[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]




                         [H.A.S.C. No. 111-129]

                                HEARING

                                   ON
 
                   NATIONAL DEFENSE AUTHORIZATION ACT

                          FOR FISCAL YEAR 2011

                                  AND

              OVERSIGHT OF PREVIOUSLY AUTHORIZED PROGRAMS

                               BEFORE THE

                      COMMITTEE ON ARMED SERVICES

                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED ELEVENTH CONGRESS

                             SECOND SESSION

                               __________

         SEAPOWER AND EXPEDITIONARY FORCES SUBCOMMITTEE HEARING

                                   ON

  BUDGET REQUEST FOR DEPARTMENT OF THE NAVY SHIPBUILDING ACQUISITION 
                                PROGRAMS

                               __________

                              HEARING HELD
                             MARCH 3, 2010

                                     
[GRAPHIC] [TIFF OMITTED] 

                                     


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             SEAPOWER AND EXPEDITIONARY FORCES SUBCOMMITTEE

                   GENE TAYLOR, Mississippi, Chairman
SOLOMON P. ORTIZ, Texas              W. TODD AKIN, Missouri
JAMES R. LANGEVIN, Rhode Island      ROB WITTMAN, Virginia
RICK LARSEN, Washington              ROSCOE G. BARTLETT, Maryland
BRAD ELLSWORTH, Indiana              J. RANDY FORBES, Virginia
JOE COURTNEY, Connecticut            DUNCAN HUNTER, California
JOE SESTAK, Pennsylvania             MIKE COFFMAN, Colorado
GLENN NYE, Virginia                  THOMAS J. ROONEY, Florida
CHELLIE PINGREE, Maine
ERIC J.J. MASSA, New York
                  Will Ebbs, Professional Staff Member
               Jenness Simler, Professional Staff Member
                  Elizabeth Drummond, Staff Assistant


                            C O N T E N T S

                              ----------                              

                     CHRONOLOGICAL LIST OF HEARINGS
                                  2010

                                                                   Page

Hearing:

Wednesday, March 3, 2010, Fiscal Year 2011 National Defense 
  Authorization Act--Budget Request for Department of the Navy 
  Shipbuilding Acquisition Programs..............................     1

Appendix:

Wednesday, March 3, 2010.........................................    51
                              ----------                              

                        WEDNESDAY, MARCH 3, 2010
FISCAL YEAR 2011 NATIONAL DEFENSE AUTHORIZATION ACT--BUDGET REQUEST FOR 
        DEPARTMENT OF THE NAVY SHIPBUILDING ACQUISITION PROGRAMS
              STATEMENTS PRESENTED BY MEMBERS OF CONGRESS

Akin, Hon. W. Todd, a Representative from Missouri, Ranking 
  Member, Seapower and Expeditionary Forces Subcommittee.........     3
Taylor, Hon. Gene, a Representative from Mississippi, Chairman, 
  Seapower and Expeditionary Forces Subcommittee.................     1

                               WITNESSES

Blake, Vice Adm. John Terence, USN, Deputy Chief of Naval 
  Operations for Integration of Capabilities and Resources.......     7
Flynn, Lt. Gen. George J., USMC, Deputy Commandant, Combat 
  Development and Integration, and Commanding General, Marine 
  Corps Combat Development Command...............................     9
Heebner, David K., Executive Vice President, Marine Systems, 
  General Dynamics Corporation...................................    34
Petters, C. Michael, Corporate Vice President and President, 
  Northrop Grumman Shipbuilding..................................    32
Stackley, Hon. Sean J., Assistant Secretary of the Navy for 
  Research, Development and Acquisition..........................     4

                                APPENDIX

Prepared Statements:

    Akin, Hon. W. Todd...........................................    59
    Heebner, David K.............................................    91
    Petters, C. Michael..........................................    75
    Stackley, Hon. Sean J., joint with Vice Adm. John Terence 
      Blake and Lt. Gen. George J. Flynn.........................    61
    Taylor, Hon. Gene............................................    55

Documents Submitted for the Record:

    [There were no Documents submitted.]
Witness Responses to Questions Asked During the Hearing:

    Mr. Taylor...................................................   109

Questions Submitted by Members Post Hearing:

    [There were no Questions submitted post hearing.]
FISCAL YEAR 2011 NATIONAL DEFENSE AUTHORIZATION ACT--BUDGET REQUEST FOR 
        DEPARTMENT OF THE NAVY SHIPBUILDING ACQUISITION PROGRAMS

                              ----------                              

                  House of Representatives,
                       Committee on Armed Services,
            Seapower and Expeditionary Forces Subcommittee,
                          Washington, DC, Wednesday, March 3, 2010.
    The subcommittee met, pursuant to call, at 2:35 p.m., in 
room HVC-210, Capitol Visitor Center, Hon. Gene Taylor 
(chairman of the subcommittee) presiding.

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

    Mr. Taylor. The hearing will come to order.
    Good afternoon, and I want to thank you all for coming. I 
apologize for the delay in the start, but we had some votes on 
the House floor. Today the subcommittee meets in open session 
to receive testimony from the Department of the Navy's 
witnesses on the shipbuilding budget request for the fiscal 
year and the proposed shipbuilding plan for the next 30 years.
    Because the shipbuilding plan has such a large effect on 
the shipbuilding industrial base, the subcommittee has 
requested that the leaders of our two largest shipyards appear 
to discuss how their plan in their view affects the industrial 
base and if they are willing to recommend changes to Congress 
on ways to achieve the goals of the shipbuilding plan in a more 
cost-effective manner.
    First, I would like to make some observations on the 
shipbuilding plan. Some of you may remember a few years ago I 
referred to the shipbuilding plan of the Navy as pure fantasy. 
Shipbuilding plans in the past have been full of unrealistic 
assumptions about the cost of ships and unrealistic assumptions 
on the amount of money the Navy would receive from the 
Department of Defense to buy those ships.
    Then realistic portions of the plan always started just 
beyond the five-year procurement plan because the Navy was not 
obligated to justify its assumptions on cost and budget in the 
past five years. Today I will make a slightly different 
observation.
    The plan submitted by the Navy this year is not pure 
fantasy as in years past, but it is possibly overly optimistic. 
It is very optimistic. The plan as submitted by the Navy, if 
funded and if executed within that funding, would restore the 
Navy fleet above 300 ships by 2018; peak at 320 ships in the 
year 2024; but return to a fleet size in the 280s by the year 
2032.
    The plan would maintain aircraft carriers at levels of 11, 
in some years 12. The plan would not meet the Marine Corps 
requirement of 38 amphibious assault ships but would hover 
around the 33 ships the Navy and Marine Corps have stated is 
the minimum number of ships that would meet an acceptable level 
of risk. The attack submarine force goes below the requirement 
of 48 boats in the year 2024, and stays below that requirement 
through 2040, with a low of 39 boats in the year 2030.
    Although it is very clear that the Navy has worked harder 
on removing fantasy from the plan, it does not build the number 
of ships at a satisfactory rate to restore our Navy to the full 
capability that I believe is necessary. The Navy was clearly 
limited in the development of this plan by the amount of 
funding for ship construction they were provided by the 
Department of Defense. Some relatively simple arithmetic 
indicates that the Navy really needed about $10 billion more 
per ship than was provided.
    Leaving aside the issue of underfunding, the shipbuilding 
plan is troubling in a few areas. First, the procurement of 
amphibious assault ships is occurring in an inefficient manner. 
The ship construction starts are not spaced to optimize the 
workforce or its supply chain. You just cannot stop and start 
shipbuilding programs and expect any cost savings in quantity 
buys or in workforce familiarity. I know that the Navy knows 
this, and certainly the one official in the Navy who knows it 
best is sitting at our witness table today.
    If the Navy has still decided to place amphibious ships in 
a plan in years which ensure extra cost due to inefficiency, 
this goes back to my previous point that the Navy really needed 
about $10 billion more per year. If that were the only issue 
with a long-term plan, it would probably be fixable, but the 
real issue facing the Navy is the cost to recapitalize the 
Ohio-class submarine. Billions in development costs followed by 
12 years each costing anywhere from $6 billion to a high of 
$8.5 billion will crush the rest of the Navy shipbuilding 
account if the Navy is required to pay the bill.
    The submitted plan assumes the Navy will pay all the costs 
for these boats and has a very optimistic assumption that extra 
funding will be available to cover some of the costs. During 
the years that these submarines are funded the rest of the Navy 
shipbuilding might be on life support. Minimal levels of 
shipbuilding construction will occur during these years 
according to this plan, and the Navy will lose over 30 ships 
from the overall force from 2024 to 2034, and that is 
optimistic.
    I have been around here long enough to know that the 
reality is increased funding will likely not be available, and 
even more significant cuts in the surface fleet could occur.
    On the positive side, the Navy 5-year plan is better than 
any plan that has been submitted in a long time. Fifty new 
ships, an average of 10 per year, is an achievable goal with 
projected funding. The problem is that the Navy is 
decommissioning ships as fast and, in the case of this year, 
faster than the Congress can fund them. And the overall numbers 
don't start to increase until 2016.
    I expect our witnesses to discuss today why this has 
happened and provide this committee with options to retain some 
of these vessels in service while new ships are built to 
replace them.
    Joining us today on our first panel, the Honorable Sean 
Stackley, Assistant Secretary of the Navy for Research, 
Development and Acquisition; Vice Admiral Terry Blake, Deputy 
Chief of Naval Operations for the Integration of Resources and 
Capabilities; Lieutenant General George Flynn, Commander, 
Marine Corps Combat Development Command, and Deputy Commandant 
for the Combat Development and Integration.
    A second panel will consist of Mr. Mike Petters, Corporate 
Vice President and President of Northrop Grumman Shipbuilding; 
and Mr. Dave Heebner, Executive Vice President, Marine Systems, 
General Dynamics Corporation.
    I want to thank our witnesses for attending. Again, I 
apologize for the delayed start.
    I now turn to the gentleman from Missouri, Mr. Akin, for 
any opening statement he has.
    [The prepared statement of Mr. Taylor can be found in the 
Appendix on page 55.]

STATEMENT OF HON. W. TODD AKIN, A REPRESENTATIVE FROM MISSOURI, 
 RANKING MEMBER, SEAPOWER AND EXPEDITIONARY FORCES SUBCOMMITTEE

    Mr. Akin. Thank you, Mr. Chairman.
    Secretary Stackley, Admiral Blake and General Flynn, good 
afternoon and welcome, and we look forward to your testimony 
today.
    The President's fiscal year 2011 defense budget for the 
Department of the Navy represents $179 billion for 
discretionary and war funding. This represents an increase of 
$52 billion over fiscal year 2010 enactment levels. The news 
was even better for shipbuilding, which saw an increase of $1.9 
billion over fiscal year 2010 enactment levels. This is clearly 
a sign that someone in the Department has gotten a message 
about the value that our maritime forces bring to our current 
and future security.
    I congratulate you and thank you for your advocacy for Navy 
and the Marine Corps personnel and programs.
    With that said, I wish all the news were positive. I have 
major concerns, particularly with the lack of future planning 
at the DOD [Department of Defense] level and our Navy's out-
year budgets. The Navy's long-term shipbuilding plan is based 
on the 113-ship force structure originally set forth in the 
2005 Naval Force Structure Assessment, as well as decisions 
made during the 2010 Quadrennial Defense Review [QDR], yet the 
2005 Naval Force Structure Assessment did not anticipate the 
Navy would be given responsibility for regional ballistic 
missile defense, and the QDR appears to have largely focused on 
the capabilities required for the near to midterm, not on the 
capabilities required for the long term to deter and defeat a 
near-peer competitor.
    Indeed, long-range shipbuilding plan explicitly states in 
summary, then, the QDR has resulted in revised mission 
priorities to better focus the Department on the war we are in. 
I am concerned that this emphasis on developing capabilities 
for today's conflicts and assessing risks based in today's 
operating environments puts our future force in jeopardy.
    Lacking better guidance from the Office of the Secretary of 
Defense, the Navy and the Marine Corps have offered their best 
judgment about a reasonable ship construction profile in the 
form of this 30-year shipbuilding plan. It is superior to many 
previous plans in several ways, but the shipbuilding plan 
acknowledges that a new force structure assessment will have to 
be completed, which causes me to question whether or not we can 
rely on this latest plan as a yardstick for assessing the 
service's capital building requirements.
    Furthermore, even though QDR states that U.S. forces must 
be able to deter, defend against and defeat aggression in anti-
access environments, the long-term shipbuilding plan does not 
appear to be driven by this goal. Instead, in the period that 
the Navy considers most likely to be characterized by a near-
peer competitor with anti-access capabilities, our forces fall 
to their lowest levels. We can't wait until that period to 
attempt to recapitalize our service combatants, attack and 
guided missile submarines and amphibious forces. If 
shipbuilding moves too slow, it will be too late.
    On a related issue, I am not convinced that this 
shipbuilding plan adequately addresses the needs for ballistic 
missile defense capable ships. Supposedly this will be 
considered as part of the new force structure assessment. I 
hope that the assessment does not shortchange the other 
missions that our combatant commanders have for these ships or 
destroyers, particularly our BMD [Ballistic Missile Defense] 
destroyers, who are already in high demand, before the 
President announced his decision to use Navy assets to defend 
Europe rather than the ground-based system.
    The Navy is being asked to support a new mission but has 
not been given new resources necessary to succeed. Today I will 
be interested in your perspectives on the hard choices that 
were made in preparing this shipbuilding plan and whether or 
not you believe the shipbuilding plan meets the Navy in a 
position of strength--puts the Navy in a position of strength 
to face a near-peer competitor in the far term.
    On a separate note, I know our witnesses realize that I am 
keenly interested in our Strike Fighter programs. Normally I 
wouldn't raise this subject in a shipbuilding hearing, but 
today I hope you will have a chance to discuss your ship 
integration plans for the Joint Strike Fighter. Too often we 
overlook the requirements being levied on our ships by the 
introduction of this fifth-generation fighter.
    Thank you again for being here today. I look forward to 
your testimony.
    And I yield back Mr. Chairman.
    [The prepared statement of Mr. Akin can be found in the 
Appendix on page 59.]
    Mr. Taylor. The Chair thanks the gentleman from Missouri.
    The Chair now recognizes Secretary Stackley.

STATEMENT OF HON. SEAN J. STACKLEY, ASSISTANT SECRETARY OF THE 
         NAVY FOR RESEARCH, DEVELOPMENT AND ACQUISITION

    Secretary Stackley. Thank you, Mr. Chairman, Representative 
Akin, distinguished members of the subcommittee. Thank you for 
the opportunity to appear before you today to address Navy 
shipbuilding. And thank you for your steadfast support to 
provide and maintain the Navy and, more importantly, for your 
commitment to our sailors and Marines.
    With the permission of the committee, I would propose to 
keep my opening remarks brief and submit a formal, more 
detailed statement for the record.
    Mr. Taylor. Without objection.
    Secretary Stackley. Today we are a battle force of 286 
ships supporting global operations with arguably greater reach, 
greater command of the seas than any navies at any point in 
history. And while we take pride in knowing that our ships, 
aircraft and weapon systems are unmatched at sea, as formidable 
as our technology may be, it is the skill, dedication and 
resourcefulness of our sailors and Marines that gives us our 
asymmetric advantage. And it is our responsibility to place in 
the hands of these young men and women the tools that they need 
to conduct our Nation's business under the most stressing 
conditions imaginable to win the fight we are in. And two, it 
is our responsibility to provide the capabilities and 
capacities to win the next fight.
    The Chief of Naval Operations [CNO] and the Commandant of 
the Marine Corps have outlined those capabilities and 
capacities in what has been referred to as the 313-ship Navy. 
And to this end, the fiscal year 2011 budget request includes 
funding for nine ships, a modest but important step towards 
meeting the CNO's and Commandant's requirements; important, 
because this year we increased Virginia-class fast-attack 
submarine procurement to two boats per year.
    In 2005, then CNO Mullen challenged the program to put the 
Navy in a position to be able to buy two boats for $4 billion 
in 2012. And this year, with Congress's support, two for four 
in 2012 has become two for four in 2011. Important because we 
increased DDG-51 production to two ships in 2011, which 
alongside the Aegis Modernization Program, adds both capability 
and capacity to our fleet's sea-based missile defense. The 
success of the Aegis system against ballistic missiles, as 
demonstrated through at-sea testing, provides a solid 
foundation for this mission. Important because with a 
competitive down select to a single design for the Littoral 
Combat Ship [LCS] later this year, our 2011 budget request 
sustains an efficient build rate of two LCS ships per year for 
the winning shipyard.
    Congress's support for this revised acquisition strategy 
has been critical to the Navy's efforts to bring much needed 
stability and to improve affordability on this vital program. 
Important, because this year's--with this year's request, we 
significantly increase our amphibious lift capability with 
procurement of an LHA-6 amphibious assault ship, and our 
logistics lift capability with procurement of a mobile landing 
platform and a joint high-speed vessel. Additionally, a second 
joint high-speed vessel has funded another procurement army for 
a total of 10 ships in fiscal year 2011.
    As we look to the near term, the Navy shipbuilding plan 
averages 10 ships per year while balancing requirements, 
affordability and industrial-based considerations in the next 
decade. We have placed aircraft carrier procurement on a 5-year 
cycle, which will ensure our ability to sustain an 11-carrier 
force from the delivery of Gerald R. Ford in 2015 through the 
year 2040. We sustain submarine construction at two boats per 
year.
    We have cancelled the CGX [Next Generation Cruiser] program 
because of technical risk and affordability concerns, and we 
will continue DDG-51 construction, leveraging a stable and 
mature infrastructure while increasing the ship's air and 
missile defense capabilities through spiral upgrades to the 
weapons and sensor suites.
    And we have restructured the Maritime Prepositioning Force 
to provide enhanced yet affordable sea-basing capabilities.
    In the second half of this decade, we will need to proceed 
with the recapitalization of three major ship programs. We plan 
to commence procurement of the replacement for the LSD-41 class 
amphibious ships, following definition of lift requirements for 
this new class. We look to accelerate introduction of our next 
fleet oiler. T-AO(X) [cargo ship] will bring greater efficiency 
and modern commercial design to our refueling at sea 
capabilities while also providing critical stability to an 
important sector of our industrial base.
    And most significantly, we will procure the lead ship of 
the Ohio-class replacement, SSBN(X), in 2019.
    The Navy's long-range shipbuilding plan fairly outlines the 
challenges we confront today and for the long term in meeting 
our Navy's force structure requirements; operational, 
technical, manufacturing and fiscal challenges all come to bear 
as we impose upon the plan greater cost realism and budget 
realism. In the most pragmatic terms in balancing requirements, 
risk, and realistic budgets, affordability controls our 
numbers.
    For different reasons, we face the same imperative that 
President Franklin Roosevelt faced when he addressed America as 
the arsenal of democracy. He stated, ``All of our present 
efforts are not enough; we must have more ships, more guns, 
more planes, and this can be accomplished only if we discard 
the notion of business as usual.''
    The challenge in Roosevelt's time was to increase 
production at any cost. The challenge in our time is to 
increase production at an affordable cost. And to this end, we 
are focusing on bringing stability to the shipbuilding program, 
adjusting our sights to find the affordable 80 percent solution 
when 80 percent meets the needs, working across our systems 
commands to improve the quality of our cost and schedule 
estimates that inform our requirements decisions, placing 
greater emphasis on competition and fixed price contracts. We 
are continuing to improve our ability to affordably deliver 
combat capability to the fleet through open architecture. We 
are clamping down on contract design changes, and we have 
cancelled high-risk programs.
    Our goals for modernizing today's force and recapitalizing 
the fleet affordably cannot be accomplished without strong 
performance by our industry partners. And so it is important 
that we have a clear understanding of the issues affecting 
industry's performance. So we will be building upon past 
studies this year to assess our shipyards, the vendor base and 
the design industrial base with an eye towards capability, 
capacity and productivity requirements needed by our Navy near 
term and far term.
    In the end, industry must perform. We will work to 
benchmark performance, to identify where improvements are 
necessary, to provide the necessary incentives for capital 
investments where warranted, and to reward sustained strong 
performance with favorable terms and conditions.
    And finally, to meet our objectives, we must be smart 
buyers. We have gone far in the course of the past year to 
reverse the downsizing trend in the acquisition workforce. From 
supervisors of shipbuilding to the warfare centers to the 
SYSCOMs [System Commanders] and program executive offices, we 
have added professionals in the fields of systems engineering, 
manufacturing, program management contracts, and test and 
evaluation.
    Of course, we have much farther to go. The objective is not 
merely to increase the workforce but to restore core 
competencies that have slipped loose over the course of a 
decade and a half of downsizing.
    In sum, the Department is committed to building the fleet 
required to support the National Defense Strategy, to which the 
fiscal year 2011 budget request addresses the near-term 
capability needs while also laying the foundation for long-term 
requirements. Ultimately, we recognize that as we balance 
requirements, affordability and industrial-based 
considerations, it is vital that we, Navy and industry, improve 
affordability within our programs in order to achieve a balance 
that gives greater favor to requirements in the industrial 
base.
    Mr. Chairman, thank you for the opportunity to appear 
before you today, and I look forward to your questions.
    [The joint prepared statement of Secretary Stackley, 
Admiral Blake, and General Flynn can be found in the Appendix 
on page 61.]
    Mr. Taylor. The Chair thanks the Secretary. I read your 
statement last night. I thought it was one of the best I have 
ever seen.
    The Chair now recognizes Vice Admiral Blake.

STATEMENT OF VICE ADM. JOHN TERENCE BLAKE, USN, DEPUTY CHIEF OF 
 NAVAL OPERATIONS FOR INTEGRATION OF CAPABILITIES AND RESOURCES

    Admiral Blake. Chairman Taylor, Congressman Akin, members 
of the committee, it is my honor to appear before you today 
with Mr. Stackley and General Flynn to discuss the Navy force 
structure and shipbuilding.
    Forty-three percent of our fleet is deployed today carrying 
out our maritime strategy. They are projecting power into 
Afghanistan, building partnerships in Africa, delivering relief 
in Haiti and providing ballistic missile defense in the Arabian 
Gulf, Western Pacific and Eastern Mediterranean.
    We are a maritime nation, and our national security depends 
upon a Navy that can keep the sea lanes free, deter aggression, 
safeguard our sources of energy, protect the interest of our 
citizens at home and abroad and reassure our friends and 
allies. To do this, our Navy must maintain its global reach and 
persistent presence while always being ready to answer the call 
for our warfighting capacity wherever and whenever it is 
needed.
    With this budget, the Navy will continue to maintain the 
maritime security of our forces, sustain a strong American 
shipbuilding base and ensure our capacity for rapid global 
response. In this year's budget, we plan to procure 9 ships and 
an average of 10 ships per year across the FYDP [Future Years 
Defense Plan].
    To achieve this shipbuilding level, hard choices are 
required across the Navy program. These choices reflect our 
commitment to a fleet that is shaped and sized to deal with 
current and future threats. The fiscal year 2011 shipbuilding 
program is based upon the most cost-effective decisions to 
achieve the most capable force. Across the next 5 years, the 
Navy is committed to an average of $14.5 billion per year to 
build an average of 10 ships a year. The challenge for us is in 
procuring the required mix of ships with the right warfighting 
capabilities for an affordable cost. To meet this challenge, 
our shipbuilding rate will depend upon aggressive cost control 
which will require both the Navy and the shipbuilding industry 
to work together in partnership.
    Demand for the ballistic missile defense, or BMD, capable 
ships continues to increase globally. To support this demand, 
we will continue to modernize the Arleigh Burke-class guided 
missile destroyers to gain BMD capability commencing in fiscal 
year 2010. After exhaustive analysis, we intend to spiral the 
DDG-51 program to the DDG-51 Flight III. This will allow us to 
develop air and missile defense radar and install it on a DDG-
51 hull. The upgraded destroyer is envisioned to be procured in 
fiscal year 2016. The DDG-51 Flight IIA procurement will 
restart the award for the contract with DDG-113 this summer. 
New construction of DDG-51 IIA destroyers will deliver 
integrated air and missile defense capabilities in new 
construction ships for the first time, providing critical BMD 
capacity for the fleet. Our amphibious warfare ships are key 
enablers in providing forward distributed presence to support 
missions ranging from theater security cooperation and 
humanitarian assistance to conventional deterrence in assuring 
access for the Joint Force.
    The Chief of Naval Operations and the Commandant of the 
Marine Corps have determined that with risk a minimum of 33 
assault echelon amphibious ships are necessary to support 
Marine Corps lift requirements for forceable entry operations. 
The Navy remains committed to procure 55 Littoral Combat Ships.
    The LCS fills warfighter gaps in support of maintaining 
dominance in the littorals and strategic chokepoints around the 
world. USS Freedom LCS-1 is currently deployed. Last week the 
ship, outfitted with the surface warfare mission package, 
achieved its first drug seizure, recovering more than a quarter 
ton of cocaine. I am convinced that both the LCS ship types--
that both the LCS ship types meet our warfighting requirements 
and fully support the decision to down select to a single hull. 
The Ohio-class ballistic missile submarines will start retiring 
in 2027 after 40 years of service life. To ensure there is no 
gap in our strategic deterrent capability we will need to start 
procuring the Ohio-class replacement in 2019. We are making the 
appropriate investment in research and development now which is 
essential for the delivery of our reliable survivable and 
adaptable ballistic missile submarine intended to operate until 
around 2080. The Virginia-class submarine is a multi-mission 
platform that fulfills a full spectrum of requirements. Now in 
its 13th year of construction, the Virginia-class program is 
demonstrating that this critical capability can be delivered 
affordably and on time. In fiscal year 2011 we will increase 
our build rate to two submarines per year.
    Navy remains committed to an 11-carrier force for the next 
three decades, which is necessary to ensure that we can respond 
to national crisis within the current prescribed timeframes. 
Our carrier force provides the Nation a unique ability to 
overcome political and geographic barriers for all missions and 
project power ashore without the need for host nation ports and 
airfields. The Navy's fiscal year 2011 long-range shipbuilding 
plan addresses the requirements to support the National Defense 
Strategy, the maritime strategy and the 2010 Quadrennial 
Defense Review [QDR].
    I ask for your support for our fiscal year 2011 budget 
request and thank you for all you do to make the United States 
Navy a global force for today and the future.
    That concludes my remarks, sir.
    [The joint prepared statement of Admiral Blake, Secretary 
Stackley, and General Flynn can be found in the Appendix on 
page 61.]
    Mr. Taylor. Thank you, Vice Admiral Blake.
    The Chair now recognizes Lieutenant General Flynn.

STATEMENT OF LT. GEN. GEORGE J. FLYNN, USMC, DEPUTY COMMANDANT, 
  COMBAT DEVELOPMENT AND INTEGRATION, AND COMMANDING GENERAL, 
            MARINE CORPS COMBAT DEVELOPMENT COMMAND

    General Flynn. Chairman Taylor, Representative Akin and 
distinguished members of the subcommittee, first, thank you for 
your support of all our service men and women and, in 
particular, for your support of our Marines and sailors.
    I appreciate the opportunity to appear today to address how 
the Nation's sea-based expeditionary force views its role 
within the Joint Force and the requirements needed to bring 
these unique and essential capabilities to the warfighter.
    I am also honored to be here today with the rest of the 
Naval team, Secretary Stackley and Vice Admiral Blake.
    As a maritime nation, naval forces, Navy and Marine Corps 
forces working together, use the sea as maneuver space and are 
a key component of our Nation's capability to protect and 
advance our interests around the globe. Today the key 
characteristics of military forces most valued in this ever-
changing security environment are versatility and adaptability. 
Since the beginning of this Nation, the Navy and Marine Corps 
have demonstrated these key attributes. In recent times, the 
amphibious withdrawal from Somalia in 1995; the projection of 
power from the sea to Afghanistan in 2001; several responses to 
natural disasters; and the Lebanon noncombat evacuation 
operation of 2006 have proven the value of our investment in 
these forces and their wide-ranging utility.
    Today your Marine Corps is once again demonstrating its 
versatility and adaptability. From Haiti to the Helmand 
province in Afghanistan, we are demonstrating our ability to 
respond across the full range of military operations and 
proving that we are truly no better friend and, if the 
situation requires, an adversary's worst enemy.
    As soldiers of the sea, our unique capabilities are enabled 
by the Navy's ability to provide force protection and 
amphibious and preposition lift. The linchpin of our ability to 
operate from the sea is our amphibious fleet. The requirement 
for amphibious ships that has been agreed to within the 
Department of the Navy is 38 ships. And in order to have a 
balanced and affordable shipbuilding program, we must be 
willing to accept risk down to 33 ships. This number gives you 
the capability needed for both steady state operations and the 
minimum number of ships needed to provide the Nation with a 
credible sea-based power projection capability of two brigades 
at an acceptable level of risk.
    The recent deployment of amphibious ships shows the utility 
of these platforms and their utilization. In January of this 
year, of the 31 amphibious ships in the current inventory, 9 
were conducting steady state operations; 7 responded to the 
disaster in Haiti; 9 were in maintenance; and 6 were available 
to respond to other missions.
    The key to the utility of our amphibious fleet is the 
versatility and flexibility built into the mix and design of 
the ships. We believe this is achieved by a balanced mix of 
platforms and integrated command and control, stalwart 
survivability and both air-and-surface connector capabilities. 
This is why we believe it is important to put the well deck 
back into our largest platform at the earliest opportunity. We 
also believe that adequately defining the requirement for the 
LSD(X), both as a ship and as part of the overall amphibious 
capability, is of vital importance to the overall flexibility 
and utility of the amphibious fleet.
    In an era of increasing access challenges, the ability to 
operate our expeditionary forces from a sea base is a required 
and valued tool in a joint warfighting tool kit. The minimum 
sea base requirements that are needed now are the ability to 
operate without a port, the ability to conduct selective 
offload, and the ability to conduct at-sea transfer of 
equipment. The original Maritime Prepositioning Force Program 
(Future) was to provide these capabilities along with organic 
command-and-control connectors, medical maintenance and 
building.
    The Maritime Prepositioning Force (Future) program in 
current vision is not affordable at present. Working with the 
Department and Navy leadership, we found a way to provide some 
of these capabilities at an affordable cost and thus 
capitalized on the investments already made in our legacy MPS 
[Maritime Prepositioning Ship] squadrons. Accordingly, we are 
going to add a mobile logistics platform and T-AKE platform to 
each of our squadrons. This will give us the capability to do 
the first three of these and envision capabilities of the sea 
base at an affordable cost.
    Again thank you for the opportunity to be here. I look 
forward to answering your questions.
    [The joint prepared statement of General Flynn, Secretary 
Stackley, and Admiral Blake can be found in the Appendix on 
page 61.]
    Mr. Taylor. The Chair thanks you very much, gentlemen.
    The Chair now recognizes the ranking member, Mr. Akin.
    Mr. Akin. Thank you, Mr. Chairman.
    I had a couple of different questions here. One was the 
result of a trip I took just a week or so ago. And I think that 
we had talked about being sensitive to the workforce and 
smoothing the workforce and trying to buy our ships in the most 
strategic way to keep our costs effective. I guess the question 
that came up was, particularly, we have I think a plan for 
building three MLPs [Maritime Landing Platforms] on, I believe, 
a 2-year set of centers, that would be 2011, 2013 and 2015. As 
we talked to people in the shipyard, they were saying it would 
be much, much better from a demanding of the work load, so you 
could keep an equal level of manning for building these ships, 
if they could be built on 1-year as opposed to 2-year centers. 
So I guess my first question is, is that something that throws 
the whole budget into chaos to do that, or is that something 
that, if we could get some reduction in cost, that that might 
be a possibility?
    Secretary Stackley. Let me first describe, we have the 
ability to move right into the first MLP in 2011 because of the 
advance work that had been done by NASSCO, the shipyard that 
has that contract. And so we have a nice dovetailed production 
plan following the T-AKE production moving into MLP.
    Traditionally--more than traditionally--the Navy has 
strived to provide a gap year between a lead ship and a first 
follow ship so that as you are building your first of class, if 
you run into design technical issues that need to be resolved, 
that you have more time to incorporate those corrections into 
the first follow ship. You described the one, I believe you 
described it as 1, 3, 5, one every other year. So, in fact, we 
do have another gap between the first follow ship and the third 
MLP. And that is, frankly, a concern with regards to the 
stability of the workforce at NASSCO.
    Of our major shipyards, NASSCO is the one that is having to 
manage the greatest gap in workload. We look at the MLP as 
providing a base workload for the shipyard, but we recognize 
that MLP alone is not sufficient workload for NASSCO to be able 
to maintain the level of performance that we are seeing today. 
So step one is, establish a base; step two is establish 
opportunities for NASSCO to compete for additional work.
    Mr. Akin. I guess my question was, if you took the ships 
scheduled in 2015 and moved it over to the 2012 spot, so you 
would have 2011, 2012, 2013 instead of 2011, 2013, 2015. That 
is assuming that they could do that without having to have a 
lot of modifications between 2011 and 2012 on the ship, I 
understand that.
    Secretary Stackley. Yes, sir. That becomes a trade between 
what is affordable inside of the budget in 2012, closing that 
gap year, which we do prefer to have a gap just to ensure that 
production--design is stable, production is off to a smooth run 
before you immediately start to bring in the first follow ship. 
And those are the competing considerations.
    Mr. Akin. From a finance point of view, does it throw the 
budgeting requirements off though as well by moving that? Is it 
something you have to pay for earlier in the plan?
    Secretary Stackley. It is about a half a billion dollar 
ship with certain assumptions, and the assumptions include that 
there is other work in the shipyard, and the three MLPs don't 
stand by themselves in that regard. So moving it from 2015 to 
2012 would be about half a billion dollars added in fiscal year 
2012.
    Mr. Akin. Thank you. That was the first question.
    The second is a little bit more general. And that is, as we 
take a look at the potential of near-peer competitor and a 
denial to access, as I took a look at specific areas of where 
our access would be denied, that is a ballistic kind of threat, 
a cruise type of threat or submarine kinds of threats, my 
concern was that it seemed that we had at least potentially 
some significant challenges in all three of those areas.
    And I guess my question, with large surface combatant force 
levels decreasing from a high of 96 down to a 60s and 70s kind 
of range; attack submarines from a high of 55 down to 39, with 
maybe sustained levels of 40; cruise missile submarines would 
be disappearing entirely. Recognizing those kinds of threats I 
guess I am curious whether, are we confident that this force 
could deter or defeat at low or moderate risk a near-peer 
competitor with that anti-access capability? I am thinking--I 
suppose you know what I am talking about. I am thinking of 
those charts of solid fuel missiles that we are not too good at 
stopping and certain wave skimmers that can dodge and weave a 
bit and increased range on submarines and things like that. 
Does it seem like there is a window here where we have to be a 
little concerned?
    Admiral Blake. Sir, if you look at it, several of the 
reasons which you just articulated are the reason why we went 
to two submarines per year for the Virginia class. It is also 
why we are accelerating our ballistic missile defense piece, 
not only on the Navy side, but General O'Reilly is also doing 
that on the ballistic missile agency side of the equation. And 
additionally, if you look at the entire spectrum----
    Mr. Akin. By the way, do they work on that IIA, or is that 
a Navy, or is that the air project?
    Admiral Blake. It is a IIA, sir. I deal with General 
O'Reilly from the BMD perspective on the Navy side, but then he 
also has his funding which he does.
    Mr. Akin. So do you do the IIA, or does he do the IIA, 
Standard Missile Block IIA?
    Admiral Blake. We do Standard Missiles Block II and Block 
III and the SM-3, sir. But they also do them. It is a shared 
line, if you will.
    Mr. Akin. Okay thank you.
    Admiral Blake. But to go back to the point, that was one of 
the reasons, as we truncated the DDG-1000 and went to the DDG-
51, was the fact that we wanted to get that ballistic missile 
defense [BMD] capability out there. And as I mentioned in my 
statement, with the 2016 ship, we are going to be putting out 
the first ship built from the ground up if you will that is 
going to be BMD capable. So our ships are, as you know, multi-
mission ships, and the idea was that we were going to deal with 
the anti-access piece, as you mentioned ASW [anti-submarine 
warfare] and BMW, and that is exactly how we are approaching 
it.
    Mr. Akin. I hear what you are saying. What you are saying 
is, you are wrapping up the submarines, and you are trying to 
wrap up the destroyers.
    Admiral Blake. Yes, sir. And we are.
    Mr. Akin. Right. The only thing is that your destroyer 
doesn't do you much good until you get that new higher-powered 
missile on it pretty much.
    Admiral Blake. Well, actually, sir, we are taking, if you 
will, sort of a three-pronged approach. We have got the Aegis 
system at sea, and we currently have 21 ships in the inventory 
that are capable of doing BMD. By the end of the FYDP, we will 
have 27 out there capable of doing it.
    So we are approaching it not only from new construction; we 
are also approaching it from ship sets. We are buying, if you 
will, BMD-capable ship sets which we then put on those--put on 
the ships that are currently in the fleet in order to make them 
BMD-capable. There are two varieties. One is called the 3.6; 
one is called the 4.0. And they give us varying capabilities. 
And the idea--and the third piece of it is that we are going to 
push out in fiscal year 2015 what we are calling Aegis Ashore. 
So we are going to have a piece out there, so it is going to 
be, if you will, a three-pronged approach. You will have Aegis 
Ashore; you will have the BMD piece on the ships that we 
currently have in the fleet, we will be upgrading them; and 
then you will start to deliver the new ships from the ground up 
starting in 2016.
    Mr. Akin. Okay. Thank you.
    At last, I couldn't resist this last little question here, 
Secretary Stackley. It is a little off topic maybe. But could 
you update me on the status of the F/A-18 multi-year effort? Do 
you think the 10 percent savings offered by Boeing was a good 
deal, first? And what is the timeline for entering into a 
multi-year contract? That is assuming that there is one. And 
why is it that the Secretary of Defense is not more eager to 
enter into the multi-year when it meets that 10 percent 
threshold that he mentioned in HASC [House Armed Services 
Committee]?
    Secretary Stackley. Let me start with the 10 percent 
savings, the question there. We do not have a priced proposal 
from Boeing that we can state with clarity that is 10 percent 
savings. What we have is a letter of commitment for a not-to-
exceed value that we will use to commence negotiations with a 
contractor. So we are starting off with a not-to-exceed value 
that is based on Boeing's estimate for single-year procurements 
level of savings. The Secretary of Defense is supporting us 
going forward with this because there is promise here. And so 
the Cost Assessment Program Evaluation Office is going to go 
through the required cost analysis to validate that in fact we 
can achieve at least the 10 percent savings that we have 
established here as the benchmark while we in parallel proceed 
with negotiation of the contract.
    So we are pushing both efforts in parallel, and the front 
end of those activities are common in terms of fact finding and 
pricing data, working closely with Boeing. And so I think we 
have got a lot of momentum in this area. We are working at an 
aggressive time line, but we are giving it our full emphasis 
and putting the first team on this.
    Mr. Akin. That is encouraging because it seemed like the 
last week or two ago, I heard that we were going to be fine for 
the March deadline, and all of a sudden that slides, and they 
are kind of going, what in the world is going on?
    Secretary Stackley. Well, we received the letter of 
commitment on the 22nd of February. And in order for the CAPE 
[Cost Assessment and Program Evaluation], the cost assessment 
group, to do a valid cost analysis to meet, frankly, the multi-
year statute, they need more than that amount of time to 
complete the analysis.
    Mr. Akin. I wish they had said that a couple weeks ago, but 
thank you. That is very straightforward.
    Thank you, Mr. Chairman.
    Mr. Taylor. The Chair thanks the gentleman from Missouri 
and now recognizes the gentleman from Washington State, Mr. 
Larsen.
    Mr. Larsen. Thank you, Mr. Chairman.
    Either for the Secretary or Admiral Blake, I want to give 
you a quick short tale of two populations of Boomers. In 2019, 
the Baby Boomers come flooding into the Social Security and 
Medicare systems. As a result of that, without other changes 
made in the structural budget of the Federal Government, we are 
going to see a large expansion of cost in the Social Security 
and Medicare system, again absent of any changes, that will 
consume, begin to consume over time larger and larger 
percentages of the entire Federal budget.
    That may sound very familiar to you, because it seems in 
2019, there is another tale of another set of boomers that come 
into the Navy's shipbuilding budget, and it will begin to 
consume larger and larger percentages of the Navy's 
shipbuilding budget at the expense, potentially, of other 
shipbuilding alternatives. I am on the Budget Committee, so I 
won't ask you to address what we are going to do about the 
first set of Boomers.
    The second set of boomers, I am very interested in hearing 
your opinions on how we are going to address this cost, 
marginal additional cost, in 2019, of this new class to replace 
the Ohio, given--now, I know you have a plan for it, but I am 
curious if you actually have received commitments from OSD 
[Office of the Secretary of Defense] and OMB [Office of 
Management and Budget] to advocate for the level of funding 
that you need, starting in 2015 and then eventually into 2019, 
to do what we want to do on destroyers and on aircraft and all 
the other lines in the Navy and on the Ohio-class replacements. 
And if we haven't received those commitments, how realistic can 
we assume the shipbuilding plan with regards to the Ohio-class 
replacement is going to be?
    Mr. Secretary.
    Secretary Stackley. Let me start with the construction of 
the 30-year plan that brings the boomer into the picture. In 
the past, in the past, the Navy had not included the cost for 
that program inside of the 30-year plan. This year, in doing 
that, it does a couple of things. It brings the problem front 
and center in terms of the pressures and the challenges that 
that program places on the total shipbuilding account. And we 
work very closely with OSD in determining, the best I can 
describe it is a notional top line because this is well beyond 
the FYDP, a notional top line for our shipbuilding account, as 
we start to march towards those years.
    And so what you see with regards to the total funding level 
for shipbuilding beyond the FYDP, that was coordinated with 
OSD, and it will continue to be revisited in each budget cycle 
as those years move inside the FYDP, while, in parallel, we 
also work the process of going from what we have today, which 
is an AOA [Analysis of Alternatives] under review at OSD, come 
through the nuclear posture review to continue to inform the 
requirements and then get into the actual requirements 
definition, the R&D [Research and Development] efforts that go 
from requirements to design and then ultimately to 
construction.
    Mr. Larsen. Admiral Blake, anything to add on that?
    Admiral Blake. I would just say, sir, the Department 
recognized the fact that, when we went into the budget, there 
were two assumptions made. The first is that it would be 
fiscally informed. So if you look at the 30-year shipbuilding 
plan, over the entire 30 years, it is at a $15.9 billion level. 
You absolutely point out the area where the high point occurs, 
when the SSBN(X) buy starts, and you will see that that goes up 
to $17.9 billion. That was recognized by the Department, and 
the position taken was that we would again continue to visit 
this.
    And as Mr. Stackley pointed out, in the past, we have put 
the SSBN(X) above the top line. It just sat there. This year, 
when we put the plan together, we brought it within the top 
line.
    Mr. Larsen. Thank you.
    So Secretary Stackley, the AOA, are you suggesting that 
there are other alternatives we are considering with regards to 
that element of the triad within the context of the nuclear 
posture review? Is that what I gather you are saying?
    Secretary Stackley. Within the AOA, if you assume the 
boomer is part of the triad, you still have a wide range of 
alternatives that you want to evaluate under the definition of 
a boomer in terms of everything from the size of the missile 
tubes to the number of missile tubes; you want to see what 
technologies you can leverage from the existing platforms, as 
well as bring to bear what we know today regarding threats, 
obsolescence and new technologies.
    Mr. Larsen. Well, my time is done. I appreciate your 
answers.
    And Mr. Chairman, I just suggest maybe this is something we 
can explore further as we are going through the budget.
    Mr. Taylor. Mr. Larsen, it is an excellent line of 
questioning. We do intend to pursue your line of questioning, 
hopefully in a separate hearing. Because of the sticker shock 
of the Ohio-class replacement, maybe it would make sense to do 
something with the Virginia class. But we are going to pursue 
that. That was an excellent line of questioning.
    The Chair now recognizes the gentleman from Virginia, Mr. 
Wittman.
    Mr. Wittman. Thank you, Mr. Chairman.
    Secretary Stackley, Admiral Blake, General Flynn, thank you 
so much for joining us today and thank you for your service to 
our Nation.
    In looking at the Navy's budget, I am generally pleased. I 
think it is a good start down the road of where we need to go. 
I guess that I still have some concerns about the budget in the 
QDR [Quadrennial Defense Review], in looking at where does it 
leave our force structure out into the future. It seems like to 
me that our Navy five years down the road is going to look 
almost exactly like it does today, and I am concerned that 
those folks that wish to do us harm, their navies are not going 
to look the same five years from now. So I am concerned about, 
where does that leave us?
    In addition to the near-term focus, I think there are some 
further strains on our naval forces in adding the ballistic 
missile defense mission to our fleet in trying to figure out, 
how are we going to make sure that we have the ships to do the 
regular missions plus the BMD mission? And if the shipbuilding 
budget itself doesn't increase, I don't see a 313-ship Navy. I 
see more like, and that is 30 years down the road, I don't see 
a 313-ship Navy; I see more like a 275-ship Navy.
    So I am concerned about the funding aspects of that and 
where it leaves us in the long term. I think the plan that the 
Navy has laid out is a good one in some aspects, but I am also 
concerned about the resources necessary to get to that 313 
within a reasonable period of time. And that leads me to this 
line of questioning.
    In developing the future year's defense plan, can you tell 
me what consideration was given to the impact on the core 
shipbuilding industrial base? And specifically, why do we seem 
to be pushing funding off for the more expensive ships into 
future years into the later portion of the 30-year shipbuilding 
plan.
    Secretary Stackley. Let me start with the second question 
first. In developing the shipbuilding plan, we have done some 
serious restructuring in terms of, what was the program on 
record? I described in my opening remarks that we have 
determined that the CGX, which was planned for 2011, it was not 
feasible in 2011. That was going to be an extraordinarily 
expensive ship based on technologies that are simply not mature 
in 2011. And so we moved to a more affordable approach 
spiraling through the DDG-51 class. Now, we ultimately have to 
go beyond today's level of missile defense capability that is 
in the 51 class, which is why we have continued to move forward 
on development of the air and missile defense radar technology. 
So that is an ongoing development. And those two intercept in 
about 2016 in terms of maturity of that technology and 
spiraling of the 51.
    So I believe Admiral Blake referred to a Flight III DDG in 
the 2016 timeframe. That simply reflects when that technology 
is available. We, frankly, would like to get there sooner. The 
Maritime Prepositioning Force (Future), we described 
restructuring that program for a more affordable enhanced sea-
basing capability, building off of our MPS today. That, again, 
was driven by affordability and looking for that solution that 
balances the requirement, cost and, frankly, looking for what 
they call a sweet spot or knee in the curve, and that is how we 
have arrived at today's construct for the Maritime 
Prepositioning Force.
    The next two programs that I touched on in my opening 
remarks, the replacement for the LSD-41 class, the LSD-41 class 
will be with us until the mid-2020s. So, in fact, when we look 
at that program starting up in 2017 in a 30-year plan, that is 
ahead of need. And so we are struggling between recognizing 
that we are going to have the challenges going through the 
period in which the Ohio-class replacement is being built, and 
that is why you see a build plan that is earlier than required 
and stretches out, trying to work within our top line 
constraints but yet not allow the amphibious force structure to 
dip too low. So it is looking for that balance.
    T-AO(X) was the other program that is just beyond the FYDP. 
Again, that is ahead of need. The existing T-AOs start retiring 
about 2026, and so this is trying to pull T-AO to the left, 
looking again at industrial base consideration for that sector 
of our industrial base and also looking at an opportunity to 
modernize that force, some efficiencies that we can gain there.
    And the other major new start, of course, is the Ohio-class 
replacement which stands by itself in terms of 2019, need to 
start procuring then to support 2017 retirement.
    Mr. Wittman. Thank you.
    Mr. Taylor. The Chair now recognizes the gentleman from 
Connecticut, Mr. Courtney.
    Mr. Courtney. Thank you, Mr. Chairman.
    I just want to follow up a little bit on what Mr. Larsen 
was probing. And I know the chairman is planning a hearing 
specifically on the issue of the Ohio-class replacement. It is 
pretty clear that is going to be a topic of focus for this 
subcommittee for this year and years to follow.
    But just sort of moving back from the long-range question, 
which Mr. Larsen asked, sort of right to the immediate future. 
The language that accompanied the budget document about the 
proposed spending for Ohio design work was pretty strong and 
emphatic that there is no leeway in this plan to allow a later 
start or delay in the procurement plan. And I guess the one 
question I wanted to ask is, of that $672 million which was put 
in the budget, I mean, is that going to potentially give us 
some flexibility or some options for this program as it moves 
along? And why the urgency?
    Secretary Stackley. Let me start; 2019, I think everyone 
understands the urgency there. With the first retirement in 
2027, we have to deliver the Ohio-class replacement in the 2027 
timeframe to have her on station 2029. So we view that as a 
national priority; 2019 then is a well-defined procurement 
year.
    The R&D stream that precedes that covers several aspects. 
One, we have to go from defining a requirement to not just the 
technology or capability that will meet the requirement, but we 
also have to look at some of the manufacturing challenges that 
we have to work our way through because Ohio was built a 
quarter century ago. And so there are a lot of unique aspects 
associated with Ohio that you don't see in other submarine 
design and construction that we have to recreate those 
capabilities. And so that is very much on the front end, so 
that, by the time we get to the procurement years, those 
manufacturing processes and facilities that have to deliver 
these pieces of hardware for the boat are mature enough that we 
have retired the risk.
    So there is a manufacturing design piece. There is a 
technology piece, and then there is the reactor piece. So we 
have reactor design activities; we call it rest-of-ship design 
activities, manufacturing and technology activities ongoing 
today to retire risk so that when we get into 2019 procurement, 
we do not suffer first-of-class issues, but in fact, we have 
got a reliable schedule so that the SSBN(X) can replace the 
Ohio on station.
    Mr. Courtney. And I guess the question of--I mean, there is 
no--I think it is pretty clear that there are Members here that 
are sort of asking about whether or not we need to do it 
exactly the way it is sort of being proposed. I mean, will that 
early start of design give us some at least answers to that 
question about whether there are other alternatives?
    Secretary Stackley. Yes, sir.
    In the near term, I described the AOA that is under review, 
the analysis of alternatives. We have what is referred to as a 
milestone A with OSD later in the spring. And so between now 
and milestone A, we will continue to work the details inside of 
the AOA, as well as work the, I will call it the spend plan, 
associated with the R&D that supports that long-term schedule. 
This is--you know, the significance of this investment requires 
that more than just a program office, more than the SSP 
[Strategic Systems Program] office are involved in the 
decisions associated with these design details. So there is 
going to be significant amount of oversight to ensure that we 
are investing the right dollars for the right capability at the 
right time to meet that mission.
    Mr. Courtney. Thank you.
    Actually some people argue that even deserves its own 
special line item in the budget, but that, again, may be a 
discussion later.
    Secretary Stackley. I will let Admiral Blake take that one.
    Mr. Courtney. I have a few seconds left, and this is 
something completely different.
    Admiral Roughead, when he was before the full committee, 
actually made a pretty powerful statement about the issue of 
alternate engines and whether or not it is feasible to have two 
different types of engines on aircraft carriers for the F-35. 
And I wondered if you wanted to expand or maybe the Admiral did 
in terms of the Navy's position regarding that issue.
    Admiral Blake. If you go to the alternative engine, what 
you end up with is two complete infrastructures on board a 
single unit and then you have--if you have those two systems 
there, then what you are dealing with is you are dealing with 
two complete lines, if you will. And so that would be one of 
the concerns that you would have if you had an alternate engine 
out there. And therefore, it would not be considered prudent, 
if you will, and I think the CNO brought that up during his 
remarks and that is why he took the position he did.
    Mr. Courtney. Thank you. Thank you, Mr. Chairman.
    Mr. Taylor. The Chair now recognizes the former chairman of 
this committee, the gentleman from Maryland, Mr. Bartlett.
    Mr. Bartlett. Thank you very much.
    Mr. Secretary, I understand that the 1000 has now breached 
the Nunn-McCurdy rules for per-unit cost growth?
    Secretary Stackley. That is correct, sir.
    Mr. Bartlett. The Weapon Acquisition Reform Act of just 
last year sets a very high bar for proceeding with a program 
rather than terminating it following this kind of breach. As 
you may remember, the 1000 was originally going to be a 32-ship 
class, and then its cost went up. Then it went to a seven-ship 
class, and then it ended up as a three-ship class. And we were 
told that the 1000 program was truncated because the 
requirements had changed and the DDG-51 with upgrades could 
better provide capability against this changed requirement.
    In light of this, what is the correct path forward relative 
to the 1000?
    Secretary Stackley. Let me start with the reduction from 
the program from 78 ships to 3 ships. The decision to truncate 
the program was made last year and was announced by Secretary 
Gates with his budget statement in April of 2009. It was after 
careful consideration of not whether the 51 could meet the DDG-
1000 requirements, but careful consideration of competing 
requirements between the need for increased air and missile 
defense and the capabilities that DDG-1000 brings which is more 
closely associated with surface fires and operations in the 
littorals.
    So the decision was made that the priority for the 
Department is to go towards increased air and missile defense 
and that the DDG-1000 program then, the land attack 
requirement, that would be truncated to a three-ship program. 
So the requirement for DDG-1000 did not go away, but the 
priorities were placed on air and missile defense.
    So when we decided to truncate the DDG-1000 at three ships, 
we continued to consider the platform to be a platform to meet 
the future surface combatant requirements for missile defense. 
Admiral Blake referred to the study that was conducted in the 
course of the past year. As we evaluated that platform, we 
determined that the best alternative was to spiral the 51 
program in the mission area.
    So as the budget came forward, having decided to truncate 
the DDG-1000 to three ships and to not use that platform for 
air and missile defense, then it became clear that there would 
be a Nunn-McCurdy for each, which was driven not by cost 
increases to the program associated with performance, but 
rather by costs that have been incurred in the program 
predominantly through research and development that when you 
divide those costs over three ships as opposed to over seven 
ships, now mathematically, in fact, you do have a breach.
    So this does not reflect having to increase investment in 
the program to continue it. In fact, what we have done is we 
have reduced investment in the program through the truncation 
and the balance of funding is to complete the three ships in 
the budget.
    Mr. Bartlett. Our shipbuilding plan acknowledges that we 
will be building just enough ships to sustain our industrial 
base. If the cost of these ships go up--and that may very well 
be true of the SSBN--then we will be building fewer ships. What 
confidence do you have that we will continue to keep six major 
shipyards viable?
    Secretary Stackley. Let me first address the part of the 
question referring to the costs going up.
    We have----
    Mr. Bartlett. Assuming, sir, the costs as they always may 
go up in the future and if we are now building just enough 
ships to barely maintain the industrial base, if the cost goes 
up, obviously unless the top line goes up, we will be yielding 
less ships. And my question is, what kind of confidence do you 
have that we would be able to keep six major shipyards viable?
    Secretary Stackley. Yes, sir.
    Let me first describe that as we put together a 
shipbuilding plan, we take a close look at what we refer to as 
workload curves that show the projected workload across not 
just the six major shipyards, but also other shipyards that are 
building ships for the Navy. And clearly certain shipyards have 
a very healthy workload looking into the future.
    We do have a couple of yards that we are quite concerned 
with. We talked earlier about NASSCO and its projected 
workload. We keep a close eye on our surface combatant 
builders. We have our nuclear yards that frankly are very solid 
workload going forward, and our amphib and auxiliary yards.
    Nuclear yards are in good shape in terms of workload. 
Surface combatants we are keeping a close eye. We look at 
completing the three DDG-1000s, go to the DDG-51s and 
ultimately getting back to a status on the 51 program where we 
can reengage in a multi-year which helps provide stability for 
those yards. Amphibs and auxiliaries, we have three yards that 
historically have built amphibs and auxiliaries. And between 
those three yards, two yards, the work yard is of concern.
    I described in my opening remarks that we are going to 
engage in a shipbuilding industrial-base study and a 
significant part of that industrial-base study is to get to the 
heart of your question exactly, so that as we go forward in POM 
12 [Program Objective Memorandum for fiscal year 2012] and we 
revisit the shipbuilding program as we do each year, we can 
have most current information with regards to not just the 
impact of the Navy program, but other work at those shipyards 
and what that means in not just their viability, but also our 
costs.
    Mr. Bartlett. Thank you, Mr. Chairman.
    Mr. Taylor. The Chair now recognizes the gentlewoman from 
Maine, Ms. Pingree.
    Ms. Pingree. Thank you very much, Chairman Taylor. First, I 
would like to start by thanking all of you for your service to 
the country, and Secretary Stackley, it is good to see you 
again, although I prefer seeing you at the shipyard in my 
district, Bath Iron Works, and you are welcome back any time 
for a visit and, of course, a lobster.
    I want to go on with--actually you were talking about this 
a little bit, and I know in your written testimony, even though 
I came late, said capable ships supported by effective 
industrial base have been the decisive element during war, 
crisis response, and peacetime operations for more than two 
centuries. Several Navy reports have agreed with this statement 
and have gone on to say that in order to maintain the two major 
surface combatant shipyards a minimum of three DDG-51s must be 
procured each year along with additional work.
    So my question goes back to this workload industrial 
capacity one. If the DDG-51 procurement rate is on average 1\1/
2\ per year, what impact will it have on this decisive element? 
And I am certainly thinking of our yard and the challenges that 
we face.
    Secretary Stackley. Yes, ma'am.
    Not to repeat the discussion I just had with Representative 
Bartlett, but the surface combatant build rate is something 
that we are keeping a very close eye on. It involves not just 
the shipbuilders, but also the combat systems suppliers because 
that industrial base is much broader than just the shipyards.
    We do not have an acquisition strategy that addresses going 
beyond the ships that are currently budgeted and requested in 
2011. We do have a plan to deliver that acquisition strategy 
this summer as we work it through OSD, and we widen the 
aperture beyond the two-one-two-one-two-type profile that you 
see in the 30-year shipbuilding plan; and by widening the 
aperture, we are looking at beyond just the continuation of the 
51 construction at those two yards to determine what are the 
critical skills, what are the capabilities and capacities that 
we need to preserve to ensure that we have this unique 
capability at these two shipyards.
    Ms. Pingree. I appreciate you are looking into that, and I 
certainly will look forward to your further study.
    Going back to another question you talked about a little 
bit on the DDG-1000, can you comment a little bit on the 
importance of leveraging the DDG-1000 technologies for other 
future Navy platforms once the DDG-1000s are operational?
    Secretary Stackley. Yes, ma'am. The DDG-1000 frankly broke 
a lot of ground with engineering development models, new 
technologies that it is bringing to the surface fleet. Perhaps 
most significantly, I would highlight reduced manning concepts 
that--not just the technology but how we will operate a ship at 
those manning levels. We will be looking to bring those 
concepts forward to the extent practical. With reduced manning 
comes a lot of technologies to reduce workload for the crew. So 
that has high interest for further applicability.
    A very clear crossover is in the combat systems arena where 
the dual band radar for the DDG-1000 is also the dual band 
radar that is going to go on the CVN 78 class. So that has 
direct applicability. And when we look at the Flight III DDG-51 
and the studies that we performed there where we took a look at 
the threat and the requirements, we looked very closely at the 
MFR [Multi-Function Radar] radar on the DDG-1000, and we 
believe that that will be the best solution for the DDG Flight 
III when we consider future threats.
    So as we move forward with the air and missile defense 
radar, we are also looking at something like a dual band radar 
capability with an MFR or what is referred to as a SPY-3 radar 
for the future DDG-51.
    Ms. Pingree. Just to follow up on that a little more, 
Admiral Blake.
    Despite the fact that as we talked about earlier, the DDG-
1000 program has been truncated to three ships, can you talk a 
little bit about the operational importance of having these 
three ships in the fleet and what valuable technological 
lessons the Navy will gain from having these ships?
    Admiral Blake. Absolutely. One of the principal seams this 
ship is going to fill is the 155 gun which it carries is going 
to be a critical seam-filler for the naval surface fire 
support. It has a long-range land attack projectile, and it 
will be used to engage targets deep inland in order to be able 
to support Marine operations. And that is a critical piece.
    If you look at our DDG-51s, they have a 13-mile gun. And so 
this is going to give us a significant force multiplier out 
there. It is going to give us precision fires, volume fires at 
a longer range. So it is an absolutely critical piece for naval 
surface fire support. Naval surface fire support is made up of 
a triangle, and three elements in it are naval surface fire 
support, tactical air, close air support, and then organic 
fires which come from the Marine Corps piece of the puzzle.
    So those three together give us a significant force 
multiplier when we are doing forcible injury.
    Ms. Pingree. Thank you. Thank you, Mr. Chair.
    Mr. Taylor. The Chair thanks the gentlewoman.
    The Chair now recognizes the gentleman from Virginia, Mr. 
Forbes, for 5 minutes.
    Mr. Forbes. Thank you, Mr. Chairman. I hear bells going off 
for some votes. I will try to be brief.
    General Flynn, I saw you in a hallway a little bit earlier 
coming down here and I was wondering why you were here so 
early. And after I left, I looked at my watch and realized it 
was time for our hearing.
    The chairman mentioned earlier about the fact that he did 
not think that this 30-year shipbuilding plan was a fantasy, 
and I have enormous respect for him and hope he is right. But 
when Secretary Gates testified, that is exactly the word he 
used to describe the money set forth in the 30-year plan. He 
said it was a fantasy.
    And I am looking, Mr. Secretary, at your statement, and I 
know you were briefed so that you could put your statement in 
the record, but in the summary, you say the Navy's long-range 
plan for the construction of Naval vessels addresses the 
requirements in support of the national defense strategy, the 
maritime strategy, and the new 2010 Quadrennial Defense Review.
    And my first question is: is the shipbuilding plan and the 
QDR based upon the June 2008 National Defense Strategy or is it 
a more recent version?
    Secretary Stackley. I think we need to take that for the 
record.
    [The information referred to was not available at the time 
of printing.]
    Mr. Forbes. Let me tell you why I am concerned about that.
    First of all, I think we should know. Secondly, according 
to the National Security Act, the administration had 150 days 
from the time they came in office, I think--you can check this 
too and confirm--to have that national security strategy and 
the national defense strategy. I haven't seen it. So if perhaps 
it has been sent to Congress and it is over here, we appreciate 
that.
    I would just love for you to get me a copy because we have 
been asking for it and haven't seen it, and I think it is 
important to know if we are going to make statements that it is 
based on that national defense strategy, what year it was based 
on. The last one that I know of was the 2008 one.
    The second thing I would ask you, Mr. Secretary, is this: I 
look at the plan that we have that has been laid out, and we 
look over the last 30 years, and I think everybody would agree 
the last 30-year average has been about $15 billion that we 
have had for shipbuilding. I think we would agree with that, 
Admiral. I think that was some of your testimony as well.
    You heard Mr. Larsen talk about earlier in 2019, we have 
got huge problems with Social Security because of the baby 
boomer situation. We hear the White House talking about the 
fact that we could have these high unemployment rates hitting 
us as long as the next decade. And I look at the CBO 
[Congressional Budget Office] analysis of this 30-year plan, 
and according to their analysis, which is an independent 
analysis, a bipartisan analysis, they think it is going to take 
$20 billion a year to reach this plan. That is a $5 billion 
difference between the 30-year average and what they think to 
reach this plan.
    Where are you going to get the $5 billion from? If you look 
at what Mr. Bartlett talked about costs going up, if you look 
at the fact that we don't have any realistic projections that 
the budget is going to get better any time soon, where are we 
going to get that $5 billion per year to make up that 
shortfall?
    Secretary Stackley. Let me start by saying that the pricing 
we have laid into the 30-year plan is, I will call it the best 
estimates that we have today for what these ships will cost in 
the future. Now, that does not mean that they don't carry risk. 
Certainly they do.
    What we have to put in place is better governance of our 
requirements definition, our design, and our procurement so 
that as we confront these risks, we don't roll into programs 
that bring continued cost growth that end up eating away at the 
force structure.
    Mr. Forbes. I don't want to interrupt you. Please do 
whatever you need to in terms of the record, but I have got 40 
seconds left.
    CBO is looking at your costs. They are not taking into 
account, as I understand it, cost projections, and still they 
say it is a $5 billion shortfall. Assuming we don't have these 
cost increases, where are you going to make up that $5 billion 
a year?
    Secretary Stackley. I don't see the added $5 billion per 
year for the ships that we have laid into the budget.
    Mr. Forbes. Do you disagree with the CBO's estimates? Is 
that what you are saying?
    Secretary Stackley. I haven't had the opportunity to go 
through the shipbuilding plan that we have submitted to 
Congress with CBO, but I do know the estimates that we have 
laid into our plan and the basis for those estimates.
    Mr. Forbes. Mr. Chairman, thank you.
    Mr. Taylor. We believe that we have enough time for Mr. 
Langevin from Rhode Island.
    Mr. Langevin. Gentlemen, thank you for your testimony today 
and for your service to our Nation.
    If I could, Secretary Stackley, talking about--you 
mentioned in your testimony the issue of missile defense. You 
talked about that a little already. I was wondering if you 
could elaborate a little further on how the Navy plans on 
achieving both its missile defense and ship defense 
requirements on this platform and what challenges does the Navy 
face using one platform, but for both roles?
    Secretary Stackley. Yes, sir. Let me start with the 
baseline. The baseline is, Admiral Blake referred to 321 Aegis 
ships today that have a degree of ballistic missile defense 
capability, and those are in service. That capability was 
backfit, brought to the ship in terms of adjunct processors 
that provide the missile defense capability working side by 
side with the AAW [anti-air warfare] capability that the Aegis 
system provides. And then, of course, you have got the missile 
load-up that works in conjunction with the AAW and missile 
defense capability.
    As we move forward and get into the later capability builds 
for the Aegis program, we come to what is referred to as a 
multi-mission signal processor that brings together both the 
air and missile defense capability so that the single system 
provides that capability without having to change modes. That 
is currently in the program. Again, it will be coming in 
through backfit as well as being introduced on the DDG-113. 
That gives us processing capability.
    And then we continue to step up capability in terms of 
sensor system as we move to the AMDR, the Air and Missile 
Defense Radar to be introduced in the 2016 timeframe.
    So we need to move from today's capability, build upon that 
to expand the integrated air and missile defense capability as 
well as sensor power so that we can more than keep pace with 
the threat as we move forward.
    Mr. Langevin. Thank you.
    Do you have anything to add on that?
    Admiral Blake. I would only say that following the decision 
to increase our BMD capability at sea, both the Navy and the 
Ballistic Missile Defense Office took the action to accelerate 
the procurement of the ship kits in order to be able to push 
those ship sets out there so that we would increase over the 
fit-up in order to meet up the demand signal of the COCOMs 
[combatant commanders].
    One of the concerns that we had was we wanted to ensure 
that we were also taking care of the ships when we put them out 
there so that we wanted to push as many sets out as we could so 
that we wouldn't have sustained deployment times out there. We 
would keep them within the windows that we currently have. That 
was one of our priorities.
    So as we built the budget, we ended up putting additional 
dollars and sets in during what we call endgame in order to 
make sure we were meeting the COCOM demand signals.
    Mr. Langevin. As I see technology changes and improves, one 
of the challenges is also meeting the power requirements. 
Particularly, we talked about new technology developments in 
radar. One of the advantages of the DDG-1000, it is a larger 
platform and could expand--you could easily incorporate 
expansions of things like add power requirements on the 
platform, and the DDG-1000 obviously doesn't easily expand to 
accommodate those expansions.
    Can you talk a little bit how we plan to meet the power 
requirements of the radar of the DDG-51?
    Secretary Stackley. Right now the DDG-51 class is equipped 
with three 3,000 KW generators. And as we look at the power 
requirements with the added radar capabilities that we bring to 
the ship, in order to restore further margin, we are looking at 
adding a fourth generator to the DDG-51, and preliminary design 
studies have identified location and ship impacts. That is 
important and that gives us a baseline.
    But we are also separately working a development effort 
towards what is referred to as hybrid electric drive. We have 
an ongoing technology program where we are going to take an in-
service ship, bring effectively a motor that couples to the 
reduction gear of a 51 giving us the ability to drive the ship 
through the electric plant. And then the next step will be to 
reverse that so you generate power from the propulsion plant 
giving--this is where the term ``hybrid electric drive'' comes 
from. Very promising technology. We have it in a demonstration 
mode today.
    We are going to look at that in conjunction with the fiscal 
year 2016 Flight III destroyer, with the hopes of being able to 
mature that technology and actually increase the ship's power 
generation capability.
    I would like to be able to come back and give you further 
information as we move down that development time line, give 
you a greater sense whether in fact we are driving to adding a 
generator or whether this alternate technology that doesn't 
just provide power, also provides much greater fuel efficiency, 
can mature enough to arrive in 2016.
    Mr. Langevin. Are you completely banking on that hybrid 
technology to meet the requirements of the power generation of 
the radar?
    Secretary Stackley. No, sir. The baseline is adding a 
fourth generator.
    In parallel with that, we see this hybrid electric drive as 
a promising alternative that more than adding the generating 
capacity to the ship would also provide a more fuel-efficient 
way of driving the ship.
    Mr. Langevin. Thank you. I yield back.
    Mr. Taylor. There is a vote on the House floor in about 2 
minutes.
    When we get back, we are going to recognize Mr. Coffman and 
Mr. Hunter in that order.
    Again, I want to thank our witnesses first for the delay in 
getting started and the delay now. We should be back in 20 
minutes or less. Thank you very much.
    [Recess.]
    Mr. Taylor. The committee will come to order.
    Again, I apologize for the delay.
    The Chair now recognizes the gentleman from Colorado, Mr. 
Coffman, for 5 minutes.
    Mr. Coffman. Thank you, Mr. Chairman.
    General Flynn, speaking recently to the Service Navy 
Association, the Commandant of the United States Marine Corps 
stated that during the Quadrennial Defense Review 
deliberations, that amphibious forces were stressed in every 
scenario. However, in looking at the 30-year shipbuilding plan, 
it does not meet the Marine Corps' stated requirement of 38 
ships in the amphibious assault force.
    Could you please comment on the risk the Nation is taking 
by not planning for a 38-ship amphibious assault force?
    General Flynn. On the requirement of 38 ships, we also 
agree that the minimum number with the degree of risk that is 
acceptable is 33, that is both for our forcible entry 
capability and our steady stream operation. The way that risk 
has to be mitigated is you increase your OpTempo [operational 
tempo]. So that means your ships have to be out at sea more and 
also compresses some of your maintenance requirements, which 
also probably adds to your O&M [operation and maintenance] 
costs.
    So we believe that 38 is the requirement, but we can do it 
at 33, and the cost is deployment tempo and also operations and 
maintenance funding, sir.
    Mr. Coffman. Thank you.
    Mr. Secretary or Admiral Blake, 6 amphibious ships--2 LHAs, 
4 LPDs [Amphibious Transport Ship, Dock]--will be 
decommissioned in the next 3 years, at the same time that our 
amphibious force falls to 30 ships and below. This is 10 
percent below the level the Navy and the Marine Corps 
characterize the limit of acceptable risk and 22 percent below 
that requirement.
    Understanding that the Navy plans to retain these vessels 
in the inactive fleet rather than selling or dismantling them, 
what would be the cost of continuing to operate these vessels 
given the significant level of risk we are assuming? What 
prevents the Navy from retaining these ships?
    Admiral Blake. Sir, to the first part of your question, you 
were absolutely right. The number is going to come down. We are 
going to be decommissioning those ships in the years as 
indicated. And it should also be noted that they will be in the 
inactive force and that if there were a national emergency, 
that those ships could be brought back out on line in order to 
support whatever the event happened to be.
    If we had to, if you will, determine what it would require 
to take the ships that are currently being decommissioned in 
that year we did a couple of excursions, it would require at 
least we estimate $1.3 billion, and that is a ROM number, Rough 
Order Magnitude. And the concern we had, it is never easy for 
the Navy as we are balancing priorities and we are looking 
within the fiscal boundaries that we are operating in, it is 
never easy to come to the decision that we have to decomission 
ships.
    However, in the case of the LPDs, they are at the end of 
their service lives, and one of the concerns that we would have 
is if we had to bring those ships back on line, there are 
probably, in addition to the number I mentioned, there would 
probably be some unforeseen costs as we kept those on line. I 
would also tell you if you look at our budget, basically we 
operate in five pots or colors of money.
    First, we have got the manpower account, and if we had to 
keep those ships in service, we would have to pressurize that 
account. So we wouldn't be able to go there to cover the cost.
    You have your R&D account, and that is where we are trying 
to build a force for the future and determine how we are going 
to meet the future threats.
    You have your infrastructure account, which has got a 
number of high priority items, everything in it from family 
housing to quality for our sailors and Marines.
    And then you have got the O&M account, the operation and 
maintenance account, and the procurement account.
    So there would be no easy place to go, if you will, when 
you look at that account if we were to, in fact, go back if we 
had to bring those ships out.
    General Flynn. One of the key things that I think you have 
to be considering when you look at the decommissioning, even 
though it may be budget driven, there still needs to be an 
operational assessment by all of the key stakeholders as to 
what that does. And when you make that decision, that is driven 
sometimes by fiscal realities. It also has to be informed of 
the operational realities and capabilities you are going to 
have or not have by doing it.
    Mr. Coffman. Thank you.
    Mr. Chairman, I yield back.
    Mr. Taylor. I thank the gentleman for a really great line 
of questioning.
    The chair recognizes Mr. Hunter.
    Mr. Hunter. Gentlemen, I thank you all for your service.
    Secretary Stackley, when it comes to the NASSCO, you have 
been asked about the MLP [Mobile Landing Platform], you have 
been asked about the amphibs. One last question here. When it 
comes to the actual T-AKE hull and propulsion system, do you 
have any thoughts about putting that into the next fleet oiler 
double hull T-AO(X) using that hull in that propulsion plant in 
that ship?
    Secretary Stackley. Yes. We have looked at concept designs 
where you leverage the existing design and take a look at what 
the capacities are for T-AKE-type hull versus what a T-AO(X) 
would need to provide.
    So there are concept studies and feasibility looks that 
indicate that T-AKE hull would be a viable platform for the T-
AO(X).
    Mr. Hunter. Would you say it is a pressing matter right now 
to get a double hulled oiler fleet out there right now?
    Secretary Stackley. Right now--in terms of the force 
requirements for oilers, we meet all of our requirements. And 
as I described earlier, service life for the T-AO classes go 
out to the mid-2020s.
    So when we, in a 30-year plan, look at pulling T-AO(X) 
forward into the 2017 timeframe, it is looking at both the 
industrial base as well as getting to that more modern 
refueling-at-sea capability that would bring the double hull. 
So that was an important consideration as we moved it to the 
left.
    Our forces have a waiver or an exemption from the MARPOL 
[Maritime Pollution Act] requirements for double hulling, but 
we do see the benefit of getting there sooner rather than 
later.
    Mr. Hunter. Moving them left up against the actual T-AKE 
production line would probably save a lot of money because they 
could keep going from there with that hull, the materials and 
everything else. But that is not going to happen? There is for 
sure going to be a gap in between if it was chosen to use that 
hull and that propulsion plant for the T-AO(X)? There is no way 
that it can be backed up to save money?
    Secretary Stackley. We took a hard look at the timing for 
the T-AO(X) and the plan, and across the alternatives when we 
tried to look at the feasibility of building T-AO(X) that much 
earlier, then we are starting to trade off other higher 
priorities inside of our requirements to fill this other 
requirement ahead of need. So that is how we ended up in the 
2017 timeframe.
    And the other thing I have to caution is when we talk about 
a T-AO(X), new ship class, there would be time devoted to that 
design but then we would also compete that new ship class so 
that it is not a given that T-AO(X), if it were on a T-AKE hull 
form would be going right behind T-AKE. There is a design piece 
and a competition piece that would intercede.
    Mr. Hunter. So even if you took that hull form, you 
wouldn't necessarily give it to the people who had been making 
those ships. It is going to be competed?
    Secretary Stackley. We would be competing.
    Mr. Hunter. So you would compete it with other shipbuilders 
that hadn't built that ship instead of having the folks having 
the expertise in building that ship carry it on?
    Secretary Stackley. We would be taking the requirements for 
the T-AO(X), we would be looking at detailed design and 
construction, determine what the proper hull form is, and we 
would be looking--from day one our intent would be to compete 
T-AO(X).
    Mr. Hunter. Even if that T-AKE hull form was chosen to be 
the model?
    Secretary Stackley. Yes, sir. At this time, I don't have 
any compelling justification to go to the sole source for T-
AO(X).
    Mr. Hunter. Thank you, Mr. Chairman.
    Mr. Taylor. The Chair will recognize the gentleman from 
Virginia for an additional 5 minutes.
    Mr. Wittman. I want to follow up a question earlier about 
amphibious ship capacity.
    Can you articulate for the committee what impact the 
availability of amphibious ships has on the Marine Corps? And 
let me ask you a little bit further.
    Have Marines and sailors been subject to back-to-back or 
unscheduled deployments because of the lack of depth in our 
amphibious inventory? And what difficulty does the Marine Corps 
face when, for instance, a ship fails to pass its end serve or 
breaks immediately upon its acceptance? I just want to put that 
in perspective to understand some of the nuances on amphibious 
capacity and what it means to the current Marine Corps.
    General Flynn. I can honestly tell you upfront we haven't 
missed a deployment because of amphibious ships. But what we 
have had to do is what was in the planned availability and what 
was actually deployed has sometimes had to be modified at the 
last minute. And what you lose then is the training time that 
you spent together working up prior to the deployment so there 
is a measure of effectiveness. That has happened recently on 
some of the deployments that we have had to substitute an LPD 
for one that couldn't deploy, and in another case, we had to 
look at another deck to do that.
    So I don't think we have missed the point. I know we 
haven't missed a deployment. But you do then lose that work-up 
time prior to deployment.
    It hasn't really affected the Marines that deploy on the 
ships, but I do think if you are the ship that was not 
scheduled to deploy and then you were put in at the last 
minute, I think it would affect the sailors that were doing 
that.
    But I think the recent deployments that you saw in January 
when we had Haiti and our other operations going on just show 
how much the fleet is used and how valuable it is to what we do 
every day, and the more flexibility you could have the better. 
That is why we went with the 11-11-11 mix of 11 big decks, 11 
LPDs and 11 LSDs to give you that overall capacity and 
flexibility.
    Mr. Wittman. I yield back, Mr. Chairman.
    Mr. Taylor. The former chairman, Mr. Bartlett.
    Mr. Bartlett. Just one short question.
    Admiral, in your testimony, you said that one of the 
missions of your Navy was to protect our sources of energy. As 
you may know, the Chinese have been very aggressively buying up 
oil all over the world. In today's world, that doesn't make 
much sense because those who come to the auction with dollars 
get the oil. We have only two percent of the world's oil. We 
use 25 percent of the world's oil.
    Do you think that the Chinese anti-ship missile may be 
relevant to their buying up oil all over the world?
    Admiral Blake. I am not sure there is a connection there, 
sir. I will tell you that we take their anti-ship missile 
seriously and that we are definitely considering ways to 
position ourselves so that we would be allowed access in an 
anti-access scenario. But other than that, sir, I don't think--
I don't know of a connection between oil buyout and the access 
missile.
    Mr. Bartlett. It makes no sense in today's world why they 
are buying oil. I think the time may come, since oil is finite, 
that they will say, Gee, guys, I am sorry. But the oil is ours 
and we can't share it.
    To make that a reality, they have to be able to protect the 
sea lanes for the shipment of oil. And if our ships can get 
there, they can't protect them, can they? That is why I think 
this new anti-ship missile may be relevant to their buying up 
oil all over the world. Because if they are going to protect 
their sea lanes, they can't have us near them, can they?
    Admiral Blake. Well, sir, I would say that we, as I 
previously said, we do take the anti-ship capability seriously 
and that the issue for us is to evolve our ballistic missile 
defense systems so that we are able to counter that capability 
and I think we are doing that.
    Mr. Bartlett. It comes close to being a gamechanger, 
doesn't it?
    Admiral Blake. I think it is a serious threat, and I think 
we need to be able to address it.
    Mr. Bartlett. I thank the gentleman.
    Mr. Taylor. Secretary Stackley, I appreciate you sticking 
around as long as you have.
    One question that comes to mind is the affordability of the 
LCS [Littoral Combat Ship] and what you expect to see 
pricewise. My question is, is it your intention to award a 
contract of 10 to the first vendor or 5 separate 2-ship 
contracts? And do you think that there would be any merit to 
giving you the legal authority to make that an award of 10 for 
multi-year, if it is not the case already?
    Secretary Stackley. Yes, sir. We do not have multi-year 
authority. What we have structured is what has been referred to 
as is a block buy where we would be awarding two firm ships, 
fiscal year 2010 ships, with options for eight additional 
ships. And we have requested in the 2011 budget request 
economic order of quantity [EOQ] advance procurement funding 
that would allow the winner to combine the two ships with 
select material buys for the eight additional ships to gain 
some savings on the material side.
    And what we structure is competition for those EOQ dollars 
so that the winner has the ability to go out to his vendor base 
and compete, who gets the multi-ship material buys as a part of 
his bid.
    So it is not a multi-year but within the authorization that 
we received in 2010, it attempts to achieve much of the benefit 
of a multi-year when it comes to stability, savings through 
material procurement and then planning, if you will, on the 
part of the winner.
    Mr. Taylor. Given that I am certainly disappointed in the 
price of that platform, I am curious if either of the vendors 
has expressed any interest in making a better deal if given a 
multi-year? Has that subject ever been broached by them?
    Secretary Stackley. I don't remember getting into a multi-
year discussion with this solicitation. We have talked about 
getting to a multi-year, and in fact, the acquisition strategy 
that we have structured, the next procurement, in fact, would 
be a multi-year procurement. But at this stage given the 
turbulence at the front end of the program, we did not 
anticipate that we would be able to move directly into a multi-
year with this buy.
    Mr. Taylor. Shifting gears. Given the critical importance 
of the EMALS [Electromagnetic Aircraft Launch System] system 
being delivered in a timely, cost-effective manner, where does 
that stand on the fourth-class carriers?
    Secretary Stackley. Let me break that out into a couple of 
pieces.
    One is the development, what is referred to as a system 
development and demonstration, SDD. We have several activities 
going on there. We have what is referred to as highly 
accelerated life testing taking place in Tupelo where system 
components are being tested and run through and accelerated 
alive to get learning in terms of the system's ability to meet 
the 50-year lifecycle that it was designed for.
    We have high-cycle testing, which takes critical components 
through--we are up to 30,000 cycles, which is about a 16-year 
lifetime of the equipment looking for information on fatigue 
and performance at those high ends of the system's performance.
    But most importantly is we have got the system, one 
catapult in the ground at Lakehurst where we bring together 
hardware, software, power system and are ramping our way up 
through what we refer to as no load tests, ultimately leading 
to aircraft launches in the end of the summer.
    So the SDD program is scheduled to complete around the 
second quarter of 2012 of the development at Lakehurst. I still 
have to get you up there, sir, when we can coordinate 
schedules, but we are learning greatly there. We have 
identified software issues that set us back in a test program. 
It came through those software issues and are continuing to 
march forward. So the SDD continues to support the CVN 78.
    Secondly, we have production. And the production we have 
the total system broken down into a half a dozen subsystems 
that we are tracking closely. For all but two major pieces of 
equipment, we are looking at significant float in the 
production schedule on the order of about 4 months.
    Two pieces of equipment. It is actually one piece of 
equipment, two of, and that is motor generator sets. We are 
closely managing that production schedule. There is no float in 
that schedule so we have to be careful that we don't incur any 
interruptions on the production side. But today we support the 
CVN 78 schedule in both SDD and production, and we have got a 
pretty strong team managing this day-in-day-out to keep it that 
way.
    Mr. Taylor. Secretary Stackley, the Navy has pointed out 
the need for surface combatants. The general has done an 
excellent job of pointing out the need for large-deck amphibs. 
This Congress has been good enough to authorize and appropriate 
funds for two DDGs, two LPDs and one LHA, and yet the Navy has 
not signed the contract. And quite honestly, we have delivered 
identical letters to both Northrop Grumman and the Navy 
reminding both of you that these are a finite amount of funds 
for a fleet that needs to grow. And I want to do everything I 
can from this end to encourage you to sign those contracts.
    Secretary Stackley. Yes, sir. Can I give you a status on 
where we are and how we are attacking this.
    In shipbuilding, what you just described is frankly the 
most significant issue that I am dealing with on a day-to-day 
basis--that is the significant amount of shipbuilding that is 
pending at Northrop Grumman on the gulf coast.
    In terms of those five ships, we, in fact, have advanced 
procurement contracts in place for the DDGs, and we have 
received proposals for the advanced procurement contract on 
LPD-26--I am sorry. We have advanced procurement contract in 
place for LPD-26. We have received proposals for construction 
for LPD-26 and proposals for construction of DDG-113. We 
received those proposals about a month ago, a little bit over a 
month ago. We are evaluating those proposals. But more 
importantly, we are engaging in direct and intensifying 
discussions with the shipbuilder to come through the 
differences between their position and our position.
    It is a collaborative but hard effort to get there. It is 
our priority, and I know it is Northrop Grumman's priority, and 
we understand and agree with your sense of urgency.
    What we have to do on the government side is ensure that we 
arrive at a contract that meets our requirements and is in the 
best interest of the taxpayer. We will keep you informed as we 
continue to move through these negotiations. They will be 
difficult. But we are, both Navy and industry, very committed 
to getting these completed successfully.
    Mr. Taylor. Lastly, and I do want to thank you for what I 
consider to be your strong efforts to turn the LCS program 
around, your good work on the Virginia program. There are a 
number of programs going in the right direction.
    The thing that continues to trouble me is that this is, to 
my knowledge, the third Chief of Naval Operations that has come 
before the committee and says we need a 313-ship fleet. We 
finally hit bottom and started growing the fleet until this 
year. This year the Navy wishes to commission 7 ships but 
wishes to decommission 10 ships. That is going the wrong way. 
And I think you have heard up and down this panel our desire, 
as Members of Congress, who have the responsibility to provide 
for the Navy, to grow the Navy.
    I think the most sensible way to do that--and I am going to 
let you tell me why not--would be to SLEP [Service Life 
Extension Program]--at least until the LCS's start being 
delivered in sufficient quantities--to SLEP the FFGs [guided 
missile frigates]. Now, the first thing that was thrown back at 
me was, Well, we don't have the manpower. I can't see where 
one-quarter of 1 percent of the 330 men and women in the United 
States Navy is really going to kill you. So I think you are 
going to have to come back with a better argument than that.
    The cost of some of these vessels--and again, I want to 
work with you on this. If we are going to SLEP them, should we 
SLEP the best, start with the best, or should we start with the 
five worst that we know need generators and other things.
    But I don't think anyone wanted the LCS program to drag out 
as long as it has. I don't think anyone wanted the fleet to 
shrink as much as it has, but we do have an alternative to a 
shrinking fleet and that is to SLEP the FFGs, so we will be 
sending you some questions in the near future, and I hope you 
will get back to me in a timely manner.
    Thank all of you for a very long day here and for your 
service to our Nation. The panel is dismissed.
    Mr. Taylor. We now call to the witness stand Mr. Mike 
Petters, the corporate vice president and president of Northrop 
Grumman Shipbuilding; and Mr. Dave Heebner, executive vice 
president, Marine Systems, General Dynamics Corporation.
    Mr. Petters, I have been told you have been on the job 
longer, if that is the case, we are going to allow you to go 
first.

 STATEMENT OF C. MICHAEL PETTERS, CORPORATE VICE PRESIDENT AND 
            PRESIDENT, NORTHROP GRUMMAN SHIPBUILDING

    Mr. Petters. Thank you, Mr. Chairman.
    Chairman Taylor, Ranking Member Akin, distinguished members 
of the Seapower and Expeditionary Forces Subcommittee. I really 
appreciate this opportunity to be here today and I appreciate 
the invitation.
    Mr. Chairman, your invitation asked for my opinion of the 
Navy's 30-year shipbuilding plan, and I will limit my remarks 
to a summary of my written testimony which I request be 
submitted for the record.
    First, I think the Navy has presented a courageous plan 
with the budget discussion taking center stage across America 
today. The Navy has stood up and said, This is what we need to 
be effective, and they have not allowed today's fiscal 
restraints to overwhelm what they believe are the mission 
requirements. But having said that, there is something 
important to understand about this plan from my perspective.
    It presumes that there will be a smaller industrial base 
required to support the plan, and it presumes that that base 
will be healthy. I think these are very bold presumptions. Our 
industrial base today, albeit with some minor adjustments over 
the years, has been established to support a 600-ship Navy, and 
yet this plan presumes even greater adjustments are to come.
    And when we do our planning at Northrop Grumman 
Shipbuilding, we always start with the assumption that the 
Navy's 30-year plan is the best case. Now, if any industry were 
to go through this kind of rationalization there would be a lot 
of turmoil and uncertainty. The Navy's plan doesn't really 
appear to consider that part of the issue.
    These kinds of adjustments would require significant 
collaboration with the Navy, the Congress, and the industry to 
enable this transition and minimize a lot of uncertainty. I 
believe that the major work areas that will be affected would 
be workforce, the facilities and the supply chain. And building 
these complex ships, as you know, requires very uniquely 
skilled craftsmen.
    At Northrop Grumman, our demographics have shifted to a 
workforce of employees with less than 5 years, coupled with a 
large population of shipbuilders with more than 25 years 
experience nearing their retirement eligibility, and that 
experience is not easily replaced. We have addressed this by 
investing in our people through leadership training, workforce 
development and apprenticeship programs. However, should some 
sort of rationalization occur, it is probable that the very 
same people that we are investing in today would be the very 
first ones we would be forced to let go. That combined with the 
projected retirement levels would jeopardize our productivity 
in the future.
    A rationalization would also be challenging in terms of our 
facilities. Shipbuilding is not like the hotel industry, where 
the solution for two hotels with 40 percent occupancy is 
closing one to reach 80 percent in the other. Each of our 
facilities are tailored for specific applications and support 
of particular missions. A great degree of thoughtfulness would 
be needed to answer the question, how would we move from where 
we are today to where we would need to be in the future? And 
yet the choices associated with facility rationalization, like 
redeployment, face capital investment and environmental 
challenges just to name two. In other words, one size solution 
would not fit all cases.
    The issue of the supply chain would be how to create a 
sustainable consistent volume of demand, which is the same 
issue we have today. Today's low volumes are eliminating 
competition. We have 80 percent sole-source in many programs, 
and 60 percent sole-source across all of our programs. Even 
with 80 percent sole-sourcing, we can still manage our costs, 
as long as we have consistent demand. And without consistent 
demand, even with competition, we struggle with managing that 
cost.
    Now, we have come through a period of multiple lead ships 
with the supply chain competition, but we are transitioning to 
follow-on ships which inevitably leads to significantly less 
competition. So how can we ensure the health of that chain?
    As I testified to this subcommittee last July, at the heart 
of our difficulties in shipbuilding is that most of the time 
the Navy must buy ships one at a time and must pay for them up 
front. This results in tough challenges in creating a healthy 
and efficient shipbuilding industry. We need to increase the 
use of initiatives that enable us to amortize our investments 
in our people, facilities and supply chain, like multi-year 
appropriations and multi-year contracts.
    And I would like to conclude my statement with a point 
regarding the Ohio-class replacement program. It has already 
been talked about at length today, but I just add, if we could 
be moving to a smaller base, as the plan seems to indicate, all 
of us, the Navy, the Congress and the industry will be 
wrestling with what size base that is. One of the factors that 
will drive that decision, in fact I think the largest factor 
that will drive that decision, is how the Ohio replacement 
program will be budgeted. If it is in the SCN [Shipbuilding and 
Conversion, Navy] account, the base would be significantly 
smaller, as this program will absolutely impact every other 
program in that account.
    If it is not in the SCN, if it is taken off the budget or 
funded as a strategic enterprise, then the base required to 
support the SCN is a different size and will minimize the 
turmoil and the uncertainty that lies ahead.
    Now, this second option would certainly be my respectful 
recommendation.
    I welcome the attention of the Congress and this 
subcommittee in particular to the needs of our industry, and I 
thank you once again for allowing me to talk with you today. I 
really appreciate the invitation. I look forward to your 
questions.
    [The prepared statement of Mr. Petters can be found in the 
Appendix on page 75.]
    Mr. Taylor. The Chair thanks the gentleman very much.
    And again, our apologizes for keeping you here so late.
    The Chair now recognizes Mr. David Heebner of General 
Dynamics.

STATEMENT OF DAVID K. HEEBNER, EXECUTIVE VICE PRESIDENT, MARINE 
             SYSTEMS, GENERAL DYNAMICS CORPORATION

    Mr. Heebner. Thank you, Chairman Taylor, Congressman Akin, 
members of the subcommittee. It is a pleasure to appear before 
this committee again. And I want to thank you for your 
committee's support for the United States shipbuilding. I would 
like to make a brief opening statement and, if you would permit 
me, submit a written statement to be added to the hearing 
record.
    Mr. Taylor. Without objection, so ordered.
    Mr. Heebner. My name is Dave Heebner, and I am the 
Executive Vice President of General Dynamics Marine Systems. GD 
Marine Systems includes Bath Iron Works in Bath, Maine; 
Electric Boat in Groton, Connecticut, and Quonset Point, Rhode 
Island; and NASSCO in San Diego, California.
    Our shipyards employ nearly 22,000 people who design, build 
and support submarines, surface combatants and auxiliary ships 
to the U.S. Navy and commercial ships for the U.S.-Flag 
customers.
    Our primary objective at General Dynamic [GD] shipyards is 
to provide the Navy quality ships that achieve fleet 
performance requirements and are the best possible value to the 
American taxpayer.
    When I last testified before this committee in July of 
2009, I mentioned three aspects that have direct and 
substantial impact on our shipyards' ability to achieve that 
goal. They are, one, stability of requirements. Stable 
requirements lead to more mature designs which reduce 
production risk and promote efficiency. Two, predictability in 
funding and scheduling. Predictability allows time for planning 
and commitment of resources that enhance shipbuilding 
processes. And three, sufficient volume for efficient 
production. Building enough ships to enable investment in 
processes, people and facilities to lower costs and maximize 
the value of each ship we deliver.
    While assessment of the industrial base impact of the 
Navy's new 30-year shipbuilding plan is ongoing, I am certain 
that the Navy has worked hard to balance available resources 
among a broad and diverse set of competing demands. Stability 
of requirements is implicit in this plan, and predictability is 
enhanced because the plan is based on reasonable assumptions 
and can be executed.
    With regard to these two aspects, the plan promotes our 
ability to provide quality ships at the best possible value.
    However, the most challenging aspect of the plan is volume. 
While we credit the Navy for its balance in allocating 
available resources, the new plan is funded at levels that 
build 13 fewer surface ships in the near term when compared to 
the previous shipbuilding plan. Internal to our shipyards, the 
volume challenge will trigger workforce resizing. And external 
to our shipyards, reduced volume will negatively affect the 
thousands of suppliers who provide components and commodities. 
In the end, this reduction in volume will lead to higher 
shipbuilding costs, not the best possible value for the 
taxpayer.
    This simply reflects the principle of economy of scale. 
Over the past decade, GD made major capital investments in our 
shipyards to enable production efficiencies, but the return on 
these investments to the Navy will be limited without 
sufficient volume. Our objective remains unchanged. We will 
deliver high-quality, capable ships to our Navy. The new 30-
year shipbuilding plan is a good baseline, and we will work 
with the Navy and the Congress to address the volume issues.
    Mr. Chairman, thank you for your continued strong support 
of American shipbuilders. I am proud of the high quality ships 
that the men and women of General Dynamics deliver to the Navy, 
and I invite the committee to visit our shipyards, so that our 
skilled workers can show you the magnificent ships they build.
    I thank you for this opportunity to testify. I look forward 
to your questions.
    [The prepared statement of Mr. Heebner can be found in the 
Appendix on page 91.]
    Mr. Taylor. Thank you, Mr. Heebner.
    The Chair now recognizes the ranking member, Mr. Akin.
    Mr. Akin. Thank you, Mr. Chairman. I did have one quick 
question of Mr. Heebner. I understand that moving work on the 
MLP into fiscal year 2012 or at least into 2014 creates more 
stability for the workforce at NASSCO, but would moving that 
work to the left create any savings on these platforms? That is 
the first question.
    And then the second question would be, what additional work 
do you hope to compete on, and will those opportunities be 
available before fiscal year 2014?
    And I guess maybe add a third thing relative to a comment 
that was made by Secretary Stackley, and that was, I think they 
said that you have got one MLP scheduled in 2011. They are 
going to skip 2012, so that there is time to work out possible 
bugs between the first and then the next couple. I just wanted 
you to respond to those if you would. Thank you.
    Mr. Heebner. Thank you, Congressman Akin.
    I would like to draw back some attention to the hearing 
that we had in July of last year, and remember that the focus 
on that hearing was the efficiency in American shipbuilding, in 
both military ships and also in commercial shipbuilding.
    And I can tell you that the investments that we have made 
to reengineer our shipyards in facilities and people and 
processes have been effective in working toward that 
efficiency. I can point out to you the Virginia-class submarine 
program and our ability to anticipate the Block III ship buy 
and significantly improve the cost of those ships, getting 
those ships down to $2 billion a copy, to be able to transition 
from an initial ship that took 84 months of span time to 
construct down to our target of 60 months, a significant 
savings. That is a credit to being able to plan effectively for 
what we want to do.
    For the MLP program, another important ingredient in being 
able to build ships serially and efficiently is by creating a 
complete design before you start building the ship. That design 
factor is built into our plans for the MLP, and I am not 
interested in going back to the old days where we wait to 
develop requirements, where we start construction with a low 
level of design completion. I think we have found the model 
that works. We have done it with the Virginia class. We have 
done it with a product carrier at NASSCO, and I think we should 
continue to do it by getting the designs complete first. That 
is our plan on MLP, and we have looked at it from the viewpoint 
of being able to build those ships serially, year after year, 
so that we can maintain the workforce and those efficiencies 
that we have built into the yard.
    Mr. Akin. So I think what I am hearing you say is because 
you are moving to the new method of building the ships which is 
less expensive, part of that says, is you have got your whole 
design as done. You know that everything is going to hook 
together, and so when you build the first one, you are not 
anticipating any major changes, so you can build the second one 
right after the first. Am I understanding you?
    Mr. Heebner. As long as our Navy partners maintain 
consistency in the requirements for those ships, we intend to 
leverage the design build process that we have now proven in 
our own processes to be effective.
    It is clearly evident in the PC [Patrol Craft] program that 
we built out there in the NASSCO shipyard, where we delivered 
that ship 6 months early, and we reduced the cost on the ship. 
We produced the first ship 6 months ahead of the schedule, and 
we reduced the cost in that to all of the stakeholders.
    So I think that that is possible in shipbuilding. We have 
demonstrated it there, and we are showing that we can meet our 
commitments in the submarine programs as well.
    Mr. Akin. So then the other part of my question was, does 
that mean savings, and can the ships be built at a lower price 
if you can, leveling your workforce, if you can build them on 
1-year increments, does that help you out? And does that 
translate to savings for the Navy?
    Mr. Heebner. As I mentioned in my opening statement, 
obviously one of the important objectives we have in 
shipbuilding is to deliver the best possible value to the 
taxpayer and by being able to maintain a skilled workforce 
without the cycles of reductions and increases, to be able to 
maintain the trained base. And I will give you a quick example.
    When we were having difficulties at NASSCO 5 or 6 years ago 
in meeting production and time lines, basically, we were 
experiencing five trainees to one journeyman. Today we have 
five journeymen to one trainee. That is the way to do it. That 
is the way you build efficiency into your yard. If you want to 
break production on us, if you want to move the next ship out 
to meet some fiscal timeline, we can do that. But that 
workforce changes under those conditions, and we go back to the 
other condition. We know what the answer is. Let's maintain the 
momentum that we have in building efficiency into our yards.
    The answer is, yes, we can save money on those ships.
    Mr. Akin. Thank you very much.
    Thank you, Mr. Chairman.
    Mr. Taylor. The Chair thanks the gentleman.
    The Chair now recognizes the gentleman from Connecticut, 
Mr. Courtney.
    Mr. Courtney. Thank you, Mr. Chairman.
    Just a follow-up on the Ohio-class discussion from the 
prior panel and Mr. Petters' reference to it.
    First of all, I think you would find a lot of support on 
this committee to finding a separate funding mechanism for 
that. It would solve a lot of problems by itself.
    I mean, obviously, the other issue is just, you know, the 
projection, the $6 billion to $7 billion per submarine, which 
the Navy has built into its shipbuilding plan. I mean given the 
fact that, obviously, the Virginia-class program achieved a 
great deal of success, as all the witnesses have mentioned 
earlier, do you think we can maybe be a little more optimistic 
about whether or not building on, you know, what we have 
learned from that, that there may be hope that we can do better 
than that projection?
    Mr. Heebner. Thank you, Congressman.
    The direct answer is yes.
    Let me just compliment the Navy at this point and the 
Congress and this committee for supporting the Ohio-class 
development process. We know what it takes to get to an 
effective design at the time of construction start. And we have 
programmed into this Ohio replacement program the time to be 
able to do that efficiently. We have engaged our partners in 
the United Kingdom, so we can cost share in that process as 
well. So we have an effective plan in place right now to be 
able to deliver those submarines, and begin construction in 
2019, and deliver those submarines on the schedule that we have 
intended.
    There is a lot of work that has to be done between now and 
then. The Navy and our UK partners have to decide on the 
requirements, the requirements for each individual boat and 
also for those that we share commonly between us. As we get 
through that process, we will build that into the design. And 
our intention is to complete the design so that we can build 
the ships in 2019 without making multiple changes as we begin 
construction. That will enable the efficiency that will keep 
the cost down.
    Mr. Courtney. Well, we are rooting for you.
    Tomorrow we are going to have a lot of people on the Hill 
who are part of the submarine industrial base. The suppliers 
are kind of swarming the place. I mean, you described how you 
know when you begin these programs, you have multiple bidders, 
and then as it goes along, because just by nature, you end up 
with sort of sole-source. I mean, how fragile is the supply 
base right now?
    Mr. Petters. As I mentioned, our overall supply chain today 
for all of Northrop Grumman shipbuilding is about 60 percent 
sole-source.
    For the submarine community, it is actually 80 percent 
sole-source. On the one hand a sole-source supplier or sole-
source condition can be particularly challenging to manage from 
a cost perspective because when you go to negotiate it with a 
sole source supplier, you have a lot different kinds of 
leverage, less leverage frankly. But what we found in all the 
studies that we have done across all of our programs is that 
the most important factor in being able to manage the cost is 
really not whether they are sole-source or not. It really is, 
are we able to provide consistent demand and steady, consistent 
demand that we can forecast and then meet our forecast on?
    So, in the case of the Virginia-class program, that has 
actually been our best program, from a cost-management 
perspective in the supply chain, because we have been able to 
predict to our supply chain, even though it is 80 percent sole-
source, we have been able to predict to them what the demand is 
going to be. And we have been able to place work with them in 
such a way that we have been able to come to good cost-
effective solutions that make sense for both the suppliers 
because they have consistent demand, as well as the 
shipbuilders and the taxpayers because of the bill.
    And so, for me, the issue is, well, while we talk about 
sole-source and lead ships kind of drive competition, at the 
end of the day, the competition is really not the panacea I 
think that people would like it to be. I think the real issue 
is treating the program as a class and then being able to keep 
a steady, consistent demand out there for that supply chain to 
manage to. And I think you can do that whether it is 80 percent 
sole-source or 20 percent sole-source. That consistent demand 
is the key.
    Mr. Courtney. Mr. Heebner.
    Mr. Heebner. The supply base for General Dynamics Electric 
Boat is 70 percent single-source supply. I would echo Mr. 
Petters' comments that it is manageable as long as we can 
provide predictability and stability to that supply base. From 
time to time, there are some of those suppliers who just cannot 
sustain themselves over time, and we take exceptional action to 
be able to maintain that source. But I do believe that it is 
manageable even at that high rate.
    Mr. Courtney. Thank you.
    Mr. Taylor. The Chair recognizes the gentleman from 
Virginia, Mr. Wittman, for 5 minutes.
    Mr. Wittman. Thank you, Mr. Chairman.
    Gentlemen, thank you so much for joining us today. We 
appreciate the great ships you build, and so do our men and 
women in uniform.
    I want to just start out with a question in looking at the 
shipbuilding plan. And you all had talked about consistency in 
demand and making sure that we had that capacity within the 
industrial base to make sure we can meet this Nation's needs. 
When I look at certain classes, I look at DDG bills, and I see 
it go from two to one, two to one, two to one. I am wondering 
how you see that affecting your capacity. And again, I realize 
the challenges there with making sure you have the experts 
there trained and making sure you keep those experts in 
building those ships. I want to talk about that particular 
class.
    And then, also, the SSNs, as you look out in the future, 
when we get to 2030, you see we start to trail off with the 
number of SSNs that we are building off to being at 39 in 2030. 
So I am wondering with the trail trailing off of the builds on 
SSNs and then it ramps back out, what does that do to the 
industrial base? And then what does the two-one-two-one 
schedule for DDG-51s do to your ability to maintain that 
capacity in the industrial base?
    Mr. Heebner. If I could start with two comments. The first 
is the DDG-51 is a good example of what can happen successfully 
in shipbuilding when you get the serial production of ship and 
you have competition between two surface combatant yards, as 
you do between Ingalls and Bath Iron Works. Now, we were 
successful in building that ship for a long time. But several 
years ago, we made an investment in the Bath Iron Works yard in 
concert with the United States Congress, the Navy, the 
communities in the State of Maine. And we built the land level 
transfer facility and we built an ultra hull manufacturing 
facility.
    And the result of that is, from the last slider we had to 
the most recent launch ship, we have taken over 2 million man 
hours, labor hours, out of the production of a single DDG-51. 
That is the type of thing you can do with investment. And you 
get--I am able to convince my board to make these kinds of 
investments when I can show them that we have the likelihood of 
serial production.
    When I saw the 30-year plan and noted three ships every 2 
years, as compared to significantly more than that in the 
periods that allowed us to build that efficiency, I don't know 
how the Navy or the Congress would intend for us to maintain 
two competitive surface combatant yards. So I think we need to 
take a look at that, keep competition in, build five ships 
every 2 years, certainly a requirement, but do it so that we 
compete with each other and get the best possible price for the 
taxpayer. Make us work hard to do that. We are ready for that 
competition. But it takes more volume than three ships every 2 
years.
    Mr. Petters. And I would just echo that there is not 
sufficient volume, in my opinion, in the plan today to have 
healthy competition. Competition works where you have 
sufficient volume to keep the competition moving year in and 
year out. And I think the DDG-51 program was the Virginia-class 
program before the Virginia-class program came along in terms 
of its model program, serial production, attracting investment, 
attracting talent, using competition to drive efficiencies. It 
is also a model program. We are on the edge of restarting that 
program now and we have a plan in front of us that is going to 
restart it at low production rates. If the expectation is that 
we can achieve what we did before in the 51 program at higher 
production rates, I would agree with my compatriot here that 
volume is not sufficient to warrant that. And so we would have 
the same issues of trying to justify investment, trying to 
attract talent and those kinds of things.
    Mr. Wittman. An additional question about our amphibious 
ships. And I know there is a lot of debate. We heard it earlier 
with General Flynn with 38 versus 33. We know we are 
transitioning. We are transitioning from the LPD to the LHD 
[Amphibious Assault Ship]. Tell me, is that transition going to 
be taking place in a way that is going to make sure we transfer 
efficiency in the process to make sure we can meet our 
amphibious ship needs?
    Mr. Petters. Up until this plan was published, the plan 
that we were working to was a plan that would finish the 11th 
LPD, then go and use the LPD hull to build a couple of LCCRs 
and use that to transition into the LSDX program. And that 
would be a bridge, if you will. It would be a bridge, a design 
bridge. It would also be a talent and capability bridge and 
facility bridge.
    This plan has removed those two LCCRs, and so basically it 
has taken the bridge out. What the implications of that are for 
LSDX, I don't know. If the idea is that somehow you can bridge 
from an LPD-27 to an LSDX with a 4- or 5-year gap, I think that 
that is a bridge too far. And so we will have to--that is one 
of--in my written testimony, that is an area where I think that 
the plan could use a little bit more scrutiny.
    Mr. Wittman. Thank you, Mr. Chairman.
    I apologize. That should have been LPD to LSD, but anyway.
    Mr. Taylor. The Chair thanks the gentleman.
    The Chair now recognizes the gentlewoman from Maine, Ms. 
Pingree, for 5 minutes.
    Ms. Pingree. Thank you very much, Chairman Taylor.
    And thank you both for being here today and speaking with 
us about your industry. You both did a good job of answering 
one of my questions about the competition, industrial base, and 
the procurement rate of the DDG-51, so I don't know that I have 
anything else to say. But I appreciate, and you have heard in 
earlier testimony, how often that comes up with the committee 
members and our concern about maintaining the industrial 
capacity and the competition.
    My other question is for Mr. Heebner. And thank you again 
for being here today. It is nice to see you. As you know, the 
DDG-1000 program is experiencing a Nunn-McCurdy cost breach due 
to the decision to truncate the program to only 3 ships instead 
of 10 and not likely because of program or shipbuilder 
performance. What is your perspective on the Secretary's 
explanation for the cost breach, and can you give us an update 
of the production of the DDG-1000?
    Mr. Heebner. Thank you, Congresswoman Pingree.
    It is a program that we are particularly proud of at this 
stage. A couple of comments I think would be appropriate before 
I talk about the Nunn-McCurdy breach. The DDG-1000 program is 
leveraging off of the success of the DDG-51 program at Bath 
Iron Works. And we have had the opportunity to exercise a land 
level transfer facility in the ultra hull and made great 
strides in improving efficiency in shipbuilding performance. We 
designed this ship more completely before start of construction 
than any other ship that has been built at Bath. And as a 
result, as we have begun the process, we have maintained the 
schedule for production and, in some cases, exceeded it.
    But you shouldn't just listen to my view of this thing. 
Secretary Stackley has a quarterly meeting with all of the 
major contributors to the DDG-1000. And I commend the Navy for 
the way they are managing and overseeing the performance of the 
multiple contributors to that program. And that ship is coming 
along.
    From our perspective, the hull mechanical and electrical is 
about 10 percent complete, so it is too early to declare 
victory, but the reality is, we are on or ahead of schedule in 
the projection. We have leveraged lessons learned in the DDG-
51. I like the comment that CNO Roughead made in his testimony 
where he said, the Nunn-McCurdy breach is mathematics. And he 
talked about a program that went from 10 ships in his last 
assessment to 3 ships, and when you do the mathematics, you 
simply get a technical breach that must be reported and must be 
dealt with.
    My suggestion to you though is that we are in the process 
right now of contracting for the DDG-1000 three ships. The 
first one is under contract. The second and the third ships are 
not under contract. If we can keep those on contract, then we 
can generate the savings that have been built into the plan. If 
we must delay those contracts, then that will have impact on 
both the workforce and also on the cost of the ship. So it is 
important that we maintain our vigilance in moving forward and 
getting those two ships under contract.
    Ms. Pingree. Thank you very much.
    Thank you, Mr. Chair.
    Mr. Taylor. Mr. Bartlett.
    Mr. Bartlett. Thank you very much.
    When I became Chair of this subcommittee, I was concerned 
that our platforms were two few and very large and provided 
very enticing targets for a peer. And I would imagine that if a 
peer chose to start a war with a Pearl Harbor kind of an event, 
I wondered how many of our major assets would be available to 
us the next morning. And we commissioned three naval 
architecture studies looking at what a future navy might ought 
to look like considering these threats. And one of those was 
chaired by Art Cebrowski, who I am sure you know.
    And his study indicated that he thought that we should have 
a 600- to 800-ship navy that would cost no more than our 
present navy because he was envisioning much smaller ships. I 
noted that we had unmanned aircraft. The pilots are in Nevada. 
And we have unmanned submarines. We still have people on ships. 
And I asked them why we still had people on ships since they 
are obviously easier to drive than either an airplane or a 
submarine. And the answer I got was that we have so few of 
them, and they are so big and so valuable, we have to have 
people on board for damage control.
    As you know, half the cost of keeping a ship at sea is the 
people. So if you got rid of half the fleet, we could have 50 
percent more ships. If you got rid of all the people, we would 
have twice as many ships.
    Well, if you had a navy like Art Cebrowski envisioned, 600 
to 800 ships, and now if you took the people off them, you 
could have 1,200 to 1,400 ships out there. With that many 
ships, you could consider them semi-expendable, and you could 
rest easy if you didn't have manpower on them to help put out 
the fires and control the damage. What would life be like in 
your yards if you were building six ships a year for each yard? 
That is what this would amount to, by the way. They wouldn't be 
quite today's ships, but they would be six ships in each yard a 
year.
    Mr. Petters. Well, Congressman, I guess my first reaction 
to that is, if I could be in serial production on any kind of 
platform, it would be preferable to building ships one at a 
time. And if I could manage the investment stream around a 
class of ships instead of trying to do it on an annual basis 
the way the budgeting process works, I could also create a set 
of efficiencies.
    I, frankly, don't think the issue is, what would it look 
like in the year that you were actually building six ships of a 
different kind? You are talking about a whole different kind of 
a concept for ships at that point.
    I think the challenge for the industry and for the Congress 
in something like that and the requirements piece of it would 
be the turbulence of the transition from the large platforms, 
the facilities to build large platforms, to creating a 
different kind of facility, a different set of qualifications 
in our workforce to set up that serial production. That would 
be a very turbulent period that would be, you know, a 
significant amount of challenges around efficiencies of 
investment.
    I can point to, you know, just an example of a composite 
facility that we have invested in heavily in Gulfport, you 
know, creating a new technology for a composite deck house for 
the DDG-1000. Those investments were made based on the concept 
that this composite deck house would be available for a class 
of ships that was a couple of dozen ships. We are now down to 
three. And so the return, you know, the managing of that return 
is a big challenge.
    And so if that is where you are going to want to end up--if 
you could say today that we knew for a fact we were going to 
end up there, I think we could all chart a path that could get 
us there efficiently.
    The challenge that I see is that, I am not sure we can 
chart that path, you know a 5- or a 10-year path when we move 
things around year in and year out.
    Mr. Bartlett. With the new Chinese anti-ship missile, I 
think having smaller and more is a distinct advantage. And if 
we had enough of them that you could consider them semi-
expendable, like we do our unmanned aircraft, then we could 
have twice as many ships for the same dollars because half the 
cost of keeping a ship at sea is the people on the ship.
    Thank you very much, Mr. Chairman.
    Mr. Taylor. The Chair thanks the gentleman and now 
recognizes the gentleman from Connecticut for 5 minutes.
    Mr. Courtney. Thank you, Mr. Chairman.
    I wanted to just pick up an item which was in your written 
testimony, Mr. Petters, regarding the workforce challenges as 
far as the bulges that you sort of have in terms of the 
demographics.
    In your testimony, you mentioned the fact that Northrop 
Grumman is doing some partnering with community colleges and I 
guess probably hopefully the vo-tech schools in terms of trying 
to solve that problem. The House actually enacted or passed a 
bill last year which is waiting, is pending in the Senate, the 
Student Aid and Fiscal Responsibility Act, which is basically a 
way of sort of reorganizing higher ed assistance that will free 
up some dollars in a budget neutral way that I think will be 
very beneficial to our country. And one of the aspects of it is 
setting up the competitive grant program for community colleges 
that show that they are collaborating with business in terms of 
workforce needs in their region.
    If it does make it through the Senate, who knows, but it 
will create I think a lot more financial resources for 
community colleges to sort of, again, get more connected to 
workforce needs in their areas. Assuming that happens and that 
your area of community colleges could sort of expand those 
types of programs, I mean, is there more capacity for Northrop 
Grumman to grow those types of programs, and would that benefit 
your workforce needs?
    Mr. Petters. Thank you for the question, Congressman.
    It is an area of personal interest for me. I served for 
several years on the State Board of Community Colleges in the 
State of Virginia, and today I am a member of the Shipbuilding 
Executive Team that does that in the State of Virginia. We are 
heavily engaged in the Workforce Council in the State of 
Mississippi, and we are also heavily engaged in the Workforce 
Development Committee in the State of Louisiana. It is so 
critical to us that I personally believe that my business has 
to be involved in the pipeline of workforce development all the 
way from the Governor's office all the way down through the 
classrooms and into the shipyard itself.
    We have in the past worked hard with the community 
colleges, and we have been able to get some Department of Labor 
grants for almost exactly the concept of things that you are 
talking about. I would have to go back and look at the specific 
legislation here, but certainly, the opportunity to compete for 
grants that would create alignment between what the community 
college's mission is and what our requirements are would be 
very beneficial to us.
    You know, the challenge for us today is that nobody 
graduates anybody with a degree in shipbuilding. You have to 
get that by coming into the shipyard. And we have actually been 
able to go into the colleges and use some of our training 
programs in the community colleges so folks work on their 
associates degree on our curriculum, which is actually very 
helpful to us.
    Mr. Courtney. In the case of EB [Electric Boat], I know for 
a fact that this is happening in southeastern Connecticut. 
There is a mentoring high school program which EB has had for a 
number of years, where students from high school get brought 
into the design area with mentors to kind of really--you know, 
they have a science and math proclivity, and this kind of helps 
them really see an end game in terms of the value of those 
skills. And we now have a situation at EB where there are 
mentors who are now mentoring high school students who 
themselves went through this program 10 or 15 years ago as high 
school kids. And Three Rivers Community College, again, does 
have those kind of relationships with EB.
    But personally, I just feel that this legislation will 
provide real resources and also policy to get our educational 
system working to help businesses, not just shipbuilding, but 
certainly it appears anyway that the demographics suggest that 
we really have got to do a better job to produce that. Again I 
don't know if you want to comment on it. But again, I really 
appreciated your testimony focusing on that issue.
    Mr. Heebner. I would make just a brief comment, Congressman 
Courtney, and I know we have spoken about this in the past. 
Clearly the path to success in a shipyard for a young man or 
woman is through experience, but it is also through education. 
And while we can do a portion of that in the shipyard itself, 
we rely on the local communities at all of our shipyards to 
augment that with formal education. We get the net benefit of 
that in the shipyard as the individual worker becomes more 
proficient at what he does. But we also get the benefit of that 
in the community because we have more educated people who are 
more engaged in the community and help to set the role models 
that others will follow as well as they come along. So it is a 
very important part of the development program in each of our 
yards.
    Mr. Courtney. Thank you, Mr. Chairman.
    Mr. Taylor. I am curious, because at different times, both 
of your corporations have been to see me and probably every 
member of this subcommittee, in, you know, what appears to be a 
semi-panic as you are trying to look out for your workforce, as 
you are trying to keep your operations going. And the question 
that always comes up in the back of my mind is, obviously, 
someone saw this downturn coming, no matter what the program 
was, a while back. To what extent do your corporations feel 
like the Navy is listening when you speak several years out and 
say, do you know what? I am going to hit a bathtub of 
employment in 2 years. I am willing to negotiate a price, a 
little bit better price on another of something that I am 
already making, would you be willing to enter into that type of 
negotiation?
    To what extent does the Navy listen to that type of an 
approach from your corporations?
    Mr. Petters. Mr. Chairman, I have a personal experience of 
going through that in Virginia. In about 2005 or 2006, we saw 
that the delivery of the Bush and the delivery of a refueling 
overall, coupled with submarine deliveries, would cause us to 
have a significant drop-off, which would then translate into a 
ramp backup as we started work on the Ford class and started to 
build into the two submarines per year.
    We started as a management team to start thinking about all 
of the different ways you can deal with that kind of an issue, 
and we started it 3 to 4 years in advance. We worked our way 
through not only the things that we can do, which adjusting our 
overtime rates, adjusting our leased employees as opposed to 
our hiring rates, trying to manage within an employment ban, so 
that we didn't hire people and then just turn right around and 
lay them off.
    We also engaged with the Navy Carrier Program Office on 
this issue. And the Navy Carrier Program Officer over the 
course of a couple of years was able to accelerate some work 
into the valley. You know, they brought the next refueling, 
they brought it into the shipyard a few months early. They were 
able to work with us on how we scheduled our PSAs [Post 
Shakedown Availability] for the ships we were going to deliver. 
And so the Navy couldn't solve the problem alone. We had to do 
a lot of work on our part to make sure that we managed it far 
enough out from a hiring and workforce perspective. But the 
Navy did lean forward in that particular case, I thought, as 
constructively as I have ever seen. When we got to 2009, when 
we were expecting a couple of thousand people, 5 years ago, we 
were expecting a couple of thousand people might be in 
jeopardy. In 2009, we didn't lay anybody off.
    Now, I can say that, you know, in the carrier business, you 
have got a horizon that is long enough there where you can see 
far enough in advance. In some of our other programs, the 
horizon is not quite that far, and you have to be more reactive 
and more responsive, which makes the challenge a little bit 
harder you know. And on top of that, you have things that move 
around on you, like attrition rates and things like that, that 
you might have an estimate that changes which causes you to 
make some adjustments.
    Where we have been able to forecast far enough in advance 
for people to actually take action that would matter, the Navy 
seems to have been able to constructively engage in that to the 
best of their ability.
    On the other hand, I think the Navy is--you know, you are 
asking my opinion--I think the Navy is constrained by their 
resources sometimes, and they understand that we take two LCCRs 
out of the program, that is going to have an effect on the size 
of the base. It is. And so I think that that has been kind of 
the, that is the challenge that we are up against now.
    Mr. Taylor. Given that it is a pretty safe bet that the 
centerpiece of the Navy surface fleet for the foreseeable 
future will be the DDG-51, do you think the Navy is doing a 
good enough job, or those people in the Navy that you deal 
with, of trying to gain whatever economies you can from things 
that you know you are going to be buying in the near and 
distant future?
    Mr. Petters. I think the first problem with the challenge 
of the restarting of the 51 line is that, whenever you restart 
a production line, really smart people sit down and try to 
figure out what is the cost? What is the extra cost going to be 
associated with gapping the line? What is the extra schedule 
going to be required?
    In my experience, we have always underestimated the cost 
impact and we have underestimated the schedule impact. And I 
think that, as we are working our way through the 51 restart, 
we are dealing with that, those issues right now, trying to 
make sure we have the best estimates of what the cost of 
restart is going to be, what the schedule should be. And I 
think the Navy has been constructively working with us to 
understand that.
    But we are not--we are right at the front end of that to 
step off and get the program rolling. And my biggest concern is 
not really the engagement we have had on the restart of the 
program, but it is on the volume following. If the volume of 
that program is going to be two-one, two-one, two-one, when the 
volume that sustained us in the previous years was three ships 
per year, that is half the volume that we had before. And I 
think that is--to me, that is the fundamental issue in the 
program; it is not really the challenge of the restart. I think 
we have good people doing good work to try to figure out the 
restart, but I think the volume is a challenge.
    Mr. Taylor. Well, toward that end, you know our dilemma; a 
shipbuilding budget that has basically been frozen about $15 
billion, huge challenges coming down the line with the Ohio 
replacement, a $7 billion aircraft carrier. To what extent have 
either of your corporations approached the Navy and said, and I 
will use the F-18 program as an example, where this vendor came 
to Congress and said, you give us a long-term contract, we will 
reduce the price of the platform? To what extent have either of 
your corporations approached the Navy and said, for this kind 
of stability, I will offer you this kind of price? I am just 
curious.
    Mr. Heebner. I could make an immediate comment on it. I 
would like to make two points on it, though.
    The first is that I spent 33 years in uniform; 11 of my 
last 14 years were in the Pentagon. And I wish I had been as 
good as Secretary Stackley at opening up my communications with 
my suppliers. I think he has done an exceptional job 
understanding the various elements of making decisions about 
national security and building ships, at creating an 
environment where his staff and the industry can communicate 
openly and effectively. So my compliments to the Navy, and 
specifically to Secretary Stackley.
    A second point is an example. The MLP program that 
Secretary Stackley referred to here today was going to be 
terminated with the MPFF program. But when we discussed that 
with the Navy, we went back to the drawing boards at NASSCO, 
and we laid out a program where we could get 70 to 80 percent 
of the capabilities in the ship that was required for 50 
percent of the cost or thereabouts. And we worked hard on doing 
that and with the Navy, to make sure that it would work for 
them.
    Now, as it turns out, after reviewing their requirements 
and our capabilities to deliver a ship at a lower rate, we came 
to a mutual agreement that it was in fact possible. So it is 
clear to me that the environment is healthy, and we can have 
discussions like this between industry and the Navy.
    Mr. Taylor. I am curious, I will mention to both of you 
that, since the Stackley plan, and I think credit is due to him 
on bringing some stability to the LCS program, since the 
Stackley plan has become the congressional plan, I have been 
approached by at least one yacht maker and several people who 
build offshore supply vessels as to their interest in bidding 
on the second five, the second block of five. I was curious if 
either of your corporations are looking into bidding on the 
second block of five LCSs.
    Mr. Petters. We are interested. We are looking at both 
programs, and we will be doing evaluations about our fit on the 
program.
    Mr. Taylor. Mr. Heebner.
    Mr. Heebner. And a similar comment. We have looked at both 
ships and the capabilities within our yards--and I say that 
with an S, because I have to look at it that way--that we do 
have the capabilities to build either of those ships, and we 
will look carefully at what the requirements are and how we can 
most effectively compete in that competition.
    Mr. Taylor. Mr. Petters, my last question goes to your 
remark, and actually both of you touched on a very high 
percentage of your subcontractors are sole-source contractors 
to you. Given the economic environment in America today, given 
the record low prices that I am seeing for public works 
projects across the country, the record number of bidders on 
construction projects, publicly funded construction projects 
around the country, my instinct tells me that there should be 
the same thing throughout America's industrial base. And my 
instinct tells me that, you know, with the price of metals 
being approximately one half of where they were 2 years ago, 
that there ought to be some bargains out there.
    Now, Mr. Petters in fairness to you, in your recent visit 
to Mississippi, you pointed out to me the amount of time it 
takes to get a contractor approved by the Navy. Keeping that in 
mind, do you feel like that the Navy is resourcing enough 
people and the right people toward bringing as many 
subcontractors as possible on line to broaden both of your 
industrial bases?
    And I am just curious, let's take a valve for an example. A 
valve manufacturer comes to both of you. I want a bid. I think 
we have the technology. We have the people to make this valve. 
They are not on the approved vendors list. What is the process 
that you go through to get them approved, and approximately how 
long does it take? Or if you have a better example, I would 
like to hear it.
    Mr. Petters. I will walk you through a hypothetical if you 
would like. It will help illustrate it. And I can take the 
question in detail for the record if you would like.
    But hypothetically, if you were a manufacturer of a product 
that you sold commercially in a retail environment and you sold 
it at a hardware store, at a pump to the offshore rigs or 
things like that, and you saw that there was a requirement to 
sell that valve to--the Navy had a requirement for a 2-inch 
valve that had this kind of flow rate and that matched the 
valve you were using, there would be, depending on the ship, 
depending on the design, the criticality of the systems, there 
would be a set of requirements that you would be asked to check 
off as the supplier, things like, have you shock qualified the 
valve? Does it require an acoustic qualification? Are the 
materials U.S. materials? Do we have specialty materials 
involved? Do you have a cost accounting system in your company 
that can separate the cost of the government work from the cost 
of your nongovernment work? Would you have, be able to support 
a quality organization that would be there to support the 
Navy's or the government's requirements for validation of the 
pedigree of the valve and the organization of that?
    And I think that the challenge you have is that, because I 
thought about it again after our conversation last week, I 
think the challenge you have is that you have a lot of folks 
who would like to do this work, but when they step back and 
look at the history of the work, they don't see enough 
predictability or sustainability there to warrant the kind of 
investment to go do those kind of things to get qualified to go 
into it. That is not a worker issue. That is a business issue.
    And so my sense of this, as we go out into the marketplace, 
is I know of companies who start up. And one of the 
requirements when they start up is that they will not do 
government work because they don't want to have to deal with 
separating their government cost collection system from their 
other cost collection systems, and they don't want to deal with 
the tracking of special pedigree of materials and go through 
the shock qualifications and the acoustic qualifications you 
have to go through. I think that is the fundamental issue.
    And so all of those things become barriers to entry, if you 
will, for the people that are in the business. And so, for me, 
that--when we talk about them being sole-source, those barriers 
to entry are really the sole-source piece of it. And for me, 
the issue then is they are sole-source, now I have to manage 
them from a consistency of demand issue. And we have 
demonstrated over the past 10 years that, even when we have 
gone sole-source in a large way like we have on the submarine 
program, we have consistent demand. We have predictable demand. 
We are able to manage the cost.
    Mr. Taylor. Mr. Heebner.
    Mr. Heebner. Mr. Chairman, I would like to answer that 
question just slightly differently.
    At these hearings, Mr. Petters and I get to speak on behalf 
of the shipyards. I think somebody needs to speak on behalf of 
the suppliers as well.
    And I would just make the point that, by definition, 
single-source suppliers does not mean inefficient or 
overpriced. I think the fact is that people are working hard 
out there to keep their prices down, and we have within our 
procurement systems checks and balances to make sure that what 
we are paying for products are in fact fair return for a fair 
investment. So I don't by definition start out with the 
assumption that they are not efficient.
    I certainly subscribe to what Mr. Petters said in the sense 
that qualifying suppliers is an arduous process that is 
established by rules that must be followed. But I give a lot of 
credit to our suppliers today who have stuck with us in this 
process of reduced production, and I think we should recognize 
them and pat them on the back for what they are doing to keep 
supplying important parts for us.
    Mr. Taylor. Absolute last question. In today's environment 
and given an excellent conversation I had on the streets of 
Biloxi this weekend with a shipyard worker, I would hope that 
both of your firms are making every effort to hire Americans 
first. And what is the policy of your two particularly when it 
comes to defense-related work? What is the policy of your two 
companies?
    Mr. Petters. In our nuclear work, we have an American 
citizenship requirement. In our nonnuclear work, the 
requirement is not quite as rigid as that. And I will get to 
you for the record exactly what our rules are if you would 
like.
    Mr. Taylor. I would like that, sir.
    [The information referred to was not available at the time 
of printing.]
    Mr. Petters. But we are looking for American citizens.
    Mr. Taylor. Mr. Heebner.
    Mr. Heebner. And I think it best that I take that for the 
record because I don't have a complete answer for you.
    [The information referred to can be found in the Appendix 
on page 109.]
    Mr. Taylor. That is fair. But if you would, a couple of 
weeks response. Thank you.
    Again, the Navy is hiring 5,000 acquisition specialists. 
When people at some of the shipyards are telling me that the 
price of their subcontracts is increasing by 30 percent in a 
time when government contracts that normally get 5 bidders are 
getting 30 and when things are regularly coming in at 10, 20, 
30 percent below the estimated cost for other government 
contracts, there is a part of me that says, why aren't we 
experiencing the same savings? And so if our 5,000 new Navy 
acquisition specialists can help you to do that and if you need 
the legal authority to make that happen, I would hope that both 
of you gentlemen would be making some suggestions to this 
committee.
    Again, I thank you very, very much for appearing before 
this committee. I apologize for the late delay and for keeping 
you so long.
    Are there any further questions.
    The committee stands adjourned.
    [Whereupon, at 6:06 p.m., the subcommittee was adjourned.]



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              WITNESS RESPONSES TO QUESTIONS ASKED DURING

                              THE HEARING

                             March 3, 2010

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

      
              RESPONSE TO QUESTION SUBMITTED BY MR. TAYLOR

    Mr. Heebner. The vast majority of employees at the three General 
Dynamics shipyards have been hired from within their local communities.
    No H2B visa holders (temporary foreign production workers) are 
employed at the General Dynamics shipyards.
    All employees at two of our shipyards, Bath Iron Works and Electric 
Boat, are US citizens.
    Due to its' location and unique regional demographics, GD-NASSCO's 
workforce consists primarily of US citizens but also includes a number 
of legal permanent residents (green card holders)--eligible to pursue 
naturalization (US citizenship), and all of whom have gone through 
company background checks. [See page 49.]

                                  
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