[Senate Hearing 112-80, Part 2]
[From the U.S. Government Publishing Office]




                                                  S. Hrg. 112-80, Pt. 2

DEPARTMENT OF DEFENSE AUTHORIZATION FOR APPROPRIATIONS FOR FISCAL YEAR 
               2012 AND THE FUTURE YEARS DEFENSE PROGRAM

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

                                HEARINGS

                               before the

                      COMMITTEE ON ARMED SERVICES
                          UNITED STATES SENATE

                      ONE HUNDRED TWELFTH CONGRESS

                             FIRST SESSION

                                   ON

                                S. 1253

     TO AUTHORIZE APPROPRIATIONS FOR FISCAL YEAR 2012 FOR MILITARY 
ACTIVITIES OF THE DEPARTMENT OF DEFENSE AND FOR MILITARY CONSTRUCTION, 
TO PRESCRIBE MILITARY PERSONNEL STRENGTHS FOR FISCAL YEAR 2012, AND FOR 
                             OTHER PURPOSES

                               ----------                              

                                 PART 2

                                SEAPOWER

                               ----------                              


                     MAY 18, 25, AND JULY 13, 2011








         Printed for the use of the Committee on Armed Services











                                                   S. Hrg. 112-80 Pt. 2

DEPARTMENT OF DEFENSE AUTHORIZATION FOR APPROPRIATIONS FOR FISCAL YEAR 
               2012 AND THE FUTURE YEARS DEFENSE PROGRAM

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

                                HEARINGS

                               before the

                      COMMITTEE ON ARMED SERVICES
                          UNITED STATES SENATE

                      ONE HUNDRED TWELFTH CONGRESS

                             FIRST SESSION

                                   ON

                                S. 1253

     TO AUTHORIZE APPROPRIATIONS FOR FISCAL YEAR 2012 FOR MILITARY 
ACTIVITIES OF THE DEPARTMENT OF DEFENSE AND FOR MILITARY CONSTRUCTION, 
TO PRESCRIBE MILITARY PERSONNEL STRENGTHS FOR FISCAL YEAR 2012, AND FOR 
                             OTHER PURPOSES

                               __________

                                 PART 2

                                SEAPOWER

                               __________

                     MAY 18, 25, AND JULY 13, 2011

                               __________

         Printed for the use of the Committee on Armed Services







        Available via the World Wide Web: http://www.fdsys.gov/


                                _____

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                      COMMITTEE ON ARMED SERVICES

                     CARL LEVIN, Michigan, Chairman

JOSEPH I. LIEBERMAN, Connecticut     JOHN McCAIN, Arizona
JACK REED, Rhode Island              JAMES M. INHOFE, Oklahoma
DANIEL K. AKAKA, Hawaii              JEFF SESSIONS, Alabama
E. BENJAMIN NELSON, Nebraska         SAXBY CHAMBLISS, Georgia
JIM WEBB, Virginia                   ROGER F. WICKER, Mississippi
CLAIRE McCASKILL, Missouri           SCOTT P. BROWN, Massachusetts
MARK UDALL, Colorado                 ROB PORTMAN, Ohio
KAY R. HAGAN, North Carolina         KELLY AYOTTE, New Hampshire
MARK BEGICH, Alaska                  SUSAN M. COLLINS, Maine
JOE MANCHIN III, West Virginia       LINDSEY GRAHAM, South Carolina
JEANNE SHAHEEN, New Hampshire        JOHN CORNYN, Texas
KIRSTEN E. GILLIBRAND, New York      DAVID VITTER, Louisiana
RICHARD BLUMENTHAL, Connecticut

                   Richard D. DeBobes, Staff Director

               David M. Morriss, Minority Staff Director

                                 ______

                        Subcommittee on Seapower

                   JACK REED, Rhode Island, Chairman

DANIEL K. AKAKA, Hawaii              ROGER F. WICKER, Mississippi
JIM WEBB, Virginia                   JEFF SESSIONS, Alabama
KAY R. HAGAN, North Carolina         KELLY AYOTTE, New Hampshire
RICHARD BLUMENTHAL, Connecticut      SUSAN M. COLLINS, Maine

                                  (ii)










                            C O N T E N T S

                              ----------                              

                    CHRONOLOGICAL LIST OF WITNESSES
                   Marine Corps Acquisition Programs
                              may 18, 2011

                                                                   Page

Stackley, Sean J., Assistant Secretary of the Navy for Research, 
  Development, and Acquisition; Accompanied by Lt. Gen. George J. 
  Flynn, USMC, Deputy Commandant for Combat Development and 
  Integration/Commanding General, Marine Corps Combat Development 
  Command; and VADM John T. Blake, USN, Deputy Chief of Naval 
  Operations for Integration of Capabilities and Resources.......     5

                       Navy Shipbuilding Programs
                              may 25, 2011

Stackley, Hon. Sean J., Assistant Secretary of the Navy for 
  Research, Development, and Acquisition.........................    45
McCoy, VADM Kevin M., USN, Commander, Naval Sea Systems Command..    57
Galinis, Captain William J., USN, Supervisor of Shipbuilding, 
  Gulf Coast.....................................................    59

  The Required Force Level of Strategic Airlift Aircraft Mandated by 
   Title 10, United States Code, and the Administration's Request to 
                       Eliminate that Requirement
                             july 13, 2011

Fox, Hon. Christine H., Director, Cost Assessment and Program 
  Evaluation, Department of Defense..............................    96
McNabb, Gen. Duncan J., USAF, Commander, U.S. Transportation 
  Command........................................................    98
Johns, Gen. Raymond E., Jr., USAF, Commander, Air Mobility 
  Command........................................................   102

                                 (iii)

 
DEPARTMENT OF DEFENSE AUTHORIZATION FOR APPROPRIATIONS FOR FISCAL YEAR 
               2012 AND THE FUTURE YEARS DEFENSE PROGRAM

                              ----------                              


                        WEDNESDAY, MAY 18, 2011

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

                   MARINE CORPS ACQUISITION PROGRAMS

    The subcommittee met, pursuant to notice, at 2:42 p.m. in 
room SR-232A, Russell Senate Office Building, Senator Jack Reed 
(chairman of the subcommittee) presiding.
    Committee members present: Senators Reed, Hagan, 
Blumenthal, Wicker, and Ayotte.
    Majority staff members present: Creighton Greene, 
professional staff member; and Thomas K. McConnell, 
professional staff member.
    Minority staff member present: David M. Morriss, minority 
staff director.
    Staff assistants present: Kathleen A. Kulenkampff and Brian 
F. Sebold.
    Committee members' assistants present: Carolyn Chuhta, 
assistant to Senator Reed; Gordon Peterson, assistant to 
Senator Webb; Roger Pena, assistant to Senator Hagan; Laurie 
Rubiner, assistant to Senator Blumenthal; Lenwood Landrum, 
assistant to Senator Sessions; Joseph Lai, assistant to Senator 
Wicker; and Brad Bowman, assistant to Senator Ayotte.

        OPENING STATEMENT OF SENATOR JACK REED, CHAIRMAN

    Senator Reed. The subcommittee will come to order. Let me 
begin by once again thanking Senator Wicker for his great 
cooperation. I look forward to working with Senator Wicker for 
another year. We had, I think, a very productive and successful 
session last year.
    I want to welcome Senator Ayotte from New Hampshire, who 
brings great insights and skill. Thank you very much, Kelly.
    Senator Ayotte. Thank you, Mr. Chairman.
    Senator Reed. We, I think, had a very successful fiscal 
year 2011, despite all the challenges, in terms of coming up 
with the necessary resources for the Marine Corps and for the 
Navy. I again am confident, working together, we can provide 
the resources necessary for the mission of the Marine Corps and 
the Navy in very difficult times and, I emphasize, on a 
bipartisan basis.
    This afternoon we're convening to hear the testimony 
concerning the Marine Corps acquisition programs. I want to 
welcome Secretary Sean Stackley, Vice Admiral John Blake, and 
Lieutenant General George Flynn back to the subcommittee. 
Welcome, gentlemen. We are grateful for all your service to the 
Nation and to the Navy. We certainly want to have you convey 
our best to the Navy and the Marine Corps, the men and women 
who do the real work and do it so well.
    The Marine Corps has continued supporting the national 
interests around the world, including significant participation 
in Afghanistan. I want to express the committee's, indeed the 
Nation's, thanks for these outstanding efforts of the Marine 
Corps and others who are involved there.
    Since last year, the Marine Corps completed a force 
structure review which recommended several actions. Among these 
was the following, and I'm paraphrasing: retain the capacity 
and capabilities to conduct amphibious operations with the 
assault echelons of two Marine Expeditionary Brigades, 
reinforced by one or more additional Marine Expeditionary 
Brigades aggregated from flying-in forces and equipment 
forward-positioned in maritime prepositioned ships.
    I commend the Marine Corps for completing this review and 
reaching this conclusion. The uncertainties we face in the 
world make it even more imperative than before that we develop 
a vision of the world as we would hope to shape events in it.
    Also since last year, we have seen the Marine Corps 
recommend cancellation of what was one of their premier 
modernization programs, the Expeditionary Fighting Vehicle 
(EFV). Since the mid-1980s the Marine Corps had focused on 
several programs that would enable what was then known as a 
ship-to-objective maneuver. These included the V-22, the 
Landing Craft-Air Cushion (LCAC) and the EFV.
    We called this hearing to better understand the rationale 
behind making this change and to understand the path forward 
for maintaining that capability to conduct amphibious 
operations. However, this hearing is not solely about that 
issue. We need to understand what progress the Marine Corps is 
making in resetting the force and in modernizing other portions 
of its equipment inventory. We also need to understand how Navy 
investment is enabling the Marine Corps to exercise the 
capabilities that are inherent to the Marine Corps.
    I believe that the world we face will continue to be one of 
uncertainty and unrest. Therefore, I continue to believe that 
great emphasis should be placed on lighter, more lethal forces 
and on the mobility of forces. But we must not let the 
outstanding performance of our Marine Corps distract attention 
from some of the real fiscal challenges that the Marine Corps 
faces. In 2002, Senator Kennedy, then the Seapower Subcommittee 
chairman, noted that the Navy needed to work diligently to 
address some of these very important problems, including 
improving fire support capability, including organic Marine 
Corps fire support and Navy shore fire support, enhancing our 
tactical mobility for Marine Corps forces, and augmenting our 
mine countermeasures capability both for sea and land combat.
    In each of these areas, we have made some progress, but 
progress has been slow. The Navy cancelled the DDG-1000 
program, capping it at three ships. These ships would have 
provided a volume of fires to support marines until the time 
when they are able to establish organic fire support ashore.
    We have been able to enhance tactical mobility in some 
respects, but now we see the end of the EFV with uncertainty 
about the system or systems that will replace that capability. 
We have seen the Navy begin to shift the mine countermeasures 
mission to the Littoral Combat Ships (LCS) and their mission 
packages. These ships should be much more deployable, but 
progress on completing the mine countermeasures systems that 
would be deployed from their mission modules has been subject 
to a number of setbacks.
    There are other examples, but in the interest of time I 
will just stop there. I hope we can explore these and other 
issues with the witnesses today.
    Before we begin with our opening statements by the panel, I 
would now like to recognize Senator Wicker for his comments.

              STATEMENT OF SENATOR ROGER F. WICKER

    Senator Wicker. Thank you, Mr. Chairman, for holding this 
important hearing, and thanks to our panelists. We certainly 
appreciate their service and don't want to pass up on an 
opportunity to say that publicly.
    The focus of today's hearing is Marine Corps procurement 
and the President's fiscal year 2012 budget request and Navy 
support to Marine Corps operations. In particular, we hope to 
focus on Secretary Gates' decision, announced in January, to 
end the Marine Corps EFV program after nearly 15 years in 
development and more than $3 billion in sunk costs.
    This decision has raised concerns among many supporters of 
the Marine Corps, and I count myself as one of those, because 
the ability to conduct an amphibious assault against a defended 
shoreline is the core competency that distinguishes our Marine 
Corps from other ground combat forces. It is a capability that 
has been honed to perfection over years of investment and 
development of doctrine, training, and specialized equipment, 
that has proven invaluable in countless missions.
    Amphibious operations made possible by the legacy vehicles 
that have come before the EFV have been as large as the Inchon 
landing during the Korean War in 1950 and the feinted landings 
in Kuwait during Operation Desert Storm in 1991. Such 
operations have also been as small as the withdrawal of U.S. 
forces from Somalia in the mid-1990s and the ongoing 
contingency operations currently underway off North Africa. The 
ability to perform such complex operations is a force 
multiplier for the United States that must be taken into 
consideration by any adversary we might face.
    Secretary Gates' decision to end the EFV program as part of 
the budget cuts sought in the fiscal year 2012 defense budget 
is supported by the Secretary of the Navy and the Commandant of 
the Marine Corps. They believe it will cost too much to 
continue EFV development, to purchase vehicles, and to operate 
them over the long term. However, the Department of the Navy's 
cost projections for the EFV are being evaluated in comparison 
to the portion of the budget historically available to the 
Marine Corps to purchase and operate its ground combat 
vehicles.
    Mr. Chairman, I question whether or not historical cost 
proportion should be the primary factor in determining the 
systems required for the Marine Corps to meet its mission 
requirements. As all of us recognize, the cost of even the most 
basic utility vehicle, the general purpose Humvee, drastically 
increased as requirements-driven modifications were 
implemented.
    As such, I hope the witnesses will explain carefully the 
methodologies that were used to evaluate our current 
requirements for an amphibious vehicle and how that analysis 
led to their decision to abandon the EFV and start over with 
lesser requirements. I would specifically appreciate our 
witnesses addressing some specific questions regarding the 
proposed termination of EFV.
    First, how are essential criteria like speed and the 
distance the vehicle will travel to the beach consistent with 
the Marine Corps' and the Navy's concept for ship-to-objective 
maneuver?
    Second, if we lower the requirements how do we ensure that 
a vehicle other than the EFV is going to be any less expensive 
to buy or operate, or that an alternative vehicle fundamentally 
changes the budget crunch the Marine Corps faces in updating 
its total inventory of ground combat vehicles?
    Third, how do we ensure that the new vehicle can be 
delivered to the Marine Corps in a timely manner if we start 
over again, given that we've been working on a replacement for 
the current Amphibious Assault Vehicle (AAV) since the mid-
1990s?
    The Navy-Marine Corps planning concept which underlays the 
requirement for the EFV has been that Navy ships should be over 
the horizon at 25 miles from shore when launching marines. The 
new concept of the amphibious combat vehicle (ACV) now being 
discussed to replace the EFV may be launched as close as 10 
miles from shore. I'd like to hear from our witnesses about our 
current naval capabilities to protect marines and sailors from 
threats such as anti-ship cruise missile systems, anti-ship 
ballistic missile systems, sea mines, and hostile aircraft.
    Given the Marine Corps' requirement for naval surface fire 
support that was intended to be met by the DDG-1000 Zumwalt 
destroyers, now capped at only three ships, as the chairman 
stated, I would like our witnesses to discuss whether only 
three DDG-1000 ships can meet the Marine Corps naval surface 
fire support requirement, or what will be done to upgrade the 
fire support capability of our other surface ships.
    Gentlemen, there are a lot of issues for us to discuss and 
I look forward to the testimony of our witnesses.
    Thank you, Mr. Chairman.
    Senator Reed. I wonder, Senator Ayotte, if you would have a 
comment?
    Senator Ayotte. I don't. Thank you very much.
    Senator Reed. Thank you.
    Secretary Stackley, your testimony has been made part of 
the record, so feel free to summarize and abridge freely.
    Mr. Secretary.

STATEMENT OF SEAN J. STACKLEY, ASSISTANT SECRETARY OF THE NAVY 
FOR RESEARCH, DEVELOPMENT, AND ACQUISITION; ACCOMPANIED BY LT. 
   GEN. GEORGE J. FLYNN, USMC, DEPUTY COMMANDANT FOR COMBAT 
 DEVELOPMENT AND INTEGRATION/COMMANDING GENERAL, MARINE CORPS 
COMBAT DEVELOPMENT COMMAND; AND VADM JOHN T. BLAKE, USN, DEPUTY 
 CHIEF OF NAVAL OPERATIONS FOR INTEGRATION OF CAPABILITIES AND 
                           RESOURCES

    Mr. Stackley. Yes, sir. Chairman Reed, Senator Wicker, 
Senator Ayotte, thank you for the opportunity to appear before 
you today to address Marine Corps programs. I'll be testifying 
alongside Lieutenant General Flynn and Vice Admiral Blake, and 
if it's acceptable I will keep my opening remarks brief and 
submit a formal statement for the record.
    Your Navy and Marine Corps serves as America's 
expeditionary force in readiness, a balanced air-ground-naval 
force, forward deployed and forward engaged. The deployment of 
Kearsarge Amphibious Readiness Group (ARG), which returned home 
to Norfolk 2 days ago, offers a great example of utility, 
flexibility, and responsiveness provided by a forward-deployed 
Marine Corps air-ground task force. The three ships of the 
Kearsarge ARG, the Kearsarge, Ponce, and Carter Hall, got 
underway in August of last year with 2,200 marines of the 26th 
Marine Expeditionary Unit (MEU) embarked. The group deployed 1 
month ahead of schedule in response to a disaster relief call 
for flood-stricken victims in Pakistan. Upon completing its 
relief mission in January, elements of the 26th MEU, 
disembarked to conduct the fight in Afghanistan alongside 
20,000 other marines in Helmand Province.
    The balance of the MEU remained embarked on the Kearsarge 
group to conduct theater security cooperation engagements in 
Jordan, Kenya, Djibouti, and other countries in Sixth Fleet's 
area of operations. As the world's attention was drawn to 
events in northern Africa, the Kearsarge group was among the 
first to respond, conducting air operations in support of 
Operations Odyssey Dawn and Unified Protector. Then, when 
relieved by the Bataan ARG, which likewise got underway early 
in response to the crisis, Kearsarge returned home this week.
    In all, in the course of their 8\1/2\ month deployment, the 
group and MEU conducted 1,500 air sorties, 150 well deck 
evolutions, covering 3 continents, and 8,000 miles of ocean. 
All the while, marines of the 31st and 15th MEUs embarked on 
Boxer and Essex amphib groups were doing likewise in operations 
stretching from Japan, the rim of the Pacific, Latin America, 
and Africa.
    The success of these operations, built upon the spirit of 
innovation and flexibility, has been the bedrock of the Marine 
Corps in the post-Cold War era. To retain this amphibious 
capability, our ship-to-shore tactical mobility is a key 
priority as the Marine Corps shapes its future force. The 
transition from operations at sea to operations ashore 
necessitates a mix of lift and combat vehicles, and to this 
end, as you described, the Marine Corps initiated the 
development of a ground and combat tactical vehicle strategy in 
2008 with the goals of fielding vehicles with the correct 
balance of performance, protection, payload, mobility, 
transportability, and fuel efficiency.
    The challenge we've encountered, which will be an enduring 
and pervasive challenge, is that the lessons learned from 
Operation Iraqi Freedom (OIF) and Operation Enduring Freedom 
(OEF) bring increased performance requirements to our vehicle 
programs, requirements that translate to increased procurement 
and operating and support costs, threatening to make new 
vehicles exponentially more expensive than the systems they're 
replacing.
    So with the focus on balancing mission needs, force 
structure constraints, and affordability, a four-phase review 
has been conducted, as you described, where the early phases 
have identified impacts associated with the increased 
requirements and later phases are intended to address impacts 
to the amphibious force, as well as vehicle requirements going 
forward.
    An important outcome of this is as the Marine Corps has 
looked at their total vehicle inventory they made a decision 
that the 42,000 vehicles they currently operate will be reduced 
by a total of 10,000 in the course of executing the results of 
this review.
    In conjunction with the formulation of this strategy and 
the conduct of the Marine Corps force structure review, two 
clear and important determinations were made. First, the 
Secretary of Defense, the Secretary of the Navy, and the 
Commandant of the Marine Corps have reaffirmed the necessity of 
the Nation to possess the full range of amphib operations, 
including forcible entry, which will require a self-deploying 
amphibious vehicle, able to project ready-to-fight marines from 
sea to land in permissive, uncertain, and hostile environments.
    This capability is a key to building power ashore and 
overcoming access challenges posed by either lack of improved 
infrastructure or the threat of an adversary. The EFV has been 
the program of record to provide this capability. However, over 
time as the EFV unit cost and operating and support costs grew, 
as production costs entered the budget alongside increasing 
costs for other vehicle programs, driven largely by increased 
vehicle complexity and survivability requirements, and as 
affordability assessments have become tempered by more 
realistic projections of post-OIF, OEF budgets, it was also 
determined that the program of record, EFV, was not affordable 
based on either procurement or operating and support cost 
estimates.
    Cost projections for the EFV procurement alone would 
consume the projected budget for all Marine Corps vehicles, 
while placing great pressure on the balance of Marine Corps 
procurement for the balance of this decade, including critical 
upgrades to C4I systems, radar systems, and logistics systems, 
all of which are necessary to replace obsolete systems of the 
expeditionary force, all of which offer improved capability 
while reducing operating and support costs for the future 
force.
    Accordingly, we have concluded we must revise our approach 
for developing and future ACVs, with increased emphasis on 
affordability to ensure we're able to field this capability in 
the numbers that would be required for amphibious operations. 
To this end, we've commenced the front end effort leading to an 
analysis of alternatives (AoA) and technical demonstration of a 
new ACV, with the intent of mitigating cost, risk, and schedule 
associated with the new vehicle through an integrated portfolio 
approach: leveraging investments made in the EFV; engaging with 
industry to foster a competition for ideas and innovation; 
weighing the vehicle performance requirements across the larger 
portfolio of capabilities required to ensure successful 
operations, including amphibious ship operations; and building 
upon the long history and force structure inherent to the 
legacy AAV.
    We need to open the trade space for vehicle performance 
requirements and include cost as a requirement to drive 
affordability trades. Ultimately, we need to procure at a rate 
that brings healthy competition and efficient production.
    Integrating the three separate programs that are in our 
program today, the Marine Personnel Carrier (MPC), the service 
life extension program (SLEP) and upgrades for a portion of the 
existing AAVs, and a new ACV would create greater opportunity 
to field this critical capability within the challenging 
resource constraints that we're facing.
    We recognize the significance of this course change 
relative to the EFV program and, further, we recognize that the 
challenges to our ground and combat tactical vehicle programs 
in total cannot be solved through this single program change, 
but will require similar focus across the vehicle portfolio. 
We're committed to conducting this work with full transparency 
with Congress.
    Mr. Chairman, thank you for the opportunity to appear 
before you today and we look forward to answering your 
questions.
    [The joint prepared statement of Mr. Stackley, General 
Flynn, and Admiral Blake follows:]
 Joint Prepared Statement by Hon. Sean J. Stackley, Lt. Gen. George J. 
             Flynn, USMC, and VADM John Terence Blake, USN
                              introduction
    Chairman Reed, Senator Wicker, and distinguished members of this 
subcommittee, we are honored to appear here today. We want to thank you 
for your continued support to our sailors, marines, and their families, 
and we appreciate the opportunity to address our ground investment 
strategy.
    As America's Expeditionary Force in Readiness our ground program 
investments support our ability to engage forward to build partners, 
assure allies and protect our interests; build access to a global 
economic system, deter aggression, and respond to crises; assist others 
when disasters strike; provide the only sustainable means to overcome 
access challenges; and, when required, defeat threats to our interests 
ashore. Key is the ability to deploy and employ from the sea in austere 
environments at a time and place of our choosing--a significant 
asymmetric, strategic, and operational advantage that has been used 137 
times since 1990.
    Our ground investments allow us to develop and sustain a ready, 
middleweight force that is easily deployable, energy efficient, and 
highly expeditionary. Complementary to our ground investment, we 
require parallel investments in amphibious ships, amphibious combat 
vehicles, connectors such as the landing craft air cushion and landing 
craft utility, naval surface fire support assets, mine counter 
measures, radars, command and control, vertical lift, and fixed-wing, 
short takeoff and vertical landing aircraft and many other programs 
critical to maintaining tactical and operational readiness. These 
investments are designed to provide a full range of complementary 
capabilities for our Nation's Expeditionary Force in Readiness.
                       the operating environment
    The adversaries we face and will likely continue to face are 
diverse and not easy to characterize into a monolithic threat. They 
learn and adapt quickly to counter our actions and target our 
vulnerabilities simultaneously across multiple domains. Surprise is a 
reality that cannot be eliminated; it must be mitigated by properly 
organizing, training, equipping, and employing our forces.
    Access must be created and maintained during all phases of conflict 
against a wide range of adversaries. Today, we face a number of 
challenges to access that must be overcome. The American Association 
for the Advancement of Science concluded in 1995 that within 30 years 
``75 percent of humanity . . . will reside in coastal areas'' (defined 
as 150 km inland). This prediction appears to be coming to fruition, as 
densely populated urban centers become increasingly common in the 
littorals--precisely where access is required.
    Environmental challenges caused by major disasters not only inflict 
intense human suffering and loss of life, the resultant damage to 
roads, buildings, fresh water resources, communications systems, and 
electrical power distribution impede first responder actions and can 
quickly overwhelm local governments. Therefore, the execution of 
disaster relief operations and restoration of basic governmental 
services present a high degree of danger and uncertainty.
    The military challenges we face span the full spectrum from 
improvised explosive devices (IEDs) through high-tech weaponry, to 
include precision munitions that target our vulnerabilities both on 
land and at sea.
    Additionally, growing sensitivities to U.S. and coalition presence 
on, near, or in the air over sovereign boundaries present increasing 
political challenges.
    In combination, these changes in the operating environment are 
having a profound impact of the complexity of combat and tactical 
vehicle designs.
    The Nation needs an expeditionary force-in-readiness that can 
overcome impediments to access and immediately respond to a crisis 
anywhere in the world across the range of military operations.
                        posturing for the future
    While supporting operations in Afghanistan remains the Commandant's 
top priority, the Marine Corps Service Campaign Plan directs the Marine 
Expeditionary Force commanders to continue to develop and maintain 
amphibious capabilities. In 2010, the Navy-Marine Corps team returned 
to conducting large-scale Marine Expeditionary Brigade/Expeditionary 
Strike Group exercises in order to hone these critical amphibious 
skills. On the west coast, I Marine Expeditionary Force and 
Expeditionary Strike Group-3 commenced its annual Marine Expeditionary 
Brigade-level amphibious exercises Dawn Blitz and Pacific Horizon. On 
the east coast, II Marine Expeditionary Force and Expeditionary Strike 
Group-2 conducted the first in a series of Marine Expeditionary 
Brigade-level exercises known as Bold Alligator. While these exercises 
are critical to enhancing our proficiency in large-scale amphibious 
operations, they also serve as a valuable platform from which new 
concepts can be tested that lead to the development of updated joint 
operating doctrine.
    These exercises and our force development experiments inform future 
amphibious capability requirements in mobility, command and control, 
intelligence, fires, sea-based logistics, organization, doctrine, 
training, and education. The landing force of the future requires 
surface and vertical assault systems with the speed, range, precision 
location and navigational capabilities, protection, and firepower to 
launch from over-the-horizon positions, maneuver through tactical 
points of entry, and achieve the objective regardless of whether it is 
on the low- or high end of the spectrum of conflict. The technologies 
required to enhance these capabilities are under development, and the 
combat systems implementing these technologies are the highest priority 
in the Marine Corps.
    Both the Secretary of Defense and the Secretary of the Navy have 
reaffirmed the necessity of the Marine Corps' amphibious assault 
mission. Accordingly, we must develop an affordable and capable 
amphibious combat vehicle to project Marines from sea to land in 
permissive, uncertain, and hostile environments. This remains the 
Corps' top priority. We ask for your continued support to reach this 
goal.
    In order to adapt to the future operating environment and address 
access challenges, the Navy and Marine Corps are pursuing a number of 
other programs that leverage operational lessons learned and adopt 
acquisition best practices.
                  ground and combat tactical vehicles
    Over the next two decades the Marine Corps will replace or upgrade 
a large portion of the ground combat and tactical vehicle inventory. 
Unit costs for new vehicles have risen substantially, on the order of 
300 to almost 500 percent, over their predecessors. The Marine Corps is 
facing increasing fiscal pressure across all investment categories. 
Command, Control, Communications, Computers, Intelligence, Surveillance 
and Reconnaissance capabilities, requirements and costs have increased 
significantly. Some programs that were initiated in response to urgent 
universal needs statements and joint urgent operational needs and 
initially funded with overseas contingency operations funds are being 
integrated into standard force structure and will therefore need to be 
funded in the base budget.
    The Marine Corps initiated its Ground and Combat Tactical Vehicle 
Strategy (GCTVS) in 2008 to provide a basis for planning, programming, 
and budgeting for balanced maneuver and mobility capabilities to our 
force. This effort is evolutionary in approach, and it includes combat 
vehicles such as the M1A1 Main Battle Tank, Amphibious Assault, and 
Light Armored Vehicles, as well as tactical vehicles such as the Medium 
Tactical Vehicle Replacement (MTVR), Mine Resistant Ambush Protected 
Vehicle, High Mobility Multipurpose Wheeled Vehicle (HMMWV), and Joint 
Light Tactical Vehicle (JLTV). The strategic goals of the GCTVS are to 
field vehicles with the correct balance of performance, protection, 
payload, mobility, transportability, and fuel efficiency. This balance 
will enable rapid concentration and dispersion of Marine Air-Ground 
Task Force (MAGTF) combat power, support strategic deployment concepts, 
and meet and sustain worldwide Marine Corps commitments.
    Our end-state is to develop a more relevant and affordable 
portfolio of combat and tactical vehicles. Through procurement, 
recapitalization, and service-life extension, we will provide the 
capacity for Marine forces to conduct irregular warfare and sustained 
operations ashore, and, when necessary, conduct Marine Expeditionary 
Force-sized forcible entry operations from the sea. The enduring 
challenge to the strategy is that the cost to procure and sustain new 
vehicles is exponentially more expensive than their predecessors.
    GCTVS is evolving in four phases. Phase I supported the 2010 
Program Objective Memorandum, and identified the boundaries of our 
strategic lift capacity and assessed the negative impact that increased 
armor protection is having on our ability to remain a sea-based 
expeditionary force. During Phase II, which supported planning for the 
fiscal year 2012 Program Objective Memorandum, we assessed the capacity 
needed to meet operational requirements. As a result of this analysis, 
we will be able to reduce our overall inventory by about 10,000 
vehicles across all vehicle types, resulting in savings in both 
procurement and long-term operations and maintenance costs.
    We will continue to refine our vehicle inventory requirements as we 
move into Phase III as part of our reconstitution strategy to inform 
POM-13 planning, update our tables of equipment to reflect our reduced 
inventory, and plan to have the reductions fully implemented by the 
fourth quarter of fiscal year 2013. We will also continue to move into 
the engineering manufacturing and development phase of the JLTV program 
and examine the feasibility of a HMMWV recapitalization program to 
address critical performance and protection requirements in our light 
tactical vehicle fleet.
    Subsequent to the decision to cancel the Expeditionary Fighting 
Vehicle (EFV) program, we broadened the strategy objectives to include 
a comprehensive cost-informed, systems engineering review of amphibious 
combat vehicle operational requirements. This ongoing review will 
analyze costs and requirements of water and land mobility, lethality 
and force protection in order to develop trade-space to drive down 
procurement and sustainment costs for future amphibious combat 
vehicles.
    Phase IV of the strategy will inform POM-16, providing the fully 
cost-informed plan to modernize our vehicle fleet to support the Marine 
Corps' objective force which was developed during the Force Structure 
Review Group.
                       amphibious combat vehicles
    The high production and operating costs of the EFV were the 
principal factors leading to the recommendation to cancel the program. 
Based on Marine Corps cost projections, the EFV would have consumed 44-
57 percent of the Marine Corps' projected procurement account during 
the years 2018-2025; consumed 90-100 percent of funding for all ground 
vehicles during the years 2018-2025: and consumed 91 percent of the 
Marine Corps' vehicle-related operations and maintenance account when 
fully fielded.
    Following several years of theater operations, we are facing 
competing demands across all elements to reset war-weary equipment and 
to modernize capabilities. Funding identified for EFV will be used to 
address overall modernization and to pursue an integrated vehicle 
program crafted from inception to provide affordable capabilities and 
where possible leveraging the investment made in the EFV. We intend to 
balance capability with cost while mitigating the risks associated with 
a new vehicle program through the use of an integrated acquisition 
portfolio approach. This approach will initially examine three 
integrated efforts: a service life extension program and upgrades for a 
portion of the existing Amphibious Assault Vehicles upgrade, the 
development of a new Amphibious Combat Vehicle, and the procurement of 
Marine Personnel Carriers. Utilizing best practices in systems 
engineering, cost estimating, and government/industry teaming during 
concept refinement and technology development, we intend to develop 
operationally relevant and technically achievable requirements that are 
affordable.
    Our fiscal year 2012 budget request was based on early cost 
estimates for the initial development of these three vehicle programs. 
We have since refined our program management approach and our cost 
estimates, necessitating a shift in some budget categories while 
maintaining a zero-sum profile. This year we will begin an analysis of 
alternatives (AoA) of amphibious combat vehicles that will evaluate 
cost versus capability of several different vehicle configurations. 
This AoA will also consider the input we have received from industry in 
response to requests for information that we released earlier this 
year. We will also conduct a series of wargames in collaboration with 
the Navy to evaluate the operational impacts of closing the ship-to-
shore distance from 25 nautical miles (nm) to 12 nm while also reducing 
the water speed of the vehicle.
    In the wake of the cancellation of the EFV, we intend to pursue an 
aggressive and responsible acquisition timeline for new and upgraded 
amphibious vehicles. To meet these challenges, we will utilize a 
disciplined systems engineering process and sound cost analysis. Where 
possible, we will streamline acquisition activities to ensure 
capabilities and requirements are met. We look forward to working with 
this committee to help meet these objectives.
               other programs supporting ground vehicles
    To complement our future ground and amphibious vehicles, the Marine 
Corps is investing in other key support areas. For example, the Corps 
is leading the way to build a next generation medium-range radar called 
the Ground/Air Task-Oriented Radar. This system will replace five 
radars, and will be significantly more advanced in its capabilities. It 
will improve threat detection and be more deployable, able to be set up 
in a fraction of the time compared with current systems. In addition, 
we are investing in the Common Aviation Command and Control System, an 
ACAT I program which will help better network our communications, 
radars, intelligence, and ultimately our forces. To better protect the 
Marine on patrol, the Corps is also planning to replace its electronic 
jamming equipment to counter IED threats with the next-generation, open 
architecture JCREW 3.3 system.
                               conclusion
    In order to contribute to the stability of the global system and 
thrive in the 21st century, amphibious forces must: engage forward to 
forge partnerships, prevent crises, promote diplomatic access, reassure 
allies and friends of our commitment, build partner capacity, and 
facilitate the security and stability of our allies; respond rapidly 
and effectively to protect national interests, contain disruptions to 
global stability, overcome access challenges by operating from the sea 
base, reinforce U.S. credibility, solidify relationships with 
international partners and forge new ones; and project power in order 
to assure access allowing us to prevail when conflict arises by rapidly 
transitioning from the open hand of engagement to the closed fist of 
power projection that can impose our Nation's will and defeat our 
adversaries.
    The sea is a vast maneuver space--one that can be used to our 
advantage provided we maintain the capability and capacity to conduct 
amphibious operations. Equally integral to overcoming access challenges 
from the sea is our ability to conduct a wide range of missions ashore 
against various threats. The mix of ground assets we are developing 
will provide the best flexibility for the Nation's Expeditionary Force 
in Readiness.
    In this age of uncertainty, the demand for adaptable forces--
capable of immediately responding to crises--is certain. It is true 
that all things are not equally important or affordable, and thus as 
the Nation resources its future national security, it will be forced to 
make tough choices between capabilities, capacities, and levels of 
readiness in and among the Services. Although it is impossible to know 
where the next flare-up will be, it is clear that well trained and 
equipped amphibious forces will be ready to respond and protect 
interests or prevent undesired effects. With the continued support of 
Congress and the American people, we will ensure amphibious forces are 
well prepared to secure our national interests in an uncertain future. 
Thank you for the opportunity to be here today and we look forward to 
answering further questions.

    Senator Reed. Thank you very much, Mr. Secretary. I presume 
that General Flynn and Admiral Blake have no statements.
    We've included and provided everybody with two charts, and 
we've shared them with the panel. One is the basic procurement 
course for Marine Corps combat ground vehicles, including the 
EFV for illustration purposes, and that is the operation and 
maintenance (O&M) costs.
    [The information referred to follows:]

    [Deleted.]
      
    
    
      
    Senator Reed. But the point really is, as we've talked 
about before, in a very few years we're looking at a huge bow 
wave, even if you factor out the EFV and assume you're getting 
a cheaper replacement, probably it's not that much cheaper. It 
might be more efficient, more effective.
    As General Flynn and I discussed, this is not unique to the 
Marine Corps. The Navy has a similar challenge when it comes to 
trying to build ballistic missiles, ballistic submarines, 
attack submarines, carriers, et cetera.
    It really has to focus our attention as to how are you 
going to deal with this issue. Even assuming the EFV is 
cancelled or a replacement comes on line, the cost of these 
other vehicles that are essential are also increasing. So, 
Secretary Stackley, please comment, and I'd like General Flynn 
to comment and Admiral Blake also from his perspective.
    Mr. Stackley. Yes, sir. Let me start with the specific 
question on the vehicles and then there's a broader issue there 
that wraps around all of this. As I mentioned in my opening 
remarks, the decision to cancel the EFV to go to another ACV 
with a greater focus on affordability is not going to fix this 
problem. It's not going to fix the vehicle problem. It's one 
step of what needs to be a number of steps in each of the 
program areas to create a more affordable vehicle portfolio.
    As I described, General Flynn led an effort looking at 
vehicle inventories. That's another important piece here, which 
is reducing the total inventory of vehicles required, and I'll 
let him go into that in more detail.
    But we have a significant looming challenge. When we look 
at our budget projections and we look at our recapitalization 
of many systems that we procured back in the 1980s and 1990s at 
higher rates of procurement, we can't look at the numbers and 
arrive at a one-for-one replacement knowing that the systems 
that we're fielding going forward are far more capable, far 
more complex, and therefore far more expensive.
    So we are across the board looking at making tough 
decisions in terms of our investments; what are the priorities 
in terms of fielding new capabilities? Depending on what the 
capability is, we look at do we extend the service life of the 
legacy capability? Is that sufficient to meet the requirements? 
Do we buy new? When do we have to make that decision? We go 
system by system into the specific list of requirements and 
challenge the requirements, cut back where it's the right risk 
decision, where the risk is, can you afford the thing, and you 
put a risk even procuring the thing versus getting some measure 
of increased capability.
    So there's no single silver bullet. There is no sacred cow. 
We know that there is no more money and we have to live within 
the resource constraints we have and make the right capability 
decisions. Hopefully, we have them correctly lined up against 
our overarching requirements. Then we have to deliver in 
accordance with what we estimate to be the right price for 
those things.
    Senator Reed. You mentioned that part of this complete 
analysis is looking at legacy systems and effectively extending 
their lives. Does that go to EFV too, in terms of a possible 
solution?
    Mr. Stackley. That is not counted out. We're at the front 
end, as I described, of the analysis. We have over 1,000 AAVs. 
Part of the technology demonstration that we would like to get 
into is, using some of those AAVs as a hull form, let's talk 
about bringing off-the-shelf systems to that hull form and see 
what performance level we can get the existing AAV up to; and 
separately look at technology demonstration of an alternative 
hull form where we could potentially port those same systems 
over now to a separately developed hull form, and what does 
that point towards in terms of cost versus capability. In any 
AoA there's likely to be an alternative that says extend the 
existing vehicle, and we don't have cause to discount that on 
the AAV.
    Senator Reed. General Flynn, please.
    General Flynn. Mr. Chairman, it's always good to see one of 
your slides used at a hearing. This is the slide that keeps me 
up at night and this is the problem that keeps me up at night. 
This includes our vehicle challenges, and if you notice the 
mountains in the sand chart are all in the out years. So this 
problem is coming and we're not ignoring it.
    Aircraft have gotten more expensive and ships have gotten 
more expensive. But on the ground side, because of our need for 
protection, whether it be in vehicles or individual protection, 
because of the battlefield that we're operating in right now, 
there's been an exponential increase in costs.
    About 5 years ago, it cost us about $1,500 to outfit an 
individual marine. Today that's $7,500. The Humvee when we 
bought it in the mid-1990s, about $50,000. When I look at 
replacements for a light vehicle, what I get across my desk is 
in the range of $300,000. So, there's an increased cost there.
    The other part is I know we can't buy our way out of here. 
Over the past couple years the budget projections were more 
optimistic than we're seeing today. So we have to do more than 
just settle for the fact that it's more expensive. When we did 
the force structure review, we tried to design a force as part 
of Secretary Gates' and Secretary Mabus' guidance, was to tell 
us what the 21st expeditionary force in readiness was. That 
wasn't just about manpower. It was also how we are going to 
equip it.
    Because you can't buy your way out of this, what should be 
the table of equipment for that force? The table of equipment 
for that force should be a crisis response TE, which would be 
lighter than what you see that force looking like in 
Afghanistan right now; and that you need to have the capability 
to heavy it up when you need it to be.
    Very similar to what the Third Battalion, 8th Marines, did 
when they came off the 26th MEU. They deployed with a crisis 
response TE, but on their way to combat in Afghanistan they 
heavied up with mine resistant ambush protected (MRAP) vehicles 
and MRAP all terrain vehicles (MATV).
    So we're going to look at ways to reduce our vehicle 
inventory, by going out light for the normal crisis response 
missions, and having the ability, either through prepositioning 
on the land or by operational use of the Maritime 
Prepositioning Force (MPF), to be able to heavy it up from 
using those assets as well. That's why it was critical that we 
operationalize the MPF to be able to do at-sea transfer of 
vehicles and selective offload.
    The other thing is, as Mr. Stackley mentioned, we took a 
hard look at our vehicle inventory and we said, ``Okay, to 
reduce costs we're going to reduce the vehicle inventory by 
about 10,000 vehicles.'' That's a significant savings in 
replacement costs and in operating costs, and that's going to 
happen over time.
    We also have to fix the requirements-acquisition 
relationship. In other words, early on we have to be able to do 
those cost-capability tradeoffs early in our process. That's 
what we're going to do as we look for a solution to the EFV and 
our approach to the ACV.
    We'll also take a hard look at our table of equipment. The 
other thing we'll look at, sir, is we are exploring everywhere 
that we can for new ideas. You mentioned about the 
recapitalization of legacy equipment. We're looking at that for 
the Humvee. Is there a way we could do something, by either 
capsule technology that we talked about last year or structural 
blast challenge, also known as chimney, has a way of mitigating 
costs. So we're pursuing technology, we're pursuing new ideas, 
and we're pursuing new concepts, all as a way to try to drive 
this down and to take some of the peaks off those hills.
    But when you look at this chart, the only thing on there is 
vehicles. Vehicles exceed our total procurement dollars. I know 
we're using historical norm, but that was 30 years of 
procurement history, when at the beginning of those 30 years we 
had over $4 billion in procurement for the ground side and some 
parts in the middle we had less than $1 billion a year.
    What I tell my people is, ``Okay, what makes us think that 
history is going to change?'' Like I say to them, sometimes you 
can have anything you want; you just can't have everything.
    Senator Reed. Thank you.
    Admiral, in the next round I'll ask if you have any 
comments. But let me recognize Senator Wicker for his 
questions.
    Senator Wicker. Thank you.
    General Flynn, let me ask you first about the 10 miles 
versus 25 miles that I mentioned in my opening statement. Has 
the requirement changed? Do you stand behind the requirement to 
conduct amphibious operations against a defended shoreline? Is 
the amphibious assault mission still relevant for the future, 
and what about the point I made about 10 miles versus 25?
    General Flynn. Senator, in context of that, it's not just 
about the amphibious assault. It's about amphibious operations 
across the range of military operations. When we did the 
recertification of the program in 2007, the launch distance 
that was used for the EFV was launched anywhere between 10 and 
20 miles, and that was for the amphibious assault.
    When we released the request for information (RFI) for the 
replacement for the EFV, what we had in the RFI was a launch 
distance of 12 to 18 miles. That 12-mile mark is not a static 
position. That is normally where the ships would come in for 
the high-speed launch. We think it's going to be dependent on a 
number of factors: our tactics, techniques, and procedures of 
using the sea as maneuver space.
    If you're going to have to do a large amphibious assault, a 
two-brigade operation, there is no doubt that we'll have a 
significant amount of time to be able to do shaping operations, 
because it'll take us about 60 days to assemble the shipping to 
be able to do that. So there is going to be significant shaping 
operations that have to take place to knock down the threat as 
well.
    Since we had the original requirement for the EFV, as 
Admiral Blake briefed last week, there have been significant 
improvements in the Navy's ability to deal with the threat. For 
the crisis that we're likely to respond to today, we're going 
to have to mitigate those risks, because you could have a high-
end threat there, but it may not be the same volume that you 
would expect against a near-peer competitor. We're going to 
have to continue to go where they don't think we're going to 
go, to use improved tactics, techniques, and procedures, and 
also to rely on the new defensive systems or integrated 
defensive systems that the Navy's bringing to the fight.
    Senator Wicker. Thank you for your answer. If I could break 
that down, would you explain in a little more layman's terms 
what happened between 2007 and 2011, or I guess 2010, and what 
the difference is? It seems to me that 10 to 20 miles is not 
that different from 12 to 18 miles. So what happened? What is 
the reason for the change between the recertification in Nunn-
McCurdy, which favored continuing the EFV, and today?
    General Flynn. One of the key drivers of the EFV was the 
ability to come up on plane, sir, and be able to go above 17 
knots. It was to be able to do that high-speed launch. The EFV 
on the water in a planing configuration could do in excess of 
25 knots. That capability's pretty expensive and that was one 
of the key drivers, to be able to hydraulically configure the 
vehicle, to be able to develop the engine thrust to be able to 
do it. That part of the capability was a key expensive piece of 
that.
    What we're saying in the future is to make the vehicle 
affordable we have to look at all the mission sets that the 
vehicle's going to have to perform, and then we're going to 
have to try to make those tradeoffs. Part of that tradeoff is 
do we need that level of speed? If we don't need that level of 
speed to be able to do the operation, can you reconfigure the 
program to be more affordable?
    The threat launch in the Nunn-McCurdy certification was 10 
to 20 miles launch. It's the speed to be able to do that, but 
it's also the ability of the task force to be able to protect 
the ship when it comes in to do the launch. Now, they wouldn't 
stay there in a static position, but we're also launching 
aircraft, we're also launching other types of connectors at the 
same time.
    Senator Wicker. Thank you, Mr. Chairman. We're going to 
have a second round?
    Senator Reed. Yes, sir.
    Senator Wicker. I think I'll defer to others and then come 
back.
    Senator Reed. Thank you, Senator Wicker.
    Senator Blumenthal.
    Senator Blumenthal. Thank you, Senator Reed.
    Thank you for all of your great work and the extraordinary 
dedication of the men and women who work with you and under 
you.
    As I've listened to some of the discussion today and read 
the testimony and other material to prepare, from a very 
simplistic standpoint some of the variants here, maybe the 
major variants, are weight, protective value, and cost. I know 
that the MRAP vehicles were once regarded as extraordinarily 
heavy vehicles and perhaps disregarded in their importance 
because of it.
    I wonder if you could comment on whether vehicles with that 
kind of bulk, for protective value and other reasons, have 
become the new normal, whether there is almost inevitably an 
increase in weight, bulk, and whether that variant is 
inevitably tied to cost, or whether technology may enable us to 
reduce both?
    General Flynn. Sir, one of the key things on weight is 
weight is a factor in being able to mitigate under-belly blast. 
But in the end, explosives tend to always win. You can always 
pack more explosives to do that. So the combination of the 
technology that you saw in the MRAP vehicle was not only 
weight. It also had a new hull shaping form, the single-V hull; 
your standoff distance from the blast. All contribute to your 
ability to mitigate blast and protect the servicemen and women 
inside the vehicles.
    What we've learned over time is, though, with weight comes 
a tremendous lack of mobility and transportability. We had to 
field an MATV in Afghanistan because the MRAP vehicles couldn't 
go everywhere because of the road structure and the ability to 
get around where you needed to go.
    We also found in some areas of the country that our light 
armored vehicles worked very well, because they could go 
anywhere, and you can't put improvised explosive devices (IED) 
everywhere. So there's a degree of protection that comes with 
mobility.
    What we've realized is, if we continue on this trend as an 
expeditionary force we may not be able to load ships any more 
with that much weight. So that's why we're looking for 
technology, and we've learned more in I think the last 5 to 10 
years about blast than we've learned over maybe 2 or 3 decades. 
That's why in the future the single-V hull may not be the 
solution. A double-V may be the solution, and in some cases a 
rigid flat hull could actually be the solution.
    That's why we're continuing to pursue alternative 
technologies to see if we can find that sweet spot, if you 
will, between transportability, mobility, and protection.
    But you're right; on the basis of where we are now, sir, 
the more weight you have, the more expensive it is, but the 
lesser mobility and transportability you have on the 
battlefield.
    Senator Blumenthal. Are you satisfied, General, that the 
Nation is investing in the technology in sufficient amount and 
timeliness to do whatever it can to improve the Joint Light 
Tactical Vehicle and all the other vehicles under development 
to take advantage not only of what we've learned in the last 5 
years, which has been impressive, but also what we need to 
learn going forward about the threats that may be in our future 
that haven't been in our past?
    General Flynn. Sir, everything I see, down working on the 
requirements aspect for the Marine Corps, is we don't discount 
any idea. We've gotten help from Mr. Stackley and we've gotten 
help from the Defense Advanced Research Projects Agency. We go 
out to this one company that was working on structural blast 
channel, technology which is known as chimney. That could have 
applications to a lot of different things. The double-V hull. 
All of that has a tendency to take weight off the vehicle. 
We've also seen some advances in material science as well.
    But we haven't found the silver bullet, so we're still 
looking. We're still discovering. But when we find something, 
sir, we see if it's going to work and we try to take advantage. 
I think we're at the stage of maybe seeing some successes in 
the not too distant future, but I don't see anything tomorrow.
    Senator Blumenthal. Thank you, General.
    Mr. Stackley. Weight is just one part of the solution, and 
really on our learning curve what we're focusing on is a total 
system design that provides the best solution. So there is a 
shaping of the hull. The element of weight itself provides a 
benefit. There's the degree of armor protection. But then, as 
General Flynn described, things like the double-V and the 
structural blast channel, there's an element of stiffness 
associated with the vehicle that's starting to emerge as this 
is an important characteristic that we need to consider in the 
design of the vehicles.
    Ultimately, what you're trying to do is protect the marines 
or soldiers inside the vehicle. So now you're starting to deal 
with designs of floors, designs of seats, and you're starting 
to get down to a certain level of detail. I believe we still 
have a significant amount of learning to do as we put together 
optimal system designs. When you start to talk now about an 
AAV, weight's a huge penalty.
    When we're looking at speed and range, when weight starts 
arriving as a requirement for protection, now you're really 
trading off total system performance. So we need to look at the 
entire design, where the ultimate goal is protecting the marine 
inside the vehicle and not go first to weight. There are a lot 
of ways to add stiffness without adding weight. There are armor 
solutions that are lighter in weight. In fact, we have some 
armor solutions that float. Those are more costly, so there's a 
cost element that we wrestle with.
    This front-end design work that we're doing for the ACV, 
we're trying to bring all of that innovation to the table and 
look at a total system approach to that protection thing, which 
does drive costs and does trade off in performance in other 
areas of the vehicle.
    Senator Blumenthal. Thank you very much.
    Thank you, Mr. Chairman.
    Admiral Blake. Sir, if I could just add to that, when we 
look at the issue from the Navy perspective, you have ships 
with expected service lives anywhere from 25 to 40 years, and 
so when we build a ship and we're going to build it for a 
period of 25 to 40 years, what I have to do is I have to sit 
down with General Flynn and we have to look at it and say, all 
right, we have to have give and take here, because the 
displacement of that vehicle is what it is and weight is a 
critical factor.
    So when we have to sit down and look at it, if a vehicle 
increases in weight then we have to figure out where our 
tradeoffs are, because we still have to get that composite 
force of marines ashore and get them ashore safely.
    Senator Reed. Thank you, Admiral Blake.
    Senator Ayotte.
    Senator Ayotte. Thank you, Mr. Chairman. I want to thank 
all of our witnesses for what they do for our country.
    I wanted to follow up, Secretary Stackley, on a question 
about the EFV program termination. As part of it, we know that 
we invested approximately $3 billion. Then part of it is this 
$185 million that we have to pay to terminate the program. I 
wanted to understand that piece of it and understand it from 
the perspective of going forward what is it that we need to do 
to inform our acquisition process?
    Was it something in our terms that we need to be conscious 
of in terms of how we're contracting for these types of 
vehicle, obviously acquisition overall, where we can put 
ourselves in a better position to deal with the cost issue, but 
also to have more favorable terms for our country, so that 
we're not put in a position where we actually have to pay money 
to terminate a program.
    So if you can help me with that, I'd really appreciate it.
    Mr. Stackley. I want to help you 100 percent here. My view 
is termination costs should be approximately zero.
    Senator Ayotte. Thank you.
    Mr. Stackley. Particularly in this program, with, I'll call 
it, knowledge upfront. There are termination costs associated 
with a major program if you slam the door shut. You have a 
large workforce and the company has responsibilities to that 
workforce in terms of everything from relocation, they might 
owe them severance, or they might have 2 months pay they have 
to pay out. So there are definite costs associated with 
termination if it's not managed.
    What we've attempted to do here is to manage the 
termination. So we've done a couple of things. We've taken a 
look at the workforce. We've taken a look at things like 
tooling and material. Those have to be disposed of at the end 
of the contract. So we've put a plan together on what do we 
want to do with these things, and we work our way out of the 
EFV by getting value out of the dollars that are otherwise 
considered to be termination dollars.
    So the workforce, for example; I've given a Warren Act 
notice. General Dynamics would have to provide 2 months notice 
to folks that they're going to be laid off. There's a bill, and 
if they're not being gainfully employed then we get nothing for 
that cost. So we took a look at the workforce. We took a look 
at where we are in the EFV program, and we want to harvest as 
much of the learning and technology that we invested in that 
program as possible to help us to transition to the ACV.
    So we put together a plan that matches the rolloff of staff 
at General Dynamics with harvesting of technologies from the 
EFV, which includes everything from subsystems on the EFV that 
might apply to the ACV, to taking the vehicles that are in 
piece parts and finishing their testing, so we actually get the 
test results that will inform the ACV.
    So you could call it a termination cost, but we're calling 
it a smart termination as we exit the program, so that we get 
the maximum value out of the program as we exit, and we don't 
incur unnecessary costs associated with terminating.
    I don't know if that answers your question or not.
    Senator Ayotte. It does. I think what we're all trying to 
figure out is how we can avoid this. What are the lessons 
learned from this experience, because we're not picking on the 
Marine Corps in all of this because we've seen this in other 
weapons systems across the Services. Whether it's putting more 
of the burden on the contractor in terms of if they don't 
produce the product that we want that they bear more of the 
risk, just in terms of, obviously we've been talking about the 
acquisition process, but what are some of the lessons learned 
overall so that we can make sure that we avoid these situations 
again?
    Mr. Stackley. Yes, ma'am. First, there are different types 
of termination. I'll just be frank. In the case of the decision 
to terminate the EFV program, as discussed, in 2007 we had the 
Nunn-McCurdy. At that point in time we decided we're going to 
continue with the program. We restructured it, and since 2007 
General Dynamics has been performing in accordance with the 
plan.
    So this isn't in 2010 their performance has led us to 
terminating the program. This is DOD looking at the future 
costs of the program and saying, we can't get there from here. 
So there's not fault on the contractor here. What he's been 
doing is he's staffed up to ramp into production, so he does 
have tooling. He has infrastructure. He has people on the 
program.
    If you try to close the program immediately, there's a lot 
of work in process. He has subcontractors throughout the 
country who are going to be invoicing for the work that they're 
doing, all allowable costs on the contract that would have to 
be paid. So that's just a practical matter of we are 
terminating, we're limiting our exposure in that termination, 
but we do have liabilities for this work that was started 
before the decision to terminate.
    Senator Ayotte. I appreciate that. I guess at the end of 
the day really where I'd like to be is, how do we avoid this 
from happening again? I know we've been talking about it, but 
when we look at the fiscal state of our country and the need 
that our Armed Forces have; I think this is just one example 
across. We've seen this on multiple areas at DOD.
    Mr. Stackley. Depending on the contract type, we have 
clauses and terms and conditions that protect the government's 
liability. Typically, for example, for our cost-plus contract, 
which development contracts are, the clause would describe that 
there's a limitation of funds. So the government's liability is 
limited to the amount of funds that are put onto a contract. 
That causes the contractor to have to measure, gauge, and 
ensure that he doesn't go spending money beyond the limitations 
that are imposed in that case.
    On a fixed-price contract, he owes us the deliverable. We 
owe him the amount of money we signed up to; he owes us the 
deliverable. Typically, on a fixed-price contract we're fully 
obligated at the front end. If we terminate while all that work 
is in place, then we're stuck with a legal review in terms of 
what his actual costs are versus what he's billed and the 
differences inside the termination.
    But we do not encumber Congress, for example. We don't 
encumber future Congresses on things like termination or 
cancellation without notifying you and telling you what the 
amount of that liability is in advance.
    Senator Ayotte. I appreciate your answer, Mr. Secretary.
    My time is up, but I still don't have a clear picture on 
when you have a situation like this you have to take the 
lessons learned. We need to take the lessons learned from this, 
all of us, and I think we need to do it across the Services. So 
I don't have a clear picture in my own mind how we avoid this 
again.
    General Flynn. Ma'am, I think one of the key lessons 
learned is we have to do the cost tradeoffs early on in the 
requirements process, not in the acquisition process. So as 
we're looking for the capability, those cost tradeoffs have to 
be done in requirements development early, so that you're not 
in acquisition, so that you know what technology you're asking 
for and you're not overreaching, and that you understand the 
costs.
    That's what's going to be different about how we're 
approaching the ACV, is that we've set up the method and the 
methodology right now to inform the requirements process, with 
cost as an independent variable.
    Senator Ayotte. Thank you, General.
    Senator Reed. Thank you, Senator Ayotte.
    Senator Hagan.
    Senator Hagan. Thank you, Mr. Chairman.
    General Flynn, Secretary Stackley, and Admiral Blake, thank 
you for your work and being here today.
    I wanted to talk about the amphibious ship requirement. I 
know that the Marine Corps' stated amphibious ship requirement 
remains 38, and the Nation currently has an amphibious fleet of 
less than 30, despite an agreement within the Navy to maintain 
a minimum of 33.
    Amphibious ships should not be decommissioned earlier than 
their expected service life spans, obviously, without 
replacements. I'm concerned that the Marine Corps will not have 
sufficient amphibious capabilities to fully support the 
combatant commanders' requirements within an acceptable level 
of risk.
    I'm also concerned that the Marine Corps will not have 
sufficient amphibious capabilities to meet its demands for 
operational deployments. Maintaining a sufficient amphibious 
capability I believe is critical in order to project power, to 
evacuate essential and non-essential U.S. personnel stationed 
overseas, and engage in crisis response and humanitarian relief 
operations.
    General Flynn, can you share your thoughts regarding the 
impact of not having the minimum amphibious ship requirement 
and how does it affect the Marine Corps' ability to respond to 
crises, such as what we've seen recently in Libya and in Japan?
    General Flynn. Ma'am, we've agreed within the Navy on the 
38-ship requirement, and that is both for what we would need to 
be able to do amphibious assault operations at the high end, 
but it's also that inventory of ships that is needed to do what 
we're actually doing today. So it's not based on desires or 
needs. It's actually what's being employed today.
    With a 33-ship inventory, you could meet both your day-to-
day needs and your larger requirements. When you get below 
that, obviously you take on additional risk in terms of 
availability, especially as you heard from the operations that 
are going on now, when you're surging.
    So where are you going to pay the bills? You're going to 
pay a bill in maintenance. Ships need to have time to be 
maintained, and if they don't have the time to be maintained we 
could have a challenge in getting them to their 40-year service 
life. The other place you pay the bill is in training; training 
of the ship and the crews together. So there is the ability to 
happen there. What we're going to see for the first time in 
recent memory when the 11th MEU deploys this summer is all 
ships will be together when they deploy. That's the additional 
risk that you take.
    So 38 was the requirement, 33 was an acceptable level of 
risk, and the further you get away from that the more risk you 
assume in being able to meet your day-to-day requirements, and 
where you pay the bill is in maintenance and in training.
    Senator Hagan. Where are we right now?
    General Flynn. I think we're at 30 right now in the 
inventory, ma'am.
    Senator Hagan. I'm concerned about the number. In last 
year's National Defense Authorization Act, Senator Webb and I 
included report language mandating a report on the 
expeditionary amphibious warfare ship force structure. The 
report directs the Secretary of Defense to complete an 
operational capabilities-based assessment that reviews and 
reconciles the amphibious requirements, the ship retirement 
schedules, as you mentioned, and the 30-year shipbuilding plan. 
Can you give me, Secretary Stackley, the status of that report?
    Mr. Stackley. Ma'am, I'm going to have to take that one for 
the record.
    [The information referred to follows:]

    The Expeditionary Amphibious Warfare Ship Force Structure Report to 
Congress was provided to the congressional defense committees on June 
3, 2011 by the Deputy Secretary of Defense.

    Senator Hagan. Okay.
    Mr. Stackley. Let me assure you, though, I'll take it for 
the record and we'll pull this thing forward and make sure it 
gets back to you in a timely manner.
    Senator Hagan. Any comments on why we have fewer than the 
minimum required, and why the Navy has continued to 
decommission vessels from the amphibious fleet despite the 
shortage?
    Mr. Stackley. Yes, ma'am. A couple pieces there. One, we're 
balancing across the ship portfolio in total. The commonly 
referred to number is a 313-ship Navy, which dates back about 5 
years when that total force structure requirement was 
established. At that time, we were at about 280 ships. Today 
we're at 287 ships. So in total we're far below what we've 
established as a requirement class by class.
    Inside of the amphibs themselves, we have two specific 
amphibious shipbuilding programs ongoing, and we've had 
challenges in terms of schedule on those programs. So part of 
the shortfall is associated with delays in delivering 
amphibious ships.
    Senator Hagan. The schedule problems being what?
    Mr. Stackley. Ship delivery schedules. Frankly, there have 
been some performance issues at the shipyards that have driven 
delays on the LPD and LHA class ships. It's also been a long-
term impact associated with Hurricane Katrina. All of our 
amphibious ships today are built at Ingalls and Avondale on the 
Gulf Coast. There's been a long-term impact associated with 
Hurricane Katrina on everything from schedules to productivity, 
and we're still working our way back from those impacts.
    The third element is the new construction side. Then there 
is the decommissioning side. We spend a lot of time reviewing 
decom schedules, and each decision in terms of decom is, I 
would say, made on its own merits or otherwise in terms of how 
many deployments does that ship have left in it, does it 
require another service life upgrade to get another deployment, 
so what's the balance of investment required to keep the amphib 
on line versus what's the useful service we would get out of 
it.
    I can only assure you that there's a lot of tough 
discussion and debate with each of those, because we're below 
the 33 number, and we're not going to be able to quickly get 
back to 33 just through new construction. So we have to look at 
the existing amphib ships in the fleet, and do what we can to 
make sure that we get the service life that's required out of 
them.
    Senator Hagan. Thank you.
    Admiral Blake. Senator, one of the issues that we have 
taken up is because of the fact that we recognize that there 
are delays in the delivery of, say, the big-deck amphibs. We 
have already looked at and are putting in place funding so that 
we can extend ships that are currently on service and not 
decommission them, delay their decommissionings, if you will.
    But that comes at a cost and that's what we work. We 
recognize that we need to meet the commitment to put the number 
of amphibs out there in order to meet the requirement. We also 
recognize that, because of the level of operational tempo that 
we've had over the past several years, that we have now made a 
concerted effort to make sure that not only do we have to look 
at extended service lives, we have to get the ships to their 
expected service lives.
    One of the best programs I can give you is the LSD-41s with 
their mid-life program. We've actually put a tailored package 
together in order to ensure that we get those ships to the end 
of their service lives. We've actually tailored it for each of 
those ships to get them out there, so that they can meet the 
end of their service.
    In addition, we're also looking at ships as they're coming 
up at the end of their service and seeing if we can work it 
that we can get additional life out of them. But again, that 
comes at a cost and we have to do the tradeoffs.
    Senator Hagan. Thank you.
    Let me ask about the Humvees. The use of the Humvees is 
limited in theater due to the survivability and the crew 
protection concerns. Obviously, with the mine blast and the 
IEDs, the Humvees have been exposed to these underbody attacks, 
which really concerns me greatly. The current Humvee underbody 
protection levels are inadequate in meeting the current and 
emerging threats that our troops are seeing.
    I'm very supportive of anything that we can do that can 
increase the survivability, the mobility, and the operational 
utility of our Humvees. In last year's authorization bill, I 
inserted language requesting the Army and the Marine Corps to 
report their Humvee acquisition and recapitalization plan. In 
the Marine Corps the report mentions that an armored capsule 
system was evaluated as a possible survivability upgrade for 
the Humvee, and the report goes on to say that, despite doing 
well in blast testing, challenges were discovered integrating 
it onto the current Humvee chassis, including the automotive 
and performance issues.
    General Flynn, can you describe some of the challenges in 
integrating the capsule onto the Humvees?
    General Flynn. Yes, Senator. We're trying to look at a 
cost-effective way of making our light tactical vehicle fleet 
last longer and be able to perform in the current threat 
environment. We looked at the capsule. The idea was to build a 
survivable capsule that could fit on an existing frame, using 
the existing drive train and power plant. What we found is when 
we married the two up we did significant frame damage when we 
took it out and tested it out in the field.
    It did well in blast testing. So now we have to look at 
what would be the cost of redoing the frame and would we have 
to redesign a frame?
    A similar effort is what we're looking at in structural 
blast channel, the chimney, that is again taking a look at an 
existing frame, an existing power plant and a power train, and 
seeing if we could recapitalize that way. Where we're at in 
that, it is doing well in its blast testing. Recently we took 
it out to the Nevada Automotive Test Center and we're seeing 
how its frame has done. In some cases we've seen some frame 
damage.
    Now, we have to analyze and say, okay, what's causing the 
frame to be damaged? Is it weight? Is it how we're marrying it 
up? Is it how the frame was manufactured? Was it manufactured 
to the right tolerances? So we're all in the information-
gathering, information analysis part. But we definitely are 
trying to pursue some way of recapitalizing the light vehicle 
fleet at an affordable cost and getting us an acceptable level 
of protection.
    Senator Hagan. Thank you, Mr. Chairman.
    Senator Reed. Thank you, Senator Hagan.
    I think one of the obvious impressions in the questioning 
of everyone is that these are a series of very critical 
decisions that are interrelated in so many different ways; the 
Navy shipbuilding program in terms of accommodating whatever 
you decide to build as an ACV, et cetera.
    There's another aspect of this. The Nunn-McCurdy breach, at 
that point there was the decision to reduce the total number of 
EFVs and to complement them with the MPC, and you face a 
milestone B decision next year, basically. That raises the 
issue again of what is the relationship between the new ACV and 
the MPC? Is that part of the analysis?
    Then there is a whole set of issues. One, if you can reduce 
the speed and increase the armor of the ACV, does that mean it 
can act in some respects as a replacement for in certain cases 
the MPC, that you can reduce the total there?
    I know General Flynn has been extraordinarily, I think, 
thoughtful about systems engineering and making decisions 
early. But there's a whole set of decisions that go not just to 
the replacement EFV, but to the MPC, LCACs, and a host of other 
things.
    General Flynn?
    General Flynn. Sir, when we cancelled the EFV the best 
option at the time that we had was to simultaneously pursue 
potentially three alternatives or three programs together. One 
was the new ACV, one was the MPC, and one was service life 
extension to the AAV.
    I don't have the final answer for you as to say in the 
future are we going to be pursuing all three, two, or one. 
We're working through the data right now. We're working through 
the AoA to do that. The MPC was added to the mix as a way of 
trying to get cost back then under control for the EFV. It was 
a less expensive vehicle, and we were trying to meet the cost 
requirements back then by doing a mixed fleet.
    That's back on the table now and we have to do that 
quickly, because I know in the current program there is a 
milestone B decision, I think in fiscal year 2014. So we need 
to get to those answers quickly, and that's one of the reasons 
why as we pursue our way forward on this we need to be able to 
do an AoA faster than we have traditionally or historically 
done. In the past it's taken 18 months to do an AoA. We need to 
do that in about 9 months. At the same time, we need to be able 
to be pursuing some type of technology demonstrator so we can 
determine what the real requirement is going to be, because 
right now I wouldn't commit to all three and say we're 
definitely going to do all three. I don't think that would be 
wise at this time because I don't have the data to back up a 
decision like that, sir.
    Senator Reed. Mr. Secretary, you have $12 million in the 
budget for the AoA. Is that enough, given the complexity of 
evaluating several moving parts?
    Mr. Stackley. Yes, sir. The budget that you're looking at 
today was best estimates put together in a pretty constrained 
period of time, and I can guarantee you we have adjustments 
coming. An AoA by itself doesn't require a whole lot of money.
    Senator Reed. Right.
    Mr. Stackley. So I don't think the AoA is going to be the 
issue. It's going to be some of the other costs. We have a lot 
of talent from the EFV program that we don't want to lose. So 
what we have to do is get productive work for them consistent 
with the time line that General Flynn described for technology 
demonstrator. I think that's really where we want to be 
investing dollars, is on identifying those mature technologies 
that would apply to a future amphibious vehicle.
    The 9-month timeline for an AoA is more aggressive than 
most, but we're not starting standing still. We're not starting 
with a clean sheet of paper, and the last thing we want to do 
is disband the corporate knowledge that we have and have to 
bring brand new folks in and climb the learning curve for the 
AoA. So we want to leverage the hot operation that we have from 
the EFV as we transition.
    Then the question on the MPC and its role. We're bringing 
all three of these--the AAV SLEP, the MPC, and the ACV--
together, same room, same group of people managing the 
capability, recognizing that we have one pot of money that's 
going to have to manage both the development and ultimately 
procurement of the vehicles and the necessary upgrades.
    So do we have an MPC plus ACV fleet? We're going to look 
real hard at whether or not that makes sense.
    Senator Reed. Another aspect here is LCAC is something 
you're looking at with a new ship-to-shore connector program. 
Is that group going to be in the room, too? That begs the 
question, too, and then obviously the Navy in terms of the 
amphib fleet, the basic delivery vessels, they'll be in the 
room, too? Are we looking outside the proverbial box at all 
these interrelated issues to make a comprehensive presentation?
    Mr. Stackley. Yes, sir. Let me describe a couple things 
there. The LCAC SLEP is wrapping up now and we're going out 
very shortly here with a request for proposal for the ship-to-
shore connector. Its set of requirements are set and the things 
that the ship-to-shore connector would be carrying are well 
set. So we don't see the ship-to-shore connector's performance 
requirements changing as a result of the discussion with 
regards to the amphibious vehicle. But it might impact the 
quantity that we end up procuring.
    Senator Reed. Thank you.
    Just one other question, then I'll recognize the ranking 
member. As General Flynn said, we'd like to think that all of 
these decisions are driven by threats and doctrine, but we know 
there's a budget lurking around every corner that has to be 
met, too. But part of your conclusion is going to be based on 
can the Navy neutralize the opposition on the shore, 
successfully get the marines either 25 nautical miles or 10 
nautical miles from the launch point in a changing environment, 
air threats, cyber threats, et cetera.
    So just if you could comment briefly on that, Admiral 
Blake. Then specifically, both you and Secretary Stackley about 
the mine countermeasure module, because some areas which we 
would anticipate a potential use of amphibious forces the most 
significant threat would be mines. So Admiral Blake, then 
Secretary Stackley, and then I'll recognize Senator Wicker.
    Admiral Blake. Sir, I think what you're referring to in 
general terms is anti-access. I think the Navy has put in place 
a number of programs. I'll only hit a couple of the highlights. 
We won't go delving down into every detail. But I think we've 
put together a family of systems. We've bundled them together 
and we've said this is how we think we can engage, if you will, 
in the anti-access environment.
    One of the premier ones would be Naval Integrated Fires 
Counter-Air. That program is, as I said, a family of systems. 
It comes in two varieties, if you will, from the air and from 
the sea. There are key components within that, everything from 
the E-2D, the aircraft, to the SM-6 missile. Then you're going 
down, of course, to the Aegis ships, Aegis cruisers and 
destroyers. I think that's how you sort of look at it, and we 
are evolving that.
    The second one I would mention is the Surface Electronic 
Warfare Improvement Program. We recognize that we have to make 
advances there because of the proliferation of systems, and 
that is one of the areas where we will have three levels, and 
each one builds on the other so that we put it as the potential 
adversary evolves so do we evolve.
    You mentioned mine warfare briefly. We recognize that the 
LCS module for the mine warfare is a key component and we have 
to get it out there. We have to get it out there because we 
have to get the man or the woman out of the minefield. Right 
now the way we deal with it is the individual has to go into 
the minefield in order to clear it. We've recognized that.
    One of the key components of that program for the LCS is 
that we get that individual out of the minefield. If we don't, 
then we are going to have to look at the current capability we 
have, which is in programs like the Avenger class, which keeps 
a man in the minefield. Then we recognize we'll have to extend 
that program. We do not want to do that. We want to get the LCS 
modules out there.
    Indications are now that we are going to get that module 
out there on time. So we believe we have a way ahead and that 
we will address the issue, as you put it.
    Senator Reed. Just for the record, Secretary Stackley, on 
time?
    Mr. Stackley. Yes, sir. Let me add on to what Admiral Blake 
said. The mine countermeasures (MCM) mission package actually 
gets delivered in phases. So we have a four-phased approach. 
It's incremental capability, and so the first increment initial 
operational capability (IOC) is in 2013. The key pieces we have 
there, we have the remote mine-hunting system (RMS), which has 
gone through Nunn-McCurdy and has been rebaselined, 
restructured to improve its reliability, but all the other 
performance parameters have been met for the RMS.
    The other elements are: a sensor system, where we have a 
sensor system today that's operated off of an aircraft, that 
provides orders of magnitude greater capability than what the 
current MCM fleet provides. What we're working on is we fall 
short of the key performance parameters (KPP) by about 5 
percent. So we have a system that's order of magnitude more 
capable, doesn't meet the full KPP. So we're looking at, okay, 
let's test it with what we have, let's field it with what we 
have, and let's figure out is it worth the added investment to 
get the other 5 percent.
    So the first increment, right now we're still holding to a 
2013 date. Then the subsequent increments provide added 
capability. As I described, the first increment will provide a 
capability equivalent to your MCM fleet. The added capability, 
what it will do is increase your sweep rates. so basically you 
can cover a greater area over less amount of time, and also 
allow us to retire the MH-53, the airborne mine countermeasure 
program that we have today.
    So many piece parts that have to be integrated together. 
One of the things that we've done there is we've taken the 
piece parts and put them all inside of one program executive 
officer for a LCS. So we're bringing the mission packages, the 
ship, the test and evaluation team, and the in-service team all 
together in one organization, and we have to ensure it's 
robustly funded.
    The history of these systems is when these ships were 
struggling the funding was cut on the mission package side. Now 
we have the ships up in production, we have this lag that we 
have to overcome on the development side, and we're focused on 
that because it is a priority.
    Senator Reed. Thank you.
    Senator Wicker.
    Senator Wicker. Secretary Stackley, the decision to cancel 
the EFV, how close of a call was that?
    Mr. Stackley. Sir, to be honest, I wasn't part of that 
decision.
    Senator Wicker. Okay, that's a fair answer.
    If we had proceeded on with the EFV, when would the first 
vehicles have been available for our troops?
    Mr. Stackley. In 2016. We had about another year, this year 
plus a year in terms of development, and then we go through the 
operational testing, to lead to IOC. The full operational 
capability would be about a decade later.
    Senator Wicker. So what is the answer?
    Mr. Stackley. It would have been 2016 for the IOC.
    Senator Wicker. Available for the troops.
    General Flynn. Sir, to make that clear, in 2016 we would 
have had one set for a battalion, but it would have taken us to 
2026 to buy the whole 570-some odd vehicles.
    Senator Wicker. Okay. Best guess, if we instead moved to 
the ACV concept, when will they be available for the troops?
    Mr. Stackley. Let me describe that. I talked about the 
three different capabilities that we're looking at between the 
MPC, the AAV SLEP, and the ACV.
    Senator Wicker. Right.
    Mr. Stackley. We're looking at tradeoffs between those 
three capabilities. So for example, what we'd like to do is 
move forward on a technology demonstrator for the ACV, about a 
2-year effort, to take a vehicle and demonstrate its 
capability, and see if we can go from there into the completion 
of development, where you'd have that same IOC that was 2016 
for an EFV, could be in the 2017, 2018 timeframe.
    So you're really in the same ballpark in terms of time that 
we had with the EFV program, and what we would do is as we look 
at this, do we want to go forward with the MPC as a stand-alone 
program, that would slide left or slide right depending on what 
we decided on the ACV.
    Senator Wicker. The prime contractor of the EFV very 
vigorously disagrees with the decision of DOD, and they have an 
estimate saying let's finish what we've started with 200. They 
estimate that doing so would cost $4.6 billion, and that would 
be less than the combined cost of termination and replacement, 
which all told would be $6.1 billion. What do you say to that?
    General Flynn. Sir, first of all, 200 vehicles doesn't meet 
the requirement. Two hundred vehicles does not give us the 
capability to do a two-brigade operation. It falls short in the 
number of vehicles.
    The other part is the O&M cost of those vehicles. It's not 
just the procurement cost of the vehicles; it's also the O&M 
cost of the individual vehicles, which was another reason why 
the decision was made to cancel the program.
    Then we'd also have the challenge of having to have a mixed 
vehicle fleet with different capabilities. So 200 vehicles does 
not meet the requirement and it gives us a mixed vehicle fleet.
    Senator Wicker. You might have that under this three-
pronged approach.
    General Flynn. No, sir. The three-pronged approach, the AAV 
SLEP would have been designed to give us the time. Even if we 
were fielding the EFV, we would have had to have invested in 
extending the life of the AAV because of the time limit that it 
would take us to go from IOC in 2016 to full operational 
capability in 2026. So we would have to do an AAV SLEP along 
the way to bridge the gap.
    Senator Wicker. So there's not much difference, in your 
judgment, in the cost of the AAV SLEP based on the termination 
of the EFV? You would have had to do that in either scenario.
    General Flynn. We would have had to have done some type of 
SLEP in survivability, mobility, and communications to get the 
vehicle mix, because we would have only been purchasing 50 
vehicles a year.
    Senator Wicker. Gentlemen, I'm learning a lot today, and I 
guess that's the point of these hearings. It occurs to me that 
we really don't know how much we're going to save because of 
this decision to cancel the EFV because we don't know what 
we're going to replace it with.
    I think, General, your testimony is that of the three-
pronged approach to where we go from here, we're not sure which 
ones we're going to do; is that correct?
    General Flynn. That would be correct, sir. I'm not ready to 
tell you what the specific vehicle mix would be until I got a 
better idea of the cost-capability trades that we could get and 
the capabilities of each of those individual programs.
    Senator Wicker. Mr. Secretary, what's your most informed 
estimate for this subcommittee of how much we're saving because 
of the cancellation of the EFV program?
    Mr. Stackley. Yes, sir. We're going to do these all in 
constant year dollars. Today the estimate for the EFV at 573--
not 200, at 573--is north of $17 million. It's approaching $18 
million per vehicle. Now, we're going to put requirements on 
the table and do some trades to get to a more affordable 
vehicle. You're not going to get the same capability at any 
significant cost reduction. So we have to trade off capability.
    Senator Wicker. Yes, we're going to get a slower vehicle 
and a less capable vehicle for sure.
    Mr. Stackley. Yes, sir. What we're going to do is, as 
General Flynn described, get requirements and acquisition in 
the room at the same time, open up, unlock the requirements, 
and price out a more affordable vehicle, where you take those 
KPPs on things like speed, range, level of protection, and 
number of marines that you're carrying, and instead of saying 
it will be the following, we create a range. So there's a range 
of speed, for example, that we're going to put on the table and 
that will influence everything from the size of the engine to 
endurance and things of that nature.
    So in doing that, we've gone one time through in terms of 
just a rough idea to figure out no-less-than values, what would 
it cost. While we are talking about an $8 to $10 million 
vehicle, the first cut going around is more like a $10 to $12 
million vehicle. So there's that. Today if you asked me a best-
informed estimate, I would tell you that we're going to be 
going from an $18 million vehicle to a $2 million vehicle based 
on what we know today, but we're very, very early in the 
process with the focus on figuring out, okay, how do we get 
that cost down further.
    But we're going to trade off capability to do that. We're 
going to trade off speed, and we're looking at things like a 
mix of ACV vessels, for example, where they don't all have to 
have the same level of capability when it comes to things like 
command and control, communications package, or maybe even 
lethality when you get to the gun system that's embarked on 
board.
    General Flynn. Senator, one area where we've learned a lot 
is in the area of protection. So there is an opportunity right 
now to take advantage of everything we've learned on protection 
in the next hull design, because if we have three big areas 
that we're looking at right now as to how to make this 
affordable in terms of capability, obviously it's performance 
over the whole mission set, not just the ship-to-shore transit, 
which is water speed, but also the performance on land and the 
protection that's needed.
    By some of the other discussions we've had today, hull 
design could change significantly in this, and that's why it's 
important that we pursue a technology demonstrator to see if 
that protection's going to be different, because that's one 
thing that's changed a lot over the last 10 years, is our 
approach to protection and the different technologies available 
to do it.
    The third factor that we have to look at is habitability, 
which also affects how the marines do in the back of the 
vehicle. That's one of the reasons as the program cancellation 
is proceeding one of the key things we're going to do with the 
technology demonstrators or the system demonstrator vehicles 
this summer is we're going to do some habitability 
experimentation to see how the marines embarked on the vehicles 
do in different lengths of time in the back of the vehicle. Air 
quality, air temperature, all of that affects your ability to 
fight when you get out of the vehicle.
    So we're going to take a look at that, and that's going to 
inform some of these tradeoffs that we're going to have to 
make, so that we can get from an $18 million vehicle somewhere 
down to a $10 to $12 million vehicle.
    The other point about the 200 vehicles, sir, is the cost 
would have grown from $18 million to well over $20 million a 
vehicle. That was one of the other reasons why we didn't think 
that was affordable.
    Senator Wicker. You heard Secretary Stackley's answer to my 
question about whether this was a close call. He said he was 
not really involved at that level. How close of a call was it 
in your estimation?
    General Flynn. Sir, I don't know how close of a call it 
was, but I would tell you it was difficult. All these decisions 
are difficult. It was a difficult decision because we realized 
how much we had invested in the program. But there was also a 
realism that, could this be affordable. The graphs that we have 
here, we were facing a pretty stark budget reality. So the 
reality was when you look at where we were on budget, whether 
we could afford the capability, and what had changed over time 
in terms of threat, and in terms of the Navy's ability to do 
it.
    Although it was a difficult decision, I believe it was the 
right decision to do it, sir.
    Senator Wicker. If it turns out it was a $15 million 
vehicle instead of $12 million vehicle, it becomes a dicier 
choice, doesn't it? That's not outside the realm of 
possibility.
    Mr. Stackley. It's not outside the realm of possibility, 
but I don't see us heading on that course. Affordability is 
going to be a heavy factor in determining the design of the 
ACV. So if we find ourselves ending up in the $15 million per 
vehicle range, we're going back into the requirements to figure 
out how do we get that cost back down so we can get the 
quantity that's needed to perform the mission.
    But today we don't have information that is looking at a 
$15 million a copy vehicle.
    Senator Wicker. Thank you, Mr. Chairman. This has been most 
informative and it does occur to me that we're well served by 
these gentlemen in front of us.
    Mr. Stackley. Can I take one more piece on? This discussion 
today, this is beyond just a hearing and beyond just a 
briefing. What we're serious about is doing this work as 
transparently as possible. We set up a war room just for having 
discussion across the table, sometimes government to 
government, and potentially down the road with industry. But 
this story is going to continue to unfold with time and we 
intend to make ourselves available as your questions continue. 
I know it's been a hard spot in the past and we want to get to 
a better place in that regard.
    Senator Reed. Let me associate myself with the thoughtful 
comment of my colleague that this was a very productive 
hearing, as a result of your questions particularly.
    I want to thank you, gentlemen, not only for your 
testimony, but for your service. Also, there may be other 
colleagues that have written questions which will be submitted, 
and I would ask everyone to get those questions in, let's say 
before next Wednesday for your prompt response. I know you're 
taking one for the record for Senator Hagan already.
    Mr. Stackley. Yes, sir.
    Senator Reed. Gentlemen, thank you very much for your 
service and for your testimony.
    With that, the hearing is adjourned.
    [Questions for the record with answers supplied follow:]
                Questions Submitted by Senator Jack Reed
                naval surface fire support requirements
    1. Senator Reed. Vice Admiral Blake and General Flynn, in my 
opening statement I mentioned the long-term efforts to address some 
very important problems, including the need to improve fire support 
capability, both organic Marine Corps fire support and Navy shore fire 
support. I also referred to the mixed results we have achieved to date 
addressing that problem. Please describe what your efforts have 
achieved to date in improving fire support capability for sustaining 
Marine Corps forces in a conflict.
    Admiral Blake. In 2005, the ``Joint Fires in Support of 
Expeditionary Operations in the Littorals'' Initial Capabilities 
Document (ICD) documented four gaps in our fires capabilities:

    (1)  The ability to transmit/receive targeting information from 
Intelligence, Surveillance and Reconnaissance (ISR) sources to Command 
and Control systems assets;
    (2)  The ability to engage moving targets in adverse weather;
    (3)  The ability to engage known targets when friendly forces are 
in close contact or when collateral damage is a concern; and
    (4)  The ability to provide volume fires to suppress targets.

    For Gap (1), the Navy-Marine Corps team focused on three areas: 
Unmanned Air Systems (UAS), Target Processing Systems, and Counter-fire 
Radar. Unmanned air systems provide expanding warfighting options and 
are frequently employed in conjunction with ground spotters to improve 
targeting. For target processing systems, the Naval Fire Control System 
(NFCS) automates shipboard naval fires planning and coordination for 
DDG-81 and following hulls (currently fielded). The Supporting Arms 
Coordination Center-Automated (SACC-A), integrates the capability to 
plan and coordinate supporting arms fires on LHA/LHDs (currently 
fielded). The Distributed Common Ground Station-Navy (DCGS-N) will 
employ common geopositioning services capable of deriving aim points 
for precision coordinate seeking weapons (Initial Operational 
Capability (IOC) planned for 2011). POM 12 investments to address Gap 
(1) include: Intelligence Carry-on Program (ICOP) and Multi-Function 
Radar (MFR). ICOP will provide critical ISR capabilities to unit level 
platforms and forces ashore (IOC planned for 2015). MFR will provide a 
sea-based counter-fire capability to the DDG-1000 (IOC planned for 
2016).
    Gaps (2) and (3) are addressed by a number of systems including 
tactical aircraft (TACAIR) delivering weaponry specific to the threat. 
Over the last 20 years, Navy-Marine Corps aviation has significantly 
increased its target prosecution capability through use of improved 
aircraft-to-weapon connectivity that enables in-flight target updates 
to data link equipped weapons. Today a single aircraft can attack 
multiple targets. Additionally, there are a number of currently, or 
soon to be, fielded weapons that are critical to ``mitigating'' these 
gaps including:

    -  Tactical Tomahawk (currently fielded)
    -  Low Collateral Damage Bomb (currently fielded)
    -  Joint Stand Off Weapon (currently fielded)
    -  Direct Attack Moving Target Capability (IOC planned for 2011).
    -  Advanced Precision Kill Weapon System (IOC planned for 2011)
    -  Harvest Hawk Airborne Weapon Mission Kit (currently fielded)

    POM 12 investments to address Gaps (2 & 3) include: The Joint Air-
to-Ground Missile (JAGM) and Small Diameter Bomb (SDB) Increment II. 
Both improve our ability to deliver precision fires and address moving 
targets in adverse weather (IOC planned for 2016).
    To address Gap (4), the ability to mass aircraft, missiles, and 
NSFS can under most scenarios provide volume fires when needed. There 
are over one hundred 5'' guns in the CG/DDG fleet today, all with a 
13nm range and most of which have a fire control system that has much 
improved accuracy over previous systems. Additionally, the TACAIR leg 
of our ``Fires Triad'' (TACAIR, sea-based fires, ground-based fires) 
provides a significant improvement in the volume of fires as compared 
to past generations of aircraft and munitions. POM 12 investments to 
address Gap (4) include: DDG-1000's Advanced Gun System (AGS) with its 
Long Range Land Attack Projectile (LRLAP), and Electro-Magnetic Rail 
Gun (EMRG). LRLAP will have the capability to deliver precision and 
volume fires (IOC planned for 2016). In future years, EMRG may offer a 
system that could launch projectiles at ranges over 100nm. The Office 
of Naval Research's EMRG Innovative Naval Prototype (INP) effort is 
underway and the system could IOC in the 2025 timeframe.
    General Flynn. The character of future operations in the littorals 
has been proffered in several key Marine Corps and Naval documents, to 
include Operational Maneuver From The Sea and Ship-to-Objective 
Maneuver (STOM). These future visions call for an increased capability 
with regard to fire support, especially during the critical transition 
of combat power ashore. We have made great strides in improving the 
aviation and ground-based fires but much work still is needed with 
naval surface fires. The STOM concept of operations identifies the need 
for fires throughout the littoral battlespace in order to support both 
the vertical and surface assault elements of the amphibious force. 
Effective fire support is provided by a combination of tactical 
aviation, naval surface fires, and ground-based indirect fires. This 
triad will ensure that the supported commander has fires available when 
and where he needs them. The complementary nature of the triad is 
essential.
    DoN/USMC Aviation are investing in two weapon systems for air-to-
ground employment that will help mitigate fire support gaps.

    1.  The JAGM will be the replacement air-to-ground missile for 
current Hellfire, TOW, and Maverick missile systems. It has a tri-mode 
seeker (millimeter wave (MMW), Semi-active Laser (SAL), and Imaging 
Infrared (IIR)) and is an all-weather, forward-firing, low collateral 
damage weapon for both moving and stationary targets. IOC for use on 
AH-1Z aircraft is 2016.
    2.  The SDB II is the second iteration (first for USMC/DoN) of the 
miniature munition weapon system family. It uses a tri-mode seeker 
(mmW, SAL, IIR) and will provide the F-35B increased standoff against 
defended targets. It is a 250 lb. weapon, that will give the JSF the 
advantage of increased kills per sortie compared to current families of 
500, 1000, and 2000 lb weapons. It has day and night capability against 
fixed and moving targets in all weather conditions. IOC for use on F-
35B is 2018.

    The Marine Corps has made considerable investments in fire support 
programs over the last two decades resulting in significant 
improvements in organic, ground-based fires support. The principal 
programs are:

     1.  High-Mobility Artillery Rocket System
     2.  M777A2 Light Weight 155mm Howitzer
     3.  Expeditionary Fire Support System includes weapon system and 
development of Precision Extended Range Munitions
     4.  Improved 81mm and 60mm mortars
     5.  Family of Artillery Munitions (Dual-Purpose Improved 
Conventional Munition replacement and munitions modernization)
     6.  Rocket Assisted Projectile replacement
     7.  Infrared 155mm Illumination
     8.  BiSpectral Smoke
     9.  Non-incendiary smoke
    10.  Advanced Field Artillery Tactical Data System

    2. Senator Reed. Vice Admiral Blake and Lieutenant General Flynn, 
what plans are represented in the budget and the Future Years Defense 
Program (FYDP) to address this problem?
    Admiral Blake. In 2005, the ``Joint Fires in Support of 
Expeditionary Operations in the Littorals'' ICD documented four gaps in 
our fires capabilities:

    (1)  The ability to transmit/receive targeting information from ISR 
sources to Command and Control systems assets;
    (2)  The ability to engage moving targets in adverse weather;
    (3)  The ability to engage known targets when friendly forces are 
in close contact or when collateral damage is a concern; and
    (4)  The ability to provide volume fires to suppress targets.

    For Gap (1), the Navy-Marine Corps team focused on three areas: 
Unmanned Air Systems (UAS), Target Processing Systems, and Counter-fire 
Radar. Unmanned air systems provide expanding warfighting options and 
are frequently employed in conjunction with ground spotters to improve 
targeting. For target processing systems, the NFCS automates shipboard 
naval fires planning and coordination for DDG 81 and following hulls 
(currently fielded). The SACC-A, integrates the capability to plan and 
coordinate supporting arms fires on LHA/LHDs (currently fielded). The 
DCGS-N will employ common geopositioning services capable of deriving 
aim points for precision coordinate seeking weapons (Initial 
Operational Capability (IOC) planned for 2011). POM 12 investments to 
address Gap (1) include: ICOP and MFR. ICOP will provide critical ISR 
capabilities to unit level platforms and forces ashore (IOC planned for 
2015). MFR will provide a sea-based counter-fire capability to the DDG-
1000 (IOC planned for 2016).
    Gaps (2) and (3) are addressed by a number of systems including 
TACAIR delivering weaponry specific to the threat. Over the last 20 
years, Navy-Marine Corps aviation has significantly increased its 
target prosecution capability through investment in precision munitions 
with advanced guidance capabilities and data linked weapons, both of 
which contribute to the ability of TACAIR assets to prosecute targets 
in challenging weather conditions and in close proximity to friendly 
forces. Additionally, there are a number of currently, or soon to be, 
fielded weapons that are critical to ``mitigating'' these gaps 
including:

    -  Low Collateral Damage Bomb (currently fielded)
    -  Joint Stand Off Weapon (currently fielded)
    -  Direct Attack Moving Target Capability (IOC planned for 2011).
    -  Advanced Precision Kill Weapons System (IOC Planned for late 
fiscal year 2011
    -  Harvest Hawk Airborne Weapons Mission Kit (Initial kits fielded)

    POM 12 investments to address Gaps (2 & 3) include: The JAGM and 
SDB Increment II. Both improve our ability to deliver precision fires 
and address moving targets in adverse weather (IOC planned for 2016).
    To address Gap (4), the ability to mass aircraft, missiles, and 
NSFS can under most scenarios provide volume fires when needed. There 
are over 100 5,, guns in the CG/DDG fleet today, all with a 13nm range 
and most of which have a fire control system that has much improved 
accuracy over previous systems. Additionally, the TACAIR leg of our 
``Fires Triad'' (TACAIR, sea-based fires, ground-based fires) provides 
a significant improvement in the volume of fires as compared to past 
generations of aircraft and munitions. POM 12 investments to address 
Gap (4) include: DDG-1000's AGS with its LRLAP, and EMRG. LRLAP will 
have the capability to deliver precision and volume fires (IOC planned 
for 2016). In future years, EMRG may offer a system that could launch 
projectiles at ranges over 100nm. The Office of Naval Research's EMRG 
INP effort is underway and the system could IOC in the 2025 timeframe.
    General Flynn. The Marine Corps does not plan or budget for NSFS 
capabilities. The DDG-1000 is the Navy's only funded Program of Record 
for NSFS.
                                 ______
                                 
             Questions Submitted by Senator Roger F. Wicker
                     expeditionary fighting vehicle
    3. Senator Wicker. Secretary Stackley, the Expeditionary Fighting 
Vehicle (EFV) program went through a Nunn-McCurdy breach and 
recertification in 2007 during which the Department of Defense (DOD) 
certified to Congress that requirements for an amphibious assault 
capability were still operationally necessary and that the most cost-
effective means to achieve that capability was the EFV. Not much has 
changed in terms of the need for the Marine Corps to have the 
capability to carry out an amphibious assault. If anything, the area 
denial capabilities of our adversaries that would oppose Navy-Marine 
Corps amphibious operations have increased. What leads DOD and the Navy 
to believe that lesser requirements for a vehicle like the EFV are 
adequate to accomplish the amphibious assault mission?
    Secretary Stackley. Based on the assessment conducted in support of 
Nunn-McCurdy certification requirements, the Vice Chairman of the Joint 
Chiefs of Staff validated that ``The Amphibious Joint Forcible Entry 
Operations capabilities defined by the EFV Capabilities Production 
Document remain essential to national security.'' The most essential of 
those capabilities were:

         the ability to self-deploy from over-the-horizon, thus 
        reducing the reliance on surface connectors whose limit of 
        advance was the beach or a port;
         the ability to carry a reinforced squad of marines in 
        a single lift to facilitate the rapid buildup and projection of 
        combat power;
         the inherent protection against most likely threats 
        encountered during the early phases of projection ashore 
        (ballistic threats from enemy combatant direct-fire weapons).

    While the tactical advantages of at-sea speed capability provided 
by the EFV are not dismissed, the principal driving factor leading to 
the EFV's water speed requirement was the assumption that Marines would 
not be combat ready after spending more than a hour in the vehicle at 
sea--a legacy of the current amphibious assault vehicle (AAV). Testing 
conducted during the EFV's development indicated that improvements in 
habitability (air conditioning and improved vehicle exhaust) may 
permitted Marines to ride in the vehicle longer without suffering ill 
effects associated with the legacy AAV. Confirmation testing is 
currently planned to occur in the Aug/Sept timeframe. At-sea speed 
requirements were a significant system complexity and cost driver. With 
information gained from EFV testing, we are reevaluating at-sea speed 
requirement.
    Our requirement remains to be able to deploy from amphibious 
shipping from over-the-visual-horizon but at ranges less than 25 nm. 
The Navy has supported campaign analysis and a war game, examining 
scenarios requiring power projection from the sea using the EFV as well 
as the legacy AAV and our current and projected suite of air assault 
connectors. The analysis used official threat assessments and modeled 
battlespace preparation in order to define threats to landings. The 
analysis assessed concurrent and separate landings from 25 nm with one 
force using EFV and another force using AAVs delivered by Landing Craft 
Air Cushion (LCAC). The analysis did not specifically compare EFV and 
AAV, in that the forces landed were in different locations and facing 
different opposition. While both missions were accomplished, suggesting 
that the EFV may not be required, higher risk was incurred using the 
LCAC/AAV as a result of a slower build-up of combat power ashore.
    Using fielded and planned capabilities to conduct pre-assault 
battlespace preparation, the Navy assessed that U.S. weapons and 
sensors will allow amphibious ships to operate at 12 nm from the coast 
with acceptable risk against any residual threats. In March 2010, the 
Office of Program Appraisal ``Assuring Operational Access'' Wargame 
conducted three separate and distinct excursions using the then Program 
of Record (EFV), the current capability set (AAV) and alternative 
capabilities (Marine Expeditionary Maneuver Vehicle (MEMV) (notional), 
and Ultra Heavy-lift Amphibious Connector (UHAC) (experimental)). The 
results indicated that each option with its CONOPs has slightly 
different risks, but similar successful outcomes.
    As part of our ongoing systems engineering analysis and in the 
analysis of alternatives to be conducted in support of the EFV's 
replacement, we intend to evaluate the costs and operational 
effectiveness of high vs. lower water speeds as well as distance 
requirements.

    4. Senator Wicker. Secretary Stackley, do the Navy and the Marine 
Corps stand behind the requirement to conduct amphibious operations 
against a defended shoreline, or can requirements and costs be reduced 
to support landings in only uncontested areas? In other words, is the 
amphibious assault mission still relevant for the future?
    Secretary Stackley. Yes, the amphibious assault mission is relevant 
now and in the future, as it has been throughout recorded history.
    An amphibious assault, as defined by the Department of Defense, 
``involves establishing a force on a hostile or potentially hostile 
shore.'' As that definition implies, an amphibious assault is not 
necessarily against a defended shoreline. In fact, Marine Corps 
maneuver warfare doctrine specifically espouses avoiding fixed defenses 
if at all possible. This doctrine reflects both common sense and 
operational experience. In 1943 General A.A. Vandegrift, who was 
awarded the Medal of Honor for his command of the 1st Marine Division 
at Guadalcanal, summarized his experience in the Solomon Islands 
campaign. ``A comparison of the several landings'' he said, ``leads to 
the inescapable conclusion that landings should not be attempted in the 
face of organized resistance if, by any combination of march or 
maneuver, it is possible to land unopposed within striking distance of 
the objective.'' That is exactly what the Marine Corps is advocating in 
the ship-to-objective maneuver concept.
    What General Vandegrift clearly understood was that in war the 
enemy gets a vote. While it is always preferable to avoid a contested 
landing, that option is not always available. Thus, when conducting 
amphibious operations in a hostile or uncertain environment, the Navy-
Marine Corps team must do so from a ready-to-fight posture.
    We are in an era of great uncertainty. The Secretary of Defense 
himself has acknowledged that the United States has been ineffective at 
predicting the next conflict. In order to protect U.S. citizens and 
interests overseas when crises erupt, we must maintain our capability 
to project power--and that includes projecting power in the face of 
armed opposition. Amphibious power is the only sustainable means of 
doing so.

    5. Senator Wicker. Secretary Stackley, fundamentally, what has 
changed since the Nunn-McCurdy certification in 2007 that favored 
continuing the EFV as the most cost-effective way to meet the 
amphibious assault requirement?
    Secretary Stackley. The requirement has not changed. As stated by 
the Secretary of Defense, we are firm in the requirement for a Marine 
Corps amphibious combat vehicle (ACV). It is the key to allowing ship-
to-shore operations in permissive, uncertain, and hostile environments; 
assuring access where infrastructure is destroyed or nonexistent; and 
creating joint access in defended areas.
    What has changed, however, is that since 2007 unit costs for all 
other vehicles have risen substantially, on the order of 300 to almost 
500 percent, over their predecessors. The enhanced threat environment 
in Iraq and Afghanistan has pushed increased counter improvised 
explosive device and location requirements onto all future combat and 
tactical vehicles. At the same time, C4/ISR capabilities, requirements 
and costs have increased significantly. These fiscal pressures combined 
with fiscal pressure across all other investment categories have forced 
the Marine Corps to develop a top-to-bottom approach that affected the 
EFV program.

    6. Senator Wicker. Secretary Stackley, when the Marine Corps 
provided information to Congress in January supporting the decision to 
end the EFV program, the case for termination was made by citing the 
affordability of the EFV, not whether the EFV would be reliable and 
capable of meeting mission requirements. The Marine Corps said that 
continuing with the EFV would: consume about half the Marine Corps 
total procurement budget for 2018-2025; consume all of the budget that 
was projected to be available for procurement of ground combat vehicles 
over that period; and consume about 90 percent of the operation and 
maintenance (O&M) budget for Marine Corps ground vehicles when the EFV 
was fully fielded. These cost projections were made against historical 
cost averages. The affordability concerns raised by the Marine Corps 
are significant, but should we allow comparisons to historical costs 
drive an assessment of what is required to do the mission?
    Secretary Stackley. The Marine Corps provides the Nation with a 
comprehensive capability that is neither defined by nor limited by a 
single vehicle platform. In order to maintain that capability and to 
improve it to meet future challenges and threats, we must consider 
affordability. In the case of EFV as with all of our other programs, 
the Marine Corps did not measure costs of future systems strictly 
against those of legacy systems.
    Over the next two decades the Marine Corps will replace or upgrade 
a large portion of the ground combat and tactical vehicle inventory. 
The Corps assessed the affordability of EFV along with other key 
elements of its ground combat and tactical vehicles against several 
affordability metrics, one of which was based on historical vehicle 
investments projected into the future. EFV was unaffordable by every 
metric but it is just as important to note that even without EFV, the 
potential required investment in vehicle modernization and sustainment 
is also unaffordable when measured against the same metrics which means 
that our fiscal trade-space within the vehicle portfolio is very 
limited, even for a capability as important as that provided by an ACV.

    7. Senator Wicker. Secretary Stackley, since almost all new 
procurement programs are more technically sophisticated than the 
equipment they replace, is the historical cost of legacy programs 
relevant to the requirements needed to execute the mission today?
    Secretary Stackley. The Marine Corps assessed the affordability of 
EFV along with other key elements of its ground combat and tactical 
vehicles against several affordability metrics, one of which was based 
on historical vehicle investments projected into the future. EFV was 
unaffordable by every metric, but it is just as important to note that 
even without EFV the potential required investment in vehicle 
modernization and sustainment is also unaffordable when measured 
against the same metrics. This effectively means that our fiscal trade-
space within the vehicle portfolio is very limited, even for a 
capability as important as that provided by an ACV.
    Over the next two decades the Marine Corps will replace or upgrade 
a large portion of the ground combat and tactical vehicle inventory. 
Unit costs for new vehicles have risen substantially, on the order of 
300 to almost 500 percent, over their predecessors. At the same time 
the Marine Corps is facing increasing fiscal pressure across all 
investment categories.
    Previously we have stated that procurement and sustainment of 573 
EFVs would have:

         consumed on average 49 percent of the Marine Corps 
        total procurement account during the years 2018-2525 (Based on 
        historical average procurement);
         consumed more than 100 percent of what is projected to 
        be available for all procurement of ground vehicles during the 
        years 2018-25;
         consumed more than 90 percent of the Marine Corps' 
        vehicle-related operations and maintenance account when fully 
        fielded.

    Our supporting analysis was based on the fact that in recent 
history the Marine Corps has committed about a third of its baseline 
ground procurement budget to ground vehicle programs. Examining the 
Marine Corps budget historically from fiscal year 1982-2015, and 
projecting forward based on historical averages, we project a total 
future vehicle procurement budget of $5.9 billion ($TY) during the 
fiscal year 2018-2025 timeframe, which is a third of the total ground 
procurement budget projection of $17.7 billion (TY$). The programmed 
vehicle procurement cost for EFV during the same timeframe was $8.6 
billion PMC, which equates to 49 percent of the projected total 
procurement budget and 146 percent of our projected vehicle procurement 
budget.
    Our supporting analysis also projected available ground equipment 
O&M funding against the O&M requirements for ground vehicles. Since 
Marine Corps O&M funding is a large account, this analysis focused only 
on baseline O&M dollars that supported:

         organizational, intermediate, and depot level 
        maintenance;
         acquisition and program support costs to include life-
        cycle management and logistics and technical support;
         sustainment programs associated with current equipment 
        sets, such as funding for secondary repairables and corrosion 
        prevention.

    To determine O&M costs and affordability for the EFV, the annual 
O&M would be about 6 percent of the average unit cost of the vehicle, 
based on the program manager's estimate (analogous to other vehicles). 
By fiscal year 2027, when the EFV was to be fully fielded, we projected 
that the annual O&M cost for the EFV program would be about $750 
million, or about 97 percent of the USMC O&M budget allocated to 
vehicles. While this projection is very coarse, based on historical 
vehicle O&M costs, and the Department would aggressively attack these 
costs had we pursued procurement of the EFV; without question, the 
complexity of this vehicle would have significantly impacted all other 
Marine Corps O&M accounts.

    8. Senator Wicker. Secretary Stackley, what sort of methodology or 
analysis of the operational requirements went into making the decision 
to end the EFV other than concern about its cost?
    Secretary Stackley. The Marine Corps assessed multiple options to 
reduce EFV program costs balanced against operational (capability, 
readiness, strategic depth and training) risk including:

    (a)  Reduced procurement. We looked at various reductions ranging 
from 37-48 percent of the Approved Acquisition Objective (AAO) of 573 
vehicles. Each AAO reduction assessed increased our operational risk. 
Each reduction option decreased or removed EFV from the operating 
forces, the Reserve component, the training support establishment, 
prepositioned equipment, and the Depot Maintenance allowance.
    (b)  Capability Modifications. 16 modifications were identified and 
considered; however, only 2 carried acceptable operational risk.
    (c)  Compressed procurement cycle. This would have required an 
additional $1.4 billion within the FYDP.
    (d)  Sustainment of current AAV in current configuration.

                   concept of ship-to-shore maneuver
    9. Senator Wicker. Vice Admiral Blake, the concept of ship-to-shore 
maneuver supporting the EFV considered anti-ship threats from land-
based mobile cruise missiles, air-to-surface weapons, and mines 
sufficiently serious that amphibious assaults were planned to be 
launched from over-the-horizon to minimize the chances of loss or 
damage to Navy ships. In the years since the EFV program was started in 
1996, anti-ship ballistic missile capabilities have been added as a 
potential threat to large Navy ships, including the large-deck 
amphibious ships, and the sophistication of the other threats has 
increased. What has changed about the Navy-Marine Corps concept of 
ship-to-shore maneuver that makes the Navy more willing to bring 
marines closer to shore to launch the assault phase?
    Admiral Blake. In the 20 years since the EFV Cost and Operational 
Effectiveness Analysis, the threat in the littorals has indeed evolved 
in new and challenging ways. These changes are characterized by the 
proliferation of anti-ship cruise missiles, guided rockets, artillery, 
mortar and missiles, advanced diesel submarines and mines. The threat 
has also changed with the emergence and evolution of coordinated small 
boat tactics and ``anti-access'' doctrine.
    The Navy's area and self defense capabilities have also evolved to 
pace this threat. Key to countering the threat is improved ISR 
capabilities, and the ability to share a common operational picture. 
The proliferation of Aegis combatants, the evolution of AN/SPY-1 radars 
and the ongoing fielding of the Cooperative Engagement Capability (CEC) 
in those combatants represents a significant enhancement in both area 
and self defense capabilities. Additionally, the Naval Integrated Fire 
Control-Counter Air (NIFC-CA) Project Office was established to ensure 
that the Navy and Joint component programs of record (Aegis 
modernization, CEC, Standard Missile-6, and E-2D) are aligned from a 
systems engineering, integration, and test perspective. NIFC-CA expands 
on the CEC sensor netting capability to provide Engage on Remote Over-
The-Horizon air defense capability to engage threats at the maximum 
kinematic range of the missile. For a significant amphibious operation 
involving a high threat environment, there will also be significant 
shaping operations that occur to reduce risks associated with the 
threat prior to commencing amphibious operations.
    Amphibious ships have also improved and will continue to improve 
self defense systems. Lower radar cross section (RCS), and the Rolling 
Airframe Missile improve survivability. New gun systems including the 
Mk 38 MOD 2 25mm gun, the Close In Weapons System) Block 1B with anti-
surface capability has been mounted on LHD and LSD Class ships, and the 
LPD-17 employs the highly capable and extremely lethal Mk 46 30mm gun.
    Enhanced naval capabilities are also being fielded to address the 
submarine threat. An improved Anti-Submarine Warfare (ASW) combat 
system suite as well as advanced versions of existing torpedoes greatly 
enhance our capability to detect, track, and engage submarines 
operating in the littorals.
    The mine threat remains a challenge, but systems such as Littoral 
Combat Ship with Mine Countermeasures Mission Module are being 
developed to help counter this threat from deep water through the surf 
zone.
    A viable standoff range will provide sufficient reaction time to 
counter the expected threat with a reasonable amount of risk. 
Acceptable operational risk is determined by considering the mission, 
the nature of the threats that can potentially oppose that mission, and 
the capabilities of friendly forces to counter those threats. The final 
decision to conduct amphibious operations is based on mission 
requirements and risk, regardless of standoff range.

    10. Senator Wicker. Vice Admiral Blake, if a 25 knot water speed is 
no longer required to launch from about 25 miles from the shore, what 
range of speed and distance from shore are being considered for the 
EFV's replacement?
    Admiral Blake. Projected speed of the EFV replacement, the ACV, is 
currently 8-10 knots. The speed of the amphibious vehicle, the distance 
traveled, along with temperature, sea-state, and cabin atmosphere have 
a direct impact on a marine's combat effectiveness once ashore. Past 
studies have indicated that an individual combat effectiveness 
diminishes after an hour of transit of time. In order to ensure optimal 
combat effectiveness, stay-time for the marine within the vehicle is 
targeted at one hour or less. Launch distance therefore is a function 
of the speed of the vehicle and the other factors listed above.
    The Marine Corps continues to evaluate these requirements, and will 
do Human Affects Testing (HAT) to determine transit time versus combat 
effectiveness, a key factor in the determination of speed and distance 
to shore.
    The Navy is working to support the Marine Corps in the development 
of the requirements for the ACV and its associated doctrine. Further 
detail with regard to ACV requirements would be more appropriately 
addressed by the Deputy Commandant Combat Development and Integration & 
Commanding General, Marine Corps Combat Development Command.

    11. Senator Wicker. Vice Admiral Blake, what drives the speed and 
distance requirement in terms of how long marines can stay in an 
amphibious vehicle and be effective when they reach shore?
    Admiral Blake. The intent of the requirement is to deliver combat 
ready marines ashore regardless of the distance traveled. The speed of 
the amphibious vehicle and the distance it travels will yield a direct 
relationship to the amount of time that a marine spends inside the 
vehicle. In addition to the time spent in the vehicle, there are 
several other factors known to affect human performance, including: 
temperature, sea-state, and cabin atmosphere. The Marine Corps will be 
conducting testing to further refine our understanding of human 
physiology as it relates to sustained travel aboard amphibious 
vehicles.
    The Navy is working to support the Marine Corps in the development 
of the requirements for the ACV and its associated doctrine. Further 
detail with regard to ACV requirements would be more appropriately 
addressed by the Deputy Commandant Combat Development and Integration 
and Commanding General, Marine Corps Combat Development Command.

    12. Senator Wicker. Vice Admiral Blake, can this be improved?
    Admiral Blake. The Marine Corps will be conducting studies in 
August 2011 to determine the relationship between time spent in the 
amphibious vehicle and combat effectiveness and identify potential 
improvements.
    The Navy is working to support the Marine Corps in the development 
of the requirements for the ACV and its associated doctrine. Further 
detail with regard to ACV requirements would be more appropriately 
addressed by the Deputy Commandant Combat Development and Integration 
and Commanding General, Marine Corps Combat Development Command.

marine corps response to the expeditionary fighting vehicle termination
    13. Senator Wicker. Lieutenant General Flynn, the Marine Corps 
proposes responding to the EFV termination through a three-phased 
acquisition policy. It will upgrade a portion of the legacy AAV 
inventory through a Service Life Extension Program (SLEP) that will 
extend their life and add capability. It will accelerate the Marine 
Personnel Carrier (MPC) program designed to complement the EFV, AAV, or 
the replacement for the EFV known as ACV. The MPC would not be designed 
to swim ashore, but would be a fighting vehicle on land. Design 
requirements are being developed. It will also develop the new ACV 
building on the lessons learned from the EFV. The wind up of the EFV is 
focused on harvesting relevant technology from the EFV program to 
transfer to the new ACV. How many of the legacy AAVs now in service 
will undergo a SLEP?
    General Flynn. We estimate that approximately 400 of our legacy AAV 
will be required to undergo SLEP in order to the required operational 
availability of vehicles as a bridge until we field the ACV.

    14. Senator Wicker. Lieutenant General Flynn, what capabilities 
will be added to the AAV?
    General Flynn. The initial priority is to make survivability and 
force protection improvements while restoring land and water 
performance lost through previous survivability improvements. This will 
likely require modifications and improvements to power-train and 
suspension components to mitigate the effects of weight growth and 
component obsolescence.

    15. Senator Wicker. Lieutenant General Flynn, how old are the AAVs 
and how much additional life will the SLEP provide?
    General Flynn. Today's AAV are built upon the LVT-7 family of 
vehicles which began fielding in 1971. Over the past 40 years these 
systems have been service life extended, product improved, rebuilt to 
standard, upgraded and continuously maintained at all echelons. 
Depending on the extent of the SLEP, it may be possible to extend the 
serice life by up to 20 years. Our current plan is limited to those 
survivability-related upgrades to improve the capability until we can 
field the ACV.

    16. Senator Wicker. Lieutenant General Flynn, how much funding does 
the Marine Corps estimate will be required, or how much is available, 
for a SLEP?
    General Flynn. The funding available in PB-12 is sufficient to 
begin work on AAV SLEP. The detailed cost estimates necessary to 
determine total program costs will be developed as part of acquisition 
strategy. We estimate that we will need to SLEP approximately 400 of 
our legacy AAVs to address force protection, survivability, durability 
and obsolescence modifications and improvements.

    17. Senator Wicker. Lieutenant General Flynn, given budget 
constraints, how confident is the Marine Corps that improvement of the 
amphibious assault capability may not be limited to a SLEP of the AAV?
    General Flynn. Development and procurement of the ACV will remain a 
high investment priority; however, we are assessing AAV affordability 
options and risks. In the absence of a modern replacement for the AAV, 
the limitations and risks associated with relying solely on the legacy 
system will be assessed and mitigated where possible.

    18. Senator Wicker. Lieutenant General Flynn, in terms of the MPC, 
how expensive is this vehicle estimated to be in comparison to the EFV 
or its proposed replacement the ACV?
    General Flynn. In order to better distribute combat power for 
sustained operations ashore, two MPCs are required to lift the same 
reinforced rifle squad that is concentrated in a single EFV or single 
ACV. Based on responses we have received from industry, the cost to 
lift a reinforced rifle squad in comparison to EFV was approximately 
half. Given current ACV cost targets, the comparative costs to lift a 
reinforced rifle squad are estimated to be approximately two thirds 
that of the ACV's targeted cost.

    19. Senator Wicker. Lieutenant General Flynn, how much money will 
actually be saved by cancelation of the EFV if the Marine Corps must 
extend the life of the AAVs, and design and build two new vehicles, the 
ACV and the MPC?
    General Flynn. The plan to procure MPC and to upgrade AAVs is 
independent of the decision to cancel EFV as the AAV upgrade was a 
necessary activity to bridge to EFV and MPC was a complementary 
capability to EFV to address overall tactical lift capacity. Both 
initiatives pre-dated the cancellation of the EFV program. The 
principal cost avoidance will be attained by developing an ACV that 
costs less to procure than the EFV would have. We have set a cost 
target of approximately $12 million for the ACV.

    20. Senator Wicker. Lieutenant General Flynn, what is the timeline 
for designing and building the MPC?
    General Flynn. We are working to fully develop an integrated 
acquisition plan in support of ACV, MPC, and AAV SLEP. Early returns in 
this process point to a required initial operational capability of 
2018.

    21. Senator Wicker. Lieutenant General Flynn, won't an improved AAV 
that will be in service for a long time together with the new ACV leave 
the Marine Corps with two different sets of amphibious vehicles and the 
associated higher costs of a mixed inventory?
    General Flynn. Improvements to the AAV are intended to enable the 
Marine Corps to sustain its amphibious capability until the ACV is 
fielded. As with other equipment replacement programs, the transition 
period between the initial fielding of a new capability and attainment 
of full operational capability will result in a mixed fleet of 
vehicles. During this transition period, the AAV inventory will be 
disposed as the ACV inventory increases.

    22. Senator Wicker. Lieutenant General Flynn, how will the MPC get 
ashore if it doesn't swim as the EFV and APC would?
    General Flynn. Introduction of the MPC into theater is planned as 
part of a Maritime Prepositioning Force deployment. MPC is a 
reinforcing capability relative to the self-deploying ACV. MPC will 
transit to the beach or port via connectors such as the LCAC, 
conventional landing craft, the Improved Navy Lighterage System or via 
pier-side offload. The ACV will be optimized to support ship-to-
objective water and land mobility as the main effort of an amphibious 
assault, while the MPC is optimized to provide a combat vehicle capable 
of protected land mobility in support of sustained operations ashore.

    23. Senator Wicker. Lieutenant General Flynn, does this mean that 
the Marine Corps will be operating two different combat vehicles during 
the land phase of the amphibious assault, the ACV, and the MPC?
    General Flynn. The Marine Corps operates multiple combat and 
tactical vehicles including AAVs, Light Armored Reconnaissance 
Vehicles, and tanks as well several tactical vehicles. The role of 
providing tactical mobility in armored personnel carriers would have 
been fulfilled by a combination of the EFV and the MPC. The ACV will 
fulfill the role intended for the EFV and it will be complemented by 
the MPC to achieve the required mobility capacity.

    24. Senator Wicker. Lieutenant General Flynn, won't protection from 
improvised explosive devices and other threats necessarily be different 
in the two vehicles?
    General Flynn. Yes. Each system will need to be designed to counter 
and mitigate the effects of the IED threat. The ACV design will be 
driven, in part, by its strenuous amphibious requirements which will 
likely mean a different survivability and force protection approach 
than for the MPC which will be designed for superior land mobility. 
However, common materials and approaches will be evaluated in order to 
reduce life cycle costs. ACV protection methodologies, performance and 
payload protection trade-space assessments and capability level 
estimates will be a critical part of early technology demonstration and 
development efforts just they were for the MPC.

    [Whereupon, at 4:09 p.m., the subcommittee adjourned.]


DEPARTMENT OF DEFENSE AUTHORIZATION FOR APPROPRIATIONS FOR FISCAL YEAR 
               2012 AND THE FUTURE YEARS DEFENSE PROGRAM

                              ----------                              


                        WEDNESDAY, MAY 25, 2011

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

                       NAVY SHIPBUILDING PROGRAMS

    The subcommittee met, pursuant to notice, at 2:27 p.m. in 
room SR-232A, Russell Senate Office Building, Senator Jack Reed 
(chairman of the subcommittee) presiding.
    Committee members present: Senators Reed, Blumenthal, 
Wicker, and Ayotte.
    Majority staff member present: Creighton Greene, 
professional staff member.
    Minority staff member present: Christopher J. Paul, 
professional staff member.
    Staff assistants present: Jennifer R. Knowles and Brian F. 
Sebold.
    Committee members' assistants present: Carolyn Chuhta, 
assistant to Senator Reed; Gordon Peterson, assistant to 
Senator Webb; Jeremy Bratt, assistant to Senator Blumenthal; 
Lenwood Landrum, assistant to Senator Sessions; Joseph Lai, 
assistant to Senator Wicker; and Brad Bowman, assistant to 
Senator Ayotte.

        OPENING STATEMENT OF SENATOR JACK REED, CHAIRMAN

    Senator Reed. Let me call the hearing to order. I want to 
welcome our witnesses to the hearing this afternoon. We're 
honored to have: Sean Stackley, Assistant Secretary of the 
Navy, Research, Development, and Acquisition; Vice Admiral 
Kevin M. McCoy, Commander, Naval Sea Systems Command (NAVSEA); 
and Captain William J. Galinis, Supervisor of Shipbuilding 
(SUPSHIP) for the Gulf Coast. Thank you, gentlemen. We're 
grateful for your service to the Nation and certainly grateful 
for the service of your fellow naval personnel and marines who 
do so much to assure our safety and our freedom. Thank you.
    The Navy continues to be faced with a number of critical 
issues as it tries to balance its modernization needs and 
procurement needs against the costs of current operations. The 
shipbuilding budget remains at a level where it will be 
difficult at best to field the Navy we want, and indeed even 
the Navy that we need.
    With that in mind, we need to ensure that we are getting 
good value for every shipbuilding dollar that we spend. We were 
very pleased to see the Department's decision to continue 
budgeting for two Virginia-class submarines per year. We 
believe that what the Navy and the contractor team have been 
achieving in driving down costs and reducing construction 
should be a model for other Navy programs.
    We support the Navy's efforts to drive costs out of the 
Ohio replacement ballistic missile submarine (SSBN) program. 
SSBNs will remain a vital leg of the nuclear triad for the 
foreseeable future. Achieving cost reduction goals in these two 
programs will yield significant stability to our Navy's 
submarine industrial base and provide the Navy with a modern, 
capable submarine fleet for many years to come. As we have been 
told on numerous occasions, stability is a very important 
factor in achieving quality and affordability.
    We now have the prospect of achieving some stability in the 
Littoral Combat Ship (LCS) program. Since last year, after 
conducting a winner-take-all competition, the Navy decided that 
by awarding 10 ships to each shipbuilder the Navy could save 
$2.9 billion, or $1 billion more than the program of record, 
and could purchase an additional LCS vessel during the same 
period of the Future Years Defense Program (FYDP), 20 ships 
rather than 19.
    We understand that each builder has been making much better 
progress on the second ship in terms of cost, quality, and 
schedule. Stability in the program should permit the 
contractors to make further improvements.
    On a somewhat less happy note, there have been lingering 
problems in some shipbuilding programs. The highest profile 
among these has been the LPD-17 program. We have had a host of 
problems on these ships, not the least of which has been cost 
growth, schedule delays, and construction problems, 
particularly on the earlier ships in the program.
    The Navy took delivery of the first and second ships while 
they were still in an incomplete form and has subsequently 
identified numerous construction problems on the first two 
ships. We also know that the Navy has had problems with the 
later ships in the class as well. There have been welding 
problems, pipe hanger installation problems, lube oil 
contamination problems, and others.
    Now, the goal here is not to single out a particular 
shipyard. In fact, you can look at every naval program over the 
last several decades and find significant problems. When I was 
first elected in 1991, the Seawolf was suffering from cost 
overruns, from quality control, et cetera. So our purpose is 
not singling out shipyards. It's really to find out 
systemically what we have to do to ensure that all the 
shipbuilding programs of the Navy are operating on budget, on 
time, and with high quality. That's the challenge we all face. 
If we understand these systemic issues, we can help the Navy 
deal with them, and that is our intention.
    Secretary Stackley, we talked last week about the bow wave 
in procurement costs and bow wave of operating and support 
(O&S) costs facing Navy and Marine Corps ground systems. I 
suspect that we could have a similar discussion today about 
Navy ships. Later in this decade we will need to ramp up 
surface ship construction to meet missile defense and fleet air 
defense requirements, and we'll have to begin construction of 
an Ohio-class replacement submarine. The 30-year shipbuilding 
plan lays out all of these programs along with the resources 
necessary to execute the plan.
    However, in our country's current fiscal environment it is 
very unlikely that we will have as much money to spend on the 
30-year shipbuilding plan as that plan assumes. Fundamentally 
that is why this hearing is so important.
    We need to focus on harvesting the savings from quality 
improvements and efficiency improvements in the shipyards 
across the entire shipbuilding program without exceptions. We 
need to do this not only because of the direct savings, but 
also because we need to demonstrate to the taxpayer that we are 
using defense dollars wisely.
    There are significant challenges and we fear they have the 
potential to add a great deal of instability to the Navy 
shipbuilding budget even in the near term. If the Navy is not 
able to control its acquisition program and drive our cost 
growth down while still getting quality ships, the Navy will 
not be able to afford the 313-ship fleet the Chief of Naval 
Operations (CNO) says he needs to meet the requirements 
identified by the Quadrennial Defense Review.
    We look forward to hearing your testimony this afternoon on 
these and other issues facing the Navy.
    With that, I will recognize my colleague Senator Wicker, 
then Senator Ayotte if she has any comments.
    Senator Wicker.

              STATEMENT OF SENATOR ROGER F. WICKER

    Senator Wicker. Mr. Chairman, thank you very much for 
holding this very important hearing today.
    I'd like to thank our witnesses for their attendance today 
as well as their selfless service to our Nation, and also thank 
all the attendees in the hearing room today for their interest.
    I'm sure I speak for all subcommittee members when I say 
that our thoughts and prayers are with all our deployed sailors 
at sea and ashore, including those expeditionary sailors from 
Mississippi, our Seabees, explosive ordnance disposal teams, 
and riverine and maritime security forces, particularly those 
who are currently engaged in combat. Their hard work and 
dedication reflect the very finest traditions of the Navy, and 
of course their sacrifices are matched only by those of their 
families, who have supported these men and women in the service 
of their country.
    There are many issues for us to discuss today. I know our 
esteemed witnesses as well as the tens of thousands of 
dedicated naval shipyard workers throughout our country share a 
joint commitment to providing our sailors and marines with the 
finest ships in the world on time and on budget. I look forward 
to the testimony of our witnesses in this regard.
    The Navy's 30-year shipbuilding plan sets a course to build 
from the current battle force inventory of only 286 ships to a 
goal of a minimum of 313. Over the next decade, the Navy will 
begin to ramp up its production of destroyers, amphibious 
landing and support ships, submarines, LCSs, oil tankers, and 
Joint High Speed Vessels (JHSV).
    I'm concerned about the amount of funding needed for ship 
construction going forward. The Ohio-class replacement SSBNs 
run about $6 to $7 billion each and the Virginia-class 
submarines cost about $2 billion each. With more than half of 
the construction and development cost dollars being needed to 
build extraordinarily expensive nuclear submarines, I am 
concerned that our commitment to submarines may be crowding out 
funding needed to build large surface ships and to modernize 
the fleet. I hope the witnesses can tell us what they are doing 
to reduce the cost of building these submarines and give us 
their views on the impact of submarine construction costs on 
surface shipbuilding, including amphibious ships, and how it 
may impact the shipbuilding industrial base.
    In addition, there are concerns that continued design 
problems and the Navy's recent decision to continue a dual sole 
source LCS strategy may increase cost risks in these and other 
complex acquisitions. From the first ship in its class, the 
LPD-17 San Antonio-class amphibious ship program has displayed 
chronic problems in terms of safety, engineering, design, and 
oversight. These problems have been so significant that they 
give rise to broader concerns about a widespread readiness 
problem afflicting our surface fleet.
    I'm pleased with the leadership of the Atlantic Fleet 
Commander, Admiral Harvey, in starting to turn these problems 
around. But I'm troubled by how we got to this point. As to the 
LPD-17 class of ships, for example, how, with five already 
delivered and four under construction, have we been left with 
an entire class of ships that, according to the Pentagon's 
chief independent weapons tester, is ``not effective, suitable, 
and not survivable in combat.''
    With Northrop Grumman's sale of its shipyards, I'd like to 
know what the Navy's plans are for the construction of the last 
LPD-17 ship.
    In addition to these points, I would also like the Gulf 
Coast SUPSHIP and the NAVSEA Commander to address the apparent 
downward trend in funding for maintenance, with the negative 
impact falling more heavily on surface combatants than on 
carriers and submarines.
    Now let me say a quick word about the F-35 Joint Strike 
Fighter (JSF) program, which has a couple of important test 
events coming up this year that relate to the shipbuilding 
portfolio, in particular shipboard testing on a carrier and on 
the L-class ship for the Navy's F-35C and the Marine Corps' F-
35B respectively.
    Given the well-deserved focus on the JSF program recently, 
I'd like to know from our witnesses what challenges do they see 
in having each of those F-35 variants effectively integrated to 
the ships from which they are supposed to operate.
    The Navy faces many difficult challenges. That said, the 
performance of our sailors and marines has never been more 
gratifying to watch. They make us proud every day.
    I look forward to hearing from the witnesses on these and 
other tough but important issues which go squarely to how we 
arm and equip those men and women who serve their Nation so 
selflessly at home and abroad.
    Thank you, Mr. Chairman.
    Senator Reed. Thank you, Senator Wicker.
    Senator Ayotte, do you have any comments?
    Senator Ayotte. Thank you, Mr. Chairman. I would just again 
welcome the witnesses and thank you for your service. I do want 
to give a special welcome to Vice Admiral McCoy, who is a 
former Commander of the Portsmouth Naval Shipyard, and we're 
very honored to have him since I'm very proud of our shipyard.
    Senator Reed. Thank you very much, Senator.
    Secretary Stackley.

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

    Mr. Stackley. Yes, sir. Mr. Chairman, Senator Wicker, 
Senator Ayotte, thank you for the opportunity for Vice Admiral 
McCoy, Captain Galinis, and myself to appear before you today 
to address Navy shipbuilding. Thank you, of course, for your 
steadfast support to our sailors and marines as you provide and 
maintain our Navy.
    With your permission, I propose to keep my opening remarks 
brief and to submit a formal more detailed statement for the 
record.
    Senator Reed. Thank you.
    Mr. Stackley. Today's Navy is a battle force of 286 ships, 
as many as half of which are under way on any given day, 
providing presence and maintaining readiness to respond to 
crisis or conflict wherever our Nation's interests are 
challenged. Our Navy's ability to reliably meet the demands 
that come with global presence and readiness rely upon certain 
enduring qualities: the size of the force, measured in numbers 
of ships; the capabilities designed and built into these ships, 
the skills and productivity of our government and industry 
workforce responsible for building and maintaining these ships; 
and the skill, dedication, and resourcefulness of our sailors 
and marines who put to sea in them.
    The CNO and the Commandant have defined the 313-ship Navy 
as the force necessary to meet our naval requirements. In fact, 
the CNO has emphasized that 313 ships is the floor. So to this 
end, the 2012 budget request includes funding for 10 ships and 
over the 5-year FYDP includes 55 ships, an increase of 5 ships 
over the plan of a year ago.
    This increase reflects a priority placed on shipbuilding 
and reflects efforts to improve affordability within our 
shipbuilding program, efforts which must prove effective if we 
are to succeed in recapitalizing ship classes which were 
constructed during the buildup of the 600-ship Navy.
    Our budget request includes continued funding for CVN-78, 
advanced procurement for CVN-79, and funding for the refueling 
overhaul of CVN-72, all necessary to sustain an 11-carrier 
force over the next 3 decades.
    We continue Virginia-class construction at two boats per 
year, a build rate essential to recapitalizing our submarine 
force, essential to affordability, and essential to ramping up 
our industrial base as we approach construction of our next 
fleet SSBN.
    We sustain DDG-51 production, adding capability and 
capacity to our sea-based missile defense, and to our plan of a 
year ago we have added a second destroyer in 2014 which, with 
the planned proposal for a multi-year procurement in 2013, will 
leverage the stability of this mature program, improve build 
rates for our two combatant shipbuilders, and improve 
affordability.
    Our Aegis modernization efforts are equally critical, 
serving to increase the number of missile defense platforms 
from 21 today to 41 by the end of the FYDP, while also 
improving their material condition to meet readiness demands in 
the second half of their service lives.
    We increase LCS construction to four ships per year. 
Efforts to stabilize design, improve production planning, 
invest in shipbuilder improvements, build at efficient rates, 
and leverage long-term vendor agreements, all within the 
framework of competitive fixed price contracts, have markedly 
improved affordability for this 55-ship program.
    We increase our amphibious lift capacity and capability 
with procurement of the 11th LPD-17 class ship and our 
extending the service of the USS Peleliu to maintain 9 
operationally available big decks while awaiting delivery of 
the lead ship of the America-class, LHA-6.
    We're also increasing our logistics lift capability with 
procurement of the third Mobile Landing Platform (MLP) and a 
JHSV. Actions by Congress and the Navy to accelerate the MLP 
program significantly improve affordability while also 
addressing a critical work load valley confronting that 
shipbuilder.
    In the second half of this decade, we will need to proceed 
with recapitalization of three major ship programs. We're 
accelerating introduction of our next fleet oiler, T-AOX, 
beginning in 2014. T-AOX will bring modern commercial design to 
our refueling at sea capabilities while also providing critical 
stability to an important sector of our industrial base.
    We plan to commence replacement of the LSD-41 class 
amphibious ships in 2017 following definition of lift 
requirements for this new ship class. Most significantly, we 
will procure the lead ship of the Ohio-class replacement in 
2019. It is vital that we sustain development activities for 
this submarine with sufficient lead times to ensure our ability 
to produce this highly complex, uniquely capable ship on 
schedule. But it's equally vital that we address cost risk on 
this program or we place other ship programs at risk. So we've 
carefully defined capabilities necessary to ensure the ship's 
ability to meet its requirements while embarking on a focused 
design for affordability effort to capitalize on lessons 
learned in the Virginia program at a much earlier stage in the 
Ohio replacement program.
    In the most pragmatic terms, in balancing requirements, 
risk, and realistic budgets, affordability does control our 
numbers. So to this end we're focused on bringing stability to 
the shipbuilding program, finding the affordable 80 percent 
solution, strengthening our acquisition workforce, imposing 
cost discipline as we define our requirements, clamping down on 
contract design changes, placing greater emphasis on O&S costs 
in our designs, and placing greater emphasis on competition and 
fixed price contracts.
    Modernizing today's force and recapitalizing the fleet 
affordably cannot be accomplished without strong performance by 
industry. So we are working with industry to benchmark 
performance, to identify where improvements are necessary, to 
provide proper incentives for capital investments where 
warranted, and to reward sustained strong performance.
    As well, we're working with industry to improve quality in 
construction and reliability and readiness in service. LPD-17 
reliability, Aegis wholeness, completion levels of new 
construction carriers, and isolated quality issues on even our 
most reliable construction program, the submarine, have caused 
us to methodically and aggressively attack root causes in 
design, construction standards, workforce training and 
qualifications, oversight and compliance, ship's force manning 
and training, documentation, software maintenance, and 
logistics support.
    Much progress has been made in these areas. Quality of 
delivered ships continues to improve. Readiness measures are 
improving. Underlying issues that have affected readiness are 
being identified. But much work remains. We need to sustain 
these efforts to improve quality and readiness while also 
ensuring the higher standard becomes the standard practice.
    In sum, the Navy is committed to building the fleet 
required to support the National Defense Strategy, to which the 
2012 budget request addresses near-term capability needs, while 
also laying the foundation for long-term requirements. 
Ultimately, we recognize that as we balance requirements, 
affordability, and industrial base considerations, it is vital 
that we, Navy and industry, improve affordability within our 
programs in order to build the Navy needed by the future force.
    Mr. Chairman, thank you for the opportunity to appear 
before you today and we look forward to your questions.
    [The joint prepared statement of Mr. Stackley, Admiral 
McCoy, and Captain Galinis follows:]
Joint Prepared Statement by Hon. Sean J. Stackley, VADM Kevin M. McCoy, 
                 USN, and CAPT William J. Galinis, USN
    Mr. Chairman, Senator Wicker, and distinguished members of the 
subcommittee, thank you for the opportunity to appear before you today 
to address Navy shipbuilding. The Department is committed to the effort 
to build an affordable fleet which supports the National Defense 
Strategy, the Maritime Strategy, and the 2010 Quadrennial Defense 
Review (QDR). The Department's fiscal year 2012 budget will provide 
platforms that are capable, agile, and able to respond to the dynamic 
nature of current and future threats. The fiscal year 2012 shipbuilding 
budget funds 10 ships, including 2 Virginia-class attack submarines, 1 
Navy Joint High Speed Vessel (JHSV), 1 LPD-17-class amphibious 
transport dock, 1 Mobile Landing Platform (MLP), 1 DDG-51-class 
destroyer, and 4 Littoral Combat Ships (LCS). In addition, the Navy 
will procure an oceanographic ship and the Army has funded one JHSV 
which the Navy will procure. Our budget also funds advance procurement 
for CVN 79, the second increment of full funding for LHA-7, and advance 
procurement for the two fiscal year 2013 DDG-51s and Virginia-class 
submarines.
    The Navy continues to ensure our shipbuilding plan is affordable, 
stable, and increases capacity and capability as needed to meet the 
most likely evolving threats. In 2010, six ships were placed in 
commission; two Virginia-class submarines, three Arleigh Burke 
destroyers, and one LCS. In addition, two T-AKEs were delivered.
    Today, our sailors and marines are conducting combat operations in 
Afghanistan. In addition, our aircraft carriers are providing about 30 
percent of combat air support for troops on the ground in Afghanistan, 
with more sorties being provided by AV-8B Harriers flying from 
amphibious assault ships. While the drawdown in Iraq continues, we 
still have more than 24,000 sailors and 22,000 marines ashore or afloat 
in the Central Command Area of Responsibility.
    Because our national interests extend beyond Iraq and Afghanistan, 
so do our sailors and marines. More than 40 percent of our ships are 
underway daily, globally present and persistently engaged. Recently, 
U.S. naval forces supported efforts in Japan. Last year, U.S. naval 
forces provided deterrence against North Korea, conducted counter-
piracy operations in the Indian Ocean with a coalition of several 
nations, trained local forces in maritime security as part of our 
Global Maritime Partnership initiatives in Africa and the Pacific, 
responded with humanitarian assistance and disaster relief to the 
earthquake in Haiti and flood in Pakistan, and conducted the world's 
largest maritime exercise, our biannual Rim of the Pacific (RIMPAC) 
multi-national training exercise. RIMPAC brought together 14 nations 
and more than 20,000 military personnel, including 25 of our Navy ships 
and submarines, a Coast Guard cutter, and elements of the III Marine 
Expeditionary Force. Through RIMPAC and follow-on exercises, our 
forward-deployed forces, in partnerships with naval forces from the 
Republic of Korea, demonstrated a strong, credible deterrent against 
continued North Korean aggression. Off the coast of Africa, as part of 
an international coalition of more than 20 other nations, U.S. naval 
forces continue to provide deterrence and maritime security in the form 
of counter-piracy. Specifically, our Navy-Marine Corps team 
successfully intervened and freed the crew of the German merchant 
vessel M/V Magellan Star after pirates captured the vessel in the Gulf 
of Aden last September and during that same deployment rescued 62 
Somali and Ethiopian persons. We are also continuing to partner with 
U.S. Coast Guard law enforcement teams in the Caribbean to conduct 
counter-narcotics and anti-trafficking operations and deny traffickers 
use of the sea for profit and exploitation.
    Our USS Kearsarge (LHD-3) Amphibious Ready Group (ARG), and U.S. 
marines assigned to the 26th Marine Expeditionary Unit (MEU), deployed 
early to reinforce the Peleliu ARG/15th MEU in providing humanitarian 
assistance to Pakistan after a flood placed almost one-fifth of the 
Nation underwater, devastating the population and the land. Our 
disaster relief effort also continued in Haiti with 15 ships including 
the USNS Comfort (T-AH-20), USS Carl Vinson (CVN-70), USS Nassau (LHA-
4) ARG with the 24th MEU, USS Bataan (LHD-5) ARG with the 22d MEU, and 
the maritime prepositioning ship USNS 1st Lt Jack Lummus (T-AK-3011), 
as part of Operation Unified Response. In Central and South America, 
the medical staff and Seabees embarked aboard the multi-purpose 
amphibious assault ship USS Iwo Jima (LHD-7), working with partner 
nations, provided medical, dental, veterinary, and engineering 
assistance to Colombia, Costa Rica, Guatemala, Guyana, Haiti, 
Nicaragua, Panama, and Suriname during Continuing Promise 2010. During 
the deployment, Continuing Promise 10 personnel provided medical, 
dental, and optometry services to more than 161,000 patients. Operation 
Pacific Partnership, led by the Commander, Destroyer Squadron 21 aboard 
the USNS Mercy, provided treatment to 109,754 patients. In addition, 
they completed 22 engineering projects and treated more than 2,800 
veterinary patients in Vietnam, Cambodia, Indonesia, Palau, Timor-
Leste, and Papua New Guinea.
    Our sailors and marines remain on point throughout the world, 
projecting U.S. influence, responding to contingencies, and building 
international relationships that will keep the maritime commons safe 
and secure. This is critical to the free flow of commerce, a foundation 
of our economic prosperity.
    Our ballistic missile submarines are providing nuclear deterrence 
year-round, while our Aegis cruisers and destroyers are providing 
conventional deterrence in the form of ballistic missile defense (BMD) 
of our allies and partners in Europe, the Mediterranean, and the 
Western Pacific. Our Carrier Strike Groups and ARGs continue to prevent 
conflict and deter aggression in the Western Pacific, Arabian Gulf and 
Indian Ocean, while their forward deployments afford the United States 
the ability to influence events abroad and the opportunity to rapidly 
respond to crisis.
    Global demand for naval forces remains high and continues to rise 
because of the ability of our maritime forces to overcome diplomatic, 
geographic, and military impediments to access while bringing the 
persistence, flexibility and agility to conduct operations at sea. Our 
fiscal year 2012 budget submission properly balances our naval forces 
to support this demand and includes five more ships than our fiscal 
year 2011 plan, which were achieved through competitive contracting, 
reduced overhead and increased efficiencies. We continue to pursue 
steps to buy smarter, streamline our organizations and operations, 
realign manpower, and pursue energy efficiencies.
    The Department has conducted a Force Structure Analysis based upon 
the minimum 313 ship force needed for our Navy-Marine Corps team. The 
plan is designed to provide the global reach; strategic deterrence; 
persistent presence; and strategic, operational and tactical effects 
expected of naval forces within reasonable levels of funding. The plan 
balances the combatant commanders' demand for naval forces with 
expected future resources, and takes into account the importance of 
maintaining an adequate national shipbuilding design and industrial 
base and using realistic cost estimates.
    The global proliferation of land-attack ballistic missiles and the 
anticipated proliferation of anti-ship ballistic missiles, and the 
challenges associated with gaining and sustaining access for shore-
based BMD systems worldwide suggest the demand for BMD-capable surface 
combatants will continue to increase beyond 2024 even with the 
introduction of Aegis Ashore.
    Over the next decade (fiscal year 2012 to fiscal year 2021), the 
Department of the Navy begins to ramp up production of ships necessary 
to support strategic deterrence, persistent presence, maritime 
security, irregular warfare, intra-theater sealift, humanitarian 
assistance, disaster relief, and partnership building missions; namely 
the LCS, JHSV and Fleet Oiler Replacement programs. At the same time, 
the Department continues production of large surface combatants and 
attack submarines, as well as amphibious landing and support ships. 
Yearly new construction shipbuilding spending during this period is 
projected to average $15 billion (fiscal year 2011$). Beyond fiscal 
year 2021, Navy investments at a sustainable average of $15.7 billion 
(fiscal year 2011$) a year in new ship construction, which is roughly 
the 30-year average. The overall size of the battle force begins a 
steady climb, reaching 324 ships by fiscal year 2021.
    In the second decade (fiscal year 2022 to fiscal year 2031), the 
recapitalization plan for the current Fleet Ballistic Missile Submarine 
(SSBN) inventory is realigned. Current plans call for 12 new Ohio-class 
replacement submarines (SSBN(X)) with life-of-the-ship nuclear reactor 
cores to replace the existing 14 Ohio-class SSBNs. Advance Procurement 
funds for detail design for the first SSBN(X) begin in fiscal year 2015 
with funds following in fiscal year 2017 to support procurement of long 
lead time material for the lead ship of the class scheduled to begin 
construction in fiscal year 2019 ensuring that 12 operational ballistic 
missile submarines will be available to perform the vital strategic 
deterrent mission. Since SSBNs have not been procured since the early 
1990s, shipbuilding expenditures have not included funds for this class 
of ships in over 20 years. To support the recapitalization of the 
seaborne leg of the Nation's strategic deterrent, yearly shipbuilding 
expenditures during the second decade are projected to average about 
$17.5 billion (fiscal year 2011$) per year, or about $2 billion more 
than the steady-state 30-year average. Even at this elevated funding 
level the total number of ships built per year will inevitably fall 
because of the percentage of the shipbuilding account which must be 
allocated for the procurement of the SSBN(X). Recognizing these 
impacts, we have already embarked on a program of aggressively 
challenging capability improvements and design and construction 
practices to identify means to deliver this important capability at 
least cost, including leveraging technology and lessons learned from 
the highly successful Virginia SSN shipbuilding program.
    In the last decade (fiscal year 2032 to fiscal year 2041), average 
new construction shipbuilding expenditures are projected to fall back 
to a more sustainable level of about $14.5 billion (fiscal year 2011$) 
per year. Moreover, after the production run of Ohio replacement SSBNs 
comes to an end in fiscal year 2034, the average number of ships built 
per year begins to rebound.
                           aircraft carriers
    Our aircraft carriers are best known for their unmistakable forward 
presence, ability to deter potential adversaries and assure our allies, 
and capacity to project power at sea and ashore; however, they are 
equally capable of providing our other core capabilities of sea 
control, maritime security, and humanitarian assistance and disaster 
response. Our carriers provide our Nation the ability to rapidly and 
decisively respond globally to crises with a small footprint that does 
not impose unnecessary political or logistic burdens upon our allies or 
potential partners.
                                 cvn-78
    The Gerald R. Ford is the lead ship of our first new class of 
aircraft carrier in nearly 40 years. Gerald R. Ford-class carriers will 
be the premier forward deployed asset for crisis response and early 
decisive striking power in a major combat operation. They incorporate 
the latest technology, including an innovative new flight deck designed 
to provide greater operational flexibility, reduced manning 
requirements, and the ability to operate all current and future naval 
aircraft. Among the new technologies being integrated is the 
Electromagnetic Aircraft Launch System (EMALS) which will support 
Ford's increased sortie generation rates. EMALS is moving from a 
promising technology to a proven operational capability, which will 
deliver the warfighting enhancement needed in the future. Recently, the 
program successfully demonstrated a controlled launch sequence with the 
full-scale EMALS production representative unit and a successful 
aircraft launch demonstration. While land-based testing is ongoing and 
identifying engineering issues that will allow us to retire risk prior 
to ship operations, EMALS' production schedule supports the planned 
delivery of CVN-78 in September 2015.
                          the submarine fleet
    Our attack and guided missile submarines have a unique capability 
for stealth and persistent operation in an access-denied environment 
and to act as a force multiplier by providing high-quality 
intelligence, surveillance, and reconnaissance (ISR) as well as 
indication and warning of potential hostile action. In addition, attack 
submarines are effective in anti-surface ship warfare and anti-
submarine warfare in almost every environment, thus eliminating any 
safe-haven that an adversary might pursue with access-denial systems. 
As such, they represent a significant conventional deterrent. While our 
attack submarine fleet provides considerable strike capacity already, 
our guided missile submarines provide significantly more strike 
capacity and a more robust capability to covertly deploy Special 
Operations Force personnel. Today, the Navy requires 48 attack 
submarines and 4 guided missile submarines (SSGN) to sustain our 
capabilities in these areas. The Navy is studying alternatives to 
sustain the capability that our SSGNs bring to the battle force when 
these ships begin to retire in 2026.
                           virginia-class ssn
    The Virginia-class submarine is a multi-mission submarine that 
dominates in the littorals and open oceans. Now in its 14th year of 
construction, the Virginia program is demonstrating that this critical 
undersea capability can be delivered affordably and on time. The Navy 
is mitigating the impending attack submarine force structure gap in the 
2020s through three parallel efforts: reducing the construction span of 
Virginia-class submarines, extending the service lives of selected 
attack submarines, and extending the length of selected attack 
submarine deployments.
                      ballistic missile submarines
    Our ballistic missile submarines are the most survivable leg of the 
Nation's strategic arsenal and provide the Nation's only day-to-day 
assured nuclear response capability. They provide survivable nuclear 
strike capabilities to assure allies, deter potential adversaries, and, 
if needed, respond in kind. The number of these submarines was 
delineated by the Nuclear Posture Review 2001 which established the 
requirement of a force comprised of 12 operational SSBNs (with 2 
additional in overhaul at any time). Because the Ohio SSBNs will begin 
retiring in fiscal year 2027, their recapitalization must start in 
fiscal year 2019 to ensure operational submarines will be available to 
replace these vital assets as they leave operational service. In 
addition, because of a life-of-ship reactor plant, the replacement SSBN 
program inventory will be 12 ships to support the seaborne leg of the 
nuclear triad. To maintain an at-sea presence for the long term, the 
United States must continue development of the follow-on to the Ohio-
class submarine. Throughout the past year, and throughout the program, 
all aspects of the Ohio replacement program continue to be thoroughly 
reviewed and aggressively challenged to drive down engineering and 
construction costs.
                        submarine modernization
    As threats evolve, it is vital to continue to modernize existing 
submarines with updated capabilities. The submarine modernization 
program includes advances in weapons, integrated combat control 
systems, sensors, open architecture, and necessary hull, mechanical and 
electrical upgrades. These upgrades are necessary to retain credible 
capabilities for the future conflicts and current peacetime ISR and 
Indication and Warning missions and to continue them on the path of 
reaching their full service life. Maintaining the stability of the 
modernization program is critical to our future Navy capability and 
capacity.
                           surface combatants
    As in the past, cruisers and destroyers will continue to deploy 
with strike groups to fulfill their traditional roles. Many will be 
required to assume additional roles within the complex BMD arena. Ships 
that provide BMD will sometimes be stationed in remote locations, away 
from strike groups, in a role as theater BMD assets. The changes 
necessary to meet demands for forward presence, strike group 
operations, and BMD place additional pressure on the existing inventory 
of surface combatants. The current baseline for number of ships in the 
surface combatant inventory is 88. While future force structure 
analyses may require the Navy to procure a greater number of these 
ships, we will also have to consider redistributing assets currently 
being employed for missions of lesser priority for these new missions 
as a result of the 2010 QDR and the President's commitment to 
supporting the missile defense of our European allies.
                                 ddg-51
    To address the rapid proliferation of ballistic and anti-ship 
missiles along with deep-water submarine threats, we have restarted 
production of the Arleigh Burke-class DDG-51 Flight IIA series. The 
Flight IIA ships will incorporate Integrated Air and Missile Defense 
(IAMD), providing much-needed BMD capacity to the Fleet. These ships 
will also be the first flight of Aegis ships to be built with the Open 
Architecture Advanced Capability Build (ACB) 12 Aegis Combat System. 
ACB 12 will allow these surface combatants to be updated and maintained 
with commercial off-the-shelf technology, yielding reduced Total 
Ownership Cost and enhancing the ability to adapt to future military 
threats. The approach for the Flight IIA restart leverages the cost-
savings of existing production lines; reduces the potential for cost 
overruns and delays through the incremental approach of developing new 
technologies; and strengthens and stabilizes the industrial base to 
more efficiently and cost effectively produce ships to meet our 
national needs. This budget request procures one ship in 2012.
    We intend to deliver highly capable, multi-mission ships tailored 
for IAMD by advancing the DDG-51 design into the next future destroyer, 
DDG Flight III. This approach will develop and install the Air and 
Missile Defense Radar on a DDG-51 hull with the necessary hull, power, 
cooling, and combat systems upgrades. Additionally, in support of the 
Navy's energy goals, a hybrid electric drive system is in development 
for the DDG-51-class and land-based testing of this system is expected 
this summer. Our fiscal year 2012 budget requests funding for a total 
of eight DDG-51 ships, including funding for an additional DDG-51 
Flight IIA ship in fiscal year 2014 and the first Flight III ship in 
fiscal year 2016. The Navy intends to pursue multiyear authority in 
fiscal year 2013 for fiscal year 2013-2017 procurements. The MYP would 
generate significant cost savings, and provide a long-term commitment 
to the shipbuilding industrial base that stabilizes shipyard employment 
levels.
                                  lcs
    The Navy remains committed to procuring 55 LCS. These ships expand 
the battle space by complementing our inherent blue water capability 
and filling warfighting gaps in the littorals and strategic choke 
points around the world. LCS design characteristics (speed, agility, 
shallow draft, payload capacity, reconfigurable mission spaces, air/
water craft capabilities) combined with its core Command, Control, 
Communications, Computers and Intelligence, sensors, and weapons 
systems, make it an ideal platform for engaging in Irregular Warfare 
and Maritime Security Operations.
    LCS capabilities address specific and validated capability gaps in 
Surface Warfare, Mine Countermeasures, and Anti-Submarine Warfare. The 
concept of operations and design specifications for LCS were developed 
to meet these gaps with focused mission packages that deploy manned and 
unmanned vehicles to execute a variety of missions. In 2010, the Navy 
deployed USS Freedom (LCS-1) with Surface Warfare (SUW) mission package 
capabilities (MH-60S helicopter, two 30mm guns, two 11m Rigid Hull 
Inflatable Boats, Maritime Security Module, a Surface Warfare DET and 
an Aviation Detachment in support of counter-illicit trafficking 
operations). By 2018, 11 Mine Countermeasures (MCM) mission packages 
will be delivered, supporting the decommissioning plan for the USS 
Avenger (MCM-1)-class ships. The core capability of the Anti-Submarine 
Warfare mission package will be provided by a Variable Depth Sonar 
(VDS) and Navy will begin at-sea testing in 2012 with a VDS Advanced 
Design Model (ADM).
    Affordability remains the key factor in acquiring the needed future 
capacity of this highly flexible and capable ship. To stay on path to 
deliver this ship in the quantities needed, the Navy announced this 
past December that we awarded 2 competitive contracts for 10 ships of 
each version of the LCS under a dual award strategy. Each ship brings 
unique strengths and capabilities to the mission and each has been 
designed in accordance with overarching objectives for reducing total 
ownership cost. Our 2012 budget funds 4 ships in fiscal year 2012, with 
a buy of 19 across the Future Years Defense Program (FYDP). We request 
your continued support as we take the measures necessary to deliver 
this much needed capability at the capacity we need to meet future 
demands.
                                ddg-1000
    The DDG-1000 Zumwalt guided missile destroyer will be an optimally 
crewed, multi-mission surface combatant designed to provide long-range, 
precision naval surface fire support to marines conducting littoral 
maneuver and subsequent operations ashore. The DDG-1000 features two 
155mm Advanced Gun Systems capable of engaging targets with the Long-
Range Land Attack Projectile at a range of over 63 nautical miles. In 
addition to providing offensive, distributed and precision fires in 
support of marines, it will provide valuable lessons in advanced 
technology such as signature reduction, active and passive self-defense 
systems, and enhanced survivability features. The first DDG-1000 is 
approximately 50 percent complete and is scheduled to deliver in fiscal 
year 2014 with initial operating capability planned in 2016.
                             modernization
    To counter emerging threats, we continue to make significant 
investments in cruiser and destroyer modernization to sustain our 
combat effectiveness and to achieve the 35 year service life of our 
earlier Aegis fleet. Our destroyer and cruiser modernization program 
includes Hull, Mechanical, and Electrical (HM&E) upgrades, as well as 
advances in warfighting capability and open architecture to reduce 
total ownership costs and expand mission capability for current and 
future combat capabilities.
    USS Arleigh Burke (DDG-51) and USS John Paul Jones (DDG-53) are the 
first two DDGs to undergo the HM&E phase of this comprehensive 
modernization. Due to the scope of the design changes, we extended 
these availabilities by 2 months to allow for adequate execution and 
system testing. The lessons learned from these first two modernization 
efforts will be included in subsequent upgrades. The second phase of 
the modernization will be conducted 2 years after the initial yard 
period and provide DDGs with an improved processing capability in their 
SPY-1D radars and an open architecture combat computing environment 
that will also be adapted to DDG-113 and following ships. Focusing on 
Flight I and II DDG-51 ships (hulls 51-78), the modernization process 
will also include the addition of BMD capability, installation of the 
Evolved Sea Sparrow Missile (ESSM), an upgraded SQQ-89A (V)15 anti-
submarine warfare system, integration of the SM-6 missile, and improved 
air dominance with processing upgrades and Naval Integrated Fire 
Control-Counter Air capability. In fiscal year 2012, USS John Paul 
Jones (DDG-53) will be the first destroyer to be modernized with ACB 
12.
    Through December 2010, Navy has completed the modernization of two 
additional cruisers, USS Mobile Bay (CG-53) and USS Philippine Sea (CG-
58). Combat System upgrades to USS Antietam (CG-54) and USS San Jacinto 
(CG-56) are in progress. Hull, Mechanical, and Electrical (HM&E) 
upgrades to USS Hue City (CG- 66) are also in progress. The key aspects 
of the CG modernization program include an upgrade to the Aegis weapons 
system to include an open architecture computing environment, 
installation of the AN/SPQ-9B radar, addition of the ESSM, an upgrade 
to Close In Weapon System Block 1B, an upgraded SQQ-89A (V)15 anti-
submarine warfare system, and improved air dominance with processing 
upgrades and Naval Integrated Fire Control-Counter Air capability. Nine 
Baseline 4 cruisers will receive the BMD upgrade beginning in fiscal 
year 2014.
    Our budget for fiscal year 2012 requests funding for the 
modernization of four cruisers (three Combat Systems and one HM&E) and 
three destroyers (one Combat System and two HM&E).
                            amphibious ships
    Amphibious ships are multi-capable, agile, and responsive to the 
dynamic nature of the security era. In an era of declining access and 
strategic uncertainty, the geographic combatant commanders' have an 
increased demand for forward-postured amphibious forces capable of 
conducting security cooperation, regional deterrence, and crisis 
response. For example, their cumulative fiscal year 2010 request for 
amphibious forces equates to 3.4 ARGs/MEUs plus 4 smaller, task-
organized amphibious formations like Global Fleet Stations. These 
demand signals reflect the operational flexibility and value of 
amphibious forces for missions across the range of military operations. 
This value is well-illustrated by the 2010 deployment of the Peleliu 
ARG/15th MEU, which concurrently conducted humanitarian assistance and 
disaster response operations in Pakistan, strike operations in 
Afghanistan, and the recovery of the M/V Magellan Star from pirates in 
the Gulf of Aden. During the same deployment, they also conducted a 
wide variety of cooperative activities with forces from Australia, 
Indonesia, the Maldives, New Zealand, Sri Lanka, Timor-Leste, Turkey, 
and Pakistan, in addition to supporting to the U.S. Secret Service 
during the Presidential visit to India. As articulated by the Secretary 
of the Navy, the Navy's amphibious ships are the fleet's most 
``flexible'' asset.
    There are two main drivers of the amphibious ship requirement: 
maintaining the persistent forward presence, the largest driver, which 
enables both engagement and crisis response, and the episodic 
aggregation of sufficient numbers to deliver the assault echelons of up 
to two Marine expeditionary brigades for major operations and 
campaigns.
    The Chief of Naval Operations and Commandant of the Marine Corps 
have determined that the force structure requirement is 38 amphibious 
ships. Understanding this requirement, and in light of the fiscal 
constraints, the Department of the Navy will accept risk by sustaining 
a minimum of 33 total amphibious ships in the active fleet. The 
Department has 30 amphibious ships in the inventory now and will reach 
33 ships by fiscal year 2017. Once 33 is attained the Department will 
retain 33 amphibious ships through the maintenance of current assets 
and the planned procurement of amphibious vessels.
                               lsd/lsd(x)
    A fully funded LSD mid-life program, to include repairs, will 
ensure these ships meet their expected service life. Material readiness 
in regards to LSD's readiness for tasking will be enhanced by a fully 
funded program. LSD(X) will replace 12 of the aging LSD-41/49 Whidbey 
Island/Harpers Ferry-class vessels and will perform an array of 
amphibious missions. Eleven LSD(X) platforms will provide one third of 
the total amphibious lift necessary to meet USMC mission requirements. 
LSD(X) Initial Capabilities Document is currently under review, the 
Analysis of Alternatives will be conducted in fiscal year 2012 with a 
planned fiscal year 2017 lead ship procurement. Affordability remains 
the key factor in acquiring the needed future capacity and operational 
capabilities of this highly flexible multifaceted ship.
                                 lpd-17
    The San Antonio-class LPD (LPD-17) has a 40-year expected service 
life and serves as the replacement for four classes of older ships: the 
LKA, LST, LSD-36, and the LPD-4. Lessons learned from the effort to 
resolve material reliability concerns identified in the early ships of 
the class are being applied to ships currently under construction. 
Quality continues to improve with each ship delivered as the Navy 
continues to work closely with the shipbuilder to address cost, 
schedule, and performance issues. Five ships have been delivered, and 
four more ships are under construction. The construction contract for 
the 10th ship was recently awarded and the 11th and final LPD is 
planned for procurement in fiscal year 2012.
    Ships of the class have deployed seven times including two ships 
that are currently on deployment. USS San Antonio (LPD-17) has deployed 
once (2008), USS New Orleans (LPD-18) has completed two successful 
overseas deployments (2009 and 2010). USS Mesa Verde (LPD-19) has also 
completed two successful overseas deployments. Today, LPD-19 is again 
deployed overseas; and USS Green Bay (LPD-20) is in the middle of her 
first overseas deployment. LPD-18 and USS New York (LPD-21) are fully 
operational, conducting local operations in their homeport areas. LPD-
17 is completing her major post-deployment repair availability prior to 
next sea trials.
    In February of this year, LPD-21 successfully passed an inspection 
by the Navy's Board of Inspection and Survey (INSURV) to support the 
Final Contract Trials. The President of INSURV remarked that LPD-21 was 
the best LPD-17-class ship they had seen and that lessons learned from 
the first ships of the class were clearly being implemented.
    The Navy and Industry have made significant progress in correcting 
early class design and construction issues on the LPD-17-class. Early 
ships of the LPD-17-class were delivered to the Navy with pipe welding 
quality, engine alignment problems, inadequate lube oil cleanliness and 
bearing wear which led to unplanned engine repairs and overhauls. These 
material issues, combined with an optimized sized crew and a reliance 
on computer-based vice classroom training, led to decreased reliability 
and operational availability of the class.
    The above issues, as well as inadequate initial reliability of the 
ships computer network and some of the engine and ship control systems 
led the Navy and DOD independent operational testing organizations to 
rate the ships as not operationally suitable during the initial 
operational testing conducted in 2007-2008. Follow-on Test and 
Evaluation, which commenced in July 2010 and runs through fiscal year 
2012, is being conducted by the Navy's Commander, Operational Test & 
Evaluation Force and the Marine Corps Operational Test and Evaluation 
Activity to confirm adequate corrective actions have been taken.
    Over the last couple of years, the shipbuilder (Northrop Grumman 
Shipbuilding, now Huntington Ingalls Industries, (HII)) has implemented 
several initiatives to address the quality issues associated with ship 
construction and delivery.
    The shipbuilder significantly revised their welding, quality and 
production processes to improve quality and ensure consistency across 
all of their shipbuilding facilities. Their workforce was retrained and 
recertified to the updated process. The Navy and HII have improved the 
oil flushing procedures to get all the contaminants out of the ship's 
lube oil system and improvements to the lube oil filters and strainers 
have been developed to better remove any contaminants that might be 
introduced through normal operation of the engines. These more 
stringent flushing procedures are being used on all ships in the class 
and the improved filters and strainers are planned for installation on 
all ships in the class. Additionally, the shipyard has taken several 
steps to ensure pipe sections are maintained in a clean condition from 
fabrication in the pipe shop to installation on the ship including a 
new cleaning process in the pipe shop and improved pipe capping 
procedures to prevent contaminants from entering the pipe during 
shipping and installation onboard the ship. The Navy has also 
significantly improved its lube oil sampling and analysis process. This 
process has been incorporated into the ship construction process. The 
shipbuilder is responsible for the overall quality of the ship. To 
manage quality, the shipbuilder utilizes a Quality Management System 
comprising of Quality Control (ensuring the correct product 
requirements, manufacturing processes, et cetera) and Quality Assurance 
(focused on end product quality and conformance).
    The Ship Wide Area Network (SWAN) design, which was based upon 
1990's Asynchronous Transfer Mode (ATM) technology, experienced 
multiple failures resulting in failover monitoring, maintainability, 
and supportability issues. The ATM-based SWAN is being replaced by 
current Gigabit Ethernet technology hardware and software. Today, this 
``Gig-E'' SWAN is installed on LPD-17, -18, and -21 with no reported 
failures to date. LPD-19 and -20 will receive this upgrade in fiscal 
year 2012; and the baseline for LPD-22 and follow ships has been 
updated to include the Gig-E SWAN. Initial system reliability issues 
with the engine controls, ship controls, and interior communications 
systems have been addressed through major software upgrades to each 
system, as well as the replacement of critical obsolete parts with more 
rugged, current technology hardware.
    Government oversight by the Navy's Supervisor of Shipbuilding, Gulf 
Coast (SSGC) has been revamped with an increase in overall SSGC manning 
by 21 percent from 2005 through the end of 2010, including an intensive 
focus on critical waterfront Quality Assurance (QA) billets. All 
Government QA weld inspectors were required to undergo retraining and 
recertification in critical process areas, and QA oversight was 
increased across all phases of production. Within the last 18 months, 
the QA organization has been restructured to include more surveillance 
of in process work and compliance with formal ship construction 
procedures. A revamped training program has been implemented, providing 
an ``apprentice to subject matter expert'' career roadmap for QA 
specialists. SSGC has implemented a process of ``critical process pulse 
audits'' to ensure HII maintains production quality across the critical 
shipbuilding areas of structure, pipe, electrical, and coatings. Navy 
critical process metrics have been aligned with the shipbuilder to 
better assess performance trends leading to earlier identification of 
issues when they arise.
    In addition, Commander, Naval Sea Systems Command (NAVSEA) sent 
teams of QA experts to assess SSGC ability to provide QA oversight and 
HII's production quality in spring 2009, July 2010, and January 2011. 
The NAVSEA audits confirmed initial improvement by both SSGC and HII. 
The focus going forward, and a key element of the critical process 
pulse audits, is ensuring sustainment of that performance.
    The Navy is also strengthening the LPD-17-class crew training by 
establishing more traditional shore-based schoolhouses for critical 
systems that will result in a blended philosophy of classroom, on-ship, 
and computer-based training rather than solely relying on the 
previously emphasized computer-based shipboard training.
    The Ship Manning Document was recently approved, increasing the 
LPD-17-class crew size to 381 from the original ``optimized'' manning 
level of 360.
    The LPD-17-Class System Sustainability Strike Team, made up of 
personnel from the Fleet, the Navy regional maintenance centers, the 
shipbuilder, the Supervisor of Shipbuilding, the class planning yard, 
and the Navy Warfare Centers was established in fiscal year 2009. The 
Strike Team has focused resources on developing and prioritizing 
correction plans addressing system design, production/quality, 
operations and maintenance issues identified in recent test/evaluation 
reports, as well as those discovered during normal shipboard 
operations. Lessons learned from this effort are being incorporated in 
the ship construction process.
    Quality and reliability problems seen on the early ships of the 
class are being systematically addressed by the shipbuilder and the 
Navy. Additionally, the Fleet has recognized the need for additional 
manning for each ship and training for the crews, which is being 
implemented. The above-listed corrections and improvements are already 
being realized in the later ships of the class, as evidenced by LPD-
21's recent success during Final Contract Trials. The Navy recently 
discovered quality problems with repairs on various ships during Fleet 
maintenance availabilities. We are addressing these issues by providing 
additional government oversight to ensure strict compliance with all 
required maintenance and repair specifications and holding the 
contractor accountable to provide quality.
                    lhd/lha/lha replacement (lha(r))
    The LHA(R) will provide flexible, multi-mission amphibious 
capabilities that span the range of military operations from forcible 
entry to humanitarian and disaster relief. LHA(R) will replace our 
Tarawa-class ships that reach the end of their already extended service 
life between 2011 and 2015 for the remaining ship of the class. The 
America (LHA-6) is now more than 30 percent complete and is scheduled 
for delivery in fiscal year 2014. The decommissioning of USS Peleliu 
(LHA-5) has been tied to the delivery of the America in order mitigate 
any possible gaps in future deployment cycles. In support of the Navy's 
commitment to advancing our energy security, the hybrid propulsion 
drive in use on USS Makin Island (LHD-8) is being installed on LHA-6. 
Beginning with LHA-8, the Navy will reintegrate the well deck onto the 
large deck amphibious assault ships. Our budget for fiscal year 2012 
requests funding for research and development to support reintegration 
of the well deck into the design of the large deck amphibious ship and 
the construction of LHA-8 in fiscal year 2016. Funding has been added 
to install a critical self defense capability for LHD-2-6 during the 
fiscal year 2016 Mid-Life Upgrade program. The Capstone Ships Self 
Defense System is essential to ensure ships survivability in any 
environment.
                     maritime prepositioning force
    The MPF(F) concept envisioned a forward-deployed squadron of ships 
to enable rapid closure to areas of interest, at-sea assembly, and 
tactical employment of forces to areas of interest in the event of 
crisis. Although useful across the range of military operations, this 
squadron was primarily designed for use in major combat operations. Due 
to refocusing of priorities and cost, this program has been deferred 
until the 2025 timeframe. The Secretary of the Navy stated that he was 
especially interested in enhancements that would give the legacy MPS 
squadrons additional capabilities and illuminate capabilities that 
would guide the development of MPF(F). Ships previously discussed in 
the context of the MPF(F) have been moved to the Command and Support 
section for battle force accounting. As noted in PB11, the Department 
has determined the large-deck aviation ships previously designated for 
the MPF(F) would better serve the Navy and Marine Corps in the 
amphibious ship inventory--hence the LHA(R)-class ships described 
previously.
    In support of this enhanced Maritime Prepositioning Squadrons 
(MPSRON) concept of employment, three T-AKE auxiliary dry cargo ships 
were added to the program to provide persistent logistic support to 
Marine Corps units afloat and ashore. Further, the Navy recognizes the 
need to provide for at-sea transfer of personnel and equipment from a 
cargo ship and to provide an interface with Landing Craft Air-Cushioned 
(LCAC) vessels, both key capabilities the MPF(F) program was to 
provide. To fulfill this capability, the Navy will procure three MLPs. 
The third MLP is included in the PB12 budget. Operationally, the three 
current MPSRONs will add an MLP, a T-AKE, and a Large Medium-Speed 
Roll-on/Roll-off (LMSR) cargo ship. Future MPF capabilities will 
increase capacity attributed to new ship designs along with seabasing 
enabling capabilities such as at-sea arrival and assembly, employment, 
persistent sustainment and reconstitution.
                        joint high speed vessel
    The JHSV provides high-speed support vessels for the combatant 
commanders who clearly communicated to the Navy their desire for the 
unique capability to move assets throughout marginally developed 
theaters of operation while requiring a less well developed port 
facility. In addition, the JHSV's relatively shallow draft permits 
operation in a greater number of port facilities around the globe. The 
combination of these attributes permits rapid transport of medium size 
payloads over intra-theater distances to austere ports, and load/
offload without reliance on a well developed, heavy port 
infrastructure. A Memorandum of Agreement with the Army transferring 
programmatic oversight and mission responsibility for the entire JHSV 
program, including operations and maintenance, to the Navy was signed 
by the Secretary of the Army and the Secretary of the Navy on May 2, 
2011. All delivered JHSVs will be operated by the Navy's Military 
Sealift Command and manned by civilian or contract mariners. The budget 
request for fiscal year 2012 includes funding for construction of the 
one Navy JHSV. Army has funded its final JHSV in fiscal year 2012. Army 
funded JHSVs will be considered part of the Navy's ship inventory.
                   fleet oiler replacement (t-ao(x))
    The Navy plans to procure the lead ship for the replacement T-AO 
fleet oiler in fiscal year 2014 with follow-on production at one ship 
every year until 2032. Ultimately, this will likely result in a 
complete recapitalization of the existing T-AO and T-AOE-classes and 
will include a total of 19 ships procured. Legacy fleet oilers will 
begin retiring in fiscal year 2017. The new oilers will have a double-
hull design to ensure compliance with the environmental protection 
requirement for this type of ship. The T-AOX AoA will also consider the 
business case of recapitalization of the four T-AOE fast combat support 
ships that begin retiring in fiscal year 2032.
                      shipbuilding industrial base
    Beyond balancing requirements and resources, the fiscal year 2012 
President's budget submission for shipbuilding also weighs the 
shipbuilding industrial base, achieving a balanced and executable 
shipbuilding program which provides additional capability while 
striving for efficiency. Our goal is to build from the current (fiscal 
year 2011) battle force inventory of 286 ships to a battle force 
inventory goal of a minimum of 313 ships. This budget submission 
includes increases in large surface combatant capability and capacity 
and both new construction and modernization to support the President's 
directive to meet the growing ballistic missile threat to the United 
States and its allies. It also continues the Navy's long-term plan for 
small surface combatants by awarding competitive contracts for 10 ships 
of each version of the LCS.
    We will continue to closely monitor our shipbuilding industrial 
base and especially the planned closure of Avondale shipyard by 2013. 
Northrop Grumman completed the divestiture of its shipbuilding segment 
by distributing shares in Huntington Ingalls Industries Inc. to its 
shareholders on March 31, 2011. After months of discussions and 
evaluation, the Navy did not object to NGC's spin-off of its 
shipbuilding business. The Navy's position on the spin-off was based on 
its conduct of due diligence with respect to proprietary forward-
looking projections, including key financial assumptions.
    Robust competitive opportunities do exist across our industrial 
base as evidenced by shipbuilding contract awards for MLP, LCS, and 
JHSV. A stable shipbuilding industrial base, underpinned by level 
loading and predictable ship procurement, is critical to meet the 
Navy's requirements for an affordable and capable future force.
                         acquisition workforce
    The Department has embarked on a deliberate plan to increase the 
size of the Department of Navy's (DoN) acquisition workforce (AWF) over 
the FYDP. The Navy's position is to continue its current plan as stated 
in the DON AWF Strategic Plan, to rebuild the (DON) civilian AWF. In 
fiscal year 2010, the DON AWF grew by approximately 3,000 people (DAWDF 
- 499, In-sourcing - 759). The remainder of the growth was in the 
Warfare Centers (NWCF organizations).
    We started last year and aggressively increased our AWF based upon 
bottom-up requirements from our program executive officers (PEOs), 
Systems Commands, and Warfare Centers. In fiscal year 2010, we have 
added approximately 1000 acquisition personnel (122 DAWDF, 325 In-
sourcing, and 600 other growth) to support shipbuilding programs at 
NAVSEA. Approximately 70 percent of these new acquisition positions 
were added to our warfare centers across the country. These warfare 
centers provide critical engineering, integration support, testing, and 
contracting oversight to all of our sea, air, land, space acquisition 
programs. These personnel are critical since they represent a part of 
the pipeline of future Program Managers and Senior Systems Engineers.
    We have also taken advantage of the Defense Acquisition Workforce 
Development Fund (DAWDF), initiated by Congress, and added nearly 400 
acquisition interns this past year. We are on target to bring aboard an 
additional 500 this year and next. About 30 percent of our DAWDF AWF 
hires are now in shipbuilding organizations. We have also improved our 
education and training programs in two critical areas of need: 
shipbuilding program management and contracting.
    We have used DAWDF funds to pilot a shipbuilding program manager's 
course that was successful enough that we are moving it permanently to 
our Defense Acquisition University program. Other training initiatives 
include the integration of a ``Navy Day'' into the current PMT-401 
course that introduces all Program Managers to DoN's S&E infrastructure 
(Warfare Centers/Labs/FFRDCs/UARCs) and the development of an 
Acquisition War Room focused on shipbuilding programs and acquisition 
lessons learned. In addition, because of the difficulty in hiring 
experienced contracting officers, we have implemented an intense 
accelerated contracting training program at NAVSEA to increase the 
number of qualified contracting officers as well as increase retention 
rates among this important group. It will take several years to rebuild 
and rebalance the DON's AWF, but these measures and continuing them 
with this budget is an important step.
    The Navy continues to emphasize the significant value added by 
having a professional cadre of onsite Supervisor of Shipbuilding 
(SUPSHIP) personnel colocated with our Nation's shipbuilding industrial 
base in an oversight role. Over the last year, the number of onboard 
SUPSHIP staff reached 1,100. This marks a continued growth trend of 
SUPSHIP staffing from approximately 900 onboard in fiscal year 2007 and 
marks another successful year of achieving hiring targets, as SUPSHIPs 
have done every year from fiscal year 2007-fiscal year 2011. Leadership 
will work to continue to align resource needs and staffing 
requirements.
                                summary
    The Navy's shipbuilding submission for fiscal year 2012 President's 
budget and fiscal year 2012-2016 FYDP supports the requirements 
addressed in the National Defense Strategy, the Maritime Strategy, and 
the 2010 QDR. The plan sustains an 11 CVN force from 2015 through 2045; 
sustains Virginia-class build rates at two submarines per year through 
the FYDP; increases Air and Missile Defense capability with increased 
DDG-51 construction and Aegis modernization; increases amphibious lift 
capability with the 11th LPD-17; sustains intra-theater lift capability 
with JHSV procurement; leverages strong competition in the LCS program 
to buy additional ships; accelerates procurement of fleet oilers; and 
continues Ohio-class replacement design and development by funding 
Research and Development efforts within the FYDP as well as Advance 
Procurement funds for detail design in fiscal year 2015. In the near 
years, this plan relies heavily on your support for our fiscal year 
2012 budget.
    Through the long range plan for naval vessels, the Navy instills 
affordability, stability, and capacity into the shipbuilding plan and 
advances capabilities to meet the most likely evolving threats. The 
plan continues DDG-51 construction to leverage a stable design and 
mature infrastructure to achieve affordable capabilities. DDG-1000 
technologies will provide long-range, precision naval surface fire 
support to marines conducting littoral maneuver and subsequent 
operations ashore. LCS will address specific and validated capability 
gaps in Mine Countermeasures, Surface Warfare, and Anti-Submarine 
Warfare, and our selection of both LCS designs leverages the unique 
capability delivered by each platform while providing stability to the 
shipbuilding infrastructure. Restructuring of our Maritime 
Prepositioning Force to augment our current MPS squadron with a T-AKE, 
MLP, and an existing LMSR will enhance the existing capabilities of the 
MPSs. The Navy has also increased the emphasis for meeting and 
extending service lives of in-service ships. We are sustaining the CG/
DDG Modernization while also providing critical mid-life overhauls of 
LSDs. We have deferred command ship replacement and intend to sustain 
the current command ships until 2039.
    The Department of the Navy has addressed realism in our 
shipbuilding plan by incorporating realistic budget projections. The 
Department has addressed the industrial base in leveraging stable 
designs to minimize disruption experience with first of class 
constructions and provides stable production rates within the 
constraints of requirements and budget. Finally, the Department of the 
Navy's plan supports the Secretary of Defense's guidance to 
significantly reduce excess overhead costs and apply the savings to 
warfighting capability and capacity.

    Senator Reed. Well, thank you, Mr. Secretary. I presume 
that Admiral McCoy and Captain Galinis do not have statements; 
or do you, sir?

  STATEMENT OF VADM KEVIN M. McCOY, USN, COMMANDER, NAVAL SEA 
                        SYSTEMS COMMAND

    Admiral McCoy. I have a short statement, sir.
    Senator Reed. Excellent. Please go ahead.
    Admiral McCoy. Mr. Chairman, Ranking Member, and 
distinguished subcommittee members, thank you very much for the 
opportunity to testify on shipbuilding initiatives and the 
material readiness of our Navy. As the Commander of NAVSEA, I 
have been actively engaged with senior Navy leadership, the 
shipbuilders, and the NAVSEA organization to improve the 
quality of ships delivered to the fleet and ensure that our 
ships retain their warfighting effectiveness and achieve their 
full service lives.
    Let me speak up front to the LPD-17 class program. Similar 
to previous shipbuilding programs, the LPD-17 class continues 
to improve and mature as lessons learned on early ships are 
rolled into follow ships and each successive hull completes the 
building process. NAVSEA and SUPSHIP Gulf Coast are working 
closely with the shipbuilder to incorporate lessons learned 
from the lead ship into follow ships.
    Relative to this class, NAVSEA's focus has been in three 
areas: One, addressing the shortcomings of government oversight 
at the SUPSHIP. SUPSHIP Gulf Coast has hired over 284 new 
employees in the past 6 years, resulting in a 21 percent 
increase in manning, including having a second Navy captain 
assigned as the deputy supervisor for operations.
    SUPSHIP has already conducted quality audits and made 
improvements in the shipbuilding process, including better 
foreign material exclusion from piping and increased quality 
assurance compliance inspections, with particular focus on 
working with the shipbuilder to assess and improve the 
compliance with critical ship construction processes. These 
efforts are independently validated by my staff on a regular 
basis, including an annual comprehensive quality assurance 
audit conducted by outside experts focusing on both the SUPSHIP 
and the shipbuilder.
    Two, ensuring shipbuilder compliance in all areas of 
construction and having the metrics and situational awareness 
of deckplate performance to catch trends early as possible in 
the shipbuilding process.
    Three, implementing strike team modifications to make the 
ships more reliable in service. We have created a cross-
functional strike team that includes engineers and fleet 
representatives to address issues associated with this new 
class of ship. Significant focus areas include: redesigning the 
filtering elements of the diesel engine and steering systems; 
improving the reliability of electrical generation and 
distribution systems; and updating the software in the 
engineering and ship control systems.
    The LPD-17 class brings tremendous warfighting capability 
to the Navy and the Marine Corps and it's imperative that we 
continue to ensure that our warships are available for tasking 
now and in the future. Moving forward, we are committed to 
leveraging lessons learned during the fleet introduction of 
LPD-17 class into our initiatives to improve overall service 
readiness.
    I will add that last week we had all five delivered LPD-17 
class ships underway, two on deployment, two on local 
operations, and one is just back from successful sea trials.
    I think we're over the big hurdles on that class, sir. In 
fact, San Antonio, which has been off line for about 18 months 
during a major rebuild from some earlier construction issues, 
is back at sea, having been at sea over a week on sea trials, 
and so far doing well.
    With respect to surface force readiness in general and the 
findings and recommendations of the fleet review panel in 2010, 
at NAVSEA we fully embrace our responsibility to: one, define 
with rigor the processes and methods of ensuring our ships meet 
their full service lives; and two, ensure that maintenance and 
modernization are executed in a formal, deliberate, and 
efficient manner to ensure the operational readiness, 
reliability, safety, and effectiveness of our ships.
    We're working hard to address these issues in order to keep 
America's Navy number one in the world.
    I'd be happy to take any of your questions, sir.
    Senator Reed. Thank you very much, Admiral, for that 
excellent testimony.
    Captain Galinis, do you have a statement?

  STATEMENT OF CAPTAIN WILLIAM J. GALINIS, USN, SUPERVISOR OF 
                    SHIPBUILDING, GULF COAST

    Captain Galinis. Sir, I do have a short statement.
    Senator Reed. We'd like to hear that. Thank you.
    Captain Galinis. Mr. Chairman, Senator Wicker, Senator 
Ayotte, thank you very much for this opportunity to testify on 
Navy shipbuilding and the quality issues affecting some of our 
ship construction programs. I have been the SUPSHIP Gulf Coast 
since September 2009 and before that served as the LPD-17 class 
program manager.
    As the SUPSHIP, I serve as the Navy's on-site or waterfront 
representative responsible for the day-to-day administration of 
Navy shipbuilding contracts with private shipyards under my 
area of responsibility. At SUPSHIP Gulf Coast my team currently 
oversees ship construction work across the Gulf Coast from 
Alabama to Louisiana and as far north as Wisconsin. The 
shipyards we oversee are currently constructing the DDG-51 
class, LHA-6, and LPD-17 class ships at the Ingalls Yards in 
Mississippi and Louisiana, the LCS class Freedom variant LCSs 
in Marinette Marine, WI, oceanographic and special purpose 
ships at VT Halter Marine in Mississippi, and several smaller 
yards, including foreign military sales work at many of the 
yards in Alabama, Mississippi, and Louisiana.
    As the Navy's waterfront representative for these 
contracts, I am responsible for overseeing shipbuilder quality 
compliance and ensuring that the ships delivered for Navy 
service meet all of our requirements. My team works on a daily 
basis with the shipyards to ensure that contractors satisfy 
their contractual obligations. It's no secret that we have 
struggled with quality of some recently delivered ships from 
Gulf Coast shipyards. We, my organization and the shipbuilders 
that we work with, have done a lot of work in this area over 
the last 2 years implementing many improvements to improve 
quality.
    In some cases, this is simply getting back to the basics, 
namely reinstituting a culture of quality and a culture of 
compliance with well-engineered written processes and 
procedures, monitoring deckplate execution, and then measuring 
our performance against these requirements. Both the supervisor 
and the shipbuilders are heavily focused on process compliance 
and are continually assessing our performance in this area.
    We are not done yet. Namely, we are executing quality work, 
but the near-term additional oversight measures are causing 
cost increases. We need to continue to improve our first-time 
quality and reduce rework. My team and the shipbuilders 
building these ships are committed to improving overall ship 
construction quality, building these ships as affordably and on 
schedule and delivering ships that are safe and reliable. I 
believe that our sailors and marines deserve nothing less, and 
I look forward to discussing these efforts with you.
    Thank you.
    Senator Reed. Thank you very much.
    Gentlemen, thank you for the very insightful testimony. Let 
me begin with Secretary Stackley. Both Senator Wicker and I 
have commented on the LPD-17 and both Admiral McCoy and Captain 
Galinis also. Just a preliminary question. We took delivery of 
these ships and found there were significant shortcomings, at 
least the initial ships. Were we obligated to take delivery? As 
someone who did not have the benefit of an Annapolis education, 
Mr. Secretary, I assumed that we'd only take delivery if 
everything was okay.
    Mr. Stackley. Yes, sir. In the case of LPD-17 we were not 
compelled to take delivery. The ship delivered in the summer of 
2005. She did receive an acceptance trial. There was a unique 
circumstance with regards to funding and completion of the 
ship. A decision was made that work would be deferred, to be 
completed in post-delivery, that deferred work would be 
documented by the Board of Inspection and Survey (INSURV) and 
they would actually come back and do a final acceptance trial 
after that post-delivery period.
    Literally days after that event, Hurricane Katrina hit the 
Gulf Coast and all good intentions were abandoned. The ship 
basically stayed at the shipyard for the amount of time 
necessary to get it ready to get under way and all the deferred 
work moved with it to its home port in Norfolk, where it was 
contracted out under a competitive bid process.
    So there was a confluence of events there. The Navy was not 
required to take delivery by any means. It was a conscious 
decision, but the planning went awry when Katrina basically 
overturned events.
    Senator Reed. But when you took delivery, was it 
contemplated that the Navy would pay the additional costs for 
the rework, or is that somehow still the responsibility of the 
yard?
    Mr. Stackley. The reality is that the first four ships were 
awarded back in about the 1996 timeframe under a single cost-
plus contract. Within the terms of a cost-plus contract, the 
government is responsible for paying the cost of the work and 
then industry basically puts at risk fee. But if there are 
allowable and allocable costs incurred on the contract, then 
the government is responsible for paying those. That does 
include rework so long as there isn't any fraud or mischarging 
or things of that nature.
    Senator Reed. Just to be clear in my mind, because of the 
nature of that cost-plus contract taking delivery of the ship 
did not shift costs to the government or the contractor?
    Mr. Stackley. Not at all, no, sir.
    Senator Reed. My presumption is that we're not contracting 
like that in the future.
    Mr. Stackley. In fact, the fifth ship of the class was also 
cost-plus, and what we did several years ago was convert that 
to a fixed price to basically stop the bleeding. In general, we 
have contracted lead ships of a class inside of a cost-plus 
contract because of all the parallel development that takes 
place with the lead ship, and then we look to move to a fixed 
price environment as quickly as possible after that.
    In this case, a single contract awarded the first four as 
cost-plus.
    Senator Reed. I think what Admiral McCoy indicated was that 
the recent ships that have delivered have much fewer problems. 
Your sense is that the trend line is now in the right 
direction, that they're leaving the yard basically ready for 
sea trial?
    Mr. Stackley. Absolutely. I'll let the two gentlemen on 
either side of me add to that, but there are several aspects of 
that. First, the program is just far more mature now. So the 
design deficiencies have been corrected, the build plans 
associated with the shipbuilder and how he builds the ship have 
matured. The vendor base has matured.
    Equally important is the government's oversight has 
matured. Admiral McCoy mentioned the strengthening of the 
SUPSHIP. A complete audit and review of processes and 
procedures is in place to ensure compliance.
    The challenge that we have is going after the first-time 
quality, as opposed to the inspected-in quality. So we're 
working side by side with the shipbuilder, because it's 
impacting them as well inside of this. They're in a fixed price 
environment now, so they're paying for their cost of rework. 
We're both working to get it right the first time, so that 
we're not incurring costs late in a ship's build cycle 
correcting deficiencies.
    Senator Reed. Admiral McCoy?
    Admiral McCoy. Mr. Chairman, let me add. Fundamental 
completion and fundamental quality improved on 21, for example, 
the last one that we took delivery of. We did have, I would 
say, two lingering problems that were late in discovery for the 
class, that did affect the 21, and that is grit in the lube oil 
system, so we had some rebearing and flushing to do to the 
engines; and insufficient socket weld length of material, and 
so we had a significant number of welds to go back and redo.
    But all the other stuff greatly improved from the first. In 
fact, we had a highly successful final contract trial just 
earlier this spring on New York and received lots of praise 
from INSURV during that trial.
    Senator Reed. Admiral, you've made the very explicit point 
that you've beefed up dramatically your supervisory staff. I 
think that quite clearly implies that one of the defects was a 
lack of Navy supervision. I think that's the case, correct?
    Admiral McCoy. Yes, sir. First let me just say, though, the 
fundamental responsibility for constructing the ship right lies 
with the contractor. However, as a backstop we have a SUPSHIP 
in place that we expect to monitor the contractor's quality 
performance and be able to pull the penalty flag out of the 
back pocket when necessary. That did not effectively happen 
here.
    I'll let Captain Galinis talk about some of the things that 
he's done to get us much more in a compliance mode and looking 
at the same metrics the shipbuilder is looking at to backstop 
the shipbuilder effectively. But I would say yes, that is a 
fundamental responsibility of the government and that did not 
happen here, sir.
    Senator Reed. One follow-on question before I recognize 
Captain Galinis. You have learned a great deal. We've all 
learned a great deal. I presume that you're operationalizing 
these lessons, not just along the Gulf Coast, but in every 
aspect of shipbuilding.
    Admiral McCoy. Yes, sir.
    Senator Reed. Also, you're taking this and you're trying 
with Secretary Stackley to plug it into the design phase and 
the build phase of future vessels, so that we don't have to 
relearn this lesson every time we have a new class of ship. Can 
you just comment briefly on that?
    Admiral McCoy. Yes. Let me just address the first part 
first. As part of what we learned coming out of the Gulf Coast 
issues, we instituted across the four SUPSHIPs what we call 
back to basics. It's heavily focused on compliance, as well as 
contract oversight and training.
    We have increased the staffing across all four SUPSHIPs by 
over 200 just in terms of gross numbers. We were at about 900 
across the force SUPSHIPs. We're now at about 1,100. So we 
recognized that across the board, particularly with this ramp-
up of shipbuilding--two LCS classes, JHSV, two Virginias--that 
we weren't postured the way we needed to be and we needed to 
get back down to the fundamentals; and that we also had in many 
cases a green workforce that needed significantly more 
training.
    So we went off on that direction across the board, across 
the corporation. I can let Captain Galinis talk about some of 
the things that he's done.
    Senator Reed. Before he does that, just a final point about 
how you, Mr. Secretary, have taken these lessons learned and 
put them into the development of new ships or new classes of 
ships?
    Mr. Stackley. I would say if you look at the LPD-17 class 
of ships, fundamentally it's a great class of ship. The Marine 
Corps loves it. The Navy operators love it. The Achilles heel 
has been some of these nagging reliability issues, like the 
grit in the lube oil, which has been kind of a mission kill 
from a propulsion standpoint. But yes, we have been looking at 
those issues across the board and looking at our other classes 
and saying, okay, where could we have the same problem?
    For example, welding. We have beefed up welding oversight 
and compliance at every one of our four SUPSHIPs because we 
know that is one of those critical processes that if it gets 
away from you it's very difficult to recover from. Critical 
coatings is another one, in terms of paint and things like 
that. So we're looking at that across the board, Senator.
    Senator Reed. Let me do this. Because my colleagues have 
been very indulgent and I've taken a lot of time and I want to 
recognize Senator Wicker. I'm going to come back with the 
second round and ask you sort of the same question, which is 
how are you working to take these lessons, incorporate them, 
not just in shipbuilding supervision but in design, in 
decisions about what ship classes you can build on the force. 
So you can think about that.
    But one reason I requested that Captain Galinis be here is 
that Admiral McCoy is a great commander and he probably reaches 
out every day, in fact several times a day, to you, Captain, 
and says, what's going on on that waterfront, what are we 
doing, et cetera? I wanted to be able to get the benefit of the 
kind of advice that Admiral McCoy, because of his leadership 
skills, gets. So can you give us, as Admiral McCoy suggested, 
some sort of feel of what you think the problems are and how 
we've addressed them and where we have to do more?
    Captain Galinis. Yes, sir. Fundamentally what I've seen 
since I've been down there, the basic root cause of this really 
comes down to process compliance. We look at it at four 
functional areas in shipbuilding: piping systems, electrical, 
coatings, and structure. Across those four major processes that 
it takes to build a ship, fundamentally the work items and the 
processes are sound. What we found--and this is on both the 
Navy side and the shipbuilder--we have gotten away from or 
deviated from following those written processes.
    Collectively there has been a renewed focus to look at the 
work processes that are in place, and ensure that we're 
following those, and then measure our compliance to those 
processes.
    What did we do at SUPSHIP Gulf Coast specifically for our 
workforce? In addition to the increased hiring that we've been 
able to do over the last several years, training has been a big 
factor in our quality organization. Essentially, we've 
restructured our quality organization and we've provided a 
career path now where a person can enter the quality workforce 
at an entry level and work his way all the way to essentially a 
subject matter expert as a quality assurance specialist.
    That was not there before. That training comprises two 
aspects of it. There's formal training, classroom, schoolhouse 
type training, as well as experience that needs to be 
documented and logged. For example, a nondestructive tester who 
would inspect welds, he goes through a formal training course 
and then he's required to incur so much time on the job 
performance, that essentially gets documented and he works 
under the supervision of a more qualified welder.
    The second thing that we've done working with the shipyard 
is we have aligned our inspection attributes and the things 
that we look at, so that we know when we get reports from the 
shipbuilder that we understand what they're looking at and they 
understand what we're looking at, so our metrics, if you will, 
are somewhat aligned. That was a tremendous process. It sounds 
fairly basic, but it was something that over time we had gotten 
away from.
    Once we aligned those metrics, what we started doing is 
what we call critical process pulse audits. Across those four 
areas that I mentioned--electrical, piping, structure, and 
coatings--we've been doing this every other month now, a joint 
inspection using the common attributes that we've developed. 
That has allowed us to realize and understand where our risk 
areas are, where the crafts are deviating from the processes 
that are in place.
    We've been doing this for probably about 14 or 16 months, 
since the early part of 2010. We have a pretty good track 
record now that we can go back and we can see where our risk 
areas are. So where in the past we didn't know what we didn't 
know, now we know where our risk areas are.
    Then the results of those processes are fed directly back 
to the operations, the craft leadership, and I meet on a 
monthly basis with the craft directors and we literally go 
through these metrics. Then from that they either adjust the 
shipyard training for the craftsmen or we adjust training for 
the quality inspectors if we need to do that. In some cases 
maybe we do make changes to the processes.
    So that in a nutshell is kind of the process that we've 
been through over the last almost 20 months or so.
    Senator Reed. Thank you very much.
    Senator Wicker.
    Senator Wicker. Let me just observe that the chairman, with 
neither an Annapolis education or a fine Reserve Officers' 
Training Corps education, seems to have been able to drill down 
on some very good points here.
    Let me see if I can summarize in layman's terms. Things are 
better now with the LPD-17 because the program has matured, and 
that stands to reason. Admiral McCoy says that actually things 
are going pretty well there now and the people love it. Yet, as 
late as the winter 2010, we did have this independent weapons 
tester saying that the ship is not effective, suitable, and is 
not survivable in combat.
    Admiral McCoy, do you take issue with that? Was it correct 
at the time it was made and in a short time that's been 
rectified, or what can you tell the committee?
    Admiral McCoy. Senator, I think if you look at the issues 
that they identify, I don't take issue with the issues. We were 
having mobility issues, no doubt about that. We were in the 
middle of grit and lube oil on just about all our ships that we 
were dealing with, so that was a mobility issue.
    Senator Wicker. When was the grit solved?
    Admiral McCoy. I'd say right now with San Antonio going to 
sea and doing well I think we can say the grit is behind us 
now.
    Senator Wicker. Just behind us?
    Admiral McCoy. Yes, sir. We've had to flush, we've had to 
change system design, and we've had to prove with a significant 
number of hours on the engines that these ships are reliable. I 
hate to knock on wood, but I'll knock on wood here and say, 
with two deployed and last week three others out at sea doing 
well, and I think a good understanding of the issues both at 
the shipbuilder and how we get the grit out, flush, service, 
and some of the system design changes, that I think that one's 
behind us.
    There were also issues with the Ship-Wide Area Network 
(SWAN). On the earlier ship, you had the less reliable, 
outdated, obsolete, almost the ATM version, and we're now 
putting the Gig E version. Two of the ships have it and we have 
a program to put that on the others.
    We had issues with interior communications that we've been 
dealing with. So we have been systematically going through some 
of these issues and I think we're in a much better place. We 
have answered this question before and I'm happy to give an 
update to the committee, sir. We'll take that one for the 
record in terms of the status of each one of those items.
    [The information referred to follows:]

    The LPD-17 Class of ships has met or exceeded all Key Performance 
Parameter objectives outlined in the LPD-17 Class Operational 
Requirements Document with the exception of one information exchange 
requirement that still needs to be validated.
    Director, Operational Test and Evaluation (DOT&E) found the LPD-17 
Class ``not operationally effective, suitable, or survivable in a 
hostile environment'' during testing in 2007-2009; and its report 
identified 68 deficiencies grouped under 3 major issues--reliability, 
self defense, and recoverability. The Navy has completed its review of 
operational test reports by DOT&E, developed corrective active action 
plans, and has substantially resolved or is in process of resolving the 
deficiencies cited.
    The LPD-17 Class operational evaluation was conducted with a legacy 
asynchronous transfer mode (ATM) version of the Ship Wide Area Network 
(SWAN) and an early version of the Engineering Control System (ECS). 
The first two ships of the class have received the upgraded GIG-E SWAN; 
and no issues have been cited since installation. Upgrades to LPDs-19 
and -20 are scheduled for completion by the end of 2012. All remaining 
LPD-17 Class ships in construction will include the GIG-E SWAN upgrade. 
New ECS software to improve performance and provide additional built-in 
test/monitoring capabilities has been installed on all LPD-17 Class 
ships.
    Main engine reliability issues have been observed on four of the 
first five LPD-17 Class ships. The root cause of those issues can be 
traced back to lube oil cleanliness. Poor initial system cleanliness 
led to steering reliability issues. A major redesign of the lube oil 
filtration system was completed in early 2010. Damaged bearings and 
lube oil piping segments have been replaced on all affected ships. New 
filters and/or modified strainers have been or will be installed on all 
delivered ships. New flushing procedures have been developed and 
implemented; LPD-22 and follow ships will all be delivered with the new 
designs and components.
    Interior/Exterior Communications (IVCS) components demonstrated 
unreliability and could not support high volume traffic capability 
beyond existing amphibious ships; and the Uninterruptible Power Supply 
(UPS) batteries failed prematurely resulting in total power loss for 
some components. The IVCS software has been upgraded; and new 
batteries, along with revised preventive maintenance procedures, have 
been installed on all LPD-17 Class ships. Additionally, a new UPS 
monitoring system is being implemented across the class.
    Recoverability refers to the ability of a ship and its crew to 
prevent loss and restore mission essential functions given a casualty 
from accidents or threat weapon effects. Systems that directly impact 
recoverability include UPS, SWAN, ECS, damage control equipment, 
shipboard damage control features and crew training. Ship system issues 
and associated resolutions have been identified in the preceding 
paragraphs. Additional isolation valves in the chill water system are 
planned for installation on all LPD-17 Class ships; and fire detection 
system software deficiencies have been identified and corrected across 
the class to improve the ship's recoverability.
    Follow-on Operational Test and Evaluation, which commenced in July 
2010, is being conducted by the Navy's Commander Operational Test and 
Evaluation Force and the Marine Corps Operational Test and Evaluation 
Activity under DOT&E oversight to confirm these corrective actions 
resolve the problems noted by DOT&E. The evaluation is scheduled to run 
through the end of fiscal year 2012.
    The first three ships of the class have successfully completed 
their maiden deployments, meeting not only their anticipated 
operational requirements but also responding to emergent missions 
requests. Today, USS Mesa Verde (LPD-19) and USS Green Bay (LPD-20) are 
deployed overseas; and the other three commissioned ships in the class 
are conducting local operations.
    A classified brief providing the status of DOT&E deficiencies and 
associated corrective actions was presented to the Senate Armed 
Services Committee professional staff on August 6, 2010; and the Navy 
can present an updated classified level brief with additional 
clarification and detail of each deficiency, if desired.

    Senator Wicker. Okay. Do you think the independent tester 
went a little overboard late last year in stating, as I have 
quoted, not effective, not survivable in combat? Went a little 
too far in your judgment?
    Admiral McCoy. I certainly don't want to second guess the 
inspector. I will tell you that in my mind I had serious issues 
a year ago on reliability of the propulsion plant because we 
were still coming through it, and I think we're through that. 
So I don't want to take issue with the tester, sir.
    Senator Wicker. Okay. Secretary Stackley, are you trying to 
jump in?
    Mr. Stackley. I was going to add to that. We did a thorough 
review of the findings from the test and evaluation (T&E) 
community coming out of operational T&E and three basic 
categories emerged. One was a reliability issue associated with 
the propulsion plant, which Admiral McCoy has highlighted and 
the efforts that have gone into identifying things from the low 
boil system to engine alignment. Those issues technically 
understood; fixes are either in place or being completed 
throughout the class.
    The second category was reliability associated with, the 
Admiral mentioned, the SWAN and the obsolete technology. That 
technology is being refreshed. This touches everything from the 
propulsion system to interior communications to motor-operated 
valves.
    Senator Wicker. Was that a design defect or a manufacturing 
failure?
    Mr. Stackley. Actually, at the time that was state-of-the-
art. This mid-90s technology was state-of-the-art for basically 
passing signals from one end of the ship to the other. You get 
to a decade later and it's obsolete technology. It has been far 
surpassed by this gigabit ethernet approach which we're 
incorporating throughout the class.
    The third category is the combat systems. On LPD-17, the 
combat systems--I will call them Navy standard systems are the 
same systems that you'll find on other Navy ships. There are 
some deficiencies associated with those systems against certain 
threats that are known throughout the Navy, that are being 
addressed Navy-wide in terms of upgrades to those systems, and 
when we have the Navy-wide solution that will be back-fit on 
the LPD-17 class.
    So the findings we found to be generally accurate and the 
final determination, that's the Director of Operational Test 
and Evaluation's call.
    Senator Wicker. Let me try to boil this down with regard to 
the LPD-17. We had gotten away from a culture of quality, and I 
take it from the testimony that the shipyard itself had gotten 
away from the culture of quality.
    Number two, the Navy didn't follow the process closely 
enough. Number three, part of that was not enough Navy 
personnel were assigned to this task to make sure we stayed 
with this culture of quality.
    Then number four, getting down to specifics, there were 
written instructions as far as the process that simply were not 
followed.
    Captain Galinis, I'll let you take the first stab at this. 
Have I summarized at least four important parts there 
correctly? If not, what did I miss? I think the chairman is 
asking the exact right question. This program has matured and 
it's going to be fine and folks like it now, but it sure has 
been a mess.
    Are we learning lessons, not just for this system, but for 
the next system, so that it can be avoided again?
    Captain Galinis. Yes, sir. First of all, I believe you did 
characterize the points correctly there. Again, the written 
processes that we have I think are good processes. As I said, 
what we have in place now, I believe, the inspections that we 
have, working with the shipyard, give us the ability to measure 
compliance with those processes. I believe that probably in the 
past we were not as effective in that area collectively, both 
the Navy and the shipbuilder, as we should have been or 
certainly could have been. I think that's what led to some of 
the issues that we're seeing.
    The pipe weld issue that Admiral McCoy referred to. The mil 
standard that's in place to measure weld quality has about 18 
different attributes, and I'll say over time our inspectors 
both on the Navy and the shipbuilder side maybe were only 
looking at 6 of those, as an example. We were not catching all 
of the particular attributes that would lead to a quality weld.
    That's just one example that over time we've atrophied how 
we look at particular issues. I think through the training 
processes now that we've put in place both on the Navy side and 
the shipbuilder side, one of the things that Admiral McCoy 
referred to, his teams that have come down, since I have been 
down there, in almost 20 months we've had eight different 
quality or technical authority type-based assessments done 
between the shipbuilder and the SUPSHIP, as well as a number of 
other informal audits.
    So one of the things that came out of that early on was the 
training of the craftsmen on the deckplate, not knowing exactly 
what process they should be using. In the Ingalls yard that we 
work with, they have three different contracts in place at the 
same time. So there are different requirements across those 
different contracts. For the craftsman on the deckplate, to do 
the job correctly he had to understand what the requirements 
were for the ship that he was working on and the processes he 
should follow.
    A lot of times that information wasn't being flowed down to 
the craftsman. I'll tell you that's one thing that the shipyard 
has corrected, and within the last year they have a very robust 
training program in place now, not just for new hires, but also 
for people in the workforce to go back and refresh those 
skills.
    Just 2 months ago I had the opportunity to go through that 
school myself and we walked through what they're doing for the 
welders, how they're training the electricians and the 
pipefitters. There is a very good effort in that place, and I 
think that gets us to that process compliance piece that we're 
striving for.
    Senator Wicker. Thank you very much. I'll stick around for 
a second round, but I know Senator Ayotte has been very 
patient, so I'll let her take a turn.
    Senator Reed. Senator Ayotte.
    Senator Ayotte. Thank you, Mr. Chairman. Thank you so much, 
Senator Wicker.
    Secretary Stackley, I wanted to ask you about the issue of 
modernization of our shipyards. In your written testimony you 
cite the impending attack submarine force structure gap that 
you anticipate coming in the 2020s. You've also stated that you 
plan to address this impending attack submarine force structure 
gap by reducing the construction span of the Virginia-class 
submarines and extending the service life of selected attack 
submarines and extending the length of selected attack 
submarine deployments.
    The Portsmouth Naval Shipyard is a very important public 
shipyard in our country. There is a gap in the modernization of 
our shipyards in terms of the backlog there. I'm sure that the 
other shipyards have backlogs as well, but the backlog at 
Portsmouth is approximately $500 million in modernization.
    What steps do we plan to take to address that, given if 
we're going to focus on extending the life and the maintenance? 
A shipyard like Portsmouth is very critical in having the 
ability and modernization to be able to do that in the most 
efficient and appropriate manner to meet your goals.
    Secretary Stackley, what steps do you think we should be 
taking to prepare for an increased workload, as I would see it 
actually, in what we do at the shipyard?
    Then also, Admiral McCoy, if you could comment, based on 
your previous experience as the commander at the Portsmouth 
Naval Shipyard, how you think the Navy's plan to address the 
attack submarine forces structure gap will impact Portsmouth, 
and also what steps we can be taking now and what steps you 
anticipate taking to address this backlog so that we can be 
prepared to meet what your proposal is.
    Mr. Stackley. Yes, ma'am. Let me start by describing first 
the mitigation efforts that you highlighted from our written 
statement. Those are mitigation only. They don't close the gap. 
If you look at the force structure tables, in fact our 
submarine force structure drops down to a low of about 39 
submarines in about 20 years.
    That's of deep concern to us. When we look at what that 
potentially means with regards to operational cycle and 
turnaround times, turnaround ratios, it means that we have to 
stay right on top of the maintenance plan for the Virginia-
class. Historically, submarine and carrier maintenance has been 
funded to about 100 percent. It's at the top of the priority 
list when it comes to our Operation and Maintenance account and 
so we ensure that we do fully fund the maintenance that's 
planned.
    You're getting at the flip side, which is, how about the 
infrastructure that's going to be responsible for executing the 
maintenance? We have a couple of benchmarks that we look at. 
The investment in terms of infrastructure for our depots, we're 
required and we do meet the requirement to ensure that at least 
6 percent of our maintenance budget would be going through 
those depots, into the infrastructure. We carefully ensure that 
we meet that benchmark.
    The backlog is the delta between that benchmark and then 
the long potential list of things that we'd like to do to 
upgrade or modernize our facilities. That comes back to the 
rest of the budget process. After we hit our benchmarks in 
terms of ensuring that we've fully funded the maintenance and 
the modernization and that we've met the benchmarks for taking 
care of the infrastructure, this remaining list of work has to 
compete inside of the budget process based on priority.
    We're looking across the board in terms of our depot 
investments and the projects that either are a higher priority 
or return the greatest bang for the buck. Looking at the future 
requirements for those depots is how it plays out. Each of the 
depots are looking at that type of a backlog and it simply 
comes down to the budget that's available, prioritizing the 
requirements inside of the budget, and ensuring that we meet 
the maintenance demands for the force today and for the 
foreseeable future.
    Senator Ayotte. Just as a brief follow-up, you said you are 
deeply concerned about the 39-submarine structure, and then 
also the purpose of the modernization would be to make sure 
that we can most efficiently use our shipyards. In terms of 
your deep concern about that, please tell me a little bit more.
    Mr. Stackley. It's both maintenance and modernization. One 
of the other things that we've done with Virginia, the latter 
half of the LA class, Seawolf, and for the replacement, is gone 
towards the ARC-E concept, which is basically modernizing as 
you go. In other words, rather than bring submarines in to deep 
modernization periods to upgrade their capability to pace the 
threat, we've gone towards a more open systems approach, so 
that the impact associated with modernization periods is less 
dramatic.
    But the other aspect of it then is just class maintenance 
plan, doing the periodic maintenance and the condition-based 
maintenance on a regular cycle. That's the two parts. It's 
ensuring the maintenance is funded, which it has been and 
foreseeably will continue to be; and the other is to ensure 
that the infrastructure is there to conduct the maintenance.
    I haven't reviewed the backlog list at Portsmouth. I 
suspect that Admiral McCoy has. But I'm not aware of an issue 
at Portsmouth regarding the backlog of upgrading that facility 
that directly places at risk our ability to maintain the 
submarine force that will be relying on Portsmouth as a depot.
    Senator Ayotte. Admiral, I know you're quite familiar with 
the shipyard. I wanted to get your thoughts on this.
    Admiral McCoy. If you did know, I'm one of the fiercest 
defenders of the four naval shipyards within DOD, because they 
are so critical to sailing in the Navy. As a matter of fact, I 
tell people every single man-day at least for the next 5 years 
has already been accounted for in the four naval shipyards with 
known work. It's that critical to the fleet.
    I watch and evaluate the military construction (MILCON) and 
the sustainment and restoration money that goes into the four 
naval shipyards. I am satisfied, and we argue vehemently inside 
the Navy rack and stack process, that the critical maintenance, 
piers and drydocks, the things we need to do to execute our 
mission every single day, is in fact done, and the critical 
replacements that we need to do.
    After that, as Secretary Stackley said, it becomes where in 
the budget in terms of this thing or that thing. Maintenance, 
MILCON, modernization, equipment buys, hiring people, 
apprentice training, and things like that where in the priority 
is the best expenditure of our dollars at any given time. But 
we are very conscious to make sure that our four naval 
shipyards get the critical maintenance that they need and 
MILCON that they need to execute their mission.
    Now, I'd like to address the attack submarine backlog. 
That's an issue that all of us are working on within the Navy. 
There are things that we can do that I will just point out that 
the folks up in Portsmouth are intimately involved with. We 
have the SUBMET folks, about 250 people up there at the 
Portsmouth Naval Shipyard, colocated along with the shipyard, 
and in fact we're looking at ways to collapse the maintenance 
cycle down. Can we do less maintenance with good engineering, 
the track record, and the trending that we've been doing over 
the years?
    For example, a year ago we signed out a change to the 
second half of the 688 class life where, instead of doing 4-
year on-center selected restricted availabilities, we're now 
doing 6-year on centers. That one change just between 2010 and 
2016 gave us 12 submarine years back.
    I think there's a tremendous opportunity for the submarine 
repair industrial base that Porstsmouth is deep in the middle 
of to look at how on the repair side we can reduce the amount 
of maintenance required to give more operational time to the 
fleet.
    We're looking at right now how do we get engineered 
overhauls from about 20 months down to 18 months? That gives us 
2 more months of submarine time. There's a huge role for our 
public shipyards in helping that submarine gap out there in the 
future, as the Secretary said.
    Senator Ayotte. Thank you very much for your answers. I 
appreciate it.
    My time is up.
    Senator Reed. Thank you very much, Senator.
    Let me go back to the question that both Senator Wicker and 
I alluded to, Mr. Secretary.
    That is, we've learned a lot through not just the LPD-17 
program, but so many programs that you've all spoken about. How 
are we capturing these lessons, not just in terms of oversight 
of the shipyards, but in the design and the contractual 
arrangements that we are going to see in the future to ensure 
the ships come in on time, on budget, and at high quality?
    Just as a footnote, I think one of the lessons we have 
learned is you have to have the Navy personnel on the shipyard. 
My sense was in the 90s that presence was a billpayer for a lot 
of things we did. With the tough budget ahead of us, we can't 
do the same thing again or we'll squander these lessons.
    With that as a prelude, Mr. Secretary, your comments 
please. Admiral McCoy, if you have comments I'd appreciate it; 
and Captain Galinis also.
    Mr. Stackley. Yes, sir. Let me start at the very front end 
of the process, which is requirements. If you get the 
requirements wrong, you can't fix them downstream. What we've 
spent a lot of time and effort on more recently is requirements 
definition, looking at risk, how much development is being 
required to meet the capabilities that are being lined up with 
the requirements, and what's it going to cost.
    I can tell you that with the LPD-17 program cost realism 
was approximately nonexistent at the front end. LCS had a 
similar problem getting out of the starting blocks. If you 
don't understand the cost and if in defining the requirements 
you bring a lot of risk associated with developing new 
capabilities, then downstream when you're trying to actually 
execute what was planned on the front end you're going to run 
into cost problems. You're going to run into schedule problems 
when you have concurrent development, design, and construction 
going on.
    So we've been focusing on the front end, bringing cost 
realism, looking for that 80 percent solution to achieve the 
requirements, reduce the risk, and reduce the cost as we get 
into the design and construction phase. The Ohio replacement 
program is a good example. We spent a year unlocking those 
requirements and looking at trades inside of capabilities to 
figure out how we get the cost of this large program down so 
that later in 5 to 10 years report that we are not breaking 
other shipbuilding programs to meet that national strategic 
requirement.
    There's the requirements piece and there's the cost realism 
piece. To go with that is design for affordability. It's really 
bringing lessons learned from other shipbuilding programs into 
the front end. We're in a much better position to do that today 
with the design tools that we have. We're away from vellums, 
we're away from paper. We're going into standard computer-aided 
design tools that allow us to design a ship many times before 
we build it.
    We can catch and capture design deficiencies and 
interferences. We can bring standard practices. We can have 
more people reviewing the design, and then look at 
producibility in that process. So it's get the requirements 
right, it's leveraging some of the lessons learned in the 
design tools that we have.
    The other key piece is to get the design done before you 
build so you're not carrying concurrency into the construction 
cycle. One example is something like a product ion readiness 
review; before you go cutting steel on this new ship program, 
you certify that the design is done, it's mature, so that we're 
not incurring concurrency in the construction process.
    Those are probably the three key things on the front end. 
Then a lot of the discussion today has been about compliance 
and oversight. I can tell you that the focus on that today is 
where it needs to be, from the top, the Secretary, CNO, on 
down, to ensure that we're investing in terms of putting the 
right people, right skills, and right location to perform that 
oversight function, and also reviewing, as we talked about all 
the procedures and processes so that we don't have disparity, 
relying on judgment at the deckplate level, but in fact we have 
certified processes and procedures in place driving that 
compliance.
    Then it's ensuring that you have a contract vehicle that 
enforces what you've tried to set up through the requirements, 
design, and specs and standards piece. I can tell you we need 
to continue to work on that. There's a lot of experience that's 
required to write a good contract, and we've lost a lot. Not 
only are SUPSHIPs attriting, but also at our headquarters.
    Those folks who are extremely experienced, that have the 30 
years school of hard knocks on what the right terms and 
conditions are and how to structure a good contract, they're 
small in number. We're going towards things like peer review 
process, where we bring in the larger acquisition workforce to 
review contracts to try to harden up everything from terms and 
conditions, incentives, and contract type.
    You see a lot of this coming through in the discussion with 
Dr. Carter and the better buying power initiatives. That is 
largely about how we buy what we buy, to write a good strong 
contract to enforce the intention that was on the front end.
    So there are a lot of parallel efforts. They need to be 
sustained. There is a lot of training of the workforce that 
goes with that. I think we're seeing early returns. We're 
seeing early good trends. But it really is a long-haul effort, 
and as we get into the challenges ahead with regard to the 
budget and new ship programs, we really have to carry this 
discipline further forward to ensure that we don't have 
breakage at a period when the budget is potentially coming down 
and major programs are trying to rise.
    Senator Reed. Admiral McCoy or Captain Galinis, any 
comment?
    Admiral McCoy. I agree with everything that the Secretary 
said relative to getting the requirements right and flowing 
that into the design. I would say probably 90 percent of my 
problems over the last almost 3 years now with the LPD-17 class 
have not been design or requirements. They have really been 
fundamental compliance with known requirements that were not 
built into the ship, either welding or foreign material 
exclusion from critical fluid systems, that kind of thing.
    What we've been trying to do is across the four SUPSHIPs 
hire up to adequate staff, proper staff, get the training, and 
then focus really on a compliance mentality and oversight with 
the shipbuilder.
    Senator Reed. Thank you.
    Captain Galinis, any comments?
    Captain Galinis. Sir, I would take it to a little bit more 
of a tactical level. What we're doing day-to-day on LPD-22, 
which is our next LPD to deliver and is going to deliver this 
year, the program office and the program executive officer 
several years back stood up the strike team. This is an 
organization with input from the fleet, from the builders, and 
from the program side, to kind of capture lessons learned 
across the class.
    They have developed a pretty good database of issues. 
They've solved a great deal of those. What we have done is 
we've leveraged off of that database and put together what I'll 
call focus groups to go and look at high-risk areas for this 
class, many of the things that Admiral McCoy and Secretary 
Stackley talked about: main propulsion; electrical; the mission 
systems area, which is your hydraulic ramps; the stern gates; 
some of the big heavy equipment on board the ship; ventilation 
systems; and coating systems. Those are the high-risk areas 
that we've had problems on the ship.
    We've put together focus teams that include resident 
experts from the warfare centers, from the fleet, from the 
program office, and the SUPSHIP's office, to work with the 
shipbuilder to ensure that we have those captured. Where we can 
get design changes in, we're doing that. Where some of the 
other fixes are really just performing the work correctly the 
first time, we're ensuring that. So there's a laser focus on 
those issues for LPD-22 as we go forward.
    Senator Reed. Thank you.
    I have some questions that I'll submit in writing, and 
we'll recognize Senator Wicker.
    Senator Wicker. I want to thank the panel for being willing 
to go in depth with us on this issue.
    Let me ask about the cost of the 2011 30-year shipbuilding 
plan. The Navy says it's going to cost $16 billion per year. 
The Congressional Budget Office (CBO) says it will cost $19 
billion per year. What can we make of that?
    Mr. Stackley. We tend to take the 30-year plan and break it 
down into three windows: first 10, second 10, and third 10, 
recognizing that in the first 10 years of the 30-year plan we 
have a lot of fidelity, better accuracy, and better 
understanding of the ships in the plan, what the requirements 
are, and what their costs are.
    So we believe we have fairly high fidelity in our cost 
estimates for the first 10 years of the plan, and that's $14 to 
$15 billion per year, maybe just a tad north of that.
    The second 10 years, you start to lose some of that 
fidelity, and that's a critical 10-year window because that's 
also where you're into heavy construction of the Ohio 
replacement program and other new ship programs are starting to 
emerge.
    Senator Wicker. Let me interject. Does CBO approach it with 
three windows of 10 years each also? If so, are they closer in 
the first 10 years?
    Mr. Stackley. Yes, sir. I was going to wrap around to that. 
I will cut to the punch line in terms of the difference between 
CBO and the Navy. Dr. Labs and I have had this conversation on 
a number of occasions. We have a difference in terms of how we 
escalate and then de-escalate the price of ships in the out 
years. It's a difference between the way the Navy cost 
estimators account for inflation versus the way CBO accounts 
for inflation. That difference makes up the majority of the 
difference between CBO's estimates and the Navy's estimates.
    What happens between that 10-, 20-, and 30-year window is 
the further out you go obviously the greater the impact the 
inflation will have, and that's where it tends to exacerbate 
the difference between the Navy and CBO.
    Going back to the 10-, 20-, 30-year look, in the first 10 
years I think we're fairly close in our estimates. We start to 
diverge in that second window, which is a combination of that 
escalation difference and also some assumptions regarding 
largely the Ohio replacement program. Then when you get out to 
the third window, the last 10 years of the 30-year plan, we're 
fairly far apart, again driven by difference in escalations, 
but now you're also starting to get into programs that don't 
exist and what assumptions are you going to make, for example, 
regarding a DDG-X out 30 years from now.
    That's why I break it down to those three windows. We're 
very much focused on the first 10-year window. We're very 
concerned about the second because that Ohio replacement 
program is so dominating. The third window we look at for long-
range planning and consideration, but we don't do a whole lot 
in the near term to try to affect that last decade of the 30-
year plan.
    Senator Wicker. That makes sense. Let me ask in conclusion 
about the industrial base. We want our shipyards to do right 
and to get this right, but also we want to keep them viable. 
There are concerns that the relatively low orders for new ships 
in the 2011 plan may jeopardize the administration's plans to 
support the shipbuilding industrial base over the intermediate 
to long term.
    Tell us what you can to reassure us in that regard, Mr. 
Secretary.
    Mr. Stackley. Yes, sir. We talked about adding five ships 
to the FYDP. If you look at the ships we've added, there was a 
very heavy focus on, one, it's a valid requirement, but two, 
the industrial base. So we've added a 2014 destroyer, for 
example. We have two surface combatant builders. We have a 
sawtooth profile, which is marginal to support two surface 
combatant builders. What we would really like to do is get that 
build rate up to a more stable flow of work that helps our 
affordability, helps their viability, and meets the force 
structure requirement.
    Senator Wicker. We'd like to help you on that.
    Mr. Stackley. Yes, sir.
    So there's the surface combatant piece. We've added a 
destroyer in the FYDP. I believe we have further to go and we 
need to continue to work on that.
    We also added the T-AOXs and we pulled the MLP to the left. 
Today we have two auxiliary builders and we need to pull that 
work into the FYDP to keep the auxiliary sector of our 
shipbuilding industrial base viable, recognizing that by itself 
is not going to be able to support two auxiliary shipbuilders 
or we are at risk of losing both.
    That was critical to the sector, but if the shipyards were 
side by side with me they would describe that as not sufficient 
to support both of the auxiliary builders today.
    The other aspects of our shipbuilding plan, submarines are 
going to two per year. In fact, in some years in the out years 
when Ohio starts up we're at three. I think that sector is very 
healthy compared to the past 10 to 15 years. For carriers, we 
are very stable between new construction and refueling and 
complex overhauls, so that sector is healthy. Then the last 
piece is amphibs and between our big deck build plan and the 
LPD-17 winding down, we have in fact pulled the LSD-X, which 
was originally going to be out in the 2020s, in to the 2017 
timeframe and are going to be kicking off that analysis of 
alternatives, again with concerns for the industrial base.
    So we keep a close eye on the industrial base when we build 
the shipbuilding plan. We are in a $15, $16 billion rate over 
that 30-year window. Some people would argue that we're going 
to be challenged to meet that budget plan. But in the near term 
we're doing everything we can to address the rise in the budget 
and the types of ships that we build with an eye on the 
industrial base.
    Senator Wicker. Thank you very much.
    Mr. Chairman, this is going to do it for me today. I really 
appreciate this panel working with us to help us increase our 
understanding of these very large, expensive, and complex 
issues.
    Senator Reed. Thank you, Senator. I want to join you in 
thanking the panel for very insightful and very, very helpful, 
constructive testimony this afternoon. We look forward to 
working with you, because this is a long-term ongoing, mutually 
involved exercise. So thank you very much.
    Admiral, thank you for your service. Mr. Secretary and 
Captain, thank you, because you brought a real from-the-
dockside view of the process and we appreciate it very, very 
much.
    With that, there will be some written questions provided to 
you within the week and we hope you respond as quickly as 
possible; and we'll now adjourn the hearing. Thank you.
    [Questions for the record with answers supplied follow:]
              Questions Submitted by Senator Jeff Sessions
                         littoral combat ships
    1. Senator Sessions. Secretary Stackley, a May 12, 2011, 
Congressional Research Service (CRS) Littoral Combat Ship (LCS) report 
stated that the Navy lacks an Economic Order Quantity (EOQ) authority 
for executing the two block-buy contracts for the LCS class ships. 
According to CRS, the provision that granted the Navy authority did not 
include wording explicitly permitting the Navy to use EOQ purchasing in 
procuring the 20 LCSs covered under the two 10-ship LCS block-buy 
contracts. The CRS report states that EOQ purchasing would shift the 
procurement of certain LCS seaframe components from later years of the 
two block-buy contracts to earlier years, funding these EOQ purchases 
would increase LCS seaframe procurement funding requirements in the 
earlier years of the two block-buy contracts, and reduce (by an even 
larger amount) LCS seaframe procurement funding requirements in the 
later years of the two LCS block-buy contracts. Does the Navy support 
authorizing language that would provide EOQ authority?
    Secretary Stackley. The Navy plans to use EOQ authority for the LCS 
program and would support additional statutory language authorizing EOQ 
for the program. However, the Navy believes that Congress has already 
authorized the Navy to make EOQ purchases under the two Block Buy 
contracts that were awarded on December 29, 2010. This statutory 
authority is granted by section 121 of the National Defense 
Authorization Act (NDAA) for Fiscal Year 2010, Pub. L. 111-84 (section 
121); as amended by Section 150 of the Continuing Appropriations and 
Surface Transportation Extensions Act, 2011, Pub. L. 111-322 (section 
150).
    Subsequently, the Navy sought authorization from Congress to award 
10-ship construction contracts to both LCS shipbuilders, thereby 
enabling the Navy to construct a total of 20 LCS vessels (acquiring 10 
each of both designs) for less than it had budgeted to acquire only 15 
ships of one design under its original acquisition strategy.
    In response, Congress enacted section 150 providing that `` . . . 
the Secretary of the Navy may award a contract or contracts for up to 
20 LCSs.'' Section 150 does not repeal or amend other portions of the 
prior authorization in section 121, including authorization to acquire 
``material and equipment in economic order quantities when cost savings 
are achievable.'' This position is supported by the fact that Congress 
subsequently included $190,351,000 of EOQ funding for the LCS Program 
in the Department of Defense and Full-Year Continuing Appropriations 
Act, 2011, Pub. L. 112-10.

    2. Senator Sessions. Secretary Stackley, do you agree or disagree 
with CRS's characterization of how EOQ authority would affect the cost 
of future LCS ships? Please explain your position.
    Secretary Stackley. The Navy plans to use EOQ authority for the LCS 
program, and would support additional statutory language authorizing 
EOQ for the Program. However, the Navy believes that Congress has 
already authorized the Navy to make EOQ purchases under the two Block 
Buy contracts that were awarded on December 29, 2010. This statutory 
authority is granted by section 121 of the NDAA for Fiscal Year 2010, 
Pub. L. 111-84 (section 121); as amended by section 150 of the 
Continuing Appropriations and Surface Transportation Extensions Act, 
2011, Pub. L. 111-322 (section 150).
    Subsequently, the Navy sought authorization from Congress to award 
10-ship construction contracts to both LCS shipbuilders, thereby 
enabling the Navy to construct a total of 20 LCS vessels (acquiring 10 
each of both designs) for less than it had budgeted to acquire only 15 
ships of one design under its original acquisition strategy.
    Congress responded by enacting section 150, providing that `` . . . 
the Secretary of the Navy may award a contract or contracts for up to 
20 LCSs.'' Section 150 does not repeal or amend other portions of the 
prior authorization in section 121, including authorization to acquire 
``material and equipment in economic order quantities when cost savings 
are achievable.'' This position is supported by the fact that Congress 
subsequently included $190,351,000 of EOQ funding for the LCS Program 
in the Department of Defense and Full-Year Continuing Appropriations 
Act, 2011, Pub. L. 112-10.
    With respect to how EOQ authority would affect the cost of future 
LCS or Navy ships in general, the Navy agrees with the CRS 
characterization. EOQ purchasing shifts procurements from later years 
to earlier years, increasing earlier year funding requirements but 
reducing by a larger amount funding requirements in later years as 
industry is able to negotiate with suppliers lower prices for items 
purchased in greater quantities. The Navy had projected more 
significant EOQ savings based on a combination of Government Furnished 
Equipment and ship component purchases prior to House Appropriations 
Committee rescission of those funds.

                           repair facilities
    3. Senator Sessions. Secretary Stackley, as we discuss the Navy's 
shipbuilding plans and fleet size, I want to recognize the important 
role that high-quality ship repair activities play in all of this. For 
decades, open competition has provided the Navy with a reliable and 
capable private sector workforce made of both large and small 
businesses. In non-nuclear ship repair this open competition was 
encouraged by the Competiveness Demonstration (Comp Demo) program that 
began in 1988. However, at the end of last Congress this successful 
program was unfortunately repealed. Since that time, more than 30 
government vessels have been set-aside, thereby eliminating numerous 
shipyards from competing to work on them. I know the negative impact 
this has on shipyards in Alabama and their skilled workers. In your 
opinion, should the Comp Demo program be reinstated for non-nuclear 
ship repair?
    Secretary Stackley. The purpose of the Comp Demo Program was to 
evaluate the ability of small businesses to compete without the use of 
general small business set-asides. The DOD Office of Acquisition, 
Technology, and Logistics, specified in their memo of June 16, 2010 
that set-asides could only be implemented if small business received 
less than 40 percent of the awarded dollars for industries covered 
under the Comp Demo Program. In fiscal year 2010, for the industry code 
that governs non-nuclear ship construction and repair, according to the 
Federal Procurement Data System, small businesses received over 55 
percent of the Navy's awards thus exceeding the minimum required by 
DOD.
    The DON Office of Small Business Programs is presently conducting 
an analysis covering the past 5 years to fully evaluate and understand 
the participation small business has had in this and other areas 
formerly covered by the Comp Demo Program to fully assess the impact of 
the repeal. Upon completion of this review DON will evaluate an 
appropriate action.
    In the meantime, prior to approving any acquisition strategy the 
DON will continue to perform comprehensive market research analysis to 
determine the availability and capability of small business, the depth 
of potential competition, the present health of the industry and the 
appropriateness of applying set-asides in accordance with the Federal 
Acquisition Regulations.

    4. Senator Sessions. Secretary Stackley, if it is not done soon, 
then what impact do you think this decrease in competition will have in 
the ship repair area?
    Secretary Stackley. The purpose of the Comp Demo Program was to 
evaluate the ability of small businesses to compete without the use of 
general small business set-asides. Elimination of the Comp Demo program 
may impact the level of competition for all Navy and Military Sealift 
Command (MSC) operated vessels, although competition would exist under 
small business set-asides.
    For non-nuclear repair of U.S. Navy ships, the repeal of the Comp 
Demo program may require that future Multi-Ship/Multi-Option (MSMO) 
contracts be set aside as appropriate per Federal Acquisition 
Regulations (FAR). For non-nuclear ship repair of MSC-operated vessels, 
while it is reasonable to expect that the majority of MSC non-nuclear 
ship repair contracts on the east coast will be set-aside, recent 
industry consolidation of some small business yards on the west coast 
makes the impact there less certain. The extent of set-asides will 
depend on the capabilities and availabilities of small business 
qualified yards which will be determined on an individual procurement 
basis.
    In the meantime, prior to approving any acquisition strategy the 
DON will continue to perform comprehensive market research analysis to 
determine the availability and capability of small business, the depth 
of potential competition, the present health of the industry and the 
appropriateness of applying set-asides in accordance with the FAR.
                                 ______
                                 
             Questions Submitted by Senator Roger F. Wicker
                            industrial base
    5. Senator Wicker. Secretary Stackley, the Navy's current 30-Year 
Shipbuilding Plan (2011 Plan) indicates that we will be building ships 
at minimum sustaining rates. Many observe that this could pose 
challenges to fulfilling the amphibious force requirement and possibly 
give rise to a sea-lift capability gap and aviation-lift gap in 2015. 
Let's set aside the operational implications of those issues for a 
moment. Many worry that the relatively low orders for new ships 
proposed in the 2011 Plan may jeopardize the administration's plans to 
support the shipbuilding industrial base over the intermediate- to 
long-term. The reductions in vendors to provide equipment for the 
shipbuilding industry may also make it difficult to realize desired 
efficiencies. Is the number of ships currently planned for enough to 
keep the Navy's six major shipyards in business?
    Secretary Stackley. The 30-year plan aligns with decisions made by 
the Secretary of Defense in fiscal year 2012 President's budget as well 
as priorities and guidance from the 2010 Quadrennial Defense Review 
(QDR). The shipbuilding program invests where necessary to ensure the 
Navy's battle force remains equal to the challenges of today as well as 
those it may face in the future. The program represents a balance 
between the expected demands upon the battle force for presence, 
partnership building, humanitarian assistance, disaster relief, 
deterrence and warfighting as well as expected future resources.
    As discussed in the fiscal year 2011 Shipbuilding Report to 
Congress, the Chief of Naval Operations and Commandant of the Marine 
Corps have agreed that 38 amphibious ships are necessary to ensure full 
lift capability for a 2.0 Marine Expeditionary Brigade (MEB) assault. 
Further they have determined that this force can be sourced in the 
Assault Echelon (AE) with 33 ships, with acceptable risk. In keeping 
with this agreement, the Navy is reviewing options to increase the AE 
to reflect a minimum of 33 amphibious ships in the AE, evenly balanced 
at 11 aviation-capable ships, 11 LPD-17-class ships, and 11 LSD-41-
class ships. The 33 ship force accepts risk in the arrival of combat 
support and combat service support elements of the MEB but has been 
judged to be adequate in meeting the needs of all parties within the 
limits of today's fiscal realities. The fiscal year 2012 President's 
budget achieves the minimum of 33 AE ships beginning in fiscal year 
2017.
    The Navy recognizes that level loading of ship procurement to help 
sustain minimum employment levels and skill retention promotes a 
healthy U.S. shipbuilding industrial base and this was considered in 
the development of our shipbuilding plan.

    6. Senator Wicker. Secretary Stackley, what is your sense about the 
shipbuilding industry's support for the proposed plan?
    Secretary Stackley. The Navy is the primary customer for all of the 
first tier shipyards. Additionally, fleet maintenance and modernization 
workload provides further workload stabilization. The Navy recognizes 
that level loading of ship procurement to help sustain minimum 
employment levels and skill retention promotes a healthy U.S. 
shipbuilding industrial base. The Navy has made a series of key 
shipbuilding investment decisions, each of which have contributed to 
meeting the Department's requirements while also serving to strengthen 
the industrial base. These adjustments to the shipbuilding plan have 
been well supported by the shipbuilding industry, including:

         accelerating increased Virginia-class submarine 
        construction to two boats per year, commencing in fiscal year 
        2011;
         realigning DDG-1000 construction to a single shipyard 
        (BIW) while restarting DDG-51 construction;
         accelerating Mobile Landing Platform construction to 
        three ships over 3 years;
         accelerating start of the future fleet oiler, T-AO(X), 
        construction from fiscal year 2020 to fiscal year 2014;
         accelerating construction of the LSD(X) to fiscal year 
        2017;
         increasing construction of DDG-51 destroyers with the 
        addition of a second DDG in fiscal year 2014; and
         dual award of LCS contracts in fiscal year 2010.

    Further, the Navy is supporting the industrial base by leveraging 
stable designs to minimize disruption experienced with first-of-class 
constructions and providing stable production rates within the 
constraints of requirements and budget.

    7. Senator Wicker. Secretary Stackley, in your view, can industry 
withstand the minimum sustaining rate at which the Navy is building 
(and intends to continue building) many of its ships?
    Secretary Stackley. The Navy recognizes that building the required 
force structure will largely depend on controlling shipbuilding costs 
(including combat systems) within an affordable range. We are committed 
to maintaining stability in requirements, funding and profiles in an 
effort to control costs. This will require the combined efforts of the 
Navy, the shipbuilding industry and combat systems industry. Working in 
conjunction with Congress, the Navy will procure and sustain force 
structure necessary to deliver the naval capabilities needed to support 
national interests.
    The Navy has and continues initiatives to support the shipbuilding 
industrial base including:

    1.  In Title II of Public Law 109-234, section 2203, Congress 
directed that at least $140 million be made available for 
infrastructure improvements at Gulf Coast shipyards that have existing 
Navy shipbuilding contracts and that were damaged by Hurricane Katrina 
in calendar year 2005. In 2010, the Department awarded an additional 
$39.5 million in infrastructure improvement projects to Gulf Coast 
shipyards that support the Navy shipbuilding industrial base. These 
projects focus on expediting recovery of shipbuilding capability, 
increasing efficiency, and preventing further hurricane damage to Gulf 
Coast shipyards.
    2.  The Department of the Navy's new ship construction procurement 
and funding plans for fiscal year 2012 and the Future Years Defense 
Program as reflected in the President's budget 2012 submission, 
reflects the Navy's commitment to support and add stability to the 
industrial base by taking into account industrial base implications, as 
acquisition strategies and contracting strategies are developed. 
Specifically the Navy has:

       a.  Accelerated production of the double-hulled fleet oiler T-
AO(X) from 2017 to 2014 in the fiscal year 2012 budget submission. This 
allows the Navy to acquire this important capability 3 years earlier 
while bringing greater stability and promoting competition in the 
shipbuilding industry.
       b.  Accelerated the procurement schedule for Mobile Landing 
Platform (MLP) to one ship per year in fiscal years 2011-2013 from 
procurement in fiscal year 2011, fiscal year 2013, and fiscal year 
2015.
       c.  Executed an acquisition strategy for the LCS where Lockheed 
Martin and Austal USA were each awarded a fixed-price incentive 
contract for the design and construction of a 10-ship block buy from 
fiscal year 2010-2015. This LCS strategy supports the industrial base 
for shipbuilding by keeping workers employed at two shipyards along 
with workers at their various subcontractors and vendors.
       d.  Developed a plan which most affordably meets the 
requirements for Navy surface combatants, commences the transition to 
improved missile defense capability in new construction, and provides 
significant stability for the industrial base. The plan allocates 
construction responsibilities for DDGs-1000-1002 and DDGs-113-115 
(fiscal year 2010-2011 ships) between Bath Iron Works (BIW) and Ingalls 
HII. The workload agreement should ensure workload stability at both 
yards, efficiently restart DDG-51 construction, facilitate performance 
improvement opportunities at both shipyards, and maintain two sources 
of supply for future Navy surface combatant shipbuilding programs. To 
further stabilize the combatant industrial base, the Navy added a 
second DDG-51 Flight IIA in fiscal year 2014 and plans to request MYP 
authorization in fiscal years 2013-2017.
       e.  Increased procurement of Virginia-class attack submarines to 
two per year starting in fiscal year 2011. The Navy plans to continue 
procurement of the Virginia-class attack submarines at two ships per 
year when possible.

    3.  Of the Big Six shipyards, only General Dynamics NASSCO has 
recently competed in the commercial shipbuilding industry. However, 
NASSCO currently has only U.S. Navy shipbuilding and repair contract 
work at the shipyard. In 2010, the Navy signed an Shipbuilding 
Capabilities Preservation Act (SCPA) agreement with NASSCO and the 
company is pursuing commercial contracts. The Navy is also prepared to 
provide an agreement, in accordance with the SCPA, that would assist in 
making HII more competitive for commercial shipbuilding work. The 
purpose/benefits of an SCPA is to facilitate a shipbuilder's entry into 
private sector work and reduce that shipbuilder's reliance on the 
Department of Defense industrial base.

    The ships brought into service during the 1980s, some procured at a 
yearly rate of four to five ships of a single class, are projected to 
retire during the next 15-20 years. With the need for multi-mission 
platforms vice single mission platforms, and recognizing the 
significantly increased capabilities of current new construction ships, 
the navy cannot recapitalize legacy ships at the same rate at which 
they were originally procured and maintain an affordable balanced 
procurement plan. The Navy is working to stabilize the shipbuilding 
plan but industry must move to right size and strive for efficiencies 
to enable an affordable shipbuilding plan.

    8. Senator Wicker. Secretary Stackley, in both the current budget 
request and in terms of a more general policy, what, if anything, is 
the Navy doing, or will it do, to support the shipbuilding industrial 
base? Are there any plans, for example, such as helping to convert 
existing shipyards into ship-repair yards?
    Secretary Stackley. The Department of Defense and Navy face the 
challenge of ensuring that the defense industrial base can meet the 
current and future requirements for systems and support while 
maintaining cost effectiveness, competition, and the necessary skills 
and technology base. To help meet this challenge, the Assistant 
Secretary of the Navy (Research, Development and Acquisition) has 
engaged an outside entity to develop and provide a publicly available, 
comprehensive, and independent assessment of the Navy shipbuilding 
industrial base.
    The Navy seeks an industrial base analysis that focuses on the 
essential capabilities and capacities needed to support Navy ship 
construction. The objective of the study is to identify the industrial 
base challenges facing the Navy and the strategies for mitigating the 
effects of those challenges, across a variety of issue areas such as 
cost, schedule, technical, infrastructure, and workforce capability. 
This may include recommendations to change/improve policies, standards, 
contract elements, performance benchmarks, government and industry 
practices, and oversight that define the effective delivery of quality 
products, platforms, and systems (including combat systems).
    Recent examples of what the Navy has done to support the industrial 
base include:

    1.  In Title II of Public Law 109-234, section 2203, Congress 
directed that at least $140 million be made available for 
infrastructure improvements at Gulf Coast shipyards that have existing 
Navy shipbuilding contracts and that were damaged by Hurricane Katrina 
in calendar year 2005. In 2010, the Department awarded an additional 
$39.5 million in infrastructure improvement projects to Gulf Coast 
shipyards that support the Navy shipbuilding industrial base. These 
projects focus on expediting recovery of shipbuilding capability, 
increasing efficiency, and preventing further hurricane damage to Gulf 
Coast shipyards.
    2.  A recent adjustment in the shipbuilding industrial base is the 
Northrop Grumman Corporation (NGC) decision to spin-off/sell its 
shipbuilding sector. Navy evaluated this complex corporate transaction 
and negotiated with NGC to ensure that the reorganized entity, 
Huntington Ingalls Industries (HII), would remain a financially viable 
company capable of performing current and future Navy shipbuilding 
programs. This reorganization is now complete, after Navy completed its 
evaluation and announced its position supporting this reorganization 
and finding HII to be a responsible contractor. The Navy is also 
prepared to provide an agreement, in accordance with the Shipbuilding 
Capabilities Preservation Act (SCPA), that would assist in making HII 
more competitive for commercial shipbuilding work. The purpose/benefits 
of an SCPA is to facilitate a shipbuilder's entry into private sector 
work and reduce that shipbuilder's reliance on the DOD industrial base. 
U.S. commercial shipbuilding accounts for approximately 1 percent of 
world commercial shipbuilding output; 80 percent of this comes from the 
mid-tier sector.
    3.  The Department of the Navy's new ship construction procurement 
and funding plans for fiscal year 2012 and the Future Years Defense 
Program as reflected in the PB2012 submission reflects the Navy's 
commitment to support and add stability to the industrial base by 
taking into account industrial base implications as acqusition 
strategies and contracting strategies are developed. Specifically the 
Navy has:

      a.  Accelerated production of the double-hulled fleet oiler T-
AO(X) from 2017 to 2014 in the fiscal year 2012 budget submission. This 
allows the Navy to acquire this important capability 3 years earlier 
while bringing greater stability and promoting competition in the 
shipbuilding industry.
      b.  Accelerated the procurement schedule for MLP to one ship per 
year in fiscal year 2011, fiscal year 2012, and fiscal year 2013 from 
procurement in fiscal year 2011, fiscal year 2013, and fiscal year 
2015.
      c.  Executed an acquisition strategy for the LCS where Lockheed 
Martin and Austal USA were each awarded a fixed-price incentive 
contract for the design and construction of a 10-ship block buy from 
fiscal year 2010 through 2015. This LCS strategy supports the 
industrial base for shipbuilding by keeping workers employed at two 
shipyards along with workers at their various subcontractors and 
vendors.
      d.  Developed a plan which most affordably meets the requirements 
for Navy surface combatants, commences the transition to improved 
missile defense capability in new construction, and provides 
significant stability for the industrial base. The plan allocates 
construction responsibilities for DDG-1000-1002 and DDG-113-115 (fiscal 
year 2010-2011 ships) between BIW and Ingalls HII. The workload 
agreement should ensure workload stability at both yards, efficiently 
restart DDG-51 construction, facilitate performance improvement 
opportunities at both shipyards, and maintain two sources of supply for 
future Navy surface combatant shipbuilding programs. To further 
stabilize the combatant industrial base, the Navy added a second DDG-51 
Flight IIA in fiscal year 2014 and plans to request MYP authorization 
in fiscal year 2013-2017.
      e.  Increased procurement of Virginia-class attack submarines to 
two per year starting in fiscal year 2011. The Navy plans to continue 
procurement of the Virginia-class attack submarines at two ships per 
year when possible.

    4.  Of the Big Six shipyards, only General Dynamics NASSCO has 
recently competed in the commercial shipbuilding industry. However, 
NASSCO currently has only U.S. Navy shipbuilding and repair contract 
work at the shipyard. In 2010, the Navy signed an SCPA agreement with 
NASSCO and the company is pursuing commercial contracts.
    5.  Government shipbuilding contracts are routinely structured with 
incentive fees on fixed price type contracts. Incentives are tools or 
mechanisms through which the government encourages specific behavior or 
performance. The Navy has implemented a number of different 
shipbuilding facilities investment incentives. By setting aside ship 
construction funds to be allocated based on business case 
justification, these special incentives allow shipbuilders the 
potential to earn additional fees toward capital and process 
improvements when proven to be mutually beneficial to both contract 
parties.
    6.  Both the Federal Acquisition Regulation (FAR Subpart 32.5) and 
specific Navy regulations address how progress payments are to be 
distributed for shipbuilding contracts. In general, contractors are 
paid upon demonstration of physical completion and costs incurred, 
while the Navy retains some remainder of funding (i.e., retentions) to 
ensure completion of contract deliverables and expectations. However, 
in certain circumstances, the Navy has authorized the early release of 
contract retentions. Contract retentions are meant as monetary leverage 
over the shipbuilder to obtain a fully compliant ship delivery, but for 
purposes of providing cash flow to support shipyard investment, early 
release of contract retentions can be a timely, real stimulus from a 
corporate perspective. Several shipbuilders have benefited from 
investments supported in part or wholly through the early release of 
contract retentions. This approach was used through the DDG-51 Program 
at General Dynamics' Bath Iron Works. Two projects that have utilized 
this mechanism are the Land Level Transfer Facility and the Ultra Hall 
Facilities.

    There are no plans to help convert existing shipyards to repair 
yards as they have the capability to perform repair work. There is 
currently excess capacity in the private ship repair industry. Navy 
must also balance public/private capacity for ship repair. Additional 
private capacity would put undue pressure on that public/private 
balance.

    9. Senator Wicker. Secretary Stackley, what level of cost risk is 
created by increasing reliance on sole-source contracts?
    Secretary Stackley. Where possible, the Navy is moving away from 
sole source contracting. But where that is unavoidable, the Navy 
strives to create a strong negotiation posture using in-depth cost 
analysis of actual costs, component breakouts, and incentives to focus 
industry on reducing costs.
    A sole source contract in itself does not automatically result in 
an elevated cost risk. The degree of contract cost risk is a function 
of Government and industry joint understanding of the contract 
requirements and an understanding of the business and technical factors 
that drive cost behavior. In September 2010, the Navy implemented an 
internal management tool coined should-cost management. The goal for 
this initiative is to ensure that program managers articulate only 
those contract requirements necessary to deliver warfighting 
capability; understand the factors that influence cost behavior; and 
drive productivity improvements into their programs during contract 
negotiations through effective contract type, terms, and conditions, 
and throughout program execution. This policy applies to all contract 
types.
    Ultimately, one of the Navy's biggest negotiation leverages is 
competition. I have challenged the acquisition community to seek every 
opportunity to compete at all levels of a program.

    10. Senator Wicker. Secretary Stackley, are there any unrealized 
opportunities to increase cost controls?
    Secretary Stackley. The Department recognizes that building the 
required force structure will largely depend on controlling 
shipbuilding costs (including combat systems). The Navy is addressing 
this in three ways.
    First, the Navy continues to look for further affordability and 
efficiency opportunities as we go forward with the shipbuilding plan, 
such as revising the acquisition strategy for the LCS program to 
maximize the advantage of the competitive pricing we received and 
enable us to gain an additional ship or seeking to employ multi-year 
contracts for Virginia-class submarines and future DDG-51 destroyers.
    Second, the Navy is continuing to emphasize the use of fixed price 
contracts as a cost control mechanism, when technical risk is low and 
when a ship's design is mature. The contract for T-AKEs-12-14 was 
recently converted to Firm Fixed Price.
    Third, the Navy is placing increased emphasis on affordable 
requirements and stable designs. Prior to Milestone A approval for the 
Ohio Replacement submarine, the Department evaluated numerous 
capability trades to reduce costs. As a result, the Navy made trades in 
the number of ballistic missile tubes, the diameter of those tubes, the 
number of torpedoes to be carried, acoustic sensors, and other 
defensive features throughout the design. These trades made the 
submarine more affordable while maintaining the necessary level of 
capability. Additionally, the Navy worked with General Dynamics NASSCO 
to develop a more affordable design of the Mobile Landing Platform 
(MLP). The alternative solution resulted in approximately $2 billion of 
cost avoidance. The MLP will improve throughput capabilities for the 
Maritime Prepositioning Squadron (MPSRON) though float-on/float-off 
(FLO-FLO) technology from a large reconfigurable mission deck.

    11. Senator Wicker. Secretary Stackley, I understand that an 
outside study on the health of the Navy's shipbuilding industrial base 
that was done for you is complete. Please share its preliminary 
findings and recommendations.
    Secretary Stackley. In April 2010, the Navy initiated a 
Shipbuilding Industrial Base Study to review capabilities/capacities of 
the shipyards including design and production, the health of the vendor 
base, and trends in rates and overhead, productivity, and investment 
strategies. The information exchange between industry and government 
has been extensive and informative. The study is due to complete 
shortly and is currently being staffed for review by senior leadership. 
Findings/recommendations of this study will be made available upon 
completion of the Navy review.

                          amphibious ship gap
    12. Senator Wicker. Secretary Stackley, it has been suggested that 
we are decommissioning amphibious ships too early in their lives and at 
a rate that cannot be sustained by new construction ships without 
dipping below a level that would negatively impact our amphibious 
capability requirements. However, ships such as the Austin-class 
amphibious transport docks (LPDs) began reaching the end of their 
designed service lives more than 20 years ago. A Service Life Extension 
Program (SLEP), which would have modernized the ships for another 10 to 
15 years of service, was not authorized by Congress when requested in 
1987. As a result, these ships which many consider ill-equipped to 
defend themselves against modern threats have remained in service far 
longer than intended. Of the recently decommissioned amphibious ships, 
how many--if any--were decommissioned earlier than their planned end of 
service life?
    Secretary Stackley. Since 2005, there have been four LHA-1-class 
Amphibious Assault Ships that have been decommissioned earlier than 
their expected service life (ESL). The ESL is the number of years a 
naval ship is expected to be in service. It is used as a planning 
estimate to facilitate the development of ship recapitalization plans. 
However, the LHA-1-class ships were built to a design service life 
(DSL) objective of 20 years, which they exceeded. The LHA-1-class did 
receive mid-life modernization availabilities that enabled them to 
exceed their DSL but were not part of a SLEP.

----------------------------------------------------------------------------------------------------------------
                                                                                                  Age at Decom.
                             Ship                                ESL  (years)     DSL  (years)       (years)
----------------------------------------------------------------------------------------------------------------
Ex-Tarawa (LHA-1)............................................              35               20             32.8
Ex-Saipan (LHA-2)............................................              35               20             29.5
Ex-Belleau Wood (LHA-3)......................................              35               20             27.1
Ex-Nassau (LHA-4)............................................              35               20             31.7
----------------------------------------------------------------------------------------------------------------


    13. Senator Wicker. Secretary Stackley, how many of those ships had 
their service lives extended beyond what was intended when they were 
built?
    Secretary Stackley. Since 2005, there have been eight Amphibious 
Warfare ships that have been decommissioned whose services lives 
extended beyond their ESL. The ESL is the number of years a naval ship 
is expected to be in service. It is used as a planning estimate to 
facilitate the development of ship recapitalization plans.

------------------------------------------------------------------------
                                                          Age at Decom.
                 Ship                     ESL  (years)       (years)
------------------------------------------------------------------------
Ex-Austin (LPD-4).....................              35             41.6
Ex-Ogden (LPD-5)......................              35             41.7
Ex-Duluth (LPD-6).....................              35             39.8
Ex-Dubuque (LPD-8)....................              35             43.8
Ex-Juneau (LPD-10)....................              35             39.3
Ex-Shreveport (LPD-12)................              35             36.8
Ex-Nashville (LPD-13).................              35             39.6
Ex-Trenton (LPD-14)...................              35             35.9
------------------------------------------------------------------------

    The LHA-1-class ships were built to a design service life (DSL) 
objective of 20 years. The four LHA-1-class ships that have been 
decommissioned since 2005 exceeded their DSL.

------------------------------------------------------------------------
                                                          Age at Decom.
                 Ship                     DSL  (years)       (years)
------------------------------------------------------------------------
Ex-Tarawa (LHA-1).....................              20             32.8
Ex-Saipan (LHA-2).....................              20             29.5
Ex-Belleau Wood (LHA-3)...............              20             27.1
Ex-Nassau (LHA-4).....................              20             31.7
------------------------------------------------------------------------


    14. Senator Wicker. Secretary Stackley, were those service life 
extensions through planned SLEPs or through an ad-hoc process?
    Secretary Stackley. Since 2005, there have been eight LPD-4-class 
Amphibious Transport ships that have been decommissioned whose services 
lives extended beyond their ESL, and four LHA-1-class Amphibious 
Assault ships that have been decommissioned whose service lives 
extended beyond their Designed Service Life (DSL).
    SLEPs can be accomplished on a Navy vessel that is approaching its 
ESL. None of the service lives of the aforementioned ships were 
extended through planned SLEPs.
    The LHA-1-class ships did receive mid-life modernization 
availabilities that enabled them to exceed their DSL. Five of the LPD-
4-class ships had an Extended Sustainability (ES) availability that 
enabled them to exceed their ESL. (Note: LPDs-7, -8, -9, -13, and -15 
received an ES availability.)

    15. Senator Wicker. Secretary Stackley, of our currently serving 
amphibious ships, how many are already beyond their planned service 
lives?
    Secretary Stackley. There are four existing ships from the LPD-4 
Austin-class, specifically USS Dubuque (LPD-8), USS Cleveland (LPD-7), 
USS Ponce (LPD-15) and the USS Denver (LPD-9) that have exceeded their 
35 year ESL. Dubuque and Cleveland both are 44 years old and will 
decommission in fiscal year 2011. Ponce will be 41 years old at her 
planned decommissioning in fiscal year 2012. Denver will be 45 years 
old at her planned decommissioning in fiscal year 2013.

    16. Senator Wicker. Secretary Stackley, if the San Antonio-class of 
ships had remained on schedule for delivery would we be experiencing 
this amphibious ship gap that raises so many concerns today?
    Secretary Stackley. If the San Antonio-class of ships had remained 
on schedule for delivery, it is less likely that we would be 
experiencing this amphibious ship gap. Specifically, it is less likely 
that the number of active, in-commission LPDs would dip below the 
requirement of eleven. This is because the lead-time required for 
adjusting the decommission dates of the legacy Austin-class LPDs is 
longer than the advanced warning associated with delivery delays of the 
San Antonio-class LPDs.

                         littoral combat ships
    17. Senator Wicker. Secretary Stackley, if last year's authority to 
implement the dual sole-source award strategy for the LCS program were 
amended to give the Navy the explicit authority to use EOQ purchases as 
part of the block-buy contracts that it awarded to the two LCS 
builders, would the Navy use this additional EOQ authority, and if so, 
how much might it reduce the cost of the 20 LCSs to be procured under 
these two contracts?
    Secretary Stackley. The Navy plans to use EOQ authority for the LCS 
program, and would support additional statutory language authorizing 
EOQ for the Program. However, the Navy believes that Congress has 
already authorized the Navy to make EOQ purchases under the two Block 
Buy contracts that were awarded on December 29, 2010. This statutory 
authority is granted by section 121 of the NDAA for Fiscal Year 2010, 
Pub. L. 111-84 (section 121); as amended by section 150 of the 
Continuing Appropriations and Surface Transportation Extensions Act, 
2011, Pub. L. 111-322 (section 150).
    Subsequently, the Navy sought authorization from Congress to award 
10-ship construction contracts to both LCS shipbuilders, thereby 
enabling the Navy to construct a total of 20 LCS vessels (acquiring 10 
each of both designs) for less than it had budgeted to acquire only 15 
ships of one design under its original acquisition strategy.
    In response, Congress enacted section 150 providing that `` . . . 
the Secretary of the Navy may award a contract or contracts for up to 
20 LCSs.'' Section 150 does not repeal or amend portions of the prior 
authorization in section 121, including authorization to acquire 
``material and equipment in economic order quantities when cost savings 
are achievable.'' This position is supported by the fact that Congress 
subsequently included $190,351,000 of EOQ funding for the LCS Program 
in the Department of Defense and Full-Year Continuing Appropriations 
Act, 2011, Pub. L. 112-10.
    The Navy had projected more significant EOQ savings of up to 10 
percent based on a combination of government-furnished equipment and 
ship component purchases prior to the House Appropriations Committee 
rescission of those funds.

    18. Senator Wicker. Secretary Stackley, the Navy has announced some 
changes or potential changes to the composition of LCS mission modules. 
Regarding the surface warfare module, it is not clear from press 
reports whether the Navy plans to replace the canceled non-line-of-
sight (NLOS) missile with the Griffin missile. Is the Griffin missile 
the Navy's replacement for the NLOS, or not?
    Secretary Stackley. In April 2010, the Army cancelled the Non-Line-
of-Sight Launch System (NLOS-LS) program. The Navy had planned to use 
NLOS-LS in the LCS Surface Warfare (SUW) Mission Package to counter the 
small boat threat. The Army planned production quantities accounted for 
nearly 90 percent of the total NLOS production, and the Army program's 
cancellation resulted in a significant and unacceptable increase to the 
projected unit cost for the Navy.
    The Navy reviewed over 50 missile systems and gun improvements for 
their ability to meet the LCS SUW requirements in a cost effective 
manner. The review led to a strategy to address all layers of LCS SUW 
defense including potential gun ammunition improvements and a phased 
plan to deploy an anti-small boat missile capability on LCS.
    The Griffin Missile, already in production by Raytheon Missile 
Systems, is planned for integration into the LCS Surface-to-Surface 
Missile Module to provide an initial SUW missile capability. The long-
term solution, one that will provide increased range and autonomous 
engagement capability to increase battlespace and engage multiple 
targets simultaneously, will be determined through competition to 
identify the most cost-effective option.
    The initial capability is planned to be in operation on LCS by 
2015, matching the previously planned introduction of NLOS capability. 
The long-term missile solution is planned to be in operation in 2017.

    19. Senator Wicker. Secretary Stackley, the Navy has also announced 
a possible change to the mine warfare (MCM) module. When will the Navy 
announce whether this change will be implemented?
    Secretary Stackley. The Navy is continuing to investigate 
modifications of the Airborne Mine Neutralization System and the Joint 
Assault Breaching System programs to replace surface/near-surface mine 
neutralization capability due to the loss of the Rapid Airborne Mine 
Clearance System. The Navy will evaluate the outcome of these ongoing 
assessments upon completion, planned for fiscal year 2012.

    20. Senator Wicker. Secretary Stackley, the Navy has announced a 
change to the antisubmarine warfare (ASW) module. How will this change 
affect the cost of the ASW module?
    Secretary Stackley. The announced change to the ASW mission module 
will result in a decrease of the cost of this module, when compared to 
the cost of the previous configuration.
    The findings of a periodic warfighting assessment led the Navy to 
change the ASW Mission Package approach to better address operational 
requirements. The resulting Increment 2 ASW Mission Module is 
inherently less complex and is technically more mature, resulting in a 
less expensive ASW Mission Module.

    21. Senator Wicker. Secretary Stackley, concerns have been 
expressed in some quarters about the combat survivability of the LCS. 
Please give your perspective on the combat survivability of this ship.
    Secretary Stackley. The LCS Ships meet the Joint Requirements 
Oversight Council-approved survivability requirements and the designs 
incorporate OPNAVINST 9070.1 Level 1 Survivability standards as well as 
tailored survivability enhancements (``Level 1+''). LCS survivability 
depends on a combination of ship design, ship quantity, and the Concept 
of Operations (CONOPS) which says LCS will:

         Operate as part of a networked battle force

                 Independent operations only in low-to medium-
                threat scenarios
                 Part of a networked battle force ops in high 
                threat environments

         Create Battle Space/Avoid being hit

                 Reliance on networked battle force for threat 
                attrition
                 Reliance on overboard systems

         Fight and survive if hit

                 Ship design: Accept ship mission kill; keep 
                ship afloat and protect crew after hit
                 Battle force design: Maintain battle force 
                fight--through capability, through LCS numbers, and 
                mission flexibility

         Withdraw/reposition if hit

                 Campaign Measure Of Effectiveness (MOE)

    LCS is designed to maintain essential mobility after a hit allowing 
the ship to exit the battle area under its own power. The LCS 
survivability features enable the ship to perform required missions in 
the littorals with an emphasis on crew survival.

    22. Senator Wicker. Secretary Stackley, the first LCS has 
experienced hull cracking. Please discuss the Navy's actions to address 
this problem, and whether it has any implications for follow-on ships 
in the program.
    Secretary Stackley. In order to validate the service life of the 
LCS-1-class design the industry team was required to conduct a Spectral 
Fatigue Analysis (SFA) in accordance with the Naval Vessel Rules (NVR). 
This analysis was conducted against the LCS operating profiles, to 
include stressing sea environments, and resulted in the identification 
of several high-stress areas in the design. These analysis findings 
were used to develop a full ship instrumentation plan and a detailed 
post delivery test and trials event schedule to include analysis 
verification and hull performance monitoring.
    NAVSEA, American Bureau of Shipping (ABS), and Industry have 
conducted a detailed analysis and review of the workmanship and design 
to determine the root cause of the hull and superstructure cracks in 
USS Freedom. Non-Destructive Testing (NDT) indicated that a 
contributing factor for the single hull crack was likely a weld defect. 
Another contributing factor is undersized backing chocks, which expose 
that area to higher-than-expected stresses. These chocks will be 
replaced during a Post Shakedown Availability (PSA) this summer.
    To address these issues in follow-on ships, Navy and Industry 
identified and implemented design changes in LCS-3 to ease 
accessibility and production of the spray rail (location of the hull 
crack of USS Freedom). LCS-5 and follow ships incorporate additional 
design changes throughout the spray rail. To confirm that there are not 
widespread weld spray rail quality issues, additional NDT is planned at 
PSA for LCS-1. Navy is also conducting an ongoing assessment to review 
the consistency of design and construction documentation for follow-on 
ship construction.
    With regard to the superstructure cracks, the investigation found 
11 of the 16 cracks coincide with high stress areas discovered in 
subsequent detailed structural modeling and analysis. Six of the 16 
cracks were attributed to some form of workmanship issue. All 16 cracks 
have been repaired.
    Based on additional analysis, the LCS-3 design was modified to 
lower the stresses in the superstructure via the installation of 
gussets and increased material thickness. Design modifications from 
LCS-3 will be incorporated into LCS-1 and no further design related 
superstructure cracking risk is expected for the LCS-1 design.

                          joint strike fighter
    23. Senator Wicker. Secretary Stackley, the F-35 Joint Strike 
Fighter (JSF) program has several important test events coming up this 
year that relate to the shipbuilding portfolio--in particular, 
shipboard testing on a carrier and an L-class ship for the Navy's F-35C 
and the Marine Corps' F-35B, respectively. At this point, what 
challenges do you see to the effective integration of each of those F-
35 variants to the ships from which they are supposed to operate? 
Please speak to, for example, thermal footprint from the main engine 
exhaust, shipboard noise levels, and information technology-related 
challenges to integration.
    Secretary Stackley.
JSF Short Takeoff and Vertical Landing (STOVL) Variant (F-35B) 
        Integration Aboard L-Class Ships (LHA and LHD):
         Eight modifications required to support F-35B 
        integration on LHA/LHD-class ships that are incorporated into a 
        package of ship change documents known as ``cornerstone'' 
        alterations. These modifications provide necessary electrical 
        servicing upgrades, expanded weapons handling and storage, 
        provisioning for the JSF Autonomic Logistics Information System 
        (ALIS), construction of secure access facilities, mission 
        rehearsal training, and relocation of the flight deck tramline 
        for safety concerns.
         The thermal stresses imparted to the deck steel by the 
        F-35B have been characterized by sub-scale modeling and a 
        representative deck coupon tested at Lockheed's hover pit in 
        January 2010. Initial results show that the ship's structure 
        will handle the thermal footprint for a single landing, but 
        further evaluation is required to determine if operationally 
        representative scenarios may prompt future ship alterations. F-
        35B Developmental Testing (DT) on board USS Wasp (LHD-1) will 
        include measurements for thermal footprint, pressure, 
        deflection, and strains caused by F-35B operations in the 
        shipboard environment. Shipboard DT is planned to occur in fall 
        2011.
         The ``cornerstone'' ship alterations have commenced on 
        USS Bonhomme Richard (LHD-6) and USS Wasp (LHD-1). Follow-on 
        design changes to install External Environment (EE) 
        modifications will occur once informed by shipboard DT. These 
        modifications will be installed on USS Wasp prior to the 
        Operational Test (OT) period currently scheduled for the 
        summer/fall of 2013. Subsequent ship alterations for the LHD-1-
        class will occur at a rate of one hull per year starting in 
        fiscal year 2015.
JSF Carrier Variant (F-35C) Integration Aboard CVNs:
         Eight modifications required for F-35C (JSF Carrier 
        variant) integration on CVNs are actively being developed to 
        maturity or being installed. These modifications provide for 
        necessary electrical servicing upgrades, expanded weapons 
        handling, construction of secure access facilities, mission 
        rehearsal training, ALIS, Joint Precision Approach and Landing 
        System, thermal effect mitigation, Lithium Ion battery storage 
        and noise abatement.
         F-35C thermal impacts on CVNs are currently being 
        studied by modeling exhaust impacts on Jet Blast Deflector 
        (JBD) and Flight Deck systems. Land-based testing of the F-35C 
        exhaust plume on a JBD started June 29, 2011. It is necessary 
        to validate the modeling analysis and determine the scope of 
        JBD and shipboard modifications.
         Required CVN modifications will continue to be 
        incorporated into CVN 68 (Nimitz)-class aircraft carriers 
        during planned maintenance availabilities in advance of F-35C 
        arrival. Required modifications that are not part of the CVN-78 
        (Ford)-class design will be incorporated into the ship prior to 
        F-35C deployment.
Common CVN/L-Class Air Ship Integration Topics
    Noise:
    The F-35 program has taken a proactive approach to address noise 
concerns on-board Naval Ships. Protecting the hearing of maintainers 
and ship board personnel has been a program focus and new Hearing 
Protection Devices (HPD) were developed to support personnel working in 
close proximity to F-35 and other jets at high power engine settings 
during launch/recovery operations. The HPD devices will allow service 
personnel to work more effectively and longer at tasks in extreme noise 
environments before reaching their total daily exposure (TDE) limit to 
high noise.
    Many F-35A noise characterization tests have been completed. Tests 
have shown F-35A is in the same noise class as other Department of 
Defense aircraft (e.g. F-22 and F/A-18E/F aircraft). F-35B Ground Test 
Plans are in development, with data collection planned for the third/
fourth quarter of calendar year 2011 timeframe. The objectives of these 
tests are to capture near-field personnel noise environments with a 
focus on capturing noise exposure data during Short Take-Off (STO) and 
Vertical Landings (VL). The data from these tests will be used to 
support noise assessments for flight deck personnel and further assist 
aircraft integration aboard L-class Ships. Ground Test Plans for the F-
35C have been developed and testing commenced in conjunction with JBD 
testing on June 29, 2011. Like F-35B, the data to be captured from this 
testing will be used to support maintainer noise exposure assessments, 
personal hearing protection requirements, and flight deck CONOPS.
    The Department of the Navy has also established hazardous noise 
exposure mitigation working groups that bring together scientists, 
engineers, and medical professionals to work toward further protecting 
our sailors and marines from the risks to prolonged exposure to noise 
from all sources (above deck, below deck, and ashore). These groups 
will collaborate on common issues affecting noise sources and exposure 
management and will work with the Department's System Safety Advisory 
Board for integration of recommendations into the Department's long-
term noise risk mitigation plans.
    Information Technology:
    Issues associated with shipboard special access program space 
accreditation have been resolved. Interoperability with legacy Naval 
Aviation Enterprise information systems remains in-work. Towards 
resolving this topic, we have identified all affected systems via a 
joint risk review; identified data exchange requirements with DoN 
legacy systems; and agreed on a plan to build the necessary interfaces 
between the F-35 ALIS system and legacy aviation maintenance systems.

                        quality control problems
    24. Senator Wicker. Vice Admiral McCoy, from the first ship in its 
class, the LPD-17 San Antonio-class amphibious ship program has 
displayed chronic problems in terms of safety, engineering, design, and 
oversight. These problems have been so significant that they give rise 
to broader concerns about a widespread readiness problem afflicting our 
surface fleet. As to the LPD-17-class of ships, we have been left with 
an entire class of ships that, according to the Pentagon's chief 
independent weapons tester, is ``not effective, suitable and not 
survivable in combat''. With Northrop Grumman's sale of its shipyards, 
what are the Navy's plans for the construction of the last LPD-17 ship?
    Admiral McCoy. A new LPD-17-class build plan, which rolls in 
lessons learned from the initial ships of the class and focuses on 
increased pre-outfitting, increased first-time quality, and higher 
completion levels at launch, has been developed and incorporated on the 
ships currently in construction. The design is mature; and the program 
requirements and schedule are stabilizing as production trends continue 
to show improvement. The last LPD-17-class ship (LPD-27) is planned to 
be awarded to Huntington Ingalls Industries.

    25. Senator Wicker. Vice Admiral McCoy and Captain Galinis, please 
address the apparent downward trend in funding for maintenance, with 
the negative impact falling more heavily on surface combatants than on 
carriers and submarines.
    Admiral McCoy and Captain Galinis. Even though the percentage of 
the Ship Maintenance requirement funded has fallen, the baseline 
maintenance budget request has actually increased from $4.3 billion in 
fiscal year 2010 to $4.9 billion in fiscal year 2012. This increase is 
a reflection of the Navy's commitment to funding the surface ship 
maintenance requirement. Additionally, investments being made in the 
Surface Maintenance Engineering Planning Program and enhanced 
assessments of our surface ships provides us with more insight on how 
to best manage risk and ensures that deferred work will be properly 
documented and tracked for completion in future availabilities. Navy 
remains committed to sustaining the force structure required to 
implement the Maritime Strategy.
    The Navy's total budget submission reflects the best balance of 
risk and available resources across the Navy portfolio.

                           ship repair issues
    26. Senator Wicker. Vice Admiral McCoy, earlier this month, the 
Navy terminated a large ship-maintenance contract with Earl Industries, 
citing problems it found with Earl's earlier work and its lack of 
proper documentation related to repair work. The Navy also reported to 
us recently that its investigation into engine repairs on the 
amphibious warship USS San Antonio and other ships similarly found that 
key maintenance reports were missing and several other important 
anomalies with documentation. However, 3 weeks before it terminated a 
$75 million, 5-year maintenance contract with Earl Industries, the Navy 
defended the company's work in a letter to the Government 
Accountability Office (GAO) in a bid protest. What is going on here?
    Admiral McCoy. The termination of Earl Industries, LLC's (Earl's) 
MSMO contract for the repair of LPD-17-class ships was based on serious 
documentation and recordkeeping problems, and other quality-assurance 
issues, discovered during Earl's ongoing Continuous Maintenance 
Availability (CMAV) on USS San Antonio (LPD-17). These problems 
generated significant concerns about the company's ability to perform 
successfully on LPD-17-class ships under the 5-year MSMO contract.
    There is no inconsistency between the Navy's defense of the bid 
protest and its decision to terminate the maintenance contract with 
Earl Industries. In its submission to GAO on April 18, 2011, concerning 
the January 2011 award to Earl, the Navy emphasized that the 
deficiencies in Earl's documentation on the CMAV contract were unknown 
to the Navy at the time of the MSMO award, and, therefore, not relevant 
to the protest. In that filing, the Navy noted that its investigation 
of Earl's documentation under the CMAV contract was ongoing. The 
escalation in performance problems during the course of the CMAV 
contract, however--including, but not limited to, issues related to 
documentation--raised concerns about the efficacy of Earl's quality-
assurance program in connection with LPD-17-class repair work. The Navy 
terminated the MSMO contract on May 6, 2011, based upon the gradual 
accumulation of information, subsequent to the award of that contract, 
regarding Earl's difficulties under the CMAV contract.

    27. Senator Wicker. Vice Admiral McCoy, what should this 
subcommittee make of these developments?
    Admiral McCoy. The termination of Earl Industries, LLC's (Earl's) 
MSMO contract for the repair of LPD-17-class ships was based on serious 
documentation and recordkeeping problems, and other quality-assurance 
issues, discovered during Earl's ongoing CMAV on USS San Antonio (LPD-
17). These problems generated significant concerns about the company's 
ability to perform successfully on LPD-17-class ships under the 5-year 
MSMO contract.
    There is no inconsistency between the Navy's defense of the bid 
protest and its decision to terminate the maintenance contract with 
Earl Industries. In its submission to GAO on April 18, 2011, concerning 
the January 2011 award to Earl, the Navy emphasized that the 
deficiencies in Earl's documentation on the CMAV contract were unknown 
to the Navy at the time of the MSMO award, and, therefore, not relevant 
to the protest. In that filing, the Navy noted that its investigation 
of Earl's documentation under the CMAV contract was ongoing. The 
escalation in performance problems during the course of the CMAV 
contract, however--including, but not limited to, issues related to 
documentation--raised concerns about the efficacy of Earl's quality-
assurance program in connection with LPD-17-class repair work. The Navy 
terminated the MSMO contract on May 6, 2011, based upon the gradual 
accumulation of information, subsequent to the award of that contract, 
regarding Earl's difficulties under the CMAV contract.

    28. Senator Wicker. Vice Admiral McCoy, like the Earl Industries 
fiasco, similar problems are affecting other shipyards and ship repair 
facilities outside the Gulf Coast. For example, Navy frigates, such as 
the USS Elrod, USS Klakring, USS Taylor, and USS Nicholas have had 
shipyard maintenance periods extended because of work that was not done 
correctly the first time and poor Navy oversight. The repair problems 
don't just end with surface ships; submarines USS Helena, USS Virginia, 
and USS San Juan have extended their shipyard periods because of a lack 
of materials and a lack of shipyard resources, all which impact ship 
and submarine sailing and deployment schedules. Is there a systemic 
problem here that needs more direct attention by Navy leadership or 
congressional action?
    Admiral McCoy. The Navy's assessment is that there is not a 
systemic problem with how ship maintenance is done. Likewise, while 
there have been some issues with recent ship maintenance efforts, the 
Navy does not see a common root cause that spans the different 
availabilities. The Navy has rigorous processes for its ships to meet 
their expected service lives and methods to verify that the necessary 
maintenance and modernization are executed in a formal, deliberate and 
efficient manner. The Navy assesses the efficacy of the ship repair 
yards, works with them to correct identified problems, and changes 
contractors when needed, thereby providing the necessary oversight to 
ensure the operational readiness, reliability, safety, and 
effectiveness of the Navy's ships and submarines.
    Several issues can impact the duration of ship availabilities. 
Availabilities may be extended or delayed as emergent repair work on 
other ships arises and is given priority. New work identified during an 
availability may also lead to the availability's extension. 
Furthermore, availabilities may be adjusted to support revised Fleet 
operational priorities. Adjustments to availabilities are appropriately 
managed by the Fleet Maintenance Officers and the Naval Sea Systems 
Command (NAVSEA).
    Regarding the allocation of shipyard resources, NAVSEA is involved 
in the management of all ship and submarine availabilities in execution 
at public and private shipyards and those at the regional maintenance 
centers. Availability workload is reviewed monthly by NAVSEA and 
quarterly with the Fleet customers. The Naval Shipyards' current fiscal 
year capacity is set to the execution guidance workload. These 
Shipyards, along with the two private-sector nuclear repair yards, use 
the One Shipyard concept to focus on cost, schedule and quality through 
standardizing processes, sharing resources among public shipyards and 
within Regional Maintenance Centers, and partnering with private 
shipyards to meet their resource requirements. Workload/workforce 
forecasting for Naval Shipyards is accomplished monthly to allow for 
the hire of specific skills based on the forecast and attrition 
history. For surface ship repairs executed by private contractors, the 
workload/workforce forecasting is determined during contract 
negotiations and monitored by the Navy's Supervisory Authority during 
execution of the contract.
                                 ______
                                 
              Questions Submitted by Senator Kelly Ayotte
                     maritime prepositioning force
    29. Senator Ayotte. Secretary Stackley, you state that the three 
current Maritime Prepositioning Ship Squadrons will add a Mobile 
Landing Platform (MLP), an Auxiliary Cargo (K) and Ammunition (E) Ship 
(T-AKE), and Large Medium-Speed, Roll-on/Roll-off (LMSR) cargo ship. I 
also note that the Navy has added three Auxiliary Cargo (K) and 
Ammunition (E) Ships to the fiscal year program. I interpret these Navy 
decisions as a reaffirmation and a validation of the importance of the 
Maritime Prepositioning Force (MPF). Based on the importance of the 
MPF, I was surprised to learn that the Navy plans to place 6 ships of 
the 3-squadron, 16-ship total MPF for the Marine Corps into reduced 
operating status beginning in fiscal year 2013. General Panter of the 
U.S. Marine Corps has stated in testimony that this decision needs 
additional analysis. When I asked General Panter last week about this 
decision, he said that placing portions of Squadron 1 in the 
Mediterranean on a reduced-operating-status would ``translate to 
potentially a slower response time in support of the combatant commands 
(COCOM).''
    During our Readiness and Management Subcommittee hearing last week, 
I understood Admiral Burke to essentially say that the decision to 
place Squadron 1 in the Mediterranean on reduced operating status was a 
calculated risk in order to save money. Does it make sense to you to 
reduce the readiness of our MPS in the Mediterranean in light of the 
turmoil in that region?
    Secretary Stackley. Yes. The MPSRONs were acquired primarily to 
support major combat operations. The timing required to support those 
major operations has changed since the squadrons were formed 25 years 
ago, permitting the Mediterranean squadron to be placed in Reduced 
Operating Status (ROS) 5-day status with acceptable risk. Response time 
includes 5 days to activate in addition to the transit time from the 
U.S. East Coast (USEC). For example, USEC to Mediterranean and the west 
coast of Africa is typically 7 to 12 transit days. It should be noted 
that none of the ships have been used to support current operations to 
date.

    30. Senator Ayotte. Secretary Stackley, if the MPS is important 
enough for your office to invest additional and finite acquisition 
funds, why isn't it important enough to maintain them at full operating 
status?
    Secretary Stackley. We have many strategic sealift capabilities 
maintained in reduced operating status (60 ships). Their capacity is 
required to meet wartime requirements, but wartime requirements do not 
mandate retention in full operating status. This is the same case for 
the Mediterranean MPS squadron.

                          advanced gun system
    31. Senator Ayotte. Secretary Stackley and Vice Admiral McCoy, 
given the investment in DDG-1000, the Advanced Gun System (AGS), and 
the Long-Range Land Attack Projectile (LRLAP), would it increase 
efficiency and lower costs by leveraging this technology for the DDG-51 
Flight III?
    Secretary Stackley and Admiral McCoy. Where practicable, Navy will 
seek to leverage existing technologies for DDG-51 Flight III. However, 
DDG-51 Flight III's primary mission will be Integrated Air and Missile 
Defense rather than DDG-1000's emphasis on Naval Surface Fire Support 
(NSFS). Therefore, DDG-51 Flight III's Naval Gun Fire Support 
requirements align most closely with current DDG-51 requirements that 
are filled by the 5'' gun system.

    32. Senator Ayotte. Secretary Stackley and Vice Admiral McCoy, if a 
modified AGS was deemed compatible with the planned DDG-51 Flight III 
general arrangement, would it be technically and programmatically 
feasible to make the necessary modifications and be production ready 
for the first planned DDG-51 Flight III?
    Secretary Stackley and Admiral McCoy. DDG-51 Flight III's primary 
mission will be Integrated Air and Missile Defense rather than DDG-
1000's emphasis on NSFS. While technically feasible to modify DDG-51 
Flight III to support AGS, such installations in DDG-51 Flight III 
ships would result in cost and schedule impacts that may not be 
acceptable. Furthermore, DDG-51 Flight III's Naval Gun Fire Support 
requirements align most closely with current DDG-51 requirements that 
are filled by the 5,, gun system.

    33. Senator Ayotte. Secretary Stackley and Vice Admiral McCoy, in 
your opinion, would the capabilities of the AGS and the LRLAP developed 
for DDG-1000 complement current weapons such as the Tomahawk Land 
Attack Missile? Please explain why or why not.
    Secretary Stackley and Admiral McCoy. The LRLAP fired from the DDG-
1000 AGS is a natural complement to tactical aircraft-delivered 
precision munitions as well as the Tomahawk Land Attack Missile. 
Together, these weapons provide combatant commanders with persistent, 
all-weather strike capability including precision and volume fires in 
support of forces ashore.

    [Whereupon, at 3:52 p.m., the subcommittee adjourned.]


DEPARTMENT OF DEFENSE AUTHORIZATION FOR APPROPRIATIONS FOR FISCAL YEAR 
               2012 AND THE FUTURE YEARS DEFENSE PROGRAM

                              ----------                              


                        WEDNESDAY, JULY 13, 2011

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

  THE REQUIRED FORCE LEVEL OF STRATEGIC AIRLIFT AIRCRAFT MANDATED BY 
   TITLE 10, UNITED STATES CODE, AND THE ADMINISTRATION'S REQUEST TO 
                       ELIMINATE THAT REQUIREMENT

    The subcommittee met, pursuant to notice, at 2:33 p.m., in 
room SR-232A, Russell Senate Office Building, Senator Jack Reed 
(chairman of the subcommittee) presiding.
    Committee members present: Senators Reed, Wicker, and 
Ayotte.
    Committee staff members present: Leah C. Brewer, 
nominations and hearings clerk; and Jennifer L. Stoker, 
security clerk.
    Majority staff member present: Creighton Greene, 
professional staff member.
    Minority staff member present: Christopher J. Paul, 
professional staff member.
    Staff assistants present: Brian F. Sebold and Breon N. 
Wells.
    Committee members' assistants present: Carolyn Chuhta, 
assistant to Senator Reed; Joseph Lai, assistant to Senator 
Wicker; and Brad Bowman, assistant to Senator Ayotte.

        OPENING STATEMENT OF SENATOR JACK REED, CHAIRMAN

    Senator Reed. The subcommittee will come to order.
    I want to extend a welcome to our witnesses and thank each 
of you for appearing before the Seapower Subcommittee today.
    The subcommittee will hear from the Honorable Christine 
Fox, Director of the Office of Cost Assessment and Program 
Evaluation (CAPE); General Duncan McNabb, Commander of the U.S. 
Transportation Command (TRANSCOM); and General Raymond Johns, 
Commander of the Air Force's Air Mobility Command (AMC). We 
welcome you all and thank you for your service.
    I would note that this hearing is principally the result of 
the excellent work that Senator Ayotte has done, together with 
her staff, to call to the attention of the subcommittee the 
issue of the inventory of strategic lift, which is a vital 
topic to this subcommittee. Her work has caused us to, I think, 
take a very close look at what you are proposing, what the 
administration is proposing, and be prepared, we hope, 
appropriately for the authorization bill when it comes to the 
floor.
    But I would be remiss if I did not very strongly, and with 
great appreciation express my thanks to Senator Ayotte and her 
staff for her excellent work.
    Senator Ayotte. Thank you very much, Mr. Chairman.
    Senator Reed. Thank you.
    Today, we would like to hear about the Department of 
Defense's (DOD) request to eliminate the provisions of section 
8062 of title 10, U.S.C., which require that DOD maintain at 
least 316 strategic airlift aircraft in the inventory.
    For these purposes, the term ``strategic airlift aircraft'' 
is defined essentially as C-5s and C-17s. Congress established 
that requirement based on previous assessments of strategic 
airlift requirements for supporting wartime operations.
    It is appropriate that we consider this change very 
carefully. We need to be sure to get this decision right since 
we could be incurring large expenses if we get the decision 
wrong in either direction, either maintaining too many aircraft 
or too few, given the potential contingencies going forward.
    If we keep more aircraft than we really need, we have to 
pay operating and support costs. If, on the other hand, we 
retire more aircraft than is prudent, we may face the need to 
reactivate retired aircraft--and that is always an iffy 
proposition, both in terms of cost and in terms of the 
availability and the condition of these aircraft--or, more 
likely, consider buying new strategic airlift aircraft.
    I suspect that either one of these options would be very 
expensive to the point that it would quickly wipe out any 
planned near-term savings in operating and support costs 
achieved by retiring too many aircraft. So getting the number 
right is absolutely important.
    I think also it is important--and again, I hope the value 
of this hearing is so that we understand the logic, the 
analyses, and that we also are able to feel comfortable about 
whatever proposal is adopted.
    We are in a situation of retiring aircraft not because the 
C-5A aircraft are worn out--I think there is a lot of 
serviceable life left in these aircraft--but Congress bought 
essentially 43 more C-17 aircraft than the Air Force said it 
needed a few years ago. Had we stopped production at 180 C-17 
aircraft, we would not be in the position of retiring any C-5A 
aircraft currently slated for retirement under the Air Force's 
plans.
    Unlike other parts of our aircraft forces, the C-5A 
aircraft we retired have not expended all of their useful 
service lives. The reason that it is suggested to retire these 
aircraft would be to save operating and support costs, not 
because they are worn out. Frankly, there are some classes of 
aircraft in our inventory that are closer to the wear-out 
situation than the C-5A.
    So I suspect that many other aspects of the Air Force would 
love the luxury of being able to retire aircraft that still 
have useful life. In fact, General Johns, I think in a previous 
position, you identified potential fighter Air Force structure 
shortfall of some 800 aircraft in the next decade because they 
were wearing out, not because we just didn't need them.
    So over the years since the late 1970s, assessments of our 
wartime requirements have fluctuated, generally increasing, 
except in the past few years. To my knowledge, previous 
analyses have never explicitly addressed requirements for a 
strategic airlift to support peacetime operations.
    Last year, despite operating fewer aircraft than the 
current requirement for 316 aircraft, we were told that 
strategic airlift forces were flying harder than ever before. 
To that specific point, because of a lack of availability of 
strategic airlift aircraft to support peacetime operations, 
TRANSCOM had to hire former Soviet strategic airlift aircraft 
to carry mine-resistant ambush protected (MRAP) vehicles to the 
theater to support combat operations in Iraq and Afghanistan.
    So it raises a host of questions about the Civil Reserve 
Air Fleet, leasing  other  nationality  aircraft,  how  many  
C-17s,  how  many  C-5s? I must say I have looked at the 
testimony, and I will just initially say how thoughtful I 
believe you have considered this issue. So thank you for that 
thoughtfulness.
    I look forward to the testimony, and I also look forward to 
a good round of questioning because, like any serious issue, 
you have raised many questions with your thoughtful analyses. 
We would like to answer them today.
    With that, let me recognize Senator Wicker. I would 
certainly like to recognize Senator Ayotte, if she would have 
comments.

              STATEMENT OF SENATOR ROGER F. WICKER

    Senator Wicker. Thank you, Mr. Chairman, and thank you for 
holding this important hearing today.
    I want to thank our witnesses for their attendance and for 
their valuable service to our Nation.
    I will be relatively brief, and I appreciate the chair and 
his willingness to allow Senator Ayotte also to make an opening 
statement.
    The National Military Strategy (NMS) has continued to 
evolve since 2005, when DOD conducted its last study to 
determine the right mix of aircraft, ships, personnel, and 
facilities to move cargo and passengers for military 
operations. Although the ability to prosecute two nearly 
simultaneous conventional campaigns remains a cornerstone of 
U.S. defense policy, the current strategy places increased 
emphasis on irregular warfare, stabilization operations, and 
support to Homeland defense.
    Furthermore, defense planning recognizes the reality of 
long-term U.S. involvement in globally dispersed operations, 
which may include commitments to major campaigns.
    In order to provide an updated comprehensive assessment of 
DOD's mobility system, TRANSCOM last year completed the 
Mobility Capabilities and Requirements Study-2016 (MCRS-16). In 
its fifth comprehensive mobility study--it is the fifth 
comprehensive mobility study conducted by DOD and the second 
mobility study conducted since September 11.
    The objectives of MCRS-16 were to determine the mobility 
capabilities and requirements needed to deploy, employ, 
sustain, and redeploy joint military forces in support of NMS 
in the 2016 timeframe. Also, to determine capability gaps and 
overlaps associated with the programmed mobility force 
structure and to provide insights and recommendations to 
support the Quadrennial Defense Review (QDR).
    MCRS-16 assessed the military's strategic airlift, large 
cargo aircraft; intra-theater airlift, small cargo aircraft; 
sealift; aerial refueling; ashore and afloat prepositioning; 
surface transportation; and infrastructure. This was done by 
assessing whether the military has the right type of equipment 
against a set of operational metrics to determine whether 
available forces met warfighter objectives within desired 
timelines.
    MCRS-16 found DOD's planned mobility capabilities are 
sufficient to support the most demanding projected 
requirements. Some specific findings are, number one, large 
cargo aircraft airlift capacity exceeds the peak demand in all 
the scenarios considered, which covered a broad spectrum of 
military operations. Based on the study's findings, the 
military needs only 264 to 300 large cargo aircraft.
    Number two, lack of foreign infrastructure or access to 
foreign infrastructure to support major force deployments 
remains the fundamental constraint when attempting to reduce 
deployment timeliness in support of U.S. objectives.
    Number three, sealift is the primary means for delivering 
large ground forces.
    Number four, DOD relies on the Civil Reserve Air Fleet 
(CRAF), with commercial air carriers as the primary means of 
delivering passengers. Projected passenger airlift capacity 
greatly exceeds the requirement in all scenarios considered.
    Number five, intra-theater airlift using the Air Force's 
programmed amount of C-130s exceeds the peak demand, covering a 
broad spectrum of military operations. Those are the findings.
    In his prepared testimony for this subcommittee, one of our 
witnesses today, General McNabb, says, ``With the MCRS-16 
complete, we now have the analytical justification to recommend 
repeal of the 316 strategic airlift floor.''
    I agree. Eliminating the 316 large cargo aircraft floor 
restriction would allow the Air Force to retire an additional 
15 C-5As and provide substantial savings by freeing up billions 
in taxpayers' dollars over the next few years. Given the 
current climate of fiscal austerity, which requires that we 
look to all corners of the defense enterprise to determine how 
DOD can conduct itself more efficiently, this is a move in the 
right direction.
    Mr. Chairman, I look forward to the testimony of our 
distinguished witnesses. I can only say one other thing. I have 
heard a wild rumor that General McNabb may be in the process of 
retiring in October.
    Surely this couldn't possibly be true. But if it is, we 
will miss his services, and he is doubly due the praise and the 
admiration of this committee and this Congress.
    Thank you very much, Mr. Chairman.
    Senator Reed. Thank you, Senator Wicker.
    Senator Ayotte.
    Senator Ayotte. Thank you, Mr. Chairman. I very much 
appreciate your holding this hearing.
    I also want to thank Ranking Member Wicker for holding this 
hearing today.
    During the markup process for the National Defense 
Authorization Act, I brought forward an amendment that would 
have changed the strategic airlift requirement, allowing DOD to 
reduce that number from 316 to 299.
    I did that because, in looking at this issue, it came to my 
attention that DOD and the Air Force had done very careful 
analyses when the proposal was submitted through the 
President's budget to the Armed Services Committees for 
consideration. That is why I was going to bring forward that in 
the markup.
    I very much appreciate the chairman and ranking member 
having this hearing. When this issue was brought up in the 
markup, they realized how important it was and decided to have 
this hearing today. I am very appreciative of their work on 
this issue.
    I want to thank all of the witnesses for being here, for 
your thoughtful analyses. Because what has been done by the Air 
Force on this issue, there was an extensive study done in 2010 
to identify the peak of demand for airlift capacity, which has 
already been referenced, and that that airlift capacity would 
be 32.7 million tons per day. We would be able to meet that 
capacity with reducing to 299 strategic airlift aircraft.
    Why is that important? It is very important, as the 
chairman and the ranking member have already mentioned, because 
all of us want to ensure that our military can meet our 
strategic airlift requirements. I know the witnesses share that 
concern, and that is why you undertook such careful analyses in 
coming to this conclusion.
    But we also want to make sure that, in these difficult 
fiscal times for our country, and for DOD, that we aren't 
spending money that we don't need to maintain aircraft that we 
no longer have a capacity or need for. If we were to change the 
strategic airlift requirements in a way that I hope will happen 
as we go forward from this hearing, we could--in retiring the 
unneeded C-5A models, save up to $1.2 billion in taxpayers' 
dollars across the Future Years Defense Program (FYDP) over the 
next 4 years.
    Those, of course, are resources that could be better used, 
either to upgrade our C-17s for other uses within the military, 
given the difficult choices that we are going to have to be 
making going forward. We, as you all know and appreciate, with 
$14 trillion in debt and with Admiral Mullen, I think, 
rightfully identifying the national debt as the greatest threat 
to our national security, all of us, when we find that we have 
too much of something that we need, it is very important for us 
to act on, in my view, your recommendations. That is what 
prompted me to raise this issue in the committee.
    I am looking forward to hearing each of the witnesses' 
testimony today. Just to follow up on something that the 
chairman said, one of the reasons that we had too many C-17s is 
because Members of Congress, rather than what you asked us to 
produce, actually, through the earmark process, had more of 
those aircraft produced than the Air Force had requested.
    So we, in part, in Congress have created this situation. 
So, I am hopeful that we will heed your careful analyses and 
advice going forward so that we can right-size and still meet 
our strategic airlift requirements.
    So thank you very much.
    Senator Reed. Thank you, Senator Ayotte.
    All of your testimony has been submitted and will be made 
part of the record. You may be free to summarize your 
testimony.
    We will begin, I believe, with Director Fox and then 
General Johns or General McNabb, whoever wants to go next.
    Director Fox, please.

 STATEMENT OF HON. CHRISTINE H. FOX, DIRECTOR, COST ASSESSMENT 
         AND PROGRAM EVALUATION, DEPARTMENT OF DEFENSE

    Ms. Fox. Mr. Chairman, Senator Wicker, and distinguished 
members of the subcommittee, thank you for the opportunity to 
appear before you to discuss DOD requirements for strategic 
airlift.
    The Office of CAPE has extensively studied strategic 
airlift requirements through a series of studies, beginning in 
the early 1990s.
    Last year, we completed the MCRS, which assessed peacetime 
and wartime demands on our airlift system. We conducted this 
study in conjunction with TRANSCOM. It serves as the analytic 
underpinning of the Air Force's current fleet management plan 
and supports retirement of 32 C-5 aircraft.
    Here, I will briefly summarize the results of that study. 
As you said, sir, we have submitted a more detailed written 
statement.
    The study assessed steady-state and surge requirements for 
airlift, sealift, and prepositioned assets for various 
scenarios, providing DOD with a comprehensive understanding of 
our mobility system in time of peace and time of war.
    An understanding of the steady-state demand is important 
because it quantifies the level of effort needed to support 
daily operations without mobilization. It also sets the 
conditions for the location of forces and mobility assets at 
the commencement of the surge events.
    For our analysis of steady-state demand, we evaluated both 
historical support to global logistics and, through modeling, 
the deployment, employment, redeployment, and sustainment of 
forces supporting globally dispersed operations. Historical 
data included missions flown in support of combatant 
commanders, such as cargo and passenger missions, exercise 
missions, and special assignment airlift missions conducted 
over the past 7 years.
    The special assignment airlift missions include movement of 
nuclear means and related material, presidential support, 
special operations support, and other time-sensitive, high-
priority missions.
    For our analysis of the surge requirements, we developed 
three different cases to evaluate peak airlift demands. Each 
case included Homeland defense and major campaigns.
    The results of our study showed that it is the surge events 
that drive the size of the strategic airlift fleet. These 
events are periods of finite, but extremely high levels of 
demand for strategic airlift. In comparison, steady-state 
demands represent prolonged requirements, but with 
significantly lower peaks. While these requirements contribute 
to the surge demand, they do not drive the size of the airlift 
fleet.
    So based on the study findings, DOD needs a military 
airlift fleet capacity between 29.1 and 32.7 million ton-miles 
per day (MTM/D), which can be met with 264 to 300 aircraft. 
These results support the Air Force desire to retire 32 C-5 
aircraft. It is our assessment that the retirement of these 
aircraft will not increase operational risk.
    Without this change, DOD would be required to maintain a 
strategic airlift fleet in excess of what is required, costing 
DOD billions of dollars over the life of the aircraft.
    Thank you again for the opportunity to appear before you, 
and I look forward to your questions.
    [The prepared statement of Ms. Fox follows:]
              Prepared Statement by Hon. Christine H. Fox
    Mr. Chairman, Senator Wicker, and distinguished members of the 
subcommittee, thank you for the opportunity to appear before you to 
discuss the Department of Defense requirements for strategic airlift.
    The Office of Cost Assessment and Program Evaluation has 
extensively studied strategic airlift requirements through a series of 
studies beginning in the early 1990s. Last year we completed the 
Mobility Capabilities Requirements Study (MCRS), which assessed 
peacetime and wartime demands on our airlift system. We conducted this 
study in conjunction with U.S. Transportation Command (TRANSCOM). It 
serves as the analytic underpinning of the U.S. Air Force's current 
fleet management plan and supports retirement of 32 C-5 aircraft. Here 
I will briefly summarize the results of that study.
    The MCRS was an 18-month, department-level assessment of a broad 
spectrum of mobility capabilities, which included strategic airlift, 
intra-theater airlift, sealift, aerial refueling, ashore and afloat 
prepositioning, surface transportation, and infrastructure. As with 
past mobility studies, MCRS assessed the mix of military (organic) and 
commercial lift capabilities needed to support the National Defense 
Strategy. The analysis was based on illustrative conventional and 
irregular military operations conducted over a notional 7-year 
timeframe.
    It is important to keep in mind the distinction between the 
resources the department uses for planned wartime capability and those 
it uses in steady-state operations. When operating at full wartime 
capability (surge demand), the department mobilizes Guard and Reserve 
Forces and employs them along with active forces at wartime utilization 
rates. Additionally, the President has the authority to activate the 
Civil Reserve Air Fleet (CRAF) which can contribute as many as 900 
aircraft. When not operating at full wartime capability (i.e., steady-
state sustainment), Guard and Reserve Forces are not mobilized, and 
CRAF is not activated. This is why the department sometimes relies on 
commercial/foreign source airlift like the Russian-built IL-76 and AN-
124 to support current operations. Accommodating a short-term surge 
with use of commercial assets is more cost-effective than maintaining 
additional force structure that is not required full time.
    MCRS assessed steady-state requirements by evaluating historical 
support to global logistics and by modeling the deployment, employment, 
redeployment, and sustainment of forces supporting globally dispersed 
operations. Steady-state analysis is important for two primary reasons. 
First, it quantifies the level of effort needed from the mobility 
system to support daily operations without mobilization. Second, it 
sets the initial conditions for the location of forces that need to be 
relocated by the mobility system to support the commencement of surge 
events.
    TRANSCOM analysts examined 7 years of mission data from the Global 
Decision Support System database to identify historical support 
requirements for global logistics. Global logistic missions include 
routine channel missions, exercise missions, and Special Assignment 
Airlift Missions (SAAMs) that fly daily support for Combatant Commands 
(COCOMs). Channel missions consist of cargo and passenger missions--
organic and commercial--flown in support of COCOMs. The study assumed 
that exercises other than Joint Chiefs of Staff/COCOM exercises would 
be canceled or curtailed when U.S. forces were engaged in one warfight 
and that all exercises would be cancelled when engaged in two 
overlapping warfights. SAAMs include movement of nuclear weapons and 
nuclear weapons-related material, presidential logistics support, 
special operations support, and other time-sensitive, high priority 
airlift requirements. The study assumed some SAAM requirements would 
continue even during overlapping campaigns.
    As part of the steady-state assessment, the study analyzed two 
different Department-approved strategic environments consisting of 
representative vignettes arranged over a 7 year timeline. The ``Global 
Insurgency'' strategic environment included 64 distinct operations and 
reflected an increased level of effort for irregular warfare 
representing an expansion and intensification of global operations. The 
strategic environment developed during the most recent Quadrennial 
Defense Review included 69 vignettes which had a similar irregular 
warfare emphasis.
    For our analysis of surge requirements, we developed three 
different cases to evaluate peak airlift demands. Each case included 
Homeland defense and major campaigns. The cases involved demanding 
operational assumptions. The model used in the analysis accounts for 
the fact that many aircraft are not loaded to their maximum weight 
capacity due to load size, scheduling constraints, and route structure. 
The MCRS cases were defined as follows:
    Case 1 evaluated two overlapping large-scale land campaigns 
occurring in different theaters of operation, concurrent with three 
nearly-simultaneous homeland defense consequence management events, 
plus support to ongoing steady-state operations, to include Operation 
Enduring Freedom (OEF). This case required a military strategic airlift 
fleet with a capacity of 32.7 million ton-miles per day (MTM/D), which 
can be met with a fleet of 300 aircraft (222 C-17s, 52 C-5Ms, and 26 C-
5As).
    Case 2 evaluated a large scale air/naval campaign immediately 
followed by a major campaign in a different theater of operation, plus 
one large-scale homeland defense consequence management event, plus 
support to ongoing steady-state operations, to include OEF. This case 
required a military strategic airlift fleet with a capacity of 30.7 
MTM/D, which can be met with a fleet of 277 aircraft (222 C-17s, 52 C-
5Ms, and 3 C-5As).
    Case 3 evaluated U.S. forces surging to conduct a large-scale land 
campaign against the backdrop of an ongoing long-term irregular warfare 
campaign of a size and scale similar to the 2007 Operation Iraqi 
Freedom (OIF) surge force. Case 3 also included three near-simultaneous 
homeland defense consequence management events, plus support to ongoing 
steady-state operations, to include OEF. This case required a military 
strategic airlift fleet with a capacity of 29.1 MTM/D, which can be met 
with a fleet of 264 aircraft (222 C-17s, 42 C-5Ms, 0 C-5As).
    The results of our study showed that it is the surge events that 
drive the size of the strategic airlift fleet. These events are periods 
of finite, but extremely high levels of demand for strategic airlift. 
In comparison, steady-state demands represent prolonged requirements, 
but with significantly lower peaks. While these requirements contribute 
to the surge demand, they do not drive the size of the organic airlift 
fleet. Based on the MCRS findings, the department needs a military 
fleet capacity between 29.1 and 32.7 MTM/D which can be met with 264 to 
300 aircraft.
    These results support the Air Force desire to retire 32 C-5A 
aircraft. It is our assessment that the retirement of these aircraft 
will not increase operational risk. Without this change, the department 
would be required to maintain a strategic airlift fleet in excess of 
what is required, costing the department billions of dollars over the 
life of the aircraft.
    Thank you again for the opportunity to appear before you, and I 
look forward to your questions.

    Senator Reed. Thank you, Director Fox. Once again, thank 
you for your very thoughtful written testimony.
    Since I don't know date of ranks--okay, General Johns. 
General McNabb, you are recognized because General Johns does 
know date of ranks. [Laughter.]

   STATEMENT OF GEN. DUNCAN J. McNABB, USAF, COMMANDER, U.S. 
                     TRANSPORTATION COMMAND

    General McNabb. Chairman Reed, Senator Wicker, and 
distinguished members of this subcommittee, I would like to 
express my gratitude to this committee for your support to 
TRANSCOM and to the men and women who strive every day to 
protect our Nation and its freedom.
    It is my distinct honor to be with you today, representing 
the more than 145,000 soldiers, sailors, marines, airmen, coast 
guardsmen, and civilians that are TRANSCOM. Daily, our total 
force team provides the warfighters the force and sustainment 
they need to win.
    I am also privileged today to be joined by two of my good 
friends and colleagues, General Ray Johns and Ms. Christine 
Fox. Great to be up here with you all.
    Rapid global mobility is among our Nation's greatest 
asymmetric advantages. And the ability to mobilize forces and 
materials within hours, rather than days or weeks, depends on 
the right-sized fleet of versatile, ready, and effective air 
mobility forces.
    I fully support the administration's proposal to repeal the 
statutory requirement for the Air Force to maintain a strategic 
cargo fleet of 316 aircraft. The congressionally-directed floor 
of 316 strategic airlifters was established before the MCRS-16 
determined the strategic airlift requirement to be 32.7 MTM per 
day. Our analysis confirms this capacity can be met with 
approximately 300 strategic airlift aircraft.
    Additionally, a strategic airlift aircraft reduction allows 
the Air Force to retire an additional 15 C-5As and, as the 
Senator mentioned, with a substantial saving of over $1.2 
billion in taxpayers' dollars across the FYDP and, most 
importantly, focus our critical infrastructure, aerial port, 
and aircrew personnel and resources on a right-sized fleet.
    The current program fleet of 222 C-17s, 52 C-5Ms, and 27 C-
5As satisfies this requirement and is far more modern and 
capable than any strategic airlift fleet in our history. To 
underscore this point, our strategic airlift fleet of 
approximately 350 aircraft in 1999 provided about 26 MTM per 
day capacity. Yet today, a fleet of only 300 aircraft will 
provide over 32 MTM per day.
    This also allows us to meet our peacetime requirements. 
Indeed, in 2010, while supporting both the troop withdrawal 
from Iraq and the surge into Afghanistan, our busiest day in 
AMC was on March 23, when we performed 16.6 MTM per day of 
lift. For comparison, prior to September 11, the busiest day in 
2001 for AMC was 5.5 MTM per day.
    When these numbers are compared with our projected 
capacity, the Air Force program fleet can meet all readiness 
and peacetime requirements, as well as be surged to meet 
wartime needs.
    In addition to a more modern and capable fleet, we also 
continuously improve the efficiency of air mobility operations. 
For example, with the use of multimodal operations, we move 
large volumes of cargo by sea to locations in close proximity 
to the area of operations, then by truck from the seaports to 
the nearby airfields, and finally by air to its destination.
    This concept has been used with great success throughout 
2010 and 2011 as we moved almost 7,000 mine-resistant attack 
platforms and M-ATVs to Afghanistan. Utilizing the combination 
of air, land, and sea modes of transportation, we increased 
velocity, employed aircraft more efficiently, and ultimately 
reduced transportation costs by almost $400 million in 2010 
alone.
    Multipurpose aircraft will also improve the efficiency and 
capacity of our airlift fleet. The KC-46 fleet, the new 
tanker--and thank you for your support of that--will be sized 
based on war plan tanker requirements. In those plans, when not 
at aerial refueling peak demand periods, the KC-46 can 
supplement the heavy airlift fleet by conducting a variety of 
airlift and air medical evacuation missions.
    Not only will it dramatically change our air refueling 
concept of operations, but it will also allow us to make the 
whole air mobility system that much more efficient.
    Our commercial partners also provide superb modernized and 
cost-effective airlift support in peace and in war. Their 
ability to move bulk cargo and passengers around the world 
complements our organic capabilities. I depend on them in 
wartime.
    The CRAF program's ability to augment our organic airlift 
fleet helps to reduce the operational burden on our military 
assets and allows us to deal with short-term surges without 
having to mobilize total force assets. Based on all these 
factors, I reiterate my full support to repeal the 316 
statutory floor.
    At TRANSCOM, we view our success through the eyes of the 
warfighter. We know that combatant commanders around the world 
absolutely depend on us to deliver the forces and their 
sustainment day in and day out.
    We are committed to deliver to the warfighter, while also 
being responsible stewards of the taxpayers' trust and dollars. 
The men and women of TRANSCOM, our components, and industry 
partners are proud to provide world-class support to those who 
put themselves on the line every day. We want them to 
absolutely know that we will always, always deliver.
    Chairman Reed, Senator Wicker, and all members of this 
subcommittee, thank you for your continued superb support of 
TRANSCOM and of all of our men and women in uniform.
    Thank you for including my written statement for the 
record, and I look forward to your questions.
    [The prepared statement of General McNabb follows:]
           Prepared Statement by Gen. Duncan J. McNabb, USAF
    Chairman Reed, Senator Wicker, and distinguished members of this 
subcommittee, I would like to begin by expressing my appreciation to 
this committee for your support to the U.S. Transportation Command 
(TRANSCOM) and to the men and women who strive every day to protect our 
Nation and its interests.
    Rapid global mobility is among our Nation's greatest asymmetric 
advantages, and the ability to mobilize forces and materiel within 
hours, rather than days or weeks, depends on the right-sized fleet of 
versatile, ready and effective air mobility forces.
    This year, the administration proposed a repeal of the statutory 
requirement for the Air Force to maintain a strategic cargo fleet of 
316 aircraft. I fully agree with the administration's proposal. The 
congressionally-directed 316 strategic airlift requirement was 
established before the Mobility Capabilities and Requirements Study 
2016 determined the strategic airlift requirement to be 32.7 million 
ton-miles per day (MTM/D), based on the most challenging wartime 
airlift scenario. Our analysis confirms 32.7 MTM/D capacity exceeds the 
peacetime requirement and can be met with approximately 300 strategic 
airlift aircraft.
    With the Mobility Capabilities and Requirements Study 2016 
complete, we now have the analytical justification to recommend repeal 
of the 316 strategic airlift floor. As I and others have previously 
stated or testified, it was necessary to wait for the results of the 
study before making any recommendation to change the size of the 
strategic airlift fleet. I do so confidently today. The strategic 
airlift aircraft reduction will allow the Air Force to retire an 
additional 15 C-5As and provides a substantial savings by freeing up 
over $1.2 billion in taxpayer dollars across the FYDP.
    The current programmed fleet of 222 C-17s, 52 C-5Ms and 27 C-5As is 
far more modern and capable than any strategic airlift fleet in our 
history. To underscore this point, our strategic airlift fleet of 
approximately 350 aircraft in 1999 provided about 26 MTM/D capacity, 
yet, today, a fleet of only 300 aircraft provides 32.7 MTM/D. The 
dramatic improvement in strategic airlift capability provided by C-17s 
and modernized C-5s has enabled a reduced fleet size to meet our 
warfighter requirements.
    C-17s will continue to meet TRANSCOM's future requirements through 
currently funded purchases, upgrade programs and fleet rotation. New C-
17s arrive with improvements that increase the reliability of the 
weapon system. Older aircraft enter into the Global Reach Improvement 
Program to increase their sustainability and reliability. Furthermore, 
aircraft located in corrosive and training environments are monitored 
and analyzed for stress and rotated to maintain structural integrity of 
the fleet.
    The C-5 is critical to our oversized and outsized air cargo 
capability. C-5 fleet management has two main focus areas: C-5 
reliability and C-5A retirements. The Reliability Enhancement and Re-
Engining Program (RERP) is on track to increase the mission capable 
rate (MCR) of the C-5 fleet by at least 25 percent over the current C-
5A and at least 15 percent over the current C-5B . . . increasing the 
utilization rate for these aircraft and allowing us to operate into 
more austere locations. All C-5 B and C models and one C-5A model 
aircraft will undergo RERP resulting in a total of 52 C-5Ms in the 
inventory. Additionally, the new maintenance processes changed our 
focus from ``fly to fail'' on major components to preventative 
replacement. This has reduced the number of C-5s stranded off-station 
awaiting parts and will result in a 7-percent increase in MCR. Finally, 
C-5A retirements will improve aircraft availability by removing 
maintenance intensive jets from the fleet and will allow us to focus 
our critical maintenance, aerial port, and aircrew personnel and 
resources on a right-sized fleet.
    In addition to a more modern and capable fleet, we also 
continuously improve the efficiency of air mobility operations. This 
efficiency allows a smaller strategic airlift fleet to handle wartime 
and peacetime mobility requirements. For example, with the use of 
multi-modal operations, we move large volumes of cargo by sea to 
locations in closer proximity to the area of operations, then by truck 
from the seaports to the nearby airfields and finally by air to its 
destination. This concept has been used with great success throughout 
2010 and 2011 as we moved almost 7,000 MRAP and MRAP all-terrain 
vehicles to Afghanistan. Utilizing the combination of air, land and sea 
modes of transportation, we increased velocity, employed aircraft more 
efficiently and ultimately reduced costs by almost $400 million in 
2010.
    Multi-purpose aircraft will also improve the efficiency and 
capacity of our airlift fleet. The KC-46 fleet, for example, will be 
sized based on war plan tanker requirements. In those plans, as the 
need for aerial refueling diminishes, the KC-46 can supplement the 
heavy airlift fleet by conducting a variety of airlift and aeromedical 
evacuation missions. Not only will it dramatically change our air 
refueling concept of operations, it will also allow us to make the 
whole air mobility system much more efficient.
    Our commercial partners provide superb, cost-effective airlift 
support in peace and in war. Their ability to move bulk cargo around 
the world complements our organic capabilities. The Civil Reserve Air 
Fleet (CRAF) program's ability to augment our organic airlift fleet 
helps to reduce the operational burden on those assets. Because of the 
importance of the CRAF, we continue to seek out incentives, especially 
those that provide additional peacetime business opportunities, to 
strengthen participation in the program with modernized aircraft by our 
commercial airline partners.
    At TRANSCOM, we view our success through the eyes of the 
warfighter. We know the combatant commanders around the world 
absolutely depend on us to deliver the forces and their sustainment day 
in and day out. We are committed to deliver what the warfighter needs, 
where they need it, when they need it . . . while also being 
responsible stewards of the taxpayers' trust and dollars. The men and 
women of TRANSCOM, our components and industry partners are proud to 
provide world-class support to those who put themselves on the line 
every day, and ensure we always, always deliver.

    Senator Reed. Thank you, General.
    General Johns?

 STATEMENT OF GEN. RAYMOND E. JOHNS, JR., USAF, COMMANDER, AIR 
                        MOBILITY COMMAND

    General Johns. Chairman Reed, Ranking Member Wicker, and 
distinguished members of the subcommittee, on behalf of the 
135,000 active duty, Air National Guard, and Air Force Reserve 
airmen of AMC, we thank you for the opportunity to speak with 
you about our strategic airlift fleet.
    AMC airmen are employed every day around the world, 
providing global mobility for the Nation. We answer the call of 
others so that they may prevail. We thank you for your 
steadfast support for our efforts over the past many years.
    As a force provider, AMC is charged with maintaining our 
strategic airlift fleet and ensuring it has the capability and 
capacity required by TRANSCOM and the geographic combatant 
commanders. The strategic airlift fleet is a national asset, 
allowing America to deliver hope, to fuel the fight, and to 
save lives anywhere in the world within hours of getting the 
call.
    We are also keenly aware of the fiscal challenges our 
Nation is facing and take very seriously our role in fulfilling 
our requirement not only today, but as we look out into the 
future. It is incumbent on us to maintain effectiveness across 
the spectrum of operations in the most efficient manner 
possible.
    We are devoted to managing the strategic airlift fleet 
responsibly. As part of the National Defense Authorization Act 
for Fiscal Year 2010, several restrictions were placed on the 
Air Force regarding strategic airlift, including a floor of 316 
aircraft and several reporting requirements prior to any C-5 
retirements.
    The Secretary of the Air Force met the C-5A retirement 
restrictions earlier this year, and we greatly appreciate the 
committee allowing us to begin retiring our oldest and least 
capable C-5s. We are still constrained by the 316 floor and 
currently are only able to retire one C-5A for every C-17 
delivered.
    AMC fully supports the President's request to repeal the 
316 strategic airlift floor and allow the Air Force to manage 
its fleet. MCRS-16, the most recent study completed on the 
strategic airlift requirement, was wholly informed by the 
National Security Strategy and the NMS. The foundation of MCRS-
16 analyses is directly tied to the QDR, and its conclusions 
reflect our Nation's strategic priorities.
    Based on MCRS-16 requirements of 32.7 MTM per day, we 
believe the program fleet size of 301 C-5s, C-5Ms, and C-17s is 
sufficient. By allowing the Air Force to retire the additional 
C-5As as requested, $1.2 billion, ma'am, as you stated, of 
unprogrammed cost will be avoided across the FYDP.
    Again, we thank you for the opportunity to come before you. 
Today is an important issue, and we sincerely thank you for 
your strong continued support. I look forward to your 
questions.
    Thank you, Mr. Chairman.
    [The prepared statement of General Johns follows:]
         Prepared Statement by Gen. Raymond E. Johns, Jr., USAF
                              introduction
    Chairman Reed, Ranking Member Wicker, distinguished members of the 
subcommittee, on behalf of the nearly 135,000 active duty, Air National 
Guard, and Air Force Reserve airmen that provide rapid Global Reach for 
the Nation as part of the Mobility Air Forces, thank you for the 
opportunity to appear before you today. Our strategic airlift 
capability is a national treasure which allows us to deliver hope, fuel 
the fight and save lives anywhere in the world within a matter of hours 
as evidenced by our continuing efforts in Afghanistan and our response 
to both the devastation in Haiti in 2010 and Japan earlier this year. 
The Mobility Air Forces are proud stewards of this capability. We 
constantly strive to ensure we have the right mix of aircraft and 
personnel to always be effective while at the same time remain fiscally 
responsible to the American taxpayer. This is the responsibility that 
brings us before you today.
                           supporting forces
    As the air component of U.S. Transportation Command (TRANSCOM), we 
are charged with providing the required airlift to support geographic 
combatant commands (COCOM) around the globe. We do not determine the 
requirement, but we develop the most effective and efficient airlift 
fleet possible to support the National Security Strategy, National 
Military Strategy, and COCOM plans. To that end, we completely support 
the President's authorization request that would: (1) strike subsection 
(g) of section 8062 of title 10, U.S.C.; and (2) change the 
certification requirement in section 137 of the National Defense 
Authorization Act for Fiscal Year 2010 (Public Law 111-84), eliminating 
the 316 strategic airlift aircraft restriction.
                         historical perspective
    The strategic airlift fleet we manage today traces its roots to the 
Mobility Requirements Study (MRS-05) completed in January 2001, prior 
to the attacks of September 11. That study addressed the best mix of 
strategic airlift required to deploy forces from a posture of global 
engagement. MRS-05 determined 54.5 million ton-miles per day (MTM/D), 
provided by a combination of organic strategic airlift and Civil 
Reserve Air Fleet (CRAF) airlift met requirements with acceptable risk. 
The organic strategic airlift accounted for 34.0 MTM/D of the 54.5 MTM/
D total requirement and could be met with a range of fleet sizes, 
dependent on the mix of strategic aircraft. Based on the operations 
tempo around the world post September 11, the Mobility Capability Study 
delivered in December 2005 confirmed the findings of MRS-05 for 
acceptable levels of risk. Both studies were led by the Office of the 
Secretary of Defense (OSD) and the Joint Staff.
    The most recent study, the Mobility Capabilities and Requirements 
Study 2016 (MCRS-16), was completed in February 2010 by OSD and 
TRANSCOM. This study investigated scenarios that generated an organic 
strategic airlift requirement of between 29.1 and 32.7 MTM/D. The 
higher number (32.7 MTM/D) is the benchmark that the Air Force and AMC 
currently uses to right size the strategic airlift fleet. Between the 
initial MRS-05 study and the most recent MCRS-16 study, the number of 
strategic airlifters required has remained relatively steady over the 
last decade (between 292 and 304 depending on fleet mix).
    Notwithstanding the COCOM requirements, the strategic airlift fleet 
we maintain today is not the one envisioned just a decade ago. When the 
final C-17 is delivered to the Air Force, we will have over 40 more in 
the inventory than anticipated during MRS-05. As the force provider, 
the exact fleet mix is less critical than the ability to provide the 
required MTM/D.
                           managing the fleet
    We greatly appreciate the committee allowing the retirement of C-
5As in accordance with the National Defense Authorization Act for 
Fiscal Year 2010 language. Every new C-17 delivered now allows 
retirement of a C-5A resulting in considerable savings. As more capable 
aircraft like the C-17 and C-5M enter the inventory, the 32.7 MTM/D 
requirement can be maintained with fewer aircraft. However, the 316 
strategic airlift floor requires us to keep unneeded, less capable C-
5As in the inventory. Each of these unneeded aircraft comes with a cost 
to maintain in flyable status, a cost not programmed in the Air Force 
budget. Over the Future Years Defense Program, the unprogrammed cost to 
the Air Force to maintain these aircraft could be as much as $1.23 
billion. For this considerable investment, the Nation will maintain 1.5 
MTM/D of excess capacity; approximately 5 percent above the requirement 
of 32.7 MTM/D.
                               conclusion
    Our ability to manage the strategic airlift fleet over the coming 
years will enable us to be more fiscally responsible to the Nation. The 
fiscal year 2012 President's budget includes a strategic airlift fleet 
of 301. This reflects the highest MCRS-16 requirement of 32.7 MTM/D 
which can be met with the programmed fleet of 222 C-17s, 52 C-5Ms and 
27 C-5As, or 301 total strategic airlifters. With over a decade of 
study by multiple organizations, we firmly believe the programmed fleet 
of 301 aircraft meets our current national strategic objectives. We 
humbly ask the committee and Congress to support the President's vision 
by repealing the 316 strategic airlift floor and enabling us to manage 
the fleet to ensure we continue to meet COCOM requirements. We thank 
you for the subcommittee's continued support of America's Air Force and 
particularly to its airmen and their contributions to Global Mobility.

    Senator Reed. Thank you very much, General Johns.
    We will do an 8-minute first round, and I think this is a 
topic that is of significant technical complexity and also 
interest that we will do a second round. We might have other 
members join us, too.
    But let me just preface my remarks by saying--and this 
might be more folklore than fact--but I think one of the 
reasons there was a floor placed with respect to strategic lift 
is that there are strong intramural and extramural pressures 
sometimes to avoid buying airlift and buying other platforms. I 
hope that is not the case going forward.
    Because, frankly, I think, as you have demonstrated and 
continue to demonstrate every day, strategic and tactical 
airlift is central to everything we do, everywhere we do it, 
and it deserves premier attention, not secondary attention. So 
that is just a preface to my questions.
    First, in terms of the analysis, there are several terms 
that are running around. Director Fox, you talk in two 
categories, steady state and surge. Other people talk about 
peacetime and wartime.
    Do you equate steady state as equals peacetime and surge 
equals wartime? Just for clarification.
    Ms. Fox. Yes, sir. Essentially, that is correct. In the 
wartime, it includes Homeland defense operations concurrent 
with the warfight. Perhaps that is part of the confusion. But, 
yes, what you said is correct.
    Senator Reed. The surge is not only Homeland security. It 
is also a major campaign, which would be a conventional fight, 
unlike the irregular warfare we are seeing now?
    Ms. Fox. Absolutely, sir. The most stringent cases, two 
overlapping, large land warfare campaigns, plus three 
simultaneously Homeland defense----
    Senator Reed. That leads to a 32.7 million tons per day 
figure to meet that?
    Ms. Fox. Yes, sir. The max.
    Senator Reed. The max, and that is what you feel you can 
obtain, even with these reductions down to 301 aircraft, 
basically?
    Ms. Fox. Yes, sir. A point of clarification, if I could?
    Senator Reed. Yes, ma'am.
    Ms. Fox. The maximum needed is not that. It is 20 MTM/D. 
But when you look at how you schedule, how you load, the size, 
so it is really quite conservative. The model tries to go 
through that so we don't get caught short in our inability to 
provide it.
    Senator Reed. Just in terms of modeling, so the range of 
error--can you quantify that in terms of--were you told to get 
this within a 2 percent error, or was that not a modeling 
factor?
    Ms. Fox. Sir, the model--I ought to be able to answer your 
question, but I will have to get back to you. We were not told 
to get to something. What we have tried to do is model it as 
accurately as we can.
    Of course, you are right. There are errors in any model. I 
should know that, but I am afraid I don't.
    [The information referred to follows:]

    The difference between the 20 million ton-miles per day (MTM/D) 
that I mentioned in my comment and the 32.7 MTM/D is the difference 
between the cargo-miles actually moved (20 MTM/D) in the simulation and 
the capacity of the fleet (32.7 MTM/D) required to achieve that level 
of activity. When loading aircraft we often run out of space before 
reaching weight limits resulting in a difference between the capacity 
of an aircraft and the capability realized. It is also true that due to 
the location of the airfields, not every aircraft flies the maximum 
hours/day authorized. The actual hours flown is dependent on weather 
and the departure and arrival locations. Thus the actual miles flown in 
a given scenario is always less than the theoretical miles possible. 
Our models take these factors and many others into consideration to 
ensure the most realistic simulation possible. In addition we update 
the model algorithms based on the latest information from current 
operations. For these reasons and because the model is based on time-
distance-payload computations which are very accurate, we are quite 
confident that the results reflect what we would actually achieve given 
the scenarios assessed. The results of the Mobility Capabilities and 
Requirements Study 2016 which range from 29.1 MTM/D-32.7 MTM/D reflect 
different strategic assumptions and are not reflections or statements 
of model error.

    Senator Reed. No, that is quite all right.
    The other issue, just a clarification, of steady state. 
Steady state is essentially what we are in right now.
    We have a major operation in Afghanistan. You are doing 
major operations out of Iraq, particularly airlifting equipment 
out of Iraq. You have ongoing support requirements globally. So 
this is steady state?
    Ms. Fox. That is correct. Steady state is intense.
    Senator Reed. Okay. General McNabb, let me--and General 
Johns or Director Fox, if you feel that you want to comment, 
please. One of the realities that is facing us right now is in 
this steady-state process, we are relying upon one of our 
allies, Pakistan, for terrestrial transit, their roads, et 
cetera. But given the political dynamics there, I will just ask 
the question.
    The loss of Pakistan as a land transit point would not in 
any way affect your plans to retire the C-5As you currently 
have on duty or in any way change your request to--at least in 
the short run--to go down to as low as 301 aircraft?
    General McNabb. No, sir, it wouldn't at all. We were really 
constrained going into Afghanistan by the throughput of the 
airfields in Afghanistan. It is not a matter of number of 
airplanes that we have. It is how many you can get in through 
and have and flow through there.
    So one thing that we have done is by using those multimodal 
operations, where we bring stuff by surface as far forward as 
possible and then maximizing C-17s going back and forth, or C-
5s, that has really allowed us to optimize those slot times 
that we have in Afghanistan. So, we will continue to work very 
hard at that.
    But, no, this would in no way restrict----
    Senator Reed. Right. But the commander on the--one of the 
reasons you have been able to do this successfully is most of 
what you are moving is into the ports in Pakistan and then up 
through Pakistan. If that option is gone and you have to 
deliver by air, now you either shift to K2, I guess, in 
Uzbekistan or you just have to be much more efficient in those 
airfields.
    General McNabb. Sir, two things that we are doing there. 
One, we opened up the operations in the north. We call it the 
northern distribution network. So we are bringing a lot of the 
resupply up through the north.
    In fact, to the tune of about 35 percent comes from the 
north, about 30 percent comes through the Pakistan ground, and 
about 35 percent by air. Everything that is high value, 
everything that is lethal, everything that is special, we bring 
in by air now.
    What we would have to do is absorb that and bring more of 
that stuff either through the north, or we would have to bring 
in by air. Air is our ultimate ace-in-the-hole. Ideally, we 
will have other ways of getting that in, and right now, we have 
worked very hard to make sure we have good options.
    Senator Reed. Right. Let me ask another question. I will 
direct it to you, Director Fox, but it might be General Johns's 
area.
    So who gets the savings if we go ahead and retire these 
aircraft?
    Ms. Fox. That would probably be a point of issue between 
the Office of the Secretary of Defense (OSD) and the Air Force. 
But I am sure the Air Force thinks the Air Force gets the 
savings. We have to see how all of the budgets and the 
requirements come out this year. He won't like my answer.
    Senator Reed. Okay, General Johns? I think your answer is 
fine.
    General Johns. What we have done by assuming the savings 
and the retirements, as we submitted our fiscal request through 
OSD, was to actually use those resources to support other air 
forces in the effort. So they have already been spread, and 
then we will have that discussion with----
    Senator Reed. So put it another way, you have already spent 
the savings, conceptually, on Air Force programs?
    General Johns. Yes, sir. I wouldn't say we spent the 
savings. We basically--yes, sir, the simple term is, we said if 
we don't have to preserve these aircraft, we would use them 
against other obligations.
    Senator Reed. Okay. I think--and again, probably best to 
follow up with a question to give us an idea of how you are 
distributing the savings, and we will follow up with a 
question.
    General Johns. Yes, sir. It wasn't like there was the 
savings there. It was more as we built the POM, we reduced the 
requirement. So it was used across the Air Force.
    Senator Reed. So you lowered the amount of request going 
forward?
    General Johns. Yes, sir. Yes, sir.
    Senator Reed. But we will, I think, follow up with a 
question, try to get an idea of what you are doing with those.
    General Johns. Yes, sir. But again, it was pretty much 
spread across. So it is hard to track and say, ``This dollar 
went here, and this dollar went there.''
    Senator Reed. Okay. Thank you.
    Let me ask another--General McNabb or General Johns, et 
cetera, particularly in your testimony, General McNabb, you 
said the C-17s will continue to meet TRANSCOM future 
requirements through currently funded purchases, upgrade 
programs, and fleet rotation.
    All of you in this study assumed no additional acquisition 
of C-17 aircraft. Is that correct?
    General McNabb. Sir, that is true.
    Senator Reed. That is true.
    General McNabb. Just make sure that we upgrade--continue to 
upgrade the older models so that we have a common model of C-
17s across the board with common capabilities.
    Senator Reed. Now just another question, and I will--as I 
said, we will have a second round. So let me at this point 
recognize Senator Wicker, and then I will see you again.
    Senator Wicker?
    Senator Wicker. I have been absent from the room, and I 
haven't heard all of the questions. If it is all right, I think 
I will let Senator Ayotte go before me, if that is all right, 
Mr. Chairman?
    Senator Reed. Senator Ayotte?
    Senator Ayotte. Thank you, Mr. Chairman.
    Thank you so much, Senator Wicker.
    I just want to make sure that we are clear on the results 
of the 2010 study. As I understand it, according to Director 
Fox's written testimony--and I would like to make sure that we 
have the concurrence of the two generals that are here--that if 
we have reduced the airlift capacity to 32.7 million tons per 
day, as the conclusion was of the study, that would still allow 
us the capacity, based on the results of the study, to do two 
overlapping large-scale land campaigns occurring in different 
theaters, three nearly simultaneous Homeland defense 
consequence management events, and ongoing, as we have right 
now, steady-state operations, including Operation Enduring 
Freedom (OEF) in Afghanistan.
    General McNabb and General Johns, do you concur with that 
analysis in terms of what capacity we would be left with if we 
reduce the number to, say, a 301 or in that range, whatever 
your recommendation would be?
    General McNabb. Yes, ma'am. We can do that. Basically, that 
32.7 was that two major land campaigns, separate theaters, just 
as you mentioned, and our ability to still handle the steady-
state requirement.
    Now, if you talk about an Afghanistan and Iraq along with 
that, then now you are starting to go a little bit beyond what 
they were talking about. We are talking in the neighborhood--we 
actually did a scenario where we did a steady state that was 
very similar to Afghanistan, along with one land campaign, and 
that was one of the other scenarios that we ran to make sure 
that we could do a much larger steady state, like we have 
today, along with another scenario.
    So based on how you just said that, if you, depending on 
how you would define Iraq and Afghanistan, what level we are at 
when you brought that up, that is the one where I would go it 
would depend how large we are still in Iraq and Afghanistan and 
then to be able to go do two theater wars.
    Senator Ayotte. General, I just wanted to follow up. The 
situation right now, for example, let us assume we stay where 
we are, current operation in Afghanistan, which would be peak 
right now, given the number of troops we have there with the 
surge before any of them are withdrawn, and we also were to be 
in a situation where we decided to leave additional troops, 
because the Iraqis have asked us to, in Iraq because we have 
obviously seen some flare-ups there because of the influence of 
others that want to undermine our success.
    If we change the capacity, would we be able to handle that 
type of situation? Because I think that is, obviously, a very 
real scenario we could face in the coming year.
    General McNabb. Yes. I think what we would do is we would 
be taking a very hard look at--because a lot of it is the 
number of forces you have engaged there. So it wouldn't be--
lift probably wouldn't be the thing that you would start 
looking it. It would be all the intelligence, surveillance, and 
reconnaissance assets, all the other assets that you would have 
to bring all that to bear.
    Senator Ayotte. Right.
    General McNabb. So lift, I would say that from the 
standpoint we will move what needs to be moved where it needs 
to be moved. It is just that overall capacity, if you mirror 
that with two very large land campaigns along with that, I 
would say we would have to prioritize within that.
    Senator Ayotte. Okay.
    General McNabb. That is beyond, I think, what the MCRS 
looked at. I don't know, Ms. Fox, how you see that. I saw that 
as the one option that we looked at for the scenario in Africa. 
Go ahead.
    Ms. Fox. So the least stressful case that we looked at was 
an Operation Iraqi Freedom (OIF), Iraq-like sustained campaign, 
plus a major ground war, land war campaign concurrently. So, 
yes, I agree with General McNabb.
    But the most stressing case was two large land campaigns, 
separate theaters. The steady state was more--was not the OIF 
peak, but it was consistent with OEF at a lower level, the 
Afghanistan.
    Senator Ayotte. Really, the point would be that this is a 
very conservative estimate. If we are in a position where we 
are engaged in two major, large-scale land campaigns and 
obviously a situation like we are sustaining right now in OEF 
in Afghanistan, that is a very significant engagement level for 
our country. I am not saying that we shouldn't be prepared to 
be there. I think our readiness should always be well beyond 
where we are.
    But as I understand your analyses, it is very conservative 
in terms of what you have provided for testimony if we were to 
reduce our capacity to 301. Is that right?
    Ms. Fox. If I could add, don't forget three additional 
concurrent Homeland events at the same time. So, yes, I would 
say it is very conservative.
    Senator Ayotte. So anyone that would be concerned about our 
readiness posture should be satisfied if we were to reduce the 
fleet to 301?
    General Johns. Yes, ma'am. Again, from Air Mobility and the 
Air Force perspective, we want to deliver on the requirements 
that come from TRANSCOM through the analyses of CAPE. So, we 
will look at that to ensure across the spectrum to do the two 
MCOs, as you talk about.
    But as we look at Iraq and Afghanistan today, they are at a 
surge period, per se, and probably a little bit above what we 
consider steady state.
    Senator Ayotte. Okay. Thank you.
    General McNabb. Senator, could I mention one other thing, 
is the other part to that is when we think about doing two 
major theater land campaigns, you really are going to mobilize 
the complete force, mobilize all our total force, and activate 
our CRAF. So this is you are bringing everything to the game.
    As I mentioned last year, during the very peak of the 
surge, our highest requirement was in the 16 MTM, about half of 
what we would surge to. But it gives you an idea of what all we 
would then bring to bear, and that is how--every once in a 
while that gets lost in it, is that you are taking everything 
and everything we have in reserve all goes.
    Senator Ayotte. So, General, just to use your example, you 
said March 23 was the peak, and that is only half, in terms of 
Afghanistan and the surge, of what you have been doing. So that 
was really only half the capacity of what we would still have 
as a capacity if we reduce to 301?
    General McNabb. That is right. Now we did not fully 
mobilize, but we did mobilize, do a partial mobilization of C-
17 and C-5 crews to be able to handle that increase.
    Senator Ayotte. Okay. General Johns?
    General Johns. Yes, ma'am. Yes, Senator.
    We called March 2011 ``March Madness'' as we looked at it 
from the mobility force. We had Japan going on. We had the 
support of Libya. We had a presidential banner mission. We had 
Afghanistan and Iraq working.
    In my history, that was the busiest period. So, again, 
March Madness of a different silk.
    In looking at that, around the 23rd of March to about the 
29th is where we had our heaviest commitment of our gray tails, 
of our mobility fleet. It was 127 C-17s, 33 C-5s, and 208 
tankers across the globe. So I have never seen such a heavy 
demand, but still that is less than half of what we could 
deliver.
    Senator Ayotte. Great. I really appreciate your putting it 
in that perspective. When you think about that much activity, 
and that is only half of the capacity that we would still be 
leaving here if we reduce the fleet to 301 or near that level.
    I also wanted to follow up, some who have been critical in 
the past of reducing the strategic Air Force airlift capacity 
to the requirements that you are recommending have cited the 
fact that we lease commercial aircraft as an argument against 
reducing or eliminating the aircraft floor. Yet I am also told 
by the Air Force that we sometimes lease aircraft for two 
reasons.
    First, in order to meet short-term surges in airlift 
demand, and second, sometimes it is more cost effective to 
lease commercial assets for a brief period rather than 
purchasing and having to continually maintain an asset.
    General McNabb, can you address this issue to those that 
might raise this issue in terms of concerns about leasing and 
our capacity?
    General McNabb. Certainly, Senator.
    I basically run an enterprise, and I have three parts to 
that enterprise. I have the active duty fleet. I have the Guard 
and Reserve total force augmentation of that as well. So I have 
the total force to augment that, and third, I have our 
commercial partners.
    All three of them are integral parts, and my job is to 
match the capability against the requirement. What goes into 
that is, is it a military-type mission like air drop or going 
into some high-threat fields where I have to use a military 
airplane? Second, it goes into cost. How much will it cost me 
if I end up taking MRAPs or M-ATVs?
    In fact, in general, if I can use our commercial partners, 
if I can use them, it is normally cheaper than if I use 
military airplanes. That does the two things you mentioned. It 
preserves their longevity. It preserves those airframes for 
when I need them later. Saves you in the long term.
    But more importantly, if I have an immediate requirement, 
then I have that extra capacity to go. We are always mixing and 
matching. As General Johns mentioned, March Madness, we were 
pivoting the enterprise to take care of Iraq and Afghanistan, 
pivoting it to Libya, pivoting it to Japan, pivoting it to 
South America for the movement of the President. All of those 
things are going, and our ability is to swing that very 
rapidly.
    A lot of questions came up, and Mr. Chairman, you brought 
up the AN-124s. The 124s actually are a subcontractor to one of 
our CRAF members, in this case Atlas Air. They actually could 
move MRAPs cheaper on that than we could on any other airplane, 
cheaper than C-17s, cheaper than C-5s. It also then freed up C-
17s to be able to go do the additional air drop that we do in 
theater.
    Those are the kinds of things that I will be looking at. 
Again, if I am helping our commercial partners, our CRAF, they 
obligate their fleet to us in wartime for peacetime business. 
So when I give them business, it is good for everybody. It is 
good for them to operate in our system. It brings jobs, and it 
is also cheaper for the taxpayers to do it that way.
    Again, it preserves my military capability for where I need 
it, and it normally has to do with threat and then also 
availability. If I were running short of airplanes, then, in 
fact, I would say, ``well, okay, I am out of C-17s. I am going 
to have to use one of these others.''
    I haven't had to do that in the last couple of years. It 
has been because of cost where I have used them.
    Senator Ayotte. Thank you, General.
    My time is expired. Appreciate it. Thank you.
    Senator Reed. Senator Wicker, please?
    Senator Wicker. Thank you very much.
    This has been a very informative hearing. Let me just see 
if I can nail a few things down.
    General McNabb, would a programmed fleet of 301 strategic 
airlifters provide enough capacity to meet wartime and 
peacetime requirements?
    General McNabb. Yes, sir.
    Senator Wicker. General Johns, do you agree?
    General Johns. Yes, Senator.
    Senator Wicker. Gentlemen, would there be any increased 
risk at all in getting your jobs done by moving to this reduced 
number?
    General McNabb. Senator, it would not. In fact, from my 
standpoint, those facilities, those air crews, the maintainers, 
the aerial porters, making sure that I have them targeted on 
our best assets is smart business and actually helps me because 
I better manage a right-sized fleet.
    Senator Wicker. The risk would be reduced, in your view?
    General McNabb. Sir, I hate to have folks working on stuff 
that I don't need. Manpower is absolutely critical.
    Again, as I think about this, running it like a business, 
those facilities and the people are the most critical factor in 
all of this. The $1.2 billion is a savings, but it is really 
taking full advantage of our great people.
    Senator Wicker. General Johns, do you concur?
    General Johns. Senator, I do concur. I think the excess 
above 301 is over capacity. I may not use the term ``risk.'' I 
may say it is extra workload on our airmen to keep that 
capability when we don't need to utilize it.
    Senator Wicker. So it is more than getting rid of a luxury. 
It is actually getting rid of something that stands in the way 
of doing our best job?
    General Johns. Yes, Senator.
    Senator Wicker. General Johns, why does the number change? 
During previous testimony, we have been told 316 was the right 
number. Why does that change?
    General Johns. Sir, I think when we were here last time--or 
before me. In fact, when General McNabb was the AMC commander, 
we didn't have the results of MCRS-16. So, that number really 
was not definitized until we saw the results of MCRS-16. Once 
we had that, we now had the analyses to articulate a position 
based on facts.
    Senator Wicker. General McNabb, how long have you seen this 
coming? I have been meeting with you for a long time.
    General McNabb. For the 300?
    Senator Wicker. Yes.
    General McNabb. The fact that about 300 was what we were 
going to need, and as we went above that----
    Senator Wicker. Indeed. Moving from the larger number to 
the 300, how long have you really honestly seen this coming?
    General McNabb. I think ever since MCRS-16 was complete. 
Because what changed really was we, from MCRS----
    Senator Wicker. That was when?
    General McNabb. I am sorry? Oh, 2010. It was 2010.
    Senator Wicker. So that was just last year, okay.
    General McNabb. So, but where we, at MCRS-05, we had a 
range, 292 to 383. The administration came in, and we said that 
we needed 292 fully modernized aircraft. That is C-17 and C-5M.
    What changed was the Nunn-McCurdy breach on the C-5 
Reliability Enhancement and Re-engining Program. Basically, we 
looked at that, and DOD got together and said, ``Okay, what is 
the best way to address this?''
    When  we  did  this,  they  said,  ``well,  if  we  don't  
do  all  of  the  C-5s because of cost, if it is not cost 
effective to do all of them, let us use--the JROC came up with 
a requirement, 33.9, and said here is how much we want to take 
all the alternatives and then cost the different ways of 
getting at that.'' That is where the 316 came from.
    But we always acknowledged that MCRS-16 was going to relook 
at all of the things that you mentioned, like steady-state 
requirements, how would we do intra-theater, all the things 
that you mentioned earlier in your opening statement, sir. We 
did that.
    We always knew that once we had the results of MCRS-16, we 
would come back and take a look at that and see is 316 the 
right number, or would it be less? It ended up being less, 301.
    Senator Wicker. We are looking at very serious budget 
constraints. General McNabb, based on your illustrious career 
and your vast experience, is this more or less an isolated 
savings, or do you think if we dig deeply we can find this Air 
Force-wide?
    Would you--and I ask that question in the context of the 
desire of many people in the public arena saying that there is 
a real savings that can be made in the defense budget.
    General McNabb. Yes, sir. I think that is what Secretary 
Gates, now Secretary Panetta, are really after on efficiencies. 
``Go take a look at every part of what you do.''
    We happen to have the opportunity to look at this as an 
enterprise because it is all parts. It also includes our 
ability to use land and air, use commercial versus military, 
all of those things. Go back and say ``every nickel we can 
save, we need to save,'' and look at every part that you do.
    I think that that is what--Ms. Fox can actually talk to 
this for the whole DOD. But from my standpoint, that is what I 
was tasked to do by the Secretary. I think all the COCOMs and 
the Services were asked to do the same thing. Go take a look at 
every part of your operation and say ``are there places where 
we can save money prudently, smartly?'' Still get the 
capability that we need but make sure that we are not wasting 
any money.
    Given the demands, as you mentioned and the chairman 
mentioned, there are a lot of things out there that are really 
wearing out that you need to spend dollars on. We want to make 
sure we are putting the dollars against the right thing.
    We have had great support because of what we have done the 
last 10 years in the mobility world. Congress has been 
tremendously supportive, as has the administration. We have 
been able to do lessons learned. We have been able to try to 
figure out how to use C-17s and C-5s in commercial and 
different ways.
    What that has done is allowed us to look into some of these 
things and come up with alternative ways of using airplanes, 
different concept of operations that would allow us to maybe 
say, hey, we can actually do this better, save some money, and 
actually reduce risk.
    This is one of those departments where I think when the 316 
number came, we always said we will use MCRS-16 to make sure 
that we refine that number, take full advantage of the C-17, 
the full 222--at that time 223 C-17s being in the inventory. 
Let us see how that plays out. Let us see how the C-5M does. 
Let us make sure that we model that.
    Let us see how this whole thing comes together with how we 
do the lessons learned from doing 10 years of surge, and let us 
put that together. That is the results that you have.
    I am very comfortable with the results. TRANSCOM and CAPE 
co-led that and did that together, and I am very comfortable 
with the results on that. I think that it captured Services, 
COCOMs, all the agencies, and made sure that we had all the 
parts to the puzzle and everybody had a voice. I think, in 
general, I have not had a lot of pushback on the MCRS results 
within DOD at all, at least from my standpoint.
    So we are basically saying we have done that. Now we come 
back and tell you here is what the answer that we get, this is 
what the analysis shows, and I am very comfortable with saying 
that you can come down to the 300 strategic airlifters.
    Senator Wicker. Finally, who can tell me what will become 
of the 32 C-5A aircraft?
    General Johns. Sir, the C-5As will go down to AMARC and put 
into our storage there.
    Senator Wicker. Is that the most efficient thing we can do 
with them?
    General Johns. Senator, as opposed to selling them or doing 
something else, sir, I think that preserves us the capability 
of putting them into storage there down at Arizona.
    Senator Wicker. All right.
    General Johns. Then potentially using some of those to 
sustain the other aircraft down the road. We will have to look 
at the discussion about do you take some of the parts from 
those to sustain the fleet to reduce operating costs in the 
future? So there is the tradeoff there we look.
    Senator Wicker. Thank you very much.
    Thank you, Mr. Chairman.
    Senator Reed. Thanks, Senator Wicker.
    Let me initiate a second round. I have a few questions.
    One, just for the record to clarify Senator Wicker's 
question, Director Fox, this is the opinion not just of the 
Department of the Air Force and TRANSCOM. This is DOD, the 
Secretary, presumably as General McNabb said, all the CINCs, 
commanders, have been able to weigh in. So, this is the 
conclusion of DOD, all the way up to the Secretary, about the 
right number?
    Ms. Fox. That is correct, sir. This has been vetted by 
everyone in DOD, and it does have the support of the Secretary.
    Senator Reed. Thank you very much.
    General McNabb, particularly in a surge, you have to call 
on the civilian fleet. What number of millions of tons per day 
or miles per tons per day would they have to contribute in a 
surge?
    Because, i.e., that 32.7 million of tons per day is just 
what your organic aircraft are delivering. There is another 
number, and that number is what? Do you know?
    General McNabb. Yes, sir. I will get that for the record 
for you, but it is about 20 MTM per day.
    [The information referred to follows:]

    Mobility Capabilities Requirements Study 2016 (MCRS-16) reported a 
peak demand for 149 wide-bodied cargo aircraft and 157 wide-bodied 
passenger aircraft. MCRS-16 used these commercial aircraft in the Civil 
Reserve Air Fleet (CRAF) to deliver approximately 43 percent of the 
cargo (bulk, containerized, and palletized cargo) and approximately 93 
percent of our passengers/troops. The 149 wide-bodied cargo aircraft in 
CRAF can generate about 25.4 million ton-miles per day (MTM/D) in 
addition to the 32.7 MTM/D provided by military organic lift to move 
oversize and outsize cargo.

    Senator Reed. Right.
    General McNabb. We plan on doing 37 percent of our cargo 
movement done by our CRAF in those two theaters that we were 
talking about. So 37 percent. So over a third will be done on 
the commercial, and 93 percent of our passengers.
    So when you say how have you sized your fleet, the gray 
tails--the C-17s, C-5s--are tailored toward rolling vehicles 
and military-type cargo because that is what they are optimized 
for. Where all your bulk cargo, your pallets and all that, 
would be carried on commercial.
    The one thing that makes it a little different that you 
have to throw in there is that sometimes the commercial can't 
go all the way forward because of the threat and then we have 
to transload. We have that built in there. But that is also 
where the one tanker, if it is not being used for tanking, 
would make a very big difference because it has the defensive 
systems to be able to do that.
    Senator Reed. You obviously have less control over the 
composition in terms of airframes of the civilian fleet. Are 
there any concerns you have about commercial companies buying 
different aircraft that might support passengers, but not any 
kind of bulk or pallets or, i.e., has that been factored in?
    General McNabb. Yes, sir. We work very closely with the 
commercial industry, and we have a mix of passenger and cargo. 
We make sure that we meet both of those.
    Just for clarification, you brought up the AN-124s, we 
don't plan on using any of that during those surges. This will 
be totally our U.S. commercial fleet, and they do a great job. 
The good part there is that they already are incentivized to 
modernize. They are already incentivized to take care of all 
the other things to get better, more efficient, fuel efficient, 
all of those things, because they can't survive in the 
commercial market if they don't do those things already.
    Senator Reed. Let me ask you another question, which is 
this--I think it is looking at the worst possible case, but 
that, in some cases, is what we get paid for. What about 
attrition of aircraft, either through normal wear and tear or 
through combat action? Has that been built into the model?
    General McNabb. Yes, sir. What I would say is that for the 
big airplanes, we have lost one C-17 and one C-5 in the last 8 
to 10 years.
    I would say that one of the things that General Johns--and 
I will ask General Johns to jump in here. Because primarily the 
Air Force, then--one of the reasons they talk about 301--and I 
think it comes up was at 299 or 301--a lot of that is to make 
sure that he has the right-sized backup aircraft inventory 
(BAI), and he has that factored in.
    But again, for the large airplanes, because we don't lose 
very many, it is not the same as what we do in fighters and 
others, where that you are going to lose some airplanes.
    So, I would say we do it a little differently. I think we 
capture it. The BAI helps us do that. By the time that we 
really have to get at, usually we are into another platform, 
and we can adjust at that time.
    Senator Reed. Let me just--a follow-up question before I 
recognize General Johns. Is that the point you raise about--
right now, in the steady-state environment, the ability, the 
willingness of commercial entities to fly is a lot more--is a 
lot, I guess, better than the situation where they are afraid 
or the insurance companies are afraid they might get shot at.
    General McNabb. Right.
    Senator Reed. So, have you effectively factored in a 
situation, and particularly in the surge, where, for many 
reasons, just the insurance companies simply saying, ``you 
ain't flying,'' that you would not be able to meet your----
    General McNabb. Yes, sir. A couple things that you do 
there. One, we work with the Federal Aviation Administration to 
guarantee insurability, wartime insurance. So we already do 
that. So, whenever you have operations into Afghanistan or 
Iraq, that is one of the things that I will sign off and say, 
we recommend that we allow that.
    But to your point, we also are not going to put any of our 
airplanes into harm's way unless they have the defensive 
systems and the training and all the things that go with that. 
So what we will do then is we will transload. We will take it 
as far forward as possible, and then we will transload.
    That is where these multi-modal ops, sometimes it is 
surface-to-air, sometimes it is commercial air-to-military air. 
We do that in Manas now. All of our passengers going into 
Afghanistan will go in on a C-17 and C-130. But we take them 
commercially to Manas and then transload them onto an airplane 
where they have the defensive systems. They have night-vision 
goggles. They have the tactics, techniques, and procedures to 
get our folks in and out in the safest possible way.
    Senator Reed. General Johns, your comments on that? I have 
a few other questions for you.
    General Johns. Yes, Mr. Chairman.
    With the large aircraft, because we haven't experienced the 
losses, we don't build in attrition reserve, as we do with the 
tactical aircraft. So our model basically is how many aircraft 
do you need to accomplish your mission? Then we have a backup 
inventory to allow us to have enough aircraft available and 
still have aircraft in the depot.
    So we have the two modeled. We don't add the third element, 
which is attrition reserve. It hasn't been warranted, and that 
would cause us to have more capacity than we need.
    Senator Reed. Let me ask you a follow-up again on Senator 
Wicker's very good question about what happens with the C-5As. 
Have you done--and this is, again, the worst-case, and again, 
we have to ask these questions--an analysis of how much it 
would cost you to take a C-5A out of the desert and put it back 
in the air, if all this very thoughtful analysis proves to be 
wrong? Because that happens sometimes.
    Is that part of the--would all the savings evaporate in two 
or three retrofits and recommitments?
    General Johns. Mr. Chairman, I would like to take the 
specific numbers for the record, if I may?
    Senator Reed. Absolutely, sir.
    [The information referred to follows:]

    The cost to return a C-5A to flying status after it has been 
inducted into the Aerospace Maintenance and Regeneration Group would 
depend on the type of storage the aircraft is placed into and the 
length of time it has been in storage. Type 1000 storage, which is the 
most costly, would maintain the retired aircraft in anticipation of 
future requirements and ensure parts were maintained in a serviceable 
manner. Type 1000 storage would generate a reoccurring cost of 
approximately $50,000 every 4 years per aircraft with an actual 
regeneration cost, the cost to return an aircraft to the fleet, 
estimated at $300,000. Based on the length of time the aircraft are in 
storage, there could be additional costs such as implementing time 
compliant technical orders for safety and periodic depot maintenance. 
Should all of these additional actions be required we estimate the cost 
would be $35 million per aircraft.

    General Johns. But we look at putting them in storage and 
keeping at different levels of readiness and then having to 
take them out and make sure they are current for the wartime 
employment or the safety employment. So let me take the 
specific numbers.
    But it is still very low in comparison to keeping that many 
aircraft, and the likelihood of needing them also is 
considered.
    Senator Reed. One other follow-up, and that is part of the 
savings going forward that you are projecting are a function of 
Congress changing the law. Just as bookkeeping or policy-wise, 
how often do you do that, Director Fox, in terms of the defense 
budget? Like, these guys will get it. We have a lot of 
confidence in them.
    Ms. Fox. Sir, I would like to tell you that we only do that 
when we have the best analyses available to support the 
decision.
    Senator Reed. That is a very good answer, but just it 
raises some policy issues with us.
    Ms. Fox. Yes, sir, I understand.
    Senator Reed. But I just wanted to flag it.
    Ms. Fox. Yes, sir.
    Senator Reed. I don't think it is a major issue at the 
moment.
    Ms. Fox. It is a very fair question, sir.
    Senator Reed. My time expired. I just must say I think this 
has been a very useful hearing. I am going to recognize Senator 
Wicker for any questions, and Senator Ayotte?
    Senator Wicker. I will pass, and I understand that Senate 
Ayotte has some.
    Senator Reed. Senator Ayotte.
    Senator Ayotte. I thank you very much, Mr. Chairman.
    I have one brief follow-up. Director Fox, is it fair to say 
that Congress has added, by earmarks, C-17s over and above what 
DOD has requested, particularly in 2007 and 2008?
    Ms. Fox. Yes, Senator, it is.
    Senator Ayotte. Is that one of the reasons why, in part, we 
find ourselves here and examining this important issue of what 
is the right size that we have?
    Ms. Fox. I do believe that the number of C-17s that we are 
ending up with, above what we had planned, is a factor. As we 
look at what we would do to get to the number that the study 
says we need, it obviously points you in a particular place. 
So, yes.
    Senator Ayotte. Thank you. Obviously, I hope going forward 
that we rely on your recommendations, as opposed to--it is one 
of the reasons that when I ran this past fall, I decided to 
swear off earmarks. So, I appreciate what can be the unintended 
consequences of some of our perhaps well-intentioned actions on 
behalf of our constituents.
    So, thank you all.
    Senator Reed. Senator Wicker has a second round.
    Senator Wicker. Let me just follow up on that. If there 
were earmarks that increased the number of these aircraft, they 
were based on the Air Force's studied opinion at the time, that 
those were appropriate numbers. Is that not correct?
    Because we have testimony that the requirement changed last 
year after MCRS-16.
    Ms. Fox. Sir, let me get back to you with the record of 
exactly what we asked for. But it is my understanding the total 
number of aircraft that you need, yes, sir, that has changed. 
It has come down.
    [The information referred to follows:]

    Over the last decade, the Department of Defense (DOD) has 
consistently maintained that an organic strategic airlift fleet of 
about 300 aircraft is required to support the strategy with acceptable 
risk. Changes to the strategic environment, as well as adjustments in 
the fleet mix, which include changes to the number of modernized C-5s, 
have contributed to variations in the total number of aircraft 
required. Prior to September 11, the Mobility Requirements Study 
concluded that DOD needed between 252 to 302 aircraft depending on the 
strategic assumptions and the mix of C-17s, C-5s, and modernized C-5s. 
In 2005, the Mobility Capability Study concluded that a fleet of 292 
aircraft, comprised of 180 C-17s and 112 fully modernized C-5s, would 
meet DOD's requirements. In 2008, when DOD reduced the C-5 Reliability 
Enhancement and Re-engining Program from 112 to 52 aircraft, the 
required number of aircraft increased slightly. During this timeframe, 
DOD briefed Congress that a new mobility study was underway to update 
earlier findings based on lessons learned from ongoing operations and 
the evolving strategic environment. Subsequently Mobility Capabilities 
Requirements Study assessed 3 different strategic cases and determined 
that the airlift capacity needed to support the strategy ranged from 
29.1 to 32.7 million ton-miles per day which can be met with a fleet of 
264-300 aircraft.

    Senator Wicker. It just changed last year?
    Ms. Fox. It is a small change, frankly, but it is a change. 
You are right. It went up, actually, a little bit from what we 
had thought before. But Congress wanted it to be 316 for a 
safety margin, as General McNabb has explained, until we 
finished the MCRS study.
    The mix within that total number is, I think, perhaps the 
question with regard to C-17s, and Congress has given us more 
C-17s than we have requested in the past. But I don't have with 
me the exact numbers we requested and what we received. But 
that is the history.
    Senator Wicker. Thank you.
    Senator Reed. My only comment is, and I think it is trying 
to encapsulate what Senator Ayotte said, had we not added 
additional C-17s, either at the request of the Air Force or the 
request of Congress, then we would not be able to retire these 
C-5As. So any way you look at it, the debate today about 
retiring C-5As is a function, at least in some respect, of the 
additional C-17s.
    Now one of the issues, and I think this goes to one of the 
points that Senator Ayotte made and one that I suggest, is that 
your analysis assumes that we will not add any additional C-
17s, that the Air Force is not going to come up and recommend 
that we build more C-17s because, unfortunately, this study has 
reduced the number of aircraft and we need more aircraft. Is 
that fair to say, General Johns?
    General Johns. Mr. Chairman, the Air Force is very content 
with the 222 C-17s. It will not be asking for additional ones.
    Senator Reed. The swing, if you will, if--again, I think 
this analysis is very thoughtful. But if there are conditions, 
unpredictable at the moment, the swing comes out of civilian 
fleet. It comes out of, as you have suggested, you will have at 
least the capacity of reactivating C-5As which have not flown 
their full life of service. Those options, I presume, would be 
advanced to us prior to any other options?
    Ms. Fox. Yes, sir, absolutely. We have done a lot of cost 
analyses of those various options. So, again, my testimony 
today is about the total number.
    Senator Reed. Right.
    Ms. Fox. Then the mix within is something that you also 
look at for cost.
    Senator Reed. General Johns?
    General Johns. Mr. Chairman, as we talked about how do you 
take them out of the depot if they are there? What you have to 
do is you have to unwrap them, and you may have to put them 
through a depot itself. You may have to do some modernization.
    But what you are hugely saving is the annual flying hour 
program of not having to fly them. So, we have to look at then 
do we put them all in that type of storage, or do we allow some 
to be used to part out and support the other aircraft?
    Senator Reed. Sure.
    General Johns. So there is a mix there between the type of 
storage we use. That is the biggest difference.
    Senator Reed. If there are no additional questions, again, 
I think, as we reflect upon these issues, we might have written 
questions, which we will submit to you. I think there has been 
some indications that you would like to provide some written 
information.
    We would accept that, and we would like to let us give 
ourselves a week, until next Wednesday, for written questions 
submitted to the panel. We would ask you to respond as quickly 
as you could to any written request made by the committee.
    Again, I have to thank Senator Ayotte because she has 
raised this issue, and she has done it with great insight into 
an important program. I think this hearing has been very useful 
to me, and I thank her for urging us to do it.
    Senator Ayotte. I want to thank the chairman and the 
ranking member, Senator Wicker, again because I raised the 
issue, but this has provided much more helpful information to 
be able to bring this to the floor of what the right number is 
and also really support for such an important issue.
    So I think this hearing was very helpful. I want to thank 
both of you for accommodating my having it. Rather than having 
that vote in committee, I think this is really a better place 
to be in terms of how much information we have.
    Thank you.
    Senator Reed. Thank you.
    If there are no further questions, the hearing is 
adjourned.
    [Questions for the record with answers supplied follow:]
                Questions Submitted by Senator Jack Reed
                         aircraft service lives
    1. Senator Reed. General Johns, what is the average number of 
flight hours on the C-5A aircraft that you intend to retire?
    General Johns. The 22 C-5As projected for retirements have an 
average of 21,237 flight hours

    2. Senator Reed. General Johns, how does this average compare to 
what we believe is the total service life of the C-5A aircraft?
    General Johns. The expected service life of the C-5A is 47,270 
flight hours. At the current flying hour rate, the fleet is not 
projected to reach or exceed the total service life before 2040.

    3. Senator Reed. General Johns, how about comparable numbers for 
the C-5B fleet?
    General Johns. The C-5B fleet has an average of 19,157 flight hours 
per aircraft with a service life expectancy of 52,500 hours.

    4. Senator Reed. General Johns, what is the average number of hours 
of service life expended by the C-17 fleet?
    General Johns. Average actual airframe hours for the entire C-17 
fleet are 9,650.

    5. Senator Reed. General Johns, how does this average compare to 
the total expected service life of the C-17 aircraft?
    General Johns. Designed service life of the C-17 is 30,000 hours 
before we examine any service life extensions.

    6. Senator Reed. General Johns, if we keep burning hours on the C-
17 at the current rate, when would we need to begin a C-17 replacement 
program?
    General Johns. The C-17 fleet averages more than the planned 1,000 
actual flight hours per year, but the life-limiting effects ``felt'' by 
the fleet are within limits. The C-17 fleet will meet its service life 
of 30 years, and based on historic usage severity, should be available 
much longer. Targeted fleet service life extension programs (SLEP) can 
be utilized to refresh aging aircraft drivers (wing upper cover, 
landing gear) as appropriate to enable continued safe/reliable/economic 
C-17 operations.
Supporting Information:
    The C-17 was delivered with an engineered service life of 30,000 
actual flight hours (AFH), programmed to fly 1,000 AFH per year for 30 
years. Recent history shows higher usage.
    The true measure of an airframe's ``remaining life'' is total 
Equivalent Flight Hours (EFH), based on aircraft usage severity; in 
effect, what the aircraft ``feels'' it is flying. Usage severity is 
specific to each tail number by mission (e.g., low-level airdrop is 
more ``severe'' than high-altitude, straight/level).
    While the entire aircraft accumulates AFH at the same rate, 
individual ``regions'' of an aircraft accumulate EFH at different 
rates, depending on each region's loading environment. For all but one 
aircraft region, the average accumulated annual EFH is under the 
designed 1,000 EFH annual standard. Wing Upper Cover (Control Point W2) 
is the exception; and it is only the exception at Altus Air Force Base 
(AFB), due to the harsh training environment which, in effect, ``ages'' 
the upper cover faster.
    HQ Air Mobility Command (AMC) and the C-17 SPO coordinate to 
monitor these operational effects at Altus, and rotate aircraft on a 
schedule through Altus. The System Program Manager and Boeing confirmed 
that W2 EFH accumulation slows down and starts to recover after 
aircraft leave Altus, as AFH begins to outpace EFH again.
    As C-17 aircraft sections approach life limits, SLEP can be 
utilized to refresh these sections in order to breathe new life into 
the fleet. For instance, a W2 SLEP, when applicable, could be applied 
to essentially reduce the aircraft ``age'' by reducing the leading 
aircraft service life driver. Currently, the only proposed C-17 SLEP 
relates to landing gear, which has a life limit of 19,000 landings 
(although it was tested to 4 lifetimes); the fleet's high time aircraft 
currently has over 17,000 landings (3 years of service life left at 
current rate); SLEP will provide a solution for these ``high landings'' 
fleet drivers, enabling continued aircraft availability. The proposed 
SLEP will analyze landing gear available life, determine components 
requiring modification to attain 38,000 landings, and implement 
required modifications or impose life limits on components.

                         aircraft availability
    7. Senator Reed. General Johns, normal Air Force planning for force 
structure includes additional aircraft for attrition reserve, so-called 
back-up inventory aircraft that protect against aircraft being 
unavailable during periods of depot maintenance, et cetera, and 
aircraft for training purposes. To what extent have your assessment of 
the adequacy of a force of 301 aircraft taken these factors into 
account?
    General Johns. AMC plans for Backup Aircraft Inventory (BAI) to 
account for aircraft that are in depot for maintenance, modifications, 
etc. Formal training requirements for mobility aircraft are also taken 
into account when considering the proper fleet size. The assessment 
that 301 inter-theater airlift aircraft will meet MCRS-16 peak demand 
takes both BAI and formal training aircraft into account. Unlike 
tactical aircraft fleets, AMC does not program for attrition reserve 
aircraft because the historic and forecasted loss rates for mobility 
aircraft does not justify the additional investment.

    8. Senator Reed. General Johns, is there any attrition reserve in 
the 301 number, or back-up aircraft inventory, or provisions for 
training aircraft? If not, what would you propose to do if we should 
lose another C-17 or C-5 aircraft in a major mishap?
    General Johns. AMC plans for BAI to account for aircraft that are 
in depot for maintenance, modifications, et cetera. Formal training 
requirements are for mobility aircraft are also taken into account when 
considering the proper fleet size. The assessment that 301 inter-
theater airlift aircraft will meet MCRS-16 peak demand takes both BAI 
and formal training aircraft into account. Unlike tactical aircraft 
fleets, AMC does not program for attrition reserve aircraft because the 
historic and forecasted loss rates for mobility aircraft does not 
justify the additional investment. Any loss in the C-17 or C-5 fleets 
would be filled by BAI aircraft.

    9. Senator Reed. General Johns, C-5B aircraft will be unavailable 
for nearly a year in the Reliability Enhancement and Re-engining 
Program (RERP) modification, which continues through 2015. In fiscal 
year 2013 and fiscal year 2014, you will have 11 C-5B aircraft offline 
undergoing the modification. If Congress removes the 316 floor, the Air 
Force plans to complete the action of getting down to 301 aircraft by 
2014. What assumptions have you made about the availability of C-5B 
aircraft that are undergoing the extensive RERP modification, where 
these aircraft will be unavailable for almost a year at a time?
    General Johns. AMC has taken into account depot possession of C-5Bs 
as they continue through the RERP modification. If a fully-mobilized 
scenario requiring all inter-theater aircraft were to arise in the 
near-term, steps would be taken to defer aircraft inputs into depot 
and/or accelerate aircraft through depot lines. The increased depot 
load for the C-5 RERP modification will not adversely impact current 
day-to-day operations.

    10. Senator Reed. General Johns wouldn`t the Air Force plans for 
retirement actually allow capabilities for million ton-miles per day 
(MTM/D) to fall below the revised requirement for several years in the 
Future Years Defense Program (FYDP)?
    General Johns. AMC's plan for 301 inter-theater airlift aircraft 
steadily improves our MTM/D capability between fiscal year 2012 and 
fiscal year 2015. As we begin fiscal year 2012, our current inventory 
of 212 delivered C-17s and 104 C-5s (5 C-5Ms, 45 C-5Bs, 2 C-5Cs, and 52 
C-5As) provides approximately 31.0 MTM/D. Continued delivery of C-17s 
to a total of 222 and the progress of the C-5 RERP modification for 52 
aircraft will steadily improve MTM/D capability to 32.1 by end of 
fiscal year 2012 and above 32.7 by end of fiscal year 2015. This steady 
improvement in capability is balanced with realistic unit conversion 
schedules from the C-5A to the C-17 and avoids expenditures on 
modifications and depot maintenance on retiring aircraft.

                      implementation of reductions
    11. Senator Reed. General Johns, have you decided which C-5A 
aircraft you want to retire, and which units will be losing aircraft 
without replacement by C-17s if you have to maintain 316 aircraft?
    General Johns. The main driver in selecting specific C-5A aircraft 
for retirement is the programmed depot maintenance (PDM) schedule. We 
typically choose aircraft coming due a PDM, and we are formulating that 
list. The remaining aircraft will be redistributed across the remaining 
C-5A units after the remaining ARC unit for conversion to the C-17 is 
selected through the Air Force's strategic basing process. All existing 
inter-theater units will be covered with aircraft.

    12. Senator Reed. General Johns, which aircraft and which units 
would be affected if we either eliminate the floor or lower the floor 
to 301 aircraft?
    General Johns. The fiscal year 2012 request reduces the C-5A fleet 
to 27 as the overall inter-theater fleet is reduced to 301 (222 C-17s, 
52 C-5Ms, and 27 C-5As). A remaining ARC C-5A to C-17 unit conversion 
will be announced as we complete the Air Force's strategic basing 
process. No units will go uncovered as we reduce the inter-theater 
fleet to 301 aircraft.

    13. Senator Reed. General Johns, if we eliminate the 316 floor, 
would the Air Force retire more than the number it takes to get to a 
total of 301?
    General Johns. Based on the most stressful MCRS-16 requirement of 
32.7 MTM/D, our fiscal year 2012 request is to retire C-5As to achieve 
an inter-theater fleet of 301 aircraft (222 C-17s, 52 C-5Ms, and 27 C-
5As). We will maintain the strategic fleet of 301 aircraft until such 
time that a new requirement is established and/or a follow-on study is 
accomplished that points to a reduced inter-theater airlift requirement 
in the future.

    14. Senator Reed. General Johns, what would be the effect of 
immediately implementing these reductions, rather than spacing them out 
over the FYDP?
    General Johns. Attempting to immediately implement all proposed C-
5A reductions in 1 year would initially exceed the Aerospace 
Maintenance and Regeneration Group ability to accept the aircraft and 
would exceed the converting unit's ability to initially train 
operations and maintenance personnel in the C-17. The proposed C-5A 
retirement schedule attempts to balance fiscal savings with achievable 
aircraft acceptance and unit conversion schedules.
                                 ______
                                 
             Questions Submitted by Senator Roger F. Wicker
                        heavy-lifting capability
    15. Senator Wicker. General McNabb, how does U.S. Transportation 
Command (TRANSCOM) engage the private sector to support the lift 
mission from big and heavy equipment like a mine-resistant ambush 
protected (MRAP) vehicle to other essentials that are large and bulky?
    General McNabb. TRANSCOM starts with the lift requirement as 
identified by the Geographic Combatant Commander. We examine 
restrictions such as size, weight and delivery timeline. For heavy 
equipment such as MRAPs, joint priorities, delivery timelines, and cost 
effectiveness are all factors in vessel and mode selection. Rapid 
delivery often requires military organic solutions, deliveries over 
time may allow engagement of commercial partners, and more cost 
effective multi-modal solutions. To ensure the best value and meet 
mission parameters, TRANSCOM acquisitions uses departmental contracting 
guidelines to engage commercial industry.

    16. Senator Wicker. General McNabb, how important is cargo 
preference to sustaining an adequate sealift capability?
    General McNabb. Maintaining U.S.-Flag sealift readiness is a top 
priority for TRANSCOM. Sealift is the primary means for delivering 
combat forces and sustainment during major and contingency operations. 
TRANSCOM's partnership with U.S. commercial sealift industry is a vital 
component in meeting the Nation's strategic sealift requirements. To 
date, over 90 percent of all cargo to Afghanistan and Iraq has been 
moved by sea in U.S.-Flag vessels.
    Under cargo preference laws, the Department of Defense (DOD) gains 
critical access to U.S.-Flag commercial sealift and transportation 
networks in exchange for our U.S.-Flag maritime industry to have first 
opportunity to move U.S. Government cargo. This allows the continued 
viability of the U.S.-Flag fleet and the pool of citizen mariners who 
man them. U.S. commercial sealift industry depends on preference cargo. 
Any reductions in available U.S.-Flag sealift will have to be offset in 
other ways to maintain DOD sealift readiness.

    17. Senator Wicker. General McNabb, the Defense Advanced Research 
Products Agency hopes that its Pelican program will provide heavy-
lifting capability from lighter-than-air vehicles for the U.S. 
military. What role do you see for such aircraft in the future?
    General McNabb. Initial research observations lead me to believe 
that airships could provide a balance of cargo throughput at lower 
operating cost and fuel savings. Such operations can potentially blend 
efficiency and cargo velocity independent of infrastructure. Beyond 
creating alternative approaches to operations, it also has the 
potential to improve the effectiveness of the existing transportation 
system.
    We are presently developing understanding of competing technical 
viewpoints through our participation in multiple Cooperative Research 
and Development Agreements with industry to analyze different aspects 
of this technology. To date, our analyses have reinforced the 
importance of flexible cargo delivery options.
                                 ______
                                 
            Questions Submitted by Senator Claire McCaskill
                          air force air fleet
    18. Senator McCaskill. Director Fox, with the high costs of keeping 
the C-5As ($30,167/hour for the C-5A vs. $13,767/hour for the C-17), 
how much of an impact would retiring C-5As have on the operation and 
maintenance budget?
    Director Fox. DOD currently has more airlift than it needs, and 
thus there would be no reason to replace C-5As with C-17s. Furthermore, 
the 2009 congressionally mandated fleet mix study conducted by the 
Institute for Defense Analyses (IDA) concluded that it is not cost 
effective to replace C-5As with C-17s. Their analyses accounted for the 
full life-cycle costs, and the operational readiness and cargo capacity 
of both aircraft. That said, retiring C-5As would save DOD 
approximately $9 million per aircraft per year in annual flying hour 
cost.

    19. Senator McCaskill. Director Fox, if the full fleet of C-5As 
were retired and the Air Force wished to maintain the same total lift 
capability as it has now, how many additional C-17s would be required 
taking into account operational readiness and cargo capacity of both 
aircraft?
    Director Fox. DOD currently has more airlift than it needs, and 
thus there is no reason to replace the 32 aircraft the Air Force 
currently plans to retire. Retiring 32 of the 59 C-5As leaves DOD with 
enough airlift capacity to meet the peak demand of the most stressing 
set of scenarios examined in the Mobility Capabilities and Requirements 
Study (MCRS-16). That said, when considering operational readiness  and 
 cargo  capacity,  it  would  take  22  C-17s  to  replace  the  
remaining  27  C-5As.

    20. Senator McCaskill. Director Fox, what would it cost to secure 
this capability taking into account the lower cost per flight hour 
rates for the C-17, reduced maintenance costs for the C-17, and reduced 
manpower costs for the C-17?
    Director Fox. Taking into account operational readiness and cargo 
capacity, it takes 22 C-17s to replace the capability of 27 C-5As at an 
upfront cost of about $6 billion in procurement. This could save 
approximately $160 million per year in operations. It is worth noting 
that the 2009 congressionally mandated fleet mix study conducted by the 
IDA concluded that it is not cost effective to replace C-5As with C-
17s. They based their conclusion on analyses of full life-cycle costs, 
and they accounted for the operational readiness and cargo capacity of 
both aircraft. Their conclusion was that if DOD needs the capacity, it 
is more cost effective to maintain some C-5As versus buying additional 
C-17s.

    21. Senator McCaskill. Director Fox, can you retire all C-5As and 
still meet your war-time mobility requirements?
    Director Fox. Retiring all the C-5As would result in a fleet 
capacity capable of meeting the demands of two of the three strategic 
cases assessed in the MCRS. The demands of the most stressing and least 
likely strategic case involving two large overlapping land campaigns 
would not be met at 100 percent and the associated risk would have to 
be assessed.

    22. Senator McCaskill. Director Fox, would the purchase of C-17 to 
replace the C-5As reduce the requirement to recapitalize the C-130 
fleet?
    Director Fox. No. While C-17s can support many intra-theater 
missions, the C-130Js are far more efficient in that role.
                                 ______
                                 
             Questions Submitted by Senator Saxby Chambliss
                        civil reserve air fleet
    23. Senator Chambliss. Director Fox, in your statement you comment: 
``When not operating at full war-time capability, Guard and Reserve 
Forces are not mobilized, and Civil Reserve Air Fleet (CRAF) aircraft 
are not activated. This is why DOD sometimes relies on commercial/
foreign source airlift like the Russian-built IL-76 and AN-124 to 
support current operations. Accommodating a short-term surge with use 
of commercial assets is more cost-effective than maintaining additional 
force structure that is not required full time.'' If that is true, 
could a limited activation of the CRAF accomplish the same objective?
    Director Fox. Generally speaking a limited activation of CRAF would 
not be able to accomplish the same objective. The IL-76 and AN-124 are 
typically used to move large cargo, like MRAP vehicles. This type of 
cargo is ill-suited for most CRAF aircraft, which are normally used to 
move personnel and bulk cargo. It's important to keep in mind that DOD 
accesses the Russian-built aircraft by providing peacetime cargo 
business to DOD's CRAF partners. They in turn determine how best to 
support the requirement. In the past, the AN-124s were provided via a 
subcontract to one of our CRAF members.

    24. Senator Chambliss. General McNabb and General Johns, section 
137 of the National Defense Authorization Act for Fiscal Year 2010 
requires the Air Force, before retiring any C-5 aircraft from the 
active inventory, to provide a report to Congress several items 
including ``an assessment of the costs, benefits, and implications of 
transferring C-5 aircraft to U.S. flag carriers operating in the CRAF 
program or to coalition partners in lieu of the retirement of such 
aircraft.'' Please explain what, if any, actions the Air Force has 
taken regarding this assessment.
    General McNabb. TRANSCOM does not oppose the transfer of C-5A 
aircraft to CRAF program carriers or to our coalition partners. Based 
on current policy however, the C-5A is catalogued on the U.S. Munitions 
List as a ``category C'' aircraft. That policy requires the removal or 
destruction of certain components before transferring ownership. In 
this case the list of components includes the wing spars, fuselage, and 
tail assembly making the aircraft inoperable. If the policy were 
altered to allow the transfer, commercial carriers would then have to 
determine if refurbishment required to meet Federal Aviation 
Administration standards were fiscally viable for operations.
    The transfer of the C-5A to coalition partners would not fall under 
the same policy. As with the acquisition of C-17s and other military 
aircraft, it would be possible for our coalition partners to acquire 
and operate the C-5A.
    General Johns. The Air Force delivered the requested report, 
``Report on Retirements of C-5A Aircraft'' to the four congressional 
defense committees in October, 2010. That report concluded that the 
benefits of transferring C-5A aircraft to CRAF are limited, primarily 
because a transfer of these aircraft to the commercial fleet would 
create an increase in capacity that isn't required, i.e. the excess 
capacity would merely be traded from one fleet to another. There is 
also a high cost to transfer the aircraft to commercial carriers due to 
required demilitarization.

                     russian and ukrainian aircraft
    25. Senator Chambliss. Director Fox, it has been estimated that 
between 2005 and 2009, DOD spent $1.7 billion contracting airlift from 
the Russians and Ukrainians. Are Russian and Ukrainian aircraft 
available world-wide or just in limited locations?
    Director Fox. DOD provides peacetime cargo business to our CRAF 
members as an incentive for their voluntary participation in the CRAF 
program. They in turn leverage the capability of foreign carriers (i.e. 
Russian and Ukrainian aircraft) to move our peacetime cargo at less 
cost to the taxpayer than using our organic fleet. Additionally, this 
helps preserve our fleet for its wartime mission. Finally, DOD only 
uses these foreign aircraft where they are accepted, and we do not rely 
on their capability to meet our wartime surge demand.

    26. Senator Chambliss. Director Fox, General McNabb, and General 
Johns, how does the United States account for the fact that, based on 
the specific requirement the Russians and Ukrainians are asked to 
support, they might decline to do so, similar to how some countries 
where we have troops or assets stationed have denied over-flight rights 
or denied our request to use those troops or assets for certain 
purposes?
    Director Fox. DOD leverages the capability of Russian and Ukrainian 
aircraft because it is often less expensive than using our organic 
fleet and it helps preserve our fleet so that we can meet wartime 
demands when called upon to do so. We do not rely on the capability of 
the Russian and Ukrainian aircraft to meet our wartime surge demand.
    General McNabb. Russia continues to be a strong partner in support 
of Operation Enduring Freedom (OEF), including the recent approval of 
Polar Overflight. Our transit agreement with the Russians has been 
instrumental moving passengers into Afghanistan. Approximately 60 
percent of troops deploying and redeploying in support of OEF transit 
over Russia's airspace. Over 1,300 flights have transited Russia 
ferrying 211,000 soldiers. In the unlikely event Russia or Ukraine 
change their stance, TRANSCOM would seek to maximize routing through 
Georgia, Azerbaijan, and Pakistan. The flexibility of the Northern Air 
Lines of Communication provides TRANSCOM with several options.
    The Northern Distribution Network provides strategic surface 
flexibility, metering cargo between the Pakistan ground routes and 
European/Russian/Caucasus routes. Loss of Russian access would have a 
large impact on this northern route system, with 79 percent of northern 
cargo passing through Russia in July 2011. Additionally, losing Russian 
access would essentially cut off supply lines from ports in Lithuania, 
Latvia, and Estonia. The load would be carried by ground lines in 
Pakistan, Georgia, Azerbaijan, Uzbekistan, Kazakhstan, Turkey, and 
Kyrgyzstan, but with slightly less volume due to host nation 
infrastructure limitations. We could also increase the amount we bring 
in by air, especially through multimodal operations.
    General Johns. We are fully capable of meeting our national 
objectives without relying on Russian and Ukrainian assets air mobility 
assets to meet our national objectives. Studies like the MCRS-16 define 
requirements we will meet with U.S. military organic lift (like C5s, C-
17s, and C-130s) combined with partnerships from carriers in the CRAF. 
A prerequisite of membership in the CRAF is being a U.S. flagged 
carrier; no foreign flagged carriers are CRAF partners. Beyond our 
combatant commander requirements and where contractual law permits, DOD 
can and does contract for commercial business with foreign flagged 
carriers. In some cases, such an arrangement results in lower costs to 
the taxpayer. In other cases, we use foreign contracts to access 
locations where a U.S.-Flag presence may be politically unwise or 
diplomatically difficult. U.S. troops or assets stationed in harm's way 
can always depend on support from U.S-Flag carriers whether they be 
military or commercial when needed.

              mobility capabilities and requirements study
    27. Senator Chambliss. Director Fox, General McNabb, and General 
Johns, in 2008, the Office of Secretary of Defense (OSD) conducted a 
Strategic Airlift Review and concluded that the then current program of 
record was the most cost-effective and there was no need for additional 
C-17s. The Joint Requirements Oversight Council (JROC) also established 
a requirement for 33.95 million ton-miles (MTM) organic capability and 
stated that any reduction in strategic airlift capability would 
increase risk to unacceptable levels and jeopardize DOD's ability to 
adequately support the combatant commands (COCOM).
    In 2008, OSD also certified the need for 316 strategic airlifters. 
In 2009, a congressionally directed airlift review conducted by the 
Institute for Defense Analyses concluded that the current program of 
record (316 aircraft) met all requirements and that retiring C-5As to 
buy/operate additional C-17s was not cost effective. Air Force 
leadership also testified to Congress that 316 strategic airlift 
aircraft was ``the sweet spot.''
    In 2009, the MCRS established a new 32.7 MTM worst case requirement 
which was lower than previous studies in recent years. The Air Force's 
desire to retire 30+ C-5As which could drive the strategic airlift 
fleet below 300 aircraft is based on this most recent study.
    Over the last 3 to 4 years, DOD and the Air Force have changed 
their positions several times on what the strategic airlift requirement 
is. How do you compare the results of these studies and which study is 
most correct?
    Director Fox. Over the last decade, DOD has consistently maintained 
that an organic strategic airlift fleet of about 300 aircraft is 
required to support the strategy with acceptable risk. The small 
changes in the numbers of aircraft (i.e., 292 vs. 316 vs. 301), and the 
required fleet capacity, expressed in MTM/D (i.e., 33.95 vs. 32.7 MTM/
D) result from changes in the National Military Strategy (NMS), changes 
in force structure, and changes in the capabilities of the airlift 
fleet. The most recent mobility study, MCRS-16 assessed three different 
strategic cases and determined that the airlift capacity needed to 
support the strategy ranged from 29.1 to 32.7 MTM/D. This can be met 
with a fleet of 264 to 300 aircraft. One of the reasons we no longer 
view 316 aircraft as ``the sweet spot'' is because that number was 
based on a greater proportion of the fleet consisting of C-5As. Because 
the C-17 is more capable than the C-5A and because Congress added 43 C-
17s over DOD's program, DOD doesn't need to retain as many C-5As to 
meet its fleet capacity requirements.
    General McNabb. The Mobility Capability Study (MCS) of 2005 
determined that the 2005 programmed force mix of 180 C-17s and 112 C-5s 
(all intended to be reliability enhanced and reengined; RERP-ed) was 
sufficient to meet organic strategic airlift requirements. The MCS did 
not establish a specific MTM/D requirement. Subsequent to MCS, as a 
result of the Nunn-McCurdy breach in the C-5 RERP, the Air Force 
limited the C-5 RERP program to 52 C-5Bs and continued with plans to 
acquire 205 C-17s to meet requirements. As part of the Nunn-McCurdy 
process, the JROC validated an organic strategic airlift requirement of 
33.95 MTM/D. The JROC validated this requirement based on the fleet mix 
used in MCS and pending the results of the MCRS-16. DOD subsequently 
determined that 316 tails (111 C-5s and 205 C-17s) best met the interim 
requirement of 33.95 MTM/D of organic capacity.
    The MCRS-16, released in 2010, determined a specific organic 
airlift requirement of 32.7 MTM/D based on updated scenarios approved 
by the Deputy Secretary of Defense (DEPSECDEF). MCRS-16 examined 
various C-17/C-5 force mixes able to meet the new 32.7 MTM/D 
requirement, and determined that a mix totaling about 300 tails 
fulfills the requirement. Although the MCS fleet mix in the 2005 study 
was sufficient to meet organic strategic lift requirements, MCRS-16 
provided a much more specific and reliable airlift requirement, based 
on high-fidelity, DEPSECDEF-approved scenarios. Bottom line: I don't 
see anything on the horizon that will substantially alter MCRS-16 
results.
    General Johns. Your recount of history is accurate and we know that 
the current demand signal for 32.7 MTM/D of strategic organic airlift 
capacity from MCRS-16 can be met with approximately 300 aircraft. Our 
program of record for 222 C-17s, 52 C-5Ms, and 27 C-5As assures we can 
address the most demanding validated needs of the Nation with this 
force structure. All previous DOD-level studies you reference were 
``correct''; the MCRS-16 is the most ``current'' and serves as the 
foundation for a requirements demand signal extending to fiscal year 
2016. History has shown a need to update such studies every quadrennial 
review cycle and we respond to those validated and reviewed changes 
each time we submit a new Program Objective Memorandum.

    28. Senator Chambliss. Director Fox, General McNabb, and General 
Johns, how do we know that you have it right this time and that we are 
not incurring unacceptable or unnecessary risks?
    Director Fox. Over the last decade, DOD has consistently maintained 
that an organic strategic airlift fleet of about 300 aircraft is 
required to support the strategy with acceptable risk. The minor 
variations in the numbers of aircraft (i.e., 292 vs. 316 vs. 301), and 
the required fleet capacity, expressed in MTM/D (i.e., 33.95 vs. 32.7 
MTM/D) result from changes in the NMS, changes in force structure, and 
changes in the capabilities of the airlift fleet. The most recent 
mobility study, MCRS-16, assessed three possible strategic cases and 
determined that the airlift capacity needed to support the strategy 
ranged from 29.1 to 32.7 MTM/D. This can be met with a fleet of 264 to 
300 aircraft. The high end number of 300 aircraft is very conservative 
as it represents the fleet required to support two overlapping major 
campaigns concurrent with three nearly simultaneous Homeland defense 
consequence management events, plus support to ongoing steady-state 
operations, to include OEF.
    General McNabb. The MCRS-16 is the most comprehensive study done to 
date. TRANSCOM and OSD led the effort and the study enjoyed the 
contributions of all the Services, COCOMs, and the Joint Staff. MCRS-16 
addressed three demanding cases to integrate overlapping campaign-level 
warfights with concurrent protection of the Homeland, support to small 
scale security postures around the globe, and maintain a preparedness 
to respond to critical alert requirements. The completeness of the 
study and the collaboration among all key participants gives us great 
confidence that we are not incurring unacceptable or unnecessary risks.
    General Johns. The MCRS-16 is the most current assessment of the 
need for mobility assets based on 2 years of studying three demanding 
cases involving the integration of scenarios to simultaneously protect 
the Homeland, posture our Nation to respond to events around the globe, 
and be prepared to address significant overlapping combatant campaigns 
in response to threats to our national interests. These DOD validated 
scenario sets are continuously being reviewed and updated to assure we 
can respond to world events and address conflicts with acceptable 
levels of risk. Each year we submit our programming actions based upon 
the most current family of scenario sets and demands approved by DOD.

    29. Senator Chambliss. Director Fox, did the MCRS-16 account for 
the possibility of future losses--combat or otherwise--in the strategic 
airlift fleet? If not, why not?
    Director Fox. Unlike combat aircraft and bombers, DOD does not 
program an attrition reserve for mobility aircraft. DOD does program 
(and the MCRS accounted for) BAI at approximately 10 percent of the 
fleet size.

    30. Senator Chambliss. Director Fox, did the MCRS account for 
already planned heavy depot modifications and upgrades to both C-17s 
and C-5s that will continue through 2016, and how these modifications 
and upgrades will affect the aircraft's availability? If not, why not?
    Director Fox. The study accounted for depot rates consistent with 
all programmed modifications.

    31. Senator Chambliss. Director Fox, did the MCRS analysis include 
or exclude training assets?
    Director Fox. MCRS included training assets. During the steady 
state portion of the analysis, the demand included full training 
operations consistent with the training demands witnessed over the past 
7 years. When operating under surge conditions, as would be the case if 
engaged in two overlapping warfights, DOD plans to curtail routine 
training while sustaining the primary training pipeline. The fleet 
capacity of 32.7 MTM/D required to meet peak demands of overlapping 
warfights includes a 50 percent reduction in training aircraft for the 
45-day surge period.

                            air force c-5ms
    32. Senator Chambliss. General McNabb and General Johns, as I 
understand, the Air Force currently has five C-5Ms in operational 
service. Please provide a summary of how well the C-5Ms are performing 
operationally.
    General McNabb and General Johns. The C-5M has demonstrated its 
superior capability as early as Operational Test and Evaluation where a 
small fleet of aircraft were employed to provide direct delivery of 
heavy outsized cargo to U.S. Central Command's (CENTCOM) front door. 
The C-5M was able to overfly the en route gas stops where any other AMC 
airlifter would have to land for fuel. These 23 hour roundtrip missions 
delivered approximately 120,000 pounds of cargo on each mission from 
Dover AFB, DE, to Turkey and Iraq, dramatically increasing mission 
velocity and reliability. Approximately 36 missions were completed by 3 
aircraft and 6 crews in only 35 days.
    In February, Dover AFB, DE, brought together an all-star team of 8 
aircrews and 28 maintainers, composed of Active and Reserve airmen, and 
deployed 2 C-5Ms and 2 C-5Bs in support of an intermodal movement of 2 
Combat Aviation Brigades (CAB) of the 101st Airborne Division. In only 
31 days, Team Dover successfully delivered 172 helicopters plus 
personnel and support equipment totaling over 6 million pounds. The C-
5M outpaced the C-5B by consuming approximately 20 percent less fuel, 
moving 59 percent of the cargo, and increased mission effectiveness and 
velocity by overflying intermediate gas stops required by the C-5B 
(while carrying heavier cargo loads in and out of the theater). The C-
5M maintained a phenomenal 87 percent logistics departure reliability 
rate.
    In June, a C-5M from Dover AFB was tasked to complete the first 
direct, non-stop mission from Dover AFB, DE, to Bagram, Afghanistan. 
This was the first flight of its kind which involved flying over Canada 
towards the Arctic Circle, then down through Russia and into 
Afghanistan. This history-making flight was made possible by the 
improved reliability and capability of the C-5M. The flight took over 
15 hours to complete. The success of this mission laid the ground-work 
for future polar over-flight operations from the United States directly 
delivering high priority outsized cargo into the area of responsibility 
(AOR).

    33. Senator Chambliss. General McNabb and General Johns, is the Air 
Force satisfied with the C-5M?
    General McNabb and General Johns. Yes, the C-5M's performance is 
exceeding our expectations. Five C-5Ms have been delivered to the Air 
Force; however, over the past 18 months we have had three or less C-5Ms 
which are available to fly missions in support of our customers. The 
other C-5Ms have been receiving modifications such as large aircraft 
infrared countermeasures (LAIRCM), programmed depot maintenance, or 
have been supporting follow-on reliability enhancement reengining 
program (RERP) development testing. With a possessed fleet size of 
three or less, a peacetime Mission Capable Rate does not provide a 
meaningful measure of the current and future performance of the C-5M. 
To date we assess the performance of the C-5M as exceeding our 
expectations. The propulsion system which is over 70 percent of the 
modification is proving very reliable and provides the C-5M much higher 
climb, payload, range, and exceptional noise abatement performance over 
the legacy C-5. Consequently, a C-5M uses less mobility assets and 10 
to 20 percent less fuel to accomplish the same mission than a legacy C-
5. On several occasions, we have tasked C-5Ms to perform their wartime 
representative surges and their wartime mission capable rate has 
exceeded 75 percent with maintenance departure reliability rates 
exceeding 85 percent. The C-5M is lauded by both aircrew and 
maintainers as being an outstanding platform. Aircrews praise the 
climb, payload, range, diagnostics system, and upgraded flight station 
equipment and displays. Maintainers now deal less with the legacy 
issues that were upgraded by the RERP conversion and maintainability 
has become much more user friendly thanks to improvements in 
diagnostics system and maintenance manuals. The C-5M maintenance repair 
time and mission essential equipment fix rates are much better than the 
standards established by the C-5 RERP Capabilities Requirement 
Document.

    34. Senator Chambliss. General McNabb and General Johns, one of 
those C-5Ms was previously a C-5A. How is that aircraft performing 
relative the other C-5Ms?
    General McNabb and General Johns. There is minimal difference 
between A and B model C-5s. The C-5Ms are still a relatively small 
fleet and we do not have enough data to determine how the ``A-model'' 
conversion is performing relative to the other C-5Ms.

          c-5 reliability enhancement and re-engining program
    35. Senator Chambliss. General McNabb and General Johns, as 
reported in the 2008 C-5 Capabilities Production Document signed by 
then Chief of Staff of the Air Force General Moseley, the Air Force 
conducted a cost/benefit analyses of the C-5 RERP effort and concluded 
that modernizing 52 C-5s to the C-5 RERP configuration results in an 
$8.9 billion reduction in total ownership costs after paying for all 
development and production through 2040. This suggests that the current 
52 aircraft C-5 RERP not only pays for itself, but generates sufficient 
net savings that would also pay to RERP the entire C-5A fleet if the 
Air Force chose to modernize them as well. Is this your understanding 
as well and are these estimates still accurate?
    General McNabb and General Johns. The reduced total ownership cost 
(RTOC) estimate will be at least $8.9 billion (BY00). However, the RTOC 
for the RERP modification of 52 C-5s will not be realized until after 
2025 which is late to funding modification of C-5As, i.e., fiscal years 
2014 to 2019. The estimated cost to RERP 27 C-5As is in excess of $3 
billion. The Air Force does not need to RERP additional C-5As to meet 
known strategic airlift requirements. Currently the Air Force plans to 
use savings from RERP to pay for future budget reductions.

    36. Senator Chambliss. General McNabb and General Johns, the MCRS 
assumes full Guard/Reserve mobilization to meet national requirements. 
Once that happens, all assets are brought to bear to meet strategic 
airlift requirements. However, in peacetime that is not the situation. 
I have heard that AMC has challenges day-to-day meeting peacetime 
requirements. Please comment on what effect your desire to retire up to 
32 C-5s will have on your ability to perform your peacetime mission?
    General McNabb. Bottom Line--there is sufficient capacity for 
peacetime operations. While supporting both the troop withdrawal from 
Iraq and the surge in Afghanistan, the busiest day for TRANSCOM's 
component, AMC, was 16.6 MTM/D. So far in 2011, it has been 15.9 MTM/D, 
highlighted by our ability to support operations in Afghanistan, Iraq, 
and Libya, while responding to the disasters in Japan, where we were 
able to deliver over 3,600 tons of supplies and evacuate over 7,500 
dependents. I am confident we have enough organic surge capacity and 
commercial partner augmentation to satisfy the anticipated workload 
based upon our recent years' experience.
    General Johns. The Air Force's need to retire 32 C-5s, excess to 
the maximum demand of 32.7 MTM/D, will not result in an adverse impact 
to our day-to-day peacetime operation. Today, in the midst of the lower 
access to C-5 aircraft because of the avionic modernization program 
(AMP) and RERP modification lines, we have still been able to balance 
our C-17 and C-5 fleets to meet current airlift requirements. Our 
challenge has been to keep the C-5s moving in the system. The 
reliability rates we've been experiencing have reduced our capacity to 
move as much airlift as we might like with the C-5. With the 52 C-5M 
tails presently programmed, we forecast an increase to C-5 airlift 
capacity. This increase comes from an increased aircraft reliability or 
mission capable rate of 54 percent with our legacy fleet to 75 percent 
for our RERP'd fleet and increased C-5M range and tonnage capability 
over the C-5A/B.

                          an-124 augmentation
    37. Senator Chambliss. General McNabb and General Johns, will we 
see TRANSCOM continuing or increasing reliance on foreign AN-124 
augmentation to get their job done?
    General McNabb. We will continue to take advantage of AN-124 
aircraft's ability to carry outsize cargo when they are the lowest cost 
option, thus allowing us to fly our C-5 and C-17 fleets at lower 
utilization (UTE) rates and preserve their service life. AN-124 
augmentation will not be at the expense of CRAF carriers and the AN-124 
capability will be arranged as a subcontract through CRAF carriers.
    General Johns. The ability to meet the requirements of U.S. 
combatant commanders around the globe does not rely upon the use of 
foreign flagged aircraft like the AN-124. Studies like the MCRS-16 come 
with solutions that rely wholly on U.S. flagged capabilities. We will 
continue to augment our organic capability and our partnerships with 
U.S. flagged carriers in the CRAF with foreign flagged carriers to 
reduce operational/personnel tempo on our troops, to save wear-and-tear 
on our military assets, to reduce costs to American taxpayers, and to 
facilitate diplomatic access to destinations that may be restricted or 
denied to U.S. carriers. We do not rely on foreign augmentation, but we 
do seek to build partnerships and trust throughout the international 
community where foreign contractual relationships make sense to save 
time, save money, and/or free our people and assets for other 
activities.

    [Whereupon, at 3:46 p.m., the subcommittee adjourned.]

                                 
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