most important. In fact, today's Navy can deliver more combat
    power than we could 20 years ago when we had twice as many ships and
    half again as many people. Figure 2 for example shows, the effects of
    technology and new operational concepts that leverage the greatly
    increased capabilities of today's Fleet.

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                            ii. current shipbuilding
        Our shipbuilding priorities reflect emerging strategic challenges,
    the operational requirement for speed and agility, and an understanding
    of evolving force capabilities. My testimony to Congress on this
    subject over the last 5 years has reflected these priorities and been
    consistent. My themes have been and remain:

             The acquisition mechanisms we possess today will not
            produce the Navy we are going to need in the 21st century.
             This highly industrialized segment of the military-
            industrial complex does not respond well to peak and valley,
            sine-cosine investment approaches.
             The ship procurement rate--dating back to the
            procurement holidays of the 1990s--was insufficient to maintain
            objective force levels and is now manifesting itself in the
            health of the shipbuilding industry.
             We need a system which better partners with Congress
            and industry to regain our buying power. Acquisition reforms
            and other approaches that help to stabilize production will, in
            our view, reduce the per unit cost of ships and increase the
            shipbuilding rate.
             We need a level investment approach in this industry,
            that when coupled with other innovations, will change the
            economic underpinning of shipbuilding.

        In no other area of our Armed Forces do we make such large capital
    investments that, in turn, impact important technological and
    industrial sectors of our economy.
    Shipbuilding Cost Growth
        Among the greatest risks all Services face is the spiraling cost of
    procurement for modern military systems, and shipbuilding is no
    exception (Figure 3). When adjusted for inflation, the cost increase in
    every class of ship that we have bought over the past 4 decades has
    been incredible.

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        This tremendous increase in cost runs counter to other capital
    goods like automobiles, where the inflation-adjusted cost has been
    relatively flat over the same period of time.

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Figure (4) shows that shipbuilding costs have grown tremendously
    over the past 4 decades. Although newer ships emphasize greater combat
    capability, propulsion power, and computing technologies than their
    predecessors, costs have spiraled out of control; cost growth that is
    not explainable solely due to enhanced complexity or reduced economies
    of scale.
        This cost spiral comes at a very challenging time because, for the
    first time in decades, we are building entirely new types of ships in
    fiscal year 2006 and beyond. These ships are needed because their
    modular nature will give us great flexibility and adaptability to fight
    in diverse environments against a variety of enemies. Such modularity
    also allows us to dramatically expand their operational capability over
    time with less technical and fiscal risk.
    Fiscal Year 2006 Budget Request
        As the budget is finalized in the coming months, there will be a
    number of issues and processes that will impact shipbuilding across the
    Future Years Defense Program (FYDP), including the cost of war in Iraq,
    Base Realignment and Closure decisions, and the findings of the
    Quadrennial Defense Review. With that in mind, our Navy budget request
    for fiscal year 2006 includes four new construction ships.
        Our original plan was for six new construction ships but
    Congressional action and shipyard factors prevented funding the final
    two ships. Our investment plan across the FYDP calls for 49 new
    construction ships, including DD(X), LHA(R), MPF(F), CVN-21, and SSN
    774s. These new ships reflect our focus on the next generation of naval
    combatants and sea basing capabilities.

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        The requirement for shipbuilding will be shaped by emerging
    technologies, the amount of forward basing, and innovative manning
    concepts such as Sea Swap. Additional variables include unit
    operational availability and the evolving capabilities needed to
    perform our missions.
        The following notional diagram (Figure 5) illustrates how
    innovative manning concepts and technological adaptation modify the
    number of ships required. The blue and yellow lines represent levels of
    combat capability and the ships required to achieve that capability.
    For example, the left side of the diagram shows our current number of
    ships (288) and a projection of ships required to meet global war on
    terror requirements (375) using traditional deployment practices. The
    right side of the diagram estimates the number of ships needed to
    achieve equivalent combat power after fully leveraging technological
    advances and employing the maximum use of Sea Swap. The middle portion
    of the curve (in the red ellipse) shows a range of ships that assumes a
    less extensive use of technology and Sea Swap. This diagram illustrates
    how the application of new technologies and manning concepts will
    enable us to attain our desired future combat capability with a force
    structure between 260 and 325 ships.

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        The power of the joint force in Operation Iraqi Freedom (OIF)
    resulted from synergy between the Services. The same concept holds true
    within our Navy. We seek the fullest integration of networks, sensors,
    weapons, and platforms. Toward that end, we are developing the next
    generation of surface combatants as ``sea frames''--analogous to ``air
    frames''--as part of a modular system. Growing research and development
    investments over the past few years directly support increased
    production of the right ships for the future in the years ahead (Figure
    6).

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                      iii. enhancing national shipbuilding
        The state of shipbuilding in the United States is a matter of
    national security and worthy of priority on the national agenda.
    Although there is no stand-alone solution to this challenge, we can
    enhance efficiency by changing shipbuilding policies. A national
    dialogue is critical, and I will work with the Department of Defense
    and the administration to consider changes to these policies for the
    fiscal year 2007 budget and beyond.
        Although not current policy, I personally recommend modifying our
    practice of fully funding most ships in a single year. The current
    policy results in funding peaks and valleys that induce uncertainty for
    shipbuilders. To compensate, industry retains excess capacity,
    increasing costs to the Navy while trying to figure out what we will
    do. We will avoid this problem and produce ships more efficiently if we
    provide a disciplined level funding approach for shipbuilding over a
    period of years coupled with a set of acquisition rules, developed in
    partnership with industry, which optimize effectiveness and efficiency.
    Figure 7 shows a notional level loaded investment structure to achieve
    a 260 ship Navy using level funding for each year. I would personally
    recommend to the Department and the administration that we adopt this
    level-funding approach for the fiscal year 2007 budget and beyond.

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        I also personally recommend use of research and development funds
    for building the lead ships of new classes. Advance procurement, split
    funding, and multi-year acquisition programs round out the
    authorizations we need to efficiently execute a disciplined national
    shipbuilding plan in fiscal year 2007 and beyond.
                                 iv. conclusion
        To make the best shipbuilding investments, more flexible
    acquisition policies are needed, to help us deliver the Navy we need in
    the future.
        Thank you for this opportunity to address my personal concerns
    regarding our national shipbuilding program. Thank you also for your
    strong and enduring support of the men and women serving our Nation in
    the United States Navy. They are deserving of our very best efforts to
    build a Navy that will remain the world's finest.

        Senator Talent. Senator Collins, why don't you finish.
        Senator Collins. Go right ahead.
        Senator Talent. I am going to be here until the end anyway.
    Seriously, go ahead.
        Senator Collins. Admiral Clark, the second issue that I
    want to raise with you today is the acquisition strategy. Now,
    I realize that it is the Navy's acquisition executive and the
    Pentagon's executive that will ultimately be making the
    decisions on this, although I think recent events suggest that
    Congress is going to have considerable input as well.
        But what I want to ask you is for your professional
    judgment. In general, we have seen the Navy in the past promote
    more competition. For example, in 2001 General Dynamics was
    blocked by the Navy and the Justice Department from purchasing
    Newport News because the acquisition would have ended
    competition in the nuclear submarine construction sector. In
    looking back at that example, there are just numerous
    statements by Defense Department and Justice Department
    officials saying, such as we really had to maintain
    competition, we could not afford to let a yard go to what would
    end up being a sole source for us for submarines.
        In your judgment, is the Navy going to be at risk if we end
    up with only one yard capable of constructing surface
    combatants?
        Admiral Clark. Senator, my view is we are at risk now. That
    is my view. I drive you to page 6 and the chart. We are at risk
    because we are not producing the product that we need and we
    are at risk because look at the investment scheme. This is the
    one I said over a 15-year period we spent $6.6 billion a year.
    There are the numbers. If that is the way we are going to do
    it, I believe that we are more at risk about failing to take
    action to reduce the cost of ships than we are at maintaining
    too much structure, because at that number the studies prove
    that we have more capacity than we can use now.
        This is why I believe that this kind of hearing has to be
    held. The question about the nuclear industry goes like this.
    In the shipbuilding world they want and need long-term
    stability. They need this. In the design area, they need to be
    designing new platforms. We are at a watershed period in our
    history. Everything out there is new. By the way, there is more
    turmoil when you are creating the future than when you are just
    floating along and doing the status quo, and we certainly have
    been working at creating a new future.
        So on the one hand, we need stability, and on the other
    hand we need new designs to keep unique capabilities that we
    alone have in the whole world. The ability to put out nuclear
    submarines and nuclear aircraft carriers, that is a capability
    that is truly unique in the world.
        So the way I see this, I do not think we really have
    competition today. I think we have apportionment. I think all
    of the numbers are now clear that it is costing us--that
    apportionment is costing us money. The numbers show that it
    will in the future.
        See, I am torn, Senator. I believe in the theoretical
    competition in the marketplace and I am also struck with the
    realities that I have a 15-year history of the kind of
    investments where my shipbuilding numbers are going.
        Senator Collins. One final comment or question to you. Do
    you believe that the competition in the design of the DD(X)
    produced more innovation than otherwise would have occurred if
    you had had only one team working on the design?
        Admiral Clark. Well, I certainly believe that it was a
    stroke of genius to put together the teams that created the
    future in DD(X). By the way, it really then gets to the issue
    of what the investments have been in shipbuilding. If you look
    over time, as opposed to some of the other segments of the
    defense industry, we have not invested that much in research
    and development. One of the realities--now we are into
    confronting reality--we have invested billions of dollars in
    research and development and I am proud of that, this budget
    that is. You have twice as much R&D in it as when I got to be
    the CNO. I am really proud of that.
        I am convinced that produced a fantastic potential ship. I
    believe DD(X) will change the nature of it forever, and in
    closed hearings I can talk about things it will do that in open
    hearings I just do not want to talk about. So very obviously,
    that design conception process, we were served well.
        Senator Collins. Thank you, Mr. Chairman.
        Senator Talent. Thank you, Senator Collins.
        We have been a little topsy-turvy, Admiral, so I was not
    able to say that--to recognize that this is almost certainly
    going to be your last appearance before this subcommittee.
        Admiral Clark. You are exactly right. To the best of my
    knowledge, Mr. Chairman, this is my last hearing.
        Senator Talent. I imagine you view that in rather a mixed
    way, probably.
        Admiral Clark. I meant it when I said it is a privilege to
    be here. I really do mean that.
        Senator Talent. It has been a privilege to have you before
    the subcommittee. I want to personally and on behalf of all the
    members of the subcommittee and the committee thank you for
    your service to the Navy. You have been a tireless advocate for
    the Navy, for your Sea Power 21 vision. You have had a
    tremendous emphasis on readiness and on people. I think the
    morale in the Navy is as high as I have ever seen it. You have
    done a superb job of changing the culture of your Service to
    meet the future, while making people like it. It is tremendous
    what you have accomplished.
        We all care so deeply about these issues and we respect
    your expertise so much, we just jump into all these questions.
    But I wanted to recognize your service. Thank you.
        Admiral Clark. Thank you. You are very generous in your
    comments and I appreciate it.
        Senator Talent. Now, I came in in the middle of Senator
    Collins' questions regarding flexible funding mechanisms. I
    want to make certain I understand what mechanisms you would
    recommend. Do they vary by size and class of ships? I am very
    attracted to the idea of flexible funding, and I think we have
    been tardy here in authorizing that. I think there is a general
    agreement, at least within the authorizing committee, on that.
    There is certainly a lot of support for it here.
        But it begins to break down when you get into details about
    what you should use, and just for the big ships and just for
    the years when you are not buying as many, and what you should
    not use. That makes it difficult if we do not have a united
    front when we then go over to the appropriators and others who
    have more concerns and try and push this change upon them.
        So if you would take a minute and say what--and if you have
    done this with Senator Collins initially before I was here, I
    am sorry.
        Admiral Clark. There is more to be said.
        Senator Talent. Yes. What mechanisms would you recommend?
    Do they vary by size, by class of ship? Tell me what you think?
        Admiral Clark. Well, if you go to page 11, to live inside
    the architecture that I have presented here you are going to
    have to be way more liberal in the development of mechanisms
    than we are today. So that means the very first thing that has
    to go is you pay for a ship in 1 year. That has to go.
        Let me give you an example. In the 2005 program, we were in
    R&D coming into the 2005 program. I had the ship in R&D in the
    previous years, speaking of stability. That is where it was.
    The language in the mark told us exactly what we had to do. We
    had to abide by research and development guidelines and
    milestones. We did that.
        When we got to the point of passing the bill in 2005, the
    decision was made that we could not build this ship in an R&D
    way. If I had been allowed to do so, I guarantee you we would
    have not only done it in 2005, we would have been fine again in
    2006. I have $730 million or $740 million against that ship in
    the 2006 line.
        Now, when you look at and you examine the realities, the
    realities are whatever that number is, 15 percent or so is
    going to be spent in the first year. I had way more money than
    I needed in that to build it in 2006, but I cannot even build
    it in 2006. We turned to whoever is going to build it and say,
    Okay, do anything you want to do, but do not dare touch your
    hands to a piece of steel. So right away we are telling them,
    do not get too fast here, go slower because you cannot go fast
    enough that you could even start building this. This just does
    not make sense any more.
        Senator Talent. So you like incremental funding?
        Admiral Clark. Incremental funding.
        Senator Talent. Without regard to the size of the ship?
        Admiral Clark. My view is that we should do it without
    regard to the size of the ship, and here is the reason. I
    believe that you have to set up some controls in the way to
    manage it. But if you look at my chart on page 11, figure 7,
    you have to give us enough flexibility to manage within this
    construct. The current system does not do that.
        So you could decide that you are going to use a split
    funding approach and you could do this by size. You could say,
    Okay, I will give you 5 years on a carrier and 3 years or 4
    years on a submarine. You could draw up some numbers. By the
    way, if you did that, I would be a lot better off than I am
    today.
        But my real view is you should want me to be as efficient
    and effective as I can be. To do that, that means you have to
    give me freedom to manage. Then you should encourage multi-
    years. We should also figure out how for everybody in the
    partnership to really like success in the multi-year construct.
    We should figure out then what we are going to be able to do if
    one of these guys is building a ship and it costs $2 billion.
    They figure out in the course of this that they save $100
    million. By the way, that is not beyond the realm of
    possibility. What could we do with that today?
        Under the current construct I could not do anything with
    it. I would have to come back and I would have to get a new set
    of authorizations. But if I had freedom to manage, it might be
    just the right window to optimize the exposure and the capacity
    in the shipyard to move on to another platform and get going in
    a multi-year kind of a concept.
        I believe that if we are really going to fix this and we
    look at the seriousness of this, that we have to be much more
    liberal in our thinking. Frankly, this is what we call
    transformation. It starts with challenging our assumptions.
    What are our assumptions about the way this business will best
    operate?
        Senator Talent. Now, explain again--and you touched on
    this--the concerns you had about the amendment that we were
    going to offer to the budget resolution this year, which would
    have authorized advance appropriations? I think you said that
    it would have--well, explain again what your concerns were?
        Admiral Clark. I do not have the chart, but draw yourself a
    little bell-shaped curve, and you start in the first year and
    15 percent of the total amount of the money goes in the first
    year, and 24 percent goes in year two, and it peaks out and
    then it starts, figure out that kind of a curve. What I have
    said, do not subject me to a windfall profit tax that says,
    Okay, it is only 15 percent the first year, I will take a
    billion dollars and I can start six ships this year, because by
    the fourth year I am going to be in chapter 11. That is my
    point.
        My point was, do not do that to me without the discipline
    that goes with the rest of this system. In other words, that is
    a little too easy, and I cannot live with the third and the
    fourth year. That is my problem with it. I have to have a
    package.
        Senator Talent. The language we were offering did not
    contain enough discipline with it in the out years?
        Admiral Clark. It did not give me level funding. It did not
    give me freedom to manage. It did not give me other things that
    we are going to need to operate in and manage within some fixed
    line.
        Senator Talent. So what I hear you saying is that
    incremental funding is a good idea if the Navy--if you get the
    other things that go with it, the freedom to manage, et cetera.
    Without it, we could be in a situation where we hit the wall in
    a few years. So it has to be a whole kind of package?
        Admiral Clark. Yes, sir.
        Senator Talent. It is not just throwing in some incremental
    funding and that is going to fix everything?
        Admiral Clark. That is my view. Now, let me say that 3-plus
    years ago I did a war game and I included and asked the
    shipyards to participate with us. What we found is that--and
    this was sitting down at the table and doing the tabletop
    wargame with them--the biggest advantage--the finding was that
    you would produce at least 15 percent more product for the same
    investment.
        The biggest advantage was coming from multi-year contracts.
    But it was difficult for them, without specifying specific
    levels, to say how much more do you get from the second and
    third order supply chain and those kinds of issues. But when
    they get up here to talk, I know they are going to talk about
    the same points that you made about the importance of
    stability. So that stability, that discipline of a stable
    investment approach is the centerpiece of this.
        Senator Talent. Sure. The comments that I made, we bear our
    full share of the responsibility on this end of Pennsylvania
    Avenue, so I am not trying to avoid it. Just, we all know
    something needs to be done. When we get into the details of
    what needs to be done, we face difficult decisions technically
    and in some cases from a resources point of view, and it has
    been hard to make the decisions.
        I am not going to ask you about China. There is really not
    a lot you could say in an open hearing. But it is very clear
    and I mentioned the newspaper stories in addition to the
    responsibilities the Navy is carrying today, we are faced with
    the potential of a peer competitor and maybe in a shorter time
    frame than we had anticipated before. This is a whole other set
    of responsibilities, so we need to get this resolved.
        If you could pick a number for level funding for
    shipbuilding and conversion, what would the number be?
        Admiral Clark. Well, 5 years ago I said $12 billion. My
    research so far--and it is not finite yet, and let me make sure
    that that is clear. But where I have given you the capability
    curves from 260 to 325, my understanding is it is going to take
    close to $12 billion in the long term to produce that 260
    number. If you want more than that--and by the way, that number
    is a 10-carrier force. But that is an attempt to use the best
    information that we have and examine reality.
        So obviously there are trades that can be made inside that
    projection that was given to you about a potential force
    structure. With necessity being the mother of invention, you
    can see why I started pushing on Sea Swap. You can see why I
    did that. I did that out of necessity, and it is my view that
    we will produce a DD(X), a littoral combat ship (LCS), as Sea-
    Swappable platforms because we will get more return on
    investment for those platforms when we do it that way.
        I understand that there are concerns that people have about
    that. I am happy to weigh their concerns against my concerns
    and the ability for me to meet the needs of the Nation.
        Senator Talent. What level funding do you say in your gut
    would produce the 260-ship Navy?
        Admiral Clark. Inside that circle of expectation, and that
    is Sea-Swapping these new platforms and the combatants, smaller
    combatants, I believe that you are looking at between $10
    billion and $12 billion a year.
        Senator Talent. $10 billion to $12 billion produces the
    260?
        Admiral Clark. Yes, sir.
        Senator Talent. Does that assume that we give you the
    ability, give the Navy the ability----
        Admiral Clark. Give us the freedom to manage and new
    mechanisms.
        Senator Talent. That includes LCS at what level?
        Admiral Clark. Yes, it does. I have to go back and look at
    that particular number. It is 60 to 70, somewhere in that
    ballpark. We will provide it for the record, sir.
        [The information referred to follows:]

        The $10 billion to $12 billion funding level produces a total of
    260 ships including 63 LCS-class ships by fiscal year 2035.

        Senator Talent. Now, I am going to ask you a question that,
    I am not trying to take you into unreal land. I was going to
    preface this by saying, if you were not fiscally constrained.
    You are always fiscally constrained.
        Admiral Clark. Sure we are. By the way, we should be. The
    taxpayers deserve that kind of pressure on us.
        Senator Talent. I wanted to say, because we have had a lot
    of conversations over the last 2 years and some of them more
    formal briefings than otherwise, I never want to be understood
    as underrating the impact for good of the internal changes you
    have made in the Navy. You mentioned Sea Swap. But just the
    whole attitude that you have managed to instill, a can-do
    attitude about finding extra dollars, doing things better for
    less, that really can work.
        This is not some kind of a pretense for saying we can do
    more. You can do more with less up to a limit, and it is only
    if you have the willingness to take that challenge on. I have
    been so impressed talking with officers how you have instilled
    that in the Navy, and I think successfully.
        What we are talking about is, even given that, what do we
    need in order to meet these requirements? I want to take you
    back to size and composition of the Navy. If you were not
    fiscally constrained as much as you are now, assuming that we
    had the ability to go to level funding, at levels say up to,
    you mentioned $12 billion, say up to $14 billion, which I am
    not saying we do, but assuming we did, what would you like the
    size of the Navy to be and maybe the composition of the Navy?
        You mentioned 260 to 325. I do not want you to get into
    details because you would have to get into classified stuff.
    But what would you feel comfortable with as an American as well
    as the CNO in terms of the size and composition?
        Admiral Clark. Figure 5 is on page 9 and that is where I
    give you the 265 to 325 number. I want to make sure everybody
    understands what these curves are. That 325 number is my 375-
    ship Navy with new concepts applied to it, and that is where, I
    believe, I would love to be.
        Now, I believe that it will take $14 billion or $15 billion
    over time to do that.
        Senator Talent. That was my next question.
        Admiral Clark. I believe that is not precise, but it is
    where we are in our analysis. It is dependent on the mix, but
    it is also capability curves and so that top curve is more
    capable than the bottom curve.
        Senator Talent. So that 325 level, you said that is your
    375-ship Navy.
        Admiral Clark. That is right.
        Senator Talent. What you mean by that--tell me if this is
    correct--is that capabilities you have acquired since you
    originally gave us the 375 figure allow you to do what you
    thought you needed 375 ships to do with 325?
        Admiral Clark. That is exactly correct. Let me continue on
    the curve. The 302 number would also be the same capability,
    but it would mean Sea-Swapping a carrier and large deck
    amphibs, and can we do that? I am not ready to say that we can.
        So I optimized that in the middle of the figure to think
    that is a reasonable thing to seek to achieve. I appreciate the
    question because it drives home the point. I have been talking
    about a Navy that was 375 capable for us to be in the places
    that we need to be around the world. What I am saying, on a
    day-to-day basis and responding to the known operational and
    war plans, that 325 number with fleet response plan, which is a
    much more ready force than we had 5 years ago, with Sea Swap,
    that is exactly the same capability. It is fewer ships sitting
    around, in airplane parlance, sitting on a ramp.
        Senator Talent. Because I take your gut, after how many
    years as CNO----
        Admiral Clark. Well, 5 years here pretty soon.
        Senator Talent. I will take your gut ahead of what the QDR
    is likely to produce at this point. So your gut is that if you
    could have what you wanted it would be 325, which gives us--you
    wanted 375.
        Admiral Clark. That is correct.
        Senator Talent. Your gut is it takes $14 billion to $15
    billion in level funding, with the management changes, to get
    us there.
        Admiral Clark. That is correct. Well, that is because, the
    other slide I just showed you was--look at the past. We have 15
    years of underinvestment.
        Senator Talent. Right.
        Admiral Clark. You are going to have to get through that.
        Senator Talent. Right. Oh, I understand. Listen, I
    understand entirely.
        Thank you. Do you have another round? I hate to give him 8
    minutes of free time. He has until 5:00.
        Again, we want to thank you, Admiral, for your service, for
    your testimony, and for your candor with us. Thank you so much.
        Admiral Clark. Thank you, Mr. Chairman. Indeed, it was a
    privilege, and I wish you the best as a group as you take on
    these very important challenges.
        Senator Talent. We hope to be seeing you again, even if
    perhaps in another capacity. Thank you.
        We will let the Admiral retire from the witness stand, and
    then the second panel, please. [Pause.]
        I want to welcome the second panel. Since the hour is late
    and you gentlemen are busy, I am going to just start with Mr.
    Toner. Michael Toner is the Executive Vice President of Marine
    Systems for General Dynamics. Mr. Toner, why do you not just
    give us your statement.

    STATEMENT OF MICHAEL W. TONER, EXECUTIVE VICE PRESIDENT--MARINE
                 SYSTEMS, GENERAL DYNAMICS CORPORATION

        Mr. Toner. Mr. Chairman and members of the committee: Thank
    you for requesting this hearing. I am Mike Toner, the Executive
    Vice President of General Dynamics Corporation Marine Systems.
        As I sat and thought about this hearing, it was
    inconceivable to me as I entered the gates at Electric Boat in
    June 1965 that at some day in my career I would be representing
    the shipbuilders of General Dynamics and providing shipbuilding
    information to the Senate Seapower Subcommittee. I am honored
    and privileged to do so.
        I have provided written testimony for the record. Prior to
    receiving your questions, I would like to make a short opening
    statement.
        There are critical issues before us today regarding the
    health and future of the Navy's shipbuilding industrial base. I
    believe that the country's ability to design and build naval
    warships is a true national asset, a legacy capability that
    could be lost if it is not continually exercised and advanced
    with modern design and construction technology. I believe
    strongly that the preservation of this industrial base is
    essential to our National security.
        Our shipbuilding industrial base produces the most advanced
    warships in the world. The strength of our industry lies in our
    people and the engineering, design, production, and ship
    technology they bring to bear in delivering these ships. We are
    an industry, however, that is dependent on Navy ship
    procurement plans for our business. Herein lies the risk and
    the fragility of our business.
        Our fragility is due largely to the instability of the
    Navy's shipbuilding procurement plans. This situation is made
    worse by unprecedented low rate production levels. These
    factors create a business environment that undermines our
    ability to effectively plan work, one where minor perturbations
    in volume have major cost and schedule consequences.
        The fiscal year 2006 Navy shipbuilding plan reflects the
    procurement of 49 ships over the Future Years Defense Plan
    (FYDP). Less than 1 year ago, this plan reflected 68 ships. The
    Navy's plan to increase submarine procurement to two ships per
    year has again been delayed, this time by 3 years, from fiscal
    year 2009 to fiscal year 2012. This is the twelfth change in
    Virginia procurement in the plan in 10 years.
        The submarine industrial base is not only dealing with an
    issue of minimum levels of ship procurement. For the first time
    in over 40 years there is no new submarine design being
    developed. Like the production industrial base, the submarine
    engineering and design industrial base is a highly specialized
    and unique capability, with no commercial counterpart. It is a
    capability that takes years to develop and must stay actively
    engaged in submarine design to retain its viability.
        It is interesting to point out the chart that the CNO used
    in his testimony, figure 7, shows notionally a ballistic
    missile submarine-X (SSBN-X) delivery in 2020. That says in the
    standard design criteria 12 years prior to the start of that
    design--prior to the delivery of the ship, you would have to
    start the design. That says in 2008 we would have to start the
    design of the SSBN-X, given the standard protocol of design.
        The fiscal year 2006 and association FYDP does not have any
    money associated with the design of a submarine to start in the
    total period of the FYDP. That leads us to say, where is this
    SSBN-X going to come from and who is going to design it, who is
    going to be there to design it, since we have not started a new
    design in over--for the first time in 40 years, we do not have
    one on the board.
        The President's budget (PB) for fiscal year 2006 further
    diminishes the surface combatant build rate. In PB 2005, 12
    DD(X)s were planned over the duration of the FYDP. Just 1 year
    later in PB 2006, the total is reduced to only five ships over
    the same time span.
        The DD-21/DD(X) program was structured from the outset to
    incorporate the integrated and cooperative efforts of two U.S.
    surface combatant shipyards across all program phases, from
    functional design to detailed design and ship construction. The
    underlying business premise has been that the ship construction
    program will be shared equally by two shipyards. This
    integrated approach, applied consistently since 1998, was
    designed to ensure that the DD(X) is the beneficiary of the
    best ideas, cumulative lessons learned, and the most innovative
    manufacturing processes the U.S. industry has to offer.
        Given this consistent emphasis on process integration and
    open cooperation, General Dynamics finds the government's
    recent announcement of a winner-take-all competition at this
    late stage in the program, after over 7 years of development,
    to be confusing, contradictory, and very disturbing. This
    situation is a troubling reminder of the Seawolf submarine
    program rescission more than a decade ago, a single program
    decision whose consequences have had significant and lasting
    impact on the submarine industrial base.
        Just as the Seawolf decision was a watershed event for the
    submarine industrial base, a misguided DD(X) decision will
    undoubtedly impact the surface combatant industrial base in
    ways not envisioned today. The end result will be a diminished
    shipbuilding capacity, suppliers exiting the defense
    businesses, and a higher end unit cost per ship.
        In the face of the Seawolf rescission, General Dynamics
    Electric Boat responded with an aggressive company-wide
    business reengineering that has kept Electric Boat financially
    viable, and competitive, while sustaining their key
    capabilities. Today we are taking these same steps at Bath Iron
    Works and National Steel and Shipbuilding Company (NASSCO).
        As we have shown in the past, our shipyards have adapted to
    the marketplace by right-sizing our organizations to meet
    market demands. But today is different. Today the long-term
    implications of further industry contraction could seriously
    harm the National security as the U.S. addresses future
    threats. The issue for you, today's political leadership, is
    whether you are comfortable with the state of the shipbuilding
    industry from a national security perspective and, if not, how
    to reshape the industrial base in a prudent manner that will
    provide industry, the Navy, and the country with financially
    healthy, technologically innovative, and affordable shipyards.
        It is unlikely that the Navy's procurement plans will
    return to the high volume levels maintained in the Cold War.
    Given the likelihood of limited production, steps can be taken
    to help reduce the cost of naval warships. These are five I
    would consider:
        One: stability and predictability--you hear it again--are
    fundamental to the functioning of any successful business.
    Shipbuilding is no exception. Absent a stable and predictable
    plan, the industrial base cannot fully leverage its
    capabilities and competencies to provide the Navy with the most
    affordable ships possible.
        Stability is also impacted by the number of lead ships
    today under construction in the industry. A lead ship is a
    first of a class ship. If you just step back and think about
    it, at the end of 2004 we delivered attack submarine-774 (SSN-
    774) and the SSN-23, both lead ships. In construction today we
    have SSN-775 at Newport News, amphibious transport dock-17
    (LPD-17), the auxiliary cargo and ammunition ship (T-AKE), and
    LCS-1. On the drawing board we have carrier vessel nuclear-21
    (CVN-21), DD(X), LCS-2. This is a level of lead ship activity
    which by its nature is somewhat unstable and adds into the
    stability factor that we deal with on a day-to-day basis.
        Two: alternative financing approaches may give the Navy
    enough budgetary flexibility to sustain their procurement
    strategy and support their national defense obligations. The
    appropriate financing approach will likely vary from program to
    program, but advance appropriations, multi-year procurements,
    incremental procurements, split funding, lead ship R&D
    procurements all potentially offer budget flexibility to the
    Navy. Most importantly, while alternative financing may not
    provide more ships, it will provide an added level of stability
    that is critical to the industrial base.
        Three: an alternative to the winner take all acquisition
    strategy for the DD(X). Since it is a cost-driven decision, we
    should determine what is driving the program cost and how might
    that cost be reduced. The DD(X) operational requirements drive
    an unprecedented number of new technologies brought to bear
    simultaneously on the first ship. From a practical standpoint,
    this increases program risk and cost dramatically over an
    approach that introduces technology through a spiral
    development over the first five ships in the FYDP. A spiral
    development approach also allows for analysis of viable less
    risky and lower cost alternatives.
        Four: in a low-rate production environment, maintenance and
    modernization work takes on a more important role in preserving
    our production capabilities. We need to look closely at our
    policies and plans for accomplishing this work. By performing
    more of this work at ship construction yards, we will
    strengthen these yards by sustaining critical shipbuilding
    skills and capabilities. In addition, we will reduce the cost
    of new construction by utilizing existing capacity and
    facilities and spreading overhead costs.
        Finally, we need to discuss the ideas to revitalize
    commercial shipbuilding in the United States. We need a U.S.
    merchant marine built and manned by Americans. We need to
    define ship types necessary to supplement our national defense
    needs. We need to explore with Congress the universe of market
    incentives necessary to encourage the private sector to build
    and operate ships for our use.
        The goal of General Dynamics Marine Systems is to be the
    best at what we do, whether it be building surface combatants,
    naval auxiliaries, or commercial ships. Toward this end, the
    General Dynamics management team remains focused on defining
    and operating sophisticated specialized facilities that have
    been properly sized for the prevailing customer-defined ship
    production rate. Unanticipated changes in volume have a
    significant impact on the cost of an hour's worth of labor.
    What we in industry need most is market predictability and an
    opportunity for a reasonable rate of return on our investments.
        When such conditions are not met, businesses close. Once a
    major naval shipyard closes, it never successfully reopens.
    Once the skilled workforce is lost, reconstitution of a
    national treasure becomes too costly and becomes nonfeasible.
        That concludes my comments. I would be happy to take any
    questions that you may have.
        [The prepared statement of Mr. Toner follows:]
                     Prepared Statement by Michael W. Toner
                                opening remarks
        Mr. Chairman and members of the committee, thank you for requesting
    this hearing. I am Mike Toner, Executive Vice President of General
    Dynamics Corporation Marine Systems. It is a true privilege to be here
    today, representing the shipbuilders of General Dynamics Marine
    Systems.
        I want to speak with you today not only as an industry executive,
    but also in the role that I am particularly comfortable with--and that
    I am most proud of--an American shipbuilder. I know this business, and
    I know it well. I know what it takes to be successful, and I know how
    fragile success can be. There are critical issues before us today
    regarding the health and future of the Navy's shipbuilding industrial
    base. I hope that my 40 years experience as a shipbuilder will help
    bring a better understanding of the issues that will impact our
    Nation's continued ability to design and build both commercial and
    naval warships. This ability is a true national asset, a legacy
    capability that could be lost if it is not continually exercised and
    advanced with modern design and construction technology.
        Over the last 14 years, three of my predecessors at General
    Dynamics have spoken to Congress on shipbuilding issues. My message
    today is not very different than it was when they spoke. Our U.S.
    shipbuilding industrial base produces the most advanced warships in the
    world, and preservation of this industrial base is essential to our
    national security. The strength of our industry lies in our people, and
    the engineering, design, production, and ship technology that they
    bring to bear in delivering these warships. We are however, an industry
    that is dependent on U.S. Navy ship procurement plans for our business.
    Herein lays the risk and fragility of our business. Our fragility is
    the result of low-rate production levels such that minor perturbations
    in volume have major cost and schedule consequences. It is exacerbated
    by the uncertainty in our business forecasts caused by continual
    revisions to the Navy's shipbuilding plans. These factors have a ripple
    effect on our unique supplier base which in turn further complicates
    our ability to ensure timely deliveries at contracted price levels.
        In the face of these market conditions, General Dynamics' shipyards
    have continued to look for ways to reduce the costs of our products
    while ensuring schedule and quality commitments are achieved as well.
    We have undertaken difficult reengineering initiatives to adjust to the
    unprecedented low-rate production of submarines and surface warships,
    consolidated operations and facilities, and aggressively attacked
    overhead costs. At the same time, we have made investments in design
    tools and systems, and production tools and facilities, with the goal
    of improving the quality and reducing the cost of our products. We have
    done what we could to keep this industry strong. What we cannot do, and
    what we look to Congress and the Navy for, is to provide program and
    funding stability. Stability means predictability, and predictability
    is fundamental to the performance of any successful business.
    Shipbuilding is certainly no exception. Stability will allow us to more
    effectively drive out costs by enabling steady, reliable production
    plans; by allowing suppliers to more effectively plan component
    manufacturing; and by providing us all--shipbuilders and suppliers--
    with the confidence to make prudent investments that will improve our
    efficiency.
        We also need Congress and the Navy to continue to explore
    alternative financing approaches for ship acquisition. Alternative
    financing approaches may give the Navy budgetary flexibility to sustain
    their procurement strategy and support their national defense
    obligations, but the appropriate financing approach will likely vary
    from program to program. Advance appropriations, multi-year
    procurements, incremental procurement, split funding and lead-ship
    research and development (R&D) procurements all potentially offer
    budget flexibility to the Navy. Most importantly, while alternative
    financing will not provide more ships, it will provide an added level
    of stability that is so critical to the industrial base.
        Finally, so much of the discussions today are in the context of the
    Navy's shipbuilding industrial base. Unfortunately, we have lost sight
    of just how important commercial shipbuilding could be to the
    strengthening of that industrial base. Today, commercial shipbuilding
    is a small part of General Dynamics' marine business; it is a much
    smaller part of this Nation's participation in the world market. The
    U.S. Navy has a vested interest in the revitalization of commercial
    shipbuilding in America. Congress and the Navy must not confine their
    thinking to new ways of financing how we buy warships. We need to find
    new ideas of how shipbuilding, not just naval shipbuilding, can be
    revitalized in the U.S.
        Within the context of the above, I'd like to discuss my three
    shipyards and their business conditions.
                                 electric boat
    Submarines
        There are over 12,000 engineers, designers, and craftsmen at
    Electric Boat. They build the most complex system in the world today--
    the nuclear submarine. The U.S. Navy nuclear submarine of today
    provides a set of capabilities unmatched by any other military
    platform. That complexity is embodied by five critical characteristics:
        Nuclear Power
        For perspective on the extent to which we build safety into the
    nuclear propulsion plants, deployed submarine sailors--who sleep, eat,
    and work within yards of the reactor, whose fresh water and fresh air
    are made with energy from the reactor--receive less total radiation
    exposure each year than the average U.S. citizen gets from natural
    background sources.
        Quieting
        Today's Virginia-class submarine at full speed is, in fact,
    generally quieter than the background ocean. Our submarines are about
    300 times quieter than a commercial cruise liner.
        Shock
        The nuclear submarine has much in common with the space shuttle,
    both send people and technologically sophisticated vessels into an
    unforgiving environment. A nuclear submarine is also designed to go
    into combat. Not only must the submarine be able to operate flawlessly
    within the ocean depths; the ship must also be able to withstand the
    rigors imposed in an underwater combat shock environment.
        Design Tolerances
        Because of the density of submarine equipment and components, and
    critical alignment of that equipment, nuclear submarine construction
    must be done to exacting tolerances. Critical equipment must continue
    to operate even when the ``as built'' construction tolerances are
    further challenged when the ship goes deeper and the external pressure
    from the sea causes critical alignments to change as operating
    conditions change.
        Subsafe
        One of the most tragic lessons we have learned in the submarine
    industry was the loss of the U.S.S Thresher in 1963. As a result of
    that casualty, the Subsafe program was established to provide assurance
    that materials and processes used in critical applications were of the
    highest quality and can withstand the enormous pressures of deep
    submergence. Over 12,000 pieces of material and over 10,000 welds are
    Subsafe certified on each nuclear submarine. The recent incident with
    the U.S.S San Francisco is truly a testament to the value of our
    Quality program. In light of the death and injuries, it is easy to
    overlook the fact that the quality of design and workmanship allowed
    the ship to not only survive, but also to return to port under its own
    power.
    Programs
        Virginia
        The Virginia-class submarine was designed by Electric Boat
    Corporation. It is the latest class of advanced capability fast attack
    submarines to be designed and delivered to the United States Navy. From
    its inception, the challenge of the Virginia Program was to find the
    optimum balance between capability and affordability.
        The Virginia-class has been designed with reconfigurable spaces and
    features that make it adaptable and responsive to the changing and
    evolving threat. The Virginia is the first naval combatant to be
    designed to meet the post-Cold War challenges of a new, uncertain
    threat environment--those conflicts in the near shore littoral
    environment. It supports seven critical post-Cold War missions: covert
    intelligence, surveillance and reconnaissance (ISR); anti-submarine
    warfare; special forces warfare; precision strike warfare; anti-surface
    ship warfare; mine warfare; and provides support for joint forces.
        The Design/Build (Integrated Product and Process Development)
    contract was the first of its type for a Department of Defense (DOD)
    Cat 1 acquisition program. At the time of the contract award in January
    1996, Electric Boat, with no precedent to follow, worked hand-in-hand
    with the Navy and led the development of new tools, processes and
    procedures, and trained shipyard workforce and oversight organizations
    to promulgate the required cultural change in the entire submarine
    enterprise. Virginia literally has raised the performance bar for
    submarine technology and shipbuilding management and is providing the
    model for shipbuilding of the future. One indication of our success was
    when we received the Pentagon's David Packard Award for acquisition
    excellence. It was the first U.S. Navy warship to be designed using
    advanced computer-aided design and visualization technology that
    supports integrated design and manufacturing from a single product
    model database.
        Each ship of the class is being constructed by both General
    Dynamics Electric Boat in Groton, Connecticut and Quonset Point, Rhode
    Island, and by Northrop Grumman Newport News in Newport News, Virginia.
    Construction is being accomplished under a unique co-production teaming
    agreement whereby the construction of the ship's 18 major modules has
    been assigned to respective yards and the delivery of each ship is
    alternated between each yard. Today, the class design is complete and
    the program is in low-rate production at one ship per year. Electric
    Boat is the prime contractor for the entire construction program.
        The program has experienced cost overruns. However, it is important
    to view these overruns within the dynamics of an uncertain, low-rate
    production market environment; and to look at the specific causes of
    these overruns. In 2001, the Navy reported an initial budget shortfall
    of $1.234 billion. This shortfall was driven by understated government
    inflation estimates, the impact of low-rate production on shipbuilders
    and suppliers, and ship requirements growth. More recently, an
    additional $419 million shortfall was driven primarily by complex new
    lead ship challenges and the reestablishment of dual sources for
    submarine construction.
        On October 12, 2004, Electric Boat (EB) delivered the lead ship,
    U.S.S Virginia (SSN774), just 3\1/2\ months from a contract delivery
    date established over 10 years earlier. The lead Virginia, SSN774 was
    the first EB submarine delivery in 6 years--and the first lead ship in
    7 years. The second ship, SSN775, will be the first Northrop Grumman
    Newport News (NGNN) submarine delivery in 8 years--and the first lead
    ship delivered by them in 28 years.
        Seawolf
        The Seawolf Program was designed to counter high performance Soviet
    submarines at the end of the Cold War. The need for a large number of
    Seawolf-class submarines was obviated by the collapse of the Soviet
    Union in 1989. Initially planned to be a 30-ship class, the program was
    reduced to three ships. The U.S.S Jimmy Carter (SSN23) is the third and
    final Seawolf-class submarine. Following closely on the heels of the
    delivery of the U.S.S Virginia, U.S.S Jimmy Carter was delivered to the
    U.S. Navy on December 22, 2004. This marked the second delivery by
    Electric Boat in 4 months.
        Differentiating the SSN23 from all other submarines is its Multi-
    Mission Platform (MMP), which includes a 100-foot, 2,500-ton hull
    section that enhances payload capacity, enabling the ship to
    accommodate the advanced technology required to develop, test and
    deploy the next generation of weapons, sensors and undersea vehicles.
        SSN23 MMP Design/Build program success has been unprecedented. Key
    to this success was the ability of experienced design and engineering
    personnel to role off of Virginia and immediately onto another major
    design program--the MMP, a project as complex as the construction of an
    entire Los Angeles-class submarine. Beginning with a notion that was
    little more than a Power Point slide, Electric Boat moved from concept
    design, to completion of detail design in 29 months--half the time
    historically needed to advance through this development cycle. Five
    months later, this unique 2,500-ton module was delivered to the Groton
    shipyard for assembly with the host ship.
        SSGN
        Electric Boat is also the prime contractor for the conversion of
    four Trident SSBN submarines to nuclear powered cruise missile (SSGN)
    configuration taking place at the Norfolk Naval Shipyard and at Puget
    Sound Naval Shipyard. This effort leverages Electric Boat's experience
    as the designer and sole builder of Trident SSBN submarines. Trident
    SSGN conversion will provide key capabilities for covert strike and
    clandestine Special Operations Force (SOF) missions.

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        The SSGN will provide up to 154 Vertical Launch Weapons from
    missile tubes previously housing ballistic missiles. Additionally, the
    SSGN will include an enhanced Virginia-class communications suite and a
    dedicated command and control space for better mission planning. The
    platform will also be modified to host two Special Operating Forces
    lockout chambers using dual Dry Deck Shelters and/or Advanced SEAL
    Delivery Vehicles. The reconfigured ship will be able to house 66 SOF
    personnel and provide a dedicated SOF command and control planning
    center. SSGN will also function as an experimental test bed to develop
    innovative operations concepts and payload/sensor alternatives for
    incorporation on future submarines. The large missile tubes inherent on
    this platform provide the volume to demonstrate and deploy non-
    traditional submarine payloads in an operational environment. The use
    of SSGN as a test bed for future capability to be included in future
    undersea systems forms the foundation for the transformation of the
    submarine force into the future.
        Life Cycle Support, Maintenance and Modernization
        Electric Boat provides centralized life-cycle support for U.S. Navy
    submarines and submersibles via an experienced design, construction and
    fleet support organization supporting all classes of submarines.
    Electric Boat provides onsite fleet support at Kings Bay, Bangor,
    Norfolk, Puget Sound, Groton and Portsmouth and fly away teams at other
    locations as requested. Support provided includes design, engineering,
    planning, maintenance, material procurement, and installation services
    that directly support the safe and reliable operation of the U.S.
    submarine force.
        Additionally, in 1998 EB began re-establishing itself as a major
    depot level submarine maintenance, modernization and repair activity.
    Supporting that transition has been a robust engagement with the Naval
    Sea Systems Command (NAVSEA), the naval shipyards, and other field
    activities in the various initiatives supporting the Navy's One
    Shipyard concept. Fundamental to this engagement is Electric Boat's
    commitment to align its maintenance related processes with those of the
    Navy. Electric Boat is now performing depot level availabilities
    including Interim Dry Dockings (IDDs), Selected Restricted
    Availabilities (SRAs, Depot Modernization Periods (DMPs), and scheduled
    Pre-Inactivation Restricted Availabilities (PIRAs) of Los Angeles- and
    Seawolf-class submarines in its Groton shipyard.
        The Navy's submarine base in Groton, CT, and Electric Boat, within
    short commuting distances of each other, work closely together to
    maintain the Navy's nuclear submarine force. This partnership is
    significant and can support not only scheduled routine maintenance and
    modernization, but also emergent or unscheduled work requiring
    technical expertise, depot level capabilities and a skilled resource-
    pool to accommodate surge requirements. The complementary SUBASE/EB
    relationship affords the Government savings as well as efficiency and
    skilled resource flexibility, creating a synergy that is critical to
    the Navy and national defense.
        Much of the cost debate for naval ships has been focused on
    acquisition cost. A truer metric may in fact be total ownership, or
    total life cycle costs. Nuclear submarines inherently possess low total
    operating costs due to their minimal manning; and, they require no at-
    sea logistics train, no protective escorts, and little support
    infrastructure ashore. Today, technology advancements have led to the
    development of a life of the ship core, eliminating the need for major
    refueling overhauls on our attack submarines. On Virginia, crew manning
    for at-sea operations, one of the key drivers of program life cycle
    cost, has been reduced by 12 percent from 134 to 118. In fact, on the
    Virginia program, there has been a 30 percent reduction in total
    ownership cost from previous submarine classes.
        Tango Bravo
        The Tango Bravo Program is a collaborative effort between the
    Defense Advanced Research Projects Agency (DARPA) and the United States
    Navy to execute a technology demonstration program to break through the
    ``technology barriers'' and enable design options for a future
    submarine. This effort is also aimed at decreasing platform
    infrastructure and the cost of the design and production of that future
    ship.
        In October 2004, Tango Bravo proposals were sought in five
    technology demonstration areas: (1) shaftless propulsion, (2) external
    weapons stow and launch, (3) hull adaptable sonar array, (4) radical
    ship infrastructure reduction, and (5) reduced crew/automated attack
    center. Electric Boat was notified in March 2005, that they had been
    selected for three Tango Bravo contract awards, subject to successful
    negotiations. The $600 million programmed in the current Navy plan for
    an undersea superiority system could be used to advance these
    technologies and integrate them into a future Virginia, or to start a
    design effort to produce a lower cost nuclear submarine. Combined,
    these technologies could lead to a complete re-architect of the
    submarine for the first time since the Nautilus. This new architecture
    could remove the constraints in present submarines imposed by the shaft
    line and torpedo room/torpedo tubes. The initiative also could provide
    for the insertion of new technologies to ensure submarine relevance in
    the future threat environment where it will deploy.
        Spiral integration of these technologies, such as external weapons,
    could be developed in parallel with a new forward end. Shaftless
    propulsion, likewise, could become a design/build effort resulting in a
    new stern and engine room section. By continuing Virginia production,
    ships of opportunity will provide an integrating platform.
        Several studies have recently been conducted on future fleet
    architectures. All have recognized the enduring value of submarines for
    future naval operations. Furthermore, under all known force level
    scenarios, including the most recent Navy 30-Year Interim Report to
    Congress, procurement of 2 ships per year will be needed to maintain
    undersea superiority and replace the aging fleet of Los Angeles-class
    (SSN688-class) attack submarines as they retire over the next several
    decades. The 30-year report neglects to indicate a new SSBN/SSGN design
    will be needed in the next decade. Absent new design work, the
    submarine design industrial base will not be around to perform this
    effort.

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    Reengineered for Low Rate Production
        With the abrupt rescission of the Seawolf program in 1991, Electric
    Boat was confronted with the challenge of remaining a viable enterprise
    in the face of a business future where its sole production program had
    been canceled. Electric Boat responded to this challenge with an
    immediate and complete reengineering of its business. This was an
    aggressive plan to ensure successful completion of its backlog of work
    while positioning the company to remain viable in what was expected to
    be a dramatically reduced submarine production market. Key objectives
    were: to be properly sized to meet demand; to utilize ``best
    practices'' for all processes and procedures; and to incorporate a
    culture of world-class performance. As a result, Electric Boat has led
    the industry in shedding excess production capacity, reducing overhead
    and infrastructure costs, and developing tools and methods to preserve
    critical skills and capabilities during low-rate production.
        One of the most critical steps in the reengineering process was
    changing the historical relationship between overhead costs and direct
    labor costs. In 1992, at the outset of Electric Boat's reengineering
    effort, an aggressive, long range, overhead cost reduction target was
    established for 1998. A plan was laid out that included significant
    reductions in overhead cost each year. Electric Boat's realization of
    its goals necessitated identifying key cost areas, breaking each one
    down into discrete elements, and, most importantly, taking aggressive
    management actions to minimize these costs. These actions have resulted
    in actual and projected cost savings of over $2.7 billion over 1993
    through 2010; $1.7 billion from 1993-2004, and $1 billion from 2005-
    2010. Over 95 percent of those savings have and will accrue to the
    Government.

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    Production and Engineering Work Force
        The manufacturing, assembly, integration, and test activities
    carried out at Electric Boat require a highly skilled workforce with a
    wide variety of critical and unique skills and capabilities. Currently
    there are over 5,000 trades, supervision, and support personnel
    involved in the construction, maintenance, and modernization of U.S.
    naval nuclear submarines at Electric Boat.
        Analysis done in support of the Office of the Deputy Under
    Secretary of Defense (Industrial Affairs & Installations), Study of the
    Submarine Industrial Base in 1997, concluded that it takes at least 2
    to 3 years for a submarine shipyard mechanic to become minimally
    proficient and from 5 to 6 years in most trades to achieve relatively
    ``full proficiency.'' In fact, it was noted that in some critical areas
    such as testing, where an extensive trade background is a prerequisite,
    it can take up to 10 years at the yard to become proficient.
        The time required for the EB production workforce to become
    proficient is exacerbated by the uniqueness of some of the skills
    required to construct nuclear submarines, such as fabrication of heavy-
    wall pressure hull sections to demanding tolerances, lead bonding and
    other radiation shielding work, and stringent quality requirements for
    nuclear and Subsafe work. These skills and abilities must be developed
    inhouse, as they are unavailable elsewhere in the shipbuilding industry
    or from other manufacturing sectors.
        Electric Boat has identified its production workforce critical mass
    at approximately 3,000 production workers (1,500 in Groton Operations
    and 1,500 in Quonset Point Operations); it does not include production
    support personnel. This would be a ``minimum efficient level'' to
    sustain an efficient, affordable production trade workforce, as well as
    retain a balance of critical skills.
        Current Virginia production forecast results in a workload volume
    that will test our ability to sustain key skills and capabilities.
    Absent additional new construction volume, submarine maintenance and
    conversion work allows us to retain an efficient trade workforce.
    Submarine maintenance and conversion work draws on many of the skills
    involved in new construction, helping to fill voids in key trades
    caused by the low rates of production. The added volume also helps to
    reduce the overall labor cost of new construction by absorbing
    overhead.
        Electric Boat has over 3,000 engineering and design personnel
    engaged in all facets of submarine design and engineering. This cadre
    of skilled and experienced personnel represents the core of the U.S.
    Design Industrial Base for nuclear submarines. Like the production
    workforce, the engineering and design force encompasses numerous skills
    and abilities unique to the nuclear submarine environment. Among these
    unique skills are the acoustic technologies essential to stealth,
    advanced analytical capabilities in the areas of shock, hydrodynamics,
    and nuclear propulsion, and submarine systems and components
    integration.
        The Electric Boat engineering and design workforce has not fallen
    below 2,500 personnel in the last 40 years. Recent studies show that at
    least 2,200 experienced engineers and designers will be required to
    retain the capability to do the next full submarine design in a timely
    and cost-efficient manner.
        The current forecast for submarine R&D and new design development
    places the Electric Boat engineering and design workforce at risk. For
    the first time since the start of the nuclear submarine program, over
    50 years ago, there is no new submarine design planned. Additional
    submarine R&D/design efforts are needed in the relatively near future
    to maintain this base of skilled engineers and designers. It is
    imperative to move forward with a new class design if the Nation is to
    retain this national security asset.

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    Navy Shipbuilding Plan--Submarines
        Beginning with the Seawolf rescission in 1991, the submarine
    industrial base has been faced with unprecedented, protracted low-rate
    procurement. Although the Seawolf decision did not appear at the time
    to have national security ramifications, that was not the case. The
    supplier base for nuclear submarines essentially collapsed. The
    decision had a ``chilling effect'' on the industries that owned the
    suppliers and made them price risk into material and components, thus
    driving up the cost of submarines. Low-procurement rate, coupled with
    continued uncertainty over future program stability, has left the
    Nation's submarine industrial base with a dangerously limited number of
    suppliers. Today on the Virginia program, over 83 percent of the
    material is supplied by single or sole source suppliers. Over the last
    10 years, many key suppliers of major equipment and material have left
    the business, resulting in the number of suppliers going from 11,000 to
    only 4,500 today. The results are material costs that continue to
    escalate at rates that place continued pressure on our ability to
    control unit costs.
        The fiscal year 2006 Navy shipbuilding plan reflects a procurement
    rate of one submarine per year until fiscal year 2012. Once again we
    have seen the Navy's plan to increase submarine procurement to two
    ships per year delayed; this time by 3 years from fiscal year 2009 to
    fiscal year 2012. This is the 12th change to the Virginia procurement
    plan in 10 years. Over this time, the forecast for nuclear submarines
    has been reduced by almost 40 percent, a reduction from 24 ships to 15
    over the 1998-2012 time frames. This is estimated to be a reduction of
    about $20 billion to our single product market.

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        Despite low procurement volume and uncertainty over future plans,
    the shipbuilders and suppliers continue to strive to reduce the cost of
    nuclear submarines. Most significantly, with help from Congress, the
    six ship, Block II procurement of Virginia ships was awarded under a
    multi-year contract, with Economic Order Quantity and funding. This
    acquisition strategy will allow the shipbuilders and suppliers to
    achieve a significant reduction in material costs that would not have
    been achievable under more typical single ship contracts.
        The submarine industrial base is not only dealing with the issue of
    a minimum level of ship procurement, but for the first time in over 40
    years, there are no new submarine designs being developed. Similar to
    the production industrial base, the submarine engineering and design
    industrial base is a highly specialized, unique capability, with no
    commercial counterpart. It is a capability that takes years to develop
    and must stay actively engaged in submarine design to retain its
    viability.
        A vivid example of the impact that procurement instability can have
    on a nation's shipbuilding capability can be seen in the depletion of
    the United Kingdom's (U.K.) submarine design and construction
    capability. Erosion of the U.K.'s submarine industrial base was caused
    by reductions in defense spending that led to an extended gap between
    designs and low submarine production rates. This resulted in the
    closure of a shipyard, major job losses, and the loss of ``corporate
    knowledge'' as experienced personnel shifted to other industries.
        The U.K. has experienced significant problems in executing their
    new submarine design program--Astute--as a result of their eroded
    capability. With their submarine engineering and design capability
    effectively disbanded they must accomplish their new design using other
    industry engineers and designers. This approach has yielded a design
    that has required numerous changes and a program that is over budget
    and behind schedule. At the U.K.'s request the U.S. Navy has tasked
    Electric Boat to assist in design and management support services to
    meet resource shortfalls of the U.K.'s current submarine industrial
    base.
        The rapid and costly depletion of the U.K.'s submarine design and
    construction capability has elements that are strikingly similar to
    those now faced by the United State's submarine industrial base. We
    could face the same dilemma as the U.K. if development funding for
    submarines is cut. The U.S. ``corporate knowledge'' base is at risk,
    and if reconstitution becomes necessary, there will be no comparable
    assistance available. Learning from the U.K.'s experience and
    proceeding with a submarine procurement plan that provides
    predictability and production rate stability is critical to our
    Nation's defense.
                                bath iron works
    Surface Combatants
        The name Bath Iron Works (BIW) has been synonymous with U.S. Navy
    surface combatants since the closing decade of the 19th century. BIW's
    first U.S. Navy warship; U.S.S. Machias was delivered and commissioned
    on July 20, 1893, and since then over 230 Bath-built ships have served
    America's Fleet in defense of our Nation. BIW delivered 89 ships to the
    U.S. Navy during WW II, averaging one destroyer every 17 days during
    the peak production years of 1943-1944.
        Since World War II, BIW has designed and built the lead ship for 11
    of the 20 new, non-nuclear surface combatant classes procured by the
    U.S. Navy. As the designer and lead ship builder of the DDG 51-class,
    BIW has been at the leading edge of the integration for Aegis and
    guided-missile weapons technology delivering 24 DDGs since the fall of
    the Berlin wall.

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    Programs
        DDG 51
        BIW is currently constructing DDG 51-class destroyers and will
    deliver 10 more of these ships before construction concludes with DDG
    112. Ultimately, BIW will build 34 of the 62 ships in the DDG 51-class
    before construction completes in 2010 making the DDGs the largest post-
    WWII class of Navy ships. Each one of these highly complex,
    technological marvels is packed full of equipment and brought to life
    by more than 48 miles of pipe and 254 miles of cabling, roughly the
    distance from one end of Maine to the other, in a ship that is 50 feet
    shorter than the Washington Monument. Each ship is unique and more
    capable than its predecessor as new technologies are introduced and
    improvements are made. As the lead shipbuilder and design agent for the
    class, BIW has been responsible for the introduction of many of these
    innovations to the Navy fleet including, dramatic radar cross section
    signature reductions, shipboard integration and testing of combat and
    sensor systems from multiple vendors, and multiple shipwide capability
    upgrades. Most significant of these was the Flight IIA redesign,
    essentially a lead ship since more than 75 percent of the construction
    drawings were modified. As the planning yard for the DDG Class, BIW
    supported the Operational Navy after the terrorist attack on the U.S.S.
    Cole by sending engineers with wearable computers directly linked to
    BIW's Surface Ship Support Center to assist damage control and
    transport operations in Yemen within 48 hours of the attack.

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        Performance by the men and women of BIW has provided significant
    cost and schedule improvements over the 20-plus years of the DDG 51
    Program. This sustained focus on performance improvements has allowed
    the cost of an hour of labor in Maine to remain affordable to the
    United States Navy. Broadly, over the last three DDGs, the engineering
    and support hours have been reduced by more than 20 percent and the
    manufacturing hours have been reduced by over 9 percent per ship. These
    improvements are attributable to front-loaded work scope, reduced
    schedule durations and local innovations.
        Since the conversion from traditional inclined building ways to the
    Land Level Transfer Facility, BIW has made a concerted effort to move
    work scope to earlier, more efficient stages of construction where
    access to equipment is less congested and support services are more
    readily available. As shown in the bar charts below, the work to be
    completed during the water-borne period, which is the least efficient
    stage of construction, has been reduced from 36 percent to only 15
    percent. Associated process improvements have enabled an 11 percent
    reduction in the hours required to complete the most complex outfitting
    aboard the ship. Further, the overall ship construction duration has
    been reduced by 30 percent since BIW began building ships on its Land
    Level Transfer Facility of which the water-borne duration has been
    reduced by 62 percent.

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        In addition to planning and scheduling driven improvements, the
    innovative spirit of BIW's skilled mechanics and managers has generated
    great benefits. Some of BIW's surface combatant ``firsts'' include:
    ``lighting-off'' the Aegis combat system and the ship's generators
    before launch; aligning the main propulsion power train before it is
    water-borne; using photogrammetry, a technology principally developed
    for surveyors and cartographers, to aid in equipment and structural
    alignment; and DDG 94, our most recent ship, delivered after only a 1
    day sea trial. BIW Land Level Transfer Facility has allowed water-borne
    work--the least efficient stage of construction--to be reduced from 36
    percent to 15 percent of ship construction.
        Littoral Combat Ship
        In response to the Navy's evolving requirements for
    transformational platforms to combat emerging threats, Bath Iron Works
    is leading a multinational team in the Final Systems Design phase of
    the Littoral Combat Ship program. The General Dynamics LCS Team concept
    couples fully integrated open architecture information systems with an
    innovative high-speed trimaran hull form to deliver maximum warfighting
    capability. With its superior capacity to carry combat payload volume
    and weight, excellent seaway performance and exceptional aviation
    capability, the General Dynamics' LCS is a flexible, agile and lethal
    solution for the Navy's needs today and for the Joint Operational
    Concepts of tomorrow.

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        Joint Sea Basing will be a critical element of our future national
    defense strategy. A General Dynamics Team lead by Bath Iron Works is
    investigating the requirements for Sea Base implementation. In close
    collaboration with all military Services, we are developing a new joint
    force concept of operations, identifying technology development needs,
    and designing two concept ships. These ships, together with the high
    speed and versatility of the General Dynamics LCS, can meet all future
    Joint Sea Basing requirements and deliver a capability that is
    tailorable, scalable, persistent and affordable.

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    Workforce and Facilities
        The 6,300 employees at Bath Iron Works are skilled craftspeople
    producing a sophisticated, complex product in support of our U.S. Navy
    customer. The specialized nature of the product demands design and
    construction skills that are not readily found in other industries.
    Shipbuilding is a labor intensive business that also necessitates
    significant investments in time and money to develop and maintain a
    proficient workforce. Each skilled shipyard mechanic requires
    approximately 5 years to gain full proficiency at a training cost of
    $50,000. Similarly, each engineer and designer requires an investment
    of 3 years and $60,000-$90,000. These skilled and innovative
    craftspeople are vital to maintaining a national shipbuilding
    competence.
        In response to the evolving Navy priorities, programmatic
    instabilities, and diminished build-rates, General Dynamics has
    implemented aggressive business restructuring efforts to appropriately
    size its shipyards and gain efficiencies. In the late 1990s, General
    Dynamics, in cooperation with the state of Maine and the city of Bath,
    invested over $300 million in a state-of-the-art Land Level Transfer
    Facility at Bath Iron Works to radically improve the shipbuilding
    process. This flexible, world-class facility was sized appropriately
    for the Navy's PB 1999 projected surface combatant plan; and supported
    the Navy's stated desire to maintain two sources of supply for surface
    combatants.

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    Navy Shipbuilding Plan--Surface Combatants
        Predictability is fundamental to the functioning of any successful
    business; shipbuilding is no exception. Key business decisions related
    to facility modernizations and the retention and enrichment of critical
    shipbuilding skills must be made years in advance of when they are
    required and must be predicated on reliable workload forecasts. Absent
    a predictable plan, the industrial base can not fully leverage its
    capabilities and competencies to provide the Navy with the most
    affordable ships possible. Unfortunately, the desired stability has
    been lacking from the Navy's recent acquisition plans.
        The Quadrennial Defense Review is one manner of justification for
    Navy ship acquisition plans. Completed in 1997, the current
    administration endorsed this plan by incorporating the same Fleet
    requirements in 2001, calling for a 300+ ship Fleet. In most basic
    terms, sustaining a 300-ship Navy requires building an average of 10
    ships/year; however, the steady-state build-rate has been 6 or less
    since 1993. PB 2006 further diminishes the build-rate--in PB 2004, 12
    DD(X)s were planned over the duration of the Future Years Defense Plan
    (FYDP), but in just 2 years this total has been reduced to only 5 ships
    over the same time span in the currently proposed budget.
        Over the past decade, industry has invested heavily in several
    programs that were ultimately canceled with no chance to see a return
    on the investment, including Arsenal ship, JCC(X), and the SC 21/DD 21
    programs, the progenitors of the current DD(X). Similarly, General
    Dynamics cooperated to the maximum extent possible with the Navy-
    initiated LPD-DDG swap. The Corporation understood and supported the
    Navy's clear need to maximize the overall management, technical and
    financial stability of the LPD 17 Program by consolidating all private
    sector responsibilities under a single business entity. The survival of
    the program was at risk; bold actions were essential and it was
    implicit that the ``swap'' process could not--would not--balance all
    business/financial issues. Knowing that such inequities existed did not
    prevent General Dynamics from acting in the best interest of the Navy
    to achieve budgetary control of the LPD 17 Program. At the time, this
    appeared to be done to our own near-term disadvantage, albeit with
    assurances of longer-term stability in Navy combatant new construction
    programs. However, recent Navy actions/proposed actions on the DD(X)
    Program appear to be in direct conflict with these assurances.
        Under the leadership of the U.S. Navy, the DD 21/DD(X) Programs
    have been structured from the outset to incorporate the integrated and
    cooperative efforts of the two U.S. surface combatant shipyards across
    all program phases, from Functional Design to Detail Design and ship
    construction. The underlying business premise, which has enabled a
    consistent focus on full cooperation, not isolated competition, has
    been that the ship construction program would be shared equally by the
    two shipyards. This integrated approach, applied consistently since
    1998, was designed to ensure that the DD(X) is the beneficiary of the
    best ideas, cumulative lessons-learned and most innovative
    manufacturing practices that U.S. industry has to offer. BIW has been
    cooperating fully with the Navy's directions in all areas, openly
    sharing design expertise and manufacturing best-practices with our
    primary competitor, NGSS-Ingalls Shipbuilding. Given this consistent
    emphasis on process integration and open cooperation, General Dynamics
    finds the Navy's recent announcement of a winner-take-all competition
    at this late stage in the program, after over 7 years of development,
    to be confusing, contradictory and very disturbing. A dangerous
    parallel exists today with DD(X) and Seawolf. Just as the Seawolf
    decision had unforeseen national security implications, so too does the
    DD(X) decision.
        The reasoning provided by the Navy for their unilateral proposal of
    a ``winner take all'' competition was in reducing the number of DD(X)
    ships to be built over the next several years, the costs of two sources
    of supply for these ships could no longer be justified. Since it
    remains the Navy's intention to buy at least 10 DD(X) warships, an
    alternative approach would be to ask industry the simple question:
    ``what is driving the cost of this ship and under these circumstances
    what can you do to reduce the cost of the DD(X) program?''
        After thinking about this I offer the following. The DD(X)
    operational requirements drive an unprecedented number of new
    technologies brought to bear simultaneously on the first ship. While
    the need for these advances in capability is unambiguous, from a
    practical standpoint both cost and risk are dramatically increased.
    These requirements were developed from an evolving document dating back
    nearly a decade. During this time the prime threat to the United States
    shifted from a major sea-power to an expanded list now including the
    war on terror and weapons of mass destruction. Clearly this ship must
    be capable against today's lower probability threat--an emerging sea
    power--but the path to meeting that threat should be considered as an
    evolutionary, affordable one rather than all capability on the first
    DD(X).
        I would suggest that the five ships in the FYDP be delivered in a
    spiral development manner. The first ship would include those
    revolutionary technologies that are just too expensive to backfit or
    forward fit into later hulls. The tumblehome hull form, the
    revolutionary electric drive propulsion system, and the appropriate
    level of capability in the combat system are examples of things that
    would remain on the first and all following ships.
        Some things should be rethought regarding the basic need for them
    when considering the threat that has evolved and viable alternatives
    with lower risk and cost. An example here might be to review the
    composite deckhouse and hanger. I would see if other material could
    meet all or most of the needs for the ship but reduce the manufacturing
    risks of this revolutionary technology--at least in modules of this
    magnitude. This would be a decision that would affect all or most of
    the ships in the DD(X) program.
        Spiral development of technology and warfighting capability is a
    third method of attack--in this case capability that could be
    affordably added later. An example here is over the first five ships
    sequentially starting with the ASW component, add mine countermeasure
    capability later, and use signature reduction techniques in a spiral
    fashion after validating the requirement over time for this
    enhancement.
        Today, BIW is preparing for low-rate production, by working to
    further reduce its overhead structures and innovatively exploiting its
    existing facilities. Bath Iron Works believes that it can best serve
    its Navy customer by remaining a modestly-sized, yet nimble shipyard
    that can provide a unique, highly-complex, sophisticated product while
    leveraging appropriate resources from across General Dynamics. In light
    of the near-term instability of the Navy's overall acquisition plans,
    it appears that the DD(X) will be a low-rate production program and BIW
    has factored this expectation into its ongoing efforts to rationalize
    design and manufacturing cost structures and facility/resource loading
    plans.
                                     nassco
    Business Overview
        National Steel and Shipbuilding Company, NASSCO, in San Diego has
    been designing and building ships for almost 50 years, and is the only
    remaining private shipyard on the west coast capable of building large,
    ocean-going vessels. NASSCO, with its 4,200 engineers, designers, and
    skilled, shipbuilding craftsmen is the largest industrial manufacturer
    in the San Diego area and is a strategic resource to both the Navy and
    Southern California. NASSCO specializes in commercial cargo ships and
    Navy auxiliary and underway replenishment ships, as well as Navy repair
    and maintenance. In the last 5 years, NASSCO has completed the design
    of three first-of-class ships, two for U.S. commercial operators, and
    one for the Navy.
        One quarter of NASSCO's business activity is devoted to maintenance
    and repair of the Navy's fleet home ported in San Diego. NASSCO,
    working together with the Navy has developed the most effective mode of
    Navy maintenance in the country. Importantly, NASSCO, with its well-
    developed new construction capability, is the only private shipyard on
    the west coast that can perform major battle damage repair or major
    structural modifications to Navy ships.
    Programs
        T-AKE
        The T-AKE 1 Lewis and Clark class dry/cargo and ammunition ship is
    the latest in NASSCO's long line of Navy auxiliary ships. It is the
    first new underway replenishment ship design in more than 20 years.
    NASSCO has eight T-AKEs under contract with options for up to an
    additional four. Using computer modeling and simulation design tools
    and proven off-the-shelf state-of-the-art commercial marine systems,
    NASSCO's T-AKE design incorporates a highly-efficient cargo handling
    system and a low life-cycle-cost electric drive propulsion system. The
    first two ships are now under construction. The Lewis and Clark lead
    ship will launch on May 21 and will deliver in early 2006.
        Commercial--TOTE
        Two new commercial roll-on/roll-off (RO/RO) trailerships, which
    feature a diesel-electric propulsion system, were delivered to Tacoma,
    Washington-based Totem Enterprises in 2003 and are providing service
    between Alaska and the lower 48 States. These ships were designed
    specifically for the rigors of the Gulf of Alaska, and have received
    many awards for their environmental protection features.
        Commercial--BP Tankers
        NASSCO has built more of the country's commercial oil tankers than
    any other shipyard today. Currently NASSCO has a series of double-hull
    Suezmax crude carriers, also with diesel-electric propulsion, under
    construction for BP. These ships are designed with a 50-year hull life
    and are the most environmentally friendly tankers ever designed and
    built. The first two ships are already in service transporting crude
    oil between Valdez, Alaska, and BP's west coast refineries. The final
    two ships will deliver by third quarter 2006.
        Underway Replenishment and Strategic Sealift
        For the Navy, NASSCO is a leading builder of underway replenishment
    and strategic sealift ships. From the AFS combat stores ships to the
    AOE gas-turbine-powered carrier strike group combat support ships, from
    T-AKR Maritime Prepositioning to the LMSR large medium speed roll-on/
    roll-off sealift ships, NASSCO-built ships are an essential element of
    the Navy's ability to operate throughout all regions of the world,
    independent of shore-based support. NASSCO's considerable experience in
    each of the Navy's past combat logistic ship and sealift ship program
    design and production ideally positions NASSCO to be a principal
    contributor on the Navy's forthcoming Sea Basing program.
    Workforce and Facilities
        While NASSCO's three new ship classes were making their way through
    the shipyard in the last 3 years, GD made a significant investment of
    more than $130 million in upgrading many of NASSCO's production
    facilities to world class levels. Although we saw some benefit from
    these new facilities on the Totem Ocean Trailer Express (TOTE) and BP
    ships, the real beneficiary is the Navy's new, T-AKE dry cargo/
    ammunition ships.
        Despite this sizable investment in new facilities, NASSCO's
    experience on its recent commercial programs has not met our
    expectations for improved efficiencies. There are a number of very
    relevant observations that I offer to this committee as a result of
    this experience at NASSCO that reinforce my own conclusions after 40
    years in this industry:
        First, an investment in shipyard shipbuilding technology and
    facilities does not in itself guarantee improved productivity and
    competitiveness. It is steady continuous volume with repeatable product
    designs that is the most important element for improving shipyard
    efficiency. We see this clearly in benchmarking our production rates
    and planning processes against leading commercial shipbuilders around
    the world, all of whom deliver between 10 and 60 ships per year. In
    contrast, NASSCO's all-time peak output was seven ships way back in
    1971. In today's market place, we produce only two or three ships per
    year.
        Second, production rates must be stable and predictable. When
    NASSCO started construction on its TOTE new buildings, its work force
    had by then declined from a high of 5,100 employees in 1995 to 2,800 in
    mid-2001 as it was winding down production on the very successful Navy
    sealift ship program and awaiting the T-AKE contract to be awarded. To
    ramp up production for the TOTE ships, NASSCO had to hire and train
    more than 1,000 new production employees at a significant recruitment
    and training cost, plus lower productivity from these inexperienced
    personnel.
    Commercial Shipbuilding
        Prior to 1981, the U.S. had a robust commercial shipbuilding
    industry. For the period 1976 through 1980, U.S shipyards had an
    average of 61 commercial ships under construction. Shipbuilding,
    however, has always been a global market and an intensely competitive
    one. It has always been an industry in which governments have actively
    supported their domestic industry. This was true in the U.S. as well.
    However, in 1981, our government made a conscious decision to stop
    providing the financial support necessary for U.S. shipyards to compete
    in the heavily subsidized international commercial shipbuilding market.
    The U.S. was going to set an example to the rest of the world, in the
    hope that other governments would also eliminate their subsidies to
    shipbuilding and provide a more level playing field for our shipyards.
        Today, unfortunately, foreign yards are still heavily subsidized by
    their governments in various ways led by Japan, Korea, and most
    recently China. Over the last almost 25 years, U.S. foreign trade has
    grown to 1.2 billion metric tons a year, a 50-percent increase. Yet,
    we, the world's largest trading nation, now have a U.S. flag merchant
    marine of 234 ships carrying an anemic 2 percent of our foreign trade.
    More important from my perspective, very few of the U.S. flag ships
    operating in our foreign trade were U.S. built. In 2004, U.S. shipyards
    had only 7 commercial ships on order, all for the domestic coastal
    trade, not foreign trade, which represents a paltry 0.3 percent share
    of the world market.
        It is not that U.S yards lack experience building commercial ships.
    U.S. yards have built cruise ships, LNG ships, RO/ROs, container ships,
    crude and product tankers, etc. In fact, five of our Nation's six
    largest shipyards have a heritage rich in building commercial ships. We
    are not in this market today because 25 years ago we lost the support
    of our elected officials and ceded the international commercial market
    to foreign shipyards. U.S. yards instead focused on building ships for
    the U.S. Navy which reached a high water mark of just under 600 ships
    in the mid-1980s. Today, the U.S. Navy fleet is less than 300 ships and
    headed lower.
        Ship design and shipbuilding technology evolves from commercial not
    naval shipbuilding. For perspective, there are some 2,000 new
    commercial ships built in the world every year; at best there might be
    100 navy ships built each year around the world.
        Commercial shipbuilding brings tremendous benefits to the Navy and
    the Nation:

             Allows shipbuilding and ship design technology
            benchmarking against the best in the world; not just the best
            in the U.S.
             Ensures access to the best of international marine
            technology and competitive prices for commercial marine systems
            that are found aboard many Navy ships
             Commercial volume allows for the continuous process
            improvement in construction technique
             Preserves and enhances the employment skill level
            necessary to build ships
             Helps attract a necessary new generation of engineers
            into shipbuilding
             Spreads yard overhead costs across a wider base making
            Navy ships less expensive
             Fills in the valleys between Navy programs

        U.S. yards are now in the unenviable situation where Navy
    shipbuilding has declined dramatically and we have little or no
    commercial business to fill the void.
        Under the right circumstances, U.S. Shipbuilders can produce
    affordable commercial ships for the Jones Act domestic trade at a
    profit in this country and the Navy would be a direct beneficiary. A
    line of commercial ships of sufficient numbers, of a proven design, and
    totally repeatable from one customer to the next, could lower the
    overhead costs on Navy programs and provide the stable and predictable
    production volumes that would drive improved efficiency and continued
    investment. This would result in a more robust, modern, U.S. flag
    fleet, but, equally important, more affordable Navy ships, and a stable
    industrial base. The Navy will always need a balanced fleet across its
    multiple mission areas from submarines, to surface combatants, to
    auxiliary and support ships. We need to do all we can to fund and
    preserve an industrial base that can efficiently and cost-effectively
    produce ships for each mission area.
    Navy Shipbuilding Plan--Naval Auxiliaries
        As a final observation, I would offer that in the low-rate
    production environment that now characterizes U.S. shipbuilding,
    program sequencing is an extremely important consideration. When NASSCO
    designed the new TOTE ships, it had not designed a new Navy or
    commercial ship in over 5 years. NASSCO essentially rebuilt its
    engineering and design capabilities, both software and people, for the
    TOTE and BP commercial programs. Such gaps in new ship program starts
    are very expensive, create significant inefficiencies, and result in
    long cycle times from contract to ship delivery. I fear we will see
    similar discontinuities in the current Navy auxiliary ship programs as
    the design development gap between T-AKE and the Navy's next planned
    program the T-AOEX and the MPF(F) is now over 6 years with the
    potential to increase even more as a result of low shipbuilding
    budgets. I would strongly urge the Navy to fully consider program
    continuity and its many implications when making its programmatic
    decisions.
                                    summary
    State of the Industrial Base
        As we have shown in the past, our shipyards can adjust to the
    market place by right-sizing our organizations to meet market demands.
    But, I believe today is different. Today, the long term implications of
    any further contraction of the capabilities of your major U.S.
    shipyards could seriously harm national security as you address our
    future threats. The issue for you, today's political leadership, is
    whether you are comfortable with the state of our shipbuilding industry
    from a national security perspective.
        In recent testimony, the CNO has illustrated the fact that over the
    last 40 years, ship unit costs have grown, and in some cases have grown
    dramatically. It cannot be disputed that there has been cost growth in
    naval warships, and that industry and the Navy must be unrelenting in
    their efforts to reduce the cost of these ships. What cannot be
    overlooked are key factors beyond the shipbuilders' and industry
    suppliers' control that have contributed to this growth. Most
    specifically, today's naval warships bring tremendous advancements in
    capability over those of 40 years ago; advancements in weapons, in
    electronics, in stealth, in survivability, and in reliability and
    maintainability.
        It is unlikely that the Navy's ship procurement plans will return
    to the high-volume levels maintained during the Cold War. Given the
    likelihood of limited production, steps must be taken to help reduce
    the cost of naval warships.
        Predictability is fundamental to the functioning of any successful
    business; shipbuilding is no exception. Key business decisions related
    to facility modernizations and the retention and enrichment of critical
    shipbuilding skills must be made years in advance of when they are
    required and must be predicated on reliable workload forecasts to
    justify such expenditures. Absent a predictable plan, the industrial
    base can not fully leverage its capabilities and competencies to
    provide the Navy with the most affordable ships possible.
        Alternative financing approaches may give the Navy enough budgetary
    flexibility to sustain their procurement strategy and support their
    national defense obligations. The appropriate financing approach will
    likely vary from program to program, but advance appropriations, multi-
    year procurements, incremental procurement, split funding and lead ship
    R&D procurements all potentially offer budget flexibility to the Navy,
    thereby creating the opportunity for industry to reliably predict
    volume, and thus provide more cost fidelity for future work. It is
    important to recognize, however, that this is not a panacea for the
    Navy. It will not buy more ships. What it will provide is an added
    level of stability that is so critical the industrial base.
        We need to look closely at our policies and plans for accomplishing
    maintenance and modernization work. In a low-rate production
    environment this work can play a much more important role in preserving
    our production capabilities. By performing more of this work at the
    ship construction yards, we will strengthen these yards by sustaining
    critical shipbuilding skills and capabilities. In addition, we will
    reduce the cost of new construction by utilizing existing capacity and
    facilities; and by spreading overhead costs.
        I also believe we need to discuss ideas to revitalize commercial
    shipbuilding in the U.S. We need a U.S. merchant marine built and
    manned by Americans and we need to define the ship types necessary to
    supplement our national defense needs. Working with Congress, we need
    to explore the universe of market incentives necessary to encourage the
    private sector to build and keep these vessels in operation.
        Toward this end, Congress and industry must do a little thinking
    ``outside of the box.'' For example, can shipbuilding have a role in
    reducing the pressures on our Nation's highway infrastructure? The
    amount of freight transported on our highways is staggering. Perhaps
    Congress, working with Government agencies, can devise appropriate
    legislation and incentives which would result in a more vibrant
    merchant marine--a fleet of commercial cargo carriers to service the
    domestic trade. The benefits would be tremendous. Such revitalization
    of commercial shipbuilding would reduce the cost of Navy platforms if
    for no other reason than the increased economies of scale from
    additional shipbuilding volume. Revitalization of commercial
    shipbuilding would result in development of commercial ``best
    practices,'' some of which could be applied to military shipbuilding
    and thereby also reduce cost to DOD. Revitalization of commercial
    shipbuilding by such a manner would also produce a ready-reserve
    capability available to DOD in case of national emergency.
        I mentioned Congress and DOD developing legislation and incentives
    to facilitate this concept. Consider that the concept outlined provides
    significant benefit to DOD. Why can't DOD, therefore, fund development
    of a non shipyard-specific design for such a cargo fleet, and then make
    that design available to industry for commercial exploitation? This is
    not so different an investment philosophy that Congress and the Navy
    currently provide to support the National Shipbuilding Research
    Program, it just adds a real tangible result to that strategy. This
    kind of thinking is what we need to do more of if we are truly going to
    strengthen our industrial base.
        The Navy, in cooperation with the shipbuilding industrial base,
    must make use of all available technical/industrial levers to maximize
    the capabilities of the industrial base to provide the Fleet with the
    right mix of the capable, affordable ships needed to meet our national
    defense needs. Industry stands ready to support the Navy customer and
    invest in the future, but a clear, predictable plan must be defined;
    then the Navy-industry partnership must work to the plan.
        The goal of General Dynamics Marine Systems is to be the best at
    what we do, whether that is submarines, surface combatants, naval
    auxiliaries or commercial ships. Toward this end, the General Dynamics
    management team remains focused on defining and operating
    sophisticated, specialized facilities that have been properly sized for
    the prevailing, customer-defined, ship production rate. The recent
    benchmarking study conducted by the Deputy Under Secretary of Defense
    for Industrial Policy confirmed that we have met that goal--facility
    resources, critical skills and competencies are continually being tuned
    to suit prevailing, as well as predicted, market demands. Unanticipated
    or uncontrollable changes in volume have a significant impact on the
    cost of an hour's worth of labor. While facilities can be readily re-
    tooled or taken off-line, this country's highly-skilled shipbuilders
    (engineers, designers and craftsmen) are a national treasure; they
    cannot simply be placed in ``reserve'' status. GD shipyards have
    avoided a reckless pursuit of added capacity; instead they have worked
    to right-size in order to be in the best position to meet the
    challenges of tomorrow's Navy. GD shipyards are meeting commitments and
    expectations. In return, we need predictability and an opportunity for
    a reasonable rate of return on our investments. When such conditions
    are not met, businesses close. Once a major naval shipbuilding yard
    closes it never successfully reopens; once the skilled workforce is
    lost, reconstitution of this national treasure is too costly and simply
    not feasible.

        Senator Talent. Thank you, Mr. Toner.
        Dr. Dur, you are next and thank you for being here. I would
    encourage you to keep your oral statement as brief as possible,
    but it is an important hearing and you are kind to give us your
    time, so take what time you need.

    STATEMENT OF PHILIP A. DUR, PH.D., PRESIDENT, NORTHROP GRUMMAN
                              SHIP SYSTEMS

        Dr. Dur. Mr. Chairman, Senator, I am honored to be asked to
    testify before you today on an issue that drives at the heart
    of your constitutional mandate to provide and to maintain a
    Navy. I believe we are at a strategic crossroads today, not
    because we may debate over the numbers of ships that constitute
    our fleet, but because of how we as a Nation are arriving at
    those numbers.
        The issue at hand is really about retaining the industrial
    capacity the Nation needs to build the ships it requires to
    protect its vital interests. In my considered opinion, the
    trends suggest that the maritime security of the country may be
    at risk.
        I want to reiterate that I for one recognize that the Navy
    and the Coast Guard do not exist to keep us, the shipbuilding
    industry, in business. I never believed that when I wore the
    Nation's cloth and I certainly do not believe it today.
        I am a shipbuilder. I build ships. We are in business to
    build seven different classes of ships at one time today, and
    we do it well. When the sea services adjust their requirements
    for cutters, for surface combatants, or expeditionary ships, we
    will adjust and scale accordingly. The question is not about
    whether we will need the ships, it is how the Nation is going
    about acquiring them and at what rate will they be produced.
    Make no mistake, the Navy and the Coast Guard want the ships
    that they have on order with us and they want our industry to
    supply quality assets to the National fleet at affordable cost.
        Both customers, however, are in a difficult situation,
    squeezed for resources to recapitalize, while at the same
    trying to operate forces at very high operating tempos. You
    have seen the Navy's well-publicized--in fact, you discussed it
    earlier--experiment with Sea Swap and the efforts to trim
    operating and life cycle costs to free up funding. This
    experiment has and will have a significant and perhaps a
    lasting impact on the size and the character of our future
    naval forces.
        I must be candid, as a guy who commanded two ships and
    maintained unit spirit, we in industry are concerned about the
    choices that are being made today in the name of force economy
    because those choices may have portentous implications for the
    future.
        For our part, we in industry, in my part of the industry,
    have transformed in several extraordinary ways. First, because
    the Navy divested its shipbuilding engineering expertise from
    its own ranks over the last decade, 7,000 engineers less at
    Naval Sea Systems Command (NAVSEA), it shifted many key program
    management responsibilities to industry. This is critical
    because we in industry have made significant investments in
    turn to respond to a new role.
        I will argue that in Northrop Grumman's management of the
    DD(X) program to date we have built a new model for the
    execution of a development program by forming a truly national
    team that is in Phase Three of the program on cost and on
    schedule, and want to continue partnering with the Navy to get
    that ship to sea.
        The recently released Government Accountability Office
    (GAO) report on Navy shipbuilding cost growth argues for an
    approach which allows for a partnership to develop more
    credible and realistic cost estimates for first of class ships
    by working to a detailed design before entering a competition
    for production contracts.
        We believe that we have a responsibility to our
    shareholders and to the American taxpayer to become the most
    efficient and competitive military shipbuilder in our business.
    Last June, I assembled the Northrop Grumman Ship Systems
    management team to chart a new course for our business, built
    on the proposition that we can become a more contributive
    member of our corporation, improve our earnings performance,
    improve the rate of return on the investments we are making,
    and at the same time provide better value to our customers.
        I think we have come a long way in doing that, and I will
    tell you a little more in just a second. But we are no longer
    two shipyards in Northrop Grumman. The notion that Northrop
    Grumman Ship Systems includes separate shipyards is an
    anachronistic view. We have streamlined to one sector with
    facilities within 100 miles of one another and we are sourcing
    these facilities in Louisiana and Mississippi, while benefiting
    from a very significant level of investment by both States in
    our capital modernization program.
        The results I think have been dramatic. For example,
    improved production process for new destroyers have resulted in
    a reduction of 500,000 man-hours per ship. Construction cycle
    estimates for the amphibious assault ship (LHD) will be reduced
    by more than 10 percent and by 20 percent for the LPD by LPD-
    22.
        Here is the catch, Mr. Chairman. There are limits on how
    much we can achieve in savings, given the production rates that
    are now projected by our customers, which have fallen
    dramatically in just the last 6 months. The decrease in the
    rate of construction is an all too familiar adjustment and the
    lack of predictability and stability costs the taxpayers
    heavily.
        Some have recently asserted that three new shipyards will
    have come into business with the introduction of the LCS
    program. I believe that statement may leave some mistaken
    impressions. While they are reputable centers of shipbuilding
    to be sure, these small yards are limited in what they can
    produce. Northrop Grumman Ship Systems is building capital
    ships, hard ships, stealthy ships, with capabilities that dwarf
    those of little ships, capabilities that will be essential if
    we are to dominate battle space in confrontations with peer
    competitors and in sea areas where there are no operating
    sanctuaries in which to hide.
        Some will argue that earlier estimates of numbers of the
    large ships needed were not driven by realistic requirements
    and that requirements must now be fiscally constrained. Let me
    offer another truism for your consideration. The fewer
    sophisticated and complex platforms you build and the slower
    the production rate, the more costly they will be. The real
    costs over the long term will come with the realization that an
    American shipbuilding industry is not able to surge to meet
    future security requirements because the industry did not
    survive.
        We have just completed an analysis examining the loss of
    learning that results from irregular build intervals and the
    introduction of green or inexperienced labor. It demonstrates
    conclusively and mathematically that the rate at which we build
    ships is critical to learning and hence the cost of ships. A
    steady rate with short intervals between starts of fabrication
    promotes stable workforce and generates steep learning curves,
    which significantly reduces production costs. The need for
    green labor that must be employed is exacerbated by layoffs and
    then our efforts to rebuild our rolls in reaction to changing
    requirements or fickle acquisition strategies. ``Binges and
    purges'' is how I describe it. This analysis clearly supports
    arguments for a stable shipbuilding plan for the National
    fleet.
        A very troubling case in point is the Navy's interim fiscal
    year 2006 annual long-range plan that I know you have been
    reviewing, which offers us a choice between two 30-year
    profiles, a 260-ship Navy and one with 325 ships. You will
    hopefully understand that this scale or range in numbers causes
    us concern precisely because it makes it impossible for us to
    make a good business case for the levels of investment in
    capital and skilled workers we are going to need.
        My concern, Mr. Chairman, is that 5 to 8 years from now,
    not 20 years from now, when the peer competitor emerges, our
    Nation will discover that our base has atrophied. Our host
    States, in my case Mississippi and Louisiana, will have ceased
    investing in shipbuilding facilities with no tax returns. The
    highly skilled workforce in our shipyards will have gone off to
    other jobs and new workers will not have been found. The
    extraordinary intellectual capital--the engineers, the
    designers--will have migrated to other industries that are seen
    to have a future where, believe me, their skills are in high
    demand.
        The next generation technologies being developed for ships
    like DD(X) will never have been developed, and the diaspora of
    the best and brightest naval engineers working on DD(X) will
    severely limit future ship choices. In short, you do not just
    turn a switch for shipbuilders to generate new capacity.
        In conclusion, I respectfully submit that the future of
    military shipbuilding in the United States turns on a national
    commitment. We cannot have a shipbuilding plan that changes
    dramatically every year and wreaks havoc on our plans for the
    industrial base. The instability in shipbuilding has produced
    sinusoidal waves in workforce and floating rates of return on
    capital. But with a stable plan we can make our investments and
    right-size the industrial base to meet the Nation's
    expectations.
        I pledge to you on behalf of the shipbuilders that I
    represent, Mr. Chairman, that we will honor stable and
    predictable plans by designing, developing, and building the
    best and most competitive warships in the world.
        Thank you for your consideration.
        [The prepared statement of Dr. Dur follows:]
                    Prepared Statement by Dr. Philip A. Dur
        Mr. Chairman, Senators, I am honored to be able to testify before
    you today. I believe we are at a strategic crossroads today--not just
    because we may have a debate about the numbers of ships that compose
    our fleets--but because of how we as a Nation arrive at those numbers.
    The issue at hand has to do with retaining the essential capability the
    Nation must have to build the ships essential to its future security.
    The current path we are on puts this capability at serious risk.
        I want to reiterate that, for one, I recognize that the Navy and
    the Coast Guard do not exist to keep us, the shipbuilding industry, in
    business. I never believed that when I wore the Nation's cloth and I
    certainly do not believe it today.
        I am a shipbuilder--I build ships. We are in business to build
    them--seven different designs today--and we do it well. When the sea
    services adjust their requirements for cutters, surface combatants, or
    expeditionary ships to do the Nation's business, industry will adjust
    and scale accordingly. The question is not about whether we will need
    ships--it is how the Nation is going about acquiring them today and at
    what rate will they be produced.
        Make no mistake, the Navy and the Coast Guard want the ships that
    are on order and they want industry to maintain the ability to supply
    quality assets to the national fleet at affordable costs. Both
    customers, however, are in a difficult situation--squeezed for
    resources while at the same time trying to transform their forces.
        You have seen the Navy's well-publicized experiment with Sea Swap
    and the efforts to trim operating and life-cycle costs to free up
    funding for new construction. This transformation has and will have a
    significant and perhaps lasting impact on the character of our future
    naval forces. I must be candid and tell you that we, in industry, are
    concerned about the choices that are being made today in the name of
    force economy because those choices may have portentous implications
    for the future.
        For our part we have transformed in several extraordinary ways.
    First, because the Navy divested shipbuilding engineering expertise
    over the last decade (Naval Sea Systems Command (NAVSEA)'s loss of
    7,000 engineers), it shifted many of the key program management
    responsibilities to our industry. This is critical because we have made
    significant investments in turn to respond to a new role.
        I will argue that in Northrop Grumman's management of the DD(X)
    program to date, we have built a new model for the execution of a
    developmental program by forming a truly national team that is--in
    Phase 3 of the program--on cost and on schedule. The recently released
    Government Accountability Office (GAO) report on Navy shipbuilding cost
    growth (Defense Acquisitions, Improved Management Practices Could Help
    Minimize Cost Growth in Navy Shipbuilding Programs) argues for just
    such an approach to develop more credible and realistic cost estimates
    for first-of-a-class ships by working to detailed design before going
    into contract competition for production.
        Second, we believe that we have a responsibility to our
    shareholders and to the American taxpayer to become the most efficient
    and competitive shipbuilders in our business.
        We are now seeing extraordinary new efficiencies in production--
    compressed build cycles and reduced amount of rework as a result of our
    efforts.
        Last June, we assembled the Northrop Grumman Ship Systems
    management team to chart a new course for our business built on the
    proposition that we can become a more contributive member of the
    Northrop Grumman Corporation, improve our earnings performance, and
    improve the return on the investments that our shareholders are making
    today. We call the initiative ``True North''--a new course. We are
    committed to trimming the controllable elements in our overhead. We are
    reducing the build-span on the ships that we have under construction.
    We are improving and have accepted a new standard for ourselves for
    first time quality. Our Lean Six Sigma processes are now paying very
    tangible dividends in program cost savings.
        We have reorganized the supply chain management organizations
    across all eight ship class programs that we are currently developing,
    working to reduce working capital and to put focus on unit assemblies
    (the building blocks for our ships). We have realigned our management
    structure so that we have three proven, seasoned experts in
    shipbuilding and in business disciplines, running the three categories
    of programs. They are aligned with the customer's organization--
    expeditionary warfare, surface combatant, and Coast Guard programs.
        We are no longer two shipyards. There is not an Avondale shipyard
    and an Ingalls shipyard. There is a Northrop Grumman Ship Systems
    sector, a single manufacturing entity. Today, we are sourcing every one
    of our facilities for elements of amphibious transport docks (LPDs) and
    those LPDs are being erected at two different sites.
        The notion that the industrial base that is Northrop Grumman Ship
    Systems includes separate operating shipyards is an anachronistic view.
    It is atavistic thinking. We have streamlined to one sector and we are
    sourcing facilities in Louisiana and Mississippi to build ships in
    either locality, and in some cases even the same ship.
        The results for us I believe have been dramatic. For example:

             Improved production processes for new guided missile
            destroyers (DDGs) brought a reduction of 500,000 man-hours per
            ship.
             Construction cycle estimates for the amphibious
            assault ship (LHD) are expected to decrease more than 10
            percent, while LPD construction times will shrink more than 20
            percent.

        Unfortunately, there are limits on how much we can achieve in
    savings given the production rates currently projected by our
    customers--which have fallen dramatically in the last 6 months. But
    this decrease in the rate of construction is an all-too-familiar
    adjustment, and the lack of predictability and stability costs the
    taxpayer heavily.
        As shipbuilding gets pushed out into the future, the return on that
    investment declines. As fewer ships in each program are built, the cost
    per ship goes way up. In that way, the true cost of ``cost-savings''
    attained through reduced quality can actually prove to be prohibitively
    expensive.
        If we were building automobiles or even small ships this might be
    an acceptable path--but we are not. Some spokesmen have recently
    asserted that three new shipyards had come into business with the
    introduction of the littoral combat ship (LCS) program. I believe that
    statement may leave mistaken impressions. While reputable centers of
    shipbuilding to be sure, these yards are limited in what they can
    produce. Northrop Grumman is building capital ships--hard ships,
    stealthy ships with capabilities that dwarf those ships we designed and
    built just 10 years ago--capabilities that will dominate the battle
    space in wars with peer competitors where there are no operating
    sanctuaries in which to hide.
        Some will argue that earlier estimates of ship numbers were not
    driven by requirements, and that requirements must be fiscally
    constrained. Let me offer another truism for consideration: the fewer
    of these sophisticated and complex platforms you build, and the slower
    the production rate, the more costly they will be. The real cost, over
    the long term, will come with the realization that an American
    shipbuilding industry is not able to surge to future security
    requirements because the industry did not survive.
        To the point of how cost is driven by numbers and production rates:
    We have just completed an analysis examining the loss of learning that
    results from irregular build intervals and the introduction of ``green
    labor.''
        This analysis demonstrates conclusively and mathematically what has
    always been intuitively obvious to us--the rate at which we build ships
    is critical to stability in learning and hence the cost of ships. A
    steady rate with shorter intervals between start of fabrication
    promotes stable workforce and generates a steep learning curve, which
    significantly reduces production costs. The amount of ``green,'' or
    ``unskilled labor'' that must be employed is exacerbated by peaks and
    valleys caused by our need to lay off and then build back up as a
    reaction to changing requirements or acquisition strategies--``binges
    and purges'' is how I describe it. The analysis clearly supports
    arguments for a stable shipbuilding plan for the National Fleet.
        A case in point is the recent release of the Navy's interim fiscal
    year 2006 Annual Long-Range Plan for the Construction of Naval Vessels.
    This study offers a choice of two 30-year fleet profiles--a 260 ship
    Navy and one with 325 ships. You will hopefully understand that this
    scale or range in future fleet numbers causes concern for us in
    industry and because it becomes almost impossible to make sound
    business cases for levels of investment in capital and skilled workers.
        The decisions we make today will shape our naval force structure
    for decades to come. Ships take a long time to build. Because the
    effects of those decisions are not immediately apparent, we can easily
    slip into a false sense of security.
        Those of us who build these ships, however, see the effects up
    front--in a declining labor force--in a reduced ability to attract
    capital--in a shrinking industrial base that may not be there in the
    future when we need it.
        My concern is that 5 to 8 years out our Nation will discover that
    our Navy has dangerously atrophied.

             The highly-skilled workforce in our shipyards will
            have gone off to other jobs . . . and new workers will not have
            been trained.
             The extraordinary intellectual capital--the engineers,
            designers, scientists--will have migrated to other industries
            that are seen to have a future, where, believe me, their skills
            are in high demand.
             The next-generation technologies being developed for
            ships like the DD(X) will never have been developed--and the
            diaspora of the best and brightest naval engineers will
            severely limit future choices.

        In short, you don't just turn a switch for shipbuilders to generate
    new capacity.
        The future of shipbuilding in the United States requires nothing
    short of a national commitment. We cannot have shipbuilding plans that
    dramatically change every year and wreak havoc on our industrial base.
    (Present PPT slides on ``churn'' in force level requirements). The
    Nation, and Congress in particular, need to decide what the National
    Fleet of the future should be--the aggregate of Coast Guard and Navy
    ship requirements.
        The instability in shipbuilding rates has produced sinusoidal waves
    in workforce. How can we invest in capital projects if we do not have a
    clear business gauge to show a return to our investors? There is a
    prohibitively high cost to the Nation for this turbulence--measured in
    dollar costs and lost capabilities to shape world events, respond to
    crisis and fight wars. With planning stability we can adjust our
    investments and right-size the industrial base to meet the Nation's
    expectations.
        We of Northrop Grumman Ship Systems build warships, conventionally
    powered surface combatants and expeditionary warfare ships and cutters.
    The future of the American shipbuilding industry will be determined by
    a national commitment to build a fleet based on clearly defined force
    requirements consistently funded by a long-term resourcing plan.
        I pledge to you, on behalf of the American shipbuilder, that we
    will honor such a commitment by designing, developing and building the
    best and most competitive warships in the world.

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Senator Talent. Thank you for that powerful statement, Dr.
    Dur.
        Mr. O'Rourke, who has for 20 years been a specialist in
    naval power with CRS, you are next. I do really want you to
    paraphrase your statement for us. Of course, the whole thing
    will go in the record. We are eager to get to the questions.
    Please.

      STATEMENT OF RONALD O'ROURKE, NATIONAL DEFENSE SPECIALIST,
                     CONGRESSIONAL RESEARCH SERVICE

        Mr. O'Rourke. Understood. Chairman Talent, thank you for
    the honor to be here today. I will briefly summarize my
    testimony here in a few remarks.
        For the shipbuilding industrial base, a significant current
    issue, as I think you have heard, is ambiguity regarding
    required numbers of Navy ships and year-to-year volatility in
    the Navy shipbuilding program. This situation can make it
    difficult for shipbuilders to make decisions in areas such as
    workforce management and facilities investment. It can also
    make it difficult for Congress to conduct effective oversight
    of Navy shipbuilding programs.
        Recent Navy testimony and reports on required numbers of
    ships, though helpful, do not do very much to resolve this
    ambiguity. Of the 49 ships in the FYDP, 21 or more than 40
    percent are littoral combat ships that are to be built at yards
    other than the six yards that have built the Navy's major ships
    in recent years. The 28 remaining ships in the FYDP equate to
    an average of 4.7 ships per year, or an average of less than
    one ship per year for each of the six yards.
        Regarding submarines, there is concern for the stability of
    the design and engineering base, which is facing the near-term
    prospect, for the first time in more than 40 years, of having
    no major submarine design project on which to work. One option
    for addressing this situation would be to start design work now
    on a new submarine, which could be financed using some portion
    of the $600 million budgeted for a future undersea superiority
    system. A new-design nuclear-powered attack submarine
    incorporating the so-called Tango Bravo technologies could be
    equivalent in capability to the Virginia class, but cost
    substantially less. Such a boat could be more easily procured
    within available resources at a rate of two per year, which is
    the rate you will need, starting in fiscal year 2012 or 2013,
    to avoid dropping below 40 boats. If design work is begun now,
    the first boat might be ready for procurement by fiscal year
    2011.
        Regarding surface combatants, if the Navy holds a winner-
    take-all competition for the DD(X) the consequences for the
    losing yard could be very serious, particularly if it is Bath.
    In addition, the Navy's decision to reduce the DD(X) to one per
    year in the FYDP is a signal that, unless budget conditions
    change, DD(X) and CG(X) procurement may never be more than one
    per year. Notwithstanding the capabilities of the DD(X) and
    CG(X), the prospect of a one-per-year rate could cause the
    DD(X)-CG(X) effort to be judged unsatisfactory in terms of
    introducing the DD(X)-CG(X) technologies in sufficient numbers
    and in terms of getting average total acquisition cost below $3
    billion a copy.
        Dissatisfaction on one or both of these points could lead
    to a decision to terminate the entire DD(X)-CG(X) effort. If
    such a decision were made in the near term, a single DD(X)
    might be built as a technology demonstrator and a second might
    be procured to give the other yard experience in building the
    design. If a decision to terminate is made at a later point, a
    few more DD(X)s might be procured. But in either case, no
    CG(X)s might be procured.
        The DD(X) has been described as a bridge to the CG(X) in
    fiscal year 2011, but it is possible the Navy and the
    industrial base might cross that bridge only to discover that,
    for cost reasons, the CG(X) is no longer waiting at the other
    end.
        There are several options for supporting the surface
    combatant industrial base between now and fiscal year 2011. An
    additional option for supporting the base in fiscal year 2011
    and beyond would be to begin design work now on a new surface
    combatant that would be smaller and less expensive than the
    DD(X) or CG(X). Such a ship, which might be about the same size
    as today's Aegis cruisers and destroyers, would have a smaller
    payload than the DD(X) or CG(X), but it could carry many of the
    same technologies as the DD(X) or CG(X) and it could be more
    easily procured within available resources at a rate of two per
    year, which is a rate that might meet operational needs better
    and be easier to divide between two yards.
        If the DD(X)-CG(X) effort is terminated and no new surface
    combatant design is ready for immediate procurement, it could
    create operational risks. It could also place enormous stress
    on the surface combatant industrial base. The submarine
    industrial base went through a period like this in the 1990s
    when the Seawolf program was terminated and the Virginia class
    was not yet ready for procurement.
        My testimony also covers the three independent studies on
    fleet architecture and I will just say right now, in
    concluding, that those studies contain recommendations which
    themselves may have implications for the industrial base.
        Mr. Chairman, that concludes my statement and I will be
    happy to respond to any questions the subcommittee might have.
        [The prepared statement of Mr. O'Rourke follows:]
                     Prepared Statement by Ronald O'Rourke
        Mr. Chairman, distinguished members of the subcommittee, thank you
    for the opportunity to appear before you to discuss Navy capabilities
    and the force structure required to provide them. As requested, my
    testimony will focus on the following:

             the status of the shipbuilding industrial base (pages
            1-6);
             the impact of current Navy shipbuilding plans on the
            industrial base (pages 6-21); and
             naval capabilities and the recent independent studies
            on fleet architecture (pages 22-42).
                     status of shipbuilding industrial base
    Current Situation
        Annual Navy ship procurement declined substantially in the early
    1990s, following the end of the Cold War, and today remains
    substantially below Cold War levels of the 1980s. As a result, among
    other things:

             current shipyard workloads and employment levels in
            many cases are below Cold War levels of the 1980s;
             some yards have considerable unused capacity;
             production economies of scale are often limited or
            poor, putting upward pressure on unit production costs;
             opportunities for the Navy to use periodic (e.g.,
            annual or biannual) competition in the awarding of shipbuilding
            contracts so as to gain the benefits of competition in
            production are limited; and
             concerns have increased regarding prospects for Navy
            shipbuilding supplier firms, many of which are sole sources of
            what they make for the Navy.
    Improved Processes and Methods
        The six yards that have built the Navy's major warships in recent
    years \1\ have taken various steps over the last decade or so to
    improve their ship-design and ship-production processes and methods.
    These steps have narrowed, but perhaps not closed, the gap in these
    processes and methods between the six yards and the world's most modern
    and capable shipyards. A Department of Defense (DOD) report scheduled
    for completion later this year will address this issue in more
    detail.\2\
    ---------------------------------------------------------------------------
        \1\ These are the three yards owned by General Dynamics--Bath Iron
    Works (GD/BIW) of Bath, ME, the Electric Boat Division (GD/EB) of
    Groton, CT, and Quonset Point, RI, and National Steel and Shipbuilding
    Company (GD/NASSCO) of San Diego, CA--and the three yards owned by
    Northrop Grumman--Avondale Shipyards (NG/Avondale) near New Orleans,
    LA, Ingalls Shipbuilding (NG/Ingalls) of Pascagoula, MS, and Newport
    News Shipbuilding (NGNN) of Newport News. NG/Avondale and NG/Ingalls,
    together with a third production facility at Gulfport, MS, form
    Northrop Grumman Ship Systems (NGSS).
        \2\ The report being prepared by DOD has been referred to as the
    Global Shipbuilding Industrial Base Benchmarking Study. For a press
    article discussing this study, see Christopher J. Castelli, ``Patrick:
    Congress Has Key Role In Examining U.S. Industrial Base,'' Inside the
    Navy, February 28, 2005.
    ---------------------------------------------------------------------------
    Rising Material And Component Costs
        The six yards have experienced rising costs for materials and
    components provided to them by supplier firms. These rising costs are a
    contributor to increasing procurement costs for Navy ships.
    Dependence on Navy Work and Opportunities For Other Work
        As a group, the six yards are highly dependent on Navy shipbuilding
    contracts, as they have been for many years. A potentially significant
    non-Navy source of shipbuilding work in coming years is procurement of
    large and medium cutters under the Coast Guard Deepwater program,
    particularly if procurement of these cutters is accelerated and
    expanded.\3\
    ---------------------------------------------------------------------------
        \3\ For more on the Deepwater program, see CRS Report RS21019,
    Coast Guard Deepwater Program: Background and Issues for Congress, by
    Ronald O'Rourke.
    ---------------------------------------------------------------------------
        A second potential non-Navy source of shipbuilding work is building
    warships for export for foreign countries. Although U.S. yards welcome
    and pursue this work, it tends to be a highly uncertain source of work
    because it depends on decisions made by foreign governments who in many
    cases are also considering competing designs offered by foreign yards.
    In addition, because of the small sizes of most foreign navies, the
    numbers of ships being contemplated for purchase by these governments
    tend to be rather small. One current opportunity in this area is the
    project announced by the administration in 2001 to provide eight non-
    nuclear-powered submarines to Taiwan.
        A third potential non-Navy source of shipbuilding work is building
    ocean-going commercial ships, which is an activity that declined
    substantially in the United States following the end in 1981 of the
    Construction Differential Subsidy (CDS) that had previously supported
    such work. Options for increasing the amount of commercial-ship
    construction work performed in U.S. yards have been discussed or
    pursued by Congress at various times, particularly since the early
    1990s, when the construction rate of large Navy ships declined.
        Some of the six yards that have built the Navy's major warships in
    recent years have explored opportunities for building commercial ships,
    but with only limited results.\4\ Yards that are configured for
    building complex combatant ships may face certain challenges in
    attempting to become competitive builders of commercial ships.\5\ One
    option that might make it easier for U.S. yards that build complex
    combatants to compete for commercial-ship construction work would be to
    make Navy combatant ships more like commercial ships. The Office of
    Force Transformation (OFT) report on alternative fleet architectures
    discussed later in this testimony essentially proposes this by using a
    merchant-like hull as the basis for building four kinds of large
    surface ships.
    ---------------------------------------------------------------------------
        \4\ GD/BIW, for example, examined the option during the 1990s but
    ultimately decided against attempting to enter the market. As another
    example, NGNN in the 1990s started a program to build double-hulled
    tankers, but lost money on the project and stopped it after building a
    few ships. The project left NGNN skeptical about the potential for
    building commercial ships profitably at NGNN. (See Jason Ma, ``Newport
    News Chief Skeptical About Entering Commercial Ship Market,'' Inside
    the Navy, March 14, 2005.)
        \5\ Yards that are competitive builders of commercial ships
    traditionally have been configured somewhat differently from yards that
    focus on building complex combatant ships. Commercial ships typically
    require less outfitting of their interiors than complex combatant
    ships, so yards that are competitive builders of commercial ships
    traditionally have had work forces with a fairly high percentage of
    basic steel workers (who build the shell of the ship) and lower numbers
    of outfitters, while yards that focus on building complex combatant
    ships traditionally have had work forces that have included larger
    numbers of outfitters. In addition, yards that focus on building
    complex combatant ships have equipment for assembling, integrating, and
    testing complex ship combat systems and (in the case of GD/EB and NGNN)
    equipment for assembling, installing, and testing nuclear-propulsion
    equipment. The additional costs associated with maintaining larger
    numbers of outfitters and equipment related to complex combat systems
    and nuclear propulsion can pose challenges to complex combatant yards
    seeking to enter the commercial-ship construction market.
        Among the six yards that currently build the Navy's larger
    warships, the yards for which the option of increasing commercial-ship
    construction work currently might be most suitable are GD/NASSCO and
    NG/Avondale. GD/NASSCO builds auxiliary and sealift ships for the Navy
    and DOD. Since these ships are similar in design and complexity to
    commercial ships, GD/NASSCO is similar to purely commercial
    shipbuilding yards in terms of numbers of outfitters and lack of
    equipment related to complex combat systems and nuclear propulsion. GD/
    NASSCO pursues commercial-ship construction work, and its workload is
    often a mix of commercial ships and Navy/DOD auxiliaries and sealift
    ships. The yard is currently building 185,000 DWT oil tankers for BP
    Oil Shipping Company USA. A total of four of these ships are to be
    delivered by 2006. The ships are to be used for transporting crude oil
    from Valdez, Alaska, to oil refineries on the U.S. West Coast, meaning
    that these ships fall under the Jones Act (Section 27 of the Merchant
    Marine Act of 1920 [46 USC. 883]), which, as discussed in a CRS Report
    (Report RS21566, The Jones Act: An Overview, by John F. Frittelli),
    ``requires that all waterborne shipping between points within the
    United States be carried by vessels built in the United States, owned
    by U.S. citizens (at least 75 percent), and manned with U.S. citizen
    crews. The act essentially bars foreign built and operated vessels from
    engaging in U.S. domestic commerce.''
        NG/Avondale has also built auxiliary and sealift ships for the Navy
    and DOD, but its current workload includes construction of LPD-17
    amphibious ships, which are somewhat complex in terms of their
    outfitting requirements and combat systems. Recent commercial-ship
    construction work at NG/Avondale includes 125,000 DWT oil tankers built
    for Polar Tankers, Inc. The first of five such ships was delivered in
    2001. These ships also appear intended for transporting crude oil from
    Alaska to the U.S. West Coast, which would qualify them under the Jones
    Act. (Avondale's web site [http://www.ss.northropgrumman.com/company/
    avondale.cfm] states: ``These 895-foot-long, 125,000 DWT ships are
    capable of carrying more than 1 million barrels of crude oil along the
    treacherous trade route from Alaska to the U.S. West Coast.'')
    ---------------------------------------------------------------------------
    Ambiguity And Volatility In Navy Plans
        A significant current issue for the shipbuilding industrial base is
    ambiguity regarding required numbers of Navy ships and year-to-year
    volatility in the composition of the Navy's 6-year shipbuilding plan.
    Ambiguity concerning required numbers of Navy ships may make it easier
    for industry officials to pour into broad remarks from the Navy or DOD
    their own hopes and dreams for individual programs. This could lead to
    excessive industry optimism about those programs.
        In addition, ambiguity concerning required numbers of Navy ships,
    combined with year-to-year volatility in Navy shipbuilding plans, can
    make it difficult for shipbuilding firms to make business decisions in
    areas such as production planning, workforce management, facilities
    investment, company-sponsored research and development, and potential
    mergers and acquisitions.\6\
    ---------------------------------------------------------------------------
        \6\ In an interview published in the February 2005 issue of
    Seapower magazine, for example, Michael Petters, the president of NGNN,
    said:
        ``If there was a clear, stable picture of what the Navy wants, and
    what sort of infrastructure needs to be in place to support that, the
    industry would adapt. But what you've had instead are the annual
    perturbations. That's a challenge for us. We make investments in ships
    that take 8 years to build, then the ship gets delayed because of the
    way the budget process works.''
        In the same published interview, Michael W. Toner, the executive
    vice president of General Dynamics' Marine Systems Group, said:
        ``Mike [Petters] is dead on. I think Secretary [of the Navy Gordon]
    England has it right, but it's up to the Navy to establish the
    stability. What's the plan? Give us a stable plan and then we can make
    the investments. Industry will do what industry needs to do. But it is
    a very difficult environment to make investment in, that's for sure.''
    (``Shipbuilding: An Uncertain Future,'' Seapower, February 2005: 28.)
        Similarly, a July 2004 press article stated:
        ``Philip Dur, chief executive officer of Northrop Grumman's
    Shipbuilding Systems, argued that the Navy's concept of `capabilities
    versus numbers' not only would hurt the Service's operations, but
    decimate the industry.''
        ``If the Navy decides it cannot afford 300 ships, it should come up
    with a smaller number and set new ship construction plans based on that
    number, Dur said.''
        ``It also would be helpful, he added, if both the Navy and the
    Coast Guard jointly planned their long-term shipbuilding buys. `I do
    not know that either Service takes the other Service's capabilities
    into account,' he said. If both services set their shipbuilding goals
    collectively, `then the shipbuilders can lay out an investment plan, a
    hiring plan [and] a training plan that was predicated on the assumption
    that we would competing for an X-number of platforms per year on a
    going-forward basis,' Dur said. . . .''
        ``If the Department of Defense can frame a requirement for ships
    and defend it, the industry would make the necessary adjustments to
    either scale down or ramp up, Dur told reporters during a recent tour
    of the company's shipyards in Louisiana and Mississippi. (Roxana Tiron,
    ``Lack of Specificity in Navy Shipbuilding Plans Irks the Industry,''
    National Defense, July 2004.)
    ---------------------------------------------------------------------------
        Ambiguity concerning required numbers of Navy ships may also make
    it difficult, if not impossible, for Congress to conduct effective
    oversight by reconciling desired Navy capabilities with planned Navy
    force structure, and planned Navy force structure with supporting Navy
    programs and budgets. With the middle element of this oversight chain
    expressed in only general terms, Congress may find it difficult to
    understand whether proposed programs and budgets will produce a Navy
    with DOD's desired capabilities. The defense oversight committees in
    recent years have criticized the Navy for presenting a confused and
    changing picture of Navy ship requirements and procurement plans.\7\
    ---------------------------------------------------------------------------
        \7\ For example, the conference report (H.Rept. 107-772 of November
    12, 2002) on the National Defense Authorization Act for Fiscal Year
    2003 (P.L. 107-314/H.R. 4546) stated
        ``In many instances, the overall Department of Defense ship
    acquisition message is confused. . . . The conferees also believe that
    the DON shares blame for this confusion because it has been
    inconsistent in its description of force structure requirements. This
    situation makes it appear as if the Navy has not fully evaluated the
    long-term implications of its annual budget requests. . . .
        ``The conferees perceive that DOD lacks a commitment to buy the
    number and type of ships required to carry out the full range of Navy
    missions without redundancy. The DON has proposed to buy more ships
    than the stated requirement in some classes, while not requesting
    sufficient new hulls in other classes that fall short of the stated
    requirement. Additionally, the conferees believe that the cost of ships
    will not be reduced by continually changing the number of ships in
    acquisition programs or by frequently changing the configuration and
    capability of those ships, all frequent attributes of recent DON
    shipbuilding plans.'' (Pages 449 and 450)
        The House Appropriations Committee, in its report (H.Rept. 108-553
    of June 18, 2004) on the Fiscal Year 2005 DOD appropriations bill (H.R.
    4613), stated:
        ``The committee remains deeply troubled by the lack of stability in
    the Navy's shipbuilding program. Often both the current year and out
    year ship construction profile is dramatically altered with the
    submission of the next budget request. Programs justified to Congress
    in terms of mission requirements in 1 year's budget are removed from
    the next. This continued shifting of the shipbuilding program promotes
    confusion and frustration throughout both the public and private
    sectors. Moreover, the committee is concerned that this continual
    shifting of priorities within the Navy's shipbuilding account indicates
    uncertainty with respect to the validity of requirements and budget
    requests in support of shipbuilding proposals.'' (Page 164)
    ---------------------------------------------------------------------------
        The Navy's February 2005 testimony that in future years it may
    require a total of 260 to 325 ships, or possibly 243 to 302 ships,
    depending on how much the Navy uses new technologies and the Sea Swap
    concept for crewing and deploying ships,\8\ and the Navy's March 2005
    interim report to Congress on long-range shipbuilding requirements,
    which details the composition of 260- and 325-ship fleets for fiscal
    year 2035,\9\ together do not resolve the current ambiguity regarding
    required numbers of Navy ships, for the following reasons:
    ---------------------------------------------------------------------------
        \8\ See, for example, Statement of Admiral Vernon Clark, USN, Chief
    of Naval Operations, Before the Senate Armed Services Committee, 10
    February 2005, pp. 18-19, and Statement of Admiral Vernon Clark, USN,
    Chief of Naval Operations, Before the House Armed Services Committee,
    17 February 2005, pp. 19-20.
        \9\ U.S., Department of the Navy, An Interim Report To Congress on
    Annual Long-Range Plan For The Construction Of Naval Vessels For Fiscal
    Year 2006. Washington, 2005. 5 pp. (This report was delivered to the
    defense committees of Congress on March 23, 2005. Defense trade
    publications obtained copies of the report and at least one publication
    posted the report on its Web site.)

             Using the 260-ship fleet as a baseline, the range of
            260 to 325 ships equates to a 25 percent range of variability
            in the potential total number of ships. Although for some ship
            categories, such as ballistic missile submarines and cruise
            missile submarines, there is little or no difference in the
            number of ships included in the 260- and 325-ship fleets, for
            other ship categories, there are substantial differences. When
            translated into percentage terms, the difference is 37 percent
            for cruisers and destroyers, 30 percent for littoral combat
            ships, 41 percent for amphibious ships, and 43 percent for
            maritime prepositioning ships. For the remaining categories of
            ships--attack submarines, aircraft carriers, combat logistics
            ships, and other ships--the percentage ranges of variability
            are 10 percent or less. In the case of aircraft carriers,
            however, the one-ship difference under two fleet plans can
            translate into a substantial difference in Navy funding
    ---------------------------------------------------------------------------
            requirements and shipbuilding work.

             The Navy's testimony and report do not make clear
            whether the range of 260 to 325 ships, or the compositions of
            the 260- and 325-ship fleets, have been endorsed by the
            Secretary of Defense as official Department of Defense (DOD)
            force-structure planning goals.
             The March 2005 report does not present a 30-year
            shipbuilding plan. Instead, it presents a 30-year projection of
            potential Navy force levels from which potential annual
            shipbuilding rates can be only partially inferred.
              impact of navy shipbuilding plans on industrial base
    Overall Ship-Procurement Rate
        The fiscal year 2006-fiscal year 2011 plan (see Table 1) would
    procure a total of 49 ships, or an average of about 8.2 ships per year.
    Assuming an average Navy ship life of 30 to 35 years, an average
    procurement rate of about 8.2 ships per year would, over the long run,
    maintain a fleet of 245 to 286 ships.

                          TABLE 1. NAVY FISCAL YEAR 2006-FISCAL YEAR 2011 SHIP-PROCUREMENT PLAN
                              (Ships fully funded in fiscal year 2005 shown for reference)
    ----------------------------------------------------------------------------------------------------------------
                                                            Fiscal Year
                                  ---------------------------------------------------------------  Total Fiscal Year
                                     2005     2006     2007     2008     2009     2010     2011        2006-2011
    ----------------------------------------------------------------------------------------------------------------
    CVN-21.......................                         1                                   1
    SSN-774......................       1        1        1        1        1        1        1                   6
    DDG-51.......................       3                                                                         0
    DD(X)........................                         1        1        1        1        1                   5
    CG(X)........................                                                             1                   1
    LCS..........................       1        1        2        3        5        5        5                  21
    LPD-17.......................       1        1        1                                                       2
    LHA(R).......................                         1                          1                            2
    TAKE.........................       2        1        1        1                                              3
    TAOE(X)......................                                           1        1        2                   4
    MPF(F).......................                                           1        1        2                   4
    MPF(A).......................                                                                                 0
    ----------------------------------------------------------------------------------------------------------------
      TOTAL......................       8        4        7        7        9       10       12                  49
    ----------------------------------------------------------------------------------------------------------------
        TOTAL less LCSs..........       7        3        5        4        4        5        7                 28
    ----------------------------------------------------------------------------------------------------------------
    Source: Department of the Navy, Highlights of the Department of the Navy Fiscal Year 2006 Budget, Chart 14 (p. 5-
      1).

        As shown in the table, Littoral Combat Ships (LCSs) account for 21
    of these 49 ships, or about 43 percent. LCSs are to be built by yards
    other than the six yards that have built the Navy's major warships in
    recent years. Setting aside LCSs so as to focus on larger ships that
    would likely be built by these six yards, the total number of larger
    ships is 28, or an average of about 4.7 ships per year. Assuming an
    average Navy ship life of 30 to 35 years, an average procurement rate
    of about 4.7 ships per year other than LCSs, if maintained over the
    long run, would maintain a fleet that included 140 to 163 ships other
    than LCSs.
        An average procurement rate of 4.7 ships per year other than LCSs
    would be about equal to the relatively low rates of Navy ship
    procurement of the mid- to late 1990s.\10\ For the six shipyards that
    have built the Navy's major warships in recent years, this average ship
    procurement rate would result, as a general matter, in relatively low
    work loads, revenues, and employment levels. Production economies of
    scale would be limited or poor, putting upward pressure on unit
    production costs. Layoffs may occur at some of the yards, and the two
    companies that own these yards may be less inclined to commit to new
    investments aimed at improving the yards' production facilities.
    ---------------------------------------------------------------------------
        \10\ The table below shows the number of battle force ships funded
    by Congress from fiscal year 1982 through fiscal year 2005.
        Battle Force Ships Procured (Fiscal Years 1982-2005)
          1982 - 17    1983 - 14    1984 - 16    1985 - 19    1986 - 20
    1987 - 17
          1988 - 15    1989 - 19    1990 - 15    1991 - 11    1992 - 11
    1993 -  7
          1994 -  4    1995 -  4    1996 -  5    1997 -  4    1998 -  5
    1999 -  5
          2000 -  6    2001 -  6    2002 -  6    2003 -  5    2004 -  7
    2005 -  8
        Source: CRS compilation based on examination of defense
    authorization and appropriation committee and conference reports for
    each fiscal year. The table excludes non-battle force ships that do not
    count toward the 310- or 375-ship goal, such as sealift and
    prepositioning ships operated by the Military Sealift Command and
    oceanographic ships operated by agencies such as the National Oceanic
    and Atmospheric Administration (NOAA).
    ---------------------------------------------------------------------------
    Individual Shipbuilding Programs
        CVN-21 Aircraft Carrier Program
        CVN-21, the next aircraft carrier, is to be built by Northrop
    Grumman Newport News (NGNN). Compared to the fiscal year 2005-fiscal
    year 2009 ship procurement plan submitted to Congress in February 2004,
    the fiscal years 2006-2011 plan would defer the procurement of CVN-21
    by a year, to fiscal year 2008. Navy officials state this was due to
    the need to finance the procurement in fiscal year 2007 of other ships,
    including the lead DD(X) destroyer and the LHA(R) amphibious assault
    ship. The fiscal years 2006-2011 plan would also defer the procurement
    of the carrier after CVN-21 from fiscal year 2011 to fiscal year
    2012.\11\
    ---------------------------------------------------------------------------
        \11\ For more on the CVN-21 program, see CRS Report RS20643, Navy
    CVN-21 Aircraft Carrier Program: Background and Issues for Congress, by
    Ronald O'Rourke.
    ---------------------------------------------------------------------------
        Navy officials state that the deferral of CVN-21 to fiscal year
    2008 increased CVN-21's procurement cost by about $400 million. The
    deferral lengthened the already-considerable production gap at NGNN
    between CVN-21 and the previous carrier, CVN-77, which was procured in
    fiscal year 2001. Lengthening this gap reduced the shipyard's ability
    to efficiently shift workers coming off the CVN-77 production effort
    onto the CVN-21 effort. As a result, workers coming off the CVN-77
    production effort could instead be furloughed, and any new workers
    hired later to support the start of CVN-21 construction could require
    training and be less productive initially than experienced workers.
        The lengthened gap between CVN-77 and CVN-21 may also increase
    costs for attack submarine construction work done at NGNN because that
    work might, for a time, need to bear a somewhat higher share of the
    shipyard's fixed overhead costs.
        SSN-774 Attack Submarine Program
        Virginia (SSN-774) class submarines are built jointly by GD/EB and
    NGNN. The fiscal years 2006-2011 plan would maintain Virginia-class
    procurement at one per year through fiscal year 2011. The fiscal years
    2005-2009 plan had called for increasing Virginia-class procurement to
    two per year starting in fiscal year 2009.\12\ Keeping Virginia-class
    procurement at one per year through fiscal year 2011 would result in
    Virginia-class work loads, revenues, and employment levels at GD/EB and
    NGNN that are about equal to current levels. As a result, production
    economies of scale for submarines would continue to remain limited or
    poor.
    ---------------------------------------------------------------------------
        \12\ For more on the SSN-774 program, see CRS Report RL32418, Navy
    Attack Submarine Force-Level Goal and Procurement Rate: Background and
    Issues for Congress, by Ronald O'Rourke.
    ---------------------------------------------------------------------------
        The part of the submarine industrial base that some observers are
    currently most concerned about is not the construction portion, but the
    design an engineering portion, much of which is resident at GD/EB and
    NGNN. With Virginia-class design work now winding down and no other
    major submarine-design project underway, the submarine design and
    engineering base is facing the near-term prospect, for the first time
    in about 50 years, of having no major submarine design project on which
    to work.
        Some Navy and industry officials are concerned that unless a major
    submarine design project is begun soon, the submarine design and
    engineering base will begin to atrophy through the departure of
    experienced personnel. Rebuilding an atrophied submarine design and
    engineering base, these Navy and industry officials believe, could add
    substantial time and cost to the next submarine design effort, whenever
    it might begin. Concern about this possibility among some Navy and
    industry officials has been strengthened by the U.K.'s recent
    difficulties in designing its new Astute-class SSN. The U.K. submarine
    design and engineering base atrophied for lack of submarine design
    work, and the subsequent Astute-class design effort has experienced
    considerable delays and cost overruns. Submarine designers and
    engineers from GD/EB were assigned to the Astute-class project to help
    the U.K. overcome these problems.\13\
    ---------------------------------------------------------------------------
        \13\ See, for example, Andrew Chuter, ``U.K. Spending Mounts For
    U.S. Help On Sub,'' Defense News, September 13, 2005: 4; Richard Scott,
    ``Electric Boat Provides Project Director For Astute Class,'' Jane's
    Navy International, May 2004: 33; Richard Scott, ``Astute Sets Out On
    The Long Road To Recovery,'' Jane's Navy International, December 2003:
    28-30; Richard Scott, ``Recovery Plan Shapes Up For Astute
    Submarines,'' Jane's Defence Weekly, November 19, 2003: 26.
    ---------------------------------------------------------------------------
        DD(X) Destroyer Program
        DD(X) destroyers are to be built by GD/BIW and/or NG/Ingalls. The
    fiscal year 2005-fiscal year 2009 plan had called for procuring a total
    of eight DD(X)s through fiscal year 2009--one in fiscal year 2005, two
    in fiscal year 2007, another two in fiscal year 2008, and three in
    fiscal year 2009. The fiscal years 2006-2011 plan would reduce
    procurement to one ship per year for the period fiscal years 2007-
    2011.\14\
    ---------------------------------------------------------------------------
        \14\ For more on the DD(X) program, see CRS Report RS21059, Navy
    DD(X) and CG(X) Programs: Background and Issues for Congress, by Ronald
    O'Rourke, and CRS Report RL32109, Navy DD(X), CG(X), and LCS Ship
    Acquisition Programs: Oversight Issues and Options for Congress, by
    Ronald O'Rourke.
    ---------------------------------------------------------------------------
        A comparison of the fiscal years 2006-2011 plan to the fiscal years
    2005-2009 plan suggests at first that the fiscal years 2006-2011 plan
    has deferred the procurement of the lead DD(X) destroyer by 2 years, to
    fiscal year 2007. The actual effect of the fiscal years 2006-2011 plan
    on the schedule for building this ship, however, appears to be less
    dramatic.\15\
    ---------------------------------------------------------------------------
        \15\ The Navy's fiscal year 2005-fiscal year 2009 plan proposed
    funding the construction of the lead DD(X) in the Navy's research and
    development account through a stream of annual funding increments
    stretching out to fiscal year 2011--an approach commonly known as
    incremental funding. Under this proposed scheme, the Navy had some
    flexibility to choose which year to record as the nominal year of
    procurement for the lead DD(X). The Navy chose fiscal year 2005, the
    year of the first scheduled increment, even though the amount of
    funding requested for the fiscal year 2005 increment equated to only
    about 8 percent of the ship's total cost, leaving the remaining 92
    percent of the ship's cost to be provided in future years.
        Congress, in acting on the Navy's proposed fiscal year 2005 budget,
    approved the Navy's fiscal year 2005 funding request for the lead DD(X)
    but directed that the ship be procured the traditional way, through the
    Navy's shipbuilding account (known formally as the Shipbuilding and
    Conversion, Navy, or SCN, account), and that it be funded the
    traditional way, in accordance with the full funding policy, which
    requires that items acquired through the procurement title of the DOD
    appropriation act be fully funded in the year they are procured.
    Consistent with this direction, the fiscal year 2005 funding increment
    was designated as advance procurement (AP) funding for a lead DD(X) to
    be procured in some future fiscal year.
        Abiding by this direction required the Navy to alter its funding
    profile for the lead DD(X) to one that fully funds the ship in a
    particular year. The fiscal year 2006-fiscal year 2011 plan suggests
    that the Navy, after examining its options, selected fiscal year 2007
    as the year in which the ship would be fully funded. The actual
    schedule for building the lead ship, however, may delayed by about a
    year rather than 2 years. Consequently, although the nominal year of
    procurement for the lead DD(X) appears to have been deferred 2 years,
    the actual amount of change in the schedule for the lead ship may be
    less.
    ---------------------------------------------------------------------------
        The fiscal years 2006-2011 Navy plan, however, defers the
    procurement of the second DD(X) by a year, to fiscal year 2008, and as
    mentioned above, reduces DD(X) procurement to one per year for the 5-
    year period fiscal years 2007-2011.
        The Navy has recently testified that it requires a total of 8 to 12
    DD(X)s. Under previous plans, however, the Navy envisioned stopping
    DD(X) procurement at about the time that it started CG(X) procurement.
    If the lead CG(X) is procured in fiscal year 2011, as shown in the
    fiscal years 2006-2011 plan, and there is a gap year in fiscal year
    2012 between the procurement of the lead CG(X) and follow-on CG(X)s
    starting in fiscal year 2013, then a sixth DD(X) might be procured in
    fiscal year 2012. If so, then the total procurement quantity for the
    DD(X) program would be six ships.\16\ The fiscal years 2006-2011 FYDP,
    however, contains no advance procurement funding in fiscal year 2011 to
    support the procurement of a sixth DD(X) in fiscal year 2012.
    ---------------------------------------------------------------------------
        \16\ For more on the DD(X) program, see CRS Report RS21059, Navy
    DD(X) Destroyer Program: Background and Issues for Congress, by Ronald
    O'Rourke; and CRS Report RL32109, Navy DD(X) and LCS Ship Acquisition
    Programs: Oversight Issues and Options for Congress, by Ronald
    O'Rourke.
    ---------------------------------------------------------------------------
        Supporters of the surface combatant industrial base expressed
    concern last year about the gap between the end of DDG-51 procurement
    and the start of DD(X) procurement. This gap, supporters argued, would
    make it difficult for the industrial base to manage the transition from
    DDG-51 production to DD(X) production. The fiscal years 2006-2011 plan
    appears to increase the length of this gap, which would likely
    intensify these concerns.
        The light-ship displacement of the DD(X) design (about 12,135 tons)
    is about 75 percent greater than that of the DDG-51 design (about 6,950
    tons). If shipyard construction work is roughly proportional to light-
    ship displacement, then building a DD(X) might generate about 75
    percent more shipyard work than building a DD(X), and building one
    DD(X) per year would be equivalent to building 1.75 DDG-51s per year.
        Supporters of GD/BIW and NG/Ingalls have argued in previous years
    that three DDG-51s per year, in conjunction with other work being
    performed at the two yards (particularly NG/Ingalls), is the minimum
    rate needed to maintain the financial health of the two yards. Navy
    officials in recent years have questioned whether this figure is still
    valid. Building the equivalent of 1.75 DDG-51s per year equates to
    about 58 percent of this rate. If the minimum rate of three DDG-51
    equivalents per year is valid, then the one-per-year procurement rate
    for the DD(X) program may raise questions about the potential future
    financial health of these yards.
        Until recently, the DD(X) acquisition strategy called for the first
    DD(X) to be built by NG/Ingalls and the second by GD/BIW, and for the
    construction contracts for the first six DD(X)s to be divided evenly
    between the two yards. As a result of the reduction in the planned
    DD(X) procurement rate, however, the Navy is considering holding a
    competition between the two yards for the right to become the sole
    builder of the DD(X).
        If the Navy holds such a competition, then the consequences for the
    yard that loses the competition could be very serious. GD/BIW is
    involved as a shipbuilder in no shipbuilding programs other than the
    DDG-51 and DD(X).\17\ Consequently, if GD/BIW loses the DD(X)
    competition and does not receive other new ship-construction work, then
    GD/BIW could experience a significant reduction in workloads, revenues,
    and employment levels by the end of the decade. Theoretical scenarios
    for the yard under such circumstances could include closure and
    liquidation of the yard, the ``mothballing'' of the yard or some
    portion of it, or reorienting the yard into one that focuses on other
    kinds of work, such as building commercial ships, overhauling and
    modernizing Navy or commercial ships, or fabricating components of Navy
    or commercial ships that are being built by other yards. Reorienting
    the yard into one that focuses on other kinds of work, if feasible,
    would likely result in workloads, revenues, and employment levels that
    are significantly reduced from today's.
    ---------------------------------------------------------------------------
        \17\ GD/BIW is also the prime contractor for the GD version of the
    LCS, but the GD version is to be built by the Austal USA shipyard, of
    Mobile, AL.
    ---------------------------------------------------------------------------
        If NGSS loses the DD(X) competition and other work being done at
    NG/Ingalls (particularly construction of amphibious ships) does not
    increase, then NG/Ingalls could similarly experience a reduction in
    workloads, revenues, and employment levels. The continuation of
    amphibious-ship construction at NG/Ingalls could make the scenarios of
    closure and liquidation or mothballing less likely for NG/Ingalls than
    for GD/BIW, but workloads, revenues, and employment levels could still
    be reduced from current levels, and the cost of amphibious-ship
    construction and other work done at NG/Ingalls could increase due to
    reduced spreading of shipyard fixed overhead costs.
        If surface-combatant construction work at GD/BIW or NG/Ingalls
    ceases, the Navy would be left with one yard actively building larger,
    complex surface combatants. If the Navy at some point wanted to
    reestablish a second source for building these ships, its options would
    include reconstituting surface combatant construction at the yard where
    the work had ceased, reconstituting it at some other yard with past
    experience building larger surface combatants--such as NGNN, which
    built nuclear-powered cruisers in the 1970s, NG/Avondale, which built
    Knox (FF-1052) class frigates in the 1970s and Hamilton (WHEC-715)
    class Coast Guard cutters in the 1960s and 1970s, or perhaps Todd
    Pacific Shipyards of Seattle, WA, which built Oliver Hazard Perry (FFG-
    7) class frigates in the 1980s \18\--or establishing it at a yard that
    has not previously built larger, complex surface combatants, but could
    be made capable of doing so.
    ---------------------------------------------------------------------------
        \18\ The Navy's FFG-7s were built at GD/BIW, Todd Pacific
    Shipyards, and Todd Shipyards of San Pedro, CA. The San Pedro yard is
    now part of Southwest Marine, Inc., which in turn is part of United
    States Marine Repair, a group of shipyards that focuses on repairing,
    modernizing, converting, and overhauling nonnuclear-powered ships.
    ---------------------------------------------------------------------------
        LPD-17 Amphibious Ship Program
        San Antonio (LPD-17) class amphibious ships are built by NGSS,
    particularly NG/Avondale. The fiscal years 2006-2011 plan would end
    procurement of LPD-17s after procuring the ninth ship in the class in
    fiscal year 2007. Previous plans had generally called for building a
    total of 12 LPD-17s through fiscal year 2010.\19\ Under the fiscal
    years 2006-2011 plan, workloads, revenues, and employment levels
    associated with building LPD-17s would wind down about 3 years earlier
    than under previous plans. NG/Avondale might be able to compensate for
    this by beginning to build TAOE(X) resupply ships or MPF(F) ships, but
    procurement of these ships is not scheduled to start until fiscal year
    2009, suggesting that NG/Avondale might experience a dip in workloads,
    revenues, and employment levels between the winding down of LPD-17
    production and the scaling up of TAOE(X) or MPF(F) production. It is
    not certain, moreover, whether NG/Avondale will participate in building
    either of these ships.
    ---------------------------------------------------------------------------
        \19\ For more on the LPD-17 program, see CRS Report RL32513, Navy-
    Marine Corps Amphibious and Maritime Prepositioning Ship Programs:
    Background and Oversight Issues for Congress, by Ronald O'Rourke.
    ---------------------------------------------------------------------------
        LHA(R) Amphibious Ship Program
        The LHA(R) amphibious assault ship would be built by NGSS,
    primarily NG/Ingalls. Compared to the fiscal years 2005-2009 plan, the
    fiscal years 2006-2011 plan would accelerate the procurement of LHA(R)
    by 1 year, to fiscal year 2007. The fiscal years 2004-2009 shipbuilding
    plan that the Navy submitted to Congress in February 2003 showed LHA(R)
    in fiscal year 2007. Accelerating procurement of LHA(R) to fiscal year
    2007 can thus be viewed as restoring the year of procurement shown in
    the plan submitted to Congress in 2003.\20\ The acceleration of LHA(R)
    to fiscal year 2007 would improve NG/Ingalls' ability to shift workers
    from the previous amphibious assault ship, LHD-8, to LHA(R), and
    perhaps help NG/Ingalls somewhat in managing the potential consequences
    of decisions regarding the DD(X) program.
    ---------------------------------------------------------------------------
        \20\ For more on the LHA(R) program, see CRS Report RL32513, Navy-
    Marine Corps Amphibious and Maritime Prepositioning Ship Programs:
    Background and Oversight Issues for Congress, by Ronald O'Rourke.
    ---------------------------------------------------------------------------
        TAKE Auxiliary Cargo Ship Program
        Lewis and Clark (TAKE-1) class auxiliary cargo ships are built by
    GD/NASSCO. Under the fiscal years 2005-2009 plan, the final three ships
    in the program were to be procured in fiscal year 2006 (two ships) and
    fiscal year 2007 (one ship). The fiscal years 2006-2011 plan would
    instead procure these ships at a rate of one per year during the 3-year
    period fiscal years 2006-2008. As a consequence, employment at the yard
    associated with building these ships may start to decline around fiscal
    year 2006 rather than fiscal year 2007, but construction work on these
    ships would continue for an additional year into the future before
    ceasing.
        TAOE(X) Replenishment Ship Program
        The fiscal years 2005-2009 plan called for procuring the first two
    TAOE(X) ships in fiscal year 2009. The fiscal years 2006-2011 plan
    reduces the fiscal year 2009 procurement to one ship. This would appear
    to reduce the potential of the TAOE(X) program to serve as a new source
    of work in fiscal year 2009 for yards that may be attempting to
    compensate at that time for the winding down of other shipbuilding
    programs.
        MPF(F)/MPF(A) Maritime Prepositioning Ship Program
        The fiscal years 2005-2009 plan included three MPF-type ships in
    fiscal year 2009--two MPF(F)s and one MPF(A) (an aviation variant of
    the MPF(F) design). The fiscal years 2006-2011 plan would reduce MPF-
    type procurement to one ship in fiscal year 2009.\21\ This would
    similarly appear to reduce the potential of the MPF program to serve as
    a new source of work in fiscal year 2009 for yards that may be
    attempting to compensate at that time for the winding down of other
    shipbuilding programs.
    ---------------------------------------------------------------------------
        \21\ For more on the MPF(F) program, see CRS Report RL32513, op
    cit.
    ---------------------------------------------------------------------------
    Options For Supporting Shipbuilding Industrial Base
        Aircraft Carrier Industrial Base
        One option for supporting the aircraft carrier industrial base
    would be to restore fiscal year 2007 as the year of procurement for
    CVN-21, which would shorten the gap in production between CVN-77 and
    CVN-21 and thereby reduce the cost of CVN-21 (and possibly also costs
    for submarine construction work at NGNN). Restoring fiscal year 2007 as
    CVN-21's year of procurement might be facilitated by making greater use
    of incremental funding for CVN-21 than currently planned, by using
    advance appropriations for CVN-21, by transferring CVN-21's detailed
    design and non-recurring engineering (DD/NRE) costs to the Navy's
    research and development account, where they could be incrementally
    funded, or by using incremental funding or advance appropriations to
    fund other ships currently planned for fiscal year 2007, such as LHA(R)
    or the lead DD(X).\22\
    ---------------------------------------------------------------------------
        \22\ For more on the potential use of incremental funding or
    advance appropriations in Navy ship procurement, see CRS Report
    RL32776, Navy Ship Procurement: Alternative Funding Approaches--
    Background and Options for Congress, by Ronald O'Rourke.
    ---------------------------------------------------------------------------
        Submarine Industrial Base
        One option for supporting the design and engineering portion of the
    submarine industrial base would be to design a new type of submarine.
    In recent months, two options have emerged for designing and procuring
    a new type of attack submarine. One option involves designing a non-
    nuclear-powered submarine equipped with an air-independent propulsion
    (AIP) system that could be procured in tandem with Virginia-class SSNs.
    The other option involves designing a reduced-cost SSN using new
    ``Tango Bravo'' technologies being developed by the Navy that would be
    procured as a successor to the Virginia-class design. Some or all of
    $600-million fund included in the fiscal years 2006-2011 FYDP for ``a
    future undersea superiority system'' could be used to help finance
    either option.
        AIP-Equipped Non-Nuclear-Powered Submarine
        The OFT report on potential fleet platform architectures that is
    discussed later in this testimony proposed a future Navy consisting of
    several new kinds of ships, including AIP-equipped non-nuclear-powered
    submarines.\23\ AIP-equipped submarines are currently being acquired by
    certain foreign navies.
    ---------------------------------------------------------------------------
        \23\ See also Christopher J. Castelli, ``Defense Department Nudges
    Navy Toward Developing Diesel Subs,'' Inside the Navy, March 7, 2005;
    Dave Ahearn, ``Lawmakers Assail Navy Budget, But Eye Non-Nuke Subs,''
    Defense Today, March 3, 2005.
    ---------------------------------------------------------------------------
        An AIP system such as a fuel-cell or closed-cycle diesel engine
    extends the stationary or low-speed submerged endurance of a non-
    nuclear-powered submarine. A conventional diesel-electric submarine has
    a stationary or low-speed submerged endurance of a few days, while an
    AIP-equipped submarine may have a stationary or low-speed submerged
    endurance of up to 2 or 3 weeks.
        An AIP system does not, however, significantly increase the high-
    speed submerged endurance of a non-nuclear-powered submarine. A non-
    nuclear-powered submarine, whether equipped with a conventional diesel-
    electric propulsion system or an AIP system, has a high-speed submerged
    endurance of perhaps 1 to 3 hours, a performance limited by the
    electrical storage capacity of the submarine's batteries, which are
    exhausted quickly at high speed.
        In contrast, a nuclear-powered submarine's submerged endurance, at
    any speed, tends to be limited by the amount of food that it can carry.
    In practice, this means that a nuclear-powered submarine can remain
    submerged for weeks or months at a time, operating at high speeds
    whenever needed.
        AIP submarines could be procured in tandem with Virginia-class
    boats. One possibility, for example, would be to procure one Virginia-
    class boat plus one or more AIP submarines each year.
        Reduced-Cost ``Tango Bravo'' SSN
        The Virginia class was designed in the early to mid-1990s, using
    technologies that were available at the time. New technologies that
    have emerged since that time may now permit the design of a new SSN
    that is substantially less expensive than the Virginia-class design,
    but equivalent in capability. The Navy and the Defense Advanced
    Research Projects Agency (DARPA) are now pursuing the development of
    these technologies under a program called Tango Bravo, a name derived
    from the initial letters of the term ``technology barriers.'' As
    described by the Navy,

              Tango Bravo will execute a technology demonstration program
            to enable design options for a reduced-size submarine with
            equivalent capability as the Virginia-class design. Implicit in
            this focus is the goal to reduce platform infrastructure and,
            ultimately, the cost of future design and production.
            Additionally, reduced platform infrastructure provides the
            opportunity for greater payload volume.
              The intent of this collaborative effort is to overcome
            selected technology barriers that are judged to have a
            significant impact on submarine platform infrastructure cost.
            Specifically, DARPA and the Navy will jointly formulate
            technical objectives for critical technology demonstrations in
            (a) shaftless propulsion, (b) external weapons, (c) conformal
            alternatives to the existing spherical array, (d) technologies
            that eliminate or substantially simplify existing submarine
            systems, and (e) automation to reduce crew workload for
            standard tasks.\24\
    ---------------------------------------------------------------------------
        \24\ Navy information paper on advanced submarine system
    development provided to CRS by Navy Office of Legislative Affairs, Jan.
    21, 2005. For additional discussion of the Tango Bravo program, see
    Aarti Shah, ``Tango Bravo Technology Contract Awards Expected This
    Spring,'' Inside the Navy, March 14, 2005; Andrew Koch, ``US Navy In
    Bid To Overhaul Undersea Combat,'' Jane's Defence Weekly, March 9,
    2005: 11; Lolita C. Baldor, ``Smaller Subs Could Ride Waves Of The
    Future,'' NavyTimes.com, February 4, 2005; Robert A. Hamilton, ``Navy,
    DARPA Seek Smaller Submarines,'' Seapower, February 2005: 22, 24-25.

        Some Navy and industry officials believe that if these technologies
    are developed, it would be possible to design a new submarine
    equivalent in capability to the Virginia class, but with a procurement
    cost of perhaps no more than 67 percent of the Virginia class, and
    possibly less. Such a submarine could more easily be procured within
    available resources at a rate of two per year, which is a rate that the
    Navy would need to start in fiscal year 2012 or fiscal year 2013, and
    sustain for a period of about 12 years, to avoid having the SSN force
    drop below 40 boats.
        Consequently, as an alternative to the option of procuring AIP
    submarines, another option would be to start design work now on a new
    ``Tango Bravo'' SSN. The goal of such an effort could be to produce an
    SSN design with capability equivalent to that of Virginia class and a
    procurement cost that is no more than 67 percent that of the Virginia
    class. The idea of designing a submarine with these features has been
    discussed by Navy and industry officials. Under this option, Virginia-
    class procurement could continue at one per year until the Tango Bravo
    submarine was ready for procurement, at which point Virginia-class
    procurement would end, and procurement of the Tango Bravo submarine
    would begin.
        If design work on a Tango Bravo submarine is begun now and pursued
    in a concerted manner, the first Tango Bravo submarine might be ready
    for procurement by fiscal year 2011. (Some industry officials believe
    that under ideal program conditions, the lead ship could be procured
    earlier than fiscal year 2011; conversely, some Navy officials believe
    the lead ship might not be ready for procurement until after fiscal
    year 2011.) If the lead ship is procured in fiscal year 2011, then the
    procurement rate could be increased to two per year starting in fiscal
    year 2012 or fiscal year 2013, meeting the time line needed to avoid
    falling below 40 boats.
        Factors To Consider In Assessing Options
        In weighing these options against one another, and against the
    option of simply continuing to procure Virginia-class SSNs, potential
    factors for Congress to consider include cost, capability, technical
    risk, and effect on the industrial base. Each of these is discussed
    below.
        Cost. The Virginia-class program has a projected total development
    cost of roughly $4 billion. An AIP submarine or Tango Bravo SSN could
    similarly require billions of dollars in up-front costs to develop.
        The OFT report recommended substituting four AIP-submarines for one
    Virginia-class submarine in each carrier strike group, suggesting that
    four AIP submarines might be procured for the same cost ($2.4 billion
    to $3.0 billion in the fiscal years 2006-2011 FYDP) as one Virginia-
    class submarine. This suggests an average unit procurement cost for an
    AIP submarine of roughly $600 million to $750 million each when
    procured at a rate of four per year. Although AIP submarines being
    built by other countries might cost this much to procure, a U.S. Navy
    AIP submarine might be built to higher capability standards and
    consequently cost more to procure, possibly reducing the equal-cost
    ratio of substitution to three to one or possibly something closer two
    to one. If so, then the annual cost of procuring one Virginia-class SSN
    plus one, two, or perhaps three AIP submarines could be equal to or
    less than that of procuring two Virginia-class boats per year.
        If the procurement cost of a Tango Bravo SSN were no more than 67
    percent that of a Virginia-class boat, then the annual procurement cost
    of two Tango Bravo SSNs could be equal to no more than 1.33 Virginia-
    class SSNs.
        Capability. As a consequence of their very limited high-speed
    submerged endurance, non-nuclear-powered submarines, even those
    equipped with AIP systems, are not well suited for submarine missions
    that require:

             long, completely stealthy transits from home port to
            the theater of operation,
             submerged periods in the theater of operation lasting
            more than 2 or 3 weeks, or
             submerged periods in the theater of operation lasting
            more than a few hours or days that involve moving the submarine
            at something more than low speed.

        With regard to the first of the three points above, the OFT report
    proposes transporting the AIP submarines into the overseas theater of
    operations aboard a transport ship.\25\ In doing so, the OFT report
    accepts that the presence of a certain number of U.S. AIP submarines in
    the theater of operations will become known to others. A potential
    force-multiplying attribute of having an SSN in a carrier strike group,
    in contrast, is that the SSN can be detached from the strike group, and
    redirected to a different theater to perform some other mission,
    without alerting others to this fact. Opposing forces in the strike
    group's theater of operations could not be sure that the SSN was not in
    their own area, and could therefore continue to devote resources to
    detecting and countering it. This would permit the SSN to achieve
    military effects in two theaters of operation at the same time--the
    strike group's theater of operations, and the other theater to which it
    is sent.
    ---------------------------------------------------------------------------
        \25\ The strategy of transporting the AIP submarines to the theater
    using transport ships is not mentioned in the 25 report but was
    explained at a Feb. 18, 2005 meeting between CRS and analysts who
    contributed to the OFT report.
    ---------------------------------------------------------------------------
        With regard to the second and third points above, the effectiveness
    of an AIP submarine would depend on what kinds of operations the
    submarine might need to perform on a day-to-day basis or in conflict
    situations while operating as part of a forward-deployed carrier strike
    group.
        One risk of a plan to begin procuring AIP submarines while
    continuing to procure Virginia-class submarines at one per year is that
    financial pressures in future years could lead to a decision to
    increase procurement of AIP submarines while reducing procurement of
    Virginia-class submarines to something less than one per year. Such a
    decision would result in a total submarine force with more AIP
    submarines and fewer SSNs than planned, and consequently with
    potentially insufficient capability to meet all submarine mission
    requirements. This possibility is a principal reason why supporters of
    the U.S. nuclear-powered submarine fleet traditionally have strongly
    resisted the idea of initiating construction of non-nuclear-powered
    submarines in this country.
        One risk of a plan to shift to procurement of Tango Bravo SSNs is
    that financial pressures in future years could lead to a decision to
    limit procurement of Tango Bravo SSNs to one per year. If the Tango
    Bravo SSN were equivalent in capability to the Virginia-class, however,
    this would produce a U.S. SSN force no less capable than would have
    resulted if Virginia-class procurement were continued at one per year.
        Technical Risk. Developing and designing an AIP submarine would
    entail a certain amount of technical risk, particularly since a non-
    nuclear-powered combat submarine has not been designed and procured for
    the U.S. Navy since the 1950s.
        Developing and designing a Tango Bravo SSN would similarly entail a
    certain amount of technical risk, particularly with regard to maturing
    the Tango Bravo technologies and incorporating them into an integrated
    SSN design. The earlier the target date for procuring the first Tango
    Bravo SSN, the higher the technical risk might be.
        In contrast to either of these options, simply continuing to
    procure Virginia-class SSNs would likely entail substantially less
    technical risk, unless an attempt were made to incorporate very
    substantial changes into the Virginia-class design, in which case the
    difference in technical risk compared to the two new-design options
    might not be as great.
        Effect On Industrial Base. Starting design work now on a new
    submarine could provide nearterm support to the submarine design and
    engineering portion of the submarine industrial base and thereby help
    maintain that base.
        An AIP submarine could be designed at either GD/EB, NGNN, or a yard
    that currently does not design submarines for the U.S. Navy, such as
    NG/Ingalls. NG/Ingalls has been associated with proposals in recent
    years for building non-nuclear-powered submarines for export to foreign
    countries such as Taiwan. If design work for an AIP submarine were to
    be done at GD/EB, NGNN, or both, it would help maintain certain
    submarine design and engineering skills at one or both of those yards.
    It would not, however, maintain certain skills at those yards related
    to the design and engineering of submarine nuclear propulsion plants.
    If the design were to be done at NG/Ingalls or some other yard, it
    might not directly support the maintenance of any submarine design and
    engineering skills at GD/EB or NGNN.
        A Tango Bravo SSN could be designed by GD/EB, NGNN, or both, so the
    potential effect of a Tango Bravo SSN program on the submarine design
    and engineering base would depend in part on the acquisition strategy
    pursued for the program. At the yard or yards doing the design work, it
    would help to maintain various skills related to the design of nuclear-
    powered submarines, including skills related to the design and
    engineering of submarine nuclear propulsion plants.
        After completing the design of an AIP submarine or Tango Bravo SSN,
    the submarine design and engineering base could turn to designing the
    next-generation ballistic missile submarine (SSBN), the lead ship of
    which might need to be procured around fiscal year 2020. After
    designing this new SSBN, the design and engineering base could turn
    back to designing a follow-on attack submarine that would take
    advantage of technologies even more advanced than those available
    today. This sequence of three successive submarine design projects
    could help maintain the submarine design and engineering base for the
    next 15 or so years.
        The potential effect of an AIP submarine procurement program on the
    construction portion of the submarine industrial base would depend in
    part on where the submarines would be built. AIP submarines could be
    built at either GD/EB, NGNN, or a yard that currently does not build
    submarines, such as NG/Ingalls. If financial pressures in future years
    lead to a decision to increase procurement of AIP submarines while
    reducing procurement of Virginia-class submarines to something less
    than one per year, this would benefit the yard building the AIP
    submarines but reduce Virginia-class construction work at GD/EB and
    NGNN below levels that might have occurred under the option of simply
    continuing with Virginia-class procurement.
        A Tango Bravo SSN could be built at either GD/EB, NGNN, or both, so
    the potential effect of a Tango Bravo SSN program on the submarine
    construction industrial base would depend in part on the acquisition
    strategy pursued for the program. If Tango Bravo SSNs were procured at
    a rate of two per year, this could result in a greater total volume of
    SSN construction work than might have occurred under the option of
    simply continuing with Virginia-class procurement. Conversely, if
    financial pressures in future years lead to a decision to limit
    procurement of Tango Bravo SSNs to one per year, this could result in a
    lower total volume of SSN construction work than might have occurred
    under the option of simply continuing with Virginia-class procurement.
        Surface Combatant Industrial Base
        Options for supporting the surface combatant industrial base can be
    divided into options for supporting the base between now and about
    fiscal year 2011, and options for supporting the base in fiscal year
    2011 and beyond. Options for supporting the surface combatant
    industrial base between now and fiscal year 2011, many of which could
    be combined, include the following:

             accelerating procurement of the first one or two
            DD(X)s by a year;
             procuring additional DD(X)s;
             procuring additional DDG-51s;
             procuring additional LPD-17 or LHA(R) amphibious
            ships;
             transferring construction of LCSs to these yards;
             modernizing Ticonderoga (CG-47) class Aegis cruisers;
             modernizing Arleigh Burke (DDG-51) class Aegis
            destroyers, perhaps more extensively than currently planned by
            the Navy; and
             accelerating and expanding procurement of large and
            medium Deepwater cutters for the Coast Guard.

        Accelerating procurement of the first one or two DD(X)s might be
    facilitated by transferring DD(X) DD/NRE costs to the Navy's research
    and development account, where they could be incrementally funded, or
    by using incremental funding or advance appropriations for these ships.
        The Navy has no requirement for additional DDG-51s, but the last
    five DDG-51s were arguably procured in part for industrial-base
    purposes,\26\ and if additional DDG-51s were procured, the Navy would
    find ways to make good use of them.
    ---------------------------------------------------------------------------
        \26\ The Navy for several years stated that it planned to build a
    total of 57 DDG-51s. A total of 62 were procured.
    ---------------------------------------------------------------------------
        Procuring additional LHA(R)s during the period fiscal years 2006-
    2011 might be facilitated by using incremental funding or advance
    appropriations.
        Transferring construction of LCSs to GD/BIW or NG/Ingalls would
    likely increase the cost of these ships due to the higher overhead
    costs of these yards compared to the smaller yards where these ships
    are currently planned to be built. It might also, however, reduce the
    cost of other work being done at GD/BIW or NG/Ingalls by spreading the
    fixed overhead costs of these over a broader workload. It might also
    avoid the risk of the LCS program creating one or more new yards that
    are highly dependent on Navy shipbuilding work, which could make more
    complex the task of managing the shipbuilding industrial base.
        Options for modernizing DDG-51s more extensively than currently
    planned by the Navy include making changes to reduce crewing
    requirements to about 200 people per ship, and lengthening the ships
    with a plug that would permit an increased payload.
        The current Coast Guard Deepwater acquisition program of record
    calls for procuring 31 to 33 large and medium cutters (six to eight
    large cutters and 25 medium cutters) over a period of many years at low
    annual production rates. Some analysts believe that more than 31 to 33
    of these cutters will be needed to fully meet the Coast Guard's
    expanded post-September 11 mission requirements. The RAND Corporation
    published a report in 2003 stating that the Coast Guard might need as
    many as 90 of these ships (44 large cutters and 46 medium cutters) to
    fully meet its post-September 11 mission requirements.\27\ Members of
    Congress and others have expressed interest in accelerating procurement
    of these cutters and in expanding the total number of cutters to be
    procured.
    ---------------------------------------------------------------------------
        \27\ John Birkler, et al., The U.S. Coast Guard's Deepwater Force
    Modernization Plan: Can It Be Accelerated? 27 Will It Meet Changing
    Security Needs?, RAND, National Security Research Division, MR-3128.0-
    USCG, Sept. 2003.
    ---------------------------------------------------------------------------
        In terms of light-ship displacement, four or five large or medium
    Deepwater cutters would be roughly equivalent to one DD(X). Procuring 4
    or 5 of these cutters per year might therefore generate about as much
    shipyard construction work as 1 DD(X) per year, and procuring 8 or 10
    per year might generate about as much shipyard construction work as two
    DD(X)s per year. Although the skill mix for building Deepwater cutters
    is somewhat different than the skill mix for building DD(X)s,
    accelerating and expanding procurement of Deepwater cutters could:

             reduce the Coast Guard's unit procurement costs for
            these ships by procuring them at more economic annual rates;
             increase Coast Guard capabilities toward post-
            September 11 requirements more quickly;
             permit the Coast Guard to retire its aging cutters
            more quickly, thereby eliminating more quickly the high
            operation and support costs of these cutters; and
             help sustain the Navy's surface combatant industrial
            base through a program funded in the budget of the Department
            of Homeland Security (DHS), the Coast Guard's parent
            department, rather than the Navy or DOD budget.\28\
    ---------------------------------------------------------------------------
        \28\ For additional discussion of the Deepwater program, see CRS
    Report RS21019, Coast Guard Deepwater 28 Program: Background and Issues
    for Congress, by Ronald O'Rourke.
    ---------------------------------------------------------------------------
        Options For Fiscal Year 2011 and Beyond
        The decision to reduce DD(X) procurement to one ship per year in
    fiscal years 2007-2011, which appears to have been driven in large part
    by affordability considerations, suggests that, unless budget
    conditions change, the Navy may never be able to afford to procure more
    than one DD(X) or CG(X) per year.
        A procurement rate of one DD(X) or CG(X) per year, if sustained for
    a period of many years, might not be enough to maintain the cruiser-
    destroyer force at desired levels.
        The prospect of a one-per-year rate might also raise questions
    about the potential cost effectiveness of the DD(X)/CG(X) effort when
    measured in terms of average unit acquisition cost, which is the
    average cost to develop and procure each ship. Given the $10 billion in
    research and development funding programmed for the DD(X) program, if
    DD(X)s or CG(X)s are procured at a rate of one per year for 20 or fewer
    years and the combined number of DD(X)s and CG(X)s is consequently 20
    or less, then the average acquisition cost for the DD(X)/CG(X) effort
    could be more than $3 billion per ship.
        Dissatisfaction with a one-per-year procurement rate due to its
    potential effects on force structure or average unit acquisition cost
    could lead to a decision at some point to terminate the DD(X)/CG(X)
    program. If such a decision were made in the near term, the total
    number of ships that might be built under the program could be as low
    as one or two. Under this scenario, a single DD(X) might be procured as
    a technology demonstrator, while a second DD(X) might be procured to
    give the other shipyard experience in building the design.
        Another scenario is that a total of five DD(X)s are procured
    through fiscal year 2011, as currently planned, but that the CG(X)
    program is terminated due to concerns about its procurement cost (which
    may be greater than that of the DD[X]) and questions about the role of
    the CG(X) in the missile-defense mission. Although the DD(X) has been
    described by DOD and others as a bridge to CG(X), there is a
    possibility (some observers say a probability) that industry may cross
    that bridge only to discover that the CG(X) is no longer waiting at the
    other end.
        If the DD(X)/CG(X) effort is terminated at some point and an
    alternative large surface combatant design is not ready to be put into
    procurement, it could place pressures on the surface combatant
    industrial base that are significantly higher than those it currently
    faces under the Navy's fiscal years 2006-2011 plan for procuring
    DD(X)s, with consequences that could be more severe.
        One option for addressing this situation would be to begin design
    work now on a new surface combatant that is substantially less
    expensive to procure than the DD(X)/CG(X). Such a surface combatant
    could be more easily procured within available resources at a rate of
    two ships per year, which might maintain the cruiser-destroyer force at
    a level closer to what the Navy may be planning. A rate of two ships
    per year might also be easier to divide between two shipyards while
    still constraining production costs. This option could aim at having
    the new design ready for procurement in fiscal year 2011, which is when
    CG(X) procurement is currently scheduled to begin.
        Notional options for a less-expensive surface combatant include:

             A roughly 9,000-ton surface combatant;
             A roughly 6,000-ton frigate; and
             A low-cost gunfire support ship.

        Each of these is discussed below. An additional option to consider,
    even though it might not be less expensive in terms of unit procurement
    cost, is the 57,000-ton missile-and-rocket ship proposed in the OFT
    report on alternative fleet platform architectures.
        Roughly 9,000-Ton Surface Combatant (SC(X)). One option for a
    smaller, less expensive, new-design ship would be a new-technology
    surface combatant about equal in size to the Navy's current 9,000-ton
    Aegis cruisers and destroyers. Such a ship, which might be called the
    SC(X) (meaning surface combatant, in development) could:

             be intended as a replacement for either the CG(X)
            program or both the DD(X) and CG(X) programs;
             incorporate many of the same technologies now being
            developed for the DD(X) and CG(X), including, for example,
            technologies permitting a reduced-sized crew and integrated
            electric-drive propulsion;
             cost substantially less to procure than a DD(X) or
            CG(X), and perhaps about as much to procure as a DDG-51
            destroyer;
             be similar to the DD(X) and CG(X) in terms of using a
            reduced-size crew to achieve annual operation and support costs
            that are considerably less than those of the current DDG-51
            design;
             carry a payload--a combination of sensors, weapon
            launchers, weapons, and aircraft--that is smaller than that of
            the DD(X) or CG(X), but comparable to that of current DDG-51s
            or Aegis cruisers.

        A land-attack oriented version of the SC(X) might be able to carry
    one Advanced Gun System (AGS), as opposed to the two on the DD(X). An
    air- and missile-defense version of the SC(X) might have fewer missile
    tubes than CG(X), but still a fairly substantial number.
        Roughly 6,000-Ton Frigate (FFG(X)). A second option for a smaller,
    less expensive, newdesign ship would be a frigate intended as a
    replacement for both the DD(X)/CG(X) effort and the LCS program. The
    option for a new-design frigate was outlined in a March 2003
    Congressional Budget Office (CBO) report on surface combatants and
    CBO's February 2005 report on options for the fiscal year 2006 Federal
    budget.\29\ CBO estimates that such a ship, which it called the FFG(X),
    might displace about 6,000 tons and have a unit procurement cost of
    about $800 million.
    ---------------------------------------------------------------------------
        \29\ U.S. Congressional Budget Office, Transforming the Navy's
    Surface Combatant Force, Mar. 2003, pp. 29 27-28, 63; and U.S.
    Congressional Budget Office, Budget Options, Feb. 2005, pp. 18-19.
    ---------------------------------------------------------------------------
        A 6,000-ton FFG(X) would likely be too small to be equipped with
    the AGS and therefore likely could not provide the additional naval
    gunfire capability that would be provided by the DD(X). A 6,000-ton
    FFG(X) might, however, be capable of performing the non-gunfire
    missions that would be performed by both the DD(X) and the LCS. A
    6,000-ton FFG(X) would could be viewed as a replacement in the surface
    combatant force structure for the Navy's Oliver Hazard Perry (FFG-7)
    class frigates and Spruance (DD-963) class destroyers. Since a 6,000-
    ton FFG(X) would be roughly midway in size between the 4,000-ton FFG-7
    design and the 9,000-ton DD-963 design, it might be suitable for
    carrying more modern versions of the mission equipment currently
    carried by the FFG-7s and DD-963s.
        Low-Cost Gunfire Support Ship. A third option for a smaller, less
    expensive, new-design ship would be a low-cost gunfire support ship--a
    relatively simple ship equipped with one or two AGSs and only such
    other equipment that is needed for basic ship operation. Other than the
    AGSs and perhaps some advanced technologies for reducing crew size and
    thus total life-cycle cost, such a ship could use existing rather than
    advanced technologies so as to minimize development time, development
    cost, and technical risk. Some of these ships might be forward-
    stationed at sites such as Guam or Diego Garcia, so as to be available
    for rapid crewing and movement to potential contingencies in the
    Western Pacific or Indian Ocean/Persian Gulf regions. The goal would be
    to procure specialized AGS-armed ships as a niche capability for the
    Navy, and then forward-station some of that capability so as to
    maximize the odds of being able to bring a desired number of AGSs to an
    overseas theater of operation in a timely manner on those occasions
    when needed.
                 independent studies on fleet architecture \30\
    ---------------------------------------------------------------------------
        \30\ This section includes some material adapted with permission
    from a March 18, 2005 memorandum to the office of Representative Roscoe
    Bartlett.
    ---------------------------------------------------------------------------
    Origin of Studies
        Section 216 of the conference report (H.Rept. 108-354 of November
    7, 2003) on the National Defense Authorization Bill for Fiscal Year
    2004 (H.R. 1588/P.L. 108-136 of November 24, 2003) required the
    Secretary of Defense to provide for two independently performed studies
    on potential future fleet platform architectures (i.e., potential force
    structure plans) for the Navy. Subsection (d) of section 216 stated in
    part that ``The results of each study under this section shall--(1)
    present the alternative fleet platform architectures considered, with
    assumptions and possible scenarios identified for each. . . .'' \31\
    ---------------------------------------------------------------------------
        \31\ Section 216 is an amended version of a provision (Section 217)
    in the House-reported version of H.R. 1588. See pages 28-29 and 612-613
    of H.Rept. 108-354, and pages 255-256 of the House report (H.Rept. 108-
    106 of May 16, 2003) on H.R. 1588.
    ---------------------------------------------------------------------------
        The two studies required by Section 216 were conducted by the
    Center for Naval Analyses (CNA) and the Office of Force Transformation
    (OFT) and were submitted to the congressional defense committees in
    February 2005.
        A third independent study on potential future fleet platform
    architectures was conducted by the Center for Strategic and Budgetary
    Assessments (CSBA). CSBA conducted this study on its own initiative and
    made it available to congressional and other audiences in March 2005 as
    an alternative to the CNA and OFT studies.
    Force Structure Recommendations
        CNA Report \32\
    ---------------------------------------------------------------------------
        \32\ Delwyn Gilmore, with contributions by Mark Lewellyn et al,
    Report to Congress Regarding Naval Force Architecture. Alexandria (VA),
    Center for Naval Analyses, 2005. (CRM D0011303.A2/1Rev, Jan. 2005) 60
    pp. (Hereafter CNA report.)
    ---------------------------------------------------------------------------
        The CNA report uses essentially the same kinds of ships and naval
    formations as those planned by the Navy. The report recommends a Navy
    force structure range of 256 to 380 ships. The low end of the range
    assumes a greater use of crew rotation and overseas homeporting of Navy
    ships than the high end. Table 2 compares the CNA-recommended force
    range to the Navy's 375-ship fleet proposal of 2002-2004 and the
    notional 260- and 325-ship fleets for fiscal year 2035 presented in the
    Navy's March 2005 interim report to Congress.

                                   TABLE 2. CNA--RECOMMENDED FORCE AND OTHER PROPOSALS
    ----------------------------------------------------------------------------------------------------------------
                                                                                                Notional Navy fleets
                                                          CNA force range    375-ship proposal  for fiscal year 2035
                         Ship type                             Navy          of 2002-2004 \1\  ---------------------
                                                                                                260 ships  325 ships
    ----------------------------------------------------------------------------------------------------------------
    Ballistic missile submarines (SSBNs)..............                 14                  14         14         14
    Cruise missile submarines (SSGNs).................                  4                   4          4          4
    Attack submarines (SSNs)..........................           38 to 62                  52         37         41
    Aircraft carriers.................................           10 to 12                  12         10         11
    Cruisers and destroyers...........................          66 to 112                 109         67         92
    Littoral combat ships (LCSs)......................           40 to 70                  56         63         82
    Amphibious ships..................................           18 to 30                  36         17         24
    Maritime Prepositioning Force (Future) ships......           19 to 21                  18         14         20
    Combat logistics (resupply) ships.................           25 to 33                  33         24         26
    Other \2\.........................................                 22                  41         10         11
    ----------------------------------------------------------------------------------------------------------------
      Total battle force ships........................         256 to 380                 375        260       325
    ----------------------------------------------------------------------------------------------------------------
    Source: Table prepared by CRS based on CNA report and March 2005 Navy report.
    \1\ Composition as shown in CNA report as the program of record for 2022. An earlier and somewhat different
      composition is shown in CRS Report RL32665.
    \2\ Includes command ships, support ships (such as salvage ships and submarine tenders), dedicated mine warfare
      ships, and sea basing connector ships.

    OFT Report
        The OFT report \33\ employs eight new ship designs that differ
    substantially from the designs of most ships currently in the fleet,
    under construction, or planned for procurement. Among the eight new
    ship designs are four types of large surface ships that would be built
    from a common, relatively inexpensive, merchant-like hull design
    developed in 2004 for the Navy's Maritime Prepositioning Force (Future)
    analysis of alternatives. These four types of ships, which would all
    displace 57,000 tons, include:
    ---------------------------------------------------------------------------
        \33\ U.S. Department of Defense, Office of the Secretary of
    Defense, Alternative Fleet Architecture Design. 33 Washington, 2005.
    (Report for the Congressional Defense Committees, Office of Force
    Transformation). 101 pp. (Hereafter OFT report.)

             An aircraft carrier that would embark a notional air
            wing of 30 Joint Strike Fighters (JSFs), 6 MV-22 Osprey tilt-
            rotor aircraft, and 15 unmanned air vehicles (UAVs). The total
            of 36 manned aircraft is about half as many as in today's
            carrier air wings, and the OFT architecture envisages
            substituting two of these new carriers for each of today's
            carriers. This new carrier would also have support spaces for
            unmanned underwater vehicles (UUVs), unmanned surface vehicles
            (USVs), and mission modules for the 1,000-ton surface combatant
            described below.
             A missile-and-rocket ship that would be equipped with
            360 vertical launch system (VLS) missile tubes and four
            trainable rocket launchers. Additional spaces on this ship
            could be used to support UUVs, USVs, and mission modules for
            the 1,000-ton surface combatant. Alternatively, these spaces
            could be used to provide limited stowage and working space for
            the 100-ton surface combatant described below, and mission
            modules for these 100-ton ships.
             An amphibious assault ship that would embark a
            notional air wing of either 30 CH-46 equivalents or 6 JSFs, 18
            MV-22s, and 3 gyrocopter heavy-lift helicopters. It would also
            have spaces for Marine Corps equipment, unmanned vehicles, and
            mission modules for the 1,000-ton surface combatant.
             A ``mother ship'' for small combatants that would
            contain stowage and support spaces for the 100-ton surface
            combatant described below.

        The four other new-design ships in the OFT architecture are:

             A 13,500-ton aircraft carrier based on a conceptual
            surface effect ship (SES)/catamaran hull design developed in
            2001 by a team at the Naval Postgraduate School. This ship
            would embark a notional air wing of 8 JSFs, 2 MV-22s, and 8
            UAVs. The total of 10 manned aircraft is roughly one-eighth as
            many as in today's carrier air wings, and the OFT architecture
            envisages substituting eight of these new carriers for each of
            today's carriers. This new ship would have a maximum speed of
            50 to 60 knots.
             A 1,000-ton surface combatant with a maximum speed of
            40 to 50 knots and standard interfaces for accepting various
            modular mission packages. These ships would self-deploy to the
            theater and would be supported in theater by one or more of the
            57,000-ton ships described above.
             A 100-ton surface combatant with a maximum speed of 60
            knots and standard interfaces for accepting various modular
            mission packages. These ships would be transported to the
            theater by the 57,000-ton mother ship and would be supported in
            theater by that ship and possibly also the 57,000-ton missile-
            and-rocket ship.
             A non-nuclear-powered submarine equipped with an air-
            independent propulsion (AIP) system. These AIP submarines would
            be lower-cost supplements to the Navy's nuclear-powered
            submarines (SSNs) and would be transported from home port to
            the theater of operations by transport ships. The OFT
            architecture envisages substituting four of these submarines
            for the SSN in each carrier strike group.\34\
    ---------------------------------------------------------------------------
        \34\ The report states that ``Alternatives to the SSNs in
    formations were diesel Air Independent Propulsion (AIP) submarines and
    unmanned undersea vehicles (UUVs). The AIP submarines were substituted
    for Virginia class SSNs on a cost basis of roughly four to one. These
    submarines could be nuclear-powered if they are designed and built
    based upon a competitive, cost suppressing business model.'' (Page 60)
    The strategy of transporting the AIP submarines to the theater using
    transport ships is not mentioned in the report but was explained at a
    February 18, 2005 meeting between CRS and analysts who contributed to
    the OFT report.

        The 1,000- and 100-ton surface combatants would be built as
    relatively inexpensive sea frames, like the LCS.
        The OFT report combines these eight types of ships, plus the Navy's
    currently planned TAOE-class resupply ship, into a fleet that would
    include a much larger total number of ships than planned by the Navy,
    about the same number of carrier-based aircraft as planned by the Navy,
    and large numbers of unmanned systems. The OFT report presents three
    alternative versions of this fleet, which the report calls Alternatives
    A, B, and C. The report calculates that each of these alternatives
    would be equal in cost to the equivalent parts of the Navy's 375-ship
    proposal. Each of these alternative force structures, like the
    equivalent parts of the Navy's 375-ship proposal, would be organized
    into 12 carrier strike groups (CSGs), 12 expeditionary strike groups
    (ESGs), and 9 surface strike groups (SSGs). The three alternative force
    structures are shown in Table 3 below.

              TABLE 3. ALTERNATIVE FLEET STRUCTURES FROM OFT REPORT
    ------------------------------------------------------------------------
                                                    Alternative
                Ship type             --------------------------------------
                                            A            B            C
    ------------------------------------------------------------------------
    57,000-ton aircraft carrier......          24           24            0
    57,000-ton missile-and-rocket              33           33           33
     ship............................
    57,000-ton amphibious assault              24           24           24
     ship............................
    57,000-ton mother ship...........           0           24           24
    13,500-ton aircraft carrier......           0            0           96
    1,000-ton surface combatant......         417            0            0
    100-ton surface combatant........           0          609          609
    AIP submarine....................          48           48           48
    TAOE-class resupply ship.........          12           12           12
    ----------------------------------
      Subtotal 1,000- and 100-ton             417          609          609
       ships.........................
    ------------------------------------------------------------------------
      Subtotal other ships...........         141          165          237
    ------------------------------------------------------------------------
        Total ships \1\..............         558          774         846
    ------------------------------------------------------------------------
    Source: Table prepared by CRS based on figures in OFT report.
    \1\ The totals shown in early copies of the OFT report are 36 ships
      lower in each case due to an error in those copies in calculating the
      numbers of ships in the 12 carrier strike groups.

        The totals shown in the table do not include SSNs, cruise missile
    submarines (SSGNs), and ballistic missile submarines (SSBNs) operating
    independently of the 12 CSGs, 12 ESGs, and 9 SSGs. The totals also do
    not include combat logistics ships other than the TAOEs (e.g., oilers,
    ammunition ships, and general stores ships) and fleet support ships.
    The Navy's 375-ship proposal, by comparison, includes all these kinds
    of ships.
        As can be seen from the shaded cells in the table, the difference
    between Alternatives A and B is that the former uses 1,000-ton surface
    combatants while the latter uses 100-ton surface combatants that are
    transported into the theater by mother ships, and the difference
    between Alternatives B and C is that the former uses 57,000-ton
    aircraft carriers while the latter substitutes 13,500-ton carriers.
    CSBA Report
        The CSBA report \35\ uses many of the same ship designs currently
    planned by the Navy, but also proposes some new ship designs. The CSBA
    report also proposes ship formations that in some cases are different
    than those planned by the Navy. Table 4 below compares the CSBA-
    recommended force structure to CNA's recommended force range, the
    Navy's 375-ship fleet proposal of 2002-2004, and the notional 260- and
    325-ship fleets for fiscal year 2035 presented in the Navy's March 2005
    interim report to Congress.
    ---------------------------------------------------------------------------
        \35\ Robert O. Work, Winning the Race: A Naval Fleet Platform
    Architecture for Enduring Maritime Supremacy. Washington, Center for
    Strategic and Budgetary Assessments, 2005. (Version as of March 1,
    2005, which is in the form of a slide briefing with 322 slides.
    Hereafter CSBA report.)

                                  TABLE 4. CSBA--RECOMMENDED FORCE AND OTHER PROPOSALS
    ----------------------------------------------------------------------------------------------------------------
                                                                                            Notional Navy fleets for
                                                                            Navy 375-ship        Fiscal Year 2035
                 Ship type                  CSBA force    CNA force range    proposal of   -------------------------
                                                                             2002-2004 a     260 ships    325 ships
    ----------------------------------------------------------------------------------------------------------------
    Ballistic missile submarines                   12 b               14               14           14           14
     (SSBNs)...........................
    Cruise missile submarines (SSGNs)..             6 b                4                4            4            4
    Attack submarines (SSNs)...........            54 c         38 to 62               52           37           41
    Large-deck aircraft carriers (CVNs)              10         10 to 12               12           10           11
    Medium aircraft carriers (CVEs)....               4                0                0            0            0
    Afloat forward staging base (AFSB).               1                0                0            0            0
    Cruisers and destroyers............        84 or 86        66 to 112              109           67           92
    Littoral combat ships (LCSs).......              84         40 to 70               56           63           82
    Amphibious ships...................            32 d         18 to 30               36           17           24
    Maritime Prepositioning Force ships            16 e       19 to 21 e             18 e         14 e         20 e
    Combat logistics (resupply) ships..            36 f         25 to 33               33           24           26
    Other g............................            34 h               22               41           10           11
    ----------------------------------------------------------------------------------------------------------------
      Total battle force ships.........    373 or 375 i       256 to 380              375          260         325
    ----------------------------------------------------------------------------------------------------------------
    Source: Table prepared by CRS based on CSBA report, CNA report, and March 2005 Navy report.
    a Composition as shown in CNA report as the program of record for 2022. An earlier and somewhat different
      composition is shown in CRS Report RL32665.
    b Alternatively, 10 SSBNs and 8 SSGNs.
    c Includes one special-mission submarine. Total number drops slightly over next 12 years.
    d Includes 8 LHDs and 24 LPD-17s.
    d In the CSBA force, these are existing MPF ships; in the other fleets, they are MPF(Future) ships.
    f Includes 8 TAOEs, 11 TAKEs, and 17 TAOs.
    g Includes command ships, and support ships (such as salvage ships and submarine tenders), dedicated mine
      warfare ships, and sea basing connector ships.
    h Includes, among other ships, two TAVBs and eight TLKAs associated with the amphibious and MPF ships.
    i In addition to these ships, the CSBA report notes that U.S. maritime forces would include 35 DOD
      prepositioning and surge sealift ships used primarily by the Army and Air Force, and 91 large, medium, and
      fast-response (i.e., small) cutters planned for procurement under the Coast Guard Deepwater acquisition
      program.

        The CSBA report makes numerous specific recommendations for ship
    force structure and ship acquisition, including the following:

             Aircraft carriers. When the George H.W. Bush (CVN-77)
            enters service in 2008 or 2009, do the following:

                     Retire the two remaining conventional
                    carriers--the Kitty Hawk (CV-63) and the Kennedy (CV-
                    67).
                     Convert the Enterprise (CVN-65) into an afloat
                    forward staging base (AFSB) with a mixed Active/
                    Reserve/civilian crew, to be used in peacetime for
                    aviation testing and in crises for embarking Special
                    Operations Forces, Army or Marine Corps Forces, or
                    Joint Air Wings.
                     Begin replacing the 10 Nimitz (CVN-68) class
                    carriers on a one-for-one basis with CVN-21-class
                    carriers procured once every 5 years using incremental
                    funding.
                     Redesignate the LHA(R) as a medium sized
                    carrier (CVE) and procure one every 3 years starting in
                    fiscal year 2007 using incremental funding.\36\
    ---------------------------------------------------------------------------
        \36\ CSBA report, slides 154-158.

    ---------------------------------------------------------------------------
             Submarines.

                     Maintain Virginia-class SSN procurement at one
                    per year for the next several years, producing an
                    eventual total of perhaps 20 Virginia-class boats.
                     Begin immediately to design a new ``undersea
                    superiority system'' with a procurement cost 50 percent
                    to 67 percent that of the Virginia-class design, with
                    the goal of achieving a procurement rate of two or
                    three of these boats per year no later than fiscal year
                    2019.
                     Study options for extending the service lives
                    of the three Seawolf SSNs and the 31 final Los Angeles-
                    class SSNs to mitigate the projected drop in SSN force
                    levels during the 2020s.
                     Reduce the SSBN force from 14 ships to 12
                    ships and convert an additional 2 SSBNs into SSGNs, for
                    a total of 6 SSGNs.
                     Study the option of reducing the SSBN force
                    further, to 10 ships, which would permit another 2
                    SSBNs to be converted into SSGNs, for a total of 8
                    SSGNs.\37\
    ---------------------------------------------------------------------------
        \37\ CSBA report, slides 276, 284, 289, 297, 299.

    ---------------------------------------------------------------------------
             Destroyers and cruisers.

                     Procure a single DD(X) in fiscal year 2007,
                    using research and development funding, as the first of
                    three surface combatant technology demonstrators.
                     Start a design competition for a next
                    generation, modular surface combatant or family of
                    combatants, with capabilities equal to or greater than
                    the DD(X)/CG(X), but with a substantially lower
                    procurement cost.
                     Build two additional surface combatant
                    technology demonstrators to compete against the DD(X)
                    design.
                     Use the results of this competition to inform
                    the design of a new surface combatant, called SCX, with
                    a procurement cost perhaps one-third to one-half that
                    of the DD(X).
                     Begin procuring this new design in fiscal year
                    2015 as a replacement for the DD(X)/CG(X) program.
                     Consider modifying the LPD-17 design into a
                    low-cost naval surface fire support ship carrying the
                    Advanced Gun System (AGS) that was to be carried by the
                    DD(X).
                     Consider procuring two additional DDG-51s to
                    help support the surface combatant industrial base in
                    the near-term.\38\
    ---------------------------------------------------------------------------
        \38\ CSBA report, slides 246, 249, and 251-253. Slide 249 states
    that possibilities for a reduced-cost alternative to the DD(X) include
    a surface combatant based on the LPD-17 design, a semi-submersible ship
    built to commercial standards (like a ship called the ``Stryker'' that
    was proposed several years ago), and a large or medium ``carrier of
    large objects,'' perhaps built to relaxed commercial standards.

             Littoral Combat Ships and Coast Guard Deepwater
    ---------------------------------------------------------------------------
            cutters.

                     Procure six LCSs per year for a total of 84
                    LCSs--42 of the Lockheed design, and 42 of the General
                    Dynamics design.
                     Organize these 84 ships into 42 divisions,
                    each consisting of one Lockheed ship and one General
                    Dynamics ship, so that each division can benefit from
                    the complementary strengths of the two designs.
                     Ensure that mission packages for the LCS and
                    mission packages for the Coast Guard's large and medium
                    Deepwater cutters are as mutually compatible as
                    possible.
                     Include the Coast Guard's Deepwater cutters
                    when counting ships that contribute to the country's
                    total fleet battle network.
                     Begin a research and development and
                    experimentation program aimed at building several
                    competing stealth surface combatant technology
                    demonstrators for operations in contested or denied-
                    access waters.\39\
    ---------------------------------------------------------------------------
        \39\ CSBA report, slides 275, 277, and 283.

    ---------------------------------------------------------------------------
             Amphibious ships.

                     Complete LHD-8 to create a force of eight
                    LHDs.
                     Rather than stopping procurement of LPD-17s
                    after the ninth ship in fiscal year 2007, as now
                    planned by the Navy, increase the LPD-17 procurement
                    rate to two ships per year and use multiyear
                    procurement (MYP) to procure a total of 24 LPD-17s.
                     Retire the 12 existing LSD-41/49 class ships,
                    leaving a 32-ship amphibious fleet consisting of eight
                    LHDs and 24 LPD-17s.
                     Form eight ``distributed expeditionary strike
                    bases''--each of which would include one LHD, three
                    LPD-17s, one Aegis cruiser, three Aegis destroyers, two
                    LCSs, and one SSGN.\40\
    ---------------------------------------------------------------------------
        \40\ CSBA report, slides 227 and 236.

    ---------------------------------------------------------------------------
             MPF and other ships.

                     Retain the three existing MPF squadrons over
                    the near- to mid-term.
                     Reconfigure two of the squadrons for irregular
                    warfare.
                     Use the third squadron as a swing asset to
                    either reinforce the two irregular-warfare squadrons or
                    to provide lift for assault follow-on echelon
                    amphibious landing forces.
                     Develop high-speed intra-theater and ship-to-
                    shore surface connectors.
                     Design an attack cargo ship (TAKA) to help
                    support sustained joint operations ashore, with a
                    target unit procurement cost of $500 million or less,
                    and begin procuring this ship in fiscal year 2014.
                     Replace the two existing hospital ships, the
                    four existing command ships, and existing support
                    tenders with new ships based on the LPD-17 design.
                     Initiate a joint experimental program for
                    future sea-basing platforms and technologies.\41\
    ---------------------------------------------------------------------------
        \41\ CSBA report, slides 228-232, and 307.

        The CSBA report raises several questions about the Navy's emerging
    sea basing concept for conducting expeditionary operations ashore. The
    ---------------------------------------------------------------------------
    report states:

              The work done thus far on sea basing is intriguing, but
            neither the concept nor the supporting technologies appear
            sufficiently mature to justify any near-term decisions such as
            canceling LPD-17 [procurement] in favor of MPF(F) ships, or
            removing the well deck from the big deck amphibious assault
            platforms, both of which would severely curtail the [fleet's]
            ability to launch surface assaults over the longer term.
              Given these large uncertainties, no major moves toward the
            sea basing vision should be made without further exploring the
            sea basing concept itself, and experimenting with different
            numbers and types of sea base platforms, connectors, and
            capabilities.\42\
    ---------------------------------------------------------------------------
        \42\ CSBA report, slide 212.
    ---------------------------------------------------------------------------
    Observations
        Observations about the CNA, OFT, and CSBA reports can be made on
    several points, including the following:

             organizations and authors;
             analytical approach;
             use of prospective ship-procurement funding levels as
            a force-planning consideration;
             fleet size and structure;
             whether the recommended force qualifies as an
            alternative fleet architecture;
             fleet capability;
             transition risks; and
             implications for the industrial base.

        Each of these is discussed below.
        Organizations and Authors
        CNA Report. CNA is a federally funded research and development
    center (FFRDC) that does much of its analytical at the Navy's request.
    The CNA report's discussion of how crew rotation may alter force-level
    requirements for maintaining day-to-day forward deployments is somewhat
    detailed and may have been adapted from other work that CNA has done on
    the topic for the Navy.
        OFT Report. The OFT report was prepared under the direction of
    retired Navy admiral Arthur Cebrowski, who was the director of OFT from
    October 29, 2001 until January 31, 2005 and the President of the Naval
    War College (NWC) from July 24, 1998 to August 22, 2001. During his
    time at NWC and OFT, Cebrowski was a leading proponent of network-
    centric warfare and distributed force architectures.
        CSBA Report. The CSBA report was prepared by Robert Work, CSBA's
    analyst for maritime issues. CSBA describes itself as ``an independent,
    policy research institute established to promote innovative thinking
    about defense planning and investment strategies for the 21st century.
    CSBA's analytic-based research makes clear the inextricable link
    between defense strategies and budgets in fostering a more effective
    and efficient defense, and the need to transform the U.S. military in
    light of an emerging military revolution.'' \43\ CSBA's Executive
    Director is Dr. Andrew F. Krepinevich, Jr., whose previous experience
    includes work in DOD's Office of Net Assessment, the office directed by
    Andrew Marshall. Krepinevich is generally considered a major writer on
    defense transformation.
    ---------------------------------------------------------------------------
        \43\ Source: CSBA's website [http://www.csbaonline.org].
    ---------------------------------------------------------------------------
        Analytical Approach
        CNA Report. The CNA report grounds its analysis in traditional DOD
    force-planning considerations and campaign modeling. The report cites
    past DOD force-planning studies that reflect similar approaches. The
    implicit argument in the CNA report is that its findings have weight in
    part because they reflect a well-established and systematic approach to
    the problem.
        OFT Report. In contrast to the CNA report, the OFT report ``calls
    into question the viability of the longstanding logic of naval force
    building.'' \44\ The OFT report grounds its analysis in four major
    force-design principles that the report identifies as responsive to
    future strategic challenges and technological opportunities.\45\ The
    report then seeks to design a fleet that it is consistent with these
    principles, and assesses that fleet using a new set of metrics that the
    report believes to be consistent with these principles. The implicit
    argument in the OFT report is that its findings have weight in part
    because they reflect major force-design principles that respond to
    future strategic challenges and technological opportunities.
    ---------------------------------------------------------------------------
        \44\ OFT report, p. 1
        \45\ The principles are complexity, smaller ships and improved
    payload fraction, network-centric warfare, and modularity.
    ---------------------------------------------------------------------------
        CSBA Report. The CSBA report employs an extensive historical
    analysis of the missions and structure of the U.S. Navy and other
    navies. The report argues that the structure of the U.S. Navy has
    shifted over time in response to changes in technology and U.S.
    security challenges, and that U.S. Military forces have entered a new
    security era (which the report calls the ``Joint Expeditionary Era'')
    during which the U.S. Navy will need to do three things.\46\ To do
    these three things, the report argues, the Navy should be structured to
    include four different force elements.\47\ The report constructs these
    four force elements and then combines them to arrive at an overall
    recommended Navy force structure. The implicit argument in the CSBA
    report is that its findings have weight in part because they reflect
    insights about future missions and force requirements gained through
    careful historical analysis of the missions and structure of the U.S.
    Navy and other navies.
    ---------------------------------------------------------------------------
        \46\ These three things are: (1) contribute to the global war on
    terrorism; (2) prepare for possible nuclear-armed regional competitors;
    and (3) hedge against the possibility of a disruptive maritime
    competition with China.
        \47\ These four force elements are: (1) a sea-based power-
    projection and regional deterrence force; (2) a global patrol, global
    war on terrorism, and homeland defense force; (3) a force for
    prevailing over enemy anti-access/area-denial forces; and (4) a
    strategic deterrence and dissuasion force.
    ---------------------------------------------------------------------------
        Prospective Ship-Procurement Funding Levels As A Consideration
        CNA Report. The CNA report aims at designing a cost-effective
    fleet. It also mentions cost estimates relating to the option of
    homeporting additional attack submarines at Guam.\48\ Prospective ship-
    procurement funding levels, however, are not prominently featured in
    the CNA report as a force-planning consideration.
    ---------------------------------------------------------------------------
        \48\ CNA Report, p. 36.
    ---------------------------------------------------------------------------
        OFT Report. Prospective ship-procurement funding levels are a
    significant force-planning consideration in the OFT report. The report
    argues that an important metric for assessing a proposed fleet
    architecture is the ease or difficulty with which it can be scaled up
    or down to adapt to changes in ship-procurement funding levels.
        The OFT report contains a fairly detailed discussion of the Navy's
    budget situation that calls into question, on several grounds, the
    Navy's prospective ability to afford its 375-ship proposal. The report
    concludes that funding for Navy ship-procurement in future years may
    fall as much as 40 percent short of what would be needed to achieve the
    Navy's 375-ship fleet proposal. If the shortfall is 40 percent, the
    report estimates, the Navy could maintain a force of 270 to 315 ships,
    which is comparable in number to today's force of 288 ships, except
    that the future force would include a substantial number of relatively
    inexpensive LCSs. If proportionate reductions are applied to the OFT
    fleets shown in Table 3, Alternative A would include 402 to 469 ships,
    Alternative B would include 557 to 650 ships, and Alternative C would
    include 609 to 711 ships. Again, these totals would not include certain
    kinds of ships (independently operating SSNs, etc.) that are included
    in the total of 270 to 315 ships associated with the Navy's currently
    planned architecture.
        CSBA Report. As with the OFT report, prospective ship-procurement
    funding levels are a significant force-planning consideration in the
    CSBA report. The CSBA report estimates that in future years, the Navy
    may have an average of about $10 billion per year in ship-acquisition
    funding. The report then aims at designing a force whose ships could be
    acquired for this average annual amount of funding.
        Fleet Size and Structure
        CNA Report. The 380-ship fleet at the high end of the CNA range is
    similar in size and composition to the Navy's 375-ship fleet proposal.
    The 256-ship fleet at the low end of the CNA range is similar in size
    and composition to the Navy's 260-ship fleet for fiscal year 2035,
    except that the 260-ship fleet has more LCSs and fewer ships in the
    ``other ships'' category.\49\
    ---------------------------------------------------------------------------
        \49\ Additional points of comparison: The CNA range of 256 to 380
    ships overlaps with potential ranges of 290 to 375 ships, 260 to 325
    ships, and 243 to 302 ships presented in the Navy's February 2005
    testimony to Congress. The mid-point of the CNA-recommended range (318
    ships) is similar in terms of total numbers of ships to the 310-ship
    fleet from the 2001 Quadrennial Defense Review (QDR). Unlike the 2001
    QDR fleet, however, the CNA-recommended force includes several dozen
    Littoral Combat Ships (LCSs) and smaller numbers of other kinds of
    ships.
    ---------------------------------------------------------------------------
        OFT Report. The OFT-recommended fleet would have a much larger
    total number of ships than the Navy's planned fleet. The OFT fleet
    would also feature a much larger share of small combatants. Of the
    ships shown in Table 3, the small combatants account for about 75
    percent in Alternative A, about 79 percent in Alternative B, and about
    72 percent in Alternative C. (Adding into the mix SSNs and other kinds
    of ships not shown in Table 3 would reduce these percentages somewhat.)
    In the Navy's notional 260- and 325-ship fleets, by contrast, LCSs
    account for about 25 percent of the total number of ships.
        The OFT architecture is similar in certain ways to a fleet
    architecture proposed by the Naval Surface Warfare Center (NSWC)
    between 1989 and 1992 and sometimes referred to as the Carrier of Large
    Objects (CLO) proposal. The NSWC architecture, like the OFT
    architecture, employed a common hull design for a large ship that could
    be built in several variants for various missions, including aviation,
    missile launching and fire support, amphibious warfare, logistics
    support, and mother-ship support of small, fast, surface combatants.
    The small, fast surface combatants in the NSWC architecture were called
    scout fighters and were in the same general size range as the 100- and
    1,000-ton surface combatants in the OFT architecture.\50\
    ---------------------------------------------------------------------------
        \50\ For more on this proposed fleet architecture, see Norman
    Polmar, ``Carrying Large Objects,'' U.S. Naval Institute Proceedings,
    December 1990: 121-122; Michael L. Bosworth et al, ``Multimission Ship
    Design for an Alternative Fleet Concept,'' Naval Engineers Journal, May
    1991: 91-106; Michael L. Bosworth, ``Fleet Versatility by Distributed
    Aviation,'' U.S. Naval Institute Proceedings, Jan. 1992: 99-102; and
    Victor A. Meyer, ``Naval Surface Warfighting Vision 2030,'' Naval
    Engineers Journal, May 1992: 74-88. See also ``USN's `2030' Plan For
    Future Fleet,'' Sea Power, Apr. 1992: 79, 82; Edward J. Walsh, ``
    `Alternative Battle Force' Stresses Commonality, Capability,'' Sea
    Power, Feb. 1991: 33-35; Robert Holzer, ``Navy Floats Revolutionary
    Ship Design for Future Fleet,'' Defense News, May 14, 1990: 4, 52; and
    Anne Rumsey, ``Navy Plans Ship Look-A-Likes,'' Defense Week, Mar. 13,
    1989: 3.
    ---------------------------------------------------------------------------
        CSBA Report. The CSBA force would have about the same total number
    of ships as the Navy's 375-ship fleet proposal. CSBA's subtotals for
    some ship categories are similar to subtotals in one or more of the
    other fleet proposals shown in Table 4. Significant differences between
    the CSBA proposal and the other fleet proposals shown in Table 4
    include:

             the four medium-sized aircraft carriers (CVEs);
             the conversion of a carrier into an afloat forward
            staging base;
             the composition of the cruiser-destroyer force (which
            would include SCXs rather than DD(X)s and CG(X)s);
             the composition of the amphibious fleet (which would
            have additional LPD-17s in lieu of today's LSD-41/49s); and
             the composition of the maritime prepositioning force
            (which would continue to include, for a time at least, today's
            MPF ships rather than the Navy's planned MPF(F) ships).
        Does It Qualify As An Alternative Force Architecture?
        CNA Report. As mentioned earlier, the CNA report uses essentially
    the same kinds of ships and naval formations as those planned by the
    Navy. If an alternative fleet platform architecture is defined as one
    that uses ship types or naval formations that differ in some
    significant way from those currently used or planned, then the CNA-
    recommended force arguably would not qualify as an alternative fleet
    platform architecture.
        OFT Report. Since the OFT report proposes building ships that are
    substantially different from those currently planned, and combines
    these ships into formations which, although similar in name to
    currently planned formations (i.e., CSGs, ESGs, and SSGs), might be
    viewed by some observers as substantially different in composition from
    the currently planned versions of these formations, the OFT-recommended
    force arguably would qualify as an alternative fleet platform
    architecture.
        CSBA Report. Since the CSBA report proposes building ships that in
    some cases are different from those currently planned, and combines
    these ships into formations that in some cases are different in
    composition from those currently planned, the CSBA-recommended force
    arguably would qualify as an alternative fleet platform architecture,
    though less dramatically so than the OFT-recommended force.
        New Ship Designs
        CNA Report. The CNA report does not propose any ship designs other
    than those already planned by the Navy.
        OFT Report. The 57,000-ton aircraft carrier in the OFT report would
    be roughly the same size as the United Kingdom's new aircraft carrier
    design, and somewhat larger than the U.S. Navy's 40,000-ton LHA/LHD-
    type amphibious assault ships. Compared to the U.S. Navy's aircraft
    carriers, which displace 81,000 to 102,000 tons, this ship could be
    considered a medium-size carrier.
        The 57,000-ton missile-and-rocket ship in the OFT report could be
    considered similar in some respects to the Navy/DARPA arsenal ship
    concept of 1996-1997, which would have been a large, relatively simple
    surface ship equipped with about 500 VLS tubes.\51\
    ---------------------------------------------------------------------------
        \51\ For more on the arsenal ship, see CRS Report 97-455 F, Navy/
    DARPA Arsenal Ship Program: Issues and Options for Congress, by Ronald
    O'Rourke. 133 pp.; and CRS Report 97-1044 F, Navy/DARPA Maritime Fire
    Support Demonstrator (Arsenal Ship) Program: Issues Arising From Its
    Termination, by Ronald O'Rourke. 6 pp. Both reports are out of print
    and are available directly from the author.
    ---------------------------------------------------------------------------
        The 13,500-ton aircraft carrier in the OFT report would be slightly
    larger than Thailand's aircraft carrier, which was commissioned in
    1997, and somewhat smaller than Spain's aircraft carrier, which was
    based on a U.S. design and was commissioned in 1988. Due to its SES/
    catamaran hull design, this 13,500-ton ship would be much faster than
    the Thai and Spanish carriers (or any other aircraft carrier now in
    operation), and might have a larger flight deck. This ship could be
    considered a small, high-speed aircraft carrier.
        The 1,000- and 100-ton surface combatants in the OFT report could
    be viewed as similar to, but smaller than, the 2,500- to 3,000-ton
    Littoral Combat Ship (LCS). Compared to the LCS, they would be closer
    in size to the Streetfighter concept (a precursor to the LCS that was
    proposed by retired admiral Cebrowski during his time at the Naval War
    College).
        The AIP submarine in the OFT report could be similar to AIP
    submarines currently being developed and acquired by a some foreign
    navies.
        CSBA Report. The proposal in the CSBA report for an afloat forward
    staging base (AFSB) is similar to other proposals for AFSBs that have
    been reported in recent years, though other proposals have suggested
    using commercial ships or military sealift ships rather than converted
    aircraft carriers as the basis for the AFSB.\52\
    ---------------------------------------------------------------------------
        \52\ See, for example, Stephen M. Carmel, ``A Commercial Approach
    to Sea Basing--Afloat Forward Staging Bases,'' U.S. Naval Institute
    Proceedings, January 2004: 78-79; Christopher J. Castelli, ``Budget
    Anticipates Developing MPF(F) Aviation Variant From LMSR,'' Inside the
    Navy, January 19, 2004; Christopher J. Castelli, ``Brewer Proposes
    Commercial Ship To Test Seabasing Technologies,'' Inside the Navy,
    January 27, 2003; Christopher J. Castelli, ``In POM-04, Navy Cancels
    JCC(X), Plans To Substitute MPF(F) Variant,'' Inside the Navy,
    September 2, 2002; Christopher J. Castelli, ``Navy May Develop New
    Support Ships, Pursue Sealift Experimentation,'' Inside the Navy, May
    27, 2002.
    ---------------------------------------------------------------------------
        The CVE in the CSBA report, like the 57,000-ton carrier in the OFT
    report, can be viewed as a medium-sized carrier. With a full load
    displacement of perhaps about 40,000 tons, the CVE would be somewhat
    smaller than the 57,000-ton carrier and consequently might embark a
    smaller air wing. The CVE, however, would be based on the LHA(R)
    amphibious ship design rather than a merchantlike hull, and
    consequently could incorporate more survivability features than the
    57,000-ton carrier. The proposal in the CSBA report for a new undersea
    superiority system with a procurement cost 50 percent to 67 percent
    that of the Virginia-class SSN design is similar to the Tango Bravo SSN
    discussed earlier in this testimony.
        The proposals in the CSBA report for a reduced-cost new-design
    surface combatant called the SCX, and for a low-cost gunfire support
    ship, are broadly similar to the options for a reduced-cost new-design
    surface combatant discussed earlier in this testimony.
        Fleet Capability
        CNA Report. The CNA report uses essentially the same kinds of ships
    and formations as planned by the Navy, and recommends generally the
    same numbers of ships as a function of forceplanning variables such as
    use of crew rotation. As a consequence, the CNA-recommended force range
    would be roughly similar in overall capability to the Navy's planned
    architecture.
        OFT Report. The OFT architecture differs so significantly from the
    Navy's planned architecture that assessing its capability relative to
    the Navy's planned architecture is not easy. As a general matter, the
    OFT report stresses overall fleet survivability more than individual-
    ship survivability, and argues that fleet effectiveness can be enhanced
    by presenting the enemy with a complex task of having to detect, track,
    and target large numbers of enemy ships. The OFT report argues that in
    addition to warfighting capability, a fleet can be judged in terms of
    its capability for adapting to changes in strategic demands and funding
    levels.\53\
    ---------------------------------------------------------------------------
        \53\ The OFT report argues that its recommended fleet architecture
    would:
         ``provide a quantum leap ahead in capabilities against a
    spectrum of enemies ranging from large, highly developed competitors to
    small but determined asymmetric adversaries'' (page 6) and be
    adaptable, in a dynamic and less-predictable security environment, to
    changing strategic or operational challenges;
         be capable of both participating in joint expeditionary
    operations and maintaining ``the strategic advantage the Navy has
    developed in the global commons,'' avoiding a need to choose between
    optimizing the fleet for ``performance against asymmetric challenges at
    the expense of its ability to confront a potential adversary capable of
    traditional high intensity conflict,'' such as China; (pages 1 and 2)
         pose significant challenges to adversaries seeking to
    counter U.S. naval forces due to the ``large numbers of combat entities
    that the enemy must deal with; a great variety of platforms with which
    the enemy must contend; speed; different combinations of forces;
    distribution of forces across large areas; and [adversary] uncertainty
    as to the mission and capabilities of a given platform;'' (page i)
         permit more constant experimentation with new operational
    concepts, and thereby achieve higher rates of learning about how to
    evolve the fleet over time; and
         recognize potential future constraints on Navy budgets and
    make the Navy more smoothly scalable to various potential future
    resource levels by shifting from a fleet composed of limited numbers of
    relatively expensive ships to one composed of larger numbers of less
    expensive ships.
    ---------------------------------------------------------------------------
        Readers who agree with most or all of these propositions might
    conclude that the OFT-recommended architecture would be more capable
    than the Navy's planned architecture. Readers who disagree with most or
    all of these propositions might conclude that the OFT-recommended
    architecture would be less capable than the Navy's planned
    architecture. Readers who agree with some of these propositions but not
    others (or who agree with these propositions up to a certain point, but
    less fervently than OFT), might conclude that the OFT-recommended
    architecture might be roughly equal in total capability to the Navy's
    planned architecture.
        In addressing the question of fleet capability, the OFT report
    states:

              Alternative fleet formations consisting of small fast and
            relatively inexpensive craft combining knowledge and attaining
            flexibility through networking appear superior to the
            programmed fleet for non-traditional warfare in a variety of
            settings. This is due to increasing the complexity the enemy
            faces and increasing U.S. fleet options that in turn reduce
            enemy options. The speed and complexity of the alternative
            fleets can provide them with the capability to complicate and
            possibly defeat the attempts of non-traditional adversaries to
            elude surveillance. The enemy could have difficulty determining
            what to expect and how to defeat them all. The superior speed
            and more numerous participants than in the programmed fleet
            provide a stronger intelligence base and more numerous
            platforms from which to conduct strikes and interceptions. This
            appears to be true even if the smaller craft are individually
            somewhat less capable and less able to sustain a hit than the
            larger ships in the programmed fleet.
              If these circumstances are not achieved, and the enemy can
            continue to elude and deceive, the [Navy's] programmed fleet
            often is as good as the [OFT] alternatives, sometimes even
            better. It is not necessarily better in cases in which
            individual ship survivability dominates, a perhaps
            counterintuitive result until we realize that fleet
            survivability not individual ship survivability is what
            dominates.
              An area in which programmed fleets might have an advantage
            would be when the long loiter time or deep reach of CTOL
            [conventional takeoff and landing] aircraft on programmed big-
            deck CVNs [nuclear-powered aircraft carriers] is needed. That
            said, there need be no great sacrifice. With airborne tanking,
            the VSTOL [very short takeoff and landing] aircraft in the
            alternatives could meet the deep strike and long loiter
            demands. Also, as mentioned earlier, a combination of advances
            in EMALS [electromagnetic aircraft launch system] and
            modifications to the JSF will make it possible to launch the
            JSF with only a marginal range-payload capability penalty.
            Moreover, trends in technology are providing unmanned aircraft
            greater capability, including greater loiter time and sensor
            capability.\54\
    ---------------------------------------------------------------------------
        \54\ OFT report, pp. 75-76. Italics as in the original.

        CSBA Report. The CSBA report argues that its architecture would
    provide a total capability equal to that of the Navy's planned
    architecture, but at a lower total cost, because the CSBA architecture
    ---------------------------------------------------------------------------
    would:

             employ new ship designs, such as the new undersea
            superiority system and the SCX, that, because of their newer
            technologies, would cost less than, but be equal in capability
            to current designs such as the Virginia-class SSN and DD(X)
            destroyer; and
             make more use of the LPD-17 hull design, whose basic
            design costs have already been paid, and which can be produced
            efficiently in large numbers and adapted economically to meet
            various mission requirements.

        It is plausible that using newer technologies would permit new,
    reduced-cost, ship designs to be more capable than such designs would
    have been in the past. Whether the increases in capability would always
    be enough to permit these ships to be equal in capability to more
    expensive current designs is less clear. The Navy may be able to
    achieve this with a new SSN design, because several new submarine
    technologies have emerged since the Virginia-class design was developed
    in the 1990s, but achieving this with a new large surface combatant
    design could be more challenging, because the DD(X) design was
    developed within the last few years and few new surface combatant
    technologies may have emerged since that time. If one or more of the
    reduced-cost designs turn out to be less capable than current designs,
    then the CSBA architecture would not generate as much total capability
    as the report projects.
        The CSBA report also argues that its architecture would produce a
    force with a mix of capabilities that would better fit future strategic
    demands. To achieve this, the report recommends, among other things,
    reducing currently planned near-term procurement of new destroyers and
    MPF(F) ships, increasing currently planned procurement of new
    amphibious ships, and changing the currently planned investment mix for
    aircraft carriers.
        Readers who agree with CSBA's description of future strategic
    demands, and who agree that CSBA's recommended investment changes
    respond to those demands, might conclude that the CSBA-recommended
    architecture would be better optimized than the Navy's planned
    architecture to meet future needs. Readers who disagree with one or
    both of these propositions might conclude that the Navy's planned
    architecture might be better optimized, or that neither architecture
    offers clear advantages in this regard.
        Transition Risks
        CNA Report. Since the CNA report uses essentially the same kinds of
    ships and naval formations as those in use today or planned by the
    Navy, and recommends similar numbers of ships, the transition risks of
    shifting from the Navy's currently planned force to the CNA-recommended
    force would appear to be small.
        OFT Report. The OFT report does not include a detailed plan for
    transitioning from today's fleet architecture to its proposed
    architecture,\55\ but such a plan could be developed as a follow-on
    analysis. The plan could involve replacing existing ship designs and
    associated formations as they retire with OFT's recommended new ship
    designs and associated formations.
    ---------------------------------------------------------------------------
        \55\ On the topic of transitioning to the proposed fleet
    architecture, the report states:
          Implementation of the alternative fleet architecture should start
    now and should target option generation, short construction time, and
    technology insertion. The alternative further provides an opportunity
    to reinvigorate the shipbuilding industrial base. The many smaller
    ships, manned and unmanned, in the alternative fleet architecture could
    be built in more shipyards and would be relevant to overseas markets.
    The potential longevity of the existing fleet will sustain existing
    shipyards as they move into building smaller ships more rapidly in this
    broader market and more competitive environment. The shipyards would
    develop a competence, broad relevance, and operate in an environment
    driven by market imperatives instead of a framework of laws that
    frustrates market forces.
          As the new ships enter service and the fleet has the opportunity
    to experiment with new operational concepts (expanded network-centric
    warfare in particular) existing ships can be retired sooner to capture
    operations savings. At this point, the sooner the existing fleet is
    retired, the sooner the benefits of the alternative fleet architecture
    design will accrue. (Page 3)
        Additional general discussion of implementation is found on pp. 76-
    77 of the report.
    ---------------------------------------------------------------------------
        Compared to the CNA-recommended force, the OFT-recommended force
    would pose significantly greater transition risks because of the number
    of new ship designs involved, the differences between several of these
    ship designs and today's designs, and the new kinds of naval formations
    that would be used, which could require development of new doctrine,
    concepts of operations, and tactics.
        CSBA Report. A stated goal of the CSBA report is to provide a
    detailed, practical transition road map for shifting from today's fleet
    structure to the report's recommended fleet structure. The many
    specific recommendations made in the report could be viewed as forming
    such a road map. Given that the CSBA-recommended force represents, in
    terms of ship designs and formations, more of a departure from Navy
    plans than the CNA-recomended force, but less of a depature from
    current Navy plans than the OFT-recommended force, the transition risks
    of the CSBA-recommended force might be viewed as somewhere in between
    those of the CNA- and OFT-recommended forces.
        Implications For Industrial Base
        CNA Report. Since the CNA report uses essentially the same kinds of
    ships and naval formations as those in use today or planned by the
    Navy, and recommends similar numbers of ships, the industrial-base
    implications of the CNA-recommended force would appear to be similar to
    those of the Navy's current plans.
        OFT Report. The OFT report seeks to reduce unit shipbuilding costs,
    and thereby permit an increase in total ship numbers, by shifting the
    fleet away from complex, highly integrated ship designs that are
    inherently expensive to build and toward less-complex merchant-like
    hulls and small sea frames that are inherently less expensive to build.
    Similarly, the OFT report seeks to increase shipbuilding options for
    the Navy by shifting the fleet away from complex, highly integrated
    ship designs that can be built only by a limited number of U.S.
    shipyards and toward less-complex merchant-like hulls and small sea
    frames that can be built by a broader array of shipyards. The OFT
    report also aims to make it easier and less expensive to modernize
    ships over their long lives, and thereby take better advantage of rapid
    developments in technology, by shifting from highly integrated ship
    designs to merchant-like hulls and sea frames.
        As a consequence of these objectives, the OFT report poses a
    significant potential business challenge to the six shipyards that have
    built the Navy's major warships in recent years. The report's
    discussion on implementing its proposed architecture states in part:

              The shipbuilding industrial base would also need to start to
            retool to build different types of ships more rapidly. Smaller
            shipyards, which presently do little or no work for the Navy
            could compete to build the smaller ships, thereby broadening
            the capabilities base of ship design and construction available
            to the Navy. The change to smaller, lower unit cost ships would
            also open up overseas markets. With more shipyards able to
            build the ships and potential for a broader overall market, the
            U.S. shipbuilding industry would have the chance to expand its
            competence, innovation and relevance. Taken together this would
            sharpen the industry's ability to compete and provide
            alternatives to a ship procurement system that is beset by laws
            and regulations that frustrate, even pervert, market
            forces.\56\
    ---------------------------------------------------------------------------
        \56\ OFT report, p. 76.

        The report's concluding section lists five ``dangers'' that ``risk
    the Navy's `losing the way.' '' One of these, the report states, is
    ``Shielding the shipbuilding industrial base from global competition,''
    which the report states ``guarantees high cost, limited innovation, and
    long cycle times for building ships.'' \57\
    ---------------------------------------------------------------------------
        \57\ OFT report, p. 80.
    ---------------------------------------------------------------------------
        CSBA Report. The CSBA report similarly raises significant potential
    issues for the six shipyards that have built the Navy's major warships
    in recent years. The report states that ``Rationalizing the defense
    industrial base is . . . a critical part of the Department of the
    Navy's (DON) maritime competition strategy, and should be the subject
    of immediate consideration and deliberation by Congress, DOD, and the
    DON.'' \58\ The report states:
    ---------------------------------------------------------------------------
        \58\ CSBA report, slide 314.

              Numerous studies have indicated that the six Tier I yards
            [i.e., the six yards that have built the Navy's major warships
            in recent years] have ``exorbitant excess capacities,'' which
            contribute to the rising costs of [Navy] warships, primarily
            because of high industrial overhead costs. These capacities are
            the result of ``cabotage laws and fluctuating national security
            acquisition policies that force shipbuilders of combatants to
            retain capacities to address required surges in coming years.''
            This last point is especially important: the DON contributes
            greatly to the problem of ``exorbitant capacities'' by its
            consistent tendency to portray overly optimistic ramp ups in
            ship production in budget ``out years.'' \59\
    ---------------------------------------------------------------------------
        \59\ CSBA report, slide 315.

        The report recommends the following as part of its overall
    ---------------------------------------------------------------------------
    transition strategy:

             Minimize production costs for more expensive warships
            (defined in the report as ships costing more than $1.4 billion
            each) by consolidating production of each kind of such ship in
            a single shipyard, pursuing learning curve efficiencies, and
            requesting use of multiyear procurement (MYP) whenever
            possible.
             Minimize production costs for warships and auxiliaries
            costing less than $1.4 billion each by emphasizing competition,
            shifting production to smaller ``Tier II'' yards, using large
            production runs, and enforcing ruthless cost control.\60\
    ---------------------------------------------------------------------------
        \60\ CSBA report, slide 316. Other steps recommended as part of the
    report's overall transition strategy (see 60 slides 124 and 125)
    include the following:
         Plan to a fiscally prudent steady-state shipbuilding
    budget of $10 billion per year.
         Maximize current capabilities and minimize nonrecurring
    engineering costs for new platforms by maintaining and pursuing hulls
    in service, in production or near production that can meet near- to
    mid-term global war on terrorism requirements and that are capable of
    operating in defended-access scenarios against nuclear-armed regional
    adversaries.
         Identify and retain or build large numbers of common hulls
    that have a large amount of internal reconfigurable volume, or that can
    carry a variety of modular payloads, or that can be easily modified or
    adapted over time to new missions.
         Pursue increased integration of Navy and Marine
    warfighting capabilities and emphasize common systems to increase
    operational effectiveness and reduce operation and support (O&S) costs.
         Focus research and development efforts on meeting future
    disruptive maritime challenges, particularly anti-access/area-denial
    networks composed of long-range systems and possibly weapons of mass
    destruction.

        The report states that ``the strategy developed in this report
    ---------------------------------------------------------------------------
    suggests that [Navy] planners might wish to:''

             maintain production of aircraft carriers at NGNN,
             consolidate production of large surface combatants and
            amphibious ships at NG/Ingalls, and
             consolidate submarine building GD/EB, or with a new,
            single submarine production company.\61\
    ---------------------------------------------------------------------------
        \61\ CSBA report, slides 317-318.

        The report states that the second of these possibilities is guided
    by the building sequence of LPD-17s and SCXs recommended in the report,
    NG/Ingalls' ability to build a wider variety of ships than GD/BIW, NG/
    Ingalls' surge capacity, and the availability of space for expanding
    NG/Ingalls if needed.\62\
    ---------------------------------------------------------------------------
        \62\ CSBA report, slide 318.
    ---------------------------------------------------------------------------
        The report states that the third of these possibilities is guided
    by the low probability that procurement of Virginia-class submarines
    will increase to two per year, the cost savings associated with
    consolidating submarine production at one yard, GD/EB's past experience
    in building SSBNs and SSNs, GD/EB's surge capacity, and the fact that
    building submarines at GD/EB would maintain two shipyards (GD/EB and
    NGNN) capable of designing and building nuclear-powered combatants of
    some kind.\63\
    ---------------------------------------------------------------------------
        \63\ CSBA report, slide 318. See also slide 298.
    ---------------------------------------------------------------------------
        The report acknowledges that yard consolidation would reduce the
    possibilities for using competition in shipbuilding in the near term
    and increase risks associated with an attack on the shipbuilding
    infrastructure, but notes that DOD consolidated construction of
    nuclear-powered carriers in a single yard years ago, and argues that
    competition might be possible in the longer run if future aircraft-
    carrying ships, the SCX, and the new undersea superiority system could
    be built in Tier II yards.\64\
    ---------------------------------------------------------------------------
        \64\ CSBA report, slides 318-319.
    ---------------------------------------------------------------------------
        The report states:

              Given their current small yearly build numbers, consolidating
            construction of aircraft carriers, surface combatants, and
            submarines in one yard [for each type] makes sense. However,
            the same logic does not hold true for auxiliaries and smaller
            combatants. These ships can normally be built at a variety of
            Tier I and Tier II yards; competition can thus be maintained in
            a reasonable and cost-effective way. For example, competing
            auxiliaries and sea lift and maneuver sea base ships between
            NASSCO, Avondale, and Tier II yards may help to keep the costs
            of these ships down.
              Building multiple classes of a single ship [type] is another
            prudent way to enforce costs, since the DON can divert
            production of any ship class that exceeds its cost target to
            another company/class that does not. Simultaneously building
            both the [Lockheed] and [General Dynamics] versions of [the]
            LCS, and the Northrop Grumman National Security Cutter, Medium
            [i.e., the medium-sized Deepwater cutter] gives the DON
            enduring capability to shift production to whatever ship stays
            within its cost target. . . .
              Of course, Congress and the DON may elect to retain
            industrial capacity, and to pay the additional ``insurance
            premium'' associated with having excess shipbuilding capacity.
            For example: Congress and the DON might wish to retain two
            submarine yards until the [undersea superiority system] design
            is clear, and wait to rationalize the submarine building base
            after potential [undersea superiority system] yearly production
            rates are clear. . . .
              In a similar vein, Congress and the DON might wish to retain
            two surface combatant yards until the design of the SCX is
            clear, and wait to rationalize the surface combatant building
            base after potential SCX yearly production rates are clear. In
            this regard, Congress could consider authorizing a modest
            additional number of [Aegis destroyers] to keep both BIW and
            Ingalls ``hot'' until the SCX is designed. . . .
              The key point is that the U.S. shipbuilding infrastructure
            must be rationally sized for expected future austere
            shipbuilding budgets, and whatever fiscally prudent [Navy]
            transition plan is finally developed by DON planners.\65\
    ---------------------------------------------------------------------------
        \65\ CSBA report, slide 319.
    ---------------------------------------------------------------------------
                                    summary
        In summary, the following can be said about the three reports:

             The CNA report presents a fairly traditional approach
            to naval force planning in which capability requirements for
            warfighting and for maintaining day-to-day naval forward
            deployments are calculated and then integrated. The CNA-
            recommended force parallels fairly closely current Navy
            thinking on the size and composition of the fleet. This is
            perhaps not surprising, given that much of CNA's analytical
            work is done at the Navy's request.
             The OFT report fundamentally challenges current Navy
            thinking on the size and composition of the fleet, and presents
            an essentially clean-sheet proposal for a future Navy that
            would be radically different from the currently planned fleet.
            This is perhaps not surprising, given both OFT's institutional
            role within DOD as a leading promoter of military
            transformation and retired admiral Cebrowski's views on
            network-centric warfare and distributed force architectures.
             The CSBA report challenges current Navy thinking on
            the size and composition of the fleet more dramatically than
            the CNA report, and less dramatically than the OFT report.
            Compared to the CNA and OFT reports, the CSBA report contains a
            more detailed implementation plan and a more detailed
            discussion of possibilities for restructuring the shipbuilding
            industrial base.

        Mr. Chairman, distinguished members of the subcommittee, this
    concludes my testimony. Thank you again for the opportunity to appear
    before you to discuss these issues. I will be pleased to respond to any
    questions you might have.

        Senator Talent. Thank you.
        Mr. Toner and Dr. Dur, let me get this off just asking you
    a question. I am going to reference the GAO report about how
    improved management practices could help minimize cost growth.
    They examined eight shipbuilding programs. They attributed the
    overruns to labor hour increases, material price increases--
    those two together were 78 percent of the overruns. Do you
    think the report accurately calculated labor hour increases? If
    so, what factors do you think drive those increases?
        Mr. Toner. Well, if I could talk primarily about the
    submarine.
        Senator Talent. Sure.
        Mr. Toner. Mr. O'Rourke brought it forth and I did also--
    the issue in the submarine community really goes to how much
    labor can you really take out of the program. I know Admiral
    Clark is fond of showing the 637 class submarine and the 774
    submarine and the tremendous growth. We are expensive and there
    is a cost associated with the capability that we provide. But
    you have to go dig in a little bit below that because the
    changes are very subtle.
        If you look at the percentage of man-hours relative to
    labor compared to a 637-class ship, which was built in 1967,
    which I happened to work on, unfortunately I guess, and the
    774, which I also went to sea on, 36 percent--it is about 16
    percent less man-hours as a percentage of the whole for labor
    on the 774 submarine.
        The material portion of the----
        Senator Talent. Percentage of the whole cost?
        Mr. Toner. Total cost, the mix. It went from close to a 43-
    57 into a two-third, one third. So the cost is now wrapped
    around a thing called material. What really happened then, in
    1991, 1992, with the rescission of the Seawolf the submarine
    industrial base collapsed. People had been making plans for a
    30-ship fleet. It disappeared. At that time we had something
    like on the order of 11,000 suppliers. It shrunk to 4,500
    suppliers, 83 percent who are sole source. That phenomenon,
    that ability to have that impact on the material cost, drove
    the cost significantly.
        So how much labor can you take out of a process? We could
    probably be on the order of $1 million to $200 million over a
    period of time through learning as you build more and more
    ships. The real question is what happens to the industrial
    base, the material suppliers for your equipment and components
    to go on the ship. It has changed dramatically, and it changed
    as a result of that decision in 1992.
        I feel very strongly that we are at the same decision point
    in DD(X). If we have the same type of environment, and it
    collapses, the industrial base is going to respond to it and
    the number of vendors that we have is going to collapse and our
    price is going to go up.
        Dr. Dur. May I take a crack at the same question?
        Senator Talent. Yes.
        Dr. Dur. I will tell you that, let us take a ship with
    which I am very familiar, the LPD-17. In the escalation of the
    labor portion of that ship, we began construction of the ship
    with the design not stable and therefore we were not able to
    outfit the unit assemblies to the degree that we wanted to. We
    had to begin building the ships before it was outfitted and
    every shipbuilder knows that when you outfit at the erection
    site or when the ship is in the water you pay a huge premium,
    and the time to outfit is when you are building the blocks or
    the unit assemblies. We were not able to do that to the degree
    we wanted to on that ship and we incurred significant growth as
    a result.
        Second, sir, the estimates based on----
        Senator Talent. Can I jump in just so I understand what you
    are saying? Do you mind?
        Dr. Dur. Sure.
        Senator Talent. Do not forget your second point.
        Is it okay with you?
        Senator Collins. Yes.
        Senator Talent. To emphasize something that I notice when I
    visit shipyards. In other kinds of manufacturing--I understand
    where the Navy is coming from maybe in not fixing design,
    because with technology changing the way it is they want to be
    able to take advantage during the design and production process
    of changes in technology. If you fix it too much at the
    beginning, then you are frozen into technology or the idea is
    you may be frozen into technology that may be outmoded by the
    time you finish building the ship.
        But what I understand you to be saying is that we are
    dealing with a product that is so big and so unwieldy that if
    you try and design it in the shipyard after you have set it up,
    any change generates such extra expenses. Is that basically
    what you are saying?
        Dr. Dur. Absolutely. What I was saying is that----
        Senator Talent. If I had let you make your second point,
    you might have covered that.
        Dr. Dur. We were anxious to begin building the ship. The
    ship was delayed. The ship was delayed for a variety of reasons
    which I will not bore you with here, all of them before I came
    on the scene. But the ship was delayed, so there was a lot of
    anxiety to begin production of the ship. The design was not yet
    complete.
        So we began building what we had designed, and subsequently
    then we had to insert a lot of pipe details, a lot of other
    bulkhead structures and the like, that were not available at
    the time we began construction. That was an exigency of the
    delay in that whole program, but it did result in significant
    labor growth.
        But the biggest and most important reason, Mr. Chairman, is
    that the estimates for how much vessel labor it would take to
    build the ship were developed from a contract design generated
    by the Navy. That contract design did not have enough detail to
    allow us to realistically estimate the cost.
        Let me give you an example. When you estimate the cost of a
    ship, in the past we have used traditional benchmarks: dollars
    per ton of steel, dollars per linear foot of weld, dollars per
    feet of cable pulled and connected. When you are dealing with a
    ship that is the first ship in the surface Navy to have fiber
    optics, for example, to move data around and therefore has to
    share cableways with electrical cabling, never having done
    that, we ran into huge cost excursions.
        Titanium pipe in lieu of the traditional copper-nickel
    piping for seawater systems. Blast-proof bulkheads, never
    before put on an amphibious ship. Stealth considerations and
    fairness of steel, never before an issue in amphibious warfare
    ship construction.
        One man ballasts and deballasts this 24,000 ton ship from a
    single station. The amount of hydraulic, pneumatic piping,
    control circuits to make that possible are enormous--all of
    them missed in the original cost estimation of the ship and the
    vessel labor required to build it.
        So no wonder when you rack up the vessel labor on the lead
    ship of a class with this kind of sophistication, never built
    before in this class of ship, and you compare it to cost
    estimates for vessel labor based on old thumb rules and
    benchmarks, you end up with huge differences in cost.
        We know what they cost now. We are coming down a very good
    learning curve. We have five of these ships under construction
    and I guarantee you that the committee will be impressed with
    what learning yields when you have a steady, stable production
    rate of the same class of ship.
        Senator Talent. Do you want to comment on that, Mr.
    O'Rourke? Then I will defer to Senator Collins.
        Mr. O'Rourke. Just one thing, to get back to your question
    earlier about the apparent tension between the idea of wanting
    to leave spaces in the ship undesigned so as to adapt to new
    rapidly changing technologies and the need to outfit sections
    of the ship as much as you can before you try and hook the
    ships----
        Senator Talent. You put it a lot better than I did, thank
    you.
        Mr. O'Rourke. I think the tension has to do with what parts
    of the ship you are looking at. There are some structures in
    the ship that you would like to know how to build so that you
    can outfit the sections while they are still in the factory,
    before you hook them up and put them in the water. That I think
    is what Dr. Dur was referring to, that he did not have those
    sections designed to a level of detail that he would have
    preferred to permit that kind of outfitting and then they had
    to take these sections and put them in the water before they
    put in these basic structures.
        What you were referring to is the idea of having spaces in
    the ship that are flexible interfaces, if you will, that will
    adapt to rapidly changing technologies that may be installed on
    the ship over its life cycle. I do think the Navy wants to
    incorporate that more and more into its ship designs, and I
    think the ship designers support that because it will allow
    these ships to be finally equipped with the most up to date
    technology at the point when they enter service and also allow
    them to be updated more easily over their life cycle.
        But the requirement for that is to have a standard defined
    space in the ship with known power outlets and so on, these
    standard interfaces, so that the designers of the rapidly
    changing technology, the electronics and so on that go aboard
    the ship, can know that in advance and work with it. There
    really is no contradiction between the two. Dr. Dur was
    referring to the fact that the more basic structures on the
    ship had not been designed in detail.
        Senator Talent. Senator Collins.
        Senator Collins. Thank you, Mr. Chairman.
        I want to begin by thanking all three of our witnesses for
    truly excellent statements that are very helpful to the
    subcommittee.
        I truly believe that the winner take all, or what I call
    the one shipyard acquisition strategy, would be disastrous for
    our national security. If our Nation needed to surge its
    shipbuilding capability, it could not do so overnight.
        Mr. Toner, your testimony makes that point very well when
    you are talking about Bath Iron Works (BIW) and the skilled
    crafts people who are producing very sophisticated, complex
    ships. You point out that, ``each skilled shipyard mechanic
    requires approximately 5 years to gain full proficiency at a
    training cost of $50,000. Similarly, each engineer and designer
    requires an investment of 3 years and 60 to $90,000.''
        I notice that Dr. Dur is also nodding in agreement about
    the investment that is made to get that skilled workforce. That
    is why the strategy which the Navy is proposing, which would
    jeopardize that skilled industrial base, causes me such
    concern.
        I would like to ask all three of you to comment on a
    question related to this, and that is, if we needed to surge
    our shipbuilding capacity would it not be--and we were down to
    only one yard or, frankly, if we needed to get our shipbuilding
    just to the level that we know from Admiral Clark's testimony
    it should be at today--would it not be extremely expensive and
    take years to actually reconstitute a shipyard that had been
    closed? Would it even be possible to reestablish a shipyard
    that had been closed?
        Mr. Toner?
        Mr. Toner. I can take a crack at that. I think if you look
    at our friends in England and their Astute submarine program,
    they are trying to reconstitute their submarine capacity in
    England, essentially going down to one shipyard. They are
    struggling mightily with that. The design capability just does
    not exist and in fact they came to, through the Navy, came to
    us, Electric Boat, to ask to support them in conducting the
    design.
        When you go look at the ship--and I have walked the ship
    there a couple times--you can see that they want to do the
    right things, but they have not gotten all the experience. You
    make decisions that are really ingrained in your learning over
    40 years of building ships, that if it is gone you do not
    really replace it. You have to learn all those things over
    again, and all those lessons learned were learned at extreme
    expense, both personal and financial for the companies making
    those investments. No company today based on the return that
    you would get would start down that path once again.
        So I firmly believe once a major naval shipyard closes, it
    is done. It is not going to come back. More importantly, of
    course, are the people. The yard is just bricks and mortar and
    what-not. But the people that go every day to that yard, they
    are going to go do something else because they are good people;
    they are capable people; and they are going to be gone. There
    just is not enough time and hours in the day to get it back.
        Senator Collins. In fact, at both BIW and Ingalls you see
    generations of families working at the shipyards, who have
    developed enormous skills that would be lost.
        Dr. Dur. I was just going to add, in our case we have
    partnerships with Gulf Coast Community College where many of
    our basic shipbuilding skills--electrical workers, pipefitters,
    pipe welders, machinists--all matriculate in a very, very
    sophisticated environment in the Gulf Coast Community College
    system, as well as the apprentice programs we have in high
    schools for people to learn how to work composites and
    polymers.
        These are new things that are initiatives that have been
    taken by the State and the community. Take the shipyard away
    and there is no substitute to regenerate the interest in crafts
    and skills.
        We may be one of the last vestiges of America's
    manufacturing base, and you lose this and regenerating it would
    be, in my estimation, very near impossible.
        Senator Collins. Mr. O'Rourke?
        Mr. O'Rourke. I agree that it would take a lot of time and
    money to reconstitute a second yard capable of building complex
    surface combatants. To begin with, if you close a yard and sell
    off the waterfront property, you cannot reconstitute it at that
    site at all. That is a one-time decision. If it gets turned
    into condos you are not going back from that decision.
        Assuming you have the waterfront property, it then depends
    on what is already there at the point in time when you decide
    to reconstitute. If you are starting with a bare patch of sand,
    it can take several years and possibly hundreds of millions of
    dollars in capital investment, and that is just for the
    production plant. That does not get to the issue of forming the
    workforce and also the management team to supervise that yard.
        If it is in fact a yard that is already up and running to
    some degree, then the time and cost could be less, but still
    substantial.
        You asked earlier about the ability to surge. I think your
    ability to surge to higher rates of production if needed is
    made easier if you have two yards because you have two
    different labor markets that you would have available to you on
    a regional basis to tap into to make new hires, and also
    because you would have two management teams available to
    oversee the increased production. Either of the two current
    yards could surge to higher rates of production, but together
    they can do it with less stress individually on each of them.
        If I could return to a question you had earlier when the
    CNO was here, you asked what he thought the value was of having
    competition in the design of the DD(X). I believe that it was
    valuable in spurring innovation in the DD(X) design. As a
    general principle, as an analyst, my view is that competition
    in design does have value in helping to generate new ideas
    sooner, or more of those ideas. I am not sure that the DD(X)
    today would have had as many good ideas incorporated into it
    had it not been designed in a competitive environment.
        Senator Collins. Thank you. You actually anticipated my
    next question to you, so thank you for answering it.
        Mr. Chairman, I know the hour is very late. I just want to
    make one final comment, and it follows up on a question that
    you raised with our witnesses about the cost growth, the
    spiraling cost growth, that the CNO cited in his testimony. I
    think when we look at the cost growth we have to understand the
    major causes of that spiraling cost, that escalating cost that
    the CNO finds so disturbing, are low procurement rates,
    increased capabilities of the ships that we are building,
    instability and a lack of predictability in the budgeting that
    makes it more difficult for the shipbuilders to plan, and also
    a push to get as much advanced cutting edge technology built
    into these ships as quickly as possible.
        So it really is a disservice if we ignore those very
    important factors when we analyze the cost growth. I wanted to
    put that on the record because I do not want the impression to
    be left that this cost growth is due somehow to mismanagement
    of costs by the shipbuilders or unreasonable labor rates or
    some other factor. In fact, if we had more stability, more
    predictable buying of our ships, that cost growth would not be
    as enormous, and it is because we keep wanting ships, as well
    we should, with more capabilities, with the best, newest
    technology. Those two are factors that drive up the costs.
        But it is a tradeoff. It costs more to have that new
    technology. So I appreciate your bringing up that issue,
    witnesses, as well. Thank you.
        Senator Talent. Well, I just say I thank the Senator. Her
    time at this hearing shows her commitment to shipbuilding and
    naval capabilities, and she and I obviously talk a lot about
    this on a personal level.
        I wanted them to answer the question. The CNO had just
    said--there is clearly disagreement here because he said that
    the cost growth is not explainable just by greater combat
    capability, propulsion power, computing technology, et cetera.
    I certainly agree that with the instability in funding and the
    general--it is unstable and it is also too low. Let us just say
    that it is not that it is just unstable. If it was unstable at
    a level that was adequate--I mean, if it was unstable in the
    sense that it was going from 16 to 13, you guys probably would
    not be complaining as much.
        It is impossible for us to determine really what exactly is
    causing it. It is impossible for us to do a reasonable and fair
    oversight of what you are doing when we have costs,
    expenditures, pingponging around all over the place and at a
    level that we all have a sense is too low, because you have
    these enormous pressures on you because of unstable funding and
    funding that is too low, and the phenomena you are referring to
    we all agree are reasonable concerns.
        So again, unless we get to a stable and adequate funding
    level we are not able to determine how much we should be
    pressuring you guys to do more than you are doing in terms of
    progress in this area.
        Please, Dr. Dur.
        Dr. Dur. If I could just comment on the point you are
    making, Mr. Chairman. I would agree with you fundamentally.
    When you compare the cost of ship production at a stable
    production rate with gaps between starts of fabrication that
    protect learning ship to ship, you end up with one set of
    costs. When you buy ships episodically, you gap years. You
    reduce production rate. You lose learning. You use green labor.
    The cost per ship goes up dramatically.
        But I will tell you, I have not seen the analysis behind
    the numbers cited by the CNO in his testimony for the growth,
    cost growth in the ship types. But I did look at one in detail,
    because we were building destroyers in the 1960s and we are
    building destroyers today. Our estimates show that for the
    shipbuilding portion of it the cost growth is more on the order
    of 9 percent rather than the 23 percent cited.
        Most of the growth is in the government-furnished
    equipment, which is really not the responsibility of the
    shipbuilder. That is provided to us by the government at their
    cost.
        Senator Talent. Well, and we are all in agreement, you
    three and CNO are in agreement, that major issues are stability
    in funding--I am reading from your list, Mr. Toner--stability
    in funding, the need for flexible funding strategies, the
    problem of low-rate production, and then the overall low
    funding levels. So we are all in agreement that those are the
    problems, and if we eliminated those problems then we would be
    in a position to determine whether we were not--whether we
    needed more from you in terms of efficiency than you were able
    to give us.
        Then we are in a position to say--and I know something
    about tactical aircraft production for the military. Much
    easier in overseeing that, to be able to say to the contractor:
    Look, you are not on budget; you are behind time; and the fault
    is yours, because you do not have these issues. Even if you do
    not buy as many as you think you are going to buy, you are
    still buying several hundred of these aircraft.
        Senator Lieberman, are you ready or do you need me to
    filibuster on your behalf a little longer?
        Senator Lieberman. I am glad you did not go to the nuclear
    option.
        Senator Talent. Constitutional option, you mean.
        Senator Lieberman. Right. [Laughter.]
        Thanks very much, Mr. Chairman. I regret that I am late. I
    had a previous conflict. I was at the closed session with
    Admiral Clark and then I had to go to a meeting. But knowing
    that would be the case, I actually did read the----
        Senator Talent. Would you yield for 2 seconds so I do not
    forget something?
        Senator Lieberman. Yes.
        Senator Talent. Evidently it is necessary housekeeping. I
    may forget it. Senator Kennedy was also at the closed session,
    and may be still trying to get here, but in the event he is not
    able to make it he asks that his written statement be made part
    of the record, and of course, without objection, we will do
    that.
        Thank you.
        [The prepared statement of Senator Kennedy follows:]
                Prepared Statement by Senator Edward M. Kennedy
        Thank you, Mr. Chairman, for calling this hearing today. I want to
    join you in welcoming our witnesses here today. I particularly want to
    express my personal gratitude and that of the members of the committee
    to Admiral Clark for the wonderful performance of the men and women of
    the Armed Forces during the past year.
        First, Mr. Chairman, I want to congratulate you on your second
    session serving as chairman of the Seapower Subcommittee. I
    specifically want to compliment you on your leadership of the
    subcommittee and say that I look forward to continuing to work with you
    in the same bipartisan fashion that has been a significant aspect of
    your chairmanship.
        The subcommittee meets this afternoon to discuss Navy shipbuilding
    and the status of the shipbuilding industrial base.
        Just about every year, we are presented with long-term shipbuilding
    plans that show how much better things will be if we can only hold on
    until the last years of the Future Years Defense Program. This year, we
    see major reductions in the plan, including the prospects for building
    more than one attack submarine or more than one DD(X) per year. In
    particular, the Navy has indicated a desire to conduct a winner-take-
    all competition for the DD(X) program. This raises substantial concerns
    about what effect this would have on the shipbuilding industrial base,
    not only for building DD(X) vessels, but also for building CG(X)
    cruisers or other major surface combatants in the future.
        I believe that the world we face will continue to be one of
    uncertainty and unrest. Decisions we make this year will have a direct
    effect on the forces and capabilities that future combatant commanders
    will use to protect our interests. We all know that our men and women
    in the Armed Forces will have responded admirably in any crisis, just
    as they have been doing to support the operations in Afghanistan and
    Iraq. It is our obligation to provide them with the tools they need to
    ensure that they are not exposed to extraordinary risk that could have
    been prevented. Over the long-term, we cannot count on continual heroic
    performance from our sailors and marines to make up for inadequate or
    inappropriate investment.
        Again, thank you Mr. Chairman for convening this hearing today.

        Senator Lieberman. Thank you, Mr. Chairman.
        But I actually did read the testimony that you submitted,
    and I think probably the point made about the importance of the
    stability of funding has been gone over in some detail. My own
    sense of where we are now, having followed our shipbuilding
    programs for some number of years here, is of course there are
    never enough resources, but we are in a really resource-
    stressed time.
        I suppose for some people it would be hard to accept that
    because obviously we are spending a lot of money every year on
    the Pentagon budget. On the other hand, we are dealing both
    with the current threat of the war on Islamic terrorism or the
    war of Islamic terrorism against us, and we have a
    responsibility to provide for the common defense on into the
    future, when we may face other competitors who may be much more
    peer competitors fighting modern but more conventional, if I
    can put it that way, certainly non-terrorist warfare.
        We do not want to make anybody into an enemy. We want to
    make everybody into our friend if we can. But there are
    countries whose investments in military and particularly in
    shipbuilding are worth noting, and China is the most
    significant of those. I worry about whether we are investing
    enough to maintain our important presence as a balance of power
    in the Asian Pacific region.
        But to get to the specifics of it, I would say, Mr.
    O'Rourke--and now I am going to go and be a little more
    parochial in terms of Electric Boat in Connecticut--that as I
    read your testimony prepared there was some good news,
    relatively speaking, which is that you said that if we keep the
    submarine procurement at one per year, which is one less than
    we hope for and think we need, but that employment levels will
    remain fairly steady at both Electric Boat and at Newport News,
    but that may not be so, probably will not be so, for designers
    and design capability.
        I apologize if you have talked about this, but this does
    concern me greatly because I gather you have talked about how
    hard it would be to reopen a shipyard once closed. I wonder how
    hard it would be to reconstitute this extraordinarily
    specialized design capability once lost. That is the question I
    wanted to ask any of you to respond to.
        Mr. Toner. Well, Senator, I will give a crack at it. Again,
    we had talked about it a little bit earlier. If I repeat myself
    I apologize. Basically, the design capability for a nuclear
    submarine is really a unique capability and once lost it is
    extremely difficult to reconstitute. That has been demonstrated
    with our friends in England and the Astute program. They
    basically struggled mightily with that program, such that we
    had to go over with the Navy's guidance to assist them in
    completing the design of their next submarine.
        In our process, we are in the position for the first time
    in 40 years not to have a submarine design on the board.
        Senator Lieberman. Exactly. That is the number that jumped
    from your testimony.
        Mr. Toner. That is a major concern of mine. It is a major
    concern of the Nation.
        Additionally, when you look at the CNO's testimony, in
    figure 7 he talks about an SSBN starting, getting to sea
    somewhere around 2020, which seems to make sense. If you
    remember, Ohio delivered in 1981 and 40 years crudely,
    approximately, is around 2020, and that ship needs to be
    replaced.
        If that is true, since basically it is 12 years from the
    start of design to delivery, given the complex nature of a
    nuclear submarine, that would say we would have to start the
    design in 2008. If you look at the existing FYDP today, there
    is no money for a design in 2008, although there is $600
    million available for undersea superiority. If undersea
    superiority is not defined as a nuclear submarine, I really do
    not know what is.
        So I think that has to be looked at and those moneys need
    to be moved in a fashion that would allow us to preserve the
    design capability and be prepared to design that ship when the
    time comes.
        Senator Lieberman. I agree with that, of course. But I do
    want to express a word of caution, that in some of my own
    conversations with folks within the Navy I am not so sure that
    they see that $600 million, which is in the budget over the
    FYDP for undersea superiority, as being exclusively for
    submarines.
        Mr. Toner. I know they do not, sir.
        Senator Lieberman. You agree with that?
        Mr. Toner. I have heard the same thing. I find it hard to
    believe, but I have heard the same thing.
        Senator Lieberman. I think the notion is that there may be
    some other systems to complement submarines that could be
    designed or developed or researched with that money. That is a
    judgment that this subcommittee and full committee is going to
    have to make, and Congress will.
        Dr. Dur, do you have anything you would like to add to this
    question of design capability?
        Dr. Dur. Design capability is a critical element in the
    industrial base that I represent, conventionally powered
    surface combatants and expeditionary warfare ships. Indeed, the
    amount of designer and engineer talent that I retain in the
    shipyard is very much a function of the pace of design. When
    people speak of year delays in this program or that, that
    translates into hundreds of jobs in the designer and the
    engineer category.
        While I have been relatively successful in getting the
    people that I need to design the ships that I have under
    contract, I worry always that the day may come when I do not
    have the people available to me locally to do what it is I have
    to do by way of design. It is a critical problem.
        Senator Lieberman. Thank you.
        Mr. O'Rourke, how seriously do you see the problem if this
    capacity to design atrophies? How long would it take to
    reconstitute the capability at the level it now exists?
        Mr. O'Rourke. I agree that there are grounds for being
    quite concerned about how this situation may develop if a new
    submarine design project is not put into place. I think the
    experience in the U.K. with the Astute class that has been
    referred to is potentially very instructive. If we allow that
    design base to atrophy, it could take a lot of time and cost to
    reconstitute. That is time and cost that would be built into
    whatever the next submarine design project is.
        I started my analysis originally from a force structure
    point of view, and we have been getting submarines at such a
    low rate for so many years that we will now need to get two
    submarines per year starting in fiscal year 2012 or fiscal year
    2013 and sustain that rate for about a dozen years just to
    avoid dropping below 40. That is the position we have now
    gotten into.
        Senator Lieberman. With apologies, I want to ask you to
    repeat that because I do not know that people understand that.
        Mr. O'Rourke. We have been procuring submarines over the
    last 15 years or so at an average rate of less than one boat
    per year. As a consequence of that, we will now need to build
    submarines at a rate of two per year starting in fiscal year
    2012 or fiscal year 2013 and sustaining that rate for about a
    dozen years, just to avoid dropping below 40.
        Senator Lieberman. Right, and the low number in the various
    projections is 41, right, for attack subs?
        Mr. O'Rourke. That is right.
        Senator Lieberman. We are now at 58?
        Mr. O'Rourke. I think we are at 53, 54, at the moment.
        If you wanted to go to something significantly higher than
    41 or 45 boats, then you are talking about building more than 2
    boats per year. But you need two boats per year just to avoid
    dropping below 40.
        Now, the reduction of the Virginia class to one boat per
    year in the FYDP frankly is a signal that Virginia-class
    procurement may never be more than one per year. If you think
    there is any truth to that, then you need to begin looking
    immediately at a way of getting to two attack submarines per
    year starting a few years from now. If the Virginia class is
    too expensive for that, then the alternative is to look for a
    less expensive submarine.
        Now, we happen to be in the potentially happy situation of
    having some new technologies at hand that were not available
    when the Virginia class was designed, that could allow industry
    and the Navy to design a submarine that is substantially less
    expensive than the Virginia class and yet still be equivalent
    to the Virginia class in capability. If you were to begin the
    design of that submarine today and pursue that project in a
    concerted manner, then the lead boat might be ready for
    procurement in fiscal year 2011.
        That could allow you to increase the procurement rate of
    that less expensive boat to two per year starting in fiscal
    year 2012 or fiscal year 2013. So I started my analysis from a
    force structure perspective and it led me to examine that
    option. But it also has the happy coincidence of providing a
    submarine design project for the design and engineering base,
    which otherwise is looking at nothing to do and at the prospect
    of atrophying over the next several years. So it could in a
    sense take care of two problems at the same time. It could
    position the acquisition situation to go to two per year more
    easily within available resources and it also provides a way of
    sustaining the submarine design and engineering base. Once they
    complete that design they could roll over into the design of
    the SSBN that was mentioned a few minutes ago, and when they
    complete that SSBN they can go back and do a downstream
    generation attack submarine. Through that sequence of three
    designs, you have a strategy for keeping the submarine design
    and engineering base going for 15 or so more years into the
    future.
        Senator Lieberman. Very interesting proposal.
        When you speak of new technologies, are you thinking of the
    air-independent propulsion?
        Mr. O'Rourke. In the case of the less expensive nuclear
    powered submarine, I am talking about the so-called Tango Bravo
    technologies.
        Senator Lieberman. You are thinking about a less expensive
    nuclear submarine, I got you.
        Mr. O'Rourke. That is right. In fact, I think it is, from a
    capability point of view, it is important to realize the
    differences between an air independent propulsion (AIP)
    submarine and a nuclear-powered submarine, and also to note
    that with the Tango Bravo technologies we are in a situation, I
    have been given to understand, where we can have a submarine as
    capable as the Virginia class, but at some lower cost.
        It is not often in the ship design business that you can be
    in a situation of having your cake and eating it too, but we
    may just be in that situation right now with submarine design.
        Senator Lieberman. Mr. Chairman, you have been very
    generous and gracious with the time.
        My final question is just to ask Dr. Dur and Mr. Toner if
    they would respond to Mr. O'Rourke's point. It was going to be
    my last question, which is rising naturally out of the facts
    that we see and the pressure on resources and the concern about
    the cost of the Virginia-class attack submarines. The question
    is, is this an alternative way to go? I think one of the
    concerns the Navy has is that we are unable to match potential
    peer competitors one for one because they are turning out
    obviously less able submarines, but much less expensive as
    well. Is there a point at which we should be trying to
    maximize, just as was said, have the continuing one a year of
    the Virginia class or something like it at that level of
    superiority, and then something less expensive that is also
    nuclear?
        Mr. Toner. Well, I think what Mr. O'Rourke has said has a
    lot of merit to it. The technologies that he is talking about
    on the Tango Bravo are really technologies that focus on the
    ability to build the ship in an easier fashion. For example,
    the external weapons mod would do away with the torpedo room, a
    very complex portion of the ship to build, very labor
    intensive, very costly. An integrated power supply such that we
    are propelling the ship with external motors, does away with
    the so-called tyranny of the shaft and all it brings.
        So it is possible to go build a smaller ship and perhaps it
    would be a little bit cheaper. But again, you have to also
    consider there is something good about volume. This concept and
    the designs that would do away with these various portions of
    the ship allow us to have significant more volume to put a lot
    of different things in.
        As far as the cost goes, cost is not really dollars per ton
    on a submarine. It is how much goes inside the sausage, if you
    will. That is where the rubber meets the road.
        Senator Lieberman. Obviously we are not going to get into
    specific cost estimates, but under the kind of scenario we are
    talking about under the Tango Bravo program as an example,
    would there be significant savings in comparison to the
    Virginia-class subs?
        Mr. Toner. It would depend, I think, from my opinion--and
    for the record, we can probably provide you a white paper with
    those type numbers on it.
        Senator Lieberman. Please do that. I would appreciate that.
        Mr. Toner. But what I would be concerned about is as you
    start to build this, the learning curve is going to come down
    on the Virginia-class submarine. Right now both the two ships,
    the 774 and 775, are lead ships and they are being produced. As
    we start to come down that curve--and we are going to come down
    it because there are two very capable shipyards building it--
    the price of Virginia is going to come down.
        The question will be with regard to the startup of this new
    ship, where is that going to cross and is it really going to be
    cheaper. Intuitively, you say yes, I think we can get there.
    But is it a big number or a little number? I would not
    necessarily put all my eggs in that basket to say, I am going
    to build a cheaper submarine.
        Virginia started out on that same path, and if you look at
    the fragility of the vendor base that supplies the material for
    these ships, we have significant issues with it. So it could
    be, yes, it could be. Is it significant or not? I am not really
    sure. But we will put together a white paper to show you that
    for the record if I could.
        Senator Lieberman. Please do. I appreciate that. Thank you.
        [The information referred to follows:]
                           Joint Undersea Superiority
        Background: OSD Program Budget Decision 753 directed the Navy to
    reduce the Virginia-class submarine procurement rate to one ship per
    year through 2011. It also requested an additional $600 million across
    the FYDP, $50 million of which is in the fiscal year 2006 President's
    budget to design a future undersea superiority system. Although the
    undersea superiority system capabilities that will be developed are
    still under evaluation, nuclear powered submarines will play a key
    role. Concurrently, the Defense Advanced Research Program Agency--in
    conjunction with the Navy--is funding the Tango Bravo (Technology
    Barriers) program to develop technologies that can break some
    traditional design paradigms that drive the cost and construction
    schedule of present submarines.
        Discussion: The Virginia-class submarines can provide the necessary
    stealth, endurance, agility, and firepower to effectively contribute to
    joint undersea superiority. Since repeated studies show that combatant
    commanders require attack submarines in numbers that can only be
    supported by building at least two ships per year, reducing Virginia
    acquisition cost through spiral development to allow higher procurement
    rates should be a central focus of the joint undersea superiority
    study. Virginia acquisition cost reduction is achievable through a
    multifaceted approach that as a minimum should include:

             Leveraging the class learning curve to reduce the cost
            of Block II ships to under $2 billion in current year dollars.
            Contracts would be structured to ensure the government that
            learning curve savings could be realized.
             Funding efforts to redesign aspects of Virginia that
            specifically enable a greater use of commercial off-the-shelf
            equipment for both contractor and government furnished
            equipment. This would counter the ongoing trend of sole source
            providers and thus increasingly expensive component costs.
             Funding research designed to optimize construction
            methodologies including the development of larger modules with
            increased outfitting and test to further reduce in-hull
            construction man-hours.

        The above actions are expected to reduce acquisition cost in the
    Virginia class and future submarine designs and can be demonstrated in
    the first ship (SSN784) of the Block III Virginia program in 2009. A
    Virginia class redesign in selected areas can also incorporate Tango
    Bravo technologies as they mature, providing valuable information and
    key risk reduction for the design of future submarines (e.g.,
    replacement SSBN). This approach brings Tango Bravo technology to sea
    earlier and provides submarines with the interface capabilities they
    will need to support the off-board elements of future joint undersea
    superiority systems. Moreover, these efforts contribute to the
    maintenance of the submarine design industrial base that is critical to
    the Nation's defense.
        Recommendation: Dedicate the $50 million in the fiscal year 2006
    budget and the $600 million additional undersea superiority funding
    across the FYDP to Virginia redesign efforts that would reduce
    acquisition cost and accelerate the deployment of new technologies
    needed to maintain joint undersea superiority.

        Dr. Dur, do you want to add anything quickly?
        Dr. Dur. Senator, I am not an expert on submarine
    construction, so I think I will defer to my colleague who is.
        Senator Lieberman. A very wise move.
        Dr. Dur. Thank you, sir.
        Senator Lieberman. Thank you all very much for excellent
    testimony, very provocative, gives us a lot to think about and
    hopefully to do something about as we deliberate on the DOD
    authorization bill for next year.
        Mr. Chairman, thank you very much for convening this
    hearing.
        Senator Talent. Thank you, Senator. Those comments I think
    will serve as closing comments for the hearing. I want to thank
    all three of you for coming and for your expertise.
        [Questions for the record with answers supplied follow:]
                Questions Submitted by Senator Edward M. Kennedy
                           intelligence requirements
        1. Senator Kennedy. Admiral Clark, your ability to meet wartime
    requirements with a smaller force depends on having intimate knowledge
    of the intentions of potential enemies to make the Fleet Response Plan
    successful. Otherwise, the enemy could fake mobilizations several times
    to wear out our ability to respond. Then, after we have taken the fleet
    home for necessary maintenance and crew rest, they could attack for
    real. Since we have just seen how poorly the Intelligence Community
    performed in assessing actual capabilities in Iraq, what gives you any
    confidence that we will be able to rely on the Intelligence Community
    for an unambiguous assessment of the enemies' intentions?
        Admiral Clark. [Deleted.]

                           submarine force structure
        2. Senator Kennedy. Admiral Clark, the last thorough analysis we
    have seen regarding attack submarine force structure requirements was
    the one conducted by the Joint Chiefs of Staff in 1999. It stated that,
    in the near-term, the Navy needed to have 55 attack submarines, and
    that in the middle of the next decade, we would need to have some 68 to
    72 attack submarines in the fleet to meet our most pressing
    requirements. The latest 30-year shipbuilding plan submitted to
    Congress in March showed that the long-term force structure goal for
    attack submarines, including nuclear-powered cruise missile attack
    submarines, would be only 41 to 45 boats. During the hearing, you
    implied that other systems or capabilities would provide adequate
    capability to substitute for some or all of the peacetime intelligence,
    surveillance, and reconnaissance (ISR) needs being met by our submarine
    force. Please provide more information on specifically what systems or
    capabilities the Navy has identified, either within the Navy or within
    other parts on the Government, that will fulfill these peacetime ISR
    requirements of the combatant commanders.
        Admiral Clark. [Deleted.]

                             industrial base study
        3. Senator Kennedy. Admiral Clark, we had asked Navy
    representatives at previous hearings about the effect of buying smaller
    numbers of surface combatants on the surface combatant industrial base.
    Now the Navy is proposing to conduct a winner-take-all competition for
    the first five ships of the DD(X) program. Previous Navy studies have
    said that the two shipyards (Bath and Ingalls) needed the equivalent of
    three DDG-51s per year plus additional work to remain viable. Has the
    Navy conducted new analyses that says that the Navy's DD(X) acquisition
    strategy will be enough to keep the surface combatant industrial base
    viable?
        Admiral Clark. The DD(X) program budget request for fiscal year
    2006 and beyond has been reduced from a class of 24-32 ships to a class
    of 8-12 ships. This results in a shipbuilding profile that has moved
    from construction of up to three ships per years to construction of one
    ship per year from fiscal year 2007 through fiscal year 2011. Both
    Northrop Grumman and General Dynamics have the capacity to
    independently design and construct the programmed class of DD(X) ships.
        While I am not assigned responsibility for acquisition programs, I
    believe an open competition for the DD(X) program would optimize our
    acquisition execution. This is the best business case for maintaining a
    financially healthy shipyard to construct DD(X) ships and provides the
    most cost efficient method of procuring these destroyers for the Navy
    and the taxpayers.
        Due to congressional concerns about this competitive winner-take-
    all acquisition strategy, other courses of action have been explored.
    These potential strategies are being discussed with OSD and other key
    stakeholders, but they do not represent the most cost efficient means
    to acquire DD(X).

        4. Senator Kennedy. Admiral Clark, has the Navy come to a new
    assessment about what surface combatant industrial base is necessary?
        Admiral Clark. Our assessment is that Navy, Congress, and the
    shipbuilding industry must work together to formulate a national
    shipbuilding plan that addresses the industrial base issues. We
    currently have a system of apportionment, rather than competition, and
    excess capacity, both of which contribute to escalating costs. To
    ensure we continue to act in the taxpayer's best interest, the
    significant increases in shipbuilding costs must be reversed and ships
    must be efficiently delivered to the Navy and the Nation. Shipbuilding
    costs have significantly exceeded inflation and the current acquisition
    policy constrains our ability to effectively manage shipbuilding
    accounts. Navy, Congress, and industry must economically deliver--
    through industrial improvements and acquisition policy reform--the
    ships that the fleet requires to fight and win our country's wars in
    the future.

                                dd(x) destroyer
        5. Senator Kennedy. Admiral Clark, the DD(X) destroyer is being
    built largely to support shore fire support requirements. At various
    times, we have heard that the Navy intended to buy as many as 31 ships
    in this class. The latest 30-year shipbuilding plan submitted to
    Congress in March showed that the DD(X) class would ultimately consist
    of only 8 to 12 ships. Have the Navy and Marine Corps done any analysis
    which shows that either an 8- or a 12-ship class of DD(X) destroyers
    would be sufficient to cover fire support requirements of the combatant
    commanders to support Army and Marine Corps operations ashore?
        Admiral Clark. Extensive analysis has been conducted on the class
    size of the DD(X) destroyer. The submitted construction profile
    reflects specific requirements finalized during the DD(X) detail design
    as the ship approaches Milestone B and Critical Design Review. Building
    on a body of analysis conducted since the 1990s, three separate options
    for DD(X) were considered to meet USMC fire support requirements. The
    smallest of these included a single 155MM Advanced Gun System and
    required a class size of approximately 24 ships, while the larger 2
    designs included 2 gun mounts and substantially larger gun magazines
    resulting in a ship class of approximately 12 ships.
        Recent Navy force structure analysis determined that a DD(X) class
    size of 8-12 ships is adequate. This is sufficient to provide one DD(X)
    per Expeditionary Strike Group in support of smaller scale distributed
    operations. Analysis of projected Major Combat Operations using OSD
    approved scenarios indicates that 8-12 DD(X) are also adequate to surge
    sufficient ships to the theater to meet Naval Surface Fires Support
    requirements in support of one or two Marine Expeditionary Brigade-size
    amphibious assaults.

                           ambiguity of requirements
        6. Senator Kennedy. Mr. Toner and Dr. Dur, Mr. O'Rourke's prepared
    statement discusses the ambiguity of the Navy's shipbuilding plans. He
    indicates that long-term requirements stated in a range of 260 to 325
    ships do not go far enough in resolving the ambiguity faced by the
    shipbuilders. Do you agree with Mr. O'Rourke's assessment, and if this
    is not sufficient, how narrowly would the Department have to state
    requirements to allow you sufficient insight for long-term planning?
        Mr. Toner. I certainly agree with Mr. O'Rourke's assessment that
    the March 2005 report does not present a 30-year shipbuilding plan,
    that instead it presents a 30-year projection of potential Navy force
    levels from which potential annual shipbuilding rates can be only
    partially inferred. That said, I believe a 30-year shipbuilding plan
    with a 25 percent variability range would be reasonably narrow enough
    for planning purposes, but only if that range was held at the ship-type
    level, and only if that plan would be reliable. The Navy's March 2005
    report included force level ranges with variability of nearly 40 for
    cruisers and destroyers and more than 40 percent for Maritime
    Prepositioning Ships. These ``plans'' are not very useful to me even
    though the report's total force level variability works out to 25. They
    are certainly not very useful to me if the force level projections are
    not supported by corresponding procurement plans that prove to be
    stable.
        I do understand the Navy cannot predict its requirements in 30
    years with certainty. What's much more important to me is stability in
    that planning. The March 2005 report includes an attack submarine force
    level requirement with only 10 percent variability. But as I pointed
    out in my prepared statement, the Virginia-class procurement plan has
    changed 12 times in the last 10 years, and that is but one example of
    instability. In the case of DD(X), the Navy has made five procurement
    plan changes since the fiscal year 1998 budget, slipped the lead ship
    authorization 4 years (to date), and revised the total force level
    projection from 32 ships to what is now a range of 8-12. General
    Dynamics made a significant capital investment in its Bath facility
    based on the Navy's acquisition plans. Would we have made that
    investment based on the current procurement plan? Or would we have made
    that investment knowing the Navy might or might not conduct a winner-
    take-all competition? Against the backdrop of these major combatant
    programs, one can have little confidence in the Navy's plan for future
    Maritime Prepositioning Ships. The March 2005 report includes force
    level projections that vary 43 percent for these ship types. That
    variability factor alone is unsettling enough. The predictability of
    any underlying procurement plan then, by definition if not by history,
    provides insufficient insight for long-term planning.
        The first step must be to define a clear, predictable shipbuilding
    plan. As Mr. O'Rourke observed, this has not yet been accomplished.
        Dr. Dur. I generally agree with the contention that a range of some
    65 ships does not provide industry sufficient insight for long term
    planning for capital investments, work force and facilities sizing or
    craft training. Ideally, the Navy, the Department of Defense, and
    Congress would agree on an ``objective'' Navy force level which would
    be reviewed at no less than a 5-year interval. The objective force
    would specify ship class, number and general mission requirements. It
    is important that the Navy's shipbuilding plan should be derived from
    this agreed objective force structure. Congress should then commit to
    supporting a ``capital investment plan'' consistent with that
    commitment. This would treat ships as the substantial capital
    investment that they are and permit companies that comprise all levels
    of the shipbuilding industrial base to make informed decisions about
    their own investments ultimately lowering the procurement cost of the
    ships the Nation needs.

                   alternate submarine propulsion approaches
        7. Senator Kennedy. Mr. O'Rourke, your prepared testimony mentions
    that possibility that the Navy could perhaps buy a mix of nuclear
    attack submarines and ones employing air-independent propulsion (AIP).
    Since a number of European concerns have invested heavily in developing
    this technology, it would appear that, if we chose to follow this
    approach, we might be able to acquire such technology without spending
    a lot more on research and development (R&D). In your opinion, would we
    need to invest heavily in R&D for AIP if we chose to pursue this
    strategy?
        Mr. O'Rourke. If a program were begun to develop and procure an AIP
    submarine for the U.S. Navy, and if one or more other countries that
    have developed AIP technology agreed to license the technology to, or
    otherwise share it with, the U.S. program, then the cost to develop AIP
    technology for the U.S. submarine could be reduced, perhaps
    substantially. If the safety or performance requirements for the U.S.
    AIP system were higher than those for the foreign AIP systems, then
    some amount of research and development funding might be needed to
    adapt the foreign AIP technology to meet the higher U.S. requirements.
        A similar logic would apply to the total development and design
    costs for a U.S. AIP submarine. If a country with an AlP submarine
    design agreed to license this design to, or otherwise share it with,
    the U.S. program, then the total cost to develop and design the U.S.
    submarine could be reduced, perhaps substantially. If the safety or
    performance requirements for the U.S. submarine were higher than those
    for the foreign submarine, then some amount of development and design
    funding might be needed to adapt the foreign submarine design to meet
    the higher U.S. requirements. If a foreign submarine design is not
    available to the U.S. program, or if a foreign design were available
    but could not be adapted to meet U.S. requirements, then a substantial
    amount of funding would be needed to develop a new design that met U.S.
    requirements. The less new design work that is required, the less
    potential the program might have for providing near-term support to the
    U.S. submarine design and engineering base.

        [Whereupon, at 6:00 p.m., the subcommittee adjourned.]

    DEPARTMENT OF DEFENSE AUTHORIZATION FOR APPROPRIATIONS FOR FISCAL YEAR
                                      2006

                                  ----------

                            TUESDAY, APRIL 19, 2005

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

        UNITED STATES MARINE CORPS GROUND AND ROTARY WING PROGRAMS AND
                                   SEABASING

        The subcommittee met, pursuant to notice, at 3:05 p.m. in
    room SR-232A, Russell Senate Office Building, Senator James M.
    Talent (chairman of the subcommittee) presiding.
        Committee members present: Senators Talent, Kennedy,
    Lieberman, and Clinton.
        Majority staff members present: Ambrose R. Hock,
    professional staff member; Gregory T. Kiley, professional staff
    member; Thomas L. MacKenzie, professional staff member; and
    Stanley R. O'Connor, Jr., professional staff member.
        Minority staff members present: Daniel J. Cox, Jr.,
    professional staff member; Creighton Greene, professional staff
    member; and Peter K. Levine, minority counsel.
        Staff assistants present: Alison E. Brill and Benjamin L.
    Rubin.
        Committee members' assistants present: Lindsey R. Neas,
    assistant to Senator Talent; Mieke Y. Eoyang, assistant to
    Senator Kennedy; Frederick M. Downey, assistant to Senator
    Lieberman; and Andrew Shapiro, assistant to Senator Clinton.

         OPENING STATEMENT OF SENATOR JAMES M. TALENT, CHAIRMAN

        Senator Talent. I will tell you what we will do. We will
    get going and when Senator Kennedy arrives maybe at the
    beginning of his questioning he can make an opening statement
    if he wants to do that.
        We are meeting today to receive testimony on Marine Corps
    ground and rotary wing programs, on seabasing, in review of the
    DOD authorization request for fiscal year 2006. Before I get
    going on my statement, I want to recognize a couple of
    distinguished visitors. One of our staff assistants, Ben
    Rubin's parents are in the room, Steve and Nancy from Boston.
    In Senator Kennedy's absence--I am sure he will want to say
    hello also--thank you for coming and for lending us your son
    for a while.
        We are pleased to have with us today: the Assistant
    Secretary of the Navy for Research, Development, and
    Acquisition, John Young, who has appeared before this
    subcommittee and the full committee on many occasions. The
    Deputy Commandant of the Marine Corps for Programs and
    Resources, Lieutenant General Magnus. Thank you for coming,
    General. The Commanding General of the Marine Corps Combat
    Development Command, Lieutenant General James Mattis. General,
    thank you for being here. The Deputy Chief of Naval Operations
    for Warfare Requirements and Programs, Vice Admiral Joseph
    Sestak. Joe, thank you for coming.
        I want to welcome you, gentlemen, and thank you for taking
    time out of your busy schedules to be with us here today. I
    especially want you, however, to pass on how proud we are of
    the soldiers, sailors, marines, and airmen who are on point in
    the global war on terror. The sacrifices that they and their
    families are making daily are not going unnoticed. They are
    deeply appreciated by this Congress and by all the American
    people. This Nation is served by the finest men and women who
    have ever served in any military at any time. I know you all
    believe that.
        The Corps' high operations tempo has tested the limits of
    the men and women of the Marine Corps and the equipment they
    depend upon to accomplish their mission. Today's hearing will
    give this subcommittee the opportunity to hear about the Corps'
    current and future programs to provide our marines with the
    best equipment available.
        There are several areas we want to hear about today. The
    committee has closely followed the efforts of the Department of
    Defense (DOD) in providing force protection capabilities to our
    soldiers and marines in Iraq and Afghanistan for countering the
    threat posed by improvised explosive devices (IEDs). The
    committee is supportive of the efforts of the Joint IED Task
    Force and believes that the task force has made significant
    contributions to force protection solutions for our marines.
    However, we want to ensure that we have explored all
    opportunities to provide force protection and otherwise to stop
    IEDs and we would like to hear the Marine Corps' views on
    counter-IED measures, including the procurement of jammers and
    armored--and also armoring wheeled vehicles.
        The Marine Corps is developing the Expeditionary Fighting
    Vehicle, a replacement for the Assault Amphibian Vehicle, to
    carry marines over water and land. The committee has been very
    supportive of this program and we were concerned to hear that
    the program was slipped a year in the current budget request.
    We understand the program not only slipped because of
    affordability concerns, but also because of technical issues.
    We want to hear about the reasons for the delay and the impact
    on the future Marine force.
        Operations in the global war on terror have stressed the
    Corps' helicopter fleet. This places added importance on the
    programs to reset and modernize Marine helicopters. The Navy
    and the Marine Corps have several ongoing helicopter
    initiatives, but the two we would like to address today are the
    programs to acquire new helicopters for presidential support
    and for heavy lift replacement.
        The Navy recently completed a source selection of the VXX
    helicopter and we would like to hear about the source selection
    process. Questions raised at a recent Airland Subcommittee
    hearing on the replacement for the CH-53 program need to be
    addressed as well. We would also like to hear, to the extent
    possible, how the MV-22 Osprey is proceeding in its operational
    testing.
        In addition to other Marine Corps programs, the
    subcommittee is also interested in the development of the
    seabasing concept. In the interim plan submitted to Congress in
    lieu of the annual 30-year shipbuilding plan, the Secretary of
    the Navy had a range of between 14 and 20 ships in the Maritime
    Prepositioning Force of the future, with each option also
    including two high-speed ships and three high-speed connectors.
    We have never in the past counted our Maritime Prepositioning
    ships in the number of ships we count in the size of the Navy.
        The objective of the sea base is to assemble, deliver, and
    sustain a sizable force from the sea. The reason for needing
    the sea base is that access to a port may not be readily
    available. I am aware that the concept for operations is
    gaining definition and I look forward to hearing about it from
    our witnesses today.
        This, however, brings up a point I feel compelled to make.
    If these numbers of ships are part of either a 260-ship fleet
    or a 325-ship fleet, then the 260-ship Navy is, as
    traditionally understood, only 241 ships, including 63 littoral
    combat ships, or the 325-ship Navy would be only 300 ships,
    counting 82 littoral combat ships. That means that in the
    traditional sense the range of size for the fleet in 30 years
    would be between 178 and 218 of what we would traditionally
    call major combatants.
        While the concept of seabasing has some appeal, I am
    concerned about the resources required to acquire this
    capability and in the world of competing resources what impacts
    it might have on the rest of the fleet.
        We will get into these and any other questions that the
    members of the subcommittee may wish to talk about. Again,
    gentlemen, I thank you for appearing before the subcommittee
    today. We look forward to your testimony.
        We will hold Senator Kennedy's opening statement in
    abeyance, unless this is him. It is not. Hello, Senator
    Lieberman. We were just about to start the witnesses'
    testimony. Do you want to make any kind of a statement?
        Senator Lieberman. No, go right ahead.
        Senator Talent. We will start with Secretary Young, who is
    the Assistant Secretary of the Navy for Research, Development,
    and Acquisition. John, please proceed.

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

        Mr. Young. Mr. Chairman, Senator Lieberman, it is a great
    privilege to appear before the subcommittee today to discuss
    the status of the fiscal year 2006 Marine Corps programs as
    well as our seabasing efforts. Mr. Chairman, thank you for
    introducing my colleagues here today. I want to agree with your
    comments and add that in multiple theaters throughout the world
    today, your Navy-Marine Corps team is prosecuting the global
    war on terror in a wide range of operations.
        Your naval team has executed these operations superbly,
    from pursuit of hostile forces in Iraq and Afghanistan to
    providing humanitarian relief after the tsunami. In each of
    these operations, marines and sailors provided a unique
    demonstration to the world of the immense and timely
    capabilities of the Navy and Marine Corps team.
        We have taken the committee's calls for urgency and
    discipline in acquisition to heart and worked to improve our
    business practices. I would like to highlight a few of the past
    year's actions.
        Through the work of the Marine Corps and the leadership of
    Secretary England, when the First Marine Expeditionary Force
    returned to Iraq in March 2004, every vehicle had some level of
    armor protection and every helicopter had advanced
    survivability equipment. To build on this momentum, Secretary
    England directed and established a formalized process action
    team, called Operation Respond, to rapidly meet requirements
    generated from deployed marines. Through Operation Respond,
    within the limits of funding rules, the Department delivered
    enhanced body armor, IED jammers, ballistic goggles, unmanned
    aerial vehicles, and other capabilities requested by marines.
        Shifting to other programs, we implemented a Joint Strike
    Fighter (JSF) Independent Review Team and recommended specific
    JSF design, ground rule assumptions, and requirements changes
    which restored short takeoff vertical landing (STOVL)
    viability. All three variants are now projected to meet their
    key performance parameters.
        Another joint program, the V-22 Osprey, has flown in excess
    of 4,900 hours since resuming flight tests in May 2002.
    Operational Evaluation began on March 28, 2005, and should lead
    to a full-rate production decision in early 2006.
        The H-1 upgrades development program is over 90 percent
    complete, with operation and evaluation (OPEVAL) for this
    program beginning late this summer.
        The Marine Corps has taken delivery of 17 KC-130J aircraft
    to date, which includes four deliveries during this fiscal
    year. Four KC-130Js were procured in fiscal year 2005 and 12
    aircraft are budgeted for procurement in fiscal year 2006. We
    have also continued to ensure the tactical capability of our
    existing KC-130 F, R, and T series aircraft by installing night
    vision kits and upgraded aircraft survivability equipment.
        The Expeditionary Fighting Vehicle (EFV) is a self-
    deploying, high water speed, armored amphibious vehicle capable
    of transporting marines from ships located beyond the horizon
    to inland objectives. The EFV will replace the AAV that was
    fielded in 1972 and will be over 35 years old when EFV is
    fielded. The Milestone C LRIP is now scheduled for September
    2006.
        Finally, the Lightweight 155, a joint Marine Corps and Army
    program, replaces the current M-198. The Departments of the
    Navy and Army awarded an $834 million multi-year contract in
    March 2005, the Lightweight 155 is a very successful program.
        We have also made significant progress in our shipbuilding
    programs that support our Expeditionary Forces. Specifically,
    lessons from Iraq and Afghanistan suggested we should maximize
    the air capability of Amphibious Assault Ship (LHA(R)) while
    leveraging the design changes already made for multi-purpose
    amphibious assault system (LHD-8). The Navy's acquisition team
    worked with Navy and Marine Corps leadership to restructure
    LHA(R) from plug-plus to an aviation variant using the proven
    LHD hull and saving over $1.1 billion. The resulting design
    provides a transformational capability that leverages our
    investment in the Joint Strike Fighter and the MV-22.
        The fiscal year 2006 budget request includes $66 million
    for Maritime Prepositioning Force Future (MPF/F) development
    and design. This family of ships is essential to the naval
    seabasing strategy and these funds are also very important to
    the long-term health of segments of our U.S. shipbuilding
    industrial base. We need your support to proceed with Maritime
    Prepositional Force (MPF) definition and experimentation
    efforts and to maintain a fully funded program. We are
    carefully looking at whether current generation platforms can
    meet a majority of the MPF requirements at lower risk and cost.
        The San Antonio, the lead ship in the Amphibious Assault
    Transport Dock (LPD-17) class of amphibious transport dock
    ships, is approximately 93 percent complete, with delivery
    scheduled for fall 2005.
        The much discussed current planned build rate of one DD(X)
    per year through the Fiscal Year Defense Program/Plan (FYDP)
    does not provide sufficient workload to sustain two yards in an
    affordable manner. We are committed to procuring those ships
    that the Navy needs in a manner that provides the best value to
    the taxpayer. The competition for DD(X) under consideration by
    the Navy provides several benefits. First, the competition will
    save a billion dollars from fiscal year 2006 to 2011 and $3
    billion on the first 10 ships.
        Second, the Navy will be able to focus on the design of
    critical subsystems of DD(X) and reduce risk and concurrency,
    issues of concern to Congress and others on the DD(X) program.
        The Navy continues to explore alternative financing
    approaches for Navy ship procurement. As Secretary England has
    stated, these funding strategies do not allow us to build more
    ships in the near term. But they do allow us to more
    efficiently execute a program and work within the rules and
    challenges of annual budgets. For example, last year the Navy
    requested Research, Development, Test, and Evaluation (RDT&E)
    funds for lead ship construction, an approach that mirrors the
    development method used in every other DOD weapons program. Our
    fiscal year 2006 budget request includes RDT&E funding for the
    second Littoral Combat Ship.
        Our fiscal year 2006 budget submission also includes two
    other shipbuilding financing approaches. We have requested
    authority to fund procurement of the LHA(R) replacement ships
    and the new generation aircraft carrier over 2 years. This
    permits the Department to level out the funding spikes
    associated with large-cost capital ships. The other financing
    mechanism included in our budget is the use of advanced
    procurement funds for lead ship production design. Since
    production design for new ships spans between 18 and 30 months,
    this jump-start will permit design efforts to begin a year
    ahead of full funding so the start of fabrication will be
    closer to the year the lead ship is authorized and appropriated
    and that budget request will be more informed by the design of
    the ship.
        Mr. Chairman, out of respect for the subcommittee, I will
    stop, leaving much more to say.
        [The prepared statement of Mr. 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 (DON) Fiscal Year 2006 Acquisition and RDT&E programs. In
    multiple theaters in the global war on terror today, your Navy and
    Marine Corps Team is involved in a range of operations, from combat
    ashore to Extended Maritime Interdiction Operations (EMIO) at sea. EMIO
    serves as a key maritime component of global war on terror, and its
    purpose is to deter, delay, and disrupt the movement of terrorists and
    terrorist-related materials at sea. Your team has conducted over 2,200
    boardings in this last year alone, even as it has flown more than 3,000
    sorties while dropping more than 100,000 pounds of ordnance from sea-
    based tactical aircraft in Iraq; and providing nearly 5,000 hours of
    dedicated surveillance in and around Iraq to coalition forces.
        At the same time, our Nation took advantage of the immediate global
    access provided by naval forces to bring time-critical assistance to
    tsunami victims in South Asia. By seabasing our relief efforts in
    Operation Unified Assistance, the Abraham Lincoln Carrier Strike Group
    (CSG) and the Bonhomme Richard Expeditionary Strike Group (ESG)--with
    marines from the 15th Marine Expeditionary Unit--delivered more than
    6,000,000 pounds of relief supplies and equipment quickly, and with
    more political acceptance than may have been possible if a larger
    footprint ashore might have been required.The fiscal year 2006 budget
    request maximizes our Nation's return on its investment by positioning
    us to meet today's challenges--from peacekeeping/stability operations
    to global war on terror operations and small-scale contingencies--and
    by transforming the force for future challenges.
                     your future navy and marine corps team
        We developed the Sea Power 21 vision in support of our National
    Military Strategy. The objective of Sea Power 21 is to ensure this
    nation possesses credible combat capability on scene to promote
    regional stability, to deter aggression throughout the world, to assure
    access of Joint Forces and to fight and win should deterrence fail. Sea
    Power 21 guides the Navy's transformation from a threat-- based
    platform centric structure to a capabilities-based, fully integrated
    force. The pillars of Sea Power 21--Sea Strike, Sea Shield, and Sea
    Base--are integrated by FORCEnet, the means by which the power of
    sensors, networks, weapons, warriors and platforms are harnessed in a
    networked combat force. This networked force will provide the strategic
    agility and persistence necessary to prevail in the continuing global
    war on terror, as well as the speed and overwhelming power to seize the
    initiative and swiftly defeat any regional peer competitor in Major
    Combat Operations (MCO).
        The Navy and Marine Corps Team of the future must be capabilities-
    based and threat-oriented. Through agility and persistence, our Navy
    and Marine Corps Team needs to be poised for the ``close-in knife
    fight'' that is the global war on terror, able to act immediately to a
    fleeting target. The challenge is to simultaneously ``set the
    conditions'' for a MCO while continuing to fight the global war on
    terror, with the understanding that the capabilities required for the
    global war on terror cannot necessarily be assumed to be a lesser-
    included case of an MCO. Our force must be the right mix of
    capabilities that balances persistence and agility with power and speed
    in order to fight the global war on terror while prepared to win a MCO.
    To do so, it must be properly postured in terms of greater operational
    availability from platforms that are much more capable as a
    distributed, networked force. While the fabric of our fighting force
    will still be the power and speed needed to seize the initiative and
    swiftly defeat any regional threat, FORCEnet's pervasive awareness
    (C4ISR) will be more important than mass. Because of its access from
    the sea, the Navy and Marine Corps are focusing significant effort and
    analysis in support of joint combat power projection by leveraging the
    maneuver space of the oceans through Seabasing. Seabasing is a national
    capability that will project and sustain naval power and joint forces,
    assuring joint access by leveraging the operational maneuver of
    sovereign, distributed and fully networked forces operating globally
    from the sea, while accelerating expeditionary deployment and
    employment timelines. The Seabased Navy will be distributed, netted,
    immediately employable and rapidly deployable, greatly increasing its
    operational availability through innovative concepts such as, for
    example, Sea Swap and the Fleet Response Plan. At the same time,
    innovative transformational platforms under development such as MPF(F),
    LHA(R) and High-Speed Connectors, will be instrumental to the Sea Base.
        To this end, the technological innovations and human-systems
    integration advances in future warships are critical. Our future
    warships will sustain operations in forward areas longer, be able to
    respond more quickly to emerging contingencies, and generate more
    sorties and simultaneous attacks against greater numbers of multiple
    aimpoints and targets with greater effect than our current fleet. The
    future is about the capabilities posture of the fleet. Our analyses is
    unveiling the type and mix of capabilities of the future fleet and has
    moved us away from point solutions towards a range of 260-325 ships
    that meet all warfighting requirements and hedges against the
    uncertainty of alternate futures.
            developing transformational joint seabasing capabilities
        The Naval Power 21 vision defines the capabilities that the 21st
    Century Navy and Marine Corps Team will deliver. Our overarching
    transformational operating concept is Sea Basing; a national
    capability, for projecting and sustaining naval power and joint forces
    that assures joint access by leveraging the operational maneuver of
    sovereign, distributed, and networked forces operating globally from
    the sea. Seabasing unifies our capabilities for projecting offensive
    power, defensive power, command and control, mobility and sustainment
    around the world. It will enable commanders to generate high tempo
    operational maneuver by making use of the sea as a means of gaining and
    maintaining advantage.
        Sea Shield is the projection of layered defensive power. It seeks
    maritime superiority to assure access, and to project defense overland.
        Sea Strike is the projection of precise and persistent offensive
    power. It leverages persistence, precision, stealth, and new force
    packaging concepts to increase operational tempo and reach. It includes
    strikes by air, missiles, and maneuver by Marine Air Ground Task Forces
    (MAGTF) supported by sea based air and long-range gunfires.
        Sea Base is the projection of operational independence. It provides
    the Joint Force Commander the ability to exploit EMW, and the
    capability to retain command and control and logistics at mobile,
    secure locations at sea.
        FORCEnet is the operational construct and architectural framework
    for naval warfare in the joint, information age. It integrates
    warriors, sensors, networks, command and control, platforms and weapons
    into a networked, distributed combat system.
        Sea Trial is the Navy's recently created process for formulating
    and testing innovative operational concepts, most of which harness
    advanced technologies and are often combined with new organizational
    configurations, in pursuit of dramatic improvements in warfighting
    effectiveness. Sea Trial concept development and experimentation (CD&E)
    is being conducted in close coordination with, the Marine Corps combat/
    force development process and reflects a sustained commitment to
    innovation. These efforts tie warfare innovation to the core
    operational challenges facing the future joint force.
        As a means of accelerating our investment in Naval Power 21, we
    employ the Naval Capability Development Process (NCDP) and
    Expeditionary Force Development System (EFDS). The NCDP and EFDS take a
    concepts-to-capabilities approach to direct investment to achieve
    future warfighting wholeness. The NCDP takes a sea-based, offensive
    approach that provides power projection and access with distributed and
    networked forces featuring unmanned and off-board nodes with
    penetrating surveillance via pervasive sensing and displaying that
    rapidly deliver precision effects. The EFDS assesses, analyzes and
    integrates MAGTF warfighting concepts, and requirements in a naval and
    joint context to support the overarching operational concept of Joint
    Seabasing. Both processes are designed to incorporate innovative
    products of Service and Joint CD&E and Science and Technology (S&T)
    efforts.
        The fiscal year 2006 budget request reflects the investments that
    will most improve our warfighting capability by developing and
    investing in future sea based and expeditionary capabilities for the
    Navy and Marine Corps. I will briefly address transformation of our
    capabilites describing some of the key program enablers. I will then
    highlight the S&T and CD&E developments that ensure continued
    transformation now and well into the future.
                                   sea shield
    Littoral Combat Ship (LCS)
        LCS will be built from the keel up to be a part of a netted and
    distributed force. The key warfighting capability of LCS will be its
    off-board systems: manned helicopters and unmanned aerial, surface and
    underwater vehicles. It is the off-board vehicles--with both sensors
    and weapons--that will enter the highest threat areas. Its modular
    design, built to open-systems architecture standards, provides
    flexibility and a means to rapidly reconfigure mission modules and
    payloads. Approximately 40 percent of LCS's payload volume will be
    reconfigurable. As technology matures, the Navy will not have to buy a
    new LCS seaframe, but will upgrade the mission modules or the unmanned
    systems. LCS will be different from any warship that has been built for
    the U.S. Navy. The program provides the best balance of risk with
    affordability and speed of construction. We have partnered with the
    Coast Guard. LCS will share a common three-dimensional radar with U.S.
    Coast Guard cutters, and in addition, there are other nations
    interested in purchasing the seaframe.
        Two contracts were competitively awarded in May 2004, for detail
    design and construction of two different LCS Flight 0 seaframes. .
    Flight 0 is comprised of four ships that will develop and demonstrate
    several new approaches to naval warfare including suitability of large-
    scale modular mission technologies and new operational concepts in the
    littoral. The detail design and construction of the first LCS flight 0
    ship began in fiscal year 2005. To date, all milestones have been met
    on schedule. Detail design for the second ship is ongoing with
    construction starting in fiscal year 2006. The two remaining seaframes
    for LCS Flight 0 will be requested in fiscal year 2007. The LCS spiral
    development acquisition strategy will support construction of multiple
    flights of focused mission ships and mission packages with progressive
    capability improvements. Procurement of the three mission packages
    (Mine Warfare, Surface Warfare and Anti Submarine Warfare) is also
    planned in fiscal year 2006. The Department is well positioned to
    proceed with LCS and deliver this needed capability to sailors as soon
    as possible.
    Multi-mission Maritime Aircraft (MMA)/P-3C
        The future for the Navy's maritime patrol force includes plans for
    sustainment, modernization, and re-capitalization of the force. Results
    of the P-3 Service Life Assessment Program (SLAP) have revealed the
    need for an aggressive approach to P-3 airframe sustainment. Key
    elements of the sustainment plan are strict management of requirements
    and flight hour use, special structural inspections to keep the
    aircraft safely flying, and increased use of simulators to satisfy
    training requirements. The fiscal year 2006 budget request reflects
    $74.5 million for Special Structural Inspections (SSI) and Special
    Structural Inspections--Kits (SSI-K), which will allow for sustainment
    and continued operation of approximately 166 aircraft. As the
    sustainment plan progresses, the inventory may be further reduced to a
    number approaching 130 aircraft. The fiscal year 2006 budget request
    also reflects a modernization budget of $51.3 million for continued
    procurement and installation of the USQ-78B acoustic processor and for
    completion of final installations of Anti-Surface Warfare Improvement
    Program (AIP) kits. We are working on plans for further mission system
    modernization to allow us to continue meeting COCOM requirements. To
    recapitalize these critical aircraft, the Navy is procuring a MMA. The
    MMA program entered System Development and Demonstration (SDD) phase in
    May 2004 and awarded a contract to the Boeing Corporation for a 737
    commercial derivative aircraft. The fiscal year 2006 budget requests
    $964.1 million for continuation of MMA SDD. Our comprehensive and
    balanced approach has allowed for re-capitalization of these critical
    assets.
    MH-60R and MH-60S
        The fiscal year 2006 budget requests $655.5 million in procurement
    and $48.1 million in RDT&E for the replacement of the Light Airborne
    Multi-Purpose System (LAMPS) MK III SH-60B and carrier-based SH-60F
    helicopters with the new configuration designated as MH-60R. The
    procurement quantity was reduced to provide an orderly production ramp.
    A Full Rate Production decision is scheduled during the second quarter
    of fiscal year 2006. The fiscal year 2006 budget requests $608.7
    million in procurement and $78.6 million in RDT&E funds for the MH-60S,
    which is the Navy's primary combat support helicopter designed to
    support Carrier and Expeditionary Strike Groups. It will replace four
    legacy platforms with a newly manufactured H-60 airframe. The MH-60S is
    currently in the full rate 5-year MYP contract with the Army. The Army
    and Navy intend to execute another platform MYP contract commencing in
    fiscal year 2007. Navy's total procurement requirement was increased
    from 237 to 271 to provide a force structure that supports the Navy-
    approved Helicopter concept of operations.
    Ship Self-Defense System (SSDS)
        The fiscal year 2006 President's budget requests $40.5 million to
    complete the Follow-On Test and Evaluation (FOT&E) in U.S.S. San
    Antonio (LPD 17) and begin live-fire testing in the SDTS. The SSDS is
    designed to expedite the detect-through-engage process for amphibious
    ships and aircraft carriers against anti-ship cruise missiles (ASCMs).
    SSDS consists of a combination of software and commercial off-the-shelf
    hardware intended to integrate sensor and engagement systems. Progress
    during fiscal year 2004 focused on the industry formal qualification
    tests of the SSDS MK 2 system and the delivery and test of the system
    in U.S.S. Reagan, CVN 76. SSDS MK2 is implementing open architecture to
    enable sharing of common command systems applications across the
    surface fleet.
    Organic Mine Countermeasures
        The fiscal year 2006 budget requests RDT&E and procurement funding
    for a variety of airborne mine countermeasure systems, which will be
    employed by the MH-60S helicopter as an organic capability within the
    Navy's strike groups. Specific systems are:

             The AN/AQS-20A Advanced Mine Hunting Sonar and the
            Airborne Mine Neutralization System (AMNS) are being developed
            to counter deep moored mines and visible bottom mines. The Navy
            is requesting $3.4 million for the AN/AQS-20A to complete
            system developmental testing, initiate and complete operational
            testing and award a contract for six AN/AQS-20A systems. For
            AMNS, the Navy is requesting $7.7 million to conduct contractor
            testing, complete system developmental testing and to reach
            Milestone C.
             The AN/AES-1 Airborne Laser Mine Detection System
            (ALMDS) and the AN/AWS-2 Rapid Airborne Mine Clearance System
            (RAMICS) are being developed to counter near surface and
            floating mines. The Navy is requesting $5.9 million in OPN for
            four ALMDS units in addition to the four LRIP units purchased
            in fiscal year 2005. For RAMICS, the Navy is requesting $16.2
            million to complete contractor testing and to begin
            developmental testing.
             The Organic Airborne and Surface Influence Sweep
            (OASIS) System will ensure the Navy will maintain an assured
            access capability and counter influence mines that may not be
            found using other mine hunting systems. The Navy is requesting
            $13.9 million for the completion of developmental and
            operational testing leading to LRIP buys in fiscal year 2007.
             The Remote Mine Hunting System (RMS) is being
            developed as an unmanned semi-submersible vehicle to deploy
            from both the DDG-51 Class (hulls 91-96) and the LCS. This
            system will provide an over-the-horizon organic mine hunting
            capability to ensure our combatants stay free of mine danger
            areas. We are also exploring the multi-mission potential of the
            RMS vehicle (which is the Remote Mine-hunting Vehicle (RMV)) as
            one of the systems for our LCS, ASW mission module package. The
            fiscal year 2006 budget request for OPN for RMS is $85 million
            for four RMS systems and $34.2 million for RMV ASW mission
            package (four vehicles).
             The Assault Breaching System involves a family of
            systems that provides the capability to detect, avoid, and
            defeat mines and obstacles in the surf and beach zone in
            support of ship to objective maneuver. The fiscal year 2006
            request includes $31 million that would support further
            development of a multi-spectral imaging sensor (COBRA) deployed
            from the Fire Scout VTUAV to detect mines and obstacles on the
            beach and to initiate development of counter-mine counter-
            obstacle munitions, as well as navigation and tactical decision
            aid systems.
                                   sea strike
    DD(X) Destroyer
        DD(X) is the centerpiece of a surface combatant family of ships
    that will deliver a broad range of capabilities. It is already
    providing the baseline for spiral development of technology and
    engineering to support a range of future ship classes such as CG(X),
    LHA(R), and CVN-21. This advanced multi-mission destroyer will bring
    revolutionary improvements to precise time-critical strike and joint
    fires for our Expeditionary and Carrier Strike Groups of the future. It
    expands the battlespace by over 400 percent; has the radar cross
    section of a fishing boat; and is as quiet as a Los Angeles class
    submarine. DD(X) will also enable the transformation of our operations
    ashore. Its on-demand, persistent, time-critical strike revolutionizes
    our joint fire support and ground maneuver concepts of operation so
    that our strike fighter aircraft are freed for more difficult targets
    at greater ranges. DD(X) will provide credible forward presence while
    operating independently or as an integral part of naval, joint, or
    combined expeditionary forces.
        The fiscal year 2006 budget request includes $1.1 billion in RDT&E
    for continued technology development and $716 million in SCN advance
    procurement funds for the first and second DD(X). DD(X) will
    dramatically improve naval surface fire support capabilities available
    for joint and coalition forces. Planned technologies, such as
    integrated power system and total ship computing environment in an open
    architecture, will provide more affordable future ship classes in terms
    of both construction and operation. DD(X) will be the first forward-fit
    surface combatant with an open architecture combat system. This
    investment will be leveraged to other surface ship procurements,
    including CVN 21 and LHA(R).
        The FYDP includes full funding for the first DD(X) in fiscal year
    2007 and construction of one ship per year in each follow on year.
    DD(X) will provide the hull form and propulsion for the future
    generation of surface combatants that provide an array of 21st century
    naval capabilities.
    SSGN
        The fiscal year 2006 budget requests $287 million of procurement
    funding for the conversion of the fourth and final submarine to be
    converted to SSGN. When completed, these submarines will provide
    transformational warfighting capability carrying up to 154 Tomahawk
    cruise missiles and support deployed Special Operating Forces. The four
    SSGN conversions are being executed utilizing a public-private
    partnership conducting the work in naval shipyards, and are scheduled
    for delivery by fiscal year 2007. The Navy has experienced minor scope
    changes as we have refueled and converted these submarines. The Navy is
    working to resolve these issues, but any changes are difficult to
    address with the rules and constraints of short duration modifications
    relying on procurement funds.
    F-35 Joint Strike Fighter (JSF)
        Our recapitalization plan includes the JSF, a stealthy, multi-role
    fighter aircraft designed jointly to be an enabler for Naval Power 21.
    The fiscal year 2006 budget request contains $2.4 billion for
    continuation of System Development and Demonstration on the JSF. The
    JSF will enhance the DON's precision strike capability with
    unprecedented stealth, range, sensor fusion, improved radar
    performance, combat identification and electronic attack capabilities
    compared to legacy platforms. The carrier variant (CV) JSF complements
    the F/A-18E/F and EA-18G in providing long-range strike capability and
    much improved persistence over the battlefield. The short takeoff and
    vertical landing (STOVL) JSF combines the multi-role versatility of the
    F/A-18 and the basing flexibility of the AV-8B. The commonality
    designed into the JSF program will reduce acquisition and operating
    costs of Navy and Marine Corps tactical aircraft and allow enhanced
    interoperability with our Allies and sister Services.
        The JSF has completed the third year of its development program,
    and the program continues working to translate concept designs to three
    producible variants. Manufacture/assembly of the first flight test
    aircraft conventional takeoff and landing (CTOL) is underway and
    roughly 40 percent complete, with assembly times much less than
    planned. Two thousand engine test hours have been completed through
    mid-January 2005. Detailed design work continues for the CTOL and STOVL
    variants. First flight is scheduled for 2006. The JSF program has
    aggressively addressed the performance issues associated with weight
    and airframe design. The STOVL variant weight has been reduced by 2500
    lbs. through design optimization. Installed thrust improvements and
    aerodynamic drag reduction as well as requirements tailoring are being
    incorporated to further improve aerodynamic performance. All three
    variants are projected to meet Key Performance Parameter requirements.
        The JSF program is completing a replan effort that began
    approximately a year ago. The software block plan and test plan are
    being reviewed consistent with the revised schedule and Service needs.
    The fiscal year 2006 budget reflects the revised System Development and
    Demonstration and production schedule.
    V-22
        The MV-22 remains the Marine Corps' number one aviation acquisition
    priority. The Osprey's increased range, speed, payload, and
    survivability will generate transformational tactical and operational
    capabilities. Ospreys will replace the aging Marine fleets of CH-46E
    and CH-53D helicopters beginning in fiscal year 2005, which will
    provide both strategic and tactical flexibility to meet emerging
    threats in the global war on terror. Utilization far above peacetime
    rates, and the physical demands of continuous operations in the harsh
    conditions of Iraq and Afghanistan, are accelerating the deterioration
    and increasing operating costs of the legacy aircraft that the MV-22
    will replace. These factors make a timely fielding of the MV-22
    critical. The fiscal year 2006 budget request includes $1.3 billion for
    nine MV-22s, trainer modifications and retrofits and $206.4 million for
    continued development, testing, and evaluation. The V-22 Osprey resumed
    flight-testing in May 2002, and it has flown in excess of 4,900 hours.
    The Commander Operational Test and Evaluation Force (COTF) Letter of
    Observation was completed in February 2005 to support Section 123
    Certification to Congress to allow the program to increase production
    above minimum sustaining rate of 11 aircraft. Operational Evaluation
    will begin in March 2005 leading to Full Rate Production in early
    fiscal year 2006.
    Heavy Lift Replacement Program (HLR, CH-53X)
        The fiscal year 2006 budget requests $272 million RDT&E to begin
    the SDD phase of the HLR program that will replace the aging fleet of
    CH-53E platforms. The Marine Corps' CH-53E continues to demonstrate its
    value as an expeditionary heavy-lift platform, with significant assault
    support contributions in Afghanistan, the Horn of Africa and Iraq.
    Vertical heavy lift will be critical to successful operations in anti-
    access, area-denial environments globally, enabling force application
    and focused logistics envisioned within the joint operating concepts.
        The CH-53E requires significant design enhancements to meet future
    interoperability requirements, improve survivability, expand range and
    payload performance, improve cargo handling and turn-around
    capabilities, and reduce operations and support costs. An Analysis of
    Alternatives determined that a ``new build'' helicopter would be the
    most cost-effective solution. The Operational Requirements Document
    defining HLR capabilities was approved in December 2004. The HLR will
    fill the vertical heavy lift requirement not resident in any other
    platform that is necessary for force application and focused logistics
    envisioned in Sea Basing and joint operating concepts. With the ability
    to transport 27,000 pounds to distances of 110 nautical miles under
    most environmental conditions, commanders will have the option to
    insert a force equipped with armored combat vehicles or two armored
    High Mobility Multi Wheeled Vehicles (HMMWVs) per sortie. To sustain
    the force, the HLR will be able to transport three independent loads
    tailored to individual receiving unit requirements and provide the
    critical logistics air connector to facilitate sea-based operations.
    This reliable, cost-effective heavy lift capability will address
    critical challenges in maintainability, reliability, and affordability
    found in present-day operations supporting the global war on terror.
    F/A-18 A/B/C/D
        The fiscal year 2006 budget request contains $422.4 million for the
    continuation of the systems upgrade programs for F/A-18 platform. As
    the F/A-18 program transitions to the F/A-18E/F, the existing inventory
    of over 900 F/A-18A/B/C/Ds will continue to comprise half of the
    Carrier Strike Group until 2012. Included in this request is the
    continued procurement of recently fielded systems such as Joint Helmet
    Mounted Cueing System, Advanced Targeting FLIR, Multi-Function
    Information Distribution System, and Digital Communications System. The
    Marine Corps continues to upgrade 76 Lot 7-11 F/A-18A and C to Lot 17
    F/A-18C aircraft capability with digital communications and tactical
    data link. The Marine Corps anticipates programmed upgrades to enhance
    the current capabilities of the F/A-18C/D with digital communications,
    tactical data link and tactical reconnaissance systems. This upgrade
    ensures that our F/A-18s remain viable and relevant in support of
    Tactical Air Integration and Expeditionary Maneuver Warfare. The
    Marines expect the F/A-18A+ to remain in the active inventory until
    2015. The marines are also employing the Litening targeting pod on the
    F/A-18 A+ and D aircraft in OIF. When combined with data link hardware,
    the Litening pod provides real time video to ground forces engaged with
    the enemy. The capabilities of the Litening pod with data link are
    highly effective for Marine Corps expeditionary F/A-18 operations. The
    fiscal year 2006 budget request also includes procurement of Center
    Barrel Replacements to extend service life of F/A-18A/C/Ds 7 years to
    meet fleet inventory requirements until 2022.
    EA-18G
        The E/A-18G continues development as the Navy's replacement for the
    EA-6B Airborne Electronic Attack (AEA) aircraft. The Navy is using the
    F/A-18E/F multi-year contract to buy four Systems Design and
    Development aircraft in fiscal year 2006 to install and integrate
    Northrop Grumman's in-production Improved Capabilities (ICAP)-III AEA
    system. These aircraft will support EA-18G operational testing and
    allow the department to deliver the next generation (AEA) capability at
    reduced cost and in the shortest possible timeframe. The Marine Corps
    initiated studies to examine options for replacing their electronic
    attack aircraft. The fiscal year 2006 budget request reflects $409
    million for Systems Design and Development. The Systems Design and
    Development continues on schedule with construction underway of the two
    development aircraft. First flight is scheduled for the fourth quarter
    of fiscal year 2006. A total quantity of 30 systems will be procured in
    LRIP with a planned fiscal year 2009 IOC and fiscal year 2012 FOC. The
    EA-18G will replace carrier-based Navy EA-6B aircraft by 2012.
    AH-1Z/UH-1Y
        The H-1 Upgrades Program will remanufacture 180 AH-1W and 100 UH-1N
    helicopters into state-of-the-art AH-1Z and UH-1Y models. The fiscal
    year 2006 budget requests $307.5 million APN funds to procure 10 UH-1Y/
    AH-1Z aircraft and $42.0 million RDT&E funds to complete the H-1
    Upgrades Engineering and Manufacturing Development phase. The
    development program is over 90 percent complete with five aircraft
    being readied for OPEVAL, which will begin this summer. Work on the
    first LRIP lot, awarded to Bell Helicopter in December 2003, is
    progressing well and the second LRIP lot will be awarded by the end of
    March 2005. The program is seeking opportunities to reduce unit cost
    and minimize the negative impact the remanufacture strategy could have
    on ongoing military operations. Regarding the latter point, we
    anticipate that some number of airframes will be newly fabricated
    instead of remanufactured in order to reduce the amount of time
    aircraft would otherwise be out of service. The optimum mix of
    remanufactured and newly fabricated aircraft is being evaluated with
    the results to be reflected in future budget requests. The H-1 Upgrade
    Program is a key modernization effort designed to resolve existing
    safety deficiencies, enhance operational effectiveness of both the AH-
    1W and the UH-1N, and extend the service life of both aircraft. The
    program will provide 100 UH-1Ys and 180 AH-1Zs with 10,000 hour
    airframes. Additionally, the commonality gained between the AH-1Z and
    UH-1Y (84 percent) will significantly reduce life-cycle costs and
    logistical footprint, while increasing the maintainability and
    deployability of both aircraft.
    AV-8B
        The fiscal year 2006 budget requests $15.5 million RDT&E funds to
    support development of the Engine Life Management Plan (ELMP)/
    Accelerated Simulated Mission Endurance Testing, Tactical Moving Map
    Display, and Aircraft Handling initiatives. The fiscal year 2006 budget
    also requests $36.6 million procurement funding for Production Line
    Transition efforts, procurement of Open Systems Core Avionics
    Requirement, ELMP upgrades, and the Readiness Management Plan which
    addresses aircraft obsolescence and deficiency issues associated with
    sustaining the AV-8B until JSF transition.
    EA-6B
        The fiscal year 2006 budget request of $120.6 million reflects the
    total budget for wing center section modifications and procurement of
    three Improved Capability (ICAP) III systems. The aging EA-6B has been
    in ever-increasing demand as DOD's only tactical radar jamming aircraft
    that also engages in communications jamming and information operations.
    EA-6B operational tempo has continued at extremely high levels during
    the past year. Safety considerations, due to wing center section and
    outer wing panel fatigue, have reduced aircraft available to the fleet
    from 95 to 85. Aircraft inventory is projected to return to above 95 by
    the end of fiscal year 2005. Program priorities are current readiness
    and successful fleet introduction of the ICAP III selective reactive
    jamming system.
    Precision Guided Munitions (PGM)
        The U.S Navy weapons programs of the 21st century are evolving to
    address the challenges of a dynamic and unpredictable enemy. New weapon
    systems are planned or have been developed and delivered to the
    combatant commanders to provide new options to engage enemy forces in
    support of the global war on terror. The Navy's fiscal year 2006 budget
    supports PGM programs that continue to allow domination of the maritime
    environment, support in-land operational forces, and enhance the
    overall department strategy to deter and dissuade potential adversaries
    while supporting our allies and friends.
    Joint Direct Attack Munitions (JDAM)
        JDAM has been the Department's weapon of choice for OEF/OIF. In
    October 2004, the U.S. Navy provided an Early Operational Capability
    and accelerated deliveries for a 500 lb. JDAM variant (GBU-38) for Navy
    F/A-18 A+/C/D platforms. After approving production of this variant, we
    immediately deployed it in order to meet an urgent warfighter need to
    employ precision munitions with limited collateral effects in the
    congested urban environments of Iraq. The fiscal year 2006 budget
    request of $82.6 million procures 3,400 DON JDAM tail kits for all
    variants, thus supporting all current and projected warfighter
    requirements. The fiscal year 2006 budget reduces procurements to 1,500
    kits per year starting in fiscal year 2008; however, the Department
    will closely monitor all JDAM variant requirements and combat
    expenditures in order to make any necessary adjustments.
    Joint Standoff Weapon (JSOW)
        A new variant of the JSOW called JSOW-C was approved for Full Rate
    Production in December 2004. Similar to the new 500 lb. JDAM program,
    this capability is in demand by the warfighter to provide new options
    for precision attack against point targets vulnerable to blast
    fragmentation effects and hardened targets. The new JSOW-C variant
    employs an augmenting charge with a follow-through penetrator bomb for
    hard targets that can also be set to explode both payloads
    simultaneously. This lethal package is coupled with an Imaging Infrared
    Seeker and GPS/INS to provide the standoff precision attack capability
    in demand by the warfighter. The fiscal year 2006 budget fully funds
    JSOW-C production and support. It also shifts funding from production
    of a submunition variant of JSOW to all JSOW-Cs until there is
    resolution of unexploded battlefield ordnance issues that are of
    concern to the Department and our allies. The Navy/contractor JSOW Team
    is dedicated to reducing acquisition costs. Specifically, we are
    expecting to achieve a unit cost reduction of more than 25 percent by
    2006 due to the implementation of lean initiatives, innovative
    processes, and engineering changes.
    Tactical Tomahawk (TACTOM)
        The fiscal year 2006 budget supports the Navy's commitment to
    replenish our precision-guided munitions inventories utilizing the
    Navy's first MYP contract for a weapon. TACTOM entered Full Rate
    Production in August 2004. We completed our second and final
    remanufacture program, converting all available older Tomahawk
    airframes to the latest Block III configuration. The Firm Fixed Price 5
    year contract (fiscal years 2004-2008) for TACTOM will save the
    taxpayer 12 percent over annual procurements. TACTOM's advanced design
    and manufacturing processes have cut procurement cost to $729,000 or
    half the cost of a Block III missile and maintenance costs by half of
    the cost of its predecessor. TACTOM provides a more capable missile
    with a 15-year product warranty and a 15-year recertification interval.
    This approach mitigates price growth of follow-on procurements by
    providing incentive for the contractor to manage for obsolescence,
    which will control future price growth on follow procurements.
    Expeditionary Fighting Vehicle (EFV)
        The EFV remains the Marine Corps' number one ground acquisition
    priority and will join the MV-22 and the LCAC as an integral component
    of the triad required for executing Expeditionary Maneuver Warfare. The
    EFV is a self-deploying, high water speed, armored amphibious vehicle
    capable of transporting marines from ships located beyond the horizon
    to inland objectives. It will be the primary means of tactical mobility
    for the marine rifle squad during expeditionary operations. This
    vehicle will replace the Assault Amphibious Vehicle (AAV7A1) that was
    fielded in 1972 and that will be over 35 years old when the EFV is
    fielded. The Milestone C LRIP is now scheduled for September 2006. The
    approved acquisition objective is for 1,013 vehicles. Initial
    operational capability is scheduled for fiscal year 2010 and full
    operational capability is scheduled for fiscal year 2020. The fiscal
    year 2006 RDT&E budget requests $253.7 million to continue a robust
    developmental test program, to conduct a comprehensive operational
    assessment, to develop the LRIP vehicle design, and to develop
    logistics products including integrated electronic technical manuals
    and training devices, simulators and courseware.
    Lightweight LW-155 Howitzer (M777A1)
        The M777A1 is a Joint USMC/Army 155mm towed artillery system that
    will replace the current M198. The Marine Corps intends to procure a
    total of 356 howitzers with IOC in fiscal year 2005. The M777A1 is
    currently finishing LRIP for the Marine Corps and the fiscal year 2006
    budget request includes $178.4 million to procure 77 systems. The DON
    and the Army awarded a $834 million multi-year contract on March 24,
    2005. The M777A1 will be able to fire the Excalibur PGM, currently
    under development by the Army to support enhanced range requirements
    for joint indirect fires.
                                    sea base
    LPD 17
        The San Antonio (LPD 17) class of amphibious transport dock ships
    is optimized for operational flexibility and designed to meet Marine
    Air-Ground Task Force lift requirements and represents a critical
    element of the Navy and Marine Corps future in expeditionary warfare.
    The fiscal year 2006 budget includes $1.3 billion to fully fund the
    construction of the eighth ship of the class. The Navy plans to build
    nine LPD 17 ships with the procurement of the ninth ship planned for
    fiscal year 2007. The lead ship is approximately 93 percent complete
    with delivery scheduled for summer 2005. In addition to the lead ship,
    four follow on ships are currently under construction. New Orleans LPD
    18 was christened on November 20, 2004, and Mesa Verde LPD 19 was
    christened January 15, 2005. Construction also continues on Green Bay
    LPD 20 and New York LPD 21. Advance procurement contracts for LPD 22
    and 23 have been awarded to support long-lead time material purchases
    for these ships.
    Lewis and Clark Class Auxiliary Dry Cargo Ammunition Ship (T-AKE)
        The fiscal year 2006 budget request includes $380 million for the
    ninth ship. The first eight ships have are under contract. Exercise of
    the option for the seventh and eighth ships occurred in January 2005.
    Lead ship construction commenced in September 2003, with a projected
    delivery date of January 2006. Projected delivery dates for the other
    ships are as follows: second ship fiscal year 2006; third, fourth and
    fifth ships fiscal year 2007; sixth and seventh ships fiscal year 2008
    and the eighth ship fiscal year 2009.
    CVN 21 Class
        The CVN 21 program is designing the aircraft carrier for the 21st
    century, as the replacement for the Nimitz class nuclear aircraft
    carriers. Overall, CVN 21 will increase sortie generation rate and
    increase survivability to better handle future threats. The new design
    nuclear propulsion plant and improved electric plant together provide
    three times the electrical generation capacity of a Nimitz class
    carrier. This capacity allows for the introduction of new systems such
    as Electromagnetic Aircraft Launching System, advanced arresting gear,
    and a new integrated warfare system that will leverage advances in open
    systems architecture to be affordably upgraded. Other features include
    an enhanced flight deck, improved weapons handling and aircraft
    servicing efficiency, and a flexible island arrangement allowing for
    future technology insertion. The fiscal year 2006 budget request
    includes $565 million of advance procurement for continued development
    of CVN 21. The program received Milestone B approval in April 2004. The
    construction contract is scheduled for award in fiscal year 2008, with
    ship delivery in fiscal year 2015.
    Nimitz Class (CVN 68 Class)
        The Refueling Complex Overhaul (RCOH) program refuels, repairs, and
    modernizes Nimitz class aircraft carriers to provide up to 50 years of
    service life. CVN 68 class was originally based on a 30-year design
    life with refueling at an estimated 14 years. Ongoing analysis of the
    reactor cores show a nominal 23 year life prior to requirement to
    refuel allowing the RCOH schedule to be adjusted accordingly. The RCOH
    Program recapitalizes these ships in lieu of procurement and is
    fundamental to sustaining the nuclear carrier force structure. RCOHs
    provide a bridge between maintaining current readiness requirements and
    preparing the platform for future readiness initiatives in support of
    Sea Power 21. They leverage technologies from other programs and
    platforms that support RCOH planning and production schedules for
    advantageous insertion during this major recapitalization effort.
        In 2004, considerable progress was made on the Eisenhower (CVN 69)
    RCOH. Restructuring of the contract in December 2003, reset target cost
    and fee, established performance incentives, reduced minimum fee,
    modified shareline ratios, and extended the RCOH duration by 11 weeks.
    Since the contract restructuring, the shipyard's performance improved
    considerably, resulting in an estimated $29 million underrun at
    completion. This underrun has allowed the ``buy back'' of work that was
    previously descoped to avoid contract cost overruns. Significant work
    items reinstituted included the refurbishment of the forward crew
    galley and 03 level ward room, embarked flag officer spaces
    habitability upgrades, installation of several refurbished antennas,
    and combat systems electronic upgrades. Delivery of Eisenhower back to
    the fleet is scheduled for 2005.
        The fiscal year 2006 budget request includes $1.5 billion in the
    first of two funding increments for the U.S.S. Carl Vinson RCOH. The
    fiscal year 2006 budget also includes $20 million in advance
    procurement funding for the U.S.S. Theodore Roosevelt (CVN 71) RCOH
    scheduled to start fiscal year 2010.
    Maritime Prepositioning Force (Future) (MPF(F))
        These future Maritime Prepositioning Ships will serve a broader
    operational function than current prepositioned ships, creating greatly
    expanded operational flexibility and effectiveness. We envision a force
    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. The MPF(F) will support the forcible entry. 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, communications and medical
    capabilities for the joint force for extended periods as well. The
    fiscal year 2006 budget request includes $66 million of RDT&E funds to
    develop technologies to support future sea basing needs in MPF(F). The
    first MPF(F) ship is planned for fiscal year 2009 with advanced
    procurement award scheduled in fiscal year 2008. It is critical to the
    Nation's naval capabilities and our shipbuilding industrial base that
    we proceed with MPF(F) definition and experimentation efforts and
    maintain a fully funded MPF(F) program.
    Landing Craft Air Cushion (LCAC) Service Life Extension Program (SLEP)
        Our fleet LCACs saw dramatically increased operational tempo
    supporting worldwide operations during the past year, underscoring the
    need for the LCAC SLEP. SLEP is a vital, ongoing effort to OMFTS and
    STOM options for the naval forces. This will provide continued critical
    surface lift for the Marine Corps for the future as these upgrades
    offer greater flexibility and endurance options that allow naval forces
    to continue to remain expeditionary and versatile in support of global
    war on terror and into the future. The program, designed to extend the
    service life of LCACs to 30 years, had several notable accomplishments
    during the past year: LCAC 2 and LCAC 4 delivered ahead of schedule.
    The award of the fiscal year 2004 contract for four craft occurred in
    March 2004. In 2004, the SLEP effort received a DOD Value Engineering
    Award for the revised acquisition strategy that will deliver the
    required LCAC capability and service life while providing a cost
    savings of $104 million through the FYDP for the program. The first
    SLEP craft, LCAC 44, rendered assistance to tsunami victims in
    Indonesia as part of Operation Unified Assistance. The Navy is
    continuing the strategy of refurbishing vice replacing the buoyancy
    boxes and will competitively select the fiscal year 2005 and fiscal
    year 2006 SLEP work. The fiscal year 2006 budget request includes $111
    million for SLEP of six craft.
    LHD 8
        The Makin Island (LHD 8) last ship of the LHD 1 Class of big deck
    amphibious ships represents a critical element of the Navy and Marine
    Corps future in expeditionary warfare. LHD 1 Class platforms provide
    critical lift and an expeditionary capability allowing rapid naval
    force response to differing crises. Offering the Joint Force Commander
    (JFC) a variety of options, LHD 1 Class platforms are critical power
    projection and C\4\ISR platforms capable of embarking JFC staffs. The
    flexibility and versatility of the LHD 8 in Seabasing circumvents the
    challenges on obtaining land-basing privileges and over flight
    permissions in support of U.S. global war on terror missions. In
    accordance with congressional direction to incrementally fund LHD 8,
    the fiscal year 2006 budget requests $198 million for the last
    increment in the continued construction of LHD 8. 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 electrical
    power rather than steam. This change is expected to realize significant
    lifecycle cost savings. Ship construction is proceeding as scheduled
    with a contract delivery date of summer 2007.
    LHA(R)
        The fiscal year 2006 budget requests $150 million of advance
    procurement funds for LHA(R) that support an accelerated ship
    construction start in fiscal year 2007. LHA(R) is the replacement
    program for four aging LHA Class ships that reach the end of their
    administratively extended service life between 2011 and 2015. LHA(R)
    Flight 0 is a modified LHD 1 Class variant with improved aviation
    capabilities designed to accommodate aircraft in the future Marine
    Corps Air Combat Element including JSF and MV-22 and provides adequate
    service life for future growth.
    Joint High Speed Vessel (JHSV)
        The Navy High Speed Connector has been merged with the Army Theater
    Support Vessel to form the JHSV program. This program will provide a
    high-speed intra-theater surface lift capability gap identified to
    implement Sea Power 21 and the Army Future Force operational concepts.
    The JHSV will be capable of supporting Joint Force needs for flexible,
    fast transport of troops and equipment for the future. Today's only
    alternative to meeting this gap is through the leasing of high speed
    vessels for rapid troop and equipment transport is airlift. The WestPac
    Express is a high-speed surface vessel currently being leased by the
    Military Sealift Command and used to transport Marines in the Western
    Pacific operating area. With the Navy designated as the lead Service,
    the Navy, Marine Corps, and Army are working together to develop the
    required documentation to meet a Milestone A decision in February 2006
    with a lead ship contract award planned for fiscal year 2008.
    KC-130
        The fiscal year 2006 budget requests $1,093 million for 12 KC-130J
    aircraft. These aircraft will be procured under an existing Air Force
    multi-year contract. The Marine Corps has taken delivery of 16 KC-130J
    aircraft to date, with five more deliveries scheduled for fiscal year
    2005. Twelve aircraft are planned for procurement in fiscal year 2006
    to bring the total number of KC-130J aircraft to 33. The KC-130 fleet
    once again proved itself as a workhorse during operations in Iraq. The
    KC-130J provides major enhancements to the current fleet of KC-130s,
    extending its range, payload, and refueling capabilities. The first KC-
    130J squadron (12 aircraft) has achieved IOC and will immediately be
    deployed in support of the global war on terror. Bold steps in
    simulator training and joint flight instruction place the KC-130J
    program on the leading edge of the transformation continuum.
    Additionally, we have continued to ensure the tactical capability of
    our existing KC-130F, R, and T series aircraft by installing night
    vision kits and upgraded aircraft survivability equipment.
    C-40
        The fiscal year 2006 budget requests $10.3 million to support
    delivery of C-40 (Boeing 737-700C) aircraft previously funded. The C-40
    replaces the aging C-9 aircraft providing intra-theater logistics
    support. To date, the Navy has taken delivery of eight C-40s with one
    more on contract. An additional six are planned for procurement in the
    FYDP.
                 command, control, and net-centric capabilities
    Deployable Joint Command and Control
        The DJC2 system is one of SECDEF's three top transformational
    initiatives to equip Combatant Commanders with a scalable, standardized
    joint C2 system that can be deployed on short notice. This Navy led
    effort serves as an example that rapid acquisition is achievable. DJC2
    was required to deliver an IOC within 18 months of program start and we
    remain on schedule.
    Joint Tactical Radio System (JTRS)
        We are working with the Air Force to successfully converge
    development of Navy and Air Force versions of JTRS (JTRS-AMF) to
    provide a common acquisition approach. Closely coupled with the JTRS
    Program and building on the initial Multi-functional Information
    Distribution System (MIDS), we have developed a promising joint effort
    with the Air Force that will significantly improve interoperability to
    the cockpit and maintain alignment with our tactical radio transition
    to the JTRS environment. This effort also has four international
    partners who are paying participants in the program.
    Mobile User Operating System (MUOS)
        The Department remains a strong participant in the National
    Security Space Program with our new start MUOS UHF Satellite Program
    that exhibits all the capabilities needed to ensure compliance with the
    DOD Net-centric models and regulations. Our SPAWAR Space Field Activity
    that supports the National Reconnaissance Office (NRO) is strong and
    very effective in identifying collaborative opportunities for Navy-NRO
    partnerships.
    Cooperative Engagement Capability (CEC)
        The fiscal year 2006 President's budget requests $88.1 million for
    continued development of the Navy's CEC. CEC provides a significant
    step forward in transforming our situational awareness of the
    battlespace. 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. The CEC program has been
    restructured to achieve alignment with the Navy's OA plans as well as
    to meet forthcoming requirements from the Joint Single Integrated Air
    Picture Systems Engineering Organization (JSSEO). A revised acquisition
    strategy reflecting this restructured approach was approved August 18,
    2004. This revision included the implementation of a pre-planned
    product improvement (P3I) approach to modify the current equipment to
    meet reduced size, weight, cost power and cooling objectives. The P3I
    approach will also implement the existing Navy design objective with
    regard to open systems, interoperability and program protection. By the
    end of fiscal year 2006 a total of 40 shipboard and 5 squadrons will be
    equipped with CEC. The fiscal year 2006 budget request $40.3 million to
    procure 5 additional CEC systems. The acquisition strategy also
    outlines the implementation of a single-track management solution set
    for Navy systems that will incorporate the IABM from JSSEO. This will
    maximize the potential for joint interoperability across the
    battlespace. We are currently in the process of competitively selecting
    a System Integrator/Design Agent to implement the developed track
    management solution set across the fleet.
    Distributed Common Ground System--Navy (DCGS-N)
        A further step forward in network-centric warfare and one of the
    Navy's transformational initiatives is DCGS-N. In January 2004, the
    Navy combined the Joint Service Imagery Processing System--Navy with
    the Joint Fires Network into DCGS-N. These programs were combined
    organizationally, programmatically, and technically. The fiscal year
    2006 budget request includes $12.4 million for continued DCGS-N
    development. This capability merges ISR, targeting and command and
    control systems into a coherent architecture to improve situational
    awareness, fires and time-sensitive targeting. It serves as a building
    block for the Navy's more extensive FORCEnet concept.
    E-2C and Advanced Hawkeye (AHE)
        The E-2C AHE is a critical enabler of transformational
    intelligence, surveillance, and reconnaissance, providing a robust
    overland capability against current and future cruise missile-type
    targets. The AHE program will modernize the E-2 platform by replacing
    the current radar and other system components to maintain open ocean
    capability while adding transformational surveillance as well as
    theater air and missile defense capabilities. The fiscal year 2006
    budget requests $249 million to procure two TE-2Cs in the third year of
    a 4-year MYP. This effort will keep the production line viable while
    the AHE, formerly known as the Radar Modernization Program, continues
    spiral development toward an Initial Operational Capability in fiscal
    year 2011. The AHE program continues to execute the SDD program of
    record. Further, OA standards are being integrated into E-2C aircraft
    and AHE program to enhance interoperability with DOD systems.
    Unmanned Aerial Vehicles (UAV)
        The global war on terror continues to place emphasis on the
    importance of UAVs. The fiscal year 2006 budget request reflects our
    commitment to a focused array of UAVs that will support and enhance
    both surveillance and strike missions with persistent, distributed,
    netted sensors.
        Fire Scout UAV
        The fiscal year 2006 budget requests $77.6 million to continue
    development of the Fire Scout UAV. The Fire Scout is a Vertical Takeoff
    and Landing Tactical UAV (VTUAV) designed to operate from all air-
    capable ships, carry modular mission payloads, and operate using the
    Tactical Control System and Tactical Common Data Link. The Fire Scout
    UAV will provide day/night real time ISR and Targeting as well as
    communication-relay and battlefield management capabilities to support
    core Littoral Combat Ship (LCS) mission areas of ASW, MIW and ASUW for
    the naval forces. Upgrades will include a four-bladed rotor and
    increased payload capacity. Upgraded Fire Scout capability will be
    fielded with LCS Flt 0.
        The Army has selected the Fire Scout for their Army Future Combat
    System Class IV UAV. Numerous similarities in hardware components,
    testing, logistics, training, software and support requirements, offer
    potential for overall program cost reduction which would clearly
    benefit both the Army and Navy. We expect to sign a MOA with the Army
    for the acquisition of the Fire Scout airframe, and selected subsystems
    on a single Navy contract. The airframes will be subsequently modified
    to Service specific requirements under separate existing Navy and Army
    contracts. The goal is to maximize common support opportunities,
    eliminate redundant costs, maximize common avionics and sensor
    configuration to promote interoperability, and eliminate redundant
    tests.
        Vertical Unmanned Air Vehicle (VUAV).
        UAVs have played a critical role in recent operations and are also
    a key element of our transformation. The Marine Corps is pursuing the
    replacement of its almost 20-year-old Pioneer UAV system that has flown
    over 6,950 hours in support of OIF highlighting the criticality of
    these systems for our Marine forces. Requirements for VUAV are being
    developed in consonance with Ship to Objective Maneuver concepts from
    Expeditionary Maneuver Warfare, the naval concepts of Sea Basing and
    Seapower 21, and with lessons learned from recent operational
    experience. The fiscal year 2006 budget requests $9.2 million to
    evaluate the Eagle Eye UAV, currently being developed by the United
    States Coast Guard in connection with its Deepwater Program. The
    Department will also continue to evaluate the capabilities of Fire
    Scout for this mission, seeking commonality within the Department.
        Joint Unmanned Combat Air System (JUCAS)
        The fiscal year 2006 budget realigns funding to the Air Force to
    establish a Joint Program Office with Navy representation to advance
    the JUCAS Program. The Department is committed to a JUCAS initiative,
    developed in partnership with the Air Force and the Defense Advanced
    Research Projects Agency. The Navy and the Air Force have defined a
    common set of science and technology requirements that recognize the
    unique needs of each Service that will form the basis for developing
    air vehicles that will contribute to a joint warfighting concept of
    operation.
                         other significant capabilities
    Presidential Helicopter Replacement Aircraft (VXX)
        The fiscal year 2006 budget requests $936 million RDT&E for SDD
    efforts for the VXX program. The goal of this accelerated program is to
    introduce a new Presidential helicopter by October 2009. The VXX
    program will utilize an evolutionary acquisition approach through a
    two-part incremental development to deliver a safe, survivable, and
    capable vertical lift aircraft while providing uninterrupted
    communications with all required agencies. The Department completed a
    Milestone B/C Defense Acquisition Board on January 13, 2005, and on
    January 28, 2005, a contract was awarded to LMSI to proceed into SDD
    and Pilot Production of the first increment aircraft.
    Technology
        Technology will never substitute for presence; rather it should
    always address a mission requirement of making naval forces more
    effective. The fiscal year 2006 budget requests $1.78 billion for a
    science and technology (S&T) portfolio designed to provide the best
    scientific research and technology in the shortest time to maximize the
    benefit to our sailors and marines.
        Efforts on behalf of Tomorrow's Fleet/Force--largely technology
    development--are organized in terms of a series of Future Naval
    Capabilities (FNCs) that focus on major technical barriers challenging
    the Navy and Marine Corps in transforming themselves for 21st century
    operations. Components and systems developed to solve the operational
    problems defined by the FNCs are evaluated in feasibility
    demonstrations, prototypes, and field trials, with the results made
    available to Navy system developers. FNCs are fully integrated with
    Navy and Marine warfighting requirements and budget-development
    processes.
        The fiscal year 2006 budget requests funding to develop several
    Innovative Naval Prototypes (INPs). These initiatives include an
    electromagnetic railgun prototype; new concepts for persistent, netted,
    littoral anti-submarine warfare; technologies to enable Seabasing; and
    the naval tactical utilization of space. INPs represent revolutionary
    ``game changers'' for future naval warfare.
                            sea trial and sea viking
    Experimentation
        Identifying and developing future capabilities for naval forces
    will require robust experimentation involving systems, platforms,
    organizations, and tactics. The Navy's Sea Trial and Marine's Sea
    Viking experimentation elements of our Naval Power 21 strategy give the
    Fleet a strong voice in evaluating the potential of new technologies
    and warfighting concepts. Extensive use of simulations, modeling, joint
    test facilities and actual forces is necessary to maintain our
    technical advantage and continual command of the seas. The Sea Viking
    04 wargame recently conducted by Joint Forces Command examined many of
    the issues surrounding Forced Entry operations from a coalition Sea
    Base. Sea Viking 06 is the next experimentation platform that is
    developing Distributed Operations and will be using or simulating many
    of the technologies and systems we are discussing today.
    Sea Trial and Sea Enterprise in Action: Operation Respond
        In support of the I Marine Expeditionary Force's (I MEF) return to
    Iraq and in support of deployed Marines in Afghanistan, the Secretary
    of the Navy established a formalized process and action team, Operation
    Respond, to rapidly respond to technological and materiel requirements
    generated from deployed marines. A senior Navy Marine Corps team co-
    chaired by the Assistant Secretary of the Navy (Research, Development
    and Acquisition) and the Deputy Commandant for Combat Development
    reviews and coordinates technical and materiel requirements for
    deployed units and utilizes the technical and engineering expertise
    throughout the DON and industry to expedite the best solutions
    available to counter rapidly evolving threats. This process served I
    MEF well in the initial year of deployment to OIF and OEF. The DON is
    establishing a Naval Innovation Lab environment to develop innovative
    ways to meet emerging technology problems within the global war on
    terror. This effort under the ASN (RDA) will leverage and expand the
    current roles and capabilities of our established requirements
    generation and materiel development and acquisition commands in order
    to better respond to innovative enemy threats.
    Counter-Improvised Explosive Devise (IED) Technology, Equipment, and
            Operations
        The Department has reprogrammed over $28.0 million in fiscal years
    2004 and 2005 for the testing, assessment and fielding of technology
    and equipment to counter and exploit the IED threat. Specific focus
    areas include joint, manportable explosive ordnance disposal (EOD) and
    intelligence, surveillance, and reconnaissance robots, IED electronic
    countermeasures, backscatter X-Ray systems, specialized search dogs and
    establishing and maintaining an IED countermeasures group at our Naval
    EOD Technical Division, Indian Head, Maryland. This group is
    responsible for support to the joint, forward-deployed, and CONUS-based
    IED exploitation cells, analysis of tactical and technical IED threats,
    development and dissemination of EOD threat advisories and EOD tactics,
    techniques and procedures, and provision of technical and training
    support to EOD operational teams. The Marine's IED Working Group
    coordinates closely with Naval EOD Technical Division, the Army's IED
    Task Force, and the Joint IED Defeat Integrated Process Team.
    Vehicle Hardening
        We reprogrammed $144 million in fiscal year 2004 funds and an
    additional $77.7 million of Marine Corps personnel funds in fiscal year
    2005 to support various Marine Corps vehicle-hardening programs.
    Additionally, $90.1 million was provided from Operation Iraqi Freedom
    funds to supplement and accelerate fulfillment of armor requirements
    through June 2005. Throughout this effort, both the Marine Corps
    Systems Command and the Marine Corps Warfighting Lab have worked with
    the Army Developmental Test Command to rapidly test and assess various
    ballistic materials to include ballistic glass, armor, and ceramic
    materials for use in vehicle hardening. To date, over 5,000 vehicles
    have been hardened with various combinations of interim armor to
    production armor kits. Other vehicle hardening initiatives include the
    development of an Explosion Resistant Coating (ERC) and a gunner
    shield. ERC is a polymer coating material that provides an additive
    lightweight blast and ballistic protection for conventional armor. An
    innovative, joint testing linkage was established between the Marine
    Corps Warfighting Lab, Naval Surface Warfare Center Dahlgren, United
    States Air Force Research Lab, and the Technical Support Working Group
    to rapidly test the efficacy of ERC as a ballistic material for
    protecting vehicles. Testing was completed for HMMWV protection from
    small arms, IED, and mine attacks. ERC is deployed in Iraq on 120 HMMWV
    interim armor sets. Gunner shields provide an armored turret as an
    additional level of protection for exposed vehicle gunners operating in
    HMMWVs and Medium Tactical Vehicle Replacements to date just under
    1,900 have been fielded to forces in Iraq. ERC in multiple
    configurations with added composites may provide a lighter and
    promising ballistic protection when applied to vehicles. Testing and
    analysis is currently underway. Initial testing of ERC has demonstrated
    a lighter level of protection can be attained. We are committed to
    fully exploring ERC options.
    Intelligence, Surveillance, and Reconnaissance (ISR)
        The Marine Corps is engaged in initiatives to provide enhanced ISR
    capabilities in theater. The Dragon Eye UAV is in full-scale fielding
    and the Marine Corps is working to conduct an Extended User Assessment
    of the Silver Fox UAV system. The Marine Corps is in the process of
    creating requirements for a Tier II UAV system to provide an organic
    UAV to the Infantry Regiment. The I MEF Scan Eagle services lease had
    codified a capability gap at this echelon and the Marine Corps
    Warfighting Lab is coordinating with Marine Corps Combat Development
    Command to find a long-term solution. The Marines have also employed
    aerostat balloon platforms to provide persistent ISR capability.
    Aircraft Survivability Equipment (ASE)
        As a result of Army aviation lessons learned, Navy and Marine Corps
    aviation staffs undertook a coordinated rapid fielding initiative of
    more than $152 million to upgrade ASE for Marine aviation units,
    preparing to deploy to Iraq in 2004. These efforts focused on ASE to
    counter infrared manportable missiles and small arms being employed by
    insurgents in more advanced anti-aircraft tactics. As a result of the
    focused efforts by our Navy and Marine Corps aviation maintenance teams
    and hard-working contractors, every Marine Helicopter engaged in OIF II
    is today supporting combat operations with upgraded ASE. All deploying
    aircraft receive the ``V2'' upgrade to the AAR-47 Missile and Laser
    Warning Set and the new ALE-47 Countermeasure Dispensing systems; AH-1W
    aircraft received IR suppressor exhaust modifications to reduce their
    signatures; AH-1W, UH-1N and KC-130 aircraft have been equipped with
    the more advanced APR-39AV2 radar detection system; CH-53E aircraft
    received interior ballistic armor and new ramp-mounted GAU-21 .50
    caliber machine guns; existing IR jamming systems on the CH-46E and KC-
    130 aircraft were upgraded. CH-46 aircraft received the M-240 7.62
    caliber machine guns, lightweight armor, and lightweight armored
    cockpit seats.
                        reforming the acquisition system
        The Department is committed to simplifying the acquisition system,
    streamlining the bureaucratic decision making process and promoting
    innovation. We continue to take advantage of numerous acquisition
    reforms to shorten cycle times, leverage commercial products and
    capabilities, optimize human systems integration and improve the
    quality of equipment being provided to our warfighters. Price-based and
    alpha contracting techniques show promise in programs such as the
    Tomahawk remanufacture program. We use leverage from international
    involvement in our acquisition programs to reduce our research and
    development costs and gain economies in production. The Department also
    seeks to improve its internal business practices and integrate
    commercial ideas. By improving these practices, we expect to be able to
    shift more dollars into combat capability and quality of service.
        The Department consolidated its directive concerning acquisition
    with the capabilities development/requirements direction, which
    contributes to joint capabilities integration and to better
    communication, cooperation and coordination between the Navy and Marine
    Corps capabilities development and acquisition communities. In 2004, we
    worked with industry to identify effective ways, including the use of
    appropriate profit/incentive arrangements, to encourage improved
    performance under Navy and Marine Corps contracts. Navy also led the
    Office of the Secretary of Defense commodity council pilot for
    strategic sourcing of administrative services, and made wider use of
    internal contracting centers of excellence and web-enabled contracting
    vehicles.
                             acquisition logistics
    Continuous Improvement
        The Navy and Marine Corps Team continues to implement several
    continuous improvement initiatives consistent with the goals of the
    President's Management Agenda that enable realignment of resources in
    order to increase our output and re-capitalize our force. The
    cornerstone of our continuous improvement effort is the education and
    use of industry proven Lean and Six Sigma efficiency methodologies in
    our day-to-day operations. Our industrial activities including back
    office support, fleet leadership and our acquisition community are all
    embarking on the journey of institutionalizing closed loop continuous
    improvement practices.
        Lean efficiency events that concentrate on increasing velocity and
    productivity in our Supply, and Aviation Intermediate Maintenance
    Departments (AIMD) were completed on the U.S.S. Harry Truman (CVN 75).
    The outcomes of these events are impressive from operational and
    resourcing perspectives. Reductions in supply wait times and
    maintenance turn-around-times exceeded 50 percent. The benefit and
    migration to all afloat AIMDs will allow us to improve our afloat
    processes and influence our future manning requirements on CVN 21 Class
    carriers. These were the first Lean events conducted on Navy warships.
    Our planning, logistics, and maintenance activities are receiving
    intense Lean and Six Sigma training as every improvement workshop to
    date has yielded order of magnitude improvements. Our Sea Systems
    Enterprise commenced Task Force Lean. Our Aviation Enterprise continues
    to yield excellent results with AIRSpeed initiatives. Our Submarine
    enterprise through Team Submarine is making great progress in targeting
    and leaning our current processes. The acquisition community commenced
    initiatives that have a goal to reduce the volume of acquisition
    related paperwork by 50 percent and reduction in paperwork cycle time
    down to 90 days.
        Another pillar of continuous improvement is the shaping of our
    business operating systems. Our Converged Enterprise Resource Planning
    (CERP) program entered into the System Development and Demonstration
    phase in September 2004, and is expected to initially deploy in fiscal
    year 2006. The core of this system is SAP. Supply, Maintenance,
    Business Operations and Financial communities will use this integrated
    software that incorporates commercial best practices. In addition to
    increasing productivity, the system provides real time information,
    total asset visibility, compliance with the Chief Financial Office Act,
    and serves as a forcing function for the integration or sun setting of
    legacy, standalone systems. The Marine Corps GCSS-MC operating system
    is also in development stage. It will provide increased asset
    visibility for our warfighters at our ``last tactical mile.'' These
    continuous improvement initiatives enable us to increase our combat
    capabilities with the expectation that we become more efficient, agile,
    flexible, and reliable at a reduced cost of doing business.
                                    summary
        Our mission remains bringing the fight to our enemies. The
    increasing dependence of our world on the seas, coupled with growing
    uncertainty of other nations' ability or desire to ensure access in a
    future conflict, will continue to drive the need for naval forces and
    the capability to project decisive joint power by access through the
    seas. The increased emphasis on the littorals and the global nature of
    the terrorist threat will demand the ability to strike where and when
    required, with the maritime domain serving as the key enabler for U.S.
    military force.
        Accordingly, we will execute the global war on terror while
    transforming for the future fight. We will continue to refine our
    operational concepts and appropriate technology investments to deliver
    the kind of dominant military power from the sea envisioned in Sea
    Power 21. We will continue to pursue the operational concepts for
    seabasing persistent combat power, even as we invest in technology and
    systems to enable naval vessels to deliver decisive, effects-based
    combat power in every tactical and operational dimension. We look
    forward to the future from a strong partnership with Congress that has
    brought the Navy and Marine Corps Team many successes today. Thank you
    for your consideration.

        Senator Talent. John, do you have your discussion about
    procurement changes and flexible funding? Is that in the
    statement that you submitted, and if so where is it?
        Mr. Young. I am not sure it is in the written statement.
        Senator Talent. It is not in the written statement?
        Mr. Young. It should be. Can we locate that and tell you?
        Senator Talent. If it is in the written statement, yes.
        Mr. Young. Okay.
        [The information referred to follows:]

        Flexible funding was not discussed in my written statement. Below
    is a description of alternative financing approaches for ship
    procurement that the Navy is exploring.
        The Navy's position is that ships, in general, should be fully
    funded in the year of authorization and appropriations. The Navy should
    be allowed to continue the practice of advance procurement for long
    lead materials and design efforts that support delivery schedules and
    reduce end item cost. However, the Navy recognizes several situations
    where a financing strategy other than full funding has, or will have,
    allowed the government to obtain the best possible value for the
    taxpayer.
        Examples of these include:

              a. Incremental Funding, used on LHD 8, LHD 6, and SSN 23.This
            is good for very specific types of hulls, which are built at a
            rate of less than one per year and where design changes during
            construction are anticipated.
              b. Two-Year Split Funding, used, or planned for, on CVN RCOH,
            CVN 21, and LHA(R). Used to procure large capital ships with a
            production rate of less than one per year. Allows the Navy more
            efficient and effective use of Navy Total Obligation Authority
            for the SCN account.
              c. Incremental Detail Design in SCN(AP), used, or planned
            for, on VA SSN, CVN-21, DD(X), and MPFF. Allows efficient
            execution of Detail Design and an early start of construction
            on lead ships.
              d. Lead Ship in RDT&E. Used on LCS, requested but rejected by
            Congress for DD(X). Allows for maximum flexibility in inserting
            new technology and overcoming cost growth as the design is
            matured.

        While full funding, in general, is important to maintain fiscal
    discipline, the Navy believes it should have enough flexibility to
    employ financing strategies other than full funding when doing so
    represents a path to better overall value to the taxpayer, helps to
    maintain the industrial base, and supports CNO priority to deliver
    needed assets to the Fleet faster and better in order to achieve our
    mission of Sea Strike, Sea Shield and Sea Basing and support the global
    war on terrorism.

        You and the members of the committee have played a personal
    role in all of this progress and I offer my great thanks on
    behalf of the Department, the Nation's marines and sailors for
    your insight, leadership, and support. We look forward to the
    chance to answer your questions.
        Senator Talent. Thank you.
        Admiral Sestak.

     STATEMENT OF VADM JOSEPH A. SESTAK, JR., USN, DEPUTY CHIEF OF
         NAVAL OPERATIONS FOR WARFARE REQUIREMENTS AND PROGRAMS

        Admiral Sestak. Thanks, Mr. Chairman. Mr. Chairman, I
    appreciate that at the beginning of this hearing you mentioned
    that you wanted us to talk a bit about the seabasing concept.
    To some degree I think the military is obligated to come over
    here and explain to what function do we serve society so that
    we might be maintained. I think the first person that I was
    aware of that spoke about seabasing was Samuel Huntington from
    Harvard University back in 1954, where in an era of massive
    retaliation, where each of us, we and the Soviet Union, both
    relied on a nuclear weapons deterrent, he stated that the
    Navy's function serving our society is to use the seas as a
    base, not to command or gain command of the seas, but rather to
    use the seas to gain conventional supremacy on land.
        So I want just to take 3 minutes out and talk about the
    seabasing concept. It is important to note: to what end does
    the Navy serve this Nation. Today we have 85 percent of the
    value of all international trade and 99 percent of the volume
    sitting at sea. Businesses' warehouses are sitting at sea
    today. Two-thirds of our economic growth recently has been
    because of our exports. So to some degree, if for no other
    reason, it is worth having a Navy to ``keep the dog on the
    porch,'' to make sure no one interrupts this commerce that
    fuels our Nation in what is a public commons, the seas, where
    anyone can be legally at any moment.
        But you get a ``two-for'' from the Navy, being forward,
    protecting our economic commerce, the dog that does not bark.
    That is, a Navy that can reach out, as it did in 1988, at a
    moment's notice and touch a Qadafi in Libya, or reach out, as
    it did in 1998, to reach into Afghanistan and Somalia
    simultaneously to strike against terrorism.
        But the third thing that this Nation gains from the Navy is
    access. That is what I think you are aware of, Mr. Chairman,
    when you were talking about a concept that then can come down
    to programs, such as the Maritime Prepositioning Force. If I
    could just hold up three short slides to say that as we are
    talking about the seabasing concept it is important--and I
    passed these out to your staffer--that this [indicating] is
    what we are trying to prevent. This is a picture in Operation
    Desert Storm. This is a Marine brigade or an Army division--
    unloading ashore.
        [The information referred to follows:]

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        This is also how we fought the last war, Operation Iraqi
    Freedom (OIF). We sat there and stockpiled our forces ashore
    until we were ready to go on the offensive. In 1991, Saddam
    shot a Scud missile that just missed this formation. There will
    be no nation in the future of any heft that will ever permit us
    to build up our forces ashore.
        So the question in seabasing is how do I marry up this
    brigade at sea and put it ashore without permitting a buildup,
    that it goes ashore ready to fight? That is the challenge that
    you have seen the Navy and the Marine Corps come to grips with
    with the seabasing concept the last 2 years.
        Second, this picture right here is 1910. This is 1910; this
    was the first flight in Hampton Roads of a plane from an
    aircraft carrier.
        [The information referred to follows:]

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Thirty two years later, the very first time we used a
    carrier in anger happened today, 63 years ago on the Doolittle
    raid. We jointly launched the U.S. Air Force off an aircraft
    carrier, a sovereign piece of American territory off Japan,
    because we had no other way to strike against the country
    because we had no bases except the sea from which to strike.
        The importance of this is not that we struck Japan. The
    importance is it took us about 32 years to get it right. I came
    back from sea with a battle group from the Persian Gulf a
    little less than 2 years ago. I could not have explained to
    you, Senator, what an MPF ship was. But in 2 years I have seen,
    working equally with our Marine Corps, that we are beginning to
    not only think the unthinkable and fathom the unfathomable, as
    some people say, but we are beginning to ``pay cash'' on this
    concept.
        So today I am ready to explain to you the programs by which
    we are able to now execute this vision, I believe, that is as
    innovative as the idea of putting an aircraft at sea, was; now,
    we are putting this ``pile of iron'' at sea and deploying it
    ashore.
        The very last slide is this one--this is an amphibious
    assault.
        [The information referred to follows:]

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        This is similar to how we did it in Guadalcanal and
    Normandy. In the future we may very well do that also. But the
    point is this: If a marine gets on a ship in San Diego, it
    takes upwards of 4 weeks to assemble a large amphibious task
    force off a nation like Korea and insert it ashore. We can be
    there 60 percent faster and with 40 percent more force, if
    MPF(F), much like that aircraft carrier that launched in 1910
    off Hampton Roads, loads out the way that we as a team are
    about to present you as the seabasing concept.
        Thank you.
        [The prepared statement of Admiral Sestak follows:]
             Prepared Statement by VADM Joseph A. Sestak, Jr., USN
        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 2006 Seabasing programs.
        The current and future security environments have become
    increasingly challenging to U.S. and allied interests because of
    regional security issues, the concern with terrorism globally, the
    expanded influence of non-state actors and the proliferation of weapons
    of mass destruction (WMD). As the U.S. security strategy for the 21st
    century evolves, our Nation remains committed to its global
    responsibilities to ensure national security through peace, prosperity
    and freedom. However, U.S. options to extend global influence through
    forward basing of military capability are diminishing. Potential
    enemies may be likely to strike U.S. bases abroad in a conflict with
    increasingly lethal weapons, including WMD that are either developed by
    indigenous industries or purchased abroad. Many nations may find it
    politically untenable to host U.S. bases or allow access through their
    territory. The strategic challenge for our National and military
    leaders will be to maintain a global presence for security in the face
    of decreasing access overseas.
                                  sea power 21
        The objective of Sea Power 21 is to ensure that our Nation
    possesses credible combat capability on scene to promote regional
    stability, to deter aggression throughout the world, to assure access
    of joint forces and to fight and win should deterrence fail. Sea Power
    21 guides the Navy's transformation from a threat-based platform
    centric structure to a capabilities-based, fully integrated force. The
    pillars of Sea Power 21--Sea Strike, Sea Shield, Sea Base--are
    integrated by FORCEnet, the means by which the power of sensors,
    networks, weapons, warriors and platforms are harnessed in a networked
    combat force. It is this networked force that will provide the access
    with the strategic agility and persistence necessary to prevail in the
    continuing war on terror, as well as the speed and overwhelming power
    to seize the initiative and swiftly defeat any regional peer competitor
    in combat operations.
        The Navy of the future must be capabilities-based and threat-
    oriented. While the fabric of our fighting force will still be the
    power and speed needed to seize the initiative and swiftly defeat any
    regional threat, FORCEnet's pervasive awareness (C\4\ISR) will be more
    important than mass. Because of its access from the sea, the Navy and
    Marine Corps are focusing significant effort and analysis in support of
    joint combat power projection by leveraging this traditional access
    provided by the oceans through Seabasing, with the access now provided
    by space and cyberspace through FORCEnet. It is the synergistic access
    provided by these great ``commons''--the sea and space and cyberspace--
    that is the revolution of the future.
        To this end, the technological innovations and human-systems
    integration advances in future platforms remain critical. Our future
    warships will sustain operations in forward areas longer, be able to
    respond more quickly to emerging contingencies, and generate more
    sorties and simultaneous attacks against greater numbers of multiple
    aim points and targets with greater effect than our current fleet.
    However, the future is about the capabilities posture of this fleet,
    which is why the future is also about establishing C\4\ISR as a
    warfighting weapon and integrator from the sea . . . and understanding
    the impact of changing C\4\ISR investment strategies on the warfight,
    in particular as it enhances our ability to project power from the
    seabase.
                                seabasing vision
        Today's U.S. strategic guidance requires secure strategic access
    and the freedom to act globally. However, during periods of crisis,
    combatant commanders will need the capability to contain the crisis by
    deterring potential adversaries or seizing the initiative to swiftly
    defeat enemy actions. Given the likely operational environment, the
    Joint Force Commander (JFC) must be able to project power when forward
    basing may not be available. Even where forward bases are otherwise
    available, their use may be politically undesirable or operationally
    restricted for military use, and the JFC may desire to reduce the
    footprint and visibility of the joint force. Where potential air, sea,
    and land entry points are available, their predictability may allow the
    enemy to focus his anti-access capabilities against our forces. In
    addition, they may be a source of friction in some coalition situations
    and present security challenges that theater operational objectives.
        Seabasing is one of several evolving Joint Integrating Concepts
    that will be a critical capability for joint forces in 2015-2025 that
    significantly increases options while decreasing liabilities, both
    militarily and politically. Projecting and sustaining joint combat
    power from the seas, Seabasing assures joint access by leveraging the
    operational maneuver of sovereign, distributed, and networked forces
    operating globally. Seabasing capitalizes on the maritime dominance
    gained by our Nation's forces, and uses the maneuver space and freedom
    of action afforded by the sea, space and cyberspace to project and
    sustain joint combat power from an inherently mobile aggregation of
    distributed and networked platforms. There are seven overarching
    principles that are essential to applying the Seabasing concept across
    a wide range of scenarios:

             Use the sea as maneuver space. Seabasing exploits the
            freedom of the high seas to conduct operational maneuver in the
            maritime (to include littoral) environment relatively
            unconstrained by political and diplomatic restrictions, for
            rapid deployment and immediate employment. Sea based operations
            provide JFCs with an operational flexibility to support the
            immediate deployment/employment/sustainment of forces across
            the extended depth and breadth of the battlespace.
             Leverage forward presence and joint interdependence.
            Joint forces operating from the sea base, in conjunction with
            other globally based joint forces, provide the JFC an on-scene,
            unconstrained, credible offensive and defensive capability
            during the early stages of a crisis. Combined with other
            elements of this joint interdependent force, forward deployed
            joint forces can help to deter or preclude a crisis or enable
            the subsequent introduction of additional forces, equipment,
            and sustainment.
             Protect joint force operations. Seabasing provides a
            large measure of inherent force protection derived from its
            freedom of operational maneuver in a maritime environment. The
            combined capabilities of joint platforms in multiple mediums
            (surface, sub-surface, and air) provide the joint forces a
            defensive shield both at sea and ashore. The integration of
            these capabilities and freedom of maneuver effectively degrades
            the enemy's ability to successfully target and engage friendly
            forces while facilitating joint force deployment, employment,
            and sustainment.
             Provide scalable, responsive joint power projection.
            Forces rapidly closing the sea base by multi-dimensional means
            (air, surface, and subsurface) give the JFC the ability to
            rapidly scale and tailor forces/capabilities to the mission.
            Seabasing provides an option to the JFC to mass, disperse, or
            project joint combat power throughout the battlespace at the
            desired time to influence, deter, contain, or defeat an
            adversary.
             Sustain joint force operations from the sea. Sea based
            logistics entails sustaining forces through an increasingly
            anticipatory and responsive logistics system to support forces
            afloat and select joint/multinational forces operating ashore.
            The sea base is sustained through the interface with support
            bases and strategic logistics pipelines enabling joint forces
            to remain on station, where needed, for extended periods of
            time. Seabasing uses selective off-load to assemble and deliver
            tailored sustainment packages directly to joint forces
            operating ashore.
             Expand access options and reduce dependence on land
            bases. Seabasing integrates global power projection
            capabilities with sea based power projection capabilities to
            provide the JFC with multiple access options to complement
            forward basing in the Joint Operating Area (JOA), and reducing
            reliance on forward basing if the security environment
            dictates. This includes theater access capabilities at improved
            and unimproved ports and airfields.
             Create uncertainty for our adversaries. Seabasing
            places an adversary in a dilemma through the conduct of
            dispersed and distributed operations. The options of multiple
            points and means of entry require an adversary to either
            disperse or concentrate his forces, creating opportunities to
            exploit seams and gaps in his defenses.

        These seven overarching principles guide the development of the
    Seabasing Concept and address how Seabasing will be employed by the
    future Joint Force. Seabasing is the capability to shape a strategic
    environment, to be rapidly employed in the global war on terror, and to
    win decisively in a major conflict--using the world's greatest maneuver
    area, the seas, to project its power.
                        seabasing operational principles
        In order to deliver credible combat power across the full spectrum
    of potential future military operations, the Seabasing Vision must be
    operationalized. This requires tying together the right Joint
    capabilities, in the right manner, to pursue operational and tactical
    objectives contributing to overall strategic goals. Seabasing allows
    the JFC to do this with minimum, or without, reliance on forward
    airfields or ports, providing tremendous operational flexibility. The
    key operational principles that make Seabasing a national asset to
    pursue national goals are laid out below:

             Military Access. Joint forces need to be able to flow
            into and out of a theater of operations as the operational
            tempo requires and the threat dictates. Among the other strike
            groups, our forward deployed Carrier Strike Groups (CSGs) and
            Expeditionary Strike Groups (ESGs) with their supporting
            surface combatants and submarines provide a robust capability
            to ensure access from the Sea Base in non-permissive
            environments. Assured access in a theater of operations is key
            not only for naval forces, but for the Joint Force, and
            Seabasing acts as a Joint portal through which a Joint Combat
            Force can assemble the appropriate mix of capabilities required
            to ensure missions success at a time and place of its choosing.
            It is important to note that this access is not just from the
            seas, but it is also gaining access to information and
            intelligence through surveillance and reconnaissance, preparing
            the battlespace with credible combat power to shape--that is,
            deter or dissuade--an adversary from acting against U.S. or
            allied interests. These attributes define Seabasing as a true
            national capability.
             Distributed. Seabasing will take advantage of the
            global commons--the sea, space and cyberspace--to expand our
            dominance throughout the battlespace. The JFC will be able to
            mass effects, rather than forces, keeping open alternate
            avenues of approach and forcing adversaries to remain off
            balance. With deep operational reach, we will be able to mask
            our intentions and rapidly apply combat power to either
            interdict terrorists without warning, or to preempt enemy
            action. Broad-Area Maritime Surveillance (BAMS), Unmanned
            Aerial Vehicles (UAVs), Multi-mission Aircraft (MMA) patrol
            aircraft, Aerial Common Sensor (ACS) intelligence aircraft, JSF
            operating from the follow-on large-deck amphibious assault ship
            (LHA(R)), and Advanced (E-2C) Hawkeye (AHE) operating from CSGs
            all provide the critical ISR and command and control necessary
            to rapidly survey this massive and distributed battlespace so
            forces can react quickly and decisively when required.
             Netted. In order to be distributed, we must be netted;
            netted in the combat forces' pervasive awareness of the
            battlespace; in their ability to communicate across that
            battlespace; and netted in the control of forces and effects
            throughout the battlespace. This is a Joint net where, for
            example, USAF global strike aircraft can seamlessly flow into
            and out of the battlespace; this is a Joint net where Army
            Styker Brigades can call for supporting fires from DD(X) long
            range advanced gun systems (AGS), or USMC Joint Strike Fighter
            (JSF) flying from LHA(R). The rationale to close the well deck
            on LHA(R) and increase its aviation strike capability was
            central to delivering a more lethal force and increasing the
            nodes within the Joint combat network. Additionally, this joint
            net will be enhanced as Special Operations Forces are inserted
            by cruise missile-equipped submarines (SSGNs), and then call
            for strikes conducted covertly by SSNs and SSGNs with Tactical
            Tomahawk (TACTOM) land attack missiles. FORCEnet, with its
            constellation of Mobile User Objective System (MUOS) and
            Tactical Satellite (TSAT) space platforms, Joint Tactical Radio
            System (JTRS) radios, and tactical data links will be key
            enablers for coordinating distributed operations in a netted
            environment.
             Greater Operational Availability. The ability to
            rapidly assemble seabasing requirements with robust
            capabilities is inextricably linked with Operational
            Availability and the sustainment of our Joint forces. Seabasing
            is enhanced and enabled by improving our force posture and
            having the right forces forward at the right time--presence
            with purpose. This includes aggressively using our Forward
            Deployed Naval Forces (FDNF), Sea Swapping crews with our
            deployed ships and maintaining the readiness required to
            quickly surge naval forces in accordance with Fleet Response
            Plan (FRP) policies. Operational availability is also enhanced
            by the Maritime Preposition Force (Future) (MPF(F)) ships,
            which rapidly bring at sea arrival and assembly of significant
            ground combat power. This is ground combat power that can be
            used for Joint Forcible Entry Operations (JFEO), in stability
            operations, global war on terrorism missions, or in support of
            humanitarian operations seen in Operation Unified Assistance
            (the tsunami relief efforts). MPF(F) delivers the JFC the
            capability to conduct rapid and decisive combat operations
            across a wide spectrum of challenging national objectives.
             Joint Transformation. As Seabasing matures and grows
            in its sophistication in Joint operations, it will further
            enhance transformation for the other Services. The Army and Air
            Force will rely on Seabasing when they consider combat lift,
            force employment, and sustainment and force protection. This
            serves as the foundation for capabilities-based, threat-
            oriented force planning--not platform or Service-centric
            planning. The JFC will be able to consider flowing U.S. Army
            distributed maneuver forces and their logistics through the Sea
            Base, utilizing the Theater Support Vessels (TSVs) and High-
            Speed Vessels (HSVs). These transformational platforms, coupled
            with the robust Sea Shield that Cooperative Engagement
            Capability (CEC) of the surface combatant force (DDGs, DD(X),
            CG(X)) and the CSG air wing, exploit the advantages of speed
            and maneuver. The projection of Sea Shield will not only exist
            at sea, but deep overland. Overland defense will be further
            enhanced by Naval and Air Force offensive counter-air (OCA) and
            suppression of enemy air defense (SEAD). Along with Air Force
            strategic tanking, Joint Forces from the sea will have
            persistence and reach unparalleled in past combat operations.
             Capabilities Based . . . Threat Oriented. As the
            operational principles above demonstrate, Seabasing will cause
            JFCs and their planners to focus on capabilities, not
            platforms. They will plan and conduct parallel operations from
            vastly different operational approaches. They will synchronize
            across a massive battlespace with increased precision and
            lethality. They will think in terms of theater-wide force
            protection and sustainment. The overall impact is that
            Seabasing will drive transformation; a transformation that
            delivers the combat power tailored for the threat, rather than
            just what is available.

        The future security environment and battlespace will be complex,
    uncertain, ambiguous, and volatile. Seabasing offers the JFC strategic
    options he has not had in the past due to uncertain access and basing
    rights. Our robust military capabilities can be assembled and poised
    for action without being subject to the constraints and restraints
    often imposed in the past by neutral and allied nations alike. When the
    security situation requires American commitment and presence, whether
    to ensure the free flow of commerce, to strengthen diplomatic actions,
    or to demonstrate political will, Seabasing--characterized by the
    principles above--provides the Nation the capability to assemble the
    joint forces needed to attain the desired end state.
    sea base concept of operations--the maritime prepositioning ship of the
                                 future mpf(f)
        Our Sea Base Concept of Operations is a Global Concept of
    Operations which employs a flexible force posture that includes Carrier
    Strike Groups (CSGs), Expeditionary Strike Groups (ESGs), surface and
    submarine strike groups, and logistics groups, among others. These
    strike and support groups are capable of responding across the spectrum
    of conflict simultaneously around the world. From the period prior to
    the onset of a crisis through the completion of stabilization
    operations, Joint Seabasing provides scalable power projection options
    to the Joint Force Commander. These capabilities provide a framework
    for the range of employment options available to the JFC through Joint
    Seabasing. With regard to forcible entry and the employment of MPF(F)
    in the future, the five tenants of Seabasing are:

              a. Close--rapid closure of joint force capabilities from
            within, or to, an area of crisis. This force, a Marine
            Expeditionary Brigade (MEB) deploys from the United States to
            the MPF(F) via two principal means--high-speed sealift and
            strategic airlift. Strategic airlift is used to fly the marines
            to a forward base to embark MPF(F) and marry up with their
            heavy equipment. Sealift is used to close non-self deploying
            aircraft, such as CH-53, and its support equipment directly to
            the Sea Base. The MPF(F) with its embarked marines join up with
            the high-speed sealift and non-self-deploying aircraft at the
            Sea Base, as it is underway for rapid assembly, saving time for
            closure to the theater.
              b. Assemble--seamless integration of scalable joint force
            capabilities on and around secure sea based assets. The
            critical capability of the future prepositioning force will be
            selective offload, which will require a ``warehouse at sea,''
            with ``just in time logistics.'' This movement of combat and
            combat support equipment will be executed when required by the
            Commander, at sea, vice waiting for its assembly at an advanced
            base ashore or within the Joint Operations Area (JOA). This new
            capability will dramatically alter the way future forces are
            employed, and improve their security while they are being
            assembled for combat. These assembly methods will be executed
            quickly and in high sea states, with reduced manpower. These
            methods involve advanced technologies that include:

                      i. External cargo transfer and movement, including
                    the use of sophisticated modern crane technologies
                      ii. Internal cargo movement, using modern state-of-
                    the art commercial warehousing techniques, adapted for
                    use at sea
                      iii. Inter-Modal Packaging systems that support
                    efficient and largely automated external and internal
                    cargo movement
                      iv. Creative use of internal volume (Internal Broken
                    Stow factor) creating the required space for selective
                    cargo breakdown, movement, and assembly.

              Under a robust and properly assembled Sea Shield, assembly
            for combat will be conducted quickly and without the
            vulnerabilities associated with assembly at fixed ports and
            airfields. This transformational capability supports the
            critical at-sea arrival and sustainment timelines required in
            future potential major conflict operations. MPF(F) is also
            uniquely suited to respond on short notice to provide
            additional combat power in support of the global war on terror.
              c. Employ--flexible employment and insertion of scalable
            joint force capabilities to meet mission objectives supported
            from the sea base. Integrated power projection includes not
            only the use of all-weather precision strike throughout the
            JOA, but also the insertion of ground forces at key objectives
            selected by the JFC. In order to do so, we will use a mix of
            vertical and surface assault:

                      i. Vertical maneuver with rotary-wing platforms
                    (e.g., MV-22 and CH-53) from the MPF(F) expands the
                    options for the JFC. Coupled with JSF from LHA(R) to
                    increase airborne fires, this vertical insertion
                    enables the JFC to employ combat forces deep into
                    austere environments with increased lethality, mobility
                    and survivability.
                      ii. Simultaneous surface maneuver with the enhanced
                    Landing Craft, Air-Cushion (LCAC(X)) for forcible entry
                    operations from the sea provides additional options for
                    the JFC and supports heavy combat payloads.

              The Sea Base must also possess the requisite capabilities to
            exercise command, control, computer, communications and
            intelligence (C\4\I) functions to support the Marine Air-Ground
            Task Force (MAGTF) Commander. It must also be able to ``size
            up'' to support a JFC or Combined (Coalition) Joint Task Force
            (CJTF) Commander, potentially as a part of the MPF(F). These
            command elements will have the capability to exercise command
            from a forward command platform, using reach-back for support
            from ashore.
              d. Sustain--persistent sustainment of selected joint forces
            afloat and ashore through transition to decisive combat
            operations ashore. An essential requirement within the
            distributed Sea Base is continual sustainment of joint force
            operations, including selected joint forces operating ashore.
            The force protection benefit of Seabasing will be to minimize
            or eliminate an operational pause caused by the buildup of a
            large lodgment ashore. Preventing this pause will reduce the
            footprint ashore and move the logistics ``tail'' to the sea
            base and within the protection provided by the Sea Shield.
            Additionally, the extent and degree with which the Sea Base can
            provide medical care at sea and rapidly move injuries to
            complex facilities outside the JOA will aid in improved
            casualty care and increased efficiencies as the Sea Base
            supports the theater commander in the future.
              e. Reconstitute--the capability to rapidly recover,
            reconstitute and redeploy joint combat capabilities within and
            around the maneuverable Sea Base for subsequent operations. As
            follow-on forces enter the JOA, or as the operational situation
            dictates, the JFC may rapidly transition joint sea-based forces
            to sequential or follow-on operations through at-sea
            reconstitution. Rapid reconstitution supports persistent combat
            operations by eliminating the need to wait for additional
            forces or new equipment from the United States to support
            additional operations in another theater of operations.

        The bridge to naval transformation is Seabasing, centered on its
    ability to project, sustain and defend decisive, flexible and credible
    Joint combat power ashore. Joint combat forces will operate from the
    Sea Base and the Navy is committed to MPF(F) as the centerpiece and key
    enabler of the Sea Base. These future Maritime Pre-positioning Ships
    will serve a broader operational and expeditionary function than
    current pre-positioned ships, creating greatly expanded operational
    flexibility and effectiveness. We envision a force 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 and sealift
    from the United States to the forward operating locations and directly
    to the MPF(F), itself. 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; and they will then sustain in-theater logistics,
    communications and medical capabilities for the joint force for
    extended periods, and then reconstitute (e.g. maneuver to another
    theater of operations) to be employed ashore, again, as needed.
                                    summary
        Seabasing is a transformational joint concept that exploits the
    United States' control of the sea to provide a viable option for the
    military commander to project joint power. The Joint Sea Base provides
    the operational ``freedom of maneuver'' to conduct a full range of
    scalable military operations. The mission of our Navy remains
    maintaining ``command of the sea'' and projecting--while protecting and
    sustaining--sovereign combat power across the global commons. The
    increasing dependence of our world on the seas, coupled with growing
    uncertainty of other nations' ability or desire to ensure access in a
    future conflict, will continue to drive the need for naval forces and
    the capability to project decisive joint power by access through the
    seas. The increased emphasis on the littorals and the global nature of
    the terrorist threat will demand the ability to apply effective and
    adequate combat power at the place and time of the Nation's choosing.
    Seabasing and the application of its operational concept within the Sea
    Base is a catalyst for transformation--across each Service--and as the
    key enabler within the maritime domain as a national capability for the
    U.S. military force.
        We look forward to the future from a strong partnership with
    Congress that has brought the Navy and Marine Corps Team many successes
    today. We thank you for your consideration.

        Senator Talent. Thank you, Admiral.
        General Magnus.

     STATEMENT OF LT. GEN. ROBERT MAGNUS, USMC, DEPUTY COMMANDANT
     FOR PROGRAMS AND RESOURCES; ACCOMPANIED BY LT. GEN. JAMES N.
         MATTIS, USMC, DEPUTY COMMANDANT FOR COMBAT DEVELOPMENT

        General Magnus. Mr. Chairman, thank you, Senator Kennedy,
    and other members for allowing us to relate to you what we are
    doing with our naval forces and our Marine Corps today. With
    your permission, we will submit our statement for the record
    and I would like to defer comments to my shipmate and fellow
    warrior, Lieutenant General Jim Mattis.
        Senator Talent. Okay. General Mattis.
        General Mattis. Chairman Talent, Senator Kennedy, and
    distinguished members of the Seapower Subcommittee: As Bob
    Magnus mentioned, our written statement has been submitted and
    I ask that it be accepted for the record.
        It is our privilege to report to you on how we are meeting
    today's combat challenges and how we are developing the
    capabilities to ensure marines remain ready for the future. The
    Marine Corps remains fully engaged in the global war on
    terrorism. With 368 marines killed and 3,879 marines wounded in
    the war on terror, we are keenly aware of our priorities.
        Together we stand shoulder to shoulder with young Americans
    of the Navy and all the Services and in Iraq and Afghanistan
    with those nations' maturing security forces. Our marines are
    performing extremely well, due in no small part to the support
    we have received from Congress. The war's operational costs are
    funded through supplemental appropriations. Internally, we have
    reorganized to stand up additional units designed to prosecute
    this fight. We have cross-leveled equipment and rapidly fielded
    equipment in response to our warfighters' emerging
    requirements. By adapting our training to lessons learned from
    the battlefield, we are successfully staying ahead of the
    enemy.
        Further, we deeply appreciate the end strength increase you
    authorized and appropriated. Our greatest asset and the focus
    of our effort is the individual marine, whose intellect,
    physical capabilities, morale, and will consistently outperform
    the enemy.
        Your support has enabled the quick fielding of equipment
    and technology that address threats across the detect, collect,
    interrupt, and mitigate force protection continuum. In
    particular, rotary wing aviation survivability equipment, the
    evolution of our vehicle hardening efforts, and the ongoing
    development in technologies to disrupt insurgents' IED attacks
    continue to save lives and preserve combat power.
        While the sobering losses of our killed and wounded sadden
    us all, our casualty rate has declined markedly over the last
    60 days, due in no small part to those resources you have
    provided. We partner closely with the sister services to gain
    synergy in effort and economies of scale. Our close working
    relationship with our comrades in the Army has been most
    beneficial.
        While the entire Marine Corps is engaged in supporting the
    global war on terror, we are also preparing for future
    conflicts. Under the construct of Naval Power 21, Navy and
    Marine forces of the future will further exploit our Nation's
    premier asymmetric advantage, command of the sea, and be able
    to leverage immediate full-scale joint operations in support of
    combatant commanders without relying on host nation support or
    timely buildup of combat power on foreign soil through seaports
    and airports that could be denied to us for political or
    military reasons.
        Acknowledging that decisive combat today is fought on land
    due to our supremacy on sea and in the air, your Navy and
    Marine Corps are employing the seabase concept to exploit the
    sea as maneuver room against the enemy ashore. We view
    seabasing to be the cornerstone of naval transformation and,
    more importantly, a national capability. Both OEF and OIF have
    proven that we must be sensitive to our friends' cultural
    differences and bordering country disputes. Denied access will
    be the recurring theme in future conflicts. A national
    capability, seabasing, unreliant on the need for a land-based
    footprint, one that can loiter over the horizon and project,
    protect, and sustain integrated joint warfighting capabilities,
    will give the President immediate response options to protect
    our Nation's interests and sovereignty, assisting our friends
    and checkmating enemy designs early.
        We need the help of Congress to take steps now in order for
    us to best prepare the Nation to face tomorrow's irregular
    threat under any access environments. To fully achieve our
    capability, we need our ship, surface connector, air connector,
    strike, and MPF future programs funded to bring this national
    capability to fruition. We deeply appreciate this hearing.
        Without decreasing our flexibility, lethality, or
    sustainability, we are increasing our Marine Corps agility
    using the capabilities provided by programs such as lighter
    weight artillery and new procurement of light armored vehicles.
    MV-22 and the Expeditionary Fighting Vehicle, you noted in your
    remarks, Mr. Chairman, allow us to strike faster and deeper.
    These, combined with the Joint Strike Fighter, Heavy Lift
    Replacement Helicopter, and the KC-130J, will make us even more
    capable. The Expeditionary Fighting Vehicle and the MV-22 are
    our number one ground and air priorities.
        We are working initiatives to extend the service life of
    the CH-53 Echo until the Heavy Lift Replacement can come on
    line. Our 51 KC-130 requirement has the 17 J models already
    delivered. These will provide us the aerial refueling
    capability needed to support our combatant commanders in the
    plan commitments and take full advantage of our rotary and
    fixed wing assets. With the Navy's support, we can develop the
    needed LPD class, LHA(R), LCAC(X), the Joint High Speed Vessel,
    and DD(X) to develop the seabasing national capability that can
    provide sovereign options to the President, address any enemy
    mischief, and conduct operations from tsunami relief to
    forcible entry.
        As we look to the future, we will continue to seek joint
    solutions. We have strong and continuing dialogue with the Army
    to share ideas, concepts, technologies, and acquisition efforts
    in areas such as new combat vehicles, counter-IED capabilities,
    individual equipment, command and control network solutions,
    and joint seabasing interoperability. With your continued
    support, we will ensure that your marines, their equipment,
    their training, and our organization are ready for any
    potential contingency. Marines and their families realize the
    danger to the Nation, our vital role, and the magnitude of our
    responsibilities.
        As the enemy has learned the hard way, we stand ready today
    and, with your continued support, we will be ready for
    tomorrow's challenges.
        General Magnus and I are prepared to take your questions.
        [The joint prepared statement of General Magnus and General
    Mattis follows:]
    Joint Prepared Statement by Lt. Gen. Robert Magnus, USMC, and Lt. Gen.
                             James N. Mattis, USMC
        Mr. Chairman, Senator Kennedy, distinguished members of the
    subcommittee, thank you for this opportunity to appear before you to
    discuss Seabasing and Resetting the Force. For the committee's specific
    concern relative to Seabasing, remarks today will focus on those Marine
    Corps and Navy capabilities that are most urgently needed to realize
    the potential of Seabasing as a strategic concept and the separate but
    related needs to reset our heavily committed and hard-used forces.
        We are a Nation at war. Our responsibility is both the present and
    the future and we are obligated to protect our homeland from the
    physical, economic and psychological threats that were cast upon our
    Nation's threshold in the opening days of this new century. We must
    defeat terrorism and other threats to our way of life at their points
    of origin, rather than react to them at their destinations, the cities
    and monuments of our homeland. This country must retain the capability
    to project power and influence to remote places where access may be
    denied.
        For over two centuries your marines have demonstrated that they are
    the expeditionary force in readiness--Most Ready When the Nation is
    Least Ready. Scalable, flexible and adaptable for peacetime crises and
    always innovative for future challenges, your Corps' number one
    priority is fighting and winning battles. On behalf of all marines, we
    thank the committee for your continued support and commitment to the
    readiness of your Marine Corps. Your support has made us more effective
    in the current fight and will continue to assist us as we reset,
    reconstitute and modernize our capabilities for operations in uncertain
    and often chaotic future environments.
                            concepts to capabilities
        While the entire Marine Corps is engaged in supporting the global
    war on terror, we also have a responsibility to prepare for future
    conflicts and contingencies. The Defense Department's Strategic
    Planning Guidance directs balanced capabilities for controlling four
    principal challenges: Traditional, Irregular, Catastrophic, and
    Disruptive. Our challenge is to determine the right balance of those
    capabilities that the Marine Corps must provide to meet challenges
    across the operational spectrum.
        Naval Power 21 is the Department of the Navy's vision that enhances
    Navy and Marine Corps capabilities today and tomorrow. This vision
    serves as the way ahead for naval programs and operations. It
    incorporates the Navy's Sea Power 21 and 21st Century Marine Corps
    frameworks as a foundation to ensure naval forces control the seas,
    assure access, and project joint power beyond the sea to influence
    events and advance American interests across the range of military
    operations.
        America's ability to use international seas and waterways, as both
    maneuver space and an operating base unconstrained by foreign veto,
    allows our naval forces to project combat power into the littoral
    regions, which contain more than half the world's population and more
    than 75 percent of its major urban areas. Highly mobile and ready for
    combat, our forward-deployed expeditionary forces are critical
    instruments of U.S. diplomacy and central components of joint military
    force packages designed to quickly contain a crisis or defeat an
    emerging threat.
        Reassuring our friends while denying our enemy sanctuary during
    hostilities, the Navy and Marine Corps Team offers unmatched amphibious
    forcible-entry capabilities and can provide a persistent combat
    capability from their mobile sea base, thus reducing the U.S.
    logistical ``footprint'' ashore. By exploiting our Nation's premier
    asymmetric advantage--command of the sea--the Navy and Marine Corps can
    loiter over the horizon and project, protect, and sustain integrated
    joint warfighting capabilities, provide additional options for the
    President, and ensure operational independence for combatant commanders
    across the full spectrum of warfare.
    Seabasing
        There are four Naval Capability Pillars that enable Seabasing to be
    the cornerstone of naval transformation. Seabasing is contingent on
    sufficient amphibious ships and MPF(F) vessels to form the Sea Base. It
    relies upon robust Sea Shield capabilities that neutralize current and
    future threats to the Sea Base and the forces that it supports. It
    exploits integrated, Navy and Marine Sea Strike capabilities. It
    depends upon FORCEnet capabilities to tie the various elements together
    and into the Joint Force. Future Sea Bases will provide a dynamic,
    mobile, networked platform from which naval and Special Operations
    Forces can operate at will in relative safety from land based
    observation and fires. The Sea Base will reduce dependence on
    vulnerable facilities ashore while reducing footprint.
        Expeditionary Maneuver Warfare (EMW) is the Marine Corps capstone
    concept that serves as a link between today's institutional
    capabilities and our family of Operating, Functional and Enabling
    concepts. Those concepts include Operational Maneuver From the Sea
    (OMFTS), Ship to Objective Maneuver (STOM), and Sustained Operations
    Ashore (SOA). OMFTS links naval and maneuver warfare, doctrine, and
    technological advances to rapidly identify and exploit enemy weaknesses
    across the section of conflict. STOM applies maneuver warfare concepts
    to the littoral battle space, envisioning seamless maneuver from over
    the horizon directly to the objectives deep inland. SOA envisions the
    MAGTF as a general purpose Operation Maneuver Element executing a
    series of precise, focused combat actions. OMFTS and STOM compel the
    enemy to defend the complete length of his coastline and array his
    forces in depth throughout the littoral.
    Distributed Operations (DO)
        DO is an additive capability to our EMW philosophy and body of
    concepts stemming from OMFTS. DO, at the strategic and operational
    level, enables Naval forces to establish a worldwide presence while
    simultaneously conducting combined and joint training with our allies
    in selected regions. This global posture allows naval forces to respond
    rapidly to emerging crises with powerful and sustainable combined arms
    teams. At the tactical level, the DO can take several forms, based upon
    the mission, enemy dispositions, and the nature of the terrain. DO is
    predicated on decentralized command and control. It requires
    situational awareness, autonomy, and increased freedom of action at
    lower tactical levels, enabling subordinate commanders to compress
    decision cycles, seize the initiative, and exploit fleeting
    opportunities. Improved situational awareness, including real time and
    high fidelity data from dispersed teams, improves the vertical
    transmission of information. Shared situational awareness, the product
    of extensive training as well as a common operating picture,
    accelerates the horizontal integration and mutually supporting actions
    of spatially dispersed units.
        Based on this richer, higher resolution intelligence picture, and
    guided by commander's intent, distributed forces could aggregate or
    remain distributed. They will be able to use simultaneous, overwhelming
    joint firepower against an increasingly confused and paralyzed
    adversary, allowing the main force access to the battle space. When
    pockets of adversaries are found, the distributed units could use
    swarming attacks to defeat them in detail. By attacking from multiple
    directions, distributed units will be seemingly everywhere. Using fire
    and maneuver with the benefits of a networked operational picture and
    combined arms, commanders will present adversary leaders with a rapidly
    deteriorating situation. MAGTFs with this additional capability will
    confront the enemy with more threats, seizing the initiative, and
    forcing our enemies into a more defensive mindset by limiting his
    options.
        Seabasing, EMW, and DO are the conceptual foundations of the Marine
    Corps of the 21st century. They lead directly to our required
    capabilities, modernization efforts, and programs and ensure the Marine
    Corps continued success in deterring and defeating our Nation's foes.
                        seabasing--a national capability
        The war against the Taliban and al Qaeda in Afghanistan provided a
    harsh dose of reality for those who assumed traditional threats and the
    availability of friendly, convenient land bases to project airpower and
    land forces. In the early phases of Operation Enduring Freedom (OEF),
    two forward-deployed Marine Expeditionary Units formed Task Force 58
    and projected the first major U.S. ``conventional'' combat units into
    Afghanistan--more than 350 miles from its sea base of amphibious
    shipping. Yet, their operations were far from traditional or
    conventional expectations. We believe these recent experiences such as
    the prohibition of the 4th Infantry Division using Turkey in the early
    stages of Operation Iraqi Freedom are compelling insights on how
    operations can be conducted in the future. As anti-access, military and
    political measures proliferate; even friendly nations may deny U.S.
    forces land basing and transit due to their own sovereign interests.
        Seabasing represents a complex capability, a system-of-systems able
    to move at will. Seabasing, enabled by joint integrated and operational
    concepts, is the employment of ships and vessels with organic strike
    fires and defensive shields of sensors and weapons, strike and
    transport aircraft, communications and logistics. We will use the sea
    as maneuver space to create uncertainty for adversaries and protect the
    joint force while receiving, staging and integrating scalable forces,
    at sea, that are capable of a broad range of missions. Its inherent
    freedom of movement, appropriate scalability, and sustainable
    persistent power provides full spectrum capabilities, from support of
    theater engagement strategies, to rapid response to natural or man made
    disasters, to military combat operations from raids, to swift defeat of
    enemies, to scale of major combat and decisive operations. The
    Seabasing concept is illustrated in Figure 1 below.

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                          Figure 1. Seabasing Concept

        Seabasing:
              (1) Provides combatant commanders with the positional
            advantage needed for the National Security and National
            Military Strategies. It provides the most efficient and
            effective means to influence or control littoral regions,
            facilitating rapid deployment and immediate employment, often
            deep inland. Seabasing provides the combatant commanders a
            capability that is optimized for use in the very areas of
            greatest concern and already deployed well forward even before
            unambiguous indications of crises.
              (2) Provides combatant commanders the means, in coordination
            with the brokers of other elements of national power, to
            concentrate capabilities at critical times and at decisive
            locations of our choosing with a degree of surprise.
              (3) Gives the combatant commanders the ability to position
            significant forces and capabilities within the secure
            environment provided by the protective shields of U.S. Navy and
            Air Forces in a mobile base that enhances mission security.
              (4) Reduces dependence on foreign sovereign ports, airfields,
            and host nation support. Recent operations in Afghanistan and
            Iraq highlight the difficulties of denied Key Attributes
            transit, and the vulnerability of Kuwait's sea and air ports to
            a variety of threats.
              (5) Provides a strategic hedge against sovereignty concerns
            that can either impede or deny altogether U.S. access to
            critical regions. The ability to conduct either engagement
            activities or military and other operations from secure bases
            in international waters can reassure allies concerned about
            their domestic reaction to U.S. basing on their sovereign
            territory.
                              seabasing operations
        Seabasing remains a primary means for the U.S during the global war
    on terror and for future challenges with often chaotic environments
    requiring rapid response to peacetime and wartime crises, and follow-on
    stability operations.
        The committee should note that the necessary ships, vessels,
    watercraft, and aircraft currently programmed in the FYDP, represent
    the key elements needed to begin implementing Seabasing. Fiscal
    constraints and priorities will determine how we can implement this
    transformational change for future challenges as we also continue what
    may be a long global war on terror.
        Today's forcible entry structure is limited to that resident within
    the 35 amphibious ships of the Battle Force. Today's Maritime Pre-
    positioning Squadrons have no capability to offload in open sea
    conditions. Tomorrow's Seabasing force will be an integrated capability
    linking forward-deployed and surge-able warships with equipment,
    sustainment and capabilities pre-positioned in Seabasing capable MPF(F)
    ships capable of selective offload in sea state 3-4, as part of a
    networked expeditionary strike force.
        Today and tomorrow, a most visible element of assurance to allies
    and deterrence to foes will be naval forward presence, including
    capabilities of Marine Expeditionary Units (Special Operations Capable)
    (MEU(SOC)) embarked, protected, and sustained by Expeditionary Strike
    Group (ESG) ships. These units provide the combatant commanders with
    forward-deployed units that can conduct a variety of quick reaction,
    sea-based, crises-response options against traditional challenges or
    against irregular foes. As Seabasing capable MPF(F) ships are delivered
    in the future, the amphibious warships Battle Force will serve as the
    advance force to initiate Joint Rapid or Forcible Entry Operations,
    building combat power more rapidly and robustly than today's fiscally
    constrained amphibious Battle Force and today's MPF, which can only
    disembark prepositioned equipment and stocks on friendly shores.
        The Marine Expeditionary Brigade (MEB) is the mid-sized Marine Air
    Ground Task Force that provides the next level of force from the
    forward deployed MEU and the Marine Expeditionary Force (MEF), capable
    of persistent major combat operations. MEBs provide supported combatant
    commanders with a scalable, war fighting capability for a wide variety
    of military operations. Today, it is capable of deployment and
    employment via amphibious shipping (normally 15-amphibious ships,
    including 5 large-deck amphibious assault ships).
        The future Seabasing effort promises more efficiency in generation
    of MEBs for operational employment as MEBs will be able to flow direct
    from home bases to the forward, on-scene, Seabasing ships, while
    leveraging the Sea Shield force protection attributes of the Seabasing
    capability. As a crisis builds 1-2 forward deployed MEUs serve as the
    ``leading edge'' of the MEB, conducting advanced force and limited
    objective, initial entry/response efforts, while the remainder of the
    strike power of the MEB is assembled on scene as part of the MPF(F)
    Seabasing echelon. This will enable MEB-sized Joint Rapid or Forcible
    Entry Operations in 10-14 days, instead of a month or we can deliver
    twice as much capability in the same time as required for a MEB today.
        The current force-sizing construct requires the capability to
    respond to 2 swiftly defeat the efforts (SDTE)--each of which could
    require 15 amphibious ships. One of these crises may become a
    Decisively defeat Campaign, bringing the most powerful force to bear,
    the Marine Expeditionary Force (MEF), for highly capable, lethal mobile
    and sustained operations which today would require 28-30 operational,
    available amphibious ships. Today's 35 Battle Force amphibious warships
    can surge the required 28-30 operationally available warships and also
    provide the peacetime rotation load for ESG/MEU(SOC) presence in up to
    3 regions.
        We have demonstrated capabilities to surge from MEU-sized forces to
    MEBs (which can be the MEF forward element) and then to the MEF using
    additional amphibious ships, adding MPF shipping from other theatres to
    offload mission required equipment at a secure port. This was most
    recently done in Operation Iraqi Freedom where the Marine Corps was
    able to prepare, offload, and assemble 2 MPF Squadrons worth of
    equipment from 11 ships for employment with marines of the MEF flown in
    by strategic airlift in less than 16-days. In the future, Seabasing
    enables us to conduct this operation without being subject to
    sovereignty challenges, through exploitation of the two planned MPF(F)
    squadrons in conjunction with forward deployed amphibious shipping,
    staging the forces at sea in 10-14 days.
    Seabasing Battle Force and Maritime Prepositioning Force Structure
        Currently the Department of the Navy has 35 Large Amphibious Ships,
    and 3 Squadrons of older, Maritime Prepositioning Force (MPF) Ships.
    Current MPF ships do not have the capability for Seabasing. In the case
    of the current MPF ships, they are built to commercial survivability
    standards, manned by civilian mariners, and are not capable of rapid,
    large scale off-load at sea (due to their dense-pack loading),
    especially in higher sea state conditions. Current MPF operations
    normally require a secure port and airfield from which arrival/assembly
    operations are conducted to ``marry'' equipment up with strategic
    airlifted troops.
        The 2001 Quadrennial Defense Review (QDR) envisioned an amphibious
    force structure of 36 warships: 12 large deck aviation ships (LHA/LHD),
    12 LPD-17s, and 12 LSD-41/49 class ships. These ships would enable
    either 3.0 MEU rotational forward presence, or in wartime provide a 2.5
    MEB (assault echelon) forcible entry capability (fiscally constrained
    from a requirement of 3.0 MEB). The 12-ship LPD-17 class was needed to
    provide the lift capacity for the 2.5 MEB constrained requirement. The
    current mix and inventory of 35 active Battle Force amphibious ships
    provides slightly more than a 2.0 MEB lift-forcible entry capability.
    Recent decisions have reduced the current LPD-17 program to nine ships,
    putting increased risk/pressure on the need for ensuring the right
    quantities and quality of warships and MPF ships for future challenges.
                        enabling seabasing capabilities
        Elements of Seabasing have been under development for some time.
    Expeditionary warships, MPF(F) ships, high speed surface connectors,
    vertical air lift connectors, sea-based fires, and ground-based fires
    are the major enablers to Seabasing as described below.
    Seabasing--the Warships
        LPD-17
        The U.S.S. San Antonio (LPD-17) Class of amphibious transport dock
    ships was designed and planned to replace 61 legacy amphibious assault
    ships: This fine class of ships is optimized for operational
    flexibility to meet Marine Air Ground Task Force requirements to
    project strike (fire and maneuver) forces from the sea deep into
    littoral land objectives. With its significantly enhanced
    survivability, habitability, and functionality, it represents a
    critical element of Seabasing with a spacious well deck for deployment
    of LCACs and Expeditionary Fighting Vehicles (EFV) and an enhanced
    flight deck and maintenance facility for employment of MV-22, medium
    assault tiltrotors and CH-53E/X heavy lift helicopters. Survivability
    upgrades protect against mines, missiles and surface attack makes it a
    highly capable platform for the forward deployed ESG/MEU and larger
    forcible entry operations. With the LHA(R) ship design emphasis on
    aviation transport and strike fires, the well decks of the LPD-17 and
    existing LSD-41/49 class have even more importance to the rapid surface
    movement of Expeditionary Fighting Vehicles deep inland and LCAC
    transport of heavy or bulky ground equipment and sustainment.
        The fiscal year 2006 budget includes $1.3 billion to fully fund the
    construction of the eighth ship of the class of fighting amphibs. The
    lead ship of the class the U.S.S. San Antonio is approximately 93
    percent complete with delivery scheduled for the summer of 2005. In
    addition to the lead ship, four follow-on ships are under construction.
    New Orleans (LPD-18) was christened on November 20, 2004; Mesa Verde
    (LPD-19) was christened January 25, 2005; construction continues on
    Green Bay (LPD-20) and New York (LPD-21). Advanced Procurement
    contracts for San Diego (LPD-22) and Anchorage (LPD-23) have been
    awarded for long-lead time material for these ships. The 8th LPD-17,
    Arlington (LPD-24), is programmed for funding in the fiscal year 2006
    budget. The ninth ship, Somerset (LPD-25) is planned for fiscal year
    2007. The LPD-17 class of warships is critical for the Marine Corps'
    amphibious lift requirement. LPD-17 ships are used for rapid, early or
    forcible entry lift in major combat operations and also provides the
    peacetime rotation basis for up to three ESG/MEU(SOC) regionally
    forward deployed.
        LHD-8
        The last of eight LHD class warships capitalizes on the proven
    design of the LHD 1 class, U.S.S. Makin Island (LHD 8) will deliver
    transformational capabilities when it enters the fleet in 2007.
    Combining design alterations from LHD 5 onward with new gas turbine
    propulsion, a revolutionary electric drive, and an enhanced combat
    systems suite, including Cooperative Engagement Capability (CEC), Makin
    Island is like no other expeditionary warship in the world. LHD 8
    serves as the basis for LHA(R) hull, mechanical, and electrical
    systems, reducing the technology risk normally found in a new class of
    ships.
        LHA(R)
        With $150 million Advanced Procurement funding provided by Congress
    in fiscal year 2005 and an additional $150 million requested in fiscal
    year 2006, the first of four LHA(R) ships is programmed in fiscal year
    2007. LHA(R), which will replace the aging LHA class ships, is a
    modified LHD 1 Class design (without well decks) with enhanced aviation
    capabilities. LHA(R) is designed to accommodate future Marine Corps
    aircraft, with emphasis on the MV-22, CH-53E/X and the Short Take Off,
    Vertical Landing (STOVL) JSF Joint Strike Fighter. Distributed
    Operations conducted from Sea Basing and expeditionary sites ashore,
    will leverage the increased strike, and support characteristics of
    these ships with ESGs capable of independent operations, or in
    conjunction with Carrier Strike groups (CSGs) for large scale
    operations when land bases are not available for contingencies.
        The LHA(R) will have nearly three times the fuel capacity of
    existing LHDs for sustained operations. It will be capable of
    operational and maintenance support for either 23 JSF or 28 MV-22
    aircraft, or a combination of fixed, rotary wing, and tiltrotor
    aircraft. MPF(F) capabilities provide the vehicle square and well deck
    spaces not available in the LHA(R) class as part of the future
    Seabasing force. The LHA(R) will support Sea Strike operations in
    addition to supporting fire and maneuver in support of the MAGTF.
    Seabasing--Maritime Prepositioning Force (Future) (MPF(F))
        MPF(F) will allow us to better exploit the sea to conduct
    reception, staging integration and projection of forces for joint
    operations, especially in an access denied environment. MPF (F) will
    provide four capabilities: (1) at-sea arrival and assembly (2) direct
    support of the assault echelon of the amphibious task force; (3) long-
    term, sea-based sustainment; and (4) at-sea reconstitution and
    redeployment.
        The MPF(F) will be a key enabler for Seabasing and future Joint
    Forcible Entry Operations. During the early phases of a joint campaign,
    these ships will provide floating bases to enable the rapid
    reinforcement of forward presence ESG/MEU forces with the rapid scaling
    up to MEB or MEF-sized forces and follow on elements of the joint
    force. The MPF(F) and expeditionary warships operating together at sea
    will provide landing platforms for MAGTFs, Special Operations Forces,
    and follow-on Army forces.
        MPF(F) is part of an integrated Seabasing concept. We will
    integrate these ships functionally with the forward deployed amphibious
    warships in the Battle Force to leverage their tremendous capability to
    reconstitute, re-supply, and rapidly reinforce assault waves launched
    from the forward deployed, more survivable assault ships. These two
    distinct, yet linked, components of the Sea Base will enable the joint
    force to ``surge'' Marines and follow on joint forces through the Sea
    Base for more rapid build up of joint capabilities, increasing combat
    tempo and responsiveness to combatant commanders' needs.
        The concept is for at least two squadrons of MPF(F) ships, a total
    of 14-20 ships. Navy and Army Joint High Speed Vessels will enable
    rapid movement within the sea base and ashore where conditions permit.
    The mix of Maritime Prepositioning Force (Future) ships is being
    determined, and will be capable of surface and air transport of Marine
    combat units, prepositioning critical equipment, and 20 days of
    supplies for Marine Expeditionary Brigades. Seabasing will provide
    increased protection and combat capability as well as rapid deployment
    and employment of forces compared to our current capabilities.
        In addition to $28 million of National Defense Sealift RDT&E funds
    in the fiscal year 2005 budget, the fiscal year 2006 budget request
    includes $66 million of RDT&E funds to support technology development
    such as selective offload in MPF(F). The first MPF(F) ship is planned
    for fiscal year 2009 with advanced procurement award scheduled in
    fiscal year 2008.
    Seabasing--Surface Connectors
        Joint High Speed Vessel (JHSV)
        The Joint High Speed Vessel will provide intra-theater,
    interoperable vessels capable of movements between dispersed
    operational platforms for inter-modal transfer of troops, combat
    equipment and sustainment, as well as high-speed dashes to and from
    shore penetration points and austere ports. Army and Navy intra-theater
    high-speed vessel programs were recently merged under a Naval Sea
    Systems Command program office in order to reduce cost yet leverage
    current commercial technologies, and ensure interoperability of vessels
    with the Joint Sea Base by acquisition of U.S. built vessels.
        The foreign leased high-speed vessels; Swift and WestPac Express
    enabled the III Marine Expeditionary Force to expand training and
    engagement in the western Pacific while decreasing transit time. They
    were also operationally used in support of tsunami relief operations in
    the Indian Ocean. The Swift also provides a research and development
    test bed and is able to serve in support of contingency response
    requirements.
        Contract awards for the first Army-funded JHSV is expected in
    fiscal year 2008 with delivery in 2010. The first Navy-funded JHSV is
    programmed for fiscal year 2009. With currently three JHSVs in Navy
    plans, the Department continues joint exercises, experiments, and
    warfighting assessments to refine its requirements.
    Landing Craft Air Cushion (LCAC) Service Life Extension Program (SLEP)
        LCACs were the first high-speed surface connector for expeditionary
    forces. Capable of high-speed dashes up to 50 nautical miles from
    shore, they carry heavy equipment, and can access a wider array of
    littoral beaches than previous displacement landing craft.
        The LCAC SLEP program provides improvements in the navigation,
    communication, and hulls for the aging fleet of LCACs, while also
    providing them a Sea State 3 heavy lift capability, which is required
    performance for both MPF(F) and amphibious ships operating in the
    Seabasing environment.
        LCACs will remain a critical component of surface lift for the
    Marine Corps. Upgrades provided by the LCAC SLEP will ensure its
    continued relevance, readiness of our expeditionary forces, and
    interoperable capabilities within and from the Joint Sea Base. The LCAC
    (SLEP) fleet will begin to reach the end of its service life in 2014.
    The follow-on, LCAC(X) program will carry significantly larger loads,
    payload weight, have extended ranges, and reduce the number of trips
    required for the force to and from the shore from Seabasing ships.
        The Department has requested $14 million in R&D funding for the
    LCAC(X) program in fiscal year 2006, and programmed to start
    procurement in fiscal year 2010. The Department has programmed $111
    million for the LCAC SLEP program for six LCACs in the fiscal year 2006
    budget.
        Expeditionary Fighting Vehicle (EFV)
        The EFV is the Marine Corps' highest ground combat acquisition
    priority, with low rate initial production scheduled to begin in fiscal
    year 2007. With Initial Operational Capability in fiscal year 2010, the
    EFV will replace our Assault Amphibious Vehicle (AAV)--7, which is
    undergoing a rebuild program to prevent gaps in capability. EFVs will
    carry the surface assault echelon's of forcible entry forces, at sea-
    speeds four times that of the AAV-7, as part of multi-dimensional
    attacks through littoral penetration points to join deep inland with
    forces vertically lifted by MV-22 and CH-53E/X aircraft. On reaching
    the shore from their over-the-horizon launch point, EFV will have the
    speed to maneuver with the M1A1 tanks and Light Armored Vehivles (LAVs)
    and the sustainment to continue the assault deep inland for link up
    with vertical assault forces, or independent maneuver. They will
    provide marines a modern armored nuclear/biological/chemical (NBC)-
    protected combat vehicle with a truly impressive 30 mm cannon to
    provide close support to dismounted troops and accurate fire on the
    move capability.
        The EFV gives marine forces a unique ability to use the seas,
    rivers, swamps and marshlands for operational and tactical maneuver, a
    capability recently demonstrated by the aging AAV7A-1 family in OIF
    when maneuver forces crossed Iraqi rivers when bridgeheads were choked
    or not existent.
    Seabasing--Vertical Lift Aircraft Connectors.
        The medium lift MV-22 program is the centerpiece of aviation lift
    connectors for the Seabasing force. The MV-22 is designed to replace
    the aging CH-46E and CH-53D helicopters. Optimized for speed,
    endurance, and survivability to rapidly deploy forces from bases deep
    at sea to objectives deep inland. The MV-22 will carry 24 combat loaded
    marines, can externally lift the Lightweight 155mm Howitzer, and will
    internally lift the Expeditionary Fire Support System (EFSS) 120 mm
    mortar, and the Internally Transportable Vehicle (ITV).
        The fiscal year 2006 budget request includes $1.3 billion for nine
    MV-22s, trainer modifications and retrofits; $206.4 million is also
    included for continued development, testing, and evaluation.
        The CH-53E/X Heavy Lift Replacement (HLR) program will replace our
    aging fleet of CH-53E Super Stallion helicopters for the Marine Corps'
    vertical heavy lift requirement. CH-53E helicopters have already begun
    retirements due to reaching service life margins, with large block
    retirements expected after fiscal year 2012.
        The CH-53X/HLR is a derivative design of the existing CH-53E,
    remaining within the same shipboard footprint, providing greater lift,
    reliability, survivability, maintainability, and cost of ownership
    improvements over the legacy CH-53E. It will have shipboard
    compatibility with all current and planned amphibious ships, as well as
    MPF(F), and be able to remain at sea as part of the Seabasing force for
    extended periods. The CH-53E and CH-53X/HLR will be critical to
    operations in anti-access, area-denial environments, enabling force
    application and focused logistics from far offshore to deep inland
    sites. The HLR will transport 27,000 pounds to distances of 110
    nautical miles with combat payloads to include the LAV or two-armored
    High Mobility Multi Wheeled Vehicles (HMMWV). To sustain the force, the
    HLR will be the critical logistics air connector for sea-based power
    projection operations.
        The fiscal year 2006 budget requests $272 million in RDT&E funds
    for the System Development and Demonstration phase of the CH-53X/HLR
    program.
    Seabasing--Fires
        The complementary capabilities of surface- and air-delivered fires
    continue to be highlighted in ongoing combat operations in Operation
    Enduring Freedom and Operation Iraqi Freedom. Precision and volume
    fires are critical to the lethality and survivability of Marine, Army,
    and Special Operations Forces. Capitalizing on lessons learned, and the
    imperative of modernization necessary for select legacy systems, the
    Corps is improving our short and long-range organic fires and our
    target acquisition sensor platforms in support of Expeditionary
    Maneuver Warfare, and especially for Distributed Operations forces.
        Vertical Unmanned Aerial Vehicles (VUAV)
        VUAV performance must achieve the speed, range, payload,
    survivability, and reliability, interoperability with command and
    control, as well as shipboard compatibility with Joint Rapid or
    Forcible Entry Operations as well as existing and future Seabasing
    ships. We have begun evaluating the Coast Guard's Eagle Eye UAV, which
    is a high-speed tiltrotor craft developed as part of its Deepwater
    Program. The VUAV is expected to provide a long-range sensor platform
    able to conduct both focused and wide ISR with time-critical targeting
    information for Seabased fires as well as maneuver fires deep inland.
        The Marine Corps requires a replacement of its almost 20-year-old
    Pioneer UAV system, which had flown over 6,950 hours in support of OIF.
    Tactical UAVs are clearly critical for marine and other forces. The
    fiscal year 2006 budget requests $9.2 million to evaluate the Eagle Eye
    program.
        STOVL-JSF and Strike Aircraft Upgrades
        The F-35 Joint Strike Fighter, Short Take Off Vertical Landing (JSF
    STOVL) aircraft will enhance our ability to conduct precision strikes
    and provide close support to our marines on the ground. JSF combines
    the basing flexibility of the AV-8B with the multi-role capabilities,
    speed, and maneuverability of the F/A-18 for both the air-to-ground and
    air-to-air requirements of the MAGTF. The aircraft has a very low radar
    cross-section and provide superior capabilities over our legacy
    aircraft in areas of survivability, lethality, and supportability. The
    STOVL version of JSF is being developed specifically for the marines
    and seven Allied partners. Use of the STOVL variant doubles the
    available Seabasing platforms for basing of strike aircraft, enabling
    dispersal of our critical strike aircraft across multiple platforms for
    survivability.
        The JSF program is due to undergo a critical design review in
    November of this year, and if approved for Low Rate Initial Production,
    IOC is planned to occur in 2012. As the Marine Corps chose to leap over
    the evolutionary improvements of the F-18E/F programs for its aging F-
    18A/C/D and AV-8B inventory, it is critical to the MAGTF's combined
    arms and Seabasing future to begin fielding the STOVL JSF within the
    FYDP. The fiscal year 2006 budget request contains $2.4 billion for
    continuation of System Development and Demonstration on the JSF.
        DD(X) Land Attack Destroyer
        Designed to operate as part of Expeditionary Strike Groups, the
    DD(X) will provide long range, time-critical, all-weather, precise, and
    high volume fires to the Seabasing force and follow on joint forces.
    Its improved stealth enhances its survivability. The DD(X)s 155
    millimeter Advanced Gun System (2 per ship) will provide increased rate
    of fire, range and lethality over currently available naval guns
    through its associated Long Range Land Attack Projectile (LRLAP). DD(X)
    will provide precision and high volume fires at ranges up to 100
    nautical miles in support of Seabasing inserted forces. In addition to
    the long-range cannon, DD(X) can employ Tomahawk Land Attack Missiles
    from the ship's 60 tubes of the Peripheral Vertical Launch Systems. The
    DD(X) will be able to conduct multiple round, simultaneous impact
    missions, when combined with its larger shell casing will yield
    significantly improved lethality for soft and hard targets. It will be
    integrated into the Joint command and control network, through the
    Naval Fire Control System at sea, and Advanced Field Artillery Tactical
    Data System (fielded with Marines and Army forces) ashore.
        Each ship will be designed to carry 600 long-range 155 mm munitions
    plus 70 long-range land attack projectiles to provide high volume
    support. Planned logistics systems to support the DD(X) in legacy and
    future Combat Logistic Force ships of the Seabasing Force will have
    unique packaging and handling mechanisms to enable rapid re-supply
    missions for the DD(X) to quickly reconstitute its magazines, allowing
    the ship to remain engaged in the fight. A range of 8 to 12 DD(X) ships
    would support forcible entry operations.
        The fiscal year 2006 budget request includes $1.1 billion in RDT&E
    for continued technology development and $716 million in SCN advance
    procurement funds for the first and second DD(X). The FYDP includes
    full funding for the first DD(X) in fiscal year 2007 and construction
    of one ship per year in each follow on year.
    Organic Ground Combat Fires
        The M777A1 Joint Lightweight Howitzer (LW-155) will be the primary
    indirect fire artillery weapon of the Marine Corps. A joint program, it
    leverages commonality of ammunition with the majority of the war
    Reserve stockpile, combined with an extensive family of precision and
    lethal munitions, capable of firing both close and deep fires in
    support of maneuver. Reductions in weight through use of advanced
    materials make it transportable from the Seabasing force by all medium
    and heavy lift aircraft.
        The Expeditionary Fire Support System (EFSS) will provide the
    vertical assault element of MAGTFs with immediately responsive, lethal,
    organic indirect fires at ranges beyond current infantry battalion
    mortars. The lighter weight, rapid fire, and small profile rifled
    mortar, will increase the ability of sea based forces to load more
    capabilities than the present truck-intensive artillery batteries. The
    Marine Corps is procuring ITV along with the EFSS to give it ground
    mobility. The EFSS and the ITV will be internally transportable by the
    CH-53E, MV-22, and CH-53X/HLR, and leverage their high speeds in
    support of deep or distributed operations forces.
        The Joint High Mobility Artillery Rocket System (HIMARS) will
    fulfill a critical gap in organic Marine Corps ground based fire
    support, providing 24-hour, all weather, precision and high volume
    missile fires. HIMARS is air transportable by C-130 aircraft, and will
    fit on JHSVs and LCACs from Seabasing ships. It provides a highly
    responsive, precision ground-based means to engage time critical,
    sensitive targets, complementing aviation fires. As part of the
    balanced suite of organic ground combat, naval surface, and air-
    delivered fires, HIMARS augments the lightweight artillery
    capabilities, providing the Division and MEF commanders the ability for
    both precision and mass fires at depth throughout the battlefield. One
    active and one Reserve Battalion of HIMARS is being procured, beginning
    in 2006.
        Complementary Low Altitude Weapon System (CLAWS)
        CLAWS is a surface-to-air weapon systems utilizing HMMWV-mounted
    AMRAAM missiles. It will possess the mobility and lethality required to
    keep pace with supported maneuver elements, and will fill the gap in
    naval air defenses during extended littoral operations. Initial
    fielding is expected in fiscal year 2009 with FOC expected in fiscal
    year 2015.
        Training Ranges--The Seabasing concept, will require realistic
    training opportunities to ensure that marines are fully prepared to
    operate in and from the maritime environment. Our littoral training
    bases, Camp Pendleton, California and Camp Lejeune, North Carolina are
    absolutely critical in preparing our forward deployed ESGs/MEUs and
    exercising the Seabasing capability. Our ability to conduct the
    fullrange of air-ground task force missions at these bases has been
    seriously eroded by a variety of encroachment issues over the years. It
    is imperative that we protect our current capabilities at both
    locations while doing our best to recapture some of their former
    capacities. We must also continue to invest in our major MAGTF training
    ranges at Twentynine Palms, California and Yuma, Arizona. These
    locations, though located some distance from the sea, permit us to more
    closely exercise the full capability of the air-ground task force in
    coordinated, live-fire exercises. Just as the Seabasing concept lends
    itself to employment throughout the world, our need to retain access to
    the valuable training ranges owned and operated by our sister services
    and our allies is of primary importance to the readiness of maritime
    forces. The unprecedented level of cross-service utilization of the
    portfolio of ranges optimizes the interoperability of joint and
    coalition forces.
                        the marine air ground task force
    The Individual Marine
        Today's marines, defending our way of life today on the
    battlefields of Iraq and Afghanistan, personify our ethos that--every
    marine is a rifleman. The success of the Corps is today, as it always
    has been, built upon Marines and their warrior ethos. We create
    warriors who are both expeditionary and interoperable in the joint,
    coalition, and interagency arenas as part of a Seabasing force or for
    expeditionary operations deep inland, capable of creating stability
    anywhere around the globe.
        From our advertising, recruiting, training, and education programs,
    we develop our marines' ability to think independently and act
    aggressively as a matter of routine. We create marines that thrive in
    the chaotic and unpredictable situations and environments that
    characterize the battlefields of the future. Our combat capability is
    built around riflemen, who in turn form scalable, combined arms teams.
        We will increase the speed, flexibility, and agility of our MAGTFs
    by first renewing emphasis on our greatest asset, the individual
    marine, through improved education and training in foreign languages,
    cultural awareness, tactical intelligence and urban operations. We are
    equipping them to operate in the alleys of the urbanized littoral,
    areas they already dominate in places so recently in the headlines like
    Fallujah, Ramadi, and the northern Babil Province. Our 21st century
    marine will ``out-learn, out-think, and out-fight'' any adversary and
    embody an aggressive moral spirit, a refined level of adaptability and
    mental agility, and the flexibility necessary to confidently and
    successfully operate on the future battlefield. Second, we are focused
    on implementing Distributed Operations where we will dominate terrain
    with small dispersed units when appropriate, and take hold of terrain
    by concentrating as the situation dictates.
        In keeping with our principle of equipping the marine for the
    fight, we have accelerated efforts to purchase the Modular Weapon
    System to replace our M16A2 rifles; to increase the density of Advanced
    Combat Optic Gun sights, Sniper Scopes and Thermal Weapon Sights that
    will enable our Marines to engage at extended ranges with precision,
    and to increase their operational tempo and agility, day or night. We
    are accelerating efforts for procurement of Common Laser Rangefinders
    to export targeting data to advanced GPS location devices, and hand
    them off to our Seabasing Fires enablers via the Target Hand-Off System
    for Distributed Operations capable squads and traditional fire support
    teams. We are making major improvements in small-unit, and MAGTF
    intelligence support equipment to synthesize and disseminate
    information from across the spectrum. At the same time we have made
    great strides through your support in providing individual and vehicle
    protective armor. One of our most significant investments is in radio
    systems to enable inter and intra squad communications, as well as
    over-the-horizon communications, Joint Tactical Radio Systems, and
    Satellite Communication on the Move capability.
        In the coming months, we will stand up a Center for Advanced
    Operational Culture Learning (CAOCL) which will ensure that Marines are
    equipped with the requisite regional, cultural, and language knowledge
    to allow them to operate successfully in the Joint expeditionary
    environment . . . in any region of the world . . . against the range of
    irregular, traditional, catastrophic, and disruptive threats.
        End Strength
        The Marine Corps greatly appreciates your recognition of our
    manpower needs after we had extensively reviewed and restructured some
    existing capabilities to meet urgent needs, and through use of our
    recent temporary manning strength increase to a force level of 178,000
    Active-Duty marines. Our first priority is to increase our infantry
    units' manning levels and mitigate the stress on these heavily
    committed organizations, which have seen upwards of a 1:1 rotation
    ratio in the past year due to the demands of global war on terrorism.
    We will also create dedicated Foreign Military Training Units (FMTUs),
    add to our recruiting force, and provide more support personnel for the
    operating forces in order to enhance our training and support to our
    marines and their families.
        USMC/U.S. Special Operations Command Initiatives
        Ongoing operations in support of the global war on terror highlight
    the interdependence in the battle space between Marine Corps operating
    forces and Special Operation Forces. The Marine Corps' pursuit of
    increased irregular warfare capabilities has resulted in formation of
    Foreign Military Training Units to assist USSOCOM. Examples of some of
    our recent successes include the Republic of Georgia Train and Equip
    Program; providing training capability to the Afghan National Army, and
    Military Assistance Training Teams to the Iraqi National Army. The
    commandant and commander of SOCOM are committed to exploring new ways
    to leverage each others capabilities as we continue to fight irregular
    wars, to include use of the Joint Seabasing concept for future
    deployment and employment options. Equipment compatibility is a crucial
    ingredient in this relationship and we continue to pursue the means to
    train, work, and operate more fluidly in the special operations
    environment.
        Marine Corps Force Structure Review Group (FSRG) Initiative
        Prior to enactment of the National Defense Authorization Act (NDAA)
    for Fiscal Year 2005, we commenced a comprehensive total force
    structure review to better meet the demands of the 21st century and
    long-term global war on terror. Subsequently, we began implementing
    force structure realignment initiatives intended to enhance low
    density/high demand capabilities, and to reduce stress for critical
    units as part of global war on terrorism. Since 1991 the Marine Corps
    has conducted multiple ``lean-down, reorganize'' initiatives to better
    prepare for tomorrow's fight. As before, the FSRG initiatives are end
    strength and structure neutral, requiring additional equipment,
    facilities, operations and maintenance resources to implement.
    Structure changes include the establishment of two additional infantry
    battalions, three light armored reconnaissance companies, three
    reconnaissance companies, two force reconnaissance platoons, and an
    additional Air-Naval Gunfire Liaison Company (ANGLICO) for the active
    component. Existing explosive ordnance disposal, intelligence, aviation
    support, civil affairs, and command and control assets will receive
    additional augmentation. The Reserve component's structure initiatives
    will increase the capability of Marine Forces Reserve to respond to the
    global war on terror and includes the establishment of an intelligence
    support battalion, a security/anti-terrorism battalion, and two
    additional light armored reconnaissance companies. Civil affairs and
    command and control units will receive additional augmentation and some
    Reserve units will be converted into Individual Mobilization Augmentee
    (IMA) Detachments--allowing more timely access to these Marine
    reservists to support contingency operations--in order to improve the
    effectiveness of their contributions.
        We continue to pursue sensible military to civilian conversions in
    order to increase the number of marines in the operating force. The
    temporary end strength increase, implementation of force structure
    initiatives, and military to civilian conversions are expected to help
    mitigate any potential negative effects this high tempo may have on
    individual marines and our force's readiness.
        The majority of new units created by these initiatives will achieve
    IOC in fiscal year 2006, with Full Operating Capability (FOC) by fiscal
    year 2008. MILCON and equipment procurement requirements will require
    funding in Fiscal Year 2005 to support IOC and FOC because military
    construction projects have an average lead time of 2 to 3 years, and
    many of the procurement items have lead times ranging from 18-24
    months.
        Our estimate of force structure initiatives' costs from fiscal
    years 2005-2011 totals approximately $1.4 billion, of which $408
    million is included in the fiscal year 2005 supplemental request. The
    fiscal year 2007 and out year costs required to complete and sustain
    the FSRG recommendations are being addressed for inclusion in our
    baseline budget.
              sustaining combat operations and resetting the force
    Sustaining the Current Level of Effort
        Your support has ensured our near-term readiness remains strong,
    even while current demand on the force is high. In the past two years,
    we have gone from a pre-global war on terrorism deployment rotation
    ratio of just over one-to-two (6 months deployed/14 months home) to
    our current ratio of just above one-to-one (7 months deployed/7
    months home), primarily in our infantry battalions, rotary-wing
    aviation squadrons, and other high demand units. This means that many
    Marine units in the operating forces are either deployed or are
    training to relieve deployed units. Most notable amongst these factors
    is the consistent, sustained deployment of approximately 30 percent of
    our ground assets and 25 percent of our aviation assets in support of
    the global war on terrorism. Those deployment rates, when considered in
    the context of our assumption that most of the ground equipment in
    theater eventually will be attrited or beyond economical repair,
    highlight the potential enormity of our equipment replacement
    requirements. Ground and aviation assets will either be replaced
    through normal, albeit accelerated, procurement methods or short-term
    measures will be taken to mitigate loss of capabilities until
    anticipated modern or transformational capabilities enter the force.
        The incremental operational costs of both OIF and OEF have been
    principally funded through supplemental appropriations based on Office
    of the Secretary of Defense guidance. In addition to the supplemental
    funding requests, the Marine Corps has reprogrammed $400 million,
    through either existing below threshold authority or by above threshold
    requests to Congress, for essential warfighting equipment in response
    to deployed Marines requests via our Urgent Universal Needs Statement
    (UUNS) process. The Marine Corps included some resetting the force
    requirements: $71 million for depot maintenance and $139 million in
    procurement of equipment and ammunition in the fiscal year 2004
    supplemental. That was an initial estimate of a total bill that is
    still being accumulated.
        In the spring of 2004, the Secretary of Defense requested that the
    Services assess the impact of higher operating tempo and environmental
    factors on the total inventory of equipment employed in Iraq and
    Afghanistan. The Marine Corps conducted a Demand on Equipment analysis
    on an initial list of 94 high cost/high use items of equipment,
    including both ground and aviation systems. That analysis estimeted
    $2.2 billion in replacement/repair costs, which were included in the
    fiscal year 2005 supplemental request. Additionally, the Marine Corps
    requested, through the fiscal year 2005 supplemental, funding to
    replace equipment taken from our prepositioning stocks (Maritime
    Prepositioning Squadron and Marine Corps Prepositioning Program--Norway
    stocks) ($246 million), and CONUS stocks ($400 million), and to fund
    urgent warfighting equipment needs in the field ($2.1 billion). In all
    instances, we assessed our ability to contract for and obligate fiscal
    year 2005 funding to expedite the delivery of this equipment. However,
    due to industrial base and other execution issues, a portion of our
    requirements must be deferred until fiscal year 2006 and subsequent
    fiscal years. At present, the Marine Corps is using the funding
    provided by the fiscal year 2005 Bridge Supplemental ($2.1 billion) to
    finance global war on terrorism operations and to procure urgently
    needed force protection equipment, including additional vehicle armor
    kits and aircraft survivability equipment.
        Equipment Cross-leveling
        A critical aspect of the Marine Corps reconstitution/reset the
    force planning effort is our ongoing effort to cross-level equipment
    across the total force, to include equipment required in Iraq and
    Afghanistan, pre-positioned stocks, and home station operating/training
    sets. In order to ensure seamless operational support to OIF and the
    most cost effective strategy for force rotations, the commandant
    directed that equipment necessary to prosecute OIF operations remain in
    theater for as long as practical. This policy has allowed the Marine
    Corps to focus our efforts on identifying, attaining, and delivering
    the best equipment possible to forces in theater. This policy also
    drastically reduces equipment rotation costs, thus husbanding critical
    financial resources for other uses.
        Although having the best equipment, in the right quantities, in
    support of deployed units is paramount, the policy of retaining
    equipment in theater has led to home station equipment shortfalls. In
    order to fill these shortfalls to a level that will enable satisfactory
    pre-deployment training, we have initiated actions to cross level
    equipment throughout the Marine Corps, including both active and
    Reserve components.
        Rapid Acquisition Processes
        The Urgent Universal Needs Statement (UUNS) process, which we
    initiated in 2002, is critical to ensuring our marines are as well
    equipped as possible. As a truly bottom up process, it provides a way
    for our warfighters in the Operating Forces to identify and forward new
    requirements for weapons and gear for quick review and approval
    (usually in less than 90 days). Through the leadership of the Secretary
    of the Navy, and supported by the Assistant Secretary of the Navy for
    Research, Development and Acquisition (ASN RDA), the Navy-Marine Corps
    team worked an expedited process known as ``Operation Respond'' for
    expedited review and acquisition of Marine and Navy requirements,
    leveraging the Department's R&D and laboratory efforts to employ
    cutting edge technology where appropriate. We are also participating in
    the Deputy Secretary of Defense-led Joint Rapid Acquisition process,
    which recently approved acquisition of 122 Cougar EOD vehicles for
    deployed Marine Corps and Army EOD teams. Our UUNS process has enabled
    us to aggressively pursue the addition of armor to all of our HMMWV and
    MTVR trucks used outside of garrisons within the USCENTCOM Area of
    Responsibility, and to quickly provide adequate body armor, improved
    rifle optics, counter Improvised Explosive Device equipment, night
    vision devices, Blue Force Tracker equipment, personal role radios
    (squad level communication devices), unique ammunition items, and
    numerous other warfighting and force protection critical items.
    Throughout all these processes, the Services have cooperated closely to
    ensure we leverage the best ideas and efforts in order to equip our
    warriors on the ground and in the air.
        Demand on Equipment
        The global war on terror usage rates in combat theaters are up to
    eight times higher than those in other locations. This increases the
    cost of operations and maintenance beyond what is typically budgeted.
    During each month of OIF, the Marine Corps incurred equipment
    maintenance and sustainment related costs of close to $80 million a
    month beyond normal budgeted levels that had to migrate from other
    sources. Assuming a similar operational tempo, and making adjustments
    for the current equipment density that is deployed in theater, the
    Marine Corps can expect in excess of $50 million per month of ground
    equipment maintenance requirements over baseline program, non-combat
    maintenance needs. In addition to higher usage rates, equipment is
    being used under extreme conditions, increasing maintenance
    requirements. Further, the practice of adding armor to unarmored
    vehicles creates significant stress on vehicle frames and power trains,
    and although lives have been saved and injuries prevented, it comes
    with detrimental costs to the materiel. To date, more than 1,800
    principal end items valued at $94.3 million have been destroyed. An
    additional 2,300 damaged end items will require depot maintenance. The
    stress on equipment continues.
        Our legacy aircraft are performing their assigned missions and
    holding up well under highly increased usage rates. The venerable CH-46
    troop transport helicopter has been flown in support of OIF at 230
    percent of its peacetime usage rate. While utilization rates have
    increased, the overall trends for deployed aircraft readiness have
    remained fairly constant, averaging 72 percent. In order to improve our
    readiness rate in theater, we are creating a limited aircraft depot
    maintenance capability. As a result of supporting combat operations,
    our non-deployed units are experiencing lower readiness, currently at
    69 percent and trending down, while the utilization has remained
    constant.
        Hellfire missiles continue to be expended in support of current
    global war on terrorism operations. The fiscal year 2005 supplemental
    requested an additional $43 million to reconstitute our Hellfire
    inventories. This request is more urgent due to termination of the
    previously planned Hellfire replacement, the Joint Common Missile
    program. In addition to Hellfire needs, engineering teams have tested
    1036 LAU-7 launchers for our F/A-18s and found 12.5 percent cracked (as
    of December 19, 2004), and 53.2 percent worn beyond limits. The current
    failure rate would result in non-mission capable F/A-18 aircraft in
    2006. Support for the Marine Corps' fiscal year 2005 supplemental
    funding request of $11 million for LAU-7s will provide long lead items,
    ensure deliveries in 2006 to maintain F/A-18 aircraft readiness.
        Marine Aviation Command and Control Systems, specifically our
    legacy TPS-63 and TPS-59 (version 3) radar systems, have experienced
    heavy utilization and resultant degraded readiness due to the global
    war on terrorism. There are no open production lines. Acceleration of
    the G/ATOR and HELRASR modern replacement programs is a part of our
    mid-term reset requirements.
        Prepositioning Programs Reset Actions, Requirements, and Funding
        OIF provided an opportunity to employ Maritime Prepositioning as it
    was envisioned. The offloading of 11 ships in 16 days through one port
    was the second largest MPF operation in history, providing most of the
    equipment used by marines in OIF I. The equipment readiness on the
    first squadron was 98.5 percent, while the second squadron was 99.1
    percent. After OIF I, and concurrent with the reorganization to
    ``mirror image'' our squadrons, we began reconstituting downloaded
    ships even as we continued to support ongoing operations. Equipment and
    supplies not used to reconstitute MPSs in Kuwait and not required by
    engaged forces were brought to Blount Island Command (BIC) and put in
    general support of MPF Maintenance Cycle 8 (MMC-8), which commenced
    with the reconstitution of MPSRON-1 beginning in April 2004.
        MPSRON-1 completed reconstitution and its maintenance cycle in
    March 2005 and is ready to support the operational requirements of the
    regional combatant commanders. The squadron's major end item
    maintenance readiness is 99.6 percent. In March-April 2004, two ships
    from MPSRON-2 and maritime prepositioning equipment and supplies from
    Blount Island Command were used to support marines still conducting
    operations in Iraq. All of MPSRON-2's maritime prepositioning equipment
    and supplies have been downloaded. Four of its ships are in the Common-
    User Sealift Pool (CUSP), and one is conducting Extended Maritime
    Interdiction Operations (EMIO) in direct support of Commander, U.S.
    Pacific Command. Ships from MPSRON-2 will rotate through its
    maintenance cycle from June 2005-April 2006.
        MPSRON-3 was reconstituted in Kuwait from September 2003-February
    2004 and will rotate through its maintenance cycle from March 2006-
    April 2007. The squadron's current major end item maintenance readiness
    is 98.8 percent .
        Marine Corps Prepositioning Program-Norway (MCPP-N)
        The Marine Corps is in the process of transforming its Norway Air-
    Landed Marine Expeditionary Brigade (NALMEB) prepositioning program
    into the MCPP-N. The prepositioning objective for MCPP-N is projected
    to be roughly equivalent to the NALMEB prepositioning objective, while
    its mission is transforming from a Cold War paradigm to an emphasis on
    forward deploying war reserve material pre-positioned stocks in general
    support of all regional combatant commanders.
        After OIF I, MCPP-N transferred major end items to the MPF program
    in support of the back load of prepositioning ships during MMC-8. In
    support of OIF II, the Marine Corps deployed approximately 5 percent of
    MCPP-N's major end items. On 1 March 2005, the Marine Corps
    redistributed 25.6 percent of MCPP-N's readiness-reportable major end
    items to units preparing to deploy in support of the global war on
    terrorism as part of our equipment cross-leveling plan. The program's
    current major end item maintenance readiness is 99.8 percent, and it is
    currently at 80.1 percent of its overall major end item's
    prepositioning objective. Its on-hand readiness for reportable end
    items will decrease to 38.2 percent when ongoing redistributions are
    complete.
        The Marine Corps is planning the reconstitution of MPSRON-2 and
    MCPP-N. The only capability that will prove difficult to reconstitute
    in the short term is ground equipment. The foundation of our
    reconstitution efforts is the additional Procurement Marine Corps (PMC)
    funding from the fiscal year 2005 supplemental. Our fiscal year 2005
    supplemental request contained PMC funding to procure the majority of
    those MPSRON-2 and MCPP-N major end item shortfalls that are executable
    in fiscal year 2005. When approved, and upon completion of fielding,
    the projected attainment for major end items will be 75 percent for
    MPSRON-2 and 87.5 percent for MCPP-N. The Marine Corps currently
    projects we will require additional PMC and O&MMC dollars to complete
    the reconstitution of MPSRON-2 and MCPP-N in fiscal year 2006 and
    future years.
    Reset the force
        Fighting the war, and resetting the force for the future, is the
    commandant's focus. While it depends on the individual item of
    equipment selected, in general, our ground equipment is experiencing
    roughly eight times the use normally experienced during peacetime
    operations. The decision to replace, rather than repair, major
    equipment items is, in most cases, cost-effective due to transportation
    costs to and from the central command's area of responsibility,
    accelerated aging due to high operational tempo, environmental
    degradation, and the need to keep up-armored vehicles in theater to
    support future rotations. Completely resetting the force will require
    additional investment over several years to accomplish. The cost today
    to reset the ground and aviation global war on terrorism force is
    estimated to be $4.0 billion and $1.3 billion respectively.
                                   conclusion
        Today, we are at war the likes of which we have never fought
    before. It is literally for our future, for our way of life. Our enemy
    is ruthless and knows no rules, no laws, and no bounds. He fights to
    kill Americans and those Iraqis who have stepped forward and are
    standing firm to prevent another murderous regime--this one based on
    extremism in its most brutal form--from replacing Hussein and his
    henchmen. Your marines standing shoulder-to-shoulder with other young
    Americans of our military services, and the Iraqi security forces, are
    performing extremely well due directly to the support they have
    received from Congress. As we sit here today in this great hall
    protected by these young Americans, they are fighting an enemy that
    shows no quarter, but the ideals of American decency and honor, their
    extraordinary courage, dedication, and commitment armor them in a way
    that nothing else can. Marines and their families realize the danger to
    the Nation, their vital role, and the magnitude of their
    responsibilities. Many have been wounded or killed in action over the
    past year carrying out these responsibilities. In the national debate
    over the root causes of war some of us may doubt the wisdom of our
    actions in this troubled land, but they do not as many of you who have
    traveled there have discovered. We owe these marines and our sailors,
    soldiers, and airmen an irredeemable debt.
        Marines continue to demonstrate that we are an expeditionary force
    in readiness--Most Ready When the Nation is Least Ready. Our number one
    priority is fighting the war and resetting the force for the future.
    Your sustained commitment to improving our Nation's Armed Forces to
    meet the challenges of today, as well as those of the future, is vital
    to the security of our Nation. We recognize Seabasing as being more
    than tactical level operations, but rather a National Capability that
    regional combatant commanders can immediately apply to emerging threats
    transcending all levels of warfare. No longer will we need to rely on
    critical airfields and seaports in the initial phases of conflict.
        On behalf of all marines, we thank the committee for your continued
    support that has made us more effective in the fight, saved lives, and
    will allow us to protect the Nation in an uncertain future.

        Senator Talent. I am here for the duration and I know that
    often committee members come with a question or two in mind. So
    I am going to go right to Senator Kennedy and then to the other
    members.

                 STATEMENT OF SENATOR EDWARD M. KENNEDY

        Senator Kennedy. Thank you very much, Mr. Chairman. I would
    like to put my full statement in the record and join with the
    others.
        [The prepared statement of Senator Kennedy follows:]
                Prepared Statement by Senator Edward M. Kennedy
        Thank you, Mr. Chairman, for calling this hearing today. I want to
    join you in welcoming these witnesses to the subcommittee this
    afternoon. We meet to discuss Marine Corps development and procurement
    priorities and the concept of Seabasing.
        First, I want to express our deep appreciation for the service and
    sacrifices that the men and women of our Armed Forces are making in war
    in Iraq today. There may have been spirited debate about the
    circumstances leading up to the war, but no one should doubt our
    Nation's solidarity behind our armed forces once they are committed to
    battle.
        However, we must not let outstanding performance by the Navy and
    Marine Corps distract our attention from some very real problems that
    face the sea services. This subcommittee has been working diligently
    with the Department of the Navy to address some of these very important
    problems, including:

             improving fire support capability, including organic
            Marine Corps fire support and Navy shore fire support; and
             augmenting our strategic lift capability.

        The focus of our hearing will be on the vision for Marine Corps'
    operational concepts for the future and how the budget before Congress
    supports that vision with development and procurement programs. I
    continue to believe that the fundamental problem that we must deal with
    in this subcommittee is achieving the proper level of modernization to
    support tomorrow's readiness.
        Without sufficient modernization aimed at the proper objectives, we
    could be faced with a 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 to support the operations in Afghanistan and in Iraq.
        However, over the long-term, we cannot count on making up for
    inadequate investment by asking our forces to do more with less.
        Everyone can agree that we will continue to need strong Marine
    Corps forces to protect our interests in many areas overseas. Within
    that context, there are a number of investment issues we need to
    consider today.
        Again, Mr. Chairman, thank you for holding this hearing today.

        Thank you. I thank those that are under you, the men and
    women that are serving so nobly and gallantly in dangerous
    circumstances all over the world. We very much appreciate their
    service to our country.
        I would like to focus initially, General Magnus, on our up-
    armoring of our High Mobility Multi Wheeled Vehicles (HMMWVs)
    and where we are on this with regards to the marines. This has
    been an issue which we have been interested in this committee
    for some period of time. I have here--we have all got short
    periods of time--since September 2003 to April 2005, nine
    different estimates about what was going to be necessary in
    terms of meeting our military obligations in both Iraq and
    Afghanistan, and the marines have been included in most of
    these estimates. They have been pointed out and I am not going
    to take the time to do it.
        Then the variance in terms of productions and how that has
    altered and varied and changed over the period of the last
    years. We have probably 35 young men that have lost their lives
    from Massachusetts. The best estimate is probably a third of
    them have died either because of lack of the up-armoring of the
    HMMWVs, some the electronic triggering of the devices. I have
    visited with all of the parents of all of the ones that have
    been killed or their family members in Massachusetts, and this
    is a continuing and ongoing issue and battle.
        I would be interested in what your status is at the present
    time. We have the supplemental. Actually, even while we are
    here trying to negotiate some increase--we have an increase in
    this in the House over what was in the Senate by about $250
    million. I think that is over what the administration actually
    asked for, and Senator Bayh has been enormously interested in
    this as well.
        Could we--I have a limited period of time. I would like to
    know sort of where you are on this, what your own kind of take
    is when all your troops are going to feel adequately protected.
    We have the up-armoring and then we have the support in terms
    of the trucks, and then maybe some information maybe turning to
    the electronic devices and whether we have a shortage or not.
    We have had testimony before the full committee that there is a
    shortage in terms of that, and I know there is important sort
    of research both within the military to try and sort of upgrade
    technology in that area.
        What can you tell us about this?
        General Magnus. Senator Kennedy, thank you very much for
    the opportunity, Mr. Chairman, the rest of the committee, an
    on-point question as to where we are in conducting this war
    right now. As the Senator indicated, there were a variety of
    estimates that came from the Department starting in late 2003.
    In late 2003, the First Marine Expeditionary Force--and General
    Mattis was part of that as a division commander--was literally
    still on the way coming home and there was not a requirement at
    that time for any Marine forces to support what has become OIF
    II and the follow-on stability and security operations.
        Within a matter of 3 months, we went from no battalions to
    three battalions to six battalions to nine battalions, 31,000
    marines, and now we are down to about 23,000 marines in what is
    essentially our fourth rotation into Iraq. We have a total--
    have gone through three different stages evolving to this
    threat after the end of the major combat operations in OIF.
    Responding to the needs of our commanders through urgent needs
    statements, we provided what is now a total of over 3,100
    armoring kits, starting out with 3/16ths armor, which is what
    we could get them out of rolled hardened armor immediately,
    bolted onto the vehicles, rapidly replaced by 3/8ths inch armor
    as that armor and those design configurations worked with the
    operational commanders over there. I would like to get this as
    brief as possible so that General Mattis can lend some comments
    because he fought with those marines and with that kit.
        In addition to what is now a total of 3,100 HMMWV kits with
    the two varying levels of armor that I indicated, we are also
    procuring nearly 500 of the M-1114 and M-1116 up-armored
    HMMWVs. The United States Army in the Multinational Force Iraq
    has already kind of forward-financed that for us by giving us
    100 of their vehicles in Iraq because this is a joint fight,
    and we will have a total of 3,600 of the HMMWV A-2 variant with
    the bolt-on armor as well as the up-armored HMMWVs.
        In addition to that, we have nearly a thousand armor kits
    that are going on our medium tactical vehicle replacement
    (MTVR), our logistics vehicles. Deliveries for those kits are
    continuing as we speak. The armor for the A-2 HMMWVs will go
    through this spring in May. The M-1114 up-armored HMMWVs goes
    through this fall, and we will continue the MTVR armor kits
    through this December.
        In addition to that, the Secretary of the Navy has been
    working this as a high priority over the last nearly year and a
    half in what he called Operation Respond, working with
    countermeasures equipment for aircraft and for ground systems,
    including electronic countermeasures equipment as well as the
    armor that we talked about, a variety of issues.
        The Deputy Secretary of Defense has initiated a Joint Rapid
    Acquisition Council which, along with the other Services,
    principally the Army and the defense laboratories, has begun
    fielding new technologies and accelerating industry. A recent
    example of that, Senator, is that approval for 122 Cougar
    explosive ordnance disposal (EOD) vehicles, which are going to
    be designed and built in South Carolina, 65 of which will go to
    the United States Marine Corps, the balance will go to the----
        Senator Kennedy. General, my time is already up, but I
    would like to--and this is a very complete answer to a
    question. Maybe I can write, get information from you.
        General Magnus. Yes, sir.
        Senator Kennedy. Just quickly, in terms of what the unmet
    needs today and what funding is in the pipeline, when do you
    think you will get what is the necessary at least request that
    the Marines have made, either in Afghanistan or Iraq or
    wherever? When will you get the last of your unmet needs, and
    is there sufficient funding now in the pipeline for that?
        General Magnus. We believe between the fiscal year 2004 and
    fiscal year 2005 supplementals--and I must caveat it and say
    that this is an evolving war. This is a very thinking enemy
    that literally puts no cost on their side. So our needs for
    armor, our needs for other countermeasures and offensive
    equipment are evolving.
        But we believe that, based upon what we know from the
    operational commanders now, this calendar year we will meet the
    requirements as we know them now, sir.
        Senator Kennedy. This calendar year?
        General Magnus. Yes, sir.
        Senator Kennedy. I see, General, my time is--I might ask
    you, you can give a more complete statement for the record. If
    I could just ask--I know that the time is up--on the V-22----
        Senator Talent. Take your time, Senator. It is important to
    the hearing.
        Senator Kennedy. We have had a fire in the V-22 engine.
    What can you tell us about where we are in terms of that
    hydraulic fire testing impacting the V-22? I would be just
    interested if you could comment on that.
        Then I see where the Fighting Vehicle, Expeditionary, has
    been delayed. It started in 1995. It is being delayed a couple
    of more years. When is that going to be resolved? You can do
    both of those.
        General Magnus. Two quick bullets for you, Senator. The
    operational assessment testing is ongoing with the V-22. We did
    have an incident with a fire which was quickly extinguished and
    all of the fire detection and suppression systems worked as
    advertised. I will defer further comment on that to Secretary
    Young. But we believe the assessment is going very well and,
    yes, as in most developmental testing, we continue to uncover
    small areas where there are corrections. But the major issues
    with this aircraft are well over.
        Of course, we will await the decision of Secretary Young
    and the Department of Defense on the future of this aircraft,
    but we are very positive and it is doing well.
        Senator Kennedy. Just, Secretary, maybe you would make a
    comment on that; and also about the reconstruction of the
    Expeditionary Fighting Vehicle, which started in 1995, is now
    delayed a couple of more years. If you could just comment on
    that.
        I thank the chair and my colleagues for the courtesy of the
    extended time.
        Mr. Young. I concur with General Magnus. OPEVAL is going
    very well on V-22 and the independent Commander of Operational
    Test and Evaluation force approved commencement of that testing
    and reviewed all the test procedures. Testing continues out to
    the June 2005 time frame. I am very optimistic that those
    results will be very good. We have resolved issues.
        As you have heard, there was a leak in a hydraulic line. We
    have gone back and inspected all of those lines and resolved a
    fix for the problem. The information concerning the program is
    consistent with what you have watched in recent times, with
    other programs, we are very open. We tell people when we have
    problems. We fix those problems, and appreciate your patience
    as we resolve these problems.
        On EFV, we encountered some issues with the hull
    electronics unit's ability to control the vehicle and then in
    reliability of the vehicle in testing. We were probably
    slipping as much as 6 months. The Program Budget Decision
    essentially slipped the program a year. It certainly gives us
    some more time. It takes risk out of the program and we believe
    it is acceptable for the program. However, it extends the
    program and that will add some cost, but we definitely had some
    issues to resolve with that hull electronics unit and to
    improve the reliability of what we want to hand the marines.
        Senator Kennedy. Thank you, Mr. Chairman. I will have maybe
    some follow-on questions in those areas, Mr. Chairman.
        Senator Talent. I have one, Senator.
        The Senator raised a couple of issues I was going to raise.
    What is the impact on the operational force of the 1-year slip
    in the EFV in your view? Obviously, you do not think it is that
    great because you were willing to let it slip.
        General Magnus. Well, you see, all the initial operating
    capability dates slipped because the procurement ramp and rate
    is decreased through the psychological operations (PSYOP)
    dissemination battalion (PDB). So the force sees those
    vehicles--I think initial operational capability (IOC) is now
    in fiscal year 2010. It slipped out. Assault amphibious
    vehicles (AAV), which I noted in my testimony are 35 years old,
    we will have to get some more miles out of those.
        Senator Talent. I wanted to ask, General, following up on
    the armoring of the HMMWVs. You are planning for a new truck.
    Do you think that the up-armor is not working with the HMMWVs?
    What is the future of armored wheeled vehicles for the Marine
    Corps?
        General Mattis. Mr. Chairman, if I could take a shot at
    that. I think we have gone just about as far as we can go with
    the 1970s technology of the Humvee and adding armor to it.
    There are aspects to the design of the vehicle that limit how
    much armor you can put on and still have a useful load in the
    vehicle. We have gone, we have engaged with industry. We have a
    lot of discussions going on. Georgia Tech has some very
    interesting work going on as far as what we can do with the
    shape of the vehicle and the internal configuration that would
    build in survivability from the ground up, rather than kind of
    adding on the armor.
        What we eventually find is that as we all try to checkmate
    the enemy's IED initiatives, that armor is only part of the
    solution. There is training solutions, there is jamming
    solutions. As far as the armor goes, we probably have to shift
    to a new vehicle. We are heavily engaged in this right now. I
    cannot give you any design right now that we have settled on
    because we have had some setbacks, as we always do when you try
    to break in new technology, this sort of thing. We have a lot
    of bright people working on it, sir.
        Senator Talent. I am going to get more into the IEDs later,
    but I am very much in favor of and very supportive of up-
    armoring. We obviously have to do it. But there is a negative
    side to it as well in terms of cost of maintenance and fuel
    costs and all the rest of it. I am pleased you are looking at a
    whole universe of options for force protection and not just
    armor, which is what we have to do in the short term.
        But I guess it is too early to talk about costs or
    anything, which is the thing that came to my mind when I read
    you were thinking about doing that.
        General Mattis. It is still too early, sir. As fast as we
    figure it out, we will be coming knocking on your door, I am
    sure.
        Senator Talent. Okay. I have no doubt of that.
        General Magnus. Mr. Chairman, if I could just quickly add
    to it. Admiral Jay Cohen, who is the Chief of Naval Research,
    working under Secretary Young, has been working in earnest with
    industry on clean sheet of paper designs, working with the
    folks that design crash and impact-resistant vehicles for
    things like NASCAR. Again, we are starting with a clean sheet
    of paper, so, knowing that we have to operate these vehicles
    with human and other loads, knowing that there is more to the
    mission than just being inside of an armored box, and knowing
    that our environmental conditions may be upwards of 140
    degrees. There is a lot of work going on in earnest with
    industry and with the defense laboratories.
        Senator Talent. Do you want to follow on?
        Senator Kennedy. Just on this, and I give my assurance to
    my colleagues it will be the last one.
        Just on the jammers, what percent are you on for jammers,
    sufficient jammers? This is an issue that there have been at
    least some reports that we are deficient in terms of percent of
    jammers that we have, Marines, currently.
        General Mattis. Senator Kennedy, especially in the
    electronics spectrum, it is a constantly evolving threat. We do
    something, they do something. We have something waiting for
    them, they try it, it does not work, so they adapt again. We
    jam the radio frequency, so they go up hardwired. There is a
    lot of ways we address this.
        Right now--and because it is an open hearing, sir, I would
    like to meet with some of your staff privately, but we have an
    improved counter-IED set of gear that is being fielded right
    now. Even as we are fielding it, we are recognizing we have to
    upgrade it, and that upgrade you have funded through the
    supplemental. So it is a constant mate and checkmate and back
    and forth.
        Again, what we have to look at is the power of the enemy
    jammers. I do not want to go into that in detail here, but you
    can understand that the jammer has to overrule something and so
    you can see the challenge that we face, and how many vehicles
    have to have it. Where at one time maybe one jammer for every
    ten vehicles, maybe one for every three. You can see where we
    are going with this.
        But I can give you a lot more complete answer privately,
    sir.
        Senator Kennedy. Thank you, Mr. Chairman.
        Mr. Young. Could I add a comment to that? Going back a year
    to the Operation Respond process, we identified, based on
    Secretary England's initiative, $16.5 million in procurement
    for the Marine Corps. We bought over 1,000 jamming systems,
    some on the low end of the cost scale and also some of the
    channel systems. We bought them anticipating the need and
    anticipating they would be part of the solution set, but, as
    the General said, not the complete solution set.
        Over a year ago, we started to put jammers in the pipeline,
    because some of them have 12- and 18-month delivery cycles.
        Senator Talent. Senator Lieberman has been very patient.
        Senator Lieberman. Well, you know, that Senator Kennedy; it
    is the long count. No, those were good questions and I
    appreciate the answers.
        I want to focus on the heavy lift and just to ask you,
    Admiral Sestak, I presume that heavy lift capacity is essential
    to the seabasing concept that you have described.
        Admiral Sestak. Yes, it is. I assume you are referring to
    vertical heavy lift; yes, sir. The 53X without a question is
    critical both for coming from the future expeditionary strike
    group and from the MPF/F of the future. In addition, if
    seabasing is to be of value to this Nation it has to be joint.
    We have actually moved a million dollars into an Office of the
    Secretary of Defense (OSD) project run by the Army to look at
    their future heavy lift helicopter in order for them to execute
    their strategic maneuver from a distance, to make sure that
    that vessel is compatible with the seabase. Much like we use
    them to go off of our carriers off Afghanistan or potentially
    into Haiti, or the Air Force with Doolittle, that is important
    we make this joint.
        Senator Lieberman. Right. I appreciate that answer. I
    appreciate the joint inquiry proceeding. At a meeting of the
    Airland Subcommittee last week and then at the full committee
    this morning in the hearing on Secretary England's nomination
    to become deputy, there is really a growing, deepening concern
    on this committee about acquisition and the process by which it
    occurs, the increase in the price of individual items, which
    makes it harder for us to buy as many as both a lot of you and
    certainly a lot of us think are necessary. So to the extent
    that we can economize by cooperating across Service lines, that
    is good news.
        General Magnus or General Mattis, I wonder whether you
    would comment a bit on what has been described as the validated
    requirement for the CH-53X and outline what needs--what
    critical technologies need to be mature to successfully
    implement the program?
        General Magnus. Thank you, Senator Lieberman and fellow
    members of the subcommittee. I appreciate the opportunity again
    to talk about something critically important, as Admiral Sestak
    said, to seabasing.
        To put it in simple Marine terms, what we want to do is we
    want to modernize our heavy lift fleet with a replacement for
    the CH-53 Echo that can do what we are demanding of the CH-53
    Echo today that it cannot do, that is to go deeper, to carry
    heavier loads, and to go into a high hot environment. We have
    already been there and in fact our critical aircraft that went
    into Afghanistan with General Mattis in Task Force 58, the KC-
    130 to be able to do air and ground refueling and move combat
    loads, the CH-53 Echo to be able to do the vertical movement of
    personnel and combat equipment, and of course either our strike
    aircraft coming off of the Navy's carriers or eventually as we
    moved in our attack helicopters to support the troops ashore.
        We would like to be able to replace this aircraft and
    basically we need to replace the 164 aircraft we have now with
    a new fleet of new production CH-53 design aircraft with
    elastomeric rotor heads, modern high-reliability,
    maintainability, and higher powered engines, with the kind of
    electrical and hydraulic systems and displays in the cockpit,
    which are available in technology today, great American
    technology from the power systems right on through the displays
    and the aircraft itself, to be able to lift loads on the order
    of 27,000 pounds to 110 miles.
        These are not future requirements. These are today
    requirements. But in many cases we cannot meet them. We have to
    be able to displace refueling ashore. So this is not some
    futuristic view of what we need to do from the seabase. This is
    what we need to do today, and it will take us about 10 years to
    develop this aircraft and get it proven.
        We are getting great support from Secretary Young, who is
    funding efforts to proceed toward what is expected to be a
    milestone decision this year to move out with that development.
        Senator Lieberman. Secretary?
        Mr. Young. I think that was a great question, and let me
    illustrate a couple of points. We believe the engine and the
    avionics are particular areas that need work, but have a good
    maturity. The main gearbox, rotor blade, and rotor damper are
    areas where we are at a technology readiness level of 4. That
    is not as mature as you would like it to be to proceed with the
    program.
        What drives that are the requirements. The requirements are
    for additional capability. To achieve that, you have to have
    technical performance, a rotor that will lift and go further
    and go faster. In those areas, that is where you see cost
    issues. If you compromise requirements, you can control costs.
    I think it is a great discussion. As you said, the issue came
    up this morning. If you push the requirements envelope, you are
    going to push the cost envelope and you are going to push the
    risk envelope. We have identified these as the first areas of
    risk reduction to work to deliver that capability.
        Senator Lieberman. Thanks, Secretary. That is very helpful.
        General Magnus or General Mattis, let me ask you. I presume
    that we are putting the CH-53Es under some real stress in both
    Iraq and Afghanistan. I wonder if you could talk a little bit
    about that. Of course, part of what we talked about today, this
    morning at the full committee, is how long it takes to get from
    the need, which you say is right now today, to satisfying the
    need, which will be 10 years from now. Nobody in the private
    sector would put up with that kind of delay.
        Having given that speech, let me ask you what we have
    learned and whether I am right that the current aircraft are
    being stressed by their use and what we have learned in these
    two conflicts about what we need.
        General Mattis. Senator Lieberman, operating in
    Afghanistan--and granted we never thought we would be putting
    naval forces 350 miles in----
        Senator Lieberman. Right.
        General Mattis.--I will tell you that I was pushing people
    to the limits of man or woman and machine. That is the bottom
    line. We were pushing to the very edge of the envelope going
    into the mountains there, 350, 450, 500 miles from the ships at
    sea, refueling them in the air at night over the mountains.
        We have continued to use these aircraft under very trying
    conditions at rates of use that far exceed, of course, our
    peacetime measures, how long we thought they would hold up
    based on a certain number of flight hours each month. We are
    flying them anywhere from four to seven and sometimes ten times
    what we expected to be flying them at.
        So the spare parts usage and the excess wear on the
    aircraft means that we do need the replacement. We need to get
    this program under way is the bottom line. We can keep the
    birds flying. They are old, they are old iron. Eventually there
    is just so much you can do with them. It will cost more each
    year to maintain them. We can buy the time, sir. But we can
    reduce risk, operational risk. What we do not want to do is
    come to you with something that has such a design or cost risk
    that we end up pricing ourselves out of business.
        So it is a balancing act as we try to take what we
    anticipate to be the true requirement, knowing that none of us
    can think of the future perfectly. I think if we were sitting
    in this room in 1805 we would not realize this room was going
    to be burned to the ground about 10 years later. We have to
    anticipate these kind of surprises and put our young men and
    women in positions where what we are asking them to do is
    reasonable. They will put their lives on the line. They know we
    are not an insurance corporation. But we owe them gear that can
    perform, going deeper. We do not want the enemy to be able to
    hide from us and have sanctuary. We need to hunt them down.
        This aircraft is critical and we need to get on with
    explaining to you what it is exactly we need. I think it is in
    process, but it is a challenge technologically and even
    operationally to make certain we keep the balance.
        General Magnus. Senator, if I could just quickly add on to
    what my shipmate said.
        Senator Talent. Yes.
        General Magnus. We have already begun putting some of these
    aircraft into desert storage. We will not fly an aircraft that
    we knowingly believe is materially unsafe. Clearly, from a
    maintenance point of view we will not do that. In last year's
    supplemental we pulled the first aircraft out of the desert
    that had already been retired, to send it back into rework so
    that we could bring it up to operationally safe standards.
        But there is an attrition over time, both through peacetime
    losses as well as fatigue, the old iron that was mentioned,
    where we absolutely will need to have replacement aircraft
    because we will not be able to remanufacture the ones that
    attrite, in the 2012 to 2014. I share your frustration,
    Senator, and I also share the Secretary's concerns about making
    something so hard that the risk goes up and it becomes
    unaffordable in the sense that we will not be able to get what
    we need.
        We intend to work in earnest with our shipmates in the Navy
    and with the acquisition executive to continue this program
    along a strong path to get this new aircraft in development as
    soon as possible.
        Senator Lieberman. Thank you.
        Secretary, let me ask you just a final one or two
    questions. Having heard this, it is somewhat like the
    conversation we had last week, but is there enough money in the
    pipeline to expedite basically the lessons learned, in a more
    direct sense to mature the critical technologies that the
    Marines know from experience they need? I know there was a
    recent GAO study that pointed to three critical technologies
    that are needed for this H-53X, CH-53X.
        Mr. Young. Let me provide a couple answers. I actually had
    a T-45 example I wanted to use as an illustration, but I will
    just say, the program that is in the President's budget request
    for fiscal year 2006 to 2011 is funded assuming what initially
    started as a remanufacture program for the CH-53s. The decision
    has been for some time now that it should be a new build
    program. That will cost more money.
        The independent cost estimate and Sikorski's estimate are
    indeed for something on the order of an additional $800
    million. As you and I had a chance to discuss last week, I have
    been anxious that the enterprise identify those funds. Could
    the program go faster? That is conceivable. However, across the
    Department, there are cases where we do not execute the best
    business case and sometimes we do take 10 years, because you
    have to balance the need across the enterprise for resources.
        This program is short of funding right now based on the
    current information we have that changes it to a new build
    program. We have adequate funds for the risk reduction efforts.
    We will definitely have to adjust the profile as long as the
    requirements stay where they are. This is a healthy discussion
    about whether some adjustment in the requirements will get us
    to a ``knee'' in the curve where we are getting the maximum
    amount for the taxpayers' dollar instead of extra requirements.
    But, we have to get that system that is easily put in the hands
    of the warfighter and they can use it, as General Mattis has
    seen, to the extreme conditions.
        Senator Lieberman. How do you--this will be my last
    question. How do you determine that? Those are very reasonable
    questions. They need a new fleet of aircraft and you are asking
    a very practical question, that maybe we have to settle for
    less than the ideal so long as we are giving the Marines a new
    fleet of heavy lift aircraft that can do the job that we ask
    them to do better than the existing fleet.
        Mr. Young. That is exactly what is going on right now with
    some of the study funding you asked me about last week that are
    committed and released. The acquisition team is working
    extensively with General Mattis and the Marine Corps team to
    talk about which requirements are costing more, which
    requirements if relaxed could yield savings, and which
    requirements are just not compromisable because you have to
    have the capability to meet the mission.
        As I said, that is a healthy discussion and these are
    critical discussions at this early phase of the program. Once
    these issues are settled, we need to make a funding commitment
    to this program and move forward. But, those issues need to be
    settled now and not changed midstream, because change will
    drive the cost in the program.
        Senator Lieberman. Just a final quick question. Do you
    think that you are going to be ready in this budget cycle to
    tell us what additional needs you have to put adequate money in
    the pipeline to get this program moving more quickly?
        Mr. Young. I think we may know by mid-summer. During the
    next couple of months, we are supposed to have updated
    independent cost estimates, an independent non-advocate review
    of the program, somebody independently looking from outside,
    and then completion of these discussions on requirements. So
    yes, I believe so.
        Senator Lieberman. So if the DOD authorization bill moves
    as slowly this year as it did last year, that will be plenty of
    time, even though we hope that it does not move as slowly.
        Mr. Young. I think we will be late to your timely movement
    of the National Defense Authorization Bill, sir.
        Senator Lieberman. Thank you.
        Thanks, Mr. Chairman.
        Senator Talent. Let me just strike while the iron is hot,
    because I had a question about the 53 also. Do I understand,
    taking your answers as a collectivity, that you are committed
    to a new build solution to this concern? Because you have this
    independent review ongoing and my understanding is that they
    are going to report on alternatives to a new build, maybe going
    back to a service life extension program. But are you committed
    to a new build and just concerned about balancing capabilities
    and costs? Or are you actively thinking about an alternative to
    a new build on the helicopter?
        Mr. Young. The FYDP reflected in fiscal year 2006 the
    President's budget request has $3.376 billion for system design
    and development of the H-53X. According to the independent cost
    estimate and the company's estimate, that is not enough money
    for a new build program. If the requirements stay at new build,
    the decision is new build, we will do new build as long as the
    enterprise finds the money to fully fund that program. I cannot
    sign a contract for a program that is not fully funded.
        Senator Talent. It sounds like there are issues you have
    not reconciled which might affect the decision about going
    ahead with the new build program. I am not being critical.
        Mr. Young. No, sir, I understand. I cannot commit to new
    build unless the enterprise is going to commit to fully fund
    it. That is my hesitation.
        Senator Lieberman. Then the enterprise you are speaking of
    is the Marines or us?
        Mr. Young. Department of the Navy and Department of
    Defense.
        Senator Lieberman. Okay.
        Senator Talent. I think I will start referring to us as an
    ``enterprise.'' Nobody will know what we are talking about.
    [Laughter.]
        It is a pleasure to have Senator Clinton with us at today's
    subcommittee meeting, and thank you for your patience.
        Senator Clinton. Thank you very much, Mr. Chairman, for
    your courtesy. I am not a member of this subcommittee, but
    there are two issues that I am particularly concerned about
    that I would like to inquire of both--in the first instance
    Secretary Young, in the second instance the Admiral.
        Secretary, I wanted to ask about the recently awarded VXX
    Marine One presidential helicopter program, which was recently
    awarded to Lockheed Martin Systems Integration of Owego, New
    York, after a very exhaustive competition. It was a tremendous
    example of what competition can bring, because they were both
    excellent proposals. It was also a terrific example of what DOD
    does in the face of a great competition by conducting a highly
    detailed and disciplined source selection process.
        The end of that process led to the awarding of the contract
    to Lockheed Martin. There have been questions raised.
    Obviously, we understand the reasons behind that. But now that
    the contract has been awarded, we think it is important we
    proceed expeditiously.
        I strongly support therefore the President's budget request
    of $936 million for VXX development in fiscal year 2006. Can
    you provide a brief overview on what full funding of that
    request in 2006 is important to keep the program on track?
        Mr. Young. At a macro level, I would start with what we
    said when we announced the program.
        There are risks out there in the environment. We obviously
    would not carry the President in a vehicle that was not safe.
    We can improve the safety, security, and performance of the
    vehicle. There is urgency to move forward.
        We received proposals from companies that said they can
    deliver a product that is significantly more capable and safer
    on the schedule we had outlined. We are going to have
    independent executive reviews and I will personally monitor the
    progress of the program. We have the first review scheduled for
    myself to chair here in the next month or so. This program
    unquestionably has some level of risk, I think a level of risk
    that is merited in light of the need to give the President more
    capability.
        We delayed the source selection, as you are well aware, so
    both teams had more than adequate effort to propose and fully
    understand what we require. They made excellent proposals, they
    understand the level of integration and the complexity of the
    challenge we put before them.
        So, within our budget request, those funds are critical to
    get started with those efforts. Those funds include money to
    buy the first three helicopters, which we intend to put
    significant test hours on. I would tell you that every aspect
    of that budget is somewhat timely relative to the fact that we
    extended the source selection to make the best possible
    decision. We are now prepared to move forward. Both companies
    have come in with plans that tell us they can execute and also
    tell us that having the funds to begin integration and test at
    an early stage is critical to having any chance to make the
    schedule.
        Senator Clinton. I appreciate that, Mr. Secretary.
    Obviously I have some experience with Marine One and adding to
    the defensive capacity of that helicopter is critical in these
    times. So I hope that we will vigorously support the
    President's request so that we can get this moving in a very
    expeditious manner.
        Admiral, I would like just to ask about the planning
    process that is leading to the recommendations coming out of
    the Navy in light of the information now available that
    confirms China's very significant investment in a blue water
    navy. I think that we talk, rightly so, about the challenges we
    face from IEDs from the current war that we are fighting
    against the enemy that we have on the battlefield at the
    moment, but I am increasingly concerned about what additional
    measures and planning we need to undertake to ensure that our
    Navy remains superior.
        It would be helpful to me to just get some brief overview
    from your perspective as Deputy Chief and also the work you
    have done--you have been very involved over the years in all
    kinds of planning and strategic assessments--where we are in
    that process at this time?
        Admiral Sestak. Senator Clinton, thanks for the question.
    Without going into classified material here, at the one end of
    the spectrum, as you rightfully said, we plan for the global
    war on terror. Often it is finding the needle in the haystack:
    where is that IED, where is that terrorist crossing the sea
    among the 86,000 merchant ships at sea today--which is one
    challenge.
        At the other side of the spectrum, we see three potential
    major conflicts which we plan for. Let us talk about one we
    have done extensively in the past 2 years through campaign
    analysis. We see three major challenges. One is access. Where
    the global war on terror is finding the needle in the haystack,
    in a major conflict we have what you might say is a saturation
    strategy--a lot of submarines, a lot of mines, a lot of
    ballistic missiles. Not just one nation; there are several that
    we have to think about, much as before World War II, we thought
    about different nations.
        That takes a different type of planning. It takes speed to
    get inside their ring prior to their being able to shut us
    down. It takes persistence. You cannot just deploy from the
    United States. You need to be there already. So in our approach
    to this we look at several aspects of our capabilities--that
    are absolutely critical. The submarine force. How else can you
    be there, inside someone's door covertly, even today?
        But we do not look at future warfare as platform on
    platform. That is the massive change. That submarine can lay a
    lot of individual distributed sensors on the ground, the bottom
    of the ocean, that can begin to track submarines. Once an enemy
    submarine goes past our submarine towards where the seabase is,
    our submarine can say: here it comes, and here comes another
    and another--and those distributed sensors, networked, begin to
    track in force.
        Second, we have to have the capability to shoot not just
    the arrows, scores, hundreds of potential archers that are
    shooting lots of arrows towards us, ballistic missiles and
    anti-ship cruise missiles. To do that, we have to do three
    things.
        Please, Senator, if I go on too long stop me, but this is
    something pretty important. The Navy is, as we are engaged
    somewhere else, really a strategic option elsewhere for what is
    primarily potentially a maritime conflict. But needs to be
    joint. We cannot win without the other Services.
        Take that archer, that transportable erector launcher, the
    one that comes out of the mountain, scoots out, and we have 1
    hour to shoot it before it all shoots a lot of arrows. So we
    need to be able to have time-critical strike. We need to be
    able to see him scoot out and that takes a space capability. We
    can be over any country in peacetime with space and be able to
    network back to some missile to shoot the archer.
        Second, it takes information operations, the ability to
    make a missile go awry, software--soft power, I mean.
        Third, it takes the ability to protect the seabase from the
    missiles that still are coming down, the last few. More
    important than that we cannot just protect the seabase. The
    Navy of today can no longer say, as it did in the Soviet Union
    days, I will get command of the seas and 4 weeks later I will
    finally show up off of Europe with 15 aircraft carriers and
    say, I am going to defend, help out, in a war that is probably
    over.
        In most conflicts of the future, we talked about speed,
    getting the marines there quickly--think if we could have done
    that with Saddam Hussein in 1990. We might not be there today.
    Speed.
        So that means that we have to have the ability to see the
    remaining arrows come down, but also protect the ports and the
    airfields that our sister services are going to flow into, or
    else they will not be able to help us in the fight.
        So in summary, what I see in the future, at this end, is a
    Navy, which I mentioned, that hopefully keeps the dog from
    barking. It is the Navy that is able to say to another nation,
    today is not your day. Where that military person on the other
    side begins to turn around to his political master and says:
    today is not my day. It includes forces forward every day.
    Today one-third of your Navy is overseas, one-third,
    immediately employable, to lay the sensors to tell us about the
    submarines, to join up with the joint force to see the archer,
    and to be able to have the ability to shoot them down or make
    them go awry--and that takes DD(X), CGX, and all.
        If I could, one last item. I will never forget the briefing
    by General Schwarzkopf at the end of 283 days into Operation
    Desert Storm. He said to the question from a reporter that
    queried why the Marine Corps waited a moment, a little bit,
    before they went over the berm because they had to clear a
    minefield. The General looked at the young reporter and said:
    Son, have you ever been in a minefield? Which Schwarzkopf had
    in Vietnam.
        Today we plan to put our sailors and men and women at sea
    into scores of mines; but in the future, we finally will have a
    craft--you are familiar with the Littoral Combat Ship (LCS)
    that is going to finally put unmanned vessels forward to sweep
    in stem prior to our sailors, similar to our marines, go
    forward so they know where the mines are not.
        So in summary, we could go into, and I would be happy to
    give your staff a detailed classified briefing on this, but it
    is truly one where we believe properly positioned, with the
    right capabilities procured, it is a Navy that can help say to
    someone that truly has interest in regional influence that,
    today is not your day.
        Senator Clinton. Thank you.
        Thank you, Mr. Chairman.
        Senator Talent. I thank the Senator for her participation
    and would like to invite her any time she wants to come to the
    subcommittee.
        General Magnus, one more question about EFV for you. You
    were quoted in a Defense Daily article as talking about the
    reason the schedule needed to slip was to reduce risks. I take
    it you would agree with what Secretary Young talked about in
    terms of the risks that we are trying to reduce with EFV?
        General Magnus. Mr. Chairman, yes, I would agree with what
    Secretary Young said.
        Senator Talent. Anything you want to add or any particular
    insights?
        General Magnus. Sir, given the opportunity, of course a
    marine will take it. In actuality, the schedule----
        Senator Talent. That is what you have common with Senators.
    [Laughter.]
        General Magnus. The schedule has moved a little bit more
    than 1 year to the right. Certainly we have--with that, we are
    going to do risk reduction. This system is doing well. Just
    like other systems developments, we will uncover things that
    need to be changed in terms of design. What we are most
    concerned--since we are demonstrating great performance with
    this vehicle now, the 30 millimeter cannon is operating
    remarkably, the water speeds are demonstrated in excess of 30
    knots, and we continue to work that. But of course, system
    reliability and maintainability and habitability for not just
    the crew, but the combat marines that will be riding in the
    back, is something that we want to make sure that when we
    deliver this to the operational forces later on this decade we
    are delivering all that this system and General Dynamics and
    our SYSCOM can deliver.
        However, some of the shift to the right in this program was
    simply because of overall DOD affordability considerations. So
    we have been able to--the good part is that we are mitigating
    risk in this program, that we have great--even if they are
    older, the legacy AAVs, which we have built with the Bradley
    suspension system and they are doing awesomely well and have
    done awesomely well over the last 2 years--but this is like the
    iron we talked about with the replacement for the CH-53 Echo.
    We are using in particular light armored vehicles and our
    armored amphibians at up to eight times the rate.
        Unlike where you can replace a lot of dynamic components
    like transmissions, we are talking about the hull form and the
    suspension itself. These are doing awesomely well and, although
    they did not do the classic amphibious assault, they have
    crossed rivers in Iraq where there were not any bridges or the
    bridges were blocked, and they knocked down buildings in
    Fallujah late last year, and they have shown a remarkable
    capability and we are looking forward to a modern replacement
    that, quite frankly, is also going to be capable of operations
    in a contaminated nuclear/biological/chemical (NBC)
    environment.
        Senator Talent. All throughout the service we have legacy
    platforms from the Cold War era that are being deployed at a
    tempo of operations (OPTEMPO) far more than we thought they
    would be when we bought them and doing things that were not
    exactly anticipated, because we are fighting a very different
    kind of war than we anticipated. We are all having to scramble
    to adjust.
        So you think the EFV emerges from the Quadrennial Defense
    Review (QDR) unscathed, despite the program costs, which is
    what, $13 billion, something like that?
        General Magnus. The program cost before the schedule was
    adjusted last year was slightly over $8 billion, again
    extending that out past the FYDP. Obviously, as we move it to
    the right we will incur costs simply due to the inflation and
    other reasons.
        As far as what is going to happen at the other end of the
    QDR, I think this is a system that has tremendous capability as
    one of our primary surface connectors in forcible and rapid
    entry operations from the sea. I think, recognizing that it is
    part of a system of systems in seabasing, but is critical to
    the combat projection of Marine maneuver forces, I think it
    should do very well in the QDR.
        Senator Talent. Yes. It is pretty central to what we all
    understand the Corps to be doing, is it not?
        General Magnus. Yes, sir. The Expeditionary Fighting
    Vehicle, the MV-22, and the heavy lift replacement aircraft are
    fundamental to projecting Marine maneuver forces ashore.
        Senator Talent. So is DD(X), but we will not get into that.
        Admiral Sestak. He meant to mention it, sir.
        Senator Talent. General Mattis, let us talk about IED. One
    of the advantages of having other Senators go is that takes
    things off the plate. There were some really good questions in
    areas that I had intended to address, but we did not get very
    heavily into IEDs.
        I know the Corps is investing a lot of energy in looking
    for ways to detect and neutralize IEDs. Let me ask, if you can,
    in an open hearing what conclusions you are drawing from those
    studies. I am also particularly interested in your opinion of
    how the Joint Task Force is working and I would like your
    assurance that the Corps in its own studies is working very
    closely with the Joint Task Force. We do not need a bunch of
    stovepipes out there.
        I bet anything you are going to tell me that you are
    working closely with them, but expound a little bit on what you
    are finding and where you think all that is going.
        General Mattis. Sir, in country, in Baghdad, we have
    marines on the Joint IED Task Force, the ones who do the
    forensics, this sort of thing. The information-sharing--I could
    tell you within hours, if First Infantry Division got hit by an
    IED, I could tell you what had happened to them in the First
    Marine Division area. The information-sharing is real-time and
    it was very, very effective for us. As we tried to anticipate
    as tactics and techniques were passed around amongst the enemy,
    we could be in a position to block them.
        If I were to sum up everything I have learned about
    fighting over the last 30 years, it is improvise, improvise,
    improvise. Nowhere is this more obvious than with the IEDs. We
    were actually hit with the first of them before we came out of
    Iraq from OIF I down in the southern area, an area called
    Northern Babil Province. The initial ones, sir, had tripwires
    on them, tripwires going across the road. The enemy does not
    care one bit if they kill innocent people. To tell you the
    truth, we are ready to fight them, but their ruthlessness
    toward even their own people was still a bit of an eye-opener
    to us over there.
        As we adapted to that, and there are very easy ways, as you
    can understand, how we would adapt to something that obvious,
    and they went to the hardwire. These were people in a part of
    Iraq where they built all of Saddam's munitions. It is the area
    south of Baghdad running down toward northern Babylon. In that
    area, the enemy adapted very, very quickly. So we were working
    with them at the same time, almost working alongside the enemy.
    They do something, we would do something. They would see what
    we were doing, and it would go back and forth.
        Today what we have matured to are a number of radio
    frequency interrupters, jammers, this sort of thing, that
    identify different parts of the spectrum. I will tell you right
    now how we can reverse the whole construct of this war: Find
    something that will prematurely detonate IEDs. At the Office of
    Naval Research (ONR), Defense Advanced Research Projects Agency
    (DARPA), and other places--I will not go into the details--
    there are people who are striving valiantly for this and
    working some very long hours.
        Senator Talent. Everybody is working for that and I just
    hope that they are sharing information.
        Let me just take you down that road a little bit, because
    you mentioned before how ruthless this enemy is. He is also
    very highly adaptive. You really have to on that level respect
    them. My concern is that our efforts not be so technology-based
    that we think that there is a technological silver bullet,
    because--it would be great if we could come up with something
    that would prematurely cause those things to explode, but then
    they might be able to find a way around that as well.
        General Mattis. Right. Sir, we are more adaptive than the
    enemy is. That is one point.
        Stovepipes would be a concern. If we do not have some way
    of fusing all this together, we could have people stumbling
    through experience-based learning that somebody else has done
    and some other university had already picked up on, this sort
    of thing. The Secretary of the Navy has funded every one of
    these issues. He has told me there is no budget on this. He
    says, whatever you need.
        We have a few surprises for the enemy. I am here alive
    today thanks to one of those surprises, I can go into detail
    on, and I will salute the Air Force on that one. But you are
    right, it is not all based on technology. Marines with rifle
    scopes on the rifles, we put them out--where we used to have
    about a dozen snipers in each battalion, now we have hundreds
    of men in each battalion carrying scopes on rifles--are able to
    spot the little antenna alongside the road. We never imagined
    that, but you give the gear to the young men, they will figure
    out how to best use it.
        Senator Talent. So you think the training for force
    protection, situational awareness, all that, you are satisfied?
        General Mattis. We are never going to be satisfied, but we
    interview every one of the grievously wounded young men that
    comes to Bethesda. These would be the worst wounded that we
    have, and we have them be the ones who grade our training, our
    predeployment training on us.
        We have made subtle variations to the training based on
    their input, but overwhelmingly we have received very positive
    responses from them about the quality of the training and
    preparing them for this.
        Senator Talent. How would you sum up intelligence that you
    are getting and what role that is playing?
        General Mattis. Ninety percent of the intelligence we get
    on IEDs comes from Iraqi people. They are the ones who call our
    tip lines. As fast as they would set off a bomb in a
    marketplace, we would have pictures of the bruised and dead up
    on the walls there in that same market hours later, with a tip
    line for people to call.
        The intelligence is good, but we work closely with the
    Royal Marines, the French Marines, and the Los Angeles Police
    Department before we got sent back in. We had just gotten home,
    we got the word we were going back into the Sunni Triangle,
    Fallujah, Ramadi. They explained about community policing, and
    it is remarkable how consistent Los Angeles Police Department
    policing the barrios, the Royal Marines in Northern Ireland,
    the French Marines in various places around the world. There
    are very common techniques that they all use, and it is all
    intelligence-based.
        We also get a fair amount off signals intelligence I will
    not go into in this hearing. But it is that combination of a
    little technology kind of intelligence, primarily human
    intelligence, and the old policeman on the beat way of picking
    it up.
        Senator Talent. I hear it is getting better. It got better
    after Fallujah and better still after the elections. Is that
    your sense also?
        General Mattis. That is absolutely the case, and I think
    the number of attacks and the casualty rates, plus the enemy's
    more desperate attacks, where they are attacking the forward
    operating bases now. That will be a quick trip to disaster for
    them, as we have seen on two cases. It will be a tough fight,
    but we will always win those.
        When they come out like that, they are losing their suasion
    over the people and they are losing the capability the IED once
    gave them, driving them to something that is very, very
    dangerous for them.
        Senator Talent. This is a war you are winning. As Secretary
    England said, this is a war we have to win, not just for Iraq
    but for the whole global war on terror. Very pleased to hear
    that you are doing the lessons learned with the British and the
    French and Los Angeles Police.
        I do not know if you have felt this way, but I am going to
    say it for the record. When you talk to these young marines and
    soldiers, their ability to go out among the populace and move
    from one role to another, their sense, the instinct that they
    have--and this is stuff they have been trained up in in the
    last couple of years, because they did not have that in basic
    or anything like it, to be a sort of a general policeman in one
    instance, and then just a friendly person making contact,
    somebody getting intelligence, and then maybe having to turn
    and be a warrior the minute after that. It is just incredible,
    the skills that they have developed.
        I just, I am lost in admiration for them, their ability to
    handle those situations.
        General Mattis. I have seen the same thing, Mr. Chairman, a
    marine literally shoot an enemy down, handing out candy within
    2 or 3 minutes to a little kid, and then driving off and waving
    to the people, without any of the potential racism or any of
    this kind of negative stuff. They are doing us proud, sir.
        Senator Talent. It is an essential role.
        You are satisfied we are capturing the forensics? When one
    of these things goes off, we are going out and getting it and
    sending it back?
        General Mattis. One hundred percent confident. Now, that is
    when you can get something. There are times, sir, if they put
    off something that has 500 pounds and it takes apart an M-1
    tank, all you can say is one heck of a big bomb, because there
    is probably not much left around of even the detonating
    material, or it is a half a mile away, blown off into some
    bushes.
        So where it is possible, there is a very good forensics
    data collection and passing around of what we found.
        Mr. Young. Senator, may I add some comments?
        Senator Talent. Go ahead.
        Mr. Young. I cannot add to the experience level, but I
    wanted to assure you that--and you have heard from Secretary
    England--he meets every month or so on OIF updates, and that
    has been the senior leadership drive that has helped force
    several of these issues. We have done things across the board
    including an ONR initiative with small business to look at any
    idea out there for counter-Soviet shoulder-fired antitank
    grenade launcher, counter-IED, counter-mortar fire.
        In the Secretary's meetings, in the Operation Respond
    meetings, we have asked Army Rapid Equipping Force (REF), and
    Army personnel to come to either set of the Secretary's
    meetings. We were injecting every idea we have into the Joint
    Task Force. So could we improve? Maybe. But we are doing
    everything we can to share ideas. There is no pride of
    ownership here in what we are doing.
        We are looking and we have used every available tool out
    there, too. The Marine Corps has been a leader in using
    military off-leash dogs to go and inspect. We have applied our
    aircraft and our aircraft sensors in unique ways to find these
    devices. We have exploited every tool we have available to us
    in trying to address the problem.
        Senator Talent. This is a subject that interests me, so I
    bring it up at every available opportunity. I have been
    pleased, and with the emphasis from the top with Secretary
    Wolfowitz, and I am satisfied that Secretary England is going
    to do the same thing, assuming he is confirmed, as I hope he
    is.
        So I am pleased at that. We just have to consistently
    emphasize every aspect of this to keep these people on the run.
    I like to make them sweat, too. Instead of us worrying about
    when the next one of these things is going to go off, make them
    sweat about whether a Special Ops guy is going to be at
    whatever safe house they think they are hiding at that night.
        Let us switch into my last set of questions. I want to talk
    a little bit more about seabasing. Admiral Sestak, I
    appreciated your vision. We are still at such an early phase of
    this. I guess I do not want to get too much into details of it.
    From what I can see in terms of your planning, you programmed
    $6.6 billion for MPF ships, which is about $1.7 billion apiece.
    Does that include, by the way, ship to shore connectors,
    intratheater capabilities, or would that have to be added
    later?
        Admiral Sestak. That particular line does not, sir. There
    are four landing craft, air cushion-type vessels that are
    funded to get the marines ashore, as well as that vertical lift
    we talked about, the CH-53E.
        Sir, let me answer your questions. I want to make sure I am
    not wasting your time.
        Senator Talent. I am not going to go heavily into this
    because I think it is still a little bit too early and I just
    do not want to have a vague back and forth here. But we were
    talking before about affordability versus capabilities and the
    fact that we may want a capability but then we look at whether
    we can afford it and then we start asking can we do this some
    other way.
        Now, you are a very strong supporter of seabasing. I am a
    very strong supporter of the current Chief of Naval Operations
    (CNO) and this is part of his whole Sea 21 concept. I have gone
    along with it, but I have to ask myself, as I understand it it
    seems to me like seabasing will take over a responsibility that
    had previously been performed by other parts of the force
    besides the Navy, in other words securing land bases from which
    we could operate, and that was done diplomatically or
    militarily. It depends on what war or engagement we are talking
    about.
        Now it seems that what we are going to develop is the
    ability within the Navy to do that at sea, I guess on the
    assumption, which I think is probably correct, that there may
    be difficulty in getting adequate land bases to operate from.
        So I guess the question is, in view of the fact that it
    looks like it is going to be expensive going in, we are all
    struggling to find more money for ships, is this a
    responsibility that we want to undertake within the Navy or
    should we within the overall structure of OSD say, you know
    what, we are going to anticipate where the conflicts may occur,
    we are going to try and secure the land bases that we need;
    diplomatically, however, if we cannot, we will task the Marines
    or we will task the Army to go and take a land base, because we
    may never have to do that and it will probably be less
    expensive than building all these ships and this whole
    seabasing concept?
        Now, I am talking on a conceptual level here.
        Admiral Sestak. Yes, sir.
        Senator Talent. Give me your answer to that.
        Admiral Sestak. Sir, I think it goes back to what do we
    believe. Do you believe that we will have access in 20 years?
    Turkey did not permit us complete access to this last war, a
    North Atlantic Treaty Organization (NATO) ally. We were limited
    to what we could bring into several NATO nations for weapons in
    recent times.
        Do you believe that we had access for Afghanistan on day
    one? No. It took us a couple weeks to months to get a base to
    operate from from Uzbekistan. So from the sea went the first
    foot soldier, from an aircraft carrier. Did we have access to
    Haiti? No, and again, it was from the sea as well as from the
    air.
        So it comes back to what do we believe. Do you believe that
    we want to have the United States have to ask for a permission
    slip from an ally, a friend, a neutral nation, for what is our
    vital interest overseas? If the answer is yes, you have
    answered--not you--this Nation has answered the question.
        But the trends have been such, if you look at the 1960s,
    from many bases overseas, to the very recent past, and a study
    done by DOD of what forces we want to take back, such as from
    Europe, the question becomes what do you want: to either leave
    forces there that you can use with surety or to assure you have
    a right to use any forces?
        So, sir, actually I believe two things. One is that this is
    not a revolution we are talking about; it is a natural
    evolution, using two-thirds of the face of this Earth as a base
    that we command. Nobody, nobody, doubts the ability for us to
    own that base. It would be a shame for us not to think about
    having the Marines capture a base, but they have one way truly
    to get there. They can pull into a port, like they did in OIF,
    and administratively offload their tanks and their Light
    Armored Vehicles (LAVs) and line them up, like that picture I
    showed and hope, like I pointed out with Senator Clinton,
    nobody has a missile that is going to rain down on them in the
    30 days or whatever it takes.
        Or we can also come from the sea, as a United States force,
    as we did in Afghanistan, as General Mattis did, coming from an
    expeditionary strike force, he went in with a Marine
    Expeditionary Unit (MEU). We can build that force, but then you
    come to the point--the devil unfortunately is in the details.
        Senator Talent. We have to make sure that the sea base is
    survivable as well. They can shoot missiles at that.
        Admiral Sestak. Yes, sir.
        Senator Talent. If you are looking at a peer competitor
    possibility, what is going to happen to the cost of these ships
    to try and ensure survivability?
        Admiral Sestak. Two answers, please, because this is such
    an important issue. How do we own the seas or not use the seas?
    So, we are on the cusp, I believe, in the next few weeks of
    having an affordable--an affordable--Maritime Prepositioning
    Squadron that meets the requirements that, by and large--and we
    have another little portion here to look at, as we have been
    talking to Mr. Young recently--of being able to have an option
    that truly is affordable to put a brigade from the sea, not
    just prepositioned, but expeditionary. I could go into those
    details if we need it.
        But it also brings me back to the second issue. I can
    surely remember reading about the battleship sailors that said:
    How can you build an aircraft carrier that is half empty with a
    great big hangar? It will never survive. The one thing the
    Marine Corps never lets us stop thinking about is what we call
    the sea shield. Sir, that is why, while MPF(F) is absolutely
    important and a marine coming off a commercial standard ship
    potentially, it is still a warship if it can be protected
    sufficiently. But what this Congress has thus far funded and
    why the CNO feels so confident about it is this: we are going
    to put standard missiles, air-to-air missiles in concept, on an
    aircraft in the sky, an E2C Hawkeye. It is going to be up
    there, not physically with the missile, but as soon as it sees
    a missile with its new radar, the Radar Modernization Program
    (RMP) radar, connected by a Cooperative Engagement Capability
    (CEC), Cooperative Engagement Capability Link, we can merely
    push a button on a surface ship and, instead of waiting for
    that missile coming over the horizon at 10 feet above the water
    where a ship cannot shoot until it is 12 miles away even though
    it is an Aegis, it can shoot 100, 150 miles away, based upon
    what the E2C can see.
        So the shield and the modeling we have done shows that,
    yes, with surety we feel this platform on the greatest maneuver
    space in the world can be defended. Not just conceptually, sir,
    for the details we do have here finally, after the last year of
    work.
        Senator Talent. Secretary Young, do you have any comment
    you want to add?
        Mr. Young. No, I think that is a great description. We just
    have to work very hard. It is just like the H-53 discussion.
    The acquisition team is working very closely with the Marine
    Corps and the Navy to say these capabilities come at a price
    and where are your balancing levels. We need to bring you an
    affordable program. I think you have hit on exactly the right
    issue.
        Senator Talent. This is exactly what the QDR is supposed to
    look at, is it not?
        Mr. Young. Yes, sir.
        Senator Talent. To reexamine assumptions going in.
        All right, let me see if I have anything else. No, I think
    we have covered it. It has been I think a really informative
    hearing.
        We will leave the record open for questions that we may
    submit for written answers, but I do thank you all for your
    time. The subcommittee is adjourned.
        [Questions for the record with answers supplied follow:]
                 Questions Submitted by Senator James M. Talent
                     ch-53x heavy lift replacement program
        1. Senator Talent. Secretary Young, at the April 6 Airland
    Subcommittee hearing, you testified that you had concerns regarding the
    CH-53X program. I understand that you have released $50 million to date
    for fiscal year 2005 risk reduction efforts. I understand that you are
    withholding an additional $50 million until you receive the results of
    an independent review team (IRT) of the program. I understand that one
    of the items you expect to hear from the independent study team is
    other alternatives to the new build program. Does this mean you
    challenge the results of the formal Analysis of Alternatives (AoA), and
    if so, could you please tell us of your specific concerns?
        Mr. Young. While I'm not challenging the results of the formal AoA,
    I am concerned about the overall affordability of the Heavy Lift
    Replacement (HLR) program. This is particularly true given the current
    fiscal environment, and the challenges of continuing to balance
    recapitalization for obtaining new capabilities while simultaneously
    sustaining the legacy fleet aircraft that are performing magnificently
    in current operations. Because of my concerns, I directed that an IRT
    be established to assess the HLR program-of-record. This IRT is
    evaluating system trade-offs, analyzing capabilities versus
    requirements, and will provide recommendations for economical and
    efficient acquisition approaches. The goal of this process is to
    aggressively pursue all options that will result in the most effective
    and efficient use of our resources given today's fiscal constraints.

        2. Senator Talent. General Mattis, do you agree with Secretary
    Young's assessment?
        General Mattis. While I'm not challenging the results of the formal
    AoA, I am concerned about the overall affordability of the HLR program.
    This is particularly true given the current fiscal environment, and the
    challenges of continuing to balance recapitalization for obtaining new
    capabilities while simultaneously sustaining the legacy fleet aircraft
    that are performing magnificently in current operations. Because of my
    concerns, I directed that an IRT be established to assess the HLR
    program-of-record. This IRT is evaluating system trade-offs, analyzing
    capabilities versus requirements, and will provide recommendations for
    economical and efficient acquisition approaches. The goal of this
    process is to aggressively pursue all options that will result in the
    most effective and efficient use of our resources given today's fiscal
    constraints.

        3. Senator Talent. Secretary Young and General Mattis, in a recent
    report on selected major programs, GAO stated that there were three
    critical technologies that must be matured for the CH-53X program. I
    understand that of the $50 million released to date for risk reduction,
    only $3 million have been dedicated to these technologies. Do you
    believe this is sufficient financing to address these three critical
    technologies, and if not, how much more should be dedicated?
        Mr. Young and General Mattis. The Navy has allocated funding
    amounts to the three CH-53X Critical Technology Elements (CTEs) that
    are consistent with the very early stage of the program. At this stage
    in the acquisition process, which is prior to formal program
    initiation, the program office is engaged in a broad range of concept
    studies and trades analyses. These efforts support an understanding of
    the user's requirements; definition of subsystem technologies and their
    alternatives; cost estimations; and the complete range of planning for
    an efficient and executable program. A sustained emphasis has been
    placed on fully preparing for the System Development and Demonstration
    (SDD) efforts that would begin shortly after a successful Milestone B
    decision. Efforts to mature CTEs are a part of the total effort in this
    pre-Milestone B environment; the Navy is doing as much as is possible
    in the pre-Milestone B environment for the CTEs while continuing to
    work towards a near-term Milestone B decision. Once MS-B is achieved
    and entry into SDD is approved, significant amounts of funding and
    effort will be expended to mature the CTEs in accordance with approved
    Technology Maturation Plans, ensuring a successful conclusion to SDD.

        4. Senator Talent. Secretary Young and General Mattis, how do you
    assess the executability of the program given that only $3 million have
    been invested for these critical technologies?
        Mr. Young and General Mattis. The CH-53X program, currently known
    as the USMC HLR program, is developing an acquisition approach that
    will ensure the program's executability. The Milestone Decision
    Authority will closely examine the program for executability at the
    program's Milestone B review, which will be the first Milestone review
    for the CH-53X program and signify formal program initiation. A
    Milestone B review not only assesses technology maturities and
    maturation plans, but also includes assessments for stable and well-
    defined user requirements and baselines; an efficient and realistic
    schedule; full funding and affordability of the program; and compliance
    with all statutory and regulatory mandates for program plans and
    documents. The program office, supervisory staffs, and independent
    agencies are actively scrutinizing and refining preliminary CH-53X
    engineering, logistics, contractual and other program strategies and
    budgets to ensure successful execution of the HLR program following
    formal program initiation.

        5. Senator Talent. General Magnus, do you need a heavy lift
    helicopter given the fact that the Marine Corps is getting ready to
    build the MV-22 Osprey?
        General Magnus. Yes. The MV-22 is a medium lift aircraft designed
    to replace our aging medium lift CH-46E and CH-53D helicopters, while
    the HLR will replace our aging heavy lift CH-53E helicopters. The MV-22
    will function primarily as a troop carrier and is also capable of
    transporting external cargo up to 10,000 pounds. The speed and range of
    the MV-22 make it essential in transporting large numbers of marines
    long distances such as those envisioned in Expeditionary Maneuver
    Warfare (EMW) and Seabasing concepts. Studies have shown that the
    capability to move troops over long distances rapidly is indispensable
    to executing this concept. The HLR is the Marine Corps' vertical heavy
    lift aircraft and will be capable of moving a 27,000 pound load 110
    nautical miles. This is critical in providing the ground combat element
    with the equipment and logistical support they need to conduct EMW and
    Seabasing.

        6. Senator Talent. General Magnus, what is the operational concept
    of the employment of the MV-22 Osprey and the CH-53 helicopter?
        General Mattis. The MV-22 is a medium lift aircraft designed to
    replace our aging medium lift CH-46E and CH-53D helicopters. The HLR
    will replace our aging heavy lift CH-53E helicopters. Together, the MV-
    22 and HLR will provide the air connector capability to the EMW/
    Seabasing concepts, where the Expeditionary Fighting Vehicle (EFV),
    Landing Craft Air Cushion, and high speed vessels provide the surface
    connector capability. Air and surface connectors are an integral part
    of the Seabasing pillars necessary to execute EMW. MV-22 specific
    missions include expeditionary assault from land or sea, raid
    operations, medium cargo lift, tactical recovery of aircraft and
    personnel, fleet logistics support, and special warfare. The Heavy Lift
    Replacement will fill the vertical heavy lift requirement not resident
    in any other platform that is necessary for force application and
    focused logistics envisioned in Seabasing and joint operating concepts.

                     expeditionary fighting vehicle program
        7. Senator Talent. General Magnus, you were quoted in an April 7,
    2005 Defense Daily article as saying, ``The Pentagon took the money out
    of EFV, in part because the program probably needed to slip schedule a
    year to reduce some risks. A lot of things concern us.'' What are your
    concerns with the EFV that lead you to say that a 1-year slip was
    ``probably needed?''
        General Magnus. The EFV program has been executing an aggressive
    developmental test (DT) program on the second-generation prototypes.
    This testing is designed to identify technical issues, including those
    causing Operational Mission Failures. The program has identified and
    developed solutions for the top reliability drivers, including
    hydraulic system improvements and hardware and software changes for the
    Hull Electronics Unit (HEU). Design changes will be incorporated into
    the vehicles this summer to resolve the identified problems. The
    additional time provided by the 1-year change in the production
    decision will enable the program to perform follow-on DT on the
    modified vehicles prior to the conduct of the Operational Assessment
    scheduled for early next year.

        8. Senator Talent. General Magnus, what is the impact on the
    operational force of the EFV restructure?
        General Magnus. Delay in the fielding of EFV equates to a delay in
    the realization of our emerging operational concepts such as
    Expeditionary Maneuver Warfare (particularly Ship To Objective
    Maneuver) and Seabasing. EFV is an enabler of these concepts as it
    provides the requisite mobility, lethality, command and control, and
    force protection to turn these concepts into fielded capabilities. A
    delay in EFV fielding also puts pressure on the legacy Assault
    Amphibious Vehicle (AAV) as it must now remain in service longer than
    originally anticipated. The EFV restructure requires our Operational
    Forces to keep the AAV running longer and delays their access to the
    increased capabilities EFV will provide.

        9. Senator Talent. General Magnus, is the Marine Corps committed to
    the EFV program?
        General Magnus. Yes, as a principal enabler of our emerging
    concepts of Expeditionary Maneuver Warfare (particularly Ship To
    Objective Maneuver) and Seabasing, the Marine Corps is fully committed
    to the EFV program. It remains our number one ground acquisition
    program.

        10. Senator Talent. General Magnus, how do you think the EFV
    program will fare coming out of the QDR?
        General Magnus. I believe the EFV program will fare exceptionally
    well coming out of the QDR. When the capabilities of this system are
    examined in their entirety, one finds that the EFV brings much more to
    the Joint Force Commander than a credible forcible entry capability.
    While forcible entry executed from over the horizon was the genesis of
    the EFV, the survivability, force protection (to include NBC collective
    protection), mobility, and lethality requirements levied upon this
    system will provide our maneuver forces with a world class armored
    personnel carrier to meet the challenges we will face in the 21st
    century.

        11. Senator Talent. Secretary Young, with total program costs
    approaching $13 billion, do you have concerns regarding the
    affordability of the program?
        Mr. Young. I will always be concerned about maximizing the
    affordability of programs. However, with the EFV program investment
    costs at approximately $12.6 billion, we will field 1,013 highly-
    capable EFVs to the Operating Forces with water and land mobility,
    direct fire lethality, survivability, and command and control
    capabilities that are significantly enhanced from the capabilities we
    have on the battlefield today. EFV is critical to the combat projection
    and tactical mobility of the marine maneuver forces ashore and we are
    committed to providing this much-needed capability.

                                  mv-22 osprey
        12. Senator Talent. Secretary Young, Admiral Sestak, General
    Magnus, and General Mattis, since two fatal mishaps in calendar year
    2000, the MV-22 Osprey has been redesigned and testing was resumed. It
    is now in its operational test phase. Section 123 of the National
    Defense Authorization Act for Fiscal Year 2002 keeps the program at
    minimum sustaining rate (11 aircraft) until the Secretary of Defense
    certifies that the aircraft's previous problems have been resolved
    through operational testing. We are aware that the MV-22 is going
    through its operational testing. Can you give us any information on how
    the testing is going?
        Mr. Young, Admiral Sestak, General Magnus, and General Mattis. The
    V-22 was certified ready for operational evaluation on February 24,
    2005. Under the auspices of the Navy's Commander, Operational Test and
    Evaluation Force, the Marine Tiltrotor Operational Test Squadron, VMX-
    22, formally began the V22 OPEVAL (OT-IIG) on March 28, 2005. It is
    ongoing today with an estimated completion at the end of June or
    beginning of July. The independent test community will not release a
    report until the testing is complete, as such, it would be
    inappropriate to comment on OPEVAL progress at this time.

        13. Senator Talent. Secretary Young, Admiral Sestak, General
    Magnus, and General Mattis, can we expect that we will be seeing the
    Secretary of Defense's certification that the aircraft's previous
    problems have been resolved?
        Mr. Young, Admiral Sestak, General Magnus, and General Mattis. Yes.
    Section 123 compliance documentation will be forwarded to USD(AT&L) on
    May 10, 2005, to support Section 123 Certification to Congress. The
    documentation package contains both the Commander, Operational Test and
    Evaluation Force (COTF) Letter of Observation as well as an independent
    assessment by OUSD(AT&L) DS/SE/AS in support of section 123 compliance.
    Both documents concluded that the MV-22 Block A has operationally
    demonstrated compliance with the four key areas (hydraulic system
    components and flight control software, reliability and
    maintainability, operations with other MV-22 and other types of
    aircraft, and downwash effects) cited in section 123 of the National
    Defense Authorization Act for Fiscal Year 2002.

        14. Senator Talent. Secretary Young, Admiral Sestak, General
    Magnus, and General Mattis, how much more costly do you expect the MV-
    22 to be from earlier estimates?
        Mr. Young, Admiral Sestak, General Magnus, and General Mattis. The
    program office is working to support the CAIG Independent Cost Estimate
    for the MS-III FRP decision. Overall costs and requirements are largely
    understood and much data exists with respect to building V-22
    production aircraft forming the basis of the Program Office estimate
    and likely the CAIG estimate. However, the CAIG's final position will
    not be complete until the August/September timeframe in support of the
    DAB decision.

        [Whereupon, at 4:40 p.m. the subcommittee adjourned.]