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





                         [H.A.S.C. No. 110-169]

                  NAVY DESTROYER ACQUISITION PROGRAMS

                               __________

                                HEARING

                               BEFORE THE

             SEAPOWER AND EXPEDITIONARY FORCES SUBCOMMITTEE

                                 OF THE

                      COMMITTEE ON ARMED SERVICES

                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             SECOND SESSION

                               __________

                              HEARING HELD

                             JULY 31, 2008


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             SEAPOWER AND EXPEDITIONARY FORCES SUBCOMMITTEE

                   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 E. GILLIBRAND, New York      DOUG LAMBORN, Colorado
JOE SESTAK, Pennsylvania             ROB WITTMAN, Virginia
                  Will Ebbs, Professional Staff Member
               Jenness Simler, Professional Staff Member
                  Elizabeth Drummond, Staff Assistant








                            C O N T E N T S

                              ----------                              

                     CHRONOLOGICAL LIST OF HEARINGS
                                  2008

                                                                   Page

Hearing:

Thursday, July 31, 2008, Navy Destroyer Acquisition Programs.....     1

Appendix:

Thursday, July 31, 2008..........................................    57
                              ----------                              

                        THURSDAY, JULY 31, 2008
                  NAVY DESTROYER ACQUISITION PROGRAMS
              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

Francis, Paul L., Director, Acquisition and Sourcing Management, 
  U.S. Government Accountability Office..........................    40
Labs, Dr. Eric J., Senior Analyst, Congressional Budget Office...    37
McCullough, Vice Adm. Barry, USN, Deputy Chief of Naval 
  Operations for Integration of Capabilities and Resources; 
  accompanied by Allison Stiller, Deputy Assistant Secretary of 
  the Navy, Ship Programs........................................     6
O'Rourke, Ronald, Specialist in Naval Affairs, Congressional 
  Research Service...............................................    35

                                APPENDIX

Prepared Statements:

    Francis, Paul L..............................................   107
    Labs, Dr. Eric J.............................................    93
    McCullough, Vice Adm. Barry, joint with Allison Stiller......    64
    O'Rourke, Ronald.............................................    75
    Taylor, Hon. Gene............................................    61

Documents Submitted for the Record:

    [There were no Documents submitted.]

Witness Responses to Questions Submitted During the Hearing:

    Mr. Kennedy..................................................   132
    Mr. Langevin.................................................   131
    Mr. Taylor...................................................   132
    Mr. Taylor on behalf of Mr. Larsen...........................   131

Questions Submitted by Members Post Hearing:

    [There were no Questions submitted post hearing.]
 
                 NAVY DESTROYER ACQUISITION PROGRAMS

                              ----------                              

                  House of Representatives,
                       Committee on Armed Services,
            Seapower and Expeditionary Forces Subcommittee,
                           Washington, DC, Thursday, July 31, 2008.
    The subcommittee met, pursuant to call, at 10:00 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.
    I want to welcome everyone and say this may be the most 
important hearing this subcommittee has held since a year ago 
January when we had the hearing on the procurement of mine-
resistant ambush protected vehicles.
    I want to thank all of you for being here.
    And because of the importance of this topic, the ranking 
member and I have extended an invitation not only to our fellow 
colleagues on the full committee and in the full House, but 
also any Members of the Senate who wish to participate.
    So, in accordance with the Rules of the House, I ask 
unanimous consent for our colleagues to be able to participate 
today.
    Hearing no objection, our colleagues will participate in 
regular order after all members of the subcommittee have had an 
opportunity to ask questions. Because of time constraints and 
the number of Members who wish to ask questions, the clerk will 
maintain the five-minute clock during the question-and-answer 
period for the members. We have been very fortunate, and I am 
told we are not expecting any votes on the House floor for 
about two hours, and so that works in our favor.
    When Mr. Bartlett and I first called this hearing, the 
purpose was to ensure that all the facts associated with the 
capabilities and the procurement costs of the DDG 1000 and the 
capabilities and the procurement costs of the DDG 51 were 
discussed in an open session by a variety of expert witnesses. 
We envisioned a hearing that would clear the air of rumor and 
lay out all of the facts without championing any side of the 
debate.
    Much has changed since that time. Last week, the Secretary 
of the Navy and the Chief of Naval Operations (CNO) announced 
that they would stop the DDG 1000 destroyer class at two ships, 
and restart the procurement of the DDG 51 class of destroyers. 
They propose an additional eight ships in the five-year plan 
beginning next year.
    Predictably, this announcement from the Navy has generated 
a fire storm. There are Members who are opposed to the 
decision, and Members who support the decision. There also 
appears to be significant efforts by some defense contractors 
to shore up support for the DDG 1000 and Congress to overturn 
the Navy's decision.
    We still need to have this hearing to clear the air on 
mission capabilities and cost for the two destroyer programs.
    By now, I presume our Navy witness, particularly Vice 
Admiral McCullough, who is a senior officer in the Navy charged 
with developing future platforms and technologies, will attempt 
to educate the committee on the reasons the Chief of Naval 
Operations has decided that he can best support the interests 
of national security with continuing the line of DDG 51 class 
ships than he can with the small class of highly capable but 
expensive DDG 1000s.
    The committee was and remains concerned concerning the cost 
estimates for the DDG 1000. But let us be perfectly clear, this 
subcommittee did not recommend canceling the DDG 1000 program 
as some in the press have said. This subcommittee did recommend 
and the full House did adopt in May a pause for the third DDG 
1000 while the development of technologies and the true cost of 
construction became known. This subcommittee also recommended 
allowing the option of returning to the DDG 51 class if the 
Navy could prove it was in the best interest of our Nation. The 
report accompanying our bill clearly states that the funding 
provided in the Fiscal Year 2009 National Defense Authorization 
Act could be used for either DDG 1000 advance procurement or 
DDG 51 advance procurement.
    I would like to make my position perfectly clear: I want 
the Navy to have the finest, most capable fleet in the world. I 
want the Navy to have a sufficient number of ships with the 
capabilities needed to counter the next generation of threats.
    I don't think we have enough submarines, and this 
subcommittee has worked in a bipartisan manner to allow the 
Navy to increase the production of submarines. My friends, Joe 
Courtney of Connecticut and Rob Wittman of Virginia, were 
instrumental in this effort.
    I don't think we have enough amphibious assault ships for 
our expeditionary forces, and with the support of Mr. Bartlett, 
we have authorized an additional Amphibious Transport Dock Ship 
(LPD) for the Navy's fleet.
    And I don't think we have the correct balance in our 
surface combatant force.
    I understand the history of the DDG 1000. It grew out of 
the DD 41 program and became the poster child for revolutionary 
change of ship capabilities during the Rumsfeld era. The 
question before this Congress is simple: Does this ship have 
the correct capabilities that our Navy needs in the future? 
Does our Navy ever envision shore-bombardment again? If not, 
why design a ship which is sized for a gun that won't be used? 
In this day of precision-guided munitions and air dominance, 
the idea of a World War II style Naval bombardment needs to be 
debated.
    This leads us to DDG 51, without question, the finest 
destroyer in the world today. A ship that is capable of 
multiple missions, from anti-submarine warfare (ASW) to cruise 
missile strike warfare to area air defense with its Aegis 
weapon system, it is the premier workhorse of our fleet. And 
perhaps most important, the ship is capable of serving in a 
ballistic missile defense (BMD) role, which the DDG 1000 cannot 
do. Again, I think this bears repeating: The DDG 51 is capable 
of serving in a ballistic missile defense role; the DDG 1000 is 
not.
    Fifty-three of the DDG 51s are currently in the fleet. Nine 
more are in various stages of construction. If the Navy wants 
to build more of them, we need more information; information 
not just about cost targets for new ships, but information on 
the total concept of support for the entire fleet of 
destroyers. The modernization program for destroyers is just as 
important as the construction program. We can never allow the 
decommissioning of ships, like we did with the first five Aegis 
cruisers, because they could not be modernized to meet the new 
threat. When a ship is retired at less than 30 years of age, 
the Navy has failed and this Congress has failed in our 
oversight. We can only get to a 300-ship Navy if we are 
building at least 10 ships a year and we keep them in the fleet 
for at least 30 years.
    So this committee is interested in the DDG 51 modernization 
program. We will also question why the Navy is not modernizing 
these destroyers at a faster rate and doing the modernization 
in construction shipyards which have the expertise and 
experience to do major modifications.
    We would like to know how we can use these technologies 
developed in the DDG 1000 weapon system and propulsion, and 
back fit them into the DDG 51s during modernization.
    So we have a lot to discuss. Our Navy has a tough road 
ahead. There are still some pretty large hurdles in Congress 
that we will need to jump, and hopefully this hearing will 
allow the Navy to explain their side of the issue.
    We have two panels of experts today to walk us through all 
of these issues. We are very fortunate to have Vice Admiral 
McCullough give the subcommittee a brief tutorial of both 
vessels at the beginning of his testimony. Members will also 
find a side-by-side description of the ships in a memorandum 
prepared by staff.
    Our Nation needs to get this right. Our Nation needs to put 
our Navy on a stable path of building ships and building them 
at a time and cost as projected. Our shipyards and the 
contractors who support them deserve to know what we expect 
them to do and when we expect them to do it. But more 
important, we need to give our Naval commanders the capability 
they need to defeat all current and potential threats.
    So I believe the debate needs to focus on the capabilities 
of these ships, and I remind my colleagues and the public that 
the numbers of ships itself is a significant capability. The 
full Congress must weigh the capabilities of these ships, the 
costs associated with these ships and the effects on the 
Nation's national security industrial base when making the 
final decisions whether to proceed or not to proceed in the 
destroyer program.
    I am very happy to acknowledge our first witnesses today. 
The Secretary has truly sent his ``A'' team: Ms. Allison 
Stiller, Deputy Assistant Secretary for Ship Programs in the 
Office of the Assistant Secretary of the Navy for Research, 
Development and Acquisition; and Vice Admiral Barry McCullough, 
who is the Deputy Chief of Naval Operations for Integration of 
Resources and Capabilities.
    Our second panel also consists of witnesses well known to 
this committee: Mr. Ron O'Rourke, who is the senior analyst in 
Naval affairs with the Congressional Research Service; Dr. Eric 
Labs, who conducts independent ship cost analyst with the 
Congressional Budget Office; and Mr. Paul Francis, who heads 
the Maritime Analysis Branch at the Government Accountability 
Office.
    I want to thank all of the witnesses for being with us 
today, and I want thank the phenomenal staff that this 
subcommittee has for helping get everybody here today and for 
their work in preparing for this hearing.
    I now want to recognize our very, very capable ranking 
member, Mr. Bartlett.
    [The prepared statement of Mr. Taylor can be found in the 
Appendix on page 61.]

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

    Mr. Bartlett. Thank you very much.
    Good morning and welcome to both panels, Admiral 
McCullough, Ms. Stiller; and on the second panel, Mr. O'Rourke, 
Mr. Francis and Dr. Labs.
    It is a pleasure to have you here with us today, and I am 
sympathetic to the challenges you face.
    For years now, in fact even up to a few months ago, the 
Secretary and the CNO have sent you to testify before this 
subcommittee to explain, and at times, to defend the Navy's 
shipbuilding plan. In particular, we have long debated the 
wisdom of developing the DDG 1000. But I understand, after 
speaking to the CNO last week, that the Navy has finally come 
to the conclusion that the Nation would be better served by 
extending the DDG 51 production line and truncating the DDG 
1000 line at two ships.
    Now you have joined us with the daunting task of explaining 
this about-face and the consequences of such a decision. It is 
appropriate for Congress to question this decision and to 
assume the role of devil's advocate to ensure that we do not 
haphazardly embark on another deviation to the shipbuilding 
plan. But I will tell you up front what I told the CNO, I for 
one applaud this move.
    The chairman and I have both said over and over that the 
Navy will never achieve a 313-ship Navy without either top-line 
relief or a significant change in the mix of platforms.
    The Navy shipbuilding plan was based on several 
assumptions, none of which were realistic. The Navy postulated 
that, first, personnel costs would not increase because the 
Navy's active end strength could be reduced. I will note this 
has not proved true for any of the Navy's sister services.
    Second, there would be no increase in operations and 
maintenance accounts, but the price of fuel alone has 
invalidated this assumption. Overall, DOD fuel expenditures 
grew by 380 percent from 1997 to 2007, even though fuel 
purchases only increased by 26 percent during this time frame.
    Third, funding for research and development would be 
reduced and stay low, in effect trading for today's 
capabilities on the backs of tomorrow's sailors. But given the 
challenges we have seen in developing technologies for many of 
our current platforms, this, too, does not hold true.
    And, fourthly, that shipbuilding funds would be protected 
among the procurement accounts. One can argue that the Navy has 
done this to a certain extent, but we have real shortages in 
other areas, such as Naval aviation. Moreover, cost increases 
within the shipbuilding accounts come at the expense of other 
shipbuilding programs, as we have seen with the T-AKE (Dry 
Cargo/Ammunition Ship), the Littoral Combat Ship (LCS) and LPD 
17.
    And fifthly, requirements in cost growth could be prevented 
on future ships. Again, LCS has been a prime example of the 
fallacy of this assumption.
    Therefore, given that none of these assumptions have been 
shown to be plausible, then the only other alternative is to 
look at the mix of platforms. The DDG 1000 program is the 
obvious first choice for reevaluation because it is the largest 
and most expensive combatant we are building, and surface 
combatants are the backbone of our battle force, and it is 
undeniable that the costs for this program have grown. The 
original Navy estimate for the fifth DDG(X) was between $1.06 
billion and $1.23 billion. Now the Navy estimates it would cost 
double that, approximately $2.3 billion.
    Many independent analysts have cautioned about the 
potential impacts to the Navy should the cost of the DDG 1000 
continue to grow.
    Some of our witnesses today are among that number, and I 
will quote Bob Work from the Center for Strategic and Budgetary 
Assessment who has stated, ``Indeed, even if the Navy's 
optimistic ship cost estimates prove to be true, it seems 
certain that the seven DDG 1000s and 19 CG(X)s will continue to 
have inevitable disproportionate impacts on plans for the 
future surface battle line and the larger 313-ship battle 
fleet.''
    Moreover, I repeatedly stated that a class of seven ships 
is no class at all, but rather a technology demonstration 
program on a massive scale. When I learned it was unlikely that 
the DDG 1000 hull could be used in the CG(X) program, the 
begrudging support I had for this program began to fade.
    However, I will issue one note of caution. As we reevaluate 
our platform mix, we must ensure that we choose platforms that 
will optimize the capabilities of our fleet for the future 
threat, not to fight yesterday's or today's wars.
    We also do not want to artificially adjust the mix of hot 
and multi-mission combatants and focus low-end mission ships 
exclusively based on costs. In many respects, this is the 
history of the convoluted DDG 21, DD(X), DDG 1000 program. 
Consideration must be given to both the future operating 
environment and to economics.
    To that end, I want to hear more about the analysis the 
Navy has done regarding future mission sets. If we do not build 
five more DDG 1000s, what risk are we assuming? What will our 
Navy not be able to do?
    In the past, we have been told that the DDG 1000 will be 
significantly more stealthy, which will be necessary for ship 
self-defense and to improve the ship's land-attack mission. We 
were also told that the Navy needed to reduce ship's manning. 
DDG 1000 has an estimated crew size of less than half that of 
the DDG 51. We were told that the introduction of an integrated 
power system would improve ship survivability, reduce fuel 
consumption, and open the door for a new directed energy 
weapons systems.
    What is to be the fate of these technologies and the 
investments we have made? Are these factors no longer as 
important as others?
    There are many other issues than these to consider, but I 
am eager to learn from our witnesses and give Members an 
opportunity to ask questions.
    I remind witnesses that we value and respect your opinions. 
All we ask is you lay out the true warfighting requirements and 
be clear about what risk we must accept with the funding 
choices we will have to make.
    Thank you, Mr. Chairman.
    Mr. Taylor. Thank you, Mr. Bartlett.
    Given the nature of today's hearing, that this is as much a 
hearing as a tutorial from the Navy to this subcommittee, I am 
going to recommend to the subcommittee that we waive the 5-
minute rule for our first two witnesses and allow them to speak 
for 10 minutes and that for the additional speakers on the 
second panel, that we give them 7 minutes.
    So without objection, so ordered.
    It is my understanding, Admiral, that you wish to speak for 
both you and Ms. Stiller.
    The Chair recognizes Admiral Barry McCullough for 10 
minutes.

 STATEMENT OF VICE ADM. BARRY MCCULLOUGH, USN, DEPUTY CHIEF OF 
NAVAL OPERATIONS FOR INTEGRATION OF CAPABILITIES AND RESOURCES; 
 ACCOMPANIED BY ALLISON STILLER, DEPUTY ASSISTANT SECRETARY OF 
                    THE NAVY, SHIP PROGRAMS

    Admiral McCullough. Chairman Taylor, Ranking Member 
Bartlett, and distinguished Members of Congress, I am honored 
to appear before you with Ms. Stiller to discuss the Navy's 
surface combatant plan.
    I request our written testimony be entered into the record.
    The Navy's plan to truncate the DDG 1000 program at two 
ships and reopen the DDG 51 line best aligns our surface 
combatant investment strategy to meet Navy and combatant 
commander warfighting needs.
    The reason for the change to the Navy's DDG plan is to 
prioritize relevant combat capability. In this plan, the Navy 
addresses the changing security environment, the dynamic 
capability of the fleet, and provides for maximum stability for 
the industrial base.
    Modernizing the fleet's cruisers and destroyers and 
executing an affordable shipbuilding plan are crucial to 
constructing and maintaining a 313-ship Navy with the 
capability and capacity to meet our country's global maritime 
needs.
    The new Navy plan is based on requirements and needed 
warfighting capability and capacity. The first two DDG 1000s 
will be completed as planned and additional DDG 51s included in 
the Navy's shipbuilding program. This proposed decision has 
acquisition and industrial base implications.
    We face a growing proliferation of ballistic missiles and 
anti-ship cruise missiles that demand greater integrated air 
and missile defense capability. Anti-submarine warfare, anti-
ship cruise missiles, and theater ballistic missile gaps pose 
increased risk to our forces. Non-state actors who in the past 
have posed low-tech threats are expanding their reach with 
improved high-end capabilities and advanced anti-ship cruise 
missiles.
    The revised DDG plan enhances ballistic missile defense, 
integrated air and missile defense, and anti-submarine warfare 
to crown our growing anti-access strategies. The demand from 
combatant commanders is for ballistic missile defense, 
integrated air and missile defense and anti-submarine warfare 
best provided by DDG 51s and not the surface fire support 
optimized in DDG 1000.
    The Marine Corps supports the Navy's position on DDG 1000, 
just as the Navy remains firmly committed to Marine Corps and 
joint and combined force clearly stated surface-fires 
requirements. These Naval surface fire requirements can be met 
with existing precision strike capability from tactical 
Tomahawk, improved aircraft delivered precision munitions, and 
current surface combatants.
    Additionally, the Navy is researching capability to extend 
the range of current surface guns to meet ship-to-objective 
maneuver required ranges. The Navy-Marine Corps team has 
initiated an in-depth review to look at how surface-caught fire 
capability fits into the Littoral Combat Ship. DDG 1000 does 
not provide area air defense or ballistic missile defense.
    Beyond addressing the capability requirements, the Navy 
needs to have the right capacity to meet combatant commander 
warfighting requirements and remain a global deterrent. 
Combatant commanders continue to request more surface ships and 
increased Naval presence to expand cooperation with new 
partners in Africa, the Black Sea, the Baltic region and the 
Indian Ocean. This is in addition to the presence required to 
man our relationships with current allies and partners. 
Therefore, the Navy must increase surface combatant capacity to 
meet combatant commander demands today for ballistic missile 
defense, theater security cooperation, and steady-state 
security posture, simultaneously developing our fleet to meet 
future demands. Africa Command capacity demands will not 
mitigate growing European Command requirements and Southern 
Command has consistently required surface combating presence 
that in the majority goes unfilled. The Navy remains committed 
to our ballistic missile defense partners around the globe, 
including Japan, Korea, the Netherlands and Spain.
    The 30-year shipbuilding plan was designed to field a force 
structure based on the fiscal year 2020 requirements of the 
National Security Strategy and the Quadrennial Defense Review. 
The 313-ship force floor represents the maximum acceptable risk 
in meeting the security demands of the 21st century.
    In the balance of capability and capacity, the Navy has 
found there are increased capability gaps, particularly in 
integrated air and missile defense and ballistic missile 
defense, as we continue to review our Force Structure Plan in 
support of the developing fiscal year 2010 program objective 
memorandum.
    The DDG 1000 is a capable ship which meets the requirements 
for which it was designed. There are 10 promising major 
technologies in the DDG 1000 program that have potential 
utility but have yet to be assessed in operational 
environments. Completing the two ships under contract will 
allow that assessment, most importantly, that of the new hull 
form, low radar cross-section, dual-band radar, and minimal 
manning initiatives. There will be an impact to DDG 1000 prime 
contractors and secondary and tertiary suppliers. Developmental 
costs, which make up a significant investment in DDG 1000, 
specifically the total ship computing environment and dual-band 
radar, will still be incurred to ensure we acquire usable 
products from the DDG 1000 effort that we are incorporating in 
the CVN-78 class and can leverage in future shipbuilding 
programs.
    The next generation cruiser, referred to as CG(X), will be 
an air and missile defense battle space dominant ship and is 
being developed to counter the increasingly difficult missile 
threats we face and project. The technologies resident in the 
DDG 51 provide extended range air defense now and, when coupled 
with open architecture initiatives, will best bridge the 
transition to the enhanced ballistic missile defense and 
integrated air and missile defense capability envisioned in the 
CG(X).
    We believe this evolutionary path is correct and addresses 
the capability gaps more quickly than maintaining the DDG 1000 
program beyond the first two ships. Additionally, production 
costs for DDG 51 are quantifiable.
    Your Navy remains committed to building the fleet of the 
future and modernizing our current fleet to meet increasingly 
complex threats. Continuing to build DDG 51s enables us to 
expand warfighting capability, reach the required 313-ship 
force structure sooner and, with the technology demonstrated in 
DDG 1000 and DDG 1001, best bridge to CG(X).
    Within the constrained shipbuilding resources available to 
the Navy, evolutionary improvement of existing proven 
capabilities must take priority to restrain the decline in size 
and relevant combat capability of the fleet.
    If you will now refer to the two ship charts you have been 
provided, I will compare the warfighting capability provided by 
DDG 51 and DDG 1000.
    [The charts referred to were not available at the time of 
printing.]
    Admiral McCullough. DDG 1000 is an approximately 15,000-ton 
guided missile destroyer with a maximum speed of approximately 
30 knots and a cruising endurance of approximately 4,500 
nautical miles at 20 knots. It has the dual-band radar, 
consisting of the S-band volume search radar and the X-band 
multi-function radar. It has a vertical launch system capacity 
of 80 cells and is capable of self-defense, anti-air warfare 
capability with the enhanced Sea Sparrow missile. The vertical 
launch system (VLS) also provides long-range land-attack 
capability with tactical Tomahawk.
    DDG 1000 has 2 advanced gun systems, 6-inch caliber with a 
magazine capacity of 600 rounds and a firing range of 
approximately 63 nautical miles with a long-range land-attack 
projectile.
    DDG 1000 anti-submarine capability consists of a dual-
frequency, bow-mounted active sonar, a multi-function towed 
array passive sonar, a torpedo countermeasure system, and a 
vertical launch anti-submarine rocket. It has a helicopter 
hangar and is capable of operating two H-60 helicopters or one 
H-60 aircraft with three vertical take-off unmanned aerial 
vehicles.
    By comparison, the DDG 51 is a 9,600-ton guided missile 
destroyer with a similar maximum speed of approximately 30 
knots and an endurance range of 4,500 miles at 20 knots. It has 
the SPY-1D(V) radar and a vertical launch system capacity of 96 
cells and is capable of a sea-based defense area anti-air-
warfare capability with SM-2 standard missiles.
    Additionally, it can provide ballistic missile defense 
capability with the SM-3 interceptor. The VLS also provides 
long-range land-attack capability with tactical Tomahawk.
    The DDG 51 has one Mark 45 gun, 5-inch caliber with a 
magazine capacity of 550 rounds and a firing range of 
approximately 13 nautical miles. DDG 51 anti-submarine warfare 
capability consists of the SQQ-89 combat system with a triple 
frequency bow-mounted active sonar, multi-function towed array 
passive sonar, a torpedo countermeasure system, 6 torpedo 
tubes, and a vertical launch anti-submarine rocket.
    It has a helicopter hangar and is capable of operating two 
H-60 aircraft.
    The fuel usage for DDG 51 is approximately 30 percent less 
than that projected of the DDG 1000 under the same operating 
conditions.
    In summary, specific capability differences include: DDG 
1000 was designed to be optimized in a littoral environment and 
is expected to meet the challenges it would face in that 
environment in most cases more effectively than would the DDG 
51. The dual-band radar has better capability in a high-clutter 
environment and the low-power, high-frequency sonar is more 
effective in shallow water reverberation-limited environments. 
However, as currently configured, the DDG 1000 cannot perform 
area-air defense and is incapable of conduction ballistic 
missile defense. In addition, though significantly quieter and 
superior in littoral anti-submarine warfare, DDG 1000's lower 
power sonar is less effective in active blue-water anti-
submarine warfare prosecutions than is the case for the DDG 51.
    The future threat, particularly from proliferated ballistic 
missiles and advanced anti-ship cruise missiles, can be better 
addressed by the DDG 51. Modifying the DDG 1000s to support 
these missions is unaffordable from the Navy's standpoint. 
Given the range of missions assigned to the Navy in the future, 
the technical complexity of the threats we are to face, and the 
relevant likelihood we will be called upon to execute these 
missions, the greatest single threat is the proliferation of 
advanced ballistic missiles followed by a burgeoning deep water 
quiet diesel submarine capability by potential adversaries.
    The future Navy will have to address these threats first, 
and today, the DDG 51 presents more capability in these areas 
than does the DDG 1000. It is particularly critical that the 
Navy receive authorization of full funding for restart of DDG 
51 in fiscal year 2009 to support our proposed fiscal year 2010 
program objective memorandum and for the continuation of DDG 
1000 essential efforts.
    In the interest of time, I was unable in this opening 
statement to answer specifically all of the questions posed in 
your letter dated 25 July to Secretary Winter.
    Ms. Stiller and I look forward to addressing your concerns 
regarding mission capability, cost analysis, industrial base 
and DDG 51 modernization. Thank you to each one of you and to 
the Congress for supporting the United States Navy.
    [The joint prepared statement of Admiral McCullough and Ms. 
Stiller can be found in the Appendix on page 64.]
    Mr. Taylor. Thank you very much, Admiral.
    And thank you, Ms. Stiller, for being here.
    I would like to remind all interested parties that the 
purpose of this hearing was to clear the air between the DDG 
1000 and DDG 51, and that each of the contractors involved was 
given the opportunity to participate in the hearing as far as 
being witnesses.
    Again, I want to remind people that we invited any Senator 
who wished to participate. And so the people who are on the 
witness stand are those who chose to participate today. But we 
want to make it perfectly clear that we have given everyone on 
each side of this debate ample opportunity to say their piece.
    The Chair now recognizes the gentleman from Maryland, our 
ranking member, Mr. Bartlett.
    Mr. Bartlett. Admiral, you kept referencing the anti-
submarine warfare capabilities of the DDG 1000 and its 
capability in the littorals. How far along was the design of 
the DDG 1000 before LCS came on the scene?
    Ms. Stiller. From a budgetary perspective, we have had R&D 
for DDG 1000--it was not DDG 1000 at the time; it was DDG(X)--
since fiscal year 1995. LCS is about 2002 time frame. I think I 
have that right.
    Mr. Bartlett. You kept emphasizing that if we truncate the 
DDG 1000 line and go to the DDG 51, that we will have less 
capability in anti-submarine warfare and in the littorals. But 
wouldn't the number of LCSs that we are planning more than 
compensate for that?
    Admiral McCullough. The LCS has an anti-submarine package, 
Congressman, and it utilizes remotely piloted vehicles, active 
and passive towed arrays and helicopter support.
    We have also worked for a distributed system development 
that I would have to take into a closed hearing.
    But the LCS ASW mission module provides very, very good 
anti-submarine capability in the littoral. What I was trying to 
compare here was the capability resident in the DDG 1000 as 
compared to the DDG 51.
    Mr. Bartlett. I understand, in 1995, when we started the 
conceptual design of the DDG 1000, had we known that the LCS 
was coming along, the 1000 might have been a very different 
ship, might it not?
    Admiral McCullough. I would be speculating if I answered 
that question, Congressman. I wasn't in the Pentagon when those 
decisions were made.
    I will tell you, we developed a littoral combat ship for 
operations in the littoral, and as we have looked at the 
evolution of the threat over the past several years, it is more 
in the blue-water region for anti-submarine warfare, as 
recently demonstrated in the Western Pacific.
    Mr. Bartlett. From 1995 on, operation in the littorals 
became more and more a priority, and it resulted, of course, in 
the design of a whole new class of ships, the LCS. I think that 
is an important element in the Navy's decision to truncate the 
1000 line and to build more 51s because a major focus of the 
1000, the littorals and anti-submarine warfare, is now I think 
more than adequately done by the LCS in its missions there. 
This is just one of the several considerations that the Navy 
used in a decision to truncate the 1000 line and to move to the 
51. Also, and we do not know the final cost on either of these, 
but the 51 is certainly going to cost less in most people's 
projections than the 1000, and so will this move us more 
quickly to a 313-ship Navy?
    Admiral McCullough. Yes, sir, it will.
    Mr. Bartlett. Thank you very much, Mr. Chairman.
    Mr. Taylor. The Chair now recognizes the gentleman from 
Connecticut, Mr. Courtney.
    Mr. Courtney. Thank you, Mr. Chairman.
    First of all, I just wanted to say that I think the record 
should reflect that this hearing was actually scheduled before 
the Navy's announcement on July 24.
    And I think Mr. Taylor and Mr. Bartlett deserve a lot of 
credit for the fact that they have really been on top of this 
issue, and this committee has been doing a very credible job of 
oversight on this program, and I think that should be noted.
    I want to follow-up on Mr. Bartlett's last question. When 
the Navy issued its statement on the 24th, it actually said 
that the 313-ship level would be reached sooner, and you just 
testified that it would. My recollection is when Admiral 
Roughead appeared before the committee earlier this year, he 
had pushed back the projection for a 313-ship Navy to I think 
2019 was my recollection.
    Admiral McCullough. Yes, sir, I believe that is correct. In 
accordance with the shipbuilding plan, it was presented to 
Congress with the President's Budget Request for fiscal year 
2009 (PB09) submittal.
    Mr. Courtney. So can you say with any more specificity 
about whether this decision will change that date?
    Admiral McCullough. Yes, sir, we believe it will. The plan 
that we played out is a proposal in our POM submittal to the 
Office of the Secretary of Defense (OSD), so this is still 
being worked within the Defense Department.
    My initial estimates--and I have my people working the 
shipbuilding plan; it will be submitted to Congress--is that we 
will be able to achieve the 313 plan approximately 2 years 
earlier.
    Mr. Courtney. In your opening statement, you said that one 
of the goals of this change is to, I wrote it down real fast 
here, is to maximize industrial base stability, was part of the 
decision. This is not one of my yard's vessels, but my 
understanding is that the 1000 requires more shipyard workers 
than the 51. How do you envision maintaining that stability?
    Ms. Stiller. We are still in the process of defining an 
acquisition strategy going forward, and we will be working with 
the Secretary of Defense's Office on that. Certainly, 
industrial-based considerations must be weighed in that 
acquisition planning, and we will do that.
    Mr. Courtney. I am sure there may be some follow-up 
questions to that point later.
    I guess my last question is that, Admiral, you testified 
that you are hoping that the Congress is going to act in the 
2009 budget to sort of begin implementing this change. I think 
that is how you finished your testimony; is that right?
    Admiral McCullough. Sir, what I would say is, this is a 
Program Objective Memorandum (POM) plan. And as one of the 
gentlemen referenced, our proposal is for eight DDG 51s in the 
fiscal year 2010 program, from fiscal year 2010 through fiscal 
year 2015. We believe to enable that program a President's 
Budget Request for 2009 (PBO9) adjustment to make it DDG 51 in 
fiscal year 2009 supports our POM-10 submittal. And that is 
what we would like to see happen, yes, sir. But that is in 
support of our POM-10 submittal, sir.
    Mr. Courtney. So what happens if we don't do that? I guess 
I am trying to sort of play this out a little bit, because it 
is kind of late in the process.
    Admiral McCullough. Yes, sir, we understand that.
    What I would say is--Allison, when was the last year we 
started building the DDG 51s?
    Ms. Stiller. The last DDG 51 was appropriated in fiscal 
year 2005, and so the point Admiral McCullough I think is 
trying to make here is, you would have a significant production 
break if you wait until fiscal year 2010. So the desire is to 
consider in 2009 as well. So that is part of the discussion we 
are having.
    If your question is if another DDG 1000 was authorized and 
appropriated, from an acquisition perspective, I have an 
approved acquisition strategy for the 1000 program as well. 
Surface combatant in fiscal year 2009 is critical, we believe, 
to the industrial base.
    Mr. Courtney. Thank you.
    I have no further questions, Mr. Chairman.
    Mr. Taylor. The Chair recognizes, again, given the 
unanimous consent request, the Chair now recognizes Mr. Saxton.
    Mr. Saxton. Thank you, Mr. Chairman.
    Admiral, during your testimony, you, I believe, said that 
the DDG 1000 had some advantages as compared to the DDG 51 and 
that the DDG 51 had some advantages as compared to the DDG 
1000. I think you indicated that the DDG 1000 had some 
advantages in the littoral environment, and that it had an 
advantage with the dual-band radar, and it had an advantage in 
shallow water, sonar in shallow water.
    At the same time, you indicated that DDG 51 had some 
advantages in air-to-air defense, in ballistic missile defense, 
in anti-ship missile defense, in anti-submarine defense in deep 
water. Did I get that all? Is that a synopsis of what you said?
    Admiral McCullough. Yes, sir, that is a fair assessment. 
The dual-band radar has both and S- and an X-band radar 
capability. And that works very well in the cluttered 
environment of the sea/shore interface.
    Mr. Saxton. Here is the question that I wanted to ask. 
Members of this subcommittee and members of the full committee 
have followed very closely the evolution of DDG 51. I did 
myself, and I saw it as a new system in the 1980's with 
capabilities that were different, much less capable than the 
Aegis system today. And I followed that evolutionary path until 
very recently DDG 51 with the missile technology. The anti-
missile technology that it has was able to take a satellite out 
of the atmosphere.
    Admiral McCullough. Yes, sir.
    Mr. Saxton. And that was quite a learning curve over a long 
period of time and evolutionary developments that took place 
that gave us capabilities today that nobody else presumably in 
the world has, a package of capabilities.
    So I guess this is my question: If DDG is not as good as 
1000 in the littoral environment and if it is not as good in 
the dual-band radar component, which I don't fully understand, 
I must admit, and if it is not as good in the sonar department 
in shallow water, how will we meet these three--how will DDG 
and other Naval assets be able to meet these requirements?
    Admiral McCullough. I will address the ASW first, sir. As 
was suggested, the LCS has quite good capability in the 
littoral environment from an anti-submarine warfare 
perspective, both from an active and passive and a combination 
of the two use of sonars and distributed systems. So we think 
we have that challenge met with the ASW portion of the LCS.
    The dual-band radar was specifically designed to function 
at the sea-land interface in a clutter environment. What I 
would tell you is it does very well there. It does exactly what 
we designed it to do, and that is because of the combination of 
the X-band and the S-band.
    As initially configured, and as you suggest, the SPY-1A in 
the early 1980's did not do well in the sea-land interface. And 
we have evolved that radar from a SPY-1A to a SPY-1B to a SPY-
1D(V). And the SPY-1D(V) is capable and can meet the threats in 
the littoral environment.
    And as you also suggest, we have evolved that radar to 
where it can shoot down satellites in outer space if that is 
what we so desire. It wasn't designed for that. It wasn't 
designed for ballistic missile defense, but we have evolved 
that system to meet that capability set.
    Now, granted, the system, the SPY system, the Aegis system 
is not designed to shoot down satellites, and that was a one-
time event, but it is configured to track and engage ballistic 
missiles.
    People ask me what the accuracy of the thing is, and I will 
tell you, we can pick where on the short- and medium-range 
ballistic missiles we want to hit the target, and that is how 
accurate it is.
    So I think, with the combination of capability with the LCS 
and the capability resident in the DDG 51, we meet the littoral 
challenge. I think that is where we are.
    Mr. Saxton. Mr. Chairman, if I may just follow up with one 
quick.
    The shallow water sonar, is there a come-along to take up 
that capability?
    Admiral McCullough. Yes, sir. The LCS ASW mission package 
has the shallow water active and passive sonar capability. And 
I believe we roll the first ASW package out in September or 
October of this year.
    Mr. Saxton. Thank you, Mr. Chairman.
    Mr. Taylor. The Chair recognizes the gentlewoman from 
Massachusetts, Ms. Tsongas.
    Ms. Tsongas. Thank you, Mr. Chairman, for allowing me to 
participate in this important hearing and for your continued 
leadership to make our shipbuilding more effective and 
affordable.
    Admiral, I have a long question. Please, if you would, bear 
with me before answering.
    Admiral McCullough and Ms. Stiller, you have both testified 
before Congress this year on the fiscal year 2009 budget and, 
in particular, on the DDG 1000 program. I would like to read a 
couple of your statements.
    In April, Admiral McCullough, at the Senate Armed Services 
Committee Seapower Subcommittee hearing, you said, ``It is, the 
DDG 1000, much more capable in the littoral, given the radar 
suite that we put on it, the signature reductions we have put 
into the ship, and it has got less than half the crew size on 
it.''
    In March of 2008, Admiral McCullough and Ms. Stiller, in 
your testimony before this subcommittee you said, ``The DDG 
1000 will capitalize on reduced signatures and enhanced 
survivability to maintain persistent presence in the littoral 
and future scenarios. The program provides the baseline for 
spiral development to support future surface ships. The dual-
band radar represents a significant increase in air defense 
capability in the cluttered littoral environment. Investment in 
open architecture and reduced manning will provide the Navy 
lifecycle cost savings and technology options that can be 
retrofit to legacy ships, thus allowing adaptability for an 
uncertain future. The program continues to execute on cost and 
on schedule.''
    In March of 2008, in a hearing before this committee, ``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 a DDG 51.''
    And Ms. Stiller, at the same hearing, ``And I would also 
add that the fleets do have input as we go through our budget 
cycles and what the requirements are.''
    Today, obviously, you see a changed threat environment. 
Nevertheless, given all your testimony just three to four 
months ago regarding the great warfighting capabilities the 
ship delivers against current and future threats and its 
capabilities that ``exceed capability resident in the DDG 51,'' 
do you stand by the testimony that you made before Congress so 
recently?
    Admiral McCullough. Ma'am, I would say everything that I 
said in my testimony, and I don't want to speak for Allison, 
remains.
    The DDG 1000 is absolutely outstanding for the requirements 
to which it was designed. The dual-band radar is better than 
the SPY-1D(V) radar in the cluttered littoral environment at 
the sea/land interface. The 155 gun, the 6-inch gun, has a 
longer range and a better fire-support capability than a 5-inch 
gun.
    The total ship's computing environment that I referenced 
again today is something we need to go forward with as we 
develop different combat systems, and we need that to complete 
the first two ships. The dual-band radar goes on CVN-78. I 
wouldn't change anything I said in that testimony. In that 
environment, the DDG 1000 outperforms the DDG 51.
    Now when I look at developing multi-mission surface 
combatants that are filling a unique role that is aligned to 
one particular mission, which is fire support, and I look at 
the global change in the security environment, I have to look 
at where I think the capabilities should go. And the capability 
resident in the DDG 51 with respect to advanced anti-ship 
cruise missiles and ballistic missile defense better suits the 
capability challenges we see today.
    Ms. Tsongas. Before I go on to ask a question about the 
sudden shift in thinking around what the threat is, Ms. 
Stiller, you said that it is important that we do buy a surface 
combatant in fiscal year 2009. Given what the House 
Appropriations Defense Subcommittee did yesterday with $450 
million for advanced procurement, no money for the DDG 51 
procurement, and the fact that the Senate equivalent is likely 
to be friendlier to the DDG 1000, I am not sure where the 
funding for a DDG 51 is going to come from. Would you support 
funding for an additional DDG 1000 instead of no surface 
combatant in this year?
    Ms. Stiller. Ma'am, as you know, our President's budget 
submission for 2009 included DDG 1000. And yes, Admiral 
McCullough said in his opening statement, we are here today to 
talk about where the Navy is headed and as part of our POM-10 
submission to the Office of the Secretary of Defense (OSD).
    So, from an execution perspective, yes, ma'am, I can 
execute a DDG 1000 in fiscal year 2009, but it comes back to a 
requirement decision; does the Department support and need that 
ship? But from an acquisition perspective, yes, ma'am, I 
absolutely could execute either way.
    Ms. Tsongas. And then I have one more question for you, 
Admiral. This isn't the first major ship acquisition program 
that has faced problems. Why does so much risk and 
inconsistency exist? Is this a problem with the threat 
assessment, or is it a budgetary issue? And what can we do to 
mitigate these problems?
    Before you answer, I appreciate that we must be flexible, 
and I appreciate that you are under great constraints when you 
testify, but shifting testimony in such a short period of time 
makes it very difficult for us as a Congress to authorize and 
appropriate funding for long-term programs in an effective and 
efficient way.
    So how do we address this so that the process is fairer for 
the Navy, for the industrial base, and the taxpayer?
    Mr. Taylor. Ms. Tsongas, again, we are trying to clear the 
air, but you are over your five minutes.
    So, Admiral, if you could give us as timely response as you 
could.
    Admiral McCullough. Yes, Sir.
    Yes, ma'am, I understand the question. There have been some 
things that have happened in the near-recent past that have 
significantly changed the way we view the threat. Some of it I 
would have to talk to you offline about due to the 
classification level of it.
    But if you look at recent ballistic missile demonstrations 
or tests by potential adversaries, they have advanced greatly 
since even 2000. And then if you look at an event that occurred 
in the Israeli-Hezbollah war where we used to attribute high-
end or high-tech threats to nation-states, that would now 
affect our ability to perform what we previously viewed as 
operations in low-threat environments into a high-tech, high-
threat environment. And so this is a requirements and 
capability issue based on the way we have seen the threat 
adjust over the past couple of years.
    We started working on this about four and a half or five 
months ago, and I understand and appreciate the dilemma for the 
Congress. But the Navy felt that this was the right way to go 
based on the capability that we see we need to meet current and 
future threats.
    Mr. Taylor. Thank you, Admiral.
    Thank you, Ms. Tsongas.
    The Chair, again, is going to recognize Members in the 
order that they were here at the gavel, and then we will go 
back to Democrat and Republican.
    The next person who was here at the time of the gavel is 
Mr. Allen from Maine.
    Mr. Allen. Thank you, Mr. Chairman. And I appreciate very 
much the chance to be here and welcome members of the panel.
    Bath Iron Works in my district only builds surface 
combatants, so it has--and it was, my understanding was the 
third DDG 1000 was intended to go to Bath Iron Works. So this 
debate means a great deal to the people who work there, to the 
company, and everyone who is connected to that particular yard.
    Both the CNO and the Secretary of the Navy have been to the 
yard. They have seen the new ultra-hull facility. They have 
talked about how important Bath Iron Works is to the 
shipbuilding industrial base in this country.
    Ms. Stiller, I think you said that when you figure out the 
acquisition strategy, the industrial base considerations will 
play a role. I would ask either or both of you to speak to the 
role you see for that particular yard as part of the Navy's 
shipbuilding base going forward?
    Ms. Stiller. Yes, sir.
    Bath Iron Works is producing surface combatants for the 
United States Navy; specifically, still building the DDG 51 
class and the lead DDG 1000 with some work also for the second 
1000. There is a work-share agreement between Northrop Grumman 
Shipbuilding and General Dynamics Bath Iron Works.
    Yes, sir, the Secretary has seen the ultra hull facility. I 
have been up there recently. That was an investment done 
through the DDG 51 program to help improve efficiencies in the 
51 program. Certainly the yard has improved efficiencies over 
time.
    We will weigh industrial base considerations as we go 
forward in our acquisition strategy formulation. So I guess I 
can assure you that we will be considering that as we move 
forward. But I don't have specifics yet, because we are still 
in the developmental phase.
    Mr. Allen. I understand, Ms. Stiller, that both yards have 
indicated to you that a restart of the 51 program in fiscal 
year 2009 can be executed.
    Ms. Stiller. Yes, sir. As a result of my hearing this 
spring before this committee, Chairman Taylor asked me to talk 
with industry, because I had said I was concerned about the 
subvendor implications of returning to DDG 51. Both yards came 
in to meet with me. They had pulsed the subvendor base.
    Now, I will tell you their assumption was the DDG 1000 
continued and that the 51 would restart. The major issue that 
they identified to me was a long lead time for the main 
reduction gear, which would be about 50 weeks longer than what 
we have traditionally seen in reduction gear fabrication. Both 
yards assured me that since they had done main reduction gear 
repairs, significant disruptive industrial events, they have 
both done those in the recent past, they felt that if they 
understood that they were going to have to build out a 
sequence, they could plan for it and execute. And I believe 
knowing that they have done that in the past and they could 
plan in the future that, yes, sir, they could restart in 2009.
    Again, they were in their assumptions, I am being truthful 
here, is that they did assume the 1000 class continued.
    Mr. Allen. Admiral, I had one more question. As I heard you 
describe the capabilities of the 1000 and the capabilities of 
the 51, it struck me that what you were really saying is that 
the Navy's understanding of the national security needs of this 
country, particularly how we respond to future threats, has 
changed based on evolution and threats both in submarines built 
by potential adversaries and also by the development of new 
missiles, both cruise missiles and ballistic missiles. And I 
just was struck also in your written testimony how often you 
referred to the demands of the combatant commanders. And I 
wonder if you would elaborate just a little bit on that fact. 
What kinds of requests are you getting combatant commanders and 
how has that affected your decision?
    Admiral McCullough. As we reviewed the integrated priority 
list from the combatant commanders that were submitted this 
year, European Command (EUCOM) asked for increased air and 
missile defense. Pacific Command (PACOM) asked for enhanced 
ballistic missile defense. And Central Command asked for 
integrated air and missile defense. And I would have to get the 
lists; I don't have them in front of me. I believe PACOM asked 
for improvements in anti-submarine warfare. And as we looked at 
that, that sort of aligned with where we viewed the national 
security environment was going.
    I would also tell you that EUCOM is coming in for a request 
for a 1.0 presence ballistic missile defense in the eastern 
Mediterranean. There has been some discussion in policy about 
putting that capability in the Baltic region. And Central 
Command has a standing request for forces for 1.0 presence for 
exo-atmospheric shooters, SM-3 shooters, and endo-atmospheric 
shooters, SM-2 block IV shooters, which is a near-term sea-
based terminal. They have that standing requirement, as does 
PACOM, have a standing requirement for almost every ballistic 
missile defense asset we can put in that theater, sir.
    Mr. Allen. Thank you.
    Thank you both.
    Mr. Taylor. The Chair thanks the gentleman.
    And the Chair would also like to make a request of Admiral 
McCullough.
    Admiral, included in next year's budget request, I would 
like the Navy to submit a cost estimate of what it would take 
when the first of the DDG 51s hit 20 years, what a service life 
extension program would cost to get those vessels 
electronically and weaponed-wise up to speed with the next 51s 
to come off the line.
    Admiral McCullough. What I would tell you, sir, is DDG 51 
made its first deployment in 1991. So she was commissioned in 
late 1990 or early 1991. So she reaches 20 years in fiscal year 
2011.
    We put in a DDG modernization package as part of the 
President's Budget Request for 2008 (PB08) that was approved by 
the Congress to modernize not only the hull, mechanical, and 
electrical systems on that ship, of those ships, to get them to 
their full service lives, but to upgrade the combat systems 
capability, because as Congressman Bartlett indicated, if we 
don't--or maybe it was you, sir--if we don't get the ships to 
be able to upgrade to meet the threat, we decommission them. 
And we did. We decommissioned the Baseline One cruisers at 
about 20 years; the Spruances at about 22; and the new threat 
upgrade DDGs, 993 Kidd class, at 17 years because we couldn't 
upgrade the combat capability in them. And the upgrade packages 
we have in the combat systems, starting for the DDG 51, is 
something we call Advanced Capability Build 12. And that is a 
technical insertion of commercial off-the-shelf (COTS)-based 
computer hardware, and it is an open architected computer 
program that is developed around a projected architecture. And 
it gives the ships in-stride ballistic missile defense, the 
ones that don't have it, with multi-mission signal processors, 
and upgrades to the original radar that was put on the first 
ships, the SPY-D(V) capability, and it also puts in integrated 
air and missile defense with the cooperative engagement 
capability that isn't resident in that class of ships now and 
provides for increased extended range area air defense with SM-
6s. And the cost of that whole upgrade, I believe, as submitted 
in the 2008 budget submittal was about $215 million a ship.
    And we need to get to the open architecture computer 
environment so we can have an open architecture business base 
that allows competition for program algorithms and hardware 
updates, because we can't afford to upgrade these ships again 
10 years after their current mid-lives at a cost of $200-plus 
million a ship. And so that is where that program is. And I can 
give you more details on that as you desire, sir.
    Mr. Taylor. Admiral, for the record, I think that is very 
important. Additionally, given the advances in cathodic 
protection and metal coatings and what not, I think it would be 
very much to the committee's interest as to, what are the 
possibilities of actually extending the life of some of these 
51s out to 40 years?
    Admiral McCullough. Yes, sir, I can do that. We 
commissioned a study by Naval Sea Systems Command (NAVSEA) to 
get the ships to 40 years already, because, as I look at the 
outyear plan and the shipbuilding plan, I understand how 
expensive it is. And NAVSEA came back to me with that report. 
And there are no show stoppers to get those ships to 40 years 
estimated service life (ESL).
    Mr. Taylor. Thank you very much, sir.
    The Chair now recognizes the gentleman from Virginia, Mr. 
Wittman.
    Mr. Wittman. Thank you, Mr. Chairman.
    Admiral McCullough, you have spoken a little bit about the 
differences in capabilities of the DDG 51, the DDG 1000, the 
surface combatant commanders' requests and what their needs 
are. I want to kind of back up a little bit and talk in a 
broader framework as far as the threats that this Nation faces 
and in the Navy's vision of its mission needs. And can you tell 
us a little bit about that and how that has led you to the 
point of restarting DDG 51? How has the Navy's vision of the 
mission changed? And if you can speak a little more 
specifically about the Navy's role in providing ballistic 
missile defense and also Naval surface fire support and how 
those elements relate to the Navy's maybe change in thought 
about how the DDG 51 meets those requirements versus the DDG 
1000.
    Admiral McCullough. Yes, sir. I will speak to that.
    As we look at threat sets both from developing nations and 
nations that used to be constrained to regional operations, the 
proliferation of ballistic missiles is substantial. So that is 
a problem. And we have recognized that over the last several 
years, starting in the late 1990's or the early 2000's, when 
the Missile Defense Agency took auspices of capability 
development out of the services and under the agency. Prior to 
that time, the Navy had something known as the Navy Area Wide 
Program. So we were already embarked on what we saw an evolving 
threat with the proliferation of ballistic missiles.
    Working with the Aegis Ballistic Missile Defense 
Directorate inside the Missile Defense Agency (MDA), the Navy 
has conducted successfully 12 of 14 engagements of medium-range 
and short-range ballistic missile targets out at the Pacific 
Missile Range Facility. We have also modified the program with 
the help of Lockheed Martin engineers, Raytheon engineers, the 
Naval Surface Weapons Center in Dahlgren, and the Navy, and 
executed a shoot down of an errant satellite because of the 
hazardous material that was in the fuel tank.
    The most recent exercise off of Kauai in November of 2007 
was conducted, as we do all of them, the ship's crew is on 
watch; it is not engineers. It is not specified folks. It is 
folks on a watch bill, without knowledge of when the target is 
going to be launched, and they launched two simultaneous short-
range ballistic missiles, and they were successfully 
intercepted by Lake Erie.
    So we have the capability to conduct intercept operations 
today with the Aegis Ballistic Missile Defense Program 3.6 or 
4.0. That capability is deployed in the Western Pacific and 
contributes to the larger ballistic missile defense system 
architecture that has been engineered by MDA to provide warning 
for rogue nation ballistic missile launches. And it is on 
station and operational today, and the combatant commanders 
want more of it, sir.
    Mr. Wittman. Thank you.
    Mr. Chairman, one additional question. When the DDG 51s 
were in production, there were a minimum of three DDG 51s 
produced per year. And past studies have indicated that the 
shipbuilding industry needs to produce at least three of those 
surface combatant ships a year in order to sustain the 
industrial base. Now, with this change in direction from the 
DDG 1000 to the DDG 51, does the Navy plan in future budget 
requests to request the production of at least three DDG 51s 
per year into the future?
    Admiral McCullough. Sir, what we have proposed to OSD as we 
have worked through this plan is eight ships across the fiscal 
year 2010 Fiscal Year Development Plan (FYDP). And the profile 
as proposed, and not approved yet by OSD, is one ship in fiscal 
year 2010; two ships in 2011; one in 2012; two in 2013; and one 
in 2014 and 2015. As we build subsequent programs in the years 
to come, we will look at that issue that you just laid out. But 
I would tell you right now, based on competing demands within 
the Department, that is what we laid in the POM-10 submittal to 
OSD.
    Mr. Wittman. Thank you, Mr. Chairman.
    Mr. Taylor. I thank the gentleman.
    The Chair intends to recognize in the following order: Mr. 
Langevin, Mr. Ellsworth, Mr. Sestak, Ms. Gillibrand, and Mr. 
Cummings. If our minority members wish to be recognized along 
the way, just let me know.
    The Chair now recognizes Mr. Langevin for five minutes.
    Mr. Langevin. Thank you, Mr. Chairman.
    And I want to thank you for your courtesy in allowing me to 
come back on the committee for this hearing, as I am on leave 
from the Armed Services Committee, on the Intelligence 
Committee right now.
    Admiral, I want to thank you for your testimony.
    Ms. Stiller, thank you for being here as well.
    Let me just say that I am certainly concerned about the 
quick shift in strategy, going from the 1000s to the DDG 51s, 
given all the due diligence that has gone into getting us to 
the point of the recommendation of the shipbuilding on the 
1000s, especially given the fact that the President's budget 
seems to be going one way. As I understand it, the Sec Def has 
not signed off on Navy's plan. The House Defense Appropriations 
Subcommittee has recommended $450 million for the DDG 1000 and 
nothing for the 51s.
    In your testimony, you stated that the decision to suspend 
the Zumwalt in favor of more Arleigh Burke class destroyers 
resulted from the Navy's belief that the DDG 51's capabilities 
better met the Navy's needs. Considering the Navy is certainly 
requesting a change in the President's budget six months after 
its submission in the middle of an appropriations cycle, you 
know, I certainly am curious about how this decision was made 
by the Navy.
    You stated in your testimony that there was significant 
change in threat assessments that prompted the review. You 
know, I would like to follow up with you, perhaps in a 
classified session or in response to my questions in writing, 
in addition to what you have stated verbally already on what 
the change in the threat is. Additionally, as you know, and 
have stated in the past, the DDG 1000 was developed as a result 
of an extensive review on budget, design, and capabilities. Did 
the decisions to suspend DDG 1000 and replace it with DDG 51 
undergo a Joint Capabilities Integration and Development System 
(JCIDS) Review? And can you please provide for the subcommittee 
a copy of that study for the record?
    [The information referred to can be found in the Appendix 
beginning on page 131.]
    Admiral McCullough. As far as the JCIDS process, my initial 
liaison with the Joint Staff has said there is no--they don't 
have a requirement for us to update the capabilities 
development document that was approved by the Joint 
Requirements Oversight Council (JROC). I do understand that the 
Vice Chairman of the Joint Chiefs of Staff is going to ask that 
the Navy come and brief the JROC on why we had the shift from 
DDG 1000 to the DDG 51s.
    Mr. Langevin. So, Admiral, this decision was made absent a 
thorough review, analysis, and study?
    Admiral McCullough. We have done the analysis and study 
internal to the Navy. And we do it with our analysis shop N81. 
I also will tell you, when the CNO came into office last 
September, he has come with vast experience in the Pacific, 
both as a deputy Pacific commander for approximately a year, 
the Pacific fleet commander for two years, and the Atlantic 
fleet commander for some period of time, six or eight months. 
And when he started to go through our program build for fiscal 
year 2010, based on his experience and where we saw the threat 
set going based on our analysis, long about the beginning of 
March he said to me that we really need to go look at this; I 
think we have an asymmetric capability mismatch between the 
projected and future threats and what we are building. Our 
internal analysis says we have excess capacity in Naval surface 
fires that the DDG 1000 was predominantly designed for and that 
we have the capacity to support the Marine Corps surface fires 
requirements. And so given his experience and what our analysis 
said, starting in about March, we started to work this process. 
We wanted----
    Mr. Langevin. Admiral, if I could, my time is limited, so 
if I could ask, it is my understanding that the CNO has not in 
fact signed off on Navy's recommendation transitioning, going 
back from the 1000s to the 51s. Is that correct?
    Admiral McCullough. It is in our budget submittal. Deputy 
Secretary of Defense and the Under Secretary for Acquisition, 
Technology, and Logistics, Secretary Young, said the Navy could 
provide this as part of their POM-10 submittal, and that we 
should start to brief Congress and industry. And the CNO and 
the Secretary have made calls Members, and Ms. Stiller and I 
have made calls on staffers, because we wanted to get to the 
Congress before you all found out about it in the newspaper. So 
the POM-10 submittal is under review by the Office of Secretary 
of Defense, sir.
    Mr. Langevin. Thank you. On the design changes and such, in 
your testimony, if we do the 51s versus 1000s, you estimate 
that the DDG 51 line could be restarted you said in fiscal year 
2009 even though you also know that certain industrial base 
issues need to be worked out. You said, given the long lead 
time for materials, such as the main reduction gear, you said--
I was going to ask if you thought that 2009 was a feasible 
estimate. You still believe that that is correct?
    Ms. Stiller. Yes, sir.
    Mr. Langevin. Okay. Well, you have stated that the new----
    Mr. Taylor. Mr. Langevin.
    Mr. Langevin. Yes.
    Mr. Taylor. We are going to let you go a little bit over, 
but in fairness to the other members, you are past your five 
minutes.
    Mr. Langevin. Thank you for your indulgence, Mr. Chairman. 
I will be brief with just this last question.
    You stated that the new DDG 51s could incorporate 
additional technologies, but we haven't heard a clear 
explanation as to what those would be. Do your cost estimates 
for the future DDG 51s reflect current design and capability or 
do they incorporate additional technologies, each of which 
could lead to insertion or new design costs?
    And finally, do your lifecycle comparisons between DDG 51 
and the 1000s incorporate the increased personnel required for 
the 51s? And have you developed estimates of termination costs 
for DDG 1000?
    Admiral McCullough. Sir, the capability set I described for 
DDG 51 that would restart as DDG 113 is based on the 
modernization program that we currently have funded in the DDG 
modernization program. And that includes the COTS-based 
computer hardware, the open architected computer program, the 
multi-mission signal processor with inherent ballistic missile 
defense capability and the extended-range anti-air warfare 
capability with SM-6. That combat system, because of the way it 
has been developed, costs less than the current combat system 
that is in DDG 112. That will be available to drop into DDG 113 
if it is a 2009 restart. So I am confident in the cost numbers 
that we have provided in letters to what the restart costs for 
a DDG 51 is. Lifecycle costs, because the DDG 1000s are 
projected to come on service or in service inside this POM-10 
developed fiscal year 2010 future year defense plan, we used 
the N4 as models on how we project costs for ops and 
maintenance and manpower on DDG 51s and the DDG 1000s. And when 
we look at manpower and fuel costs and spare parts, a DDG 51 
over the lifecycle is about $4 million more expensive to 
operate than the DDG 1000. I will get you the exact number, but 
I think it is $4 million. That is different than what is in the 
Selected Acquisition Report because the SAR reflects different 
requirements for lifecycle costs than we do when we do budget 
development for ops and maintenance and manpower on ships.
    Mr. Langevin. I know my time has long since expired, so I 
want to thank the chairman for his indulgence.
    Admiral and Ms. Stiller, I will have follow-up questions 
that I would like a quick response for the record.
    Thank you.
    Admiral McCullough. Yes, sir, thank you.
    Mr. Taylor. The Chair thanks the gentleman.
    The Chair recognizes the gentleman from Indiana.
    Mr. Ellsworth. Thank you, Mr. Chairman.
    Thank you, Admiral and Ms. Stiller, for being here. I will 
try to keep mine brief. Admiral, is this, in your vast 
experience, the first time this has ever occurred, we canceled 
a program midstream, in your years in the Navy? In the Navy or 
any of the other armed services?
    Admiral McCullough. First, sir, I would like to just make 
one correction. We are not canceling the program. We are 
truncating the program at two ships. And those will be 
developed and fielded both to demonstrate the technology and to 
use in operations. Allison and I just talked for a minute, I 
have been in the Pentagon for about 3 years, and I have been 
commissioned for a little over 33 years. And the only other 
major program I can remember that has been canceled was the A-
12.
    Ms. Stiller. From a truncation perspective, and not 
necessarily the Department, but the Sea Wolf (Sea Wolf class 
fast attack submarine) program was truncated, first, at one 
submarine and then two and finally three.
    Mr. Ellsworth. And Ms. Stiller, I know you are the expert 
in percentage of the work being done, we have talked before, 
the two ships that we have contracted, and I have not had a 
chance to review the documentation, at what level, what 
percentage are they in construction? Are they done? Are they at 
zero?
    Ms. Stiller. No.
    Sir. We awarded the contracts for the dual lead ships in 
February of this year. And the plan, Bath Iron Works has the 
lead ship. We had always said we wanted to get to a certain 
point in design before we started construction. That is about 
80 to 85 percent. And they intend to start fabrication on the 
lead ship up north in October of this year and about a year 
later down south. So we have not started production, although 
both yards have taken the design products and translated them 
into usable modules that will go into the ship to prove that 
the digits-to-steel translation works. And I am happy to report 
it has worked incredibly well. The program is going quite well, 
cost and schedule. DDG 51 is likewise a very successful 
program.
    Mr. Ellsworth. So we will produce two only of the DDG 
1000s. Is that----
    Admiral McCullough. That is the Navy's plan as submitted to 
OSD, yes, sir.
    Mr. Ellsworth. And when that occurs and when these ships 
are fully operational, then, Admiral, would you tell me the 
difficulties or challenges down the road with having 2 of one 
and 33 of another, whatever the number is, of the 51s? How does 
that challenge you in the training, replacement parts, running 
two ships only? What are the challenges you will face in that?
    Admiral McCullough. Well, any time you have a small class, 
you have economy-of-scale issues. So you get a lot of DDG 51s, 
you have one set of issues. When you have a small class, you 
face another set of issues. That said, I will tell you the Navy 
has a history of small ship classes, and we know how to deal 
with it. The John F. Kennedy was a one of a class. The 
Enterprise is one of a class. There were two California class 
cruisers. The there were four Virginia class cruisers. There 
are three Sea Wolf submarines.
    Which ones did I leave out? Oh, Bainbridge is one of a 
class. Truxtun is one of a class. Long Beach is one of a class. 
So there are challenges, but we have the experience to deal 
with it, sir.
    Mr. Ellsworth. Thank you, Mr. Chairman. I will yield back.
    Mr. Taylor. The Chair thanks the gentleman.
    And for the record, Mr. Larsen has asked for a breakdown of 
the lifecycle costs of the two vessels to be submitted for the 
record.
    [The information referred to can be found in the Appendix 
beginning on page 131.]
    Mr. Taylor. The Chair now recognizes Admiral Sestak from 
Pennsylvania.
    Mr. Sestak. Thanks, Mr. Chairman.
    About three years ago, CNO Clark came before this committee 
and said that, if we do not preserve the DDG 1000, we would be 
putting at risk the sons and daughters of our Nation. For some 
reason that seemed, understandably, potentially to handcuff the 
Congress. We took him at his word, or they did.
    Why is your credibility any better today to tell us it is 
not needed and that something else can replace whatever it was 
that put our sons and daughters at such risk?
    Admiral McCullough. Congressman, I respect Admiral Clark 
immensely. And when he testified before this committee, given 
what we knew of the world situation at that time, I think he 
was absolutely correct.
    Mr. Sestak. What did you get to replace whatever DDG 1000 
was supposed to do to protect the sons and daughters? Not that 
the threat has changed. What has taken its place to do that? 
Because the analyses we had over there said the other ones 
couldn't do it, that led him to state that. What is taking its 
place to do that?
    Admiral McCullough. The surface fires analysis, first, I 
have to brief you in another environment. But I would tell you 
that the capacity that the DDG 1000 brought in the surface 
fires for which the ship was designed is easily accounted for 
by the improvements in airborne-delivered precision strike 
munitions, tactical Tomahawks today as well as our current----
    Mr. Sestak. If I could, Admiral, those analyses were also--
and there has been no changes in those programs of record since 
he made that statement.
    Admiral McCullough. Congressman, to adequately----
    Mr. Sestak. With all due respect, there has not been.
    Admiral McCullough. Yes, sir. But to adequately get at your 
question, I have got to take it into a classified environment. 
I can't discuss it here.
    Mr. Sestak. But if I could, I understand that something has 
moved to the left. I am not arguing that point. I am arguing 
what is taking the place of DDG 1000, that it was the only 
thing that could meet this need? It was the only thing that 
could meet this need. Not the new threat.
    Admiral McCullough. Yes, sir.
    No, that is the surface fires requirement.
    Mr. Sestak. My understanding is that was not just what he 
was talking about, because there is also--my second question 
is, to some extent, the Navy had tried to evolve over the past 
years not to be a Navy of a man but to be a Navy of analysis. 
Where is the area of analysis (AOA) for this proposal of yours? 
Where is the AOA for the CG(X), the DDX--excuse me, I am 
sorry--DDG 1000 was supposed to take us to? What about the 
electric drive that was to lead to the electric magnetic gun? 
And the global war of terror, which Secretary Gates came out 
today and said that is the future for the next decades. And DDX 
wasn't just meant for Korea, it was meant to go--DDG 21--to go 
around with the electromagnetic radar gun (ERG) everywhere, to 
reach into those countries with that, not just Korea, but the 
concept for the Navy was to contribute to the global war on 
terror. Are we making a strategic decision today on one ship? 
Where is the analysis, the strategic thought, the studies and 
the cost studies that will show, is this really the way to go, 
or is there a different change or a better approach? I don't 
think we have seen those.
    Admiral McCullough. We have significant analysis on the 
surface fires requirement, not only for the campaign but 
elsewhere, that says----
    Mr. Sestak. But this was also--I understand surface fires. 
But we have also taken this ship down from 1,200 rounds to 600 
rounds, from 120 VLS tubes down to 80 VLS tubes. We decremented 
over these past years that surface fire support. But it was the 
other things, the stealthiness of it, the range, the ability to 
go with the ERG and the electromagnetic gun and what it boded 
for the future. What has replaced those?
    Admiral McCullough. I will tell you we will continue to 
develop the integrated electric power system for use in future 
surface combatants. I would also tell you the closest thing we 
have with electric or electronic warfare, electromagnetic 
warfare is the electromagnetic rail gun that is being 
demonstrated in Dahlgren. And I don't see any potential to 
weaponize that before about 2020. And I would say that the 
technologies incumbent in the DDG 1000 for the fire suppression 
systems, et cetera, are very applicable to any future surface 
combatant and backfittable--if that is a word--we can backfit 
them into current surface combatants when they are modernized.
    Mr. Sestak. Could I ask another question on cost, because I 
don't have much time? If you go through the various costs that 
you have had in things like BMD upgrade costs in your 
President's budget, or the radar upgrade costs on the Zumwalt 
presentation in NAVSEA in February of 2008, and I can give you 
the rest of the documents; when you work out the figures, those 
costs that the Navy has provided, it appears that if you wanted 
to have a baseline DDG 51 restart, that the cost, according to 
your figures, would be about $3.1 billion, with an SPY-1D with 
BMD capability versus dual-band radar (DBR) with BMD of--for 
the Zumwalt of about $2.6 billion. Then if you bring it to the 
15-plus decibels (db), the cost is about $4.8 billion for the 
DDG 51 restart and about $3 billion to get to plus-15 for the 
Zumwalt. My question is not that these figures are right or 
wrong. Why are your figures today correct, but these figures 
from your documents aren't in the past? What has changed in the 
costing of these radars and these combat systems? Because, 
again, I think it goes to the credibility of coming forward 
today and saying, which you did, Admiral, it is going to be 
unaffordable with the Zumwalt; yet just back in February, we 
were saying it was affordable.
    Ms. Stiller. I guess I would say that this decision is 
based on the requirement and a threat, not an affordability 
decision. But back to your numbers----
    Mr. Sestak. Are we making this decision not based upon 
affordability today? Is that what you are saying?
    Admiral McCullough. Absolutely.
    Mr. Sestak. So then why not go with the Zumwalt, since you 
don't care about affordability? You told us earlier in the 
testimony that you cared about affordability, that it would be 
unaffordable was your exact words, which was part of the 
reasons you weren't going to go with Zumwalt.
    Admiral McCullough. I said it would be unaffordable to 
upgrade the Zumwalts to the capability we need. Congressman, I 
don't have the numbers in front of me that you do.
    Mr. Sestak. Admiral----
    Mr. Taylor. Admiral, we have been generous to everyone on 
the time. But we need to be fair to some other folks.
    Mr. Sestak. I guess my only comment, after having watched 
AOAs and studies and capabilities and credibility is, wow, we 
are turning on a dime. For a nice niche, I understand that 
capabilities move to the left. But what is filling the rest of 
the gap? And where are the studies attendant to that strategic 
approach and the credibility of the numbers to support it?
    Mr. Taylor. The gentleman's time has expired.
    If I may, Admiral, the Navy may say that affordability is 
not a question. In fairness, in this room, it is obviously very 
much a question. I don't recall before the full committee 
anyone saying, let's take some money from missile defense and 
put it into ships. I don't recall anyone saying, let's take 
money out of aerial tankers and put it into ships.
    We have got, approximately, throughout the National Guard 
they are at 60 percent of their equipment. And I don't recall 
anyone saying, let's take it out of the National Guard and put 
it into ships. And again, we are wrestling with about a $13 
billion shipbuilding account that has been frozen for about 5 
years. And even though the Defense budget has grown by $100 
billion on President Bush's watch, the money for shipbuilding 
has remained frozen, and the fleet has actually shrunk. So, 
obviously, we live with some constraints the Admiral does not. 
And again, in fairness, I just think that, until we hear the 
other subcommittees and the other subcommittee chairmen coming 
forward and saying, here, have some money, we have got to do 
the best we can with what we have.
    Having said that, I would like to recognize Ms. Gillibrand.
    Mrs. Gillibrand. Thank you, Mr. Chairman.
    I want to continue some of the lines that my colleague, Mr. 
Sestak, started. Did you do a comparison of cost studies 
between how much it would be to retrofit or to improve the 51s 
with the technology that you had specifically developed for the 
1000s?
    Ms. Stiller. Over time, over the years we have been asked 
the question about the 10 engineering development models that 
were developed for--that are developed for DDG 1000, and could 
they apply on DDG 51?
    Mrs. Gillibrand. Right.
    Ms. Stiller. Of the 10, there were 3 that we have looked at 
very hard. One was dual-band radar. It will not fit on DDG 51. 
We understand that. We looked at installing the gun, the 
advanced gun system. And that is achievable from a Naval 
architecture perspective. The magazine would be significantly 
smaller than what you have on DDG 1000.
    Mrs. Gillibrand. And did you run the cost for the cost of 
the gun on that?
    Ms. Stiller. We did cost that, but I don't have those 
figures. I can get those to you. And we also looked at putting 
the integrated power system on DDG 51. You can do that. There 
would be some speed penalties. So that would have to be a 
requirements decision on whether we would backfit that in the 
modernization program. But we have looked at that in the past. 
And those were the three technologies that we thought had the 
most promise to go on DDG 51.
    Mrs. Gillibrand. So 3 out of 10 can be transferred. And 
haven't you spent $10 billion on developing the 10 
technologies?
    Ms. Stiller. We spent--our total program to date, from 1995 
to today, and we have about $13 billion invested. Some of it is 
research and development (R&D), as you mentioned, and some of 
it is the shipbuilding and conversion (SCN) to buy the lead 
ships.
    Mrs. Gillibrand. So if those additional seven technologies 
were developed because of certain requirements that we had, how 
are you going to meet those requirements if you can't utilize 
those seven technologies?
    Admiral McCullough. Ma'am, as I said in my testimony, there 
are some things associated with the reduced manning initiatives 
in DDG 1000 that we will continue to look at for application 
both in back fit and forward fit. I spoke specifically of the 
fire suppression systems, which automatically reconfigure fire 
mains and put fire mains out and allow you to reduce manning, 
as well as the flight deck fire-fighting system. Ms. Stiller 
spoke of the advanced gun system.
    As I look through the list of technologies that I have that 
we have spent money on for DDG 1000, the peripheral vertical 
launch system and advanced VLS has applicability potentially 
for back fit, but for definitely forward fit into CG(X). As I 
look at integrated composite deck house and apertures that we 
tested in the desert, that definitely has applicability to 
CG(X). The infrared suppression, we could fit if we decided we 
needed that. The integrated power system is available for 
future fit and back fit, as Ms. Stiller just said. I spoke to 
the fire-fighting systems. We think development of the total 
ship computing environment is important. It needs to be 
completed to make the DDG 1000s operational. And we will look 
at that computing program as compared to other computing 
programs and decide which way is the best way to evolve Navy 
combat systems. The hull form scale model, we want to take the 
ship to sea and see how the different hull form operates in a 
real environment. The only one that I cannot see at this time 
is the total undersea warfare system. Now there is a mine 
avoidance piece of that that we would definitely look at.
    Mrs. Gillibrand. Okay. So what you are saying is that, of 
the seven technologies that you can't use with the DDG 51s, you 
are hoping to use them in the next generation of shipbuilding--
--
    Admiral McCullough. Absolutely.
    Mrs. Gillibrand [continuing]. With the CG(X)s. So you are 
going to skip a generation, but you are going to spend all the 
taxpayer money building 51s that don't have these capabilities 
that clearly we had requirements for or you wouldn't have 
devised them.
    So it seems to me we are wasting money investing in the DDG 
51s if they don't have the technology capabilities that we 
need, and we are going to in fact use those technologies, but 
we are going to have skip a whole shipbuilding generation to do 
it.
    Admiral McCullough. There is a lot of technology that was 
put in the ship because of Naval architecture constraints and 
some things we were trying to do to reduce manning. The reduced 
manning initiatives we will push as fast as we can. But what we 
are saying to the Congress today is this is a capability 
mismatch with the way we see the threat going.
    Mrs. Gillibrand. So you are saying we don't need those 
seven technologies.
    Admiral McCullough. No, ma'am, I didn't say that. We need 
the technologies to take forward. There are some we can use as 
backfit into DDG 51. The capabilities to combat capabilities we 
see today based on the current and projected future threat is 
more suited by DDG 51. We need the technologies to take surface 
combatants forward.
    Mrs. Gillibrand. Okay. So your testimony at the end of the 
day is that the DDG 51s meet the current needs, threat 
requirements, than the 1000, than the DDG 1000.
    Mr. Taylor. Ms. Gillibrand's time has expired.
    Admiral, if you would please answer the question.
    Admiral McCullough. Yes, ma'am, that is correct.
    Mrs. Gillibrand. Thank you.
    Admiral McCullough. Yes, ma'am.
    Mr. Taylor. The Chair recognizes the gentleman from New 
Jersey. He will be followed by the gentleman from Massachusetts 
and then the gentleman from Virginia, and then we will wrap 
this panel up and move on to the next panel.
    Mr. Saxton. Admiral, I have spent a fair amount of my time 
here on the committee dealing with the Special Operations 
Command. And one of the strengths of the Special Operations 
Command is that they are able to identify threats in real time 
as they change and adapt their operating procedures to deal 
with those threats. A good example, non-Special Operations 
Command, of changing threat occurred beginning in 2001-2002 
when we had to deal with the improvised explosive device (IED) 
problem. We are still doing that. In order to deal with that 
problem, we immediately or almost immediately established an 
IED task force to adapt special procedures and make 
recommendations to this committee as to how we could protect 
the lives and the health of men and women who were subject to 
IEDs. So we understand that threat changes. And you have said 
that multiple times here today.
    In the notes that we have from the Navy, there is a 
paragraph here that says: We must consider the evolving 
security environment in which we operate. Given the changes in 
potential threats and the developing capabilities of potential 
adversaries, we are making this move in order to avoid a 
threat-to-capability mismatch.
    Could you just specifically, as specifically as you can, 
say how the threat has changed and how you believe the decision 
that you made will best meet that threat?
    Admiral McCullough. There are three specific areas. One is 
with the increased proliferation of ballistic missiles that 
provide anti-access challenges to our forces today globally, 
not only the high end threat posed by potential adversaries in 
the Pacific but lesser included capabilities in the Arabian 
Gulf region, in Northeast Asia, and the ability--or the 
proliferation of that threat globally. So the ballistic missile 
threat is the first piece.
    The second piece is when you see a high-tech threat 
capability that is usually resident in a nation-state come off 
the beach in a conflict against a non-state actor and strike a 
warship and do significant damage to it. It is, where is that 
capability going to go next, with what potential non-state 
actor? And that happened in the eastern Mediterranean in 2006. 
And I will tell you there are nations that are developing quiet 
diesel submarine technology and putting it into blue water to 
challenge where we operate. And we need improved capability 
against the open-ocean deep-water quiet-diesel submarine 
threat. And that is where we see the capability that has come 
rapidly left from where it was projected. I don't think anybody 
ever envisioned Hezbollah being able to launch a C-802, and 
they did that quite well.
    Mr. Saxton. Well, thank you, Admiral.
    And before my time expires, let me just congratulate the 
Navy on getting the Freedom underway here in the last week or 
so. That is a good accomplishment.
    Admiral McCullough. Thank you, sir. We were very pleased 
with how the builders trials are going on that ship. And it was 
nice to see pictures of her underway, making way with no land 
in sight.
    But thank you.
    Mr. Taylor. The Chair recognizes, again going back to our 
initial motion to allow people who are not members of this 
committee to speak, the Chair recognizes the gentleman from 
Massachusetts, Mr. Kennedy--gentleman from Rhode Island, my 
apologies.
    Mr. Kennedy. Thank you very much.
    I appreciate the opportunity to say a few words. Thank the 
Chair.
    What I am interested in is obviously getting to the 
analyses for the costs, because obviously we have seen the 
Congressional Budget Office (CBO) and Government Accountability 
Office (GAO) come up with very differing costs. And as the 
chairman said, we have to consider the costs as much as you say 
that this is about mission. So we really need to get those 
costs, as much as you said you don't have the detailed analysis 
in front of you, I mean, it is really crucial for us before we 
make these decisions.
    Admiral McCullough. Sure.
    Mr. Kennedy. And frankly, when you are looking at 
retrofitting, you know, DDG 51; when you are looking at 
reduction loss; and timing is money; and how much you are 
factoring in your ability to retrofit that without any loss in 
time; being able to get those supply schedules up; do all of 
that and keep to a cost schedule when you have already got, you 
know, DDG 1000 in the pipeline with the schedules in line and 
with costs coming down, given the fact that all your, you know, 
cost redundancies have all been embedded in the first ship, and 
we are starting to see that come down. I mean, obviously, 
trying to compare last ship in the last class with the first 
ship in the new class is comparing apples and oranges. And you 
know, we know that the first Zumwalt is a very expensive ship, 
but it is obviously embedded with redundant costs that aren't 
going to be seen in a future ship. And we are buying, you know, 
a whole generation of new, you know, technologies for all the 
future oncoming generation of cruisers and the CV(N). As you 
pointed out, these new technologies are going to be applicable 
in other platforms. So I think we have to get all of this in 
proper perspective. And it would be really helpful to us if you 
did that.
    I think the concern is, you know, we have got open 
architecture with the Zumwalt, and yet we don't with the old 
Aegis system. And you know, how do you begin to retrofit an 
open system with a closed system? And obviously, that is not 
something you can really do. And so this begs some questions in 
terms of industrial base, you know, that I am concerned with. 
And then, in terms of the--from what I understand in terms of 
the BMD threats, you know, I am not certain that the case has 
been clearly made to me that retrofitting DDG 51s is 
necessarily less cost compared to upgrading the 1000s. I mean, 
you know, like I said, you are still having to re-up the--you 
know, doing it one way versus the other still needs to be 
presented to me. We still haven't been given the proper 
analyses. And I think we deserve to get these analyses really 
put in front of us and the historic data and all of this 
because, you know, we are all being given information from 
various sources, and I don't think we are getting it all 
clearly put to us.
    So I would really just ask those from this panel and the 
next panel to be giving us the straight information so that we 
can all work off the same sheet of music here. That is the only 
way we can go about making our decisions without making them in 
the vacuum. And that is the reason why I am here, is because, 
you know, obviously, we want to make these decisions. We are 
talking about costly decisions if we don't make the right ones. 
And you know, capabilities are very important. And we really 
want to make sure we have the right capabilities. And putting, 
you know, new weapons systems on old ships, we want to make 
sure that--from what I have been told, that doesn't make a lot 
of sense because it doesn't work. You know, trying to retrofit 
modern technology with old systems doesn't really necessarily 
work. And we are looking at new threats. Well, how do we 
incorporate the new technology to meet those threats? So I know 
a lot has been discussed today, and I am here to listen and 
learn, but I am anxious to also get all the information that 
you said that you are going to provide this committee as well.
    Admiral McCullough. Yes, sir, we will be glad to provide 
that level of detail on cost and also the technological path. 
And I would say that your reference to open architecture in the 
Aegis system, the older Aegis systems, are closed. It is all 
proprietary Lockheed Martin. With the Congress's help, the Navy 
has spent a lot of money to get the system to be open 
architected so we can publish it in our library, and all the 
interface standards are known by all the corporations that 
allow free market competition for upgrades to both the hardware 
and the software piece of the program. But we will be happy to 
provide you that detail, sir.
    Mr. Kennedy. And you know, that obviously is going to save 
the government money in the years ahead. But time most of all 
because you can, you know, be able to move in and out new 
systems as the open architecture will allow. And obviously, we 
are anxious to reduce the time delays and move the best and the 
brightest folks to be able to take advantage of the latest in 
technology and give it to our people in the field ASAP when it 
becomes available. So it is a big benefit of what our last 
moves have been in terms of this, you know, DDG 1000. And that 
is the aspect of it that we don't want to lose if we are 
talking about different hulls.
    Mr. Taylor. Mr. Kennedy, if you can, wrap it up, please.
    Mr. Kennedy. Okay. If you can't retrofit the old hull with 
the new technology, what happens to the new technology is what 
I am asking you.
    Admiral McCullough. Yes, sir. We will provide you that 
information. And then, one thing, when I said this is a 
capabilities-based decision on the part of the Navy, I don't 
mean to ever imply that we don't look at the cost based on 
affordability. Because we are very gracious of the money that 
the Congress provides to operate and maintain the Navy. So when 
I said it was a capabilities-based decision, that is what drove 
us, but we are very conscious of how much things cost. And I 
will be glad to get you the information on the costs and 
details as well as the technology flow.
    [The information referred to was not available at the time 
of printing.]
    Mr. Taylor. The Chair thanks the gentleman.
    The Chair now recognizes the gentleman from Virginia, Mr. 
Wittman.
    Mr. Wittman. Thank you, Mr. Chairman.
    Just one more question for Admiral McCullough. Again, 
getting a little more general, broad in scope, there has 
obviously been some challenges in the costs, rising costs of 
our shipbuilding programs. I was wondering, has the Navy or the 
National Shipbuilding Research Program (NSRP) explored 
different software applications, such as the COTS software or 
other technologies, that might enable these efforts to be a 
little more cost-effective both in the design, engineering, and 
manufacturing of the vessel? And another part of that question, 
is I know the Sec Nav and CNO often cite best practices and 
lessons learned from foreign shipyards. And can you tell us a 
little bit about how those best practices might succeed here in 
the United States? And are we able to apply those similar 
practices or technologies here?
    Ms. Stiller. Yes, sir, the National Shipbuilding Research 
Program that you talked about has been in place for quite a 
while now. And it has evolved over the last couple of years 
where we wanted more stakeholder involvement in the process. So 
the program executive officers that buy the carriers and the 
submarines and the surface ships for the United States Navy 
have an active role with industry to define what projects ought 
to be explored, where they see there would be benefit on 
programs that are coming up or in process. So I would say that 
is a very well run program and has really afforded us a lot of 
opportunities. As for where can we learn from the foreign yards 
and how they have become efficient, each of our shipbuilders 
has gone and benchmarked other yards. And we have also had an 
OSD study that benchmarked our yards versus the European and 
Asian shipyards and has found, from 2000 to 2005, there has 
been improvement in our U.S. yards in certain areas. So I think 
you can see the improvements as each of the yards has brought 
them in and put them into their processes. So, yes, sir, we 
have certainly seen leveraging their experience into our 
shipbuilding programs.
    Mr. Wittman. Thank you, Mr. Chairman.
    Mr. Taylor. Thank you.
    And I, hopefully in fairness to all concerned, have waited 
until last. And I very much appreciate all of the questions.
    We have been very generous in the time. We probably are 
going to stick closer to the five-minute rule in the next 
round.
    But a couple of observations. In the lead-up to the budget 
vote of May the 9th, 2001, President Bush would repeatedly go 
on television and say that some economists worried about us 
paying down the debt too soon. I would like to find that 
economist. He said that we could spend more, collect less, and 
somehow balance the budget. We are $4 trillion deeper in debt 
than when we took that vote.
    Since that time, in fairness, Congress has passed a huge 
prescription drug benefit bill, very expensive. We have been 
involved in two very costly wars, both in human lives and in 
dollars. We have had at least seven hurricanes hit our country. 
Midwest floods, tornadoes, and a lot of very expensive things 
happened.
    What this committee has to do is struggle with the reality 
that neither of the Presidential candidates is proposing a 
substantial increase in the shipbuilding budget, and that every 
ship that is proposed is a great ship. The question is, where 
is the money for these ships going to come from?
    Ms. Stiller, not that long ago, one of your colleagues, and 
a man I consider to be a great national resource, Mr. Young, 
made a statement before the Senate Armed Services Committee 
that he felt like if we were to continue the DD 1000 program 
that at some point the price would come down to about $2.6 
billion per ship. We sent the Department and Mr. Young a letter 
about a month ago saying that if he could find any contractor 
anywhere in America who would commit to that firm price for 
follow-on vessels of the DD 1000, that the committee would drop 
its objections to the third vessel.
    Now, we have had a month, and we have had a heck of a lot 
of time for the two potential vendors to take a look at it, 
come back to us with a firm, fixed $2.6 billion price. Have 
either of the contractors stepped forward with that contract?
    Ms. Stiller. Sir, I am not aware if they have.
    Mr. Taylor. Admiral, you strike me as a very smart man, so 
I am going to ask you a fairly simple question. At the moment, 
what does the Navy project the cost of a DD 1000 to be when 
they are delivered, the first two?
    Admiral McCullough. About $3.2 billion, sir.
    Mr. Taylor. What did the Navy project the cost of the LCS 
to be?
    Admiral McCullough. Basic construction costs were projected 
to be $220 million when we started the program.
    Mr. Taylor. And the cost of that fairly simple warship is 
now expected to be?
    Admiral McCullough. About two and a half times that, sir.
    Mr. Taylor. About two and a half times, for a fairly 
simple, what was intended to be a fairly simple low-cost 
alternative to ships. Given that, what degree of confidence do 
you have that that the DD 1000 will be delivered at $3.5 
billion?
    Ms. Stiller. Sir, I have a tremendous amount of more 
confidence than what we saw in LCS. As you well know, the Naval 
Vessel Rules were in development when we were in design on LCS. 
That is not the case on DDG 1000. Naval Vessel Rules were 
approved and in place. As you know, we started construction on 
LCS vessels before the design was barely started. And as I said 
earlier, in the case of DDG 1000, we will be 80 to 85 percent 
complete with the design before we go into construction. I am 
not going to tell you there won't be challenges on lead ships. 
There always are. But I don't see us set up in the same way 
that we were on LCS on this program.
    Mr. Taylor. So you are telling me you have a fairly high 
degree of confidence it is going to be delivered at $3.5 
billion?
    Ms. Stiller. Sir, the contract--yes, sir. It is $3.2 
billion, but yes, sir, at this point in time, I see no reason 
to say we won't be able to deliver. The companies, we awarded 
the contracts, they feel like they can deliver for that amount 
of money. So I am fairly--I am very confident at this point. 
But the dynamic is, what is the future surface combatants, and 
what is behind it? And that is important to the yards as well.
    Mr. Taylor. The goal, the minimal size articulated by the 
Navy for the surface fleet is what?
    Admiral McCullough. It is 88 surface combatants plus the 55 
LCSs, I believe, is what was in the 2009 shipbuilding plan.
    Mr. Taylor. But the total number, and I think it was first 
articulated by Admiral Clark when he was CNO and repeated by 
Admiral Mullen and repeated again by Admiral Roughead, your 
goal is how many total ships?
    Admiral McCullough. Admiral Roughead refers to it as a 
force structure floor of 313 ships. Admiral Mullen referred to 
it as a 313-ship force structure plan. So 313 is the minimum 
number of ships, with a maximum acceptable risk that we believe 
we need.
    Mr. Taylor. And just to walk the people of this Nation 
through this, the fleet today is approximately 290?
    Admiral McCullough. 280 ships, sir.
    Mr. Taylor. 280 ships. So to get to 313 would require 
approximately how many ships to be built each year, and how 
long for each of those ships to remain in the service?
    Admiral McCullough. Design service lives (DSLs) vary, and 
the program is laid out to recap based on the service lives of 
the ships. For example, combatants are about 35 years. Aircraft 
carriers are 50 years. And so we program recapped it to 
maintain the force level at the right capability mix. I would 
tell you it is about 12, 12 and a half ships a year.
    Mr. Taylor. Okay. Given that the shipbuilding account has 
been frozen at roughly $13 billion a year by the President's 
request, and Congress has tweaked that a little bit each year 
and made it a little bit bigger, but it is still not much more 
than $13 billion, given the cost of this ship at $3.2 billion 
per copy, best case scenario, how many ships does that let you 
build a year?
    Admiral McCullough. I believe it was 7 in the fiscal year 
2009 program, and we are looking at 10 in the fiscal year 2010 
program that is under debate, or under submittal to the Office 
of the Secretary of Defense.
    Mr. Taylor. But this year's budget request was for seven?
    Admiral McCullough. Yes.
    Mr. Taylor. Based on the reality of these numbers.
    Admiral McCullough. Yes, sir.
    Mr. Taylor. The committee tweaked that up to I believe 10 
by moving--by canceling the third--I am sorry, by pausing the 
third DD 1000, put in an LPD and additional T-AKEs into the 
mix. The committee was able to take the President's request and 
get it up to 10, but still dealing with the harsh realities of 
a $13 billion building account. Is that correct?
    Admiral McCullough. I have seen the marks, sir, I will 
defer to you on the marks.
    Mr. Taylor. The point, I would remind the committee, is 
that this committee, I think very wisely, is spending $18 
billion on mine resistant ambush protected vehicles (MRAPs) so 
that the kids who are on patrols in Iraq and over the next 
years are going to be less likely to die from improvised 
explosive devices. We have a huge bill coming on aerial 
tankers. That alone is going to be between $35 billion and $40 
billion to build the first 179. The National Guard is at about 
60 percent of its equipment, and we do not operate in a vacuum. 
All of these things have to happen.
    Again, I personally want to commend Admiral Roughead. He 
was good enough to sometime last fall throw this proposal at 
me. It took me some time to think it through, and it obviously 
would make a change at both the Mississippi shipyard and the 
Bath shipyard. But given the harsh economic realities, I think 
he made the right decision, and I think he should be commended 
for that decision.
    Admiral, I want to thank you for appearing, and, Ms. 
Stiller, I want to thank you for being here.
    Mr. Kennedy has a follow-up.
    Mr. Kennedy. When you give your analysis, can you give us 
ships at sea days, because when we talk about ships at sea that 
are available, we are interested in the days that they can be 
at sea. New technology in Zumwalt gives us a lot more days at 
sea, from what I understand, because of its commercial off-the-
shelf and the embedded technology makes it so it doesn't, like 
the old Arleigh Burkes, have to come in and spend a lot of time 
being re-upped and reworked, and spend less lifetime in the 
shipyard, so to speak. So it is more useful to the Navy more 
often.
    What we are talking about is total number of days that it 
can actually be used by the Navy. So we want real apples-to-
apples comparison.
    Admiral McCullough. Yes, sir. We can give you the current 
surface combatants and the projected operational availability 
of DDG 1000. We can provide that.
    [The information referred to can be found in the Appendix 
beginning on page 132.]
    Mr. Taylor. Last, I want to remind this committee that it 
was the will of this committee and the full House and the full 
Senate that the next generation of surface combatant will be 
nuclear-powered. Mr. Bartlett began pushing that idea when he 
was the chairman of this committee, and fuel at that time was 
about $70 a barrel. And last time I checked, it was over $130 a 
barrel, making Mr. Bartlett's judgment at that time look even 
smarter now.
    Again, I commend the CNO because I think the extension of 
the 51 program gets us to a nuclear cruiser quicker than the 
building of the 1000. So for a lot of reasons, Admiral, I hope 
you would pass on my compliments to Admiral Roughead. I think 
he made a tough but right decision for the future of the Navy. 
Thank you for appearing.
    Mr. Taylor. The Chair now calls our second panel.
    Our second panel consists of witnesses well known to this 
committee: Mr. Ronald O'Rourke, a Senior Analyst of Naval 
Affairs with the Congressional Research Service; Dr. Eric Labs, 
who conducts independent ship cost analysis with the 
Congressional Budget Office (CBO); and Mr. Paul Francis, the 
head of the Maritime Analysis Branch of the Government 
Accountability Office.
    We thank all three of you gentlemen for being here. By 
prior agreement of the committee, you will be recognized for 
seven minutes apiece. Who wishes to go first?
    Mr. O'Rourke, if you don't mind.

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

    Mr. O'Rourke. Chairman Taylor, Ranking Member Bartlett, 
distinguished members of the subcommittee, thank you for the 
opportunity to testify on this issue. With your permission, I 
would like to submit my statement for the record and summarize 
it briefly.
    Mr. Taylor. Without objection, so ordered.
    Mr. O'Rourke. I would like to make five basic points. 
First, the recent change in what the Navy wants to do with 
destroyer procurement appears rooted not just in a concern 
about shipbuilding affordability, as the Navy witnesses have 
stated, it also reflects a shift in thinking concerning 
relative mission priorities. The Navy now wants its destroyer 
procurement over the next several years to be oriented toward 
improving the fleet's capabilities for, among other things, air 
and missile defense.
    This shift in mission priorities for new destroyers might 
be rooted partly in a several-year slip in the schedule for 
procuring the lead CG(X). The Navy had wanted to begin 
improving the fleet's air and missile defense capabilities 
through a procurement of CG(X)s starting in fiscal year 2011, 
but the date for procuring the lead CG(X) now appears to have 
slipped several years.
    The shift in the Navy's relative mission priorities for new 
destroyers also reflects a Navy reassessment of the 
capabilities that will be needed in coming years to conduct 
certain operations.
    The DDG 1000 is a multi-mission destroyer with an emphasis 
on land attack and operating in littoral waters. This mission 
emphasis traces back to the program's origins in the early 
1990's, and predates certain more recent developments such as, 
for example, the concern that has developed in recent years 
over Chinese modernization, an effort that appears aimed in 
part at improving Chinese capabilities for operating in blue 
waters, and includes, among other things, the acquisition of 
more modern submarines, antiship cruise missiles and theater 
ballistic missiles, including, as DOD has now noted, antiship 
ballistic missiles.
    The DDG 51 is a multi-nmission destroyer with an emphasis 
on blue-water operations, including air defense and a recently 
added capability for missile defense. So my first basic point 
is that this change in the Navy's mission priorities for new 
destroyers is a key factor in understanding and evaluating the 
Navy's change in its preferred path for destroyer procurement.
    My second point is that although the discussion of 
restarting DDG 51 procurement has focused on building repeat 
copies of the current flight to a design, there is also the 
option of procuring a modified version of the DDG 51 that would 
have reduced operating and support (O&S) costs. My statement 
discusses three potential ways for reducing the O&S costs of 
the DDG 51, and shows some estimates of the O&S savings that 
might result from such steps. The key point here is that the 
DDG 51's O&S cost is not written in stone. It can be reduced.
    The DDG 51 design can also be modified to improve its air 
and missile defense capabilities, and my statement outlines 
some options for doing this, by equipping the ship with an 
improved radar or additional missile launch tubes, or both.
    My third point is that although the discussion has focused 
on building new DDG 51s, this situation raises the question of 
whether the current program for modernizing the existing DDG 
51s should be altered so that the modernized ships would have 
reduced O&S costs and perhaps also improved air and missile 
defense capabilities.
    Expanding the scope of work to be done in the DDG 51 
modernization program could have implications for the 
industrial base part of this situation, which I will get to in 
a moment.
    My fourth point is that an additional option for improving 
the fleet's air and missile defense capabilities through ship 
procurement over the next few years would be to procure a few 
or several noncombat ships equipped with a powerful radar for 
supporting the fleet's missile defense operations and perhaps 
also air defense operations. The aim in procuring these adjunct 
ships would be to provide the fleet in the nearer term with 
some powerful missile defense radars at relatively low cost, 
pending the entry into service later on of significant numbers 
of CG(X)s. These noncombat radar ships could be similar to the 
Cobra Judy replacement ship.
    My fifth and final point concerns the shipbuilding 
industrial base. Policymakers have expressed concern about the 
potential impact on the shipyards of a decision to stop DDG 
1000 procurement and restart DDG 51 procurement. Particular 
concern has been expressed about Bath Iron Works since 
construction of surface combatants is Bath's primary source of 
work. As I discussed in my statement, a notional calculation 
suggests that building 9 or 10 DDG 51s might provide roughly 
the same number of shipyard labor hours as building the final 
DDG 1000s, and that assigning 5 or 6 of those DDG 51s to a 
shipyard might provide that shipyard with roughly the same 
number of labor hours as it would have received if it were the 
primary yard for building 3 of the final 5 DDG 1000s.
    But there is more to the issue than that. In discussing the 
issue regarding Bath and Ingalls, a key point is that building 
DDG 1000s or DDG 51s are not the only options for supporting 
these yards. To the contrary, there are several additional 
options that might be used as supplements to help maintain 
employment levels and preserve key shipbuilding skills.
    My statement lists a number of these options, and it is not 
an exhaustive list. One of those options would be to assign the 
modernization of existing DDG 51s to the two yards that 
originally built the ships, meaning Bath and Ingalls. I 
maintain a report on the age of ship modernization program, and 
as I discuss in that report, some industry sources have 
advocated shifting the DDG 51 modernizations to Bath and 
Ingalls. And if the scope of work in the DDG 51 modernization 
program were increased to include steps like those I mentioned 
earlier for further reducing the ship's O&S costs or for 
improving their air and missile defense capabilities, then that 
could increase the amount of supplementary work that would be 
provided to Bath and Ingalls by assigning the modernization to 
those two yards.
    As I just mentioned, that is only one option for putting 
additional work into Bath or Ingalls. There are several others. 
The key point is that building DDG 1000s or building DDG 51s 
are not the only way to support the yards.
    Mr. Chairman, this concludes my statement. Thank you again 
for an opportunity to provide my statement. I will be happy to 
answer any questions the subcommittee has.
    Mr. Taylor. Thank you, Mr. O'Rourke.
    [The prepared statement of Mr. O'Rourke can be found in the 
Appendix on page 75.]
    Mr. Taylor. Dr. Labs.

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

    Dr. Labs. Mr. Chairman, Congressman Bartlett, and members 
of the subcommittee, I appreciate the opportunity to appear 
before you today. I would like to make several points, but I, 
too, would like to summarize my statement for the record and 
submit the formal one.
    First, the total cost of the Navy's shipbuilding program 
through the period covered by the DOD Fiscal Year Development 
Plan (FYDP) would be about 30 percent higher than the Navy 
currently estimates.
    Building the newest generation of destroyers and cruisers 
probably would cost significantly more than the Navy estimates.
    My third point, building two DDG 51 Arleigh Burke class 
destroyers per year between 2010 and 2013 would cost less than 
building five more DDG 1000s. Counting projected operating 
costs over 35 years, the total ownership cost of five DDG 1000s 
would almost equal of that of eight DDG 51s.
    According to the budgetary information provided in the 
DOD's 2009 FYDP, the Navy estimates that the cost of all its 
shipbuilding activities would average about $16 billion a year 
in 2009 dollars over the period covered by 2009 to 2013. That 
amount is 25 percent greater than the $13 billion that Navy 
spent on average for shipbuilding between 2003 and 2008.
    CBO's estimates of the costs of those same activities would 
be about $21 billion through 2013, or 30 percent more than the 
cost projected in the Navy's plan, and about 60 percent more 
than the amount the Navy has spent recently.
    To the DDG 51 destroyer, the Navy had planned to buy one 
DDG 1000 destroyer each year between 2009 and 2013. In addition 
to the two authorized in 2007, the service's 2009 budget 
suggests that the Navy expected the two ships to cost $3.2 
billion each, with the average cost of the five follow-ons $2.3 
billion each. CBO, by contrast, estimates the first two to be 
about $5 billion each, with the average cost of the follow-ons 
to be $3.6 billion each. And we used the DDG 51 program as an 
analogy for estimating those costs.
    The Navy has asserted that the basis for CBO's estimate may 
not be valid because the DDG 51 had a number of problems in the 
early stages of its construction that should not be expected to 
occur during the construction of the first DDG 1000s. 
Specifically, the design of the lead DDG 51 was disrupted and 
delayed because a new design tool being used at the time was 
incomplete and not well understood. It had to be abandoned and 
the design restarted using more traditional methods. The design 
of the lead DDG 51 was thus about 20 percent complete when 
construction began.
    By contrast, according to the Navy, the design of the DDG 
1000 progressed far more smoothly. The Navy expects to have the 
design 80 to 85 percent complete when construction begins this 
summer.
    In addition, because the DDG 51 is a smaller, more compact 
ship, the Navy believes that on a ton-per-ton basis it has been 
more difficult to build than the DDG 1000 class is expected to 
be.
    Although the Navy may not encounter the same problems 
constructing the lead DDG 1000 it did when constructing the 
lead DDG 51, CBO expects that the service will encounter other 
problems that will increase the cost. Problems with the first 
littoral battle combat ships and with the lead LPD-17 
illustrate the difficulties the Navy has had. Both the LCS and 
LPD-17 are much less complex technology than the DDG 1000. And, 
in addition, while the designs of littoral combat ships and the 
DDG 51 were only 20 to 30 percent complete at the start of 
fabrication, the design of the LPD-17 was about 80 percent 
complete at the start of fabrication, and it was arguably the 
Navy's most troubled program over the last 20 years.
    A comparison of the Navy's estimate for two additional DDG 
51s and an assessment for the seven DDG 1000s which were slated 
to be purchased in 2013 illustrates the risk for cost growth. 
This information was provided to the Senate. The Navy stated 
that if the Congress authorized the purchase of two new DDG 51s 
in 2009, the cost would be about $3.3 billion, or slightly less 
than $1.7 billion each.
    The Navy has also stated that to build the cost of the 
seventh DDG 1000 in 2013 would be about $2.4 billion in 2013 
dollars. If you adjust those dollars down to the same-year 
dollars, 2009 dollars, the Navy's estimates imply that the 
5,000 extra tons that the DDG 1000 is larger than the DDG 51 
will increase that ship's cost by only $200 million, or 10 
percent, compared to a DDG 51.
    If CBO's estimates prove correct, the lead ships of the DDG 
1000 program would actually experience lower cost growth than 
many of the Navy's lead ship programs of the past 20 years. The 
Cost Analysis Improvement Group (CAIG) has done an analysis 
that has shown that 5 of 8 lead ship programs experienced cost 
growths of over 50 percent. And the CAIG's analysis did not 
include the Virginia class program, which experienced cost 
growth of 11 and 25 percent for the first two ships. Nor did it 
include the LCS, which has experienced cost growth well over 
100 percent.
    Looking at the cost of restarting the DDG 51 program, the 
subcommittee specifically asked CBO to examine those costs of 
canceling the program and restarting DDG 51 production. The 
Congress authorized funding for what would be the last DDG 51s 
in 2005. Out of a total program of 62 DDG 51s, 9 remain under 
construction.
    CBO does not have sufficient information available to 
determine how much it would cost to restart the production 
above extrapolating the cost of the ships themselves. CBO 
assumed it would cost $400 million to reestablish the lines, 
and thus buying eight DDG 51s, two per year between 2010 and 
2013, would cost a total of $15.7 billion. Building five DDG 
1000s between 2009 and 2013 would cost $18.5 billion. Twelve 
DDG 51s, or three per year between 2010 and 2013, would cost 
about $21.4 billion.
    With respect to total ownership costs of the DDG 1000 and 
DDG 51 destroyers, the Navy has stated that total operating 
cost of a DDG 51 would be about $41 million per year, or about 
10 percent more than the DDG 1000 $37 million annual operating 
cost. That difference is much smaller than the Navy previously 
estimated. In 2005, the Navy asserted that operating a DDG 51 
would cost about 30 percent more than operating a DDG 1000. In 
comparison, CBO at that time testified before this subcommittee 
and said that the cost difference would actually be about 6 
percent more for a DDG 51 versus a DDG 1000.
    CBO expects that the total ownership cost of a DDG 51 would 
be about 60 percent the cost of a DDG 1000. Over the course of 
a 35-year service life, the cost to buy and operate a DDG 51 
would be $2.4 billion. In comparison, the total cost to build 
and operate a DDG 1000 destroyer would be $3.9 billion. Thus, 
the cost to buy and operate five DDG 1000s would total $19.4 
billion over 35 years. In comparison, the cost to buy and 
operate more DDG 51 destroyers over a period of 35 years would 
be about $19.2 billion for 8 ships and $26.8 billion for 12.
    Thank you, Mr. Chairman. That concludes my statement. I am 
happy to answer any questions you may have.
    [The prepared statement of Mr. Labs can be found in the 
Appendix on page 93.]
    Mr. Taylor. Dr. Labs, for the record, what was the cost of 
a barrel of fuel when the CBO ran these calculations?
    Dr. Labs. You are talking about the total ownership costs. 
I didn't compare the cost of fuel, Mr. Chairman. I used the 
statement of operating costs that the Navy used in its letter 
to the Senate. So whatever the cost of fuel was when they 
projected those costs.
    Mr. Taylor. For the record, I would like that comparison, 
because it is my understanding that the DDG 51 uses less fuel. 
With the significant growth of the cost of fuel, and without a 
lot of confidence that that price is going down, I think it is 
a fair question to ask and something that we need to look at.
    [The information referred to can be found in the Appendix 
beginning on page 132.]
    Mr. Kennedy. Mr. Chairman, I didn't understand what he was 
saying in terms the operating in a lifetime costs, you know, it 
is half the number of people on the DDG 1000 as the DDG 51. 
What was the relative cost of manning the DDG 1000?
    Dr. Labs. DDG 1000 is 148 crewmembers, and the DDG 51 is 
about 320 or 312.
    Mr. Kennedy. So over 35 years, what is the difference in 
operation?
    Mr. Taylor. Mr. Kennedy, you will be recognized in regular 
order.
    Mr. Kennedy. He just testified, and it was very unclear 
what he was saying.
    Mr. O'Rourke. On the question of fuel costs, I actually put 
that question to the Navy. They provided that answer to me a 
few days ago, and they said that the steaming cost figures that 
show in Admiral Roughead's May 7 letter to the Senate reflected 
an analysis done in February and reflected a fuel cost of about 
$112 per barrel.
    Mr. Taylor. Thank you.
    The Chair now recognizes Mr. Francis.

    STATEMENT OF PAUL L. FRANCIS, DIRECTOR, ACQUISITION AND 
   SOURCING MANAGEMENT, U.S. GOVERNMENT ACCOUNTABILITY OFFICE

    Mr. Francis. I appreciate being invited here today to 
participate in the discussion of surface combatants. I ask that 
my written statement be submitted for the record.
    Much of what I am going to talk about today comes from a 
report that we issued today on the DDG 1000. At GAO, we have 
not analyzed the comparison between continued construction of 
the DDG 51 and the DDG 1000; however, much of what I am going 
to say today is going to address the likelihood, and rather, I 
would say, the unlikelihood that the Navy would have been able 
to execute the DDG 1000 program within its current budget in 
terms of time and money.
    Let me start off by saying that I think the Navy has done 
some really good things to manage the DDG 1000 program. I think 
their approach to technology development has been sound. I 
think their software-development program has had a very good 
approach. And I believe their design process which they modeled 
after the Virginia class submarine has been much better than 
prior classes.
    But even with these best efforts as the Navy stands to 
begin construction of the first DDG 1000, the cost and the 
design and the construction schedule are under strain, and let 
me give you some detail on that.
    In the recent schedule for the program, they have extended 
the delivery of the ship by about one year, which I think is a 
good thing, but within that schedule, some key events have been 
pushed out two to three years. The net effect has been a lot of 
the margin in the construction schedule to adjust for likely 
problems has already been taken out.
    For example, light off of the ship is a key event, and that 
is when you turn on all of your key ship systems, hull, 
mechanical and electrical, and all of your mission systems, 
combat systems like your radars and gun systems and sonar.
    Originally on the DDG 1000, they were all going to be lit 
off in 2011. Now that has been split in two. Now the ship will 
be lit off in 2011, but the combat systems will be lit off in 
2013, two years later. The significance of that is it is just 
before sea trials begin, so the margin between turning on the 
combat systems and beginning sea trials has been compressed.
    The integrated power system that provides the electricity 
and the propulsion for the ship, originally the plan was to 
test that on land in 2008, install it on the ship in 2009, and 
then have that ready two years in advance of lighting the ship 
off. The current plan now is to install on the ship in 2009, 
but not complete the testing until 2011. So the test of the 
integrated power system will follow installation by two years 
so that problems discovered will be have to be retrofitted onto 
the ship. And again, when they have those test results, it will 
be just when they are ready to light off.
    Dual-band radar. The original plan on that was to have both 
a multifunction radar and the volume search radar tested and 
installed on the deckhouse before the deckhouse was shipped 
from Gulfport to either one of the yards. Now the current plan 
is only to put the multifunction radar in the deckhouse first. 
The volume search radar has slipped from 2010 to 2013. They 
won't put the volume search radar on the ship until it is 
already afloat. And again, that will be just before light off.
    Finally, software has also slipped three years. So 
originally we were going to have the software in 2010. Now it 
will be 2013. Again, the significance of that is the software, 
the volume search radar and the light off are all going to 
occur in 2013, so there really is no margin for error in the 
schedule.
    I look at these as practical, sensible decisions the 
program office has to make because the combat systems have been 
delayed. They are not going to be there. But I think the 
question for oversight is just before we have begun 
construction, it seems like we have executed all of the 
workarounds that you would normally execute during 
construction. So the question is where does that leave us when 
we do run into problems in construction, and I think they will 
result in needing more time and money.
    In the area of money, the ship construction budget is $6.3 
billion for both ships. I think that is unlikely to be enough 
to pay for the ships. Right now our historical analysis of lead 
ships is that they overrun by about 27 percent. Most of that 
cost growth occurs in the second half of construction. Even the 
Pentagon's independent cost estimates say those two ships are 
going to cost almost $900 million more than the Navy estimates.
    Being a little more specific, the Navy has about $363 
million left in unobligated money. That is money that is not 
under contract; yet a couple of big things are not under 
contract yet, including the volume search radar and some of the 
combat systems. The cost estimates for those are ranging 
between $340 million and $852 million, so the Navy has just 
enough money now to cover the low end of those systems not 
under contract, assuming no cost growth.
    That is part of the reason why we question whether it was 
prudent to go forward with contracting for the third ship in 
January 2009. Our sense was there would not be enough 
construction experience to validate the cost estimates and get 
a good track record on the first two ships before getting a 
good contract for the third ship, and, of course, setting the 
prices for the remaining four. Besides that, the Navy was not 
going to be able to begin construction of the third ship until 
July 2010 under the best of circumstances, so that ship could 
be deferred, in our view, without a major impact on the 
industrial base.
    Let me just wrap up by making a few comments on the Navy's 
proposed decision to truncate the program. In my view, it seems 
like it is a painful decision, one that is borne out of maybe 
fiscal and changing requirements necessity. But the decision is 
a poor reflection, I think, on the requirements, acquisition, 
and budgeting processes that developed the business cases for 
these ships.
    I don't think it is a case of poor execution that the 
program office couldn't execute the program well, but rather a 
business case that wasn't executable. And it is not isolated. 
It is the last in a series of business cases that we couldn't 
execute for the time and money set aside. So I think we really 
have to ask ourselves why is this? Why do ship systems get 
approved and presented for budget that can't be executed for 
the amounts that are estimated? And I think one of the reasons 
is too many demands are made on the ship programs.
    I think that what ends up happening is we get unrealistic 
compromises to try to meet everyone's demands. I will say on 
the DDG 1000, sort of a microexample where the scope of the 
ship was set around mission requirements. Then the desire to 
reduce manning increased the complexity of the ship further. 
But the budget for the ship--the cost estimate was constrained 
by the budget, and the schedule was constrained by the 
shipyard's workloads. So you ended up with something that you 
couldn't execute.
    So just in closing, I was very much struck by Admiral 
McCullough's comment that current fire support capabilities 
were sufficient to meet the need, yet three years ago that 
didn't appear to be the case, and that was the basis for the 
ship. So we have to ask those questions. What is it about these 
processes that aren't giving us the right answers at the right 
time?
    Thank you, Mr. Chairman.
    Mr. Taylor. Thank you.
    [The prepared statement of Mr. Francis can be found in the 
Appendix on page 107.]
    Mr. Taylor. And I am going to open this up to the panel. In 
the summer of 2006, then-Chairman Bartlett took us to visit 
several of the shipyards, including the Marinette shipyard. In 
the summer of 2006, we were told at Marinette everything is on 
track, everything is on budget, and sometime between that 
visit, which I am going to guess was in August, and about 
November we started getting frantic phone calls from the CNO 
that we have a world of troubles. We are way over budget, we 
are way behind schedule. It was several things.
    So my question is given what has happened with what was 
supposed to be a fairly simple, low-cost warship, is there a 
professional guidepost based on a percentage of the completion 
of the hull where people can look at a ship and say, okay, we 
are past, let us say, the 80 percent mark, we are still on 
budget, and we have reason to believe that everything is 
tracking the way it should?
    The reason I ask that is at what point do we pass that mark 
on the DDG 1000 so that we have some degree of certainty that 
the $3.2 billion number that Ms. Stiller just gave us will be 
accurate and that we are more or less out of the woods?
    And so if that is a fair analogy, that is what I am looking 
for, because based on the LCS, I have a very low degree of 
confidence that that $3.2 billion target will be met. I open 
that question up to the panel.
    Mr. Francis. Mr. Chairman, let me start off. We have found 
it very difficult, quite honestly, to find those right way 
points because it seems like every program has a different set 
of points and uses a different set of terminology to describe 
the design process. But nonetheless, on something like the LCS, 
I would say the percentage of the design, the detailed design, 
that was demonstrably done as one of those way points, and on 
that one you would say not a lot of technical content, so you 
wouldn't have to worry so much about technology development. So 
I would take that design process and then couple it with what 
the yard's experience has been in its construction time lines, 
and you would have to match those then to the cost estimate. I 
think you can see that up front.
    So those are three things that I would list out for 
something like LCS.
    DDG 1000 adds the dimension of technology uncertainty. So 
even though, let us say, your marker for detail design looks 
really good, if your radar and your propulsion system and other 
things haven't been developed and proven yet, those drawings 
aren't any good. So what looks good at this point might get 
undone by discoveries with technology.
    If they had demonstrated those technologies as they 
planned, at this point the confidence level would be very high, 
assuming that they funded at a high confidence level in the 
cost estimate. And at one point on the ship, they planned to 
demonstrate the power system and the radar on a surrogate ship 
that would have given us that confidence. So DDG 1000 is going 
to be several years, especially until that radar is 
demonstrated, that we will have that confidence.
    Mr. Taylor. Anyone else?
    Mr. O'Rourke. Just to add on a slightly different aspect of 
this, I think another issue to be aware of is whether any of 
the costs normally associated with building the DDG 1000 will 
be deferred beyond the normal accounting period for totaling up 
the ship's total procurement cost. We saw a little bit of that 
happen with the lead LPD-17, and as I was able to understand 
it, something like a little more than $100 million of what 
normally would have been included in the end cost of that ship 
was deferred beyond the accounting period and was covered 
elsewhere in the Navy's budget, which gave us a distorted 
understanding, if you will, of what the total cost was to build 
that ship. And I think that could be an issue to look at in 
connection with the DDG 1000 construction process, to make sure 
that elements that are normally costed within the total end 
cost of the ship are, in fact, being included there, or whether 
there are any elements that are being deferred into other 
accounts and other stages of the accounting process.
    Mr. Taylor. Thank you.
    Mr. Labs.
    Dr. Labs. Mr. Chairman, I would add two things to that. I 
don't have a scientifically based number. I agree with Mr. 
Francis, it does vary from program to program. I sort of follow 
a rule of thumb, which is based on instinct and a hunch than 
anything else, which is that you want to at least see half, you 
know, 60 percent or so of the ship before you are getting a 
sense whether things are on cost and on target at that time. 
You know, your confidence is certainly growing by that point.
    Another point I would make relevant to the LCS program is 
one of the big issues there, in my opinion, was that I don't 
believe the Navy ever came in with a realistic approach to the 
cost of that ship to start with. Any historical analogy to save 
the frigate program, the FFG-7, would have told you that a ship 
of that size would cost somewhere in the $400 million to $500 
million range. If they had started with that premise and worked 
from there, I honestly don't believe the LCS would have been in 
as much trouble as it has been over the last couple of years.
    Mr. Taylor. Gentlemen, we have six people, five-minute 
rule. We are supposed to have a hard stop at 1 p.m. I hope the 
committee will let us go five minutes over. So we are going to 
strictly adhere to the five-minute rule starting with Mr. 
Bartlett.
    Mr. Bartlett. Thank you.
    One of you mentioned that the Navy now says that they have 
adequate fire support. I know that through the years there has 
been a considerable difference of opinion between the Marine 
Corps, whom they are supporting, and the Navy as to what 
adequate fire support is. Are they now in agreement?
    Mr. Francis. That is what I understand from the Navy. We 
did a report for this committee, this subcommittee on that 
issue two years ago, and they had finally reached agreement, 
and the agreement was there was a gap that needed to be filled, 
and it needed to be filled by the DDG 1000. So to hear today 
that the agreement is that, in essence, gap is not there and 
doesn't need to be filled by the DDG 1000 would represent, in 
my view, a new agreement.
    Mr. Bartlett. Thank you.
    When we first envisioned the DD(X) program, how many ships 
were envisioned?
    Mr. O'Rourke. In the early stages when it was still DDG 21, 
a number as high as 32 was mentioned. And that then became 16 
to 24, and that got moved down to 12, and then it became 8 and 
then became 7.
    Mr. Bartlett. As I watched this occur, I was impressed that 
what we ended up with was--even at seven ships, it was not a 
class of ships, it was little more than a technology 
demonstration platform, and I thought that two was a little 
different number than seven, if, in fact, it was simply a 
technology demonstrate platform.
    I signed onto this program when I was assured that the hull 
was going to be used in CG(X). I feel a little had now when I 
am told the hull will probably not be used in CG(X), because my 
original disposition was that if all it was was a technology 
demonstration program, maybe we could demonstrate those 
technologies on other platforms and save the cost of this class 
and begin earlier or enlarge the second class.
    Mr. O'Rourke, I was interested in your little charts that 
showed the comparison between the cost of the DDG 1000 and the 
DDG 51. Of course, where the DDG 51 fell far short was in 
manning. How much of a modernization that we might use could 
really reduce manpower costs to near that of the DDG 1000?
    Mr. O'Rourke. I put that question to the Navy because 
Admiral Roughead's May 7 letter to the Senate referred to the 
fact that his chart did not include any manpower reductions 
that would be realized through the DDG 51 modernization 
program. And the Navy came back to me when I asked them about 
that, and the understanding that I have based on the Navy's 
explanation back to me is that the DDG 51 modernization program 
is not officially expected to achieve any further manpower 
reductions, but that the size of the DDG 51 crew for other 
reasons has recently been reduced by about 18 people from the 
figures shown in Admiral Roughead's letter.
    So the size of the DDG 51 crew, as explained to me by the 
Navy, is coming down by about 18, but not because of the DDG 51 
modernization program. And my own statement talks about the 
possibility of taking the crew size down further on the basis 
of an industry briefing that was given to me five years ago, 
and also this subcommittee's own statement along those lines 
and a committee report that came out in 2004.
    Mr. Bartlett. As the price of oil goes up, the Chinese are 
increasing their efforts at scouring the world to buy oil, and 
not just oil, but buy goodwill. Coincident with that they are 
aggressively building a blue-water navy. None of this, of 
course, was accurately predicted in 1995 when we began the 
design of the DDG 1000 line.
    In view of the fact of what China is doing, and we now have 
the LCS, which was not even a dream in 1995, is this not a good 
decision to go to the DDG 51, which has more of a blue-water 
focus, than staying with the DDG 1000, which had a considerable 
littoral focus?
    Mr. O'Rourke. As a CRS analyst, I can't say whether a 
decision that someone advocates is good or bad, but what I can 
tell you is that there have been certain developments in the 
Navy's understanding and the general understanding of what the 
future operating environment might be that have occurred since 
the early 1990's, which was the period when the DDG 21 program 
was originally conceived. And one of those major developments 
was the growing concern over Chinese naval modernization, which 
is something that I track in some detail in another one of my 
CRS reports.
    Concerns over Chinese naval modernization did not begin to 
mount in general discussion until the mid- to, I would say, in 
the late 1990's, and the discussion has really only gotten 
going on that, I would say, in the last five years or so. So 
this, to me, is a much more recent development compared to the 
date and time when the DDG 21 program was conceived.
    Mr. Taylor. The Chair now recognizes Admiral Sestak from 
Pennsylvania.
    Mr. Sestak. If I can make a statement, I actually find 
today a bit disappointing to some degree to what you spoke 
about, Mr. Francis.
    From what I can gather over the past months, there has been 
a decision that the Intelligence Community has said something 
has moved to the left, that we now need a ballistic missile 
defense ship at sea to face a more nearer-term threat than we 
had had from the Intelligence Community for quite a few years.
    I have never met a one-armed intelligence officer because 
they are always saying on the one hand, but on the other hand. 
However, we are making a dramatic sea change right now, a 
strategic sea change for a ship based upon some intelligence, 
is what I gather from today's testimony.
    Undergirding that is a concern about numbers of ships to 
where I had thought, particularly under CNO Clark's tenure when 
he proffered that maybe 260 to 300 ships in his 30-year 
shipbuilding plan was a way to begin to come to grips as a Navy 
that potentially posturing differently, let us say more ships 
of BMD stationed in Guam, for whatever reason that that might 
be an area of the world where you would want that capability 
rather than having to rotate them, taking five to keep one 
forward, could begin to give us a Navy that isn't always 
turning it appears that we need more money. In fact, the 30-
year shipbuilding plan this year says we need 40 percent more 
to do our 30-year shipbuilding plan for 313 ships than just 
last year, and then the cost that comes with that.
    So my issue today is more of credibility not of 
individuals, but of a process of how can Congress truly have 
credibility on two areas. One obviously, I think, is the cost. 
Do we really know what this DDG Flight II will be? In your 
testimony it is a standard stick-shift Flight II, but my 
limited knowledge of what that radar is going to have to do if 
this threat has truly moved to the left is that radar will need 
a lot of upgrade to handle this threat. Where is that cost?
    Second, I don't know where the strategic sense of the Navy 
is today. We were going to the littorals. Just like Secretary 
Gates in the front page of the Post said today for our 
military, it is the global war. Now we have gone back to the 
blue seas, and I gather there is a spectrum here.
    I was taken by the analysis over the years in the Navy that 
drove us to a certain position. I am unimpressed by the failure 
to provide that same kind of analysis that Congress, I think, 
should be making its decision on, not how many ships, but what 
is the capability we need. And so I guess mine is more a 
statement of disappointment in credibility of a process, not 
only how we got here, but how do we prevent it in the future, 
the most capable Navy at the least cost. And this is a 
strategic sea change. And, frankly, from my limited time in the 
Navy, I don't feel I have the factors in front of me to make a 
decision, nor have I been able to gain them. This may be the 
right decision.
    Just for a question, what do you feel about the credibility 
of the process that got us here? And, Mr. O'Rourke, the 
credibility of the strategic sense of where the Navy is going, 
the Navy of the future, because we are making a dramatic change 
in integrated air and missile defense (IAMD).
    Mr. Francis. Quickly, Mr. Sestak, I do think that we need 
to ask some fundamental questions about requirements, 
acquisition and budgeting. The discussion today, I think, was 
unique in that we are talking about a change in requirements. 
Part of my analysis is even had those requirements changed, we 
would not have been able to execute the programs as planned. So 
maybe that deals more with acquisition and funding. But when 
you add the requirements piece, for ballistic missile defense, 
that is a portfolio system, so we have to ask a hard question 
that if there is a change in that threat, how does that 
translate into an Aegis capability? And, secondarily, what did 
happen with the fire support requirement for the marines?
    Mr. Taylor. The Chair recognizes the gentleman from 
Virginia Mr. Wittman.
    Mr. Wittman. Thank you, Mr. Chairman.
    Mr. Francis, you spoke earlier about the development of 
these major systems on board and, because of the delay in the 
development of those, those systems not being lit up until just 
about the time the ship goes to sea trial. Can you explain some 
of the extended concerns about that and how that may either 
affect cost or affect delivery times on potentially DDG 1000s, 
and how that maybe plays into the decisionmaking on DDG 51 in 
the context of what the Navy is presented?
    Mr. Francis. Yes, sir.
    Our analysis shows that under the current schedule which 
has just been readjusted as construction begins, that those key 
events, like the integrated power system, the combat systems, 
particularly the radar and the software, are all planned to 
occur, demonstrate late in the program. If there is any delay 
in those systems, light off will get pushed out, which means 
the sea trials will get pushed out, which means IOC, the 
initial operational capability, will get pushed out.
    As the schedule delays, you incur additional costs, the 
overhead of the yards, software engineers and so forth. So the 
implication of that is if anything goes wrong, if any of those 
things don't deliver as planned, and deliveries have been 
changed a number of times, we will have cost increases, which 
means then that the money we have set aside to buy at this 
point the seven DDG 1000s won't be enough, and we will most 
likely end up making adjustments in the near-term budget to 
accommodate those increases, which will push other ships out. 
So I think that is the tie between the two.
    Mr. Wittman. One additional question. You had spoken that 
the yards couldn't start on DDG 1002, which is the third ship 
requested in the fiscal year 2009 budget, until July of 2010 at 
the earliest. Do you have any sense when either yard could 
start construction of a DDG 51 considering the time frame they 
spoke about being able to start on DDG 1002?
    Mr. Francis. That I don't, sir. I know there was a 
discussion about the reduction gear time line perhaps being the 
pacing item, and I thought that was set at 50 weeks. I don't 
know if my colleagues have any information on that.
    Mr. O'Rourke. The amount of additional long lead time for 
the reduction gear is an additional--the time period is the 
addition on top of what the normal lead time would be for the 
reduction gear. The reduction gear is one longer pole in the 
tent, and the other variable in that situation is the extent to 
which--and I think Allison mentioned this--the extent to which 
you can look at doing the construction of the ship through an 
altered sequence that would accommodate a later delivery of the 
reduction gear than would normally take place in the sequence. 
So 50 weeks on top of the normal lead time.
    Mr. Wittman. If 400- to $450 million were appropriated and 
authorized for advantaged procurement of a destroyer in 2009, 
what do you estimate the industrial base impacts might be if 
that decision were made?
    Mr. O'Rourke. I think it would depend on what other near-
term work would be put into the yards to make up for whatever 
gap might be developing between the winding down DDG 1000 work 
before you begin to wind up DDG 51 work. There will be 
potentially a valley developing depending on the timing of DDG 
51 restart, and then it becomes an issue what other work was 
put into the yard to fill out that valley.
    Mr. Wittman. Would those dollars smooth out that dip?
    Mr. O'Rourke. The sooner you commit money to the 51 
restart, the greater likelihood you have of mitigating the 
valley between the winding down of the DDG 1000 work and the 
winding up of the DDG 51 work.
    Mr. Taylor. The Chair recognizes Mr. Courtney for five 
minutes.
    Mr. Courtney. Thank you, Mr. Chairman.
    I would actually like to ask Mr. Labs a couple of 
questions. Earlier Mr. Taylor was pointing out the track record 
over the last four or five years of a $13 billion flat line for 
shipbuilding or average cost for shipbuilding. In your report 
on page 2, you estimated--well, you reported, rather, that the 
Navy's shipbuilding plan projects a cost of roughly averaging 
$16 billion. Your analysis is that it is probably closer to $20 
billion; is that correct?
    Dr. Labs. That is correct.
    Mr. Courtney. If we follow this recent or this new 
recommendation to switch from the DDG 1000 to the DDG 51s, 
would that change your numbers?
    Dr. Labs. Absolutely it would change the numbers. Would 
they change the numbers significantly? I don't know. I would 
have to actually sort of run those numbers, do the analysis.
    Certainly there is a number of changes that the Navy is 
also proposing to make, not just the cancellation or the 
truncation of the DDG 1000. They are also proposing to push the 
CG(X) beyond 2013. That frees up money within the FYDP. I would 
need to reanalyze to tell you whether the Navy has gotten 
closer to a $13 billion steady state, if that is your desired 
aim, or something else.
    The basis of the numbers that I have presented in my 
testimony assumes two DDG 51s a year, which we assume cost more 
than the Navy's estimate for DDG 1000, although I don't think 
that they cost more than the CBO's estimate of the DDG 1000.
    On the other hand, the Navy's profile that Admiral 
McCullough talked about was not two a year; it was one, two, 
one, two, something like that. So some of those individual unit 
costs might be higher, but the overall annual budget cost would 
be lower. I would have to run those to know what the effect is, 
and whatever other effects the Navy makes in their shipbuilding 
plan.
    Mr. Courtney. Is your analysis based on 2008 dollars?
    Dr. Labs. 2009 dollars.
    Mr. Courtney. So if we are looking at the back end of the 
shipbuilding plan, which is somewhere between 2017 and 2019, 
and actually I am assuming there will be some inflation between 
now and then, we are talking numbers that are going to be 
significantly higher than even what you report?
    Dr. Labs. Absolutely. The CBO analysis is in constant 2009 
dollars. So if you want to see what those numbers look like in 
then-year or budget-year dollars, you would have to add 
inflation on top of that.
    Mr. Courtney. It is certainly going to give the next 
Administration a big headache coming in.
    The other question, you heard Admiral McCullough testify 
that this change would move up the schedule to hit the 313 
fleet from 2017 to 2019. I just wonder if you had any comment 
on that projection, whether or not that makes sense to you?
    Dr. Labs. Doing sort of a mental calculation, that seems 
plausible. Last year's schedule on the LCS program had a 
different building profile, and the 313 ship goal was going to 
be hit in 2016. Now with this year's shipbuilding plan, that 
got pushed out by three years. If you end up putting more 
destroyers in the plan versus what is currently in the budget, 
it seems plausible you will reach that two years earlier.
    Mr. O'Rourke. I took Admiral McCullough's comments to be 
based primarily on simply the difference between getting 
another five DDG 1000s and getting eight or something like that 
DDG 51s. And you have an extra 3 or something ships, and if you 
were getting kind of close to 313 anyway, you might get over 
that number 1 or 2 years higher. That is how I understood the 
comment from Admiral McCullough.
    Mr. Francis. I don't have anything to add on that.
    Mr. Courtney. I thank you, Mr. Chairman.
    Mr. Taylor. The Chair thanks the gentleman.
    Just for your information, the Chair will recognize in 
order Mr. Allen, Mr. Langevin, and Mr. Kennedy, and that will 
conclude the hearing.
    Mr. Allen.
    Mr. Allen. Thank you, Mr. Chairman. And thank you all for 
being here today.
    I would like to begin with a statement. This clearly was a 
tough decision for the Navy made at the highest levels, but, at 
least from my perspective, it seems to me the right decision. I 
do believe the Navy has defended this decision in terms that 
can be easily understood. You would have to be in this area not 
paying attention to understand that the threat of quiet 
submarines is an issue that we need to pay attention to as a 
country, and that the development and the proliferation of 
missile technology is something that every branch of the 
service has to take into account.
    If you marry that to their reevaluation of how often they 
would actually use the land support firepower of a DDG 1000, I 
believe the Navy has made a case.
    But I have real concerns for what the decision means for 
the industrial base going forward. In some ways going back to 
an established program means there will be greater stability 
going forward, but I am concerned about the number of ships.
    As I read your testimony, Mr. O'Rourke, it sounds as if you 
are saying that six DDG 51s would essentially replace the work 
at Bath Iron Works of three DDG 1000s. I'm not sure that is the 
right number. I think we need to know more and get some sense 
of the timing.
    I am also concerned if the CG(X) gets pushed out over some 
period of time, there is another gap developing here. Whether 
we are looking beyond this period or we are adding some more 
DDG 51s into the FYDP, it does seem to me that we are going to 
need more FYDPs to fill this gap, because we have to preserve 
the six shipyards that we have today. I think they are a vital 
component of our national security.
    Having said all of that, I am interested in your 
suggestions for other work, because no matter where we go, 
these shipyards need some additional work, particularly Bath 
Iron Works, which is dependent on surface combatants, and so I 
would like to get some sense from you, Mr. O'Rourke, of what 
can be done to preserve in particular that yard because it is 
so dependent on surface combatants? What other work could we 
move their way?
    Mr. O'Rourke. That is one of the larger points that I do 
try to make in my testimony. When we are looking at the 
situation facing Bath, it is not one that is solely of DDG 
1000s or DDG 51s, because there are a number of other possible 
forms of work that could be put in these yards, and I listed a 
number of these options in my testimony.
    I have already spoken about the idea of assigning the DDG 
51 modernization to the boatyards.
    Another one is to assign the Aegis cruiser modernization to 
the build yards.
    A third would be to procure some number of these noncombat 
adjunct radar ships that I talked about.
    Another would be to have Bath Iron Works participate 
somehow in the construction of the littoral combat ships that 
are built to the General Dynamics design.
    Another is to procure one or more LPD-17s beyond those that 
are in the Navy's current shipbuilding plans and perhaps have 
Bath participate in building parts of those ships, similar to 
how Bath in fact is participating in the construction of one of 
those LPDs already.
    Another option is to procure additional LHA-type 
amphibious--big-deck amphibious assault ships.
    And then there were some other options I also mentioned. I 
developed a list of 10, and I don't even think that is 
exhaustive.
    And one other key point is that even if you add something 
to the shipbuilding plan and it only goes to Ingalls, that 
could still help Bath because it could permit more of the DDG-
51 work to go to Bath, while still adequately supporting 
Ingalls. So we have to look at the total mix of work between 
both of these yards and then decide what might be the most 
cost-effective path forward.
    But my main point is that this is not a question of 
building only 1000s or only 51s. There are a number of other 
things out there that could put work into these yards to 
support employment levels and to preserve critical shipbuilding 
skills, including outfitting skills and combat system 
integration skills.
    Mr. Allen. Thank you, Mr. Chairman. I will yield back.
    Mr. Taylor. Thank you.
    The Chair recognizes Mr. Langevin from Rhode Island.
    Mr. Langevin. Thank you, Mr. Chairman.
    I want to thank the panel for being here; and, Mr. 
Chairman, again I want to thank you again for holding this very 
important hearing on a very complex issue.
    Let me say that I have not been impressed by the process 
that the Navy has gone through in making the decision to cancel 
the DDG-1000 program and going to the 51s, and it seems to me 
that there is a rush to judgment here without thorough 
analysis.
    To the panel, let me ask you this question. In the Navy's 
testimony, they estimated that the DDG-51 line could be 
restarted in fiscal year 2009 even though they are facing 
several ship and vendor-based issues. My question is, what are 
your views about the feasibility of restarting the 51 line in 
fiscal year 2009 and what would you estimate the costs of 
resuming production to be?
    Dr. Labs. I do believe that the Navy can certainly restart 
the line in 2009. The question comes as to when would the ship 
deliver. If you have a delay because of the reduction gear or 
other parts, other reasons, you need to get various vendors up 
and running again, the ship may not deliver in four or five 
years, which is what you typically see with DDG-51s today. It 
may take six years for that ship to deliver. So you can 
certainly begin building DDG-51s in 2009 if you choose.
    If you are trying to ask me what are the exact costs of 
sort of reestablishing those production lines, as I indicated 
in my testimony, I don't have a good handle on that, and I am 
not sure the Navy has a perfectly good handle on that yet. We 
assumed for the purposes of this analysis that it would cost 
around $400 million to sort of reestablish that line. The costs 
could be more or costs could be less. Because there is--the 
shipyards themselves have to restart production, but there is 
also a number of Government Furnished Equipment (GFE) 
components, government-furnished equipment, that also must be 
provided. And I don't have a complete analysis of what all the 
potential costs and implications of that are at this point.
    Mr. Langevin. And other panel members disagree or want to 
add to that?
    Mr. O'Rourke. I just think it also depends in part on what 
it is we are talking about when we talk about reopening the 
line. It is not really just one object. It is a lot of vendors 
and a lot of locations. The Navy can certainly take steps to 
reopen or reestablish certain elements of that line along 
certain timelines. So something could be done in fiscal year 
2009. Exactly how much and, as Eric said, what effect that 
ultimately has on when that first ship is delivered is a 
somewhat different question.
    Mr. Langevin. All right. Well, there has been, of course, 
now in terms of actually restarting the line--and you are not 
exactly going to be building the old 51s, because we are 
talking about insertion technologies. So, you know, there has 
been discussion of incorporating these new technologies and 
design changes to the DDG-51, which could further increase per 
unit costs over historical trends. Have you received any 
information from the Navy as to what additional capabilities 
the DDG-51 might have and what the cost estimates would be for 
those changes? And if so, could you comment on the Navy's 
estimates?
    Mr. O'Rourke. Just very generally, in my own testimony I 
have included discussion of options for altering the 
configuration of the Flight IIA design to include additional 
features, either an improved radar or more missile launch 
tubes, or both. But my understanding, both prior to this 
hearing and also listening to the Navy's testimony at this 
hearing, is that they are proposing not to build altered DDG-
51s but more or less repeats of the current Flight IIA design 
as it would exist in the DDG-12.
    Mr. Langevin. Let me stop you there, if I could, because it 
is my understanding that the existing design of DDG-51 is not 
capable of supporting the radar that would be needed for 
ballistic missile defense, which is what their--major part of 
their rationale of moving back to the 51s, because it----
    Mr. O'Rourke. Right. And the sense I get from the Navy's 
testimony is that they are not envisioning changing the radar 
on the ship. That is an option I discussed in my testimony, but 
I think that the path that the Navy laid out in their testimony 
is to continue getting the 51s with a SPY-1 radar, not with a 
radar using active array technology. And so, although I discuss 
that in my testimony, the sense I get from the Navy's testimony 
is that they are looking at not doing that, not making any 
major changes to the combat system of the ship as it would 
exist from the DDG-112 baseline.
    Mr. Francis. Mr. Langevin, there are--I know in the missile 
defense budget they do put in money to modify the Aegis ships, 
both the cruisers and the destroyers. So there are some 
modifications associated with being compatible with the 
ballistic missile defense ships (BMDS). Now whether it is 
physically to the radar itself or whether they are software 
upgrades or what have you, but there would be a cost that would 
have to be accounted for in the new ships if in fact they are 
being deployed for ballistic missile defense.
    Mr. O'Rourke. Right. But the ships that the Navy is talking 
about building, based on their testimony today, is a 
configuration that is similar to what you get when an existing 
DDG-51 comes out of the modernization program, which is the 
configuration similar to DDG-112, the last of the 51s currently 
under construction. That is not a ship with a different radar, 
it is not a ship with additional missile tubes or any other 
major configuration changes.
    Mr. Taylor. The Chair recognizes the gentleman from Rhode 
Island, Mr. Kennedy.
    Mr. Kennedy. Thank you. Thank you, Mr. Chairman.
    And, Mr. Chairman, I agree with you, frankly, on the whole 
premise of your hearings, that we haven't gotten the Navy's 
true answer on really the real cost of these ships. But the 
same goes true with the flip side of the coin. What makes us 
think, if we haven't gotten the true cost of the DDG-1000, that 
we are going to get the true cost of the retrofit of the DDG-
51? Okay?
    So you are going to say to us, we are going to save a lot 
of money because we are not going to go down the, quote/
unquote, cost overruns of the DDG-1000, and then you are going 
to give us a lot of reasons why that is so expensive. But then 
we are going to avoid talking in this hearing about what Mr. 
Langevin just brought up, and that is all of the costs that 
have not been brought up that will be incurred from the vendor 
base that will have to be restarted.
    Granted we didn't even appropriate any dollars in this 
year's appropriations bill for any DDG-51s. So we are talking 
2005 was the last time they came off, trying to restart that 
vendor base. You just pointed out that it is closed 
architecture. So trying to retrofit and redesign every 
subsystem of the DDG-51 so that if you are trying to upgrade 
the radar you have got to do that and if you are trying to 
upgrade this you have got to do that, and who knows what the 
real cost of the reduction gear long lead time is? Do you guys 
have any idea? I mean, I know that you quoted $400 million, but 
where did that number come from? From CBO? Can you guys provide 
that?
    Dr. Labs. I used the $400 million number as an assumption 
based on, actually, this subcommittee's mark in the 
authorization bill, where you appropriated $400 million either 
for DDG-1000 advanced appropriation or for surface combatant 
advanced appropriation. As much as we have tried with either 
the contractors or with the Navy, we haven't gotten any details 
on that.
    Mr. Kennedy. Okay. Well, obviously, the point being is that 
we can't put our finger on anything that you are giving us if 
we are not getting an apples-to-apples comparison, whether it 
is talking about DDG-51 or 1000. And it is not fair for us to 
be out there whacking the cost of 1000 for costs if you are not 
comparing it to what the refit cost of 51 is. That is one 
issue, and we are just talking costs there.
    Now the second issue is what Mr. Sestak brought up; and 
that is, what is the national security interests here? And it 
seems as though we have had several CNOs come up to the 
Congress for years and say that we needed this DDG-1000 because 
the littoral environment was where our threat was. And what I 
am interested in is, as Mr. Sestak said--and, by the way, Mr. 
Sestak was the Deputy Chief of Naval Operations for Warfare 
Requirements and Programs when he was in the Navy. So he should 
have some idea of what this stuff is. And he said it baffled 
him, just up here right now, what the big change in rationale 
was. He was there when the intelligence was dictating the 
littoral environment. He knows--when he said, why not move the 
ships over to Guam, you know what he was talking about. He was 
talking about the Taiwan Straits and China. He is talking about 
the missile defense from China.
    The DDG-1000 has the stealth capability. It looks like a 
fishing vessel out there, according to the testimony. Whereas 
the Arleigh Burkes look like big huge destroyers and can be 
picked off like that.
    When are we going to factor in the cost of 360-some odd 
American lives on these vessels, too? These are all 
calculations we are going to make if they are going to be 
patrolling the waters. When does America not want to be looked 
at like we are overbearing in those straits and instead have a 
nice, calm, stealthy cruiser out there for protection, but we 
don't want to have visible annoyance by having a big, big 
destroyer out there? But a nice stealthy destroyer like a DDG-
1000 is just what we want in case we need it, but not in their 
face, which is what we want with the Chinese. Not in their face 
but there in case we need it.
    These are major policy decisions on national security basis 
we need to consider. And, frankly, I don't think we have really 
gotten it; and so that is what I hope we get a better answer 
from the Navy on.
    I thank the chairman for giving us this time today to have 
these hearings.
    Mr. Taylor. Sure.
    Mr. O'Rourke.
    Mr. O'Rourke. Yeah, just very briefly, I agree with you 
that we need to see a comparison of the two paths forward in 
terms of costs that accounts for whatever configuration 
changes, among other things, the Navy might want to make in the 
51 design. They need to show those numbers.
    And I agree with you also that I think the Navy needs to 
explain more fully the concept that they have introduced here 
in their testimony today that they have undergone a shift in 
their thinking about missions. And what I gather from Admiral 
McCullough's testimony today is that they feel they have done 
that analysis and that they are prepared to share it. I think 
they now need to share it so people can see these things and 
make their evaluation.
    Mr. Kennedy. With your indulgence, Mr. Chairman, one point.
    Mr. Taylor. Mr. Kennedy, it is not so much my indulgence, 
but the committee is going to need this room at 2 o'clock, full 
committee.
    Mr. Kennedy. Okay.
    Mr. Taylor. But if I may, let me answer a couple of 
questions that you already asked, and I think you did it--I 
think you asked some great questions.
    Number one, our Nation has already received--delivered over 
50 DDG-51s. So I think it is fair to say that we have a very 
good track record of what they cost and what all the equipment 
on them cost.
    Second thing, I would remind the gentleman that the 1000 is 
physically one-third larger than the 51. So if it is just 
looking for something--and I have got to tell Mr. Kennedy that 
I am absolutely amazed on my flights overseas to visit the 
troops how many ships you see as you are crossing the ocean. 
Yes, it is stealthy on radar, but in the case of the Taiwan 
Straits, as you mention, it is a fairly small place with a lot 
of junks, a lot of nonhostile vessel traffic and, yes, a lot of 
airlines up there, any one of which can hit their GPS and go, 
that is your latitude and longitude of the American fleet. So, 
again, just something we ought to keep in mind.
    I do want to commend all of the witnesses for asking some 
great questions. That was the purpose of this hearing, to clear 
the air. And if any of you three gentlemen would like to answer 
Mr. Kennedy's questions, and then we will let you go.
    Mr. Francis. Just two points, Mr. Chairman, Mr. Kennedy.
    I take at face value what the Navy said about the change in 
the blue-water threat and the missile defense. I do think the 
statement that the fire support requirements can be met with 
existing capabilities, that came as a surprise to me.
    And I think the chairman makes a good point on cost. I 
think we have to be skeptical of cost estimates, but the DDG-51 
has a lot of actual cost history. And I would come back to the 
chairman's challenge that he mentioned in the beginning of the 
hearing, ask for a fixed price and see who gives you a fixed 
price contract, and I think you might get one on the 51. It is 
a good question to ask, and I think it is telling that you 
can't get one on the DDG-1000.
    Mr. O'Rourke. Just very quickly, to sum up what I was 
saying earlier, Admiral McCullough said in his testimony today 
that they have done the analysis. So I think it is reasonable 
for other people to ask to see that analysis.
    Dr. Labs. Mr. Chairman, Mr. Kennedy, I would just simply 
agree with Mr. O'Rourke and Mr. Francis. I think you are 
absolutely right. You are entitled to sort of see what the 
numbers are going to start those vendor bases back up again. 
But we do have an awful lot of statistical and historical data 
on the DDG-51 that makes it at least easier for somebody like 
CBO to sort of give a better sense of what it might be than, 
say, the DDG-1000, where you really have to use different kinds 
of analogies.
    Mr. Taylor. Again, we want to thank all of our witnesses. 
We want to thank all the members who participated. And this 
hearing is adjourned.
    [Whereupon, at 1:15 p.m., the subcommittee was adjourned.]
?

      
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                            A P P E N D I X

                             July 31, 2008

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


              PREPARED STATEMENTS SUBMITTED FOR THE RECORD

                             July 31, 2008

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

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

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


              WITNESS RESPONSES TO QUESTIONS ASKED DURING

                              THE HEARING

                             July 31, 2008

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

      
             RESPONSE TO QUESTION SUBMITTED BY MR. LANGEVIN

    Admiral McCullough. The Joint Requirements Oversight Council (JROC) 
was not specifically engaged in the Navy's deliberations prior to 
submission of the Navy's POM-10 proposed plan to the Office of the 
Secretary of Defense. The JROC will be briefed 18 July 2008.
    The Navy is concerned about evolving capability gaps in the outer 
air battle in the blue water, particularly against the improved 
ballistic missile capabilities of near-peer competitors. The DDG 51 is 
a proven, multi-mission guided missile destroyer and the Navy's most 
capable ship against ballistic missile threats. Ballistic Missile 
Defense is a key capability that DDG 1000 lacks--that capability is 
already being incorporated into the DDG 51 class.
    The way ahead for FY 2010 and beyond will be determined by the Navy 
and the Department of Defense's continuing assessment of existing and 
evolving threats, ensuring that the Navy delivers those capabilities 
best suited to meet our national security needs both now and the 
foreseeable future. This will include, but not be limited to, defense 
against missile threats and the challenging requirements to operate in 
the littoral environments. As the Navy and the Department of Defense 
develops its FY 2010-2015 budget, all of these considerations will be 
weighed to ensure we build the right Navy for the future. [See page 
21.]
                                 ______
                                 
  RESPONSE TO QUESTION SUBMITTED BY MR. TAYLOR ON BEHALF OF MR. LARSEN
    Admiral McCullough. The comprehensive estimate of total life cycle 
costs for the DDG 51 and DDG 1000 classes is stated in the Selected 
Acquisition Reports (SAR's) provided to Congress. These life cycle cost 
estimates employ data from the Navy Visibility and Management of 
Operating and Support Costs (VAMOSC) database. They include both direct 
costs and other categories of costs that are not budgeted to a specific 
program. The summary of the SAR Life Cycle Cost estimates (FY07$) for 
the two classes are:


------------------------------------------------------------------------
                  Category                      DDG 1000       DDG 51
------------------------------------------------------------------------
Mission Pay and Allowance                             7.2          22.8
------------------------------------------------------------------------
Unit Level Consumption                               11.0          12.6
------------------------------------------------------------------------
Intermediate Maintenance                              0.8           0.8
------------------------------------------------------------------------
Depot Maintenance                                    10.9           7.6
------------------------------------------------------------------------
Contractor Support                                     --           0.9
------------------------------------------------------------------------
Sustaining Support                                   15.4           3.3
------------------------------------------------------------------------
Indirect                                              4.8          12.8
------------------------------------------------------------------------
Other                                                  --            --
------------------------------------------------------------------------
Total Annual                                         50.1          60.8
------------------------------------------------------------------------
       All costs in FY07$ based on December 2007 SAR's.
------------------------------------------------------------------------

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