[Senate Hearing 110-394]
[From the U.S. Government Publishing Office]




                                                 S. Hrg. 110-394, Pt. 2

 
DEPARTMENT OF DEFENSE AUTHORIZATION FOR APPROPRIATIONS FOR FISCAL YEAR 
                                  2009

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

                                HEARINGS

                               before the

                      COMMITTEE ON ARMED SERVICES
                          UNITED STATES SENATE

                       ONE HUNDRED TENTH CONGRESS

                             SECOND SESSION

                                   ON

                                S. 3001

     TO AUTHORIZE APPROPRIATIONS FOR FISCAL YEAR 2009 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, AND FOR OTHER PURPOSES

                               ----------                              

                                 PART 2

                                SEAPOWER

                               ----------                              

                       MARCH 12 AND APRIL 8, 2008


         Printed for the use of the Committee on Armed Services
DEPARTMENT OF DEFENSE AUTHORIZATION FOR APPROPRIATIONS FOR FISCAL YEAR 
                         2009--Part 2  SEAPOWER

42-630 PDF

                                 ______

2008

                                                  S. Hrg. 110-394 Pt. 2

DEPARTMENT OF DEFENSE AUTHORIZATION FOR APPROPRIATIONS FOR FISCAL YEAR 
                                  2009

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

                                HEARINGS

                               before the

                      COMMITTEE ON ARMED SERVICES
                          UNITED STATES SENATE

                       ONE HUNDRED TENTH CONGRESS

                             SECOND SESSION

                                   ON

                                S. 3001

     TO AUTHORIZE APPROPRIATIONS FOR FISCAL YEAR 2009 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, AND FOR OTHER PURPOSES

                               __________

                                 PART 2

                                SEAPOWER

                               __________

                       MARCH 12 AND APRIL 8, 2008


         Printed for the use of the Committee on Armed Services


                     U.S. GOVERNMENT PRINTING OFFICE
42-630 PDF                 WASHINGTON DC:  2008
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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                 SAXBY CHAMBLISS, Georgia
E. BENJAMIN NELSON, Nebraska         LINDSEY O. GRAHAM, South Carolina
EVAN BAYH, Indiana                   ELIZABETH DOLE, North Carolina
HILLARY RODHAM CLINTON, New York     JOHN CORNYN, Texas
MARK L. PRYOR, Arkansas              JOHN THUNE, South Dakota
JIM WEBB, Virginia                   MEL MARTINEZ, Florida
CLAIRE McCASKILL, Missouri           ROGER F. WICKER, Mississippi

                   Richard D. DeBobes, Staff Director

              Michael V. Kostiw, Republican Staff Director

                                 ______

                        Subcommittee on Seapower

               EDWARD M. KENNEDY, Massachusetts, Chairman

JOSEPH I. LIEBERMAN, Connecticut     MEL MARTINEZ, Florida
JACK REED, Rhode Island              JOHN WARNER, Virginia,
DANIEL K. AKAKA, Hawaii              JEFF SESSIONS, Alabama
BILL NELSON, Florida                 SUSAN M. COLLINS, Maine
JIM WEBB, Virginia                   JOHN CORNYN, Texas

                                  (ii)
?

                            C O N T E N T S

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                    CHRONOLOGICAL LIST OF WITNESSES
                        Strategic Lift Programs
                             march 12, 2008

                                                                   Page
Payton, Hon. Sue C., Assistant Secretary for Acquisition, 
  Department of the Air Force....................................     4
Schwartz, Gen. Norton A., USAF, Commander, United States 
  Transportation Command.........................................     8

     Navy Force Structure Requirements and Programs to Meet Those 
                              Requirements
                             april 8, 2008

Stiller, Allison F., Deputy Assistant Secretary of the Navy for 
  Ships, Department of the Navy..................................    53
McCullough, VADM Bernard J. ``Barry,'' III, USN, Deputy Chief of 
  Naval Operations for Integration of Capabilities and Resources, 
  Department of the Navy.........................................    60
Amos, Lt. Gen. James F., USMC, Commander, Marine Corps Combat 
  Development Command............................................    61

                                 (iii)


DEPARTMENT OF DEFENSE AUTHORIZATION FOR APPROPRIATIONS FOR FISCAL YEAR 
                                  2009

                              ----------                              


                       WEDNESDAY, MARCH 12, 2008

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

                        STRATEGIC LIFT PROGRAMS

    The subcommittee met, pursuant to notice, at 2:18 p.m. in 
Room SR-222, Russell Senate Office Building, Senator Edward M. 
Kennedy (chairman of the subcommittee) presiding.
    Committee members present: Senators Kennedy, Martinez, and 
Sessions.
    Committee staff member present: Leah C. Brewer, nominations 
and hearings clerk.
    Majority staff member present: Creighton Greene, 
professional staff member.
    Minority staff members present: Michael V. Kostiw, 
Republican staff director; Gregory T. Kiley, professional staff 
member; and Sean J. Stackley, professional staff member.
    Staff assistant present: Fletcher L. Cork.
    Committee members' assistants present: Jay Maroney, 
assistant to Senator Kennedy; Frederick M. Downey, assistant to 
Senator Lieberman; Gordon I. Peterson, assistant to Senator 
Webb; Sandra Luff and Samuel Zega, assistants to Senator 
Warner; Mark J. Winter, assistant to Senator Collins; and Brian 
W. Walsh, assistant to Senator Martinez.

    OPENING STATEMENT OF SENATOR EDWARD M. KENNEDY, CHAIRMAN

    Senator Kennedy. The subcommittee will come to order. I 
apologize to all of our wonderful witnesses and to our members 
here. I was necessarily tied up over on the floor for a few 
moments, but I am grateful for their patience.
    We would like to welcome Senator Martinez to the committee, 
and to our subcommittee. This is a very important subcommittee 
of the Armed Services Committee dealing with force projection 
with all of its implications, and that is a matter of 
extraordinary importance and consequence at any time for our 
national security and particularly at this time.
    We are very fortunate in this whole area of national 
security to have some of the most gifted, wonderful members of 
the Armed Forces who are involved in this undertaking and 
responsibility. Perhaps not always on the front page in terms 
of the news, but front page in terms of all of us who know the 
value of their service, extending to making sure that our men 
and women are going to get to the right place at the right time 
and making sure that those who have served so well and 
gallantly and courageously and have been wounded in the course 
of battle are going to be brought home with the kind of 
attention and respect that they deserve.
    There is an extremely broad responsibility with the force 
projection in this subcommittee and we take it very seriously, 
and we are very grateful for those that serve on it.
    So, Senator Martinez, we want to thank you, and we welcome 
you to it.
    It is always a pleasure to be with my friend, Jeff 
Sessions, who is tireless in terms of his interest in the Armed 
Services Committee generally and also in terms of the workings 
of this subcommittee, and we are glad to have him aboard.
    I had a good brief but informed and interesting few minutes 
with General Schwartz earlier today.
    I have some questions to get to. We talked about a number 
of these items earlier. He will have an opportunity to talk 
about all of them this afternoon, and we will have a chance to 
talk and respond to these questions.
    My statement is both a word of welcome and a discussion 
about all of the importance of this subcommittee. I will 
include it in the record in its entirety to save us some time.
    [The prepared statement of Senator Kennedy follows:]

            Prepared Statement by Senator Edward M. Kennedy

    The subcommittee will come to order. I want to extend a welcome to 
our witnesses and thank each of you for appearing before the Seapower 
Subcommittee today.
    The subcommittee will hear today from the Honorable Sue Payton, 
Assistant Secretary of the Air Force for Acquisition, and General 
Norton Schwartz, Commander of the Transportation Command. We welcome 
both of you and thank you for your service.
    First, I always think it's important to note the heroism and 
professionalism of the coalition armed forces presently engaged in Iraq 
and Afghanistan. While we may have disagreements among policy officials 
about the war, let no one mistake that disagreement for a lack of 
support for the men and women who are serving their country in the 
Middle East right now. Our thoughts and prayers are with them and their 
families who are also called by their country to sacrifice in this war 
effort.
    Now, turning to the subject of this hearing, I would note that 
strategic lift is an important and continuing interest of this 
subcommittee. Over many years, and with several different individuals 
holding the chairmanship of this subcommittee, we have devoted 
significant energies to the subject of strategic mobility.
    Today's hearing continues the subcommittee's strong bipartisan 
interest in the broader strategic lift policy issues facing the Nation 
today. I want to take this opportunity to welcome Senator Martinez to 
the position of ranking member of the subcommittee. I have had the good 
fortune to work with a number of Senators in the leadership of this 
subcommittee, including Senators Warner, Cohen, Snowe, Sessions, 
Talent, and Thune. I believe that, in each of those cases, we have 
worked as a non-partisan team to see to the interests of the men and 
women of the Armed Forces whose programs fall within our jurisdiction. 
I look forward to continuing this approach with you, Senator Martinez, 
as we work toward a new National Defense Authorization Act.
    I believe that the Defense Department's recent experience would 
indicate to me that the current strategic lift capability may need to 
be enhanced, despite what we have seen in the Mobility Capability Study 
and the Quadrennial Defense Review. In fact, we adopted direction to 
the Department of Defense in the most recent Authorization Act to 
complete a new study of strategic mobility requirements. I want to 
thank Senator McCaskill for leading the effort to include this new 
study language.
    We have heard of a number of current issues that the subcommittee 
should hear about today. One of those is the stress on our mobility 
personnel and their equipment. Another surrounds the best method to 
solve our longer-term requirements for strategic airlift. We have the 
question of continuing the production line for the C-17 aircraft 
program. We also have the C-5 reliability enhancement and re-engining 
program (RERP) efforts and the recent Nunn-McCurdy certification that 
the RERP upgrades for the C-5 needed to continue to meet national 
security requirements.
    In the interests of time, I will conclude my comments to leave more 
time for questions.
    Once again, welcome, Senator Martinez.

    Senator Kennedy. Senator Martinez.

               STATEMENT OF SENATOR MEL MARTINEZ

    Senator Martinez. Thank you, Senator Kennedy. I really 
appreciate your welcome.
    I am delighted to have an opportunity to serve on this 
subcommittee, and I am really looking forward to the work. I 
have endeavored to get up to speed, and there is a lot to 
learn, and I have learned a lot. I will likewise place my 
statement in the record.
    I want to thank General Schwartz and Secretary Payton for 
their appearance here today and, most of all, for their service 
to our country at these critical times.
    I appreciate very much your warm words of welcome. I look 
forward to working with you and the other members to ensure 
that we can do our part to assist a mission that is so critical 
at this time in our Nation's history. So thank you very much.
    [The prepared statement of Senator Martinez follows:]

               Prepared Statement by Senator Mel Martinez

    Thank you, Mr. Chairman.
    I'm pleased to join you in welcoming our witnesses for today's 
hearing. General Schwartz and Secretary Payton, thank you for your 
testimony today, and more importantly, thank you for your leadership 
and service to our country every day.
    Whether supporting the global war on terror with the air bridge 
across the Atlantic, or medically evacuating critically wounded to 
receive lifesaving care in the States, or performing humanitarian 
relief operations in some distant corner of the globe, or simply 
transporting household goods for hundreds of thousands of service men 
and their families each year, U.S. Transportation Command's (TRANSCOM) 
ability to provide persistent lift of personnel and material anywhere 
in the world, virtually ``on demand,'' is vital to our Nation's 
security.
    We are deeply grateful and proud of the airmen, soldiers, sailors, 
and merchant marines who are conducting these lift operations every 
hour of every day. They've turned the remarkable into the routine.
    I am very interested in hearing your assessment of current 
operations and the health of our mobility forces. TRANSCOM has been 
central to every phase of Operations Enduring Freedom and Iraqi 
Freedom--from the employment of prepositioning stocks and the first 
deployment of troops to the current sustainment of surge forces. It's 
important that we understand what you require in order to sustain your 
high operational tempo. Equally important, we need to employ the 
lessons learned from today's operations as we size and shape the future 
strategic lift force.
    With that in mind, today's hearing should provide much-needed 
clarity regarding the plan for strategic lift aircraft. Last year's 
update to the Mobility Capabilities Study confirmed the requirement for 
``about 300'' large airlifters, meaning the current program of 190 C-17 
and 111 modernized C-5 aircraft. The more recent review of strategic 
airlift by the Department, triggered by the C-5 re-engining program 
Nunn-McCurdy cost breach, concluded that re-engining the C-5A model 
aircraft, 60 in total, would neither be necessary nor cost effective in 
meeting airlift requirements. It was also concluded that it was not 
affordable to buy additional C-17 aircraft. Your assessment of these 
findings will be helpful.
    Meanwhile, the award of the KC-45 tanker is an important step 
toward recapitalizing the aging tanker fleet--TRANSCOM's top 
procurement priority. It is not the intent to review contract award 
details here, but it is important to gain your insights regarding how 
this tanker's capabilities promise to reshape your mission 
effectiveness. In particular, I am interested in understanding the 
operational value offered by the tanker's alternate role as an 
airlifter, and how this added cargo and passenger capacity would be 
employed in your most stressing scenario of supporting two near-
simultaneous major combat operations.
    As well, we welcome your insights regarding the role to be 
performed by the Civil Reserve Air Fleet (CRAF) in future force 
planning. We are interested in your assessment of the health and 
viability of your CRAF partners, and your recommendations regarding 
initiatives to strengthen the CRAF program to ensure the continued 
reliability of this critical lift component.
    Finally, while much of our current focus is necessarily on matters 
of strategic airlift, we need to be looking ahead to future 
requirements to recapitalize our Sealift and Prepositioning Forces. I 
know that you are working with the Navy to define requirements for the 
Maritime Preposition Force (Future), and it will be valuable to gain 
your insights on this emerging program. As well, the age of our Fast 
Sealift Ships and the Ready Reserve Force dictate that we commit to a 
long-term recapitalization plan as we approach their replacement.
    Much to Senator Kennedy's and Senator Warner's credit, this 
subcommittee has played a significant role in support of strategic 
mobility in the past. I look forward to joining their efforts and 
working with you and your staff as we move forward to provide the 
resources necessary to support your operations, while also helping to 
shape the future TRANSCOM.
    Again, I thank you for joining us today, and look forward to your 
testimony.

    Senator Kennedy. Thank you very much.
    Senator Sessions.
    Senator Sessions. Thank you, Mr. Chairman. I have no 
statement.
    Senator Kennedy. Fine. Secretary Payton, a very special 
welcome to you.
    Ms. Payton. Thank you, sir.
    Senator Kennedy. We are grateful for your presence, and we 
look forward to your presentation.

   STATEMENT OF HON. SUE C. PAYTON, ASSISTANT SECRETARY FOR 
            ACQUISITION, DEPARTMENT OF THE AIR FORCE

    Ms. Payton. Thank you. Mr. Chairman, Senator Martinez, and 
members of the subcommittee, it is my distinct honor to appear 
before you today to testify on the state of several Air Force 
mobility programs.
    I am further honored to be joined by General Norton 
Schwartz, Commander of U.S. Transportation Command (TRANSCOM), 
and the person I most consider to be our customer in 
acquisition for mobility. I look forward to discussing how the 
Air Force is committed to modernizing and recapitalizing our 
aging aircraft to protect our Nation and support our airmen, 
while providing the best value to the American taxpayers.
    In the interest of time, I will limit my opening remarks to 
the KC-45A, the C-5 modernization program, C-130J production, 
and the C-27, also known as our Joint Cargo Aircraft (JCA).
    The KC-45A is our number-one procurement priority. The KC-
45A tankers will provide greater overall capability than the 
current inventory of 500 plus KC-135E and KC-135R tankers, 
which will take several decades to replace. While the average 
age of the fleet is over 47 years, when the last KC-135R is 
retired, it will be more than 80 years old, and it is so 
absolutely critical for the Nation to move forward on this 
program now.
    The Air Force spent an unprecedented amount of time and 
effort with the offerers, ensuring we had open communications 
and a completely transparent process. I am extremely proud of 
the KC-45A acquisition team, and I am certain that the Air 
Force selected the best overall value to the warfighter and the 
taxpayer based on the competition evaluation criteria.
    With regards to our strategic air fleet, the modernization 
of the C-5 fleet remains an Air Force priority to meet 
combatant commanders' requirements. The last time I testified 
before a subcommittee of the Senate with General Schwartz, 
Secretary Wynne had just announced the C-5 Reliability 
Enhancement Re-engining Program (RERP) was in a critical Nunn-
McCurdy breach.
    I am very pleased to tell you that on February 14, 2008, 
the Under Secretary of Defense for Acquisition, Technology, and 
Logistics certified the restructure of the C-5 RERP. The 
certified production program consists of modernizing the 
remaining 47 C-5Bs and 2 C-5Cs.
    A key component of intra-theater airlift modernization 
effort is our C-130J. As of February 2008, we have fielded 63 
of the 87 funded C-130J aircraft. The current C-130J multi-year 
procurement contract ends in fiscal year 2008, and we will be 
using suboptimized additional procurements through annual 
contracts to procure future aircraft until a new multi-year 
procurement contract can be negotiated.
    As a joint Army-Air Force program, the JCA is uniquely 
qualified to perform time-sensitive, mission-critical resupply. 
On February 29, the Office of the Secretary of Defense (OSD) 
sent the required six reports and certification required by the 
National Defense Authorization Act for Fiscal Year 2008. We are 
now prepared to move forward with this joint program.
    The men and women in Air Force acquisition take great pride 
in delivering on our promise to deliver warfighter capabilities 
on time and on cost. I am honored to represent them in front of 
this subcommittee. I thank you again for the opportunity to be 
here. I look forward very much to your questions and comments.
    [The prepared statement of Ms. Payton follows:]

                 Prepared Statement by Hon. Sue Payton

                              INTRODUCTION

    Mr. Chairman and members of the subcommittee, it is my distinct 
honor to appear before the subcommittee today with General Norton 
Schwartz, Commander of U.S. Transportation Command. I look forward to 
discussing with you the state of several Air Force mobility programs.
    I am proud to represent the finest acquisition workforce in the 
Department and I can honestly say we have the smartest and hardest 
working airmen developing the most advanced technology required by the 
joint warfighter. We are committed to acquiring the most capable weapon 
systems for the warfighter while being diligent stewards to the 
taxpayer and operating in an open and transparent environment ``without 
fear or favor.'' We are living in interesting times as we constantly 
balance the near-term need to equip today's warfighter on today's front 
lines securing air, space, and cyberspace, while simultaneously 
modernizing the force to ensure tomorrow's warfighter is equipped for 
success and never surprised by our adversaries.

                      ACQUISITION LESSONS LEARNED

    The Air Force is committed to improving its acquisition process 
performance. Success in this endeavor depends on setting achievable 
stable requirements, getting appropriate resources, using disciplined 
systems engineering, and managing effectively with a skilled workforce. 
Our challenge is to quickly and economically convert ideas, experiments 
and prototypes into battlefield effects. This entails more than 
creating new weapon systems; it means adopting an inherently agile and 
responsive acquisition culture. Such institutional agility will allow 
us to effectively and efficiently divest our legacy systems while 
fielding the capabilities needed to meet new global challenges.
    There are several lessons that I have learned as the Air Force 
Acquisition Executive over the past 19 months. The first lesson is that 
acquisitions of complex, highly integrated, interoperable, survivable 
systems are difficult. The challenges for developing complex weapon 
systems are not well understood outside of the acquisition community. 
The second is that source selection protests are a way of life and they 
continue to challenge the Air Force's ability to develop and field 
desperately needed systems, on time and on cost. Protests are a 
valuable check and balance in the acquisition process, but frivolous 
protests only delay desperately needed combat capability to our 
warfighter and waste valuable taxpayer dollars. Another valuable lesson 
is that the workforce must be empowered to make decisions and we need 
to have the right people with the necessary training and expertise. Our 
negotiating teams and especially our contracting officers have been 
empowered to negotiate and close the deal with industry. Additionally, 
under Air Force Smart Operations for the 21st Century, a new initiative 
called Installation Acquisition Transformation (IAT) is underway. An 
objective of this new initiative is to strategically realign the 
installation contracting organization within the Continental United 
States and move away from a tactically focused approach. With today's 
fiscally constrained environment, IAT will allow for an agile operating 
structure where we can leverage and increase the technical competence 
of our workforce while realizing cost savings through proven strategic 
sourcing techniques consistent with Office of Management and Budget 
guidance. I have also learned that the Nunn-McCurdy process, while 
difficult, results in healthier, more executable programs. I inherited 
several under funded programs with cost growth challenges, because the 
cost, schedule and performance baselines were established well in 
advance of when we could reasonably project the technical and schedule 
issues that can drive costs out of control. The lessons I have learned 
in the first year and a half of my tenure have brought focus to many 
daily efforts. However, my commitment to integrity and transparency in 
all Air Force acquisitions remains firm and the bedrock of all our 
acquisition activities.

                FLEET MODERNIZATION AND RECAPITALIZATION

    I look forward to discussing with the committee the Air Force's top 
acquisition priority, the KC-45A, as well as the status of additional 
high-priority acquisition programs such as the C-5 modernization 
programs; continued production of the C-130J and introduction of the C-
27 Joint Cargo Aircraft (JCA) ; as well as our efforts on alternative 
fuels certification for our aircraft inventory.
KC-45A
    The KC-45A is our highest procurement priority and it is critical 
to the entire joint and coalition military team's ability to project 
combat power around the world. It gives America and our Allies 
unparalleled rapid response to combat and humanitarian relief 
operations. KC-45A tankers will provide increased aircraft 
availability, more adaptable technology, more flexible employment 
options, and greater overall capability than the current inventory of 
KC-135E and KC-135R tankers. The KC-45A will be able to refuel 
receptacle and probe-equipped aircraft on every mission and itself be 
in-flight refuelable. Also, the KC-45A will have an additional role to 
carry cargo, aero-medical evacuation and passengers, and be equipped 
with defensive systems to enhance its utility to the warfighter.
    The current fleet of Eisenhower-era KC-135s average 47 years old. 
The KC-45A program is based on a planned purchase of 179 aircraft and 
is the first of up to 3 recapitalization programs to replace the entire 
legacy fleet. The Air Force has budgeted approximately $3 billion per 
year for an annual production rate of 12-18 aircraft. But even with 
this level of investment, it will take several decades to replace the 
500+ Eisenhower-era KC135s. It's absolutely critical for the Air Force 
to move forward now on this program.
    As you are aware, the Air Force awarded the KC-X contract to 
Northrop Grumman, who met or exceeded the requirements of the Request 
for Proposal and provided the best overall value to the warfighter and 
the taxpayer based on the competition evaluation factors. The Air Force 
spent an unprecedented amount of time and effort with the offerors 
ensuring open communications and a completely transparent process. It 
is our Air Force goal to move forward with a program of smart, steady 
reinvestment to ensure future viability of this unique and vital U.S. 
national capability. I am extremely proud of the KC-45A Acquisition 
team on the recent award of the KC-45A tanker and the capability it 
will bring to the fight.

                       C-5 MODERNIZATION PROGRAMS

    Modernization of the C-5 fleet remains an Air Force priority to 
meet combatant commanders' requirements for on-time delivery of 
oversized and outsized cargo. This effort will bring needed capability 
to the warfighter through 2040, getting our troops and equipment to the 
fight by increasing the mission availability of C-5s with their 
unmatched out sized and oversized, roll-on/roll-off capability.
    The C-5 modernization effort is a combination of two programs. The 
Avionics Modernization Program (AMP) provides modernized avionics and 
allows the aircraft to efficiently access international airspace. The 
second program is the Reliability Enhancement Re-engining Program 
(RERP), which builds upon the C-5 AMP modification. C-5 RERP replaces 
the propulsion system and improves the reliability of over 70 systems 
and components.
    On February 14, 2008, the Under Secretary of Defense for 
Acquisition, Technology, and Logistics certified the restructure of C-5 
RERP production modernization to 47 C-5Bs and 2 C-5Cs. The C-5A 
aircraft are not included in the restructured program. However, they 
will undergo AMP modification to enable the aircraft to meet global 
Communications/Navigation/Surveillance and Air Traffic Management 
standards. We are working closely with Secretary Young and his staff to 
produce the best product for the warfighter and the taxpayer.

                      CONTINUED C-130J PRODUCTION

    The C-130J is a key component of the intra-theater airlift 
modernization effort. Air Mobility Command identified a need for 127 
combat delivery C-130Js to meet intra-theater airlift requirements. 
Through defense appropriation and global war on terrorism supplemental 
bills, Congress has funded 70 C-130Js, 10 WC-13OJs and 7EC-13OJs and as 
of February 2008, we have fielded 63 total C-13OJ aircraft. The current 
C-130J Multi-Year Procurement (MYP) contract ends in fiscal year 2008 
and we will be using suboptimized additional procurements through 
annual contracts to procure future aircraft until a new MYP contract 
can be negotiated. Fiscal year 2009 C-130J procurement is dependent 
upon the Air Force Special Operations Command's HC/MC-130 
recapitalization program and sales to the United States Marines Corps 
and coalition partners.

                      INTRODUCTION OF THE C-27 JCA

    The C-27 is a joint Army and Air Force program to procure a small 
cargo aircraft capable of providing responsive, flexible and tailored 
airlift for combat, humanitarian and homeland defense missions. 
National Defense Authorization Act for Fiscal Year 2008 language 
prohibited obligation and expenditure of appropriated funds until the 
Secretary of Defense provides specified reports to the Congressional 
Defense Committees and certifies the requirement for the aircraft. In 
the interest of openness and transparency, the Office of the Secretary 
of Defense (OSD) took the extraordinary step of delivering the draft 
Joint Intra-Theater Airlift Fleet Mix Analysis report to the 
Congressional Defense Committees before completing the sufficiency 
review. On February 29, OSD sent the required six reports and 
certification and we are prepared to move forward with this joint 
program.

                    ALTERNATIVE FUELS CERTIFICATION

    Following Presidential direction to reduce dependence on foreign 
oil, the Air Force is aggressively pursuing a broad range of energy 
alternatives. As the Department of Defense's leading consumer of jet 
fuel, we are currently engaged in evaluating alternative fuels and 
engine technologies leading to greater fuel efficiency. In 2007, we 
fully certified the B-52 to fly on a synthetic fuel blend and 
demonstrated C-17 operations. In 2008, we expect to certify both the C-
17 and B-1B, demonstrate F-22 operations, and conduct ground testing on 
the engines that power the F-16 and F-15. The remainder of the U.S. Air 
Force aircraft fleet is expected to be tested and certified by early 
2011. Other Air Force technology efforts continue to explore high-
efficiency aerodynamic concepts, advanced gas turbines and variable 
cycle engines providing higher performance and greater fuel efficiency.

                               CONCLUSION

    The dynamic and threatening environment in which the U.S. military 
operates requires an agile and responsive acquisition enterprise. To 
meet the requirements of our joint and coalition warfighters, we must 
continue to focus our efforts on modernizing and recapitalizing our 
aging weapon systems. The men and women in Air Force Acquisition take 
great pride in delivering on our promise and I am honored to represent 
them in front of this committee. Thank you again for the opportunity to 
be here today and I look forward to your comments and questions.

    Senator Kennedy. Thank you very much, Madam Secretary.
    General Schwartz?

 STATEMENT OF GEN. NORTON A. SCHWARTZ, USAF, COMMANDER, UNITED 
                 STATES TRANSPORTATION COMMAND

    General Schwartz. Chairman Kennedy, Senator Martinez, and 
Senator Sessions, it is my privilege to be with you today, 
representing the more than 155,000 men and women of TRANSCOM. 
We are a supporting command, and our number-one mission is to 
provide outstanding support to the warfighter and to the Nation 
by rapidly delivering combat power and sustainment to the Joint 
Force Commander, providing the utmost care in moving our 
wounded from the battlefield to world-class medical treatment 
facilities, and redeploying our folks home to their families.
    As the Department's Distribution Process Owner, TRANSCOM 
also leads a collaborative effort within the defense logistics 
community to improve the Department of Defense (DOD) supply 
chain. We execute our global missions through our component 
commands--the Army Surface Deployment and Distribution Command, 
the Navy Military Sealift Command, and the Air Force Air 
Mobility Command.
    Our effectiveness is the direct result of the hard work and 
dedication of these true professionals, and I am grateful to 
you, Mr. Chairman, and all of Congress for this needed support 
that you provide.
    I could not be prouder of the TRANSCOM team or our national 
partners. Today, we are supporting the global war on terrorism 
and keeping our promises to the warfighters. The delivery of 
much-needed Mine-Resistant Ambush Protected (MRAP) vehicles to 
protect our troops continues to be a top priority.
    To date, we have delivered more than 3,800 MRAPs to the 
U.S. Central Command (CENTCOM) theater, delivered almost 
exclusively by air in the early stages. As production rates 
have climbed, we have reached a balance between air and surface 
modes of transportation to optimize distribution.
    We continue to advance normalized transportation operations 
throughout CENTCOM. In 2007, we initiated the first U.S.-
flagged commercial cargo flights into Afghanistan and Iraq 
since combat operations began and increased the use of 
alternative air and seaport facilities in the region, thus 
broadening our capability to provide the best possible support 
to our warfighters.
    We have also focused on improving quality of life for our 
people. Through the Families First program, we are improving 
household goods shipments, as this recurring event affects the 
lives of our servicemembers and certainly their families. We 
now protect household goods shipments with full replacement 
value. In addition, the Defense Personal Property Shipping 
System, the Web-based software, which will better facilitate 
household moves, will be fully integrated into all shipping 
offices later this year.
    We are also transforming the military deployment and 
distribution enterprise by incorporating commercial best 
practices where it makes sense. Much like the Fortune 500 
companies, which realize savings through transportation 
management services, our Defense Transportation Coordination 
Initiative (DTCI), in partnership with the Defense Logistics 
Agency and the Services, will use a commercial transportation 
coordinator to help manage a significant portion of DOD routine 
freight movements.
    Over the next few weeks, we will implement DTCI at three 
continental United States locations, and we are encouraged by 
the potential savings and improved support we can provide as 
DTCI expands to additional sites throughout the coming year.
    It is through a combination of military and commercial 
capabilities that TRANSCOM fields a transportation and 
distribution system that is unmatched anywhere in the world. As 
we look to the future, rapid global mobility will continue to 
be a key enabler and ensuring the appropriate mix of lift 
assets is vitally important to this mission.
    Mr. Chairman, my top airlift priority is recapitalization 
of the tanker fleet. I am encouraged that the KC-45 is now 
under contract, albeit under protest. The KC-45 with multi-
point refueling, significant cargo and passenger carrying 
capability, and appropriate defensive systems will be a game-
changing platform for the future of global mobility.
    I am also encouraged by the Department's decision to 
certify the C-5 modernization program. The Nation needs the 
outsized and oversized lift capability provided by a reliable 
C-5 to complement the C-17. We are optimistic that the newly 
certified program will deliver the needed reliability and 
performance to make the C-5 a more productive platform.
    Despite our very substantial military force structure, 
TRANSCOM will always depend on a mix of Government and 
commercial assets. We should guard against overbuilding the 
organic airlift and sealift fleets, which could place our long-
standing commercial partnerships at risk. A critical national 
capability for projecting military power and sustaining forces 
is a viable Civil Reserve Air Fleet (CRAF). The continued 
success of the CRAF relies upon the strengths of our U.S.-
flagged airlines.
    We are beginning to look toward a post-Operation Iraqi 
Freedom timeframe, when lift requirements will subside. Given 
that eventual reality, we are looking at innovative ways to 
encourage continued participation, thus ensuring the long-term 
health of the CRAF program.
    I am grateful to you, sir, and to the subcommittee for 
allowing me to appear before you today to discuss these and 
other important issues. I thank you for the essential support 
you provide in enabling our capabilities. I look forward, sir, 
to your questions.
    Thank you, sir.
    [The prepared statement of General Schwartz follows:]

          Prepared Statement of Gen. Norton A. Schwartz, USAF

 INTRODUCING THE UNITED STATES TRANSPORTATION COMMAND (USTRANSCOM) 2008

Mission/Organization
    USTRANSCOM, a unified combatant command (COCOM), serves as the 
``quarterback'' of the Joint Deployment and Distribution Enterprise 
(JDDE) whose purpose is to project national security capabilities, 
provide end-to-end visibility of forces and sustainment in transit, and 
rapidly respond to support joint logistics requirements. Through our 
component commands, the Army's Surface Deployment and Distribution 
Command (SDDC), the Navy's Military Sealift Command (MSC), the Air 
Force's Air Mobility Command (AMC) and our national and commercial 
partners, we execute military and commercial transportation, terminal 
management, aerial refueling and global patient movement through the 
Defense Transportation System (DTS). As designated in 2003, re-
designated in 2006, codified in the 2006 Unified Command Plan, and now 
institutionalized in Department of Defense (DOD) instructions, 
USTRANSCOM is the DOD's Distribution Process Owner (DPO) and is leading 
a collaborative effort with JDDE partners across the defense logistics 
community to increase the precision, reliability and efficiency of the 
DOD supply chain. By increasing collaboration, employing expeditionary 
tools and streamlined systems, adapting our business models and 
ensuring an appropriate mix of lift assets, we keep our promises to our 
warfighters and the Nation, today and tomorrow.

                 KEEPING PROMISES TO THE NATION IN 2007

Global War on Terrorism Update
    In 2007, USTRANSCOM overcame many challenges to meet the 
warfighter's requirements for the global war on terrorism, including 
Operations Iraqi Freedom (OIF), Enduring Freedom (OEF) and Noble Eagle 
(ONE). AMC, in collaboration with our commercial partners, moved 
1,475,427 passengers on deployment, redeployment, sustainment, and rest 
and recuperation missions. This indispensable relationship with 
commercial industry freed our organic aircraft to airlift 167,396 short 
tons of vital cargo into the U.S. Central Command (USCENTCOM) theater. 
Additionally, we airdropped 3,350 short tons of critical supplies for 
coalition forces in Afghanistan.
    Our aging AMC tankers also delivered 168 million gallons of fuel to 
U.S. and coalition aircraft in support of OEF/OIF and helped secure our 
skies in support of ONE by flying more than 333 sorties and offloading 
2.3 million gallons of fuel to combat air patrol fighters and support 
aircraft.
    MSC and SDDC's contributions in OIF and OEF were equally 
impressive, delivering 916,000 short tons/17,850,000 square feet of 
cargo. MSC's point-to-point tankers also delivered over 1.79 billion 
gallons of fuel supporting worldwide DOD requirements.

Support to other Combatant Commanders
    Operations in the USCENTCOM area of responsibility (AOR) were our 
primary focus this past year. USTRANSCOM rapidly deployed five 
additional U.S. Army Brigade Combat Teams (BCT) to help stabilize Iraq, 
while simultaneously supporting on-time force rotations. Working in 
concert with our JDDE partners, we deployed 19 and redeployed 14 BCTs, 
and rotated 2 Air Expeditionary Forces and 3 Marine Air-Ground Task 
Forces.
    Delivering Mine-Resistant Ambush Protected (MRAP) vehicles was also 
a high priority. We rapidly delivered over 1,657 lifesaving MRAPs both 
by air and sea while simultaneously maintaining high levels of force 
deployment and redeployment operations. Concurrently, we moved over 
25,000 improved armor kits for U.S. High Mobility Multipurpose Wheeled 
Vehicles, ensuring our warfighters received the latest advances in 
vehicle protection.
    Turkey is a key ally in the global war on terrorism, and our 
operations through Incirlik Air Base are vital to our efficient 
intermodal distribution into Iraq. This year we delivered over 66,000 
short tons of cargo via aircraft flying out of Incirlik, 10,000 short 
tons and 144 cargo aircraft sorties more than in 2006.
    We continue to advance and normalize transportation operations 
throughout USCENTCOM. In 2007, we initiated the first U.S.-flagged 
commercial cargo flights into Afghanistan and Iraq since combat 
operations began and increased the use of alternative air and seaport 
facilities to augment the redeployment flow of containers that would 
otherwise go through Kuwait. These operations broaden our capability to 
provide the best possible support to the COCOMs.
    The availability of direct commercial cargo capacity presents 
opportunities for cost savings and efficiencies. Through our air cargo 
tender program, we moved more than 126,000 short tons of intra-theater 
cargo via commercial air carriers vice military aircraft or ground 
convoys. This capability saved $258 million and freed 14,168 C-130 
missions for other requirements. More importantly, the 67,500 pallets 
moved by commercial air resulted in fewer ground convoys, mitigating 
the risk to U.S. forces. Additionally, we contracted with commercial 
shipping companies to deliver increasing amounts of containerized cargo 
directly to Iraq, through the port of Umm Qasr, reducing the need for 
overland transportation from outlying regional ports. This created new 
jobs for Iraqi truckers and port workers, helping to accelerate the 
economic revitalization and stabilization process in the region.
    Our quick response capability proved vital in supporting Lebanon in 
its recent battle against internal insurgents. USTRANSCOM rapidly 
airlifted over 480 short tons of ammunition from the U.S., sealifted 
over 5,600 coalition-supplied artillery shells and moved 130 vehicles 
plus support equipment from Europe to Lebanon. This rapid support was 
instrumental in Lebanon's ability to defeat Fatah al-Islam and maintain 
its sovereignty.
    While operations in USCENTCOM remain a primary focus, we are 
mindful of our global commitments. In the U.S. European Command AOR, 
USTRANSCOM rotated 7,752 peacekeepers into the Darfur region to support 
the African Union Mission in Sudan as it executed its transition of 
authority to the United Nations Mission in Sudan.
    In U.S. Southern Command (USSOUTHCOM), USTRANSCOM conducted 10 
detainee movement operations from Guantanamo Bay, Cuba, repatriating 70 
detainees to various points around the globe. We also airlifted over 
1,400 passengers and 1,500 short tons of cargo to support Presidential 
visits to Brazil, Uruguay, Colombia and Guatemala, strengthening key 
regional partnerships.
    In the U.S. Pacific Command (USPACOM) AOR, in addition to providing 
forces and sustainment for OEF-P (Philippines), we set records in 
Operation Deep Freeze, airlifting over 1,900 short tons of cargo and 
5,000 passengers, and sealifting 11.9 million gallons of fuel and 12 
million pounds of cargo into McMurdo Station, Antarctica, in support of 
the National Science Foundation. In a successful proof of concept, a C-
17 conducted the first-ever airdrop at the South Pole, delivering 35.5 
short tons of cargo.
    At home, USTRANSCOM maintains strong partnerships with U.S. 
Northern Command (USNORTHCOM) and non-DOD organizations such as the 
Federal Emergency Management Agency (FEMA). We have synchronized plans 
to support civil authorities during catastrophic events like hurricanes 
and the devastating wildfires that swept across parts of California. 
Working closely with these partners, USTRANSCOM moved over 250 
passengers and 360 short tons of cargo and provided urgently needed 
command and control, aerial firefighting and aero-medical evacuation 
elements to reduce the loss of life and property.
    We also support the geographic COCOMs through exercises, which 
provide critical training and serve as a venue to refine business and 
deployment and distribution processes. For example, the Republic of 
Korea Reception, Staging, Onward Movement and Integration and Ulchi 
Focus Lens exercises in the USPACOM AOR allowed us to integrate new 
command and control processes and capabilities to better support the 
joint warfighter. USSOUTHCOM's Panamax, the largest 2007 multinational 
exercise involving more than 30 ships, 12 aircraft, and 7,500 personnel 
from 19 nations, also gave us ample refinement opportunities. 
Additionally, we tested our Containerized Ammunition Distribution 
System (CADS). During Exercise Turbo CADS 2007, we shipped 1,133 
container loads of munitions to five ports using an MSC-chartered 
commercial container ship, which substantially increased USPACOM's 
wartime munitions readiness and prepared commercial ports to augment 
typical host nation ports used for ammunition shipments. Finally, 
during USNORTHCOM's Ardent Sentry 2007, an exercise centered on 
deployment and employment of Homeland Defense Quick Reaction Force and 
Joint Task Force--Civil Support elements, we successfully exercised our 
new Theater Distribution Management Portable Deployment Kit, a 
manportable suite equipped with Radio Frequency Identification, 
satellite communication and other technologies to provide in-transit 
visibility for unit deployments and cargo movements. The future kit 
will provide Global Positioning System-based, passenger manifesting and 
cargo accountability capability.

Improving DOD Supply Chain Management
    In our role as the DPO, USTRANSCOM declared 2007 the ``Year of 
Metrics'' and made great strides to develop the JDDE Performance 
Measure Framework. This framework allows us to better evaluate supply 
chain performance, reliability and cost, gain insight into system 
behavior and identify ways to drive tangible improvements. Using 
``Voice of the Warfighter'' surveys, we conducted 200 face-to-face 
interviews with logisticians across 4 COCOMs to validate the key 
performance indicators that will both measure and drive supply chain 
performance to meet COCOM and warfighter expectations. Representative 
outcomes include substantial improvement in delivery times and better 
alignment of shared business processes across supply, transport, and 
end user segments of the DOD supply chain to improve support to the 
warfighter.
    Another significant improvement in supply chain management will be 
the Joint Shipment Manager construct, a collaborative effort between 
USTRANSCOM, Defense Logistics Agency and USPACOM operations analysts 
and local commercial transportation experts. This construct will place 
a distribution hub near Defense Distribution Center Pearl Harbor to 
maximize transportation efficiencies between the Oahu ports and the 
distribution center. The arrangement will offer customer service and 
delivery time improvements across more than 150 transportation lanes 
with the potential for a 12 percent net reduction in annual operating 
costs.

Supporting the Warfighter
    Our support for the warfighter includes improving quality of life. 
Through the Families First program we are improving household goods 
shipments, as this recurring event directly affects the lives of our 
servicemembers and their families. In 2007, SDDC and its partners moved 
1.63 billion pounds in household goods. Families First will benefit the 
large portion of DOD that moves each year by allowing personnel to rate 
transportation service providers online, obtain counseling via the web 
and file personal property claims directly with the provider. The 
Defense Personnel Property System (DPS), which will provide these web-
based capabilities and help manage the 680,000 annual shipments of 
household goods, reached initial operational capability in November 
2007 and will be fully integrated into all 136 shipping offices by 
September 2008. We also began implementing Full Replacement Value 
protection for household goods shipments. This enhancement was made 
possible by the John Warner National Defense Authorization Act for 
Fiscal Year 2007 and will be fully implemented for all shipments by 
March 1, 2008.
    Perhaps the most important of all our missions is the movement of 
injured warfighters from the battlefield to world-class medical 
treatment facilities. This is a complex, time-sensitive process 
requiring close collaboration with doctors, military hospitals and our 
aero-medical evacuation crews to move injured personnel at exactly the 
correct time to the correct place. In 2007, we transported over 9,900 
patients from the USCENTCOM AOR and over 16,000 patients globally. We 
continue to improve an already superb process by chartering the Global 
Patient Movement Joint Advisory Board to develop a joint critical care 
transport capability, standardize the theater Patient Movement 
Requirements Centers and implement joint electronic medical records.
    Should the worst occur and a warfighter perish in the defense of 
our Nation, USTRANSCOM ensures the most dignified transport from the 
battlefield to final destination. This year, we transported 837 of our 
fallen heroes aboard military or military-contracted aircraft to the 
airfield nearest the interment.
leading the joint deployment and distribution enterprise transformation

Process and Systems Transformations
    As DOD's DPO, we are leading transformation of the JDDE to meet the 
changing environment of current operations and to improve performance 
to meet the needs of the future force. A key enabler of this 
transformation is our initiative to implement a single transportation 
tracking number. Much like commercial industry, this will allow 
decisionmakers to more easily track warfighting capability in the DOD 
pipeline.
    As DOD's functional proponent for Radio Frequency Identification 
(RFID) and related Automated Identification Technology (AIT), we are 
taking a corporate approach to synchronize the myriads of ongoing AIT 
efforts with the Services, DLA and other partners. We published a 
concept of operations and developed an implementation plan to transform 
the current AIT environment and improve asset visibility. We 
implemented active RFID technology at our strategic ports to provide 
detailed cargo movement information. Through the Alaska RFID 
Implementation project and Joint Regional Inventory Material Management 
initiative, we have installed passive RFID technology at selected 
military installations in Alaska, California, and Hawaii.
    Another major initiative, Theater Enterprise Deployment and 
Distribution, takes an enterprise view of the JDDE to identify 
performance gaps or shortfalls and provides the foundation for 
instituting common joint processes, establishing intra-theater 
organizational relationships and applying common Information Technology 
(IT) support. This effort is yielding positive results.
    Our transformation includes moving toward private industry 
arrangements geared toward performance and integrated customer-focused 
solutions, such as our Defense Transportation Coordination Initiative 
(DTCI). DTCI has quickly evolved from a concept to a fully-integrated 
and operationally-focused program office. In August 2007 we partnered 
with the Defense Logistics Agency (DLA) and the Services to contract a 
commercial transportation services coordinator to help manage DOD 
continental United States (CONUS) freight. This partnership will 
provide visibility of CONUS freight movements, enabling load 
consolidation, increased use of cost effective intermodal solutions and 
intelligent scheduling. Today, many Fortune 500 companies using 
transportation management services witness cost savings of 7-15 
percent. Our comprehensive analysis shows incorporating such commercial 
best practices could yield cost savings of up to 15 percent annually 
over the 7-year contract.
    Managing the portfolio of IT systems is key to meeting the ever 
increasing need for information. Historically, IT resources have been 
managed and acquired as stand-alone systems rather than integral parts 
of a net-centric capability. This often results in duplicative 
investment in the same or similar systems, limiting the ability to 
share information and fully incorporate doctrine, organization, 
training, materiel, leadership and education factors. As the 
Distribution Portfolio Manager, we are aligning IT with warfighter 
needs through enterprise level planning, integrated architectures and 
warfighter preferred performance measures.
    An example of our alignment efforts is the convergence of DLA's 
Integrated Data Environment (IDE) logistics system and USTRANSCOM's 
Global Transportation Network (GTN). The creation of an IT backbone 
through the IDE/GTN Convergence (IGC) allows us to more closely operate 
with DLA, provides a common data environment for the DOD supply/
transportation enterprise and facilitates development of new 
applications riding on that backbone. For instance, in June 2007 we 
fielded a Motor Carrier Compliance capability, which allows us to 
determine carriers' compliance with contractual requirements for 
electronic status of movement and Government bills of lading. IGC will 
also make possible the spring 2008 fielding of World Wide Express/
International Heavyweight Express air carrier shipment status 
compliance.
    The migration of surface port information from the Worldwide Port 
System into the Global Air Transportation Execution System (GATES) is a 
similar effort, providing a single web-based port processing and 
manifesting system for DOD. GATES will also link to external systems, 
thus enhancing information sharing across DOD and in-transit visibility 
for the warfighter. Other transformation initiatives include Common 
Operational Picture for Distribution and Deployment, which fuses 
information from multiple systems to present one distribution and 
deployment picture to the user; and the Single Load Planning concept, 
which combines features of the Automated Air Load Planning System and 
the Integrated Computerized Deployment System to allow air and surface 
load planning on a single web-based application.
    Business process reengineering and continuous process improvements 
are at the heart of USTRANSCOM's ongoing transformation. Agile 
Transportation for the 21st Century (AT21) is an effort to implement 
distribution industry best practices using commercial off-the-shelf 
tools and then transition to commercial optimization and scheduling 
technologies. This transition will improve transportation planning, 
improve forecast accuracy and increase on-time delivery of forces and 
supplies to combatant commanders at a lower cost to the Services. When 
fully operational, AT21 will provide the warfighter full distribution 
pipeline visibility and enable throughput management at critical ports 
and waypoints around the world.
    In collaboration with the Air Force and Defense Finance and 
Accounting Service, we are replacing outdated, unreliable billing and 
accounting processes and systems. The Defense Enterprise Accounting and 
Management System (DEAMS) will transform the financial management of 
our $10 billion enterprise. When fully fielded, DEAMS will set a new 
standard for effective and efficient stewardship of Defense Working 
Capital Fund resources.
    AMC is transforming its relationships with the air components of 
the COCOMs at the Air Operations Centers. By summer of 2008, AMC will 
integrate strategic and theater mobility missions planning and 
execution information across coalition, Joint, and Air Force systems. 
Globally, AMC will have unprecedented ability to plan and report 
aircraft movements into, around, and out of COCOM AORs and provide 
USTRANSCOM visibility of in-theater air assets for air refueling, 
airlift and air medical evacuation missions.
    Finally, in the area of patient movement we are continuing 
development of the TRANSCOM Regulating and Command & Control Evacuation 
System (TRAC2ES). TRAC2ES will reach full operational capability in 
2010 and provide access to information on available transportation 
assets, retrospective trend analysis, improved in-transit visibility, 
automated data sharing and global web-based user training.
Organizational Realignment/Personnel Issues
    Although vital to what we do, the JDDE is more than just processes 
and systems. We are focused on initiatives that provide for the needs 
of the warfighter. First, we are developing organizational structures, 
both in the distribution network and at USTRANSCOM, to enhance JDDE 
responsiveness.
    Joint Deployment Distribution Operations Centers (JDDOC), resident 
in each geographic AOR, continue to aid COCOMs in improving integration 
of strategic and theater distribution. As each COCOM tailors the JDDOC 
to best meet theater needs, USTRANSCOM assists with the development of 
performance-based metric framework as part of the organization.
    A good example of the JDDOC's value is our previously mentioned 
support of Lebanese Armed Forces (LAF). USEUCOM and USCENTCOM's JDDOCs 
facilitated movement of donated munitions to the LAF by tapping into 
regional expertise, as well as by reaching back to national partners in 
the U.S. to maximize intra-theater and inter-theater lift. This unique 
mission was possible because of the established collaboration across 
our JDDOCs.
    Another emerging capability is Joint Task Force-Port Opening (JTF-
PO), an on-call, jointly trained, world-wide deployable team which 
enables the rapid opening of ports. JTF-PO was designed with the 
command and control capability and in-transit visibility technology to 
support geographic COCOMs and sustain domestic first responders. It has 
been endorsed by the COCOMs and demonstrated in national level, Joint 
Chiefs of Staff and multi-national exercises.
    The JTF-PO Aerial Port of Debarkation (APOD) combines Air Force and 
Army units to open an airport and prepare it for logistics operations 
in as little as 24 hours. A JTF-PO APOD was fully operational during 
Ardent Sentry 07, responding to 23 military and 9 commercial airlift 
missions, handling over 1,400 short tons and processing nearly 900 
passengers. We are currently fielding the Seaport of Debarkation 
capability to open a seaport in a comparable fashion.
    The Base Realignment and Closure (BRAC) process has presented a 
unique opportunity to establish a modern command and control structure. 
Our BRAC initiatives are estimated to save the taxpayer $1.2 billion 
over the next 20 years as we realize efficiencies resulting from 
consolidation. SDDC's move to Scott Air Force Base in 2007 is the most 
visible of our comprehensive consolidation efforts. This organizational 
realignment along with the new USTRANSCOM facility housing SDDC and 
other critical functions has facilitated consolidation activities.
    One such consolidation is our new ``Fusion Center'', which co-
locates SDDC, MSC, and AMC planners with our command staff, allowing 
air, surface and sea transportation teams of experts to approach 
movement requirements planning from an integrated, intermodal 
perspective. This includes combining SDDC, AMC, and USTRANSCOM networks 
and moving to joint certification and accreditation by USTRANSCOM of 
all transportation working capital fund-resourced systems.
    A second consolidation of SDDC, MSC and AMC analysts made our 
vision for a Joint Distribution Process Analysis Center (JDPAC) a 
reality. While not fully operational until 2010, the JDPAC is primed to 
co-lead the Mobility Capabilities and Requirements Study (MCRS) with 
OSD and already contributes to the Joint Staff Operational Availability 
studies and the OSD Analytical Agenda. The JPDAC is also building the 
foundation to conduct a bi-annual Future Mobility Assessment. JDPAC 
supports the geographic COCOMs through several ongoing or planned 
projects to include Guam infrastructure and shared logistics studies 
for USPACOM; infrastructure, theater airlift and throughput studies for 
USCENTCOM; and airlift and distribution studies for U.S. Africa Command 
(USAFRICOM). We expect significant expansion of our analytical 
capabilities this year with initial delivery of programmatic and 
distribution modeling and simulation tools, and in time, JDPAC will 
bring unprecedented distribution modeling and simulation capability, 
research techniques and sophisticated engineering tools to bear on 
complex distribution problems.
    Finally, the Acquisition Center of Excellence (ACE) combines common 
carrier acquisitions and contract functions under one authority. ACE 
produces synergies and efficiencies in securing national transportation 
and distribution service contracts by centralized procurement of air, 
surface and ocean transportation.
    In parallel with BRAC transformation, our Joint Intelligence 
Operations Center-Transportation (JIOC-TRANS) reached initial 
operational capability in 2007. JIOC-TRANS enhances our ability to 
anticipate emerging global events and warn transportation and 
distribution decisionmakers by collaborating with the National 
Intelligence Community and intelligence components of the other COCOMs.
    In concert with the Defense Finance and Accounting Service, we 
established a Billing Center at Scott Air Force Base. Typically, cargo 
movement within the DTS requires the billing of segmented 
transportation events by mode. When changing transportation modes, 
bills may be generated for each mode used. In addition, cargo movement 
via ship may generate three separate bills for loading the ship at the 
Port of Embarkation, for the actual sealift and for unloading at the 
Port of Debarkation. As it matures, the Billing Center will generate a 
single consolidated bill for each customer that includes all 
transportation modes and billable events.
    USTRANSCOM is also examining ways to achieve efficiencies in 
container management. Preliminary analyses indicate opportunities to 
clarify responsibilities and command relationships by consolidating 
authority, strategiC-level planning and funding in a DOD-level 
Executive Agent organization.
    We are developing military and civilian personnel to manage 
deployment and distribution for warfighters in joint, interagency, and 
multinational environments. These joint logisticians will ensure the 
viability and vitality of the JDDE. We developed a competency model for 
Defense deployment and distribution. The Joint Staff has validated and 
is planning to use it as a starting point to develop a broader 
competency model for joint logistics. We have also teamed with the 
Industrial College of the Armed Forces to enhance joint logistician 
training in the classroom. In its third year, the Supply Chain 
Management program has 43 graduates with 27 enrolled for 2008.
Maintaining Airlift Readiness for Mission Execution
    Rapid global mobility is a key enabler to the effectiveness of the 
joint force. As response times shrink from weeks to hours, our ability 
to rapidly aggregate and move operational capabilities forward depends 
on versatile, ready, and effective mobility forces.
    However, much of our mobility force structure requires 
modernization. My top air mobility priority is the recapitalization of 
our aging tankers from a fleet of Eisenhower--era KC-135s and Reagan--
era KC-10s to the more capable KC-45, having multi-point refueling, 
significant cargo and passenger carrying and defensive system 
capabilities. The KC-45 will fulfill its primary refueling role, and 
have the flexibility to contribute to an array of enhanced mobility 
solutions, mitigating some short-term risk and/or mission load in other 
areas. The Air Force must recapitalize this fleet and retire those 
remaining KC-135s that are no longer safe to fly or that are no longer 
mission effective.
    The KC-10 fleet must also be modified to operate in the global 
airspace environment to remain viable through approximately 2040. AMC 
is examining ways to modernize the KC-10 to comply with international 
airspace requirements, address obsolescence and provide a path for 
future avionics upgrades.
    Our National Defense Strategy requires a viable fleet of strategic 
airlift aircraft. The C-17 is, and will continue to be, a key mobility 
asset. We are approaching the end of the procurement program of C-17s, 
with the fiscal year 2007 supplemental extending the fleet to 190 
aircraft. Should C-5 modernization falter, we will need to sustain C-17 
production.
    The outsized and oversized, roll-on/roll-off capability provided by 
the C-5 is essential to meet global mobility requirements. However, 
this year the C-5 had the lowest departure reliability and mission 
capable rates among the airlift fleet. Modernizing the C-5s with 
avionics upgrades, new engines and other reliability enhancements is 
necessary to increase aircraft availability, enable access to 
international airspace and foreign airfields, reduce fuel consumption 
and extend the useful life of this unique asset through 2040. AMC must 
modernize the C-5 fleet while closely managing the costs of the 
program, for which Under Secretary of Defense for Acquisition, 
Technology and Logistics (USD(AT&L)) certification is pending.
    Intra-theater airlift is a key component of our global mobility 
force. We currently have grounded three and restricted 24 Air Force C-
130s due to center wing box (CWB) problems, and another 40 aircraft 
have been temporarily repaired. The Air Force's C-130 CWB replacement 
program for combat delivery C-130H1s is funded thru fiscal year 2013. 
Funding stability for CWB is critical to maintaining intratheater 
airlift operational effectiveness. Additionally, C-130 variants have 
faced challenges of noncompliance with global air traffic requirements, 
aircraft avionics equipage and sustainment. The Avionics Modernization 
Program will modify 222 combat delivery C-130H2/2.5/3s. USD(AT&L) 
directed the Air Force to develop an investment strategy for satisfying 
the capability of the remaining 166 C-130 aircraft, which includes 47 
C-130H1s and 10 LC-130s.
    While the C-130 remains a workhorse for intra-theater lift, the C-
27 will fulfill the joint force need to support dispersed tactical 
elements and go the ``last tactical mile''. Acquisition of the C-27, 
coupled with the repair and replacement of the CWB on select C-130s, 
and additional C-130J procurement will provide the right mix of 
aircraft to meet COCOM requirements.
    A modern tool in our tactical airlift arsenal is the Joint 
Precision Airdrop System (JPADS). JPADS provides precision airdrop from 
higher altitudes with a four-fold increase in accuracy over previous 
ballistic airdrop systems and the ability to deliver to multiple drop 
zones on a single pass. Today, over 250 JPADS systems are supporting 
operations in OIF/OEF. An additional advantage of the JPADS technology 
is the ability to apply the JPADS Mission Planning System to 
conventional airdrop delivery methods. These drops, termed Improved 
Container Delivery System (ICDS), produce a refined release point 
enhancing ballistic load accuracy by 60 percent while allowing 
deployment from higher and less vulnerable operating altitudes. On 
average, JPADS/ICDS delivers more than 400,000 pounds of cargo each 
month. Since being deployed to OIF/OEF in July 2006, JPADS/ICDS has 
eliminated the need for many ground convoy supply missions, thus 
removing countless personnel from dangerous roadways.
    The ability to rapidly offload cargo with our Tunner and Halvorsen 
loaders cannot be overlooked. The Air Force has funded the full 
complement of 318 Tunners, but only 392 of 538 Halvorsens. We strongly 
support Air Force acquisition of the remaining assets to properly 
outfit our global mobility force.
    Distinguished Visitor (DV) airlift is a key component of the global 
mobility force. Our senior leaders often require immediate and 
sometimes simultaneous airlift to carry out diplomatic and other 
missions in an ever-changing strategic environment. In partnership with 
the Joint Staff and Services, we are facilitating collaborative 
scheduling processes, policy and technology initiatives as well as 
working to modernize our DV fleet with the Senior Leadership Command, 
Control, and Communications System-Airborne (SLC3S-A) package. SLC3S-A 
offers our senior government officials communications and information 
management capabilities comparable to those available in their 
permanent government office environments, while they travel globally 
aboard U.S. Government aircraft.

Maintaining Sealift Readiness
    On the sealift side, our efforts focus on targeted investments in 
readiness, leveraging commercial capabilities and improvements in 
maintaining our organic fleet. In previous years, we ``right-sized'' 
the strategic sealift fleet by transferring older, lower utility ships 
out of the Ready Reserve Force (RRF). The RRF, which is owned and 
operated by the Maritime Administration, now consists of 44 ships, down 
from 102 in 1994. We used the savings generated from retiring the 
vessels to extend the service life of the remaining vessels, fund 
efficiency and safety enhancements and leverage our commercial partners 
to recapitalize lost capacity.
    We are also working with MSC to recapitalize aging tankers and 
extend the service life of our Fast Sealift Ships (FSS). International 
regulations and commercial refinery standards limit tankers loading and 
discharging at most worldwide oil terminals to a maximum age of 25 
years. This will place MSC's tankers beyond their useful life in 2010. 
As such, MSC contracted for new tankers, which will be built in a U.S. 
shipyard. Additionally, MSC completed an Outyear Engineering 
Requirements Assessment for the FSSs that determined the FSS platforms 
could safely and economically operate through 2033. This extends their 
military useful service life to approximately 60 years vice the 
originally planned 50 years.
    In 2007, MSC conducted a successful test activation of a small T1 
size tanker under a unique contingency contract supporting our 
strategic capabilities in the Far East. We also replaced our 40-year-
old Offshore Petroleum Discharge System (OPDS). This year MSC chartered 
a new U.S.-built, U.S.-flagged and U.S.-crewed vessel for this mission. 
Replacing our OPDS vessel with a modern technology ship greatly 
enhances our capability to support the warfighter with fuel over the 
shore when access to prepared ports is denied.
    To further shore up our strategic sealift capability, we fully 
support the Navy's effort to exercise purchase options on U.S.-
manufactured ships employed in the Maritime Prepositioning Ships 
program. Apart from the support they provide for the Marine Corps' 
prepositioning requirements, these ships have a dual use of providing 
transportation capacity for surge and sustainment missions.

Maintaining Infrastructure Readiness
    Infrastructure is the cornerstone of our ability to project 
national power. We continue our close coordination with the Department 
of Transportation (DOT), the Federal Highway Administration and the 
States to balance peacetime and wartime surface movement requirements 
on the U.S. highway system. In advance of the reauthorization of 
surface transportation legislation, we are updating the Strategic 
Highway Network as part of our Highways for National Defense Program, 
focusing on congestion, condition and capacity issues along our 
intermodal deployment routes. We urge Congress to address national 
defense public highway needs in future national highway programs.
    With many of our strategic seaports operating at or near capacity, 
we are also examining our infrastructure to ensure it is capable of 
meeting national security requirements. SDDC has initiated Port Look 
2008 to examine ways to optimize the use of U.S. strategic commercial 
and military seaports.
    We are also looking to expand our reach into regions of increasing 
national interest and potential instability, most notably Africa, 
Southeast Asia, and South America. USTRANSCOM personnel visited all the 
geographic COCOMs to better understand emerging contingency plans and 
to champion the need for mobility-capable cooperative security 
locations. Additionally, we led Global En-Route Infrastructure Steering 
Committee meetings to prioritize joint military construction projects 
to expand key global mobility capabilities while ensuring current 
mobility infrastructure remains viable.

Protecting our Forces
    Protecting our forces is key to accomplishing our global mission. 
Our Critical Infrastructure Program (CIP) is fostering information 
sharing among DOD, DOT, U.S. Coast Guard, Transportation Security 
Administration (TSA) and the COCOMs. The CIP mitigates identified risks 
to our critical worldwide physical and cyber transportation 
infrastructures.
    Our components are improving threat protection in their mission 
areas. SDDC implemented waterside barriers, improved security equipment 
and optimized guard positions at our seaports. AMC continues to field 
the Large Aircraft Infrared Countermeasures system to protect mobility 
aircraft from advanced manportable missiles. MSC is integrating Navy 
Embarked Security Teams to secure our sealift assets. Finally, we are 
working with the Joint Staff on individual protective equipment and 
technological improvements in Chemical, Biological, and Radiological 
warfare defense capabilities.
    We support all initiatives to authenticate drivers and workers in 
the distribution supply chain. This year, we improved interoperability 
between the Defense Biometric Identification System and TSA's 
Transportation Worker Identification Credential (TWIC) programs. SDDC 
began issuing biometric credentials to our commercial truck drivers 
holding security clearances who haul arms, ammunition, explosives and 
classified items. We are also seeking TSA's approval to accept DOD 
credentials in lieu of TWIC.
    Improving supply chain security includes protecting our Military 
Ocean Terminals. We must provide a trained and capable security force 
at adequate levels to protect critical infrastructure. We continue to 
work on improvements using both technical and personnel solutions. In 
partnership with the Joint Non-Lethal Weapons Directorate, we tested 
several promising pieces of equipment that would enhance waterway 
control. We are also conducting manpower surveys to adequately address 
the workload concerns of our anti-terrorism and force protection 
personnel.

Fiscal Stewardship
    While we are focused on effectiveness in our supporting role, we 
are decidedly mindful of costs and constantly look to find efficiencies 
due to our stewardship of a significant portion of the Nation's 
treasure. Since 2003, we avoided over $1.6 billion in costs. We 
achieved the majority of these savings by shifting to less costly 
transportation modes attributable to forward stocking initiatives at 
Defense Distribution Center, Kuwait. We realized additional savings by 
incorporating challenge protocols to validate requests for high-cost 
transportation options and negotiating least-cost transportation 
solutions. As a large consumer of hydrocarbons, we began using 
alternative fuels. Twenty-five percent of our diesel fuel consumption 
this year was bio-diesel and 11 of 12 AMC bases are now equipped to 
handle and issue bio-diesel fuel. Similarly, 6 percent of our unleaded 
fuel was issued as E-85, and 4 of 12 bases are equipped to manage E-85.

Maintaining Partnerships
    Mutually supporting relationships are essential to the success of 
any enterprise and ours is no different. The Civil Reserve Air Fleet 
(CRAF) is a critical partner in our Nation's ability to project and 
sustain forces. Our legislative initiative is aimed at preserving CRAF 
viability by providing a prudent amount of assured business to our 
commercial airline partners, thus incentivizing them to maintain 
sufficient aircraft availability to meet future DOD needs.
    In addition to CRAF, the Maritime Security Program (MSP) and the 
Voluntary Sealift Agreement (VISA) U.S.-flag commercial sealift 
carriers remain a critical partner in our Nation's ability to project 
and sustain forces by providing the Department of Defense with assured 
access to commercial U.S.-flag ships as well as U.S. mariners to 
support national security requirements during war or national 
emergency.
    Our commercial sealift partners accessed through the Universal 
Services Contract (USC) are also vital to our mission. USC provides 
worldwide intermodal transportation services through the DTS, and is a 
cost-effective means to transport less than shipload lots of equipment 
and supplies by leveraging commercial trade routes and existing 
commercial capacity. Although traditionally focused on port-to-port 
transportation services, efforts are underway to improve the USC by 
asking our commercial sealift partners to expand service to cover the 
entire end-to-end distribution process, include provisions for prime 
vendor direct booking and improve claims resolution mechanisms.
    In an increasingly global environment, we continue to work with our 
allies to ensure smooth distribution operations. Strategic airlift 
capability is increasing as Australia, Canada and the United Kingdom 
now have C-17s, and a consortium of NATO and Partnership for Peace 
nations is planning to procure C-17 aircraft as well. The imminent 
acquisition of new air refueling aircraft by a number of allies and 
ongoing discussions with other countries on how to best assist in 
providing and acquiring air refueling, airlift and sealift support, on 
a reciprocal, reimbursable basis, bodes well for our global 
distribution operations. Over the past year we have made excellent use 
of international agreements by using the acquisition and cross-
servicing authorities provided by law to offer and obtain reimbursable 
logistic support in more than 20 countries.
    In addition, we are working to develop closer ties with other 
government agencies by making them aware of the unique capabilities and 
expertise we can provide through the Joint Interagency Coordination 
Group (JIACG). The JIACG, now resident at each COCOM, is reaping 
benefits today via close partnering with USAID, FEMA, the Department of 
State and others to bring all elements of national power to bear and 
incorporate lessons learned from recent events into current planning.

Looking Ahead
    As the Services evolve to meet future challenges, we must work in 
concert with them, anticipating their need for innovative mobility and 
distribution strategies. We are continuously exploring new ways to 
support future force requirements. Through our Deployment and 
Distribution Enterprise Technology research and development program we 
leverage emerging technologies to deliver enhanced joint warfighting 
capabilities. Program successes include the JPADS-Mission Planner, 
which improved airdrop delivery accuracy to isolated areas; and the 
Joint Modular Intermodal Container, which enhanced unit deployment and 
theater distribution. Leveraging successful prototype testing, we have 
transitioned the Wireless Gate Release System to the Air Force. This 
system significantly decreases the cost of airdrop operations by 
doubling C-130 JPADS delivery capacity and reducing damage to 
airdropped cargo bundles. This year we will provide improved 
distribution modeling tools for the JDPAC, deliver a web-based 
application to optimize the execution of worldwide Operational Support 
Airlift, and begin development of a Lightweight Trauma Module to 
improve the already superb en route care of injured personnel. Next 
year we will partner with the services to pursue mesh network, tags, 
and tracking technologies to enhance asset visibility and develop a 
collaborative Single Load Planning Capability. We ask Congress to fully 
fund DOD's modest Deployment and Distribution Enterprise Technology 
program.
    We continue to participate in the capabilities-based assessment of 
Sea Basing, spanning the range of military operations in the 2015-2025 
timeframe. The success of Sea Basing relies heavily on advances in 
cargo handling, ship-to-ship cargo transfers, high-speed connectors and 
sea state mitigation through sea state four.
    AMC produced the Global Mobility Concept of Operations and the 2008 
Air Mobility Master Plan outlining future mobility force operations to 
2025. The framework centers on five operational capabilities: airlift, 
air refueling, expeditionary air mobility operations, space lift and 
Special Operations Forces mobility.
    One of our greatest challenges lies in supporting the recently 
activated USAFRICOM. With Africa significantly lacking infrastructure 
to support air, land and sea transportation, we will undoubtedly 
advocate for targeted infrastructure improvements. In doing so, we must 
remain flexible to rapidly changing requirements while being sensitive 
to the often fragile geopolitical climate that exists in many parts of 
Africa.
    To make sure we judiciously meet these challenges, we have 
initiated a Global Access and Infrastructure Assessment (GAIA) to 
examine current global access and infrastructure capabilities on a 
region-by-region basis. GAIA will highlight gaps in coverage to ensure 
sufficient infrastructure exists to fully support future mobility 
operations. GAIA will also provide the infrastructure baseline 
assessment for the next MCRS.
    All these challenges require a flexible, dynamic Command Corporate 
Services environment to improve the precision, reliability, and 
efficiency of the entire DOD Supply Chain.

                             FINAL THOUGHTS

    We have been entrusted with the authority to lead and transform the 
DOD Distribution System and the awesome responsibility of serving the 
geographic combatant commanders as they execute our Nation's most 
demanding military missions. Of the future, we know only that major 
conflicts will be joint and combined, involving all services and 
national and international partners acting in an interdependent manner. 
In this environment, we are challenged to be forward-leaning and 
forward-thinking and to anticipate and meet the needs of our 
warfighters across the globe. I am extremely proud of the USTRANSCOM 
team and our national partners. Today, we are supporting the global war 
on terrorism while providing consistent precision and velocity to 
deliver combat forces and humanitarian relief in support of national 
objectives. We are also good stewards of our national resources, and in 
our role as the DOD DPO, we will continue to look to the future, 
constantly reexamining our capabilities, forces and processes while 
implementing enterprise-wide changes ever mindful of cost, value and 
efficiency. With all that the Nation has placed in our trust, a promise 
given by us will be a promise kept.

    Senator Kennedy. Thank you. Thank you very much for your 
testimony and also for your dedication to the service of our 
country.
    We will do 10-minute rounds, and I ask that the clerk let 
me know when I have about a minute and a half left.
    Secretary Payton, there has been a lot of interest in 
Congress over the Air Force's February 29 decision to award the 
tanker to Northrop Grumman. I understand that Boeing filed a 
protest of the award yesterday. So, according to the bid 
protest rules, the Government Accountability Office (GAO) has 
100 days to issue the decision. That means we might not have a 
GAO decision of the protest until sometime in June.
    The tanker program does not fall within the jurisdiction of 
this subcommittee, but I thought I would offer you an 
opportunity to say anything that you are able about the award, 
the process leading up to the award, or about the protest. Then 
I would ask General Schwartz to do the same.
    As I say, it is not directly in the jurisdiction of this 
subcommittee, but there is a lot of interest in it. Perhaps you 
want to? We had a briefing on this yesterday.
    Ms. Payton. Yes.
    Senator Kennedy. I think it is an issue that is topical.
    Ms. Payton. Yes, sir. Thank you very much for the 
opportunity to explain the process that was followed for the 
tanker competition. The process that was followed was an effort 
to make sure that all the offerers understood every single 
detail about the requirements and the capabilities desired by 
the Air Force and by our customer, Air Mobility Command (AMC), 
who defined the requirements.
    The requirements were approved by the Joint Requirements 
Oversight Council (JROC) in November 2006. We had several draft 
Requests for Proposals (RFPs) that we coordinated with the 
offerers so that we could get a thorough understanding that 
they knew what was being requested in the competition. We did 
put the final RFP out, after a lot of meetings, on January 30, 
2007.
    We continuously encouraged questions and answered every 
question that came into us. We had well over 500 evaluation 
notices that are well-documented because we wanted to make sure 
that people really knew what we wanted, and we didn't want a 
confusion at a debrief, where someone might stand up and say, 
``I had no idea that this was a requirement.'' To put it very 
succinctly, we did an awful lot more in this particular source 
selection than in any other source selection to be open, 
transparent, and fair to the offerers.
    We also had a DOD Inspector General investigation in the 
middle of source selection, which is very rare. The DOD came in 
to make sure that we had traced all those requirements from the 
JROC into the system requirements document that was part of the 
RFP to make sure we hadn't dropped any requirements or added 
any requirements. They did a very thorough review and found 
that everything was totally in accordance with good practices.
    We had the GAO come in in the middle of source selection to 
take a look at our acquisition strategy. As well, they 
determined that we were following all the regulations of the 
Federal Acquisition Regulations and that we had a solid 
process.
    We had OSD send in an independent review team that 
thoroughly looked at everything that was going on. Were the 
people in the source selection evaluation team, as they 
debriefed the people in the source selection advisory council, 
were all of those factors flowing into the advisory council? 
Were all of the factors that the advisory council were aware of 
flowing into the SSA?
    They looked at were the offerers being treated fairly as 
well, and were we following all the rules and regulations and 
documenting all of the findings that we had? They, too, said 
that this was probably the best, most unprecedented 
coordination that has ever been done, to their knowledge. The 
group included the director of all defense procurement----
    Senator Kennedy. This is enormously important, and I just 
limited myself to 10 minutes at the start of it. So maybe you 
could wrap up a little bit here?
    Ms. Payton. I was just about to conclude. Yes, sir.
    Senator Kennedy. Then I think I will come back to the topic 
because I have some technical questions on the subject matter 
which we are going to get into. But this is very interesting 
and very valuable, so I don't want to suggest that it isn't.
    Ms. Payton. Yes, and that was the last thing, yes, sir, 
that happened. We had the DOD team that included an Army 
expert, an acquisition and Navy expert, lawyers, and the person 
that is the director of the defense procurement group within 
OSD.
    We feel very confident that sound processes were followed, 
that our motives were pure throughout the entire process, and 
that we had no fear and no favor from anyone in this process. 
We did what was right for providing best value to our 
warfighter and the taxpayer. Thank you.
    Senator Kennedy. Good. Let me go on, General Schwartz, to 
some of the important matters that I think we hopefully will be 
able to address. One, last November, you responded to a letter 
from Chairman Levin asking your personal and professional 
opinion about how many C-17 aircraft to buy, if any, beyond the 
190 aircraft that were planned.
    If I can paraphrase your response, you said that given the 
uncertainty about the C-5A modernization program, you couldn't 
recommend terminating the C-17 production at this time. You 
went on to say that you thought 205 C-17 and 111 C-5s is the 
correct fleet mix for the future.
    Without objection, the two letters will be made part of the 
record.
    [The information referred to follows:]
      
    
    
      
    
    
      
    Senator Kennedy. So, General Schwartz, now the Under 
Secretary  has  certified  the  C-5  RERP  to  continue,  at  
least  for  the  C-5B. Does the mix now of 205 C-17s and 111 C-
5As still represent your personal and professional view of the 
fleet needed to meet your requirements?
    General Schwartz. Mr. Chairman, it does.
    Senator Kennedy. General Schwartz, Secretary Young's Nunn-
McCurdy certification of the C-5 RERP upgrade indicated several 
actions that were planned, including providing the Avionics 
Modernization Program (AMP) upgrading for all 111 C-5s and 
requiring the Air Force institute performance-based logistics 
and lean Six Sigma process improvements to the maintenance 
activity for all 111 C-5 aircraft be improved capability and 
lower operating cost.
    Is there funding in the budget and the Future Years Defense 
Program to complete the AMP and improve logistics for the C-5s?
    General Schwartz. Mr. Chairman, I understand that is the 
case. Ms. Payton can confirm that. But of course, it is 
important to perform the avionics modernization on the 
airplanes that do not receive the full-up reliability 
improvement in order to assure that the aircraft can access 
controlled airspace of the future. That is essential and is 
also required for safety of flight reasons.
    But as I understand it, sir, both programs now are properly 
funded.
    Senator Kennedy. How will the AMC respond to these 
directions for improving logistic support for the C-5?
    General Schwartz. Sir, there is an effort underway in the 
AMC. It is consistent with a larger Air Force program called 
AFSO21, which is essentially lean in the Air Force. It is clear 
that there is a place for improvement, probably in maintenance 
of all of our airplanes, but certainly true in the C-5 and in 
the spare parts inventory and so on.
    But I remain convinced, Mr. Chairman, that the C-5 
reliability improvement program will make a very substantial 
difference, in the reliability of the airplane--for example, we 
currently schedule two airplanes to make one. That is just the 
reality. That will be less the case in the future. Importantly, 
the improved airplane will also perform much better, carry 
more, fly higher, use less gas, exactly the kinds of things 
operators treasure.
    Senator Kennedy. I am going to include John Young's letter 
for the record.
    [The information referred to follows:]
      
    
    
      
    
    
      
    
    
      
    
    
      
    
    
      
    
    
      
    
    
      
    Senator Kennedy. On page 2 of that, he goes into talking 
about the importance of retention and operation, C-5A are 
required, the AMPs, and the next paragraph, the logistical 
aspects, which you have referred to.
    Secretary Payton, the DOD-approved cost estimate of the C-5 
RERP has shown that there was, indeed, a breach of the Nunn-
McCurdy threshold for the C-5 RERP modernization. The Cost 
Analysis Improvement Group (CAIG), which produced that approved 
estimate derived a constant-dollar cost estimate of 
acquisition, unit cost of $92 million, $92.4 million versus 
$60.5 million originally estimated.
    While this increase was unfortunate, the estimate only 
reflects half the increase that the Air Force derived, as the 
service cost position reporting the Nunn-McCurdy violation in 
the first place. Can you explain why the Air Force estimate was 
so much higher than the CAIG?
    Ms. Payton. Yes, sir. In trying to get affordability and 
cost growth under control and inheriting many programs that 
were costed at a 50 or 40 or 30 percent confidence level to 
begin with, I have set the stage so that the person who 
inherits the job after me will get programs that are costed at 
a higher level of confidence.
    If 10 things can go wrong on a program and you only have 
enough money to fix 4 of them, i.e., you would be at a 40 
percent confidence level in your amount of money allocated, 
that puts our acquisition workforce in a terrible situation. So 
I have indicated that an 80 percent to 90 percent confidence 
level should be the funding level for our program, so that our 
acquisition people do have enough money in order to pay for 
things when things go wrong that you weren't counting on.
    So the reason our Air Force cost estimate was higher is 
because they calculated it at an 80 percent confidence level, 
having a few more engineers, having a little bit more time in 
the schedule in case things go wrong, rather than at a 50 
percent confidence level, which is what the OSD CAIG calculates 
cost at.
    Senator Kennedy. That is an interesting concept and one 
which I can see has value if it is constantly used. Of course, 
there was at least an argument made that the estimate by the 
Air Force was so prohibitively high that it is sure to 
terminate the whole program. Therefore, when they came back in 
at the lower cost, which is the real cost, they found that it 
made sense in terms of the value of the program.
    So I think we want to find out it is important in terms of 
accounting, but also what the impact is going to be, just as we 
want to make sure that we are going to have truth in accounting 
in terms of it and consistency in the accounting. When I heard 
those figures that are going out and said that is the end of 
the program, and most other people thought it was the end of 
the program, and then we heard there were some in the Air Force 
who wanted the end of the program, this is a pretty easy way to 
end it.
    Then we found out that the costs were not really related, 
were double what were the real costs on it. So it raised some 
serious questions, and I think you have given us an 
explanation.
    Ms. Payton. Yes, sir. I have had other programs that have 
come before me, and I have insisted on an 80 percent confidence 
level so that acquisition doesn't get cost overruns. We 
estimate them so low, and all of a sudden, they are 30 percent 
overrun when, in fact, they were not funded properly to begin 
with.
    So I am trying to set the stage for my successors for all 
programs.
    Senator Kennedy. This is for all programs, right?
    Ms. Payton. For all programs, sir. For all programs I have 
a memo and guidance out that we will no longer lowball these 
programs. They must be funded properly so our acquisition 
workforce has a fighting chance to maintain its integrity and 
to deliver on time and on cost.
    Senator Kennedy. My time is up, but I would be interested 
what the results are. At 80 percent, do you have a consistent 
fact that you are missing the target because you are using at 
80 percent versus if you had used, what, the 50 percent? I am 
not an accountant, and I don't know.
    Ms. Payton. I would be glad to follow up with you.
    [The information referred to follows:]

    Of the 35 acquisition category 1, non-space programs, 9 are funded 
in the 80-90 percent confidence level. The remaining programs either do 
not have a specific confidence level assigned to the cost estimate, are 
funded at the 50 percent confidence level per the Office of the 
Secretary of Defense Cost Analysis Improvement Group, or were baselined 
before the SAF/AQ guidance.

    Senator Kennedy. But with that, there is going to be some 
issues in terms of the merits of a particular kind of system. 
It would be interesting for us to know, using the higher 
figure, the accuracy of that.
    Ms. Payton. Yes, sir. The C-5 program, to begin with, was 
under estimated. We baselined it way, way too early before we 
had any data. We do this in a very poor manner, and so we came 
up with a number, ``I think it will be about this.'' We 
breached Nunn-McCurdy because I think we baselined it way too 
low to begin with.
    So I am trying to put some discipline in the process. We 
have great cost estimators, but we always pick the low number. 
We should start picking a higher number so that we can give our 
acquisition people a fighting chance to be successful.
    Senator Kennedy. Thank you.
    Senator Martinez.
    Senator Martinez. Thank you, Mr. Chairman.
    You spoke eloquently, I think, about the process on the KC-
45A, and I had the benefit of also, Secretary Payton, hearing 
you yesterday. I want to just commend you for the very even-
handed way that you have made your presentation in both 
instances.
    Ms. Payton. Thank you.
    Senator Martinez. As someone who does not have a direct 
stake in the outcome, I must say that it sounds like a process 
that, well, obviously, the protest is undergoing. So I 
shouldn't comment on it. But it just does seem like you are 
providing the kind of information that is helpful to us.
    General Schwartz, on that same subject, if I could ask, 
could you describe for us, you had determined this to be the 
top priority of your command, the tanker fleet. They currently 
fly out of MacDill Air Force Base in my backyard in Tampa. I 
was just wondering if you could speak to us about the 
importance of the KC-45's passenger and cargo capability and 
what it will do for your airlift mission? Also, does this 
capability add to your ability to operate at greater capacity 
and greater efficiency?
    General Schwartz. Certainly, sir. I think it is important 
to recognize that while other countries have modest 
capabilities in this area now--France, Italy, Japan, the U.K., 
so on--we have a unique capability to project American military 
power that the tankers give us.
    It allows us to establish the air bridge through which we 
move airlift aircraft, pack passengers, and cargo. It allows us 
to put fighter aircraft and bomber aircraft into an area of 
responsibility (AOR) to perform missions as required. Likewise, 
it supports the intelligence, surveillance, and reconnaissance 
capability of the Armed Forces with air-breathing sensors. It 
is a fundamental and almost a uniquely American capability.
    The dilemma is, is that 500 of our 550 or so airplanes are 
aging. They were manufactured not long after I was born. While 
we have modified and improved the KC-135 over the years, we 
need a successor platform. We made the case, which was 
validated by the JROC, that in today's environment what we 
needed was an airplane that certainly could do the refueling 
mission, but needed to offer more versatility than just to do 
refueling.
    Throughout the Armed Forces, sir, single-point platforms, 
single-mission platforms, are not necessarily the best 
solution. You want to have versatility. Doors, floors, and 
defensive systems in a tanker-type airplane provide that type 
of versatility so that you can carry passengers. You can carry 
cargo. You can air refuel on the same sortie, and you can 
position the airplane in threat airspace that at the moment we 
very carefully manage with regard to the KC-135 and the KC-10.
    The bottom line is, sir, we need an airplane of the 2000s, 
not of the 1950s. That is exactly, it appears to me, what the 
Air Force has selected.
    Senator Martinez. Tell me, General Schwartz, about this 
very sensitive mission that you spoke of, which is transferring 
of injured service men and women from the theater to critical 
care facilities, which I know you place a great deal of 
importance on that. Can you tell us and give us an update 
regarding your continued efforts to improve this vital mission, 
and let us know also of any further support that Congress might 
provide you in this vital area?
    General Schwartz. This is a mission which is a moral 
imperative. We have a contract, Senator, with our kids, and 
that is if they get banged up on the battlefield that we will 
leave no stone unturned to return them to the best medical care 
on the planet.
    I honestly believe that we and part of what we do 
underwrites the All-Volunteer Force because if the kids stop 
believing that, they will stop volunteering. So, our capacity 
to do this has just multiplied because of modern aircraft.
    In the old days, when we had C-141s and KC-135s and so on, 
these were adequate. But they were not designed with good 
power, good lighting, or good environmentals--temperature 
control, pressurization, and so on. Modern airplanes do that, 
like the C-17, to a T. So if we put a superb medical crew in 
the back, they actually have an intensive care unit that is as 
good as anything on terra firma. We have fortunately in the 
last 2\1/2\ years only lost one troop that passed away while 
returning from the CENTCOM AOR, returning to the United States.
    It is a tribute, sir, to both the aircrews in the 
airplanes, the equipment on the birds, and, most importantly, 
the medical teams that provide that care. That capability is 
embedded in the KC-45 requirement. There is no doubt in my mind 
that we will use that airplane to perform that function, and it 
will do it exceedingly well. Profoundly important mission.
    Senator Martinez. Let me ask both of you if you could 
comment on the working relationship with our commercial 
transportation partners and supporting labor organizations that 
allows you to do your mission and to supplement your mission. I 
am speaking of CRAF specifically.
    General Schwartz. Yes, sir. If I may, Madam Secretary?
    Ms. Payton. Please.
    General Schwartz. The United States Government, sir, can 
never own all of the assets it would need in a major surge. Our 
secret weapon, frankly, at the TRANSCOM is this capacity to 
blend both organic U.S. Government-owned resources and 
commercial resources to best effect. This happens both in the 
airlift and the sealift communities.
    Let me start with the sealift first. It is important to 
recognize, sir, that all of our sealift assets, even those that 
are owned by the Navy and those that are owned by the Maritime 
Administration, are operated by U.S. Merchant Mariners, 
civilian U.S. Merchant Mariners. In my opinion, that is the 
fifth Service. They are dedicated, patriotic Americans, and 
they do a terrific job.
    The same thing is true on the airlift side, where roughly 
95 percent of the passengers that we move--and we move a lot--
we have moved 5 million passengers since September 11--moves on 
commercial platforms. Roughly 40 percent of the cargo that we 
move moves on commercial platforms, and so that is very 
important. The way we get access to these platforms is through 
the CRAF. Once again, those are crewed by American civilian 
aviators.
    So, it is vitally important, sir, preserving those two 
capabilities and structuring the incentives that allow American 
industry to support the Government when we need to surge is 
something that I think is very important for the future.
    I just would close, sir, by commenting that one of the 
things that you hold me accountable for is maintaining the 
balance between the organic fleet and the commercial 
capability. As I mentioned in my opening remarks, I caution 
about overbuilding the organic fleet because if that occurs, it 
competes in peacetime with that preference cargo, the 
incentives that we offer our commercial partners. So that is 
one of the reasons that I believe 205 is the right number of C-
17s.
    Thank you, sir.
    Senator Martinez. While you are on that subject, would you 
also comment on the recapitalization needs that you might be 
seeing in terms of our seagoing lift assets?
    General Schwartz. Yes, sir. We are in a period at the 
moment where there is not a need to initiate a new sealift 
program. You may recall, sir, that both in the immediate 
aftermath to the first Gulf War, there was a considerable 
investment made by Congress in sealift capability. Those 
platforms will remain viable through about 2020.
    So we won't have to seriously consider successor platforms 
until program year 2012, the 2012 program. We are a couple of 
years out from that. But at that point, 2 years from now, it 
will be time for us to think about the recapitalization of the 
fast sealift ships.
    You may recall those were the old SEALAND ships, the high-
speed SL-7s that DOD bought and converted, and they will go out 
to about 60 years. At that point, it will be time to replace 
them.
    Senator Martinez. My time has expired. Thank you both very 
much.
    General Schwartz. Thank you, sir.
    Senator Kennedy. Senator Sessions.
    Senator Sessions. Thank you, Mr. Chairman.
    The Navy recently awarded contracts for the joint high-
speed vessel. What role do you expect them to play, when will a 
lead contractor be decided, when do you expect them to enter 
into the fleet, and how many?
    General Schwartz. Sir, I will have to do this for the 
record in terms of when they will be delivered. I don't have 
that off the top of my head. However, the last program summary 
I saw was that there were going to be three Navy and five Army 
platforms. This is an important capability, and the reason is, 
is because not everything has to fly.
    If you can move units, coherent units on a surface 
platform, which is what the high-speed vessel will allow us to 
do is to move a Marine company, for example, very effectively 
over, say, distances from in the western Pacific from Okinawa 
to Korea, or similar arrangements in the Gulf. These are 
excellent platforms, again, for moving coherent units where you 
have port capability.
    It is an important initiative. It is one which the regional 
commanders who I support certainly endorse--U.S. Pacific 
Command and CENTCOM, in particular. The first increment of 
that, I am quite certain, will be eight platforms. I will give 
you the delivery schedule for the record.
    [The information referred to follows:]

    [Deleted.]

    Senator Sessions. All right. Secretary Payton, with regard 
to the tanker and the procedures that were utilized, there were 
lease arrangements which fell apart and much embarrassment over 
that. Congress, as part of our response and mandate to DOD, 
required that this contract be bid, did it not?
    Ms. Payton. Yes, sir.
    Senator Sessions. When Congress required that, issues such 
as components, labor requirements, or other issues in existence 
at the time that Congress had originally passed, were the 
standards that you had to follow when you executed the 
contract.
    Ms. Payton. Yes, sir.
    Senator Sessions. So some Members of Congress that are 
complaining to you about how you conducted the process forget 
we set up the process of how bids should be conducted, and then 
we directed the Air Force to bid this contract, and do you feel 
like you followed those requirements?
    Ms. Payton. Absolutely.
    Senator Sessions. Are you satisfied that the aircraft 
chosen will be a superior product for the military personnel 
who will use them?
    Ms. Payton. No doubt. Yes, sir.
    Senator Sessions. General Schwartz, would you comment on 
that?
    General Schwartz. Sir, I am content with the selection 
process.
    Senator Sessions. Will the aircraft today, General 
Schwartz, the aircraft that has been selected, how does it 
compare to the existing aircraft? Do you get savings and 
benefits from having this more modern aircraft in addition to 
just eliminating a fleet that is getting more and more costly?
    General Schwartz. Senator Sessions, I think the short 
answer is this: the 707 was a magnificent machine in its day, 
and it was designed to fly once every 3 days. Airplanes today, 
particularly commercial variants, are designed to fly three 
times a day. That kind of utility, that kind of productivity, 
will change the way we do business.
    That is really the thing that is exciting. The versatility 
that is inherent in the airframe to both refuel and to lift and 
to do it with a modicum of self-protection is a game changer, 
in my view.
    Senator Sessions. With regard to your comments about lift 
and the commercial sector, the Army Reserve unit I used to be a 
member of for 10 years--I was a part of the Military Sealift 
Command, and we contemplated and had leases with ships, and in 
a crisis, we didn't expect that we would have enough military 
ships to lift everything that we needed, but we had a priority 
lease with regard to those shipping companies that they would 
immediately bring their ships to the service of the country for 
whatever needs we might have, along with their crews.
    First of all, is that essentially what you are doing with 
the Air Force, and is that a big cost saver?
    General Schwartz. That is essentially the process that we 
have both on the airlift and the sealift side. Clearly, if the 
U.S. Government owned the assets and the networks that we take 
the commercial networks out there that we take advantage of, 
some have estimated that the cost of it would be $50 billion.
    Senator Sessions. In extra cost if you tried to maintain 
that as a force?
    General Schwartz. Exactly. Exactly. The truth, this is a 
particularly advantageous arrangement where, for a relatively 
modest incentive, we are assured that both our airline partners 
and our sealift partners will present their vessels or their 
aircraft typically within 48 hours, a little bit longer for the 
sealift folks depending on where their ships are, and support 
America's business.
    Senator Sessions. I think striking that right balance, 
people might disagree where it is. But I absolutely agree it is 
just not feasible for us to maintain all these ships sitting 
with no real mission, and then for a certain number of months, 
they might all be used. It makes more sense to have the kind of 
contracts in place that allows you to call up commercial 
aircraft that are well-maintained and can be utilized 
immediately.
    With regard to I think you mentioned, there is considerably 
more cargo and considerably more personnel lift capability in 
these new tanker aircraft. Mr. Chairman, the fuel--you probably 
know, but I didn't until some time ago--is just in the wings. 
The main cargo area is open for personnel and any cargo. So you 
get a considerably amount more of cargo and personnel lift 
capability with this?
    General Schwartz. We certainly do, and that is not a 
trivial matter.
    Senator Sessions. Secretary Payton, do you know the details 
of the numbers on that offhand?
    Ms. Payton. Yes, sir, I do. I think relative to the 
winner--the successful offer and the unsuccessful offer, I 
can't really give those particular numbers out at this time.
    This was a tanker first. It has incredible offload capacity 
at 1,000 nautical miles and 2,000 nautical miles. So from a 
tanker perspective, it will take many less tankers to refuel 
many more receivers and to stay in the air for a much longer 
time.
    Relative to passengers, hundreds of more passengers can be 
carried. Aeromedical evacuation as well is hugely improved with 
either one of these tankers. So it is a great multi-mission 
aircraft, but tanking is job one.
    Senator Sessions. Thank you, and I know it remains the Air 
Force's number-one priority for recapitalization. You mentioned 
multi-point refueling. What does that mean, Secretary Payton or 
General Schwartz?
    Ms. Payton. Do you want to take that?
    General Schwartz. I would be happy to. In other words, this 
airplane will be able to refuel both from the boom for those 
typically Air Force aircraft that have a boom and receptacle 
sort of refueling arrangement. Or at the same time, there will 
be wing pods, which allow refueling what we call probe and 
basket. Typically, the United States Navy uses that. So the 
baskets come back out of the pods and the Navy aircraft can 
refuel.
    So you can refuel both off the pods and the boom 
simultaneously.
    Ms. Payton. As well with our coalition partners who 
typically use the drogue or the basket side of it, yes.
    General Schwartz. Right.
    Senator Sessions. Thank you very much.
    Senator Kennedy. Thank you very much. I have just a final 
couple of questions.
    Secretary Payton, what is the status of those negotiations 
for buying any C-17 beyond the 180 aircraft in the original Air 
Force program?
    Ms. Payton. From an acquisition point of view, we have no 
requirements to procure any additional C-17s. I do understand 
that some have been put in the supplemental. So a request went 
in in the supplemental.
    The requirement side of the world is handled by the uniform 
service relative to operations and readiness, and once those 
requirements are approved and funded, then the acquisition 
workforce kicks into work. But at this point, relative to 
acquisition, I have no new requirements to procure any more C-
17s.
    Senator Kennedy. If there are, are you including 
negotiation of options for buying some number of C-17 with the 
final appropriations in 2008?
    Ms. Payton. No.
    Senator Kennedy. If not, would you be conducting all new 
negotiations for any 2008 aircraft?
    Ms. Payton. No, sir. We don't have any negotiations in work 
for C-17s. As a matter of fact, a primary concern right now is 
that factory and the amount of money it costs to close it down. 
So if we are not going to buy more, then we need to figure out 
how to fund the closedown of it. If we are, then we won't know 
that until the supplemental is approved later this year, I 
understand.
    Senator Kennedy. The point I am getting to is whether you 
consider any of these options in terms of negotiating for 
expansion of C-17s?
    Ms. Payton. I believe we have been provided unsolicited 
proposals. But at this time, we are not looking at those 
because we have no money, and it would violate the law to try 
to do something without any money.
    Senator Kennedy. Let me ask you, General Schwartz, just to 
conceptually and just briefly with the looking down the road in 
terms of national security and defense and where we are, where 
we are going to be, how do you see the expansion of the 
Services, which are being looked at, all the different types 
and changes, how do you consider those potential changes as you 
are planning now in terms of the future?
    General Schwartz. There are a number of matters out there 
that do need to be factored into what is the right fleet size 
and mix. Some of those factors include, at the moment, changes 
related to the size in the ground forces, both the Marine Corps 
and the Army. Some of that relates to the equipment, which 
needs to be transported. This tends to grow over time. It 
rarely gets smaller.
    Likewise, the plans that the combatant commanders have to 
employ the force influence how quickly one must close the 
force. Every several years, we do what we call a mobility 
study, sometimes called a capability study, sometimes called a 
requirements study. This time, upcoming, sir, it will be both.
    The so-called mobility, capability, and requirement study 
(MCRS) 2008 will look at all of these factors to offer the best 
assessment on what is the right size of the force and what is 
the best fleet mix. Now, there is another study underway as 
well, directed by Congress, known at least in our lingo as 
McCaskill-Tauscher, which is due in January 2009. The Institute 
for Defense Analyses is going to do that one.
    The DOD study, which we are a full partner in, MCRS, will 
be due later in 2009. We are working hard to synchronize those 
two efforts so that they don't get disconnected.
    One final comment, sir. You asked me earlier about 205 
C17s. A key factor in 205 is this question about the growth in 
the ground forces. I believe that the growth in the ground 
forces is not to provide the country with a capability to surge 
more brigades in a short period of time. In other words, say, 
for the sake of argument, our current plan is 20 brigades, that 
the additional brigade equivalents that will come onboard are 
not there to take it to 25, but rather to reduce the tempo on 
the ground forces that, in some cases, are pulling 15-month 
tours now or longer, or 7 months for the Marine Corps or maybe 
a little longer--to reduce that tempo.
    I think that is the case. The studies will reconfirm that 
is, in fact, what the Department intends. But that is certainly 
my understanding of where we are at and is why I remain 
confident that 205 is the right number.
    Senator Kennedy. I want to thank you very much. We might 
have some questions for the record from the other members who 
weren't here.
    General Schwartz. Understood, sir.
    Senator Kennedy. We're very grateful, and we appreciate and 
we applaud you. We weren't always in this kind of circumstance 
in terms of airlift in recent years.
    General Schwartz. Right.
    Senator Kennedy. So you deserve very considerable credit to 
get us up to the shape that we are in, and we are very 
impressed with it. Thank you very much.
    General Schwartz. To you, sir, and Congress, who enabled us 
to do it.
    Ms. Payton. Yes, sir.
    Senator Kennedy. Thank you. The subcommittee stands 
adjourned.
    [Questions for the record with answers supplied follow:]

            Questions Submitted by Senator Edward M. Kennedy

                        C-5A AIRCRAFT READINESS

    1. Senator Kennedy. General Schwartz, Secretary Young's Nunn-
McCurdy certification of the C-5 Reliability Enhancement and Re-
engining Program (RERP) upgrade indicated several actions that were 
planned, including providing the Avionics Modernization Program (AMP), 
upgrade to all 111 C-5s, and requiring that the Air Force institute 
performance-based logistics and Lean Six Sigma process improvements to 
the maintenance activities for all 111 C-5 aircraft to improve 
capability and lower operating costs. Is there funding in the budget 
and the Future Years Defense Program to complete the AMP and improve 
logistics support for the C-5 fleet?
    General Schwartz. The current budget funds the AMP modification for 
the remaining fleet. Additionally, reliability will be improved through 
the RERP effort on the B models and through a change in the logistics 
philosophy used on the entire fleet. The C-5 is moving from a ``fly-to-
fail'' system to a scheduled inspection and maintenance program, 
similar to the commercial world. These programs are also funded in the 
current budget.

    2. Senator Kennedy. General Schwartz, how will the Air Mobility 
Command respond to these directions for improving logistics support for 
the C-5 fleet?
    General Schwartz. The Air Mobility Command efforts to improve 
logistics support for the C-5 fleet include Aircraft Availability 
Improvement Programs such as Maintenance Steering Group (MSG-3) and the 
C-5 Regionalized Isochronal Inspection program (C-5 RISO). MSG-3 is an 
inspection philosophy that alters the traditional fly-to-fail approach 
to maintenance. At the same time, it moves the C-5 community to a more 
proactive condition-based approach to aircraft maintenance. The RISO 
reduces the number of inspection facilities across the country and the 
subsequent manpower associated with these facilities. Additionally, it 
minimizes simultaneous inspections and maximizes inspection 
proficiency. Together, these programs will improve overall reliability 
and make additional aircraft available to the warfighter.

                     STATUS OF THE C-17A PRODUCTION

    3. Senator Kennedy. Secretary Payton, Congress added 10 aircraft to 
the budget request in fiscal year 2007 and has authorized 8 aircraft in 
fiscal year 2008. Congress has not yet acted on the final Department of 
Defense (DOD) supplemental appropriations for 2008. What is the status 
of the negotiations for buying any C-17 aircraft with the fiscal year 
2007 funds?
    Ms. Payton. An Undefinitized Contractual Action was issued December 
18, 2006, for the 10 additional aircraft so the contractor could begin 
work. The first aircraft is scheduled to deliver in November 2008 and 
the last will deliver in July 2009. The Air Force is in preliminary 
stages of negotiations, with contract definitization anticipated in 
July 2008.

    4. Senator Kennedy. Secretary Payton, are you including negotiation 
of options for buying some number of C-17 aircraft with the final 
appropriations for 2008? If not, would you be conducting all new 
negotiations for any 2008 aircraft?
    Ms. Payton. We have not included any options for C-17 aircraft 
identified in the fiscal year 2008 appropriations. Boeing would be 
required to submit a new certified proposal for 2008 aircraft.

                        C-5 RERP COST ESTIMATING

    5.  Senator  Kennedy.  Secretary  Payton,  the  DOD-approved  cost  
estimate  of  the C-5 RERP showed that there was indeed a breach of the 
Nunn-McCurdy thresholds for the C-5 RERP modernization. The Cost 
Analysis Improvement Group (CAIG), which produced that approved 
estimate, derived a constant dollar cost estimate of acquisition unit 
cost of $92.4 million, versus the $60.5 million originally estimated. 
While this increase was unfortunate, this estimate only reflects half 
the increase that the Air Force derived as the service cost position in 
reporting the Nunn-McCurdy violation in the first place. During the 
hearing, you said that the primary reason for this was that you were 
funding the program to the 80-90 percent confidence level, and that 
this is now standard practice for major Air Force acquisition programs. 
Could you provide the committee a list of all Air Force major 
acquisition programs and identify the confidence level assumed in 
building the cost estimates for the current program?
    Ms. Payton. Of the 33 acquisition category 1, non-space programs, 9 
are funded in the 80-90 percent confidence level. The remaining 
programs either do not have a specific confidence level assigned to the 
cost estimate, are funded at the 50 percent confidence level per the 
Office of the Secretary of Defense CAIG, or were baselined before the 
SAF/AQ guidance.
      
    
    
      
                                 ______
                                 
              Questions Submitted by Senator Mel Martinez

                      ONGOING MOBILITY OPERATIONS

    6. Senator Martinez. General Schwartz, U.S. Transportation Command 
(TRANSCOM) has been central to virtually every major U.S. global 
operation, providing persistent support to the regional commanders. 
Mission requirements have been highly varied--supporting forces in Iraq 
and Afghanistan, providing humanitarian relief, moving patients 
worldwide to provide critical care; all while supporting steady state 
global operations. How would you assess the current readiness of the 
mobility fleet of aircraft and ships, and that of the men and women 
operating this fleet, given the operational tempo of these ongoing 
operations?
    General Schwartz. [Deleted.]

    7. Senator Martinez. General Schwartz, how does your strategic 
airlift requirement address and account for the stand-up of U.S. Africa 
Command (AFRICOM) and the Grow the Force initiative?
    General Schwartz. The strategic airlift requirement is based upon 
comprehensive analysis of all the major airlift missions required to 
support the National Military Strategy. The 2005 Mobility Capability 
Study provides the most recent analysis but did not include the recent 
stand-up of the U.S. AFRICOM and the Grow the Force initiative. The 
congressionally-directed Airlift Fleet Mix Analysis and the Department 
of Defense Mobility Capabilities and Requirements Study, to be 
completed in January and May 2009 respectively, will consider a number 
of emerging operational issues, to include future AFRICOM needs and the 
Grow the Force initiative requirements.

        UNITED STATES TRANSPORTATION COMMAND PROGRAM PRIORITIES

    8. Senator Martinez. General Schwartz, there are a number of major 
programs--ongoing and future--which comprise TRANSCOM's end-to-end lift 
capability. C-17 production, C-5 modernization, tanker fleet 
recapitalization, C-130 modernization, and Joint Cargo Aircraft are 
primary examples. To some extent, the capabilities provided by these 
programs overlap. Strategic lift aircraft, for example, are performing 
tactical lift. Likewise, the future Joint Cargo Aircraft may take 
pressure off of tactical airlift requirements. Meanwhile, you've 
expressed the importance that the future tanker be capable of cargo and 
passenger lift. While this reflects smart management of limited 
resources, these programs are also competing with each other for 
procurement funding. Could you please outline your program priorities 
as they pertain to ensuring balanced capability across the full 
spectrum of lift requirements?
    General Schwartz. Rapid global mobility is essential to the 
effectiveness of the future force and I am comfortable that the current 
funding levels in the President's budget adequately address these 
mobility priorities with manageable risk.
    With that in mind, my top mobility priority of recapitalization of 
our aging tanker fleet is funded at the Program of Record. Continued 
funding support and minimizing delays in the KC-X program is critical 
to the TRANSCOM mission. Additionally, legacy mobility platforms must 
remain funded at the requested levels in the President's budget. Any 
reductions in programmed funding for the C-5 AMP and RERP or C-130 AMP 
and center wing box translate into additional risk. While I support the 
programmed fleet of 190 C-17s, in conjunction with the modernization of 
a portion of the C-5 fleet, I would favor a modest increase in the C-17 
programmed fleet from 190 to 205 aircraft. Finally, LAIRCM installation 
on the C-37/C-40 fleet must remain fully funded as requested in the 
President's budget. LAIRCM equipped C-37/C-40s will free up C-130s and 
C-17s currently tied to missions requiring defensive systems.

    9. Senator Martinez. General Schwartz, recognizing that we are 
always bound by fiscal constraints, are you satisfied that this year's 
budget request adequately addresses these priorities?
    General Schwartz. Rapid global mobility is essential to the 
effectiveness of the future force and I am comfortable that the current 
funding levels in the President's budget adequately address these 
mobility priorities with manageable risk.
    With that in mind, my top mobility priority of recapitalization of 
our aging tanker fleet is funded at the Program of Record. Continued 
funding support and minimizing delays in the KC-X program is critical 
to the TRANSCOM mission. Additionally, legacy mobility platforms must 
remain funded at the requested levels in the President's budget. Any 
reductions in programmed funding for the C-5 AMP and RERP or C-130 AMP 
and center wing box translate into additional risk. While I support the 
programmed fleet of 190 C-17s, in conjunction with the modernization of 
a portion of the C-5 fleet, I would favor a modest increase in the C-17 
programmed fleet from 190 to 205 aircraft. Finally, LAIRCM installation 
on the C-37/C-40 fleet must remain fully funded as requested in the 
President's budget. LAIRCM equipped C-37/C-40s will free up C-130s and 
C-17s currently tied to missions requiring defensive systems.

            C-5 RELIABILITY ENHANCEMENT RE-ENGINING PROGRAM

    10. Senator Martinez. Secretary Payton and General Schwartz, the 
Under Secretary of Defense recently completed his review of the C-5 
RERP in conjunction with the program's Nunn-McCurdy cost breach; and he 
certified that the most cost-effective  way  to  meet  your  strategic  
airlift  requirements  is  to  re-engine  the  51  C-5B  and  C-5C  
aircraft,  only. He  also  reviewed  options  for  procuring  
additional  C-17 aircraft and rejected those options as not meeting 
requirements and more costly to the taxpayer; ultimately concluding 
that procurement of additional C-17 aircraft was not affordable. Do you 
agree with the course the Under Secretary has set for strategic airlift 
programs, particularly in view of the priority placed on the tanker 
program within the TRANSCOM portfolio?
    Ms. Payton. I support the Department's decision as outlined in the 
C-5 Nunn-McCurdy certification.
    General Schwartz. Based on current analysis, the Under Secretary is 
pursuing a prudent acquisition approach in accordance with the 
President's budget. As always, we must reassess our strategy if and 
when future studies indicate a need for change.

    11.  Senator  Martinez.  General  Schwartz,  in  response  to  
questions  regarding C-17 aircraft on the Unfunded Priority List, the 
Air Force has indicated that the C-17 acquisition objective has been 
increased to 248 aircraft--an increase of 58 above current program and 
43 above your sweet spot. What impact would this increase to your C-17 
fleet have on your ability to manage a balanced airlift force, 
including your Civil Reserve Air Fleet (CRAF) partners, in a cost 
effective manner?
    General Schwartz. A fleet of 248 C-17s assumes the retirement of 
all 59 C-5As and one-for-one replacement by C-17s to the C-5A units. 
All C-5A units are assigned to the Guard or Reserve. The C-17s would 
fly the same number of hours as the C-5s they replace. As a result, 
expanding the C-17 fleet to 248 and retiring the C-5As would have no 
effect on our CRAF partners.

    12.  Senator  Martinez.  Secretary  Payton,  I  understand  that  
three  re-engined C-5 aircraft are currently conducting flight testing. 
Could you provide your assessment of the performance of these re-
engined aircraft in meeting their reliability objectives?
    Ms. Payton. As of April 7, 2008, the three SDD aircraft have 
successfully completed a total of 276 flights while accumulating 
approximately 840 hours flight time. Overall, the flight test program 
has executed over 76 percent of ground and flight specification test 
points. Both Lockheed Martin Aeronautics Company and Air Force 
Developmental Test Organization reliability performance tracking 
efforts indicate the three modified C-5M aircraft are meeting 
reliability requirements and are, in fact, exceeding requirements in 
several areas. Our assessment of the most recent data, as reported by 
the Air Force Developmental Test Organization, indicates that 
reliability and maintainability specifications will be met. The C-5M 
propulsion system, the cornerstone of C-5 RERP accounting for 54 
percent of the expected Mission Capable Rate (MCR) improvement, is 
exhibiting exceptional reliability performance during flight testing as 
shown on the attached chart.
      
    
    

    13. Senator Martinez. Secretary Payton, if the three re-engined C-5 
aircraft that are currently undergoing flight testing are not meeting 
their objectives, what would you attribute the cause for this shortfall 
and what actions are underway to correct it?
    Ms. Payton. Our assessment of the most recent data, as reported by 
the Air Force Developmental Test Organization, indicates that 
reliability and maintainability requirements will be met.

    14. Senator Martinez. Secretary Payton, the prime contractor for 
the C-5 aircraft proposed to mitigate cost growth through long-term 
purchase agreements with his vendors and not-to-exceed (NTE) pricing 
with the Air Force. Could you provide an update on your current 
acquisition strategy for this program, and your progress in completing 
negotiations for the contract?
    Ms. Payton. Our contract now establishes NTE prices for the 49 
aircraft to be modified to the RERP configuration over 7 lots. We have 
negotiated fixed prices for Lots 1 through 3 and expect to be on 
contract by 30 April with these prices. The prices will be subject to 
economic price adjustment for unusual economic impacts on only the 
propulsion system and the pylons.
    Prices for Lots 4 through 7 will be negotiated as fixed prices 
prior to funding of each option. We continue to pursue cost-reduction 
initiatives for all lots.
    The fixed prices and the NTE prices are based on a buy profile of 1 
in fiscal year 2008, 3 in fiscal year 2009, 5 in fiscal year 2010, 7 in 
fiscal year 2011, 11 in fiscal year 2012, 11 in fiscal year 2013, and 
11 in fiscal year 2014. The Air Force is committed to funding for this 
buy profile.

    15. Senator Martinez. Secretary Payton, what structure and 
incentives are you incorporating to improve upon the C-5 aircraft 
program cost estimates?
    Ms. Payton. Fixed prices, subject to adjustment for unusual 
economic fluctuation, have been negotiated for Lots 1 through 3. Fixed-
price arrangements provide maximum incentive on a contractor to reduce 
costs in order to maximize profit within the negotiated price.
    Our contract also establishes NTE prices for Lots 4 through 7. 
These prices will be negotiated prior to award/funding of the options 
for each lot. The contractor is encouraged within this NTE structure to 
reduce costs; future profit negotiations will consider whether the Air 
Force significantly benefits from the contractor's efforts to reduce 
cost or improve schedule or performance.
    We will work with the contractor and with the Defense Contract 
Management Agency (DCMA) to closely track actual costs during 
production. For example, we are requiring Earned Value Management 
reporting. We are also working with DCMA and the contractor to improve 
the company's estimating system. All of this information will 
facilitate negotiation of fair and reasonable prices for Lots 4 through 
7.

    16. Senator Martinez. Secretary Payton, understanding that a 
significant percentage of the C-5 aircraft program's cost growth is 
associated with government costs, what specific measures are you taking 
to curb this cost growth on the program, and how would you judge the 
likely effectiveness of these measures?
    Ms. Payton. Two factors caused C-5 RERP production cost growth 
associated with Other Government Costs (OGC): (1) underestimation at 
Milestone B of required Government Furnished Equipment (GFE); and (2) 
growth in Engineering Change Orders (ECO) and Mission Support costs, 
which were calculated by applying a factor to the increased total 
contract cost.
    Completion of the C-5 RERP modification on the three SDD aircraft 
enabled a more complete understanding of the GFE required for 
Production, both in terms or actual items required and cost. Using this 
actual data, which was lacking at Milestone B, is a more effective way 
to develop program cost.

                    KC-45 TANKER AIR LIFT CAPABILITY

    17. Senator Martinez. General Schwartz, a discriminating 
requirement for the KC-45 tanker is the ability of the aircraft to be 
alternatively employed as an airlifter for passenger and cargo 
transport. The KC-45 lift capability was not included in the analysis 
for the Mobility Capabilities Study. However, this capability should 
significantly reduce your risk in meeting requirements in support of 
major combat operations. Are you able to quantify the magnitude of this 
lift contribution in terms of either million ton miles per day or C-17 
equivalents?
    General Schwartz. During the first weeks of wartime surge 
operations (periods of peak demand for both airlift and aerial 
refueling), the KC-45 is dedicated for use in its primary role as a 
tanker supporting deployment and employment operations. Million Ton-
Miles per Day (MTM/D) is a wartime surge metric. The AMC does not plan 
to credit any MTM/D contributions from the KC-45 to the wartime surge 
equation; a policy consistent with the way we evaluate KC-10 
performance today. However, AMC will use the KC-45s to meet airlift 
demands for CRAF transload of passengers and bulk cargo when the CRAF 
cannot operate in threatened environments. During periods of reduced 
aerial refueling demand, the KC-45 can also contribute effectively to 
organic delivery of passengers and cargo to locations and environments 
not served by commercial industry. The KC-45 lift capacity was not 
included in analysis for the MCS nor will it be included in our current 
MCRS analysis since those studies are in the 2012 to 2017 timeframe and 
the KC-45 will not reach FOC. Finally, it is inappropriate to equate 
KC-45 with C-17 capability. The KC-45 is not designed to carry the 
oversize and outsize equipment delivered by C-17s or access the austere 
environments visited by C-17s.

                        CIVIL RESERVE AIR FLEET

    18. Senator Martinez. Secretary Payton and General Schwartz, the 
DOD has submitted a legislative proposal to guarantee that a proper 
amount of assured business for CRAF partners will be available in the 
future. Would you please explain the importance of having U.S.-flagged 
commercial airline capability to carry outsize cargo within the CRAF 
program, and then, the importance of your proposed assured business 
model to the health of the CRAF program?
    Ms. Payton. I defer this question to General Schwartz because U.S. 
TRANSCOM manages the CRAF contract with commercial air carriers.
    General Schwartz. A U.S-flag commercial airline outsize cargo 
capability is not something we currently require in the CRAF as this 
need is met by our C-5 and C-17 fleet.
    We believe the assured business proposal is an integral part of the 
strategy to ensure the continuing viability of the CRAF program when 
DOD movement requirements return to pre-September 11 levels. The 
Department has a study underway to determine what other incentives or 
alternative organizing principles are needed to assure the CRAF program 
remains attractive to U.S. air carriers. I do, however, believe that 
the assured business concept will be a key part of the Department's 
business relationships with our CRAF partners.

    19. Senator Martinez. Secretary Payton and General Schwartz, has 
there been a trend away from medium-sized air cargo carriers that would 
jeopardize these partners' participation in CRAF?
    Ms. Payton. I defer this question to General Schwartz because U.S. 
TRANSCOM manages the CRAF contract with commercial air carriers.
    General Schwartz. There is no trend by the TRANSCOM to move away 
from medium-sized air cargo carriers. Both large- and medium-sized 
cargo carriers make essential contributions to the Defense 
Transportation System (DTS).

    20. Senator Martinez. Secretary Payton and General Schwartz, as the 
global defense landscape changes and we bring units back from overseas 
to the United States, how does that affect the business relationship 
with our CRAF partners?
    Ms. Payton. I defer this question to General Schwartz because U.S. 
TRANSCOM manages the CRAF contract with commercial air carriers.
    General Schwartz. Current Operation Iraqi Freedom/Operation 
Enduring Freedom (OIF/OEF) requirements sustain Civil Reserve Air Fleet 
(CRAF) carriers with wartime airlift business that will be greatly 
reduced post OIF/OEF. Current CRAF business is approximately $2.5 
billion a year. Historically, the total pre-September 11 annual CRAF 
business was approximately $500-600 million per year. The tenuous state 
of the airline industry raises additional and significant concerns over 
CRAF viability post OIF/OEF-especially for the smaller CRAF charter 
carriers, both cargo and passenger. Careful consideration of 
legislative proposals, such as the CRAF Assured Business proposal 
currently before Congress, together with other possible incentives will 
be required to help assure a viable CRAF with adequate participation/
capability in the future. As directed by Congress, DOD has contracted 
with Institute for Defense Analyses (IDA), a Federally Funded Research 
and Development Center, to study the future of CRAF to include 
potential impacts of a drawdown on our industry partners. That report 
is scheduled to be provided by the Secretary to Congress no later than 
September 30, 2008.

    21. Senator Martinez. Secretary Payton and General Schwartz, to 
what extent are your maritime partners, through the Maritime Security 
Program and Voluntary Intermodal Security Agreement Program, similarly 
affected by DOD business volatility?
    Ms. Payton. I defer this question to General Schwartz because U.S. 
TRANSCOM manages the CRAF contract with commercial air carriers.
    General Schwartz. Each of our strategic sealift partners enrolled 
in the Maritime Security Program and the Voluntary Intermodal Sealift 
Agreement will be affected differently depending on the percentage of 
their business model that is predicated on DOD business. In the global 
war on terrorism, DOD business for some carriers may be as little as 1 
percent while others could be as much as 60-70 percent. One of the 
TRANSCOM's highest priority initiatives for 2008 is to assess the 
expansion of the DTS business base in order to bring other Federal 
departments and agencies ship movements under the DOD distribution 
umbrella, increasing the amount of DOD cargo and lessening the effect 
of the loss of DOD specific cargo.

                            MILITARY SEALIFT

    22. Senator Martinez. General Schwartz, the Navy is formulating a 
program to procure Maritime Prepositioning Force (Future) (MPF(F)) 
ships, which, in addition to providing prepositioning of equipment for 
operational forces, would be available for routine tasking by the 
combatant commanders. How does the Navy's employment plan for this 
future MPF capability integrate with your vision for meeting 
prepositioning mission requirements?
    General Schwartz. The Navy's MPF(F) will constitute a component of 
our Nation's Global Prepositioning Materiel Capabilities and support a 
wide spectrum of Joint forces operations. MPF(F) will significantly 
improve the way we project cargo into an objective area; decreasing 
reliance on access to secure ports and airfields, and speeding the 
closure time of critical materiel.
    Doctrine to integrate MPF(F) with other naval forces and ensure it 
complements the DTS is still being developed. TRANSCOM will remain 
engaged in this process and duly consider the future capabilities of 
MPF(F) vessels in the development of overall strategic sealift 
requirements.

    23. Senator Martinez. General Schwartz, Operation Iraqi Freedom 
placed heavy demands on prepositioned equipment. How would you assess 
progress to restore the readiness of the preposition force for future 
contingencies?
    General Schwartz. Each of the Services has a sound strategy for 
reconstituting and revitalizing their preposition force. It will take a 
few years to reach the intended end-state but the reconstituted force, 
by incorporating a combination of recent lessons learned and 
modernization initiatives, will be better suited to support the 
combatant commanders future contingencies. Current operations influence 
timelines in the case of both the Army and Marine Corps. One of the 
Army's Large Medium-Speed Roll-on/Roll-off (LMSR) vessels is in full 
operating status and reconstituted with prepositioned stock; five more 
LMSRs will reset with Army Prepositioned Stock-3 cargo between 2010 and 
2013 in accordance with Army Prepositioning Strategy 2015. Full 
reconstitution of the Marines' MPF is expected by 2012. Two former Army 
LMSRs are scheduled for transfer to the MPF (one in April 2008 and one 
in April 2009). Additional acquisitions and alternatives to accommodate 
MPF growth are being considered.

    [Whereupon, at 3:15 p.m., the subcommittee adjourned.]


DEPARTMENT OF DEFENSE AUTHORIZATION FOR APPROPRIATIONS FOR FISCAL YEAR 
                                  2009

                              ----------                              


                         TUESDAY, APRIL 8, 2008

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

     NAVY FORCE STRUCTURE REQUIREMENTS AND PROGRAMS TO MEET THOSE 
                              REQUIREMENTS

    The subcommittee met, pursuant to notice, at 2:41 p.m. in 
room SR-222, Russell Senate Office Building, Senator Edward M. 
Kennedy (chairman of the subcommittee) presiding.
    Committee members present: Senators Kennedy, Sessions, 
Collins, and Martinez.
    Majority staff member present: Creighton Greene, 
professional staff member.
    Minority staff members present: David M. Morriss, minority 
counsel; and Sean J. Stackley, professional staff member.
    Staff assistants present: Jessica L. Kingston and Benjamin 
L. Rubin.
    Committee members' assistants present: Jay Maroney, 
assistant to Senator Kennedy; Gordon I. Peterson, assistant to 
Senator Webb; Sandra Luff, assistant to Senator Warner; Todd 
Stiefler, assistant to Senator Sessions; Mark J. Winter, 
assistant to Senator Collins; and Brian W. Walsh, assistant to 
Senator Martinez.

    OPENING STATEMENT OF SENATOR EDWARD M. KENNEDY, CHAIRMAN

    Senator Kennedy. Good afternoon. The hearing will come to 
order. We welcome Deputy Assistant Secretary of the Navy for 
Ships, Allison Stiller. We want to thank you for a long period 
of service for the Navy, and not without its challenges.
    We thank you very much for your dedication.
    Ms. Stiller. Thank you very much.
    Senator Kennedy. We also welcome Barry McCullough, who's 
Deputy Chief of Naval Operations for Integration of 
Capabilities and Resources. We thank you very much for being 
here, Admiral. General Amos, Commander, Marine Corps Combat 
Development Command, we thank you very much. We know you've had 
recent service over in Iraq and we thank you. We thank all of 
our panel for their important public service and service to our 
country.
    We are faced, all of us and the Services, with a number of 
critical issues that confront the Department of the Navy in 
balancing modernization needs against the costs of supporting 
ongoing operations in Iraq and Afghanistan. Within that general 
area there are several specific concerns for the subcommittee 
today.
    One of these is in the prospects for meeting future force 
structure requirements. We're facing the prospect that the 
current Department of the Navy program will lead to potentially 
large gaps between the forces that the Chief of Naval 
Operations (CNO) and the Commandant of the Marine Corps have 
said they need and the forces that will be available to their 
successors.
    In one case, the CNO has said that the Navy needs to have 
48 attack submarines to meet the combat commanders' 
requirements. We're faced with the risk of falling well short 
of that goal for more than 10 years starting during the next 
decade.
    In another case, the Navy now predicts the Navy and Marine 
Corps tactical aircraft forces are facing a shortfall of at 
least 125 tactical fighters needed to outfit our active air 
wings, 10 aircraft carrier air wings, and 3 Marine Corps air 
wings. With shortfalls that large, we could be faced with 
drastically reducing the number of aircraft available on short 
notice to the combatant commanders, either because we have 
deployed understrength air wings or because we did not deploy 
the carrier at all because of these aircraft shortages.
    I mention the aviation situation not because we will deal 
with it in detail this afternoon, but to illustrate that we 
will not be able to look to Navy aviation to be a bill-player 
for the problems of the shipbuilding portfolio.
    Other challenges face the Navy centering on acquisition 
programs. We have had special concern about the Littoral Combat 
Ship (LCS). This was intended to be a ship that the Navy could 
acquire relatively inexpensively and relatively quickly. As it 
turns out, the LCS program will be neither. Once again, we are 
presented with a program with significant cost growth, which at 
least in part was driven by the Service changing requirements 
after the design and construction was signed and making poor 
original cost estimates.
    The LCS situation raises significant questions about 
acquisition management within the Navy. For example, why 
weren't the Navy and contract teams better able to see the 
problems sooner? At the time we marked up the National Defense 
Authorization Bill for Fiscal Year 2008, the subcommittee 
believed that the second LCS team, led by General Dynamics, was 
likely to experience the very same difficulty as the Lockheed 
Martin team. You'll recall the Navy had terminated the contract 
on the second Lockheed Martin LCS, the LCS-3, earlier last 
year.
    During the middle of the markup, the committee heard from 
Secretary Winter and Admiral Mullen, who both claimed that 
things were not as bad with General Dynamics' part of the 
program as they had proven to be on the Lockheed Martin ships. 
They made these assertions despite the Navy's own internal 
estimates to the contrary.
    Late in 2007, the Navy finally realized it was facing the 
same situation with General Dynamics as it faced with Lockheed 
Martin and tried to get General Dynamics to sign up to a fixed-
price contract for the two ships or face outright cancellation 
on the second ship, just as the Navy had done with Lockheed 
Martin. The Navy and General Dynamics could not reach an 
agreement, so the Navy terminated the contract for the second 
vessel, the LCS-4, for the convenience of the government.
    In summary, the Navy was still viewing the LCS program too 
optimistically as late as May last year, again just months away 
from having to terminate the contract for LCS-4. I would be 
interested in hearing from Secretary Stiller about what actions 
the Department has taken to strengthen the acquisition 
oversight and restore confidence in the Navy's ability to 
manage major acquisition programs.
    We have also been waiting too long for better definitions 
of requirements in a couple of areas. First, the Navy was 
supposed to already have reached some better definition of 
requirements for the next generation cruiser, called the CG(X). 
The longer these definitions wait, the less likely it is the 
Navy will be able to maintain the intended schedule of awarding 
the first ship of that class in 2011.
    We also are waiting for indications from the Navy about 
whether they will comply with the requirements that this new 
ship be nuclear powered or whether they will be seeking a 
waiver from that requirement from the Secretary of Defense. If 
that ship is to be nuclear powered, work would have to begin 
immediately on the design of such a ship to have a chance of 
starting construction any time before the middle of the next 
decade.
    Another area where the Navy has had trouble defining the 
requirements that has been a problem is the Maritime 
Prepositioning Force-Future (MPF-F) program. While the 
subcommittee has heard for several years about the 
contributions that such a force could make to Marine Corps and 
Navy operations, we have seen that the procurement of certain 
ships within that objective has been delayed each year as 
resolution of questions about the requirements and capabilities 
keep being deferred.
    There are other concerns, but in the interest of time I'll 
conclude with the following note. The subject of Navy force 
structure and acquisition is 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 energies to these subjects. Today's 
hearing continues the subcommittee's strong bipartisan interest 
in the broader naval force structure issues facing the Nation 
today. It is in that bipartisan spirit that I again welcome 
Senator Martinez to the Seapower Subcommittee for the first 
year as serving as the ranking member of the subcommittee. I 
look forward to all of your testimony this afternoon and other 
issues facing the Department of the Navy, and we'll ask Senator 
Martinez for any comments he'd like to make.
    [The prepared statement of Senator Kennedy follows:]

            Prepared Statement by Senator Edward M. Kennedy

    The subcommittee will come to order. I want to welcome Secretary 
Stiller, Admiral McCullough, and General Amos to the subcommittee this 
afternoon. We are grateful to you for your service to the Nation and to 
the valorous and truly professional men and women in the whole Navy and 
Marine Corps team.
    You are faced with a number of critical issues that confront the 
Department of the Navy in balancing your modernization needs against 
the costs of supporting ongoing operations in Iraq and Afghanistan.
    Within that general area, there are also several specific concerns 
for the subcommittee today. One of these is in the prospects for 
meeting future force structure requirements. We are facing the prospect 
that the current Navy program will lead to potentially large gaps 
between the forces that the Chief of Naval Operations (CNO) and the 
Commandant of the Marine Corps have said they need and the forces that 
will be available to their successors.
    In one case, the CNO has said that the Navy needs to have 48 attack 
submarines to meet combatant commander requirements, but we are faced 
with the risk of falling well short of that goal for more than 10 years 
starting during the next decade.
    In another case, the Navy now predicts that Navy and Marine Corps 
tactical aircraft forces are facing a shortfall of at least 138 
tactical fighters needed to outfit our active air wings, 10 aircraft 
carrier air wings, and 3 Marine Corps air wings. With shortfalls that 
large, we could be faced with drastically 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 these aircraft shortages. I 
mention the aviation situation, not because we will deal with it in 
detail this afternoon, but to illustrate that we will not be able to 
look to naval aviation to be ``bill-payer'' for problems in the 
shipbuilding portfolio.
    Other challenges face the Navy, centering on acquisition programs. 
We have had 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, the 
LCS program will be neither. Once again we are presented with a program 
with significant cost growth which, at least in part, was driven by the 
Service changing requirements after the design and construction 
contract was signed and making poor original cost estimates.
    The LCS situation raises significant questions about acquisition 
management within the Navy. For example, why weren't the Navy and 
contractor teams better able to see the problems sooner? At the time we 
marked up the National Defense Authorization Bill for Fiscal Year 2008, 
the subcommittee believed that the second LCS team, led by General 
Dynamics, was likely to experience the very same difficulties as the 
Lockheed Martin team. We all recall that the Navy had terminated the 
contract on the second Lockheed Martin LCS, LCS-3, earlier last year.
    During the middle of markup, the Committee heard from Secretary 
Winter and Admiral Mullen (then CNO) who both claimed that things were 
not as bad with the General Dynamics part of the program as they had 
proven to be on the Lockheed Martin ships. They made these assertions 
despite the Navy's own internal estimates to the contrary.
    Late in 2007, the Navy finally realized that it was facing the same 
situation with General Dynamics as it had faced with Lockheed Martin, 
and tried to get General Dynamics to sign up to a fixed-price contract 
on the two ships or face outright cancellation on the second ship (just 
as the Navy had done with Lockheed Martin).
    The Navy and General Dynamics could not reach and agreement, so the 
Navy terminated the contract for the second vessel (LCS-4) for the 
convenience of the government.
    In summary, the Navy was still viewing the LCS program too 
optimistically as late as May last year, again just months away from 
having to terminate the contract for LCS-4.
    I would be interested in hearing from Secretary Stiller about what 
actions the Department is taking to strengthen acquisition oversight 
and restore confidence in the Navy's ability to manage major 
acquisition programs.
    We have also been waiting too long for better definitions of 
requirements in a couple of areas: first, the Navy was supposed to have 
already reached some better definition of requirements for the next 
generation cruiser, called CG(X). The longer these definitions wait, 
the less likely it is that the Navy will be able to maintain the 
intended schedule of awarding the first ship of that new class in 2011. 
We also are waiting for indications from the Navy about whether they 
will comply with the requirement that this new ship be nuclear powered, 
or whether they will be seeking a waiver from that requirement from the 
Secretary of Defense. If this ship is to be nuclear powered, work would 
have to begin immediately on the design of such a ship to have any 
chance of starting construction anytime before the middle of the next 
decade.
    Another area where the Navy has had trouble defining the 
requirements has been a problem is the Maritime Prepositioning Force-
Future program. While the subcommittee has heard for several years 
about the contribution that such a force could make to Marine Corps and 
Navy operations, we have seen the procurement of certain ships within 
that objective being delayed each year as the resolution of questions 
about the requirements and capabilities keeps being deferred.
    There are other concerns, but in the interest of time I will 
conclude with the following note: the subject of Navy force structure 
and acquisition is 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 energies to these subjects.
    Today's hearing continues the subcommittee's strong bipartisan 
interest in the broader naval force structure issues facing the Nation 
today. It is in that bipartisan spirit that I again welcome Senator 
Martinez to the Seapower Subcommittee for his first year of serving as 
ranking member on the subcommittee.
    I look forward hearing your testimony this afternoon on these and 
other issues facing the Department of the Navy.

               STATEMENT OF SENATOR MEL MARTINEZ

    Senator Martinez. Thank you, Mr. Chairman. I very much 
appreciate your kind words of welcome and I look forward to 
continuing to work in the bipartisan fashion that this 
subcommittee needs to have in order to accomplish our common 
goals.
    I also am pleased to welcome the witnesses, Secretary 
Stiller, Admiral McCullough, and General Amos. We thank you for 
your service to our Nation and thank you for joining us today.
    This morning the Armed Services Committee received 
testimony on operations in Iraq and I know the more than 24,000 
marines assigned to the Multi-National Force have performed 
remarkably, particularly in Al Anbar Province. Likewise, the 
Navy has made vital contributions in the theater. Over 10,000 
sailors are augmenting ground forces in a variety of roles.
    Without question, marines, sailors, soldiers, and airmen in 
combat are our number one priority. However, while the 
committee focuses on meeting the demands of these current 
operations, we must also take a longer view to ensure the 
readiness of our fleet and fleet marine force for future 
conflict.
    The Navy reports as much as half of our ships are under way 
on any given day supporting the global war on terror and 
performing vigilance, peacekeeping, and humanitarian relief 
missions around the world. We're accustomed to and indeed our 
National Security Strategy is built upon freedom of the seas, a 
freedom that is made possible only through global presence and 
naval superiority. Absent a credible challenge at sea over the 
past 2 decades, however, the fleet has drawn down to 280 ships 
and it's in jeopardy of slipping further.
    I share the strong concern raised by the subcommittee these 
past several years regarding this decline in the size of our 
fleet. Particularly today as we witness rapid expansion by 
competitor navies, most notably that of China, we must guard 
against shortfalls to our numbers of aircraft carriers, 
submarines, amphibious ships, and surface combatants.
    The CNO has presented Congress with a shipbuilding plan to 
reverse this trend and build the Navy back to 313 ships. Even 
this plan, however, which strives to balance capability with 
affordability, must cope with shortfalls in key warfighting 
areas while confronting significant cost risk. The cost 
estimate for building this future Navy exceeds the investments 
of the past 15 years by greater than 50 percent. Arguably, this 
is a bill that has come due as a result of the long lapse in 
ship construction following the end of the Cold War.
    In the 2009 budget request, however, it falls four ships 
and $1.5 billion short of the shipbuilding plan presented to 
this subcommittee just 1 year ago. This is a disturbing leading 
indicator of challenges ahead. It is important today to gain 
your candid assessment of these challenges, to hear from you 
regarding progress on new ship programs and regarding the 
health and welfare of the industrial base.
    As well, I look forward to your practical assessment of the 
Navy's ability to finance a shipbuilding plan in the face of 
ever-increasing budget pressures and competing priorities. In 
the end, we need to arrive at a common understanding of the 
Navy and Marine Corps's priorities and risks and the prudent 
actions available to the administration and Congress that would 
mitigate these risks.
    I also join the chairman in my concern over the LCS 
program. I want to make sure that we have this on track and are 
moving forward adequately, because without that component of 
the new shipbuilding program I don't think we can meet that 
goal of a 313-ship Navy.
    I thank you again for joining us. I thank you for your 
tremendous service, and I look forward to your testimony here 
before us today.
    Thank you, Mr. Chairman.
    [The prepared statement of Senator Martinez follows:]

               Prepared Statement by Senator Mel Martinez

    Thank you, Mr. Chairman.
    I'm also pleased to welcome our witnesses. Secretary Stiller, 
Admiral McCullough, and General Amos, thank you for joining us.
    Earlier today, the committee received testimony on operations in 
Iraq, where the 24,000 marines assigned to the Multi-National Force 
have performed remarkably in the Al Anbar Province. Likewise, the Navy 
has made vital contributions in-theater with over 10,000 sailors 
augmenting ground forces.
    Without question, marines, sailors, soldiers, and airmen in combat 
are our number one priority. However, while the committee focuses on 
meeting the demands of these current operations, we must also take `the 
longer view' to ensure the readiness of our Fleet and Fleet Marine 
Force for future conflict.
    By the Navy's reports, as many as half of our ships are underway on 
any given day supporting the global war on terror, and performing 
vigilance, peacekeeping, and humanitarian relief missions around the 
world. We are accustomed to, and indeed our National Security Strategy 
is built upon freedom of the seas--a freedom that is made possible only 
through global presence and naval superiority.
    Absent a credible challenge at sea over the past two decades, 
however, the Fleet has drawn down to 280 ships and is in jeopardy of 
slipping further. I share the strong concerns raised by the committee 
these past several years regarding this decline in the size of our 
fleet. Particularly today, as we witness rapid expansion by competitor 
navies, most notably China, we must guard against shortfalls to our 
numbers of aircraft carriers, submarines, amphibious ships, and surface 
combatants.
    The CNO has presented to Congress a shipbuilding plan to reverse 
the trend and build the Navy back to 313 ships. Even this plan, 
however, which strives to balance capability with affordability, must 
cope with shortfalls in key warfighting areas while confronting 
significant cost risk.
    The cost estimate for building this future Navy exceeds investments 
of the past 15 years by greater than 50 percent. Arguably, this is a 
bill that has come due as a result of the long lapse in ship 
construction following the end of the Cold War.
    The 2009 budget request, however, falls four ships and $1.5 billion 
short of the shipbuilding plan presented to this subcommittee just 1 
year ago. This is a disturbing `leading indicator' of challenges ahead.
    It is important today to gain your candid assessment of these 
challenges; to hear from you regarding progress on new ship programs, 
and regarding the health and welfare of the industrial base. As well, I 
look for your practical assessment of the Navy's ability to finance the 
shipbuilding plan in the face of ever-increasing budget pressures and 
competing priorities. In the end, we need to arrive at a common 
understanding of the Navy's and Marine Corps' priorities and risks, and 
the prudent actions available to the administration and to Congress 
that would mitigate these risks.
    Again, thank you for joining us. I thank you for your tremendous 
service to our country, and I look forward to your testimony.

    Senator Kennedy. Thank you very much.
    Secretary Stiller, we'd be delighted if you'd lead off, 
please.

STATEMENT OF ALLISON F. STILLER, DEPUTY ASSISTANT SECRETARY OF 
           THE NAVY FOR SHIPS, DEPARTMENT OF THE NAVY

    Ms. Stiller. Mr. Chairman, Senator Martinez, Senator 
Collins: It's a privilege for Lieutenant General Amos, Vice 
Admiral McCullough, and me to appear before you today to 
discuss Navy shipbuilding. I request that Vice Admiral 
McCullough's and my written statement be entered into the 
record.
    Senator Kennedy. Without objection.
    Ms. Stiller. The Department is committed to build an 
affordable fleet at or above 313 ships, tailored to support the 
National Defense Strategy, the recently signed Maritime 
Strategy, and the 2006 Quadrennial Defense Review (QDR). For 
the first time in a long while, the Navy's budget does not 
include funding for any lead ships. This year a total of seven 
ships are included in the fiscal year 2009 President's budget: 
one Virginia-class submarine, one DDG-1000-class ship, two 
LCSs, two T-AKEs, and one Navy Joint High-Speed Vessel (JHSV). 
In addition, although not part of the Navy's 313-ship force 
structure, the Navy will procure 1 JHSV for the Army in fiscal 
year 2009.
    I'll now elaborate on the specifics of the request. The 
Navy is requesting $2.1 billion of full funding for one 
Virginia-class submarine in fiscal year 2009 and advanced 
procurement for the fiscal year 2010 boat, and advanced 
procurement for two boats in fiscal year 2011. The Virginia-
class construction program is continuing to make progress 
toward realizing CNO's goal of buying two Virginia-class 
submarines for $4 billion as measured in fiscal year 2005 
dollars, starting in fiscal year 2012.
    Because of your support with the addition of advanced 
procurement funding last year, the Navy has accelerated the 
production of two Virginia-class submarines per year from 
fiscal year 2012 to fiscal year 2011. Two months ago, the Navy 
awarded contracts for the construction of the dual DDG-1000 
lead ships to General Dynamics-Bath Iron Works and to Northrop 
Grumman Shipbuilding. The fiscal year 2009 President's budget 
request of $2.55 billion provides full funding for the third 
ship of the DDG-1000-class and advanced procurement for the 
fourth ship. With recent approval from the Defense Acquisition 
Executive (DAE) for the follow ship acquisition strategy, the 
Navy intends to utilize fixed-price incentive fee contracts 
through a competition for quantity.
    The Navy remains committed to the LCS program and LCS 
remains a critical warfighting requirement for our Navy. The 
fiscal year 2009 President's budget request includes $920 
million for two additional LCS sea frames. The Navy also 
intends to execute the fiscal year 2008 appropriation for one 
sea frame, utilizing the remaining funding and material from 
the terminated ships. Under an acquisition strategy approved in 
January 2008 by the DAE, the fiscal years 2008 and 2009 awards 
will be for fixed-price incentive fee contracts based on a 
limited competition between the current LCS sea frame prime 
contractors.
    The fiscal year 2009 President's budget request also 
provides for procurements of two T-AKEs in the National Defense 
Sealift Fund.
    The JHSV program is currently in the technology development 
phase. Lead ship award is anticipated in late fiscal year 2008, 
with delivery of the first vessel in 2011. The fiscal year 2009 
President's budget request includes $187 million for the 
construction of the first Navy-funded JHSV and $173 million for 
the second Army-funded vessel. We worked diligently to 
stabilize our shipbuilding plan and move into serial 
production.
    The Navy remains committed to ensure fiscal responsibility 
in shipbuilding acquisition programs, as evidenced by the 
cancellation of LCS-3 and LCS-4 last year.
    Mr. Chairman, we'd like to thank you for this opportunity 
to discuss the Navy's shipbuilding budget request for fiscal 
year 2009. Vice Admiral McCullough would like to remark briefly 
on a day in the Navy. Thank you.
    [The joint prepared statement of Ms. Stiller and Admiral 
McCullough follows:]

     Joint Prepared Statement by Allison F. Stiller and VADM Barry 
                            McCullough, USN

    Mr. Chairman and distinguished members of the subcommittee, thank 
you for the opportunity to appear before you today to address Navy 
shipbuilding. The Department is committed to the effort to build an 
affordable 313-ship fleet by 2020 tailored to support the National 
Defense Strategy, the Maritime Strategy, and the 2006 Quadrennial 
Defense Review. This year a total of seven ships are included in the 
fiscal year 2009 President's budget, one Virginia-class SSN, one DDG-
1000, two littoral combat ships (LCSs), two T-AKE, and one Navy Joint 
High Speed Vessel (JHSV). In addition, although not part of the Navy's 
313-ship force structure, the Navy will procure 1 JHSV for the Army in 
fiscal year 2009.
    The Department has updated the Long-Range Strategic Shipbuilding 
Plan with an eye on further stabilizing workload and funding 
requirements. A stable plan will enable the shipbuilding industry to 
maintain critical skills and to make business decisions that increase 
efficiency and productivity in order to meet the Navy's projected 
shipbuilding requirements. In addition to a stable shipbuilding plan, 
the Department has been exploring alternatives with the shipbuilding 
industry to mitigate workload fluctuations among shipyards to maintain 
a stable and skilled workforce across the industry sectors. The 
Department requests consideration of a general cost cap exception to 
allow the Department to work with industry to better level load work 
across the industrial base.
    We still face challenges. In response to cost increases in the lead 
ships of the LCS class, the Navy has slowed the initial rate of 
production to reduce risk; however, the Navy remains committed to the 
program to fill critical warfighting gaps that exist today. In an area 
of success, the innovative design and build practices being implemented 
by Virginia-class are already showing promise and can serve as a model 
for other programs. Bringing the cost of the Virginia-class fast attack 
submarine down to $2 billion (fiscal year 2005 $) per hull by fiscal 
year 2012 remains a challenge and is currently within $50 million of 
target.
    The Gulf Coast shipyards have struggled since Hurricane Katrina. 
Over the last year the Navy and Northrop Grumman Ship Systems have 
worked at a ship portfolio level to reset the schedule baselines and 
have adjusted the associated contracts accordingly. Additionally, six 
Gulf Coast shipbuilders were awarded contracts in 2007 under Section 
2203 of Public Law 109-234, Emergency Supplemental Appropriations for 
Defense, The Global War on Terror and Hurricane Recovery 2006. The 
purpose of these contracts is to expedite recovery of shipbuilding 
capability in areas affected by Hurricane Katrina by repairing and/or 
replacing shipbuilding facilities, to make lasting improvement in 
shipyard facilities that would result in measurable cost reductions in 
current and future Navy shipbuilding contracts, and to improve the 
ability of shipbuilding facilities on the Gulf Coast to withstand 
damage from potential hurricanes or other natural disasters.
    Lastly, we are actively working with our Allies to exchange best 
practices and lessons learned on shipbuilding efforts. A Shipbuilding 
Quadrilateral forum has been established which includes the U.S., 
United Kingdom, Canada, and Australia to discuss systematic trends that 
are emerging in shipbuilding programs. The forum serves to discuss, 
compare and contrast acquisition matters such as contracting practice 
and industry trends. In addition, the Navy is partnering with the 
United Kingdom to support the new missile compartment design for their 
Vanguard-class replacement.
    As noted earlier, the Department proposes procurement of seven new 
construction ships as part of the 2009 President's budget request. Each 
of these ships as well as other significant Navy shipbuilding programs 
are discussed below.

                             VIRGINIA-CLASS

    Currently, four Virginia-class submarines have been delivered to 
the Fleet and six more are under construction. In the past year, the 
Navy commissioned U.S.S. Hawaii (SSN-776), the third boat of the 
Virginia-class, christened the fourth submarine of the class, North 
Carolina (SSN-777), and laid the keel for the fifth submarine, New 
Hampshire (SSN-778). In 2008 we will deliver and commission two 
submarines. North Carolina (SSN-777), the fourth submarine, just 
delivered last week and will commission in May. New Hampshire (SSN-
778), the fifth submarine is scheduled to deliver in October, 6 months 
ahead of the April 2009 contract delivery date. In January 2008, the 
seventh, eighth, and ninth hulls were named Missouri (SSN-780), 
California (SSN-781) and Mississippi (SSN-782), respectively.
    The Virginia-class construction program is continuing to make 
progress toward realizing the Chief of Naval Operation's goal of buying 
two Virginia SSNs for $4 billion as measured in fiscal year 2005 
dollars, starting in fiscal year 2012. General Dynamics Electric Boat 
and Northrop Grumman Newport News (NGNN), will continue to jointly 
produce these submarines and are working to reduce the construction 
time and cost of these ships in concert with the program office. In 
this budget, the production of two Virginia-class submarines per year 
has accelerated to start in fiscal year 2011 vice fiscal year 2012. The 
fiscal year 2008 congressional plus-up for advanced procurement was 
instrumental to this effort. Negotiations for an eight-ship multi-year 
procurement contract will begin soon, and we anticipate signing that 
contract in late 2008. The Navy requests approval for the next multi-
year contract.

                           DDG-1000 DESTROYER

    This multi-mission surface combatant, tailored for land attack and 
littoral dominance, will provide independent forward presence and 
deterrence and operate as an integral part of joint and combined 
expeditionary forces. DDG-1000 will capitalize on reduced signatures 
and enhanced survivability to maintain persistent presence in the 
littoral in future scenarios. The program provides the baseline for 
spiral development to support future surface ships. DDG-1000 with the 
Advanced Gun System and associated Long-Range Land Attack Projectile 
will provide volume and precision fires in support of joint forces 
ashore. The dual band radar represents a significant increase in air 
defense capability in the cluttered littoral environment. Investment in 
open architecture and reduced manning will provide the Navy life cycle 
cost savings and technology options that can be retrofit to legacy 
ships thus allowing adaptability for an uncertain future. The program 
continues to execute on cost and schedule.
    This month, the Navy awarded contracts for construction of the dual 
lead ships to General Dynamics Bath Iron Works and to Northrop Grumman 
Shipbuilding. Ship detail design and the design of the mission system 
equipment are on track to support the start of production. The fiscal 
year 2009 President's budget request of $2.55 billion provides full 
funding for the third ship of the class, and advanced procurement for 
the fourth ship. With recent approval from the Defense Acquisition 
Executive for the follow ship acquisition strategy, the Navy intends to 
utilize fixed-price incentive fee contracts for the follow ships 
awarded through a competition for quantity.

                          LITTORAL COMBAT SHIP

    LCS will be a fast, agile, and networked surface combatant with 
capabilities optimized to assure naval and joint force access into 
contested littoral regions. LCS will operate with focused-mission 
packages that deploy manned and unmanned vehicles to execute a variety 
of missions, including anti-submarine warfare, anti-surface warfare and 
mine countermeasures. LCS will also possess inherent capabilities to 
support homeland defense, Maritime Interception Operations, and Special 
Operation Forces.
    The Navy remains committed to the LCS program, and LCS remains a 
critical warfighting requirement for our Navy to maintain dominance in 
the littorals and strategic choke points around the world. However, the 
Navy identified significant cost increases on the order of 100 percent 
for the lead ships in the LCS class, due to unrealistic contractor 
proposals, development difficulties and changes from a commercial 
baseline. The Navy believes that active oversight and strict cost 
controls are needed to deliver these ships to the fleet over the long 
term. The Navy demonstrated strong oversight when it terminated the 
contracts for LCS-3 and LCS-4 in 2007.
    It is vital that the Navy continue through first-of-class 
construction challenges to complete LCS-1 and LCS-2. When these ships 
are delivered, the Department will be able to better evaluate their 
costs and capabilities. LCS-1 and LCS-2 are currently scheduled to 
deliver to the Navy in 2008. The Navy will seek congressional support 
to complete the reprogramming of fiscal year 2007 LCS shipbuilding 
funds to complete LCS-1 and LCS-2.
    The fiscal year 2009 President's budget request includes $920 
million for two additional LCS seaframes. The Navy also intends to 
execute the fiscal year 2008 appropriation for one seaframe, utilizing 
the remaining funding and material from the terminated ships. The Navy 
will also seek congressional support for the reprogramming of these 
funds for the fiscal year 2008 procurement. Under an acquisition 
strategy approved in January 2008 by the Defense Acquisition Executive, 
the fiscal year 2008 and 2009 awards will be for fixed-price incentive 
fee contracts, based on a limited competition between the current LCS 
seaframe prime contractors. These ships will be designated as Flight 0+ 
and will include all existing approved engineering changes developed 
from lessons learned, along with any current improvements to 
construction or fabrication procedures. The Navy will incorporate 
further lessons learned from LCS-1 and LCS-2 sea trials into these 
ships prior to production. Any such changes will be minimized to those 
essential for safety and/or operability. Acquisition strategies for 
fiscal year 2010 and follow ships are under Navy review.

        LEWIS AND CLARK CLASS DRY CARGO/AMMUNITION SHIP (T-AKE)

    T-AKE was designed to replace the Navy's aging combat stores (T-
AFS) and ammunition (T-AE) shuttle ships. Working in concert with an 
oiler (T-AO), the team can perform a ``substitute'' station ship 
mission which will provide necessary depth in combat logistics. The 
fiscal year 2009 President's budget request provides for procurement of 
two T-AKEs in the National Defense Sealift Fund. Fourteen T-AKE hulls 
are covered under a fixed-price incentive contract with General 
Dynamics National Steel and Shipbuilding Company. Three of the T-AKEs 
are to support MPF-F program requirements. Major accomplishments for 
the year include the christening of T-AKE-4 (Richard E. Byrd) in May 
2007 and the delivery of T-AKE-3 (Alan Shepard) in June 2007 and T-AKE-
4 in November 2007. T-AKE-5 (Robert E. Peary) launched in October 2007. 
Progress continues on the follow on ships including the keel laying for 
T-AKE-6 (Amelia Earhart) in June 2007 and T-AKE-7 in November 2007. T-
AKE-8 commenced construction in October 2007. The construction contract 
option for the T-AKE-10 and long lead time material for the T-AKE-11 
were exercised in January 2008. The fiscal year 2009 funding is to 
complete funding for two ships (T-AKE-11 and T-AKE-12).

                        JOINT HIGH SPEED VESSEL

    High speed connectors will facilitate the conduct of sustained sea-
based operations by expediting force closure and allowing the 
persistence necessary for success in the littorals. Connectors are 
grouped into three categories: inter-theater, the Joint High Speed 
Sealift, which provides strategic force closure for the continental 
United States-based forces; intra-theater, the JHSV that enables rapid 
closure and sustainment of Marine forces; and the Joint Maritime 
Assault Connector, to move troops and resources from the sea base to 
shore. These platforms will link bases and stations around the world to 
the sea base and other advanced bases, as well as provide linkages 
between the sea base and forces operating ashore. JHSV is currently in 
the Technology Development Phase. The Capabilities Development Document 
was Joint Requirements Oversight Council (JROC)-approved in January 
2007. Milestone B is anticipated in fiscal year 2008 with delivery of 
the first vessel in 2011. The fiscal year 2009 President's budget 
request including research and development (R&D) is $186.8 million for 
the construction of the first Navy-funded JHSV and $173.0 million for 
the second Army-funded vessel.
    The Navy also continues with important new construction and 
modernization programs. These programs are outlined below.

                                 CVN-21

    CVN-78, the lead ship of the CVN-21 program will replace U.S.S. 
Enterprise (CVN-65). CVN-21 warfighting capability improvements 
include: 25 percent increase in sortie generation rate, ship's force 
reduction approaching 800 billets with an additional 400 billets 
reduction including airwing and embarked staff, nearly three-fold 
increase in electrical generating capacity, restoration of Service Life 
Allowances, and enhanced Integrated Warfare System to pace future 
threats. These capability improvements will ensure that the CVN, the 
centerpiece of the Navy's Carrier Strike Group, continue to pace 
projected threats. The major critical technologies and capabilities 
planned for integration into the lead ship include: Electromagnetic 
Aircraft Launch System, Advanced Arresting Gear, Joint Precision 
Aircraft Landing System, Improved Survivability, Enhanced Flight Deck 
and Improved Weapon and Material Handling.
    The National Defense Authorization Act for Fiscal Year 2007 
authorized the Navy to enter into construction contracts for the first 
three ships of the CVN-78 class and provided for 4-year funding of the 
first three ships beginning with construction of the Gerald R. Ford 
(CVN-78) in fiscal year 2008. Non-recurring investment in the class 
design is $5.7 billion and the cost of the lead ship (excluding all 
nonrecurring costs) is $8.1 billion ($TY), nearly $300 million less 
than the projected cost to buy a Nimitz-class aircraft carrier in the 
same timeframe. The President's budget request for fiscal year 2009 
included $2.7 billion as the second of the four funding increments 
planned for CVN-78. The Navy released the Request for Proposal for 
Detail Design and Construction of the lead ship in July 2007 and NGNN 
responded with their contract proposal on October 31, 2007. Contract 
negotiations are ongoing.

                              CVN-68 CLASS

    George H.W. Bush (CVN-77), is the 10th and final Nimitz-class 
nuclear powered aircraft carrier. The construction of CVN-77 has 
proceeded rapidly following the launch in October 2006. The aircraft 
catapults began testing in January of this year by `launching' dead-
loads. Sea trials will commence this fall. The George H.W. Bush is 
expected to deliver near the end of this calendar year. The 
commissioning date has been set for January 10, 2009. The President's 
budget for fiscal year 2009 requests $20.5 million for the completion 
of government responsible mission critical and safety system 
installations reflecting operational needs to deploy the George H.W. 
Bush at a readiness condition appropriate for the defense of America's 
freedom. The program remains within the congressionally enacted $6,057 
million cost limitation.

                CVN-68 CLASS REFUELING COMPLEX OVERHAUL

    The CVN-68 Class Refueling Complex Overhaul (RCOH) program spans 
40+ years across the Nimitz-class. During each RCOH, 35 percent of a 
carrier's total Service Life Maintenance plan is performed, as well as 
depot level mid-life recapitalization that extends the service life of 
Nimitz-class carriers out to approximately 50 years. Refueling of the 
ships' nuclear reactors, warfighting modernization, and repair of ship 
systems and infrastructure are also completed to meet future missions. 
These combined upgrades support a reduction in operating costs, achieve 
expected service life, and allow the Nimitz-class to deter projected 
threats well into the 21st century. This program is critical for the 
class to achieve its service life and retain combat relevance. The 
President's budget for fiscal year 2009 requests $124.5 million in 
fiscal year 2009 to facilitate the acceleration of the execution start 
date for U.S.S. Theodore Roosevelt (CVN-71) to September 2009, and 
$21.4 million advanced procurement for U.S.S. Abraham Lincoln (CVN-72) 
RCOH. This acceleration provides additional 2 months of operational 
availability to the carrier fleet during the critical 2012-2015 period 
before the commissioning of the Gerald R. Ford (CVN-78) and adds 
approximately 1 million manhours to NGNN's fiscal year 2009 workload 
keeping 300 NGNN skilled workers employed.

               WASP (LHD-1)-CLASS AMPHIBIOUS ASSAULT SHIP

    The Wasp (LHD-1)-class comprises multi-purpose amphibious assault 
ships whose primary mission is to provide embarked commanders with 
command and control capabilities for sea-based maneuver/assault 
operations as well as employing elements of a landing force through a 
combination of helicopters and amphibious vehicles. Seven LHDs have 
been delivered to the fleet. The last of the LHD-1-class, U.S.S. Makin 
Island (LHD-8), is scheduled to be delivered in November 2008. Although 
a modified repeat of the previous seven ships, this ship introduced gas 
turbine propulsion system with all electric auxiliary systems and 
eliminated the steam plant and steam systems.

      LHA(R) GENERAL PURPOSE AMPHIBIOUS ASSAULT SHIP (REPLACEMENT)

    The LHA(R) Assault Echelon ships will provide the Nation with 
forcible entry capability and forward deployed contingency response 
forces. These ships will provide enhanced hangar and maintenance spaces 
to support aviation maintenance and increased jet fuel storage and 
aviation ordnance magazines. The LHA(R) Assault Echelon ship is the 
functional replacement for the aging LHA-1-class ships that reach the 
end of their extended service life in 2011-2015. The Detail Design and 
Construction contract for the lead ship, LHA-6, was awarded on June 1, 
2007, with a contract delivery date of August 31, 2012.

                  LPD-17 CLASS AMPHIBIOUS WARFARE SHIP

    The LPD-17 San Antonio-class of amphibious warfare ships represents 
the Department of the Navy's commitment to a modern expeditionary power 
projection fleet that will enable our naval force to operate across the 
spectrum of warfare. The Navy took delivery of the first LPD-17 in the 
summer of 2005, and operational evaluation began in the spring of 2007. 
LPD-18 (U.S.S. New Orleans) and LPD-19 (U.S.S. Mesa Verde) were 
commissioned in March 2007 and December 2007, respectively. LPD-19 will 
undergo shock trials this summer. There are five ships currently under 
construction. LPD-20 (Green Bay) is expected to deliver this year, and 
LPD-21 (New York) has been launched and will be christened in March 
2008. LPDs-22-24 are in various stages of the construction phase, and 
the option for construction of LPD-25 was exercised on December 21, 
2007. The fiscal year 2009 President's budget request includes funding 
for outfitting/post delivery efforts on LPDs 20-24 and program closeout 
efforts required following delivery of the final LPD-17-class ship. The 
San Antonio-class ship replaces four classes of older ships--the LKA, 
LST, LSD-36, and the LPD-4--and will have a 40-year expected service 
life. San Antonio class ships will play a key role in supporting the 
ongoing global war on terrorism by forward deploying marines and their 
equipment to respond to crises abroad.

             MARITIME PREPOSITIONING FORCE (FUTURE) (MPF-F)

    MPF-F provides a scalable, joint, sea-based capability for the 
closure, arrival, assembly and employment of up to a MEB-sized force. 
It will also support the sustainment and reconstitution of forces when 
required. MPF-F is envisioned for frequent utility in Humanitarian 
Assistance/Disaster Relief, Noncombatant Evacuation Operations, Theater 
Security Cooperation, and other Littoral Combat Operations as well as 
major combat operations. When coupled with an Expeditionary Strike 
Group or Carrier Strike Group, MPF-F will provide the Nation with a 
highly flexible operational and logistics support capability that 
enables rapid reinforcement of the Assault Echelon of an Amphibious 
Force in anti-access or denial environments. In March 2006, the Defense 
Acquisition Board approved program entry into the Technology 
Development Phase. An R&D plan is currently being executed and the 
program is progressing on track. The fiscal year 2009 President's 
budget request includes $41.8 million R&D for ongoing risk reduction 
and technology development, and advance procurement for the fiscal year 
2010 MPF Aviation Ship.

                           DDG MODERNIZATION

    The DDG-51 modernization program is a comprehensive 62-ship program 
designed to modernize the Hull, Mechanical, and Electrical (HM&E) and 
Combat Systems. These combined upgrades support a reduction in manpower 
and operating costs, achieve expected service life, and allow the class 
to pace the projected threat well into the 21st century. This program 
is critical for the class to achieve its service life and retain combat 
relevance.
    The first DDG to be modernized will be DDG-51 with an HM&E 
availability in fiscal year 2010. Congress provided additional funds to 
this program with $50 million SCN in fiscal year 2005, $50 million in 
SCN in fiscal year 2006, and $30 million in OPN in fiscal year 2007. 
The HM&E alterations are being developed in SCN new construction in 
order to minimize development costs and mitigate technical and schedule 
risk. The President's budget for fiscal year 2008 included the addition 
of robust warfighting upgrades. The President's budget request for 
fiscal year 2009 includes $316 million which supports the Flight I and 
II ship modernizations starting in fiscal year 2010.

                         CRUISER MODERNIZATION

    Twenty-two cruisers remain in service and are planned for 
modernization. A comprehensive Mission Life Extension is critical to 
achieving the ship's expected service life and includes the All 
Electric Modification, Smartship, Hull Mechanical & Electrical system 
upgrades and a series of alterations designed to restore displacement 
and stability margins, correct hull and deck house cracking and improve 
quality of life and service onboard. Cruiser Modernization bridges the 
gap to future surface combatants and will facilitate a more rapid and 
affordable capability insertion process. The first full modernization 
is CG-52 commencing in February 2008. The President's budget request 
for fiscal year 2009 includes $413 million which will modernize two 
cruisers.

                                 CG(X)

    CG(X) is envisioned to be a highly capable surface combatant 
tailored for Joint Air and Missile Defense and Joint Air Control 
Operations. CG(X) will provide airspace dominance and Sea Shield 
protection to Joint forces. The Maritime Air and Missile Defense of 
Joint Forces Initial Capabilities Document was validated by the JROC in 
May 2006. Under the Navy's current program of record, the program 
procures its first ship in fiscal year 2011 with follow-on construction 
in fiscal year 2013.
    The results of the Navy's Analysis of Alternatives for the Maritime 
Air and Missile Defense of Joint Forces capability are currently within 
the Navy staffing process. Resulting requirements definition and 
acquisition plans, including schedule options and associated risks, are 
being evaluated in preparation for CG(X) Milestone A, planned to occur 
in fiscal year 2008. This process includes recognition of the 
requirement of the National Defense Authorization Act for Fiscal Year 
2008, that all major combatant vessels of the United States Navy strike 
forces be constructed with an integrated nuclear power plant, unless 
the Secretary of Defense determines this not to be in the best interest 
of the United States.
    Regardless of the Navy's selection of a particular preferred 
alternative, vital R&D efforts must continue in fiscal year 2009. These 
engineering development and integration efforts include systems 
engineering, analysis, computer program development, interface design, 
Engineering Development Models, technical documentation and system 
testing to ensure a fully functional CG(X) system design. The fiscal 
year 2009 President's budget request will continue maturation of the 
CG(X) design based on the preferred alternative selected.

                       OHIO-CLASS SSGN CONVERSION

    The Ohio-class SSGN Conversion Program continues to be a successful 
transformational program. All four ships, U.S.S. Ohio (SSGN-726), 
U.S.S. Florida (SSGN-728), U.S.S. Michigan (SSGN-727), and U.S.S. 
Georgia (SSGN-729), have been delivered to the Fleet. The SSGNs 
completed their Operational Evaluation and had its Initial Operational 
Capability declared on November 1, 2007. Additionally, U.S.S. Michigan 
will complete testing with the Advanced SEAL Delivery System in March 
2008. U.S.S. Ohio, the first SSGN to complete conversion, is now 
deployed in the Pacific Ocean and has already conducted its first crew 
exchange in Guam.

                  SSBN ENGINEERED REFUELING OVERHAULS

    The Ohio-class SSBN Engineered Refueling Overhaul (ERO) Program 
will continue with the fiscal year 2009 authorization for the start of 
the industrial period for the fifth submarine, U.S.S. Tennessee (SSBN-
734). In addition, fiscal year 2009 includes advance procurement 
funding for U.S.S. Pennsylvania (SSBN-735) and U.S.S. West Virginia 
(SSBN-736) which will start in fiscal year 2010 and fiscal year 2011, 
respectively. These EROs are the one-time depot maintenance period near 
the mid-point of the SSBN service life, where the nuclear reactor is 
refueled, major equipment is refurbished, class alterations are 
installed, and SUBSAFE unrestricted operations maintenance is 
accomplished.

                           SHIP INACTIVATIONS

    The Navy remains committed to reducing and eliminating any 
environmental risks posed by its inactive ships by reducing the size of 
the inactive ship inventory. This inventory has been reduced from a 
high of 195 ships in 1997 to 62 ships today. The Navy plans to 
decommission 29 ships between fiscal year 2009 and fiscal year 2013, of 
which 23 will be designated for disposal upon decommissioning and 6 
will be retained for future mobilization purposes.
    The Navy utilizes six disposal methods to reduce the inventory of 
non-nuclear inactive ships, including Foreign Military Sales transfers; 
interagency transfers to the Maritime Administration, U.S. Coast Guard, 
or other agencies; donations for memorial/museum use; domestic 
dismantling; experimental use/fleet training sink exercises; and ship 
reefing. While fleet training sink exercises are not a disposal method, 
since the primary purpose is weapons effectiveness testing or fleet 
training, it does contribute to inventory reduction.

                                SUMMARY

    The Navy is committed to ensure fiscal responsibility in 
shipbuilding acquisition and modernization programs.

  STATEMENT OF VADM BERNARD J. ``BARRY'' McCULLOUGH III, USN, 
      DEPUTY CHIEF OF NAVAL OPERATIONS FOR INTEGRATION OF 
       CAPABILITIES AND RESOURCES, DEPARTMENT OF THE NAVY

    Admiral McCullough. Chairman Kennedy, Senator Martinez, and 
Senator Collins: I'm honored to appear before you today with 
Ms. Stiller and General Amos to discuss Navy force structure 
requirements and the fiscal year 2009 budget request.
    Before we begin, I'd like to share with you what your Navy 
accomplished on March 19. The fleet is 280 ships strong, with 
140 ships, or 50 percent, underway. There are over 332,000 
Active Duty, 70,000 Reserve, and 178,000 civilians serving in 
the Navy; 6,300 sailors are deployed around the world in 
support of the global war on terror.
    Beginning in the Caribbean and eastern Pacific, Hawaii, our 
newest Virginia-class submarine, along with Cromlin, Simpson, 
Steven W. Groves, and Navy P-3s, are conducting 
counternarcotics operations in support of U.S. and 
participating nations' drug control programs.
    In the European theater, Dallas is in the Mediterranean 
participating in the North Atlantic Treaty Organization 
operations, monitoring maritime activity to detect, deter, and 
respond to terrorism and other transnational threats. Nassau, 
Nashville, and San Jacinto are conducting maritime and theater 
security operations. Fort McHenry and Swift arrive in Monrovia, 
Liberia, as part of the Africa Partnership Station, supporting 
an exercise delivering humanitarian assistance and medical 
goods in conjunction with U.S. Marine Forces Europe and Project 
Hope.
    In the Central Command (CENTCOM) area of operations, 
supporting Operation Iraqi Freedom (OIF) and Operation Enduring 
Freedom (OEF), Harry S. Truman Carrier Strike Group is 
underway, while the Tarawa Expeditionary Strike Group conducts 
port visits in the Arabian Gulf. Riverine forces are conducting 
a variety of missions in country, while in the air, Navy 
airborne intelligence, surveillance, and reconnaissance assets 
are providing critical intelligence to Navy and Special 
Operations Forces. EA-6B Prowlers are supporting efforts on the 
land.
    Carney, Hopper, and Winston Churchill are conducting 
maritime security operations, while off the west coast of 
Africa, Oscar Austin is supporting counter-piracy operations 
with coalition forces.
    In the Pacific theater, Nimitz Carrier Strike Group is 
underway in the western Pacific providing presence, while Kitty 
Hawk completes her first day of at-sea training since 
completing a maintenance period. Essex Expeditionary Strike 
Group is en route to Yokosuka, Japan, for a port visit after 
completing exercises with Republic of Philippines forces, while 
Ohio is in Guam after participating in the binational exercise 
Key Resolve/Foal Eagle.
    In Indonesia, Harpers Ferry and marines from the 31st 
Marine Expeditionary Unit (MEU) participate in field exercises 
and provide medical and dental civic action programs. In the 
eastern Pacific, Peleliu and elements of the 15th MEU are 
underway, preparing for a summer deployment, while Carrier 
Airwing Two completes embarkation on Abraham Lincoln and is in 
the progress of performing carrier qualifications at the start 
of a 7-month deployment in support of OIF and OEF.
    Finally, in the mid-Pacific Lake Erie, which last month 
launched a modified SM-3 missile and successfully intercepted 
and destroyed an inoperable satellite containing a toxic 
hazard, was in Pearl Harbor finishing her last day of material 
inspection with the Board of Inspection and Survey.
    These are everyday examples of the balanced capability set 
the 2009 fiscal year shipbuilding program will provide to meet 
the challenge the Nation faces with a reasonable degree of 
risk. The Navy's 313-ship force structure represents the 
minimum number of ships the Navy requires, the minimum 
capacity, if you will, to provide global reach, persistent 
presence, and warfighting effects expected of Navy forces as 
outlined in the National Defense Strategy, the 2006 QDR, and 
the recently signed Maritime Strategy.
    I thank you for this opportunity to discuss the Navy 
shipbuilding program with you and look forward to answering 
your questions.
    Senator Kennedy. Thank you very much.
    General Amos?

 STATEMENT OF LT. GEN. JAMES F. AMOS, USMC, COMMANDER, MARINE 
                CORPS COMBAT DEVELOPMENT COMMAND

    General Amos. Thank you, Chairman Kennedy, Senator 
Martinez, and Senator Collins: Thank you for the opportunity to 
appear before you today and talk to you about your Marine 
Corps.
    As we meet here this afternoon, we have a little over 2,000 
marines that have landed in the southeastern part of 
Afghanistan--I know you're aware of that--from the 24th MEU. 
It's not completely on the ground yet, but they'll be flowed in 
within the next couple of weeks. Early elements of the lead 
elements of the Second Battalion, Seventh Marines Reinforced, 
from Twentynine Palms, are on the ground as well.
    When it's all said and done, there'll be 3,500 marines and 
sailors down in the Helmand Province, arguably probably the 
most dangerous part of all of Afghanistan. So on behalf of 
those 3,500 marines and sailors and the 24,000-plus that we 
have in the Al Anbar Province in Iraq, I want to thank you for 
your strong support for the last 5 years of heavy combat for 
the marines.
    Senator Kennedy. General, where is more dangerous, do you 
think, to those 3,200 that have arrived down there in southern 
Afghanistan, or to the marines in----
    General Amos. I think the area where the marines are going 
to be in the Helmand Province, down with the Canadians and the 
Brits, Mr. Chairman, is probably the most dangerous area and 
the most unstable area of Afghanistan right now.
    Senator Kennedy. Is that more dangerous, less dangerous 
than Iraq?
    General Amos. For us it's more dangerous. The western part 
of Iraq, the Al Anbar Province, was the early part that saw the 
awakening from the sheiks. So there's always danger there. I 
don't want to misrepresent it. But that area has turned around 
for us, for the marines.
    I also carry a message from the families, the wives, the 
children, the parents of our marines and sailors, the husbands. 
I want to thank you again for your strong support for the last 
5 years.
    I come to you today with really just two comments. The 
first one is, by nature the Marine Corps is a light and 
expeditionary force. Arguably, we have been on land now for the 
last 5 years. But we're going to return to our roots, which is 
our naval heritage. But we need to be able to return as a light 
force, light enough to be able to get someplace quickly, with 
enough punch to complete the mission.
    That mission can be something as benign as working the 
tsunami relief. It can be something not as benign, but 
important, as removing 17,000 civilians from Lebanon 2 years 
ago when that crisis took place. It can also come right to our 
home, our home ports and our countrymen, with the Hurricane 
Katrina operations. So everything from what we call phase zero 
operations all the way to the right of the spectrum, where it's 
major combat operations, your Marine Corps needs to be light 
and expeditionary.
    So as you see our programs come before you--you'll see 
efforts, for instance the Joint Light Tactical Vehicle, you'll 
see an effort for us to try to keep the weight of that vehicle 
down so that we can get it off the ships and get it across 
beaches, carry it underneath helicopters, and that kind of 
thing.
    So everything we do, from the way we recruit young men and 
women and promise them, really, hardship, to the equipment we 
buy and the way we train, are all focused through the filter of 
expeditionary operations.
    My second point, Mr. Chairman, is that we're a maritime 
force. As I said earlier, we've been on land now for the last 5 
years, but our CNO and our Commandant understand that our 
synergy and our greatest strength is when we come together as a 
naval force who go aboard ships. So as we grow the force to 
202,000, thank you for your support for that, but as we do 
that, as we back out of Iraq, somewhere down the road we'll be 
able to get back aboard ships, and that's exactly where the 
Commandant of the Marine Corps wants to take us.
    We will come from the sea more than likely for future naval 
operations, and when we do we'll come from amphibs and we'll 
come through sea bases and we'll come through MPF-F. So I'd ask 
for your support as we take a look at the amphibious 
requirements, we take a look specifically for the 10th LPD-17. 
We need that ship, and I ask for your continued support for the 
14 ships, the program of record, for the MPF-F.
    Mr. Chairman, I ask that you take my statement for the 
record and I'm prepared to answer any questions that you have.
    Senator Kennedy. Without objection.
    [The prepared statement of General Amos follows:]

           Prepared Statement by Lt. Gen. James F. Amos, USMC

                            I. INTRODUCTION

    Chairman Kennedy, Senator Martinez, and distinguished members of 
the Seapower Subcommittee; it is my privilege to report to you on 
Marine Corps shipbuilding and force structure requirements.
    We know these next few years will be challenging--not only in the 
immediate conflict in Iraq, but in subsequent campaigns in the long war 
on terror. This is a multi-faceted, generational struggle that will not 
be won in one battle, in one country, or by one method. Many of the 
underlying causes of the current conflict will persist in the coming 
decades and may be exacerbated by States and transnational actors who 
are unwilling or unable to integrate into the global community. In this 
environment, the Marine Corps must be able to rapidly adapt to broad 
strategic conditions and wide-ranging threats. We remain faithful to 
our enduring mission--to be wherever, whenever our country needs us and 
to prevail over whatever challenges we face. We have done this and will 
continue to do so by recruiting and retaining the best of our Nation's 
sons and daughters, training them in tough, realistic scenarios and 
providing them the best equipment available. We are confident that with 
your continued support, your Corps will remain the Nation's force in 
readiness and continue to fulfill its congressionally-mandated mission 
of being the most ready when the Nation is least ready.

                       II. LOOKING TO THE FUTURE

Strategic Vision Group
    To improve our capacity to anticipate, the Commandant of the Marine 
Corps established a Strategic Vision Group (SVG) in June 2007. This 
group is designed to assist the Commandant in determining how best to 
posture the Marine Corps for successful service to the Nation in the 
years to come. The Group studies the future state of the world, 
considers the most likely world conditions and threats, and then 
conducts assessments of our military, political, and economic power to 
derive implications for the country, the Department, and the Marine 
Corps from now through 2025. For example, the SVG characterizes the 
most likely future conflicts as a blurred mix of irregular and 
conventional warfare in which terrorists, extremists, and criminals may 
become the most lethal and dominant enemy. Additionally, the SVG 
discerned that enemy states may adopt similar asymmetric tactics and 
techniques that will make access to operating areas ashore and 
subsequent operations, including combat, more challenging. Armed with 
these critical assessments, the SVG will translate them into tangible 
products addressing implications to national security and Marine Corps' 
continued readiness and relevance.
    The SVG has made significant progress in synthesizing inputs from 
United States and allied strategic assessments, and has established 
relationships with a wide community of subject matter experts and 
related sister Service efforts. The Group has briefed our senior 
leadership on assessments of the 2025 security environment, the key 
patterns and trends that can be foreseen impacting the strategic 
context, and future operational environments. Most significantly, 
recent assessments prompted development of the Commandant's overarching 
Marine Corps Vision and Strategy. This document will provide a 
comprehensive, actionable, and compelling narrative that describes how 
the Marine Corps will continue to serve as the Nation's ``force in 
readiness'' for the 21st century and will be published in June 2008.

                         SCIENCE AND TECHNOLOGY

    By always keeping an eye to the future, advances in science and 
technology (S&T) provide an immediate, measurable advantage to our 
warfighters and provide for development and implementation of concepts 
only dreamed of 20 years ago. In light of this importance, the 
Secretary of the Navy, the Chief of Naval Operations (CNO), and the 
Commandant recently completed and published a combined Naval S&T 
Strategic Plan that establishes objectives and provides direction to 
ensure our investments are focused on accomplishment of Navy and Marine 
Corps visions and goals. This plan identifies, as objectives, our five 
most critically needed technology enhancements:

         lightening the load of our dismounted marines and 
        sailors through new materials and technologies that are both 
        lighter and that provide enhanced protection;
         the application of robotics to ground logistics 
        delivery and a cargo unmanned aerial vehicle to rapidly move 
        logistics on a distributed battlefield;
         high-fidelity immersion simulation in support of small 
        unit ground tactical training;
         improved vehicle survivability for our future family 
        of tactical vehicles through application of new construction 
        materials such as synthetic armor;
         persistent intelligence, surveillance, and 
        reconnaissance technologies aimed specifically at providing 
        tactically relevant intelligence in all phases of a broad 
        spectrum of operations.

   III. PROVIDE OUR NATION A NAVAL FORCE THAT IS FULLY PREPARED FOR 
    EMPLOYMENT AS A MARINE AIR-GROUND TASK FORCE (MAGTF) ACROSS THE 
                          SPECTRUM OF CONFLICT

Long War Concept
    The Marine Corps' concept of force employment to meet the need for 
counterinsurgency and building partnership capacity is outlined in our 
February 2008 concept of employment ``The Long War: Send in the 
Marines.'' This employment concept further explains how the Marine 
Corps will support the National Defense Strategy and multi-national 
efforts in the global war on terrorism/Long War. This publication is 
nested within our major concepts and strategies: the Maritime Strategy, 
the Naval Operations Concept, and Marine Corps Operating Concepts for a 
Changing Security Environment. The focus of this new Long War concept 
is to increase the Marine Corps' global, persistent forward presence, 
tailored to build partnership capacity for security, while adapting 
existing forces and creating new capabilities for an uncertain future. 
Through these efforts, we will better enable multi-national 
partnerships to address existing regional challenges, while mitigating 
the conditions that allow irregular threats to proliferate.
    Although we will continue to develop our full spectrum 
capabilities, this war will place demands on our marines that differ 
significantly from those of the recent past. Paramount among these 
demands will be the requirement for marines to train and mentor the 
security forces of partner nations in a manner that empowers their 
governments to secure their own countries. This long war strategy helps 
posture our Corps to serve as the Nation's expeditionary force-in-
readiness--able to answer the call when needed.

Maritime Strategy
    The October 2007 Maritime Strategy reaffirms our naval character 
and reemphasizes our enduring relationship with the Navy, and now, the 
Coast Guard. Current combat operations limit our ability to 
aggressively commit forces to strategy implementation at this time. 
However, as we increase our end strength to 202,000 marines and as 
security conditions continue to improve in Iraq, the Marine Corps will 
transition our forces to forward presence in other priority areas and 
other battles in the Long War. The Maritime Strategy notes that, ``Our 
ability to overcome challenges to access and to project and sustain 
power ashore is the basis of our combat credibility.'' Our means of 
projecting power is the congressionally-mandated mission of amphibious 
forcible entry. The same flexible, expeditionary capabilities that 
enable forcible entry also have great utility in enabling the wide 
range of missions needed to counter the growth of extremist movements 
and terrorism. Such expeditionary capability and readiness require a 
high level of proficiency and long-term resourcing and is not a 
capability we can create on short notice.
    Today, information moves almost instantaneously around the world 
via cyberspace, and while people may quickly travel great distances by 
air, the preponderance of materiel still moves the way it has for 
millennia--by sea. Whenever the United States has responded to conflict 
around the globe, the vast majority of United States Joint Forces, 
their equipment, and supplies have been transported by sea. In the 
first half of the 20th century, demonstrating considerable foresight 
and innovation, U.S. Navy and Marine Corps leaders developed the 
capabilities necessary to establish sea control and project power 
ashore where and when desired. In the latter half of the same century 
the importance of these capabilities waned, as the United States 
enjoyed the luxury of extensive basing rights overseas, to include 
secure ports and airfields.
    In recent years, this network of overseas bases has been 
dramatically reduced, even as we are confronted by a variety of 
strategic challenges and are locked in a global struggle for influence. 
The ability to overcome political, geographic, and military challenges 
to access has re-emerged as a critical necessity for protecting vital 
interests overseas. Fortunately, the United States possesses an 
asymmetric advantage in that endeavor: seapower. Our ability to cross 
wide expanses of ocean and to remain persistently offshore at a time 
and place of our choosing is a significant national capability. This 
means that the Navy-Marine Team can use the sea as both maneuver space 
and as a secure operating area to overcome impediments to access.

Seabasing
    The approach for overcoming these impediments is called Seabasing. 
The Joint Seabasing concept--particularly when using aircraft carriers 
and amphibious ships with embarked marines--mitigates reliance on ports 
and airfields in the area of operations. It is the ideal method for 
projecting influence and power ashore in a selectively discrete or 
overt manner--from conducting security cooperation activities, to 
providing humanitarian assistance, to deterring and, when necessary, 
supporting major combat operations.
    The seabasing capability currently employed by the Navy-Marine 
Corps team, however, is limited in its ability to support large joint 
operations. The sealift transporting the preponderance of the joint 
force's materiel is still dependent upon secure ports and airfields. 
Recognizing the importance of seabasing to 21st century needs, the Navy 
and Marine Corps evolved a robust body of conceptual work and, with 
other joint partners, produced a Seabasing Joint Integrating Concept. 
This concept defines Joint Seabasing as ``the rapid deployment, 
assembly, command, projection, reconstitution, and re-employment of 
joint combat power from the sea, while providing continuous support, 
sustainment, and force protection to select expeditionary joint forces 
without reliance on land bases within the Joint Operations Area. These 
capabilities expand operational maneuver options, and facilitate 
assured access and entry from the sea.''
    Just as the amphibious innovations championed by the Navy-Marine 
Corps during the 1920s and 1930s benefited the entire joint and allied 
force in World War II, the Navy-Marine Corps seabasing initiatives 
currently underway are expanding into more comprehensive joint and 
interagency endeavors. The ability to conduct at-sea transfer of 
resources, for both ship-to-ship and ship-to-shore purposes, has 
emerged as a key enabler for deploying, employing, and sustaining joint 
forces from the sea. Building upon the cornerstones provided by 
amphibious ships and aircraft carriers, initiatives include developing 
high-speed intra-theater connectors, surface connectors, and Maritime 
Prepositioning Force (Future) (MPF-F). These initiatives--as well as 
others--will be employed in combination to achieve an increasingly 
robust capability to reduce the joint force's reliance on ports and 
airfields in the objective area.
    Together, the Navy and Marine Corps provide the Nation with its 
capability to rapidly project and sustain combat power ashore in the 
face of armed opposition. When access is denied or in jeopardy, 
forward-postured and rapidly deployable Marine forces are trained and 
ready to create and exploit seams in an enemy's defenses by leveraging 
available joint and naval capabilities, projecting sustainable combat 
power ashore, and securing entry for follow-on forces. The Marine 
Expeditionary Force (MEF) is the Nation's premier forcible entry force. 
Two Marine Expeditionary Brigades (MEB) provide the assault echelon 
that fights from amphibious ships. These forces launch from over the 
horizon to strike inland objectives and fracture the enemy's defenses. 
They are reinforced by a brigade of marines employed through MPF-F. 
Collectively, these capabilities provide an ability to respond to 
crisis across the spectrum of operations without reliance on 
infrastructure or basing ashore.
    In recent years our amphibious and prepositioned capabilities have 
been in high demand across the spectrum of operations. These 
capabilities have enabled over 85 commitments, such as the recent 
Lebanon noncombatant evacuation and tsunami and Hurricane Katrina 
relief operations, since the end of the Cold War--doubling the rate at 
which they were employed during that superpower stand-off. Considering 
this demonstrated utility, the modest investment of 34 amphibious ships 
and MPF-F is not too much of an investment to secure the United States' 
ability to conduct forcible entry operations; ensure strategic access 
and retain global freedom of action; strengthen existing and emerging 
alliances and partnerships; and establish favorable security 
conditions.

                     IV. SHIPBUILDING REQUIREMENTS

    Based on strategic guidance, in the last several years the Navy and 
Marine Corps have accepted risk in our Nation's forcible entry 
capacity, and reduced amphibious lift from 3.0 MEB assault echelon (AE) 
to 2.0 MEB AE. In the budgetary arena, the value of amphibious ships is 
too often assessed exclusively in terms of forcible entry--discounting 
their demonstrated usefulness across the range of operations and the 
clear imperative for marines embarked aboard amphibious ships to meet 
Phase 0 demands. The ability to transition between those two strategic 
goalposts, and to respond to every mission-tasking in between, will 
rely on a strong Navy-Marine Corps Team and the amphibious ships that 
facilitate our bond. The Navy and Marine Corps have worked diligently 
to determine the minimum number of amphibious ships necessary to 
satisfy the Nation's needs.
    The Marine Corps' contribution to the Nation's forcible entry 
requirement is a single, simultaneously-employed two MEB assault 
capability--as part of a seabased MEF. Although not a part of the MEF 
AE, a third reinforcing MEB is required and will be provided through 
MPF-F shipping. Each MEB AE requires 17 amphibious warfare ships--
resulting in an overall ship requirement for 34 amphibious warfare 
ships. However, given current fiscal constraints, the Navy and Marine 
Corps have agreed to assume a degree of operational risk by limiting 
the AE of each MEB by using only 15 ships per MEB--in other words, a 
Battle Force that provides 30 ``operationally available'' amphibious 
warfare ships.

Amphibious Ships
    In that 30-ship Battle Force, 10 aviation-capable big deck ships 
(LHA/LHD/LHA(R)), 10 LPD-17-class ships, and 10 LSD class ships are 
required to accommodate the MAGTF capabilities. In order to meet a 30-
ship availability rate--based on a CNO-approved maintenance factor of 
10 percent--a minimum of 11 ships of each of the current types of 
amphibious ships are required--for a total of 33 ships. The CNO has 
concurred with this requirement for 33 amphibious warfare ships, which 
provide the ``backbone'' of our maritime capability--giving us the 
ability to meet the demands of harsh environments across the spectrum 
of conflict.
    The LPD-17 San Antonio-class of amphibious warfare ships represents 
the Department of the Navy's commitment to a modern expeditionary power 
projection fleet enabling our naval force to operate across the 
spectrum of warfare. The LPD-17 class replaces four classes of older 
ships--LKA, LST, LSD-36, LPD-4--and will have a 40-year expected 
service life. It is imperative that 11 of these ships be built to meet 
the minimum of 10 necessary for the 2.0 MEB AE amphibious lift 
requirement. Procurement of the 10th and 11th LPDs remains a priority.

Maritime Prepositioning Force (Future)
    Capable of supporting the rapid deployment of three MEBs, the 
legacy Maritime Prepositioning Force (MPF) is a proven capability used 
as a force deployment option in selected contingencies to close forces 
on accelerated timelines for major combat operations and, in 
combination with amphibious forces, to rapidly and simultaneously react 
to crises in more than one theater. The next and necessary evolution of 
this program is fielding of the MPF-F Squadron. MPF-F is a key enabler 
of Seabasing and will build on the success of the legacy MPF program. 
It will provide support to a wide range of military operations with 
improved capabilities such as at-sea arrival and assembly, selective 
offload of specific mission sets, and long-term, sea-based sustainment. 
From the sea base, the squadron will be capable of prepositioning a 
single MEB's critical equipment and sustainment for delivery offshore--
essentially creating a port and airfield at sea. While the MPF-F is not 
suitable for independent forcible entry operations, it is critical for 
the rapid build up and sustainment of additional combat forces once 
entry has been achieved by our AE. The MPF-F, along with two legacy MPF 
squadrons, will give our Nation the capacity to quickly generate three 
MEBs in support of multiple combatant commanders. The MPF-F squadron 
composition decision was made in May 2005 and is designed to consist of 
three aviation-capable big-deck ships, three large medium-speed roll-
on/roll-off ships, three T-AKE supply ships, three Mobile Landing 
Platforms, and two dense-packed container ships. Many of these will be 
crewed by civilian mariners and, as stated earlier, are not designed to 
conduct forcible entry operations.

Ship Modernization
    Amphibious and maritime prepositioning ship modernization is vital 
to maintaining our Nation's maritime forward presence and expeditionary 
capabilities. Two decades of equipment growth and recent armor 
initiatives have impacted the capability and capacity of our present 
amphibious and maritime prepositioning ship fleets that were designed 
to lift an early 1980s naval force. We are monitoring the Navy's 
progress in upgrading and extending the service lives of our big-deck 
amphibious assault support ships to ensure those vessels are uniformly 
outfitted with up-to-date sea-based communications and network 
capabilities, and will be able to compensate for increased weight and 
density of Marine Corps assets as a result of armoring initiatives. We 
must ensure that the dock landing ship fleet is recapitalized to 
accommodate 21st century Marine Corps forces. Moreover, we are actively 
working with the Navy to incorporate newer, more flexible ship 
platforms from the existing Military Sealift Command fleet into our 
aging Maritime Prepositioning Ships program. As we reset these ships, 
changes are necessary to ensure future afloat prepositioning platforms 
can accommodate our updated tables of equipment and sustainment support 
requirements.

                    V. RIGHT-SIZING OUR MARINE CORPS

    To meet the demands of the Long War, and prepare for other 
contingencies for which the MAGTF is uniquely capable, our Corps must 
be sufficiently manned, well trained, and properly equipped. To fulfill 
our obligations to the Nation, and with the approval of the President 
and Congress, we are growing our end strength to 202,000 Active 
component marines. Our decision to grow to 202,000 marines was based on 
national strategic guidance combined with increasing operational 
forward presence requirements, and was guided by the Department of 
Defense's 1:2 unit deployment-to-dwell ratio policy. The additional end 
strength will result in three balanced MEFs--balanced in both capacity 
and capability--and will ensure the Marine Corps can meet increasing 
combatant commander demands for expeditionary forces.
    The development of Marine Corps force structure has been the result 
of a thorough and ongoing process that supports the combatant 
commanders and accomplishes our title 10 responsibilities. The process 
addresses each pillar of combat development--Doctrine, Organization, 
Training, Materiel, Leadership and Education, Personnel, and 
Facilities--and identifies our required capabilities and the issues 
associated with fielding them. We have front-loaded structure for 
recruiters and trainers to support this growth and have phased the 
introduction of units balanced across the MAGTF. The increase in 
capacity will be gradual, as we stand up new units and add end strength 
through fiscal year 2011, while we simultaneously grow mid-grade 
enlisted and officer leadership--a vital part of our growth that cannot 
be developed overnight. In addition to personnel, this growth includes 
expansions of our infrastructure to provide suitable housing and 
support facilities, and the right mix of equipment for the current and 
future fight.
    Our engagements thus far in Iraq and Afghanistan have been a Total 
Force effort--our Reserve Forces continue to perform impressively. As 
our Active Force increases in size, our reliance on our Reserve Forces 
should decrease--helping us achieve the 1:5 deployment-to-dwell ratio. 
We believe our current authorized end strength of 39,600 Selected 
Marine Corps Reserves is the right level. As with every organization 
within the Marine Corps, we continue to review the make-up and 
structure of our Reserve to ensure the right capabilities reside within 
Marine Forces Reserve units and our Individual Mobilization Augmentee 
program.

Building Educational and Training Structure
    As part of our holistic growth plan, we are increasing training 
capacity and reinvigorating our pre-deployment training program to 
provide support to all elements of our MAGTFs. In accordance with the 
Secretary of Defense's Security Cooperation guidance, we are developing 
training and education programs to build the capacity of allied and 
partner nations. We are also developing the capability to conduct 
large-scale MAGTF exercises within a joint, coalition, and interagency 
context to maintain proficiency in core warfighting functions such as 
combined arms maneuver, amphibious operations, and maritime 
prepositioning operations. Finally, our budget request supports our 
training and education programs and training ranges to accommodate the 
202,000 Grow the Force effort.
    World-Class Marine Corps University (MCU)
    Our success in the Long War hinges on a multi-dimensional force 
well trained for the current fight, but educated for the next. 
Historically, our Corps has produced respected leaders who have 
demonstrated intellectual agility in warfighting; however our current 
deployment tempo places our Professional Military Education (PME) 
programs at risk. We must maintain the steady flow of thinkers, 
planners, and aggressive commanders who can execute effectively across 
the entire spectrum of operations. Last year we conducted a 
comprehensive `health of PME' assessment which identified six areas 
necessary for the creation of a world-class MCU: students, curriculum, 
educational programs, staff, policy, and infrastructure. We have world-
class students and faculty as evidenced by Marines' performance on 
today's battlefields. We have made substantial improvements in our 
curricula by integrating irregular warfare instruction while 
maintaining a balance with conventional and amphibious warfare. Seeking 
to ensure readiness for the next challenge, this year we added Iran and 
China faculty chairs. We must however, correct significant 
infrastructure and information technology deficiencies. It is crucial 
that resources to support our MCU master plan be committed and approved 
to support this critical effort. With proper investment and your 
support, the MCU will become a world-class educational institution to 
match its world-class students.
    Center for Irregular Warfare
    In 2007, we established the Center for Irregular Warfare (CIW) as 
our primary agency for identifying, coordinating, and implementing 
Marine Corps irregular warfare capability initiatives. The CIW reaches 
out through the Center for Advanced Operational Culture Learning 
(CAOCL) and Security Cooperation Education and Training Center (SCETC) 
to other military and civilian agencies. Last year, the CAOCL expanded 
beyond pre-deployment unit training by offering operational culture, 
regional studies, and limited language courses for officer PME 
programs. Thus far, approximately 2,100 new lieutenants have been 
assigned regions for career long-term study through the regional 
learning concept, which are being expanded this year to include 
sergeants, staff sergeants, and captains. Both officer and enlisted 
marines will receive operational culture education throughout their 
careers.
    Since early 2006, the SCETC has formalized our military advisor 
training curricula, and in fiscal year 2007 trained over 30 transition 
teams. In fiscal year 2008, the SCETC is scheduled to train over 100 
teams (over 2,000 marine advisors) and we will stand up a Training 
Advisory Group to manage global sourcing of future transition and 
security cooperation teams.

                             VI. CONCLUSION

    Our Nation rightfully has high expectations of her Corps--as she 
should. Your marines are answering the call around the globe, 
performing with distinction in the face of great hardships. As they 
continue to serve in harm's way, our moral imperative is to fully 
support them--we owe them the full resources required to complete the 
tasks we have given them. Now more than ever, they need the sustained 
support of the American people and Congress to simultaneously maintain 
our readiness, reset the force during an extended war, and to modernize 
to face the challenges of the future. Again, we thank you for the 
opportunity to report to you on their behalf.

    Senator Kennedy. First of all, Admiral McCullough, the Navy 
is projecting a shortfall, as I mentioned, of the F-18 aircraft 
during the next decade. According to Navy testimony, that 
shortfall could be as large as 125 aircraft short of the number 
required to support the 10 aircraft carrier wings and 3 Marine 
Corps. In my opening statement I asserted that anyone looking 
to solve the shipbuilding problems could not look to naval 
aviation to be a bill-payer. Do you agree with that assessment?
    Admiral McCullough. Yes, sir. The way I look at this is 
particularly from the Navy. The 125 shortfall is for the 
Department. The Navy shortfall commencing in 2017 is 
approximately 69 strike fighter aircraft. There are several 
ways we've worked at that. We're looking  at  life  extensions  
from  a  fatigue  life  standpoint  on  the  F/A-18 A through 
Ds to 10,000 hours, on the F/A-18 E and Fs to 9,000 hours, to 
try to mitigate the effects of that strike fighter shortfall.
    Senator Kennedy. We'd appreciate your keeping us abreast of 
your assessment, both of the life expectancy of the planes, 
what's necessary to get it, and also how that fills the gap.
    Secretary Stiller, one of the big decisions in shipbuilding 
is to fund the third DDG Land Attack Destroyer in fiscal year 
2009 or whether to delay it a year and perhaps even truncate it 
at a total of two ships, as some have suggested. Such 
discussions usually included buying some form of DDG-51 Aegis 
destroyers, either in the 1-year delay or continuing until the 
Navy's ready to buy the CG(X), the next generation cruiser.
    The Navy had intended to sign the contracts for two lead 
ships in 2007, but recently completed negotiations and signed 
the contracts almost a year later than planned. In part, the 
Navy delayed the award while they switched the shipyard 
responsible for building the first ship. The Navy plan for the 
fiscal year 2009 ship is to award a fixed-price contract for 
that ship.
    Since it's taken so long to sign the lead ships contracts, 
which are cost plus contracts, and since very little actual 
ship construction information will be available at the time the 
contractors have to submit their bids for fiscal year 2009 
ship, why would the Navy believe that you'll be able to sign 
these contracts in a timely fashion in 2009?
    Ms. Stiller. Yes, sir. One is that we took several steps as 
we took a pause on DDG-1000. We didn't stop the activity on the 
detailed design. So the detailed design has been continuing 
right along, as well as procurement of long lead items as 
authorized by the DAE.
    While we didn't sign the actual construction contract until 
about a month ago, we were proceeding incrementally, in fact, 
there are a couple things that make us feel very confident that 
we could sign fixed-price deals in 2009. That's because part of 
what we've authorized the shipbuilders to do is to build a 
complex machinery block to prove out the translation of the 
design from the product model into the production floor, so to 
speak.
    That's ongoing. That will wrap up at Bath Iron Works this 
summer and at Northrop Grumman a little later in the year. But 
that will inform their bids.
    Senator Kennedy. So you don't feel that you lost the time?
    Ms. Stiller. No, sir. From the original when we thought we 
would start on the lead ship, there was about a 5-month slip. 
But we still feel that we were doing the prudent things to 
continue the program and that the 2009----
    Senator Kennedy. That's manageable, you think?
    Ms. Stiller. Yes, sir.
    Senator Kennedy. Why would the Navy believe that the 
contractors would be willing to take a larger portion of the 
risk to build the ship for roughly $2.5 billion in a fixed-
price contract, when the first ship cost more than $3 billion 
and the shipyards will have very few actuals upon which to base 
their bids?
    Ms. Stiller. There are a couple of reasons. First of all, 
they will be significantly far along in design when they start 
production. They'll be about 85 percent. For example, LCS was 
less than 25 percent along. So they should be getting the 
return data right away.
    Also, what I talked about, what we've carved out for both 
of them to do is a complex machinery block, and that work will 
be done before the bids are due, so they will have that return 
data, and we feel comfortable that that will prove to them and 
the Navy that they understand the design and what these ships 
truly cost.
    Also, the other element is the material that's under 
procurement. A good portion, I'd say 98 percent, of the long 
lead material and some of the other commodities are already 
under fixed-price contracts for the lead ship. They understand 
the material portion of the ship.
    Senator Kennedy. So you're on track on those and feel 
confident about it?
    Ms. Stiller. Yes, sir.
    Senator Kennedy. General Amos, I mentioned the MPF in my 
opening statement, where defining the requirements has been a 
problem. I know that it's been prudent to take sufficient time 
upfront to define the requirements for any major program. But 
the MPF program appears to be taking longer than anyone had 
originally estimated.
    While the subcommittee has heard for several years about 
the contribution such a force would make to the Marine Corps 
and Navy, we have seen the procurement of certain ships 
designed to support the MPF program, such as the Mobile Landing 
Platform (MLP), being delayed each year as the resolution of 
questions about requirements and capabilities has been 
deferred.
    What clarification can you give us about when requirements 
will be defined for these new ships, and when will we see the 
plans for building these new ships stabilize?
    General Amos. Mr. Chairman, we just completed about 3 weeks 
ago the Commandant's Title 10 war game on sea basing, and it 
was joint and combined. Eleven nations participated, over 300 
folks from the Office of the Secretary of Defense (OSD) and the 
interagency. The whole idea was sea basing. Buried in there, in 
the middle of all of that, was MPF-F. It's an important part of 
the whole sea basing concept.
    But MPF-F is not sea basing, but it is certainly the key 
enabler, and it is the heart and soul of our Nation's ability 
to do sea basing in the future, vice the kind of sea basing we 
do right now, where you pull up with a single ship and you 
can't offload necessarily in stream, it's difficult to offload 
at high sea states. So MPF-F will provide us that capability.
    The good news is that in the Future Years Defense Program 
(FYDP) there are three of these MLPs. We're actually going to 
start cutting steel on the MLP within the next couple of years 
and we'll see that. I predict when that ship pulls alongside a 
large, medium-speed, roll-on/roll-off (RORO) ship and lowers a 
ramp onto the MLP and the first 70-ton tank comes off of that, 
when you have landing craft, air cushions up there to take it 
ashore, it's going to revolutionize sea basing and our whole 
perspective on that in the future.
    So, Mr. Chairman, I think we have the requirements 
identified. I think what we've done is we've just done a poor 
job of being able to pass that message across to both Congress 
and OSD and the American people.
    Senator Kennedy. Conceptually it certainly makes a good 
deal of sense. But there have been the questions about the 
implementation.
    Let me ask you about the urgent needs process, General. 
According to recent reports, the Marine general in command of 
the forces in western Iraq sent the urgent request on February 
17, 2005, for 1,169 mine resistant ambush protected (MRAP) 
vehicles, and the urgent request was apparently lost in the 
bureaucracy of Marine Corps combat development and never made 
it up to the senior levels of the Marine Corps. As we all know, 
it took the Secretary of Defense personally getting involved in 
2007 to fix a broken bureaucracy and a get sufficient number of 
MRAP vehicles to forces in Iraq.
    Last June, Secretary Gates stated: ``The way I put it to 
everyone is that you have to look outside the normal 
bureaucratic way of doing things, and so does industry, because 
lives are at stake. For every month we delay, scores of young 
Americans are going to die.''
    In this morning's Senate Armed Services Committee hearing, 
General Petraeus thanked the committee for their support in 
delivering the MRAP vehicles to Iraq, calling them lifesavers.
    If proper MRAP procurement had begun in 2005 in response to 
the known threats, hundreds of deaths and injuries could have 
been prevented. The Marine Corps questioned the press reports 
about the issue, but a Naval Audit Service report last 
September said the Marine Corps had not established adequate 
oversight of the urgent needs requirement process. This process 
at the time of our audit was ineffective.
    The Marine Corps has asked the Pentagon's Inspector General 
(IG) to examine the allegations. The real question is whether 
the Marine Corps today is adaptive enough to meet urgent needs. 
There are many success stories with rapidly fielding urgent 
needs in the last few years, including small unmanned ground 
and aerial vehicles, hand-held electronic translators, and 
Quick Clot, a granular mineral material that speeds the natural 
clotting process and limits blood loss.
    But many of these successes have involved the Army's urgent 
needs system. The Army's rapid equipping force has been in 
place for years. It seems to be a more responsive system for 
addressing urgent needs, including the practice of deploying 
many of its members to forward teams throughout Iraq and 
Afghanistan to identify needs and then assess how well rapidly 
fielded equipment works.
    So I'm concerned, General Amos, that the changes the Marine 
Corps seems to be making to the system are only bandaid 
solutions, more importantly, that not enough of the changes are 
long term. If too much of the system is being fixed in informal 
meetings or by personal intervention of senior leaders, that 
doesn't fix the bureaucracy for the future.
    So what actions are you specifically taking to make changes 
to the urgent needs process and to codify these changes so that 
the entire culture with respect to urgent needs is fixed in the 
Marine Corps?
    General Amos. Mr. Chairman, I truly appreciate your concern 
in this area. There are probably a number of urgent needs in 
2003, 2004, and 2005 that have my personal signature on them 
from Iraq. So I'm very sensitive to this and I do appreciate 
exactly what you said.
    As I look back on 2005--and I was there, had come up from 
Camp Lejeune and was part of the meeting when the decision was 
made to buy the M-1114s. I know you've been briefed on that, as 
your staff has. But honestly, at the time we thought--the 
Commandant did and the senior leadership did--we were doing 
exactly the best thing for the Marines as a result of our IG 
that had just come back and said the Marines want the up-
armored Humvee.
    I look back now, like you, I regret that we didn't have the 
foresight to buy the MRAPs in 2005. They have saved lives and 
they are a critical enabler. But what we've done since the 
Naval Audit report has come in--and they talked about three 
major things. They said you need to have some type of 
overarching order that defines roles and responsibilities; you 
need to have a tracking system that allows visibility up and 
down the chain; and you need to establish controls and provide 
oversight, in other words metrics. We've done that.
    In 2006 we've had a Lean 6 Sigma effort that's come in, 
that came in before I went there and took command. The results 
of that are right now an electronic system in cyberworld where 
when a requirement comes in from the fleet--and it has to come 
in from our warfighters; it can't be just somebody that's in 
WestPac that's not affiliated with warfighting necessarily. But 
when that urgent need comes in, we see it, I see it 
automatically right here as well as my other generals, my 
colonels, and the folks that process this thing.
    We see it. It comes in, it flows. We've reduced the amount 
of time. We have visibility. We've done everything, I think, 
that we ought to be doing as responsible stewards of the lives 
and requirements of our young men and women. So I think we're 
there.
    I'd like to give you two examples of what just took place 
within the last about 2 weeks to talk about the value of this 
cyber system, this virtual network where everybody gets to see 
it. The 24th MEU that's on the ground in Afghanistan right now, 
the commander about 2 weeks before he deployed, so just about a 
month ago, said: I need tier two unmanned aerial vehicles. We 
don't have any with the MEU. That's not an integral part of a 
MEU. That came in signed by the three-star. I saw it. It came 
into the process. I looked at it and I said: We need to get 
moving on this right away because this MEU is going to deploy 
immediately.
    While this thing was grinding its way--and I say 
``grinding'' not in the slow term, but I mean working its 
process--it went right to the head of Marine Aviation, went 
over to the Naval Air Systems Command, and we already have it 
under contract, and the Scan Eagles will be in theater here 
within the next probably 2 weeks.
    The second thing they asked for is a counter-mortar radar. 
We don't have that. That's not part of a battalion's normal 
fix. That thing popped up. I saw it about 2 weeks ago and said: 
Let's buy it; it's in the system; it's commercial off-the-
shelf; other forces have it.
    So, Mr. Chairman, I appreciate what you're saying. I think 
we understand and we have the system in place.
    Senator Kennedy. I thank you. My time is up, and I think 
it's impressive, what you've said and what you've done. We want 
to make sure that it's going to be a system that's going to 
remain in place.
    General Amos. Yes, sir.
    Senator Kennedy. Perhaps I'll be a little bit more specific 
and ask if you'd give me a note on this about how you're 
working on this.
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    Senator Kennedy. Just finally, Admiral McCullough, I'm 
interested always in mine warfare. General Amos talks about how 
we're coming in from the sea and returning to the sea, and this 
mine warfare has been an area which we've been interested in 
for some period of time. I'm going to submit some questions 
just on that.
    The last question, if I could ask, Admiral, I understand, 
since the time that the U.S.S. Cole was in Aden and they had 
that tragedy there, that naval ships don't go back into Aden. I 
was in preparation for the Petraeus hearing and someone 
mentioned to me that this has some significance, because 
they're trying to make the point that al Qaeda is making is 
that once the United States leaves it doesn't come back, and 
they were using the fact that there had been the attack on the 
Cole and we haven't had a Navy ship that's come back into Aden. 
They used other examples, the Khobar Towers in Saudi Arabia; 
once Americans have left places they don't come back, and if 
they leave in Iraq they're not going back.
    It was just an interesting point. I see you down here at 
the other end of the table. I don't know whether you want to 
make a quick comment on this or whether there's a reason that 
they don't come. I know it was rare that they went there, but 
if you want to submit something later; it's a sort of an off-
the-wall question.
    Admiral McCullough. Yes, sir. I'll have to check on whether 
we've put anybody back into Aden. I'm not sure that that's 
totally correct, but I'll get that answer.
    Senator Kennedy. Yes, that would be fine.
    Admiral McCullough. We've used Aden as a refuel point for 
ships that were independently deploying to Fifth Fleet to 
execute maritime security operations, both going in and coming 
out, and that's what we used Aden for. We didn't use it a lot, 
but that's what we used it for.
    Senator Kennedy. Okay. If you could just let me know I'd 
appreciate it. Thanks very much.
    [The information referred to follows:]

    No U.S. ships have pulled into Aden, Yemen, in any capacity, since 
U.S.S. Cole's terrorist attack in October 2000. This includes port 
visits or servicing stops.

    Senator Kennedy. Senator Martinez.
    Senator Martinez. Thank you, Mr. Chairman.
    Admiral McCullough, one of the things we've been discussing 
is the need for there to be a floor of a 313-ship Navy. From 
your perspective, what is the optimal number of ships that we 
should have in our Navy, obviously 313 being the goal?
    Admiral McCullough. Senator, we look at the 313 number as a 
capability-based force structure based on a 2020 threat. As we 
speak to our component commanders globally, specifically in 
Pacific Command with Pacific Fleet and in CENTCOM with 
Commander, United States Navy Central Command, there's always a 
higher demand for presence than we have in theater. 
Specifically, Admiral Willard would like to get at the 
southwestern Pacific.
    I don't have a specific number to give you, but I'll tell 
you that in a lot of ways capacity becomes a capability of its 
own. So I'll get back to you on a higher number, but CNO has 
specifically said we believe we can do the Nation's bidding in 
accordance with the Maritime Strategy with moderate risk with a 
313 capability-based force structure.
    Senator Martinez. I know there are some challenges in 
funding this and in the budget and so forth for this, and I was 
just wondering. The CNO has emphasized that he will control the 
costs by controlling requirements.
    Admiral McCullough. Yes, sir.
    Senator Martinez. But in spite of this, the Congressional 
Budget Office believes that the Navy has underestimated 
shipbuilding costs by $3 to $4 billion per year, suggesting 
further cuts are necessary to meet the overarching requirement 
for the 313-ship Navy. So, Admiral, my question is, how has the 
CNO's direction to control requirements translated into policy 
and practice? It would be good to know exactly examples where 
we've done that in the reduction of shipbuilding costs.
    [The information referred to follows:]

    A full force structure assessment occurs as a part of the 
Department of Defense's (DOD) Quadrennial Defense Review (QDR). In 
2005, the Navy conducted a comprehensive, capability-based Force 
Structure Assessment to support POM-08. The Navy's ship force structure 
requirement of 313 ships is based on detailed campaign and mission 
analysis of 4 warfighting scenarios (3 major contingency operations 
(MCO), plus global war on terror), using ship types projected to be in 
the fleet in 2020 through 2024 and the current DOD planning guidance to 
wage two nearly-simultaneous conventional campaigns. Subsequent 
campaign analysis for MCO and in-depth global war on terror analysis 
validated capability and capacity requirements of the 313-ship force 
structure. The analytic baseline supporting the 313-ship plan, although 
significantly updated with new warfare analysis since 2005, continues 
to support the quantities of ships by class in the original baseline. 
The next QDR will provide an opportunity to readdress the basis of the 
current planning guidance, which if changed, will affect the inputs 
into Navy's next comprehensive, capability-based Force Structure 
Assessment and produce an updated requirement.
    The current President's budget 2009 represents the best overall 
balance between procurements to meet operational requirements and 
affordability. The Navy has examined the feasibility of increased 
shipbuilding investment in fiscal year 2009. Given current industrial 
base capacity, the Navy's plan to achieve the 313-ship mix required by 
the fiscal year 2020 timeframe, and other competing Navy requirements 
that must be met, $12.4 billion in the fiscal year 2009 budget request 
is sufficient and represents the necessary resources to achieve the 
required warfighting capability on time. In addition, the Navy's plan 
increases shipbuilding investments from $12.4 billion in fiscal year 
2009 to over $17.9 billion in fiscal year 2013.
    It is a significant challenge to get the number of ships we need 
with the right capabilities within the Navy's overall funding level; 
however, the Navy is committed to achieving a force structure of at 
least 313 ships, with the necessary warfighting capability that the 
Navy will need by fiscal year 2020.

    Admiral McCullough. Sir, when we submitted the 2009 
shipbuilding plan to Congress we looked at what we had said: in 
fiscal year 2005 dollars to execute the plan, that we needed 
about $13.4 billion a year. Our review prior to submitting the 
2009 plan, because of the escalation in material and some labor 
requirements in the various yards, said that we should probably 
have funded that to about $14.6 billion a year, which in 2007 
dollars is about $15.7 billion a year. So right now we believe 
the plan's based on $15.7 billion a year and escalated out 
through 2020.
    Additionally, the CNO asked us to look at a different way 
to couch a shipbuilding plan, because we think we understand 
relatively well the costs in the near years and through the 
FYDP and probably to some degree out through what we call the 
near term, to 2020. Beyond 2020, the ships in the shipbuilding 
plan are replacements for ships that were built in the late 
1970s and 1980s and are just our best estimate on what they'd 
be in a per-unit replacement.
    Requirements generation, we've worked with the Marine Corps 
and the secretariat to develop an acquisition governance 
process which gets senior Navy leadership much more involved in 
major acquisition decisions at an earlier point. We call it the 
six gate review process. The CNO or the Commandant are 
responsible for the first three gates, which involve 
development of the initial capabilities document, the guidance 
to work through the analysis of alternatives, and approval of 
which alternative is selected, and then development of the 
capabilities development document that goes into the joint 
capabilities integration and development system process.
    At that point, the Assistant Secretary of the Navy for 
Research, Development, and Acquisition, starts to chair the 
gate reviews. We have developed a process called a system 
design specification (SDS) that goes into the overarching 
requirements, technical requirements that exist currently in 
the Navy, to better specify what requirements we put in the 
Request for Proposals (RFPs) with the contractor.
    Once we agree on the SDSs and the capabilities development 
document is approved by the Joint Requirements Oversight 
Council (JROC) process, we come together and develop the RFP. 
This goes through another gate review that's approved by the 
Assistant Secretary of the Navy for Research, Development, and 
Acquisition.
    The way I liken this to is when we used to develop key 
performance parameters (KPPs) in the capabilities development 
document. They're high level requirements, like a ship will go 
so many knots for X number of miles, or it'll have so many 
weapons tubes in it, and it'll have threshold and objectives in 
those requirements. We then gave that to the acquisition 
community and expected them to develop detailed requirements to 
pass to industry. We didn't always do that very well.
    So the SDS will provide adequate detail to industry, so 
that if I had asked for a CTS Cadillac that the specifications 
I give to industry tell them I want a CTS Cadillac and can't be 
interpreted to mean I want a Ford F-150 pickup truck.
    So I think through that process we better control our 
requirements, because throughout the process we review the 
health of the program, the budget, and the cost estimates. This 
process has been recently implemented and I think that's 
probably what the CNO was referring to.
    Senator Martinez. Ms. Stiller, if you could focus on the 
requirements discipline that is necessary, but not enough to 
reduce costs, and what is the acquisition organization doing to 
improve cost estimates and to elevate cost control in the 
shipbuilding contracts?
    Ms. Stiller. Yes, sir. Just to echo what Admiral McCullough 
said, I have one tangible example that came out right after we 
went through the LCS review. We were in the process of getting 
ready to issue the RFP for the JHSV, and we took a pause and 
worked with the requirements community and what I call the 
technical community that's writing the building codes to say, 
do we really want these features to be designed to Coast Guard 
specs, naval vessel rules, or military specs.
    We came up with a detailed matrix, which is part of what a 
SDS will do, that will tell you what specifications you want to 
build that ship. So we delayed the RFP release until we knew we 
had it right and we had agreement across the board. That's one 
example.
    But what we're doing on the acquisition side to improve the 
independent cost estimates is, we're using realistic indices. 
We've seen escalation on certain materials, like nickel for 
example rose 700 percent in 1 year. Instead of using just 
standard OSD inflation indices, we're looking at the indices 
that are specific to shipbuilding--copper, steel, aluminum. 
Whatever goes into a ship, we're watching those and factoring 
those into our cost estimates.
    We look at cost estimating relationships as it relates to 
ships we've built in the past and what that means to future 
ships. As we get through a bunch of these lead ships and we 
start to get into serial production--that's why I commented I'm 
very happy we don't have lead ships in this budget--it helps us 
to inform our cost estimates for the future ships, and we're 
using those as well.
    We look at obsolescence and we work with the shipyards to 
understand where we might have obsolescence issues in the 
vendor base, so that we can factor that in as well.
    Another tool that we've given to all the program managers 
is restrictions on the type of changes that they can approve. 
Changes for safety items or test and trial deficiencies, for 
example, they have the ability to make the change. If the 
change is I want more or somebody else tells me I want more, 
they have to come and ask approval through the process. That 
will greatly reduce the number of changes that are introduced 
during the design and construction of a vessel.
    Senator Martinez. Thank you.
    My time's about to expire, but let me ask one last 
question. Admiral, regarding the situation at Mayport, the 
Environmental Impact Statement has now been completed and I was 
wondering what your plans were for future funding of Mayport, 
particularly to complete any of the improvements that need to 
be made. Are you at all familiar with what I'm talking about? 
We need some dredging, wharf upgrades, and things of that 
nature.
    Admiral McCullough. Yes, sir, I'm familiar with that and 
I've dealt with it on the periphery. I'd like to take that 
question for the record and have the right folks get you the 
correct answer.
    Senator Martinez. I'd like to know when is completion of 
the strategic laydown study so that we may know when a decision 
may be made on that.
    Admiral McCullough. Yes, sir.
    [The information referred to follows:]

    Only the Draft Environmental Impact Statement (EIS) has been 
completed. The Final EIS will not be completed until November 2008. A 
Record of Decision (ROD) on a preferred alternative for the Mayport EIS 
will follow in December 2008. The Navy will fully consider operational, 
financial, and environmental factors before making decisions regarding 
the homeporting alternatives being evaluated in the EIS. If the Navy's 
preferred alternative requires military construction (MILCON), these 
requirements will be balanced with the Navy's other programming 
priorities.
    The plan for future funding of Mayport depends upon the alternative 
chosen in the ROD. Should the ROD select an alternative to move any 
ships to Mayport, funding will be requested in order to meet the 
desired date of initial operating capability (IOC). For example, in 
order to make a 2014 IOC date for CVN homeporting at Mayport, several 
supporting MILCON projects would need to be programmed beginning in the 
fiscal year 2010 budget.

    Senator Martinez. Thank you.
    Senator Kennedy. Senator Collins.
    Senator Collins. Thank you.
    Ms. Stiller, I want to take up where the chairman left off 
on the DDG-1000. Some House members have proposed terminating 
the DDG-1000 after building just the two lead ships and instead 
building more DDG-51s, which the Navy has not asked for.
    So first let me get you on record: Does the Navy oppose 
that plan?
    Ms. Stiller. Right now, ma'am, the program of record is 
seven DDG-1000s. That was signed out in the 30-year 
shipbuilding plan.
    Senator Collins. So that's a yes, right?
    Ms. Stiller. Yes, ma'am.
    Senator Collins. In addition to the many capabilities that 
would be sacrificed if we went back to the DDG-51 instead of 
proceeding to the DDG-1000, there are also some important cost 
considerations. The DDG-51 is coming to the end of that class 
of ships. Has the Navy done an estimate of how much it would 
cost to restart the DDG-51 line?
    Ms. Stiller. Ma'am, we've looked at it in a couple of ways 
because that information has been requested from the House. 
Some estimates indicate if you built one ship it would be $2.1 
billion and if you built two it would be $3.3 billion if you go 
back to DDG-51. However, I expressed concern when I testified 
before the House Armed Services Committee that I don't 
necessarily understand all the subvendor implications, because 
the last multi-year was signed in 2002 and we did an economic 
order quantity.
    I have agreed to work with the shipbuilders to try to 
understand the subvendor implications, and I don't have that 
data yet. They're going to come see me in a couple of weeks. 
But there may be some subvendor implications that we were not 
aware of when we cost this. But right now those were the 
estimates, yes, ma'am.
    Senator Collins. If there are those implications, that 
presumably would increase the cost still further, correct?
    Ms. Stiller. Yes, ma'am.
    Senator Collins. In addition, has the Navy looked at the 
total life cycle cost, the total operational costs of the DDG-
1000 versus the DDG-51?
    Ms. Stiller. Yes, ma'am. As part of all program 
documentation that we take forward to the DAE, we have to look 
at the total ownership cost of those vessels. I don't have the 
comparison between DDG-1000 and DDG-51. I'll have to take that 
for the record. But I'll be happy to provide that for you.
    Senator Collins. As luck would have it, I do have that 
information. It's my understanding that the Navy has estimated 
that the DDG-1000, when you look at the total life cycle costs, 
that it actually costs less to operate the DDG-1000 over 35 
years than the DDG-51. In fact, the estimate that I have from 
the Navy is that it's $4.5 billion less to operate 10 ships 
over 35 years.
    Setting aside that issue for just a moment, isn't there a 
considerable cost savings that results from the far smaller 
crew size that is needed to operate the DDG-1000 compared to 
the DDG-51?
    Ms. Stiller. Yes, ma'am. Certainly manpower reductions will 
save you over the life of the class. There are additional 
maintenance costs, though, when you do that. When you take 
sailors off, there's going to be more shoreside maintenance 
that will have to be done. But overall I do believe there is a 
net savings. I hear your numbers. I'll make sure that I go back 
and verify those.
    [The information referred to follows:]

    The Navy has not stated that it would cost roughly the same amount 
of money to procure and maintain one DDG-51 ship as it would a DDG-1000 
ship. The unit costs for the final ships of the DDG-51 class (procured 
in fiscal year 2005) are lower than the projected unit costs for the 
follow ships of the DDG-1000 class. However, the Navy does expect that 
a DDG-1000-class ship will have a lower annual total operating and 
support (O&S) cost per ship than a DDG-51 class ship. This comparison 
is based on the Navy service cost estimate for DDG-1000 O&S costs 
compared to a composite across all ships of the DDG-51 class based on 
reported O&S cost data. The overall lower DDG-1000 per ship annual O&S 
cost is primarily due to the decreased ship manning for DDG-1000 as 
compared to DDG-51. This decreased manning affects both direct mission 
personnel costs and indirect support costs (such as installation and 
personnel support costs). The Navy is currently updating the O&S cost 
estimate for DDG-1000 based on the current design and life cycle 
support strategy.

    Senator Collins. Thank you.
    It's my understanding that the crew size for the DDG-1000 
is projected to be only 148 sailors. Admiral, if I'm wrong on 
that feel free to jump in.
    Admiral McCullough. Yes, ma'am. The core crew on the DDG-
1000 is 114 crew members. The aviation detachment 28, so the 
total for the ship is about 142.
    Senator Collins. 142, and that compares very favorably with 
the DDG-51. The crew size for that I believe is something in 
the neighborhood of 346 or so; is that correct?
    Admiral McCullough. Yes, ma'am, depending on what variant 
of the ship and what we've done to take efficiencies in Smart 
Ship and drive the crew size down. But it's in excess of 300 
folks, yes, ma'am.
    Senator Collins. So we're talking about a ship that is more 
capable and yet can be operated with about half the crew size; 
is that accurate?
    Admiral McCullough. It's much more capable in the littoral, 
given the radar suite that we put on it, the signature 
reductions that we've put into the ship, and yes, ma'am, it has 
less than half the crew size on it.
    Senator Collins. Admiral, could you speak to some of the 
other capabilities that the DDG-1000 would give the Navy that 
it does not currently have with the DDG-51, fine ship though 
that is?
    Admiral McCullough. Yes, ma'am, DDG-51's a great ship.
    DDG-1000 has 10 technological advancements on it, and I'll 
do the best I can without a cheat sheet in front of me. It has 
an integrated electric drive fight-through power system that's 
a 78 megawatt power plant, and it is electric drive. It has a 
significantly reduced acoustic signature that rivals the 
signature of some of our attack submarines. It has a thermal 
suppression system that reduces the infrared signature of the 
ship.
    The hull form is specifically designed to reduce the wake, 
which is a significant portion of the radar cross-section of 
the ship. So the ship has a very, very small radar cross-
signature compared to a DDG-51.
    Senator Collins. So it's stealthier?
    Admiral McCullough. Yes, ma'am.
    We put two advanced gun systems on it that are unmanned 155 
millimeter tubes, that are designed to shoot a long-range land 
attack projectile that has a nominal range in excess of 60 
miles with a very small circular error probability. So it's 
very accurate. It's GPS-guided. The system is designed so it 
can have multiple rounds simultaneously impact the target at 
that range.
    The gun system is totally unmanned. I would tell you from 
the work that we've done from computer simulation and actually 
shot the gun at Dugway Proving Grounds in Utah, if you looked 
at the computer simulation of the gun and compared it to the 
real gun firing, you can't tell which one's which until the 
breach block opens on the gun.
    We have fired the long-range land attack projectile from a 
155 tube. I believe it was at Point Mugu. We fired it at a 
barge approximately 60 miles at sea. We put a video camera on 
the barge. The barge owner was not as convinced as we were what 
the accuracy of the projectile would be. They made us insure 
the barge. You can see the projectile splash off the barge 
where it was supposed to.
    The SPY-3 radar, the X-band radar on that ship, provides 
the ship with periscope detection as well as very high fidelity 
in the littoral. So it reduces the clutter of the radar and 
enables it to see targets over land much better than what a 
SPY-1 can do.
    The last one's the fire suppression system, which enables 
us to reduce the crew size.
    Senator Collins. Thank you, Admiral. I think it's clear 
that it is an extraordinarily capable ship which will be able 
to be operated with half the crew size, which has life cycle 
costs that are extremely favorable, and that we should proceed 
with it.
    If I could just ask one more quick question of Ms. Stiller. 
Ms. Stiller, how important is the DDG-51 modernization program 
to achieving the goal of a 313-ship Navy?
    Ms. Stiller. DDG modernization is an important component. 
But I'll defer to Admiral McCullough for the requirements.
    Admiral McCullough. Modernization of our current fleet is 
the heart of the 313 force structure plan. If you look at 2020 
and look at the battle force inventory, the majority of the 
ships that make up the battle force inventory are sitting at 
the pier today.
    We historically don't do a good job with ships if we don't 
modernize the combat systems. If you look at the 993-class 
DDGs, we decommissioned them at about 17 years, which was half 
their engineered service life. The Baseline 1 cruisers we 
decommissioned at about 20 years. That was about half of their 
expected service lives. The Spruance-class destroyers we 
decommissioned at an average age of 22 years, which was half of 
their estimated service life roughly.
    If you don't modernize the combat system and you can't pace 
the current threat, the ships have a tendency to become 
irrelevant. So the combat systems and hull, mechanical, and 
electrical modernization program that we've put in for the 47 
cruisers in the DDG-51s is a key cornerstone of the 313 plan, 
and Bunker Hill is in her modernization right now.
    Senator Collins. Thank you.
    I would just conclude my questioning by saying to the 
chairman that the most efficient way to undertake that 
modernization of the DDG-51s, a modernization that we just 
heard is critical to achieving the goal of a 313-ship fleet, is 
to return those ships to the building yards, which have the 
expertise to do the retrofits in a most efficient manner.
    Thank you, Mr. Chairman.
    Senator Kennedy. I never thought of that before. That's a 
real interesting observation.
    Senator Collins. I know the chairman wants to save money at 
all times and the best way is to bring them back.
    Senator Kennedy. Bring them home, bring them home.
    Senator Collins. Thank you, Mr. Chairman.
    Senator Kennedy. Senator Sessions.
    Senator Sessions. Thank you. I'm not surprised that Senator 
Collins had all that information when she asked that question. 
She's not trained as a lawyer, but she usually knows the answer 
before she asks.
    Let me ask a few questions about the LCS. I'm a little 
worried about that. But first let me compliment the Navy on a 
decade of work that is designed to transform the Navy into an 
effective fighting force that can utilize less personnel, more 
firepower, and more capabilities. I hope we continue to do 
that, but we don't need to weaken the Navy in the process. So I 
hope you'll keep us advised.
    As I understand it, I think it's clear that the Navy has 
placed, Secretary Stiller, the LCS at the center of its 
procurement and at the center of its 313-ship Navy. How many of 
those LCS ships are planned to be part of the 313-ship Navy?
    Ms. Stiller. The plan is still for 55 LCS as part of the 
313 plan.
    Senator Sessions. At one point it was as high as 82, I 
believe, in one of the plans.
    The LCS vessel has outstanding capabilities in areas, for 
example, like the Persian Gulf, would it not?
    Ms. Stiller. Yes, sir. I'm going to defer to Admiral 
McCullough.
    Senator Sessions. Admiral McCullough, I guess I'll ask you.
    Admiral McCullough. Yes, sir. The ship's designed as a 
focused mission ship. It has very good capability in mine 
warfare and in the anti-surface warfare area that we looked 
extensively at scenarios in the Arabian Gulf, yes, sir.
    Senator Sessions. It's not exactly a replacement of any 
other ship. It's more of a new capability for the Navy; is that 
correct, Admiral?
    Admiral McCullough. Yes, sir, that's correct.
    Senator Sessions. What are some of the new capabilities 
that you expect to achieve from that ship?
    Admiral McCullough. It has significant enhancements in the 
mine warfare area, specifically with a remote mine-hunting 
vehicle that tows an SQS-20 sonar, which is a very accurate 
sonar, to find mines.
    Senator Sessions. Let me mention that Senator Kennedy I 
think for years has rightly been concerned about mines and the 
threats of mines to major vessels. One mine can neutralize 
hundreds of millions of dollars of ship capability.
    The LCS clearly is an advancement in our anti-mine 
capability?
    Admiral McCullough. Yes, sir.
    Senator Sessions. Would that be one of its top 
capabilities? It's the first one you mentioned.
    Admiral McCullough. We've delivered the first mine mission 
package. It came out just last fall. It had the remote mine-
hunting vehicle, the SQS-20A sonar. We're working on an 
Airborne Mine Neutralization System. It also included an 
Airborne Laser Mine Detection System and the support equipment 
that goes with that.
    We're working on some additional capability which involves 
putting a 30-millimeter gun on the ship to neutralize mines. 
The system's called the Rapid Airborne Mine Clearance System. 
We're also working on a program where it can detect mines over 
the beach. So this will have a significant mine warfare 
capability to enable us to maintain access against people that 
would use mines as an anti-access strategy.
    Senator Sessions. Compared to capabilities, this ship also 
has personnel demands?
    Admiral McCullough. Yes, sir. The core crew on the ship is 
40 folks. There are 15 folks that go with the mission packages 
and about 20 or 22 that go with the aviation detachment on a 
ship.
    Senator Sessions. So 60 or so even with the packages and 
capabilities.
    Admiral McCullough. 75, yes, sir.
    Senator Sessions. Fuel mileage? It depends on how fast it 
goes, right?
    Admiral McCullough. It depends. Yes, sir, it depends on how 
fast it's traveling. The threshold KPP for the ship is 40 
knots. Both of the ships use large gas turbine engines as well 
as diesel engines to propel them. So even with the advanced 
hull-form and General Dynamics variant, they still burn a lot 
of fuel when they go fast, yes, sir.
    Senator Sessions. But just to ask you, Admiral McCullough, 
the Navy remains committed to this ship to being 55 of the 313 
ships we envision in the Navy?
    Admiral McCullough. Yes, sir, that's correct.
    Senator Sessions. We have one today.
    Admiral McCullough. Yes, sir.
    Senator Sessions. Now, Secretary Stiller, I have been 
concerned. I can't complain too much. I have to admire 
Secretary Winter for saying we're going to challenge the costs, 
we're going to keep costs down. Basically, you've put a hold on 
both versions now of the ship. Explain to me in simple English 
where we are in terms of bringing this ship up to the 55 we're 
supposed to have. Are we going to be behind? Does this 
represent any lack of commitment on behalf of the Navy to the 
ship, or do you remain committed to it as a critical part of 
the future navy combat system?
    Ms. Stiller. Yes, sir, we are committed to the LCS program. 
Right now LCS-1 is about 82 percent along in her construction. 
She'll go to builder's trials here in May. LCS-2 is about 68 
percent along and she'll launch in late April.
    We have one ship in 2008 and two in 2009 that we are in the 
process of running a limited competition between the two primes 
for the total of three. Ideally, one would have one and the 
other would have two. That RFP was just released and so the 
contractors are in the process of working up their proposals. 
The Navy's hope is to award toward the latter part of the 
summertime the 2008 ship as well as the options for the 2009 
ships.
    As for getting to 55, I believe in the 313 plan we still 
get there before 2020. It's in 2019. So we've laid out a ramp-
up of quantities that will get us there by 2019.
    Senator Sessions. I can't criticize you if you need to 
examine the expense, examine the capabilities, and make a good 
decision. But I do think that you have to be aware that in the 
environment we operate under that if we delay something too 
long and we can't make up our minds it can allow Congress to 
take money and spend it on other things.
    If it's a critical part of your shipbuilding capability, 
Admiral, and your needs for the warfighter, we don't need to 
dawdle around here. We need to work out the problems, challenge 
the contractors if need be, and get this thing moving.
    Do you understand the dangers that we can have with 
uncertainty in the procurement process?
    Ms. Stiller. Yes, sir, absolutely. That's why we are moving 
forward as quickly as we can on the 2008 and 2009 procurements, 
which will also be in a fixed-price environment, recognizing 
the cost cap imposed by Congress as well.
    Senator Sessions. Thank you.
    Senator Martinez [presiding]. Thank you.
    I want to focus on the LCS, but I want to make sure that we 
talk a little bit about the amphibious lift requirements, 
General Amos. My understanding is that the Marine Corps has 
long had a requirement for three amphibious brigades to conduct 
amphibious assault, but fiscal constraints reshaped this 
requirement for operationally available amphibious lift to two 
brigade assault echelons.
    So how does this requirement for two brigade assault 
echelons translate into numbers and types of amphibious ships, 
and what are the assumptions and related risks in sizing this 
amphibious force?
    General Amos. Senator Martinez, you're absolutely correct. 
There has been risk that has been taken already as we went from 
three Marine Expeditionary Brigades worth of assault echelon, 
which equates to forcible entry, our Nation's ability to 
project forces from the sea ashore in an environment or a 
nation that doesn't want us to be there. So we went from 3 to 
2.5 and we're down to 2.0 right now.
    That number of marines and that requirement requires just a 
little bit over 17 ships to hold that many marines, 17 ships 
per Marine Expeditionary Brigade. A decision was made 2 years 
ago by the Commandant and the CNO to accept the level of risk, 
further level of risk, and allow those total numbers to get 
down to 15 per Marine Expeditionary Brigade.
    So that's a total of 30 ships. Now, just like anything 
else, like airplanes and whatever, everything's not up 100 
percent of the time. Things are in maintenance, things are in 
overhaul. So if you just take the historic average of 
maintenance and availability, you need about 34 ships. You need 
a little bit more than 34, but 34 ships to bring those two 
brigades worth of marines ashore.
    Now, it's important to note that the mix inside that is 
important, and that's why in my opening statement I talked 
about the 10th LPD and I talked about the importance of that 
ship and the capabilities it brings. It's a 25,000-ton ship. It 
is an enormous ship and it's very, very capable.
    So we're looking at a proper mix inside those 15 ships: 5 
big-deck what we call LHA-LHD ships, 5 LPD-17 ships, and 5 LSD-
41, or 49 ships to bring up the total of 15 to put in there. So 
that's how we got to the total requirement agreed to by the CNO 
and the Commandant of 34 ships. It's really about 33: 11 big 
decks, 11 LPD-17s, and 11 LSDs.
    Senator Martinez. We need to fix the problem. My question 
to you would be, what would be your priorities in terms of 
fixing the capabilities and the shortfalls? From your 
perspective, how would you like to see this proceed?
    General Amos. I know the Commandant's number one unfunded 
priority for this year is the 10th LPD. Right now there is the 
LPD-17 line scheduled to be closed in fiscal year 2009. There 
is money applied to that, $103 million, and what the Navy and 
the Marine Corps--I'll just speak for the Marine Corps--what 
the Marine Corps would like to see happen is to have that 10th 
LPD fully funded with global war on terror funds and get that 
thing underway and under contract.
    Senator Martinez. Ms. Stiller, if that was not to take 
place what would then happen to the industrial base for the 
shipbuilding of that particular class of ship?
    Ms. Stiller. If you look at the industrial base and where 
we are in the LPD production, I would say that you could wait 
until fiscal year 2010 to buy that ship with a little bit more 
risk, but beyond that you would definitely end up with a cold 
production line.
    Senator Martinez. One last question, General Amos. As you 
indicated in your opening remarks, the role of the marines in 
Iraq and Afghanistan has been a land-based role, not the 
traditional role of the Marine Corps in expeditionary warfare. 
Is there a need for you, for the Marine Corps, to rebuild this 
fundamental expertise through the ranks of the Corps in order 
to retain the full skills and capabilities required to project 
power ashore from the sea?
    General Amos. Sir, there is. The Commandant talked to his 
leadership about that. We have really a couple of generations 
of young company-grade officers now that have never even been 
aboard a ship, because we've been focused solely, narrowly on 
the set of operations that we're doing in Iraq and Afghanistan. 
So we understand that.
    One of the driving factors behind growing the Marine Corps 
to 202,000 was to give us a little bit of elasticity in the 
deploying units. Right now--and I know you know this, Senator--
there's a large percentage of our front-line combat units that 
are on about a one-to-one dwell to rotation. They're gone for 7 
months, they're home for 7 months. It's a bit of a ruse because 
they're home really for probably 6 to 5 months because they 
spend 30 days at Twentynine Palms away from their family, then 
they're going to rotate early so that they can go over there 
and relieve the unit that they're going to take their spot. So 
somewhere between 5 to 7 months is the time they're home.
    So if we grow the force we get a little bit more dwell, 
hopefully two-to-one, which is our goal. Then when we do that, 
that now allows us, the senior leadership, to be able to say: 
Okay, you're going to go a year from now or 14 months from now, 
you're going to go back into Iraq, you're going to go into 
Afghanistan, instead of saying 5 months from now and we have to 
start training immediately.
    So that allows us the opportunity to do some full-scale 
operations and training. We're building that capability right 
now with the growth of the force and with the training plans 
that come underneath my command down at Quantico. So we 
recognize it. We need to be able to do it. Quite honestly, it's 
a Title 10 responsibility that Congress has given us and we're 
not doing that right now.
    Senator Martinez. Thank you all very much.
    The hearing is adjourned.
    [Questions for the record with answers supplied follow:]

            Questions Submitted by Senator Edward M. Kennedy

                          LITTORAL COMBAT SHIP

    1. Senator Kennedy. Secretary Stiller and Admiral McCullough, you 
are having particular problems with the Littoral Combat Ship (LCS) that 
are very much in the news. Admiral Clark said he wanted this relatively 
inexpensive ship in a hurry to meet the projected threat in the 
littorals. Now we find that we will not get these ships in a hurry, nor 
will they be as inexpensive as we were led to believe. What is the Navy 
doing to meet this urgent threat that the LCS was intended to address 
with the LCS program delayed as it has been?
    Ms. Stiller and Admiral McCullough. The Navy is accepting greater 
risk by addressing littoral threats with current force structure of 
mine countermeasures ships and multi-mission ships. However, there will 
be capability gaps until LCS delivers in capacity.

    2. Senator Kennedy. Secretary Stiller and Admiral McCullough, have 
you investigated deploying mission modules on other Navy combatant 
vessels?
    Ms. Stiller and Admiral McCullough. The Navy is examining options 
to deploy selected LCS mission modules on other combatant vessels. In 
February 2008, Secretary Young (USD, AT&L) directed the Secretary of 
the Navy to conduct an analysis of alternative (AoA) platforms and 
develop a concept of operations (CONOPs) for mine countermeasures (MCM) 
capability fielding with and without LCS. The analysis and CONOPs will 
be submitted with the fiscal year 2010 MCM Master Plan and should also 
include forward staging and system sparing considerations.

    3. Senator Kennedy. Secretary Stiller and Admiral McCullough, if 
you are just accepting greater risk for the interim, why didn't the 
Navy just plan from the beginning to accept that greater risk for some 
period of time and get the LCS program right in the first place?
    Ms. Stiller and Admiral McCullough. The LCS program was designed to 
address warfighting gaps in MCMs, surface warfare, and anti-submarine 
warfare. Because of the compelling and urgent warfighting need, the LCS 
program attempted to meet a faster schedule than typical Navy programs. 
With a constrained price, tight schedule, two different designs at two 
different shipyards, and demanding performance requirements, LCS took 
on much higher risk than other programs. The rapid schedule also forced 
a large degree of concurrency between design and construction.
    In order to reduce program risk to acceptable levels, the Navy has 
restructured the program to accommodate known cost and schedule 
estimates. LCS remains a program of maximum importance to the Navy, and 
the Navy continues to monitor it closely. Warfighting requirements to 
fill the capability gaps remain compelling and consistent; therefore, 
the requirement for LCS remains unchanged.

                          ACQUISITION REFORMS

    4. Senator Kennedy. Secretary Stiller, it seems that the LCS should 
provide plenty of educational opportunities for how not to manage a 
major acquisition program. Unfortunately, it appears that many of the 
lessons learned from the LCS program were actually lessons ignored. We 
were in such hurry we ignored almost all of the lessons we learned 
painfully in previous years about how not to buy major weapons systems. 
For example, we picked the ship platform without having conducted any 
analysis to see whether there were other, more capable or less 
expensive solutions to the problem we faced. We changed requirements 
after we signed the contract. We did not have an adequate number of 
people with the right acquisition experience to oversee the shipyards. 
What steps have you taken or are you planning to take to improve the 
Navy's ability to acquire major systems on time and on cost?
    Ms. Stiller. On February 26, 2008, we issued SECNAVNOTE 5000, which 
instituted an Acquisition Governance Improvement Six-Gate reporting, 
reviewing, and oversight process that provides specific criteria for 
areas such as requirements, funding, and technical performance 
including a Probability of Program Success tool. This new process 
ensures that the various stakeholders from the resources, requirements, 
and acquisition communities address and revisit at defined intervals 
issues associated with technical maturity, affordability, and program 
health. We are currently developing new guidance addressing system 
design methods; the use of independently-chaired engineering technical 
review boards; and responsibility for Configuration Steering Boards to 
monitor requirements changes as well as consider cost and funding 
availability. It is important to note that the success of all these 
initiatives is heavily dependent on personnel with the correct training 
and experience commensurate with responsibilities assigned. While we 
are working to ensure we have the personnel with the requisite skill 
sets, this is an area where there is a shortage in both government and 
industry.

    5. Senator Kennedy. Secretary Stiller, I know that previous 
uniformed Navy leaders, including Admiral Mullen, have complained about 
a lack of transparency between the officers responsible for setting 
requirements and the acquisition system trying to meet those 
requirements. What steps should be or have been taken to break down 
these barriers?
    Ms. Stiller. On February 26, 2008, we issued SECNAVNOTE 5000, which 
instituted an Acquisition Governance Improvement Six-Gate reporting, 
reviewing, and oversight process. Its purpose is to ensure early and 
frequent involvement and collaboration among the leadership of the 
requirements, resources, and acquisition communities. New changes to 
both DOD Instruction 5000.2 and SECNAVINST 5000.2 include additional 
emphasis on requirements discipline. Configuration Steering Boards will 
oversee any changes to the requirements baseline. In addition, the 
Department of the Navy will implement a Systems Design Specification 
which will provide more clarity to the Capability Development Document 
(CDD)/CPD development process and convert and interpret operational 
specifications into affordable design requirements.

                    AIRCRAFT CARRIER FORCE STRUCTURE

    6. Senator Kennedy. Admiral McCullough, Congress argued at length 
over the past several years about letting the aircraft carrier force 
structure fall below 12. That was contentious enough. Again this year, 
the Navy is proposing legislation that would permit a temporary 
reduction in the number of aircraft carriers from 11 to 10 in the 
middle of the next decade. Assuming that Congress were to agree to 
allow this temporary reduction, what steps is the Navy proposing to 
take between now and then to mitigate this drop in force structure that 
impinges on the ability of future Chiefs of Naval Operations to meet 
requirements of the combatant commanders?
    Admiral McCullough. The Navy remains fully committed to an 11-
carrier force; however, it is fiscally imprudent to operate 11 carriers 
between CVN-65 inactivation and CVN-78 commissioning. For the duration 
of this force structure gap, Navy can meet projected operational 
requirements with moderate risk by mitigating the operational impacts 
through the selective rescheduling of carrier maintenance 
availabilities and the inherent flexibility provided by the Fleet 
Response Plan (FRP). Ongoing process improvement events focus on 
reducing the time between the end of construction/maintenance 
availabilities to ship Initial Operational Capability/Major Combat 
Operations (MCO) Surge Readiness. Additionally, the maturity of FRP, 
increased experience with the Refueling Complex Overhaul program, and 
refinement of the Continuous Maintenance concept allows Navy to improve 
carrier operational availability. Navy will have the force structure to 
maintain six carriers deployed or available within 30 days plus an 
additional carrier available within 90 days. Accordingly, Navy will 
continue to work with the combatant commanders through the Joint Staff 
to best mitigate operational risk during this timeframe.

                              COST CONTROL

    7. Senator Kennedy. Secretary Stiller, we all know that the Navy 
will have difficulty affording the shipbuilding procurement programs 
that will meet our requirements and maintain the 313-ship that Admiral 
Mullen and Admiral Roughead have identified as the requirement. What 
steps are you taking or proposing to help constrain the rising costs in 
the shipbuilding account?
    Ms. Stiller. The Navy's shipbuilding plan recognizes the need for 
careful management of requirements and aggressive cost control 
measures. This can only be achieved in partnership with industry by 
utilizing realistic assumptions, instilling discipline in shipbuilding 
requirements, and driving more industry and government investments to 
reduce cost. Given the importance of requirements-containment and cost-
reduction to the viability of the shipbuilding plan, the Navy continues 
to evaluate each ship class and identify cost reduction opportunities 
while balancing warfighting requirements, costs, and industrial base 
realities.
    The Navy plans to make greater use of other contract incentives, 
such as multi-year procurements, fixed-price contracts (when and where 
appropriate), and increased use of competition. These efforts are 
expected to contribute to real cost containment in future shipbuilding 
plans. The Navy's shipbuilding plan requires a balance among 
operational requirements and risk, affordability, and industrial base 
utilization. Additionally, use of gates in oversight of shipbuilding 
programs to better integrate the requirements and the acquisition 
community in order to further stabilize the programs have been 
implemented. The Navy's long-range vision reduces the types and models 
of ships, maximizes the reuse of ship designs and components, and 
implements open architecture for software and hardware systems.
    The Navy continues to work with shipbuilders to strive for level 
loading of production facilities. Workload peaks and valleys are 
mitigated through work share opportunities and regional outsourcing.

    8. Senator Kennedy. Secretary Stiller, given this cost concern, why 
has the Navy chosen again this year to not provide any funding for the 
National Shipbuilding Research Program (NSRP), the one program where 
the Navy was providing matching funding for industry to help make 
itself more efficient?
    Ms. Stiller. Although NSRP was put in place with the major goal of 
reducing the cost of shipbuilding and repair, there was a lack of 
direct focus on specific shipbuilding programs. The focus was on cross-
shipyard collaboration to implement initiatives that were applicable 
industry-wide. Navy and industry collaboratively have decided to 
transform NSRP from its previous structure to a mechanism that will 
address ship-specific initiatives. This new construct will align with 
corporate Navy philosophy to reduce the cost of our shipbuilding 
programs. While it is no longer a dedicated line item in the budget, 
Navy is still committed to NSRP.

                              CG(X) RADAR

    9. Senator Kennedy. Secretary Stiller and Admiral McCullough, the 
cost of pursuing ballistic missile defense has been very high. I am 
very concerned about ensuring that we spend no more than is necessary 
to achieve that capability in order to hold down those costs. We know 
that the DDG-1000 program is developing new radars as part of the 
ship's combat system. One of those radars is the Volume Search Radar 
(VSR). Some have asserted that the Navy and the contractors could 
modify the VSR to make it larger for comparatively little cost, and by 
doing so could avoid the very high cost of developing totally new 
radars for the Navy's next generation cruiser, the CG(X) class. I know 
that you have not published the CG(X) AoA, but I will ask this question 
anyway. Would it be possible to upgrade the VSR radars from the DDG-
1000 to do more than serve as the primary sensor on the CG(X)? If so, 
would that course be substantially cheaper than developing totally new 
radars for CG(X)?
    Ms. Stiller and Admiral McCullough. No, it is not technically 
feasible to upgrade VSR to meet integrated air and missile defense 
requirements for CG(X). VSR, as designed, does not contain the critical 
technologies required to provide the minimum capabilities required to 
satisfy the integrated air and missile defense requirements set. 
Incorporating these capabilities into the VSR is not technically 
achievable.
                                 ______
                                 
               Questions Submitted by Senator Bill Nelson

                                STRATEGY

    10. Senator Bill Nelson. Ms. Stiller and Admiral McCullough, what 
is the status of the strategic laydown study? Has it been completed? If 
not, when will it be delivered to Congress?
    Ms. Stiller and Admiral McCullough. Conducted yearly as part of an 
internal review, the Strategic Laydown and Dispersal study is currently 
still ongoing and is not yet complete. The Strategic Laydown and 
Dispersal was developed as part of a working process used to inform 
Navy decisions on the potential future alignment of fleet capabilities 
and operations. As part of an ongoing Navy process, the Strategic 
Laydown and Dispersal was not developed with the intent to produce a 
public document.

    11. Senator Bill Nelson. Ms. Stiller and Admiral McCullough, the 
National Defense Authorization Act for Fiscal Year 2006 requires the 
Navy to maintain 11 operational carriers. Does the Navy plan to deviate 
from this law?
    Ms. Stiller and Admiral McCullough. The Navy continues to work with 
Congress through established legislative processes to identify a 
position that is both fiscally and operationally responsible. The Navy 
is committed long-term to a minimum of 11 operational carriers.

    12. Senator Bill Nelson. Ms. Stiller and Admiral McCullough, please 
detail the Navy's plan to address Navy leadership's goal of strategic 
dispersion.
    Ms. Stiller and Admiral McCullough. The Chief of Naval Operations 
(CNO)-directed Strategic Laydown and Dispersal plan was designed to 
inform Navy decisions on where ships of the 313-ship Navy could be 
homeported based on steady state security postures and potential 
contingency operations in the 2020 time frame. The Strategic Laydown 
and Dispersal takes into account response times, analysis of 
requirements for regional presence and deployment locations, as well as 
infrastructure capabilities and capacities.
    The Strategic Laydown and Dispersal is just one aspect of a more 
comprehensive and complex analysis of our Naval Forces. There are 
multiple ongoing efforts that also contribute to developing the force 
structure, personnel, and infrastructure needed to execute the New 
Maritime Strategy and support the future fleet.

    13. Senator Bill Nelson. Ms. Stiller and Admiral McCullough, how 
will the Navy carry out this goal with respect to dispersing its 
Atlantic Fleet aircraft carriers among more than one port?
    Ms. Stiller and Admiral McCullough. A decision with respect to 
Atlantic Fleet carrier dispersal has not yet been made. There are 
multiple ongoing efforts that inform this decision. The Navy will fully 
consider operational, financial, and environmental factors before 
making decisions regarding the homeporting alternatives being evaluated 
for its Atlantic Fleet aircraft carrier force.
    The Mayport Draft Environmental Impact Statement (DEIS) was 
released to the public on 28 March 2008. This DEIS reviews and assesses 
several potential action alternatives for comparison. Upon completion 
of the public comment period, efforts will begin to incorporate public 
and agency comments and develop the Final EIS. Originally planned to 
close on 12 May, the public comment period is being extended to 27 May 
2008. This limited extension of the public comment period recognizes 
the importance of public review and comment on the DEIS while allowing 
Navy decision-making to proceed on a reasonable timeline.
    While not exclusively concerned with a single class or ship 
location, the Strategic Laydown and Dispersal study is part of a larger 
Navy process to inform future decisions on the potential alignment of 
fleet assets, capabilities, and operations. This effort is exploring 
several disposition alternatives without presupposing the results of 
the Mayport DEIS.

                     ENVIRONMENTAL IMPACT STATEMENT

    14. Senator Bill Nelson. Ms. Stiller and Admiral McCullough, the 
Navy recently released a DEIS on Mayport Naval Station to look at home 
porting options for additional ships. In addition, the Navy also 
released a DEIS on Naval Air Station Jacksonville. According to the 
Congressional Research Service and the Senate Committee on Environment 
and Public Works, it is unusual for a DEIS to omit a preferred 
alternative. The Navy included a preferred alternative in the NAS 
Jacksonville DEIS. Why did the Navy omit a preferred alternative in the 
Mayport DEIS?
    Ms. Stiller and Admiral McCullough. The Navy did not identify a 
preferred alternative in the DEIS released on 28 March 2008 because the 
Navy has not selected one. Not stating a preferred alternative in the 
DEIS is authorized under NEPA and CEQ regulations. While the DEIS does 
thoroughly examine environmental factors, the selection of a preferred 
alternative will also consider force laydown implications, total costs, 
and other relevant factors. Analysis of these other factors is not yet 
complete. The Navy will identify a preferred alternative based on all 
these factors in the final EIS scheduled for release in November 2008.

    15. Senator Bill Nelson. Ms. Stiller and Admiral McCullough, when 
will the Navy provide a preferred alternative in the Mayport DEIS?
    Ms. Stiller and Admiral McCullough. The Navy did not identify a 
preferred alternative in the DEIS released on 28 March 2008, because 
the Navy has not selected one. While the DEIS does thoroughly examine 
environmental factors, the selection of a preferred alternative will 
also consider force laydown implications, total costs, and other 
relevant factors. Analysis of these other factors is not yet complete. 
The Navy will identify a preferred alternative based on all these 
factors in the final EIS scheduled for release in November 2008.
                                 ______
                                 
              Questions Submitted by Senator Mel Martinez

                            VALVES AND PUMPS

    16. Senator Martinez. Ms. Stiller, recent reports indicate that a 
group of important Navy suppliers, valve and pump manufacturers, may be 
in jeopardy of going out of business or filing for bankruptcy due to 
numerous asbestos lawsuits. Are you aware of this issue?
    Ms. Stiller. Yes. The Valve and Pump Coalition (VPC) met with me on 
April 1, 2008, to inform the Navy of the wave of asbestos litigation 
being brought against their industry, and the risk the VPC foresees for 
the pump and valve industrial base as a result of this litigation. The 
VPC consists of Buffalo Pumps and Leslie Controls. As a result of this 
meeting, the Navy has been assessing the potential impacts to national 
defense and the domestic industrial base if pump and valve vendors go 
out of business due to asbestos litigation.

    17. Senator Martinez. Ms. Stiller, these lawsuits have the 
potential to disrupt the supply of certain valves and pumps for our 
ships. If this disruption were to occur, would it pose a significant 
problem for our ships and operations?
    Ms. Stiller. The disruption of our valve and pump supply could 
potentially have an impact to our shipbuilding programs. The severity 
of the impact would depend on which and how many vendors had supply 
disruptions, and the suddenness, duration, or finality of the 
disruption. If any vendor went out of business, it is reasonable to 
expect that its product line could be purchased by the remaining 
vendors; there would likely be a gap in engineering continuity; and 
there would likely be some impact to ship design, construction, and in-
service support. While it is possible to transition the data required 
to produce another vendor's product to a new vendor, it is expected to 
cause cost increases and time delays for the Navy's programs.

    18. Senator Martinez. Ms. Stiller, how do you plan to solve this 
problem?
    Ms. Stiller. While the loss of any pump and valve supplier to our 
shipbuilders will have an impact on Navy programs, it is possible that 
the Navy could qualify other vendors to supply pumps or valves for Navy 
programs. Development costs and time would be required for this option. 
However, the Navy could procure a stockpile of equipment and spare 
parts as a means of minimizing schedule and service delays.

                              SONAR DOMES

    19. Senator Martinez. Ms. Stiller, is the Navy satisfied with the 
performance of the surface ship and submarine sonar domes currently 
supplied to the fleet?
    Ms. Stiller. The Navy is satisfied with the performance of the 
surface ship sonar domes currently supplied to the fleet by B.F. 
Goodrich, Jacksonville, FL. The rubber and composite domes for the FFG 
class have performed well, as have the sonar dome rubber windows for 
both the CG and DDG classes.
    The Navy is also satisfied with the performance of sonar domes and 
sonar dome boots being procured for Virginia-class submarines.

    20. Senator Martinez. Admiral McCullough, does the Navy have a 
requirement or a plan to seek a second source for sonar dome 
production?
    Admiral McCullough. Sonar domes and boots are procured for surface 
ships and submarines from the only presently-qualified vendor, B.F. 
Goodrich, Jacksonville, FL. There is no current plan to seek a second 
source; however, the Navy is conducting a Small Business Innovation 
Research (SBIR) effort to explore alternative solutions.

                                MAYPORT

    21. Senator Martinez. Admiral McCullough, now that the EIS has been 
completed, what are your plans for future funding for Mayport?
    Admiral McCullough. Only the DEIS has been completed. The Final EIS 
will not be completed until November 2008. A Record of Decision (ROD) 
on a preferred alternative for the Mayport EIS will follow in December 
2008. The Navy will fully consider operational, financial, and 
environmental factors before making decisions regarding the homeporting 
alternatives being evaluated in the EIS. If the Navy's preferred 
alternative requires MILCON, these requirements will be balanced with 
the Navy's other programming priorities.
    The plan for future funding of Mayport depends upon the alternative 
chosen in the ROD. Should the ROD select an alternative to move any 
ships to Mayport, funding will be requested in order to meet the 
desired date of initial operating capability (IOC). For example, in 
order to make a 2014 IOC date for CVN homeporting at Mayport, several 
supporting MILCON projects would need to be programmed beginning in the 
fiscal year 2010 budget.

    22. Senator Martinez. Admiral McCullough, we have been told that 
the final decision may hinge on the completion of a strategic lay-down 
study. When do you expect this strategic lay-down study to be 
completed?
    Admiral McCullough. Conducted yearly as part of an internal review, 
the Strategic Laydown and Dispersal study is currently still ongoing 
and is not yet complete. The Strategic Laydown and Dispersal was 
developed as part of a working process used to inform Navy decisions on 
the potential future alignment of fleet capabilities and operations. As 
part of an ongoing Navy process, the Strategic Laydown and Dispersal 
was not developed with the intent to produce a public document.

    23. Senator Martinez. Admiral McCullough, how much money does the 
Navy plan on including in the fiscal year 2010 budget for Mayport wharf 
upgrades and dredging?
    Admiral McCullough. In addition to the fiscal year 2009 P-999 Alpha 
Wharf project ($14.9 million), the 2009 President's budget (PB-09) 
request includes MILCON restoration projects for Bravo Wharf (P-888; 
$30.0 million) in fiscal year 2010 and Charlie Wharf (P-777; $20.8 
million) in fiscal year 2011. The PB-09 request also includes O&MN 
funds for maintenance dredging: fiscal year 2010 ($5 million), fiscal 
year 2012 ($6 million), and fiscal year 2014 ($6 million). The fiscal 
year 2010 President's budget request is still under development. The 
investments currently programmed for fiscal year 2010 and beyond will 
be given full consideration and prioritized against all Navy 
requirements.
                                 ______
                                 
              Questions Submitted by Senator Jeff Sessions

                           HAWAII SUPERFERRY

    24. Senator Sessions. Ms. Stiller, an important part of having a 
capable Navy is having available substantial lift capabilities for both 
inter-theater and intra-theater lift. Combatant commanders identified 
both a near-term and a long-term requirement for high-speed intra-
theater surface lift and there is now in the budget a plan to procure a 
substantial number of Joint High Speed Vessels (JHSV) to meet that 
requirement. However, with the current building schedule we won't see 
the first of those ships until 2012 or 2013 and it will be a decade or 
more before we see a significant JHSV capability on the water, which 
means that we will have a substantial shortfall in intra-theater lift 
capabilities for many years to come. I understand that the Navy has 
been considering for the last few months a plan to install national 
defense features (NDF) on one or more of the Hawaii Superferry ships 
that have been built or are being built in the United States and will 
be in the Voluntary Intermodal Sealift Agreement (VISA) program. Are 
you aware of this issue?
    Ms. Stiller. The Navy is reviewing the operational requirements 
that could be met by the Hawaiian Superferry company's unsolicited 
proposal which identified specific changes to be funded under the NDF 
program. The bridge to the JHSV program is currently being met by the 
Military Sealift Command (MSC)-leased vessels M/V Westpac Express and 
HSV-2 Swift. Although the NDF program is a cost-effective means to 
provide for surge sealift or resupply capability by providing active, 
crewed ships with proven mechanical reliability and desirable 
performance capabilities, it is not meant to support continuous 
operations and the ships are only used in times of national 
emergencies.

    25. Senator Sessions. Ms. Stiller, would it be fair to say that the 
Navy and the Marine Corps would benefit from having available on call a 
high speed ferry like the Hawaii Superferry with substantial NDF 
already installed?
    Ms. Stiller. The Navy and Marine Corps are currently reviewing what 
requirements the Hawaiian Superferry, with the proposed NDF features 
installed, could provide in meeting wartime surge operations.

    26. Senator Sessions. Ms. Stiller, wouldn't this give the combatant 
commanders some much needed near-term capability?
    Ms. Stiller. The NDF program is designed to ensure that the 
Department of Defense can obtain militarily-useful commercial cargo 
ships in times of national emergencies. The NDF program funds 
installation of militarily-useful features on U.S.-built vessels during 
construction or conversion. NDF funding also pays for any increased 
costs during commercial operations that are directly attributable to 
the NDF. The NDF program is a cost-effective means to provide for surge 
sealift or resupply capability by providing active, crewed ships with 
proven mechanical reliability and desirable performance capabilities. 
The NDF program is not meant to support continuous operations and the 
ships are only used in times of national emergencies. Each proposal 
submitted for NDF must be addressed on its own merit, and consideration 
of the business case for the Navy must be taken into account.
                                 ______
                                 
              Questions Submitted by Senator Susan Collins

                                  DDG

    27. Senator Collins. Ms. Stiller, given the focus and concern on 
cost of Navy shipbuilding in general and the DDG-1000 specifically, 
please tell me what the impact would be on cost of the first two ships, 
as well as the impact on the stability of the program's industrial base 
if the program were terminated after first two ships.
    Ms. Stiller. If the fiscal year 2009 President's budget request for 
DDG-1000 is not funded, it will impact warfighting capability gaps, 
cost, and the shipbuilding industrial base. The cost of the first two 
ships, now under contract to General Dynamics Bath Iron Works and 
Northrop Grumman Shipbuilding, will significantly increase due to the 
lack of the shipbuilders' ability to spread shipyard overhead cost 
among multiple ships. Additionally, the cost of the mission systems 
equipment for the lead ships will increase for similar overhead cost 
increases. The loss of this workload would also likely impact costs on 
other Navy contracts at these shipbuilders. Finally, the lack of a 
fiscal year 2009 ship will likely impact the shipbuilding industrial 
base including workforce stability and may endanger the future 
viability of the Nation's major shipyards.
    Each shipbuilder's lead-ship cost proposal was based on a seven-
ship program of record DDG-1000 workload. The cancellation of the 
program would affect vendors that are currently under contract and 
building class-specific systems and components that would not be 
incorporated in large numbers or at all on future ships, including 
systems such as the Dual Band Radar (Raytheon/Lockheed Martin), 
Advanced Gun System (BAE Systems), Integrated Power System (Converteam/
DRS Technologies), Advanced Vertical Launch System (Raytheon/BAE 
Systems), and Total Ship Computing Environment Infrastructure 
(Raytheon). Hundreds of system and component vendors employing 
thousands of people in 49 States would also be impacted. To date, total 
of $13.2 billion has been invested in the program: $6.3 billion spent 
on research and development (R&D) and $6.9 appropriated for lead ships 
construction and advance procurement for the third ship. Terminating 
the program would provide little return on this investment and a 
decades' worth of development effort.
    The Navy continues to stress that a stable plan will enable the 
shipbuilding industry to maintain critical skills and to make business 
decisions that increase efficiency and productivity in order to meet 
the Navy's projected shipbuilding requirements. Terminating the program 
would produce the opposite effect. Most importantly, the cancellation 
of future ships would deny the Fleet critical capabilities and limit 
the introduction of next-generation capabilities to deal with known and 
anticipated threats.

    28. Senator Collins. Ms. Stiller and Admiral McCullough, the 
current Navy shipbuilding request of $14.1 billion in the fiscal year 
2009 budget does not meet the $15.8 billion the Navy has estimated it 
needs to meet its own 30 shipbuilding plan, and the CNO has stated that 
the cost of a nuclear-powered cruiser would be $600 to $700 million 
more per ship. Do you see any way that the Navy can afford to build 
nuclear-powered surface combatants?
    Ms. Stiller and Admiral McCullough. There is always a balance that 
must be achieved in the shipbuilding accounts. Our first priority is to 
get the capabilities we need on the schedule we need them. However, 
these priorities are always tempered by affordability and the impact of 
any single program on the resources available to support other programs 
within that sector of the Navy's accounts. Clearly accommodating the 
upfront cost for a nuclear-powered cruiser would be difficult and will 
pose a challenge with respect to the limited resources we have within 
the shipbuilding sector. This may result in a need to request 
additional funding from the Office of the Secretary of Defense (OSD) or 
Congress to meet the direction provided in last year's National Defense 
Authorization Act.
    The greatest concern regarding affordability of nuclear cruisers 
would not be whether we can afford to build the ships but rather what 
the impact is on the remaining resource demands the Navy faces after 
funding these nuclear cruisers to the appropriate resource level. As 
the Navy prepares for Milestone A and selection of a preferred design 
alternative, including consideration of ships with a nuclear-power 
option, the Navy will continue to assess the potential impacts on the 
remaining shipbuilding program.

    29. Senator Collins. Ms. Stiller and Admiral McCullough, aside from 
the dramatically increased costs, is it even practical to replace the 
current power plant in the DDG-51 or DDG-1000 with a nuclear power 
plant?
    Ms. Stiller and Admiral McCullough. No, it is not practical to 
replace the current power plant in the DDG-51 or DDG-1000 with a 
nuclear power plant.
    The specific capability needs as well as unique ship integration 
constraints of the DDG-51 and DDG-1000 compared to existing nuclear-
powered ships would necessitate a wholly new nuclear propulsion plant 
design and/or significant hull redesign for these applications. Given 
the extensive redesign of the DDG-51 and DDG-1000 to incorporate 
nuclear propulsion, this effort would take many years and several 
billion dollars to complete and therefore is impractical.
                                 ______
                                 
               Questions Submitted by Senator John McCain

            UNFUNDED REQUIREMENT FOR 10TH LPD-17 CLASS SHIP

    30. Senator McCain. Ms. Stiller, the Navy and Marine Corps have 
included a 10th LPD-17 class ship as a top priority on the unfunded 
requirements list again this year. With the ninth and currently last 
ship of the class starting construction, what would be the impact to 
the shipbuilding industrial base and to the Navy's ability to procure a 
future LPD-17 if funding is not provided in 2009 for this ship?
    Ms. Stiller. There are currently five LPD-17 class ships under 
construction. As LPD-25, the 9th LPD-17-class ship, is not expected to 
deliver until February 2012, there is currently a backlog of LPD work. 
To avoid a production break impact, the 10th ship would need to be 
appropriated no later than fiscal year 2010. The Navy is revisiting the 
10th LPD-17 as part of fiscal year 2010 budget deliberation.

                         FUTURE CRUISER, CG(X)

    31. Senator McCain. Admiral McCullough, the Navy's program includes 
about $3 billion in R&D towards a future missile defense cruiser, 
CG(X), in 2011. The 2008 National Defense Authorization Act requires 
that CG(X) be nuclear-powered unless the Secretary of Defense 
determines that it is not in the national interest. What is the status 
of the Navy's AoA for the CG(X), and when will Congress have sufficient 
insight to the program to be able to support this year's budget 
request?
    Admiral McCullough. The results of the Maritime Air and Missile 
Defense of Joint Forces (MAMDJF) AoA, more commonly referred to as the 
CG(X) AoA, were delivered to the Staff of the CNO in January 2008. The 
CNO Staff is reviewing the comprehensive and lengthy report. A series 
of internal Navy reviews have been conducted, and will continue, until 
decisions in several critical areas are made. The Navy will select a 
service-preferred alternative for CG(X) and then provide a 
recommendation to OSD at a Milestone A Defense Acquisition Board (DAB) 
anticipated in fiscal year 2008. Once complete, the AoA Report will be 
forwarded from CNO via SECNAV's OSD. Following approval of the AoA, the 
Navy will seek Milestone A approval for the CG(X) program from the 
Defense Acquisition Executive. The Navy will be able to provide further 
detail on the AoA results and the Navy's selection of a preferred 
alternative to Congress upon Milestone A approval.
    Regardless of the selected alternative, the President's fiscal year 
2009 budget request for the CG(X) budget funds vital efforts in 
requirements analysis, technology development, and ship design activity 
that need to continue.

    32. Senator McCain. Admiral McCullough, the press has reported that 
the Navy has determined that if it is to be nuclear-powered, CG(X) 
would use a scaled version of the CVN-21 reactor plant. Has the Navy 
determined whether this reactor plant could be installed in the DDG-
1000 hullform?
    Admiral McCullough. Yes, the Navy has determined that the CVN-78 
reactor plant cannot be installed in the DDG-1000 hull form. The 
nuclear-powered CG(X) option will have a hull form which will be 
designed to accommodate the CVN-78 reactor plant.

    33. Senator McCain. Admiral McCullough, what is the Navy's range of 
cost estimates for building a nuclear-powered CG(X)?
    Admiral McCullough. The MAMDTF AoA includes cost analysis for the 
potential use of nuclear propulsion for CG(X).
    Navy leadership is reviewing the AoA results. The Navy will select 
a service preferred alternative for CG(X) and then provide a 
recommendation to OSD at a Milestone A DAB anticipated in fiscal year 
2008.
    The Navy's fiscal year 2006 Report to Congress on Alternative 
Propulsion Methods for Surface Combatants and Amphibious Warfare Ships 
indicated an upfront nuclear acquisition cost premium of $600-$700 
million in fiscal year 2007 dollars per ship for a medium surface 
combatant. This premium is over and above the acquisition cost of a 
fossil fueled ship. While the nuclear-power variant includes a higher 
upfront acquisition cost than the fossil fuel variant, it will be 
offset over the life cycle by lower operations and support costs 
completely or to some degree depending on ships OPTEMPO, energy 
demands, and fuel prices.

    34. Senator McCain. Admiral McCullough, what is the Navy's plan for 
certifying the two surface combatant shipbuilders, Bath Iron Works and 
Ingalls Shipbuilding, for nuclear ship construction?
    Admiral McCullough. The Navy currently has no plans to certify 
General Dynamics Bath Iron Works (BIW) and Northrop Grumman 
Shipbuilding-Gulf Coast (NGSB-GC) for nuclear-powered ship 
construction. Northrop Grumman Shipbuilding-Newport News and General 
Dynamics Electric Boat are the Nation's two authorized and experienced 
nuclear qualified construction shipyards. However, non-nuclear sections 
of future nuclear-powered ships could be built by other shipyards 
currently experienced in naval surface combatant construction (BIW and 
NGSB-GC). The method and location of construction of potential nuclear-
powered surface combatants have not yet been determined.

                        NATIONAL SECURITY CUTTER

    35. Senator McCain. Admiral McCullough, the National Security 
Cutter (NSC), constructed for the Coast Guard Deepwater program, would 
appear to provide a low cost alternative for certain naval missions. 
Has the Navy reviewed the capabilities offered by the NSC, and if so, 
could you provide your assessment regarding the suitability of this 
ship to meet low-mix missions envisioned by the Maritime Strategy?
    Admiral McCullough. Yes, the Navy has reviewed the capabilities of 
the Coast Guard's NSC. The NSC cannot fulfill key requirements within 
the naval warfare mission that the Navy's LCS is designed to achieve, 
including survivability, crew size, sprint speed, draft, and the 
ability to embark and employ focused mission packages. The CONOPs and 
design specifications for the two ships are not compatible.

         LCS is built to Naval Vessel Rules to provide Level 1 
        survivability. NSC is built to commercial standards and was not 
        designed to operate in the same threat environment.
         LCS has a crew size requirement of 75, including core crew, 
        mission package detachment and aviation detachment. NSC's crew 
        size is 143.
         The LCS has a sprint speed of 40+ knots. NSC's sprint speed 
        is 28 knots.
         LCS draft is approximately 13 feet. The NSC's draft is 21 
        feet. This fundamentally limits the areas where the ship can 
        effectively operate.
         LCS has been designed and purpose-built to carry and operate 
        focused naval warfare mission packages that address Joint 
        Staff-approved capability gaps in MCMs, surface warfare, and 
        anti-submarine warfare. The NSC does not have the shipboard 
        interface nor the footprint availability required to receive 
        and operate these mission packages, nor does it have the 
        organic capability to execute the specific LCS gap filler 
        capability and therefore cannot fulfill the role of LCS.

    The Navy and LCS Program Office have partnered with the Coast Guard 
Deepwater program to share useful information, identify risk 
mitigations to new technology, and to ensure commonality where it is 
practicable and cost effective (e.g., common 57mm gun, common air 
search radar, and associated crew training programs).

           OHIO-CLASS BALLISTIC MISSILE SUBMARINE REPLACEMENT

    36. Senator McCain. Admiral McCullough, funding for development of 
the Ohio-class ballistic missile submarine replacement is included in 
the Future Years Defense Program, with procurement of long lead 
material within the decade. However, the Navy's long-range shipbuilding 
plan does not include procurement funding required to replace the Ohio-
class ballistic missile submarines. What are the projected procurement 
costs for this strategic program, and how does the Navy propose that it 
be funded?
    Admiral McCullough. The Navy is working to define the initial 
capabilities for the Sea-Based Strategic Deterrent, which will describe 
the attributes required for strategic deterrence influence for the 
follow-on capability to the Ohio-class SSBN. This capability analysis 
will support an AoA planned to commence in fiscal year 2009. The 
Shipbuilding and Conversion, Navy (SCN) estimated cost will be 
developed at the conclusion of the AoA in the fall of 2009.
    The Navy anticipates commencing R&D efforts for the follow-on to 
the Ohio-class SSBN in fiscal year 2010. However, since the Ohio-class 
SSBN replacement has neither been designed, nor the program developed, 
any cost estimate for SCN at this time would be premature.

       SEA BASING AND THE MARITIME PREPOSITIONING FORCE (FUTURE)

    37. Senator McCain. Admiral McCullough, how does the Navy intend to 
man and equip the large deck amphibious ships included in the Maritime 
Prepositioning Force Future, and what warfighting role is planned for 
these ships in amphibious assault operations?
    Admiral McCullough. The CDD for the MPF-F large deck amphibious 
ships has not yet been finalized. One option being considered calls for 
the MPF-F large deck aviation ships to be manned and operated by a MSC 
civilian crew while in a prepositioned status. MSC crews would be 
augmented by Active Duty Navy/Marine Corps and civilian contractor 
personnel who are charged with maintaining the prepositioned equipment 
and certain ship systems.
    Once operationalized, the MSC crew will be augmented by Navy and 
Marine Corps personnel to fully man required functions to employ forces 
ashore, such as the air department, ordnance department, combat 
information center, and ship's company. MSC crews would continue to 
provide non-warfighting support in propulsion, ship auxiliaries, and 
housekeeping.
    Excluding the self defense systems except crew served weapons the 
MPF-F LHA(R)s will be identical (with fact of life changes) to the 
legacy design.
    The MPF-F big decks, as part of the MPF-F, will deliver the 
Vertical Assault element of a reinforcing Third Marine Expeditionary 
Brigade (MEB) to complement the two MEBs delivered by Assault Echelon 
shipping in an MCO. MPF-F's big decks will also provide a substantial 
contribution to the sustainment of forces operating ashore by creating 
an air base at sea to generate ample sorties for air delivery of 
supplies and support of aircraft maintenance.

    38. Senator McCain. Admiral McCullough, has the Navy established 
capstone requirements to provide for defense of the sea-base ships, 
which by themselves lack the self-defense and damage control 
capabilities of amphibious warships?
    Admiral McCullough. A Capstone System Threat Assessment (ONI-CTA-
003-06) was completed in May 2006. Additionally, on 15 January 2008 the 
Joint Staff for Intelligence (J-2) and Defense Intelligence Agency 
(DIA) certified concurrence with the assessed threat as laid out in the 
MPF-F Capability Development Document's threat section. The assessments 
identify potential, projected, and technologically feasible threats to 
MPF-F and will be used as the basis for threat delineation. It is 
anticipated that the primary threats shall be from aircraft, ships, 
submarines, coastal defense units armed with anti-ship cruise missiles, 
theater ballistic anti-ship surface-to-surface missiles, and air-, 
ship-, and submarine-launched mines. Secondary, but significant, 
threats also come from submarine-launched torpedoes; tactical air-to-
surface missiles; other ordnance carried by sea- and land-based 
aircraft (fixed and rotary-wing); chemical, biological, and nuclear 
weapons; and in the future, directed energy weapons. When operating in 
the littoral environment, additional threats may be encountered from 
coastal artillery, multiple rocket launchers, small boats, and atypical 
sources such as torpedoes from coastal defense sites. A tertiary threat 
will include preemptive attacks or covert action from Special 
Operations Forces, combat divers and terrorists. Command, control, and 
communications (C3) electronic attack and electronic support systems 
may support the weapons threats.
    An MPF-F program-sponsored Sea Shield analysis was conducted for an 
approved MCO scenario. The scenario used an approved Multi-Service 
Force Deployment (MSFD) document for 2012 with friendly and threat 
capabilities extrapolated out to 2024. MPF-F was included in the force 
laydown operating from a sea base and delivering a MEB ashore from over 
the horizon. The Navy's Seabasing and Sea Shield pillars, Marine Corps 
Combat Development Command's Seabasing Integration Division, Naval Sea 
Systems Command, elements of the Joint Staff, and OSD's Program 
Analysis and Evaluation Branch participated in the development of the 
analysis. While operating in a threat environment, MPF-F will be 
protected by other Naval Sea Shield and/or other Joint or Combined 
forces commensurate with the threat. The analysis showed that an 
appropriate level of Sea Shield was attained to protect the MPF-F.

                          LITTORAL COMBAT SHIP

    39. Senator McCain. Admiral McCullough, the two versions of the LCS 
are very different, yet reportedly both meet Navy requirements. The 
Navy has previously stated the intent to gain efficiencies in 
construction and lifecycle by conducting a downselect once these ships' 
capabilities have been fully tested. What is the current Navy's plan 
for downselecting to a single design and opening up competition for 
construction?
    Admiral McCullough. The acquisition strategy for fiscal year 2010 
and out-year ships is under Navy review. OSD will conduct a Milestone B 
prior to fiscal year 2010 procurement. The Navy and OSD will consider 
the questions of down-selecting seaframes and the transition to full 
and open competition as part of the fiscal year 2010 acquisition 
strategy deliberations.

    40. Senator McCain. Admiral McCullough, what is the Navy's current 
estimate for follow ship costs on the program, and how is the Navy 
leveraging its plan to build a large number (55) of these ships to 
drive these costs down?
    Admiral McCullough. The statutory cost cap for LCS is $460 million 
per ship. However, execution within that cost cap will be a challenge 
as this estimate was based on its applicability to the fifth and sixth 
ships of the class and on two ships being appropriated in fiscal year 
2008. This procurement plan would have allowed increased sharing of 
some program costs between seaframes.
    The Navy believes that additional design maturity, production 
progress on LCS-1 and 2, and a competitive contract award between 
incumbent suppliers will enable the use of fixed-price incentive terms 
for the fiscal year 2008 ship appropriated by Congress and the two 
fiscal year 2009 ships that the Navy is requesting.
    When these first two ships are delivered, the Navy will be able to 
better evaluate their costs and capabilities, and to make decisions 
regarding the best manner to procure the remainder of the class. The 
acquisition strategy for fiscal year 2010 and outyear ships has not yet 
been formulated. OSD will conduct a Milestone B prior to fiscal year 
2010 procurement. The Navy and OSD will consider the questions of 
single seaframe assessment and the transition to full and open 
competition.

                       DDG-1000 DESTROYER PROGRAM

    41. Senator McCain. Admiral McCullough, the committee has strongly 
supported the DDG-1000 Destroyer, and views it as a critical capability 
for the future Navy. When considering that greater than $5 billion has 
been invested in new technologies for this ship, it's difficult to 
understand how the Navy has determined that a seven-ship program is the 
right size for the dollars invested and the missions envisioned for the 
class. How many DDG-1000 Destroyers are needed to meet the Marine Corps 
requirement for naval gunfire support in support of MCOs?
    Admiral McCullough. The Navy requires seven multi-mission DDG-1000s 
to support MCOs and to maintain presence in forward operating areas to 
support the warfighting needs of the combatant commanders, including 
meeting Marine Corps naval gunfire support. U.S. Marine Corps fire 
support requirements are specifically addressed with DDG-1000 Advanced 
Gun System and its Long-Range Land Attack Projectile which will meet 90 
percent of the Marine Corps' call for fires requirement within 5 
minutes.

    42. Senator McCain. Admiral McCullough, what are the accompanying 
assumptions regarding the availability of DDG-1000 ships to meet this 
mission, when accounting for depot maintenance and other employment 
factors?
    Admiral McCullough. The requirement for seven DDG-1000 ships in the 
Navy's Annual Long-Range Plan for Construction of Naval Vessels for 
fiscal year 2009 was based on analysis that included the following 
assumptions: intermediate and depot level maintenance periods and 
availability timelines, DDG-1000 employment across the globe, potential 
warfighting requirements, affordability in filling the Naval Fires 
warfighting gap, and acceptable risks.

    [Whereupon, at 3:56 p.m., the subcommittee adjourned.]

                                 
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