[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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                      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.
      
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    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.
      
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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.
      
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                        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.
      
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    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.
      
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    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.
      
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    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.
      
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    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).
      
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                  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.
      
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    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\
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    \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\
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    \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\
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    \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\
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    \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\
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    \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\
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    \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\
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    \65\ CSBA report, slide 319.
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                                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.]

                                 
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