[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]



 
                         [H.A.S.C. No. 110-138]



                                HEARING

                                   ON

                   NATIONAL DEFENSE AUTHORIZATION ACT

                          FOR FISCAL YEAR 2009

                                  AND

              OVERSIGHT OF PREVIOUSLY AUTHORIZED PROGRAMS

                               BEFORE THE

                      COMMITTEE ON ARMED SERVICES

                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             SECOND SESSION

                               __________

         SEAPOWER AND EXPEDITIONARY FORCES SUBCOMMITTEE HEARING

                                   ON

                  BUDGET REQUEST FOR NAVY SHIPBUILDING

                               __________

                              HEARING HELD
                             MARCH 14, 2008

                                     
[GRAPHIC] [TIFF OMITTED] TONGRESS.#13

                                     

                  U.S. GOVERNMENT PRINTING OFFICE
43-784                    WASHINGTON : 2009
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                   SEAPOWER AND EXPEDITIONARY FORCES

                   GENE TAYLOR, Mississippi, Chairman
NEIL ABERCROMBIE, Hawaii             ROSCOE G. BARTLETT, Maryland
RICK LARSEN, Washington              TERRY EVERETT, Alabama
MADELEINE Z. BORDALLO, Guam          J. RANDY FORBES, Virginia
BRAD ELLSWORTH, Indiana              JOE WILSON, South Carolina
JOE COURTNEY, Connecticut            BILL SHUSTER, Pennsylvania
KIRSTEN GILLIBRAND, New York         DOUG LAMBORN, Colorado
JOE SESTAK, Pennsylvania             ROB WITTMAN, Virginia
                  Will Ebbs, Professional Staff Member
               Jenness Simler, Professional Staff Member
                     Karna Sandler, Staff Assistant



                            C O N T E N T S

                              ----------                              

                     CHRONOLOGICAL LIST OF HEARINGS
                                  2008

                                                                   Page

Hearing:

Friday, March 14, 2008, Fiscal Year 2009 National Defense 
  Authorization Act--Budget Request for Navy Shipbuilding........     1

Appendix:

Friday, March 14, 2008...........................................    43
                              ----------                              

                         FRIDAY, MARCH 14, 2008
FISCAL YEAR 2009 NATIONAL DEFENSE AUTHORIZATION ACT--BUDGET REQUEST FOR 
                           NAVY SHIPBUILDING
              STATEMENTS PRESENTED BY MEMBERS OF CONGRESS

Bartlett, Hon. Roscoe G., a Representative from Maryland, Ranking 
  Member, Seapower and Expeditionary Forces Subcommittee.........     4
Taylor, Hon. Gene, a Representative from Mississippi, Chairman, 
  Seapower and Expeditionary Forces Subcommittee.................     1

                               WITNESSES

Labs, Dr. Eric J., Senior Naval Analyst, Congressional Budget 
  Office.........................................................    32
McCullough, Vice Adm. Barry, Deputy Chief of Naval Operations for 
  Integration of Capabilities and Resources, U.S. Navy...........     7
O'Rourke, Ronald, Specialist in Naval Affairs, Congressional 
  Research Service...............................................    27
Stiller, Hon. Allison, Deputy Assistant Secretary of the Navy, 
  Ship Programs..................................................     6

                                APPENDIX

Prepared Statements:Stiller

    Labs, Dr. Eric J.............................................    89
    McCullough, Vice Adm. Barry, joint with Hon. Allison Stiller.    52
    O'Rourke, Ronald.............................................    63
    Taylor, Hon. Gene............................................    47

Documents Submitted for the Record:
    [There were no Documents submitted.]

Questions and Answers Submitted for the Record:
    [There were no Questions submitted.]

FISCAL YEAR 2009 NATIONAL DEFENSE AUTHORIZATION ACT--BUDGET REQUEST FOR 
                           NAVY SHIPBUILDING

                              ----------                              

                  House of Representatives,
                       Committee on Armed Services,
            Seapower and Expeditionary Forces Subcommittee,
                            Washington, DC, Friday, March 14, 2008.
    The subcommittee met, pursuant to call, at 10 a.m. in room 
2212, Rayburn House Office Building, Hon. Gene Taylor (chairman 
of the subcommittee) presiding.

 OPENING STATEMENT OF HON. GENE TAYLOR, A REPRESENTATIVE FROM 
   MISSISSIPPI, CHAIRMAN, SEAPOWER AND EXPEDITIONARY FORCES 
                          SUBCOMMITTEE

    Mr. Taylor. The hearing will come to order.
    Today, the subcommittee meets to receive testimony from 
representatives of the Department of the Navy, Congressional 
Budget Office, and the Congressional Research Service for the 
fiscal year 2009 budget request for ship construction.
    The subcommittee is pleased to welcome our first panel, the 
Honorable Allison Stiller, Deputy Assistant Secretary of the 
Navy, Ship Programs, and Vice Admiral Barry McCullough, Deputy 
Chief of Naval Operations, Resources and Requirements.
    The second panel will consist of Mr. Ronald O'Rourke, 
Specialist in National Affairs for the Congressional Research 
Service, and Dr. Eric Labs, Senior Analyst of the Congressional 
Budget Office.
    I also would like to personally welcome all four of our 
witnesses for their testimony.
    Navy and Congress has difficult decisions regarding 
shipbuilding. It is no secret that the current Administration 
has been no friend to the Navy. By the time this President 
leaves office, we will have 60 less ships than when George W. 
Bush took office. It will be up to the next President and the 
next Congress to put our Nation back on track to building and 
maintaining a powerful fleet. However, there are some things we 
can do and must do this year to set the course for recovery.
    Current shipbuilding plans for 313 ships. At the moment 
that is pure fantasy. It is totally unaffordable with the 
resources the Department of Defense allocates to the Navy for 
ship construction. This year, in the annual Long-Range Report 
to Congress on Shipbuilding, the Navy essentially admits it 
does not have the funding to build the ships it requires in the 
far-term which is defined as after 2020.
    The Navy also increased projections of the near-term 
shipbuilding costs from $12.4 billion per year to $15.8 billion 
per year, using costs of year 2007 dollars. This was projected 
by Dr. Labs from the Congressional Budget Office with the 
Navy's adamant denial. Today, we will have the opportunity for 
the Navy to explain their revised forecast, and to receive an 
update from Dr. Labs as to his evaluation of the new forecasts.
    I am disappointed with the ever-changing shipbuilding plan. 
We have been told for the past few years that the key to 
efficiency is stability, and I agree with that. However, there 
is nothing stated in this shipbuilding plan. As I analyze the 
shipbuilding plan, I see four programs that are building ships 
on time and on budget; that is the LPD-17 class amphibious 
assault ships, the Arleigh Burke class destroyers, the Virginia 
class submarines, and the T-AKE dry cargo ammunition ship.
    And what is the Navy's answer to programs which builds 
ships on costs and schedule? To cancel the LPD-17 before the 
minimum Marine Corps requirement of 12 ships is achieved; to 
cancel the DDG-51 Burke destroyers in favor of a brand-new ship 
with 10 major technological innovations that may end up costing 
five times more than Arleigh Burke; to continue to delay 
construction of two submarines into the year 2011; to cancel 
the last two ships of T-AKE crafts.
    On 5 May, I asked Admiral Keating, the Commander of the 
Pacific Fleet, on Wednesday if he would rather have two DDG-
1000s, or five DDG-51s. He told me he preferred the DDG-51s. 
This proves to me that the Navy in Washington does not always 
listen to the Navy that actually operates the fleet.
    Although I put the T-AKE in the list of programs which are 
healthy, I would like our witnesses to address why the T-AKE as 
requested and funded for fiscal year 2008 is not being put on 
contract. The subcommittee understands that the money that was 
requested to purchase the ship was instead used to renegotiate 
contract times. And I very much want to thank Admiral Sestak 
for bringing that to the committee's attention. I understand 
that the Navy thinks it can do this because the money is in a 
working capital fund called the National Defense Sealift Fund, 
or NDSF. I can assure you that it is not the intent of Congress 
that money authorized and appropriated for a specific purpose, 
in this case procurement of a ship, be used for any other 
purpose without further authorization on the programming. I 
expect our Navy witnesses to comment on this today.
    Instead of being asked to fund these programs that are 
building ships on time and at the projected cost, we are asked 
to fund programs that are not. One such program is the Littoral 
Combat Ship. This program will go into the textbooks to train 
future acquisition officers on how not to run a program. The 
LCS will be at least twice as expensive as advertised and is 
taking twice as long to build as it should have. Neither vessel 
has been underway under its own power, and the Navy has 
canceled two contracts out since last year which are already 
funded because of cost overruns. Yet this year we are asked to 
authorize two more ships.
    A fair question to ask Ms. Stiller is, ``why?'' What is the 
difference between then and now that indicates this program is 
in any way ready to build more ships? We have been told the 
answer to this question is that there is an emergency need for 
these ships in the fleet. If that is true, then why did the 
Navy cancel the last two ships? There is no sense throwing 
money at these programs until the Navy can prove that at least 
one of these ships can get to sea and do its mission.
    They have also asked to continue to fund a class of seven 
destroyers that are the most expensive surface warships ever 
built. I understand that the program manager has gone to great 
lengths to ensure that mistakes that occurred in the LCS 
program are not repeated in the DDG-1000 program. That is good. 
However, this ship is, on order of complexity, which is orders 
of magnitude greater than the LCS; a cost overrun of only 10 
percent for the first two ships, which would be excellent for 
the first class of a ship, is still close to $700 million. With 
all the new technologies that must work out for the ship to 
sail, a cost overrun of 20 percent or even 30 percent is not 
out of the question.
    Another very risky program is the new aircraft carrier. Not 
that the Navy and Newport News don't know how to build aircraft 
carriers, they do. They do it very well. However, there is one 
major new technology, the Electromagnetic Airlift Launch 
System, or the EMALS, has not even been tested in a shipyard 
configuration, and the ship is already under construction. Just 
last week, the Navy requested an additional $40 million for 
continued development of EMALS because, and I quote, ``the 
contractor underestimated design production costs''. The cynic 
in me would say that the contractor purposely low-balled the 
bid to get the contract, knowing full well the Navy would be 
forced to pay whatever the true cost of the system turned out 
to be. Perhaps we should have built another Nimitz class 
carrier until the research and design on that system was 
complete.
    I am concerned with the plans for the so-called Marine 
Prepositioning Force, commonly known as the MPF(F). I am not 
convinced that the Navy and Marine Corps are in sync with the 
requirements of this force. I am not sure that the Navy has a 
reasonable plan to build these ships efficiently. One thing I 
do know is that breaking production lines and then restarting 
them is expensive. Losing the tradesmen who build these ships 
because of gaps in the Navy plan is unacceptable.
    And, last, I am concerned that the Navy is not taking 
seriously the law that Congress enacted last year concerning 
the next generation cruiser. The law mandates that the cruiser 
has an integrated nuclear power system, and it will have. 
Analysis of alternatives notwithstanding, I expect the Navy 
will abide by this law, not a recommendation, a law.
    I understand that the planned start date for fiscal year 
2011 may have slipped due to radar design, among other issues. 
But the issue is not the power plant. The plant is designed and 
ready to be built and installed in a hull form resembling our 
current surface combatants.
    I would also like to add for the record that we have taken 
some journalistic liberty with today's Washington Post 
editorial cartoon. And if you saw the Washington Post today, 
you will find that Uncle Sam was caught in bed with a barrel of 
oil. And the caption read, ``Why does Uncle Sam keep doing 
risky, stupid things?'' with all due respect to the Washington 
Post, we have changed that, and we have inserted the Navy 
Admiral, Admiral McCullough, and it now says, ``Why does the 
Navy keep doing stupid, risky things?'' because the Navy's 
pushback on the nuclear powered carrier, to me, strikes me as 
the exact same thing.
    The greatest vulnerability to our Nation's military is our 
dependence on fuel. At the moment, there is no viable 
alternative to refuel a Humvee. There is no viable alternative 
for an F-18 or an F-22. When it comes to surface ships, there 
is a viable alternative to petroleum, and that is nuclear 
power. And this committee spoke on that, the Congress spoke on 
it. It is the law of the land. And, quite frankly, I want to go 
on record that, as far as I am concerned, we are going to fund 
a nuclear powered cruiser or we are not going to fund a cruiser 
at all.
    With that, I would like to turn to my very capable 
assistant, the person who probably has done the best job of any 
Member of Congress of making me aware of our Nation's 
vulnerability to having our fuel cut off, and a great asset to 
this committee, our ranking member, the gentleman from 
Maryland, Mr. Bartlett.
    [The prepared statement of Mr. Taylor can be found in the 
Appendix on page 47.]

  STATEMENT OF HON. ROSCOE G. BARTLETT, A REPRESENTATIVE FROM 
  MARYLAND, RANKING MEMBER, SEAPOWER AND EXPEDITIONARY FORCES 
                          SUBCOMMITTEE

    Mr. Bartlett. Thank you very much, Mr. Chairman.
    If I might, before I begin my opening statement, I would 
like to welcome the newest member of our committee. He comes 
from the First Congressional District in the country, I 
believe, Virginia No. 1. Thank you very much, and welcome to 
the subcommittee.
    Good morning to both panels. First, I would like to say 
that I could just not give my opening statement and say ditto-
ditto to the chairman's statement. I agree completely. Good 
morning to both panels. Admiral McCullough, Ms. Stiller, Mr. 
O'Rourke, and Dr. Labs. It is a pleasure to have you here with 
us today.
    The shipbuilding hearing is always one of the most 
important held by the subcommittee. This year, given the 
critical choices Congress must make in receiving the proposed 
shipbuilding budget, this hearing seems all the more 
significant. When I speak of critical choices, I am referring, 
of course, to the very issues the chairman has already 
highlighted.
    For example, if we were to accept the budget request at 
face value, the LPD-17 production line would be shut down. This 
would mean that nearly 20 percent of the Marine Corps' 
requirement for amphibious lift would remain unfulfilled. As a 
Nation, are we willing to accept that risk?
    Conversely, if we are forced to restart production after 
fiscal year 2009, it is patently obvious that the cost of this 
ship will increase. The cost will increase not only for the 
LPD-17 line, but for future platforms that could be constructed 
using the LPD-17 hull form. I, for one, do not want this 
committee to be complicit in intentionally increasing the cost 
of shipbuilding, which is, of course, a matter of persistent 
and escalating concern.
    Although Navy procurement accounts grew by over $1 billion, 
the shipbuilding program did not. The best news in the 
shipbuilding program is that the budget request moves up to a 
per year construction of the Virginia class submarine to fiscal 
year 2011, a year sooner than previously. Ironically, that is 
not even an fiscal year 2009 matter. I hope both panels of 
witnesses will discuss what options are available to Congress 
in 2009 to enable the ramp in production even sooner than 
fiscal year 2011.
    Unfortunately, the rest of the news is rather bleak. From 
2008 to 2009, the Navy has reduced the number of ships being 
procured by approximately 25 percent. One quarter of the ships 
the Navy planned to build last year are gone. The long-term 
shipbuilding plan still speaks to a 313-ship Navy, as does the 
Chief of Naval Operations, but it is time we started facing 
facts. The Navy will never get there without either top line 
relief or a significant change in the mix of platforms. The 
Navy shipbuilding plan is based on the assumption that over the 
next 30 years the shipbuilding account will nearly triple in 
size. Do our witnesses really think this is realistic? How can 
you? If it is not, and I tell you that it is not, then the only 
other alternative is to look at the mix of platforms.
    For example, is it wise to buy destroyers in advance that 
will cost $3 billion a copy and more likely $5 billion apiece, 
if the Congressional Budget Office is right, while we shut down 
stable, more affordable production lines such as the DDG-51 
line? How much risk are we buying down with only seven DDG-
1000s at a cost of $21 billion to $35 billion, when you could 
likely have at least 17 upgraded DDG-51s for the same amount? 
And, how much risk are we buying down if we procure two more 
Littoral Combat Ships the year after we canceled two, and the 
year in which the Navy plans to conduct an operational 
evaluation and possible down select of LCS-1 and LCS-2? If 
there is no down select, the Navy has stated there will be 
design changes made to the Flight 1 ships. So the two we buy 
now will be different than the remaining 50. Is that worth it 
if those funds could keep a stable program like LPD-17 alive?
    There are many more issues like these to consider, but I am 
eager to hear from our witnesses and to give members an 
opportunity to ask questions before we are interrupted by 
votes.
    I will conclude by echoing the chairman's remarks about the 
dedication of the fine people we have testifying before us 
today. These questions that have been raised are broad in scope 
and, to a great extent, the responsibility of Congress, not you 
personally, to sort out. All we can ask of you is that you lay 
out the true warfighting requirements and be clear about what 
risks we must accept with the funding choices we will have to 
make. The rest is up to us.
    Thanks again to all four witnesses for your service to our 
Nation and for being here. Thank you very much, Mr. Chairman.
    Mr. Taylor. Thank you, Mr. Bartlett.
    Mr. Wittman, we want to welcome you to the committee, and I 
apologize for not formally welcoming you to the committee. It 
is great to have a new member of the committee, it is great to 
have someone representing that district here on the 
subcommittee. And if you would like, we would break with the 
protocol and allow you to make an opening statement. Now, don't 
expect us to be nice to you all the time, but it is your first 
day.
    Mr. Wittman. Thank you, Mr. Chairman. It is an honor and a 
privilege to be part of this subcommittee, and I look forward 
to working with each and every one of you here to make sure 
that we look after the best interests of our Nation as it 
relates to our SEACOM. Thank you again for the gracious 
introduction.
    Mr. Taylor. Do any other members have an opening statement?
    Ms. Stiller, again, Admiral, although it is the Chair of 
the full committee's desire to limit witnesses to five minutes, 
one of the beauties of this subcommittee is that we do have 
more time. And so please take whatever time you need to make 
your statement, keeping in mind that we will probably have 
votes around 11. With that, I will recognize Assistant 
Secretary of the Navy, Ms. Stiller.

 STATEMENT OF HON. ALLISON STILLER, DEPUTY ASSISTANT SECRETARY 
                   OF THE NAVY, SHIP PROGRAMS

    Secretary Stiller. Mr. Chairman, distinguished members of 
the subcommittee, it is a pleasure for Vice Admiral McCullough 
and me to appear before you today to discuss Navy shipbuilding. 
I request that our written statement be entered into the 
record.
    Mr. Taylor. Without objection.
    Secretary Stiller. The Department is committed to build an 
affordable fleet at or above 313 ships tailored to support the 
National Defense Strategy, the recently signed Maritime 
Strategy, and the 2006 QDR. For the first time in a long while, 
the Navy's budget does not include funding for any lead ships.
    This year, our total of seven ships are included in the 
2009 budget. One Virginia class submarine, one DDG-1000 class 
ship, two LCS, two T-AKEs, and one Navy Joint High Speed Vessel 
(JHSV). In addition, although not part of the Navy's 313-ship 
force structure, the Navy will procure one JHSV for the Army in 
fiscal year 2009. I will now elaborate on the specifics of our 
request.
    The Navy is requesting $2.1 billion of full funding for one 
Virginia class submarine in fiscal year 2009, and advance 
procurement for the fiscal year 2010 boat, and advance 
procurement for two boats in fiscal year 2011.
    The Virginia class construction program is continuing to 
make progress toward realizing CNO's goal of buying two 
Virginia class submarines for $4 billion as measured in 2005 
dollars starting in fiscal year 2012. Because of your support 
with the addition of advance procurement funding last year, the 
Navy has accelerated the production of two Virginia class 
submarines per year from fiscal year 2012 to fiscal year 2011.
    One month ago, the Navy awarded contracts for the 
construction of the dual DDG-1000 lead ships to General 
Dynamics, Bath Iron Works, and Northrop Grumman Shipbuilding. 
The fiscal year 2009 President's budget request of $2.55 
billion provides funding for the third DDG-1000 class and 
advance procurement for the fourth ship.
    With recent approval from the Defense Acquisition Executive 
for the Follow-On Ship Acquisition Strategy, the Navy intends 
to utilize a fixed price incentive fee contract through a 
competition for quantity for the remaining five ships.
    The Navy remains committed to the Littoral Combat Ship 
Program, and LCS remains a critical warfighting requirement for 
our Navy. The fiscal year 2009 President's budget request 
includes $920 million for two additional LCS seaframes. The 
Navy also intends to execute the fiscal year 2008 appropriation 
for one seaframe, utilizing the remaining funding and material 
from the terminated ships. Under an acquisition strategy 
approved in January by the Defense Acquisition Executive, the 
fiscal year 2008 and 2009 awards will be for fixed price 
incentive contracts based on limited competition between the 
current LCS seaframe prime contractors.
    The 2009 President's budget request also provides 
procurement of two T-AKEs in the National Defense Sealift Fund. 
The fiscal year 2009 funding is for two ships, T-AKE-11 and 12.
    The Joint High Speed Vessel program is currently in the 
technology and development phase. Lead ship award is 
anticipated late in fiscal year 2008, with delivery of the 
first vessel in 2011. The fiscal year 2009 President's budget 
request includes $187 million for the construction of the first 
Navy funded JHSV, and $173 million for the second Army funded 
vessel.
    We have worked diligently to stabilize our shipbuilding 
plan and move into serial production. The Navy remains 
committed to ensure fiscal responsibility in shipbuilding 
acquisition programs, as evidenced by the cancellation of LCS-3 
and four last year.
    Mr. Chairman, we would like to thank you for this 
opportunity to discuss the Navy's shipbuilding budget request 
for 2009. Vice Admiral McCullough would like to remark briefly 
on the ``A Day in the Navy.'' Thank you.
    Mr. Taylor. The Chair recognizes Vice Admiral McCullough.
    [The joint prepared statement of Secretary Stiller and 
Admiral McCullough can be found in the Appendix on page 52.]

STATEMENT OF VICE ADM. BARRY MCCULLOUGH, DEPUTY CHIEF OF NAVAL 
OPERATIONS FOR INTEGRATION OF CAPABILITIES AND RESOURCES, U.S. 
                              NAVY

    Admiral McCullough. Chairman Taylor, Ranking Member 
Bartlett, distinguished members of the subcommittee, I am 
honored to appear before you with Ms. Stiller to discuss Navy 
shipbuilding. Before we begin, I would like to share with you 
what your Navy accomplished one day last month on 20 February.
    The fleet is 279 ships strong, with 127 ships underway, 46 
percent of the fleet. There are 332,800 Active Duty, 70,600 
Reserve, and 177,600 civilians serving in the Navy. Beginning 
in the eastern Atlantic, George Washington is preparing for 
future deployment to Japan while the Nassau Expeditionary 
Strike Group is under way to start its deployment. Crommelin, 
Simpson, Steven W. Groves, and Navy P-3s are conducting 
counternarcotics operations in the Caribbean and eastern 
Pacific.
    In the European theater, Cole is operating in the 
Mediterranean with the British, and San Jacinto is in the Black 
Sea with NATO in Partnership for Peace Nation navies.
    Supporting Africa Partnership Station, Fort McHenry arrives 
in Cameroon, and HSV-2 Swift is in the Gulf of Guinea. 
Bainbridge and John L. Hall are on station to support President 
Bush's visit to the continent.
    In the Central Command area of operation supporting Iraqi 
and Enduring Freedom, carriers Truman Carrier Strike Group 
departs Jabal Ali, and the Tarawa Expeditionary Strike Group 
reenters the Arabian Gulf. Riverine forces are conducting a 
variety of missions in country, while in the air, Navy airborne 
ISRS sets are providing critical intelligence to Navy and 
Special Operations Forces.
    On the ground, 14,000 sailors are deployed as individual 
augmentees. Six Navy-led Provincial Reconstruction Teams in 
Afghanistan delivered aid and provided reconstruction, while 
more than 3,000 medical personnel support operations.
    Off the east coast of Africa, Carney, Whidbey Island, and 
Oscar Austin are supporting counter-piracy operations with 
coalition forces.
    In the Pacific theater, Nimitz Carrier Strike Group is 
underway in the western Pacific, providing presence while Kitty 
Hawk undergoes maintenance. Essex Expeditionary Strike Group 
continues exercises with the Republic of Philippines forces. 
The USS Ohio conducts the first ever SSGN foreign port visits 
to Pusan in the Republic of Korea.
    Finally, in the mid-Pacific, Lake Erie launches a modified 
SM-3 missile, and successfully intercepts and destroys an 
inoperable satellite containing a toxic hazard.
    These are everyday examples of the balance capabilities 
that the 2009 fiscal year shipbuilding program will provide to 
meet the challenges the Nation faces with a reasonable degree 
of risk. The Navy's 313-ship force structure represents the 
minimum number of ships the Navy requires, the minimum 
capacity, if you will, to provide global reach, persistent 
presence, and warfighting effects expected of Navy forces 
outlined in the National Defense Strategy, the 2006 Quadrennial 
Defense Review, and the recently signed Maritime Strategy.
    I thank you for this opportunity to discuss the Navy's 
shipbuilding program with you, and look forward to answering 
your questions.
    [The joint prepared statement of Admiral McCullough and 
Secretary Stiller can be found in the Appendix on page 52.]
    Mr. Taylor. Thank you, Admiral. I very much appreciate you 
making us aware of what the Navy does on a daily basis. I 
regret to say that your statement had nothing to do with the 
Navy's shipbuilding request. And I guess, because it is so, 
quite frankly, pitiful, maybe you wouldn't want to talk about 
it either, because this year's request does not get us to a 
313-ship Navy, it doesn't get us anywhere near there. It 
doesn't address the problems of the past. It doesn't point out 
a plan for the future, Ms. Stiller.
    Now, quite frankly, that comes from the Administration, not 
from the brass. And, with that, I am going to yield to the 
Ranking Member, Mr. Bartlett.
    Mr. Bartlett. I think that in his opening statement the 
chairman outlined pretty concisely the positions of the 
committee. I would just like to ask you, what are reasonable 
arguments against his proposed changes to the ship procurement?
    Secretary Stiller. Sir, as we formulated the 2009 budget 
request, we looked to balance across the entirety of the Navy 
on what we needed to buy. And we think that the 2009 budget 
represents buying those needs in an appropriate fashion. We 
balance the industrial base as we go through these evolutions 
as well as with the warfighting requirement.
    Admiral McCullough. I will talk about the LPD-17 
discussion. In the shipbuilding plan, there is a statement that 
the Commandant of the Marine Corps has identified Assault 
Echelon Amphibious Lift that consists of 11 aviation capable 
ships, 11 LPD-17 type ships, and 11 LSD-41-49 class ships. And 
in that portion of the plan, the CNO acknowledges and supports 
the Commandant's determinations.
    When we looked across the portfolio that was required with 
the funds available in the 2009 budget, I think we have 
balanced it, not giving one or the other of the programs either 
a detriment or a plus to the best we could with our 
requirements.
    In the course of trying to meet the Commandant's 
requirement, we have looked at and proposed extending the 
estimated service lives of two Tarawa class LHAs and two Austin 
class LPDs.
    While that does not fully address the Commandant's 
requirement, given the funding available and the requirements 
for the entire department, specifically the Navy, we think that 
is the best balance of capability in the 2009 proposal.
    Mr. Bartlett. When we talk to the people who sail the ships 
and will have to fight the wars, we ask them about the balance 
between procuring five more 1000s, which would bring the total 
to seven, which is little more than a technology demonstration 
exercise. Contrast that with using the money supplied to keep 
the 51 line alive and to buy more of those, I think just about 
everybody we have talked to felt that their warfighting 
capability would be better if we didn't build the next five 
1000s and instead used the money to buy about twice as many 
51s.
    If you really want to get to a 313-ship Navy, why isn't 
that the right path to follow?
    Admiral McCullough. First, sir, I would say I hear the 
number twice as many DDG-51s as compared to DDG-1000s. I would 
tell you it is more than the number of five additional ships, 
but I don't believe it is twice.
    The DDG-51 is a very capable ship. That is true. I will 
tell you the capability that we put in the DDG-1000 with 
performance in the littoral, both against missile threats and 
to provide surface fire support, exceeds the capability and the 
capacity that is resident in the DDG-51.
    Secretary Stiller. And I would also add that the fleets do 
have input as we go through our budget cycle on what the 
requirements are.
    Mr. Bartlett. With oil at $110 a barrel, why is the Navy 
pushing back on our requirement to make the future large 
combatants nuclear, considering not just the cost, the life 
cycle cost, but the enormous operational advantages you get 
when you don't have to refuel for another 30 years?
    Secretary Stiller. I would tell you, sir, that the Navy is 
taking seriously the law; and we have included as part of our 
analysis of alternatives for the CGX to look at nuclear power 
as an option. And we are in the process of going through those 
requirement--that analysis of alternatives right now and 
staffing that.
    Admiral McCullough. Sir, we fully understand the law and, 
as Ms. Stiller said, one of the options or alternatives in the 
AOA is a nuclear powered variant.
    When we look at the price of oil and the projected cost of 
oil for the future and the energy density demands of a ship of 
that type, nuclear power is very worthy of consideration to put 
in a ship, understanding what Congress has passed as law.
    Mr. Bartlett. I would just like to reiterate that I don't 
think that there is any dissension anywhere in this committee 
with the proposals that the chairman has made in his opening 
statement. I hope that our mark this year, that our bill this 
year includes just those recommendations, because I think it is 
the right way for the Navy to go.
    By the way, this is not something that we have concocted up 
in a vacuum. We have had a number of discussions with the 
people who sail the ships and will need to fight our wars. And 
I think that we have a pretty good consensus that what the 
chairman has proposed in their view would certainly not produce 
a less capable Navy but would very likely produce a more 
capable Navy and more quickly get us to the 313-ship line.
    We have particular problems with the LCS; and the 
chairman's question, if you are going to buy two more from the 
same people that failed or that we thought were going to fail 
to build the LCS-3 and LCS-4 with the funds appropriated, why 
do we think that we should buy two more now when we haven't 
done a down select and when we are going back to the same two 
contractors?
    Secretary Stiller. Sir, I will let Admiral McCullough 
comment on the requirement, but I will talk to you a little bit 
about the acquisition strategy and where we were last year when 
we made the decision to terminate LCS-3 and then later 4.
    We tried, as you know, to control costs. We approached both 
companies to fixed price LCS-3 and 4, and we could not come to 
an agreement on that, primarily because of where they were in 
construction. When you look at where LCS-1 and 2 are today, 
LCS-1 will go on trials this spring and LCS-2 will be launched 
this spring. So they are quite a bit further along in 
construction, and so the shipbuilders will have a better sense 
of what the true cost of the ships are.
    And so what we are proposing is the competition for 
quantity, combining the one ship in 2008 and two in 2009, and 
add to that competition will be a fixed price competition. So 
that should balance the exposure that the Department has on 
those ships. And I do think that the companies will be much 
more comfortable bidding in a fixed price environment because 
of where they are in the construction of the two lead ships.
    Admiral McCullough. As far as the warfighting requirement, 
the warfighting requirement for LCS has not changed, and none 
of the warfighting capabilities in the ship have been changed 
since its inception. We do have a current critical warfighting 
need, an unfilled gap, if you will, in the area of swarming 
small boats armed with anti-ship cruise missiles and 
specifically with anti-access strategies using mines. And LCS 
brings us those capabilities.
    The decision to cancel LCS-3 and 4 was very difficult, and 
the CNO and the Secretary, Ms. Stiller and I and a multitude of 
others, discussed this at length, understanding that if we 
canceled the ships, what we were doing to exacerbate the gap, 
if you will. But based on the performance of the two 
contractors at that point, it was prudent to cancel those two 
ships even though it stretched out our ability to procure this 
capability that we need to fill the warfighting gaps, sir.
    Mr. Bartlett. Mr. Chairman, I would just like to note that 
if the LCS is going to live up to the anticipations we had for 
it when it was first proposed to us, we really need to have an 
at-sea mission package change capability. To do that, we need a 
medium lift helicopter. The 60 just isn't big enough to do 
that. And so the present plans are that the LCS will have to 
leave the fight, steam to port which may be 3 days away, change 
the mission package, and steam back, so that it could be absent 
from the fight for a week. That really shouldn't be necessary, 
it wouldn't be necessary if the Navy had a medium lift 
helicopter so that the mission package could be changed off 
with another ship. And I hope, then, that if we are going to 
proceed with these procurements, that the Navy would be 
insistent that we have an at-sea change capability. Because if 
we don't, it really depreciates the effectiveness of the LCS. 
Does it not?
    Admiral McCullough. Sir, that was never part of the 
requirement for LCS to do, and that is the change of mission 
packages. The thought process here is there would be the 
appropriate number of mission packages deployed to the forward 
theaters, and that the combatant commanders with actionable 
intelligence would appropriately configure those ships to fight 
the missions that he saw in a potential crisis. And so we have 
given the capability, the modularity, if you will, with these 
mission packages to enable any ship to be outfitted with any of 
the three packages.
    And I understand what you are saying about the medium lift 
helicopter. No, it is true that an H-60 cannot lift the mission 
package. But that was never the intent, sir.
    Mr. Bartlett. If this is a workaround, then I don't think 
it should be necessary, because it really will depreciate the 
flexibility of the LCS and its capabilities in future fights.
    Thank you very much, Mr. Chairman.
    Mr. Taylor. And Admiral McCullough and Ms. Stiller, the 
ranking member has raised what I think are some very valid 
concerns. Anyone who has read a history book on the Battle of 
the Midway knows that one of the things that attributed to the 
American victory was the Japanese's need to rearm their 
bombers, and the time it took for them to be on deck as they 
rearmed from torpedos to land attack. So there is obviously 
historical precedence for the gentleman's concerns.
    What I would ask, and I will also say that three years ago 
I had never heard of the hogging and sagging calculation, using 
the Coast Guard screwup on their program. But for the rest of 
my life, if I don't ask, did someone run a hogging and sagging 
calculation on this vessel before we build it or modify it, 
shame on me.
    So given that, the gentleman has some very valid concerns. 
I would ask that you and the Admiral find some time in your 
schedule between now and markup where you could meet with us 
and address the gentleman from Maryland's concerns, and see if 
there is anything we can do up front. Again, we are about 
finding vulnerabilities and addressing them before sailors lose 
their lives needlessly.
    Admiral McCullough. Yes, sir. We would be happy to.
    Mr. Taylor. Thank you. With that, the Chair recognizes the 
gentleman from Connecticut, Mr. Courtney.
    Mr. Courtney. Thank you, Mr. Chairman. And I want to thank 
the witnesses again for their testimony. Particularly Secretary 
Stiller, your positive reviews of the Virginia class program is 
something that I am going to sort of take or interpret as a 
back-handed compliment to Mr. Taylor and the subcommittee, 
because we again stepped out of line a little bit from the 
budget that was submitted last year and passed the $588 million 
advance procurement because I think we believe in the fact that 
this is a shipbuilding program that is really hitting all 
cylinders.
    The New Hampshire, which Admiral Ruff has turned the valve 
on the graving dock a couple weeks ago to flood, is eight 
months ahead of schedule in terms of delivery, a million fewer 
man-hours in terms of construction. I mean, clearly, both 
Northrop Grumman and Electric Boat are again getting the kinks 
out and creating a much more efficient program. And I guess 
with that in the context, as Mr. Taylor indicated, the budget, 
despite the fact that we did a substantial advance procurement 
last year, again, the request is two ships a year, two subs a 
year, in 2011.
    When I asked Secretary Winter a couple weeks ago why they 
didn't go to 2010, his answer was that the Navy didn't want to 
get into a 2-1-2 building schedule. But my recollection is, 
last year, when industry testified before this committee they 
actually said that that was a schedule that they could go with. 
You know, building five over three years instead of four over 
three years would be better in terms of maintaining the 
momentum that they are building up and creating, by your own 
testimony.
    So I just wonder if we could again revisit that for a 
second, and what your thinking was about not going to 2010 with 
that advance procurement money we appropriated last year.
    Secretary Stiller. Yes, sir. First, I would just like to 
comment. You are absolutely right, the Virginia program is 
doing quite well. But I think that proves what happens when you 
can get into serial production and actually come down a 
learning curve. It is a good news story. I could tell you, four 
years ago when I came into this job, Virginia was struggling as 
well with lead ship issues. So once you get into serial 
production, that is good.
    Now, to address your question, what the Secretary said is 
exactly what we looked at. We didn't want to get into a 2-1-2 
sawtooth type profile, because, as we looked at the industrial 
base curves we knew we would see hiring and then a dip-down to 
go back up again, and we thought it best to have a gradual ramp 
to a steady state.
    So I hear that industry said that, but from our analysis we 
felt it would be prudent to put it in 11, so that, when you 
went to two, you stayed at two.
    Admiral McCullough. And, yes, sir. When we looked at the 
profiles and the workload that Ms. Stiller said, we agreed with 
that. And, again, it is the best fitted capabilities across the 
Navy's entire shipbuilding portfolio. We wanted to accelerate 
the two-a-year procurement of Virginias. And when we balanced 
the risk to the Navy across all our shipbuilding portfolio, 
2011 was the right year to put that boat in the program.
    Mr. Courtney. Well, thank you. Again, I think the overall 
goal I think we agree on, which is that we want to smooth out 
the process and keep, again, this momentum of early delivery, 
which again I think is going to help the Navy with that 
shortfall in the submarine fleet 15 years out which we have 
talked about in this committee certainly many times, the CRS 
witness I think later today may have some thoughts about the 2-
1-2 approach, which again we will just sort of keep exploring 
that.
    One other idea that is being discussed, and I am sure you 
know this, is whether or not, again in the interest of making 
sure that we don't lose time and waste costs, is whether we can 
advance in the 2009 budget some funding for early construction 
of the 2011 second sub this year. And, again, in other words, 
man-hours would be moved forward into the 2009 budget year, 
again with the goal of shortening the delivery for that 2011 
second sub. And I don't know if you have any thoughts on that 
or if that is an idea that we can sort of again discuss and 
hopefully work together on.
    Secretary Stiller. I don't know the specifics of the 
request at this point. We have had advance construction 
authorization for other ships in the past. We have had it on 
the big deck amphibs, on the carriers and a couple LPDs a few 
years ago. And, really, you have to get into the details of how 
that money would be used and is there a future bill to the 
Department. We would have to understand that as well. If we 
advance on one, does that mean we need to advance on all of the 
rest in the multi-year.
    The other comment I would make about this next multi-year--
and thank you very much for giving us the authorization for 
that. That is most helpful. We will need to--the earlier ships 
in that multi-year are the ships, the boats that we are going 
to work to get down to the $2 billion savings. So we are doing 
some nonrecurring engineering in those ships, and so we also 
want to make sure that we have that time to do that disciplined 
R&D or design efforts so that we don't have issues in 
construction. But we have to balance that with advanced 
construction as well.
    Mr. Courtney. One last question, Mr. Chairman. The 2009 
shipbuilding plan that you submitted, one of the changes in 
addition to the timeline for the overall fleet is that the SSBN 
was 14 in the last years and it is down to 12. And I just 
wonder if you can explain that change.
    Admiral McCullough. Yes, sir. What we looked at with 
respect to the ballistic missile submarine replacements is the 
operational requirements for 12 submarines. And the 14 is based 
on having to do a midlife refueling of the ballistic missile 
submarines. And given the advances in reactive technology, I 
would rather you talk to Admiral McDonald about. We can go to 
single reactor cores, life of the ship reactor cores. And so 
since we don't need to refuel the ships at midlife. That is the 
reason we went from 14 to 12 submarines.
    Mr. Courtney. We will continue some discussion on that 
issue. Thank you, Mr. Chairman.
    Mr. Taylor. The Chair thanks the gentleman.
    And without putting any undue pressure on the new gentleman 
from Tidewater, Virginia, I would just quickly remind you that, 
in the brief time I have been here, you are following in the 
footsteps of Owen Pickett, Norm Sisisky, Herb Bateman, and the 
late Jo Ann Davis. So, now that we have put all that pressure 
on you, I want to recognize the newest member of our 
subcommittee, Mr. Wittman.
    Mr. Wittman. Thank you, Mr. Chairman. It is certainly an 
honor and a privilege to be part of this committee. And I begin 
a question for Deputy Secretary Stiller. This is going to be 
more general in scope.
    The Congressional Budget Office estimated the Navy's 30-
year shipbuilding plan costs at about $22 billion a year, and 
the Navy estimated its cost at $14 billion. And that is in 
fiscal year 2007 dollars. Obviously, there is a large disparity 
between CBO's cost estimates and the Navy's cost estimates. And 
my question is twofold.
    One is, is there going to be an effort to reconcile that 
and make sure that those estimates are closer to what we would 
consider to be realistic? And, since $12 billion will only buy 
seven ships, do you believe that the CBO's budget estimate is 
more realistic than the Department of Navy's?
    Secretary Stiller. I would answer that I believe the Navy's 
estimate is more accurate. We have certainly had good dialogue 
with Dr. Labs and CBO. And some of our assumptions are just 
different, and so that is where you see the disparity.
    We have done a very hard scrub over the last several years 
to make sure that our cost estimates are more realistic, and 
you have seen that migrate over time. We look at material 
escalation over time. And we don't just accept indices that are 
given to us; we look at it specifically in the shipbuilding 
sector, and we use those to budget. We understand man-hours to 
build ships; we understand density factors in ships. And, for 
example, on DDG-1000, we made a conscious decision in the 
design to make it more producible, to make the spaces more open 
and less densely packed, because we know that drives costs. And 
so those kinds of assumptions are factored into our estimates, 
as well as the historical information that we have from ship 
construction for many, many years.
    Mr. Wittman. Thank you. A question concerning the LCS 
program. You have previously stated that procurement of 
additional LCS ships for the operational evaluation of LCS-1 
and 2 is necessary in order to fulfill urgent operational 
needs, such as mine warfare in the littorals. As well, the Navy 
has argued against cuts to the mission modules, despite the 
fact that the number of LCS seaframes has been reduced, citing 
your ability to use the systems contained in the mission 
modules on other platforms. Can you tell me what funds are 
included in the fiscal year 2009 budget to test and integrate 
these mission systems into alternative platforms as a plan B in 
case the LCS program continues to experience difficulties? If 
there are none, how can you assert that these capabilities are 
urgently needed?
    Admiral McCullough. First, sir, there is no R&D money or 
OPM money to place the mission modules on other platforms. That 
said, there are--and I will correct this number if I get it 
wrong--there are about five DDG-51 class ships that can deploy 
the remote mine hunting vehicle that is a part of the mine 
mission module.
    When we were working through the capability concerning 
airborne mine countermeasures, originally that was envisioned 
to deploy on an aircraft carrier. So there is a potential to 
put that capability on an aircraft carrier and carry it to a 
forward theater.
    I caution that, because if you put airborne mine 
countermeasures capability on the aircraft carrier, you are 
impacting the footprint of the other helicopters that go on the 
aircraft carrier.
    So while we don't have any money in the program to put that 
capability on other ships, the ability exists to put portions 
of the mine mission module on other platforms.
    Mr. Wittman. Thank you, Mr. Chairman.
    Mr. Taylor. The Chair thanks the gentleman.
    The Chair now recognizes the gentleman from Washington 
State, Mr. Larsen.
    Mr. Larsen. Thank you.
    Secretary Stiller, you mentioned in response to Mr. 
Courtney's question regarding serial productions, once you get 
into serial production costs come down. As it applies to DDG-
1000, are we planning enough DDG-1000s to get into what you 
would call serial production if we are only doing seven? How 
can we get that cost to come down if we are only doing seven?
    Secretary Stiller. We do expect to see some learning as we 
go along, and that has been factored in as we priced the ships. 
So, yes, sir, you will see some learning on even seven ships.
    Mr. Larsen. Even on seven ships?
    Secretary Stiller. Yes, sir.
    Mr. Larsen. And then we will end the program just in time 
to start on something else, it seems.
    Secretary Stiller. Well, sir, it also depends on the way 
forward. We talked about CGX. And so there may be technologies 
that migrate from DDG-1000 into the new platform, and so those 
skill sets would be retained for CGX as well. That is a 
possibility.
    Mr. Larsen. And I think one of the concerns you are hearing 
is a lot of possibilities and not hearing enough about 
probabilities and programs that we are having a lot of problems 
with.
    Secretary Stiller. I would say on DDG-1000, the program has 
been running extremely well, all the development that we have 
been doing to get up to the contract that we just signed about 
a month ago. We have been on cost and schedule for the software 
development and for the detail design effort that has been 
ongoing at both shipyards. This program has been around for a 
long time, about 10 years, and we have done a lot of risk 
reduction to ensure that the technologies that go into the ship 
are proven and that we know what we are getting. Now, 
integrating them will still be a challenge, and I am not going 
to minimize that.
    The good news on DDG-1000 as well is we will be 85 percent 
complete with design before construction starts this August, 
and that is comparable to what we saw on Virginia class, and 
that was a very good news story from a rework perspective. I am 
very optimistic there. LCS, we only saw about 25 percent of the 
design done.
    Mr. Larsen. So we recently entered into construction 
contracts for the first two 1000s. So are you confident we can 
build these ships to the funding you requested then?
    Secretary Stiller. Sir, I will tell you, lead ships are 
hard. I am not going to give you an absolute, but I feel very 
comfortable with the contracts that we have signed with 
industry. I think industry would tell you they are comfortable 
or they would not have signed the contracts. So, right now, 
with the design being 85 percent complete when we start 
construction, we should have rework minimized. I won't say 
there won't be an oops somewhere later on, but right now I feel 
very comfortable with where we are.
    Mr. Larsen. I appreciate that. And you can understand the 
skepticism on this side of the dais. But you placed these ships 
under contract, the actual construction starts are still months 
away. Are you confident that you can execute the third ship 
that is requested in the fiscal year 2009 budget?
    Secretary Stiller. Yes, sir, we are. The dual lead ships 
were actually counted in 2007, and the design effort was 
continuing as we negotiated the contract for the construction 
piece. We knew we had to do the design to be ready to start 
construction. So I think, yes, we will know where the design 
is. We will also have return data. One of the things that we 
had authorized the yards to do was to each take a complex part 
of the machinery spaces that the other guy designed, build it, 
and so those will deliver in August and later, I think it is 
December, respectively. And that will be to prove out that the 
digits, the steel to show that the design tool is producible at 
the corresponding yards.
    So I think that that is going to be a good news story for 
us. That construction on those modules is going quite well 
right now.
    Mr. Larsen. We may have some follow-up there.
    Admiral McCullough, as CNO and you as well, stated, in 
general, that 10 operationally available aircraft carriers are 
too few, and we want to have a minimum of 11. You stated that 
you have taken steps to mitigate the 10-carrier period that 
would be created starting in fiscal year 2013, should the 
Enterprise be retired, but that you will struggle to meet the 
deployment needs if that time period extends beyond 33 months 
or so.
    Should the CVN-78 deliver on schedule, there will be a 32-
month gap between the retirement of the Enterprise and delivery 
of the Ford. Moreover, according to the December 2006 DOD 
report on the Ford's progress, there is some indication the 
Ford wouldn't reach initial operation capability until 
September 2016, which would result in an operational 
availability of 45 months.
    Given that this 45-month or more gap is possible, and 
seemingly probable according to the DOD report, what steps is 
the Navy taking to ensure that it can continue to meet 
deployment needs with a 10-carrier Navy over an additional 12 
months?
    Admiral McCullough. Yes, sir. Thank you for the question. 
One thing we have done is we have mitigated the potential of 
going to 10 aircraft carriers or the period of going to 10 
aircraft carriers between the delivery of the Ford in fiscal 
year 2015 and decommissioning of the Enterprise or inactivation 
of the Enterprise at the beginning of fiscal year 2013 by, one, 
moving Roosevelt's complex refuel and overhaul into fiscal year 
2009 and as part of our fiscal year 2009 request to Congress. 
That gains two months of operational availability of that ship 
by moving it into 2009.
    Mr. Larsen. On the back end?
    Admiral McCullough. On the back end. The other thing that 
we have done, is there is a lean initiative to combine the post 
shakedown availabilities with either the refueling overhauls or 
the new construction build period that results in approximately 
five months of additional operational availability. So when you 
couple those two things together, in the case of Roosevelt, we 
gain seven months of operational availability.
    We have also looked at PIA's carrier maintenance 
availabilities that would occur in that gap time, and have 
moved some of them to the right so that we will be able to meet 
an annualized six-plus-one FRP capability for the aircraft 
carrier fleet.
    The Enterprise is a tough problem. I was the engineer on 
that ship for 26 months back in the 1995 to 1997 time frame, 
and it is like the infrastructure in your house; you know, once 
she gets old, she's old. And, also, I would tell you that the 
power plants, much more complex than the ones we have today.
    Why am I telling you all this? If we put Enterprise in a 
maintenance availability in the beginning of fiscal year 2013 
to extend her to maintain the 11 aircraft carriers, that would 
cost us about over $1 billion in maintenance. And then, when I 
look at the ops and the personnel costs, it is about $2.2 
billion to extend her. We would get one more deployment out of 
that ship after that time period.
    It also significantly impacts the complex refuel and 
overhauls of the Nimitz class carriers, specifically Lincoln. 
And when Lincoln comes home in that time frame, if she doesn't 
go in when she is supposed to, she has no acebow whatsoever and 
she will have to remain in port, if you will, until we can get 
Enterprise out. And that subsequently delays every complex 
refuel and overhaul.
    So any acebow we gain by putting Enterprise in another 
availability is just overwhelmingly consumed and puts us in a 
negative acebow by the follow-on effects to the refuel and 
overhauls of the other aircraft carriers.
    Mr. Larsen. Can you clarify? On the description you just 
gave, it assumes still a 33-month gap. It doesn't address the 
potential additional 12 months.
    Admiral McCullough. Well, when we worked the 78 issue, part 
of the ability to mitigate from 45 to 33 months is that lean 
initiative that I spoke about. So you get some time back. So I 
think for a short period of time--and I consider 33 months, 3 
years, a relatively short period of time--that we have worked 
hard to ensure we have the operational availability to carrier 
force, which is COCOM's requirements. Long term, we cannot do 
that. The minimum number of operational aircraft carriers we 
need in the carrier force is 11.
    Mr. Larsen. And just if I may, Mr. Chair.
    Mr. Taylor. Certainly.
    Mr. Larsen. You mentioned the Lincoln and presumably there 
is other folks coming in for--other ships coming in for 
overhaul. So you are saying if you do this, you can maintain 
your schedule for the overhauls on any of the other Nimitz 
class carriers that are coming in, the schedule that you have 
laid out?
    Admiral McCullough. What I am trying to address, sir, is 
there is only one drydock where they can do this work. And if 
you put Enterprise in it, Lincoln can't go in to do what she 
needs to do. So she is delayed and then every subsequent 
complex refuel and overhaul is delayed. Additionally, once 
Enterprise came home from this other deployment, she doesn't 
have the availability to deploy again. And I can talk to you 
about that off line. And I can't get her into dock for another 
four or so years to get her inactivated. So I have no acebow 
for that ship during that time period. But because it a nuclear 
powered warship, I have got to maintain the crew on it. So now 
I have got a cost extending that ship and I have no operational 
availability out of it.
    Mr. Larsen. Well, maybe after our break, two weeks in--
coming back in early April, maybe you and I can talk about 
that.
    Admiral McCullough. Yes, sir, I would be happy to do that.
    Mr. Larsen. Thank you. Thank you, Mr. Chairman.
    Mr. Taylor. The Chair thanks the gentleman from Washington. 
The Chair now recognizes in the order of people who were here 
at the time of the gavel, the gentleman from Pennsylvania, 
Admiral Sestak.
    Mr. Sestak. Thanks, Mr. Chairman. I wanted to ask about the 
30-year shipbuilding plan. Last year it came in at--the 2008 
plan at $16 billion a year. I think the Congressional Budget 
Office had assumed it was going to be $22 billion a year. But 
you said we could do the $16 billion a year if we made sure 
that--even assuming that there is no real growth in the top 
line, that R&D--which hasn't happened--that R&D would decline, 
but this year it has gone up, that any personnel costs would be 
offset by a decrease in personnel. What has changed that in one 
year you have gone from $16 billion to $22 billion?
    Admiral McCullough. Sir, I will talk to that a little bit. 
The original plan that we submitted had the shipbuilding costs 
at $13.4 billion a year in 2005 dollars. It escalated to 2007. 
That is about $14.4 billion. Over the course of the last year 
as we developed the plans submitted with the budget this year, 
as Ms. Stiller talked to, we looked at inflation specifically 
with materials that are associated with building ships and 
compared that to what DOD mandated is our inflation line. And 
it is higher, the actual inflation is higher. And so----
    Mr. Sestak. So one reason is inflation. What are the other 
reasons, Admiral?
    Admiral McCullough. That is what drove----
    Mr. Sestak. But inflation hasn't been 40 percent.
    Admiral McCullough. No, sir. But in our plan, what we say 
the 2007 dollars would be to execute our plan is $15.8 billion. 
So in comparison, if you put in 2007 dollars to 2007 dollars--
--
    Mr. Sestak. My dollars were in 2008 dollars. So the 2008 
was 16 to 22. You are getting 11 billion, 12 billion today, 
correct?
    Secretary Stiller. We only have the 2007 figures in front 
of us. We can escalate that for you for the record.
    Mr. Sestak. Would you agree it is a pretty significant 
increase? It is 19 percent for the first 5 or 6 years. But 
after that over the whole 30 years, you agree it is about a 40 
percent increase?
    Admiral McCullough. What I say, sir, and the reason we 
broke the plan down into near term and far term in this 
particular plan is the near term being through 2020.
    Mr. Sestak. The near term, I will buy that. It is about 19 
percent. The long term is about 40 percent.
    Admiral McCullough. We think we have a reasonable handle on 
it. Outside of 2020, you have things like the ballistic missile 
submarine recap, the DDG-51 recap and the other platforms. We 
don't really know what those are.
    Mr. Sestak. I have got your point.
    Admiral McCullough. Yes, sir, I agree.
    Mr. Sestak. The reason I was curious was a couple. Last 
year, Ms. Secretary, you had talked very well about corporate 
ways you have been working with all the industry to leverage 
material buys and workload sharing. I had asked for a copy of 
those meetings and I haven't gotten them yet. If you could, I 
really would very much appreciate them. And the reason it was 
is I was just curious how that all is resolved in meetings you 
have gone through and the list of the formal meetings that you 
have had. Why weren't the SSBNs in the----
    Admiral McCullough. Why didn't we include----
    Mr. Sestak. Why didn't you have SSBNs in your 30-year 
shipbuilding plan? Because that will rachet up the cost a lot 
more.
    Admiral McCullough. I agree it will put significant 
pressure on the account. We didn't include them because we are 
still going through the initial definition of what that 
capability is.
    Mr. Sestak. But there is other ships in there you are going 
through the initial, CG(X)----
    Admiral McCullough. CG(X) is a more near term. We don't 
know what the ballistic missile submarine replacement is going 
to be. So any wedge I put in there would have been a guess.
    Mr. Sestak. My next question has to do with NSDF funds. You 
probably saw I asked the Secretary that question. Should we be 
having an LHA $3.5 billion warfighting ship in--national ship--
NDS--I have forgotten. The reason I ask is you nippered money 
back and forth between--you know, we gave you a 12th--11th 
LKA--ET-AKE last year. You have come back and asked for the 
11th again. And you took that money and paid off some contracts 
for the previous ships. So if you put a ship into the national 
ship--what is it called again?
    Secretary Stiller. National Defense Shipbuilding Fund.
    Mr. Sestak. National Defense Shipbuilding Fund. You don't 
have to come back to Congress to ask to move money around. And 
so my question is should we understand that maybe with T-AKEs--
but why put an LAH or--into the--$3.5 billion ship into that?
    Secretary Stiller. Yes, sir. 10 USC 2218 defines DOD 
sealift vessels. And in that statute, maritime prepositioning 
ships are included. So our--but that TLHA----
    Mr. Sestak. But that could mean you could call an aircraft 
carrier a maritime prepositioning ship and you could put it 
over--if I follow your line of reasoning, you have taken LHA 
and now said I am now going to designate it as a maritime 
prepositioning ship. You could theoretically call the next 
aircraft carrier a maritime prepositioning ship and it could 
fit under that description you just gave me. Am I wrong?
    Secretary Stiller. I am going to answer it a different way, 
sir. I am not going to say you are wrong. The MPF(F) aviation 
ship we have in the budget does not include all the warfighting 
capability that you would get in an assault echelon ship.
    Mr. Sestak. Could you give me the differences later?
    Secretary Stiller. Yes, sir, I would be happy to. So that 
is why it was considered preposition. On the T-AKE----
    Mr. Sestak. My memory of it, it is not very much different. 
But anyway, let me just move on. Why didn't you put the money 
for the cost overruns of the contracts of the T-AKE under the 
completion of prior year shipbuilding line? Shouldn't you have 
done that to highlight it to Congress that these were overruns?
    Secretary Stiller. Legally, as we looked at it, you are 
right. The NDSF is a revolving fund. And we have the 
flexibility. We did--before we made the decision to enter into 
this contract negotiations, we did brief the staff, both on 
this committee and on the appropriations committee because we 
wanted to make sure everybody knew what we were----
    Mr. Sestak. But shouldn't you put it into the Congress 
line?
    Secretary Stiller. No, sir. The prior completion line is 
specifically SCN funded and the National Defense Sealift Fund 
doesn't have a prior completion line. The flexibility of the 
account allows you----
    Mr. Sestak. Allows you to do that?
    Secretary Stiller. Yes, sir.
    Mr. Sestak. Ms. Stiller, the reason I ask these questions 
is I honestly believe you all do great work over there. But you 
approximately get $11 billion today for shipbuilding. You are 
asking to increase your budget 50 percent almost, or half, to 
afford the shipbuilding plan of the future. And it just seems 
to me that that type of flexibility or the ability to know what 
you are working with industry on and the ability to have--you 
know, if there is differences, if there is a $3.5 billion ship 
which I see no differences in this fund and is less transparent 
than it might be of how money is utilized by Congress, it seems 
to me there really has to be some effort of which you spoke 
about last time of trying to manage better, be 100 percent over 
cost. Because Navy traditionally has only been 5 percent of its 
shipbuilding over cost on ships. Now you are upwards of 100 
percent on LCS and LPD-7 and you can go on down the line, DDG-
100. It just seems to me the more transparency rather than this 
flexibility and the more openness of working together with 
Congress, the industry and you could help a lot. You are at 50 
percent increase almost in shipbuilding money, that is a lot at 
a tough time.
    Thank you very much.
    Mr. Taylor. The Chair thanks the gentleman for a really 
excellent line of questioning. And I would encourage the 
gentleman from Pennsylvania to follow up his line of 
questioning with some language requesting the committee staff 
that would close that loophole so that when we as a committee 
fund a ship, direct the Navy to build a ship, that we don't 
discover a year later that those funds have gone for something 
other than what we thought the law said. So I very much 
appreciate you bringing this to the committee's attention. I 
would encourage you to follow up on that.
    With that, I would like to recognize the gentleman from 
Indiana, Mr. Ellsworth.
    Mr. Ellsworth. Thank you, Mr. Chairman. You can breathe a 
sigh of relief. The former admiral took all my questions word 
for word. It is amazing how--he must have looked at my notes. I 
will be a little less specific.
    A, I would like to associate my comments with the chairman 
and the ranking member on the importance of moving toward that 
nuclear fleet. I think that is so important, anything we can do 
to move toward that. And, Secretary, I also appreciate your 
comments through this whole thing about watching the dime on 
all of these projects. We sink a lot of money--and this 
committee and the Armed Services Committee and I think the 
public want a strong armed services and don't mind spending 
money there. But they do want that money spent wisely. And I 
appreciate that you do look at that.
    Could you touch on for me--not being a former Admiral. I 
have been involved in some building building but not 
shipbuilding. And when you talk about the 85 percent design, 
and I think you said some are even started with 25 percent of 
the design done, can you explore that a little bit for me and 
how that runs into the cost of this? I am just getting pictures 
of--getting the hull down and then starting--that is kind of 
foreign to me of how that works and what kind of cost overruns 
are because of that. Is that just the way this has to be, that 
we can't design this until we are into this and building up? If 
you could help me just explore that for a new member.
    Secretary Stiller. Certainly. We do what we call concept 
designs where you roughly know what the ship's displacement is 
going to be and what kind of propulsion plan and weapon systems 
you are going to have, and then you go into what I call 
detailed design, where you put the attributes in there, you run 
the pipe, you run the electrical, you design the space. And we 
start that with the keel up, because that is how we build the 
ships. And so when I say 85 percent of the design is done when 
we start on DDG-1000, start construction, almost every single 
space will have been touched at least to--but all of the 
spaces--we won't start construction on a space that isn't 
totally detail designed and turned over for production. We have 
learned this over time and the CATIA design tools that we 
employ, that our shipyards employ when they are designing, 
having really helped us. We have learned that you want to be 
significantly far along in design and 85 percent complete seems 
to be about the right metric.
    We saw really good results on Virginia. Seawolf, when she 
started construction, was only about 47 percent complete in 
design. So what you see is the rework go down. We had over 
68,000 changes on the Seawolf class. We had less than 25,000 on 
Virginia class. So you do learn a lot when you can get the 
design products complete before you start fab. But you won't--
the way we set it up on DDG-1000 is they won't start physically 
constructing a space that isn't completely designed. And so 
they will build from the keel up.
    Mr. Ellsworth. Thank you very much. Like I said, Mr. 
Chairman, most of my questions were answered by Mr. Wittman or 
asked by that. So I will yield back. Thank you.
    Mr. Taylor. The Chair thanks the gentleman. Ms. Stiller, 
let me begin by giving credit where credit is due. I want to 
thank Captain Will Ebbs, who is the Chief of Staff for this 
subcommittee. Great help on that opening statement. And really 
getting to the point of another program. I can continue--this 
is my editorial comment to see the lingering effects of a 
former Secretary of Defense, who I thought during his tenure 
short-changed the United States Navy. And I think the short-
changing of the United States Navy continues even in his 
absence. So one of the things that we had hoped to accomplish 
in changing the name of this subcommittee back to its 
traditional name of Seapower is to lay out a marker. It is not 
about the incremental use of naval power, it is about seapower. 
It is about the use of overwhelming force. It is about having a 
Navy so strong that any peer opponent would think not once or 
twice, just come to the conclusion that they don't want to 
start a war that involves the United States Navy.
    What we see is a budget request that calls for the 
incremental use of force. And I think we have discovered the 
hard way in Iraq just as we--as the Nation sadly learned in 
Vietnam, that is not a good way to go to war. You say all the 
right things, but you don't follow it up with your budget. We 
don't appear to have learned the lessons of the OCS program.
    Already Mr. O'Rourke is going to testify later that you--
and I am talking about the administrative end of the Department 
of Defense--you still can't point to any number and tell me 
that is what the DDG-1000 is going to cost. That is not a safe 
way to go into a program. You would think we had learned from 
the LCS. And in recent weeks, some very senior Navy, officials 
speaking off the record, have posed to me a question that I am 
going to pose to you. Their question to me was how would I feel 
and how did I think this committee would feel if they 
terminated the DDG-1000 program and two, took the funds that 
would have gone to the DDG-1000 program and built additional 
DDG-51s, a program that has been very successful that to date I 
can't remember a single enlisted or uniformed officer of the 
United States Navy saying anything detrimental about that 
platform. We get the economies of scale of having built now 
well over 50 of these platforms, a known supplier base. And as 
we have all learned and Mr. Wittman is going to learn, the best 
value you get in any program is the last year you built, not 
the first year you built.
    So having not invented this thought, but actually having 
some people that I greatly respect pose the question to me, my 
question to you is how quickly could you in your capacity meet 
with our Nation's supplier base, pose that question? What kind 
of price and what kind of availability would be for a multiyear 
of additional DDG-51s should this Nation make the decision in 
this year's authorization bill--the House and the Senate would 
have to concur and the appropriators would certainly have to 
concur. What kind of price, what kind of delivery could we have 
for additional 51s in lieu of DDG-1000s? I would also--since I 
am guessing there are industry representatives in this room--
welcome them to contact the committee directly. But, again, we 
don't sign contracts. You do. But I think it is a question that 
was--I am glad someone asked it. I think it is worth pursuing.
    I very much appreciate the Commander in Chief of the 
Pacific Command for his forthright answer before the committee 
when asked if given the option of a couple of 1000s or five 
DDG-51s. Some concerns have been raised about how best we can 
make the transition from this program, the existing programs, 
to the nuclear cruisers. Admiral McCullough gave Mr. Bartlett 
and I, I thought, an excellent briefing on some of the 
challenges associated with trying to take some of those new 
platforms and put them on the DDG-51 hull. I greatly appreciate 
your time in walking us through it.
    But as far as getting our Nation to a fleet of 313 ships, 
getting the best return on the taxpayer's dollar, I have got to 
believe that that proposal makes a lot of sense. So I would 
welcome--I have now laid that out in front of you. I would like 
to hear your thoughts on it.
    Second, going to the Admirals. Again, very astute 
observations on the enormous cost and the limited return of 
refueling the Enterprise in the fairly new future, a future 
that we have to address. I would also say to you, Ms. Stiller, 
and whoever--you know, again I hope that the next--I think you 
do a good job. I would hope that the next Administration would 
be smart enough to let you continue in your job. Neither one of 
us know that that is going to happen, but I have said that.
    Secretary Stiller. Thank you.
    Mr. Taylor. But when that challenge comes down the line, I 
would think if you in your capacity approached this committee 
with an all-or-nothing approach of saying I want to go to a 11 
carrier task force--I am sorry--to 10, from 11 to 10, I would 
think you would meet a very poor response. On the other hand, 
if you were to approach this subcommittee--and I can't speak 
for the appropriators--and say for the--anywhere from $2 
billion that I have heard from some senior Navy officials to 
the 1 billion that I have heard from the Admiral today, that we 
would spend to get an additional 7 months out of the 
Enterprise, if I could have that money to purchase an 
additional nuclear powered submarine, if I could have that 
money to purchase an additional amphibious assault ship, if I 
could have that money to get started on the nuclear cruiser 
program, I would believe that you would find a much more 
favorable response from the people who have to answer to the 
moms and dads of those sailors. I think it is fairly easy for 
us to say we could either have 7 months out of a carrier or 30 
years out of one of those platforms which gets us closer to our 
313-ship Navy.
    So having thrown those two very real scenarios that I hope 
this subcommittee will talk about between now and our May 
markup, I would like to hear your thoughts on that. And if you 
are not comfortable about talking about it today, I would more 
than welcome your thoughts between now and markup. Let me also 
say that I am not opposed to--and again I can only speak for 
the subcommittee--but I am not opposed to proposing to the 
subcommittee some either/or options for funding. No one was 
more frustrated. And with what I thought was an excellent 
committee mark last year, the Administration only asked for 7, 
this committee funded 10 vessels only to have it get a heck of 
a lot closer to the President's 7 at the end of the day, 
including to the best of my knowledge on the day that the 
conference report was signed, to have the Secretary of the Navy 
actually pull one of the ships that we just put in the budget 
out of the budget. And I don't want to see that happen again. 
It takes a whole year for Congress to fix a mistake like that. 
And quite frankly I don't want to see that again.
    So I would be willing to work with Secretary Winter and the 
Navy brass to propose some either/or funding options so that we 
don't find ourself in that situation to where if a program that 
is in the bill for some reason needs to be canceled, that we do 
something else worthwhile for the Navy fleet with those funds 
rather than waiting a whole year to correct that.
    So three things I have tossed out at you. We have got to do 
better. And the keyword is ``we.'' And Congress wants to do our 
part, but we certainly cannot keep repeating the mistakes of 
the LCS program, which is the Navy program, the Coast Guard 
problems with stretching the 110s to 123s. The track record 
recently is not very good.
    Secretary Stiller. Okay. I will start with the DDG-1000/
DDG-51 question. The current program on record for the DDG-1000 
is 7 ships. And I articulated our acquisition strategy way 
forward. The DDG-51 program is 62 ships. The last multiyear 
contract was awarded in fiscal year 2002 and the last ships 
were appropriated and awarded in fiscal year 2005. So as you 
talked about consulting industry and the vendors, I absolutely 
think we would have to do that to have a really good sense of 
what the true cost of a DDG-51 if you bought one, say, in 2009 
because the--and I worry not as much with the shipbuilders 
because they are still building. I am worried more about the 
vendor base because a lot of that economic order quantity for 
those ships was bought in 2002. And so those vendors have 
poised to be ready for DDG-1000 and other platforms or--could 
they restart their lines? That is the question I have got to go 
answer.
    Mr. Taylor. To that point, which is an excellent point, 
which subcontractors in particular do you worry about?
    Secretary Stiller. Reduction gear for the DDGs come right 
out--any of the lead long items, the propulsion plant and 
others--they may say there is not an issue, but I would want to 
go and make sure that we scrub that. Because the last thing I 
want to do is say it is this cost and then I come back later 
and say, no, it wasn't, it was more.
    Mr. Taylor. And, again, I very much appreciate you bringing 
that to the subcommittee's attention. So what I would ask of 
you in turn is to contact those subcontractors about a 
realistic period of time of one month from today, that you 
report back to the subcommittee on the availability and what 
price changes we could anticipate if that was the case.
    Secretary Stiller. Yes, sir.
    Mr. Taylor. Okay. Please continue.
    Secretary Stiller. Okay. I am happy to continue the 
dialogue on this. On the Enterprise question, as Admiral 
McCullough pointed out, it is a billion dollars to do the 
availability, but there is another bill to keep the 
infrastructure to support Enterprise. So the total bill is 
about $2.2 billion, and that is a bill to the Department. It is 
not currently programmed. And so for me to say what would I buy 
with it, I don't even know that--that money doesn't exist 
today. That would be over the shipbuilding budget today.
    Mr. Taylor. But, Ms. Stiller, again--and I have already 
laid out that I thought the next Administration would be very 
wise to keep you around. So it is at the moment your 
responsibility to fund that ship. The Navy would have to find 
funding sources within their budget to fund that ship. So given 
that, to use the vernacular, the monkey is on your back to find 
that $2 billion. If it is the intention of the United States 
Navy to come before this subcommittee and the other appropriate 
subcommittees and say we would like to go to 10 instead of 11, 
I would strongly recommend that given that you have already got 
the responsibility of identifying $2 billion, of approaching 
this subcommittee with an option of what else you could do for 
that. Because if all of us are in agreement that we need to get 
to a 313-ship Navy, if all of us are in agreement that we need 
to do something different and better than what we have been 
doing, I would think that that idea falls into that category.
    Secretary Stiller. Well, we will take that one for the 
record. I will work with Admiral McCullough on that.
    Mr. Taylor. Mr. Bartlett.
    Mr. Bartlett. Thank you very much for your testimony. Thank 
you, Mr. Chairman.
    Mr. Taylor. Admiral Sestak, do you have any follow-up 
questions?
    Mr. Sestak. Just one. If you do--if I heard that correctly, 
Mr. Chairman, if there is to be this effort to analyze--which I 
think is a great thing to look at, DDG, you know, the 
continuous, could I ask them maybe to throw one more into the 
mix that they might--Ms. Stiller, how many DDGs are you 
building right now?
    Secretary Stiller. A total class of 62.
    Mr. Sestak. I am sorry. DDG-1000.
    Secretary Stiller. Seven.
    Mr. Sestak. So if you are building seven of these and if 
you work through the rotation for the Persian Gulf, that means 
you could keep one of those seven ships forward at any one 
time. It takes seven to----
    Admiral McCullough. The way we looked at this, sir, was----
    Mr. Sestak. You could do it differently. You could put four 
of them in Japan if you wanted to or whatever.
    Admiral McCullough. Well, we have got them with DSG 
requirements, with the expeditionary structure----
    Mr. Sestak. So if one expeditionary strike group is--let's 
just say you want to keep it in the Persian Gulf, it will be 
one ship at all times in the Gulf. So we are building seven 
ships to keep one or two forward at $3.5 billion a piece. Some 
people have looked at the DDG-1000 as a bridge to CG(X). There 
is another thing to look at. Is having the DDG-1000 become more 
immediately a CG(X). It may not be the dream of the final CG(X) 
as you get into all the different worlds of what might be. But 
if you took your Aegis--and the analysis might show you that if 
you net the Aegis with enough volume on that radar of the DDG 
maybe by the third one--you know what I am talking about--is 
maybe you could have the third one be a CG(X). It might be 
enough decibels netted with your whole--all the other Aegis 
ships to give you practically the same capability as when CG(X) 
final comes out in 2018. So my only thing is if you are keeping 
one of these shooters forward of the seven, might it be better 
for us to go to CG(X) more immediately even though it isn't the 
final full volume of radar if you analyze all the Aegis netted 
together with it?
    Admiral McCullough. Sir----
    Mr. Sestak. I am not arguing pros or cons, but if there is 
analysis that might be----
    Admiral McCullough. I have got detailed analysis, some of 
it I shared with the chairman and the ranking member on 
Wednesday, that I would be happy to come talk to you about that 
addresses that.
    Mr. Sestak. Is it classified?
    Admiral McCullough. Yes.
    Mr. Taylor. If I may, Admiral Sestak, I would ask the 
Admiral--I appreciate him meeting with the ranking member and 
myself--to make that available to any member of the 
subcommittee or full committee that would like to attend.
    Admiral McCullough. Yes, sir. I would be happy to do that.
    Mr. Taylor. Please continue.
    Mr. Sestak. I am sorry. That was it. I have just been taken 
where we started with 32, I think, of these DDG-1000s. We are 
down to seven now. And it has got a great gun and all, but I 
just didn't know if we could leap or something, although I 
would like to see what the other analysis----
    Mr. Taylor. Admiral, one last question that I would have 
for the record.
    Admiral McCullough. Sir.
    Mr. Taylor. What other platforms could the gun that is 
envisioned for the DDG-1000, what other platforms would be 
applicable? And if you are not comfortable now, that--either 
existing platforms or future platforms that are contemplated.
    Admiral McCullough. Sir, I will tell you we looked at could 
you put the advanced gun system in an Arleigh Burke hull. And 
without doing the detailed shock analysis on it, I will tell 
you fiscally it fits. We would have to do some arrangement 
changes in it, but you can put the gun in there. My concern is 
the magazine capacity. Outside of that, we haven't looked at 
putting it in any other hull form. So I would get back to you 
on that.
    Mr. Taylor. Thank you very much. The Chair recognizes Mr. 
Wittman.
    Mr. Wittman. Thank you, Mr. Chairman. Just another follow-
up question on this 11-carrier capability. If you look a little 
bit further out into the future, you would see that the Kitty 
Hawk is scheduled to be decommissioned in November of 2008. And 
the plan is, I believe, to have CVN-77 the George H.W. Bush to 
replace that and that is set to be commissioned in 2009. It 
leaves us back in a period of--a 10-carrier fleet. Are there 
plans in the works to extend the deployment of the Kitty Hawk? 
And if not, what are the plans there to make sure that we are 
at 11 carriers versus 10?
    Admiral McCullough. First, sir, the replacement for Kitty 
Hawk in Japan is the George Washington 73. We look at Kitty 
Hawk--and to be honest with you, sir, she is about the same age 
as the Enterprise, maybe 6 months older than Enterprise. And we 
have the same issues with fender bases and material condition 
and the difficulty of maintaining those ships operationally 
ready on that particular ship that we do on the Enterprise. So 
the current plan is Kitty Hawk comes home and is 
decommissioned. Her numerical replacement, if you will, is the 
Bush. And so given when she decommissions and when Bush 
commissions, we have worked hard to make sure we maintain the 
11 carriers so that we don't take Kitty Hawk off line before we 
have Bush commissioned.
    Mr. Taylor. Are there any additional questions for this 
panel? Okay. So with that in mind, Secretary Stiller, thank you 
for being here. Admiral, thank you for being here. We are going 
to relieve you of this duty for the moment. And we would also 
like to remind Mr. O'Rourke and the next panel that since we 
have two votes and since it is about lunchtime, it would be my 
recommendation to the subcommittee that we break until 12:15. 
If there are no objections, we will be back at 12:15 for the 
second panel.
    [Whereupon, at 11:36 a.m., the subcommittee recessed, to 
reconvene at 12:15 p.m., the same day.]
    Mr. Taylor. All right. I apologize for the absence of a 
number of members between the vote of FISA on the floor and 
some other subcommittees meeting. But we do want to welcome our 
second panel, Mr. Ron O'Rourke, the Assistant--I am sorry--the 
Specialist in Naval Affairs for the Congressional Research 
Service; Mr. Eric Labs, the Senior Analyst with the 
Congressional Budget Office.
    Again, the full committee chairman normally limits his 
witnesses to five minutes. But I think we have the luxury of 
giving you whatever time you deem necessary. It is my 
understanding that there is an hour's debate on the FISA bill. 
So if you could kind of keep that in mind. And the Chair 
recognizes Mr. O'Rourke.

  STATEMENT OF RONALD O'ROURKE, SPECIALIST IN NAVAL AFFAIRS, 
                 CONGRESSIONAL RESEARCH SERVICE

    Mr. O'Rourke. Chairman Taylor and distinguished members of 
the subcommittee, thank you for the opportunity to testify 
today on these programs. With your permission, I would like to 
submit my statement for the record and summarize it for you 
briefly.
    Mr. Taylor. Without objection.
    Mr. O'Rourke. The Navy this year has increased by about 40 
percent in real terms its estimated cost for implementing the 
30-year shipbuilding plan. This increase is so large that the 
Navy no longer appears to have a clearly identifiable announced 
strategy for raising the shipbuilding funds needed to execute 
the plan. The Navy's ship recapitalization financing challenge 
appears broadly similar in scope to the Air Force's aircraft 
recapitalization challenge. But while the Navy and the Air 
Force may be similar in terms of facing major recapitalization 
financing challenges, the two services are strikingly different 
in terms of how they are responding to that situation. The Air 
Force is responding by stating directly and repeatedly that the 
Air Force budget needs to be increased by about $20 billion a 
year in the next 5 years. The Navy in contrast studiously 
avoided asking for an increase to its programmed budget in 
recent years. If one service is vocal about the need for a 
budget increase while the other is not, policymakers could 
develop an unbalanced understanding of the relative funding 
needs of two services.
    Regarding amphibious ships, the lack of a 10th LPD-17 in 
the plan has been mentioned. The 313-ship plan calls for 10 
LPDs, LPD-17s, and the Marine Corps says a force with 11 LPD-
17s is needed to meet the 2.0 MEB lift goal. As detailed in my 
statement, the Marine Corps calculates that the amphibious 
force that would be maintained under the 30-year plan would 
fall significantly short of meeting this goal.
    The Navy has scheduled for fiscal year 2011 the additional 
Virginia class boat that Congress began to fund last year. This 
additional boat will mitigate the projected attacks of marine 
shortfall. Congress has the option of accelerating the full 
funding of this additional boat to fiscal year 2010 or fiscal 
year 2009. The main purpose in doing this would not be to bring 
that boat into service sooner, but to make a space in the 
fiscal year 2011 budget to fund another additional submarine, 
which would further mitigate the shortfall.
    And in that connection, we had more discussion this morning 
about the 2-1-2 profile that might result, for example, if you 
took that boat and accelerated it into the fiscal year 2010 
time frame. The Navy argued last year and has argued now again 
this year that that kind of profile would perturbable the 
industrial base. I provided a rejoinder to that argument in my 
testimony last year and I have done so again in my prepared 
statement for this year, and essentially the rejoinder is in 
two parts. Right now the Navy is building essentially one 
submarine every 12 months. They want to move to a profile of 
building one submarine every 6 months. If you do two submarines 
in one year and one the next, you have done 3 submarines over 
24 months, and you can schedule those 3 submarines so that you 
have a start on each boat once every 8 months. Starting a boat 
once every 8 months could actually help the industrial base 
make a transition from the current schedule of one boat every 
12 months to the schedule of one every 6 months. It would be 
the intermediate step, in other words. And the second part of 
the rejoinder is that the Navy's own shipbuilding plan includes 
a 2-1-2-1 profile for the final 10 years of the plan.
    The subcommittee asked that I address the question of the 
potential effect of DDG-1000 cost growth on the shipbuilding 
plan. Very briefly. If DDG-1000s wind up costing what CBO 
estimates they will cost, then the total amount of cost growth 
on the seven DDG-1000s would be roughly $11.8 billion in then 
year dollars. The cost growth on the seven ships, in other 
words, would be roughly comparable to the total amount of 
funding in the SCN account in certain recent years.
    Mr. Taylor. For the record, what is your estimate? What is 
CBO's estimate as to the cost?
    Mr. O'Rourke. I don't have my own estimate. I have been 
working on the basis of CBO's estimate.
    Mr. Taylor. What is CBO's estimate for the record? What is 
the dollar amount for the record?
    Mr. O'Rourke. The Navy's estimated budget for the Loop 2 
lead ships is about $3.2 billion apiece and the follow ships 
are roughly $2.5 billion apiece. And CBO has estimated--and I 
will detail it for you later--that these ships as a whole, that 
the seven ships would average out to about 70 percent more 
expensive than what the Navy had estimated last year or maybe 
65, 64 percent more than what the Navy is estimating this year.
    Mr. Taylor. So that dollar is what?
    Mr. O'Rourke. So that instead of the lead ships costing 
$3.3 billion, you would add 60 or 70 percent to that total. You 
would be up more toward the $5 billion range. And CBO will 
provide those numbers more specifically for you in their 
testimony.
    Mr. Taylor. Okay.
    Mr. O'Rourke. The subcommittee asks that I address the 
option of procuring DDG-51s instead of DDG-1000s as a bridge to 
a nuclear powered CG(X) based on an enlarged version of the 
DDG-51 hull. One approach would use the funding now programmed 
for the five remaining DDG-1000s to procure eight additional 
DDG-51s. Another approach would use the funding program for the 
third and fourth DDG-1000s to procure three additional DDG-51s 
and use the funding for the final three DDG-1000s to procure 
three CG(X)s that are currently planned for later years.
    The DDG-1000 and DDG-51 are both multi-mission destroyers. 
The 1000 has a stronger emphasis on land attack and operations 
in littoral waters. The 51 is more oriented toward blue water 
operations. Consistent with its larger size, higher procurement 
cost, and greater use of new technologies, the Navy believes 
the 1000 is more capable than the 51 in several respects. The 
great individual capability of the 1000 would be offset to some 
degree by the greater quantity of 51s. The Navy has stated that 
it doesn't require additional 51s. Supporters of procuring 
additional 51s could argue that they are multi-mission ships 
for which the Navy would find good uses. Procuring 51s might 
pose less risk of cost growth than procuring 1000s or would 
likely result in higher life cycle crew related costs. And 
based on information provided by the Navy, procuring the 51s in 
the numbers I mentioned would generate 60 to 64 percent as many 
shipyard labor hours as procuring the 1000s.
    Moving to the CG(X), the Navy has not yet announced a top 
level design for this ship. This raises a potential oversight 
question as to whether the Navy is leaving itself enough time 
to do the design work needed to support the procurement of a 
lead CG(X) in fiscal year 2011. A second potential oversight 
question is whether the continued passage of time without an 
announced top-level design would have the effect of running out 
the clock on the option of procuring a nuclear powered CG(X) in 
2011.
    Regarding the National Defense Sealift Fund, which I cover 
in my prepared statement, one potential oversight issue for the 
subcommittee is whether law or regulations regarding the NDSF 
should be altered to make cost growth on prior year NDSF ships 
more visible in budget justification documents. And this has to 
do with the 11th T-AKE that was discussed a little bit earlier 
in the hearing.
    Mr. Taylor. Mr. O'Rourke, I am sorry to interrupt. I would 
hope at some point during your presentation that you would go 
back to that 64 percent of the man-hours for the DDG-51 versus 
the 1000. And I would hope that either in your analysis or Dr. 
Labs' analysis, how much of that time is actually wasted on the 
learning curve of the new vessel? How many of those hours are 
just wasted if someone tries to--I am going to hang this 
bracket, how am I going to get this pipe through this bulkhead 
as opposed to actually producing something the Navy can use?
    Mr. O'Rourke. The Navy has testified or the Navy provided 
information to me actually within the last couple of days that 
it estimates that building a DDG would require roughly 40 
percent as many shipyard labor hours as building a DDG-1000. 
And they provided me with what those man-hour numbers were. I 
am just going to keep it in terms of ratios and percentages if 
you don't mind here. And part of the reason that----
    Mr. Taylor. But being in your line of work--and you struck 
me as an expert. If you can't do that today, I would very much 
welcome that for the record. Because with any new vessel, there 
is a heck of a lot of time wasted just trying to figure out how 
to do something.
    Mr. O'Rourke. Part of the reason the ratio is as it is, 
where the 1000 is estimated by the Navy to generate 2-1/2 times 
the amount of shipyard labor hours as the 51 is because these 
DDG-1000s are at the top of that class' learning curve, whereas 
the 1000s are well, well down their learning curve. There is a 
little bit of lost learning now on the 51 because they have had 
a gap in the production. But still they would be back to a 
situation that was equivalently much farther down the learning 
curve than what you have on the 1000. So some fair portion of 
the difference in the labor hours between these two ships 
reflects the fact that the 1000 is at the top of its learning 
curve, and these would all be early ships on that class' 
learning curve.
    Mr. Taylor. For the record, you would have two yards 
simultaneously learning the same things.
    Mr. O'Rourke. Yeah. If the ships are built as complete 
ships by separate yards, then you would have a split learning 
curve. If they are built through some kind of shared or joint 
production arrangement, then the splitting of the learning 
curve would be mitigated and you would have a unified learning 
curve for that portion of every ship that is built by the 
shipyard that does it.
    Mr. Taylor. Okay. Please continue.
    Mr. O'Rourke. I was mentioning the NDSF and the issue of 
the 11th T-AKE that was discussed earlier in the hearing. This 
situation arises because ships funded through the NDSF are not 
subject to the full funding provision in the same way that 
ships and other defense items are that are procured through the 
procurement title of the defense appropriation account. That is 
why I have always pointed out in my reports and testimony over 
the years that if you fund a ship through the NDSF, it will not 
be subject to the full funding provision in the same way and 
the Navy will have the ability to move money around in the way 
it has done now on the T-AKE program. When ships are funded 
through the NDSF for a multi-ship class, the Congress may 
nominally provide the money thinking that that money is going 
to go to a specific ship, but it does not have to. And this is 
not the first time this has happened. The Navy moved money 
around on the 19 or 20 ship large medium speed roll on, roll 
off, or LNSR shipbuilding program, and there was a matrix of 
funding for that program in which funding provided for specific 
ships was in fact divided up and applied to other ships in the 
program.
    For example, there was one fiscal year--I think it was 
fiscal year 1995 when Congress not only provided money for two 
of those LNSRs but the money in fact was chopped up and applied 
to 16 different ships in the program. So it is very important, 
I think, for Congress to realize that when they fund a ship in 
the NDSF in a multi-ship class, the Navy has the ability to 
move the money around in this way under the current laws and 
regulations pertaining to the NDSF.
    Mr. Taylor. Mr. O'Rourke, while you are on that subject, it 
is my belief that Admiral Sestak will be asking the committee 
staff to draw an amendment to close that loophole. I would ask 
if you could find the time to take a look at that suggested 
language and make sure that it is accomplishing what we would 
like to accomplish, which is to close that loophole.
    Mr. O'Rourke. I would be happy to do so.
    And the final thing that I wanted to mention in my opening 
remarks relates to China because the subcommittee asked that I 
address the question of Navy capabilities needed to counter a 
future western Pacific threat. The country that currently 
appears to have the most potential, proposing a significant 
western Pacific military challenge, is China. There is a 
consensus among observers that Taiwan is a near-term focus of 
China's military modernization. Consistent with this, observers 
believe China want its modernized military to be capable of 
acting as an anti-access force for deterring, defeating or 
delaying intervening U.S. forces. China in coming years could 
field a layered maritime anti-access force broadly analogous to 
the Soviet sea denial force of the 1980's. One potential 
difference is that China's force could include anti-ship 
ballistic missiles capable of hitting moving ships at sea.
    Some observers believe China's naval modernization effort 
is also tied to broader or longer term goals, such as asserting 
China's regional military leadership, defending China's 
maritime territorial claims and protecting China's sea lines of 
communication. These broader or longer term goals imply that if 
the situation with Taiwan is somehow resolved, China will find 
continuing reasons to pursue its modernization effort. These 
goals also imply that if China completes its planned buildup of 
Taiwan-related force elements or if the situation with Taiwan 
is somehow resolved, the composition of China's naval 
modernization effort could shift to include a greater emphasis 
on naval force elements appropriate for supporting these 
broader or longer term goals, and that could mean a greater 
emphasis on things like aircraft carriers, nuclear powered 
attack submarines and serial production of destroyers.
    And last, a third implication of these broader or longer 
term goals is that even if China's military never fires a shot 
in anger at an opposing military, China's naval forces will 
still be used on a day-to-day basis to promote China's 
political position in the Pacific. This creates an essentially 
political reason to maintain a competitive U.S. naval presence 
in the region.
    Mr. Chairman, this concludes my statement, and I will be 
happy to respond to any questions the subcommittee may have.
    [The prepared statement of Mr. O'Rourke can be found in the 
Appendix on page 63.]
    Mr. Taylor. Thank you very much. The Chair now recognizes 
Dr. Labs.

     STATEMENT OF DR. ERIC J. LABS, SENIOR NAVAL ANALYST, 
                  CONGRESSIONAL BUDGET OFFICE

    Dr. Labs. Mr. Chairman, members of the subcommittee, I 
appreciate the opportunity to appear before you today, and I 
too would like to sum up my statement for the record, and I 
want to summarize it right here.
    Mr. Taylor. Without objection.
    Dr. Labs. I would like to make five points. First, 
executing the Navy's most recent 30-year shipbuilding plan will 
cost an average of about $25 billion a year in 2009 dollars or 
about double the 12.6 billion a year the Navy has spent on 
average since 2003. The costs displayed in the Navy's 2009 
shipbuilding plan imply that the Navy appears to have 
substantially revised its estimate of the cost of implementing 
the 30-year shipbuilding plan, bringing its overall estimate 
into general line with CBO's estimates of the past 3 years.
    However, I would like to add a caveat to that. Detailed 
data provided to CBO just last night implied that the Navy may 
not have changed its cost estimates for unit costs of 
individual ships compared to its 2007-2008 plans. There is a 
disconnect there that we are going to explore more fully with 
the Navy and try to understand why the cost and the plan show 
something entirely different from the detailed data that was 
provided to us last night.
    Nevertheless and notwithstanding the overall alignment of 
the Navy's and CBO's estimates based on the cost that are in 
the plan itself, CBO's cost for the 2009 shipbuilding plan 
through 2013 are about 30 percent higher than the Navy's 
estimates. The CBO estimates those costs at an average of 21 
billion a year versus about 16 billion for the Navy estimate.
    In particular, CBO estimates that the DDG-1000 guided 
missile destroyer and the CG(X) future cruiser would probably 
cost significantly more than that Navy currently estimates. For 
the 2009 to 2020 period, the period in which the Navy describes 
as the near term in its plan, CBO estimates for new ship 
construction alone are about 15 percent higher than the Navy's.
    And fifth, the Navy's cost estimates for the 2009 
shipbuilding plan beyond 2020, which are described in the 
Navy's plan as the far term, appear higher than CBO's by about 
20 percent. It appears to us that the Navy has abandoned its 
cost target methodology that it has used in previous 
shipbuilding reports to develop its 2009 shipbuilding plan.
    Under its 2007 and 2008 plans, the Navy estimated that it 
needed about an average of about $16 billion a year over 30 
years of new construction funding alone to buy and sustain a 
313-ship fleet. From the limited information available in the 
2009 plan itself, not the detailed data we received yesterday, 
the Navy now appears to estimate the cost of its plan at about 
$22 billion a year in new construction spending alone, a 40 
percent increase. That number excludes the cost of replacing 
the Navy's Ohio class ballistic missile submarines when they 
retire in the 2020's. The Navy includes those submarines in its 
procurement schedule under the 2009 plan but excludes them from 
its cost estimates. Including SSBNs and other costs, such as 
nuclear refuelings, would raise the Navy's estimate for total 
shipbuilding to an average of about $26 billion a year over 30 
years.
    CBO requested one month ago detailed information on ship 
costs for the Navy's 2009 plan. As I stated earlier, it was 
provided yesterday evening. There is, however, a large 
disconnect between the overall cost for shipbuilding displayed 
in the 2009 plan and the detailed information provided to CBO. 
The data and the shipbuilding plan implied total 30-year new 
construction costs of $22 billion a year, as I had just 
mentioned, compared to 13 billion a year using the detailed 
information provide by the Navy to CBO.
    As I said, we are going to try to work with the Navy and 
try to understand exactly what is going on here. With respect 
to the 2009 and 2013 period of the Future Years Defense 
Program, CBO's estimates for most new ship programs are higher 
than the Navy's, but the largest differences between the two 
estimates are for the cost of the DDG-1000 destroyer and the 
cruiser.
    The Navy plans to buy five DDG-1000s and 2 CG(X)s between 
2009 and 2013. The service estimates the cost of those seven 
ships at a total of about 16 billion, whereas CBO's estimate is 
$29 billion for the two cruisers and five destroyers. If CBO's 
cost estimates for the DDG-1000 and the CG(X) are realized, it 
would be difficult for the Navy to build a 313-ship fleet 
without substantially increasing the service's shipbuilding 
budgets during the years spanned by the 2009 FYDP and beyond. 
The difference between CBO's and Navy's estimates for the cost 
of the DDG-1000 program alone represent about 12 percent of the 
Navy's total shipbuilding budget to 2013, or about $10 billion. 
In the absence of additional resources, paying that difference 
could, for example, require canceling the purchases of either 
20 littoral combat ships or most of the MPF(F) program 
purchased under the 2009 FYDP.
    There are obviously other trades that could be made, but 
those are two illustrations. If the CBO's estimate for the cost 
of CG(X) is realized, the Navy may find it difficult to 
purchase two CG(X)s a year between 2015 and 2021, as contained 
in the 2009 plan. If the service is able to afford only one 
CG(X) per year, then seven CG(X)s would either be canceled or 
delayed until the mid to late 2020's. Delay in the CG(X)s 
purchases rather than the cancellation could mean that other 
ship purchases contained in the 2009 plan during the period 
beyond 2020 might have to be canceled or delayed as well. In 
either case, the Navy may find it difficult to achieve a 313-
ship fleet in 2020 or beyond.
    Finally, my last point today. While there are a number of 
issues contained in the Navy's 2009 shipbuilding plan that 
would be worth highlighting--and I was glad to see Mr. O'Rourke 
note a number of them--I would like to note that the Navy has 
assumed that the service life of many of its surface combatants 
and amphibious ships would be longer than in previous plans. 
Specifically, the Navy assumes the DDG-51 Arleigh Burke class 
destroyers would serve for 40 years and 16 amphibious ships, 
including all 12 of the existing LSD-41s and 49s would serve an 
average of 43 years, about 4 years longer than what the Navy 
assumed in its previous two shipbuilding plans. Historical 
evidence suggests that that may not be a reasonable assumption, 
at least with respect to surface combatants.
    Over the last 30 years, the Navy has retired 16 full 
classes of service combatants and retired part of two 
additional classes. The average retirement age of those ships 
was less than 25 years. The reasons the Navy cites for those 
retirements vary. Some were for budgetary reasons during the 
drawdown after the Cold War. Others were because ships reached 
the end of their service life. But it does illustrate the 
challenge the Navy will have in keeping the DDG-51s in the 
fleet effectively for 40 years.
    Thank you, Mr. Chairman. That concludes my opening 
statement. I look forward to any questions you may have.
    [The prepared statement of Dr. Labs can be found in the 
Appendix on page 89.]
    Mr. Taylor. Thank you very much, Dr. Labs. The Chair yields 
to the gentlemen from Connecticut, Mr. Courtney.
    Mr. Courtney. Thank you, Mr. Chairman. Dr. Labs, I think I 
counted the word ``disconnect'' in your testimony about a half 
dozen times. Really, looking at it from up above or 30,000 feet 
or whatever, I mean, your description describes a fairly almost 
incoherent arrangement in terms of the targets that people are 
trying to reach at. Is CBO going to--I mean, do you look at the 
plan in terms of the ships and do your own sort of run as far 
as what you think it would cost to get there versus what was 
submitted to the Congress by the Navy?
    Dr. Labs. Yes, sir. We generate our own cost estimates for 
most of the ships in the shipbuilding plan. There are a few 
small items that we may adopt the Navy estimates on. But all 
the major shipbuilding programs we try to come up with an 
independent estimate.
    Mr. Courtney. And are you still sort of crunching the 
numbers on that or is that something you have already arrived 
at?
    Dr. Labs. Based on the available data that we have today, 
we got an estimate that is in the prepared statement that is 
our current estimate. Now, depending on what kind of 
information--you know, I was explaining to some of the staff, 
for example, that depending on what kind of detailed 
information we got back from the Navy on their individual ship 
costs, we might have to go back and kind of look at our 
assumptions and see if what we had done was reasonable. Because 
at the time, it appeared to us that the Navy's unit costs for 
many of its ship programs were as high or higher than ours, at 
least in the outyears.
    Now, having received this detailed information just last 
night at 6 p.m., the unit costs that they are listing there, 
that does not appear to be the case. And I am not exactly sure 
why that is and see if they have got some--you know, I just 
don't quite understand what is going on in there. We are going 
to try to figure out why that is. But overall, the estimates 
that I provide here, CBO estimates, are generated by us in-
house.
    Mr. Courtney. Is it higher or lower?
    Dr. Labs. As was mentioned earlier, through the 2020 
period, the ship unit cost estimates that CBO has are higher 
than the Navy's by varying amounts depending on the ship 
program. Beyond 2021, the total shipbuilding budget costs that 
were displayed in the plan in the Figure 1, in the Navy 
shipbuilding plan, would imply that at least some of their unit 
cost estimates would have to be higher than CBO's, although 
that did not prove to be the case in the detailed information 
that we received. So again I am not sure what is exactly going 
on there.
    Mr. Courtney. Okay.
    Dr. Labs. I hope that answers your question.
    Mr. Courtney. Sort of. Mr. O'Rourke finished his testimony 
talking about the maritime challenge and trying to meet it with 
a fleet size that I think the Admiral earlier described today 
as sort of the minimum risk level. It just seems that--talk 
about a disconnect, I mean, there is obviously a problem that 
when you, I guess, put the two testimonies side by side--Mr. 
O'Rourke, again you have kind of answered a lot of my questions 
right off the bat talking about the 2-1-2 sequence. But I 
wanted to at least get your comments on another approach, which 
has been sort of talked about, which is using the advanced 
construction method which I guess has been done in other ship 
programs as a way of, you know, sort of maybe getting to that 
same sort of smoother trend without necessarily going to 2-1-2. 
And I just wondered if you have any comments about how that 
could work or might work.
    Mr. O'Rourke. As I understand it, there has been an idea 
put forward to put some advanced construction funding into this 
year's budget as a plus-up for the purpose of beginning work 
sooner, I take it, on the second fiscal year 2011 boat. The 
idea there would be to do some of the work on that boat a 
little bit earlier and to therefore permit the shipyard to 
better optimize its construction schedule for that ship. This 
has been done to one degree or another with a few other ships 
in recent years and the experience seems to be that, yes, doing 
that sort of thing can permit the ship to be built in less time 
and therefore make the ship less expensive. So doing this would 
not add any extra submarines into the submarine force, but it 
would permit that particular submarine to be built less 
expensively and that could free up money to be used on other 
priorities.
    Mr. Courtney. Dr. Labs, in your comments regarding the 
attack submarine shortfall, I mean, one of the ways you sort of 
postulate that the Navy could address that is by, I guess, the 
scheduling, that if you build submarines faster and get them 
operational faster, that kind of reduces that trough that is in 
the 2020 range. Does that make sense?
    Dr. Labs. Yes, sir. What I am referring to there is that 
there are various initiatives that the Navy is looking at to 
try to mitigate that shortfall, And one of the ones that they 
have stated that they are going to try to achieve is to 
actually build the submarines rather than in six years, try to 
get that down to something less than that, even as little as 
five years. And if you do that, you get--I don't remember the 
numbers off the top of my head--but you get more submarines 
into the fleet a little bit faster.
    Mr. O'Rourke. It is a one-time benefit of two extra ships, 
and it is already cranked into the Navy's shortfall mitigation 
plan.
    Dr. Labs. But the 2009 plan as it stands does not yet take 
credit for that. They don't assume that yet, because they 
haven't achieved that faster build rate so far; and that is 
something that they are going to try to do.
    Mr. O'Rourke. The attack submarine shortfall has been 
something that, I know in my own work, I have been testifying 
and reporting on now for 13 years. And the Navy came forward 
with a shortfall mitigation plan and presented it to Eric and 
me a year or two ago, and part of it is to get the one-time 
benefit of the two extra boats by shortening the construction 
schedule.
    And there are other measures in that mitigation plan as 
well. The Navy testified that that mitigation plan can close up 
the gap in terms of maintaining day-to-day forward deployment 
of attack submarines, but it could not fully close the gap in 
terms of your ability to surge submarines for wartime uses. And 
the gap there remained three surged boats, which would mean a 
gap in your total inventory of four surged boats.
    So if you take that now as the key gap for which the Navy 
doesn't even have an identified mitigation strategy at this 
point, then of those four boats in that remaining gap, the 
Congress has now funded one of those four boats, which is now 
the second boat currently scheduled for fiscal year 2011, and 
that leaves three more to go. And that is why, if the Congress 
were to decide to accelerate the fiscal year 2011 boat to an 
earlier year and then create that hole in fiscal year 2011 to 
put another boat in, you would actually be making in percentage 
terms a significant reduction on that remaining four-boat 
wartime shortfall that the Navy calculated it does not have a 
mitigation strategy for.
    Mr. Courtney. Well, as usual, you are giving us the 
spectrum of options, which is very helpful. And the SSBN change 
that took place where it went from 14 to 12, I don't know if 
you have any comments you want to make as far as that 
particular.
    Mr. O'Rourke. Only one comment, which is that that is 
consistent with the Navy's testimony before the Senate 
Appropriations Committee, I think it was last year. They 
mentioned the same reason for planning 12 rather than 14, that 
they would be moving to a life-of-the-ship core, and you would 
not run into a situation halfway through the ship's life cycle 
of having to take two boats effectively out of service for the 
purpose of doing the midlife refuelings.
    Dr. Labs. The only thing I would add to that, because that 
was the same thing we had understood last year as well, is that 
the plan's requirement is still, though, at 14. The actual 
production schedule is 12. It is not clear to me why 
necessarily--that if they can achieve the same operational goal 
with 12 as they needed 14 in the past, why they wouldn't 
necessarily have revisited the question of the requirement.
    Mr. Courtney. Thank you, Mr. Chairman.
    Mr. Taylor. Thank you, Mr. Courtney.
    Mr. O'Rourke, have you been asked by the Navy or anyone 
else to take a look at the proposal to stop the DDG-1000 at the 
purchase of two, go back to additional 51s with the money that 
would have gone for the additional 1000s, and come up with some 
sort of a formula of what you think would be an economic order 
quantity for the additional 51s?
    Mr. O'Rourke. No, sir. The Navy has not asked me to look 
into that.
    Mr. Taylor. Okay. Would you? For the record, I would like 
this subcommittee to make that request.
    Mr. O'Rourke. I would be happy to do that on behalf of the 
subcommittee.
    Mr. Taylor. The second question would be, we would 
appreciate--and Dr. Labs as well--your professional opinion as 
to when would be the soonest that this Nation could expedite 
the acquisition of the nuclear cruiser 2, which legislative 
year, given the challenges that we have now learned the hard 
way with the LCS, which the Coast Guard has learned the hard 
way with the 1-10 program.
    I would--again going to the thought that was thrown out of 
building additional 51s, building fewer 1000s, expediting the 
nuclear cruiser, when is the soonest that we could reasonably 
do that?
    Mr. O'Rourke. I can give you a partial answer to the second 
question right now.
    Assuming that we don't fully fund the lead CG(X) in this 
year's budget, in the fiscal year 2009 budget, then the 
question becomes, do you do it in fiscal year 2011, or could 
you accelerate it to 1 year to fiscal year 2010?
    In terms of funding the ship, you could fund it as a fiscal 
year 2010 ship. It might not execute on a schedule normally 
associated with a fiscal year 2010 ship, but you could fund it. 
It would, in effect, be banking the ship to be executed in some 
later year.
    So there are two questions here. One is, how soon could you 
execute a ship of a given design? And the other question is, 
how soon could Congress fund it? And the answer is, Congress 
could fund it in fiscal year 2010 if it wanted to, with the 
understanding, however, that it would not necessarily execute 
on a schedule normally associated with an fiscal year 2010 
ship. But you could actually get the ship recorded as a 
procurement in fiscal year 2010.
    Mr. Taylor. Keeping in mind that that nuclear cruiser would 
have to be substantially larger than the DDG-51 hull, my 
observation is that the Navy, in going to systems integrators, 
fairly well destroyed within the Navy their ability to make a 
good decision as to what the next generation of ships ought to 
look like. My opinion is that they are in the process of 
reconstituting that process.
    How quickly do you think the Navy will get that capability 
back within house? How quickly could they come up with a design 
for a nuclear powered cruiser that they have confidence would 
be good for the things that we are looking for, which is a ship 
that is a viable part of the United States fleet for 30 years 
after the day it is christened?
    Mr. O'Rourke. The Navy is in the process, as I think the 
Coast Guard is, of rebuilding its in-house system design 
engineering capability. And, as a general answer to that 
question, I would say the following: That the earlier you 
design the ship, the greater the amount of reliance the Navy 
would have to place on private industry to handle certain 
aspects of that design work; and the later you do it, the 
further down you do it, the greater share of that design-
related responsibility the Navy could take on for itself in-
house. It would be a progression or a spectrum that existed 
over time.
    Mr. Taylor. Dr. Labs, don't be shy.
    Dr. Labs. I will not, Mr. Chairman. Thank you.
    What I would say is--not that I disagree with anything that 
Mr. O'Rourke said; I fully concur with that. I would simply add 
that if you look at sort of comparative surface combatant 
programs, the DDG-1000 being an example, and others, and given 
the current state at which the Navy decision-making is for the 
CG(X) cruiser--at least to the extent that I can understand it, 
because I haven't seen the AOA either--at least at this point, 
executing a CG(X), a nuclear CG(X) in 2011, it seems to me, 
would be rather optimistic, especially when you start to think 
about the fact that you do want to have a lot of that detailed 
design done so you avoid as many cost overruns as possible.
    But to be able to put precisely as to when that could 
happen, I am not sure. Certainly funding it in 2010 or 2011 is 
not an issue. The question is, when would they actually then 
start construction, bending metal?
    Mr. O'Rourke. This is the concern that I raised in my 
testimony, that we do not yet have an announced top level or 
concept design for the ship. At this same or this equivalent 
point in the DDG-1000 program, we did have that kind of an 
understanding of what the ship was going to look like; and, in 
fact, we had had it for several months. And so at the parallel 
stage in the CG(X) program, we don't even have a cartoon that 
we can look at for this ship.
    Mr. Taylor. A question I would like to pose to you: We 
often hear from the detractors of the plan to go to the nuclear 
powered cruiser is that it would cost more money.
    I would counter that by saying--and I want you to comment 
on this--I think we have a very good idea of what an A1B power 
plant would cost. I would counter by saying, it might be the 
only part of the nuclear cruiser that we do know what it is 
going to cost, as opposed to weapons systems, electronics, 
hulls, everything else that is still up in the air. So I would 
like you to comment on that.
    Another thing I would like your thoughts on is, I am 
absolutely committed to preserving our defense industrial base 
for shipbuilding. One of the challenges I have been made aware 
of is the need to keep the capabilities of the nuclear 
propulsion capabilities design work team together at Electric 
Boat and other places. To what extent, if any, in your opinion, 
could the expertise that is available at Electric Boat be put 
to use to designing the propulsion for that nuclear cruiser? 
And, would it make sense, in your opinion, to try to work 
toward that goal or not?
    Mr. O'Rourke. Just very briefly, if I could respond to the 
second of those questions and then go back to the earlier one.
    Sustaining the submarine design and engineering base, 
including the portion of it that design submarine reactor 
plants, has been a concern on the Hill and within the Navy for 
a number of years now.
    Mr. Taylor. In your opinion, is it a valid concern?
    Mr. O'Rourke. In my view, it is a valid concern, and----
    Mr. Taylor. I just want to get that for the record.
    Dr. Labs. I agree that it is a valid concern.
    Mr. O'Rourke. And one option for helping to sustain the 
submarine design and engineering base including, or in this 
case, specifically the portion of it that designs reactor 
plans, is to have Electric Boat work on the design of the 
reactor plant for a nuclear powered cruiser. In fact, Electric 
Boat has participated in the design of the reactor plant for 
the carrier. So there is already precedent for having Electric 
Boat workers participate in the design of the surface ship 
nuclear plant, and that is part of what has helped us sustain 
that base in the past.
    Mr. Taylor. Going back to both of your professional 
opinions now, stated what is known, would it be a logical thing 
for this committee to work towards?
    Mr. O'Rourke. I think it is certainly a viable option for 
the committee to consider.
    But--as you know, I can't make recommendations for or 
against, but it is a logical option that the Congress has 
available to it as one means for helping to sustain especially 
that portion of the submarine design and engineering base.
    On your earlier question about the----
    Mr. Taylor. I want to see, Dr. Labs, what is your opinion?
    Dr. Labs. I was going to echo Mr. O'Rourke's comments, in 
fact the exact same analogy that Electric Boat has used some of 
its nuclear engineers and designers to assist in the 
development of the CVN-21 program, the CVN-78 carrier. So he is 
exactly right, the precedent is there.
    It is certainly something that would be, especially given 
the nature of the way the shipyards are run by two corporate 
giants, and the six yards and the two corporate giants; that 
kind of interyard transfers and transfers of skills, even 
sometimes sharing between the two corporate giants, is 
occurring much more frequently today than, say, it would have 
10 or 20 years ago.
    To your specific question about, is it a viable option for 
the committee to consider, to pursue, I am in the same position 
Mr. O'Rourke is. I am not allowed to sort of make 
recommendations.
    Mr. Taylor. You have been asked.
    Dr. Labs. It is certainly something worth exploring. Any 
options along those lines is worth exploring. And there is more 
than one out there. There is certainly the Virginia class 
reactor can put that into a service combatant. There is the 
carrier reactor you can put that in. Again, there are going to 
be design changes, there is going to be size considerations.
    Mr. Taylor. You have raised a great question. And for the 
record, and whether you are comfortable with it right now or 
not--and I am sorry to interrupt, Mr. O'Rourke, but I want to 
get this on the record while we could. I have been told that 
the power plant for the Virginia class would be too small for 
the anticipated needs of the CG(XM).
    Dr. Labs. I have been told the same thing.
    Mr. Taylor. But A1B would be, in the opinion of the folks I 
have spoken to, provide all the power that is necessary for 
propulsion, weapons upgrades, for electronics upgrades, for the 
30-plus-year life of the vessel.
    Dr. Labs. The same thing has been explained to me, as well, 
by folks with the Navy. Now, that also goes to add that the 
size of the reactor for the--the carrier reactor, putting it in 
a cruiser would necessitate a much larger surface combatant. 
There was some press reports last year of sort of 23,000-, 
25,000-ton ships. That is where, as I understand it, you would 
need to go for the weight and the supporting systems.
    Mr. Taylor. Dr. O'Rourke, we interrupted your line of 
thought, and I apologize, but I did want to ask those 
questions.
    Mr. O'Rourke. No problem. I wanted to get back to the first 
half of what you originally asked, which had to do with the up-
front costs versus the life cycle costs and how we know the 
costs of the A1B versus not knowing.
    The argument for the nuclear cruiser from a strictly 
economic point of view has always been the general one that the 
up-front costs would be offset to some degree, largely or 
entirely, over its life cycle by avoided fossil fuel costs.
    Now, when the Navy was asked this at the full committee's 
hearing several days ago, the Secretary of the Navy 
acknowledged that logic, but he also said that he was not able 
as the Secretary of the Navy to borrow against future savings 
to pay right now for the up-front costs. And that is true.
    But it is also true that the Navy is anticipating life 
cycle savings from features that it is putting into the DDG-
1000 or other new ships that will reduce their cruise size. So 
it is willing to pay additional up-front costs within an eye 
toward recouping savings down the road. They can't borrow 
against those savings, either, but as a matter of strategic 
planning for the Navy's future, they are willing to make that 
trade-off.
    So, if there is a different way of looking at the situation 
from the way the Secretary of the Navy described it to the full 
committee the other day, it would be to say, yes, you can't 
borrow against those future costs to pay for something now. But 
the Navy nevertheless is making that choice in the area of 
putting technology into ships for reducing cruise size.
    Mr. Taylor. Excellent point. Thank you.
    Dr. Labs, anything additional?
    Dr. Labs. I don't have anything to add to that. Certainly a 
calculation could be done to sort of determine where that would 
fall out on different assumed prices for future fuel costs, but 
I don't necessarily have anything to add to what Mr. O'Rourke 
said.
    Mr. Taylor. My last question would be, and then I am going 
to yield to the gentleman from Connecticut: I have now heard a 
cost estimate ranging from today's testimony of $1 billion for 
an additional 7 months of operation of the carrier Enterprise 
to $2 billion, which was given to me by another senior naval 
officer.
    For the record, if either of you gentlemen would like to go 
on the record as to what you estimate the Nation would pay to 
get approximately another 7 months of service; and I guess the 
follow-up would be, would it only be for 7 months of service or 
so, or would it be for a period longer than that?
    Dr. Labs. I don't have any detailed information that would 
allow me to sort of give you an estimate like that. If you 
would like me to look into that question, we can certainly do 
that.
    Mr. Taylor. I think for the sake of the--I think it would 
be a very wise thing for us to request that.
    Dr. Labs. Sure.
    Mr. Taylor. Mr. O'Rourke.
    Mr. O'Rourke. If it is a matter of coming up with an 
independent cost estimate, then it would be better for me to 
defer to CBO as the point person for that.
    Mr. Taylor. Okay. Mr. Courtney.
    Mr. Courtney. I am all done.
    Mr. Taylor. Again, thank you very much. We are going to 
leave the record open for the customary five days for members 
to submit questions. And we thank you very much for appearing 
before the committee.
    We stand adjourned.
    [Whereupon, at 1:10 p.m., the subcommittee was adjourned.]
?

      
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