[Senate Hearing 112-590, Part 2]
[From the U.S. Government Publishing Office]




                                                 S. Hrg. 112-590, Pt. 2

DEPARTMENT OF DEFENSE AUTHORIZATION FOR APPROPRIATIONS FOR FISCAL YEAR 
               2013 AND THE FUTURE YEARS DEFENSE PROGRAM

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

                                HEARINGS

                               before the

                      COMMITTEE ON ARMED SERVICES
                          UNITED STATES SENATE

                      ONE HUNDRED TWELFTH CONGRESS

                             SECOND SESSION

                                   ON

                                S. 3254

     TO AUTHORIZE APPROPRIATIONS FOR FISCAL YEAR 2013 FOR MILITARY 
ACTIVITIES OF THE DEPARTMENT OF DEFENSE, FOR MILITARY CONSTRUCTION, AND 
   FOR DEFENSE ACTIVITIES OF THE DEPARTMENT OF ENERGY, TO PRESCRIBE 
   MILITARY PERSONNEL STRENGTHS FOR SUCH FISCAL YEAR, AND FOR OTHER 
                                PURPOSES

                               ----------                              

                                 PART 2

                                SEAPOWER

                               ----------                              

                         APRIL 19 AND 26, 2012


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]




         Printed for the use of the Committee on Armed Services










                                                  S. Hrg. 112-590 Pt. 2

DEPARTMENT OF DEFENSE AUTHORIZATION FOR APPROPRIATIONS FOR FISCAL YEAR 
               2013 AND THE FUTURE YEARS DEFENSE PROGRAM

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

                                HEARINGS

                               before the

                      COMMITTEE ON ARMED SERVICES
                          UNITED STATES SENATE

                      ONE HUNDRED TWELFTH CONGRESS

                             SECOND SESSION

                                   ON

                                S. 3254

     TO AUTHORIZE APPROPRIATIONS FOR FISCAL YEAR 2013 FOR MILITARY 
ACTIVITIES OF THE DEPARTMENT OF DEFENSE, FOR MILITARY CONSTRUCTION, AND 
   FOR DEFENSE ACTIVITIES OF THE DEPARTMENT OF ENERGY, TO PRESCRIBE 
   MILITARY PERSONNEL STRENGTHS FOR SUCH FISCAL YEAR, AND FOR OTHER 
                                PURPOSES

                               __________

                                 PART 2

                                SEAPOWER

                               __________

                         APRIL 19 AND 26, 2012

                               __________

         Printed for the use of the Committee on Armed Services



[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]





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

                  U.S. GOVERNMENT PRINTING OFFICE

76-538 PDF                WASHINGTON : 2013
-----------------------------------------------------------------------
For sale by the Superintendent of Documents, U.S. Government Printing 
Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; DC 
area (202) 512-1800 Fax: (202) 512-2104  Mail: Stop IDCC, Washington, DC 
20402-0001



                      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

                 Ann E. Sauer, 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
                       Navy Shipbuilding Programs
                             April 19, 2012

                                                                   Page

Stackley, Hon. Sean J., Assistant Secretary of the Navy 
  (Research, Development, and Acquisition); Accompanied by VADM 
  Kevin M. Mccoy, USN, Commander, Naval Sea Systems Command; VADM 
  John T. Blake, USN, Deputy Chief of Naval Operations, 
  Integration of Capabilities and Resources (N8); VADM William R. 
  Burke, USN, Deputy Chief of Naval Operations, Warfare Systems 
  (N9); and Lt. Gen. Richard P. Mills, USMC, Deputy Commandant 
  for Combat Development and Integration/Commanding General, 
  Marine Corps Combat Development Command........................     5

                   Marine Corps Acquisition Programs
                             april 26, 2012

Stackley, Hon. Sean J., Assistant Secretary of the Navy 
  (Research, Development, and Acquisition).......................    61
Mills, Lt.Gen. Richard P., USMC, Deputy Commandant for Combat 
  Development and Integration/Commanding General, Marine Corps 
  Combat Development Command.....................................    68

                                 (iii)

 
DEPARTMENT OF DEFENSE AUTHORIZATION FOR APPROPRIATIONS FOR FISCAL YEAR 
               2013 AND THE FUTURE YEARS DEFENSE PROGRAM

                              ----------                              


                        THURSDAY, APRIL 19, 2012

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

                       NAVY SHIPBUILDING PROGRAMS

    The subcommittee met, pursuant to notice, at 9:30 a.m. in 
room SR-232A, Russell Senate Office Building, Senator Jack Reed 
(chairman of the subcommittee) presiding.
    Committee members present: Senators Reed, Sessions, and 
Wicker.
    Majority staff member present: Creighton Greene, 
professional staff member.
    Minority staff members present: Bryan D. Parker, minority 
investigative counsel; and Christopher J. Paul, professional 
staff member.
    Staff assistant Present: Brian F. Sebold.
    Committee members' assistants present: Carolyn Chuhta, 
assistant to Senator Reed; Gordon Peterson, assistant to 
Senator Webb; Lenwood Landrum, assistant to Senator Sessions; 
and Joseph Lai, assistant to Senator Wicker.

        OPENING STATEMENT OF SENATOR JACK REED, CHAIRMAN

    Senator Reed. Let me call the hearing to order. I want to 
welcome and thank our witnesses who have joined us this 
morning. We're honored to have the Honorable Sean J. Stackley, 
who's the Assistant Secretary of the Navy for Research, 
Development, and Acquisition; Vice Admiral Kevin M. McCoy, USN, 
Commander, Naval Sea Systems Command; Vice Admiral John T. 
Blake, USN, Deputy Chief of Naval Operations (CNO), Integration 
of Capabilities and Resources, N8; Vice Admiral William R. 
Burke, USN, Deputy CNO, Warfare Systems, N9; and Lieutenant 
General Richard P. Mills, USMC, Deputy Commandant for Combat 
Development and Integration/Commanding General, Marine Corps 
Combat Development Command. Thank you, gentlemen, thank you.
    We're obviously grateful not only for your appearance 
today, but for your extraordinary service to the Nation and to 
the extraordinarily courageous and professional men and women 
of the Navy and the Marine Corps that you have the privilege to 
lead, and we thank you and we hope you thank them, too, on our 
behalf.
    The Navy continues to be faced with a number of critical 
issues as it tries to balance its modernization and procurement 
needs against the cost 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 of Defense's (DOD) original 
decision to budget for two Virginia-class submarines per year, 
but are troubled by the new shipbuilding plan that would delay 
one of the two fiscal year 2014 boats until fiscal 2018. We 
know that the Navy and contractor team are able to drive down 
costs under the two boats per year plan. We will need to hear 
more about why the Navy made this change and what options may 
exist for reinstating the two boats per year plan.
    We support the Navy's continuing efforts to drive costs out 
of the Ohio replacement SSBN program. SSBNs will remain a vital 
leg of the nuclear triad for the foreseeable future. 
Establishing and achieving cost reduction goals in the 
Virginia-class and Ohio replacement programs will yield 
significant stability to our Nation's submarine industrial base 
and provide the Navy with a modern, capable submarine fleet for 
many years to come.
    Last month, the subcommittee held a private briefing on 
issues surrounding the Ohio replacement program. But we should 
get on the record that the Navy continues to try to reduce 
costs on this program to make it more affordable and 
potentially less disruptive to the rest of the shipbuilding 
account.
    Also last month, the full committee heard testimony from 
Secretary Frank Kendall, who agreed that, even with Navy cost 
reduction efforts of the program, DOD may need to step in and 
help the Navy pay for this critical program, the SSBN program 
particularly. We will want to hear from our witnesses about the 
cost reduction efforts and how DOD might step in to help pay 
for this program. I think you understand, I have a certain 
affection and regard for submarines.
    The subcommittee met last year and focused primarily on 
other programs that were experiencing quality control issues or 
other production issues. It is never a pleasant situation where 
major programs are having such problems. In receiving last 
year's testimony from the Navy, it seemed to me that the Navy 
was making good faith efforts to improve the situation through 
changes in staffing, training, and organization.
    We're eager to hear from Secretary Stackley and Vice 
Admiral McCoy this morning on the progress they have made on 
these initiatives since last year.
    In our country's fiscal environment, it's very unlikely it 
will have as much money to spend as the 30-year shipbuilding 
plan assumes. Fundamentally, that is why this hearing is so 
important. We need to focus on managing these important 
programs in ways that are efficient and effective in delivering 
the capability the country needs from its Navy. We need to 
improve quality and efficiency in all of our shipbuilding 
programs, not only because of the direct savings, but also 
because we need to demonstrate to the taxpayers that we are 
using defense dollars wisely.
    We look forward to hearing your testimony this morning on 
these and other issues facing the Navy.
    With that, let me recognize Senator Wicker.
    Thank you.

              STATEMENT OF SENATOR ROGER F. WICKER

    Senator Wicker. Thank you, Mr. Chairman. I know you have an 
affection for submarines, but you also have an affection for 
defending the country in general, as a whole; and I think in 
that regard we're very well-served by this very distinguished 
panel; we have five men with very difficult tasks and 
responsible jobs. I appreciate them being here at this 
important hearing.
    Vice Admiral Burke is here, I believe, for the first time 
before this panel. Last month, the CNO assigned Admiral Burke 
to the new position of Deputy CNO for Warfare Systems, 
responsible for integration of manpower, training, sustainment, 
modernization, and procurement of ships, submarines, and air 
programs. We look forward to seeing him again before this 
subcommittee.
    Let me take a moment to mention that this is a particularly 
momentous year in our history. It marks the bicentennial of the 
War of 1812 and the writing of our national anthem, the Star 
Spangled Banner. Notably, the War of 1812 was the first 
declared war in our Nation's history. The Battle of Lake Erie, 
which is depicted in William Henry Powell's beautiful and 
profound painting in the east stairwell of the Senate, was 
fought during this conflict and is one of the Navy's greatest 
victories.
    Today, our sailors and marines continue to exemplify the 
benchmarks of leadership, seamanship, and heroism set by their 
predecessors 200 years ago.
    I also want to recognize the outstanding efforts of the 
Navy's expeditionary sailors in places like my State of 
Mississippi. Our Seabees from the Naval Construction Battalion 
Gulfport have facilitated the fastest combat theater expansion 
in U.S. Central Command's (CENTCOM) history. In the past year, 
approximately 2,400 of our Gulfport-based Seabees from two 
naval construction regiments and nine naval mobile construction 
battalions deployed to Afghanistan and Kuwait, Okinawa, Guam, 
Europe, and Africa. Their hard work and dedication reflects the 
very finest traditions of the Navy.
    Mr. Chairman, the Navy's 30-year shipbuilding plan that was 
submitted to Congress last month projects that for the first 
time the fleet would remain below 310 ships during the entire 
30-year period. The plan also foresees critical shortfalls in 
cruisers, destroyers, and amphibious ships.
    I believe these proposed cuts to our naval capabilities 
without a plan to compensate for them will place our strategic 
interests in the Asia-Pacific region and Arabian Sea at greater 
risk. I'd like to hear from our witnesses on what I consider 
five key issues that our subcommittee will review this year.
    First, viability of the industrial base. The viability of 
the 30-year shipbuilding plan is essential to the strength of 
our shipbuilding industrial base. The strength of the skills, 
capabilities, and capacities inherent to new construction, 
shipyards, and weapons system developers reinforce the Navy's 
dominant maritime position. I'd like to hear from our witnesses 
how they carefully weighed the effects on the shipbuilding 
industrial base when they balanced resources and requirements 
in drafting the shipbuilding plan.
    Second, balance of the force. I remain concerned about the 
amount of funding needed for ship construction going forward. 
With more than half the construction and development cost 
dollars allocated to build nuclear submarines, submarine 
construction costs could crowd out funding needed to build 
large surface ships and to modernize the fleet. I hope our 
witnesses can tell us what they're 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 destroyers.
    Third, I'm interested in learning the views of our 
witnesses on ways we can ensure the Navy's shipbuilding plan 
meets the demand for amphibious ships from our combatant 
commanders. This demand has increased more than 80 percent over 
the last 5 years. I'm particularly pleased that the Navy and 
Huntington Ingalls signed a Memorandum of Agreement (MOA) last 
month for LHA-7, the second America-class amphibious assault 
ship to be built in my home State of Mississippi.
    As we begin to pivot toward the Asia-Pacific region, the 
Navy and Marine Corps will serve as the linchpin of American 
force projection abroad. Amphibious ships such as LHA-7 will 
help enable our troops to meet any challenges that our country 
may face in the future.
    Fourth, multiyear procurement authority. This subcommittee 
will carefully consider in the coming weeks the Navy's two 
shipbuilding multiyear procurement requests included in its 
budget submission: authority for the Virginia-class submarines 
and the DDG-51 Arleigh Burke-class destroyers. I know members 
of our subcommittee will be interested to learn how these 
multiyear proposals will offer the best value to the warfighter 
and the American taxpayers.
    Finally, sequestration. The Navy faces significant budget 
challenges ahead. The Budget Control Act (BCA) passed by 
Congress and signed by the President last August requires 
sequestration to be implemented across all the departments, 
including DOD. Sequestration is not a hypothetical. It is the 
law of the land, unless changed. On January 3, 2013, a mere 257 
days from today, sequestration will happen unless legislation 
is passed to undo it.
    Mr. Chairman, our national defense is solely a Federal 
responsibility. Defense spending is also a two-fer that 
supports our national security and our high-tech manufacturing 
workforce. As such, I hope our witnesses today will elaborate 
on their assessment of the impact that sequestration will have 
on our sailors, marines, and our industrial base.
    With that in mind, I look forward to the testimony of all 
these fine witnesses. Also, Mr. Chairman, without objection, at 
this point I would like to submit the statement for the record 
of our colleague, Senator Susan Collins, who could not be here 
due to a scheduling conflict. Thank you, sir.
    [The prepared statement of Senator Collins:]
              Prepared Statement by Senator Susan Collins
    Secretary Stackley, I want to thank you and the other witnesses for 
your public service. The challenges facing our country and our Navy are 
great. The administration and Congress have a responsibility to 
establish budget priorities. The Senate has not passed a budget in 2 
years, and I am troubled by the priorities established in the budget of 
this administration, and previous administrations when I look at the 
historic budget topline for shipbuilding. The annual shipbuilding 
budget has averaged about $14 billion, which is troubling when I 
compare that figure to other Federal spending each year.
    For example, our country pays as much in interest on the national 
debt each month as we do for shipbuilding for an entire year. We spend 
the equivalent of the shipbuilding budget, $15 billion a year, on 
Federal agency travel and conferences. The Army spent more than a 
year's worth of shipbuilding--$19 billion--for research and development 
on the Future Combat System--a program it ultimately cancelled.
    Shipbuilding represents a mere 2.2 percent of the $614 billion 
requested by the Department of Defense (DOD) this year. So, the point I 
simply would like to make is that Navy ships are a great value for our 
country. Ships promote U.S. diplomacy overseas. They deter aggression 
from happening in the first place. They protect the commercial sea 
lanes that underpin our national economy.
    It seems to me that the shipbuilding account punches above its 
weight in comparison to the small portion of the DOD and Federal budget 
it represents.

    Senator Reed. Thank you, Senator Wicker.
    Senator Sessions, do you have any comments?
    Senator Sessions. Thank you, Mr. Chairman, for your 
leadership. I value that so much. You've been a real asset to 
the Senate. Senator Wicker, thank you for those good comments.
    I'm concerned about the sequester. Senator Reed, he is 
exactly correct. That is the law. We need to be taking some 
real action to fix it so we don't end up scrambling at the last 
minute.
    So I thank all of you for your testimony and I look forward 
to participating.
    Senator Reed. Thank you very much.
    I want to commend my colleagues, too, for their great 
service in support in a very collaborative and cooperative 
basis on so many different issues. So thank you, gentlemen.
    Secretary Stackley, I presume you will go first; is that 
correct? Or do you have another preference?

STATEMENT OF HON. SEAN J. STACKLEY, ASSISTANT SECRETARY OF THE 
 NAVY (RESEARCH, DEVELOPMENT, AND ACQUISITION); ACCOMPANIED BY 
VADM KEVIN M. McCOY, USN, COMMANDER, NAVAL SEA SYSTEMS COMMAND; 
  VADM JOHN T. BLAKE, USN, DEPUTY CHIEF OF NAVAL OPERATIONS, 
INTEGRATION OF CAPABILITIES AND RESOURCES (N8); VADM WILLIAM R. 
 BURKE, USN, DEPUTY CHIEF OF NAVAL OPERATIONS, WARFARE SYSTEMS 
 (N9); AND LT. GEN. RICHARD P. MILLS, USMC, DEPUTY COMMANDANT 
  FOR COMBAT DEVELOPMENT AND INTEGRATION/COMMANDING GENERAL, 
            MARINE CORPS COMBAT DEVELOPMENT COMMAND

    Mr. Stackley. Yes, sir, I'm going to propose that we have a 
single statement for the Navy and Marine Corps.
    Senator Reed. That is welcome. Thank you very much, 
Secretary Stackley.
    Mr. Stackley. Yes, sir. Thank you, Mr. Chairman, Senator 
Wicker, Senator Sessions, for the opportunity to appear before 
you today to discuss Navy shipbuilding. As always, thank you 
for your leadership on the many issues that fall under 
Congress' broad responsibility to provide and maintain our Navy 
and, perhaps most importantly, for your steadfast commitment to 
our sailors and marines around the world.
    With the permission of the subcommittee, I have a brief 
opening statement and would propose to submit a more formal 
statement for the record.
    Senator Reed. Without objection.
    Mr. Stackley. Thank you.
    Today we are a force of 282 ships, about half of which on 
any given day are underway, performing missions around the 
globe, supporting operations in Afghanistan, providing maritime 
security along the vital sea lanes, missile defense in the 
Mediterranean and the Sea of Japan, intelligence, surveillance, 
and reconnaissance (ISR), as needed, global presence at sea and 
with an embarked marine force, and readiness to move ashore.
    They're conducting anti-piracy patrols, global partnership 
stations humanitarian assistance, and they are quietly, 
reliably on patrol and providing strategic deterrence. All the 
while they're training for the next deployment, the next 
operation.
    In support of the defense strategic guidance, we're 
building toward a force of about 300 warships, ships that will 
provide the capability and the capacity to maintain our 
maritime superiority today and for the foreseeable future.
    We have reshaped our shipbuilding plan over a year ago to 
reflect the priorities of the new defense strategy and the 
reality of fact-of-life top-line reductions consistent with the 
BCA. This year's shipbuilding plan strikes a balance between 
capacity, capability, affordability, and the industrial base.
    We have important work to do in order to close out-year 
gaps or risks identified by the long-range shipbuilding plan. 
In doing so, we need to drive the equation to deliver the full 
capability and capacity that our warfighters need, at the 
lowest possible cost.
    The Secretary of the Navy remains strongly committed to 
investing in shipbuilding and we have put that commitment to 
work over the last year. Since this time last year, two 
destroyers, a submarine, an LPD-17 amphibious ship, and a T-AKE 
dry cargo-ammunition ship have joined the fleet. The submarine 
Mississippi, the Littoral Combat Ship (LCS) Fort Worth, and the 
Joint High-Speed Vessel (JHSV) Spearhead will deliver this 
spring. Another half a dozen ships have been christened, keels 
have been laid for the lead ship of the DDG-1000-class, the 
mobile landing platform (MLP) class, and the next LCS, 
Virginia, and T-AKE. Construction has begun on another 11 
warships.
    In total, since December 2010, we've awarded contracts to 
procure 38 ships, including options, most competitively 
awarded, all fixed-price contracts, and we're on track to 
increase that number to 40 this spring with the anticipated 
awards of the next amphibious assault ship, the LHA-7, and the 
11th and final ship of the LPD-17 class. These contracts 
provide an important degree of certainty to our industrial base 
in an otherwise uncertain period in defense spending.
    We recognize, however, that it is not possible to simply 
buy our way to recapitalizing our force. We must focus 
relentlessly on improving affordability in our shipbuilding 
programs.
    This year's 2013 budget request includes funding for 10 
ships, including the first year of full funding for the second 
ship of the Gerald R. Ford-class, CVN-79, maintaining aircraft 
carrier construction starts on 5-year intervals. CVN-79 is 
required to deliver in 2022, which aligns with the end of 
service life for Nimitz, the ship CVN-79 will functionally 
replace to maintain an 11-aircraft carrier force structure. 
This provides schedule flexibility, which is important for this 
ship for it enables the Navy and the shipbuilder to develop and 
implement a more affordable build strategy that incorporates 
the findings and recommendations emerging from lessons learned 
in the design and construction of the lead ship CVN-78.
    We continue with Virginia-class fast attack submarine 
procurement at two boats in fiscal year 2013 and are requesting 
authorization of a nine-boat multiyear procurement commencing 
in fiscal year 2014. The Virginia program reliably delivers 
critical undersea capacity affordably and on time, in large 
part due to multiyear savings resulting from economic order 
quantity opportunities, improved workforce planning, and 
workload sequencing, optimized construction scheduling, 
increased opportunities for facilities investment, and reduced 
support and engineering workload.
    Within this request, however, top-line constraints have 
forced the Navy to defer a planned second boat from fiscal year 
2014 to fiscal year 2018.
    We're requesting funding for two Flight 2A DDG-51 Arleigh 
Burke-class destroyers in 2013 in conjunction with the 
multiyear request for nine ships, projected to save $1.5 
billion. This strong-performing, stable program provides much-
needed ballistic missile defense (BMD) capability and capacity 
to the fleet.
    Key to meeting the growing ballistic missile threat is our 
Air and Missile Defense Radar (AMDR) program, which will 
greatly improve the sensitivity and long-range detection and 
engagement of increasingly complex threats. In the course of 
the AMDR competitive development, we've witnessed impressive 
progress, while assessments of technology maturity steadily 
improve and estimates for cost steadily decline.
    We are continuing to execute the dual-award strategy for 
LCS. In 2013, we're requesting funds for 4 ships and a total of 
16 ships across the Future Years Defense Program (FYDP). 
Program affordability continues to improve as we ramp up 
production. Notably, the fixed-price options for the 10th ship 
of these block buys are about half the cost of their respective 
lead ships. Likewise, the ships' mission packages are moving 
smartly forward in developmental testing in support of initial 
operational capability (IOC) milestones.
    With five LPD-17-class ships in various stages of 
construction and the lead ship of the America-class preparing 
to float off this summer, our shipbuilding program continues to 
build towards the amphibious lift capability required for the 
assault echelon of two Marine Expeditionary Brigades in support 
of joint forcible entry operations. Quality continues to 
improve with each ship delivered on the Gulf Coast and we are 
likewise working closely with the shipbuilder to improve cost 
and schedule on these critical programs.
    While today we are finalizing contract details for LHA-7, 
we are requesting funding in 2013 to begin design for the 
fiscal year 2017 assault ship, LHA-8. Although we have shifted 
our plans to procure the replacement for the LHD-41-class 
amphibious ships beyond the FYDP, we are pressing on with the 
LSDX analysis of alternatives (AOA) this year in advance of 
preliminary design.
    We're continuing to increase our logistics lift capability 
with the 10th JHSV and the first of three MLPs currently under 
contract. As well, to meet CENTCOM's requirement for an afloat 
forward staging base, the Navy has requested funding to modify 
the third MLP and advance procurement toward a fourth fiscal 
year 2014 MLP for this mission. This highly versatile four-ship 
MLP-class will then support the two maritime prepositioning 
squadrons as well as the Afloat Forward Staging Base (AFSB) 
mission.
    In view of fiscal constraints, we are shifting procurement 
for the lead ship of the Ohio replacement program to 2021. This 
2-year shift defers $8.5 billion of cost beyond this decade, 
while providing opportunity to reduce developmental risk by 
increasing the new ballistic missile submarine's level of 
design completion and maturity. Equally important, we'll need 
to employ this time to further our efforts to drive down costs 
in every stage of development, engineering, construction, 
operations, and support on this program.
    However, the delay will result in a temporary reduction to 
10 available SSBNs in the 2030s. With no major SSBN overhauls 
planned during this period, the risk associated with meeting 
at-sea present requirements is assessed to be moderate, but 
manageable.
    The strength of our shipbuilding plan is closely coupled 
with the strength of our shipbuilding industrial base. Over the 
past several years, the Navy has placed a priority in 
increasing shipbuilding rates and providing stability for the 
shipbuilding industrial base, which translates into retention 
of skilled labor, improved material purchasing and workforce 
planning, strong learning curve performance, and the ability 
for industry to invest in facility improvements, all resulting 
in more efficient ship construction and a more affordable 
shipbuilding program.
    Accordingly, in the course of balancing resources and 
requirements in the formulation of the shipbuilding plan, the 
effect of program decisions on the industrial base must 
continue to be closely weighed.
    One of the greatest challenges to our future shipbuilding 
program and therefore elements of our industrial base is the 
rapidly increasing cost of our ship programs. To this end, in 
addition to the emphasis on stability, the Navy is establishing 
affordability requirements and investing in design for 
affordability for future ship programs, mandating use of open 
system design, leveraging competition where it exists in 
shipbuilding, employing fixed-price contracts to control costs 
in production, imposing strict criteria, limiting disruptive 
change to contracts, investing in industry-wide manufacturing 
process improvements through the national shipbuilding research 
program, and incentivizing capital investment in facilities 
where warranted.
    Ultimately, we recognize that as we balance requirements, 
affordability, and industrial base considerations, it is ever 
more important that our shipbuilding plan closely aligns with 
the priorities outlined in the new defense strategy. In view of 
increasing pressure on our top line, it's equally paramount 
that we, Navy and industry, continue to improve the 
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 answering your 
questions.
    [The joint prepared statement of Mr. Stackley, Vice Admiral 
McCoy, Vice Admiral Blake, Vice Admiral Burke, and Lieutenant 
General Mills follows:]
Joint Prepared Statement by Hon. Sean J. Stackley; VADM Kevin M. McCoy, 
USN; VADM John Terence Blake, USN; VADM William R. Burke, USN; and Lt. 
                      Gen. Richard P. Mills, USMC
    Mr. Chairman, Senator Wicker, and distinguished members of the 
subcommittee, thank you for the opportunity to appear before you today 
to address Department of the Navy (DoN) shipbuilding. The Department is 
committed to build the fleet that best supports the Defense Strategic 
Guidance that emerged from collaborative efforts of the Services, 
combatant commanders, Chairman of the Joint Chiefs of Staff, the 
Secretary of Defense and the President. The fiscal year 2013 
President's budget request for shipbuilding provides for platforms that 
will evolve and adapt, allowing our warfighters to fight and win the 
Nation's wars, remain forward and be ready. While the Budget Control 
Act of 2011 placed new constraints on the DoN budget, which required 
hard choices and prioritization to address, our shipbuilding plan 
attempts to balance capacity, capability and the industrial base.
    Today's Navy is a Battle Force of 282 ships. As described in the 
Long-Range Plan for Construction of Naval Vessels for fiscal year 2013, 
which outlines the DoN's 5-year shipbuilding plan (included in the 
fiscal year 2013 President's budget request) and provides a projection 
for new ship construction and planned ship retirements over the 
following 25-year period, the Navy is building for a 21st century 
battle force of about 300 warships.
    The last year has proven eventful for Navy and Marine Corps 
operations across the entire spectrum of the Maritime Strategy from 
building maritime partnerships to executing our core capabilities of 
forward presence, deterrence, power projection, sea control, maritime 
security, and humanitarian assistance and disaster response.
    As 2011 began, the Enterprise Strike Group sailed east from 
Norfolk, headed out on a penultimate deployment for the carrier. The 
Vinson Strike Group was already operating in 7th Fleet and sailing 
toward the Arabian Sea where it would join the Kearsarge Amphibious 
Ready Group supporting marines of I Marine Expeditionary Force in 
theater. Kearsarge, in its fifth month of deployment, had left Norfolk 
in the summer of 2010 with the 26th Marine Expeditionary Unit (MEU) 
embarked, on a mission to provide disaster relief to the flood stricken 
people of Pakistan. With relief efforts complete, the 26th MEU moved on 
to Operation Enduring Freedom in Afghanistan.
    Shortly after Enterprise deployed, Reagan, Chancellorsville, and 
Preble would get underway from San Diego to conduct multinational 
training in the Western Pacific before relieving the watch in the 
Indian Ocean.
    Then, a month later, a fuse was lit in the Middle East--unleashing 
instability, causing governments to topple, jeopardizing American 
citizens and interests in this strategic region. As the Arab Spring 
emerged, Kearsarge and 26th MEU would sail to the Mediterranean and 
Enterprise would swing west. Amphibious ships Boxer, Green Bay, and 
Comstock and the 13th MEU would get underway from San Diego.
    Then in March of last year, half the world away, unimaginable 
devastation swept away whole villages and towns along the coast of 
Japan, claiming an untold number of lives while leaving the smoldering 
threat of greater destruction and loss. Before the world fully grasped 
the situation, marines, stationed in Okinawa, would airlift to the 
region for disaster response. The Essex Amphibious Group, forward 
deployed to Japan, would get underway and the Reagan Strike Group, now 
in the Western Pacific, would sail north, joining Essex, to provide 
critical supplies, medical services and rescue efforts. Operation 
Tomodachi would eventually employ 22 ships, 140 aircraft and 15,000 
sailors and marines to deliver more than 260 tons of relief supplies to 
earthquake and tsunami survivors.
    Meanwhile, as Muammar Qaddafi launched his army in an assault 
against his own citizens, guided-missile destroyers Stout and Barry and 
attack submarines Providence and Scranton and the guided missile 
submarine Florida, as well as British ships and submarines, launched 
their cruise missiles against Libyan air defense, surface-to-air 
missile sites and communication nodes, demonstrating our extraordinary 
power projection capability. Over the course of the NATO operation, 
Florida would launch more than 90 Tomahawks of the more than 200 total.
    Aircraft of the Enterprise and 26th MEU operating from Kearsarge, 
joined by the first deployed EA-18G Growler squadron, would leave 
Afghanistan and redeploy to the Mediterranean to join coalition forces 
in establishing a no-fly zone to halt the Libyan army and the bloodshed 
it threatened.
    That same week, Bataan, Mesa Verde, Whidbey Island, and the 22nd 
MEU would surge from Norfolk to strengthen the coalition Operation 
``Odyssey Dawn.''
    Through 2011, carrier air wings embarked aboard Enterprise, Abraham 
Lincoln, Carl Vinson, John C. Stennis, Ronald Reagan, and George H.W. 
Bush, on her first-ever combat deployment, would fly nearly 15,500 
sorties totaling more than 49,000 flight hours in support of coalition 
forces on the ground in Iraq and Afghanistan and Operation New Dawn.
    What is most remarkable about this story of the first 3 months of 
2011 is that it is replayed month after month in Navy and Marine Corps 
operations. On any given day in any given year, nearly half of our 
battle force ships are underway, supporting missions around the globe--
conducting anti-piracy patrols, global partnership stations, under-ice 
operations, supporting operations ashore, strategic deterrence, missile 
defense missions, amphibious operations or humanitarian assistance 
missions, such as the hospital ship Comfort in Operation Continuing 
Promise. Today, Enterprise, commissioned in 1961, is once again on 
deployment, this time, for the last time.
    No other military and no other nation on earth today, has the 
reach, the presence, the capability, the training and the resolve to 
maintain this pace or breadth of operations. Global reach, persistent 
presence, and operational flexibility, the inherent characteristics of 
U.S. seapower articulated in the Cooperative Strategy for 21st Century 
Seapower, are demonstrated in all we have done in 2011 and continue to 
do in 2012. These tenets, along with the Defense Strategic Guidance, 
guide the priorities and direction of the Department of the Navy's 
fiscal year 2013 President's budget request.
                  the fiscal year 2013 budget request
    The fiscal year 2013 President's budget request funds 10 ships: 1 
Gerald R. Ford-class aircraft carrier, 2 Virginia-class fast attack 
submarines, 2 DDG-51 Arleigh Burke-class destroyers, 4 Littoral Combat 
Ships (LCS), and 1 Navy Joint High Speed Vessel (JHSV). In addition, 
the Department is requesting Multiyear Procurement (MYP) authority for 
the Virginia-class (fiscal year 2014 through fiscal year 2018 ships) 
and the DDG-51 Arleigh Burke-class (fiscal year 2013 through fiscal 
year 2017 ships).
                           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 
relief. 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.
    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 
replace aging Nimitz-class carriers and are expected to be the premier 
forward deployed asset for crisis response and early decisive striking 
power in a major combat operation through the remainder of this 
century. While the Gerald R. Ford aircraft carrier design uses the 
Nimitz-class hull form, it is essentially a brand new ship with new 
technologies and interior arrangements that improve warfighting 
capability, operational availability, and quality of life, while 
reducing crew size (approximately 1,200 sailors including air wing 
reductions) and total ownership costs (TOC). TOC reduction by hull is 
expected to result in $5 billion over the 50 year service life of each 
ship of the Gerald R. Ford-class.
    The fiscal year 2013 President's budget requests the first year of 
full funding for the second ship of the Gerald R. Ford-class, CVN-79, 
effectively maintaining aircraft carrier construction starts on 5 year 
intervals. This is an important benchmark for sustaining the large 
vendor base that supports this unique ship class. The build duration 
for CVN-79, though, has been extended by 2 years. This adjusted profile 
provides for delivery no later than 2022, which aligns with the end of 
service life for Nimitz, the ship CVN-79 will functionally replace to 
maintain an 11 carrier force structure. This extended build period will 
also allow for production efficiencies which are discussed in more 
detail below.
    Inarguably, this new class of aircraft carrier brings forward 
tremendous capability and life cycle cost advantages compared to the 
Nimitz-class she will replace. However, the design, development and 
construction efforts required to overcome the technical challenges 
inherent to these advanced capabilities have significantly impacted 
cost performance on the lead ship. In the course of this past year, the 
Navy conducted a detailed review of the Gerald R. Ford-class build plan 
to improve end-to-end aircraft carrier design, material procurement, 
production planning, build and test. This effort, taken in conjunction 
with a series of corrective actions with the shipbuilder on the lead 
ship, will not erase cost growth on Gerald R. Ford, but should improve 
performance on the lead ship while fully benefitting CVN-79 and 
following ships of the class. The added build duration planned for CVN-
79 allows the Navy and shipbuilder to develop and implement a more 
affordable, optimal build strategy that incorporates the findings of 
the end-to-end review as well as lessons learned from design and 
construction of the lead ship. This year's budget request includes 
prior year completion funding to address increases incurred to date in 
Gerald R. Ford government furnished equipment, non-recurring design, 
and ship construction.
    Among the new technologies being integrated is the Electromagnetic 
Aircraft Launch System (EMALS) which will support Ford's increased 
sortie generation rates. EMALS testing continues and has been 
successful. To date, EMALS has launched more than 1,500 dead loads and 
134 aircraft launches from the full scale EMALS production 
representative unit using 5 different types of test aircraft, including 
an F-35C Joint Strike Fighter. EMALS' production schedule supports the 
planned delivery of Gerald R. Ford in September 2015.
    Advanced Arresting Gear (AAG) is also a new technology planned for 
Gerald R. Ford. This technology will provide the capability to recover 
all existing and future carrier-based fixed wing air vehicles, 
including those too heavy or too light for current systems. Testing of 
a full-scale, land-based installation of AAG is ongoing. It, too, 
supports the planned delivery of Gerald R. Ford.
    Dual Band Radar (DBR) will also be introduced on Gerald R. Ford. 
DBR integrates an X-band Multi-Function Radar with an S-band Volume 
Search Radar to provide a single interface to the ship's combat system. 
Its active planar arrays enable Gerald R. Ford to be designed with an 
island smaller than those on current carriers, which contributes to the 
ship's increased sortie generation rate. With the truncation of the 
DDG-1000 program at three ships and subsequent removal of the S-band 
radar from the DDG-1000 baseline, Gerald R. Ford will be the lead ship 
for DBR developmental testing. DBR production schedule supports the 
planned delivery of Gerald R. Ford.
    Gerald R. Ford's newly designed reactor delivers more core energy 
and nearly three times the electrical output of the current carrier's 
plant, yet will need only half as many sailors to operate and will be 
easier to maintain. Gerald R. Ford also incorporates several 
survivability enhancements to counter current and emerging threats.
    With more than half of the service life of the Nimitz-class still 
remaining, the Refueling Complex Overhaul (RCOH) continues as a key 
enabler for the enduring presence of the aircraft carrier fleet. This 
year's budget request includes prior year completion funding for the 
RCOH of the fourth ship of the Nimitz-class, Theodore Roosevelt, whose 
availability was extended due to unexpected growth work discovered 
during execution. In addition, the budget request includes incremental 
funding to initiate the RCOH of Abraham Lincoln and advance procurement 
funding for the RCOH of George Washington.
                          the submarine fleet
    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 robust 
capability to covertly deploy special operations force (SOF) personnel. 
Today the Navy has four guided missile submarines (SSGN). To mitigate 
the loss of strike capacity when SSGNs retire in the next decade, the 
Navy has requested Research and Development funding in fiscal year 2013 
to begin design of a modification to the Virginia-class SSN, the 
Virginia Payload Module. This added capability would contain four SSGN-
like tubes for strike and future payloads. Pending the future fiscal 
environment, modified Virginia-class SSNs could be procured starting no 
earlier than fiscal year 2019. This would permit Navy to sustain 
undersea strike capacity without requiring the Navy to construct a 
purpose-built ship to replace the SSGN--an option that would be cost 
prohibitive.
    The fiscal year 2013 President's budget requests funding for two 
Virginia-class submarines in fiscal year 2013 as well as advance 
procurement and economic order quantity funding for the fiscal year 
2014 through 2018 boats. The fiscal year 2013 boats are the last two 
submarines under the Block III (fiscal years 2009 through 2013 
Multiyear Procurement (MYP) contract). Now in its 15th year of 
construction, the Virginia program reliably delivers this critical 
undersea capability affordably and on time, in large part due to the 
cost savings and stability provided by the program's multiyear 
procurement strategy. The Department expects continuation of this 
strategy to yield similar benefits, and is including a legislative 
proposal for the authorization of a nine-ship MYP for procurement of 
the next block of Virginia-class submarines (fiscal years 2014 through 
2018) with the fiscal year 2013 President's budget request. The Navy 
estimates 14.4 percent savings on this MYP versus single ship 
procurement, as result of economic order quantity opportunities, 
improved workforce planning and workload sequencing, optimized 
construction scheduling, increased opportunity for facilities 
investment, and reduced support and engineering workload; all made 
possible by leveraging the stability offered by the MYP.
    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 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 Ohio Replacement Program inventory is 
assumed to be 12 ships. The Nuclear Posture Review (NPR) completed in 
April 2010 determined that the United States would retain a nuclear 
triad under New START and that, for the near-term, the Navy would 
retain all 14 SSBNs in the current inventory. The NPR stated that, 
depending upon future force structure assessments and how SSBNs age in 
the coming years; the United States will consider reducing from 14 to 
12 Ohio-class submarines in the second half of this decade. 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. Due to budget 
constraints, the Department has shifted procurement of the lead Ohio 
Replacement submarine by 2 years (from fiscal year 2019 to fiscal year 
2021). The delay results in a temporary reduction to 10 available SSBNs 
in the 2030s during the transition period between Ohio and Ohio 
Replacement SSBNs. Because there are no major SSBN overhauls planned 
during this period, an available force of 10 ships will be able to meet 
the current U.S. Strategic Command's at-sea presence requirements, 
albeit with increased operational risk that stems from the reduced 
force levels. The fiscal year 2013 budget requests funding to continue 
development of the Ohio Replacement Program and ensures Common Missile 
Compartment efforts are on track to support the United Kingdom's 
Successor Program's schedule. All aspects of the Ohio Replacement 
Program will continue to be thoroughly reviewed and aggressively 
challenged to drive down engineering, construction, and operations and 
support costs.
    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.
    Modernization is also critical to sustaining the current combat 
capabilities of the submarine fleet. Through extensive use of 
commercial off-the-shelf (COTS) equipment, modern submarine Control, 
Communications, Computers, and Intelligence (C4I) systems are 
maintained with a minimal industrial logistics tail. Regular 
replacement of electronics through the Tech Insertion process prevents 
part obsolescence and related impacts to operational availability. This 
successful COTS model has sustained the submarine fleet for the past 
decade at a fraction of legacy combat system costs. Maintaining the 
stability of the modernization program is critical to our future Navy 
capability and capacity.
                        large surface combatants
    Guided missile cruisers (CGs) and guided missile destroyers (DDGs) 
comprise our large surface combatant fleet. When viewed as a whole, 
these ships fulfill broad mission requirements both independently and 
in conjunction with a strike group. The demands for increased 
capability and capacity in Ballistic Missile Defense (BMD), Integrated 
Air and Missile Defense (IAMD) and open ocean anti-submarine warfare 
(ASW) have resulted in a shift of focus on the type and quantity of 
these ships. The Navy's ongoing analysis is influenced by the emerging 
shift of focus for large surface combatants; the increased demand for 
capability and capacity in integrated air and missile defense; and open 
ocean anti-submarine warfare resulting from changing global threats. 
BMD forward presence is assumed to be ``in stride'' meaning that a BMD 
capable ship can transition rapidly between BMD and other operations 
historically assigned to these classes of ships.
    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 65 percent complete and is scheduled to deliver in fiscal 
year 2014 with initial operating capability planned in 2016.
    The fiscal year 2013 President's budget requests funding for two 
Flight IIA DDG-51 Arleigh Burke-class destroyers as well as advance 
procurement and economic order quantity funds for the fiscal year 2013 
through fiscal year 2017 Multiyear Procurement (MYP). These two ships 
are planned as part of the fiscal years 2013 through 2017 MYP. The 
Flight IIA ships will incorporate Integrated Air and Missile Defense 
(IAMD), providing much-needed BMD capacity to the Fleet. In evaluating 
the merits of a MYP contract for fiscal years 2013 through 2017 DDG-
51s, the Navy projected $1.5 billion in savings for nine ships across 
that time period and has leveraged these savings in the procurement of 
the nine ships.
    The Navy is proceeding with the Air and Missile Defense Radar 
(AMDR) program to meet the growing ballistic missile threat by greatly 
improving the sensitivity and longer range detection and engagement of 
increasingly complex threats. This scalable radar is planned for 
installation on the DDG-51 Flight III ships to support joint battle 
space threat awareness and defense, including BMD, area air defense, 
and ship self defense. The AMDR radar suite will be capable of 
providing simultaneous surveillance and engagement support for long 
range BMD and area air defense. Three Fixed Price Incentive Technology 
Development phase contracts were awarded in the fall of 2010. AMDR 
technology development is on track and successfully completed the three 
System Functional Reviews in December 2011. Prototype development to 
demonstrate critical technologies is well underway. The program remains 
on schedule for the Preliminary Design Reviews in the fall of 2012 and 
the Navy plans to award an Engineering and Manufacturing Development 
contract in early fiscal year 2013. Pending the successful 
demonstration of technical maturity and final determination that 
production risks have been suitably mitigated, the Navy intends to 
conduct a separate fixed price competition for installation of the AMDR 
Engineering Change Proposal into DDG-51 ships, commencing in fiscal 
year 2016.
    To counter emerging threats, the Navy continues to make significant 
investments in cruiser and destroyer modernization to sustain combat 
effectiveness and to achieve the 35 year service life of the Aegis 
fleet. Destroyer and cruiser modernization programs include 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. The fiscal year 2013 President's budget request includes 
funding for the modernization of three cruisers (one Combat Systems and 
two HM&E) and five destroyers (two Combat System and three HM&E). 
Beyond Aegis modernization, the Navy is continuing development of 
Hybrid Electric Drive (HED) at the Land Based Engineering Site to 
mature this promising technology. An initial shipboard demonstration of 
HED is targeted for installation in a DDG-51 ship in early calendar 
year 2013.
    The Aegis Fleet serves as the Surface Navy's sea-based BMD force. 
The Advanced Capability Build 12/Technology Insertion 12 (ACB 12/TI 
12), also known as Baseline 9, constitutes the most significant combat 
system upgrade of the Aegis Fleet. In service DDGs will undergo a 
comprehensive modernization of their combat system, and new 
construction DDGs starting with DDG-113 will be outfitted with ACB 12/
TI 12. ACB 12/TI 12 brings the Integrated Air and Ballistic Missile 
Defense (IAMD) capability to Surface Combatants. IAMD allows Aegis 
Destroyers to perform the BMD mission without any degradation to their 
ability to conduct Anti Air Warfare (AAW) simultaneously through the 
introduction of the Multi-Mission Signal Processor (MMSP). ACB 12/TI 12 
software development is 97 percent complete and on schedule. John Paul 
Jones's ACB 12/TI 12 modernization will begin in the fall of 2012. John 
Paul Jones will be the first IAMD capable destroyer, paving the way for 
backfit into existing destroyers as well as forward fit on new 
construction ships in the restart of the DDG-51-class. ACB 12/TI 12 
also provides a platform for rapid introduction of additional BMD 
capabilities.
    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 net result of 
these changes to meet demands for forward presence, strike group 
operations and BMD places additional pressure on the existing inventory 
of surface combatants. In addition, the constraints of the current 
budget resulted in the Navy having to retire seven CGs (four in fiscal 
year 2013 and three in fiscal year 2014) before the end of their 
service lives. While the specific CGs chosen for decommissioning were 
selected with a view toward minimizing the impact their loss will have 
on BMD capability and capacity, the loss of these ships will 
necessitate other ships fulfilling their roles in non-BMD situations--
further exacerbating the demands for large surface combatant structure. 
To support the President's Phased Adaptive Approach for defense of 
Europe, Navy plans on placing four BMD capable DDG-51 platforms in a 
Forward Deployed Naval Forces status in Rota, Spain, significantly 
reducing the number of ships required to source this mission. Further, 
the Navy will continue to explore alternatives that will redistribute 
assets currently being employed for missions of lesser priority to meet 
the missions contained in the updated defense strategy.
                        small surface combatants
    The Navy remains committed to an inventory of 55 Littoral Combat 
Ships (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 C4I, sensors, and weapons systems, make it an ideal 
platform for engaging in Maritime Security Operations.
    The Navy's fiscal year 2013 President's budget funds four LCSs in 
fiscal year 2013, with a total of 16 to be procured across the Future 
Years Defense Program (FYDP). Affordability remains the key factor in 
acquiring the needed future capacity of these highly flexible and 
capable ships. The Navy remains on course to deliver these ships in the 
quantities needed through the execution of the two competitive block 
buy contracts (for ten ships of each version) awarded in fiscal year 
2010. 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.
    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. The first two Mine 
Countermeasure (MCM) Mission Modules (MM), first two Surface Warfare 
(SUW) MMs, and the first Anti-Submarine (ASW) MM have been delivered. 
The fiscal year 2013 President's budget requests approximately $300 
million in Research and Development funding for continued development 
of mission modules, and Procurement funding to buy common mission 
module equipment and three mission packages (one MCM and two SUW).
                            amphibious ships
    Amphibious ships operate forward to support allies, respond to 
crises, deter potential adversaries, and provide the Nation's best 
means of projecting sustainable power ashore; they provide the best 
means for providing humanitarian assistance and disaster relief. 
Amphibious forces comprised of sailors, marines, and ships provide the 
ability to rapidly and decisively respond to global crises without a 
permanent footprint ashore that would place unnecessary political or 
logistic burdens upon our allies or potential partners. There are two 
main drivers of the amphibious ship requirement: maintaining the 
persistent forward presence, which enables both engagement and crisis 
response, and delivering the assault echelons of up to two Marine 
Expeditionary Brigades (MEB) for joint entry operations.
    The Chief of Naval Operations and Commandant of the Marine Corps 
have determined that the optimal force structure for amphibious lift 
requirements is 38 amphibious ships to support the operations of 2.0 
MEBs. Balancing the total naval force structure requirements against 
fiscal projections imposes risk on meeting this requirement. Based on 
the footprint of a 2.0 MEB force, the minimum number of operationally 
available ships necessary to meet the assault echelon requirement is 
30: a force made up of ten Amphibious Assault Ships (LHD/LHA), 10 
Amphibious Transport Docks (LPD) and 10 Dock Landing Ships (LSD). The 
DoN can meet this requirement as long as all 10 of each type is 
operationally available when needed. Historically, the Navy has carried 
more than this minimum number of ships to mitigate the impact that 
long-duration maintenance has on their availability when they are 
tasked to respond during conflict. Planning factors call for a force of 
33 ships to achieve this availability. Today, the Amphibious Force 
Structure stands at 28 ships, which includes 9 LHD/LHAs, 7 LPDs, and 12 
LSDs.
    The Navy is commencing recapitalization of the large deck 
amphibious assault ships with the construction of America (LHA-6). 
America is now more than 60 percent complete and is scheduled for 
delivery in fiscal year 2014. The fiscal year 2013 President's budget 
request includes a funding request to complete construction of America, 
which will cover government liabilities up to the contract ceiling and 
impacts from the Pension Protection Act of 2006. Beginning with LHA 8, 
which is planned for procurement in fiscal year 2017, the Navy will 
reintegrate the well deck into the large deck amphibious assault ships 
to provide necessary surface lift capacity. Funding to design this 
reintegration of the well deck is included in the fiscal year 2013 
President's budget request.
    The San Antonio-class LPD (LPD-17) serves as the replacement for 
four classes of older ships: the LKA, LST, LSD-36, and the LPD-4. Six 
of the 11 authorized and approved ships of this class have been 
delivered to the Navy. 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. The utility of this class was best demonstrated by 
USS Mesa Verde (LPD-19) as she recently returned after 19 months of 
deployed operation over a 25 month period.
    LSD(X) will replace the aging LSD-41/49 Whidbey Island/Harpers 
Ferry-class vessels and will perform an array of amphibious missions. 
An Analysis of Alternatives (AoA) will be conducted in fiscal year 
2012. The fiscal year 2013 President's budget requests funds for 
Research and Development required for technology development and 
initial design efforts resulting from the AoA. Affordability will be a 
key factor in acquiring the needed future capacity and operational 
capabilities of this highly flexible multifaceted ship.
    A fully funded LSD mid-life program, to include repairs, is 
essential for ensuring the LSD-41/49 ships are able to meet their 
readiness for tasking requirements and meet their expected service 
life. Funding for LSD mid-life is included in the fiscal year 2013 
President's budget request.
                            auxiliary ships
    Combat Logistics Support ships fulfill the vital role of providing 
underway replenishment of fuel, food, repair parts, ammunition and 
equipment to forward deployed ships and their embarked aircraft, to 
enable them to operate for extended periods of time at sea. Combat 
Logistic Support Ships consist of T-AOE fast support ships, T-AKE 
auxiliary dry cargo ships, and T-AO fleet oilers. The T-AO and T-AKE 
ships tend to serve as shuttle ships between resupply ports and their 
customer ships, while the T-AOE tends to serve as a station ship, 
accompanying and staying on-station with a Carrier Strike Group (CSG) 
to provide fuel as required to customer ships.
    Support Vessels such as the Mobile Landing Platform (MLP) and the 
Joint High Speed Vessel (JHSV) provide additional flexibility to the 
combatant commander within the operating area. The MLP enables at sea 
transfer of vehicles from cargo ships and facilitates the delivery of 
these vehicles, equipment, personnel and supplies between the sea and 
restricted access locations ashore. The JHSV provides a high-speed, 
shallow draft alternative to moving personnel and material within and 
between the operating areas, and to support security cooperation and 
engagement missions. Other support vessels, such as salvage ships, 
fleet tug boats, and submarine tenders serve in various supporting 
roles, but are not counted as part of the battle force.
    The fiscal year 2013 President's budget requests Research and 
Development funds to mature the Navy's concept for the replacement T-AO 
fleet oiler in fiscal year 2016. The Analysis of Alternatives (AoA) is 
nearing completion. The new oilers will have a double-hull design to 
ensure compliance with the environmental protection requirement for 
this type of ship.
    In support of the enhanced Maritime Prepositioning Ship Squadron 
(MPSRON) concept of operations, two T-AKE auxiliary dry cargo ships are 
being allocated to the Maritime Prepositioning Squadrons (MPS) to 
provide sea-based logistic support to Marine Corps units afloat and 
ashore. Further, the Navy recognizes the need to provide for at-sea 
transfer of vehicles from a cargo ship and to provide an interface with 
surface connectors. The Mobile Landing Platforms (MLP) (support 
vessels) will provide an enhanced throughput option for the MPS and 
increase capacity to support combatant commander requirements. It will 
facilitate delivery of vehicles, equipment, personnel, and supplies 
between the sea base and restricted access locations ashore. The Navy 
has awarded a contract for three MLPs. As part of the fiscal year 2013 
budget deliberations, the Department will retain two MPSRONs and return 
the third to U.S. Transportation Command for common sealift support. 
The first two MLPs will be built to support the two MPSRONs.
    During the fiscal year 2013 deliberations, U.S. Central Command 
submitted a Request for Forces for Afloat Forward Staging Base (AFSB) 
capability with capacity for Mine Warfare. In the past, the Navy has 
provided fleet assets to address the AFSB demand. In order to avoid 
diverting a fleet asset to fulfill this request, the Department has 
elected to convert Ponce to provide an interim AFSB capability until 
fiscal year 2016. To meet the enduring AFSB mission, Navy plans to 
modify the MLP 3 (fiscal year 2012 ship) to become a dedicated AFSB 
asset and will request an MLP 4 in fiscal year 2014 to provide an 
additional MLP variant for the AFSB mission. This will result in a 
class of four MLPs--two dedicated to the two MPSRONs and two dedicated 
to the AFSB mission. The two dedicated MLP/AFSBs are required to 
provide continuous AFSB support anywhere in the world. Advance 
Procurement funds for the fiscal year 2014 ship as well as Research and 
Development funds for AFSB are included in the fiscal year 2013 budget 
request. MLP 3 is planned for delivery in order to replace Ponce by 
fiscal year 2016.
    The fiscal year 2013 President's budget request includes funding 
for construction of the tenth and final JHSV (support vessel). A 
Memorandum of Agreement with the Army transferred programmatic 
oversight and mission responsibility for the entire JHSV program, 
including operations and maintenance, to the Navy. All delivered JHSV's 
will be operated by the Military Sealift Command and manned by civilian 
or contract mariners.
                     decommissionings/inactivations
    As a result of fiscal constraints, the Navy chose to prioritize 
readiness over capacity. The fiscal year 2013 decision to decommission 
seven Ticonderoga-class guided missile cruisers (CG), four in fiscal 
year 2013 and three in fiscal year 2014, and two LSDs exemplify our 
resolve to provide a more ready and sustainable Fleet within our budget 
constraints. The resources made available by these retirements will 
allow increased funding for training and maintenance. Both the cruisers 
and the LSDs were in need of significant maintenance investment and six 
of the seven cruisers required further investment to install BMD 
capability. Inactivating the CGs resulted in approximately $4.1 billion 
in savings across the FYDP, including manpower and maintenance savings 
and costs avoided by not executing combat system and hull, mechanical, 
and electrical upgrades. These savings were shifted to other portions 
of the Fleet. Inactivation of the two LSDs in fiscal year 2014 saved 
approximately $293 million across the FYDP. These ships will be placed 
in Mobility ``B'' category, allowing for re-activation should 
conditions warrant. The reduction in cruiser and amphibious capacity 
and shift to a more sustainable deployment model will result in some 
reductions to the amount of presence the Navy will provide overseas in 
some select areas, or a change in the nature of that presence to favor 
innovative and lower-cost approaches.
           affordability and the shipbuilding industrial base
    The strength of our shipbuilding plan is closely coupled with the 
strength of our shipbuilding industrial base. The critical skills, 
capabilities, and capacities inherent to our new construction shipyards 
and weapon systems developers inarguably underpin the U.S. Navy's 
dominant maritime position. Accordingly, in the course of balancing 
resources and requirements in the formulation of the shipbuilding plan, 
the effect of program decisions on the industrial base must be closely 
weighed.
    Over the past several years, the Navy has placed a priority on 
increasing shipbuilding rates and providing stability for the 
shipbuilding industrial base. Stability translates into retention of 
skilled labor, improved material purchasing and workforce planning, 
strong learning curve performance, and the ability for industry to 
invest in facility improvements; all resulting in more efficient ship 
construction and a more affordable shipbuilding program.
    The past Virginia-class and DDG-51-class MYPs, the DDG-1000 Swap/
DDG-51 Restart Agreement, the LCS dual block buy, the three ship MLP 
procurement, the continuation of CVN-78-class procurements on constant 
5 year centers, and the heel-to-toe CVN RCOH induction-to-delivery 
cycle have provided critical stable workload for the affected shipyards 
and their respective vendor base. The fiscal year 2013 President's 
budget request for the next Virginia-class and DDG-51-class MYPs will 
help to further stabilize the surface combatant and submarine 
industrial base through this decade. Likewise, the funding requested to 
procure a fourth MLP, and to configure MLP-3 and MLP-4 as AFSBs will 
also provide for added workload within the auxiliary shipbuilding 
sector.
    However, the shipbuilding plan submitted with the fiscal year 2013 
President's budget request also reflects difficult choices guided by 
the strategic priorities and fiscal constraints brought with two 
governing works; the 2011 Budget Control Act and the recently released 
`Sustaining U.S. Global Leadership: Priorities for 21st Century 
Defense.' The decisions to truncate the JHSV program, to delay starting 
the TAO(X), LSD(X), and SSBN(X) programs, and to defer a destroyer, a 
submarine, LHA-8, and two LCS ships to later years in the FYDP (or 
beyond) are decisions which place added stress on the industrial base 
and on the affordability of the respective programs; yet best match our 
resources to our requirements.
    Any strategy which seeks to improve upon these projections by 
relying upon increasing investment above the current plan for 
shipbuilding is, at best, high risk. In fact, the current shipbuilding 
program calls for significant added investment through the FYDP and 
beyond (particularly during the period of SSBN(X) procurement). 
Accordingly, the Navy must continue to explore and implement 
alternatives to improve upon these projections for shipbuilding and the 
industrial base through other means.
    The strategy going forward must continue to center upon improving 
affordability. One of the greatest challenges to our future 
shipbuilding program, and therefore to elements of our industrial base, 
is the rapidly increasing cost of our ship programs. To this end, in 
addition to the emphasis on stability discussed above, the Navy is 
establishing affordability requirements and investing in Design for 
Affordability for future ship programs; mandating use of open systems 
design; leveraging competition where it exists in shipbuilding; 
employing fixed-price contracts to control cost for ships and weapon 
systems in production; imposing strict criteria limiting disruptive 
change to contracts; investing in industry-wide manufacturing process 
improvements through the National Shipbuilding Research Program; and 
incentivizing capital investment in facilities where warranted. There 
are additional mechanisms to improve affordability, which have required 
or will require congressional support:

         Strong industry performance in restarting DDG-51 
        production has yielded substantial savings for the fiscal year 
        2011/2012 ships placed under contract. The Navy is targeting 
        additional savings through the competitive fiscal year 2013 to 
        fiscal year 2017 MYP.
         Provision of a Shipbuilding Capabilities Preservation 
        Agreement (SCPA), to improve a Navy shipbuilder's 
        competitiveness for commercial work, is particularly effective 
        for auxiliary shipbuilders that possess the skills and 
        capabilities common to both Navy and commercial shipbuilding. 
        Navy has signed one SCPA agreement in the recent past.

    The Navy will continue to aggressively pursue the mutual objectives 
of improving the affordability of our shipbuilding program and 
increasing the strength of our shipbuilding industrial base, and is 
committed to working closely with Congress on these efforts.
                        shipbuilder performance
    The Navy continues to work with the shipbuilders to improve 
performance on current contracts and to invest in process improvements 
to maximize affordability on current and future contracts. The majority 
of the Navy's shipbuilding contracts are now fixed price type 
contracts, where industry bears a significantly increased 
responsibility for risk. The Navy, in conjunction with the 
shipbuilders, has been and continues to identify specific areas in 
design and build specifications that have the most potential to realize 
savings across multiple platforms. The four highest priority functional 
areas being examined are hull and structure, electrical systems, piping 
systems, and paint and coatings. Some of these will yield near-term 
cost savings while others will yield even more significant cost savings 
over a longer period of time.
    The Navy's Supervisors of Shipbuilding (SUPSHIP) work closely with 
the shipbuilders to address cost, schedule, and performance issues 
while providing on-site oversight of the shipbuilder's quality 
management systems. There are numerous examples where multiple 
initiatives were implemented to address quality issues but some 
specific examples worth highlighting are associated with the 
construction and delivery of the San Antonio-class ships. Welding and 
production processes were significantly revised to improve quality and 
the workforce was retrained and recertified to ensure consistency 
throughout all of the shipbuilder's facilities. More stringent 
procedures were developed and implemented to improve the removal of 
contaminants from the ship's lube oil system. In addition, these 
procedural changes were accompanied by design improvements to the lube 
oil filters and strainers on all San Antonio-class ships. The shipyard 
also took steps to improve cleanliness in the pipe shop which will 
improve quality in the installation of pipe on the ships As a result of 
these and many other initiatives, contractor quality continues to 
improve with each ship delivered to the Navy.
    The Navy is focused on compliance with the fundamental processes of 
structural, electrical, piping, and paint and coating work. Striving to 
better understand quality trends, the Navy is engaging earlier with the 
shipbuilder on potential cost and schedule issues through the use of 
earned value management and other schedule and cost tools.
    Acquisition Workforce
    The Navy has embarked on a deliberate plan to strengthen the 
acquisition workforce over the FYDP. The Navy's position is to continue 
its current plan as stated in the Department of Navy (DoN) Acquisition 
Workforce (AWF) Strategic Plan, to rebuild the DoN civilian acquisition 
workforce. In the past 2 years, the DoN AWF has hired approximately 
4,300 full-time equivalents and has improved its education and training 
programs in shipbuilding program management and contracting.
    The Navy continues to emphasize the need for a professional cadre 
of onsite SUPSHIP personnel co-located with the Nation's shipbuilding 
industrial base in an oversight role. Over the last year, the number of 
onboard SUPSHIP staff reached 1,146. 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 to fiscal year 
2011. Preserving these staffing gains made over the past 4 years is 
critically important to ensuring sufficient oversight and management of 
the Navy's shipbuilding programs.
    Summary
    The Navy continues to instill affordability, stability, and 
capacity into the shipbuilding plan and to advance capabilities to 
become a more agile, lethal and flexible force to address the 
challenges and opportunities facing the Nation. The carrier force will 
sustain a 5 year interval for construction starts to better align 
delivery of the Gerald R. Ford-class ships with the ends of service 
life for the Nimitz-class ships while ensuring the Navy maintains an 
eleven carrier fleet. The submarine force will continue to be 
preeminent in the world as the Navy continues to invest in Virginia-
class submarines via multiyear contracts, submarine modernization, and 
prepare for replacement of the ballistic missile capability. The plan 
also continues DDG-51 construction via a multiyear contract to leverage 
a stable design and mature infrastructure to achieve affordable 
capabilities. LCS will address specific and validated capability gaps 
in Mine Countermeasures, Surface Warfare, and Anti-Submarine Warfare, 
and the selection of both LCS designs leverages the unique capability 
delivered by each platform while providing stability to the 
shipbuilding infrastructure. The Navy's amphibious force will remain 
capable with full funding of LSD mid-life upgrades, replacement of the 
LSD-41/49-class ships with LSD(X), construction of the LHA Replacement 
Class, and successful deliveries of the LPD-17-class ships. Finally, 
the Navy is investing in the auxiliary fleet with the procurement of 
the last JHSV and four MLPs, with variants supporting the MPS and the 
AFSB demands.
    The Navy and Marine Corps, on the high seas and closing foreign 
shores, stand ready to answer the call of the Nation. We thank you for 
your continued support and request your approval of the fiscal year 
2013 President's budget request for shipbuilding.

    Senator Reed. Thank you very much, Mr. Secretary, for an 
excellent statement.
    Mr. Stackley. Thank you.
    Senator Reed. Let me go back to the issues in terms of 
submarines. As you indicated, we had reached some significant 
economies, producing the ships under budget, on time and two 
per year. Now we're in a situation where we're going to skip a 
year. That will have implications on the ability to maintain 
these efficiencies in the shipyards and it also will cause some 
disruption, which usually ends up in paying more ultimately 
than paying less.
    I know you had to make some very difficult decisions, but I 
wonder if there is a way to restore a second boat to fiscal 
year 2014 or to mitigate the effects of the delay. Can you 
describe in more detail, if you feel it necessary, the reasons 
for the delay and what could be done to fix this issue, and is 
legislative authority necessary?
    Mr. Stackley. Yes, sir. Let me just punctuate your 
assessment of the value of two per year and the efforts that 
were taken to get to that rate of production and our intent and 
desire to be able to sustain it. First in terms of force 
structure requirements, our requirements for attack submarines 
is laid out fairly well in the 30-year shipbuilding report and 
states squarely that 48 attack boats is what the Nation needs 
in order to meet our requirements for the near-term and long-
term.
    Today we have greater than 48 boats in the force. However, 
in order to sustain 48 boats, if you do the math, assuming a 
service life of about 33 years, you need to be building at a 
rate of 1 to 2 per year sustained. We've endured a long period 
of submarine construction when, in fact, we were building at 
one and in certain cases zero submarines. So while today we 
have a force greater than 48 boats, when you look ahead to the 
late 2020s and 2030s our force structure will dip down as a 
result of that past low rate of submarine construction.
    So two per year, not only is it beneficial from an 
industrial base perspective, but it's critical from a force 
structure perspective that we sustain two per year in the near-
term as best as possible to minimize that longer-term force 
structure gap.
    Now, why are we staring at a one-boat year in 2014? This is 
simply the hard line that came with the new top line. In the 
Navy's budget submit, and frankly with the Office of the 
Secretary of Defense (OSD) throughout the budget process, I 
will state that everything that could be done within the top 
line was done to hold onto that second boat in 2014. But in the 
end we had to compromise on that second boat in order to 
balance, and in doing so we moved it from 2014 to 2018, kept it 
within the multiyear, which mitigates some of the impact. But 
it was perhaps one of the harder decisions that the Navy had to 
deal with.
    Let me address the next part of your question, which is 
what are our alternatives at this point. When we were faced 
with making that move, first as it was important to keep it in 
the multiyear because we want to at least work with industry to 
level load to the extent possible that dip in 2014, but we also 
looked at the funding. In order to fully fund a second boat in 
2014, it would require, first, advanced procurement in 2013, 
plus the balance of full funding required in 2014.
    That total is north of $700 million. It's approximately 
$777 million in 2013 that would be required, as well as a 
balance of greater than $1.2 billion in 2014. We couldn't get 
there within our top line. We couldn't get there.
    When it comes to executing at shipbuilding, the reality is 
that, while we fully fund ships, our outlay rate is drawn out 
over a longer period of time. So for a particular program such 
as aircraft carriers and large-deck amphibs, where there's such 
a significant spike in the budget in the full funding year, the 
Navy, working with OSD, the Office of Management and Budget 
(OMB), and Congress, have adopted an incremental funding 
approach that smoothes out that spike, because what we need to 
do is ensure that our outlays and obligation rates are covered 
by the funding in any particular year. If we go to that 
alternative funding mechanism, then it smoothes out the spike.
    In many respects, we're looking at a similar circumstance 
here with Virginia. That additional boat in 2014 created a 
spike for us in the budget and, absent the ability to other 
than fully fund the boat, we had to push it to the right. So we 
have looked at what it would take to restore the boat within 
the top line, and a couple of things happened.
    First, when you add the boat, in addition to addressing the 
requirement, you generate savings associated with additional 
economic order quantity material, savings associated with 
sustained learning curve performance, as opposed to a potential 
negative learning curve performance, and savings associated 
with improved planning.
    [The information referred to follows:]

    There are two alternative proposals recommended, both using 
incremental funding, to restore the fiscal year 2014-2 ship making the 
Block IV contract a 10 ship MYP. One proposal requires $778 million of 
fiscal year 2013 Advanced Procurement funding and incremental funding 
authority for the fiscal year 2014-fiscal year 2016 ships. The second 
proposal is Total Obligation Authority (TOA) neutral and requires 
incremental funding authority for the fiscal year 2013-fiscal year 2018 
ships. As fiscal year 2013 is the last year of the Block III contract 
and the Navy is currently contractually required to fully fund these 
ships, a contract modification would be required to amend the Block III 
contract. In both options, the addition of a second ship in fiscal year 
2014 to the Block IV contract will result in an incremental cost of 
$1,736.7 million across Block IV, which is funded via incremental 
funding authority and largely TOA neutral. Program of record and both 
options are depicted in the attached chart.
      
    
    

    Mr. Stackley. Every step along the process you generate 
savings by having that second boat in 2014. If you then look at 
the total Virginia program and you look at the bottom line for 
the total Virginia program and you assess, without tripping 
over full funding versus incremental funding discussions, at 
the bottom line what is the net cost impact of adding a second 
boat in 2014, it's near neutral.
    In other words, the net savings associated effectively 
adding the boat by pulling it to the left outweigh the upfront 
costs associated with that. The trouble is that in the budget 
framework requiring full funding we don't have that top line to 
do that.
    So the long-term savings associated with the second boat 
balance out the upfront investment required by the second boat, 
but within the constraints of our budget we were unable to get 
there.
    Senator Reed. You might be able to help us help you get 
there through appropriate legislative language. Is that 
feasible? .
    Mr. Stackley. We could work with your staffs to address the 
total picture and leave that for your action.
    Senator Reed. That is very fair.
    I have many additional questions, but let me recognize 
Senator Wicker so everyone gets a chance to engage, and then 
Senator Sessions, and then I'll pick up with the second round.
    Senator Wicker. To pick up on some of the questions I 
mentioned in my opening statement, the Navy's long-term 30-year 
shipbuilding plan, which indicates we'll build ships at minimum 
sustaining rates--and I realize there are funding constraints 
that we all have to work with. But I'm particularly concerned 
about the proposed construction of new ships that will lead to 
job reductions, that we're going to have to make up for later 
on.
    I think all five of you agree and all three of us up here 
agree, it's irresponsible to think that we can lay off skilled 
workers, engineers for example, and expect them to be available 
when future contracts are awarded. These are the peaks and 
valleys that we've talked about. I know the Navy's concerned 
about employment valleys.
    Admiral McCoy, I may just let you go first on this, and I'm 
sure Secretary Stackley will want to follow up. Is the number 
of ships currently planned enough to keep the Navy's six major 
shipyards in business? If we don't keep them in business, what 
does that do to competition going forward in the medium-term 
and long-term? Does it make us rely long-term on more sole 
source contracts because we don't have enough yards competing? 
What are you gentlemen doing to think of every possible option 
for avoiding these employment valleys that we can't recover 
from in a decade when we need those jobs again?
    Admiral McCoy. Senator, thank you for the question. I think 
if you look out over certainly the next 5 years, I think the 
answer to your question is yes, there's workload out there in 
each one of our big six shipyards, except for the actions that 
Huntington Ingalls is taking relative to their Avondale yard, 
so big five shipyards. There is that work.
    There are peaks and valleys that we do have to manage. I 
will say that three of our yards--Electric Boat, NASSCO, and 
Huntington Ingalls-Newport News--are also in the repair 
business, and we work very closely with those three yards to 
level load the repair business along with the spikes and 
valleys in the new construction business. One, for example, is 
Electric Boat. We are closely coupled on the nuclear submarine 
repair business with the naval shipyards. Today, for example, 
on any given day we may have from 200 to 300 Electric Boat 
employees anywhere around the country in one of our four naval 
shipyards helping us with peaks and valleys, so that we 
minimize overtime in naval shipyards and things like that.
    We are constantly looking across the industrial base at 
those peaks and valleys to see where, between post-shakedown 
availability work, where it makes sense repair work, and those 
kinds of things, Senator.
    Senator Wicker. Let me interject, and I know you haven't 
given a complete answer yet. Is the repair work at all a 
possibility for Pascagoula? Is that something you've discussed 
at all?
    Mr. Stackley. May I?
    Senator Wicker. Please.
    Mr. Stackley. Yes, sir. First, when it comes to repair 
work, there is a homeporting policy that we're not going to 
ship a ship out of its homeport for limited repair 
availabilities. What that means is for Huntington-Ingalls 
Industries (HII) on the Gulf Coast, they would only have the 
opportunity to compete for major repair availabilities that are 
bid coast-wide. Those are limited in number. But when we bid 
coast-wide it is an open competition.
    So it's up to in this case HII to choose to bid. The back 
end of that is would they be competitive in the bid? In other 
words, if you have a ship construction yard that's competing 
against a repair yard and you look at the total associated with 
the competitiveness, the rate structure, the overhead costs 
that you carry with a shipbuilder, they have to assess whether 
or not they're competitive to determine whether they will 
compete for those bids.
    Senator Wicker. So it's not a conversation you've really 
had with Ingalls in Pascagoula?
    Mr. Stackley. Actually, we have talked with regards to 
major modernization for combatants, and particularly the Aegis 
modernization program when it was in its formulation stage, 
whether or not the building yards would have the opportunity to 
bid. There have been alternatives that we looked at and 
continue to look at. But today those availabilities are 
captured within the 6-month timeframe of a homeport policy, and 
so it's been beyond their reach.
    Senator Wicker. Admiral McCoy, I did cut you off in mid-
statement. So I want to give you an opportunity to complete 
your thought.
    Admiral McCoy. That was basically what I had to say. To sum 
up, I'd say, yes, over the next 5 years we see enough work for 
the yards. There will be peaks and valleys and we are working 
with them all the time to see what legitimate other work we 
have that can help them through that period, where they can be 
competitive as well.
    Senator Wicker. Okay. Let me ask you this, Secretary 
Stackley. Secretary Napolitano was testifying March 8 before 
the Senate Appropriations Committee and she was asked by 
Senator Murkowski about the Coast Guard's future shipbuilding 
plans. Let me just read her response. The Secretary said this:

          ``In light of what DOD is doing with respect to its 
        budget reductions under the BCA, we are coordinating 
        with naval operations, looking at what the Navy is 
        doing with its assets, then really correlating on what 
        7 and 8''--meaning National Security Cutters 7 and 8--
        ``would do should they be built. We think that, given 
        where we are with the budget and the fiscal 
        environment, before moving on numbers 7 and 8 we want 
        to make sure we're coordinating with the Navy.''

    The 30-year shipbuilding plan does not mention Coast Guard 
cutters. Can you explain what coordination there is and what 
Secretary Napolitano could have been talking about? Is there 
coordination between the Services, DOD, and the Department of 
Homeland Security on ensuring that the shipbuilding rate is 
meeting our commanders' requirements?
    Mr. Stackley. Yes, sir. There's going to be a two-part 
answer to this. I'm going to answer the first part and ask 
Admiral Blake to answer the second part. The two parts have to 
deal with a MOA between the Navy and the Coast Guard when it 
comes to force responsibilities, that I'll ask Admiral Blake to 
address.
    The other part of the coordination side is on the 
procurement side, and there's a very healthy dialogue in place 
between the Navy and the Coast Guard regarding the national 
security cutter, as well as the other elements of the Coast 
Guard recapitalization program.
    So we have detailed discussions in terms of how we the Navy 
can help the Coast Guard in its procurement efforts while 
separately, at the CNO and Commandant level, there's the larger 
discussion taking place regarding how the Navy and the Coast 
Guard operate together, not just in terms of missions and 
capabilities, but Service to Service.
    Admiral Blake. Sir, the Navy and the Coast Guard, and the 
Navy and all the Services, we have a series of meetings, we 
call them warfighter talks, in which we discuss areas in which 
we can find commonality. One of the challenges we have is the 
different requirements that each of the Services have. Where we 
can find commonality among requirements, then we proceed down 
that path.
    For example, if you look at Coast Guard ships, Coast Guard 
ships have many of the same systems that we have on Navy ships. 
But where we have a tendency to diverge as we're heading down 
that path is because of the differing requirements that each of 
the Services bring to the table. But for both efficiency and 
effectiveness, we attempt to find as many common areas as 
possible and then go down those paths.
    Senator Reed. Thank you, Senator Wicker.
    Senator Sessions.
    Senator Sessions. Thank you.
    Secretary Stackley, the Secretary of the Navy and the CNO 
testified before our full Senate Armed Services Committee and 
the Secretary of the Navy has met with me, describing the 
improvements made with the LCS in its cost and schedule. Recent 
press articles describe problems with the LCS, including 
Defense News on April 5 and the New York Times.
    What is your assessment? It seems to me these articles are 
basing their concerns on older data. Maybe we're not getting 
the word out about the progress that I understand is occurring 
there. The LCS is such a critical part of the Navy's future. It 
has fewer sailors, higher speeds, less fuel cost, and 
remarkable capabilities.
    If you would, tell us where you think we are in that 
system?
    Mr. Stackley. Yes, sir. I'll look to share this response 
with Admiral Blake. But let me start with the platform. The 
history of the startup of this program is well known. I'm not 
going to replow that turf there. However, as I mentioned in my 
opening remarks, we have the first follow ships, one near 
complete. The LCS-3 up north is completing her builder's trials 
and getting ready for acceptance trials to be delivered this 
spring.
    Near textbook. It's going extremely well in terms of 
schedule and being on target, and in terms of quality of 
construction. That's the result of not just plowing in the 
lessons learned from the lead ship, but the significant 
investment that was made by that shipyard to support this 
construction program.
    Separate and very similar on the Gulf Coast. Austal, which 
is 9 to 12 months removed from the construction up north, 
simply by the sequencing of the contracts. Again, plowing the 
lessons learned, investing in the facilities, accomplishing the 
training that needs to be accomplished for the workforce, and 
cleaning up the design. We're seeing the same rate of 
improvement on the Gulf Coast.
    So both construction efforts north and south are quickly 
capturing lessons learned from the lead ship, making the 
investments necessary, and on the production ramp that we need 
to see to support the 55-ship program. That's the construction 
side. We see stability, we see steady improvement, and we see 
good cost returns on the front end of this dual block buy 
strategy.
    Now we have to be talking about mission packages. The 
mission package development efforts, we have today three-plus 
mission packages in development: mine countermeasures (MCM), 
anti-surface warfare, and anti-submarine warfare (ASW). As well 
we have a search and seize, a small module that we've put to 
work. They're conducting development testing to support their 
IOC milestones in the 2014 through 2016 timeframe.
    This spring, for example, we conducted the first shipboard 
demonstration of the MCM mission package on board the 
Independence, working down at the Navy's Warfare Center in 
Panama City. The first time we brought all the elements that 
make up the first increment of the MCM package to the ship, and 
operated with sailors. We learned some things, but we also 
demonstrated the ability to conduct these mission scenarios 
using the unmanned and remote operated vehicles that make up a 
large part of the LCS mission package.
    So the development and testing for the mission packages, in 
that case MCM, separately the anti-surface warfare mission 
package, testing, and in fact we'll be outfitting the LCS-1 
with the first increment of the anti-surface warfare mission 
package when it deploys next year to Singapore, and then 
development of the ASW mission package, all moving forward.
    So that effort lags the construction timeframe by 
deliberation so that the ships and mission packages are all 
IOC-ing in the middle of this decade.
    The third important piece is fleet introduction. So we have 
one lead ship on the West Coast, LCS-1, and LCS-2, right now 
making its way to her homeport in San Diego. We're on the front 
end of fleet introduction at the same time. As with any new 
ship class, we learn a lot. We also train up a sailor force 
that becomes proficient in this ship class.
    We're on the front end of this program. I don't spend too 
much time studying the reports that come from the press other 
than to be aware of what information is out there and try to 
correct any misperceptions. But she's going well. We're 
learning a lot. We look forward to deploying LCS-1 next year, 
and we have a lot of work that we have to do to make sure that 
when she deploys she is well supported and succeeds in all the 
mission areas that we assign to her.
    Senator Sessions. You don't see any cost or technical 
problems of great concern to you at this point?
    Mr. Stackley. I think cost is under control. I think I've 
addressed that fairly well.
    Senator Sessions. I thought I heard you say the 10th ship 
would perhaps be half the cost of the first ship?
    Mr. Stackley. Inside of our block buys, each 10th ship, in 
other words, for each shipbuilder, when you look at the fixed-
price option, that's a 2015 ship. When you look at a fixed-
price option for those 10 ships, they're at about half of the 
lead ship's price. You have to take escalation out and put them 
all in the same base year dollars. But it's a very impressive 
learning curve that these shipyards have committed to inside of 
those fixed-price contracts, and that they've put the 
investment behind to ensure that they hit the numbers.
    Senator Sessions. The Navy hasn't changed its view of the 
important role it would play in the future fleet?
    Mr. Stackley. No, sir, and I think I should allow Admiral 
Blake to address that.
    Senator Sessions. Admiral Blake.
    Admiral Blake. Yes, sir. I would tell you the LCSs are 
replacing three classes of ships. They're replacing the PCs, 
they're replacing the MCMs, the minesweepers, and they're 
replacing the FFGs. I think that alone just gives you an idea 
of how critical these are to the future of the Navy. We're 
being able to replace three classes of ships with a single 
class because of the fact that we are going to modularity.
    I'll just anchor for a second on the Avenger-class, the 
minesweeps. They'll be starting to come out of service in 
fiscal year 2019. When those ships start coming out, we'll be 
bringing the LCSs on line. One of the big or key 
transformations in there is that we're going to be able to get 
the man out of the minefield. In the current technology, we 
have to put the man in the minefield in order to be able to 
clear it. When we go to the LCS with its modularity, we will be 
able to take the man out of the minefield. We'll be able to use 
unmanned vehicles. We'll be able to use helicopters, which we 
currently use, but we'll be able to get that individual out of 
there. So we'll be able to keep our sailors out of harm's way, 
or out of harm's way as opposed to where they currently are, 
which is in the field.
    You can look at each of the modules that are coming on 
line, whether it's the surface one or the ASW module, and I 
think you would see that these are absolutely critical, that we 
have to fill in for these as those assets come out of the 
fleet.
    Senator Sessions. How old is the current minesweeper fleet?
    Admiral Blake. I'd have to get you the age. But they're 
coming to the end of their expected service lives, starting 
with the ones in fiscal year 2019. But I'd have to get you the 
exact age on all of them.
    [The information referred to follows:]

    The current minesweeper fleet is between 18 to 25 years old. The 
USS Avenger was the first ship commissioned in 1987, and the USS Chief 
was the last ship commissioned in 1994.

    Senator Sessions. I was on one a number of years ago. It 
was pretty old.
    Admiral Blake. Yes, sir, they are old.
    Senator Sessions. That was a number of years ago.
    Admiral McCoy. Senator, may I jump in on your question 
about technical concerns?
    Senator Sessions. Yes.
    Admiral McCoy. One of the things about LCS was the first 
two ships, in fact, are research and development (R&D) 
platforms. They were bought with R&D funds. Normally on a new 
ship design, we have a fairly robust R&D program ahead of the 
ship. These were our R&D platforms. In fact, if you look at 
LCS-1, we went from concept of the ship to deployment in 7 
years, which is a record for the Navy.
    On every single one of our new classes, even ones that we 
put R&D money in upfront, we learn technical issues on the 
first of the class, that we feed back into the subsequent 
ships. We've learned on LCS as well. But if we take LCS-1, it 
did a Fourth Fleet deployment, then took it out to the Rim of 
the Pacific (RIMPAC) Exercise, took it out to Hawaii, rode it 
very hard for 25 days out there, most of the time at very high 
speed, and brought it back.
    We've had some technical issues, but nothing that would 
tell us that the platform itself is fundamentally unsound or 
will not be a very well performing ship in service. Every time 
we find something, we fold it back into the construction line, 
sir.
    Senator Sessions. Thank you.
    Mr. Chairman, thank you. We are concerned about the size of 
the fleet and that budget-driven fact is a problem and, I 
think, as you answered, Mr. Stackley, and our chairman here 
mentioned, sometimes we just have to find the money, Senator 
Reed, because it costs so much to delay and put off the 
construction. It has so many ramifications not to stay in track 
at an efficient level of production. Mr. Stackley, we value 
your judgment and insight, and I hope you will keep us posted.
    Thank you.
    Senator Reed. Thank you very much, Senator Sessions.
    We'll begin a second round. If necessary, we'll do a third 
round. These are all very good questions.
    I think we're focusing on some critical issues in the 
shipbuilding program. Last year we had a very, very good 
hearing. Admiral McCoy attended and Captain Galinis from the 
Gulf Coast was there. Mr. Secretary, you were there also, among 
others. At that hearing we recognized that there were some 
serious problems with quality and cost, but that you were 
seriously engaged, Admiral McCoy and your colleagues, in 
dealing with the cost issues and dealing with the quality 
issues, too.
    So could you give us an update of the measurable progress 
we've made going forward in these shipyards and assurances that 
we've now reached a point where costs are under control and 
quality is acceptable?
    Admiral McCoy. Yes, sir. Let me start with quality, because 
if you don't get quality right you're cost isn't going to be 
right. We've worked very, very hard with both the shipbuilder 
on the Gulf Coast as well as my Supervisor of Shipbuilding 
Office. Since 2007 or so, I've increased the staff of my team 
down there by about 20 percent. One of the things we've done 
over the last 3 years very hard down there is get the 
Supervisor of Shipbuilding as well as the shipbuilder focused 
on fundamental, everyday deckplate compliance.
    We look at four key areas: piping, electrical, structural, 
and coatings, areas where we had the problems with the LPD-17 
class, for example. In addition, we took the lessons learned 
from the fleet introduction of the LPD-17 class and we made a 
significant number of design changes and we folded those back 
into the line, and some of those we still have to backfit onto 
our ships, principally in the area of how do we keep blue oil 
clean and making smart system design changes there.
    Since those efforts, we delivered LPD-22, the soon to be 
USS San Diego, it will be commissioned in about a month. It was 
delivered in December. That ship went through the most rigorous 
acceptance trials we've had to date. In fact, we added what I 
call an endurance trial, it was actually a third trial after 
the builder's trial and acceptance trial, and then an endurance 
trial, where we ran the ship's main propulsion diesels as well 
as the ship service electrical diesel generators, ran them very 
hard for a period of time, and then we came back in port, we 
rolled out bearings, did inspections, and in fact verified the 
oil was clean, no scoring, that kind of thing.
    San Diego just made the transit from the Gulf Coast and 
reached its port of San Diego about 2 weeks ago. So it was very 
successful. In fact, the remarks from INSURV in terms of the 
number of deficiencies in their report was the best ever LPD-17 
class.
    On top of that, in the last 2 years I've brought an outside 
audit team in three times--they're going back in this fall--of 
outside experts, not only to audit the shipbuilder, but also 
the Supervisor of Shipbuilding.
    So I think I am satisfied that on any given day fundamental 
compliance is happening back down at the yard. We look at those 
metrics every week, I have my folks intently focused on going 
out and doing inspections, as well as the yard, and we compare 
those notes, and I'm satisfied at this point, and we're now in 
a sustainment mode to make sure we don't lose ground.
    I think cost is one area where we still have work to do. 
The cost of compliance of quality in the yard is still high and 
the yard is working on that. We are working with the 
shipbuilder on moving more work to the left in the build cycle, 
more outfitting, to get the cost down. We're working with them 
on the material builds in terms of better pricing and that kind 
of stuff.
    We still have a ways to go with costs and along with that 
schedule. But I'm satisfied right now that quality is where it 
needs to be. We just need to drive the cost of obtaining that 
quality, continue to drive that down, sir.
    Senator Reed. Thank you. Secretary Stackley, who shares 
those costs? This is part of the contractual arrangements going 
forward, but also these were bid, there was the presumption 
that they could deliver quality with the costs that they 
stated. Those costs are still challenging. So how are we not 
only reducing costs in the present time, but as we go forward, 
with our contractual arrangements making sure that we don't 
absorb costs that should be properly done by the contractor?
    Mr. Stackley. Yes, sir. Generally speaking, each 
shipbuilding contract has its own terms and conditions and cost 
structure. So who pays or what the share is for those costs, 
it's a contract-by-contract discussion. However, as I mentioned 
in my opening remarks, the 38 ships that we've put under 
contract since December 2010 are all fixed-price ships. Some of 
those are firm-fixed-price, in which case all of the costs of 
rework or any cost growth is on the shipbuilder's side of the 
ledger.
    Most of those are a fixed-price incentive contract, which 
means that there is a share line associated with cost growth, 
and in almost every case it's a 50-50 share line, which states 
that, regardless of the cause of the cost growth, if the 
shipbuilder's costs increase we share those costs 50-50 up to a 
point of total assumption, in which case it converts basically 
to a firm-fixed-price contract at that point in time.
    We believe that's the right cost structure and it's proven 
very effective over our shipbuilding history to control costs.
    The several steps to this are: before going into the 
contract, make sure your requirements, your design, your specs 
are all nailed down, so there's not unnecessary churn that's 
driving cost growth; and then make sure of processes and 
procedures, the build plan, that contribute to controlling 
quality are in place; and then in the event of additional cost 
growth, it does appear on a 50-50 share line up to the ceiling.
    In the case of the ships that Admiral McCoy discussed on 
the Gulf Coast, those ships are at ceiling, in which case the 
cost growth was the burden of the shipbuilders beyond the 
ceiling.
    Senator Reed. Thank you.
    Let me turn quickly now to the Ohio replacement. As we 
mentioned, Secretary Kendall was here and he conceptually 
agreed that, because of the role of the Ohio-class replacement 
in the strategic triad, that this is not strictly a Navy 
program; this is a DOD program, a national program; and that he 
seemed to be open to efforts to provide support for the Navy.
    It goes back to the question that Senator Wicker posed, 
too. At some point you could have one class of ships that are 
necessary, but crowd out other necessary ships without this 
type of DOD support.
    Are you actively working with DOD to develop financial 
support for the Ohio-class replacement?
    Mr. Stackley. Sir, I'm going to say the answer is yes. You 
have to recognize that actively working with DOD on a 
procurement program that's 8 years away, it's hard to nail 
something down today that when you get out there it will still 
be in effect.
    So for today, we're talking about planning. Inside of the 
30-year shipbuilding plan that we submitted as a report to 
Congress, we lay out today's force structure, the procurement 
plan over the next 30 years, and what it would cost to support 
that procurement plan. In fact, OSD has provided for planning 
purposes some headroom in the years of the Ohio replacement 
construction program to give the Navy the ability to better 
accommodate it. That's not full headroom. That's simply if you 
look at the average shipbuilding investment between now and the 
start of the Ohio replacement program and then you look at the 
period of the Ohio replacement program, there's about a $2 
billion per year hedge that's been allowed for the Navy for 
planning purposes.
    So today, in the long-term planning phases we provide some 
room for working with OSD, provide some room for planning 
purposes. But we have to relentlessly hammer on this issue 
between now and when that becomes real money inside the FYDP, 
or what we'll be looking at is a shipbuilding plan that's not 
executable.
    Senator Reed. Admiral Blake, please.
    Admiral Blake. Sir, when we put the 30-year plan together, 
one of the good-news items that comes out of that is the fact 
that we highlight issues like the fact that when you're in that 
second period of 5-year defense plans from the 2019 period out, 
we highlighted the fact that the Shipbuilding and Conversion, 
Navy plan at that point will go up over $4 billion. It will go 
from a $15.1 billion average, which we're currently in in this 
FYDP and the next, it'll go up in excess of $19 billion.
    So what we end up doing is, as we point that out to DOD, 
they recognize, as you saw in the plan, that there is a 
significant challenge for the Navy because that is such a steep 
curve as we're trying to balance across the entire portfolio, 
and that there will have to be something done in order to be 
able to keep a balanced program.
    Senator Reed. Thank you very much.
    We've been joined by Senator Blumenthal. We recognize 
Senator Blumenthal for his questions and then Senator Wicker. I 
have other questions and I'll finish up. Senator Blumenthal.
    Senator Blumenthal. Thank you. Thank you, Mr. Chairman, and 
thank you all for your great work in DOD on behalf of our 
Nation and the men and women under your command.
    I want to follow up on the questions that have been asked 
about the Ohio-class, in particular whether the 2-year delay 
will achieve substantial R&D progress that will in the long run 
save money as well as advance the superiority of the weapons 
system. Is that your view?
    Mr. Stackley. Yes, sir. If I could simply outline what is 
being done inside the 2-year delay. First, as we look at this 
we have critical path activities that need to support the start 
of construction for the Ohio replacement program. So when we 
lay out the timeframe between now and the 2021 procurement, we 
keep the critical path activities on track.
    In total, between now and that start we have increased R&D 
investments. The R&D budget between now and 2021 is more than a 
billion dollars above what it would have been for a 2019 start. 
So there is R&D wholeness that will contribute to continued 
development, critical path activities, greater design maturity, 
and overall risk retirement going into the start of 
construction of the Ohio replacement program.
    There's also a parallel program with the United Kingdom. 
They're replacing the Vanguard, their strategic deterrent 
submarine, at about the same timeframe. So we have an effort, 
referred to as the Common Missile Compartment, which is common 
to both the United States and the United Kingdom's submarine 
programs. That is staying on track to the United Kingdom's 
schedule.
    What that means is that is slightly ahead of the U.S. 
submarine program now. That means that that entire effort and 
the risk associated with it will be reduced for the United 
States by virtue of the fact that we'll be staying on the 
United Kingdom's schedule. So there's direct improvement to 
risk management associated with the Common Missile Compartment. 
There's direct improvement to retiring risk in developments 
through the total of additional R&D investment during the 
timeframe.
    What's absolutely critical is that we manage the money and 
the time wisely, so that when we get to the start of 
construction for the Ohio replacement program we are at a 
higher level of design completion, a higher level of technology 
maturity, and we've taken advantage of this time and 
opportunity to find those ways to reduce cost in the program.
    Senator Blumenthal. My understanding is that this 2-year 
delay continues our schedule to be in sync with the British; is 
that correct?
    Mr. Stackley. As a result of the 2-year delay, the United 
Kingdom's successor program is ahead of the U.S. Ohio 
replacement program. The parts of the respective programs that 
are common, the Common Missile Compartment, which is a section 
of the ship that includes the strategic weapons system, that is 
staying on schedule to support the U.K.'s successor program.
    Senator Blumenthal. Going to the Virginia-class submarine, 
I have followed a number of the questions and your answers in 
response to Senator Reed's inquiries about it. Number one, I 
just want to second that I hope that perhaps this subcommittee 
and the full committee and Congress can work with the Navy in 
seeking to restore that funding for the boat that was pushed to 
2018 because of the potential savings that you have mentioned 
in connection with building that second submarine in 2014.
    If there is a way to avoid the budget spike in cost that 
right now has caused the delay, if there is some accounting or 
legislative language that could be devised, I'm very eager to 
join with Senator Reed on working on that.
    Mr. Stackley. If I can just state it as squarely as I can, 
today you are working on the 2013 budget. The options before 
you include adding money to the Navy's budget to support the 
advance procurement of a second 2014 budget, and the total 
there is north of $700 million. If you do that, that leaves the 
Navy with about a $1.2 billion bill in 2014, which is the same 
problem that we confronted in building the Program Objective 
Memorandum (POM) for fiscal year 2013, that we don't have the 
headroom for that $1.2 billion.
    That would be a significant reduction in the bill for the 
Navy, but it does still leave us with a problem in 2014 that 
we'd have to address in the POM.
    The other alternative, frankly, is incremental funding, 
which is not in accordance with policy. Policy would dictate 
that we fully fund each boat in the multiyear procurement. I'm 
simply going to state that these are extraordinary times. This 
is an extraordinarily important program and this is a fleeting 
opportunity. If we don't capture that second boat in 2014, the 
opportunity cannot be recovered in terms of force structure, in 
terms of savings potential, and in terms of the industrial 
base.
    Under these extraordinary times, it is perhaps appropriate 
that the Navy and Congress look at whether or not this is the 
right time to provide an exception to full funding. It has its 
drawbacks, going to an incremental funding approach. We explore 
it and we would welcome a discussion with the Hill in that 
regard.
    Senator Blumenthal. I would welcome a discussion as well. I 
very much appreciate your putting it so squarely and, I might 
say, eloquently, and I think that the burden is on us to 
recognize that we are in extraordinary times. We face 
extraordinary challenges, but also extraordinary opportunities 
to make sure that we meet our obligations, take advantage of 
the opportunities to secure our undersea warfare capability at 
the least possible cost in the long term.
    I welcome your responses to Senator Reed and just now to 
myself, and I hope to follow up with you.
    Mr. Stackley. Sir, the only thing I think it's important to 
add is, the Navy's willingness to have this discussion is 
underpinned by the strong performance of the Virginia program. 
Otherwise we wouldn't even consider it. It's the strong 
performance on the Virginia program. It's the fact that we, the 
Navy, DOD, and we look for Congress to follow, are willing to 
make the long-term commitment associated with multiyear 
procurement, that that offsets concerns associated with 
incremental funding during that period.
    Senator Blumenthal. I think you've just stated a very 
critical factor in this discussion, which is that the 
performance under this program ahead of schedule, under budget, 
consistently, and reliably is another extraordinary 
circumstance that has to be part of this discussion to justify 
incremental funding. So I welcome your responses.
    Thank you.
    Senator Reed. Thank you, Senator Blumenthal.
    Senator Wicker.
    Senator Wicker. Thank you.
    Admiral Burke and General Mills, from an operational 
perspective, the Navy budget calls for decreases in large 
amphibious ships, among other categories. In my opening 
statement, I mentioned the requests from combatant commanders 
for amphibious ships has increased over 80 percent in the last 
5 years, a very dramatic number. What is the reason for that 
and what will be the impact if these requests are not met?
    Admiral Burke. Senator, thanks for the question. You're 
right, the combatant command (COCOM) demand signal has gone up 
significantly, to the point where if we were to meet all their 
requirements it would take a Navy of greater than 500 ships. I 
certainly am not here to begrudge the COCOM demand signal 
because they have challenges that they're trying to deal with. 
But we can't meet all their demands.
    There is a process in DOD, run by the Joint Staff, called 
the global force management process, by which they take in the 
COCOM requirements and adjudicate that along with the forces we 
have to come to a reasonable allocation of force. That's a 
process we're dealing with today. We've been using that process 
for a number of years and I would expect we will continue to 
use that process in the future to bridge the gap between supply 
and demand.
    General Mills. Senator, if I could just add to that, I 
would say the increased demand really is testimony to the 
flexibility, the versatility, the value of our forward-deployed 
amphibious forces, and what it gives to those COCOMs out there 
who use those forces across a large range of mission sets. I 
think it's a testimony to how valuable the forces are to our 
people out there who are doing the job.
    As we look at the inventory of ships, I think we look at it 
in three ways. We certainly look at it in the ships it takes to 
maintain that forward presence on a day-to-day basis, and 
provides those tools to the COCOMs for their engagement, for 
their crisis response, et cetera. We look at it for the ability 
to give training opportunities for our homestationed forces who 
need to train with those amphibious ships in order to build 
both our skill sets and our interoperability with the Navy. Of 
course, we have been relatively clear in our requirement in the 
event of a major crisis that we need 30 operationally 
available, ready amphibious ships at the point of action, and 
that we have worked with the Navy closely as they developed 
their shipbuilding plan over the next 30 years to take a look 
at those requirements and plan to meet them.
    Senator Wicker. General, when we drop below 30 to 29 
amphibious ships, what's that going to do to your capability?
    General Mills. Each time we have dropped the number of our 
requirement, I think, it's been an acceptance by us of 
additional risk at each step along the road. I think that we 
worked very closely again with the Navy so they understand what 
the requirement is and that they do their best to meet them.
    I think in the long range we're poised well to meet those 
requirements. In the short range, there is risk. There is risk 
associated.
    Senator Wicker. Can you help us understand that risk? Can 
you be a little more specific?
    General Mills. I think the risk comes in in the event of a 
major crisis it would be incumbent upon the commander who is 
moving forward to work, to decide what he could or could not 
bring along because he didn't have the capability to load it on 
board the ships. He'd have to seek mitigation through other 
processes, either other transportation venues or he would have 
to simply take that risk that he initially on the beach would 
have less than what he had initially anticipated.
    Senator Wicker. I alluded to sequestration, Secretary 
Stackley, so I'm going to let you comment on that. Has OMB 
provided the Navy with specific guidance on sequestration? Will 
you be required to submit a revised plan that takes 
sequestration into account? Have you initiated contingency 
planning for sequestration?
    Mr. Stackley. Yes, sir. I'm going to share this response 
again with Admiral Blake. But let me describe that the first 
guidance has not come down regarding sequestration at this 
point in time. Today, we're literally in the middle of our 
build for POM for fiscal year 2014, so we're going through 
establishing the fiscal years 2014 through 2018 baseline, which 
clearly starts with POM 2013 and makes adjustments and changes 
associated with the top line and associated with the total 
program.
    We're moving forward with the POM for fiscal year 2014 
build, in accordance with a schedule that supports submitting 
the budget to the Hill next February. We'll complete those 
deliberations inside the Navy this summer.
    At that time, we expect OMB, working with Congress, to make 
a determination regarding sequestration planning. I can state 
that, and it's been stated before by the Secretary of Defense 
and the Secretary of the Navy, that if we have to adjust our 
top lines to reflect another potentially half trillion dollar 
reduction to the defense budget over the ensuing decade, we're 
looking at an entirely different force.
    The first half trillion dollars that we reflected in the 5 
years of POM 2013 and then the 5 years beyond, that caused a 
lot of significant change to our program, much of which we've 
just discussed here this morning. The notion of doubling that 
amount of reduction cuts deeply.
    Senator Wicker. That takes the minimal risk that General 
Mills alluded to and just completely blows that up by an order 
of magnitude at least.
    Mr. Stackley. You cannot take the force and the operations 
that we have in place today and are conducting today and try to 
imagine continuing that with another half a trillion dollar 
reduction to our defense program over the next 10 years. It's a 
significant shift and we have not at this point in time put 
contingencies in place, although we are always looking at 
opportunities to be able to reduce our programs' costs, and we 
are also looking at potential builds that will be coming down 
the path, but nothing to the size of what sequestration would 
impose.
    Senator Wicker. You're going to share that answer with 
Admiral Blake, I believe.
    Mr. Stackley. Yes, sir.
    Admiral Blake. Yes, sir. Just to echo what Mr. Stackley has 
said, we have not begun any form of formalized looks at the 
sequestration process. That said, it is always in the back of 
our minds.
    Senator Wicker. I'll bet it is.
    Admiral Blake. Yes, sir.
    But as also Mr. Stackley said, what we are currently doing 
right now is we are working on our POM 2014 proposal as we go 
forward in the fiscal year. I would tell you that if, in fact, 
sequestration were put in place you would have a radically 
different force for the Navy. It would be extremely different 
than what you currently see today.
    When we were putting the current budget together and we 
were coming up with the half a trillion dollar cut in the 
program, we were looking at a couple of fundamentals. We were 
looking at capability versus capacity. We said do we want to 
have this capability and, if so, at what capacity. Then we went 
to the issue of wholeness versus hollowness. We wanted to 
ensure that the force was whole, as opposed to keeping 
additional force structure that would lead us to a hollow 
force.
    If you take what we have already done and then you compound 
it with sequestration, the task ahead of us would be extremely 
difficult and, as I said, you would not end up with the force 
that you currently have today in any way, shape, or form.
    Senator Wicker. Thank you.
    Admiral Burke, go ahead, please.
    Admiral Burke. Just to put the potential cut from 
sequestration in context, it's about the size of the annual 
shipbuilding budget potentially, the full amount. It's almost 
the same amount as our aviation procurement budget, and it's 
about twice the size of the sum of our maintenance and aviation 
maintenance budgets. So it is significant.
    I think were it to come to pass, I believe we'd have to re-
look at our strategy as well.
    Admiral Blake. Yes, sir. If I can just add to that, we 
essentially have five pots of money. You have your manpower 
piece, you have your infrastructure piece, you have your R&D 
piece, you have your operations and maintenance (O&M) piece, 
and you have your procurement piece. On the Navy's side of the 
equation, procurement is our largest account.
    When you put something in place, as Admiral Burke was just 
saying, to the extent that sequestration would do, you can look 
at those accounts and you would see that it's either in your 
O&M account, or it's in your procurement account. The only 
other big account we have is our manpower account. 
Infrastructure and R&D are relatively small compared to those 
three. Manpower is a must-pay bill. We have to pay the people. 
So that takes that one off the table.
    Then you end up going to the two accounts. It's either your 
O&M account or it's your procurement account to cover something 
like that.
    Senator Wicker. Thank you very much.
    Let me just observe, Mr. Chairman and Senator Blumenthal, I 
voted for the legislation that puts sequestration in place. I 
think, like most of the people who voted yes, I voted for it 
believing in my heart that we would have the leadership in this 
city both in the administration and in Congress to come to 
grips with where the real spending is, to come to grips with 
the fact that we need a different taxation policy that provides 
for greater growth, but also that we have 60 percent of the 
budget plus that's off limits every year. We don't look at it 
every year in the appropriations process. It's on automatic 
pilot.
    I believed that we would be able to come to grips with 
that. To date we've not. We've either not had the leadership or 
the will in this city to come to grips with those issues. While 
sitting here in this room it's unthinkable that we would get to 
actually this brinkmanship of sequestration, I don't know if 
it's any more or less unbelievable than it was last year when I 
actually voted for it, Mr. Chairman.
    I'm not absolutely convinced that we won't face this. I 
certainly hope we don't. I think it would be the disaster that 
you gentlemen have described. But it is indeed disappointing 
that our inability to come to grips with the part of our budget 
that makes up the majority of taxpayer spending is seemingly 
still off limits and we haven't been able to address that. I 
hope we can.
    Thank you, Mr. Chairman.
    Senator Reed. Thank you, Senator Wicker.
    Let me continue with some issues regarding the proposed 
retirement of the Aegis cruisers. Admiral Burke, Admiral Blake, 
and Mr. Secretary, as I understand it, seven cruisers are going 
to be retired, and they have a direct impact on our anti-
missile capabilities. In fact, there's some suggestion that 
these retirements might reduce our ability to meet the Navy's 
objectives in terms of missile defense platforms and missile 
capabilities.
    Has our missile defense-capable ships requirement changed, 
allowing us to reduce the number of ships that we have? If not, 
what are we doing to mitigate? Then I'll have a follow-on 
question.
    Admiral Burke. Sir, as you've heard today in many of our 
other decisions, the cruiser decommissioning proposal was a 
very difficult choice, and we find ourselves balancing 
procurement, readiness, and people accounts to achieve the 
global force management and avoid the hollow force that Admiral 
Blake talked about.
    No, our missile defense requirement has not abated. It 
continues. The demand continues to grow. But these were not 
missile defense ships. These were not BMD ships. These were 
carrier and strike group defense ships, that would have 
required significant resources. The numbers are roughly just 
short of $2 billion to do the maintenance and repairs to get 
them up to speed. Some of those ships were built with some 
aluminum that has suffered from significant cracking problems 
and it's been quite a challenge for us. There's also some 
maintenance backlog that would need to be addressed there to 
make them viable for the long run.
    In addition, there's the annual O&M dollars that one would 
have to pay to keep them viable, and that's another just over 
$1 billion. Then the helicopters, the communications upgrades, 
and the people is another a little more than $1 billion.
    So overall across the FYDP we're talking about $4.1 
billion. Then to meet the potential BMD requirements we'd have 
to put BMD on those ships as well, which is more than another 
billion dollars. We're talking about a lot of money to keep 
those ships in the fleet.
    Part of the reason we make the decision to do that is 
because they are not BMD ships yet. But I think over the last 
couple of years, we have finally found our way on taking care 
of our surface ships. We need to make sure that we continue 
down that track and take care of the young ships so they don't 
get into the condition that these older ships have gotten into, 
where they have a backlog of maintenance.
    The reason I fully support this decision is because if you 
want to maintain the largest, most sustainable, and most 
capable fleet you can have, you need to do all of the 
maintenance and modernization. We have a bunch of ships and 
we're unable to take care of them all properly, and so we can 
either choose to continue to do that or we can go down a more 
righteous and judicious path in my view, which is to maintain 
the fleet as well as we possibly can, and we'll end up with a 
better, larger fleet as a result.
    Senator Reed. Just to clarify that, the short-run 
operational loss is the protection of the carrier battle groups 
by these Aegis submarines from missile attack, either land-
based missile attack or any missile attack; is that correct?
    Admiral Burke. Yes. We have 22 cruisers today. We have 11 
carriers, 10 carriers at the moment, but 11 carriers in the 
future. We typically will deploy each carrier strike group with 
one of these cruisers. So it will not have a direct impact on 
the carrier strike group, sir.
    Senator Reed. Then the other issue here, too, is there was 
at least a very theoretical consideration of moving these 
platforms onto BMD capabilities. That's now essentially off the 
table, and it raises the question of--and this is perhaps at 
the Secretary level--has there been discussion within DOD of 
moving resources from land-based systems into more sea-based 
systems, where you would get more bang for your buck 
effectively?
    That's, I'm sure, an object of debate within the building, 
but has that discussion taken place?
    Mr. Stackley. I would say constantly, sir. There's no 
single solution or single element when it comes to missile 
defense. From the Navy's perspective, first we look at force 
structure. We need to defend the battle group. But at the 
larger national level, there is constant discussion about what 
contributions could be made by the sea-based element of missile 
defense.
    There's some tension there in terms of what does that mean 
regarding the dedication of platforms to that mission, what 
does that mean to the overall force structure, and how does 
that affect things? Today we're moving forward with the Phased 
Adaptive Approach with Europe, and, in fact, the land-based 
piece of that effort is taking Aegis ashore.
    Senator Reed. Yes.
    Mr. Stackley. So we're putting the capability on land, 
because it has proven effect. The early increments associated 
with sea-based is bringing Aegis destroyers to the 
Mediterranean, where they provide a capability for that region. 
Then to address the impact on force structure, what that means 
is a part of the solution is forward deploying Aegis 
destroyers, so that the number of ships that are affected is 
limited.
    There's constant discussion. There are capabilities that 
have come forward through the Aegis program that have proven 
extremely effective in the missile defense arena. Throughout 
those discussions, we have to look at our priorities, the 
suitability of the capabilities for the respective missions, 
and then, as Admiral Burke described, managing the total force.
    Admiral Blake. Sir?
    Senator Reed. Go ahead, sir.
    Admiral Blake. If I could just expand on or expound on what 
Admiral Burke was talking about, when we were putting the 
budget together one of the fundamentals we had was the issue of 
hollowness versus wholeness. I don't think anybody in the Navy 
was pleased when we came forward and said that we were going to 
have to take both amphibious ships and cruisers out of service 
earlier than their expected service lives.
    But I would tell you that if someone were to direct that 
those ships be put back in, my real concern would be, all 
right, I still have a bill to pay and I am probably very likely 
going to have to put something else on the table which will be 
considered equally egregious. It was not an easy decision on 
our part, but we were driven by the fundamental approach that 
we wanted to ensure at the end of the day our force was whole 
and that we were not heading down a hollow path.
    Admiral McCoy. Senator, just to complete that thought, both 
Admiral Blake and Admiral Burke talked about the difficult 
decision. But for the first time in fiscal year 2013, we have 
fully funded maintenance, and particularly surface maintenance, 
which has always been short. So with Overseas Contingency 
Operations (OCO) funding we have fully funded in our budget 
surface maintenance, and that goes to that wholeness 
discussion.
    Senator Reed. With OCO funding, which is transitory at 
best.
    Admiral McCoy. About 20 percent of our maintenance budget 
right now is reliant on OCO, yes, sir.
    Senator Reed. Okay. Just for the record, the 313-ship 
target total, is that still under the Secretary's guidance, is 
that still the requirement for the Navy?
    Admiral Blake. What we're doing right now, sir, is, based 
on the new strategy which we have received, we are in the 
process of doing a force structure assessment, and then we will 
then brief that to DOD and we will ascertain the requirement 
for the right size of the fleet.
    Senator Reed. So it's a work in progress?
    Admiral Blake. Yes, sir. That is going on even as we speak.
    Senator Reed. A final question, and then I'll recognize 
Senator Blumenthal.
    We talked about the commitment of both the Navy and the 
contractors to get ships out on time, under budget, et cetera. 
One of the things that complicates that is sometimes the Navy 
changes the plan midway through. There are some examples. I'm 
told that the MLP program, which just signed a contract for a 
third vessel, now intends to build a ship in an AFSB 
configuration, which is new. The Navy wants to sign a multiyear 
for the DDG-51 destroyer, but plans to shift to a new 
configuration, new radar, et cetera.
    To what extent are those changes adding costs and to what 
extent can we avoid those kinds of changes so that we can 
mitigate costs?
    Mr. Stackley. Yes, sir. I'm going to pound the table on 
stability. That has to be one of the cornerstones to our 
program going forward, and that's requirements, design, build 
plan, et cetera. So throughout our process we do everything we 
can to maintain stability.
    In terms of the MLP, we also have to deal with the real 
world. When new requirements emerge, you have to address the 
requirements and you have to look at how can we best meet that 
in terms of cost and schedule so that the warfighter is getting 
what he needs, when he needs it, within the fiscal constraints 
that we have.
    Specifically regarding the MLP and the modification 
associated with the AFSB, we've done a preliminary review in 
terms of what the impact would be to the MLP technical baseline 
and the impact is measured in terms of small impact to the base 
ship, small, single digit percent to the base ship. 
Effectively, what we're doing is we're adding to it, as opposed 
to redesigning the interior.
    The AFSB brings an aviation capability for basically 
vertical lift, as opposed to the baseline MLP, which is more of 
a horizontal lift. So the designs that we're looking at are all 
very much cost conscious to minimize the impact to the base 
ship, but deliver the core capability that's been requested by 
Fifth Fleet.
    We see that as a very controlled and measured approach to 
bring the capability without downstream trying to backfit it or 
holding up the program and introducing cost and delay 
otherwise. We'd be happy to share the details with the staff to 
get a full understanding of what that impact is and what those 
details are, as they mature.
    The other discussion on DDG-51, the fiscal year 2013 
multiyear that we've requested is for a Flight 2A baseline 
multiyear. We're looking at nine Flight 2A ships in the 
multiyear. But what we need to do is introduce the capability 
that I described in my opening remarks regarding the AMDR. In 
parallel with that multiyear, we're completing the development 
of the AMDR, targeting 2016 DDG-51 ships. We are not making 
that a part of the contract baseline, but at the point of 
maturity when we've completed not just the technology 
development phase, but the engineering and manufacturing 
development phase, and we have a firm handle on the details 
associated with the impacts of AMDR to that ship, then we'll 
have a decision point downstream in advance of the 2016 ship 
that tells us, and we share that with Congress, that the 
technology is mature, that we understand the impacts, and that 
we have the design complete sufficient to support introduction 
in the 2016 ships, we understand the costs.
    We will be competing this engineering change proposal 
between the two builders as a fixed price competition to 
incorporate the cost, so that stability, cost control, and 
introduction of this key capability that we need can all come 
together. I believe it's very measured. We are not jumping the 
gun here. We're not slamming that into the multiyear at the 
front end. It is a downstream decision, but we believe it's 
important enough to get that capability introduced to the fleet 
that we want to do it smartly, but timely as well.
    Senator Reed. Thank you.
    Admiral Blake. Sir, just to give you a little more 
background on the AFSB, we are filling an urgent COCOM demand 
signal. In the near term, we are going to take the Ponce, which 
was originally going to be decommissioned this past March, and 
we are now going to do some minor modifications on her, and 
then we will push that ship out to meet the COCOM demand. 
That's the near term.
    Then the far-term solution is to do the modifications, as 
Mr. Stackley described, to the MLP in order to be able to meet 
that COCOM demand signal for the AFSB.
    Senator Reed. Thank you.
    General Mills, I'll see you next Thursday, right? So I'll 
have a chance to just quiz you in depth. I don't know if you 
have a quick comment?
    General Mills. Sir, I look forward to next Thursday.
    Senator Reed. So do I, sir. Thank you. I wasn't ignoring 
you.
    Senator Blumenthal.
    Senator Blumenthal. Thank you, Mr. Chairman.
    I have a question that is a little bit different than most 
that have been asked so far, although I missed some at the 
beginning part of your testimony. I'm very interested in 
renewable energy, particularly the use of fuel cells. I think 
the Navy really has been leading the way in this effort, and I 
want to thank you for what you've been doing.
    But I wonder whether you could comment on whether the 
extraordinary times that we face, to use a euphemism, Secretary 
Stackley, for these extraordinary constraints and challenges, 
are in any way inhibiting the drive toward using more renewable 
energy in the shipbuilding program, whether it is viewed as a 
means of cutting costs in the long-run, as I believe it should 
be viewed? If you could comment generally on that?
    Mr. Stackley. Yes, sir, and I'll probably share this with 
Admiral McCoy. But as you're well aware, alternative energy has 
been a top priority for the Secretary of the Navy, and we have 
been investing across the board--ships, deployed forces, our 
installations and sites--to reduce our energy demands so that 
we're driving up efficiency. So step one is reduce your energy 
demands.
    A very simple example is the development that's going on 
right now for a hybrid electric drive for our surface 
combatants. We're looking at employing technologies that are 
already at sea on other ships and introducing that onto our 
larger ship class, the DDG-51s, to try to reduce their fuel 
bill and to get greater legs for those ships.
    We see an opportunity there to drive our fuel costs down by 
simply 5 percent on each of our destroyers, which when you add 
it up is a fairly significant savings. So we're working that 
technology. We're going to do a demonstration here in the next 
year with one ship in service, with a long-term goal of backfit 
and forward fit that type of technology. That's one simple 
example.
    Separately, I think you're well aware of the efforts that 
the Navy has been working on the R&D for alternative fuels. So 
that's biofuels. We're looking at all of our prime movers, gas 
turbines predominantly, to ensure that they are certified for 
operating with biofuels. There's been much discussion regarding 
the economics of that. The economics are probably a long-term 
issue. But side-by-side with the economics is the operational 
imperative of trying to reduce our reliance on fossil fuels 
from offshore.
    You specifically asked about fuel cells. Fuel cell 
technology has been under development for decades. In fact, 
some other navies are employing fuel cell technology for their 
non-nuclear submarines. It is a good alternative energy source 
for non-nuclear submarines. For the Navy, that would not meet 
our mission requirements. I would say the large-scale 
application of fuel cell technology doesn't in that case meet 
our mission requirements.
    But for commercial and military, fuel cell is a very 
promising technology. We're not going to drive that equation in 
terms of its development, but we are going to look to leverage 
it.
    Admiral McCoy. Senator, I'll just chime in. Most of the 
attention in this area has been on the alternative fuels. On 
the ship side, for example, we've already sailed one of our 
test gas turbine ships off the coast of California and we don't 
see any issue with being able to use that fuel. We're going to 
continue to expand that, including with the RIMPAC exercise 
this summer.
    But an area that really hasn't gotten a lot of air time is 
what I call dozens of initiatives that we've fast-tracked out 
there to reduce the amount of fuel, as Mr. Stackley was saying. 
These are everything from the hybrid motor that Mr. Stackley 
talked about to simple things like hull coatings.
    The good news about the things I'm going to talk about real 
quickly here is we're not on the leading edge of technology. 
We're adapting what's already in industry that can be smartly 
used in Navy ships. Slippery hull coatings that Maersk lines 
and other folks are using, we have them on a number of ships, 
and we are testing those. I really think we're talking about 
really hundreds, if not by the time we're done, initiatives 
that might get us very small, 1 percent, whatever, a half a 
percent, but when you think about the number of steaming hours 
that we have.
    LED lighting, we're putting those on our ships and looking 
for the effect of those. Smart voyage management systems that 
plot the course for the weather to minimize the drag on the 
ship. A hybrid motor, but also efficient motors, compressors, 
and pumps, and we're putting those on our ships and measuring 
the effect of those.
    So we have a very active program that we're funding, that's 
getting this stuff out to sea, taking what makes sense, what 
has a good payback, and going ahead and further deploying it.
    Admiral Blake. Sir, if I can just add, just from a fiscal 
perspective, for every dollar that a barrel of oil goes up we 
end up spending approximately an additional $31 million on the 
Navy side of the equation in order to get that fuel out there. 
So we have to do something. We're currently executing the 
fiscal year 2012 budget and you see the daily fluctuations in 
the fuel prices, we're having to come to grips with that. Every 
time you see that price of a barrel go up a dollar, we have to 
come up with an additional $31 million in order to cover it.
    Admiral Burke. Senator, you've heard a lot about what we're 
doing afloat. We're doing some of the very similar situations 
in the air, looking at coatings, engine development, flight 
profiles, and getting adjustments to air corridors to allow us 
to fly through those to save fuel.
    But also on the shore side, there's a lot of effort going 
into that. As Admiral McCoy said, we are not on the leading 
edge of technology there. But the implementation there has 
wide-ranging impact. For example, we are just beginning to 
meter all the buildings, and particularly base housing is on 
the leading end of this. We meter those houses and evaluate how 
much energy they use relative to other very similar houses, and 
then charge the occupants if they go over the average, or 
refund their money if they save money.
    The holy grail on this on the shore side is to be able to 
do this in all our bases, and we are well into installing those 
monitoring devices, metering, such that we can do that.
    General Mills. Sir, I would offer up from the Marine Corps 
side several things. First, on the individual bases already in 
theater, being used by troops downrange, are battery saving and 
renewables there, along the lines of batteries, green blankets, 
solar panels, those types of things; very, very successful, to 
include troops that are in heavy combat.
    On the shore side, to mirror the Admiral's comments, for 
example, up at Bridgeport, CA, which is our Mountain Warfare 
Training Command, we are soon to be energy neutral because of 
what we're producing through solar and geothermal energy, and, 
in fact, in the very near future we'll actually be able to sell 
some of that electricity to the local power grid because we'll 
be producing more than what we, in fact, need.
    Our warfighting lab down at Quantico is exploring a 
multitude of projects that we can push out to the fleet quickly 
to lighten up the individual marine's load and also to save 
fuel. Fuel efficiency is a major factor in all of our AOA as we 
look at new vehicles and new equipment to put on line.
    It's a multi-fronted effort to really get some fuel savings 
in order to save those O&M dollars.
    Senator Blumenthal. Thank you very much. Thank you for 
those very impressive answers.
    Thank you, Mr. Chairman.
    Senator Reed. Thank you, Senator Blumenthal.
    Gentlemen, thank you for your excellent testimony, and for 
your service to the Navy and the Marine Corps and the Nation.
    We will keep the record open for 1 week. Some of my 
colleagues might have statements they want to submit or 
questions they might direct to you. Please promptly respond to 
the questions.
    With no further ado, this hearing is adjourned.
    [Questions for the record with answers supplied follow:]
                Questions Submitted by Senator Jack Reed
                   littoral combat ship design issues
    1. Senator Reed. Secretary Stackley, USS Freedom (LCS-1) has 
experienced some issues with cracking. As I understand it, after sea 
trials in February 2011, the Navy found 17 cracks on the ship. I also 
understand that the Littoral Combat Ship (LCS) program manager issued a 
memorandum indicating that the cracks represented a risk in operating 
the LCS-1 at the extreme edges of its safe operating envelope, and 
directed that the maximum speed for the LCS-1 to be capped at 20 knots 
in rough water. Additionally, the Navy found cracks in nearly identical 
locations on opposite sides of the ship. I understand that these cracks 
may be indicative of some systematic design issue with the LCS-1. What 
is your view on the reports of cracking in the hull and the limitations 
it puts on the ship's capabilities?
    Mr. Stackley. The cracks detected on LCS-1 are not indicative of a 
systematic design issue on the Freedom variant of the LCS.
    As was briefed to the Senate and House Armed Services Committees 
(SASC/HASC) in March and April 2011, respectively, there were 17 cracks 
discovered on LCS-1 after 30 months of operation (including post 
delivery test and trials, early deployment, and fleet operations). 
There was a single crack in the hull and 16 minor cracks in the 
superstructure.
    The hull crack was discovered in February 2011 while LCS-1 was 
undergoing heavy weather trials off the coast of Northern California. A 
limitation to the safe operating envelope was implemented until the 
crack was repaired. The hull crack was attributed to a weld defect and 
undersized backing chocks, both of which exposed that area to higher 
than expected stress. The hull crack was repaired during a Continuous 
Maintenance Availability (CMAV) in February/March 2011 and the safe 
operating envelope restriction was lifted, allowing the ship to resume 
all ranges of speeds and operations. During a subsequent post shakedown 
availability, the undersized chocks were replaced. In addition, design 
changes were implemented on LCS-3 to ease accessibility to that area of 
the hull during construction to facilitate welding.
    Regarding the 16 superstructure cracks, the investigation found 11 
of these cracks coincide with high stress areas discovered in 
subsequent detailed structural modeling and analysis and 6 of the 
cracks had some form of workmanship issue during either construction or 
post delivery. All of these cracks have been repaired. Based on 
additional analysis, the LCS-3 design was modified to reduce the 
stresses in the superstructure. Design modifications from LCS-3 have 
been incorporated into LCS-1 and no further design-related 
superstructure cracking risk is anticipated for the LCS-1 design.
    In summary, the cracks are not indicative of a systematic design 
issue on LCS-1. The Navy has been proactive in discovering the root 
cause of the cracks and implementing design and production improvements 
on all of the follow ships of the Freedom variant.

    2. Senator Reed. Secretary Stackley, are cracks in nearly identical 
locations on opposite sides of the ship, as apparently were identified 
in the LCS-1, indicative of a systematic flaw in the design of the LCS-
1, and if so, how will the Navy address this issue?
    Mr. Stackley. The cracks detected on LCS-1 are not indicative of a 
systematic design issue on the Freedom variant of the LCS.
    As Navy briefed to the SASC/HASC in March and April 2011, 
respectively, there were 17 cracks discovered on LCS-1 after 30 months 
of operation (including post delivery test and trials, early 
deployment, and fleet operations). There was a single crack in the hull 
and 16 minor cracks in the superstructure. The small subset of the 16 
superstructure cracks that were mirrored on the opposite side of the 
ship was also detailed in the congressional briefs.
    The hull crack was discovered in February 2011 while LCS-1 was 
undergoing heavy weather trials off the coast of Northern California. A 
limitation to the safe operating envelope was implemented until the 
crack was repaired. The hull crack was attributed to a weld defect and 
undersized backing chocks, both of which exposed that area to higher 
than expected stress. The hull crack was repaired during a CMAV in 
February/March 2011 and the safe operating envelope restriction was 
lifted, allowing the ship to resume all ranges of speeds and 
operations. During a subsequent post shakedown availability, the 
undersized chocks were replaced. In addition, design changes were 
implemented on LCS-3 to ease accessibility to that area of the hull 
during construction to facilitate welding.
    Regarding the 16 superstructure cracks, the investigation found 11 
of these cracks coincide with high stress areas discovered in 
subsequent detailed structural modeling and analysis and 6 of the 
cracks had some form of workmanship issue during either construction or 
post delivery. All of these cracks have been repaired. Based on 
additional analysis, the LCS-3 design was modified to reduce the 
stresses in the superstructure. Design modifications from LCS-3 have 
been incorporated into LCS-1 and no further design related 
superstructure cracking risk is anticipated for the LCS-1 design.
    In summary, the cracks are not indicative of a systematic design 
issue on LCS-1. The Navy has been proactive in discovering the root 
cause of the cracks, and implementing design and production 
improvements on all of the follow ships of the Freedom variant.

    3. Senator Reed. Secretary Stackley and Admiral Blake, I also 
understand that during transit from Mayport, FL, to its homeport in San 
Diego, CA, the LCS-1 experienced a number of equipment failures, 
perhaps as many as 80 such failures, and at least once the ship lost 
all electricity, temporarily leaving her adrift at sea. Nevertheless, 
the committee has received favorable testimony on the LCS, including 
testimony from Secretary Mabus, who praised the performance of the 
ship, testifying that: ``LCS-1, the Freedom, demonstrated some of the 
things we can expect during her maiden deployment earlier this year,'' 
and then-Chief of Naval Operations (CNO), Admiral Gary Roughead, 
stating: ``I deployed the LCS earlier than any other ship class to 
assure we were on the right path operationally. It is clear to me that 
we are.'' Are these two testimonies inconsistent with the LCS-1 
performance during that transit?
    Mr. Stackley and Admiral Blake. No, these two testimonies are not 
inconsistent. Throughout its deployment, USS Freedom (LCS-1) safely 
operated and conducted its mission. Few of the 80 equipment failures 
cited above were mission critical. The ship did experience a brief loss 
of power; however, it should be noted that many commercial and U.S. 
Navy vessels have periods of power loss due to plant set-up and 
operator control. In the event of power loss, there are specific Navy 
procedures documented in the Engineering Operational Sequencing System 
(EOSS) to quickly restore power throughout the ship. To address 
concerns documented with electric power generation, the LCS Program 
executed Electric Plant Reliability Improvement Programs on both ship 
designs to increase reliability of ship service diesel generators and 
the performance and management of the shipboard electrical systems. 
This has resulted in changes that have been implemented through post 
delivery availabilities on LCS-1 and LCS-2 as well as captured for LCS-
3 and follow ships. Additionally, sensors were installed to monitor 
performance trends.
    LCS-1 arrived in San Diego on April 23, 2010, successfully 
completing her maiden deployment having traveled 6,500 miles, including 
transiting the Panama Canal. Highlights of operations in 3rd and 4th 
Fleet Areas of Responsibility include theater security cooperation port 
visits in Colombia, Panama, and Mexico, successful performance of 
strike group operations with the USS Carl Vinson Carrier Strike Group, 
joint maneuvers with the Mexican Navy, and counter-illicit trafficking 
patrols which resulted in four interdictions yielding over five tons of 
cocaine, two seized vessels, and nine suspected smugglers taken into 
custody. The second phase of the early deployment included LCS-1 
participating in the bi-annual Rim of the Pacific (RIMPAC) exercise 
with 14 other nations, 34 ships, 5 submarines, 100 aircraft, and over 
20,000 personnel. The early deployment included the development of a 
coordinated logistics support plan. The lessons learned from the LCS-1 
deployment have provided critical data to inform the permanent support 
plan for the 55 ships of the LCS class, as well as valuable information 
used in the construction of both LCS-3 and the block buy ships.

    4. Senator Reed. Secretary Stackley, does the experience with the 
cracks and other equipment failures call into question the 
survivability of the LCS-1 in a hostile combat environment?
    Mr. Stackley. The cracks and other equipment failures experienced 
by LCS-1 do not call into question the survivability. These types of 
issues are not uncommon to first of class ships and the Navy has 
corrected the underlying technical issues.
    LCS ships are built to meet JROC-approved survivability 
requirements and include OPNAVINST 9070.1 Level 1 Survivability 
standards. The LCS design specifically includes Level 1 plus additional 
tailored survivability enhancements (``Level 1+''). LCS survivability 
depends on a combination of ship design, ship numbers, and ship CONOPS 
which says LCS will:

         Operate as part of a networked battle force

                 Independent operations 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 offboard 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-LCS is designed to maintain 
        essential mobility after a hit allowing the ship to exit the 
        battle area under its own power. The LCS systems allow ship's 
        crew to navigate and communicate while repositioning after a 
        hit all the while utilizing numbers (of LCSs), and CONOPS as 
        force multipliers. LCS incorporates survivability systems to 
        perform required missions in the littoral with an emphasis on 
        crew survival.

    5. Senator Reed. Secretary Stackley, can the Navy ensure that these 
issues with the LCS program will be addressed before follow-on ships 
are delivered?
    Mr. Stackley. Yes. The LCS program incorporates lessons learned 
during construction of the lead ship of both LCS variants. For example, 
the Navy has implemented design modifications and production process 
improvements on LCS-3 and follow-on hulls to correct the superstructure 
cracking experienced. The LCS program has collected data on the lead 
ships, executed design reviews/design updates, and continues to 
implement those findings into the follow-on ships as required. In 
addition, those findings have led to upgrades and changes on LCS-1 and 
LCS-2 to ensure that these research and development (R&D) hulls are 
fully operational fleet assets.

    6. Senator Reed. Secretary Stackley, if you are unable to fix these 
issues, would that result in a need to discontinue the Navy's dual-
source acquisition strategy?
    Mr. Stackley. As a result the of lessons learned from LCS-1 and 
LCS-2, the risk of discontinuing the dual-source block buy continues to 
decrease as the program matures. The Navy has implemented design 
modifications and production process improvements on LCS-3 and follow-
on hulls to correct the superstructure cracking experienced on LCS-1. 
In addition, the lessons-learned have led to upgrades and changes on 
LCS-1 and LCS-2 to ensure that these R&D hulls are fully operational 
fleet assets.

    7. Senator Reed. Secretary Stackley, I also understand that the 
Director of Operational Test and Evaluation (DOT&E) may not have 
released any formal developmental test and evaluation (T&E) reports. 
Does this lack of releasing reports in any way reflect the fact that 
the Navy and the DOT&E are not cooperating effectively on the LCS 
program?
    Mr. Stackley. No. The LCS Program Office has been working in close 
coordination with the DOT&E community since the early days of the 
program. DOT&E has been an active member of the T&E Working-level 
Integrated Program Teams (WIPT) since 2004 and most recently at the OSD 
level in the Milestone-related Integrating IPTs (IIPT) and Overarching 
IPTs (OIPT) that occurred in 2011. The Navy is actively developing the 
required reports documenting the results of all the developmental 
testing that has occurred on LCS-1. Once completed, these reports will 
be delivered to DOT&E.

    8. Senator Reed. Secretary Stackley, how will you ensure that the 
Navy works more closely with the DOT&E on the LCS program and better 
informs the DOT&E and Congress of vulnerabilities with the LCS during 
the T&E process?
    Mr. Stackley. The LCS Program Office has been working in close 
coordination with the DOT&E community since the early days of the 
program. DOT&E has been an active member of the T&E WIPTs since 2004 
and most recently at the OSD level in the IIPTs and OIPTs that occurred 
in 2011. The Navy provided Draft Detail Design Integrated Survivability 
Assessment Reports (DDISAR) to DOT&E in the second quarter of fiscal 
year 2012, in advance of completion of modeling results and shot line 
selections. DOT&E and the Program Office now are working jointly to 
complete the DDISARs before planning and conduct of the Total Ship 
Survivability Trials (TSST) to assess seaframe survivability in fiscal 
year 2014. Additionally, the LCS Program Office provided a draft of the 
57mm Live Fire T&E Management Plan to OSD/DOT&E on March 29, 2012, and 
received comments on April 3, 2012. Comment resolution is in process.
                                 ______
                                 
              Questions Submitted by Senator Kay R. Hagan
                            amphibious ships
    9. Senator Hagan. General Mills, in 2009, the Navy identified the 
requirement for 38 amphibious ships, but accepted the risk of 33 ships 
due to fiscal constraints. This risk was deemed acceptable based on an 
assumed fleet readiness rate of 90 percent, which would have 30 
operational ships at any given time. The current shipbuilding plan 
shows an average inventory of 29 ships across the Future Years Defense 
Program (FYDP) and historical trends demonstrate amphibious ship 
readiness well below the assumed rate of 90 percent, closer to 80 
percent. The shipbuilding plan doesn't get us to the required number of 
32 or 33 amphibious ships, depending on the year of the report, until 
2022. What impact, if any, has amphibious ship availability had on 
readiness?
    General Mills. One Marine Expeditionary Brigade (MEB) assault 
echelon requires 17 operationally available amphibious warships and we 
require a minimum of two MEBs to meet combatant commander requirements. 
These ships, along with the requisite number of ship-to-shore 
connectors, represent the minimum number of ships needed to provide the 
Nation with a sea-based power projection capability for full spectrum 
amphibious operations. Fiscal constraints reducing this operational 
availability down to 30 ships have already required us to assume risk, 
not only in quantities, but also the speed with which we can respond. 
As of May 2012, there are 28 ships in the Navy's amphibious fleet, with 
3 scheduled for decommissioning and 4 new ships under construction in 
the yards. Within the coming FYDP, the inventory will decline in fiscal 
year 2014 before rising to an average of 30 amphibious warships over 
the next 30 years. The key to meeting amphibious lift requirements with 
acceptable risk is maintaining a fleet which provides 30 operationally 
available ships.
    Shortfall in amphibious lift remains a concern as we work with the 
CNO and his staff to mitigate risk in meeting the amphibious lift 
requirement. We are aggressively reviewing our amphibious concepts, 
doctrine, and plans and have recently developed an Ellis Group 
specifically charged with developing innovative solutions to overcome 
these obstacles and look for new methods given these amphibious ship 
shortfalls.

    10. Senator Hagan. General Mills, what level of risk is being 
assumed across the FYDP?
    General Mills. The combatant commanders' cumulative operational 
demand for amphibious ships falls into three basic categories: forward 
presence and engagement; crisis response; and operations plans. While 
operations plans amphibious warship requirements have remained 
consistent, the demand for the first two categories has dramatically 
increased in the post-Cold War era. In the past 20 years, U.S. 
amphibious forces have responded to crises and contingencies well over 
100 times, a response rate that approximately doubles that of the Cold 
War. Furthermore, during the same period, forward-postured amphibious 
forces have continually conducted sea-based security cooperation with 
international partners--reflecting the philosophy espoused in the 
Maritime Strategy that preventing war is as important as winning wars.
    An inventory of 33 ships allows the Navy/Marine Corps team to: meet 
desired presence goals; fully supports our ability to build 
partnerships through engagement; and respond to crisis. Optimally, 
deploying 3 forward ARG/MEUs and 2 enhanced MPSRONs--each with an MLP 
and T-AKE integrated into the squadron--provides the Nation the ability 
to respond to small to large scale crisis within 7-10 days. These 
ships, equipment, marines, and sailors are the same capability used to 
strengthen our relationships worldwide and provide a strategic 
``buffer'' protecting our interests and a global economy and stability. 
Rotational Amphibious Ready Groups and Marine Expeditionary Units form 
together to provide forward deployed naval forces in four Geographic 
Combatant Command areas of responsibility.
    In addition to forward presence and episodic crises response, we 
maintain the requirement for an amphibious warship fleet for 
contingencies requiring our role in joint operational access. One MEB 
assault echelon requires 17 operationally available amphibious warships 
and we require a minimum of 2 MEBs to meet combatant commander 
requirements. These ships, along with the requisite number of ship-to-
shore connectors, represent the minimum number of ships needed to 
provide the Nation with a sea-based power projection capability for 
full spectrum amphibious operations. As of May 2012, there are 28 ships 
in the Navy's amphibious fleet, with 3 scheduled for decommissioning 
and 4 new ships under construction in the yards. Within the coming 
FYDP, the inventory will decline in fiscal year 2014 before rising to 
an average of 30 amphibious warships over the next 30 years. Fiscal 
constraints reduce operational availability down to 30 ships, based on 
an inventory of 33 ships, which requires us to assume risk, not only in 
quantities, but also the speed with which we can respond. The key to 
meeting amphibious lift requirements with acceptable risk is 
maintaining a fleet which provides 30 operationally available ships for 
the 3 categories described.

    11. Senator Hagan. General Mills, how important are amphibious 
ships and other amphibious capabilities to your plans to distribute 
forces throughout the Pacific?
    General Mills. The geographic realities of the Pacific theater 
demand naval responsiveness. The genesis of the amphibious and power 
projection capabilities of the Navy and Marine Corps traces back more 
than 70 years to operations in the Pacific--where today key terrain and 
strategic chokepoints are separated by large expanses of ocean. The 
Pacific theater is where 30 percent of the world's population and the 
same percentage of our primary trading partners reside; where five 
major defense treaties are focused; where 50 percent of the world's 
megacities are situated; and where natural disasters over the past 
decade have required the greatest attention from the international 
community. The geography of the Pacific has not changed, though our 
tactics and operations continually evolve with the changing character 
and lethality of modern warfare. Approximately 24,000 marines already 
in the Pacific conduct an ambitious, annual training cycle of more than 
80 exercises, engagements, and initiatives, in addition to the crises 
we respond to such as Operation Tomodachi in Japan last year.
    Forward presence involves a combination of land- and sea-based 
naval forces. Our enduring bases and presence have served U.S. National 
Security interests well for decades. Our rotational presence in 
locations such as Japan, Korea, Australia, the Philippines, Thailand, 
and Singapore reassures our allies and partners. Sea-basing, the act of 
using amphibious warships with support from maritime prepositioned 
ships with various types of connectors is uniquely suited to provide 
the geographic combatant commander with the flexibility to deploy 
forces anywhere in the Pacific region without having to rely on 
multiple bases ashore or imposing our presence on a sovereign nation. 
Sea-basing enables forward deployed presence at an affordable cost. 
Forward-deployed naval forces serve as a deterrent and provide a 
flexible, agile response capability for crises or contingencies. 
Maritime prepositioning offers the ability to rapidly support and 
sustain Marine Corps forces in the Pacific during training, exercises, 
or emerging crises, and delivers the full range of logistical support 
those forces require.

    12. Senator Hagan. General Mills, what is the current amphibious 
ship requirement?
    General Mills. One MEB assault echelon requires 17 operationally 
available amphibious warships and we require a minimum of 2 MEBs to 
meet combatant commander requirements. These ships, along with the 
requisite number of ship-to-shore connectors, represent the minimum 
number of ships needed to provide the Nation with a sea-based power 
projection capability for full spectrum amphibious operations. Fiscal 
constraints reducing this operational availability down to 30 ships 
have already required us to assume risk, not only in quantities, but 
also the speed with which we can respond. As of May 2012, there are 28 
ships in the Navy's amphibious fleet, with 3 scheduled for 
decommissioning and 4 new ships under construction in the yards. Within 
the coming FYDP, the inventory will decline in fiscal year 2014 before 
rising to an average of 30 amphibious warships over the next 30 years. 
The key to meeting amphibious lift requirements with acceptable risk is 
maintaining a fleet which provides 30 operationally available ships.

    13. Senator Hagan. Admiral McCoy, why don't we have these ships now 
or expect to have them anytime soon for that matter?
    Admiral McCoy. The Navy remains committed to providing 30 
operationally available amphibious ships to meet naval amphibious lift 
demand. Although budgetary pressures have led us to shift priorities 
elsewhere in the short-term and the future fiscal environment is 
unclear, the Navy can achieve this goal by sustaining an inventory of 
about 32 amphibious ships in the mid- to long-term.
    The 32-ship amphibious force we are procuring to support this need 
will optimally be comprised of 11 LHA/D, 11 LPD-17, and 10 LSD. Our 
proposed delivery/decommissioning profile will meet historical sourcing 
for Amphibious Ready Groups.
    The 30-year shipbuilding plan procures the first LHA(R) Flight 1 
amphibious assault ship in fiscal year 2017, 1 year later than 
originally expected. Current plans call for this ship to include a well 
deck and a reduced island to improve its surface and aerial assault 
capabilities. Additionally, the plan delays decommissioning of an 
amphibious assault ship (LHA-5) from fiscal year 2014 to fiscal year 
2015 to maintain large deck amphibious ships in the inventory pending 
LHA-6 delivery to the fleet. The Navy will continue to procure Flight I 
LHA(R) amphibious assault ships in the mid-term period. Three of these 
large, multi-purpose warships will be built every 4 years, starting in 
fiscal year 2024.
    The 30-year shipbuilding plan procures the first LSD(X), the 
replacement for LSD-41 and -49 dock landing ships, in fiscal year 2018. 
Three of the 10 planned LSD(X)s are to be procured in the near-term 
planning period with the remaining 7 ships procured during the mid-term 
planning period; the last coming in fiscal year 2032. As the first of 
these legacy ships will not retire until fiscal year 2026, this 
procurement action is ahead of need; it is being taken primarily to 
preserve the shipbuilding industrial base and to maintain a long-term 
total amphibious inventory at or slightly above 32 ships. The 
additional ships in the inventory will help reduce the risk associated 
with generating the 30 operationally available amphibious ships needed 
to meet amphibious lift demand.

    14. Senator Hagan. Admiral McCoy, why, with fewer ships this year 
than last, are we looking to decommission two more amphibious ships?
    Admiral McCoy. The decision to inactivate certain fleet assets was 
made to maintain the proper mix of capability in the battle force and 
provide a fiscal pathway to sustain, modernize, and update the existing 
and future fleet while maintaining an industrial base.

         The Navy plans to transfer 2 of 12 LSDs to the 
        inactive fleet and delay procurement of LSD(X). This will 
        maintain an adaptable amphibious landing force of approximately 
        30 ships.

    In the short-term, we are accepting risk to aviation and vehicle 
lift. We may be able to reduce the risk by relying more heavily on 
carrier tactical aviation for close air support and by delivering 
additional support vehicles via Mobile Landing Platform (MLP) and/or 
Joint High Speed Vessel (JHSV) to support ground maneuver. This 
decision reflects the judicious use of limited resources while 
balancing operational risk.
                                 ______
                                 
             Questions Submitted by Senator Roger F. Wicker
                   cvn-78 ford-class aircraft carrier
    15. Senator Wicker. Secretary Stackley and Admiral McCoy, it is 
likely that the cost to complete construction of the USS Gerald R. Ford 
aircraft carrier will overrun significantly. What new approaches will 
the Navy take to ensure that the Ford-class carrier's costs get under 
control?
    Mr. Stackley and Admiral McCoy. The Navy's ongoing efforts to 
control cost in the CVN-78 class are detailed in the March 26, 2012 
letter from the Secretary of the Navy to Senators Levin and McCain. 
Strategies to incorporate lessons learned from CVN-78 and apply them to 
CVN-79 are described below.
Improving Cost Performance on CVN-78
    Cost growth to date is attributable to increases in design, 
contractor furnished material, government furnished material (notably, 
the Electromagnetic Aircraft Launching System (EMALS) and the Dual Band 
Radar (DBR)), and production labor performance. To achieve the best 
case outcome, the program must execute with zero additional cost growth 
in design and material procurement, and must improve production 
performance. The Navy and the shipbuilder have implemented a series of 
actions and initiatives in the management and oversight of CVN-78 that 
cross the full span of contracting, design, material procurement, 
government furnished equipment, production planning, production, 
management, and oversight.
    CVN-78 is being procured within a framework of cost plus contracts. 
Within this framework, however, the recent series of action taken by 
the Navy to improve contract effectiveness are achieving the desired 
effect of incentivizing improved cost performance and reducing 
government exposure to further cost growth.

         CVN-78 design has been converted from a level of 
        effort, fixed fee contract to a completion contract with a firm 
        target and incentive fee. Shipbuilder cost performance has been 
        on target or better since this contract was changed.
         CVN-78 construction fee has been retracted, consistent 
        with contract performance. However, the shipbuilder is 
        incentivized by the contract shareline to improve upon current 
        performance to meet agreed-to cost goals.
         Contract design changes are under strict control; 
        authorized only for safety, damage control, mission-degrading 
        deficiencies, or similar. Adjudicated changes have been 
        contained to less than 1 percent of contract target price.
         The Navy converted the EMALS and AAG production 
        contract to a firm, fixed-price contract, capping cost growth 
        to that system and imposing penalties for late delivery.
         Naval Sea Systems Command is performing a review of 
        carrier specifications with the shipbuilder, removing or 
        improving upon overly burdensome or unneeded specifications 
        that impose unnecessary cost on the program.

    The largest impact to cost performance to date has been contractor 
and government material cost overruns. These issues trace to lead ship 
complexity and CVN-78 concurrency, but they also point to inadequate 
accountability for carrier material procurement, primarily during the 
ship's advance procurement period (2002-2008). These effects cannot be 
reversed on CVN-78, but it is essential to improve upon material 
delivery to the shipyard to mitigate the significant impact of material 
delays on production performance. Equally important, the systemic 
material procurement deficiencies must be corrected for CVN-79. To this 
end, the Navy and shipbuilder have taken the following actions.

         The Navy has employed outside supply chain management 
        experts to develop optimal material procurement strategies. The 
        Navy and the shipbuilder are reviewing remaining material 
        requirements to employ these best practices (structuring 
        procurements to achieve quantity discounts, dual-sourcing to 
        improve schedule performance and leverage competitive 
        opportunities, etc.).
         The shipbuilder has assigned engineering and material 
        sourcing personnel to each of their key vendors to expedite 
        component qualifications and delivery to the shipyard.
         The shipbuilder is inventorying all excess material 
        procured on CVN-78 for transfer to CVN-79 (cost reduction to 
        CVN-78), as applicable.
         The Program Executive Officer (Carriers) is conducting 
        quarterly flag-level government furnished equipment summits to 
        drive cost reduction opportunities and ensure on-time delivery 
        of required equipment and design information to the 
        shipbuilder.

    The most important finding regarding CVN-78 remaining cost is that 
the CVN-78 build plan, consistent with the Nimitz class, focuses 
foremost on completion of structural and critical path work to support 
launching the ship on schedule. This emphasis on structure comes at the 
expense of completing ship systems, outfitting, and furnishing early in 
the build process and results in costly, labor-intensive system 
completion activity during later, more costly stages of production. 
Achieving the program's cost improvement targets will require that CVN-
78 increase its level of completion at launch, from current estimate of 
60 percent to no less than 65 percent. To achieve this goal and drive 
greater focus on system completion:

         The Navy fostered a collaborative build process review 
        by the shipbuilder with other tier-1 private shipyards in order 
        to benchmark its performance and identify fundamental changes 
        that would yield marked improvement;
         The shipbuilder has established specific launch 
        metrics by system (foundations, machinery, piping, power 
        panels, vent duct, lighting, etc.) and increased staffing for 
        waterfront engineering and material expediters to support 
        meeting these metrics;
         The shipbuilder has linked all of these processes 
        within a detailed integrated master schedule, providing greater 
        visibility to current performance and greater ability to 
        control future cost and schedule performance across the 
        shipbuilding disciplines;
         The Navy and shipbuilder are conducting Unit Readiness 
        Reviews of CVN-78 erection units to ensure that the outfitted 
        condition of each hull unit being lifted into the dry-dock 
        contains the proper level of outfitting.

    These initiatives, which summarize a more detailed list of actions 
being implemented and tracked as result of the end-to-end review, are 
accompanied by important management changes.

         The shipbuilder has assigned a new Vice President in 
        charge of CVN-78, a new Vice President in charge of material 
        management and purchasing, and a number of new general shop 
        foremen to strengthen CVN-78 performance.
         The Navy has assigned a second tour flag officer with 
        considerable carrier operations, construction, and program 
        management experience as the new Program Executive Officer 
        (PEO).
         The PEO and shipyard president conduct bi-weekly 
        launch readiness reviews focusing on cost performance, critical 
        path issues, and accomplishment of the target for launch 
        completion.
         The Assistant Secretary of the Navy (Research, 
        Development, and Acquisition) conducts a monthly review of 
        program progress and performance with the PEO and shipbuilder, 
        bringing to bear the full weight of the Department, as needed, 
        to ensure that all that can be done to improve on cost 
        performance is being done.

    Early production performance improvements can be traced directly to 
these actions, however, significant further improvement is required. To 
this end, the Navy is conducting a line-by-line review of all cost-to-
go on CVN-78 to identify further opportunity to reduce cost and to 
mitigate risk.
Improving Cost Performance on CVN-79
    CVN-79 advance procurement commenced in 2007 with advance 
construction activities following in 2011. Authorization for CVN-79 
procurement is requested in the fiscal year 2013 President's budget 
request with the first year of incremental funding. Two years have been 
added to the CVN-79 production schedule in this budget request, 
afforded by the fact that CVN-79 will replace CVN-68 when she 
inactivates. To improve affordability for CVN-79, the Navy plans to 
leverage this added time by introducing a fundamental change to the 
carrier procurement approach and a corresponding shift to the carrier 
build plan, while incorporating CVN-78 lessons learned.
    The two principal documents which the Navy and shipbuilder must 
ensure are correct and complete at the outset of CVN-79 procurement are 
the design and the build plan.
    Design is governed by rules in place that no changes will be 
considered for the follow ship except changes necessary to correct 
design deficiencies on the lead ship, fact-of-life changes to correct 
obsolescence issues, or changes that will result in reduced cost for 
the follow ship. Exceptions to these rules must be approved by the JROC 
or designee. Accordingly, the Navy is requesting procurement authority 
for CVN-79 with the Design Product Model complete and construction 
drawings approximately 95 percent complete (compared to approximately 
30 percent complete at time of lead ship authorization).
    As well, first article testing and certification will be complete 
for virtually all major new equipments introduced in the Ford-class. At 
this point in time, the shipbuilder has developed a complete bill of 
material for CVN-79. The Navy is working with the shipbuilder to ensure 
that the contractor's material estimates are in-line with Navy should 
cost estimates; eliminating non-recurring costs embedded in lead ship 
material, validating quantities, validating escalation indices, 
incorporating lead ship lessons learned. The Navy has increased its 
oversight of contractor furnished material procurement, ensuring that 
material procurement is competed (where competition is available); that 
it is fixed priced; that commodities are bundled to leverage economic 
order quantity opportunities; and that the vendor base capacity and 
schedule for receipt supports the optimal build plan being developed 
for production.
    In total, the high level of design maturity and material 
certification provides a stable technical baseline for material 
procurement cost and schedule performance, which are critical to 
developing and executing an improved, reliable build plan.
    In order to significantly improve production labor performance, 
based on timely receipt of design and material, the Navy and 
shipbuilder are reviewing and implementing changes to the CVN-79 build 
plan and affected facilities. The guiding principles are:

         Maximize planned work in the shops and early stages of 
        construction,
         Revise sequence of structural unit construction to 
        maximize learning curve performance through families of units 
        and work cells,
         Incorporate design changes to improve Ford-class 
        producibility,
         Increase the size of erection units to eliminate 
        disruptive unit breaks and improve unit alignment and fairness,
         Increase outfitting levels for assembled units prior 
        to erection in the dry-dock,
         Increase overall ship completion levels at each key 
        event.

    The shipbuilder is working on detailed plans for facility 
improvements that will improve productivity, and the Navy will consider 
incentives for capital improvements that would provide targeted return 
on investment, such as:

         Increasing the amount of temporary and permanent 
        covered work areas,
         Adding ramps and service towers for improved access to 
        work sites and the dry-dock,
         Increasing lift capacity to enable construction of 
        larger, more fully outfitted super-lifts.

    An incremental improvement to carrier construction cost will fall 
short of the improvement necessary to ensure affordability for CVN-79 
and follow ships. Accordingly, the shipbuilder has established 
aggressive targets for CVN-79 to drive the game-changing improvements 
needed for carrier construction. These targets include:

         75 percent complete at launch (15 percent > Ford);
         85-90 of cable pulled prior to Launch (25-30 percent > 
        Ford);
         30 percent increase in front-end shop work (piping 
        details, foundations, etc);
         All structural unit hot work complete prior to blast 
        and paint;
         25 percent increase to work package throughput;
         100 percent of material available for all work 
        packages in accordance with the integrated master schedule;
         Zero delinquent engineering and planning products;
         Resolution of engineering problems in < 8 hours.

    In parallel with efforts to improve shipbuilder costs, the PEO is 
establishing equally aggressive targets to reduce the cost of 
government furnished equipment for CVN-79; working equipment item by 
equipment item with an objective to reduce overall GFE costs by $500 
million. Likewise, the Naval Sea Systems Command is committed to 
continuing its ongoing effort to identify specification changes that 
could significantly reduce cost without compromising safety and 
technical rigor.
    The output of these efforts comprises the optimal build plan for 
CVN-79 and follow, and will be incorporated in the detail design and 
construction baseline for CVN-79. CVN-79 will be procured using a fixed 
price incentive contract.

    16. Senator Wicker. Secretary Stackley and Admiral McCoy, one of 
the many new technologies on the Ford-class aircraft carrier is the 
Electromagnetic Aircraft Launch System (EMALS) and the Advanced 
Arresting Gear. Please describe how these key programs are doing.
    Mr. Stackley and Admiral McCoy. The EMALS is designed for the CVN-
78-class aircraft carrier. EMALS System Development and Demonstration 
(SDD) program is 87.4 percent complete and currently in the T&E phase. 
T&E status is as follows:

         Highly Accelerated Life Testing (HALT) of trough 
        components completed 13,144 cycles of 18,000 planned cycles.
         High Cycle Testing (HCT) of power equipment completed 
        32,217 cycles of 40,000 planned cycles.
         Full Scale Catapult System Functional Demonstration 
        (SFD) completed:

                 5,648 maneuvers, including 1,622 no-load and 
                2,014 deadload launches
                 Four F/A-18E risk reduction launches in 
                December 2010
                 One F-35C risk reduction launch in November 
                2011
                 Test site is undergoing reconfiguration until 
                July 2012

         Aircraft Compatibility Testing (ACT) Phase I is 
        complete;

                 129 aircraft launches including F/A-18E (with 
                and without stores), C-2A, T-45C and E-2D

         Electromagnetic Interference (EMI) tests completed:

                 Weapons (HERO): Electronic Explosive Device 
                response tests
                 Aircraft systems: F/A-18E, T-45C and C-2A 
                tested to EMALS emissions levels in the Patuxent River 
                anechoic chamber. F/A-18E, T-45C, C-2A, E-2D, and F-35C 
                tested at the SFD site against actual EMALS emissions
                 Personnel (HERP): Component testing complete

    The EMALS firm-fixed-price production contract was definitized in 
June 2010 and production is complete or underway on all major 
subsystems. EMALS component deliveries to the shipyard commenced in May 
2011, and the last component will deliver in April 2014. EMALS 
component deliveries to date have met CVN-78 Required In-Yard Dates 
(RIYDs) or have delivered in time to avoid major construction delays. 
EMALS is on track to meet all future CVN-78 RIYDs.
    The Advanced Arresting Gear (AAG) is designed for forward fit in 
CVN-78-class carriers as well as back fit in Nimitz-class carriers. The 
SDD Program is 80 percent complete and in the T&E phase. Test status is 
as follows:

         Extended Reliability Testing (ERT) of components has 
        completed 5,610 cycles
         Jet Car Track Site (JCTS) testing has completed:

                 Hardware Commissioning including 13 deadloads
                 Deadload Commissioning including:

                         80 percent of full operating envelope 
                        available for test
                         125 deadloads representative of F/A-
                        18E/F, EA-18G, F/A-18C/D, E-2C, C-2A, and T-45 
                        recoveries

                 Testing is on hold while system water twisters 
                undergo structural redesign to prevent internal 
                structural failure
                 Estimated return to commissioning is June 2012 
                with commencement of JCTS performance testing in fiscal 
                year 2013

    The AAG firm-fixed-price production effort was definitized in June 
2010 as part of a combined contract with EMALS. Production is underway 
on most major subsystems. The first AAG component deliveries to the 
shipyard occurred in March 2012. Delivery of most major AAG hardware 
will be complete by fall of 2012. Final delivery of the production 
water twisters is under evaluation.

    17. Senator Wicker. Secretary Stackley and Admiral McCoy, will 
these systems meet the required in-yard date for delivery and 
installation on the Ford?
    Mr. Stackley and Admiral McCoy. To date, EMALS has delivered 259 
hardware end items for CVN-78, including 12 schedule-critical energy 
storage subsystem (ESS) motor/generators and 70.5 miles of cable to the 
shipyard. EMALS component deliveries to date have met CVN-78 RIYDs or 
have delivered in time to avoid major construction delays.
    AAG production for CVN-78 is underway on all major subsystems. The 
first AAG component deliveries to the shipyard began in March 2012. To 
date, 142 hardware end items have been delivered to the shipyard 
including 4 of the 8 required electric motors needed to meet 2012 RIYDs 
and 12.6 miles of cable. The Navy and the shipbuilder are coordinating 
revision to the delivery dates for AAG water twisters and purchase 
cable drum assemblies to address component design modifications while 
ensuring minimal impact to ship's build schedule. The remaining 62 
hardware items have either been completed or are in manufacture to meet 
RIYDs later in 2012 and 2013. Installation of AAG hardware is planned 
to begin in late summer of 2012.

      proposed early retirements of cruisers and amphibious ships
    18. Senator Wicker. Admiral Blake, why did the Navy cut seven 
Ticonderoga Aegis-class cruisers early and put two landing ship dock 
(LSD) amphibious ships in reduced operating status?
    Admiral Blake. As a result of fiscal constraints, the Navy chose to 
prioritize readiness over capacity. The fiscal year 2013 decision to 
decommission the cruisers (CG) and LSDs exemplify our resolve to 
provide a more ready and sustainable fleet within our budget 
constraints. The resources made available by these retirements will 
allow increased funding for training and maintenance. Both the cruisers 
and the LSDs were in need of significant maintenance investment and six 
of the seven cruisers required further investment to install BMD 
capability. Inactivating the CGs resulted in approximately $4.1 billion 
in savings across the FYDP, including manpower, helicopters, and 
maintenance savings and costs avoided by not executing combat system 
and hull, mechanical, and electrical upgrades. These savings were 
shifted to other portions of the fleet. Inactivation of the two LSDs in 
fiscal year 2014 saved approximately $293 million each across the FYDP. 
These ships will be placed in Mobilization Category B allowing for 
reactivation should conditions warrant. The reduction in cruiser and 
amphibious capacity and shift to a more sustainable deployment model 
will result in some reductions to the amount of presence the Navy will 
provide overseas in some select areas, or a change in the nature of 
that presence to favor innovative and lower-cost approaches. This 
decision supports wholeness of the force by not having more force 
structure than we can afford to maintain, equip, and man.

    19. Senator Wicker. Admiral Burke, how does retiring seven 
Ticonderoga Aegis-class cruisers early and putting two LSD amphibious 
ships in reduced operating status square away with the Secretary of 
Defense's new strategic guidance, which puts renewed emphasis on the 
Asia-Pacific region?
    Admiral Blake. The Navy can meet the Defense Strategic Guidance 
with the current and projected force structure provided in Navy's 
President's budget for 2013 submission. Keeping these ships that are 
increasingly expensive to maintain and operate, in service, would 
divert funding from other programs vital to the Navy's mission, 
including the modernization and procurement of ships critical to fleet 
needs, and compete for scarce operations and maintenance dollars to 
sustain fleet readiness.
    Consistent with the Defense Strategic Guidance, the Navy will 
posture continuous, credible combat power in the Western Pacific and 
the Arabian Gulf/Indian Ocean to protect our vital interests, assure 
friends and allies, and deter potential adversaries. Naval forces 
remain flexible and agile, able to swing rapidly in response to 
emergent high priority requirements in other theaters, as well as to 
surge from U.S. homeports in the event of crises. The Navy can meet 
these challenges under our current operational tempo and deployment 
lengths.
    As reported in the Annual Report to Congress on Long-Range Plan for 
Construction of Naval Vessels for Fiscal Year 2013, all nine ships 
being retired will be placed in Out of Commission in Reserve Status 
(OCIR) and not in Reduced Operating Status (ROS).

    20. Senator Wicker. Admiral Burke, what is the Navy doing to enable 
it to reactivate at a later date the seven cruisers it plans to retire 
early?
    Admiral Blake. The Addendum to the Report to Congress on the Long-
Range Plan for the Construction of Naval Vessels in Fiscal Year 2013 
indicates the seven cruisers will be designated to be retained in an 
OCIR status. The seven cruisers will undergo a standard inactivation 
program and be placed in a Mobilization Category B status, which 
includes dehumidification and cathodic protection to prepare them for 
long-term storage and potential future reactivation. In the future, if 
a decision to return any/all of the cruisers to service is made, the 
Navy will have to determine the cost and duration of the activation 
availability needed to recommission these ships in a meaningful combat 
status after assessing individual ship material readiness and 
determining the required warfighting capability upgrades necessary to 
return the ship(s) to operation.

    21. Senator Wicker. Admiral Burke, what are the potential 
operational implications of these early retirements?
    Admiral Blake. The primary operational impact will be fewer assets 
to address geographic combatant commanders' demand. To mitigate the 
impact of early ship retirements, other employment models have been 
adopted. For example, relocating Ballistic Missile Defense (BMD) 
destroyers to Rota, Spain, is one approach to source geographic 
combatant commanders' demand. Innovative amphibious shipbasing concepts 
are more challenging since true capability must include Marine Corps 
resources, training, and embark factors. Nevertheless, Navy will 
continue to explore new employment models to place more capacity 
forward in order to maximize responsiveness and readiness of our force.
    Overall, the current and planned Navy battle force provides a fleet 
capable of sourcing combatant commanders' demands with manageable risk. 
Going forward, our current shipbuilding plan balances the anticipated 
future demand for naval forces with expected resources.

    22. Senator Wicker. Admiral Blake, what would be the cost to keep 
these ships without retiring them?
    Admiral Blake. As a result of fiscal constraints, the Navy chose to 
prioritize readiness over capacity. The fiscal year 2013 decision to 
decommission the CGs and LSDs exemplify our resolve to provide a more 
ready and sustainable fleet within our budget constraints. The 
resources made available by these retirements will allow increased 
funding for training and maintenance. The reduction in cruiser and 
amphibious capacity and shift to a more sustainable deployment model 
will result in some reductions to the amount of presence the Navy will 
provide overseas in some select areas, or a change in the nature of 
that presence to favor innovative and lower-cost approaches. This 
decision supports wholeness of the force by not having more force 
structure than we can afford to man, train, and equip.
    Based on additional analysis, the cost to retain and fully 
modernize the following three CGs scheduled for decommissioning in 
fiscal year 2013 (USS Cowpens (CG-63), USS Anzio (CG-68), and USS 
Vicksburg (CG-69)), including BMD upgrade and MH-60R helicopter 
procurement, is:

         Fiscal Year 2013: $640 million
         Fiscal Year 2014: $590 million
         FYDP: $2.7 billion

    The cost to retain and fully modernize the remaining cruisers is 
dependent upon the decisions to be made in fiscal year 2013.
    The Navy estimates overall cost to retain and modernize, maintain, 
man, and equip the two LSDs proposed for decommission is:

         Fiscal Year 2013: $63 million
         Fiscal Year 2014: $105 million
         FYDP: $512 million

    23. Senator Wicker. Admiral Blake, the Department of Defense has 
cited reversibility in connection with its new strategic guidance. What 
is the Navy doing to enable it to reactivate the seven cruisers at a 
later date after the ships are retired early?
    Admiral Blake. The Addendum to the Report to Congress on the Long-
Range Plan for the Construction of Naval Vessels in Fiscal Year 2013 
indicates the seven cruisers will be designated to be retained in an 
OCIR status. The seven cruisers will undergo a standard inactivation 
program and be placed in a Mobilization Category B status, which 
includes dehumidification and cathodic protection to prepare them for 
long-term storage and potential future reactivation. In the future, if 
a decision to return any/all of the cruisers to service is made, the 
Navy will have to determine the cost and duration of the activation 
availability needed to recommission these ships in a meaningful combat 
status after assessing individual ship material readiness and 
determining the required warfighting capability upgrades necessary to 
return the ship(s) to operation.
                                 ______
                                 
            Questions Submitted by Senator Susan M. Collins
                     multiyear procurement savings
    24. Senator Collins. Secretary Stackley, at a recent House Armed 
Services Committee hearing regarding Navy ship acquisition, industry 
officials testified that multiyear procurements (MYP) are incredibly 
important in terms of stability for the workforce, achieving efficient 
ship construction compared to annual procurements and reducing overall 
costs. Please discuss the affordability and possible savings achieved 
by an MYP for the DDG-51 destroyer program.
    Mr. Stackley. A MYP achieves affordability for the Navy by enabling 
industry to maintain a stable workforce which in turn facilitates 
efficiencies in the shipbuilding process including planning, 
scheduling, and material purchasing efforts. The MYP also enables the 
contractor to buy materials in economic order quantities providing for 
additional savings during construction. In addition, MYP contracts 
drive a more stable design configuration reducing the amount and cost 
of engineering changes over the course of the construction cycle. For 
the DDG-51 fiscal years 2013-2017 MYP, the Navy estimates a cost 
savings of $1.5 billion during the next 5 years, a net savings of 8.7 
percent, in comparison to single year procurements over the same 
timeframe. A detailed breakdown of the savings is provided below:
       
    
    

                 importance to the fleet of the ddg-51
    25. Senator Collins. Admiral Blake, at a recent House Armed 
Services Committee hearing regarding Navy ship acquisition, you were 
asked: ``what would the Navy have preferred to see stay in the budget 
if you had more resources?'' Your response was, ``the DDG and the SSN 
that we had to give up in 2014.'' Please elaborate on this answer.
    Admiral Blake. The projected Navy battle force is fully capable of 
meeting the strategic guidance found in Sustaining U.S. Global 
Leadership: Priorities for 21st Century Defense, and as importantly, 
the construction plan that builds it, sustains the national 
shipbuilding design and industrial base. In the current budget 
environment, the Navy must carefully prioritize its commitments in the 
various areas of responsibility. Removing the DDG and SSN from the 
budget was purely a financial decision as, over the next decade, the 
Navy will see a decline in its DDG and SSN inventory resulting from the 
large number of Aegis CGs and Los Angeles-class SSNs reaching the end 
of their service lives. Buying additional DDGs and SSNs in the near 
term, provided they are affordable and do not disrupt other priorities, 
would help address this growing gap between the supply of these multi-
purpose warships and the combatant commanders' demands for more assets.

    26. Senator Collins. Admiral Blake, please describe the importance 
and flexible capabilities of these additional platforms in the context 
of the new defense strategy.
    Admiral Blake. The DDG-51 destroyer operates independently or as 
part of a carrier strike group (CSG), surface action group, or in 
support of Marine amphibious task force in environments that include 
air, surface, and subsurface threats. Fiscal year 2010 and follow on 
DDG-51s also provide BMD. These ships respond to low intensity 
conflict, coastal, and littoral offshore warfare scenarios as well as 
open ocean conflict by providing power projection and forward presence 
and conducting escort operations at sea.
    The Virginia-class nuclear-powered attack submarine's high 
endurance and covert nature make it an ideal platform for anti-access/
area denial environments. The complement of sensors, torpedoes, and 
Tomahawk missiles enable the Virginia-class submarine to execute 
missions including anti-submarine warfare, anti-surface warfare, strike 
warfare, intelligence surveillance and reconnaissance, and special 
warfare.
    These two multi-mission warships would provide additional capacity 
and enhance the Navy's ability to accomplish the primary missions set 
out in the new Defense Strategic Guidance, including deter and defeat 
aggression, project power despite anti-access/area denial challenges, 
and stabilizing global presence.

                    force structure and requirements
    27. Senator Collins. Admiral Blake, in recent years, I have 
repeatedly cited the analyses of the 2010 Quadrennial Defense Review 
Independent Panel and the Center for New American Security that have 
called for a fleet of 328 ships or more, even as each CNO since 2005 
has said that 313 ships is the minimum number required. You testified 
last month that the unconstrained combatant command is probably about 
500 ships. That is 100 ships more than Admiral Greenert testified 
before Congress last year when he was still at Fleet Forces Command, 
and 215 ships more than we will have in our fleet now or we will have 
in 5 years. This week at the Sea-Air-Space Symposium, the CNO indicated 
the Navy cannot run at its current pace for much longer, that the pace 
of operations is unsustainable. In your view, how do we address this 
problem?
    Admiral Blake. The Navy is addressing the current unsustainable 
pace of operations through our fiscal year 2013 budget submission. The 
Navy plans to prioritize improving readiness over capacity and shift to 
a more sustainable deployment model by:

         Fully funding ship maintenance and midlife 
        modernization periods, and continuing a series of actions to 
        address surface ship material condition
         Increasing investment in training and adjusting the 
        FRTP to be more sustainable and provide units adequate time to 
        train, maintain, and achieve the needed fit and fill in their 
        manning between deployments
         Forward basing and forward deploying ships to reduce 
        transit time, so that the Navy-Marine Corps team can continue 
        delivering the rapid response our Nation requires of us
         Employing rotating crews on mine countermeasures, 
        patrol coastal class ships, and soon LCSs as the force grows, 
        and further studying the benefits and costs of expanding and 
        using rotational crewing

    The Navy is in the process of conducting a Force Structure 
Assessment (FSA) based on the new Defense Strategic Guidance (DSG). The 
FSA will evaluate the capabilities needed to execute the DSG, the ships 
and aircraft needed to deliver these capabilities, and the resulting 
inventory requirements. Overall, the proper mix of critical 
capabilities necessary to support the DSG will prove more significant 
than the exact number of ships in the fleet.

               surface combatant service life assumptions
    28. Senator Collins. Admiral Blake, the Navy has proposed to retire 
six non-BMD-capable cruisers, at an average service life of 21 years, 
because it was cheaper to retire them and buy new than it was to 
upgrade and modernize them to perform BMD. I understand that the 
projected service life for these ships was 30 years. I'm concerned that 
this one case is actually the tip of the iceberg of a significant issue 
the Navy and Congress must face together, even if we are capable of 
maintaining ships for more than 3 decades, the prohibitive cost to 
perform the necessary maintenance may lead us to question whether the 
maintenance investment is worth the benefit. The shipbuilding plan 
makes considerably optimistic assumptions that all destroyers will at 
least reach 35 years of service life and the newer versions will reach 
40-year service lives. The actual retirement data for these ships 
suggests that a more realistic assumption for the service life of these 
ships is much less than that. Are the Navy's assumptions for estimated 
service life based upon the Navy's actual experience with those classes 
of ships or is it based upon a different model the Navy has developed?
    Admiral Blake. Expected Service Life (ESL) is based in part on 
previous ship-type platform experience, design, and materials, but is 
also tied to force capability, ship maintenance funding, ship manning, 
and recapitalization requirements. An ESL is planning guidance, not a 
technical limitation. The Navy uses the ESL of ships as an estimate on 
which to base long-range ship planning, budget development, and force 
structure for procurement or recapitalization.
    Actual service life depends on maintenance, modernization, and 
operational employment. Additionally, other factors such as design 
changes or modifications made to the ship, or a design that is not 
amenable to a subsequent operational system upgrade, may make it 
infeasible to continue its service. Without ongoing ship maintenance 
and modernization, ships will not achieve their expected service lives.
    For destroyers specifically, the Navy has implemented a DDG 
Modernization Program to upgrade each ship's systems and extend service 
life to 40 years. The Navy will closely monitor the material condition 
of these ships during the various maintenance and modernization periods 
as they progress through their service lives to enable them to reach a 
40-year ESL. The Navy will also utilize spiral upgrades to existing 
ships to maximize ship operational availability, enable learning curve 
efficiencies, and perform continuous and emergent maintenance. The Navy 
will endeavor to operate every ship procured to the very end of its 
ESL.
    The shipbuilding plan takes into account the expected retirement of 
ships during the 30-year period. By using open, flexible payload bays 
and open architecture combat systems, the Navy is designing ships that 
can accommodate capability upgrades throughout their service lives in 
order to remain operationally and tactically relevant. The Navy policy 
is to ensure all ships reach their ESL. ESL extensions could, in a span 
of years, reduce the numbers of ships that must be recapitalized; 
however, any deferral of shipbuilding costs would be offset by the 
additional cost of maintenance, system upgrades, and modernization 
required to keep the ships operational and tactically relevant in their 
latter years.

    [Whereupon, at 11:20 a.m., the subcommittee adjourned.]


DEPARTMENT OF DEFENSE AUTHORIZATION FOR APPROPRIATIONS FOR FISCAL YEAR 
               2013 AND THE FUTURE YEARS DEFENSE PROGRAM

                              ----------                              


                        THURSDAY, APRIL 26, 2012

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

                   MARINE CORPS ACQUISITION PROGRAMS

    The subcommittee met, pursuant to notice, at 10:05 a.m. in 
room SR-222, 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; and Thomas K. McConnell, 
professional staff member.
    Minority staff member present: Bryan D. Parker, minority 
investigative counsel.
    Staff assistant present: Brian F. Sebold.
    Committee members' assistants present: Carolyn Chuhta, 
assistant to Senator Reed; Ethan Saxon, assistant to Senator 
Blumenthal; 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 thank 
our ranking member, Senator Wicker, and my colleagues. We 
particularly thank Sean J. Stackley, the Assistant Secretary of 
the Navy for Research, Development, and Acquisition; and 
Lieutenant General Richard P. Mills, USMC, the Deputy 
Commandant for Combat Development and Integration and 
Commanding General for Marine Corps Combat Development Command, 
for joining us here today. We are grateful for your dedicated 
service to the Nation, the Marine Corps, and the marines and 
families who represent us so well and so bravely every day. So 
thank you, gentlemen, for what you do.
    A year ago at our last hearing on this topic, Marine Corps 
ground force acquisition programs were in turmoil following the 
termination of the Expeditionary Fighting Vehicle (EFV), amidst 
the realization that the Marine Corps could not afford either 
the cost to procure or to subsequently operate and maintain the 
portfolio of ground vehicles it had on the books.
    In the last year, the Marine Corps leadership has taken 
action to address this impending bow wave. The target price for 
the replacement of the terminated EFV, called the Amphibious 
Combat Vehicle (ACV), is about one-third less than the EFV. 
This cost reduction is to be achieved mainly by greatly 
reducing water speed and the complexity associated with 
transforming a tracked combat vehicle into a speedboat. This 
procurement cost reduction should directly translate into 
operations and maintenance (O&M) savings as well.
    The Army and the Marine Corps also have dramatically 
reduced the costs of the Joint Light Tactical Vehicle (JLTV) 
and the Marine Corps has pared their projected inventories of 
trucks and other wheeled tactical vehicles by 25 percent.
    In the National Defense Authorization Act (NDAA) for Fiscal 
Year 2012, the committee enacted a requirement for the Marine 
Corps to conduct a comprehensive vehicle portfolio life cycle 
affordability study before proceeding further with its 
modernization plans. That study should be completed soon and we 
hope that it will show whether the actions that the Marine 
Corps has taken thus far are sufficient.
    For the remainder of my opening statement, I want to focus 
on what I see as the central planning issue facing the Marine 
Corps at this time. Since the end of the Cold War and Operation 
Desert Storm, the size of the assault echelons of the largest 
amphibious operation that the Navy and Marine Corps could 
conduct has dwindled from four Marine expeditionary brigades 
(MEB) to two. The entry assault portion of that force consists 
of six battalions. The Marine Corps currently has enough 
Amphibious Assault Vehicle (AAV)-7 Amphibious Assault Tractors 
to self-deploy all of those battalions ashore plus many more. 
The supporting tanks, heavy artillery, light armored vehicles, 
and trucks would be brought ashore with ship-to-shore 
connectors once the assault infantry has established a secure 
beachhead.
    When the cost of the EFV ballooned in the middle of the 
last decade, the Marine Corps took two related steps. It cut 
the number of EFVs it planned to produce almost in half, 
reducing the number of infantry battalions that could be self-
deployed in amphibious assault craft from 12 to 8; and it 
initiated plans to procure a non-amphibious wheeled armored 
personnel carrier to lift 4 infantry battalions.
    This would appear to represent an erosion of the Nation's 
amphibious assault capability. Marine Personnel Carriers (MPC), 
at least as currently envisioned, would require the use of 
ship-to-shore connectors to enter the battle and cannot conduct 
an assault against a defended shoreline. These connectors, the 
Landing Craft Air Cushions (LCAC) and Landing Craft Utility 
(LCU), are large, expensive, and few in number. To the extent 
they are used to transport infantry assault forces, they cannot 
be used to move tanks, artillery, and other critical supporting 
elements. The rate at which combat power could be built up on 
shore would be substantially decreased and there would be 
increased risk to the infantry assault forces themselves.
    In addition, whereas one amphibious tractor can lift a 
rifle squad, it would take two MPCs to do so, which will 
consume significantly more volume and weight on already 
stressed amphibious shipping.
    When the Marine Corps terminated the EFV and decided to 
acquire a substantially cheaper substitute, the committee 
assumed that the Marine Corps would want to return to a 
strategy of acquiring enough self-deploying amphibious tractors 
to equip 12 infantry assault battalions. This assumption was 
buttressed by the likelihood that a slower speed assault 
vehicle would have the weight margin to support armor 
protection equal to a prospective armored personnel carrier.
    However, the Marine Corps may be headed in the opposite 
direction, towards a further reduction in the acquisition 
objective for the ACV. The subcommittee is informed that the 
Marine Corps is seriously considering an option to limit ACV 
procurement to four infantry assault battalions and making up 
the difference with MPCs and other vehicles such as mine-
resistant ambush protected (MRAP) vehicles.
    Marine Corps staff have stated that there is an independent 
requirement for a wheeled armored personnel carrier apart from 
any consideration of ACV cost, mobility, or armored protection, 
and rather than sustaining the time-honored doctrine that 
splitting rifle squads in two, necessitated by the small 
internal volume of wheeled armored personnel carriers, would 
seriously degrade combat capability, this is being 
characterized as a potentially positive method of coping with 
distributed land warfare environments.
    We are concerned that substituting wheeled armored 
personnel carriers for amphibious tractors could erode the 
Marine Corps' amphibious assault capability, the capability 
that separates the Marine Corps from the Army in one dimension 
at least. The Marine Corps is now conducting a so-called fleet 
mix study to help it decide how many of what vehicle types it 
should buy in the future.
    The Marine Corps also points out that it is possible to 
postpone a decision on how many ACVs to procure until full-
scale development is underway. I look forward to a dialogue 
about this issue today with our witnesses.
    Before I turn it over to Senator Wicker, we are at a 
critical moment. The Marine Corps has performed magnificently 
for the last 10 years in a non-amphibious role. In fact, 
amphibious operations have essentially taken a back seat to the 
extraordinary and courageous actions in Iraq and Afghanistan, 
dealing in a counterinsurgency environment, using equipment 
that's designed for urban warfare, not beach assaults. We're at 
the point now where doctrinally, operationally, and in terms of 
acquisition, we have to make a decision, are we getting back 
into the amphibious business with both feet or are we putting 
one foot in and still looking back at potential operations that 
require skill, courage, but they're not amphibious operations.
    That's why I think this hearing and the timing of this 
hearing and your deliberations are so important and I wanted to 
go at length at some of the concerns that we have. These are 
concerns I think we all share.
    With that, let me recognize the ranking member and 
apologize for the length of my statement.

              STATEMENT OF SENATOR ROGER F. WICKER

    Senator Wicker. Thank you, Mr. Chairman, for holding this 
important hearing, and thanks to our witnesses, very talented 
public servants, for your participation and continued service 
to our Nation.
    Since our last hearing on the Marine Corps acquisition 
programs, we've witnessed some significant developments. In 
August, Congress passed and the President signed the Budget 
Control Act (BCA), which threatens further, deeper cuts to our 
military. Meanwhile, the United States is rebalancing its 
national security strategy and realigning its forces with 
greater focus on the Asia-Pacific region. However, the 
President's proposed budget seeks to reduce Marine Corps end 
strength by 20,000 marines and delay or defer certain weapons 
system purchases.
    I would like our witnesses to elaborate on the Marine 
Corps' strategy for modernizing its ground combat and tactical 
vehicle fleet, including the ACV, the JLTV, and the MPC. I'm 
particularly interested to learn how the Marine Corps plans to 
meet its ground vehicle requirements within current and 
projected budget constraints, yet still maintain high 
operational capability and readiness.
    Our Nation's increased emphasis on the Asia-Pacific region 
underscores the importance of the core competency that 
distinguishes the Marine Corps from other ground forces, its 
ability to conduct amphibious assaults against a defended 
shoreline. However, in today's threat environment the Marine 
Corps cannot continue to rely on the Vietnam era AAV.
    Many supporters of the Marine Corps, including this 
Senator, were disappointed by the cancellation of the EFV, but 
we also understood that it was not a financially viable 
solution. I hope our witnesses can explain how the current 
program will benefit from the more than $3 billion spent on 
this EFV. The American taxpayers need to be assured that this 
program was not a complete loss. As such, I look forward to 
hearing from our witnesses the specific steps the Marine Corps 
is taking on the ACV program to ensure the delivery of a 
vehicle that: one, meets Marine Corps requirements; two, is 
cost effective; and three, is delivered as quickly as possible.
    On the issue of the JLTV, I'm encouraged by the progress 
that the Marine Corps and the Army have made on this multi-
service program. The JLTV Program Office will award prototype 
development contracts in June. I trust our witnesses will 
reassure this subcommittee that the Marine Corps JLTV 
requirements are stable to ensure that the Marine Corps can 
afford to field this important replacement for our HMMWVs as 
soon as possible.
    With regard to both the ACV and the JLTV, I'm told that the 
Marine Corps is relying on competition to gauge early on what 
is technologically feasible and to reduce cost. Secretary 
Stackley, I commend you and your team for your efforts to 
pursue competitive acquisition programs for the Navy and Marine 
Corps. However, competition requires viable competitors, which 
we do not always have. So I'd like our witnesses' best 
assessment of the state of the U.S. industrial base for ground 
combat and tactical vehicles and what can be done to sustain 
the vitality of our manufacturing base at the contractor and 
supply chain levels.
    Finally, the Marine Corps faces significant budget 
challenges ahead. As I have mentioned repeatedly, the BCA 
passed by Congress and signed by the President last August 
requires sequestration to be implemented across all 
departments, including the Department of Defense (DOD). 
Sequestration is not a hypothetical. It is the law of the land. 
On January 3rd of next year, 250 days from today, sequestration 
will take place unless legislation is passed to undo it and 
signed by the President.
    Our national defense is solely a Federal responsibility. 
Defense spending is also a two-fer, as we all know. It supports 
our national security and our high technology manufacturing 
workforce.
    The Marine Corps budget accounts for approximately 8 
percent of the DOD total budget. I'm gravely concerned that 
sequestration could disproportionately impact the Marine Corps 
on everything from modernization to readiness. As such, I hope 
our witnesses today will elaborate on their assessment of the 
impact that sequestration will have on our expeditionary Marine 
Corps and our industrial base.
    Thank you very much, Mr. Chairman.
    Senator Reed. Thank you very much, Senator Wicker.
    We'll recognize Secretary Stackley and then General Mills, 
if he has comments. Mr. Secretary, please.

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

    Mr. Stackley. Yes, sir. Chairman Reed, Senator Wicker, 
thank you for the opportunity to appear before you today to 
address Marine Corps modernization. I will be testifying 
alongside Lieutenant General Mills and if it's acceptable to 
the subcommittee, I propose to keep opening remarks brief and 
submit a formal statement for the record.
    Senator Reed. Without objection and with great enthusiasm. 
[Laughter.]
    Mr. Stackley. Sir, your Marine Corps serves as America's 
expeditionary force in readiness, a balanced air-ground-naval 
force, forward deployed and forward engaged. Today, over 30,000 
marines are deployed around the world, on the ground in 
Afghanistan in support of Operation Enduring Freedom (OEF), and 
at sea deployed aboard amphibious ships operating off coasts 
from Northern Africa to Japan, conducting air operations and 
ship-to-shore operations, building partnerships, deterring 
enemies, and responding to crises and contingencies.
    Unequivocally, our top priority is to support these 
marines, who by their service and sacrifice have placed in the 
hands of our Nation's leaders the tools and options that they 
need to respond to today's world events and shape future 
events, all the while defending those freedoms we hold most 
dear.
    Over the past year, the Navy and Marine Corps have 
responded to a rapid succession of unpredicted political 
upheavals, natural disasters, social unrest, piracy, and 
emerging threats in various unstable areas of the world's 
littoral regions. Marines were first on the scene to provide 
humanitarian assistance and disaster relief in Japan in the 
wake of that nation's devastating tsunami; the first to fly air 
strikes over Libya in Operation Odyssey Dawn. They were on 
scene to evacuate noncombatants from Tunisia and reinforced our 
embassies in Egypt, Yemen, and Bahrain. Of course, all of these 
and similar global response operations were conducted against 
the backdrop of sustained combat and counterinsurgency 
operations in Afghanistan.
    To say that your Navy-Marine Corps team is the best at what 
they do does not do justice, for among the world's fighting 
forces, none other can do what they do. Accordingly, we will 
develop for the current and future force those capabilities 
that give our marines the ability to respond rapidly and to 
shape, deter, defeat, and deny our enemies sanctuary.
    In readying for its role as the post-OEF expeditionary 
force in readiness, the Marine Corps will accept risk in 
extended ground operations while reshaping the force for 
scaleable crisis response missions such as countermeasures, 
counterproliferation, disaster relief, protection of U.S. 
citizens overseas, security cooperation, and support of our 
allies. We'll rebalance our force posture back to the Pacific, 
remain postured to the Middle East, yet remain globally 
responsive, ever mindful of the world's choke points and 
prepared to respond where needed, as needed, as directed by the 
President.
    The seamless maneuver of marines from the sea to conduct 
operations ashore, whether for training, humanitarian 
assistance, or combat operations, remains a key priority as the 
Marine Corps shapes its future force. To this end, the Marine 
Corps modernization strategy includes sustainment of amphibious 
lift capabilities as outlined in the Navy's 30-year 
shipbuilding plan. Landing craft, air cushion and utility, will 
be replaced with more capable, more reliable connectors. 
Recapitalization of critical aviation capabilities, from the 
short takeoff vertical landing (STOVL) version of the Joint 
Strike Fighter (JSF) to modernized attack and utility H-1 
helicopters to the development of the heavy lift H-53K 
helicopter.
    Modernization of the Marine Corps' expeditionary combat 
command, control, and communication capabilities with the 
development of the Ground-Air Task-Oriented Radar, the Common 
Aviation Command and Control System, and the Global Combat 
Support System; and modernization of the Marine Corps' ground 
combat vehicles.
    The Navy has developed and is implementing a four-phase 
strategy, the Ground Combat Tactical Vehicle Strategy, to guide 
the planning, programming, and investment required to provide 
balanced maneuver and mobility capabilities to the force. The 
strategy is focused on achieving the mix of wheeled and tracked 
vehicles that best balances performance, payload, 
survivability, fuel efficiency, transportability, and cost.
    It is within this construct that the Navy will determine 
the future capabilities and numbers of the ACV, the JLTV, and 
the MPC. Within the ground vehicle portfolio, our top priority 
is the ACV. In the highly complex and uncertain future security 
environment, the execution of amphibious operations will 
require a self-deploying amphibious vehicle. This vehicle is 
essential to our ability to conduct surface littoral maneuver 
and seamlessly project ready-to-fight marines ashore from sea 
to land in permissive, uncertain, and hostile environments.
    It allows us to maximize available amphibious lift and 
increase the rate at which we build power ashore. This 
capability is key to overcoming access challenges posed by the 
lack of improved infrastructure or the threat of an adversary.
    Throughout 2011, we conducted a comprehensive systems 
engineering review of amphibious vehicle operational 
requirements. The review evaluated the requirements for water 
mobility, land mobility, lethality, and force protection for 
the future combat environment. It provided well-informed 
preliminary cost estimates for development, production, and 
sustainment for the range of capabilities suited for these 
requirements. The systematic review ultimately provided well-
informed analytical data to support the currently ongoing ACV 
analysis of alternatives (AOA).
    Alongside the ACV program, the JLTV addresses shortfalls 
for select light combat vehicles which perform our most 
demanding missions. These two critical programs are being 
developed in concert with the overall integrated vehicle 
strategy, which includes select upgrade and sustainment of the 
HMMWV fleet, upgrade of the legacy AAV as a bridge to the ACV, 
continued research and development (R&D) for the MPC in support 
of vehicle fleet mix alternatives, and management of the 
overall vehicle fleet, reduced by greater than 20 percent as a 
result of the most recent force structure review.
    For our entire portfolio and particularly the ACV and JLTV, 
the Marine Corps has taken a textbook approach to developing 
these critical combat vehicles, placing priority on getting the 
requirements right at the front end, employing mature 
technology where possible to reduce cost and risk in 
development, establishing affordability as a requirement, 
conducting comprehensive systems engineering and cost analysis, 
streamlining the acquisition process where feasible, leveraging 
competition, and, perhaps most importantly, integrating the 
requirements and acquisition team to enable effective cost 
performance trades throughout the requirements definition and 
systems development process.
    Mr. Chairman, thank you for the opportunity to appear 
before you today. We look forward to answering your questions.
    [The jont prepared statement of Mr. Stackley and General 
Mills follows:]
         Joint Prepared Statement by Hon. Sean J. Stackley and 
                     Lt.Gen. Richard P. Mills, USMC
                              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 Marine Corps acquisition 
programs.
    As America's Expeditionary Force in Readiness, the Marine Corps' 
ground modernization investments support our Nation's ability to be 
prepared for all manner of crises and contingencies. As a 
``middleweight force,'' marines do not seek to supplant any Service or 
``own'' any domain. Rather, Marine forces transit in a ``lane'' that 
passes through all domains--land, sea, air, space and cyber--operating 
capably and freely throughout the spectrum of threats, whether they be 
conventional, irregular or the uncertain hybrid areas where they 
overlap. 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 more 
than 130 times in the past 2 decades.
    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 are 
making parallel investments in amphibious ships, amphibious combat 
vehicles, connectors such as the landing craft air cushion (LCAC) and 
landing craft utility (LCU), naval surface fire support assets, mine 
counter measures, radars, command and control, vertical lift, and 
fixed-wing, short takeoff and vertical landing (STOVL) 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 Department of the Navy and its Marine Corps are fully aware of 
the fiscal challenges facing our Nation and have critically examined 
and streamlined our capabilities for the future. We have accepted our 
share of the additional risk associated with reduced resources; 
however, we have also sought innovative and practical means to mitigate 
that risk. We leverage programs, technologies, technical skills and 
competencies of other Services to ensure we deliver the most effective 
and affordable combat capability to our marines. We also seek to 
capitalize on our industrial base to identify and pursue innovative and 
ground-breaking solutions to meeting the warfighter's needs and to 
reduce acquisition and sustainment costs of our systems.
                         operating environment
    During the past year, the Navy and Marine Corps have responded to a 
rapid succession of unpredicted political upheavals, natural disasters, 
social unrest, piracy and emerging threats in various unstable areas of 
the world's littoral regions. Marines were first on the scene to 
provide humanitarian assistance and disaster relief in Japan in the 
wake of a monumental tsunami; were the first to fly air strikes over 
Libya; evacuated noncombatants from Tunisia; and reinforced our 
embassies in Egypt, Yemen, and Bahrain. While accomplishing all of 
that, marines continued sustained combat and counterinsurgency 
operations in Afghanistan.
    History has shown that crises usually come with little or no 
warning; stemming from the same conditions of uncertainty, complexity 
and chaos continue as risks across the world today. Regardless of the 
financial pressures placed on governments and markets today, crises 
requiring military intervention undoubtedly will continue tomorrow. In 
this environment, physical presence and readiness matter significantly. 
As a maritime nation, dependant on the sea for the free exchange of 
ideas and trade, America requires security both at home and abroad. 
Since the 1990s, America has been reducing its foreign basing and 
presence, bringing forces back home. This trend is not likely to change 
in the face of the strategic and budget realities we currently face. 
There remains an enduring requirement to balance presence with cost. In 
the past, the Nation has chosen to depend on the Navy and Marine Corps 
to provide a lean and economical force of an expeditionary nature, 
operating forward and in close proximity to potential trouble spots. 
Investing in naval forces that can respond to a wide range of crisis 
situations creates options and decision space for our Nation's leaders.
                        role of the marine corps
    New strategic guidance issued by the President and the Secretary of 
Defense provides the framework by which the Marine Corps will balance 
the demands of the future security environment with the realities of 
our current budget. The guidance calls for a future force that will 
``remain capable across the spectrum of missions, fully prepared to 
deter and defeat aggression and to defend the homeland and our allies 
in a complex security environment.'' As America's force in readiness, 
the Marine Corps provides efficient and effective insurance against the 
unexpected with an adaptive, multi-capable force that has the reach to 
defend American citizens, commerce and our vital national interests.
    Bridging a seam in our Nation's defense between heavy conventional 
and Special Operations Forces (SOF), the U.S. Marine Corps is light 
enough to arrive rapidly at the scene of a crisis, but heavy enough to 
carry the day and sustain itself upon arrival. Operating in a state of 
persistent forward presence aboard amphibious warships, your Marine 
Corps remains the most economical, agile and ready force immediately 
available to deter aggression and respond to crises. This flexible and 
multi-capable force maintains high readiness levels and can mitigate 
risk; satisfy the standing strategic need for crisis response; and, 
when necessary, spearhead entry and access for the Joint Force. Given 
likely future operations set forth in the new guidance--ranging from 
defeating rogue actors to responding to natural disasters--the Nation 
should invest in the small premium it pays for high readiness levels 
within its naval amphibious forces. Because our Nation cannot afford to 
hold the entire Joint Force at such high rates of readiness, it has 
historically ensured that marines remain ready, and has repeatedly 
relied on marines to fill gaps, buy time for decision makers, ensure 
access, or respond when and where needed.
    As a ``middleweight force,'' the Marine Corps is optimized for 
rapid deployment, versatile employment, and self-sustainment via Marine 
Air-Ground Task Forces (MAGTF), which are balanced, combined-arms 
formations under a single commander. All MAGTFs consist of four core 
elements: a Command Element, Ground Combat Element, Aviation Combat 
Element, and Logistics Combat Element. MAGTFs are scalable in size and 
capability.
    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. 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.
                                 reset
    Reset is a subset of reconstitution and comprises the actions taken 
to restore units to a desired level of combat capability commensurate 
with the units' future missions; and after more than a decade of 
combat, this will require an unprecedented level of effort.\1\ The 
Marine Corps is resetting its forces ``in stride'' with fighting the 
war in Afghanistan and transitioning to the new Defense Strategic 
Guidance. Unlike previous post-conflict periods, such as after 
Operation Desert Storm, we do not anticipate taking an ``operational 
pause'' to reset as we transition from Operation Enduring Freedom 
(OEF).
---------------------------------------------------------------------------
    \1\ Reconstitution refers to actions beyond reset, taken during or 
after operational employment, to restore and/or upgrade combat 
capability to full-spectrum operational readiness. Reconstitution 
includes personnel, equipment, and training. Force reconstitution 
includes activities from normal sustainment (rearm, refuel, recover 
(dwell), repair, and replace), through reorganization and regeneration 
of units to redeployment. As to equipment, our reconstitution efforts 
include reset, replenishing tables of equipment, and modernization.
---------------------------------------------------------------------------
    The Marine Corps' Operation Enduring Freedom Ground Equipment Reset 
Strategy, which was released in January 2012, helps to identify the 
equipment we will reset or divest. We currently estimate, subject to 
change, that the ground equipment reset liability is in excess of $3 
billion.\2\ This forecast is primarily based on the replacement of 
combat losses, the repair of items to serviceable condition, and the 
extension in service life of selected items. The Strategy prioritizes 
reset requirements along with investment and modernization decisions to 
develop our middleweight force, per the Defense Strategic Guidance.
---------------------------------------------------------------------------
    \2\ This $3 billion liability is our ``strategic'' reset--which is 
the cost to reset our Afghanistan equipment to a zero-hours/zero-miles 
condition. In addition to strategic reset, we have a $1.3 billion OCO 
request in fiscal year 2013--primarily to cover cost of war issues; but 
some of which is slated for strategic maintenance for reset. The 
precise amount of the $1.3 billion to be used for reset depends on the 
quantity of equipment that flows out of Afghanistan and our depot 
capacity.
---------------------------------------------------------------------------
    Our reset effort is already underway and it maximizes the Marine 
Corps' depot capacity, where we expect the bulk of reset execution to 
occur for 2 to 3 years after our equipment's return to the depot. The 
continued availability of our total ground equipment depot capacity at 
both Barstow, CA, and Albany, GA, is essential for timely reset, our 
ability to generate readiness, and to surge in response to wartime 
demand. Continued congressional support to our long-term reset 
challenge is critical to reset the Marine Corps' equipment.
    We are examining future equipment requirements with an ongoing 
comprehensive review of the Marine Corps' equipment inventories. This 
effort will validate reset strategies, future acquisition plans, depot 
maintenance programming, and required modernization initiatives. This 
review will incorporate the lessons we learned from over a decade of 
combat to upgrade our tables of equipment to reflect the way we fight 
today and our warfighting requirements of tomorrow.
                             modernization
    In conjunction with reset efforts, the Marine Corps is undertaking 
several initiatives to conduct only essential modernization of the 
Marine Corps Total Force. This will place the Corps on a sustainable 
course to achieve institutional balance. We are doing so by judiciously 
developing and procuring the right equipment needed for success in the 
conflicts of tomorrow, especially in those areas that underpin our core 
competencies. As such, we ask for continued Congressional support to 
modernize equipment and maintain a high state of readiness that will 
place us on solid footing in a post-Afghanistan security environment. 
While budgetary pressures will likely constrain modernization 
initiatives, we will mitigate pressure by continuing to prioritize and 
sequence both our modernization and sustainment programs to ensure that 
our equipment is always ready and that we are proceeding in a fiscally 
responsible manner. Modernization programs that require significant 
additional funding above current levels will be evaluated for continued 
operational requirement and capability/capacity modification.
    Our force structure, and associated vehicles, are highly leveraged 
investments. They optimize strategic lift capability and provide 
aggregate utility across the range of military operations. Our ground 
modernization strategy is to sequentially modernize priority 
capabilities, reduce equipment requirements wherever possible, and 
judiciously sustain remaining equipment. The current baseline budget 
allows for equipment modernization on a reasonable timeline. Possible 
future reductions in the baseline budget will result in delay, 
modification or elimination of key modernization programs. 
Modernization in the following areas is critical to maintaining 
operational capabilities and readiness:

         Ground Combat and Tactical Vehicles;
         Aviation;
         Preparing for Future Battlefields;
         Amphibious and Pre-positioning Ships;
         Expeditionary Energy; and
         Intelligence, Surveillance and Reconnaissance.
              ground combat and tactical vehicle strategy
    The programmatic priority for our ground forces is the seamless 
maneuver of marines from the sea to conduct operations ashore whether 
for training, humanitarian assistance or combat. The Marine Corps' 
Ground Combat and Tactical Vehicle Strategy (GCTVS) is the basis for 
planning, programming and budgeting to provide balanced maneuver and 
mobility capabilities to operating forces. The GCTVS is focused on 
achieving the right mix of assets, while balancing performance, 
payload, survivability, fuel efficiency, transportability and cost. 
Vehicles comprising the GCTVS include the entire inventory of wheeled 
and tracked vehicles, and planned future capabilities, including the 
Amphibious Combat Vehicle (ACV), Joint Light Tactical Vehicle (JLTV), 
and the Marine Personnel Carrier (MPC).
    The current priorities within the GCTVS include the following:

         Develop a modern ACV;
         Develop and procure JLTV;
         Sustain a portion of the High Mobility Multipurpose 
        Wheeled Vehicles (HMMWVs) through 2030;
         Initiate a legacy Assault Amphibious Vehicle upgrade 
        as a bridge to ACV;
         Continue research and development in MPC through 
        fiscal year 2014 to identify the most effective portfolio mix 
        of vehicles; and
         Limit procurement of vehicles to reduced Approved 
        Acquisition Objective estimates as identified.

    Our top ground modernization priority is the ACV. Based on our 10-
year investment plan, we intend to address our light combat vehicle 
shortfalls both before and after development of the ACV. Our JLTV 
strategy depends on procuring those vehicles with the most demanding 
mission profiles before we turn our focus to ACV. The biggest risk to 
sequential modernization is schedule--not program schedules but rather 
decision schedules. If JLTV is delayed, we lose an opportunity that we 
cannot readdress until after ACV procurement in the late 2020s.
    Throughout 2011 and informed by cost, we conducted a comprehensive 
systems engineering review of amphibious vehicle operational 
requirements. The review evaluated the requirements for water mobility, 
land mobility, lethality and force protection of the future 
environment. The identification of essential requirements helped to 
drive down both the production and the sustainment costs for future 
amphibious vehicles.
    We are conducting an Analysis of Alternatives (AoA) to review six 
ACV options. The results of the AoA are expected to be complete in June 
of this year, and the results will inform the direction and scope of 
the ACV program. The MPC program is maturing as a wheeled armored 
personnel carrier that is complementary to the ACV as a solution to the 
general support lift requirements of Marine Forces operating in the 
littorals.
    We are firmly partnered with the U.S. Army in fielding a Joint 
Light Tactical Vehicle to replace a portion of our legacy light lift 
utility vehicles. Our long-term participation in this program remains 
predicated on development of a cost-effective vehicle, whose payload 
integrates seamlessly with our expeditionary operations and likely 
amphibious and strategic lift profiles. The Joint Requirements 
Oversight Council approved the JLTV Capability Development Document, 
and the Department of the Navy is working with the Army to establish a 
program of record at Milestone B in the third quarter of fiscal year 
2012. Our approach to JLTV is as an incremental acquisition, and our 
objective for Increment I currently stands at 5,500 vehicles.
    We are focused on developing and procuring Multiple Mission Role 
Variants of the JLTV family of light vehicles to modernize for the most 
demanding missions, providing increased payload, energy efficiency, 
performance and protection. The JLTV will replace 30 percent of the 
High Mobility Multipurpose Wheeled Vehicle (HMMWV) family. At this 
time, JLTV is on schedule, affordable, and performing to meet essential 
validated Marine Corps light combat capability gaps.
    Last fall, the Marine Corps conducted an affordability review of 
the portfolio--which included the process of using Knowledge Points to 
tailor JLTV cost versus capability decisions. Our end-state is to 
develop a more relevant and affordable portfolio of combat and tactical 
vehicles. Through procurement and service-life extension, we will 
provide the capacity for Marine forces to respond to crises with up to 
a Marine Expeditionary Force-sized forcible entry operation, address 
irregular threats, and conduct sustained operations ashore when 
necessary.
                        additional modernization
    To complement 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 system 
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, the Corps is investing in the Common Aviation 
Command and Control System, which will help better network our 
communications, radars, intelligence, and ultimately our forces. To 
better protect the marine on patrol, we are also planning to replace 
electronic jamming equipment with the next-generation, open 
architecture JCREW 3.3 system. This system will ensure sailors and 
marines are better able to counter future improvised explosive device 
(IED) threats. We are also investing in the Ground Renewable 
Expeditionary Energy System and Solar Portable Alternative 
communications Energy System. These systems will provide portable 
power, increasing self sufficiency, and reduce requirements for fuel 
resupply for small units operating at the forward edge.
    Over the last 10 years of near continuous combat operations, the 
need for fuel and batteries on the battlefield has grown exponentially. 
Since 2001, the Corps has increased the number of radios infantry 
battalions use by 250 percent and the number of computers/information 
technology equipment by 300 percent. The number of vehicles has risen 
by 200 percent, with their associated weight increasing more than 75 
percent as a result of force protection requirements. In the end, the 
force today is more lethal, but we have become critically dependent on 
fuel and batteries, which has increased the risk to our logistics 
trains. Moreover, a 2010 study found that one marine is wounded for 
every 50 fuel and water convoys.
    To reduce risk and increase combat effectiveness, in March 2011, 
the Commandant issued the ``Marine Corps Expeditionary Energy Strategy 
and Implementation Plan'' to change the way the Corps thinks about and 
values energy. This is a ``bases-to-battlefield'' strategy, which means 
all marines will be trained to understand the relationship between 
resource efficiency and combat effectiveness. Throughout the Navy and 
the Marine Corps, we will consider energy performance in all our 
requirements and acquisitions decisions.
                    fiscal year 2013 budget request
    The Navy and Marine Corps team is fully aware of the fiscal 
challenges facing our Nation and has critically examined and 
streamlined our force needs for the future. We continually strive to be 
good stewards of the public trust by maintaining the very best 
financial management practices. The Marines are proud of the reputation 
for frugality and remain one of the best values for the defense dollar. 
As a force-in-readiness, the Marine Corps must judiciously preserve 
readiness, manning and modernization with only 8.2 percent \3\ of DOD's 
budget--this amount includes all Marine and associated Navy accounts 
including amphibious ship construction and operation. Our ground forces 
modernization comprises only 9 percent of our total budget; and is only 
about $2 billion a year.\4\
---------------------------------------------------------------------------
    \3\ This percentage is based on the fiscal year 12 Defense budget 
authorization and is slightly larger than the 7.8 percent sum cited in 
the past. The percentage includes $3 billion in fiscal year 2012 
funding for amphibious warship new construction as well as Navy funding 
for chaplains, medical personnel, amphibious warships (operations and 
maintenance) and Marine Corps aircraft.
    \4\ The 9 percent figure in this sentence is based on the fiscal 
year 2012 Defense budget authorization. The percentage includes 
procurement Marine Corps and RDT&E, and totals $2.3 billion.
---------------------------------------------------------------------------
                               conclusion
    Through the support of Congress, our marines and sailors responding 
to crisis and in the fight have received everything necessary to ensure 
success over the past decade of near constant combat operations. As we 
begin to transition to the challenges and opportunities of the post-OEF 
world and reorient to the Pacific under our new Defense Strategic 
Guidance, the Marine Corps must begin to rebalance and modernize for 
the future. We must also keep faith with and provide the right 
resources for those who have served and sacrificed so selflessly in our 
All-Volunteer Force since September 11. 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 your questions.

    Senator Reed. Thank you very much, Mr. Secretary.
    General Mills, do you have a comment?

STATEMENT OF LT.GEN. RICHARD P. MILLS, USMC, DEPUTY COMMANDANT 
  FOR COMBAT DEVELOPMENT AND INTEGRATION/COMMANDING GENERAL, 
            MARINE CORPS COMBAT DEVELOPMENT COMMAND

    General Mills. Sir, I'll just add my personal thanks to 
both of you for your continued support to our marines, the 
sailors who support us, and of course our families. Without 
your support we simply could not do our mission. Thank you.
    Senator Reed. Thank you very much, gentlemen.
    I propose an 8-minute first round, and then we have a long 
list of questions, so we'll go back and forth after that. I 
want to ask a few questions and then recognize my ranking 
member.
    General Mills, we've talked about the recent exercise that 
you conducted, a major amphibious exercise. When we were 
younger, this used to be an annual operation under various code 
names. I remember Solid Shield. We got out of that business for 
about 10 years, frankly, because of the requirements in 
Afghanistan and Iraq.
    Could you give us some details on what you learned, both 
strengths and the deficiencies of the Marine Corps, from that 
amphibious operation? One point you mentioned was inserting a 
Marine Corps unit 150 miles downrange, which raises questions 
of how to provide support. I'd appreciate any comments on that.
    General Mills. Yes, sir, I appreciate the opportunity to 
discuss that. That's Exercise Bold Alligator, which was our 
largest amphibious exercise in the past 10 years. Obviously, 
over the past 10 years we have been primarily focused on 
providing well-trained forces to Iraq and Afghanistan and 
therefore we haven't attempted an exercise of this scale in a 
while. It's going to be both an experiment and interesting for 
us to see how we do it.
    Let me preface this by saying, however, there's a myth that 
we have been ignoring amphibious operations over the past 10 
years, and that's really not true. In the past 10 years, we 
have not missed a Marine Expeditionary Unit (MEU) deployment. 
We've had three MEUs on the water deployed at all times, 
working with our Navy counterparts. So we have retained that 
amphibious capability over the years in which our main focus, 
of course, has been the war in Afghanistan. But again, I just 
remind everyone that we have not lost that experience level nor 
that capability.
    For Bold Alligator, it was a very, very aggressive schedule 
of events. We wanted to see whether we could composite two MEUs 
into a MEB afloat, work with our Navy counterparts then to plan 
an amphibious operation ashore in support both of Special 
Operations Forces (SOF) already operating within the AOA and in 
order to resolve a series of tactical scenarios which we would 
face.
    The highlight, I think, was our emphasis on distributed 
operations, realizing that we are going to have to attack 
through different means to avoid hard spaces and avoid enemy 
defenses and move and looking for gaps and openings, which 
requires the force to be spread out further than perhaps when 
you and I did operations when we were younger. We felt that was 
very successful. We were able to insert the reinforced company, 
really a battalion minus, several hundred miles inland and we 
were able to sustain them over a period of time as they linked 
up with friendly forces ashore and conducted a series of 
tactical evolutions.
    We were expressly interested in communications and our 
ability to command and control at those kinds of distances. So, 
taking some experimental projects that we're working on down at 
the Marine Corps Laboratory in Quantico, we were able to do 
that. At the same time, we were able to lighten the load of the 
force going in and of the individual marines and sailors 
ashore. Some of the experimental communications equipment that 
we have takes one radar and replaces three that would normally 
be carried at the squad, platoon, and company level.
    Other areas in which we found some success were in 
logistically being able to self-sustain them through energy 
conservation methods, bringing in things like solar blankets 
and our greens experiments so we wouldn't have to carry as many 
batteries nor as much fuel to sustain forces at that level. We 
found that to be very, very successful.
    Logistically, we looked at things like being able to purify 
our own water once ashore, once again to alleviate that 
logistics burden that's placed on units that are that deep into 
enemy territory.
    We had lessons learned, of course, but we found that staff 
interaction at sea was very successful. We worked very well 
with the Navy counterparts at the flag officer level and the 
staffs that were fully integrated. Our ship to shore movement 
was done well and was done successfully, and again reinforced 
many of the things that we've been working at over the past 10 
years.
    So all in all, a very good exercise, but one in which we 
didn't simply want to replicate things we had done 10 years 
ago, but one in which we wanted to stretch the boundaries and 
take a look at how we conduct amphibious operations in the 
future. I think at that level we were successful.
    Senator Reed. Do you plan to have a similar operation this 
year and following years? Has this become the new routine?
    General Mills. We do intend to. We're going to have a 
regular series of exercises, both on the east coast and on the 
west coast and afloat in the Western Pacific, again to 
revalidate some of our concepts, to test some of our new 
concepts out, and as our new equipment comes on line to ensure 
that that's fully integrated in the amphibious capability.
    Senator Reed. As I mentioned in my opening comments, we're 
at a critical juncture here where we're moving from a major 
focus on ground operations in Afghanistan and counterinsurgency 
into more of a focus on the Pacific, inherently amphibious 
maritime operations. Can you, General Mills and Mr. Stackley, 
but General Mills first, give us a notion of the alternatives 
or the strategies and doctrines that you're looking at going 
forward, and also based, of course, on the threats that you 
perceive? I know this could fill 15 volumes of single-spaced 
pages, but in as succinct as possible a way, what is the 
threat-driven doctrine that you're trying to rebuild the Marine 
Corps to face?
    General Mills. We believe that under the current threat if 
you look at the high end threat in the Pacific area, that 
that's going to force us to have, initially at least, more 
standoff distance of our amphibious forces and more pre-assault 
operations as you move forward towards the objective area. 
Those shaping operations that would take place on the ground at 
the target area would involve such things as long-range air, 
involve SOFs, and other, more highly classified systems that 
you could bring to bear on that area in which you were going to 
attempt to land.
    We also believe that distributed operations, both at sea 
and once we arrive on the ground, will alleviate some of that 
threat. Working with our Navy partners, we take a look at what 
the ranges are, what the capability of the enemy threat would 
be, and once we arrive in the area again to bypass those 
defended beaches that we spoke about a little bit earlier and 
by using concepts such as ship-to-objective maneuver to bypass 
the hard surfaces and move to areas in which we can accomplish 
our mission without doing an old-fashioned amphibious assault.
    It's a combination of new equipment, new tactics, 
techniques, and procedures, and some new strategy that will 
allow us to remain relevant. We certainly believe that forward-
deployed amphibious forces is a requirement and a price that 
the United States has to bear in order to be a world power. We 
provide you with a flexible force, forward deployed, ready to 
respond to crisis, and ready to give our decisionmakers here in 
Washington time to make key decisions. We believe that 
interacting with our allies, especially in the Pacific, 
reinforcing our old ties with the Australians, looking back at 
some of our other old allies and again reinforcing them through 
our training, through our presence, and through our engagement 
will pay large benefits in the long run.
    Senator Reed. Let me follow up with one very quick 
question, then recognize Senator Wicker. Your first exposure to 
the Marine Corps as a child in the 1950s was watching a landing 
craft go to the beach. Do you have in your doctrine a ratio 
between sealift and airlift for getting marines to the shore? 
Is that a number that's situationally determined or is it 
doctrinally we want to have two-thirds landing craft a third 
lift, or vice versa?
    General Mills. Yes, sir. Doctrinally, the rule of thumb 
would be two-thirds of the force would land by surface, one-
third would go in by air. Of course, there's a lot of other 
factors that play into that, weather, sea conditions, things 
like that. But essentially that allows you to get your combat 
power quickly ashore and then allows you to build up that 
beachhead, bringing in your logistics trains, bringing in your 
supporting arms, expanding that beachhead, and then conducting 
your subsequent operations ashore.
    As we look at the portfolio of vehicles, for instance, and 
decide what mix we're going to have between tracked amphibians 
and wheeled MPCs, much of that depends on our analysis of what 
do we need to bring in initially across that beach. But then 90 
percent of that time is going to be spent expanding that 
beachhead, so what's the capability you're going to need for 
subsequent operations ashore.
    Those are the kinds of factors that we're looking at as we 
balance what that ultimate portfolio mix will be between our 
tracked amphibians, our MPCs, and our JLTVs.
    Senator Reed. Thank you, sir.
    Senator Wicker.
    Senator Wicker. Thank you very much.
    General Mills, the Marine Corps and Army were able to 
reduce the JLTV vehicle cost from a projected $634,000 to 
$266,000 per vehicle. I understand you're trying to reduce that 
vehicle cost even further. How did you do this? Describe 
briefly to our subcommittee the requirements that were 
eliminated. Were they key requirements, and how will they 
affect the vehicle performance?
    General Mills. Sir, we believe probably the biggest driving 
factor in cost reduction will be competition in order to 
provide that. For instance, currently we have six major 
organizations that are interested in providing that vehicle to 
us. So we believe competition within the acquisition process 
will naturally drive the price down as those companies compete 
for the business.
    Second of all, working with the Army, and the Army has been 
extraordinarily cooperative and it's been a great team effort 
to take a look at the vehicle and pare down not what we want, 
but what we need on board a vehicle. Both of us were very 
concerned about protection levels and we arrived at a solution 
set that allowed us to take the protection level that we 
needed, yet keep the weight down, so that we were able to both 
transport it on our amphibious ships and--or sling it beneath 
our heavy lift helicopters and get it ashore quickly.
    We also looked at perhaps, rather than buy everything we 
wanted at one time, have a vehicle that would give us some 
capability for growth, that would allow us later on to perhaps 
upgrade the weapons system that might be on board it, take a 
look at weight growth that could be allowed if we wanted to add 
armor, and then take a look at kits, if you will, that would 
allow us to increase the levels of armor based on threat that 
we would see ashore.
    I think it's been a real teamwork effort between the Army 
and the Marine Corps to lay our requirements on the table and 
then look for ways in which we could compromise and yet ensure 
that we were providing our soldiers and our marines with the 
right level of protection, with the right speed and mobility on 
the ground, and with equipment that we know would be reliable 
and available to them for years to come.
    Senator Wicker. So we reduce protection levels, weight, and 
cut back on weapons systems and levels of armor; is that a fair 
summary?
    General Mills. What I would really say, sir, is we scrubbed 
our requirements extraordinarily hard. We didn't surrender any 
of our requirements, but we really studied them and said, what 
is it that we absolutely needed, what level of protection was 
needed by our forces on the ground, what weapons system best 
serves our purpose, and all of which could fold into an 
affordability matrix.
    Mr. Stackley. If I can add to that, one of the challenges 
that the JLTV has had in its history has been taking this joint 
requirement between the Army and the Marine Corps and arriving 
at a single family of vehicles. There is a divergence when it 
comes to mobility, the impact of weight, transportability of 
the JLTV when you look at what the Marine Corps needs to load 
these vehicles onto amphibious ships, get them to shore, and to 
have the maneuverability that it needs ashore, versus some of 
the requirements on the Army side that drives greater reliance 
on armor and that drives up weight.
    One of the keys to arriving at a more affordable program 
was to tailor JLTV so that the armor solution could be 
scaleable, it could be provided by kits, so that the Marine 
Corps could get the vehicles of the size and weight that it 
needs for its mobility purposes, and if the situation warrants 
or dictates an upgrade, the additional armor kits.
    That helps tremendously in terms of affordability, 
transportability, and the mobility requirements for the Marine 
Corps while also serving the Army. That solution was one of the 
keys to really getting to a more affordable vehicle, really 
just hammering out the requirements on the front end between 
the two Services to stay with the family of vehicles that gives 
you the benefit of large-volume procurement, not just through 
competition, but just the large volume helps to drive down the 
cost.
    Senator Wicker. Mr. Secretary, you mentioned in your 
statement getting the requirements right at the front end. Is 
it accurate to say that now the requirements of the JLTV are 
stable?
    Mr. Stackley. Yes, sir. We went through what's referred to 
as a Defense Acquisition Board with the joint program, Army, 
Marine Corps, and Acquisition, Technology, and Logistics, to 
review the acquisition plan, and with the Joint Staff present 
and subsequently through the requirements definition process 
with the Joint Staff; and a lot of good discussion and debate 
over how much capability was required for the JLTV, and the 
Joint Staff helped shape some of those requirements to scale 
back some of those requirements to drive affordability of the 
program.
    Senator Wicker. General Mills mentioned that competition 
was a key factor. I think I told you in my opening statement 
that I'd like some assurances that we're going to continue to 
have viable competitors. What reassuring words can you give the 
subcommittee about what you've done to sustain the viability of 
these competitors in the manufacturing base?
    Mr. Stackley. Yes, sir. First, General Mills referred to 
about a half a dozen interested industry members. In fact, what 
we expect to see is teaming in industry for competition on the 
program.
    One of the keys to keep the industrial base primed in this 
particular case is time. If this were going to be a long, 
drawn-out development program, in fact the industrial base 
would be marching through a valley waiting for JLTV to emerge 
in production. So again going back to looking at the sweet spot 
between capability and affordability, the industrial base 
piece, if you can leverage mature technologies and make this 
more of an integration effort as opposed to a development 
effort, you can cut down significantly on the timeline to get 
to production.
    In fact, for the JLTV program we're doing that. We're 
driving integration of existing capabilities as opposed to a 
significant development effort, so we can get through the 
design, into the limited rate initial production phase, more 
quickly. That helps in terms of meeting the capability gap, it 
helps in terms of the industrial base, it helps in terms of 
cost.
    We think we have that about right. We've managed the risk 
in the definition of the requirements and balanced that against 
the affordability of the program. The Marine Corps and the Army 
have worked very closely in terms of when the Marine Corps buys 
its vehicles, when the Army buys its vehicles, looking at 
respective gaps and also looking at respective budgets in terms 
of what they can afford, and then adding them together so that 
the industrial base ramp is nice and stable.
    We're working that with industry. There has been very open 
dialogue with industry in every regard in terms of through the 
development of the requirements and looking at the ramp in 
numbers.
    Senator Wicker. You two can decide who will take this 
question. Assuming we prevent sequestration, give us your best 
guess on the schedule for the Marine Corps to procure JLTV? 
When will the Marine Corps receive its first delivery of 
operationally capable vehicles and how many do you expect in 
that first delivery lot?
    Mr. Stackley. Yes, sir. The first Marine Corps buy for 
production units is about 2015. Right now the plan is 2015 and 
we're on the front end of that procurement process. It goes up 
in a ramp. So in the Future Years Defense Program (FYDP), 
through the end of the FYDP, the Marine Corps procures about 
400 JLTVs on a ramp between 2015 and 2017, and the delivery 
timeframe is about a 2-year lag. So until industry gets up into 
a steady state in terms of production, you'll see a solid 2-
year lag between when we procure and when those vehicles are 
delivered.
    Senator Wicker. I wonder if I could squeeze in one more 
question. General, what did we get out of our $3 billion on the 
EFV?
    General Mills. Yes, sir. We're taking the lessons learned 
from that across the board and applying them to our ACV. We 
still have several of those at Camp Pendleton that we can 
operate and learn from. But we're looking at things like the 
stability in the water, habitability, because the marines are 
going to be in the new ACVs for longer periods of time. So 
there were lessons learned that we can apply directly to our 
AOA as we look at that coming down.
    Some of our power train and power requirement lessons 
learned from the previous vehicle could be applied to the new 
one as we look at the AOA and decide which vehicle we want to 
proceed with.
    Senator Wicker. What have you learned about habitability? 
How long can a marine stay in one of those vehicles?
    General Mills. We've done some experiments on the west 
coast with marines in vehicles, in both the old EFV and our 
AAVs, and we have found that the rule of thumb is less than an 
hour. We actually can put marines in them and it can last 
longer. It depends obviously on a number of things: sea state, 
for instance; the number of marines you put in the back of 
these kinds of vehicles.
    We just recently completed an experiment off Camp 
Pendleton, where we put some of our old AAVs in the water at 12 
miles, floated them in. Some of those vehicles were in the 
water for up to 3 hours. Now, they did not have marines in the 
back. They had crews on board. But the crews landed and were 
surprisingly fit. We are doing some studies to see what is the 
time that we could put marines in the back of them, how far can 
we move them in the water, and what can we expect of them once 
they land. That's still in the study process.
    Senator Wicker. Thank you.
    Senator Reed. Thank you.
    Senator Blumenthal.
    Senator Blumenthal. Thank you, Mr. Chairman.
    Let me pursue that line of questioning for just a couple of 
moments, if I may. I understand the lessons learned from the 
EFV in terms of its capabilities. How about in terms of cost 
control, General Mills or Secretary Stackley?
    Mr. Stackley. Let me start. The lessons learned in terms of 
cost control were extraordinarily fundamental. In fact, they're 
similar to lessons learned we have picked up in other programs 
that broke along the way. I stated at the opening, getting the 
requirements right at the front end. That is so critical. The 
EFV concept was developed greater than 20 years ago now, and 
the requirements at the front end were very far-reaching. It 
was orders of magnitude beyond the fleet's experience and also 
beyond industry's ability at the time, without an understanding 
of cost.
    One of the things that we have done through the EFV is 
we've done a complete teardown of cost in terms of development 
and, equally or more importantly, procurement, and then through 
that you extrapolate to operating and support cost. One of the 
things that broke the EFV was operating and support costs.
    We've done that teardown, so we have a fairly strong 
understanding of a cost basis for the alternatives that are 
being evaluated today through the ACV AOA, a fairly good cost 
breakdown that we're putting side-by-side during the 
requirements definition process, so that requirements aren't 
being written unconstrained or uninformed by costs.
    Then that effort is being done jointly between the 
requirements and the acquisition offices. So they're locked 
together debating, assessing, and ultimately arriving at a set 
of requirements for the ACV with a good understanding of what 
it will cost to procure and to support, and then that is being 
overlaid by what the projections are for Marine Corps 
procurement and budgets, so that you have a good balance 
between requirements and capability, cost, and then 
affordability as defined by the budget.
    This work has been going on since the decision to cancel 
the EFV program and it is, frankly, moving pretty smartly 
forward. I think when we come out of the AOA we'll have a half 
a dozen alternatives that we'll be well-postured for and be 
able to make decisions that 3, 4, or 5 years from now the basis 
of those decisions will still ring true.
    Senator Blumenthal. It sounds to me like those are very 
profound lessons that could be useful not only in the ACV 
context, but really for many other procurement programs across 
the Services.
    Mr. Stackley. Yes, sir. We're struggling to get to a point 
where we can make affordability a requirement. So while we have 
key performance parameters that go into our requirements 
document, that document does not capture what those systems 
will cost. So in our overall acquisition process we want to be 
able to tag affordability against those requirements, so we 
don't end up out of bounds when we're halfway through 
development or at the front end of production.
    Senator Blumenthal. Thank you.
    General Mills, I had occasion yesterday to speak with Major 
General Toolan about the progress and the outstanding 
performance of our marines in Afghanistan. I know you're very 
familiar with it. He emphasized the gains that we've made, but 
the continuing dangers to our troops. We all know that one of 
the greatest sources of those dangers is the improvised 
explosive device (IED), the roadside bombs that continue to 
maim and kill our brave marines there.
    I wonder if you could update the subcommittee on the 
ability of the Marine Corps to equip our troops with the 
protective gear, pelvic protective gear and biker shorts and so 
forth, but also what perhaps in the way of new programs might 
be in the works, because this kind of warfare will no doubt 
continue in the future. It's asymmetric, extraordinarily 
damaging, but cost effective for our enemies to use. So any 
comments you would have, I would appreciate.
    General Mills. Sir, I would thank the Senate and Congress 
for their support on being able to provide very quickly needed 
countermeasures to IEDs to the marines in the field. Our urgent 
needs process, in which we respond very quickly to commanders' 
absolutely urgent warfighting requirements, has been very 
successful for us across the board, I think everything from the 
MRAP program, which was done extraordinarily rapidly, as 
efficiently, I think, as possible, but bottom line was it saved 
countless lives on the battlefield, is a great example of that. 
Everything from that large project down to protective devices 
that marines now wear across their hips in order to protect 
vital organs, which was responded to very, very quickly.
    Everything in between, when a commander on the ground sees 
a need and there is either a commercially available solution or 
a process to rapidly develop to fill that need, it's done 
extraordinarily quickly and given to those marines. I saw in my 
time in Afghanistan and in talking to General Toolan during his 
time, whenever they came up with a new idea that was useful, 
whether it be the low metal detectors that were in response to 
the insurgent capability to fashion these IEDs out of wood and 
plastic, whether it be the mine clearing equipment that went 
forward that was needed, everything from boat hook type things 
to very sophisticated explosive ordnance disposal (EOD) robots, 
again very, very quickly.
    I think the process worked. I think that there was a point 
there where cost or competition perhaps was not the driving 
factor, but it was what does that marine need on the ground to 
save his life, and that was met very, very well.
    In the lessons learned, we certainly agree with you that 
this is a threat that will carry on. It's cheap, it's easy to 
do, and it has a significant asymmetric effect on the 
battlefield. We've taken that into consideration. I point to 
probably the JLTV as a great example. If you look at the HMMWV, 
which the JLTV will replace, the HMMWV was an unarmored 
vehicle, it was a Jeep, soft-skinned, and proved itself 
extraordinarily vulnerable to IEDs and small arms. HMMWVs don't 
go outside the wire in Afghanistan any more. They're all inside 
the wire. Only armored protection goes outside the wire.
    When the JLTV requirements were put together, armored 
protection was a significant requirement. Probably 10 years 
ago, 15 years ago, it wouldn't have been. We would have 
produced another soft-skinned vehicle.
    If you look at our MPC, protection underneath from the IED 
threat becomes a critical requirement that we have to look at 
as we go forward. I think the lessons learned both from the 
self-protection equipment that a marine wears into combat to 
the vehicle suite that he's going to have access to, all are 
going to show lessons learned from the war and have IED 
protection, explosive protection, and mine protection built 
into it. The ACV is another example of that.
    Senator Blumenthal. Thank you very much, General Mills. 
Thank you both for your excellent testimony this morning.
    Thank you.
    Senator Reed. Thank you, Senator Blumenthal.
    We'll initiate a second round, presumably 8 minutes. If my 
colleagues want to come back and ask questions, I certainly 
want to give them that opportunity.
    General Mills, one of the urgent procurement initiatives 
because of Afghanistan and Iraq was the MRAP, and the MRAP All-
Terrain Vehicles. They don't seem to fit into the amphibious 
strategy that we're talking about. So it begs the simple 
question: What are you going to do with these vehicles? Will 
you park them someplace, or will a portion of them be used? Can 
you give us some ideas?
    General Mills. Sir, we have a little over 4,000 of them in 
the inventory right now as we come out of Afghanistan. We're 
going to do several things with them. Our plan, we're going to 
keep about 2,500 of them on inactive service. They will be used 
in countermine operations with our EOD folks, with our combat 
engineers, with our route clearance units. That is a 
requirement developed directly out of the war and they'll play 
an important role in there.
    We'll have some available to the operating forces, whether 
they're pre-staged forward at a location or here in the United 
States. We'll have some available for training at our various 
training locations and some available for training for our 
maintainers and our operators.
    The remainder--we'll work through Marine Corps Systems 
Command to rid ourselves of. We don't want to maintain an 
excessive number of those due to costs. So it'll be a split 
strategy of divesting ourselves of what we don't need for the 
future, but also keeping that capability and being able to 
deploy it.
    The deployment piece will be an issue we have to work our 
way through. As you stated, they're heavy. They're big. They do 
take up an awful lot of footprint if you put them on your 
forward-deployed ships. However, I will keep them accessible to 
our forward-deployed forces, able to come forward through a 
transportation method when needed and when called for by the 
commander on the ground.
    Senator Reed. One aspect of both the Navy and the Marine 
Corps budget which, I think, has huge implications is the F-
35B, with the sheer size of the procurement dollars required 
for that activity. General Mills and Secretary Stackley, your 
view is that this is critical to your doctrinal approach to the 
future in terms of amphibious operations, and if you have to 
pay some of the costs indirectly you're prepared to do that, I 
presume?
    General Mills. Sir, I believe the F-35 is an absolutely 
critical requirement for the Marine Corps. The ability to 
forward deploy with our large-deck amphibs and bring fixed wing 
aviation, with all the benefits that has attached to it, is 
critical to the Marine Corps air-ground task force concept in 
which we fight now and will fight in the future.
    Certainly one of the things you want when you're conducting 
amphibious operations is the ability to put supporting arms 
ashore to support your landing force in the initial hours of 
any operation. With the decline in naval gunfire surface 
support that we've seen, I think the use of Marine Corps 
aviation becomes even more critical, that you can impact 
targets well inland. We talk about a threat that has been 
developed against the amphibious forces which can be launched 
from well beyond the beachhead. That capability to do that is 
absolutely critical.
    Our Harriers have done a great job for us. They're 
beginning to run out of life, as we know. General Roebling has 
done some excellent programs to extend that as far as possible, 
but they will run out of life in the early 2020s and the F-35, 
the STOVL capability, is critical to Marine Corps' capabilities 
going forward into this century.
    Senator Reed. Secretary Stackley, the cost factor is 
significant and, despite the best planning, it's going to 
impact probably every system in the Marine Corps and the Navy. 
From both perspectives, how do you soften the blow, if you 
will, in terms of not only what the Marine Corps has to 
acquire, but what the Navy has to acquire to support the Marine 
Corps, to complement the emerging doctrine?
    Mr. Stackley. Yes, sir. With particular regard to the JSF, 
as you're well aware, two factors come to play inside of this 
FYDP. First is the program schedule, and the schedule has moved 
to the right, which has resulted in the product ramp being 
brought down while we complete the developmental testing and 
get to a more mature point in the program where we can ramp up 
to steady production.
    The unit cost on the aircraft has increased as well, and 
we're battling that through the design and development phase, 
and also through the way we buy the aircraft. But it does put 
significant pressure on the overall tactical air (TACAIR) 
portfolio for the Navy and the Marine Corps.
    So we don't try to solve the JSF cost in isolation. The 
requirement is unchanged, for the Navy 680 JSFs split between a 
carrier version and a STOVL version. What we are managing in 
the near- to mid-term is the total TACAIR portfolio, where 
we're at risk of a TACAIR shortfall. That's more than just the 
effects of the JSF. We do have the aging Harriers and the F/A-
18A through D versions that need to go through a service life 
extension program (SLEP), as well as completing the production 
and procurement of the E&F aircraft.
    So between those three, we're balancing within the budget 
to determine how many A through Ds can we afford to SLEP, and 
what's the right production ramp for JSF that we can sustain 
within our budget. We count on the E&F in terms of its service 
life. It's a healthy aircraft for the near- to mid-term. What 
that leaves us with is managing the amount of risk inside the 
TACAIR portfolio.
    We've briefed the committee over the last several years as 
that picture has unfolded. This past year we've revised our 
estimates in terms of the TACAIR shortfall, which peaks in 
about 6 or 7 years from now. The revision was, frankly, a 
downward revision, despite the upward pressure on costs on the 
JSF program, primarily as a result of the revised estimates of 
fly rates as we have gotten out of Iraq and we look forward to 
getting out of Afghanistan.
    Frankly, it's one of the two things that keeps me up at 
night. But we're managing it closely. We have to continue to 
manage the execution of the SLEP. We have to make sure that the 
F-18 aircraft that go through the SLEP get the upgrades they 
need to be combat-capable, while we continue to work the 
introduction of the JSF.
    It's a complex problem with many variables. JSF has added 
some pressure in terms of cost, but what we're managing is 
total portfolio.
    Senator Reed. Thank you.
    We have a chart. I think you're familiar with it. This is 
the chart we used last year.
    [The chart referred to follows:]
      
    
    
      
    Senator Reed. I think it's useful because it's the O&M cost 
of the vehicles. The bottom orange line is the EFV. That's 
gone, so you just pull that out. But still the rest of the 
colored areas representing individual vehicles go above that 
dark line, which is the steady state without a significant 
combat operation, and even above the dotted line, which is 
steady state with combat operations.
    If you can give us a notion of, one, how well you're doing 
to bring those lines underneath your expected budget; and then, 
two, when you would think because of the wear and tear on 
vehicles, et cetera, that the cost of O&M would go up. Mr. 
Secretary, please comment generally on what we're doing.
    The final point I'll make is this chart was available last 
year for the testimony and what I think repeatedly we heard was 
the way we're going to deal with this is reducing the overall 
number of vehicles. Is that still the bottom line, what we have 
to do? So if you can elaborate?
    Mr. Stackley. Yes, sir. I'll start and then let General 
Mills finish.
    Senator Reed. Yes.
    Mr. Stackley. First, the approach we took on looking at the 
affordability of ground combat tactical vehicles for the Marine 
Corps, we're adopting this same approach across the board 
program-by-program, because we can't afford to look at the 
individual program. We have to look at its affordability inside 
of a total portfolio. Then quite often when we do that, we 
realize in the out-years we're overprogrammed.
    I will give the Marine Corps credit for doing a tremendous 
job of taking a look at the problem--this goes back 2 years 
ago--and realizing we can't get there from here. We are 
overprogrammed. The first decision that came out of that was we 
have to do a scrub of the fleet mix of vehicles, and in that 
was the decision to terminate the EFV program.
    But by itself--and we were very clear--that's not enough to 
solve this problem. A part of the ground combat tactical 
vehicle strategy was taking a look at the total fleet size and 
mix and determining what can we do to get from what has built 
up over the years down to what we absolutely need going 
forward.
    The first cut coming out of that strategy was a readiness 
of about 10,000 vehicles planned for the portfolio for the 
foreseeable future, greater than 20 percent. That has a direct 
impact on the O&M projections going forward.
    The other half of the equation was looking at what we buy 
and when we buy it. So while this is O&M, there's a similar 
picture that reflects the procurement side at the same 
timeframe. So the vehicle strategy has placed a sequence of 
what we buy and also has driven affordability into what we buy. 
As far forward as we can look and project today, our vehicle 
procurement strategy aligns with our budget projections.
    The other aspect that's built into this chart, not 
immediately apparent, is the front end of that chart, the left-
hand side, is augmented by Overseas Contingency Operations 
(OCO) funding. One of the challenges that remains before us is 
a post-OCO environment, what does that mean for sustaining our 
vehicle fleet? We're continuing to work that. We have a near-
term reset that we have budgeted, but there is a longer-term 
strategic buildout there that we've identified to everyone. But 
that's very much contingent upon when we get out of 
Afghanistan.
    Your specific question regarding why does that tail down. I 
can't reconstruct the last couple of years of that chart, but 
I'm going to tell you that that's probably more than anything 
else a budget peculiarity in terms of how far forward we 
project certain programs, and since we don't have other 
programs identified yet, the budget numbers probably took over 
the chart at that point in time.
    Senator Reed. Realistically, the chart is accurate, but 
with the right assumptions the lines would continue to go up, 
or be level at least?
    Mr. Stackley. Yes, sir.
    Senator Reed. Thank you.
    I have additional questions, so we'll have another round.
    General Mills. Senator, if I could just add.
    Senator Reed. Excuse me, General.
    General Mills. He covered very clearly what our procurement 
piece was. Regarding O&M costs, other things which we're doing 
to take a look to try to control some of those costs, because 
we realize that will be pressurized under the new budget system 
when you look at the budget amounts that are available to us, 
regarding our older vehicles we do have a plan to do a 
sustainment package on 81 percent of the vehicles that we're 
going to retain in the fleet, both our HMMWVs, our ACVs, and 
our other vehicles. So as they come out of theater, we have a 
very thorough sustainment package we put them through that will 
restore them to we think a good, reliable level.
    For our newer vehicles, of course, we're looking at raising 
reliability standards, challenging the builders to give us 
vehicles that are more reliable the longer time between major 
breakdowns. Also fuel efficiency. Fuel is a big piece of O&M 
costs and we're looking at vehicles that are more fuel 
efficient, and that becomes a factor that we're going to 
consider heavily, where in the past perhaps we didn't give it 
as much set. That's the reset that Mr. Stackley talked about. 
We want to bring those vehicles that are coming out of theater, 
that have been used and have been ridden hard, and bring them 
back to as good a state as we can so they are reliable in the 
future, driving down future maintenance costs.
    We have a pretty comprehensive effort to keep those costs 
as low as possible, understanding also that O&M costs drive 
training, and you have to be able to make sure that you keep 
levels there that you're able to use vehicles, train on them, 
and keep them in the field for preparation.
    Senator Reed. Thank you, sir.
    With that, Senator Ayotte.
    Senator Ayotte. Thank you, Mr. Chairman.
    I want to thank both of our distinguished witnesses for 
being here and for their service to our country.
    Secretary Stackley, I want to follow up on your testimony 
from last week's shipbuilding hearing and particularly ask you 
about the Virginia-class submarine. First of all, is the 
Virginia-class submarine performing well?
    Mr. Stackley. Yes, ma'am, absolutely. It's performing well 
in terms of production, but more importantly performing well in 
terms of the fleet. If you had one of the fleet sailors on 
board here talking about when they compare a Virginia to even 
Los Angeles-class, it's a leap forward in terms of combat 
capability. They're very excited about it.
    Senator Ayotte. Terrific.
    As you're probably aware, the Chief of Naval Operations has 
testified that the Navy is only able to meet 61 percent of the 
combatant commander requirements and requests for attack 
submarines. Are you familiar with that number?
    Mr. Stackley. Yes.
    Senator Ayotte. Yet, for budget reasons, the Navy has 
recommended, because of the numbers that were given in the BCA, 
that we postpone the procurement of one Virginia-class 
submarine from 2014 to 2018. I wanted to ask you about some of 
your testimony at the shipbuilding hearing about this issue, 
particularly the issue of if we were able to move to say that 
if we were to lower the cost by doing it, the cost to purchase 
on an incremental basis. I believe that you testified last week 
about the fact that if you assess the bottom line or the net 
cost impact of adding a second Virginia-class, in other words 
bringing it back up to 2014, that it's near neutral. In other 
words, the net savings associated with pulling the boat to the 
left if we did it on an incremental basis would effectively, 
adding the boat by pulling it to the left, outweigh the upfront 
cost if we had to purchase the entire submarine up front.
    As I understand it, the House Armed Services Committee 
(HASC) Seapower Subcommittee did just that and recommended that 
we actually push back the purchase, but do it on an incremental 
basis.
    Can you help me? Can you comment on this and also explain 
that if we were to purchase the Virginia-class in the 
incremental way that you described in the shipbuilding hearing, 
what impact that would have?
    Mr. Stackley. Yes, ma'am. First, the way the cost analysis 
works out is we assess the Virginia-class program as opposed to 
individual boats, what the program cost would be, not simply 
moving a boat from 2018 back to 2014, but literally moving a 
boat from the end of the program to 2014, because we want to 
sustain two per year.
    Senator Ayotte. Right.
    Mr. Stackley. Then when you look at the total program cost 
for those two different procurement profiles, the upfront cost 
for that second boat in 2014 is offset by savings across the 
program in the later years.
    Senator Ayotte. By moving it up, right.
    Mr. Stackley. Yes, ma'am. So at the bottom line, for the 
Virginia multi-year, 9 versus 10 boats, it is near neutral 
adding that second boat in 2014. That's independent of how you 
fund it.
    The discussion regarding incremental funding simply 
reflects the constraints that we have for our top line in 2014. 
We did not have sufficient head room to fully fund the second 
boat in 2014. So there is an exception to the full funding 
policy that's been put in place for carriers and large-deck 
amphibs that allows you to spread those costs over a number of 
years to eliminate the spike that it causes in the budget.
    In this particular case, that would enable us to fund a 
second boat in 2014 without giving up the second boat in 2018 
and stay near neutral at the bottom line.
    Senator Ayotte. The only reason that you weren't able to 
recommend that to us is because you didn't have that capacity 
for the submarine fleet, is that right, in terms of how you 
could budget?
    Mr. Stackley. You say ``capacity''?
    Senator Ayotte. I mean you didn't have the authority, is 
what I meant to say.
    Mr. Stackley. Yes, ma'am. The policy is that we fully fund 
our capital investments in the year in which we procure them. 
There are exceptions to that, but we do not have an exception 
in this case for Virginia. So while it works out analytically, 
policywise we don't have the authority to incrementally fund 
it.
    Senator Ayotte. Wouldn't it make sense to have an exception 
for Virginia, the way you just described it in terms of how we 
look at this?
    Mr. Stackley. When you simply look at the fact that we have 
this demand for submarine service that exceeds our capacity, 
and in fact longer-term our number of attack boats in the fleet 
goes down until we hit a valley in the 2030s.
    Senator Ayotte. Right, the nine-sub valley is by 2030?
    Mr. Stackley. Our requirement is 48 boats.
    Senator Ayotte. Right.
    Mr. Stackley. Our force structure out in the 2030s 
timeframe drops well below 48 boats. So to affect that, to try 
to improve upon that, you really have to sustain two boats per 
year as long as you can, until you get to the point where you 
have some flexibility in the buy rate. We're not at that point 
yet.
    So it's a budget constraint that drove us to make this 
reduction in 2014, but the requirement would insist otherwise, 
that we get back up to two boats and sustain it as best we can.
    Senator Ayotte. This would be something that perhaps would 
be a very important authority that we could give you with 
respect to our attack submarine fleet and also making sure if 
we did what the HASC Seapower Subcommittee just did we could 
ensure that the two remained constant in a way that would be 
much better in terms of trying to meet our combatant 
commanders' requirement for the attack submarines; isn't that 
true?
    Mr. Stackley. Let me describe that the President's budget 
didn't request it, but I think it's important that we discuss 
and provide the information regarding this alternative to full 
funding, so that everyone can assess the value to the force, 
the value to the industrial base, and then the affordability 
that adding that second boat provides, and weigh that against 
the importance of the full funding policy.
    Senator Ayotte. Right. But as we're talking about it in the 
testimony before the subcommittee today, this is a very 
sensible move, as well as making sure that we meet the requests 
of our combatant commanders, and we already are not meeting 
them. We're only meeting 61 percent of those requests now.
    Mr. Stackley. Getting that second boat in 2014 is the most 
affordable way to buy another submarine.
    Senator Ayotte. I very much appreciate your providing that 
insight to us. I want you to know that this is something that I 
am going to be proposing and pushing with the rest of the 
members of the Senate Armed Services Committee, and I think it 
only makes sense in terms of not only the cost, but also making 
sure that we maintain our attack submarine fleet and given the 
needs of our combatant commanders, and particularly if we look 
at our shift in strategy as a focus on the Asia-Pacific region, 
obviously our naval fleet and the importance of it, that's 
very, very important that we have a robust attack submarine 
fleet, and the Virginia class is very important to that. I 
appreciate your testimony today.
    Thank you very much. Thank you for being here.
    Senator Reed. As long as you want to speak about 
submarines, Senator, you may continue. [Laughter.]
    Senator Blumenthal. I'm prepared to speak about submarines.
    Senator Reed. In that case, we'll recognize Senator 
Blumenthal.
    Senator Blumenthal. Thank you.
    I want to thank Senator Ayotte for that line of 
questioning, which you and I really engaged in at the last 
hearing. I think Secretary Stackley put it extraordinarily in 
that hearing, and I don't want to put words in your mouth, but 
effectively you suggested that the committee should adopt this 
incremental funding approach, which you said is an 
extraordinary method of funding, but we live, as you put it, in 
extraordinary times, and we are facing extraordinary 
challenges. I agree with you completely.
    Senator Ayotte, I'm glad you followed up with those 
questions, because I've already written to the chairman, and I 
know others have as well, endorsing the idea of moving that 
submarine forward without necessarily funding it up front and 
doing the incremental funding. I'm glad to see that the HASC 
has adopted that approach, which perhaps we can follow here.
    I want to thank you for the testimony this morning in 
effect endorsing--that may be too strong a word--but at least 
suggesting favorable consideration on the part of our 
committee.
    Senator Ayotte. We may be able to have bipartisan agreement 
on this. I like that.
    Senator Blumenthal. I think we will, and I'm sure that 
Senator Reed may have favorable things to say about it as well.
    Senator Reed. I have made a note to myself.
    Senator Blumenthal. I would like to just move to another 
topic if I may, Mr. Chairman. It was really suggested by the 
testimony making reference to the Commandant's energy 
efficiency statement. I know there was a more high-falutin term 
for it, but I want to commend and thank the Marine Corps for 
focusing on this issue. Secretary Stackley, you and I discussed 
it a little bit in the last hearing.
    But I'm wondering, in light of this chart and other 
analyses that show, as you put so well, General Mills, the 
costs of simply running these vehicles using our present source 
of energy; and certainly I think one of the lessons in 
Afghanistan has to be the tremendous cost of providing fuel, 
which when you think about it is really staggering, not only 
the cost in dollars, but the vulnerability in terms of the 
Pakistan route that it creates and the cost in human lives in 
the convoys that is required.
    I'm wondering whether there is thought to alternative means 
of running these machines, so to speak. I don't know whether I 
can put it in a more sophisticated way, but just alternative 
sources of energy that can be used in these vehicles.
    Mr. Stackley. The chart that was displayed regarding the 
O&M costs for the vehicle fleet, General Mills hit the issue 
when he described the majority of those vehicles, they are 
aging; they are going to go through a sustainment program. 
They'll get modernized. They'll go through improvements so they 
can serve well beyond their service life.
    Regarding your specific question, the point there is that 
the majority of those vehicles, those drive trains are what 
they are. If there's an opportunity to improve upon the drive 
train as we go through the modernization, we're going to 
explore that and do that to the extent it improves the 
operation of the vehicle and drives down its operation and 
support cost.
    But there's little opportunity to introduce new 
technologies for drive trains beyond the programs that we're 
introducing today. So the JLTV program, in particular, we've 
discussed whether or not there's an opportunity to look at a 
more fuel efficient system. In fact, energy is one of the 
requirements that's being drafted up for that vehicle. But it 
doesn't drive you to a leap-ahead technology in a drive train 
when it comes to military vehicles, not yet.
    It is something that we have to continue to look at. So 
while we do development in parallel on the components and the 
subsystems, at some point downstream we have to explore how do 
we introduce these more efficient drive trains to the fleet of 
vehicles. It will be a slow, slow transition because of the 
large numbers of legacy vehicles that we start with.
    General Mills. Sir, I would just add two things that we're 
looking at from the Marine Corps perspective. One, of course, 
is life in the barracks when you're back, not in the field, not 
at war, not training, looking at various energy supplements 
there that we can use. Solar is the one that we're most active 
in, and we're having success at many of our bases in replacing 
fossil-driven fuels with our solar capabilities. Our Mountain 
Warfare Training Command up in Bridgeport, CA, is soon to be a 
negative energy user. They're going to provide everything they 
need through solar and through thermo, which they have access 
to, and may, in fact, be able to sell some of that energy out 
in town to the local power grid.
    We're looking at ways back in the barracks in which we can 
ensure those barracks are green, for want of a better term, and 
which we can save power.
    Out in the field, in the vehicles, we're looking at 
ensuring our new vehicles have alternate power units attached 
to them, so that you don't have to run a 10K generator that 
uses an awful lot of fuel when you simply want to keep some 
lights on in the Combat Operations Center (COC). You can use a 
more efficient method of providing that electricity, looking 
for more efficiency. Lighting in our COCs and places like that, 
those aren't huge savings, but they chip away at the 
requirements.
    I found that when I was in Afghanistan, surprisingly, the 
troops were extraordinarily receptive to energy-saving devices, 
because they knew what that meant to them as far as the 
logistics trail they had to drag along and the risks they had 
to take in moving large quantities of fuel around the country 
in which fuel trucks were lucrative targets, both for the enemy 
and for corruption.
    We're looking for ways big and small to save power, save 
energy, reduce that logistics trail, and also to reduce costs, 
as pointed out by that graph.
    Senator Blumenthal. I thank you for those answers. Also, 
the March 2011 Marine Corps Expeditionary Strategy and 
Implementation Plan was the report that I was referring to 
before. I think it's a great step in the basis to battlefield 
strategy and I hope that it will be updated because technology 
is moving so quickly that there's a lot of opportunity.
    General Mills. Sir, if I can just add, twice a year we 
sponsor what we call an expeditionary forward operating base, 
one at Camp Pendleton and one at Camp Lejeune. The one at Camp 
Lejeune goes next week and we're going to have a group of 
staffers accompany us down there. The intent of that is to look 
at expeditionary ways to save fuel, both through solar and 
other experimental methods. It will expose us to them, it will 
allow us to identify some projects worthwhile to take forward 
to us on our deployments, try them out in the field under real 
conditions, and then report back as to whether there are things 
that we want to exploit. It's an ongoing project for us.
    Senator Blumenthal. Thank you very much.
    Senator Reed. Thank you, Senator Blumenthal.
    Let me ask some additional questions. General Mills, I want 
to get a feel for the procurement strategy. We started off with 
the notion of buying about 1,000 EFVs to replace roughly 1,000 
AAV-7s, which you have in your inventory now. The EFV is out 
and now we're looking at basically dividing your resources 
between the ACV, which would be the assault craft, and the 
wheeled armored personnel carrier.
    The wheeled armored personnel carrier doesn't swim. It 
carries only half a squad, so it has some tactical 
consequences. It's about as heavy to lift as the ACVs, which 
raises the question, particularly if we're still doctrinally 
looking at roughly two-thirds of our assault forces going 
ashore by amphibious vehicle, what is the ratio of investment 
in the ACV versus the personnel carrier, and why are we buying 
personnel carriers? Can you comment?
    General Mills. Sir, we feel the portfolio approach is the 
best one, that both from an affordability perspective, but more 
importantly for the flexibility it gives the commander on the 
ground. We don't believe that every marine has to swim ashore 
in a self-propelled amphibious vehicle, that the forces flown 
ashore off of the ships will go ashore through a series of 
means. A third of the force will go in by aviation, for 
instance, and land and link up with heavy equipment later on 
ashore. Initial assault waves will go in in our ACVs because of 
the uncertainty of what they're going to meet once they reach 
that beachhead.
    Once that beachhead is established, however, we can begin 
to run connectors in there, which are our LCAC and our LCU, 
bringing in the remainder of our vehicles. They can bring in 
the MPCs that you spoke of.
    Then, once ashore, those vehicles give us great 
flexibility, give us better speed than the tracked vehicles do 
in the field, give us efficiencies in fuel, and provide us 
with, I think, better combat power for that commander as he 
pushes the beachhead in and proceeds on to exploit the 
opportunities on the ground.
    We currently have a mixture of vehicles. We have a 
portfolio. It works. It fits into our concept of operations 
very, very well. We're still doing the study as to what that 
breakdown should be. We think that the total requirement is the 
ability to have 12 battalions with some armored protection 
mobility. Whether we break down to all of them being on ACVs, 
probably an unaffordable strategy, or what the exact breakdown 
will be, is an ongoing study and will be a decision that we're 
going to push down the road a little bit for the Commandant to 
make. But once the AOA on the ACV is complete, once we have a 
better feel for the MPC characteristics and costs, we think we 
will give him an opportunity to make his decision as to how he 
sees the fleet motored up, if you will.
    Senator Reed. So you're teeing this up for a decision on 
numbers based on what you think is the optimal configuration 
for your doctrine, your tactical operations?
    General Mills. Exactly, sir. Of course, cost has to be a 
factor.
    Senator Reed. Let me go back to the point that you have a 
vehicle that takes half a squad, which complicates command and 
control. That is a factor which I assume you're going to also 
consider. My sense, over the last several decades the thrust of 
buying military equipment for land forces was to at least have 
a squad size as the minimum organization point carrier, both 
lift as well as the personnel carriers. This seems to be a 
diversion from that.
    General Mills. Sir, it is different. But we think that it 
does also mitigate some risk. It does disperse that unit, so 
should you lose one of the vehicles, you haven't lost an entire 
squad. Some of our experience in Iraq, for instance, where we 
lost some AAVs that had full squads on board, and then you lost 
an entire fighting unit, so there is some advantage to 
splitting that squad into units.
    There are challenges with command and control as you 
pointed out. It also gives us some advantage in distributed 
operations as we begin to spread these units out, fight at 
greater distances and fight in smaller units. There is some 
capability there. But we do feel that the MPC will give us some 
flexibility, some efficiencies, some reliability that a tracked 
vehicle, which is more complicated and complex, doesn't give 
us.
    Mr. Stackley. If I could just add?
    Senator Reed. Yes, Mr. Secretary.
    Mr. Stackley. First, sir, you're asking exactly the right 
questions, and they're the same questions that we're asking 
ourselves internally. Those are all built into the AOA that's 
being accomplished for the ACV.
    But also, as we look at that portfolio mix, the fleet mix 
of vehicles, it's very similar to the discussion we had earlier 
when you laid out the total O&M costs for the fleet of 
vehicles. It's the same portfolio approach that we're taking 
when we look ahead through the ground combat tactical vehicle 
strategy.
    Senator Reed. Let me raise a question with you, Mr. 
Secretary, on that. We have communicated back and forth about 
habitability issues with respect to the assault ships coming 
ashore. From General Mills' initial comment about the new 
threat, the new doctrine, that you're going to have to swim a 
long way to the beach, longer than we thought before, there's 
been some testing and you responded to the committee that it 
does not appear that the multi-hour water movements have 
degraded the capability of the marines coming ashore.
    We understand that this test was done under mild weather 
conditions, et cetera. I raise the issue because I would 
presume this is again something that you're going to test again 
and again and again under a whole series of conditions, because 
you have to get to the beach, but if you get off the amphibious 
vehicle in a degraded state, that's not doing your marines any 
favors. I know you don't want that to happen.
    Mr. Stackley. Yes, sir. Inconclusive is a good word for 
this case. We did about a 1-week habitability assessment test 
and submitted the report to Congress. We did not get the 
challenging sea conditions that would have provided more 
meaningful results. But what we did gain from that is we did 
not find anything in that early testing that said it can't be 
done. The assessment and the testing of the marines that 
participated concluded that, at least for these sea conditions 
and under the 1-, 2-, and 3-hour scenarios, when they got to 
the beach they were operationally effective.
    The report describes that when it comes to cognitive skills 
and things, there was some marginal degradation, but when it 
came to marines being able to perform a combat mission, for 
those conditions everything looked okay. We have to go beyond, 
though. We have to do further testing. This is important, not 
just to development of the ACV, but it's important to how we 
operate going forward for amphibious operations.
    Senator Reed. Do you have a comment, General?
    General Mills. Sir, I would just add one comment to that. 
We know what the optimum conditions are now. We've been doing 
it for years; 4,000 yards off the beach and sea state one. You 
get ashore quickly and you barely know you're in the water.
    Our challenge, as we plan to use the exercises that I 
talked to you about earlier to push those limits, is to find 
what's the worst case. We know what the best case is, 4,000 
yards and sea state one. Now what's the worst case? How many 
miles off the beach could you be? What kind of sea states could 
you operate in, and what decisions will that Marine Air-Ground 
Task Force commander have to make when he looks at amphibious 
operations in the future?
    So we're going to do that. We're going to do it 
incrementally, we're going to do it safely, because we 
certainly don't want to put loaded vehicles well out at sea 
with marines in the back and have a problem. So we're going to 
do it incrementally, we're going to do it safely, and we're 
going to use what we've learned to help guide our decisions 
when we see those results of the AOA.
    It is very concerning to us and we are working it.
    Senator Reed. I have just a few additional questions, but 
Senator Ayotte, if you would like to do an additional round, go 
ahead.
    Senator Ayotte. Thank you, Mr. Chairman. I really 
appreciate it. I just have two areas of questioning. I 
appreciate it.
    General Mills, I wanted to thank you for coming to my 
office recently to talk about the Navy's proposal to eliminate 
one of the three maritime prepositioning squadrons and to 
reduce the number of maritime prepositioning ships in the 
fiscal year 2013 proposal. We just recently received the report 
that I had asked for in the 2012 NDAA about this topic and also 
the risks associated in terms of our readiness with reducing 
the prepositioned squadrons.
    Obviously, this is something that we're looking at. We're 
reducing status, but in the fiscal year 2013 budget we're 
eliminating one because of the fiscal pressures that we face. 
In the report, General Amos consulted with the U.S. European 
Command and U.S. Africa Command (AFRICOM) commanders. They 
certified that the risk was acceptable, but still acknowledged 
that it's going to create capability gaps and influence force 
closure and crisis response times in terms of some of the gaps 
we might have.
    But the mitigating factor, as you and I also talked about 
in my office, was the prepositioning program in Norway. In 
terms of the equipment in Norway, that equipment is not on 
ships, is that right?
    General Mills. That's correct. It's in caves that are 
maintained by the Norwegians under an agreement.
    Senator Ayotte. We would probably need to get it on a ship. 
That's one of the capacities we may need, unless we need it 
right there. But most likely we'd need to get it on a ship, 
correct?
    General Mills. Yes, ma'am.
    Senator Ayotte. So that's one additional step we would have 
to take, as opposed to already having the ship right there, the 
squad, and what we're eliminating in capacity now; is that 
right?
    General Mills. That's correct.
    Senator Ayotte. How long will it take to get the equipment 
on the ships?
    General Mills. That's a difficult question to answer 
because of the many factors that would play into that. 
Depending on how much equipment you needed, what that slice 
was, weather conditions, that kind of thing, a MEU loads out in 
about a week from Camp Lejeune to Moorehead City and gets on 
board ships and moves out. I'd have to get back to you with 
exact planning figures to get out of the caves and get to 
commercially available shipping. But I think it's a reasonable 
amount that we could respond to large-scale contingencies.
    Senator Ayotte. If you're able to answer me more 
specifically as a follow-up, I'd appreciate it.
    General Mills. Yes, ma'am.
    [The information referred to follows:]

    Surge sealift ships can be activated and sail to Norway in about 2 
weeks. An additional option is to call upon U.S.-flagged ships from the 
Maritime Security Program (MSP). Some of these MSP ships conduct trade 
in northern Europe, thus can likely respond in days.
    It will take 7 to 10 days to load the equipment in Norway onto 
ships once they arrive. However, Marine Corps Prepositioning Program-
Norway (MCPP-N) is versatile, and ground, rail, and air are all 
possible modes of transportation. Strategic air was used for MCPP-N 
support of the Russian wildfires in 2011 and humanitarian assistance to 
Turkey following the earthquakes in 2011, allowing equipment and 
supplies to be delivered very quickly.
    Current MCPP-N on hand, ground and aviation equipment will require 
two ships, and a fully-attained prepositioning objective will require 
three ships. It takes 5 days to load each ship, and ships can be loaded 
concurrently if berths and required personnel are available.
    Current MCPP-N munitions on hand, and a fully attained 
prepositioning objective, will require one ship. It will take 5 days to 
load the current on hand munitions and 9 days to load a fully attained 
prepositioning objective. Munitions conduct load out from a different 
port than ground and aviation equipment.

    Senator Ayotte. Then also, how is the equipment in Norway 
in the caves different than the equipment that's in a maritime 
prepositioning squadron? Is it a different type of equipment or 
is it the same?
    General Mills. It's basically the same. It's a cross-
section of Marine Corps equipment. The plan to reload the 
caves, because we're going to reload them, is to organize them 
around MEU- or MEB-sized units, which are probably the 
appropriate size unit you'd want to have respond to something 
that was going to happen either in Africa or in the Levant.
    Senator Ayotte. Are we going to have to do some 
modernization and update on the equipment in Norway?
    General Mills. We would have to as we restock it. We have a 
plan with all of our prepositioning, whether afloat or ashore, 
to modernize it on schedule at the times it needs to be done. 
But those caves are going to be restocked. They're low in our 
priorities, in all honesty, but they are on our priorities to 
restock them and have them prepared and ready to go.
    Senator Ayotte. One of the factors we're dealing with in 
terms of just thinking about a difference in capability between 
the squadron and the caves is not only loading the ships, but 
also the equipment there isn't as modern as what's in the 
squadron right now, is it?
    General Mills. I'd say it's comparable. I would say it's 
comparable.
    Senator Ayotte. It's comparable?
    General Mills. I can get you some information on that, but 
I would say it's comparable.
    Senator Ayotte. Okay. I would appreciate if you have any 
additional information on that as well. Thank you very much.
    [The information referred to follows:]

    The equipment sets within the Maritime Prepositioning Force (MPF) 
program and the Marine Corps Prepositioning Program-Norway (MCPP-N) are 
comparable in terms of modernization and maintenance readiness; 
however, the MPF equipment set includes larger quantities and a wider 
array of equipment than MCPP-N. The MCPP-N equipment set does not 
currently have all of the communications and weapons systems 
prepositioned in the MPF.
    The Marine Corps is currently conducting an assessment of MCPP-N to 
ensure future operational relevance from a capability and capacity 
standpoint. The Marine Corps is in the process of modifying the 
composition of prepositioning stocks within MCPP-N as part of an 
ongoing transformation effort. MCPP-N formerly supported an air-landed 
Marine Expeditionary Brigade (MEB) with engineering, transportation, 
aviation support equipment, and various classes of supply. This 
existing equipment set is being reshaped, with the addition of 
communications and additional ordnance assets, to support a Marine Air-
Ground Task Force built around an infantry battalion task force and 
composite aviation squadron. MCPP-N will retain its primary role of 
augmenting up to a MEB-sized force to support the reinforcement of 
Norway and U.S. Marine Corps expeditionary operations.
    Over the course of the next several years, and to the maximum 
extent possible, MCPP-N will be restocked with equipment that becomes 
available as a result of the decommissioning of Maritime Prepositioning 
Ship Squadron-1 (MPSRON-1) and drawdown from combat operations in 
support of Operation Enduring Freedom. This is essential to increasing 
attainment levels in Norway and mitigating risk to U.S. European 
Command and U.S. Africa Command associated with the loss of MPSRON-1. 
Though MCPP-N will mitigate this risk to some extent, it is not a 
substitute for the afloat prepositioned capability within MPSRON-1.

    Senator Ayotte. This has just been something I've been very 
interested in, in terms of our capacity and our ability of 
eliminating one of these squadrons in terms of response times. 
So I do appreciate your follow-up on it. We certainly are 
taking on additional risk by doing this. I think you'd agree 
with me on that.
    General Mills. Yes, ma'am, there is additional risk. As we 
discussed earlier, the squadrons that we're going to have are 
enhanced. They are better than the squadrons that we had. They 
have newer ships, they have more capacity, and so the 
individual squadron gives us a better capability.
    Senator Ayotte. But also, location is helpful, too.
    General Mills. Location is very helpful.
    Senator Ayotte. Especially with AFRICOM, yes.
    General Mills. Although those ships will be focused to the 
Pacific, the advantage they give you is the flexibility of 
being able to move them should a crisis arise someplace in the 
European or African theaters. You always have the flexibility 
with forward-deployed amphibious capability to move it to the 
point of crisis.
    Senator Ayotte. Thank you, General Mills. I look forward to 
also continuing to talk with you about this issue.
    Secretary Stackley, if we undertake what I think would be 
foolish, to allow sequestration to go into place, on an annual 
basis that's about $15 billion to the Navy, which as I 
understand it would be the equivalent of our entire 
shipbuilding budget in 1 year or the equivalent of 2 years of 
maintaining our fleet, or would be the entire naval air fleet 
procurement in 1 year. Is that true?
    Mr. Stackley. In terms of numbers, that's about right, yes, 
ma'am. The impact of the first $487 billion over the decade to 
the Navy was about $50 billion over the FYDP, and so the first 
thing when you talk about sequestration is you have to 
recognize that we've already carved out $50 billion and the 
budget that you're looking at reflects those actions.
    To consider sequestration and its impact, the next thing 
you have to recognize is a lot of the budget can't be adjusted. 
There's some core of O&M that you have to have. So that $10 to 
$15 billion of additional impact per year really lays on top of 
a relatively small portion of the overall budget. So its impact 
will just be devastating.
    We don't today plan for sequestration. The first step of 
planning sequestration would probably have to be arriving at a 
new defense strategy because the defense strategy that's in 
place could not be supported if sequestration hit.
    Senator Ayotte. General, I assume that if sequestration 
goes forward it would be devastating to the Marine Corps as 
well?
    General Mills. Yes, ma'am, across the board; acquisition, 
the O&M part of it, and the training piece of it. Assuming the 
personnel section was excused from it, it would have a 
devastating effect on our acquisition, our training, and our 
readiness.
    Senator Ayotte. It is my hope that we will take this issue 
up very quickly around here, so you don't have to undertake any 
type of planning for things that would be devastating to our 
military, as well as for our industrial base, that has to look 
ahead in terms of planning and the capacity. I think about our 
shipbuilding capacity. This is a very, very important issue. So 
I appreciate both of your being here today.
    Thank you.
    Senator Reed. Thank you, Senator Ayotte.
    I have two concluding questions. We've talked about the 
Littoral Combat Ship (LCS), a program that gets a lot of 
attention. The Marine Corps has expressed some interest in 
developing and fielding some modules for the LCS that would 
support Marine Corps warfare missions. Can you discuss, General 
Mills, what these modules might be and how it would complement 
everything we've talked about this morning?
    General Mills. Certainly. We have a planning team right 
now, as a matter of fact, that's out visiting the ships and 
working with the Navy to take a look at ways in which the 
Marine Corps could complement the capability of the LCSs. I 
think one that leaps immediately to mind is there's an 
overriding requirement out in the combatant commands for 
amphibious ships. A lot of that requirement is relatively low-
level engagement opportunities. I think that, given the fact 
that we can get some helicopters on board one of the LCSs, we 
could put a module on board in which marines could live and do 
some training and get ashore. I think that would be ideal for 
those kinds of low-level operations.
    Second, I think when you look at operations in littorals, 
in the shallow waters and perhaps the bays and rivers, those 
ships give you some capability in those areas, small-scale 
Marine Corps units, that you want to send forward.
    I think there's lots of opportunity there. We're going to 
take a hard look at it. We're going to work with the Navy fleet 
command to find opportunities to experiment with it. I think 
that we'll find some use.
    Senator Reed. Mr. Secretary, the program of record for LCS 
doesn't have an expeditionary module or a Marine Corps 
component. How are you beginning to plan for this, or is this 
in such an early stage that it hasn't reached your attention?
    Mr. Stackley. No, sir, the program of record has the three 
mission modules: anti-submarine warfare, mine countermeasures, 
and anti-surface warfare. But we recognize that that's a 
starting point. What the LCS brings is flexibility. It's a 
modular concept, so it brings space, volume, displacement, and 
margin. It provides power and links. It provides aviation 
capability and also provides boat-handling capability.
    We're looking at missions that that capacity that the LCS 
brings can neatly support. General Mills just talked about the 
Marine Corps. We are also in discussions with SOF. We look at 
some specialty niches associated with humanitarian assistance, 
as well as search and seizure.
    Admiral Harvey has been pounding the table on this: hey, we 
need to look beyond the first three mission packages. We need 
to be looking at where else can we employ LCS and get started 
now on developing the concepts so we can have that capability 
in hand sooner.
    Senator Reed. Thank you.
    General Mills and Secretary Stackley, you're probably aware 
that the Chinese have an amphibious vehicle. One version is a 
tank in which a 105-millimeter gun appears. The other is an 
infantry fighting vehicle with a 30-millimeter cannon. They're 
both high speed planing vehicles. They look a lot or something 
like the EFV might have looked like. They're also building 
their first set of large amphibious ships that compare to, 
roughly, the LPD-17 class.
    Can you give us an assessment of your view or your take, or 
is this something that you're still considering?
    General Mills. I think it reflects the interest that China 
has in overseas areas in which they're very interested in 
looking for natural resources and things like that, and they 
begin to have the capability to project power. I think that any 
country, any world power, has to have that capability, the 
ability to project power, and I think that amphibious forces 
are the natural growth from making that assumption. So I think 
that it's their beginning steps on a way to being able to 
project power to areas that they're interested in.
    Senator Reed. Mr. Secretary?
    Mr. Stackley. I would say that China's not alone. There are 
several nations around the world that are expanding their 
amphibious warfare capabilities. I think statistically there's 
a 200 percent increase when you look globally at investment in 
amphibious capabilities beyond the United States. More 
recently, it's been well-advertised that the Russian navy is 
acquiring a French-designed and built amphibious ship, the 
Mistral-class.
    So, as General Mills described, it is a method of power 
projection, increasing attention in the littorals; I think that 
simply reflects that.
    Senator Reed. Thank you very much, gentlemen, not only for 
your testimony today, but for your service to the Navy and the 
Marine Corps and to the Nation. Obviously, as always, please 
commend those that you lead for their extraordinary efforts.
    We'll keep the record open for a week, and there may be 
additional statements or questions submitted by colleagues. We 
would ask you to respond as quickly as you could to any written 
questions.
    With no further business, this hearing is adjourned.
    [Questions for the record with answers supplied follow:]
              Questions Submitted by Senator Kay R. Hagan
                  modernized expanded capacity vehicle
    1. Senator Hagan. Lieutenant General Mills, until recently, there 
were plans to modify and upgrade High Mobility Multipurpose Wheeled 
Vehicle (HMMWV), through the Modernized Expanded Capacity Vehicle 
(MECV) program, to provide a light tactical vehicle that could be 
useful in an environment where improvised explosive devices (IED) are 
prevalent. Now, all efforts are focused towards the Joint Light 
Tactical Vehicle (JLTV). The decision to move away from the MECV 
program has impacted the defense industrial base. Industry moved to 
address HMMWV survivability and crew protection concerns and now they 
are told the program is terminated. Meanwhile, the JLTV is still in the 
research, development, test, and evaluation (RDT&E) phase. What is the 
Marine Corps' plan should the JLTV program's timeline slide?
    General Mills. The HMMWV Survivability Improvement Initiative 
(HSII) was developed in early 2011 as a complementary effort to JLTV, 
recapitalizing a portion of our light tactical vehicles and extending 
their service life. The Army and Marine Corps collaboratively developed 
JLTV and HMMWV recapitalization requirements and programs (called MECV 
in the Army) throughout this period. The Marine Corps evaluated, 
through experimentation, testing, and analysis, a recapitalization 
approach, HSII, but decided against it. Given the added weight 
necessary to improve protection, HMMWV-based platforms will not meet 
Marine Corps requirements in terms of reliability, payload, service 
life, mobility, ability to fit on Maritime Prepositioning Force (MPF) 
shipping. The Army does not intend to invest to meet these 
requirements. Therefore, the Marine Corps will reduce the scope of our 
2011 HMMWV competitive survivability initiative and establish a HMMWV 
sustainment program. The purpose of that effort, through modification 
to existing platforms, is to extend HMMWV service life out to 2030. 
Marine Corps collaboration with the Army MECV program will continue to 
identify successful component designs that may be applied in our HMMWV 
sustainment program.

    2. Senator Hagan. Lieutenant General Mills, do you see any value in 
continuing to explore options with the MECV testing, for which 
approximately $20 million had been budgeted for fiscal year 2012?
    General Mills. No. HMMWV recap does not meet the Marine Corps 
requirements for light vehicles meeting the full desired mission 
profile, while remaining transportable and possessing the desired 
characteristics of our sustainment effort, returning reliability, 
payload, and mobility.

    3. Senator Hagan. Lieutenant General Mills, what factors were 
behind the decision to cancel the MECV program and focus on the JLTV?
    General Mills. Last year, we determined that with the added weight 
necessary to improve protection, HMMWV-based platforms will not meet 
Marine Corps requirements in terms of reliability, payload, service 
life, mobility, or ability to fit on amphibious and MPF shipping. 
Therefore, we reduced the scope of our HMMWV competitive survivability 
initiative to a HMMWV sustainment program. The purpose of that effort 
is to extend the service life of our roughly 14,500 light tactical 
vehicle fleet out to 2030, as a portion is replaced by the JLTV. The 
focus of the HMMWV sustainment effort will be toward safety and 
engineering enhancements, a return of mobility and payload, increased 
reliability, and reduced operating costs for those vehicles for the 
operating forces.
                                 ______
                                 
             Questions Submitted by Senator Roger F. Wicker
                     expeditionary fighting vehicle
    4. 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?
    Mr. Stackley. The Navy and Marine Corps have conducted/supported 
campaign analysis and a wargame examining scenarios requiring power 
projection from the sea using the EFV as well as the legacy Amphibious 
Assault Vehicle (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. 
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 nautical miles 
from the coast with acceptable risk against any residual threats. This 
analysis suggests a 25 nautical miles assault range of the EFV may not 
be required.
    For the past 2 decades, both the threats in the littorals and U.S. 
area and self-defense capabilities against those threats have evolved, 
enabling discharge of amphibious vehicles at approximately 12 nautical 
miles from shore. 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 an hour 
in the vehicle at sea--a legacy of the current AAV. Initial 
developmental testing indicated that improvements in habitability (air 
conditioning and improved vehicle exhaust) permitted marines to ride in 
the vehicle longer without suffering ill effects associated with the 
legacy AAV. At-sea speed requirements were a significant system 
complexity and cost-driver that did not significantly contribute to the 
operational effectiveness of the vehicle.

    5. 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?
    Mr. Stackley. There is absolutely an enduring requirement for the 
capability to conduct opposed amphibious operations; in simple terms, 
this gives the United States an assured access capability under any 
circumstances. America remains a maritime nation with global 
responsibilities. The majority of the world's population lives within 
200 miles of the sea. The Marine Corps-Navy team provides the Nation's 
only assured access force that can come from the sea to project and 
sustain power ashore in this environment. Amphibious forces provide a 
maritime power such as the U.S. significant advantages including the 
ability to overcome the tyranny of distance and project power where we 
have no basing or infrastructure. The amphibious capability inherent in 
the Marine Corps also provides a powerful deterrent that is central to 
our National Security Strategy.
    Forward deployed amphibious forces are capable of conducting 
security cooperation, building partnership capacity, responding to 
crises by providing humanitarian assistance and disaster response (HA/
DR) or conducting non-combatant evacuation operations, serving as a 
deterrent to hostility, and conducting forcible entry as either a 
single force or facilitating the forward movement of a larger force. In 
all cases, the global presence and rapid response of amphibious forces 
provide critical options to the Joint Force Commanders, Geographic 
Combatant Commanders, and the National Command Authority.
    Conversely, the risks associated with a lost or diminished 
amphibious capability present serious threats to our national security 
from lost influence with our global partners, an inability to develop 
new partnerships, an inability to counter growing threats from 
terrorism, an inability to protect our interests in the global commons 
from piracy threats, and unchecked competition from peer nations. It is 
imperative that the Navy-Marine Corps team maintains its amphibious 
capabilities forward deployed and globally postured so that it remains 
the ``most ready'' when the Nation is ``least ready.''

    6. 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?
    Mr. Stackley. The decision to cancel EFV procurement was not made 
lightly, as we recognized the importance of the Marine Corps' ability 
to respond to crisis around the globe as vital to our Nation's 
security. Two factors were at the core of the decision to cancel the 
EFV: affordability, both in procurement and sustainment; and the impact 
of that cost on our ability to reset or modernize other warfighting 
capabilities after 10 years of combat. Projected costs of EFV grew 
substantially over the course of the program, and it simply became 
unaffordable to procure and sustain over time, especially in light of 
this Nation's emerging fiscal environment and other critical capability 
needs of the Marine Corps.

    7. Senator Wicker. Secretary Stackley and Lieutenant General Mills, 
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 
to 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 to drive an assessment 
of what is required to do the mission?
    Mr. Stackley and General Mills. One element used to evaluate the 
affordability of the EFV and all other ground vehicle modernization and 
sustainment efforts was the 30-year average of vehicle procurement as 
it related to the Marine Corps warfighting investment account. The last 
30 years contained periods of significant investment in ground 
equipment modernization (LAV, M1A1, MTVR, LVSR, HMMWV, and HIMARS). 
During that period, vehicle investment averaged 33 percent of total 
procurement except during modernization peaks, when it approached or 
slightly exceeded 50 percent of total procurement. A principal 
consideration of EFV affordability was the measure of cost versus 
capability delivered. The EFV represented a major expense in combat 
vehicle modernization, with a great deal of the cost being driven by a 
high water speed requirement where water mobility constituted only 20 
percent of the vehicle's operational mission profile. During the EFV's 
development, landward threats grew exponentially as evidenced by enemy 
employment of IEDs in Iraq and Afghanistan but the constraints imposed 
by the EFV's water mobility requirements did not allow for growth to 
accommodate armor and other protective systems to make the vehicle more 
operationally effective in its landward mission. We believe future 
vehicle modernization should focus investments in more operationally 
relevant capabilities, procured faster, and--where operational or 
threat complexity exceed a single vehicle type's capacity--a portfolio 
approach to modernization mitigates the weakness imposed by 
overinvesting in specialized mission vehicles.

    8. Senator Wicker. Secretary Stackley and Lieutenant General Mills, 
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?
    Mr. Stackley and General Mills. To the extent that historical data 
provides a benchmark from which to begin planning, historical data 
regarding the cost data of legacy programs is relevant to the 
requirements needed to execute the mission today.
    As to the EFV, the Marine Corps assessed the affordability of EFV 
along with other key elements of our 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; however, it is just as important to note 
that even without EFV, the potential required investment in vehicle 
modernization and sustainment is also potentially unaffordable when 
measured against the same metrics. This means that our fiscal trade-
space within the vehicle portfolio is very limited, even for a 
capability as important as that provided by an amphibious combat 
vehicle (ACV).

    9. Senator Wicker. Secretary Stackley and Lieutenant General Mills, 
the Average Procurement Unit Cost--the cost of the vehicle not 
including research and development (R&D) and program-unique military 
construction costs--of the EFV was estimated to be $16.8 million in 
fiscal year 2007 dollars while some projections have the cost reaching 
more than $23 million per vehicle. The cost of the legacy AAV is about 
$4 million per vehicle. 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?
    Mr. Stackley. The Navy and Marine Corps conducted campaign analysis 
and wargames 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. 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 
nautical miles from the coast with acceptable risk against any residual 
threats. The closure timeframe for ship to shore movement no longer 
requires a high speed vessel to ensure combat build-up ashore.
    General Mills. The decision to cancel EFV procurement was not made 
lightly, as we recognized the importance of the Marine Corps' ability 
to respond to crisis around the globe as vital to the Nation's 
security. Three factors were at the core of the decision to cancel the 
EFV: affordability, both in procurement and sustainment; the impact of 
that cost on our ability to reset or modernize other warfighting 
capabilities after 10 years of combat; and cost of the EFV in relation 
to its overall operational suitability across the range of military 
operations. Projected costs of EFV grew substantially over the course 
of the program, and it simply became unaffordable to procure and 
sustain over time, especially in light of the Nation's emerging fiscal 
environment and other critical capability needs of the Marine Corps.
    The following is a summary of the key operation and sustainment 
(O&S) ground rules and assumptions in the EFV O&S estimate:

         Total Life Cycle Systems Management Program (Program 
        Manager has cradle-to-grave responsibility for O&S)
         Contractor Logistics Support (Procurement, Marine 
        Corps (PMC) and Operation and Maintenance, Marine Corps (OMMC))

                 PMC will cover these costs until a determined 
                Depot Support Date at which time these costs will be 
                split 50/50 for 1 year; OMMC funding will be used 
                thereafter

         Three Levels of Maintenance (organizational, 
        intermediate, depot)
         Peacetime Operation--437 hrs/yr

                 Engine: 150 hrs/vehicle/yr
                 APU: 287 hrs/vehicle/yr

         Mature System Reliability--21.9 hrs mean time between 
        failure
         Tech Insertion Costs (PMC) are excluded
         Any applicable O&S-related surcharges are not included 
        at this time

    Procurement of the EFV was simply no longer affordable; and the 
projected operation and support costs became too onerous.

    10. Senator Wicker. Lieutenant General Mills, 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?
    General Mills. 25 nautical miles was based on keeping the 
amphibious force beyond the enemy's radar horizon, thereby making it 
more difficult for the enemy to monitor amphibious force activity and 
target amphibious warships. The proliferation of anti-ship cruise 
missiles already allowed most of our adversaries to engage well beyond 
25 nautical miles, but the distance made their targeting solution more 
complicated. The triad of EFV, Landing Craft Air Cushion (LCAC), and 
MV-22 allowed amphibious warships to project forces ashore and remain 
beyond the 25 nautical miles.
    However, the capabilities of our Aegis capable combatants have 
always allowed our Navy systems to engage incoming anti-ship cruise 
missile/airborne threats at distances less than 25 nautical miles, and 
our analysis continually indicates that these tactics are successful 
with very few leakers. Ships could go into as close as 10 nautical 
miles and still be protected from these leakers with organic maritime 
defense systems. 12 nautical miles was selected as the distance for our 
revised concept for amphibious operations because it also keeps ships 
out of range of coastal gun systems.
    With the cancellation of EFV, ships of the amphibious force will 
now have to come in closer than 25 nautical miles to deploy the ACV.
    The LCAC and MV-22 still allow most of the amphibious warships to 
stay outside 25 nautical miles. Only those ships deploying the ACVs 
need to come into 12 nautical miles and then they only need to remain 
as long as needed to launch the initial ACV assault force. Once 
complete, these ships could go back outside 25 nautical miles, and the 
LCAC with the MV-22 (in concert with other surface and vertical 
connectors) remain sufficient to sustain the force.

    11. Senator Wicker. Lieutenant General Mills, 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?
    General Mills. The launch distance is not a static position; it's 
going to be dependent on a number of factors: our tactics, techniques, 
and procedures of using the sea as maneuver space. Also, there have 
been significant improvements in the Navy's ability to deal with the 
threat.
    For the past 2 decades, both the threats in the littorals and U.S. 
area and self-defense capabilities against those threats have evolved, 
enabling discharge of ACVs at distances beyond the visual horizon 
(approximately 12 nautical miles from shore). 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 an hour in the vehicle at sea--a legacy 
of the current AAV. Initial developmental testing indicated that 
improvements in habitability (air conditioning and improved vehicle 
exhaust) more than high speed or longer duration permitted marines to 
ride in the vehicle longer without suffering ill effects associated 
with the legacy AAV. At-sea speed requirements were a significant 
system complexity and cost-driver that did not significantly contribute 
to the operational effectiveness of the vehicle.

    12. Senator Wicker. Lieutenant General Mills, 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?
    General Mills. For the past 2 decades, both the threats in the 
littorals and U.S. area and self-defense capabilities against those 
threats have evolved, enabling discharge of amphibious vehicles at 
approximately 12 nautical miles from shore. 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 an hour in the vehicle at sea--a legacy 
of the current AAV. Initial developmental testing indicated that 
improvements in habitability (air handling and improved vehicle 
exhaust) more than high speed or longer duration permitted marines to 
ride in the vehicle longer without suffering ill effects associated 
with the legacy AAV. At-sea speed requirements were a significant 
system complexity and cost-driver that did not significantly contribute 
to the operational effectiveness of the vehicle.

    13. Senator Wicker. Lieutenant General Mills, can this be improved?
    General Mills. Yes. Improved habitability is a key system attribute 
defining the ACV. There are various mature, low-risk technologies that 
can be incorporated that will improve both sea and landward ride 
quality.

    14. Senator Wicker. Lieutenant General Mills, the Marine Corps 
proposes responding to the EFV termination through a three-phased 
acquisition policy: upgrade a portion of the legacy AAV inventory 
through a Service Life Extension Program (SLEP) that will extend their 
life and add capability; accelerate the Marine Personnel Carrier (MPC) 
program designed to complement the EFV, AAV, or the replacement for the 
EFV known as ACV; and 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. 
The MPC would not be designed to swim ashore, but would be a fighting 
vehicle on land. Design requirements are being developed. How many of 
the legacy AAVs now in service will undergo a SLEP?
    General Mills. The SLEP is now referred to as a survivability 
upgrade which is intended to address the greatest limitation of the 
current AAV--survivability and force protection against underbelly 
mines and IEDs. The upgrade will improve overall vehicle survivability 
for 392 AAVP7A1s by adding underbelly blast protection, interior spall 
mitigation, and blast attenuating seating. Anticipating resulting 
weight growth, the program will also restore vehicle land and water 
mobility to previously achieved performance levels with power train, 
track, and suspension upgrades. These vehicles will be phased out of 
the inventory as the ACV reaches full operational capability.

    15. Senator Wicker. Lieutenant General Mills, what capabilities 
will be added to the AAV?
    General Mills. The survivability upgrade is intended to address the 
greatest limitation of the current AAV--survivability and force 
protection against underbelly mines and IEDs. The upgrade will improve 
overall vehicle survivability for 392 AAVP7A1s by adding underbelly 
blast protection, interior spall mitigation, and blast attenuating 
seating. Anticipating resulting weight growth, the program will also 
restore vehicle land and water mobility to previously achieved 
performance levels with power train, track, and suspension upgrades. 
These vehicles will be phased out of the inventory as the ACV reaches 
full operational capability.

    16. Senator Wicker. Lieutenant General Mills, how old are the AAVs 
and how much additional life will the SLEP provide?
    General Mills. 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. Our 
current survivability upgrade is intended to address the greatest 
limitation of the current AAV--survivability and force protection 
against underbelly mines and IEDs. The upgrade will improve overall 
vehicle survivability for 392 AAVP7A1s by adding underbelly blast 
protection, interior spall mitigation, and blast attenuating seating. 
Anticipating resulting weight growth, the program will also restore 
vehicle land and water mobility to previously achieved performance 
levels with power train, track, and suspension upgrades. These vehicles 
will be phased out of the inventory as the ACV reaches full operational 
capability by 2030.

    17. Senator Wicker. Lieutenant General Mills, how much funding does 
the Marine Corps estimate will be required--or how much is available--
for a SLEP?
    General Mills. The 2013 President's budget supports the initiation 
of the AAV survivability upgrade program. The total cost estimate is 
based on an Average Production Unit Cost of $1.65 million for 392 
vehicles.

    18. Senator Wicker. Lieutenant General Mills, 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 Mills. Under any future budgetary constraint, the 
survivability upgrade of the AAV is essential to maintaining an 
operationally relevant ACV capability until a modern ACV is developed 
and fielded. We have planned a prioritized, sequenced, and balanced 
combat vehicle modernization program that is achievable, with moderate 
risk to other ground combat modernization and within the President's 
budget fiscal year 2013 levels of investment extended through fiscal 
year 2030. ACV modernization is our top ground combat investment 
priority but future budgetary pressures could severely limit our 
ability to achieve this capability.

    19. Senator Wicker. Lieutenant General Mills, 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 Mills. 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 ACV. Based on 
responses we have received from industry and our own estimates, the 
cost to procure an equivalent number of MPC is approximately a quarter 
of the cost of EFV. Based on a range of cost estimates and 
affordability predictions, dependent on capability, quantity, and 
production schedules, MPCs are estimated to cost half or less than that 
to procure ACV. In terms of total life cycle costs, equivalent numbers 
of MPC will cost about one-third of EFV and one-half of ACV.

    20. Senator Wicker. Lieutenant General Mills, how much money will 
actually be saved by cancellation of the EFV if the Marine Corps must 
extend the life of the AAV and design and build two new vehicles, the 
ACV and the MPC?
    General Mills. The decision to procure MPC and to upgrade AAV was 
independent of the decision to cancel EFV. The AAV upgrade was 
necessary to bridge to EFV and will be necessary to bridge to ACV; 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 substantially less to procure than the EFV would have. 
We have done extensive systems engineering cost-to-capability analysis 
in support of the ACV program in order to prioritize capabilities, 
ensure a lower risk engineering, manufacturing, and development 
program, and to control cost from the outset of requirements 
development.

    21. Senator Wicker. Lieutenant General Mills, what is the timeline 
for designing and building the MPC?
    General Mills. We are working to fully develop an integrated 
acquisition plan in support of ACV, MPC, and AAV survivability upgrade. 
Over the last several years, we have conducted extensive market 
research and technology development in support of the MPC program which 
we believe will lead to the potential for a lower risk, more rapid 
acquisition. Still, our acquisition plans are sequenced and are shaped 
by cost and affordability projections over time and by the necessity to 
consider other required modernization and sustainment efforts across 
our warfighting portfolio. Based on these estimates, we will have an 
initial operational capability in fiscal year 2022.

    22. Senator Wicker. Lieutenant General Mills, 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 Mills. 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.

    23. Senator Wicker. Lieutenant General Mills, how will the MPC get 
ashore if it doesn't swim as the EFV and the ACV would?
    General Mills. 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, 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.

    24. Senator Wicker. Lieutenant General Mills, does this mean that 
the Marine Corps will be operating two different combat vehicles during 
the land phase of an amphibious assault, the ACV and the MPC?
    General Mills. The Marine Corps operates multiple combat and 
tactical vehicles including AAVs, Light Armored Reconnaissance 
Vehicles, tanks, and 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 our required mobility capacity across the range of military 
operations.

    25. Senator Wicker. Lieutenant General Mills, won't protection from 
IEDs and other threats necessarily be different in the two vehicles?
    General Mills. 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 as they were for the MPC.

    [Whereupon, at 11:48 a.m., the subcommittee adjourned.]

                                 
