[Senate Hearing 110-201]
[From the U.S. Government Publishing Office]


                                                 S. Hrg. 110-201, Pt. 2
 
DEPARTMENT OF DEFENSE AUTHORIZATION FOR APPROPRIATIONS FOR FISCAL YEAR 
                                  2008

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

                                HEARING

                               before the

                      COMMITTEE ON ARMED SERVICES
                          UNITED STATES SENATE

                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION

                                   ON

                                S. 1547

     TO AUTHORIZE APPROPRIATIONS FOR FISCAL YEAR 2008 FOR MILITARY 
ACTIVITIES OF THE DEPARTMENT OF DEFENSE, FOR MILITARY CONSTRUCTION, AND 
   FOR DEFENSE ACTIVITIES OF THE DEPARTMENT OF ENERGY, TO PRESCRIBE 
PERSONNEL STRENGTHS FOR SUCH FISCAL YEAR FOR THE ARMED FORCES, AND FOR 
                             OTHER PURPOSES

                               ----------                              

                                 PART 2

                                SEAPOWER

                               ----------                              

                              MAY 3, 2007


         Printed for the use of the Committee on Armed Services
DEPARTMENT OF DEFENSE AUTHORIZATION FOR APPROPRIATIONS FOR FISCAL YEAR 
                         2008--Part 2  SEAPOWER

                                                  S. Hrg. 110-201 Pt. 2

DEPARTMENT OF DEFENSE AUTHORIZATION FOR APPROPRIATIONS FOR FISCAL YEAR 
                                  2008

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

                                HEARING

                               before the

                      COMMITTEE ON ARMED SERVICES
                          UNITED STATES SENATE

                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION

                                   ON

                                S. 1547

     TO AUTHORIZE APPROPRIATIONS FOR FISCAL YEAR 2008 FOR MILITARY 
ACTIVITIES OF THE DEPARTMENT OF DEFENSE, FOR MILITARY CONSTRUCTION, AND 
   FOR DEFENSE ACTIVITIES OF THE DEPARTMENT OF ENERGY, TO PRESCRIBE 
PERSONNEL STRENGTHS FOR SUCH FISCAL YEAR FOR THE ARMED FORCES, AND FOR 
                             OTHER PURPOSES

                               __________

                                 PART 2

                                SEAPOWER

                               __________

                              MAY 3, 2007


         Printed for the use of the Committee on Armed Services



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                      COMMITTEE ON ARMED SERVICES

                     CARL LEVIN, Michigan, Chairman

EDWARD M. KENNEDY, Massachusetts     JOHN McCAIN, Arizona
ROBERT C. BYRD, West Virginia        JOHN WARNER, Virginia,
JOSEPH I. LIEBERMAN, Connecticut     JAMES M. INHOFE, Oklahoma
JACK REED, Rhode Island              JEFF SESSIONS, Alabama
DANIEL K. AKAKA, Hawaii              SUSAN M. COLLINS, Maine
BILL NELSON, Florida                 JOHN ENSIGN, Nevada
E. BENJAMIN NELSON, Nebraska         SAXBY CHAMBLISS, Georgia
EVAN BAYH, Indiana                   LINDSEY O. GRAHAM, South Carolina
HILLARY RODHAM CLINTON, New York     ELIZABETH DOLE, North Carolina
MARK L. PRYOR, Arkansas              JOHN CORNYN, Texas
JIM WEBB, Virginia                   JOHN THUNE, South Dakota
CLAIRE McCASKILL, Missouri           MEL MARTINEZ, Florida

                   Richard D. DeBobes, Staff Director

             Michael V. Kostiw, Replublican Staff Director

                                 ______

                        Subcommittee on Seapower

               EDWARD M. KENNEDY, Massachusetts, Chairman

JOSEPH I. LIEBERMAN, Connecticut     JOHN THUNE, South Dakota
JACK REED, Rhode Island              JOHN WARNER, Virginia,
DANIEL K. AKAKA, Hawaii              SUSAN M. COLLINS, Maine
BILL NELSON, Florida                 JOHN ENSIGN, Nevada
JIM WEBB, Virginia                   MEL MARTINEZ, Florida

                                  (ii)
?

                            C O N T E N T S

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                    CHRONOLOGICAL LIST OF WITNESSES
             Navy Force Structure Requirements and Programs
                              may 3, 2007

                                                                   Page
Winter, Hon. Donald C., Secretary of the Navy....................     5
Mullen, ADM Michael G., USN, Chief of Naval Operations...........     7

                                 (iii)


DEPARTMENT OF DEFENSE AUTHORIZATION FOR APPROPRIATIONS FOR FISCAL YEAR 
                                  2008

                              ----------                              


                         THURSDAY, MAY 3, 2007

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

             NAVY FORCE STRUCTURE REQUIREMENTS AND PROGRAMS

    The subcommittee met, pursuant to notice, at 3:35 p.m. in 
room SR-222, Russell Senate Office Building, Senator Joseph I. 
Lieberman (acting chairman of the subcommittee) presiding.
    Committee members present: Senators Lieberman, Reed, Webb, 
Collins, and Thune.
    Committee staff members present: Leah C. Brewer, 
nominations and hearings clerk; and John H. Quirk V, security 
clerk.
    Majority staff members present: Creighton Greene, 
professional staff member; and William K. Sutey, professional 
staff member.
    Minority staff members present: Michael V. Kostiw, 
Republican staff director; Gregory T. Kiley, professional staff 
member; and Sean G. Stackley, professional staff member.
    Staff assistants present: Fletcher L. Cork and Micah H. 
Harris.
    Committee members' assistants present: Frederick M. Downey 
and Colleen J. Shogan, assistants to Senator Lieberman; 
Jonathan Cooper, assistant to Senator Bill Nelson; Gordon I. 
Peterson, assistant to Senator Webb; Sandra Luff, assistant to 
Senator Warner; Jeremy Shull, assistant to Senator Inhofe; Jane 
Alonso, Patrick M. Hughes, and Mark J. Winter, assistants to 
Senator Collins; and Stuart C. Mallory, assistant to Senator 
Thune.

        OPENING STATEMENT OF SENATOR JOSEPH I. LIEBERMAN

    Senator Lieberman. The hearing will come to order. I thank 
everybody for coming in. I thank our friends from the public 
and the media for their patience. We had reason to go into 
closed session for the first part. Of course, I thank Secretary 
Winter and Admiral Mullen for being here. We are grateful to 
you for your service to our country and to the extraordinarily 
skillful, professional, and courageous men and women under your 
command. I hope whenever you have the opportunity you will 
convey our gratitude and our pride to them.
    I should announce in public session what I did in closed 
session. Apparently nobody was confused, but I am not Senator 
Kennedy, who usually chairs this subcommittee. Senator Kennedy 
is on the floor managing the legislation there and could not 
break for the hearing. He asked me, since I am next in 
seniority, to chair, and I am honored to do that.
    Secretary Winter and Admiral Mullen, you are faced with a 
number of critical issues that confront the Department of the 
Navy as you attempt to balance modernization needs, based on 
threat assessments for the future, against the costs of 
supporting ongoing operations, particularly in Iraq and 
Afghanistan. There are several areas of concern for the 
subcommittee today and for me personally that I would like to 
mention. I know Senator Kennedy shares these concerns.
    One is the prospects for meeting future force structure 
requirements. We are facing the prospect that the current 
Department of Navy program will lead to potentially large gaps 
between the forces that the Chief of Naval Operations (CNO) has 
said he needs and the forces that will be available to him and 
his successors. This is a matter of budget restraints and it is 
important for the public to understand that, though the 
absolute dollar number we are spending on defense now and will 
next year is large by any estimate, it still remains lower as a 
percentage of Gross Domestic Product than we have ever to my 
knowledge spent during wartime, which is what we are in.
    It is forcing the various Services, in this case the Navy, 
to make decisions that I am concerned about. I mention first 
one case. The Navy now predicts that Navy and Marine Corps 
tactical aircraft forces are facing a shortfall of as many as 
150 tactical fighters needed to outfit our 10 aircraft carrier 
air wings. With shortfalls that large, I worry, and I am sure 
you do, that we could be faced with reducing the number of 
aircraft available on short notice to the combatant commanders, 
either because we have deployed under-strength air wings or 
because we did not deploy the carrier at all because of the 
aircraft shortages. That is something none of us want.
    In another case, the CNO has said that the Navy needs to 
have 48 attack submarines to meet the requirements of the 
combatant commanders. But we are faced with the risk now of 
falling well short of that goal, down to 40, for more than 10 
years, starting some time during the next decade, that as other 
potential peer competitors continue to build submarines at a 
rapid rate.
    Other challenges facing the Navy center on acquisition 
programs. I know that the members of this subcommittee have 
special concerns about the Littoral Combat Ship (LCS) program. 
This was intended to be a ship that the Navy could acquire 
relatively inexpensively and relatively quickly. As it turns 
out, unfortunately, it looks like the LCS program may in fact 
be neither. Once again we are presented with a program with 
significant cost growth, which at least in part is driven by 
the service changing requirements after the design and 
construction contract was signed.
    The LCS situation raises significant questions about 
acquisition management within the Navy. This is not dissimilar 
from exactly the same questions raised about the other 
Services. So we want to ask today in regard to the LCS program, 
why were not the Navy and contractor teams better able to see 
the problem sooner? How could we have gotten to the point that 
the program was just months away from running out of money, 
with no alarms being sounded up the acquisition chain of 
command?
    I want to ask Secretary Winter about what actions he 
believes the Department of the Navy should take to strengthen 
acquisition oversight and restore confidence in the Navy's 
ability to manage these major acquisition programs.
    The subject of Navy force structure and acquisition, 
therefore, is of concern to us, but not a new one for the 
subcommittee. Over many years and with several different 
individuals holding the chairmanship of this subcommittee, we 
have devoted significant attention and concern to these 
subjects, as we do today. Today's hearing, I think, continues 
the strong bipartisan interest in the broader naval force 
structure issues facing the Nation today. It is in that 
bipartisan spirit of shared interest and respect that I am glad 
to call on the ranking member of the Seapower Subcommittee, 
Senator Thune, new to this lofty position, I might say, and on 
Senator Kennedy's behalf to welcome him as ranking member and 
ask him if he would like to make an opening statement now.

                STATEMENT OF SENATOR JOHN THUNE

    Senator Thune. Thank you, Mr. Chairman. It is a pleasure to 
be joining the Seapower Subcommittee. I look forward to working 
closely with you and our other colleagues on the committee on 
naval and other matters that come before us and to improving 
and building upon the naval assets that we have in the State of 
South Dakota.
    I am also pleased to welcome Secretary Winter for our 
second panel. Admiral Mullen, I appreciate very much your 
testimony from earlier this afternoon. You have done an 
excellent job of articulating some of your challenges and of 
providing critical insights for this next discussion.
    The committee, of course, has placed priority on meeting 
the demands of current operations in Iraq and Afghanistan, and 
the Navy has contributed in important ways to those operations. 
However, we must also maintain sight of the broader role of the 
fleet, half of which may be underway on any given day to 
perform vigilance, peacekeeping, and humanitarian relief around 
the world, and to provide a level of security made possible 
only through global presence and naval superiority.
    This is an important backdrop for today's hearing, which is 
truly focused on the Navy's readiness, and by that, in many 
respects, I mean the Nation's readiness for future major 
conflict. A previous CNO, Admiral King, summed up the 
challenges of maintaining readiness in a memo to President 
Roosevelt, in which he stated: ``The fundamental United States 
policy is to maintain the Navy in strength and readiness to 
uphold national policies and interests and to guard the United 
States and its overseas possessions.''
    In time of peace, when the threats to our national security 
change with the strength and attitude of other nations in the 
world, it is frequently difficult to translate our requirements 
into terms of ships and planes and trained men. It is one thing 
to say that we must have and maintain a Navy adequate to uphold 
national policies and interests and to protect us against 
potential enemies, but it is another thing to decide what is 
and what is not the naval strength adequate for that purpose.''
    Clearly, much has changed in the world since Admiral King 
made these remarks some 60 years ago, but I think his insights 
capture the challenges that confront us today. While it is 
appropriate that we spend great efforts focusing on the details 
of how we buy the ships and aircraft for our fleet--and, Mr. 
Secretary, we look forward to your testimony in that area--I 
believe we all would agree that perhaps the greatest challenge 
before us, as Admiral King suggested, is to decide what is and 
what is not the naval strength in terms of ships and planes 
adequate to uphold our national policies and interests and to 
protect us against potential enemies.
    While we enjoy the superiority of today's fleet, I share 
the strong concerns raised by this committee these past several 
years regarding the steady decline in the size of our fleet. 
Admiral Mullen, you deserve great credit for committing to a 
plan to reverse that trend. Your shipbuilding program appears 
to balance the competing elements of capability and 
affordability.
    However, even this ambitious plan to build our Navy back to 
313 ships has to cope with shortfalls in key warfighting areas 
while also confronting significant cost risk. It would be 
extremely valuable today to gain your assessment of these 
challenges and to approach a common understanding of the 
prudent actions that would help mitigate the risks.
    It is also important to gain your assessment of progress on 
new ship programs. Clearly, Mr. Secretary, we look to learn 
from your recent experience with the Littoral Combat Ship and 
are interested in hearing of changes that you would propose to 
ensure other programs benefit by this experience. We need 
greater clarity on your plans to employ competition and balance 
industrial base factors for the Littoral Combat Ship and other 
major shipbuilding programs, including the guided missile 
(DDG)-1000 Destroyer.
    As well, we need to explore important opportunities to 
close capability gaps as we approach the next Virginia 
submarine multi-year procurement and as we consider 
alternatives for supporting Marine Corps amphibious lift 
requirements.
    Finally, the Navy's estimate for this shipbuilding program 
represents a 50-percent increase above investments of the past 
decade. I appreciate that you have met your commitment for 2008 
and would be interested in hearing your practical assessment of 
the Navy's ability to continue to finance the plan in the face 
of ever-increasing budget pressures.
    Thank you, gentlemen, for joining us. So, Mr. Chairman, 
again thank you for holding the hearing today. I look forward 
to the testimony from Mr. Secretary.
    Senator Lieberman. Thanks, Senator Thune.
    Secretary Winter, thank you for being here. We welcome your 
testimony now.

   STATEMENT OF HON. DONALD C. WINTER, SECRETARY OF THE NAVY

    Secretary Winter. Thank you very much, Senator Lieberman, 
Senator Thune, distinguished members of the subcommittee. Thank 
you for the opportunity to appear here this afternoon. I 
respectfully submit my statement for the record and I applaud 
Congress and this committee in particular for its increasing 
interest in shipbuilding. This is an area that needs attention 
from all sides and it is an area in which I have focused most 
of my time in working to improve our efforts. I have taken 
action to hold both contractors and the Navy responsible and 
accountable for our shipbuilding program.
    At the same time, I am working hard to establish an 
attractive business environment for building naval ships. The 
Department of the Navy recognizes that we will fail to achieve 
our shipbuilding and thus force structure goals if we do not 
correct the number of serious deficiencies in our acquisition 
programs and processes. I am reviewing the Department's major 
shipbuilding programs and I am working to improve our overall 
processes.
    I can assure you that I share your frustration and disquiet 
over the problems that we have encountered in many of our 
programs. I can also assure you that your Navy is leaning 
forward and beginning to build the ships and submarines that 
our country needs for the future.
    Over the past years, we have executed a major shipbuilding 
research and development program that has set the stage for a 
major force transformation in the Navy's structure. We are in 
the early stages of development and production of more classes 
of new ships than we have produced in recent times. This will 
result in the transformation of the fleet and will position it 
to deal with a very uncertain future.
    But, as you have seen, such a grand transformation will not 
be without problems. You have my promise and commitment to 
oversee the management of these programs and I request your 
continued support in helping me to get our Navy shipbuilding 
program in position to deliver on our requirements. Putting our 
shipbuilding programs on a more solid footing is an urgent 
priority. With your help, we can succeed in building the fleet 
we need in our Nation's defense.
    Thank you very much and I look forward to answering your 
questions.
    [The prepared statement of Secretary Winter follows:]

              Prepared Statement by Hon. Donald C. Winter

    Thank you for inviting me to appear before the Senate Armed 
Services Committee, Subcommittee on Seapower. The support that this 
committee provides to the Navy and Marine Corps is greatly appreciated.
    A strong Navy is key to maritime dominance and is a critical aspect 
of our National Defense Strategy. We need a force structure of 313 
ships. The process of acquiring new ships is challenging and the budget 
is tightly wound. Many of our past problems have resulted from 
constantly changing requirements and shipbuilding plans. If the 
Department of the Navy is to succeed in acquiring and maintaining the 
required numbers of ships, we need a plan, we need to stick to it, and 
we need to closely manage the execution of the plan. The 313-ship plan 
that was promulgated over the past 2 years is our goal. The force 
produced by this plan will satisfy our requirements for blue, green, 
and brown water capabilities.
    The biggest challenge we face is acquisition of new ships. We 
cannot build the quantities or qualities of ships that are required 
unless we correct several shortfalls.
    I have initiated a review of our major shipbuilding programs while 
simultaneously working to institutionalize key acquisition reform 
initiatives. The recent challenges associated with the Littoral Combat 
Ship (LCS) and other shipbuilding programs point to a number of issues 
that we are addressing. In the long-term, I am initiating the following 
actions:

         Re-assert Navy control over the entire shipbuilding 
        acquisition process. Control over acquisitions also means 
        decoupling decision points.
         Establish the Navy as the lead systems integrator to 
        optimize the overall capability of the fleet.
         Use the shipbuilding contract process to incentivize 
        contractors to design for production and sustainment.
         Use independent cost estimates for the trade-offs and 
        decisions thus increasing reliability of the cost estimation 
        process.
         Assure that detail design and construction contracts 
        are supported by mature specifications.
         Develop an acquisition workforce capable of providing 
        knowledgeable program oversight.

    I am working to develop solutions that are in the best overall 
interest of the taxpayer, the Navy, and the industry that supports 
shipbuilding.
    In reviewing specific programs, my focus thus far has been on LCS, 
LPD-17, T-AKE, and Virginia class submarines. In past discussions, I 
have noted our efforts to bring the production cost of Virginia class 
submarines down to $2 billion in fiscal year 2005 dollars. We are 
making considerable progress in this area and must achieve that goal by 
2012, when we shift to two units per year.
    The early experience with the LCS has been disappointing and must 
be corrected to assure that we construct these vitally needed ships in 
a timely and cost effective manner. I am restructuring the program to 
address cost and programmatic issues. This restructuring will result in 
the cancellation of one of the fiscal year 2006 ships and will require 
the funding allocated for the fiscal year 2007 ships to be used to 
offset cost and schedule issues associated with the fiscal year 2005 
and other two fiscal year 2006 ships. I am redoubling efforts to manage 
for the success of the lead ship efforts. My proposal is to reduce buys 
for fiscal year 2008 and fiscal year 2009 from what was previously 
planned and position the program to down-select to a single design in 
fiscal year 2010. It is critical that the Department of the Navy take 
this action early to assure this vital program is technically sound and 
affordable.
    With respect to DDG-1000, CVN-78, MPF(F), and LHA(R), I plan to 
conduct detailed reviews of each of these programs to address potential 
issues early in these programs. Each of these programs must be properly 
initiated and closely monitored to assure success.
    To make our shipbuilding plan work, there are several areas where I 
need your help. I will need your support for the LCS restructuring plan 
I have noted previously. I will need your patience as we transform mine 
warfare shipboard capabilities to a LCS-centric structure. It is 
imperative that we move to this more capable force and retire less 
capable assets. A second area where we require your support is in 
modifying language regarding the number of aircraft carriers required. 
As we have noted, there will be a short period of time between the 
period when U.S.S. Enterprise (CVN-65) is retired and the Gerald Ford 
enters service when it will be necessary to reduce our carrier force 
from eleven to ten units. We will be able to meet operational 
requirements during this period with limited risk by carefully 
scheduling maintenance activities. A third challenge we are working 
through is getting amphibious lift right.
    I applaud Congress and this committee in particular for its 
increasing interest in shipbuilding. I acknowledge the desire of many 
Members to increase force structure at a faster rate than the 
Department of the Navy can afford to execute. My biggest concerns 
regarding changes to our annual shipbuilding plan relate to the budget 
and to the shipbuilding industrial base. Any additions to the 
shipbuilding budget that have unfunded out year liabilities will 
disrupt our delicate plan to achieve the desired long-term force 
structure. With respect to the shipbuilding industrial base, Hurricane 
Katrina has complicated the ability of the industrial base to surge, 
thus reducing flexibility to execute increased procurement rates. I am 
exploring opportunities to work with our industrial partners to restore 
our shipbuilding industrial base flexibility.
    In summary, your Navy is leaning forward and building the ships and 
submarines our country needs for the future. Over the past years we 
have executed a major shipbuilding research and development program 
that has set the stage for a major transformation in the Navy's force 
structure. We are in the early stages of development and production of 
more classes of new ships than we have produced in recent times. This 
will result in a transformation of the fleet and position it to deal 
with a very uncertain future. But, as you have seen, such a grand 
transformation will not be without problems. You have my promise to 
actively manage these programs and I request your support in helping me 
to get our Navy's shipbuilding program in position to deliver the fleet 
it needs.

    Senator Lieberman. Thank you, Secretary Winter.
    Admiral Mullen, do you have an opening statement for this 
open session?

    STATEMENT OF ADM MICHAEL G. MULLEN, USN, CHIEF OF NAVAL 
                           OPERATIONS

    Admiral Mullen. No, sir.
    [The prepared statement of Admiral Mullen follows:]

            Prepared Statement by ADM Michael G. Mullen, USN

    Chairman Kennedy, Senator Thune, and distinguished members of the 
Seapower Subcommittee, it is a privilege to appear before you 
representing the brave men and women, sailors and civilians of the 
United States Navy. We appreciate the long standing support we have 
received from your subcommittee.

                              INTRODUCTION

    We are a maritime nation involved in a long, irregular and global 
war that extends far beyond Iraq and Afghanistan. The threat we face 
breeds within failing states and the undergoverned spaces of the world 
and preys upon those weakened by poverty, disease, and hatred. It 
thrives where there is no rule of law and spreads through cyberspace 
and the vast maritime commons in this age of globalization.
    We are also confronted by nation-states determined to develop 
sophisticated weapons systems, including nuclear arms. We cannot allow 
ourselves to be fixated on one threat alone. Our national security is 
dependent upon a strong Navy that can keep the sea lanes free, deter 
aggression, safeguard our sources of energy, protect the interests of 
our citizens at home and reassure our friends abroad. We must never 
relinquish overmatching capability and capacity.
    While our ground forces are engaged in Iraq and Afghanistan, Navy's 
ability to deliver two unique attributes--global reach and persistent 
presence--continues to support our worldwide responsibilities and 
provide a powerful deterrent force in day-to-day operations and as our 
Nation's ``Strategic Reserve.'' As we face the rapidly changing 
security environment, there is no alternative to a well-balanced fleet.
    As I testified before Congress last year and earlier this year, I 
identified three priorities addressed by our fiscal year 2007 budget: 
Sustain Combat Readiness, Build a Fleet for the Future, and Develop 
21st Century Leaders. We have made progress in all three and our fiscal 
year 2008 budget reaffirms our commitment to these priorities. In 
today's testimony, I will focus on building a fleet for the future, 
placing particular emphasis on strengthening our core warfighting 
capabilities and increasing our military capacity.

                            FORCE STRUCTURE

    In 2005, the Navy conducted extensive analysis to determine the 
minimum required force structure needed to meet the security demands of 
the 21st century with an acceptable level of risk. In February 2006, 
Navy submitted a 30-year shipbuilding plan that would provide 
approximately 313 ships by 2020 with warfighting capacity and 
capability to meet the expected threat and security demands. Our 
recently submitted fiscal year 2008 Annual Long Range Plan for 
Construction of Naval Vessels (30-year shipbuilding plan), essentially 
unchanged from our 2007 submission, is intended to provide the 
shipbuilding industry with sufficient predictability to maintain 
critical skills and to make business decisions that increase efficiency 
and productivity in order to meet the Navy's projected shipbuilding 
requirements.
    Navy's force structure requirement was developed and validated 
through detailed joint campaign and mission level analysis, optimized 
through innovative sourcing initiatives (e.g. Fleet Response Plan 
(FRP)), adaptive force packaging) that increase platform operational 
availability. Importantly, the future battle force was measured against 
the anticipated threats for the 2020 timeframe.
    The future Navy will remain sea based, with global speed and 
persistent presence provided by forward deployed and surge-ready forces 
through the FRP. To maximize return on investment, the Navy must be 
balanced to fight an asymmetric war against the evil of terrorism, to 
help secure the maritime commons through strong partnerships and 
Maritime Security Operations, to deter would-be aggressors and, when 
necessary, to fight and win Major Combat Operations (MCO). This 
capabilities-based battle force can be disaggregated and distributed 
worldwide to support the operational demands of our combatant 
commanders.
    Our force structure strategy is balanced between new construction 
and modernization for ships, and recapitalization and sustainment for 
aircraft. It is critical to our strategy for us to have vigorous 
modernization and sustainment programs to achieve the expected service 
life of our ships and aircraft in the face of rapidly escalating global 
threats using advanced technologies. Modernization and sustainment 
optimizes our capital investments.
    With 38 ships currently under contract for construction, we can see 
the future fleet taking shape. In 2006, we christened the first Freedom 
Class littoral combat ship, amphibious assault ship Makin Island, 
amphibious transport dock ship Green Bay, guided-missile destroyers 
Gridley and Sampson, nuclear attack submarine (SSN) Hawaii, auxiliary 
dry cargo ships Alan Shepard and Sacagawea, and the aircraft carrier 
George H.W. Bush. We commissioned the SSN Texas and the guided-missile 
destroyer Farragut. We also rolled out the first EA-18G Growler. By the 
end of fiscal year 2007, our fleet's net size will have grown from a 
low of 274 ships in March 2007 to 279, including 5 newly commissioned 
ships.
    Navy is in the process of evaluating the impact global developments 
have had on our risk assumptions in our force plan and ultimately 
whether or not this should affect our future Battle Force. We are 
further evaluating lessons learned from the recently identified 
Littoral Combat Ship (LCS) cost overruns. Whatever the outcome of these 
evaluations, we will work closely with our partners in industry to 
control requirements and costs, and provide the industrial base the 
stability it needs to become more productive.
    Future platforms and combat systems must be designed and built with 
the knowledge that we plan to continually upgrade them over their 
lifetime. An Open Architecture approach to software acquisition and 
development of integrated weapons systems is a critical part of this 
business model. Free and open competition in which the best ideas win 
is the goal.
    To facilitate the stability required to achieve reduced costs in 
this constrained industrial sector, the fiscal year 2008 President's 
budget submission made no changes in ship acquisitions in fiscal year 
2008 from PB07 to PB08. Navy has a long-range vision to maximize reuse 
of ship designs and components, and to employ a business model that 
encourages the use of open architecture and mission systems modularity.
    The next major challenge in building a fleet for the future is to 
deliver a long range aviation procurement plan. Much work has been done 
analyzing joint warfighting capabilities and capacity based on threat 
and risk assessments driven by Defense Planning Guidance. Consideration 
has also been given to affordability, industrial capacity and 
production times associated with next generation aviation warfare. The 
Navy will work to deliver a stable aviation build plan that transforms 
and balances aviation capabilities with respect to conventional and 
irregular warfare, reduces excess capacity, and achieves technological 
superiority through cost-wise investments in recapitalization, 
sustainment and modernization programs.
    Resourcing critical maritime and joint effects, the President's 
budget procures 188 aircraft in fiscal year 2008, with a goal of 
eventually reducing average aircraft age from 74 percent to 50 percent 
of expected service life. The plan is structured to support required 
economic order quantity (EOQ) investments and facilitate Multi-Year 
Procurement (MYP) contracts.

                      BUILD A FLEET FOR THE FUTURE

    As we adapt to asymmetric threats and the challenges of irregular 
warfare, we cannot lose sight of Navy's core warfighting competencies. 
We must continue to improve performance in anti-submarine and mine 
warfare, anti-surface warfare, anti-air warfare, strike warfare, 
ballistic missile defense, and other core maritime superiority 
missions. We will continue to mature our FRP to ensure combat ready, 
surge-capable forces are available to meet any contingency.
    We have worked hard with Congress and industry to start to create 
stability between our shipbuilding plans and industrial base. We must 
continue to fund and build a balanced, effective Battle Force of about 
313 ships . . . the minimum force required to guarantee the long-term 
strength and viability of U.S. naval sea and air power with acceptable 
risk. We recognize the need to control requirements, maintain program 
stability, curb costs, and encourage best business practices. We need 
support for sustained funding of our shipbuilding account--consistent 
with the 30-year plan--that is critical to provide our partners in 
industry the stability they need to curb cost growth and sustain our 
vital shipbuilding industrial base.
    To build a fleet for the future and ensure the superiority of our 
future fleet, we seek congressional support in the following areas:

         11 Carrier Force. The 30-year shipbuilding plan 
        recognizes that as a result of the retirement of U.S.S. 
        Enterprise in fiscal year 2013, the number of aircraft carriers 
        will drop to 10 for a period of approximately 33 months, until 
        the U.S.S. Gerald Ford enters active service. Legislative 
        relief is required from the National Defense Authorization Act 
        for Fiscal Year 2007 requiring a carrier force of 11. In 
        developing the 30-year shipbuilding plan, Navy conducted 
        extensive analysis that concluded the temporary drop to a 
        carrier force of 10 for 33 months, from fiscal year 2013 
        through fiscal year 2015, is an acceptable short-term risk.
         Littoral Combat Ship. The LCS program remains of 
        critical importance to our Navy providing mine warfare, anti-
        submarine and anti-surface warfare capabilities. Extensive 
        force structure analysis, as reflected in the 30-year 
        shipbuilding plan, establishes a requirement for 55 LCS. Navy 
        is committed to satisfying this valid requirement.
          Current cost estimates exceed established thresholds for 
        detail design and construction of LCS-1, the lead Lockheed 
        Martin hull. This recent cost growth (to some extent the result 
        of unrealistic schedule and cost constraints, unstable 
        specifications at time of contract award, design-build 
        concurrency, subcontractor performance delays impacting 
        critical path, rework due to design changes, and Engineering 
        Change Proposal scope increases) has provided an opportunity to 
        reinforce the Navy's commitment to providing warfighting 
        capability through affordability. The Navy executed a pause in 
        the construction of LCS-3, the second Lockheed Martin hull, to 
        conduct a thorough review of the program, and to examine both 
        internal and external factors relating to the acquisition and 
        contracting processes, practices, and oversight and the related 
        impact on cost. Negotiations failed to achieve a proper 
        balancing of risk at an executable price for the Navy, which 
        has led to the termination of construction of LCS Hull #3.
          On 12 April 2007, Navy terminated the contract with Lockheed 
        Martin for construction of LCS Hull #3 since the cost-to-risk 
        balance was considered unaffordable. The Navy remains committed 
        to bringing LCS capability into the fleet to address emerging 
        Long War and MCO capability requirements. Our LCS acquisition 
        strategy is executable, affordable, and in the best interests 
        of the Navy.
         Virginia Class MYP. The Navy remains committed to 
        reduce Virginia acquisition costs to $2 billion (fiscal year 
        2005 dollars) per hull concurrent with a build rate of two 
        ships per year starting in fiscal year 2012. Two items 
        requested this year are critical to achieving this goal. The 
        first is authority in the National Defense Authorization Act 
        for Fiscal Year 2008 to enter into a MYP contract with EOQ in 
        fiscal year 2009. This would provide the Navy a significant 
        negotiating advantage, send a clear signal to industry 
        regarding the Navy's commitment to future submarine 
        procurement, and reduce risk. The Navy anticipates $2.9 billion 
        (13 percent) of savings compared to annual (single ship) 
        procurement contracts by using a 5-year/7-ship MYP contract for 
        Virginia class submarines starting in fiscal year 2009.
          The second item critical to achieving cost reduction and an 
        increased build rate of two submarines per year is the Virginia 
        class cost reduction investment contained in the fiscal year 
        2008 budget request. As detailed in the recently delivered 
        Report to Congress on Virginia Class Cost Reduction, the Navy 
        plans to achieve its cost goal for the program through 
        construction performance improvements, design changes that 
        reduce cost, and by increasing the procurement rate under a MYP 
        contract with EOQ authority. The cost reduction investment 
        funds are vital to implementing the needed construction 
        performance improvements and design changes.
          As identified in the 30-year shipbuilding plan, even with a 
        build rate of two Virginia class submarines per year commencing 
        in 2012, the number of nuclear attack submarines will fall 
        below the desired 48 submarine fleet identified in the 30-year 
        shipbuilding plan from about 2020 through 2034. This apparent 
        shortfall, however, can be managed through several risk 
        mitigation efforts. First, stationing 60 percent of our attack 
        submarines in the Pacific, as recommended in the 2006 
        Quadrennial Defense Review, will reduce critical response times 
        in the Pacific. Second, by adjusting patrol times of our attack 
        submarines, we can ensure greater operational availability 
        without significantly impacting our sailors and their families. 
        Finally, by pursuing an integrated approach to undersea warfare 
        queuing through multiple sensors (e.g. Unmanned Undersea 
        Vehicles, the P-8A Multi-Mission Aircraft, SH-60R/S 
        helicopters), we can improve critical target detection, 
        tracking, and sensor-to-shooter response times to fully support 
        the requirements of our combatant commanders for attack 
        submarine presence worldwide. Other initiatives under review 
        include reducing build time of the Virginia class SSN from 72 
        to 60 months and considering modest hull-life extensions on a 
        small number of SSNs.
         Split Funding for Zumwalt class DDG. The DDG-1000 
        Zumwalt class destroyer brings much needed stealth, counter 
        air, and surface fire support to the fight. The Tumblehome hull 
        provides a reduced radar cross section and acoustic signature 
        while its Dual Band Radar represents a significant increase in 
        air defense capability in the cluttered littoral environment. 
        With the Advanced Gun System and associated Long Range Land 
        Attack Projectile (LRLAP) DDG-1000 will provide volume and 
        precision fires in support of Joint forces ashore. A Global 
        Positioning System-guided, 155 millimeter round, LRLAP will 
        provide all-weather fires capability out to 83 nautical miles. 
        Open architecture and reduced manning will provide the Navy 
        life cycle cost savings and technology that can be retrofit to 
        legacy ships. DDG-1000 is the harbinger of our future fleet, 
        taking major steps in advanced warfighting, reduced manning, a 
        fully integrated power/propulsion system, and an open 
        architecture design.
          The support of Congress for last year's split funding request 
        is greatly appreciated. This year Navy requests the second half 
        of split year funding for dual lead ships of the Zumwalt class 
        destroyer to maximize competitive efficiencies and focus design 
        efforts. Split funding will also lend stability to the 
        shipbuilding industrial base. This funding strategy supports 
        the current budget structure, enhances future competitive 
        opportunities, and limits liability for appropriations in 
        future years.
         Joint Strike Fighter. The F-35 Joint Strike Fighter 
        (JSF) remains the cornerstone of Navy's continuing superiority 
        in air warfare. Although risk associated with the recent 2 year 
        slip in the carrier variant of the F-35 will be mitigated by a 
        modest increased buy of F/A-18E,F variants, there should be no 
        doubt that JSF is a much more capable aircraft to which the 
        Navy is fully committed. I encourage your continued strong 
        support of this program to guard against further delays in 
        production.
         Legacy Aircraft Replacement. As our aging, legacy 
        aircraft reach the end of the service lives, funding for 
        follow-on programs becomes critical. Among these programs are 
        the P-8A Multi-mission Maritime Aircraft (MMA), the F/A-18E/F 
        and JSF, the EA-18G airborne electronic attack aircraft, the V-
        22 tilt-rotor aircraft, and the MH-60R/S and CH-53K 
        helicopters. Navy's RDT&E program is also vital to this effort.
         Anti-submarine warfare (ASW). Submarines with 
        improving stealth and attack capability--particularly modern 
        diesel attack submarines--are proliferating worldwide at an 
        alarming rate. Locating these relatively inexpensive but 
        extremely quiet boats presents our Navy with a formidable 
        challenge. Navy is pursuing a distributed and netted approach 
        to ASW. Some of the key ASW programs we must continue to 
        develop and field as quickly as possible include: Surface Ship 
        Torpedo Defense System; High Altitude ASW Weapon Concept; 
        Deployable Distributed Autonomous system; Reliable Acoustic 
        Path Vertical Line Array, and Aircraft Carrier Periscope 
        Detection Radar.
         SONAR Restrictions. ASW is a very complex and 
        challenging warfighting competency in which to achieve and 
        sustain the required level of expertise. Therefore every 
        opportunity we have to gain and maintain proficiency at the 
        ship/unit level, and every opportunity we have to integrate 
        units in complex scenarios is crucial to our readiness. 
        Unfortunately, our ability to train in the same manner in which 
        we fight is under attack in public forums, including the 
        courts. Thus far, we have seen little scientific basis for the 
        claims lodged against the Navy. However, these allegations 
        present the potential for severe restrictions on our continued 
        ability to train effectively, as we saw in RIMPAC 2006 wherein 
        we lost 3 days of valuable ASW training with active sonar 
        because of a court restraining order. Navy is currently 
        executing a comprehensive plan of action to cover all our at-
        sea training areas with environmental compliance documents by 
        the end of 2009. We are committed to maintaining an open 
        dialogue, continuing to advance our scientific understanding of 
        the impacts of sonar on marine mammals, and complying with the 
        relevant statutes. We have consistently made this clear as an 
        organization in our debate on this issue. Maintaining 
        proficiency in ASW is a daily challenge, and while our long-
        term compliance documents are being developed, we cannot afford 
        to stop training. We owe it to our sailors to ensure they 
        receive the training they need to fight and win.
          The Marine Mammal Protection Act (MMPA) requires permits for 
        activities that may affect marine mammals. This includes 
        military activities, including certain Navy activities at sea. 
        The National Defense Authorization Act of 2004 included a 
        provision that authorizes the Secretary of Defense to grant 
        exemptions to the MMPA for certain military activities critical 
        to our national defense. On 23 January 2007, the Deputy 
        Secretary of Defense granted Navy a National Defense Exemption 
        (NDE) for 2 years covering mid-frequency active (MFA) sonar 
        activities for major exercises and in major operating areas, as 
        well as the use of Improved Explosive Echo Ranging sonobuoys. 
        The NDE will help Navy continue to conduct the sonar training 
        necessary for our national defense while protecting marine 
        mammals through established mitigation measures.
         Naval Expeditionary Combat Command (NECC). NECC is 
        developing into a true force of choice in phase zero (pre-
        conflict) and phase V (reconstruction) operations, and is a 
        vital part of our Nation's Long War against terrorism. All new 
        forces--Riverine, Expeditionary Training Group, Maritime Civil 
        Affairs and Maritime Expeditionary Security Force--will meet 
        full IOC objectives in fiscal year 2007. Riverine deployed its 
        first squadron to Iraq in March to provide area security at 
        Haditha dam and interdiction operations on the Euphrates River. 
        Your continued support of our Riverine capability and capacity 
        is vital. Our second Riverine Squadron was established on 2 
        February 2007 and our third Squadron will be stood up this 
        June.
         Sea Basing and Expeditionary Warfare. It would be 
        difficult to consider any future expeditionary missions without 
        recognizing the need for a sea base from which to employ Joint/
        Multinational Capabilities across the full Range of Military 
        Operations. Seabasing provides operational maneuver and assured 
        access to the Joint/Multinational forces while significantly 
        reducing our footprint ashore, thereby minimizing the need to 
        obtain host nation permission and/or support. These operational 
        characteristics will prove increasingly vital in the post-
        Operation Iraqi Freedom/Operation Enduring Freedom political-
        military security environment. Navy is exploring innovative 
        operational concepts combining seabasing with adaptive force 
        packaging that will further support national security policy 
        and the combatant commanders' objectives worldwide. Our 30-year 
        shipbuilding plan provides for seabasing that covers the 
        spectrum of warfare from Joint Forcible Entry to persistent and 
        cooperative Theater Security Cooperation.
          Over the last several years, my staff and that of the 
        Commandant's Marine Corps Combat Development Center, and Marine 
        Corps Headquarters, have worked diligently to develop a 
        strategy for amphibious warfare that is relevant to the myriad 
        challenges we face in the complex security environment of the 
        21st century. The investment strategy we have embarked upon 
        represents the Navy-Marine Corps shared vision of the future 
        and a significant investment of time and resources for both our 
        Services. This vision was further validated by the Naval 
        Operating Concept signed by the Commandant of the Marine Corps, 
        General Hagee, and me last summer.
          Based on a foundation built upon well-defined analytical 
        underpinnings, our staffs agreed on an investment program that 
        would provide a capable, agile, and affordable response force. 
        Specifically, our investments in tomorrow's Navy reflect a 
        commitment to build the fleet of the future, with the 
        capability and capacity to fight and win the Nation's wars, 
        including amphibious operations from the sea. This commitment 
        supports the operational forces in the assault echelon and 
        provides protection for the Maritime Prepositioning Force--
        Future (MPF(F)) to ensure its survivability in any hostile 
        environment.
          The ability of our future fleet to meet the demand signal for 
        amphibious forces must be viewed in the aggregate. Given the 
        cost of ships today, we cannot discount the value of ships 
        procured to support prepositioned equipment. Prepositioned 
        assets must be included in the overall force availability 
        equation--ignoring MPF(F) as the lift component of an 
        additional Marine Expeditionary Battalion (MEB) would be 
        incongruous with today's fiscal environment. The capabilities 
        provided by the MPF(F) mitigate concerns regarding the 
        operational availability of the assault echelon force required 
        to deliver 2.0 MEB lift, vehicle square footage, and passenger 
        requirements. As reflected in our 30-year shipbuilding plan, we 
        believe 30 amphibious ships will meet these requirements, when 
        supported by, and supporting, the MPF(F).
         Ballistic Missile Defense. Missile tests on the Korean 
        Peninsula and by Iran, along with the proliferation of 
        ballistic missile technology, underscore the growing need for a 
        robust, sea-borne ballistic missile defense system. Last year, 
        the Navy made further progress on our Aegis Ballistic Missile 
        Defense (BMD), the sea-based component of the Missile Defense 
        Agency's (MDA) Ballistic Missile Defense System (BMDS). It 
        enables surface combatants to support ground-based sensors and 
        provides a capability to intercept short- and medium-range 
        ballistic missiles with ship-based interceptors (SM-3). The 
        Sea-Based Terminal effort will provide the ability to engage 
        Short Range Ballistic Missiles (SRBMs) with modified SM-2 Blk 
        IV missiles from Aegis BMD capable ships.
          In May, 2006, U.S.S. Lake Erie (CG 70) successfully engaged 
        and intercepted a LANCE short-range test target with a modified 
        SM-2 Block IV missile in a Navy-sponsored BMD demonstration. As 
        a result, the Navy is modifying the remaining inventory of 100 
        SM-2 Block IV missiles, and MDA is modifying the Aegis BMD 
        program to support sea-based terminal engagements. In June, 
        2006, Navy successfully achieved a second engagement of a 
        separating SRBM target with the AEGIS BMD system.
          Last week, the Navy successfully engaged and destroyed a non-
        separating exo-atmospheric short-range ballistic missile, while 
        simultaneously engaging a low altitude cruise missile. This 
        successful engagement brings the tally to 8 successful 
        intercepts in 10 flight tests and underscores the value of this 
        sea-borne ballistic missile defense capability in an era of 
        rapidly proliferating ballistic missile hardware and 
        technology.
         Research and Development. To achieve the speed of war 
        Navy is pursuing Innovative Naval Prototypes--revolutionary 
        ``game changers'' for future naval warfare. These initiatives 
        have resulted in the development of an electromagnetic rail-gun 
        prototype; new concepts for persistent, netted, littoral anti-
        submarine warfare; technologies to enable seabasing; and the 
        naval tactical utilization of space.
         Public Shipyard Loading. As we work with industry on 
        shipbuilding cost reduction, we must ensure legislation and 
        policy support best business practices and efficiencies. 
        Apportioning work based upon funding quotas to drive 
        workloading in public naval shipyards potentially diverts 
        efficiency opportunities away from the private sector. Public 
        yards provide vital services for nuclear propulsion and 
        submarine work, and these critical competencies must be 
        maintained. However, our first priorities in shipyard loading 
        should be quality, efficiency, and cost savings. We seek your 
        assistance in removing restrictions on our workloading 
        flexibility.

    Additional information on some of Navy's priority warfighting 
programs is offered in the attached Annex I.

                               CONCLUSION

    Our Navy is truly a bargain, costing the taxpayers less than 1 
percent of GDP. But as we strive to sustain combat readiness, build a 
fleet for the future and develop 21st century leaders, we cannot allow 
ourselves to take this for granted. We must be mindful of the need to 
maintain a strong Navy now, and after our ground forces return home.
    It has been just over 20 years since Congress passed the Goldwater-
Nichols Department of Defense Reorganization Act of 1986, subsequently 
signed into law by President Reagan. While this landmark legislation 
established a clean chain of command running from the President through 
the Secretary of Defense and Chairman of the Joint Chiefs directly to 
the unified combatant commanders, and increased synergy among services 
by providing for shared procurement and development of technologies, it 
also precluded Service Chiefs from participating in the acquisition 
process beyond the identification of requirements.
    Without direct involvement in the entire acquisition cycle, Service 
Chiefs have little control over the mechanisms that drive efficiencies 
and best business practice in our major acquisition programs. Yet, the 
chiefs bear the responsibility of providing the right capabilities and 
capacity to meet the demands of our combatant commanders. I believe we 
should explore putting the Service Chiefs, and their military 
expertise, back into the acquisition chain of command and to hold them 
accountable for their procurement programs.
    Our Nation depends upon a strong Navy with the global reach and 
persistent presence needed to provide deterrence, access, and 
assurance, while delivering lethal warfighting capacity whenever and 
wherever it is needed. Our Navy is fighting the global war on terror 
while at the same time providing a Strategic Reserve worldwide for the 
President and our unified and combatant commanders. As we assess the 
risks associated with the dynamic security challenges that face us, we 
must ensure we have the Battle Force, the people, and the combat 
readiness we need to win our Nation's wars.
    Simply reacting to change is no longer an acceptable course of 
action if our Navy is to successfully wage asymmetric warfare and 
simultaneously deter regional and transnational threats: Two 
Challenges, One Fleet. Our Nation's security and prosperity depend upon 
keeping our shores safe and the world's maritime highways open and 
free.
      
    
    
      
    
    
      
    
    
      
    
    
      
    
    
      
    
    
      
    
    
      
    
    
      
    
    
      
    
    
      
    
    
      
    
    
      
    
    
      
    
    
      
    
    
      
    
    
      
    
    
      
    Senator Lieberman. Thank you. I will proceed.
    I want to get back to some of the questions I raised in my 
opening statement here about the stress on the capital programs 
of the Navy. I mentioned we are in danger of falling below the 
Navy's own requirement of having 48 attack submarines for a 14-
year period beginning in 2020. It sounds a long way away, but 
it is not that long away, and unless we start to act on it it 
is going to be a problem for us.
    In 2028, the number of attack submarines is expected to 
fall to 40 under the current shipbuilding plan, not only below 
the Navy's current requirement, but also far below the 
historically estimated need of submarines. In fact, in 1999, 
just 8 years ago, the Joint Chiefs of Staff (JCS) concluded 
that the Navy needed to have 55 attack submarines in the near-
term and 68 to 72 subs by the middle of the next decade. So we 
are obviously far short of that estimate.
    I say parenthetically what you know because you live with 
it. Namely, that the current 30-year shipbuilding plan calls 
for maintaining a 313-ship fleet as a minimum. In recent years, 
the estimates of the necessary fleet size from respected people 
have gone as high as 380. Meanwhile, the current Navy stands at 
about 279 ships.
    So I say all this to just say again that we have a problem 
and in my opinion we are not spending enough. The recent 
incident, which has been publicly described, with China and a 
sub coming into the area where the Kitty Hawk Battle Group was 
and public reports that China is producing as many as two and a 
half subs per year and is rapidly closing the overall fleet 
strength gap, seems to indicate to me anyway that we need a 
much greater number of ships and subs than we are currently 
procuring.
    Admiral, I wanted to ask you to respond to this question. 
The Navy has repeatedly testified that it needs 2 years of 
advance procurement funding before construction in a given sub 
in order to have the parts that require a long lead time. 
However, the Congressional Research Service has said that the 
2-year advance procurement is not necessary, that Congress can 
fund the entire sub construction program in a single year, 
which means that the finished product would take 2 years longer 
at the back end. In fact, that was done in 1988 when Congress 
funded the construction of two aircraft carriers in a single 
year, including advance procurement.
    So, acknowledging both the budget pressure you are under 
and the need in my opinion to accelerate to 2009 the date by 
which we start building two subs a year, provided we enter into 
a multi-year contract to save costs, why should Congress not 
begin to fund two subs a year in 2009?
    Admiral Mullen. Senator, the basis for this, as you 
indicated, is the 313-ship future force structure plan. We are 
275 ships today. By the end of the year, I actually hope in the 
commissioning, one of which is later this week, to head north 
in terms of stopping the free fall. We talked earlier about, or 
I have talked consistently about having a balanced fleet. The 
48 submarines was the warfighting analysis that we went through 
extensively and I am very comfortable with that number and very 
comfortable with that number against the 1999 JCS study.
    That said, the plan you speak to, we do fall to 40 
submarines. We have looked in the last year at ways to mitigate 
that and we are looking at possibilities of extending some hull 
life for a deployment, for an additional deployment. The hull 
lives of our nuclear attack submarines have gone from 30 years 
to 33 and now it looks as though there is a possibility some of 
them could be extended as one way.
    We want to reduce the time it takes to construct the 
Virginia class submarine from 72 months to 60 months. That 
makes more submarines available. I also have the option of 
keeping them deployed longer for a period of time to mitigate 
that.
    With reasonable assumptions about those three specific 
possibilities, I can mitigate that eight submarine gap that you 
described in that timeframe down to about three submarines. We 
will continue to work that. So as I indicated, we would look to 
mitigate this. We are working very hard on that and we 
certainly intend to do that.
    But I share your concern in your opening statement about 
the pressure. I have been doing these budgets since the mid-
1990s and we are, the Navy now, I am under extraordinary 
pressure across my people accounts, my operations accounts, as 
well as my procurement accounts, and the heart of those 
procurement accounts are ships, submarines, and airplanes, and 
balancing that in the environment in which I am finding myself 
right now is a real challenge.
    The cost growth we cannot tolerate or we are not going to 
be able to build the ships, the cost growth you speak to in 
LCS; we are not going to be able to meet this plan. We have to 
control that. So we are working hard in a very constrained 
environment to get there, and I am comfortable that we have 
worked hard in these mitigation areas, but it is early and it 
is still a concern.
    Senator Lieberman. I appreciate that we share that concern. 
I do want to say that the very mitigating circumstances, the 
program to mitigate the impact of a gap where we fall 
substantially below the 48 submarines, is really a pressure 
that we ought not to be putting you under, and frankly the 
submarine force. I worry about whether we are pushing the subs 
structurally beyond what they can handle. I am certainly 
worried if one of the mitigating policies is to extend 
deployments, what that will do to the morale of the submarine 
force because, as you well know, they already deploy at a 
pretty good rate.
    Admiral Mullen. Well, Senator, they would not be major 
extensions. This is a month or 2. It is not an exceptional 
period of time. We certainly would never take the risk, if 
there was any concern with material failure, would not do that.
    I did not answer your question about can we buy it all in 1 
year. The 3-year buy is basically a function of, obviously, 
affordability in a given year and also what I can execute to 
build the submarine. Clearly, that has been how a submarine has 
been built and the time line that we have had it. Could you 
appropriate all the money to do that or could we, could the 
Hill do that? Yes, absolutely. But the challenge will be 
executing that money in a meaningful way, and so it has been 
that, again it has been that balance.
    We have done that with other programs, but that has been 
it, the way we have built submarines.
    Senator Lieberman. My time is up and I thank you. We will 
continue on this exchange. We have been going at it for a few 
years already.
    But I do want to say with some pride, and also to express 
my appreciation to the Navy, that the submarine building 
program has been going forward at a very good cost control, on 
a cost control basis, and the speed of delivery. Everything is 
relative, but when we start to talk about getting the cost of a 
submarine down to $2 billion, which it looks like we can do, 
that is a lot of money. But compared to some of the other 
shipbuilding programs, it is not so bad.
    Admiral Mullen. Senator, the other thing, and I will try 
not to fill this up, but if I buy a $2 billion submarine in 
2009, get to two a year, I have nothing in 2010 and 2011. I 
have no resources applied against that. So the program comes 
back to me to fill that up. Again, we are in a plan right now 
to get to two in 2012. That is several billion dollars, $4 to 
$5 billion that I currently do not have in the program.
    Senator Lieberman. Well, if you and I and a few others can 
get to two subs in 2009, we will take care of 2010 and 2011.
    Admiral Mullen. Yes, sir.
    Senator Lieberman. That is an expression of faith.
    Admiral Mullen. Yes, sir.
    Senator Lieberman. Senator Thune.
    Senator Thune. I have a feeling submarines are going to be 
really well-covered on this subcommittee.
    A question for you, Admiral, or for Secretary Winter, and 
that has to do with affordability of the LCS. It is critical in 
order to achieve the large numbers--55 ships, I think, is the 
goal that the Navy has determined it needs--that we start 
making some headway here. I harken back, I guess, to what the 
plan was for affordability was. One, keep it simple in its 
design; do not change the requirements; maximize competition; 
and leverage the smaller shipyards, which would be more 
efficient, building smaller, simple ships, and speed up the 
process to avoid the cost growth that often comes with time.
    I think the full committee and this subcommittee in 
particular has been in your corner on affordability. But we 
appear to be on a path that doubles the $220 million estimate 
for these ships. Mr. Secretary, I appreciate your efforts to 
stabilize this program, but I would like to have you explain, 
if you could, how the Navy and the industry's original 
estimates ran so far askew. Second, since the Navy's estimates 
indicate cost growth for both industry teams building their 
first ship, why has the Navy only taken corrective action on 
one contract and how do you intend to control cost for the 
remaining ships under both contracts?
    Secretary Winter. Sir, let me address both questions there. 
First of all, relative to the reasons that we are in a cost 
overrun situation, I think it really is due to the over 
optimism that was created at the beginning of the program. I 
believe that as we look backwards we were not as realistic as 
perhaps we should have been relative to the cost estimates, in 
particular the cost estimates for the lead ships. We are now 
having to deal with that and one of the unfortunate aspects of 
initiating a contract which is underfunded is that often things 
are not done as well as they should be in the beginning, and it 
is at the early stages of the program where much can be done to 
reduce the overall cost of a ship.
    I do believe, though, that with a total buy on the 
magnitude of 55 ships, which is the current program, there is 
huge opportunity out there to be able to motivate the type of 
business case, to provide the rewards that industry would be 
looking for, for a significant investment in a modern 
production capability, and in fact we may be able to afford two 
production capabilities. That would enable us to work through a 
leader-follower arrangement and be able to maintain competition 
in the long run.
    Working through the issues that we are going through right 
now, developing a competitive base, and being able to leverage 
the quantity buys that we are talking about in the future, all 
will hopefully lead us to a more affordable cost position on 
this particular vessel.
    Relative to the General Dynamics (GD) position and compared 
to the Lockheed position, we have established formal tripwires, 
if you will, associated with the performance parameters that GD 
is engaged in right now and Lockheed has already worked 
through. Should GD exceed any of those tripwires, it is our 
intention to pursue the same remedies that we sought with 
Lockheed Martin relative to containing their costs and seeking 
a renegotiation of the contract.
    At this point in time, GD has not exceeded any of those 
tripwires. I will note that we have kept those tripwires, the 
specifics there, confidential and have not shared them with the 
contractor, specifically to ensure that we have an honest and 
open assessment and there is no opportunity or motivation for 
gaming any of the particular parameters associated with that.
    Senator Thune. The contracts for both industry teams place 
the Navy in the position of financing 100 percent of the cost 
overrun. How do you balance the risk on future major programs 
to avoid finding ourselves in a similar position?
    Secretary Winter. I believe, sir, in future major programs, 
in the production phase at least, we very much need to go to 
cost structures, fixed-price incentive type structures, which 
enable us to share the cost risk appropriately between the 
contractor and the Navy. When we are talking about initial 
development phases, where there are very high uncertainties and 
it is difficult to obtain a fixed-price bid from a contractor, 
we will probably still have to go with cost reimbursable 
contracts. But even there, there are mechanisms that are 
available to us to provide cost and schedule incentives that 
share that risk with the contractor.
    Senator Thune. Given the cost pressures on the shipbuilding 
program, what impact do the increased cost and delays in the 
LCS program have on the balance of the Navy's plan?
    Secretary Winter. Well, the significant impact that it has 
had is the need to reprogram or request reprogramming authority 
for the fiscal year 2007 funding to be able to be used for the 
completion of the vessels that still are under contract. In the 
out years, we are hopeful that the cost reductions associated 
with the strategy we are going to with the selected 
configuration and the quantity buy that will enable the cost 
efficiencies associated with a modern production facility, that 
those mechanisms will enable us to minimize the cost impact to 
the overall shipbuilding program.
    We need to go through that, though. We need to understand 
exactly how much we are going to be able to get by way of 
investment in those facilities and the leverage that that will 
provide us. But I am very hopeful that we will be able to 
recoup a significant amount of the increase in cost.
    Senator Thune. I want to jump to one other subject here 
quickly and that is the Joint Strike Fighter (JSF) gap. The 
Government Accountability Office recently released a study 
titled ``Tactical Aircraft: DOD Needs a Joint Integrated 
Investment Strategy.'' It made several conclusions: One, the 
Department of Defense (DOD) does not have a single integrated 
investment plan for recapitalizing and modernizing its tactical 
air forces; and that without a joint integrated investment 
strategy it is difficult to evaluate the severity of capability 
gaps or, alternatively, areas of redundancy.
    In light of the Navy's concerns over a strike fighter gap, 
how do you respond to those findings? Given the Navy's 
additional competing need to recapitalize its fleet of ships, 
how would you assess affordability of the Navy's aviation 
procurement plans?
    Admiral Mullen. One of the things that came out of the 
shipbuilding effort that we put forth was to try to stabilize 
it. One of the results of that was the desire on the part of 
many senior leaders in the Navy to stabilize the aviation plan 
as well, because it too had seen instability in recent years. 
So we are about there right now, this year and next year, to 
basically figure out how many aircraft we need and how we can 
stabilize it, with the same underpinning philosophy, so that 
industry can plan, not have significant changes every year, and 
then produce what we need at best cost and in a timely way.
    Specifically for me, for the Navy, the strike fighter 
shortfall--and I think your initial number was on the order of 
110 planes. I have seen numbers as low as 40 or 50 and as high 
as over 200. The numbers I am very comfortable with is a 
shortfall starting in about 8 to 10 years of 47 to 71 planes, 
depending on whether we buy 40 or 50 a year at a certain price. 
The highest numbers are at a very low production rate, at a 
very high price.
    From the standpoint of the programs that I need, I need the 
JSF. I need it for its range, its payload, its stealth, its 
sustainability. So I am committed to that. Where I find myself 
is in the middle here, because I find myself buying more F-18 
Es and Fs, and they are great airplanes, but they are not the 
planes I need to populate the entirety of my air wings in the 
future. I have to get to JSF and that is the plan right now.
    I will not talk about the DOD strategy, but I can tell you 
within the Navy the strategy is to get to JSF as quickly as we 
can, and yet there are some acquisition challenges we want to 
be mindful of with where this program is as well.
    I also have a challenge, a very clear challenge, with Jim 
Conway and I, the Commandant of the Marine Corps, because I 
basically fund Marine Corps aviation, and how we balance that 
inside the requirements that we both have is also a significant 
challenge. He and I are committed to working through that, and 
that is part of this shortfall as well.
    So I recognize the shortfall is there. I know we have to 
stabilize this plan in the very near future. But it is going to 
take a significant amount of additional procurement investment 
to get there and really mitigate that shortfall.
    Senator Thune. Thank you.
    Thank you, Mr. Chairman.
    Senator Lieberman. Thanks, Senator Thune.
    Senator Reed.
    Senator Reed. Thank you very much, Mr. Chairman. Senator 
Lieberman has asked these wonderful questions about submarines. 
He has grasped the mettle of naval policy, the submarine. It is 
the most key element, so thank you.
    Senator Lieberman. We stand together.
    Senator Reed. We stand together.
    Mr. Secretary and Admiral Mullen, thank you not only for 
being here today, but for your great service to the Nation. 
Following on this issue of submarines, we have talked a lot in 
this open session about force structure, but there is also the 
industrial base issue, which is absolutely critical, not just 
to submarine construction, but to all naval shipbuilding 
programs.
    One of the areas of concern is that this is the first time 
in many, many years we have not had an active design program 
for a submarine. The recent RAND report suggested the that 
design for the new Trident, the new ballistic missile 
submarine, be accelerated. Mr. Secretary and Admiral, could you 
comment on that?
    Secretary Winter. Yes, Senator, pleased to. We have 
recently been going through several iterations of a plan to 
create the next generation strategic deterrent for the Navy. 
One of the things that I have been fairly insistent on is 
ensuring that that is a complete integrated strategic plan, 
going through everything from the warhead to the missile to the 
boat itself. I think we now have a good laydown of a plan. We 
have worked through the aspects with United States Strategic 
Command in terms of ensuring that we have a current set of 
requirements and a good forecast of where those requirements 
may evolve in the future, both on the nuclear and the non-
nuclear side. That will be factored into the overall design 
study activities for the future, the Ohio class replacement, if 
you will, activities.
    Initially, those will be mostly design studies as we go 
through the overall assessment of alternatives that can provide 
the basis for that strategic deterrent, and it will later on 
evolve into preliminary design efforts for the replacement 
activity. We do want to focus on getting to the right objective 
in the long-term and making sure that we have a good systems 
engineering process that we are factoring through. With that, 
we will phase in the individual design activities as the 
requirements support.
    Senator Reed. Thank you, Mr. Secretary.
    Admiral, do you have any comments?
    Admiral Mullen. Well, I would only echo that and say we 
recognize the criticality of this industry base or the design 
base. We are very committed, and Secretary Winter has led this 
effort, to really understand where we are and how we sustain 
it, which includes, could include various options. It is 
underpinned by the belief that if we lose it we cannot get it 
back, and the Nation cannot afford that.
    Senator Reed. Thank you.
    Senator Lieberman pointed out that there has been some 
significant advances in lowering the cost of submarine 
construction. In fact, the selected acquisition report 
estimated a reduction of about 3 percent of the total Virginia 
class submarine program. That I think is significant and I hope 
you share that feeling.
    But second, there are also opportunities within that cost 
reduction for additional research and design work to further 
accelerate reductions. Is that something that you are 
considering, Mr. Secretary or Admiral?
    Secretary Winter. Yes, sir, we are considering both 
additional research and development activity. As you are 
probably aware, we have a number of efforts going on right now 
in terms of design modifications for the Virginia class, which 
are principally oriented towards reduction of costs, design for 
production, enhancements for that vessel. We are also engaged 
in a number of activities in terms of advanced submarine design 
and construction, including some promising activities in 
coordination with the Defense Advanced Research Projects 
Agency.
    Senator Reed. Thank you, Mr. Secretary.
    Admiral, let me ask another question. That is, as we both 
understand, our colleagues in the House adopted a measure that 
I believe would fund an additional set of Virginia class 
components, not specific to a hull.
    Secretary Winter. Yes, sir.
    Admiral Mullen, is that an approach you think has merit?
    Admiral Mullen. I do. I think it does have merit. As you 
said, it is not tied to a specific hull. In terms of--and it 
really gets to the issue that both you and Senator Lieberman 
are raising, which is to get the cost of the business down. It 
will allow us to continue to reduce risk over the long-term.
    I think it is an investment in long-term cost reduction 
here, both in this program and--one group I would really like 
to pat on the back is Electric Boat has done incredible work to 
help us reduce this cost. It is very clear when you go there 
that they are aboard to try to make this happen 
enthusiastically and as partners, and it is part of that 
strategic partnership I think we need to make to sustain, to 
have an outstanding industrial base for the future.
    Senator Reed. Thank you.
    Mr. Secretary, any further comments?
    Secretary Winter. I would just add that in shipbuilding in 
general, and in particular in submarine construction, 
maintaining the pace of work is very critical to efficient 
production. This is not a business where just-in-time inventory 
works. Having long lead items worked in advance so as to ensure 
that the pace of production is able to be maintained is a very 
good way of reducing the risk of program execution.
    Senator Reed. Thank you.
    One final question, Admiral Mullen, is that the Marine 
Corps stated a requirement for a minimum of 30 operational 
amphibious ships.
    Admiral Mullen. Right.
    Senator Reed. You are actually planning, as I understand 
it, to reduce the inventory of these ships. But your rationale 
I think for being able to meet the Marine Corps needs is that 
you can provide 100 percent readiness of these ships. Can I 
understand your rationale and is it feasible?
    Admiral Mullen. Yes, sir. General Conway and I certainly 
have agreed that the requirement is for the availability of 30 
ships. Based on historic availability, doing the math, you need 
33 to do that. Now, that is how we have done it historically. 
What I have committed to him is to provide him the lift he 
needs.
    We have 31 ships, amphibious ships, in the 30-year 
shipbuilding plan and we have to look at how we are going to 
fight in the future and specifically how we are going to move 
this 2.0 Marine Expeditionary Brigade into the fight. General 
Conway and I have agreed to figure out a way together to make 
that work. It could include higher availability of ships. Some 
of it depends on, obviously, the warning time you would have 
and that kind of thing.
    We are also building the Maritime Preposition Force Future 
ships, a significant investment there, which also has the 
potential to help us move marines to the fight. So there is an 
awful lot. It is a very complex set of variables and it is also 
a very important part of how we build the sea base for the 
future, which I think is going to become more and more 
important in terms of availability of footprint ashore and the 
requirement, not just from the Navy and Marine side but from a 
joint perspective, to be able to flow combat power through a 
sea base.
    Senator Reed. Thank you very much.
    Thank you, Mr. Chairman.
    Senator Lieberman. Thank you.
    Senator Collins.
    Senator Collins. Mr. Chairman, I would be remiss if I did 
not welcome our new ranking member. Perhaps the Senator from 
South Dakota will be more dispassionate on the Navy's budget 
than the rest of us around this table. But I hope that our new 
ranking member will take a great deal of guidance from the 
Senator from Connecticut, the Senator from Rhode Island, the 
Senator from Virginia, and the Senator from Maine on such 
issues as submarines, aircraft carriers, destroyers. I just 
want to offer you all the guidance in the world on those 
important issues, as we welcome you to your new and very 
important position.
    It is amazing to me that our last ranking Republican was 
from Missouri and now we have one from South Dakota. There 
seems to be a pattern here.
    Mr. Secretary, thank you so much for being here today. Last 
year we approved the funding for the dual lead ship design for 
the DDG-1000 and also funding for construction. This ship is 
obviously critical to the 313-ship plan that the CNO has put 
out. I am concerned that, although the design contracts were 
awarded to both yards in August of 2006, that the construction 
contracts have yet to be awarded.
    My concern is that this delay will begin to have an impact 
on the shipyard employees, on the vendor and subcontractor 
base. There is a lead time in getting the necessary 
subcontractor contracts in place and we cannot proceed with 
that until the contract is awarded. So this is a concern to me.
    I am also concerned that any further delays in the award of 
the construction contract will have an impact on overall cost 
and could well drive up costs.
    Could you update us on the status of the award of the 
construction contract?
    Secretary Winter. Yes, Senator. I asked for a short hold be 
placed on the award and contracting there to ensure that the 
lessons learned from LCS were properly factored into the DDG-
1000 contract. I have now been satisfied that that has been 
done and I recently authorized the Assistant Secretary of the 
Navy for Research, Development, and Acquisition to proceed to 
the finalization and definitization of those contracts.
    Senator Collins. Thank you. That is good news indeed. Do 
you have a timetable for going forward on the contract?
    Secretary Winter. I believe we are very close, in a matter 
of weeks hopefully. I would hesitate to give you a definitive 
schedule, but I would be happy to get you an update as soon as 
possible.
    Senator Collins. Thank you.
    [The information referred to follows:]

    On September 25, 2007, the Navy decided to resequence delivery of 
the first ship set of DDG-1000 mission systems government-furnished 
equipment (GFE) to General Dynamics Bath Iron Works (BIW) vice Northrop 
Grumman Ship Systems (NGSS). The Navy has received cost proposals from 
both BIW and NGSS reflecting the GFE resequencing and is entering 
negotiations with the two shipyards for lead ship production. The Navy 
anticipates completing negotiations no later than January 2008.

    Senator Collins. Admiral Mullen, we have talked many times 
about the reduced life cycle costs of the new DDG-1000 because 
of the reduced crew size and other efficiencies. We also have a 
challenge as far as extending the life, the useful life of the 
DDG-51 class and making sure that we get the full number of 
years originally envisioned in order to achieve your goal of 
the 313-ship fleet.
    Could you comment on the importance of modernizing that 
class of ships in order to achieve your goal?
    Admiral Mullen. Yes, ma'am. Absolutely vital. We have in 
the 2008 program both modernization money for the cruisers, the 
Aegis cruisers, as well as the Aegis destroyers. We do not have 
a good history here of modernizing our ships, and we cannot 
afford to do that. So it is vital that these programs be 
supported.
    I am not talking about just over here. Clearly that is 
important, but that is internal to the Navy. Historically, we 
do not have a good record of doing that. So we recognize that 
and I recognize that as part of this 313-ship plan, that we 
have to do that and get these ships to their hull life. 
Typically, it is when we decommission ships, it is not 
because--surface ships--it is not because their hulls are worn 
out; it is because their combat systems are not modernized. 
That is what we have to invest in and that is what this program 
is all about.
    Senator Collins. Thank you.
    Secretary Winter, in February, the Commander of Naval Sea 
Systems Command, Vice Admiral Paul Sullivan, briefed the Maine 
and New Hampshire delegations on the Navy's latest Naval 
Shipyard Business Plan for 2008 through 2013. I know this is an 
issue that you have put a great deal of time and effort into 
and that you have emphasized to Naval Sea Systems Command 
(NAVSEA) the need to use all four of the Navy's public 
shipyards as efficiently as possible. I am grateful for the 
personal effort that you have put into this plan.
    Now, obviously NAVSEA faces certain constraints in 
distributing workload among the four shipyards. But I am 
concerned upon reviewing the plan that the Navy's plan may not 
fully acknowledge the specializations that each of the 
shipyards has. For example, Portsmouth Naval Shipyard in 
Kittery, ME, its expertise is with attack submarines. It was 
also called the gold standard during the Base Realignment and 
Closures Commission. We are very proud of that.
    Puget Sound specializes in ballistic missile submarines. 
The Senator from Virginia's shipyard focuses on aircraft 
carriers. So there are different expertises that are available. 
Does the Navy intend to try to optimize the specific and 
unusual skill sets that each shipyard has so as to ensure that 
we get the best value as we allocate the work among the four 
shipyards?
    Secretary Winter. Thank you for the question, Senator. As 
you noted, I put a bit of personal time into this. I do feel a 
level of stewardship responsibility regarding all four of the 
yards.
    As you noted, we have requested that the Navy look at this 
from an optimization perspective and the overall objective here 
is to optimize the operational availability of the various 
ships in the most cost effective manner. Major consideration of 
that is the most effective utilization of the skills that are 
resident at each of the facilities. So that will be a very 
significant factor in terms of the allocation of availabilities 
to the individual yards, as well as the timing to be able to 
take maximum advantage of the work force that is resident at 
the individual yards.
    Senator Collins. Thank you. I look forward to continuing to 
work with you on all of these issues.
    Secretary Winter. I would be pleased to.
    Senator Collins. Thank you both.
    Senator Lieberman. Thank you, Senator Collins.
    Senator Webb, welcome.
    Senator Webb. Nice to be here, Mr. Chairman.
    Senator Lieberman. I note that, following the exchange 
between Senator Collins and Senator Thune, I never really 
stopped to notice this before, that all of us on this 
Subcommittee, both parties--this is a bipartisan inclination--
except for Senator Ensign and Senator Thune are coastal 
Senators.
    Senator Collins. I do not think that is a coincidence.
    Senator Lieberman. We are not running your time, Jim.
    Senator Webb. I would not be so optimistic about the 
Senator from South Dakota. I think there are rivers in South 
Dakota.
    Senator Thune. Thank you very much.
    Senator Webb. We are going to soon see the Riverine Warfare 
Center in Sioux City. I can remember when I was Secretary of 
the Navy 20 years ago we spent a lot of time talking to Senator 
Stevens about strategic homeporting in Alaska.
    Senator Thune. Mr. Chairman, I would show great deference 
to all my colleagues, coastal state colleagues here, on 
shipbuilding issues and only ask in exchange that you show 
deference to me when it comes to farm programs. [Laughter.]
    Senator Lieberman. It is a deal.
    Senator Webb's time should start now.
    Senator Webb. Thank you, Mr. Chairman.
    Mr. Secretary, first I would like to congratulate you and 
express my appreciation for the work you have done on trying to 
tighten up the business side of this. We cannot increase the 
force structure in the way that many of us would like without 
having the efficiencies built into it. I think that what you 
have done over the past couple of months is very commendable.
    Secretary Winter. Thank you, sir.
    Senator Webb. As a starting point on these force structure 
issues, I have to look back to the time when Admiral Mullen and 
I graduated from the Naval Academy 39 years ago. We had 932, I 
think, ships in the United States Navy. It went down to 479 in 
the post-Vietnam drawdown. We got it up to 568 when I was 
Secretary of the Navy. We are down to 270----
    Admiral Mullen. '5.
    Senator Webb.--275 Navy ships, which is roughly half that, 
now. There are different eras and different national 
requirements. But I think truly today when you look at what has 
happened, we have a number of budget restraints that are based 
on the inevitable strategic mousetrap, from the ground forces 
being burned up in Iraq, weapons system, force structure, 
replenishment, all those sorts of things. Inevitably when this 
happened, our strategic forces tend to pay.
    I would like to ask, Admiral Mullen, in an ideal strategic 
world, not in a budgetary sense but in an ideal strategic 
world, looking at the responsibilities of the United States 
around the world, where would you see the Navy force structure?
    Admiral Mullen. Certainly north of 313 Navy ships. Senator 
Lieberman or--I am sorry, Senator Thune I think talked about 
380 as well, and that was one of the estimates that was out 
there 3 or 4 years ago. I think you hit at one of the most 
vital parts of how we have these discussions in the world that 
we are living in right now, which is what is the strategic 
appetite and how are we going to resource it.
    I am extremely concerned about the long-term ability of 
naval forces, Navy and Marine Corps, to be out and about in the 
ways that we need to be in the unpredictable world that we 
have. That said, back to the point the Secretary made, our 
operational availability right now is a whole lot better than 
it used to be. We have invested an awful lot of money and 
resources. So today 40 percent of the ships that we have are 
deployed, which is a very high number and they are doing 
exceptionally well.
    313 Navy ships was really minimum risk. I have not done any 
current analysis, sort of unbounded, to say without those 
bounds what should it be. But I would describe it more as the 
maximum acceptable risk is where we are right now, and I am 
very comfortable saying that.
    Senator Webb. What was the end result of the experiment I 
was reading about that was in the papers a year or 2 ago with 
rotating ships' crews and keeping ships themselves on station?
    Admiral Mullen. We call that Sea Swap, and we just finished 
the second phase of that, the second series of three ships. 
There are many lessons that came out of that. Probably the most 
significant is that it does pretty well on cruisers, 
destroyers, and smaller ships. Trying to scale it up to the big 
ships is going to be a difficult problem.
    But I think in the manning constructs, we are in the middle 
of changing sea-shore rotation. I think in manning constructs 
in the future that there will be pieces of that that we will 
roll into. I talked about availability of ships, even 
availability of submarines. Would we consider rotating a crew 
as opposed to bringing a submarine back off a deployment, for 
example, or a cruiser or a destroyer? I think those are things 
that come out of the lessons that we learned there to make 
these incredibly important platforms and large capital 
investments mean more to what we are doing in terms of our 
overall country's security.
    Senator Webb. Potentially be a force structure multiplier.
    Admiral Mullen. Yes, sir, absolutely.
    Senator Webb. Secretary Winter, you used two phrases which 
I think were pretty important in terms of how we are making 
these decisions. One is that we are all fiduciaries here, 
because so much of this procurement cycle is beyond the next, 
say, 5 years, et cetera.
    The other is ``pace of work.'' I have a question relating 
to keeping this pace of work from falling into the bath tub and 
coming back out again when we lose so many good people. We have 
been told that the Newport News Shipyard, which is the largest 
employer in the entire Commonwealth of Virginia, that there is 
going to be one of these dips between 2009 and 2012 when a 
great percentage of work is done and before we pick up I 
believe on two submarine projects starting in fiscal year 2012.
    Is there a way for the Navy to take steps in conjunction 
with the business community to prevent that sort of hiatus?
    Secretary Winter. Well, sir, we have been working that in 
several aspects. First of all, I think the plan and the profile 
there of work has been pretty well understood and has been very 
stable for the last at least year. So there has been a basis of 
planning.
    Second of all, we are trying to utilize the one yard 
construct, which enables a sharing of personnel between the 
public and private yards in particular down in the Tidewater 
region.
    Thirdly, we will be looking very carefully at emergent 
opportunities for additional work availabilities that may come 
up within this time period and will see what we can do in terms 
of being able to use those to help retain the critical skills 
that are available at Newport News.
    Senator Webb. Thank you.
    Admiral Mullen, I would like to associate myself with the 
views of Senator Warner on this Oceana problem. He would have 
been here, but he is down with the Queen of England today.
    Senator Lieberman. That is what senior Senators get to do. 
I speak as a junior Senator.
    Senator Webb. He actually said he did this during the 
Bicentennial as well, so I guess he deserves a return visit.
    Senator Lieberman. But not during the Centennial.
    Senator Webb. That is right.
    Senator Warner mentioned his belief that the facility at 
Fort Pickett might be an acceptable alternative and it has the 
advantage of already being a government-owned facility with 
respect to clearances and that sort of thing. I know you have 
stated your views that this is outside of the tactical radius 
or the training radius that has been heretofore defined.
    But I am just wondering if you could clarify for us what 
your thoughts are on the different options that are available 
since that one site in North Carolina apparently is not going 
to work.
    Admiral Mullen. Yes, sir, and I appreciate the question. I 
was asked that--actually, I was down in Norfolk on Tuesday and 
I was asked that question. Clearly, we are--the requirement for 
the outlying field is a very significant one. I appreciate 
Senator Warner both making that offer and that we have--what I 
said was tied to the requirement at the time, which was we had 
drawn a line at 50 miles and obviously Fort Pickett is further 
away than that specifically.
    But what I also said in my statement and it did not 
necessarily register in all the quotes was that my lens is wide 
open on this. The Secretary has indicated in discussions with 
Senator Warner, we are willing to look at other options and 
certainly include Fort Pickett, and that is really where I am.
    The criteria that Fort Pickett was excluded from was back 
when we first considered outlying fields. We are having 
challenges clearly in North Carolina. We want to get this 
right. We are trying to balance it between two bases, Cherry 
Point and Oceana, which is what constrained us to some degree. 
But we are willing to look at all options at this point in 
time, and be consistent with the process that we have used 
today.
    Senator Webb. I appreciate your clarification.
    Admiral Mullen. Thank you, sir.
    Senator Webb. Thank you, Mr. Chairman.
    Senator Lieberman. Thank you very much, Senator Webb.
    Gentlemen, I think Senator Thune and I will go one or two 
more questions and then let you depart. I appreciate it very 
much.
    This is to Admiral Mullen. Just when I thought I got the 
pronunciation right as ``Litt-OR-al,'' you said ``LITT-or-al'' 
just a while back, and I want you to clarify for me which is 
the preferred pronunciation of the LCS.
    Secretary Winter. We disagree, sir. [Laughter.]
    Admiral Mullen. I actually use both terms.
    Senator Lieberman. We have noticed.
    Admiral Mullen. How about a waffle answer?
    Senator Lieberman. But you do not waffle on anything else, 
so that is all right.
    Anyway, we talked about the concerns about the escalation 
in cost of the LCS program, heading up to close to two times, 
am I right, what we originally hoped it would be? We have some 
very big acquisition programs, carriers and destroyers, 
actually multi-billion dollar programs, and of course the subs, 
which we talked about.
    Admiral, I appreciate very much what you said about 
Electric Boat (EB). That will mean a lot to the workers up 
there. That is appreciated.
    Secretary Winter, let me ask you more generally considering 
this, and particularly the problems on the LCS. I have great 
regard for your management abilities. What steps are you taking 
or are you planning to take to improve the Navy's ability to 
acquire these major systems on time and on cost? In some sense, 
I am not looking for compliments for EB, but what--if you care 
to--you do not have to answer. But I am curious, what worked 
there and what lessons can you draw from that to the others?
    Secretary Winter. Well, sir, I think there are a number of 
factors. First of all, we have to have a very firm 
understanding of what it is that we are buying. That to a great 
extent has to be defined by the Navy at the outset and 
eventually handed over to the industrial team for the final 
definitization of design compatible with the construction 
facilities.
    Second of all, we have to have an agreed to, realistic cost 
and schedule basis for the program. I think we have gone a long 
way to doing that on the Virginia class.
    Lastly, I think we need to have an acquisition force that 
is properly sized and skilled, with the right backgrounds to 
engage in the oversight of the activity. In particular, I 
believe that on the naval reactor side with the submarine 
efforts we have a very stable and mature acquisition 
organization and it has been able to provide that type of 
oversight. You couple that in with established and well 
understood relationships between the Navy and the contractor 
team and I think you have all the possibilities of a very 
efficient and effective acquisition program.
    Senator Lieberman. That is interesting. So part of it is 
the experience of the acquisition force?
    Secretary Winter. Most definitely, sir. I think that we 
have seen that, not only in the Navy, but I think we have seen 
that in other services as well.
    Senator Lieberman. We have for sure. So what do you do to 
try to make sure you improve the acquisition force across the 
board?
    Secretary Winter. Well, sir, I think it is going to take a 
while to do this, but I believe that we have to emphasize and 
accelerate the process of training individuals in acquisition. 
I think we have to make sure that the individuals who are 
selected for that have the basic engineering and experience in 
the development of ships from an operator's perspective before 
they get involved in the acquisition side.
    I think we have to recognize that it is a multi-year 
investment, that we have to take the individuals, give them the 
various opportunities in programs which are ongoing, and give 
them the opportunity to build up the experience base before 
they take responsibility for either an existing program or in 
particular a new program.
    In that regard, sir, if I could, I think we have to 
recognize that when we start new programs there are additional 
demands that are placed on the acquisition team, and in 
particular in those circumstances we have to make sure that we 
provide some of our best and most experienced individuals to be 
able to lead that from the Navy perspective.
    Senator Lieberman. Thanks. Well, we are going to keep in 
touch with you on that and urge you to be as demanding as you 
have to be to have this be what you want it to be.
    I have one more sort of open-ended question, but I am going 
to save it until the end for Admiral Mullen and yield to 
Senator Thune at this time.
    Senator Thune. Thank you, Mr. Chairman.
    Senator Warner, who could not be here today, had asked that 
there be two letters included in the record. The first is a 
letter from him to the Secretary dated April 19, 2007, which 
urges the Navy to consider existing military locations in 
Virginia, including Fort Pickett, for a new outlying landing 
field (OLF). The second is a letter from Senator Warner to the 
Secretary dated April 20, 2007, which thanks the Secretary for 
his time in a phone conversation where the Secretary confirmed 
that the Navy would consider locations in Virginia, including 
Fort Pickett, as a viable option for an OLF.
    [The information referred to follows:]
      
    
    
      
    
    
      
    Senator Thune. I would like to ask a question. Admiral 
Mullen, the ongoing operations in Iraq and the demand for 
ground forces has resulted in the deployment of thousands of 
sailors and individual augmentees to United States Central 
Command (CENTCOM). You have pointed to the contributions of 
these individuals with pride, noting that there are more 
sailors supporting operations in the ground in the CENTCOM area 
of responsibility (AOR), over 12,000, than the Navy has at sea 
in that AOR.
    We have seen reports from General Mosely, however, 
expressing concern that ongoing demand for these augmentees is 
hurting morale and retention in the Air Force. Similar concerns 
could be expressed by Navy personnel who do not feel that they 
signed up for ground duty. Are the demands being placed on the 
Navy for individual augmentees excessive or becoming difficult 
to meet?
    Admiral Mullen. No, sir, they are not. In fact, I was with 
many of them over the holidays in both Iraq and Afghanistan and 
they are making a huge difference. They know they are making a 
difference and they are very proud of what they are doing. I 
have tried to keep a very close eye on what I would call the 
red lines that would give me concern, and we are just not there 
yet.
    Senator Thune. Do you see any negative impact on morale and 
retention as a result of ongoing operations?
    Admiral Mullen. No, sir. In fact, our recruiting numbers 
are good, our retention numbers are good. I think it was at 
actually the Senate hearing I did last time where I indicated 
for the first time I had seen first-term retention this year 
dip below 50 percent. That is our goal. That really got my 
attention. I am happy to report that the monthly that just came 
in a couple days ago, it is back above 50 percent for this 
year.
    So we paid a lot of attention to that, and I just have not 
seen the kind of impact. In fact, the individual augmentees 
that I have spoken to, whether they are in Guantanamo Bay, the 
Horn of Africa, Bahrain, Iraq, Afghanistan, have been 
incredibly positive. It is almost 13,000; it is over 13,000 
right now today.
    Senator Thune. Given that number, do you consider a maximum 
number of sailors that can be assigned to Army and Marine Corps 
units in CENTCOM without harmful effects on the readiness of 
the Navy? Do you have a threshold or a maximum number?
    Admiral Mullen. We work pretty hard to try to predict how 
many more there will be and there has been a gradual increase. 
But I do not see anything in the future over the next 2 or 3 
years as I am able to predict that requirement that is going to 
raise this level dramatically higher so that it would have that 
kind of impact.
    Senator Thune. Thank you, Mr. Chairman.
    Senator Lieberman. Thanks, Senator Thune. Thanks very much.
    I have a question that is not the particular purview of 
this subcommittee, but rather of our Personnel Subcommittee. 
You are still reducing Navy personnel, are you not?
    Admiral Mullen. Yes, sir.
    Senator Lieberman. What numbers are you at now?
    Admiral Mullen. At the end of 2007, I will be at about 
340,000. We are actually asking for another 12,000 to come down 
in the 2008 budget. That gets me to about 328,000. I am going 
to settle out at about, between 320 and 325, is the plan, and 
we have a plan to do that.
    Senator Lieberman. You are confident that you can handle 
what we are asking you to do with those numbers?
    Admiral Mullen. Yes, sir. But I am at that point, I have 
gotten to a point where that is enough. You are hitting at what 
I believe is as big an issue as we have in the Department, is 
how we are going to compensate and how we resource that aspect. 
Our most vital part of our overall Navy--actually, it is all 
the services--are people, and the costs continue to go up. 
Adequately making sure we have the resources to do that in the 
future is really going to be critical.
    Senator Lieberman. Absolutely.
    Let me just ask you this final open-ended question. It is 
about the future. Here we are very focused on Iraq, 
Afghanistan, the threat of the global war on terrorism and al 
Qaeda. We are investing in a lot of programs--and I am speaking 
about the Navy now, of course--that, they have some real 
significant relevance, of course, to the global war on 
terrorism. But some of these I know are also against a hedge of 
a future peer competitor. Even now, in the global war on 
terrorism, we have increasing worries about Iran.
    I wonder if you would talk a little about what you see as 
the kind of future geopolitical, geostrategic environment that 
you are asking us to fund the Navy to meet, and specifically, 
to the extent that you are able in open session, talk a little 
bit about China and Iran?
    Admiral Mullen. I believe without, obviously, getting into 
the very, very, getting into the middle of the political debate 
about Iraq--and I believed this for years--that there will be a 
time when we come out of Iraq and out of Afghanistan. I think 
it is--and I have talked to Jim Conway about this and my open-
ended--I mean, my open arms to him is welcome aboard, let us 
get under way, because I think it is really vital for the 
country to be out and about, which is what the Navy and Marine 
Corps can do, and it does it obviously with a very strong Navy.
    Very difficult to predict, just based on what our 
predictions have been in recent years, what is going to happen 
and where the difficulties might be. It gets back to this, one 
of the concepts that I talk about is this 1,000-ship Navy, 
global partnerships in a very dangerous world, where you have 
weapons, weapons of mass destruction, drugs, immigration 
challenges, fishing violations, etcetera, and 90 percent of 
what moves in and out of most countries in the world goes by 
sea. So secure sea lanes to afford the opportunity for those 
economies to thrive are vital.
    Navies do that and we know how to do that. Then 
specifically, the western Pacific is a vital region. Obviously 
you have both China and India, thriving new economies, and 
there is going to continue to be a global adjustment associated 
with those economic engines and the transparency of China's 
intent is not clear.
    You indicated earlier they are building 2 submarines a year 
or more than that, they are building 10 surface combatant ships 
a year or more than that. It has been very difficult to 
understand exactly why. They are building a Navy that is 
certainly more capable than the challenge they might have with 
Taiwan if we had a problem with the situation up near her, off 
the coast in Taiwan or near Taiwan.
    So it is the strategic intent specifically with her. I was 
recently in India and the focus there is very much on a more 
regional, broader--focus of the Indian Navy is a broader, 
regional focus, and they also share those kinds of concerns. So 
it is the transparency piece. China is buying technology, 
developing weapons, and creating challenges for us in other 
domains that I could not talk to in an open forum, that we are 
all very concerned about.
    That said, what Admiral Fallon did out there when he was 
United States Pacific Command, engaging military to military, I 
think is vital.
    With Iran, Iran sits at the heart of, obviously, the sea 
lane through which 60 percent of the world's oil resources 
travel. It is a vital, critical sea lane. We have been there, 
the United States Navy has been there since the late 1940s. We 
are going to be there a long time. Preserving that sea lane and 
preserving it so that a global economy can thrive is key as 
well.
    I am concerned about what Iran is speaking about, what they 
are doing. Their taking these 13 British sailors and marines 
recently is just another example. Their rhetoric is strong. 
Clearly they could--they have the capability to shut down that 
strait for a period of time.
    [Additional information follows:]

    During my testimony, I indicated concern about Iran's recent 
capture of the 13 British sailors and marines. I would like to correct 
the record to show that there were 15 British sailors and marines 
recently captured by Iran, not 13.

    I worry a lot about the Middle East, quite frankly, just 
the broader Middle East, outside of a discussion about Iraq and 
Afghanistan. Stability there is really critical. Naval forces 
as they are today, we have two carriers that are there today. 
Naval forces are a really important part of that stability.
    That does not even speak to what may happen in other parts 
of the world. We are engaged in Africa, east and west coast, as 
a Navy. We are engaged down in South America in a positive way, 
to prevent and deter. A strong Navy has always been a great 
deterrent and a great strength of this country, and that is why 
I am concerned about building the Navy that we need for the 
future.
    Senator Lieberman. Thanks for that very thoughtful answer. 
We are concerned, too, and we want to keep the Navy as strong 
as we possibly can.
    I thank you, Secretary Winter, for your testimony, for your 
service. Admiral Mullen, obviously the same to you.
    We are going to keep the record of the hearing open for 10 
days in case you want to add anything or we want to ask you a 
few more questions.
    Senator Thune, do you want to make any conclusion?
    Senator Thune. Just to also express my appreciation for 
your outstanding service, Admiral and Mr. Secretary. We thank 
you for all that you do and for those that serve under you. 
Please convey our deepest appreciation to them for their 
service.
    Secretary Winter. Thank you very much.
    Admiral Mullen. Thank you, sir.
    Senator Lieberman. Thank you. The hearing is adjourned.
    [Questions for the record with answers supplied follow:]

             Questions Submitted by Senator Saxby Chambliss

 SURFACE SHIP TORPEDO DEFENSE AND ANTI-TORPEDO TORPEDO DEFENSE SYSTEMS

    1. Senator Chambliss. Admiral Mullen, the Navy has previously 
responded to a prior congressional inquiry that torpedo defense is an 
important ship survivability capability, and included Surface Ship 
Torpedo Defense (SSTD) in the recent CNO unfunded priority submission. 
Recent Navy budget submissions and congressional staffer briefs 
indicate that the Navy has decremented the fiscal year 2008 SSTD Anti-
Torpedo Torpedo (ATT) developmental funding by half ($15 million) and 
that the AN/WSQ-11 torpedo defense system intended for high value units 
is no longer funded for development. Please explain the Navy's intent 
with respect to expeditiously fielding an improved torpedo defense 
capability for Navy ships, particularly high value ships most 
susceptible to a torpedo attack.
    Admiral Mullen. The Navy recognizes that improved SSTD capability 
using ATT is a funded requirement and is working to expeditiously 
deliver this capability in accordance with technology maturity and 
available resources. The Navy's intent is to initially integrate ATT 
capability on Ticonderoga class guided missile cruisers and Arleigh 
Burke class guided missile destroyers that are equipped with the SQQ-
89A(V)15 Combat System. These cruisers and destroyers (CRUDES) have 
fire control and launcher systems that are modifiable for the ATT 
application, and the SQQ-89A(V)15 configuration provides threat torpedo 
detection, classification, and localization (DCL) capability. 
Improvements to CRUDES DCL capability were planned for testing in 
fiscal year 2007, but this testing has been deferred to fiscal year 
2008 due to the unavailability of ships. Integration of the SSTD and 
its subsystems in CRUDES ships is a first step toward fielding an 
effective SSTD on high value, large deck ships. The Navy plans to 
leverage technologies developed and tested for CRUDES platforms to 
improve high value ship torpedo defense. The fiscal year 2008 budget 
submission reduced ATT development in favor of higher priority Navy 
programs and while evaluating DCL technology maturity. The impact of 
this reduction will be a 2-year delay to ATT initial operating 
capability. The Navy is willing to accept this risk in order to fund 
higher priority programs.


    2. Senator Chambliss. Admiral Mullen, Congress has continued to 
support development of the ATT capability. In light of recent funding 
decrements, please explain the Navy's intent and plan to field the ATT 
capability for SSTD protection.
    Admiral Mullen. The Navy's intent is to initially integrate ATT 
capability on Ticonderoga class guided missile cruisers and Arleigh 
Burke class guided missile destroyers that are equipped with the SQQ-
89A(V)15 Combat System. These CRUDES have fire control and launcher 
systems that are modifiable for the ATT application, and the SQQ-
89A(V)15 configuration provides threat torpedo detection, 
classification, and localization capability. The Navy plans to leverage 
technologies developed and tested for CRUDES platforms to make future 
improvements to other ship classes, including aircraft carriers.
    The Navy's plan is to utilize an evolutionary acquisition approach 
to deliver increments of ATT capability to the warfighters. Increment I 
plans to field the multi-mission hardware baseline and the first ATT 
software spiral to prosecute salvos of threat torpedoes. Increment II 
plans to field the software for enhanced salvo capability. Increment 
III plans to field the weapon and software for offensive Anti-Submarine 
Warfare capability. The Navy is drafting a capability development 
document and planning for an ATT Milestone B review in fiscal year 
2008.


    3. Senator Chambliss. Admiral Mullen, Congress has expressed 
concern regarding the increasing capability of threat torpedoes to 
engage surface ships, as well as the increased potential of the Chinese 
Navy's ability to engage surface ships with anti-ship torpedoes. The 
Navy has indicated that new construction ships (CVN, DDG-1000, LCS, 
etc.) will be outfitted with standard and effective torpedo 
countermeasures. However, recent Navy actions to reduce the SSTD 
developmental funding line and not fund the proposed AN/WSQ-11 system 
for Navy high value units appear counterproductive to enhancing the 
capability of Navy ships to defend themselves against a torpedo attack. 
Please explain the Navy's plan to provide each new construction class 
ship with a robust torpedo defense system.
    Admiral Mullen. The Navy intends to utilize the appropriate torpedo 
defenses to meet the unique requirements for each new construction ship 
class within available resources. As with other mission areas, the Navy 
will maximize the undersea defense capabilities of the Carrier Strike 
Group (CSG) by utilizing joint integrated operations.
    The Littoral Combat Ship (LCS) baseline design has space and weight 
reserved for a torpedo detection, classification, and localization 
(DCL) system that is compatible with the class's sprint speed as well 
as its space and weight requirements. The LCS Concept of Operations 
(CONOPS) minimizes time in submarine danger areas. Unmanned surface and 
subsurface vehicles are planned for threat submarine detection. Anti-
Submarine Warfare (ASW) helicopters will be used for threat submarine 
detection and prosecution prior to engagement with LCS in its mission 
areas. If LCS is alerted to a nearby threat submarine, it will exploit 
its high sprint speed and maneuverability to move to an area out of 
torpedo range. The Navy plans to leverage current and future 
development efforts to provide LCS with torpedo DCL and countermeasure 
capabilities.
    DDG-1000 will incorporate the Integrated Undersea Warfare (IUSW) 
suite with the AN/SLQ-25D (NIXIE), AN/SQQ-89A(V)15, and Launched 
Expendable Acoustic Decoy System (LEADS) for its baseline torpedo 
defense. Further, DDG-1000 is designed with space and weight reserve to 
accommodate the Anti-Torpedo Torpedo (ATT). These systems, incorporated 
into DDG-1000's Total Ship Computing Environment (TSCE), will integrate 
Undersea Warfare combat management, fire control, command and control, 
and defensive countermeasures, enabling DDG-1000 to engage undersea 
threats in both littoral and open ocean environments.
    Aircraft carrier (CVN) protection uses an integrated CSG approach 
for torpedo defense that includes early detection and prosecution of 
undersea threats by maritime
patrol aircraft, submarines, and CRUDES ships. CVN defensive capability 
is provided by the AN/SLQ-25C NIXIE system. To further improve high 
value ship torpedo defense in the future, the Navy plans to leverage 
technologies developed and tested for CRUDES platforms, including ATT.

    [Whereupon, at 4:48 p.m., the subcommittee adjourned.]

                                 
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