    [Senate Hearing 119-158]
    [From the U.S. Government Publishing Office]

                                                            S. Hrg. 119-158

                           THE STATE OF CONVENTIONAL SURFACE
                                      SHIPBUILDING

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

                                    HEARING

                                   BEFORE THE

                            SUBCOMMITTEE ON SEAPOWER

                                     OF THE

                          COMMITTEE ON ARMED SERVICES
                              UNITED STATES SENATE

                        ONE HUNDRED NINETEENTH CONGRESS

                                 FIRST SESSION

                                   __________

                                 MARCH 25, 2025

                                   __________

             Printed for the use of the Committee on Armed Services

    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

                     Available via: http:// www.govinfo.gov

                                      __________

                       U.S. GOVERNMENT PUBLISHING OFFICE
    61-561 PDF                  WASHINGTON : 2025

    -----------------------------------------------------------------------------------
                          COMMITTEE ON ARMED SERVICES

                      ROGER F. WICKER, Mississippi, Chairman

    DEB FISCHER, Nebraska			JACK REED, Rhode Island
    TOM COTTON, Arkansas			JEANNE SHAHEEN, New Hampshire
    MIKE ROUNDS, South Dakota		KIRSTEN E. GILLIBRAND, New York
    JONI ERNST, Iowa			RICHARD BLUMENTHAL, Connecticut
    DAN SULLIVAN, Alaska			MAZIE K. HIRONO, Hawaii
    KEVIN CRAMER, North Dakota		TIM KAINE, Virginia
    RICK SCOTT, Florida			ANGUS S. KING, Jr., Maine
    TOMMY TUBERVILLE, Alabama		ELIZABETH WARREN, Massachusetts
    MARKWAYNE MULLIN, Oklahoma	        GARY C. PETERS, Michigan
    TED BUDD, North Carolina		TAMMY DUCKWORTH, Illinois
    ERIC SCHMITT, Missouri			JACKY ROSEN, Nevada
    JIM BANKS, INDIANA			MARK KELLY, Arizona
    TIM SHEEHY, MONTANA                  	ELISSA SLOTKIN, MICHIGAN

    		   John P. Keast, Staff Director
    		Elizabeth L. King, Minority Staff Director
    _________________________________________________________________

                            Subcommittee on Seapower

       RICK SCOTT, Florida, Chairman

    DAN SULLIVAN, Alaska		TIM KAINE, Virginia
    TOMMY TUBERVILLE, Alabama	JEANNE SHAHEEN, New Hampshire
    MARKWAYNE MULLIN, Oklahoma	RICHARD BLUMENTHAL, Connecticut
    JIM BANKS, Indiana		ANGUS S. KING, Jr., Maine
    TIM SHEEHY, Montana 		MAZIE K. HIRONO, Hawaii

                                     (ii)

                                C O N T E N T S

    _________________________________________________________________

                                 march 25, 2025

                                                                       Page

    The State of Conventional Surface Shipbuilding...................     1

                               Member Statements

    Statement of Senator Rick Scott..................................     1

    Statement of Senator Tim Kaine...................................     3

                               Witness Statements

    Seidle, Dr. Brett A., Acting Assistant Secretary of the Navy for      4
      Research, Development, and Acquisition.

    Downey, Vice Admiral James P., USN Commander, Naval Sea Systems       6
      Command Department of the Navy.

    Oakley, Ms. Shelby S., Director, Contracting and National            12
      Security Acquisitions Government Accountability Office.

    Questions for the Record.........................................    59

                                     (iii)

                 THE STATE OF CONVENTIONAL SURFACE SHIPBUILDING

                                  ----------

                            TUESDAY, MARCH 25, 2025

                          United States Senate,
                              Subcommittee on Seapower,
                                   Committee on Armed Services,
                                                        Washington, DC.
        The Committee met, pursuant to notice, at 2:31 p.m. in room
    SR-222, Russell Senate Office Building, Senator Rick Scott
    (Chairman of the Subcommittee) presiding.
        Committee Members present: Senators Scott, Sullivan,
    Sheehy, Kaine, Shaheen, Blumental, and King.

                OPENING STATEMENT OF SENATOR RICK SCOTT

        Senator Scott. The hearing will come to order. Thank you
    each of you for being here. It's my hour to serve as Chair of
    this important Subcommittee and I look forward to working with
    my colleague, Ranking Member Kaine from Virginia, to ensure
    Navy has the ships and resources they need. The Navy's very
    significant to both of us.
        First off, I want to introduce our witnesses. We're joined
    by three experts in the State of our Nation's able
    shipbuilding, starting with Dr. Brett Seidle, who serves as the
    Acting Assistant Secretary of the Navy for Research Development
    and Acquisition and is responsible for the overall management
    for shipbuilding programs. Nice, easy time.
        Next, is Vice Admiral James Downey, who serves as the
    Commander of the Naval Sea Systems Command, providing technical
    direction, contracting authority, construction oversight, and
    other critical functions for Navy shipbuilding.
        Finally, Shelby Oakley, who is the director for Contracting
    and National Security Acquisitions at the Government Accounting
    Office, where she has reviewed our shipbuilding efforts
    extensively. Thank you again for being here and thank you for
    what you service to our country.
        So many of you have heard me talk about my father, my dad.
    I'm blessed. I have my doctor dad, he was crazy. He joined the
    Army very young, underage. He was one of 3,000 Americans who
    did all four combat jumps for the Second World War. I think he
    got paid more to do jumps. He thinks about 80 out of 80 people
    came back alive. He told me the Germans were bad, the foxholes
    were bad, the food was bad, so I joined the Navy. But I'm proud
    he did, he did all four combat jumps with the 82d airborne that
    they did, and then fought in the Battle of the Bulge.
        I thought the food was going to be better, but it was
    really not very great. I served as radarman aboard the USS
    Glover. I'm proud of being a Navy veteran, but we can all
    acknowledge that he's facing significant challenges and in need
    of a turnaround. President Trump has made clear that his
    administration is focused on making our military the lethal
    fighting force it should be, and I'm glad we have a President
    focused on this.
        In the past few years, unfortunately, we've seen the Navy
    failing to recruit, pass the audit, and most relevant to our
    discussion today, deliver ships on time and on budget. In the
    last 5 years, 41 ships were delivered to the Navy. Of those 41
    ships, only four were delivered on time and on budget. It's 9.7
    percent. So, I'm a business guy, I built businesses. No one
    would consider less than 10 percent success, acceptable. In the
    private sector something would've changed. You wouldn't keep
    using the same company, a company would probably go bankrupt.
    You clearly change people out.
        Yet, over the past 4 years, we've seen the Navy failing to
    improve ships, innovate or deliver things on time and on
    budget. As a failure to the American people expect their
    Federal Government to use their tax dollars wisely and expect
    their Navy to be on the cutting edge of innovation to defend
    our national security.
        We clearly have to make some changes. I think my colleague,
    Senator Kaine, is in the same position. We want to do
    everything we can to help with a turnaround and we got to do it
    fast.
        In today's Subcommittee on Seapower hearing, we will
    provide oversight on our Navy's conventional surface
    shipbuilding efforts, see why our naval readiness and
    shipbuilding are falling behind communist China, and understand
    how we can work to rapidly change course.
        I have serious concerns about the challenges to our
    maritime dominance. The United States is losing ground
    unfortunately to communist China in naval power, and our
    shipbuilding enterprise is failing to keep up. Communist China
    Navy has 370 ships and submarines with over 150 major surface
    combatants, and they continue to pioneer innovative designs
    like large, unmanned surface vessels and carriers for unmanned
    aircraft.
        In contrast, the United States has failed to capitalize its
    naval shipbuilding since Ronald Reagan led the production surge
    over four decades ago. Our service combatant fleet is growing
    old with the average age of our ship exceeding 20 years,
    meanwhile, programs intended to modernize our force have
    completely failed.
        The Cruise replacement program, the Littoral combat ship,
    the Zumwalt-class destroyers, its failure to modernized forced
    us to restart production of older guided missile destroyers
    (DDG)-51 Arleigh Burke-class ships as a temporary fix, even
    though these ships were already desperately in need of
    innovation to begin with.
        What's even more concerning is that we don't seem to be
    learning from our mistakes or taking any significant steps to
    improve the process. Take the Constellation-class frigate, once
    intended as an affordable and mature design, as a glaring
    example of our ongoing challenges. Our recent Government
    Accountability Office (GAO) report attributed the program's
    failures to an immature design, with constant weight growth and
    slow approval processes that have delayed the lead ship by at
    least 3 years. This crisis extends beyond combatant ships. Our
    logistics and support fleet, including oceanographic ships,
    towing and salvage ships and fleet oilers, suffer from the same
    systemic failures.
        The common thread here is ships aren't being delivered on
    time, they're way over budget, and too often they aren't what
    we wanted. We're past the time for gradual change; we need to
    take immediate bold transformative action to change how the
    Navy acquires ships in the entire design and building process.
    If we don't, we're going to continue falling behind our
    adversaries, the stakes could not be possibly be higher.
    Communist China, unfortunately, their government has chosen to
    be our enemy. It's our job to ensure the United States Navy has
    the tools and ships it needs to be ready for whatever may come.
        Throughout today's hearing, I ask our witnesses to put all
    options on the table, because if we do not act decisively, the
    United States risk being a second rate, naval power, unable to
    defend our interest or deter aggression increasingly in
    dangerous world. I'd now like to recognize Ranking Member Kaine
    for his comments.

                     STATEMENT OF SENATOR TIM KAINE

        Senator Kaine. Thank you, Chairman Scott, and thanks to all
    the witnesses and everybody who's here to talk about this
    important topic. I look forward to working together as your
    Ranking Member in this Subcommittee. You're right that both of
    us personally, you as a Navy Veteran and me as the father of a
    Marine, but also because of our state's equities, care very
    deeply about the Seapower mission.
        I'll acknowledge the same thing that I acknowledged at the
    hearing last year, that the hearing takes place during an
    extraordinary time for the U.S. Navy. Let's start with some
    positives. Attacks continue on commercial ships in the Red Sea.
    That's not a positive, but our Nation sailors have demonstrated
    absolutely remarkable ability to defend key shipping lanes that
    permit global commerce, battling back against a heavy arsenal
    of attacks from the Houthis. We appreciate the bravery of the
    women and men who sail them to those waters and the skill and
    competence that they've shown over the last many months.
        We know that the Navy today is not operating at readiness
    levels to match the threats we face around the world. We had
    the hearing in the full Committee 2 weeks back. The Vice Chief
    basically said that we have an 80 percent readiness standard
    for ships and subs. It's somewhat complex, what that metric
    means, but the bottom line is we're at about 62 percent to the
    80 on surface ships, 67 percent to the 80 on subs. We've seen
    some improvement in maintenance, but on the construction side,
    we're not where we need to be.
        Given the change in administrations, the first year of the
    administration, we never get the budget in February. So, we
    don't have the budget request for fiscal year 2026. So, I can't
    yet comment upon how that budget might address the issue of
    readiness. But we're here today to discuss the State of the
    industrial base that supports the conventional Navy, how the
    Navy is supporting the base, and what we need to do to support
    it in the future.
        The Navy's industrial base is not in great shape. I don't
    say any of that to attack either the Navy, the Navy witnesses,
    or the industrial base. We have fantastic innovators, but
    bottom line for a series of reasons, whether it's supply chain
    challenges, workforce challenges, inflation, not sufficient
    attention to the way to allocate the work among those with the
    capacity to do it. We're not meeting our needs.
        Despite the best efforts of your predecessors, we have
    watched as the performance of Navy shipbuilding has degraded
    across the portfolio. We know that the pacing threat from the
    Navy is much more stressing than this everyday threat that
    we're seeing in the Red Sea. The Indo-Pacific and other
    theaters have critical challenges for us.
        There are some success stories: the amphibious warship and
    destroyer productions are moving forward at pace. But Virginia-
    class submarine, Columbia-class submarine, the frigate program
    that the Chairman mentioned and others, we've got real issues.
    I am a member of the Health Education Labor Pension Committee,
    and I'm sort of particularly focused on workforce challenge.
        I will just State up front, I'm a little bit worried on the
    supply chain side and the cost side. What a regime of
    comprehensive tariffs against products around the world will do
    this, the cost of some of the inputs that could make this
    matter even tougher. There are areas where money is going to be
    needed, but there's also areas where more money is not going to
    be enough to make the difference, or at least not enough of one
    fast enough to meet the needs that we have, and so, it's a
    matter of doing things better.
        We have to be open to new approaches, admit what we have
    been doing needs to change and improve if we want a better
    outcome. Ms. Oakley, the GAO report that you issued recently,
    it was long, but my punchline was if we keep doing the same
    thing we've been doing and expect that the results will
    magically be better, we're living in a fantasy world. We're not
    going to get better results unless we're willing to embrace
    change.
        So, I look forward to the discussion today with the
    Chairman and our colleagues, and with that, I yield back.
    Great.
        Senator Scott. Thank you, Senator Kaine. Now we'll hear
    from Dr. Seidle.

    STATEMENT OF DR. BRETT A. SEIDLE, ACTING ASSISTANT SECRETARY OF
          THE NAVY FOR RESEARCH, DEVELOPMENT, AND ACQUISITION

        Dr. Seidle. Thank you Chairman Scott, Ranking Member Kaine
    and distinguished Members of this Subcommittee, good afternoon.
    I sincerely appreciate the opportunity to be here today to
    address the State of conventional U.S. shipbuilding.
        I am currently the Acting Assistant Secretary of the Navy
    for Research Development and Acquisition and prior to assuming
    this role in January, I spent half my career in the private
    sector leading manufacturing organizations for General Motors
    and Alcoa. The other half of my career has been spent leading
    the Naval Research and Development establishment and since
    arriving in DC in 2020, I've also spent time serving as the
    executive director of National Steel and Shipbuilding Company
    (NASSCO) for leading our Nation's public shipyards.
        First and foremost, today, I fervently believe our Navy has
    never been more important than it is right now. The United
    States projects its presence around the globe via our Blue
    Water Navy impacting geopolitical decisions on a daily basis
    and helping to maintain our way of life.
        Leading in the Navy has resulted in a very purpose-driven
    life for me and I believe it's a mission that resonates with
    all of us who serve. That mission ensuring the men and women of
    the armed services come home safely, that our sailors and
    marines are never in a fair fight, is both motivational and
    inspirational for myself and the rest of our acquisition team.
        I mentioned recently that we have fielded the finest Navy
    ever assembled in the history of the world, and I believe that
    is still true yet today. Our Navy's performance these past 3
    years has been in a word, outstanding delivering on engagements
    from the Red Sea to the Western Pacific, and I have been proud
    to be a part of the team that helps make that possible. For the
    men and women of this body and the thousands of employees who
    make up our acquisition enterprise and industrial partners, you
    have my heartfelt thanks for delivering on that performance.
        But today, I have a bounce in my step for another reason,
    because not only do we have to perform militarily, but we are
    also in an economic battle with our adversaries. Nations build
    wealth when they build products. Strong manufacturing base is
    key to economic buildup.
        Today, we once again recognize the need to reinvigorate and
    awaken the industrial might of our Nation, and I can't think of
    no better place to start than our shipbuilding enterprise. I
    truly am more excited about this challenge than anything I've
    been involved in during the past 40 years and it is way past
    time that we get after it. I have been asked if it's just too
    hard to find people that want to do the work of shipbuilding,
    that the work is too difficult, too hot, too cold, too dirty. I
    find that assertion to be patently false.
        The human condition is the same as when I was a kid. People
    want a fair wage. They want to be respected for the work that
    they perform. They want to have a mission they support that's
    bigger than their life. I think supporting our Navy checks all
    those boxes.
        I have visited our shipyards and it was confirming of my
    beliefs and rather than being discouraged, I come away
    emboldened from what I saw. Because there I met industrial
    partners and leaders I respect, employees who were passionate
    about our Navy and their role in supporting this country and I
    also saw latent capacity that can be tapped to make a real
    difference.
        Having said all the above, we clearly have significant
    challenges in our shipbuilding enterprise. Simply put, we need
    more ships delivered on time and on budget, and we are
    challenged in both of these arenas. Costs are rising faster
    than inflation, and schedules on multiple programs are delayed
    one to 3 years late. We need increased modernization,
    infrastructure investment, better workforce hiring and
    retention, and improved supply chain performance. My commitment
    to this body is that our industrial partners and I, with your
    strong continued support, plan to get after these issues and
    will behave as if the fight is tonight.
        I also believe the relationship between this body and our
    industrial partners is central to our success and solving the
    problems already mentioned. In each of these three groups,
    individuals get up every day, passionate about solving the
    problems in front of us with similar goals and aspirations,
    albeit different perspectives.
        In that vein, this Committee has my passionate commitment
    to be an outstanding partner, to look forward and drive change,
    to build the connective tissue with our industrial partners-
    instrumental to our success, and to reinvigorate our
    manufacturing base to drive the economic engine of this
    country.
        I am genuinely excited to be here today and look forward to
    taking your questions.
        Senator Scott. Thank you. Vice Admiral Downey.

    STATEMENT OF VICE ADMIRAL JAMES P. DOWNEY, USN COMMANDER, NAVAL
               SEA SYSTEMS COMMAND DEPARTMENT OF THE NAVY

        Admiral Downey. Chairman Scott, Ranking Member Kaine,
    distinguished members of the Seapower Subcommittee. Thank you
    for this opportunity to appear before you today to discuss the
    Navy's conventional surface shipbuilding programs.
        I would first like to thank the Committee for its candid
    perspectives, in determination to help the Navy accelerate the
    delivery of combat power to the fleet. Recent testimony before
    Congress, including testimony reports from my GAO colleague,
    Ms. Oakley, have been integral in supporting the Navy's routine
    communication with Congress regarding the complex realities of
    shipbuilding in 2025.
        As the commander of Naval Sea Systems Command (NAVSEA), I
    am privileged to lead a team charged with translating war
    fighter requirements into combat capability, enabling our
    Nation and its allies to provide persistent presence and peace,
    project power and war, and assured access at all times. Our
    focus is on getting our ships and their war fighting systems
    designed, delivered, and maintained to meet global national
    security requirements.
        With any project and certainly one as complex as
    shipbuilding, judicious planning is what establishes the
    foundation for successful execution. As the technical authority
    for our ships and related systems, NAVSEA is committed to
    appropriately evaluating costs schedule, and technical
    requirements to deliver the right capabilities to our war
    fighters, recognizing that requirements discipline plays a
    quintessential role in shaping a program for success.
        As a best practice, the Navy procures approximately 50
    percent of our surface force to primarily commercial standards.
    For combatant programs, with more stringent build requirements,
    we continually review our military specifications and are
    committed to doing so collaboratively alongside industry, to
    simplify and streamline wherever possible.
        We are also actively transitioning design plans into
    digitized formats, reducing the burden on the ship builder.
    Similarly, we are committed to working alongside industry, to
    ensure our contracts and acquisition strategies are aligned and
    balanced to the specific procurement need. We continue to face
    mounting challenges, from shifting demographics and workforce
    shortages, to supply chain disruptions, that collectively
    continue to pressurize our shipbuilding contracts.
        We need strategic solutions to improve waterfront
    productivity, and we are evaluating contracting approaches and
    incentives, while also centralizing that data to better access
    what levers are needed to improve shipbuilding performance. In
    program execution, our supervisors of shipbuilding provide the
    onsite technical and contractual oversight for the construction
    of Navy vessels at our major private shipyards.
        As of today, the Navy has 92 ships under contract, with 56
    ships actively in construction. In addition to these prime
    shipbuilding contracts, we also have a number of yards that
    outsource large components, resulting in a more distributed
    shipbuilding model, with somewhat more complex oversight
    required.
        With the assistance of this Committee, we now have a
    dedicated Deputy Commander within NAVSEA, overseeing our
    waterfronts and improving communications and coordination
    across all of our shipbuilding projects, to better deliver
    capability at the speed and scale of need.
        When you visit the shipyards and speak to the workers,
    whether it's welders, machinists, front office staff, or
    engineers, you understand what it means to them to build a
    great ship from the keel up, to start with nothing and then to
    deliver a fully capable warship. That's the product of teamwork
    in its purest form of execution.
        This shipbuilding culture, which in some communities goes
    back generations, is what we focus on cultivating and
    nurturing. Continuing to do so will require competitive wages
    as well as affordable housing, quality schools, and other
    supporting functions for the shipyard workers. NAVSEA is deeply
    committed to helping industry create productive, and safe
    workspaces on the waterfront in order to attract and retain the
    skilled workforce we need to build the Navy our Nation
    requires.
        So, I thank Congress for these investments in our
    shipbuilding programs, because these efforts will not only help
    stabilize production, but will enhance the maritime industry
    for future generations. I'm committed to transparently working
    in close collaboration with this Congress and industry to meet
    the Navy's four structure goals.
        Thank you again for this opportunity to appear before you
    today. I look forward to your questions.
        [The joint prepared statement of Dr. Brett A. Seidle and
    Vice Admiral James P. Downey follows:]
        [The information referred to follows:]

              Joint Prepared Statement by Dr. Brett A. Seidle and
                          Vice Admiral James P. Downey
                           introductions and welcome
        Chairman Scott, Ranking Member Kaine, and distinguished Members of
    the Subcommittee, thank you for the opportunity to appear before you
    today to address the status of conventionally powered surface
    shipbuilding. Building and maintaining a world-class and globally
    deployable Navy and Marine Corps as a first line of defense for the
    United States is a continuous effort. We can only achieve our strategic
    goals of strengthening maritime dominance, executing a culture of
    warfighting excellence, and remaining the most lethal force in the
    world by building and maintaining resilient supply chains, engaging in
    flexible acquisition practices as current authorities allow, employing
    sound economic deterrence principles, and training and retaining a
    robust and knowledgeable workforce.
        The presence of the Navy and Marine Corps team reassures
    international allies and partners, deters potential adversaries and
    responds to those who threaten the lives of our Sailors, Marines and
    civilian merchant mariners engaged in lawful operations and
    international commercial activities. A strong, resilient, and effective
    shipbuilding industrial base, composed of shipyards, depots, original
    equipment manufacturers (OEMs), suppliers, ship designers, and
    associated supply chains, is essential to accomplishing and sustaining
    operational readiness. Growing and modernizing vital production and
    repair facilities is a national security imperative. We, alongside our
    industry partners, must invest in our industrial base with a collective
    goal to accelerate the production, throughput, and sustainment of the
    ships and submarines we require. We, alongside our industry partners,
    must continue to hold ourselves accountable and we will.
        The security of our country and preservation of our national
    interests remains reliant on a superior naval force, strategically
    postured to deter conflict and, if necessary, fight and win America's
    wars. Global events have continued to pressurize the need for rapid
    change and the Department of the Navy (DON) has taken note. We are
    aggressively seeking and implementing new and improved ways to operate,
    integrate, and sustain our forces and maintain a solid industrial base.
    The Navy and Marine Corps team must continue to provide unmatched
    operational capability to best support the geographic Combatant
    Commanders in countering constantly evolving geopolitical challenges
    and threats.
        Ensuring timely delivery of ships that are capable and on-budget is
    critical to maintaining our national security and maritime dominance.
    The DON appreciates the support of Congress and this Committee for the
    Department's acquisition, sustainment, research, and development
    programs that allow us to continue to build and operate a lethal,
    capable, integrated, and forward-postured Navy and Marine Corps.
                   state of conventional surface shipbuilding
        U.S. shipbuilders continue to produce the highest quality, safest,
    and most advanced warships on the globe. At a time when outstanding
    performance against adversaries is needed in contested maritime commons
    from the Red Sea to the Western Pacific, the U.S. Navy continues to
    provide unmatched capability. However, the U.S. shipbuilding industry
    is challenged to produce the quantity of ships at the rate required to
    effect lasting, sustainable growth in the battle force inventory and
    the Navy is challenged in providing reliable direction as the
    underpinning for their success. On balance, cost and schedule
    performance remain challenged; deliveries are approximately one to 3
    years late and costs continue to rise faster than overall inflation.
    These challenges are prevalent across the nuclear and conventional
    shipbuilding communities with both Navy and Industry sharing
    responsibility. Identified challenges include atrophy of our
    manufacturing industrial base, pre-COVID contracts, workforce shortages
    related to macroeconomic and demographic trends, diminished workforce
    proficiency, supply chain disruptions, iterative technical requirement
    updates, design immaturity, and inconsistent industry investment across
    the shipbuilding industrial base.
        Similar pressures affect the Tier 2 and 3 shipyards, providing
    opportunity for the Navy to more consistently level load workload where
    additional capacity remains. The Navy must continue to provide reliable
    demand signal to the industrial base to broaden interest, strengthen
    commitment, and encourage investment at all levels.
        The U.S. share of global shipbuilding--commercial and military--and
    the number of naval vessels delivered per year are not meeting the
    desired targets. The current industrial base is optimized for the
    efficient, peacetime production of ships and munitions. Historic
    underinvestment and industry consolidation following the end of the
    cold war have reduced competition and capacity at the Tier 1 shipyards
    and their suppliers, leading to workforce-constrained build schedules
    that do not meet Navy targets. The remaining prime shipbuilders and
    subcontractors face shortages of available skilled workers in both the
    trades (welders, pipefitters, electricians, etc.) and design/
    engineering workforce leading to schedule disruptions, delayed delivery
    of critical components, and associated cost and schedule challenges.
        In addition, the current relative wage rate for shipbuilders is
    behind historical averages. In the 1980's, approximately 38 percent of
    the workforce was engaged in manufacturing activity. Today, that number
    is closer to 12 percent. It is also true that, historically,
    manufacturing sector workers earned approximately 3-4 times the minimum
    wage, irrespective of geography. Today, shipyard workers' wages are
    only marginally above inflation-adjusted living wages, which leads to
    significant competition with local service sectors and adjacent labor
    pools. The Navy encourages the shipyards to make continued and
    increased investment in their workforce, alongside efforts to improve
    quality of service for their shipbuilders, which is critical to
    increasing hiring, reducing attrition, and developing the workforce.
    The Navy has recently funded initiatives aimed at improving
    transportation and parking options, addressing housing and childcare
    shortages, and providing retention bonuses to address these challenges
    at some of our major prime shipbuilders. The Navy acknowledges that
    additional opportunities remain and is working with the Administration
    to identify and support them.
        The Navy faces its own challenges as well. Burdensome acquisition
    processes and contracts that were established prior to the COVID-19
    pandemic also contribute to the current situation. We are committed to
    improving our acquisition, oversight, and cost estimation and budgeting
    processes, holding ourselves accountable, implementing innovative
    contracting strategies, and continuing to develop the acquisition
    workforce.
                                  path forward
        With the help of Congress, the U.S. Navy is a key participant in a
    whole-of-government effort to enhance the national shipbuilding
    industry. In addition to investments in the nuclear shipbuilding
    industrial base and surface combatant industrial base, the Navy is in
    the middle of a generational increase in demand for shipbuilding.
        With 92 ships on contract and 56 hulls under construction, the Navy
    assesses industry has sufficient backlog to continue materiel
    investments and labor force hiring, retention, and improvement
    initiatives. The Navy is assisting with capital expenditure projects at
    each of the Tier 1 shipyards, workforce development initiatives, and
    investing in growing the labor pool for critical trades. The Navy is
    also pursuing strategic outsourcing efforts to smartly shift some
    workload to smaller shipyards and key suppliers to enable long-term
    sustainable growth in capacity at the prime shipbuilders delivering our
    battle force ships, including the innovative partnership with private
    equity and industry to create the United Submarine Alliance Fund and
    the subsequent purchase of the Alabama Shipyard.
        The Navy is working to improve the cost realism between cost
    estimates, budgeting, and contracting for shipbuilding programs. Cost
    estimates must continue to adapt to the changing workforce and supply
    chain.
        In September 2024, the Navy established the Maritime Industrial
    Base (MIB) Program Office to lead enterprise efforts to restore
    America's shipbuilding capacity and to ensure the Navy can build and
    sustain the fleet required to support the National Defense Strategy.
    This strategic reorganization integrates the Submarine Industrial Base
    and Surface Combatant Industrial Base programs into a cohesive entity
    focused on the overall health of the maritime enterprise. The
    transition to the MIB Program represents a comprehensive approach to
    revitalizing America's shipbuilding and ship sustainment ecosystems,
    enabling the Navy to holistically address challenges and opportunities,
    respond to a comprehensive Navy demand signal, while also opening the
    aperture on efforts and investments to meet future defense demands more
    efficiently.
        The U.S. maritime industrial base is the critical enabler of the
    Navy's ability to deliver and maintain combat capability necessary to
    execute its missions around the world. The industrial base consists of
    public and private naval shipyards, private industry partners, highly
    skilled workforces, OEMs, complex supply chains, and organic resources.
    Since 2018, approximately $9 billion has been appropriated for
    submarine industrial base efforts. Congress has also appropriated $1.2
    billion for the large surface combatant and frigate industrial base.
    The Navy's strategy to improve the health of our maritime industrial
    base is focused on six key lines of effort: growing capability and
    capacity in the supply chain, modernizing shipbuilder infrastructure,
    expanding capacity of key suppliers to take on work traditionally
    executed by shipbuilders, developing the critical maritime
    manufacturing workforce, operationalizing advanced manufacturing
    technology, and increasing government oversight.
        The Navy has implemented a data-driven and data-informed process to
    ensure our investments and initiatives are targeting the primary
    needle-movers and enablers of shipbuilding and ship sustainment
    schedules. As part of this process, we assess and track impacts of Navy
    investment at multiple levels. At the individual project level, the
    Navy implements discrete, measurable return on investment metrics for
    each project with a mandated feedback loop to measure progress. At the
    aggregate level, we assess multiple individual projects with shared
    objectives; and at the portfolio level, we assess projects and
    aggregate-level impacts relative to production schedule drivers. The
    Navy's data-based assessment and decisionmaking process for industrial
    base investment enables a standard approach to assessing impact and
    identifying challenges and opportunities, improving coordination, and
    integrating perspectives among a range of stakeholders. Collectively,
    these efforts support flexible decisionmaking to meet a dynamic supply
    chain environment.
        The Navy is seeing early indications that investments appropriated
    to date are helping to stabilize targeted sectors of the industrial
    base that provide critical materials for in-service ships as well as
    new construction programs. Since Fiscal Year 2018 (FY 2018), we have
    launched more than 725 supplier development projects with more than 300
    suppliers across 33 states to add capability, capacity, and resiliency
    to the supply chain, including developing alternate suppliers for
    critical components. The Navy has invested more than $1 billion since
    fiscal year 2018 to improve the performance of companies that supply
    sequence-critical material for new construction programs--material that
    must be delivered on time to maintain production schedules. The Navy's
    six regional Talent Pipeline Programs have placed more than 6,400
    trades workers in the maritime sector and, through our partnership with
    the Southeastern New England Defense Industry Alliance, more than 6,750
    workers have been trained and placed in the shipbuilding industrial
    base.
        The Accelerated Training in Defense Manufacturing rapid trades
    training program in Danville, VA has trained more than 775 students in
    key maritime trades, and in January 2025, opened the National Training
    Center which will scale the program to 1,000 graduates per year by
    2025. The Additive Manufacturing Center of Excellence (AM CoE) in
    Danville, VA made significant progress in maturing and operationalizing
    additive manufacturing, printing more than 270 parts and leading
    efforts to scale AM by producing production-ready Technical Data
    Packages, responding to emergent material needs, centralizing non-
    recurring engineering, and qualifying AM suppliers to enable parts
    production at scale. The AM CoE is already helping get our ships back
    to sea, with more than 15 examples where the AM CoE has printed parts
    for ships and submarines in response to emergent needs, saving over 900
    days of delay relative to traditional procurement paths.
                             recent accomplishments
        Flight III DDG 51s will provide enhanced Integrated Air and Missile
    Defense (IAMD) with the AN/SPY-6(V)1 (SPY-6) radar and Aegis Baseline
    10 (BL10) combat system. These combat system enhancements meet the
    growing ballistic missile threat by improving radar sensitivity and
    enabling longer range detection of more numerous and increasingly
    complex threats. The Flight III program demonstrated design maturity
    through its successful completion of phase 1 developmental testing and
    the SPY-6 radar program is in serial production to support delivery for
    Flight III and DDG Modernization 2.0 ships. August 2024 marked the
    successful completion of initial shipboard Developmental Testing on the
    first DDG 51 Flight III ship, USS Jack H Lucas (DDG 125), which
    delivered in June 2023.
        The Navy is extending a number of Arleigh Burke-class (DDG 51)
    Destroyers beyond their 35-year Expected Service Life, which will
    provide additional years of ship service life through the mid-2030's.
    Over the last 15 years the Navy has made significant investments in DDG
    51 Class Maintenance and Modernization, allowing them to continue
    providing credible capacity to the Fleet thanks to combat system
    upgrades and compliance with lifecycle maintenance plans.
        The Zumwalt-class (DDG 1000) guided missile destroyers are multi-
    mission surface combatants designed to provide long-range, offensive
    surface strike capabilities. The DON is developing a hypersonic weapon
    system that will enable precise and timely strike capability against
    deep inland targets in contested environments. In collaboration with
    the Army, the Department is leveraging a common All Up Round missile
    design and test opportunities to field a conventional hypersonic weapon
    system. Zumwalt-class DDGs will be the first Navy platform to field
    hypersonic capability in the late-2020's, followed by Block V Virginia-
    class SSNs starting in the early 2030's. The development and
    demonstration of hypersonic strike weapon systems supports the U.S.
    ability to deter, and if necessary, defeat potential adversaries.
        The DDG 1000 program continues to accomplish first-time integration
    of unique combat systems elements, complete Post Delivery Test and
    Trials, demonstrate operational performance and start the installation
    of the first Conventional Prompt Strike (CPS) hypersonic weapon system
    on a maritime platform.
        The Constellation-class Frigate (FFG 62) is an essential program in
    pursuit of a larger and more lethal Joint Force in response to the
    urgent China threat. The FFG 62 acquisition strategy is informed by
    previous shipbuilding programs and takes advantage of proven systems
    that increase commonality across platforms and decreases developmental
    risk, including the three-phased-array SPY-6(V)3 radar, Vertical Launch
    System (VLS) missile launchers, and Aegis combat system software. The
    first six ships are under contract with the future-USS Constellation
    under construction. The Navy acknowledges significant schedule delays
    for the lead ship due to a number of factors. The Navy and shipbuilder
    continue to surge resources in this area to complete design reviews and
    ensure achievement of required capability.
        After overcoming significant challenges in design and production,
    the LCS Class continues to mature, and the Navy continues to invest in
    making the ships more lethal and survivable to elevate their value in
    the future fight. The Navy will continue to invest in systems like the
    Naval Strike Missile (NSM) and Lethality and Survivability (L&S)
    upgrades. L&S upgrades address system obsolescence, enhance cyber
    security protection to LCS computing environments, provide weapons
    system performance enhancements, and add survivability systems.
        The Navy reached a significant milestone in modernizing mine
    countermeasure (MCM) capability, as the MCM Mission Package (MP)
    declared IOC in March 2023. The Navy has since embarked three LCS MCM
    MPs onto Independence Variant LCSs, starting in April 2024. The MCM MP
    is slated to begin deployments in fiscal year 2025, and MCM MPs remain
    on track to fully replace the aging Avenger-class MCM and MH-53E
    Airborne MCM (AMCM) fleet by the end of fiscal year 2027.
        Our Navy and Marine Corps integrate resources across disparate
    domains and elements of national power to deter adversaries and
    campaign forward. Procuring our amphibious ships affordably and
    efficiently is essential. On September 24, 2024, the Navy awarded an
    amphibious Multi-Ship Procurement (MSP) contract for three San Antonio-
    class (LPD 17) and one America-class (LHA). The amphibious ship MSP
    demonstrates the Navy's commitment to maintaining 31 amphibious warfare
    ships and prudence with taxpayer funds. This multi-billion-dollar award
    reflects Navy's commitment to build and sustain our maritime dominance
    and allows for critical investment and sustainment of our shipbuilding
    industrial base, helping to ensure stability and jobs for the next
    decade.
        In addition to large, manned battle force ships, the Navy continues
    to identify and pursue opportunities for manned-unmanned teaming to
    increase overall lethality of the joint force. The DON continues to
    invest and mature the enabling and core technologies needed to deliver
    unmanned surface and undersea capabilities. These capabilities along
    with the platforms to support them are foundational to creating the
    hybrid fleet of the future. Manned-unmanned teaming will increase
    capacity, standoff, reach, and enable maneuver and Distributed Maritime
    Operations while reducing risk to our sailors and marines. Unmanned
    Surface Vehicles (USV) will expand information operations and missile
    magazine depth. The Navy continues to work with our industry partners
    on maturing reliable Hull, Mechanical and Electrical capability;
    advancing the required networks and radios; developing a common core
    USV Combat System and vessel control software; improving sensory
    perception and autonomy; and prototyping platform and USV payloads. In
    fiscal year 2024, the Navy successfully completed six 720-hour
    propulsion configuration tests in accordance with the 2021 NDAA
    language. These successful tests will allow certification of multiple
    propulsion configurations for use on future USVs. Our fleet of five USV
    prototypes provide valuable fleet training opportunities as we continue
    to develop Tactics, Techniques, and Procedures. These prototypes are
    helping us to mature technology in support of future USV procurement.
                                   conclusion
        Maintaining and enhancing the conventional surface shipbuilding
    industry is critical to sustaining the operational readiness and
    strategic posture of the Navy and Marine Corps. The challenges faced by
    the shipbuilding industry require a collective and sustained effort
    from the Department of the Navy and our industry partners to continue
    holding ourselves accountable to the warfighter and the taxpayer. By
    investing in the industrial base, modernizing facilities, developing a
    skilled workforce, and holding ourselves accountable we can ensure that
    the Navy and Marine Corps team remains capable and prepared to meet
    evolving geopolitical challenges and threats. The Department of the
    Navy is committed to improving acquisition processes, employing
    innovative contracting strategies, and continuing to support the
    shipbuilding industry to accelerate production and maintain a resilient
    supply chain.
        The Navy is a key participant in the whole-of-government effort to
    enhance the national shipbuilding industry. Combined with generational
    investments in the maritime industrial base, we are collaborating with
    Congress, industry, academia and training organizations, trade
    associations, and all levels of government in pursuit of improved cost
    and schedule performance. Together, we can build and sustain a lethal,
    capable, and forward-postured Navy and Marine Corps that will continue
    to safeguard our national security and maritime dominance. Our Nation
    and the world need the strength of our Navy, and our intent is to do
    everything in our power to deliver on that promise.

        Senator Scott. Thanks, Admiral. Ms. Oakley.

     STATEMENT OF MS. SHELBY S. OAKLEY, DIRECTOR, CONTRACTING AND
    NATIONAL SECURITY ACQUISITIONS GOVERNMENT ACCOUNTABILITY OFFICE

        Ms. Oakley. Chairman Scott, Ranking Member Kaine and
    Members of the Subcommittee, thank you for the opportunity to
    speak with you today about the ongoing challenges facing Navy
    surface shipbuilding and the solutions that could help turn
    things around.
        Let's start with the hard truth. Despite the Navy
    shipbuilding budget nearly doubling over the past two decades,
    the size of its fleet hasn't grown. The Navy had roughly the
    same number of ships in 2003 as it does today, even though it
    has spent billions trying to expand. In addition, almost every
    surface ship is now significantly delayed.
        Meanwhile, our strategic competitors are rapidly building
    and deploying modern, highly capable fleets. The Navy simply
    cannot afford to continue with business as usual.
        For over 20 years, GAO has been reporting that the Navy's
    approach to shipbuilding is fundamentally flawed. We've issued
    90 recommendations since 2015 alone, yet more than 60 of them
    remain unaddressed and the consequences of inaction are clear,
    billions in cost overruns, years of schedule delays, ships that
    ultimately don't provide expected capability.
        The biggest driver of the outcomes we see are the
    unrealistic business cases that the Navy puts forward to
    support its shipbuilding programs. These business cases don't
    adequately reconcile what can actually be done within available
    resources, including technology, design knowledge, industrial
    based capacity, and funding.
        As a result, the Navy's budget requests are founded on
    optimism, to secure funding. Later as business cases
    deteriorate and realism sets in, challenges that were
    predictable from the start, begin to emerge. Yet the Navy
    continues to push forward, awarding contracts for ships that
    likely can't be built with the resources available. As a
    result, they arrive later than planned and cost far more than
    expected. The Littoral Combat Ships (LCS) and DDG 1000, among
    others stand out as prominent prior examples of this dynamic.
        The question is, has the Navy learned from these past
    mistakes? To some extent, yes. Recent efforts incorporating
    more proven systems and increasing engagement with industry
    before contract award are steps in the right direction. But old
    habits die hard.
        Take the Frigate program for example. The Navy has already
    put six ships under contract despite the fact that two key
    systems remain unproven and design changes have led to weight
    growth that threatens performance. Now over 2 years in,
    construction on the lead ship has effectively stalled with
    delivery delayed by at least 3 years. This isn't just a minor
    hiccup, it's indicative of a system where providing a capable
    ship to the fleet on time is given less priority than
    protecting the program budget and keeping money flowing to
    underperforming programs, under the guise of stabilizing the
    industrial base. This approach directly threatens the Navy's
    ability to meet its long-term force structure goals that rely
    on large numbers of frigates.
        You might ask, is this scenario simply unavoidable? Is Navy
    shipbuilding just irreparably broken? The answer's no, but the
    Navy must break the cycle. Our work over the past 15 years,
    visiting and learning from leading companies around the world,
    including leading builders and buyers, consistently
    demonstrates that large complex projects can be designed and
    built on schedule and within budget, if the right practices are
    followed.
        These include things like first developing a solid business
    case, one that aligns technology design knowledge funding,
    industrial based capacity, and time, before committing to
    construction. Then continuously evaluating that that business
    case is maintained.
        Second, adopting iterative approaches that include
    developing and refining designs and cycles, using knowledge
    gained from testing, validating, and obtaining user feedback.
    Third, improving collaboration by streamlining decisionmaking.
    Finally strengthening in-house expertise and investing in
    modern ship design capabilities and digital tools to better
    execute and oversee programs.
        These approaches enable leading ship builders to develop
    complex ships in vastly shorter timeframes in the Navy, and to
    be adaptable to evolving customer needs. Our work has shown
    that they can be thoughtfully applied to Navy shipbuilding.
        In conclusion, the Navy has much work to do to improve its
    practices and restore its credibility with Congress, taxpayers
    in the fleet. It won't be easy. Breaking with entrenched ways
    of doing business requires sustained commitment over many years
    to see real change. Such improvements could help the Navy
    achieve its four structure goals faster, create stability for
    the industrial base, and send a clear message to potential
    adversaries that the U.S. Navy remains the dominant maritime
    force.
        Chairman Scott, Ranking Member Kaine, and Members of the
    Subcommittee, thank you for your time and for allowing me to
    speak on this important topic. I'll take any questions you
    have.
        [The prepared statement of Ms. Oakley follows:]

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Senator Scott. I think the Ranking Member Kaine and I are
    not going to alternate, going to do a vote, so we'll be in and
    out. So, I'll start with my questions. Admiral Downey, how long
    have you had the job?
        Admiral Downey. Just over a year, sir. January of 2023.
        Senator Scott. So you inherited some of the issues you're
    dealing with.
        Admiral Downey. A few issues. Yes, sir.
        Senator Scott. All right. So, let's talk about the
    Constellation-class frigate. So, it's what, 3 years behind
    budget. Three years behind way over budget. So, let's talk
    about what went wrong. So first off, Here's my understanding,
    tell me if I've got this wrong. The Navy chose the
    Constellation-class frigate based on the parent design of the
    European frigate used by Italy and France, right?
        Admiral Downey. Yes, sir.
        Senator Scott. The Navy awarded the design to Fincantieri
    Marinette Marine for about $800 million for the lead ship,
    right?
        Admiral Downey. Yes, sir. With a competition across five
    folks for about 18 months.
        Senator Scott. Construction began in August, 2022 with the
    Navy certifying basic and functional design was complete as
    required by law.
        Admiral Downey. Yes, sir.
        Senator Scott. A little over 2 years ago, two and a half
    years ago, right. So how did a ship that started with 85
    percent in common with the parent design, fall to 15 percent in
    common with that parent design, and were those design changes
    from the Navy or from the shipyard?
        Admiral Downey. Sir, I'll start with the design changes. A
    combination of both. There's a group of about 182 changes,
    about 80 percent of the changes were requested from Fincantieri
    to adjust the build spec to their design, all significant
    changes to get closer to what they proposed. Then there was
    about 20 percent from Navy.
        Of those of Navy, we invoked Build America Act, which
    changed equipment in the propulsion plant, but that was the
    decision to start from the first of the class. We canceled a
    couple systems, the MQ-8, for example, and said, we'll get to
    that in the future. We reduced speed on the ship. There was a
    very significant speed requirement in Sea State six beyond what
    a destroyer would be required. So, there's a combination of
    changes on both sides, sir.
        Senator Scott. So why were the changes made?
        Admiral Downey. The 20 percent on the Navy side were to
    change to the requirements that we had proposed and to cancel
    about three changes there. One cancellation of speed and two
    other system cancellations because those programs got canceled
    out. The vast majority of the changes, working together with
    Fincantieri, were their recommendations to align the build spec
    change what we put out to closer to their proposal.
        Senator Scott. So, was that a decision by the Navy or a
    decision by Congress?
        Admiral Downey. The Navy changes were a decision by Navy
    working with Fincantieri. The other changes were proposed by
    Fincantieri and Navy agreed to the changes.
        Senator Scott. Did that increase the cost?
        Admiral Downey. Overall, yes, from a perspective of time
    because design wasn't completed right. So, they fell behind in
    design and therefore it's contributing to the 36 months.
        Senator Scott. So, was it a fixed price contract?
        Admiral Downey. Yes, it's price contract for fixed price
    incentive fee contract for building the ship, and the ship
    builder went with a firm fixed price design contract, through a
    subcontractor.
        Senator Scott. Okay, and they won in a bid process, right?
        Admiral Downey. I'm sorry, sir.
        Senator Scott. They went through a bid.
        Admiral Downey. They went through a bid with us, and then
    they contracted to Gibbs & Cox for the design.
        Senator Scott. So, are they making money?
        Admiral Downey. No.
        Senator Scott. Okay.
        Admiral Downey. They're losing money
        Senator Scott. As a result of losing money, did they slow
    anything down?
        Admiral Downey. Yes. As I said, I took this job I had the
    opportunity for this command in January of 2024. Was invited to
    sit through a review a couple months before that, and could see
    that the reviews needed additional rigor, that the status of
    production was about 3 percent. But design was reported as
    holding up production despite the prior estimates of how far
    design was completed. So overall, what appeared to be occurring
    to me is the design was being significantly over progressed.
        Senator Scott. So, the company, the builder, made the
    decision to slow down because they were losing money?
        Admiral Downey. Yes. Because they chose to do a firm fixed
    price to design contract.
        Senator Scott. Does that bother you?
        Admiral Downey. Yes.
        Senator Scott. Huh. Okay.
        Admiral Downey. To address this, we surged about 80 people
    up onsite in Wisconsin, with the money invested to drive a
    collaborative approach to finished design. We expect that
    functional design will complete by this summer. We've gone from
    30 percent first time quality as I took that first review and
    came into the job to 80 percent, by co-locating Navy engineers,
    not only with Fincantieri, but also requiring Fincantieri to
    bring their subcontractor up onsite in Wisconsin as well.
        Senator Scott. Senator Blumenthal.
        Senator Blumenthal. Thanks, Mr. Chairman. Ms. Oakley, I
    know that the President's announced a new office to oversee
    shipbuilding, but on the other hand the Musk operation, call it
    whatever you will, and the Secretary of Defense are evidently
    going to terminate, fire people, who would be hands-on
    overseeing and supervising shipbuilding. Am I right that this
    kind of mass firing of the civilian workforce, many of them
    veterans would undermine and potentially set back our
    shipbuilding efforts?
        Ms. Oakley. I don't have any insight into the specific cuts
    that Department of Government Efficiency (DOGE) is proposing
    for the Navy programs or the Navy workforce. I will say that
    our report that we issued a few weeks ago on the Navy
    shipbuilding and ship repair industrial base, identified
    workforce capacity as a key issue that came up over and over
    again, both within the Navy and at the builders, as a key
    challenge for turning things around in terms of performance,
    both at the yards and within the Navy itself.
        Senator Blumenthal. So, building the workforce requires
    investment in people. It requires morale and a commitment of
    support to people who show up for work every day, whether it's
    building submarines or other ships or supervising the process
    of committing resources to them. Correct?
        Ms. Oakley. Yes. I think it would be difficult to buildup a
    workforce without that kind of support.
        Senator Blumenthal. Let me ask others here, how do we build
    that workforce which we've talked about doing for years and
    years in submarine construction, for example, and it isn't
    getting done, evidently?
        Dr. Seidle. I appreciate the question. I think we're
    putting a lot of effort in our maritime industrial base arena.
    This body has funded us about $4 billion over the last 2 years,
    and we have aggressively gone after kind of the workforce
    hiring and retention.
        I think we've seen some good effect on the hiring arena, I
    think you've seen the buildsubmarines.com at some of our major
    sporting events, will probably be in the March Madness arena
    too, on advertisements. We've had 16 million hits on that site,
    2.5 million applications. It's led to about 9,700 employees
    hired in 2023, a 40 percent increase over 22, another 10,000 in
    2024.
        But sir, those folks are coming and then we're attritting
    out way too quick. We probably are seeing 50 to 60 percent
    attrition in our first-year employees and it is about the labor
    rates. When I was working in manufacturing in the 1980's,
    minimum wage is $3.35 an hour, and we paid three or four X for
    $13 or $14 an hour for our labor. Today it's about 1.2 X
    compared to the living wage, and it's impacting that
    significantly.
        Senator Blumenthal. Electric Boat is doing a lot of great
    work in its apprenticeship program and its outreach in
    training, in going into the community colleges and the schools.
    But I'm hopeful that the Department of Defense can do more to
    support what they are doing. Especially as we go into the
    National Defense Authorization Act (NDAA) investing in
    apprenticeship training. Would you agree that we need to do
    more of it?
        Dr. Seidle. Most definitely. I was up at Electric Boat, had
    a chance to see some of the programs that they have. I think
    not only is it great from a training perspective, it's the
    community involvement and it allows people to feel good about
    their workplace and their environment and their culture. So
    yes, very supportive of that Sir.
        Senator Blumenthal. You would agree that we will continue
    to need to build more submarines?
        Dr. Seidle. Absolutely.
        Senator Blumenthal. That includes not just Virginia-class,
    but also the Columbia-class?
        Dr. Seidle. Absolutely, yes.
        Senator Blumenthal. Would it be a mistake? I think, you
    know, what I believe to for example, eliminate the Columbia-
    class?
        Dr. Seidle. It would be a significant mistake. We have
    maritime dominance in that submarine arena. The Columbia-class
    is the most important leg of our nuclear triad. A critical
    capability that we need to maintain dominance in.
        Senator Blumenthal. Do we need to continue to build the
    Virginia-class?
        Dr. Seidle. Absolutely, yes.
        Senator Blumenthal. These are rhetorical questions.
        Dr. Seidle. They are rhetorical. We are all in with you,
    sir, on that.
        Senator Blumenthal. I would see no need to ask in a normal
    time.
        Dr. Seidle. I understand.
        Senator Blumenthal. I'm appreciative that you're on record
    and I believe the Department of Navy is as well, and I hope the
    Secretary of the Navy newly confirmed will be as passionate as
    you and I are.
        Dr. Seidle. Thank you. Based on my conversations with him,
    I'm sure he will be, sir. Thank you.
        Senator Blumenthal. Thank you. Thanks, Mr. Chairman.
        Senator Kaine. [Presiding.] Senator Sheehy.
        Senator Sheehy. Thank you, Interim Chairman, I guess
    Ranking Member Chairman. Even if we wanted to scale our
    shipbuilding capacity, even if we wanted to take it to the 10,
    20, 30X that we need to even approach what China's building
    right now. I mean, how do we physically do it? We don't even
    have the physical shipyards available to build those right now.
    So, from an industrial based perspective, how do we acquire the
    physical footprint to start building enough vessels that we're
    going to need very quickly?
        Dr. Seidle. So, my first reaction to that, there's a lot of
    discussion around shipyard capacity and capability. There's a
    study ongoing right now with the Navy and Cape that will be out
    shortly, that talks about the capacity and how much more is
    needed. I think at this point, the workforce issues that we're
    talking about and the greening of the workforce is leading to
    lots of rework.
        For example, at most of our yards right now, the years of
    experience is 3 to 4 years. I think unlocking that latent
    capacity is a lot about driving modernization into the yards,
    getting through some of these wages issues to have our
    retention numbers up. All those things start to play. We also
    are working on a lot of----
        Senator Sheehy. I agree that workforce is key, but I think
    the workforce will fundamentally and eventually respond to a
    free-market incentive and is relatively elastic. But, you know,
    last time we had to build a Navy fast, you know, Henry Kaiser
    bulldozed 10 miles of San Francisco Bay and built a shipyard.
    We just don't have that capability anymore. I mean, whether
    it's ocean front real estate, isn't available anymore.
        So, I've heard a lot about the workforce and I totally
    agree with you, we're very aligned on the workforce issue, I
    think is critical. But I have not really heard anybody yet talk
    about the real estate issue, which is how do we get the
    physical space available to conduct the work when needed.
        Ms. Oakley. I think one of the things that needs to be
    considered is looking beyond these big platforms, right?
    Looking to smaller, non-traditional capabilities that could
    provide that decisive capability for us. You know, in that
    China fight, thinking about things like robotic autonomous
    systems, leveraging those kinds of things, smaller yards can
    build those types of ships.
        When you're thinking about building up our capacity for
    shipbuilding in the United States, we can look toward those
    types of platforms to be the augmenter to the fleet that we
    need. Not just looking to build, you know, double, or triple
    the amount of large surface combatants.
        Senator Sheehy. I'd agree, but I think, you know it's
    always fun to talk about the tactical end of the spear, because
    that's what's fun to look at. But the reality is the heavy
    lift, sea lift logistic capability to move a lot of people and
    a lot of stuff halfway around the world quickly is--that's
    actually what's more deeply concerning to me. Not the pointed
    end of the spear, the war fighting end of the Navy, but the
    ability to lift 500,000 troops in everything they need and all
    the vehicles they need halfway around the world quickly.
        To that end, my second question, and I'll yield back there,
    is you know, the incentives around shipbuilding and the
    contractors there, and that Senator Scott alluded to you know,
    the shipbuilding acquisition model is very dated. You know,
    it's basically still the same model that we had 80 years ago.
        Traditionally and historically, a lot of large naval fleets
    used leased vessels. Instead of placing the risk on the
    government to buy the ships and the contractors, basically,
    there are some risks there, but really the risk on the Navy to
    buy them.
        Has there been any study on exploration of leasing of
    ships, placing the risk on private companies who would be
    willing potentially to take that risk to build us a fleet, that
    it wouldn't probably be right for guided missile destroyers and
    cruisers and submarines, but it could work for you know, some
    like submarine tenders, which we're woefully short on right
    now, I think we have two, we need like 15 and logistical
    vessels.
        Has there been exploration of leasing commercial vessels
    and putting the maintenance burden, the upgrade burden on the
    contractors versus on the Navy?
        Admiral Downey. I'll take that one, sir. I don't think so.
    I've been doing this for quite a while and I haven't seen
    studies on leasing. I'll go back to your other point. We need
    them produced, we have about 80 commercial vessels under U.S.
    flag versus thousands under another country. So, it really, I
    think it goes back to your other point here of how do we
    increase capacity? So, on the pure Navy side, we do have some
    in my view, having worked with Maine and California a lot,
    there is more capacity up in Bath, and there is more capacity
    out at NASSCO in California. We need to look at our
    requirements, our variations in builds, and how we get a more-a
    longer run similar to the DDG-51 program. We're all working on
    Virginia and there's multiple blocks of Virginia's.
        So that definitely has an effect on the producibility and
    the learning there. So, I think we have to do both and get to
    who would produce them for us. We've added Wisconsin
    Fincantieri Marinette, we've added Austal, and now we have
    Hanwha in Philadelphia.
        We've also looked in the past at reactivating reserve or
    decommission ships principally the frigate class. That has led
    to, it's a dated combat system. We've reactivated some of those
    ships for foreign countries, but it's would mainly be for
    coastal patrol. But to your point, we need to do both. We need
    to grow the shipyards here and look at other acquisition
    options.
        Senator Sheehy. Thank you.
        Senator Kaine. Senator King.
        Senator King. Thank you. I've been waiting 13 years for the
    timer to break, so there'd be no limit. A couple of sorts of
    technical observations before I get to broader questions. One
    is, as you know, the Next Generation Guided-Missile Destroyer
    (DDG-X) is in the design stage, and the concern from the point
    of view of the shipyards, both in Bath and in Mississippi, is
    that there be a smooth transition between DDG-51 and the DDG-X.
    What concerns us is a timing trough, because you can't turn on
    and turn off welders.
        So, I hope that as you plan out the transition process,
    that that's top of mind, because it would be disastrous for the
    yards if there was a lag in demand between the two ships.
    Doctor, are you with me on that one?
        Dr. Seidle. Yes, I am. So, we saw the lessons from DDG-51
    to DDG-1000 back in the day and how some of that worked out. We
    clearly are going to be intentional about the transition of
    DDG-51 to DDG-X, to keep the production line hot, to then
    feather in DDG-X and then only taper out DDG-51 once DDG-X is
    up and running.
        Senator King. I'm glad to hear that. Keep that in mind.
        Dr. Seidle. Yes, will do.
        Senator King. Second point on this developing DDG-X,
    Ingalls and General Dynamics are working together on the
    design, which is a new approach, but it's an important one, and
    I hope the Navy will continue to iterate with them, because
    having the build yards be involved in the design will make a
    big difference in terms of construction learning curve and all
    those kinds of things. So, I hope that project which is
    underway, will be maintained and the Navy will be forthcoming
    in terms of communication with the two yards.
        Dr. Seidle. Yes, just to comment on that, I see that as a
    great opportunity. We're working with them even before
    preliminary design phase, and it gets to some of the things
    that you've talked about, Ms. Oakley, that we need to be doing,
    so we are excited and we'll be all about it.
        Senator King. Well, having served on this Committee for a
    while, it strikes me that one of the problems we have is
    requirements creep. At some point, it has to be pencils down.
    If you learn anything from the Ford, it's that doing research
    while you're building a ship is not the way to go.
        So, I think, again, that as we move toward DDG-X, we need
    to say, okay, here's the requirements, here's the design, and
    let's build it. Not, let's iterate the design as we are moving
    through the construction process, that's what's really messed
    us up in some of these major overrun projects. If I were going
    to list the three biggest problems right now in developing
    shipyard capacity, the first would be workforce, the second
    would be workforce, and the third would be workforce. The Navy
    has to be thinking in unconventional ways.
        For example, one of the most important things that could be
    done to develop workforce is to have childcare facilities,
    parking, housing in the area. We've had people recruited to
    Bath who get there, and then they can't find a place to live.
    So, I believe that that has to be part of the mentality of
    developing workforce.
        Then of course training, and all those details that go to
    attracting people in this economy. Finally on the development
    of the infrastructure, it is the infrastructure itself. There
    has to be investment. It has to be a joint investment between
    the private shipyards and the Navy in terms of infrastructure
    buildings, more efficient layout of the facility and those
    kinds of steps I think are very, very important.
        So, again, I'm giving you advice, but this is based on my
    experience with working with these shipyards. I guess I would
    reiterate, oh, I wanted my final question to GAO. You mentioned
    60 or so recommendations that haven't been followed. What are
    the top three that if you had to beep, if you were pressed,
    what are the top three recommendations that haven't been
    followed that you think would make a difference?
        Ms. Oakley. You really pressing my memory on 60
    recommendations, but I think most pressing in the front of my
    mind are our recommendations related to design and the changes
    that we'd like to see the Navy make with regard to, like you
    said, ensuring that the design is finalized before we're
    awarding a contract for construction, and before we're starting
    to bend metal. Because the problems arise when those design
    changes start creeping in as the pressures of a fixed price
    contract begin to mount.
        Then that leads to just challenges overall, and it's just
    exactly what we're seeing with the frigate program. So, we made
    recommendations to the Navy that they ensure that they have
    matured their basic and functional design before awarding the
    contract for detailed design and construction.
        Another recommendation that we made was related to ensuring
    that detailed design on each individual block is finished
    before you begin construction on that block. Most of those
    recommendations are really aimed at ensuring that there's less
    of a likelihood that these surprises will pop up at a time
    where the pressure's going to be high to continue to proceed
    because of, you know, schedule or money challenges.
        Senator King. I think this goes without saying, and I
    appreciate that modularity is king at this point. So, we're
    building 40-year assets here. They ought to be constructed in
    such a way that they can be upgraded easily without ripping the
    whole platform apart. So, I hope those are some things.
        The other thing that is something that I've observed, is
    when we're buying these major objects, we should also buy the
    Internet Protocol (IP), so that every ship can have its own 3D
    printer. We don't have to have ships in port, for inordinate
    amounts of time waiting for a part. So, I hope that's in your
    planning as well because in this day and age, and by the way, I
    think the same thing about the Air Force, availability is a big
    issue in our fleet, and we should improve our availability. We
    should benchmark against Carnival Cruise Lines, because if they
    were only available 40 or 50 percent of the time, they'd be out
    of business.
        So, to the extent we can have intellectual property as part
    of the purchase, then you have the right to make the parts as
    necessary without even having necessarily to go back into port.
    Thank you.
        Admiral Downey. Thank you for that, sir. I'll hit on a few
    of those points. Modularity; for the Ford-class, we studied in
    the design that about 40 percent of the cost of modernization
    goes to rip out. So, for the Ford-class, where we have the
    command spaces, the O-3 level, the gallery deck we went with a
    general arrangement where all 19 mission bays are lined up
    against each other and the services are moved out of the
    spaces.
        Heating Ventilation, and Air Conditioning (HVAC), ducting,
    these things, and built in a flexible infrastructure. So that
    common bolt size, quick disconnect power panels, lighting, are
    pressurized under deck so that you don't have any ducting in
    the spaces. So those type of efforts are modularity that
    removes I'll say hardware constrained interface or many
    different such interfaces to the systems, is an area we
    significantly need to move forward with.
        On the tool sets, we also have some, I will say not even
    balanced efforts, but some solid tool sets in the submarine
    area and digital arrangement drawings in the carrier area. So
    that it's not left to an interpretation of the worker. The
    drawings can be extremely complex. So, we have invested in
    those areas significantly. Studies show in those areas that
    such tools, and I have one more point, but such tools can
    reduce labor by as much as 8 percent as you go through that
    work.
        The other key area on the commercial side, so I have been
    to Korea, Japan, India, Canada, et cetera, Spain, Italy, and
    the Middle East. Most of the yards that I've been to that have
    a large production capability, use a common tool set across the
    yard. We go by program. So, when we get into yards that have
    multiple product lines, they may be using different tool sets,
    until you go into some of the other foreign large yards it's
    less obvious in our yards of what's going on. They don't change
    the tool set to the new one, until it's ready to support all
    their product lines.
        Last point is, in our yards where we have multiple lines,
    they're also managed by program. They're not managed by a
    governance approach across the yard from the government side.
    Some of our yards, we have more than half a dozen lines in
    those yards. So, it goes to the priority of the program and the
    different government offices integrating.
        So, we have been working closely on what is a governance
    approach that allows shipyard X to get their programs done to
    cost and schedule in more than a program focused manner.
        Senator King. I appreciate that. You mentioned bolts and I
    once visited a Toyota plant in Tokyo where they built one RAV4
    a minute, one brand new automobile a minute came off the line.
    They said one of the secrets of the success of that factory was
    listening to the workers. One of the things I said, well, what
    kind of suggestions did they make? He said, well, somebody
    noticed we had 86 different bolts in a Toyota, and we figured
    out how to make that into about eight. It saved a huge amount
    of time, a huge amount of acquisition, and that kind of
    analysis. I think the lesson there is to listen to the workers
    because they know on the ship deck what works and what doesn't
    work.
        Dr. Seidle. Yes. Just to comment on that automotive guy in
    my past----
        Senator King. Is your mic on?
        Dr. Seidle. It is. Maybe I'll get closer. Automotive guy in
    my past, quick story about Toyota and General Motors (GM). When
    I was working for General Motors, worst running plant in our
    lineup was the Fremont plant. It had about 55 percent uptime on
    the assembly line, 20 percent absenteeism, criminal activity.
    GM gave up and just shut the plant down in 1980 or 1981.
        Three years later, Toyota wanted a footprint in the U.S. to
    make vehicles, we wanted to learn TPS, Toyota Production
    System, they said, let's use the Fremont plant. We said, no,
    you don't want to do that, right? Bad karma. They convinced us
    and then they said, let's hire the people back. We said, no,
    you really don't understand, you don't want to do that, but
    they did it. In 3 years it was the best running plant in our
    lineup, 96 percent uptime, just an incredible work environment.
    You'd go there and you would see folks on fire for what they
    were doing at their station.
        It was because they were empowered to make changes for what
    they were doing to improve their work and their efficiency and
    throughput. It was an amazing thing to see the difference.
    You're absolutely right that it pays dividends in any
    manufacturing arena where there's a lot of touch labor, and
    folks can improve what they're doing. Over.
        Senator King. Thank you, gentlemen. Thank you very much,
    madam, for your comment.
        Ms. Oakley. I'll just make a quick comment, because your
    last comment about talking to the people is in many of your
    comments are completely in line with our leading practices for
    product development that GAO has gone and talked to leading
    companies all across the world and ask them how do they do
    business? How do they meet customer needs? How do they get
    products out on time quickly and on budget?
        One of the key aspects of that is that user feedback, the
    people who are actually going to be using the product, give
    feedback all along the way from the beginning to the end, that
    drives changes in that design, design drives changes in how
    it's produced, and then results in providing the customer with
    a capability that they actually want and will be happy with.
        So, I think what you're saying is completely in line with
    recommendations we've made both to DOD and to the Navy, to
    bring their practices more in line with how these leading
    companies do business. Thank you.
        Senator King. Thank you, Mr. Chairman.
        Senator Scott. [Presiding.] Thank you, Ranking Member
    Kaine.
        Senator Kaine. Thank you, Mr. Chair. I'm going to hopscotch
    around on some topics. Ms. Oakley, on the last point, I would
    suggest sometimes GAO go visit a company in Lynchburg,
    Virginia, Framatome, which is one of the main suppliers in the
    nuclear base. Framatome is responsible for going out during
    outages at nuclear power plants.
        Outages are not disasters. They're the planned period where
    they pull a reactor out, retrofit and put it in. Obviously they
    want to do that as fast as they can, and watching how they are
    able to do this work of such complexity, surge it and do it in
    a very short time so that the reactor is not offline and is
    actually producing power. It makes me a little bit embarrassed
    as I think about how slow we are in some other aspects of what
    we do. So that would be one to put on your visit list.
        Ms. Oakley. Yes, happy to do that.
        Senator Kaine. To Admiral Downey or Dr. Seidle, do you all
    know how the shipbuilding enterprise workforce has been
    affected thus far by DOGE or particular directives from the
    secretary that might be related to DOGE?
        Dr. Seidle. So, I'll make some comments and I'll let
    Admiral Downey make a few comments as well on that.
        Senator Kaine. I'll accept ``No, I don't know yet'' for an
    answer, if you don't really have the sense of it.
        Dr. Seidle. So, from the earlier comments, I think the
    first thing that we have been assessing is the deferred
    resignation program, in the area that kind of I oversee. If you
    think about the Professional Employer Organization (PEO)
    community and the supervisor ship builders that he has, it
    looks like those numbers are in the 3 percent range.
        Whenever we look at the number of folks on that list that
    were probably retirement eligible and decided to say, I'm going
    to take this now as a result, it drops down to about a percent
    and a half. So, it is a manageable thing for us when you think
    about normal attrition.
        Senator Kaine. How about on the probationary side?
        Dr. Seidle. Probationary side small numbers as well. As you
    know, we've kind of stopped that process. So once again, the
    numbers in my neck of the woods appear to be manageable to work
    through, because we have that kind of attrition also on a
    yearly basis.
        Senator Kaine. Admiral Downey, anything different to offer
    on that?
        Admiral Downey. I would offer, I represent a large part of
    the Navy enterprise, about 90,000 folks, and that they're 90
    percent civilian. The deferred retirement number across that
    enterprise for me is around 1,200 folks. With the offers, these
    are people who chose to retire. There were very few
    probationary people that were probationary due to performance.
        Senator Kaine. Right. Probationers, you know, for everybody
    who isn't familiar with this, they're new hires, so they're
    either brand new or they're career switchers. So, somebody
    going from active duty to civilian DOD, that's a career
    switcher who then is probationary.
        Admiral Downey. Sir, that's where I was going. My folks
    hired 7,400 people last year, about 8 percent of the 90,000 and
    that's not uncommon per year. As we've worked through the
    definitions, almost all of those folks have been, I'll get the
    word wrong, accepted or exempted because of the national
    defense work that they're doing.
        The other area was purchase cards. We purchase a lot in our
    naval shipyards. That's how they buy material. So Portsmouth
    Naval Shipyard may have more than a thousand transactions a
    month et cetera. I have in the 10,000 to 15,000 a month across
    all these areas, and we were able to turn on, per command, what
    I asked for to have turned back on.
        Senator Kaine. So, everybody wasn't limited to just $1,
    right?
        Admiral Downey. So far, we've very brief interruption, and
    we've gotten back to what I've asked to have back. On the
    industry side, across this rest of this decade, the
    shipbuilding need for what we have booked is to hire about
    200,000 people. That's what's needed across that effort. So,
    the stabilization of programs, the not changing of
    requirements, that's going to be critically important to these
    people.
        Last one on that, on wages, Dr. Seidle hit where those
    wages are. Some of our initiatives to focus on a 25 percent
    increase for the first folks, you know, the first-year people,
    $20 to $25, that adds about 1 percent to the cost of a ship. A
    $4 billion ship becomes a 4,040,000,000.
        Senator Kaine. You mentioned this to me yesterday and I'm
    curious about this. So, Dr. Seidle, you were testifying right
    as I came back from voting about this, the odd compression
    between, you know, it used to be that a ship builder compared
    to minimum wage is making, you know, multiply x minimum wage.
    Now we're down to 1.3, 1.4, which makes the relative
    attractiveness in a job in the shipyard less.
        The point that Admiral Downey made yesterday and today is
    if you increase sort of beginning salaries, and I guess you do
    some other adjustments, so there's not unacceptable salary
    compression, but if you do a 25 percent increase, it changes
    the cost of a carrier, for example, by 1 percent, because so
    much more is not in the salary side. That's, an important
    thing, and I think that's something that we have to grapple
    with. Here's, a question I was curious about----
        Admiral Downey. One point on that, sir, if I may. it's not
    simply to raise the wage, but if we can retain these folks and
    have them focused, we're going to deliver closer to schedule
    and the overall cost is going to come down.
        Senator Kaine. Yes. We're dealing with this greening of the
    workforce and retention is really important. Let me ask you
    this, I was pleased when the President during his State of the
    Union on March 4th, announced plans to establish a White House
    office of shipbuilding to revitalize U.S. shipbuilding
    industry. I'm just wondering if have you been read in, are
    there yet details about what that looks like, what's the Navy's
    plan for collaborating with this White House office of
    shipbuilding? How might it be structured? Who might the
    leadership be? This is 21 days after that speech, so maybe the
    answer is no. But do you know any more about that proposal?
        Dr. Seidle. At this point it is still early in the
    discussions on that. We do expect to have solid integration,
    have been told that we'll be over there regularly having
    conversations, but to date, we still haven't moved out on our
    end yet on some of that.
        Senator Kaine. We'll want to keep track on that from the
    Subcommittee standpoint. Over to you Ms. Oakley, and something
    the GAO had a report that was a December report about
    amphibious warfare fleet. Navy needs to complete key efforts to
    better ensure ships are available for marines. The report had
    this conclusion, ``The Navy is likely to face difficulties
    meeting a statutory requirement to have at least 31 amphibious
    ships in the future, given the age of the ships and other
    factors''.
        There's a provision in the NDAA at section 1023, that
    requires that the naval combat force of the Navy shall include
    not less than 31 operational amphibious warfare ships, but it
    allows to be counted as operational ships that are temporarily
    unavailable. What's GAO's perspective on how the Navy is
    interpreting ``temporarily unavailable''? Because we want 31,
    but we don't want 31 discounted by a deep fraction of
    ``temporarily unavailable'' ships that we really can't count on
    to be.
        Ms. Oakley. Yes, I mean, I think that report pointed out
    that some of the things that were considered ``temporarily
    unavailable'' were years at a time unavailable and counted
    toward that total.
        Senator Kaine. Would you suggest that in an NDAA, for
    example, this year, we should take some of that ambiguity out
    of a phrase, like temporarily unavailable and maybe be a little
    more specific about what we mean?
        Ms. Oakley. I think the more specific you can be in giving
    direction to the Navy would be helpful, because then it leaves
    it up to their interpretation. The other thing I'd mention is
    that we have recommendations from 2020, that ask the Navy to
    reconsider how it defines operational availability, because
    oftentimes those definitions can be based upon a ship just
    being able to get underway, but not actually being able to do
    its missions. Those recommendations remain unopen and there's
    no action yet on those recommendations.
        Senator Kaine. I have one other question I'd like to ask
    maybe before, I'm sure you have a second round, and I may think
    of some other things too, but to Ms. Oakley, in your opening
    testimony, you were kind of assessing some of the challenges
    that you know, undergirded the report that you recently did
    about pacing challenges and construction.
        One of the things you said, maybe in response to a
    question, is some degree of sort of unreality between the ships
    we're putting under contract and the Navy sort of does it with
    an optimism about the future budget meeting what they've put
    under contract, and we're not really lining up what we're
    saying we're going to do with the budgetary resources.
        I'm troubled by this. I mean, here's a recent example that
    speaks to a potential cognitive dissonance. We did a
    reconciliation bill a couple weeks back, that suggested we
    should spend about another $150 billion in defense. We're going
    to continue, on top of what the base budget has been, we're
    going to continue to work on that. But at the same time as we
    were doing that, the secretary was sending out kind of the cut
    memo to the Pentagon, exempting 17 areas, but saying to
    everybody else, come up with a five to 8 percent cut.
        Now, I get it, that just asking for a cut plan does not
    mean you're going to accept the full plan. Just because you've
    exempted somebody in round one doesn't mean you won't come back
    to them later. But it did seem to me a little odd that we were
    saying we need 150 billion more dollars and at the same time,
    I'm reading the memo from the Secretary of Defense saying,
    everybody's got to give me cuts. Maybe the cuts are going to be
    reprogrammed back in, but I just worry that we are not really
    being like cold-blooded and objective and just truthful.
        I mean, sometimes the eyes are bigger than the stomach, and
    we want more than we're willing to pay for, but what is the way
    we get at that problem? I mean, it's got to be discipline on
    our shoulders, but it also has to be disciplined over at the
    Pentagon.
        Ms. Oakley. I think there's a couple of ways to get at
    that. You know, when we're talking about realism, we don't just
    mean that they can't do what they put on paper under their
    current budget, we mean that they can't do what they put on
    paper at all. Right?
        So, they walk into these programs oftentimes with these
    unrealistic business cases that say, oh, the technology will
    mature, the design will work out, that system will get there on
    time. Then we structure all of the cost and schedule estimates
    around that optimism, and then they don't arrive. Then that
    causes cascading delays and problems. Right?
        So, then the overall top line that's required increases,
    instead of putting in the work at the beginning to gain the
    knowledge that you need to be able to understand, here's what
    it's going to take to get there, both from a cost and schedule
    perspective, and then putting forth those realistic budget
    estimates, those realistic schedule estimates, that match with
    that.
        Now, that doesn't mean that you automatically say, oh, you
    know what, it's going to take us 20 years to build this ship,
    and that's just what it is. Right? That's where our leading
    practices for product development could really be useful to the
    Navy, because these leading companies, they don't focus on
    going for a home run every time, they build their products such
    that they can be designed and iterated on over the course of a
    number of years.
        They put in that work at the beginning to understand what
    is the most important thing that we need to provide a valuable
    capability to our customer or to the sailor in this case, and
    how do we then structure a program that can be done quickly to
    get that out all while we're thinking about what is the next
    iteration? what's the next thing that we can get them quickly?
    That then therefore truncates the amount of money that you need
    and the amount of time that you need, to look toward devoting
    that money and could allow the Navy to be flexible and agile to
    changing threats.
        Senator Kaine. Great. Thank you very much.
        Senator Scott. Okay. I'll just ask a question before
    Senator Sullivan gets ready. Dr. Seidle, you worked in the auto
    industry? Were you a supplier or were you one of the big
    companies?
        Dr. Seidle. so, first I worked with General Motors for
    about 13 years, then I was with Alcoa when we stood up a plant
    to support the big three automakers.
        Senator Scott. Did you ever get a fixed price contract with
    one of the Original Equipment Manufacturer (OEMs)? Did you ever
    agree to build something for a fixed price?
        Dr. Seidle. I certainly did.
        Senator Scott. When you did that, did you like take in
    consideration you might have to pay somebody to do the work?
        Dr. Seidle. Sure did.
        Senator Scott. Did you take in consideration what you would
    have to pay them in wages?
        Dr. Seidle. Yes.
        Senator Scott. Probably did, right. After you got the
    contract, did you go back to the OEM and say, I really don't
    like this contract, I'd like to get paid more?
        [Laughter.]
        Dr. Seidle. I'll tell you sir; we had several contracts
    that were underwater when I was with Alcoa trying to really buy
    our way into that business the first time. So, we dealt with
    those to your point, right. We owned it.
        Senator Scott. They were so understanding. Right. They just
    said, sure, we'll just pay you more money. It was a bid
    contract and you made the decision to go into that and get the
    contract and then you lost money.
        Dr. Seidle. There wasn't enough understanding, sir.
        Senator Scott. So, when you were doing that, did you say
    what I heard, that I went down and that the builder just
    decided to stop working.
        Dr. Seidle. Yes.
        Senator Scott. Did you ever do that?
        Dr. Seidle. No, I did not do that.
        Senator Scott. Would that have ever helped you get more
    contracts that OEMs?
        Dr. Seidle. That would not, sir.
        Senator Scott. Alright. So, did one of the OEMs ever say to
    you, you know, I'm really worried about your workforce?
        Dr. Seidle. Yes.
        Senator Scott. But did they say, let me give you a whole
    bunch more money?
        [Laughter.]
        Dr. Seidle. No, they didn't, sir.
        Senator Scott. So, I mean, what's frustrated me is that
    these people go bid on these contracts. Like Senator Kaine
    said, well, you brought it up earlier, that there's been wage
    compression. I think in a lot of industries there's been a lot
    of wage compression, but no one told these companies to set the
    wage at this point. They made that decision.
        Dr. Seidle. Yes. This gets to the business case issues that
    Ms. Oakley brings up. Right? The business case has to stand on
    its own for them and for us both.
        Senator Scott. Now, it's our job to review. Like when I ran
    an auto company, we were a supplier to the big companies. So,
    for my contracts, I had to reduce my prices. I defined
    productivity gains every year, year after year after year, I
    lost a contract by contract. They never came to me shocking and
    said, let me just give you a little bit more money, I feel
    sorry for you.
        Dr. Seidle. Yes.
        Senator Scott. Just makes you mad that these people go out
    there, and what you've said is, they're bitching because they
    can't get the workforce. Whose responsibility, is it? They bid
    for their own contract.
        Dr. Seidle. In my opinion, the business cases right now are
    not where they need to be for both our industrial partners and
    ourselves. So, then we have some of these contracts that are
    pre Coronavirus Disease (COVID) contracts as well and
    ultimately, we find ourselves in a tough situation.
        Now, sir, I will also tell you I am a proponent of working
    closely with them right now to get to the right answer, to make
    these adjustments, to do the right thing, because our Nation
    needs it. Also, as I've been out there meeting with them, I see
    industrial partners that are willing to come to the party as
    well with us. I can't speak to what's happened the last two or
    three decades on that front, but I can tell you what I'm seeing
    now.
        Senator Scott. Right. Senator Sullivan.
        Senator Sullivan. Thank you, Mr. Chairman. Great questions.
    It's good to have a businessman as a Senator.
        [Laughter.]
        Senator Sullivan. Okay, boy, oh boy. I don't even know
    where to begin on this topic, but I think the really good news
    is, as the President of the United States and everybody on this
    Committee, bipartisan group of Senators, we all want to get at
    this problem, fix this problem. Boy, I don't even know where to
    begin.
        Let me begin, Ms. Oakley, great job on your guys' newest
    study that came up, your report. I sent it to the incoming
    Secretary of the Navy and said, you should read this. Very
    quickly, from your big analysis, the top three things, if
    you've already said it, say it again, that you think we should
    be doing.
        Again, the big idea here is that everybody wants to fix
    this, the President, the Secretary of the Navy (SEC NAV), all
    of us, so that's not always the case in Congress. We're willing
    to put a lot of money toward it, but that's not always needed
    either. What are the big three that you would recommend
    succinctly here?
        Ms. Oakley. I think you're referring to the industrial base
    report that we issued, right?
        Senator Sullivan. Yes.
        Ms. Oakley. So, from that report, I think the biggest thing
    is that the Navy needs to ensure that it seizes this bipartisan
    support and opportunity that it has with all the investments
    that are going in to address the industrial based challenges
    and issues. So that report, as you note determine that the Navy
    didn't really have metrics in place to----
        Senator Sullivan. Or a strategy for that.
        Ms. Oakley. Or a strategy to guide those investments.
        Senator Sullivan. The last Navy Secretary and God love
    them--but you know, when you're getting the climate action
    report to Congress, which is not required by Congress, you're
    talking about climate change all the time and not shipbuilding.
    No wonder we're in this disaster, but I'm going to look toward
    the future.
        [Laughter.]
        Ms. Oakley. Well, that takes me to my next point in looking
    toward the future. So, the Navy kind of has two problems here,
    right? As Admiral Downey mentioned, there's already 90 ships
    under contract, I think that amounts to about $150 billion
    backlog of ships. So, the ship in some cases has already sailed
    on those products. So, what they can do in that regard is look
    toward gaining that knowledge about design, ensuring designs
    are stable before construction begins, so that that
    construction progress isn't disrupted and we're not talking
    about design changes.
        Senator Sullivan. Okay. Can I really, I want to touch on
    that point. Did you guys see the Wall Street Journal piece?
    They did a really good piece recently on, I'm trying to think
    of what ship it was.
        Ms. Oakley. Frigate.
        Senator Sullivan. It was on Frigate and all the change
    orders that just killed it. I had the honor of having lunch,
    just a week ago, with the former Secretary of the Navy, John
    Lehman, who was responsible for building Reagan's 600 ship
    Navy. Pretty impressive, right? The size of the U.S. economy
    was about one third of that size than we are today, the
    employment, and these guys just focused and built a gigantic
    navy. They helped us win the cold war. He did it. He was
    secretary for 6 years. I said, Mr. Secretary, how'd you, do it,
    and what's the number one thing? He said, change orders.
        I stopped him. I said, once we get through a phase done,
    done. He told me all the examples of industry and everybody,
    some big top guy in the industry tried to get him fired. He
    says, we're done, no change, build that ship. Build 30-40 of
    them, maybe come back after that. Build the ship, stop with the
    change orders.
        I think the Navy right now is almost the opposite. That
    Wall Street Journal article was, heck every time some captain
    in the Navy had a new idea, it was a brand-new change order it
    seemed like on that ship. So, would you agree that that's like
    a huge one? Certainly, Secretary Lehman thought it was huge,
    and that guy knew what the heck he was doing, right? He built
    the 600 ship Navy under Reagan.
        Ms. Oakley. I think that when you're talking about being
    able to snap a chalk line like that and say no more change, you
    have to make sure that you've done the work to understand that
    you can even actually build the ship that you've designed. So,
    our recommendations would focus on doing that upfront work so
    that you can snap that chalk line, and be assured of the ship
    that you're building and the timeframes and costs with which
    you're going to be able to build it.
        Senator Sullivan. Okay. It's a great point, because it's
    not like we've never done this before, right? It's not like we
    don't know how to build Navy ships. It's not like we don't know
    how to build a giant fleet. We just need to relearn our lessons
    from the past. Would you agree with that?
        Ms. Oakley. I agree. The Navy knows what it's doing.
        Senator Sullivan. Admiral, let me ask you, it's a really
    big question and you're the perfect guy to answer it. So, you
    know, we have this great impeccable culture of excellence and
    safety record in our nuclear reactor program. The head of Navy
    nuclear reactors is an Admiral, starting with the legendary
    Hyman Rickover, who has an 8-year billet. You think that's part
    of the reason Navy nuclear reactors has been so successful?
        Admiral Downey. Certainly, is part of it. Continuity is
    important in these complex projects.
        Senator Sullivan. So, I had a provision last year in the
    NDAA that said, your job, NAVSEA, which oversees all the
    shipbuilding from design to building, should have an 8-year
    billet. A little radical, but I took the example from the Navy
    nuclear reactors. How long is your billet right now?
        Admiral Downey. Three years.
        Senator Sullivan. Okay. Three years.
        Admiral Downey. Typically, it's a year or two extensions.
    You start with 3-year orders----
        Senator Sullivan. Oh, do they normally extend you?
        Admiral Downey. Oh, yes.
        Senator Sullivan. Okay. Well then that makes my amendment
    even smarter. Because I think you're a Vice Admiral, by the
    way. Is it always a Vice Admiral? NAVSEA?
        Admiral Downey. This job it's been a Vice Admiral since the
    seventies.
        Senator Sullivan. Okay. So, I think you're a great Vice
    Admiral, but when you're two, 3 years in, you're three, and
    this is nothing against you or all the other Vice Admirals,
    this is a really big job. You're probably like, I wonder if I
    can make admiral. So, you're looking around and you are kind of
    maybe not so focused. I'm not saying you; I'm just saying
    generically.
        So, the Senate in a debate, right in this room, good
    debate, I got Democrats, Republicans pushed back on me and by
    the end they were like, geez, Dan, this makes a lot of sense.
    Let's do 8 years, NAVSEA, like the Navy nuclear reactors head
    in the last 3 years. He's a full Admiral, four star and that
    way, and it's your last job, just like Navy nuclear reactors.
        Now we were told the Pentagon and the Navy hated my idea.
    When it went to conference, they stripped it out. So, there you
    go. In innovation that I think was pretty darn good, you're
    even telling me that normally it's 3 years, but they say, oh,
    you might be extended one or two if we need you. No, let's just
    say like Navy nukes that NAVSEA should start as a three star,
    get promoted to a four star, 8 years.
        So, you are responsible designing and building ships. Three
    years, I mean, how long does it take to build an Arleigh Burke
    guided missile destroyer, typically?
        Admiral Downey. About 5 years. Yes.
        Senator Sullivan. So, you can't even oversee the building
    of one ship, is that correct?
        Admiral Downey. Not from start to finish.
        Senator Sullivan. No, you can't. How about a frigate, how
    long normally?
        Admiral Downey. Well, frigates from the past, we're still
    working on that schedule now.
        Senator Sullivan. I know you are,
        Admiral Downey. But this started in 2022, and we're
    forecasting a 3-year delay, so 7 years. But it should be back
    to the 4-ish year point of view.
        Senator Sullivan. But even that's 4 years, right?
        Admiral Downey. Yes, sir.
        Senator Sullivan. Okay. So now I know you probably need to
    get permission from Big Navy to answer this question, but what
    do you think about the idea of having the NAVSEA, like the head
    of nuclear Navy nuclear reactors being an 8-year billet,
    oversee it, own it, and then you retire as a four-star Admiral
    when you're done. Just the way Admiral Rickover did, just
    pretty much everyone else did, with the exception, I think of
    Admiral Richardson who did such a good job, he was promoted
    Chief of Naval Operations (CNO), but that was unusual. What do
    you think of that idea? Especially, how many years are you into
    your current billet?
        Admiral Downey. Just over a year. January of 2024.
        Senator Sullivan. So, you think you'd be able to do a
    better job if you were looking at your current billet and say,
    I have seven more years to turn this machine around. Or right
    now, you're like, geez, I got two more years left. I'm
    wondering if I'm going to make four-star Admiral. I wonder if I
    should be looking around. What do you think is better for you?
        Admiral Downey. So, a couple technical nuances, there is no
    four star. I'm an engineering duty officer, so our last four
    star was Admiral Rickover.
        Senator Sullivan. We can make the NAVSEA Admiral in his
    final 3 years of an 8-year billet, a 4-star admiral.
        Admiral Downey. I understand, I'm not out looking for
    another one, not that I wouldn't love to stay.
        Senator Sullivan. None of this is--I'm using you as a
    generic example. None of this is directed at you. You're doing
    a great job.
        Admiral Downey. What I would offer is, my most complex jobs
    I've had have been more than 3 years. Not by initial design,
    but I had a certain destroyer program and I wasn't leaving even
    after selected for flag, until that ship was delivered.
        Senator Sullivan. Isn't that making my point? If NAVSEA
    typically gets extended beyond 3 years, which sounds like it
    does. Doesn't that make the point of what we're trying to do
    here? Because this Committee, in the U.S. Senate agreed with
    the amendment we passed, that amendment got stripped out in the
    house conference.
        Admiral Downey. Continuity is usually a good thing. Then
    you can do whatever you need to do to the person if they're not
    performing. Another nuance, it's a little complicated, just my
    personal comment, as you promote halfway through, who relieves
    you? There's a three-star reliever. So, it's a little--the long
    runs got to be thought of.
        Senator Sullivan. Don't we do that with navy nuclear
    reactors?
        Admiral Downey. No, that's four star relieves a four star.
        Senator Sullivan. Alright. We will figure that out. Anyone
    else have a view on that from our experts here? I'm way over my
    time, sorry.
        [Laughter.]
        Dr. Seidle. I'll answer it with a question. Any large
    corporation that has complex products, do they change out their
    leadership that quickly?
        Admiral Downey. There you go.
        Ms. Oakley. That's consistent with my knowledge.
        Senator Sullivan. Okay. Thank you, Mr. Chairman. I think
    I'm going to make another attack at this idea, and hopefully
    the Navy will agree with us and not fight to kill it, which
    they did successfully last year.
        Senator Scott. Thank you. Admiral Downey could a ship
    builder, let's go back to what Senator King was talking about.
    Could a ship builder act on recommendations from its workers
    such as standardizing the bolts or making other changes as
    Senator King suggested? Or would it take years to get the
    change qualified and approved by the Navy?
        Admiral Downey. Thank you for the question, sir. It depends
    upon what the change is, what the Senator was referring to, are
    Gemba walks, you're at the water for, I'm sure you're familiar.
    So, we have been on the surface maintenance side in the last 20
    months, we've doubled the on-time delivery. We have been doing
    Gemba walks for about the last 3 years, of what is holding
    things up, how do we go faster? Getting it into the larger
    complex system, it takes longer than that, and we've seen that.
        So, we've been really focused on additive manufacturing
    efforts. We've got about 15 different major projects going on
    and moving those parts as an example, from 900 to 9,000
    available. We need to move much quicker here. We are not moving
    quick enough.
        Senator Scott. You know what, I don't understand. I was
    never in this shipbuilding business. But I don't get why it
    would take that long to build a ship? I mean, you have all the
    parts and so why would it take, I mean, you can see maybe it'd
    take 2 years to build a ship, but 4 years, 5 years, 8 years. I
    mean, if you just start, think about it. If the way we do
    manufacturing in this country, it didn't seem like it would
    take that long, right?
        Admiral Downey. So that's an area we need to improve, we
    don't have all the material upfront. We buy it throughout. So,
    the Committee Congress has supported us significantly in the
    last few years of changing advanced procurement, from 2 years
    to 3 years. Half of our material in the last three to 4 years,
    5 years has taken half as long again too. So, we don't start
    with all that material there.
        Even if it's a follow-on multi-year, we need to affect that
    and make sure we're ready. We need better efforts in getting
    the jobs for the workers that the hours that are effective as
    we analyze them, it's not where it needs to be. They're back
    and forth to the work site.
        Senator Scott. But that's the responsibility of the company
    that bid on this contract.
        Admiral Downey. Yes, I'm not arguing, sir.
        Senator Scott. That's what's frustrating about this, is
    that's their job. Have we asked you that when you were in the
    auto business? Did they? No
        Admiral Downey. I agree with you.
        Senator Scott. How long does it take to build a cruise
    ship?
        Admiral Downey. It's closer to the couple of years.
        Senator Scott. Do you know?
        Ms. Oakley. Yes. We benchmarked and the longest commercial
    ship that we benchmarked took 52 months. The quickest Navy ship
    that we benchmarked was somewhere around 90. It was a complex
    commercial cruise ship.
        Senator Scott. Took 52 months
        Ms. Oakley. At most.
        Senator Scott. What was the, like the second one when like
    Royal Caribbean has all these oceans or whatever--well how much
    of the second one after they built that first one at that
    design?
        Ms. Oakley. I don't have that data, but it's never longer.
        Senator Scott. Golly. It just doesn't make sense. I mean,
    it doesn't make any sense to me why we're doing this. So, Dr.
    Seidle, why did the Navy use a firm fixed price contract for
    the design construction of the frigate? What was the rationale
    and do you think this was right?
        Dr. Seidle. I can't speak to the rationale of that, and
    honestly, Admiral Downey might have better sight picture on
    that. We certainly talk a lot about firm fixed price for lead
    ships is not what we typically want to do, right? That's not
    how we are typically trying to roll. So not sure about the
    decision back at that time. I can pull the thread on that or if
    Admiral Downey has additional insight. But it's not typical
    what we would do for a lead ship.
        Senator Scott. Go ahead.
        Admiral Downey. The Navy awarded a fixed price incentive
    fee with the ship builder for a first of class, and then the
    ship builder awarded a firm fixed price with their
    subcontractor. I don't know why we didn't say, why are you
    doing that? How is that risk balanced? But we also awarded a
    fixed price incentive fee for Tactical Auxiliary General Ocean
    Surveillance (T-AGOS), for example.
        So, you can trace this back several years ago, that there
    was more than two, there was three or four programs that we're
    starting first of class with and we're doing fixed price.
    Having been involved with this business a long time, generally
    that's not a risk balanced approach for first of class.
        Senator Scott. Ms. Oakley, so when you give them these
    ideas and then they don't do them, do they tell you you're
    crazy? Do they just ignore you? What do they do?
        [Laughter.]
        Ms. Oakley. Thankfully, I've never had anybody in the Navy
    tell me I'm crazy.
        Senator Scott. Do they just ignore you?
        Ms. Oakley. Yes, It's just a lack of action in a lot of
    different respects. I think also too the recommendations don't
    get elevated to the level that they need to be, to be able to
    be resolved. I'm glad to be able to work with Dr. Seidle you
    know, going forward on how we can get some of these
    recommendations implemented.
        Dr. Seidle. Okay. I'll, make a comment on that. We met last
    week to talk about this as well and spent some time together. I
    think in the past we typically are talking to each other via
    reports, which is not really the way to get after it. I think
    we can do a lot better job of working closely with her office
    and I mean that sincerely.
        Senator Scott. You know, going back to what Senator
    Sullivan said, the problem you have if you sit here, who's
    responsible? Nobody. Because we change people out all the time.
    So far, like can you say John was responsible or Sally was
    responsible for the frigate not being done on time?
        Admiral Downey. No.
        Senator Scott. In business you could.
        Admiral Downey. Yes sir. No. multiple folks involved in
    multiple turnovers over that period of time.
        Senator Scott. Has anybody been held accountable?
        Admiral Downey. Not from a termination perspective.
        Senator Scott. From a, didn't get promoted?
        Admiral Downey. Yes. I will share, I've terminated for
    cause, relief for cause, multiple folks. I terminated the Ford
    program manager when I was the PEO, I terminated the shipyard,
    Chief Executive Officer (CEO) and Executive Officer (XO) out in
    the far east this fall. Those aren't decisions that you ponder.
    It's not fun, but those are decisions that have to be reported
    to Congress and you got to move out on it. Overall, where that
    is appropriate, it has in the longer run a positive effect on
    the workforce and the product line.
        Senator Scott. Yes. You know, in business, no one wants to
    fire anybody, right? It's not your fun day, right? Boy today am
    excited. But if you don't, then nothing happens. I'm done.
        Senator Kaine. Senator Shaheen is on her way, so as soon as
    she comes in I'll depart. Tariffs on aluminum and steel, how
    might that affect the cost of these inputs into a supply chain
    where we're already seeing costs go up faster than the rate of
    inflation?
        Dr. Seidle. So, we're having those discussions. It's a
    little early from an assessment perspective. You know, probably
    about half of our aluminum and a third of our steel in 23 came
    from Canada. Clearly tariffs in those arenas could drive cost.
    But having said that, the steel plate and bar for our
    shipbuilding efforts, most of it is domestically sourced. But
    we are expecting impacts, but we don't have our hands around
    yet what those impacts are yet.
        Senator Kaine. Would it be hard or easy to go from, you
    know, 66 percent domestic to a hundred percent domestic, like
    that?
        Dr. Seidle. I don't have the----
        Senator Kaine. It'd be hard. Let me say one last thing and
    Senator Shaheen's about to arrive and I know I have a couple of
    questions. Just on the matching our reality to our budget, I'm
    very pro Australia, United Kingdom, United States (AUKUS). I
    think it's great. I think we need to have more alliances in the
    India Pacific. We need to deal with the China threat that the
    Chair discussed.
        But I am worried about this reality to budget and in
    particular, given that the Australian Parliament did something
    that I just shuttered to contemplate what it would be like if
    we tried to do this here. They had a debate and they voted to
    give the U.S. $3 billion for the United States workforce to
    help build subs for Australia.
        So, imagine we were having a debate on the floor of the
    Senate about we want to give the UK $3 billion to help us do
    something. It would be a very tough debate. They did it and
    they made the commitment and it demonstrates the concern that
    they have about China, obviously. But we have a lot at stake in
    trying once they have gone out on that political limb way out
    on the limb, we've got all lot at stake in trying to make sure
    we can meet the commitment.
        So, we need to meet our own needs for sure. But that's a
    huge commitment that they've made to us, and we need to
    reciprocate with that. I yield back, Mr. Chairman. Thank you.
        Senator Scott. Senator Shaheen, are you ready?
        Senator Shaheen. So, I think this is for Dr. Seidle. Am I
    pronouncing your name correctly?
        Dr. Seidle. You most certainly are, ma'am. Thanks.
        Senator Shaheen. Alright. As you know, at our Nation's four
    public shipyards, and actually Senator Kaine may have raised
    this concern, the maintenance and sustainment mission is
    critical. With that in mind, I wanted to ask about the future
    of the Single Integrated Operational Plan (SIOP) program, which
    is very important to the Portsmouth Naval Shipyard. I hear that
    the Navy's getting close to a decision on the infrastructure
    upgrades that are required for the Ford-class carrier program
    at the Puget Sound Shipyard. That this will be the largest
    construction project that the Navy's ever undertaken.
        While I understand that the Navy has said it will not
    impact other SIOP projects that are already underway, I want
    you to reassure me that that is in fact the case because there
    are a number of projects underway at the Portsmouth Naval
    Shipyard that will be affected if there are impacts on other
    yards that already have SIOP projects under construction.
        Dr. Seidle. Yes, thank you for that question, ma'am. The
    multi-mission dry dock obviously, in the infrastructure
    upgrades is an important effort that we are absolutely looking
    at, and intend to move forward with.
        I think it's fair to say no impacts to current SIOP
    projects that are ongoing right now. We have about 6.3 billion
    worth of projects across 51 different projects. It includes dry
    docks up at Portsmouth, two of those there. We got a dry dock
    at Norfolk; we got a dry dock going in at Pearl as well, and so
    those efforts are all ongoing. The Multi-Mission Dry-Dock
    (M2D2) is about 80 percent complete from a design perspective.
        Like I said, we don't expect impacts to current SIOP
    projects, but we will obviously prioritize funding and SIOP
    issues going forward. Some of that will play out in our
    decisionmaking and we'll continue to update via kind of our
    SIOP 5-year plan.
        I'm bullish on like SIOP is doing great things for the
    Navy, Mark Edelson and his team are really doing good work. Not
    only solving some of these infrastructure issues that we've had
    forever. Somebody was saying you know, our most recent built
    shipyard is in 1908. We don't often think about it that way.
        Senator Shaheen. New Hampshire goes back to 1800, so----
        Dr. Seidle. I know, right? So just great work ongoing
    there. Also, a lot of industrial equipment, you know, 500
    million and probably 237 pieces of equipment, I think is the
    number. So, we are committed to stay in the course on SIOP in
    perpetuity. So, we'll continue to keep you updated and apprised
    as we move forward.
        Senator Shaheen. So, as you're thinking about the
    commitment and Puget, what's the timetable? So, what should
    people who are watching this be considering as they're thinking
    about where the decision points are for what's going to happen?
        Dr. Seidle. Yes, ma'am. I'll take that question for the
    record and get back with you from a timing because I don't want
    to misspeak on that because I know it's an important piece of
    the equation. But we'll take that for the record and come back
    to you.
        Senator Shaheen. Okay, thank you.
        Admiral Downey. Ma'am, I can offer, being responsible for
    the shipyards. I have just had an update this morning on how
    it's going in Portsmouth on the dual docking capability, and
    overall going well. That project is well ahead of M2D2, but
    your senses are right. It's a large project, M2D2, Ford-class
    carrier docking capability and major electrical upgrades.
        As we go through these SIOP reviews and decisions, there's
    two constant themes of the reviews. How is it going to affect
    the work of the ships that are being processed through the
    yards? Then how is it going to affect the other projects?
        So, these are themes at the highest levels of the Navy as
    we go through, and we'll get the specific dates, but roughly
    M2D2 is, I'll use the phrase, a slow start around the 2028
    timeframe and 2030 kind of the large start. That's the rough
    timeframe and we'll come back and validate. A lot of that of
    course depends upon where we are in the budget process and what
    the national priorities are.
        Senator Shaheen. Will the fact that we're in a continuing
    resolution for the remainder of this year affect that?
        Admiral Downey. The continuing resolution approach will
    affect some of the maintenance decisions for some of our
    platforms, but not the construction projects that I'm aware of.
        Senator Scott. Okay.
        Senator Shaheen. Thank you, Mr. Chairman.
        Senator Scott. All right, thanks to the witness. Thanks for
    coming, thanks for your testimony. We're going to leave the
    record open for 3 days to take questions for the record.
        This concludes the meeting.
        [Whereupon, at 4:09 p.m., the Committee adjourned.]

        [Questions for the record with answers supplied follow:]

                Questions Submitted by Senator Tommy Tuberville
                         actions to avoid past failures
        1. Senator Tuberville. Dr. Seidle, the same Navy failed acquisition
    strategy used on the Constellation-class Frigate is also being used on
    Stalwart-class auxiliary general ocean surveillance ships (T-AGOS). We
    have a constantly changing ship design on a firm-fixed price contract
    for six ships. What specific actions are you taking with T-AGOS to
    avoid repeating past failures?
        Dr. Seidle. The Navy is applying lessons learned from the Frigate
    program and applying them to the Explorer-class ocean surveillance (T-
    AGOS) program. One such lesson learned is that the program will avoid
    over-progressing its metrics regarding design maturity. Additionally,
    the Navy has established an increased and continual onsite program and
    engineering presence at the shipbuilder and a critical subcontractor to
    address technical challenges. Contractually, the detailed design was
    split from the construction of the lead ship. The lead ship was awarded
    in May 2024, but to prevent challenges encountered with early
    construction, the shipbuilder is not authorized to begin construction
    until the Navy has completed all applicable design reviews and
    conducted a Production Readiness Review.

        2. Senator Tuberville. Vice Admiral Downey, the same Navy failed
    acquisition strategy used on the Constellation-class Frigate is also
    being used on T-AGOS. We have a constantly changing ship design on a
    firm-fixed price contract for six ships. How are you controlling the
    Navy's engineering authorities differently on T-AGOS to avoid constant
    changes?
        Vice Admiral Downey. To meet operational requirements, the
    Stalwart-class auxiliary general ocean surveillance (T-AGOS) 25 will be
    the largest and fastest Small Waterplane Area, Twin Hull (SWATH) Hull)
    ship designed and built in the United States. The Navy is working
    closely with the shipbuilder on the design and providing onsite
    engineering expertise and assistance to help design this unique ship.
        T-AGOS uses a different design strategy from the Frigate, with a
    heavy reliance on commercial technology and requirements. The Navy's
    technical authority on aauxiliary ships, such as T-AGOS, is more
    limited than on combatants such as the Frigate. Auxiliary ship
    technical authority largely relies on commercial regulatory bodies,
    such as the American Bureau of Shipping and industry standards groups,
    and the Institute of Electrical and Electronics Engineers. The Navy has
    technical authority over a select few key performance parameters
    identified in the capability development document (CDD), military-
    specific requirements, or higher technical risk areas of design.
        The T-AGOS requirements as defined by the CDD have remained stable,
    with no changes since November 2021. Contract specification changes to
    date have been mostly minor administrative changes, clarifications, or
    relief from requirements as requested by the shipbuilder.
                                   __________
                 Questions Submitted by Senator Mazie K. Hirono
                      first-of-class transition challenges
        3. Senator Hirono. Dr. Seidle, persistent difficulties in
    transitioning first-of-class ships from design to full-scale production
    is leading to unforeseen complications and setbacks. The Constellation-
    class frigate has been affected by this issue. What steps is the Navy
    taking to ensure better design maturity before starting construction on
    first-of-class vessels?
        Dr. Seidle. Along with production readiness, design maturity is
    certainly one of the key indicators of readiness to begin ship
    construction. The Navy is more aware of the consequences of beginning
    construction before achieving requisite design maturity levels. We
    appreciate this focus from Congress, on behalf of the taxpayers, and
    are redoubling our focus on achieving necessary levels of production
    readiness and design maturity prior to commencement of construction. We
    are focused on `World Class Shipbuilding and Design'--developing a
    pragmatic method for: measuring and communicating levels of design
    completion; performing meaningful production readiness reviews prior to
    commencement of construction; and increasing focus and engagement by
    senior Navy leaders in these efforts.

        4. Senator Hirono. Vice Admiral Downey, how is the Navy
    implementing lessons learned from previous first-of-class delays to
    avoid repeating the same mistakes in future shipbuilding programs?
        Vice Admiral Downey. The Navy is actively incorporating lessons
    learned from first-of-class shipbuilding delays by emphasizing
    requirements stability, design maturity, robust prototyping and
    testing, and improved integration of new technologies before
    construction begins. Programs are adopting a ``design-then-build''
    approach, which prioritizes mature designs and systems engineering to
    minimize costly rework and schedule slips. Additionally, the Navy is
    enhancing collaboration with industry through integrated product teams,
    leveraging technology to improve the design process, and using digital
    tools to identify and manage risk earlier in the process. These steps
    aim to improve cost control, schedule adherence, and overall program
    execution on follow-on ships.
                          constellation-class frigate
        5. Senator Hirono. Dr. Seidle, Vice Admiral Downey, and Ms. Oakley,
    the Constellation-class frigate program is intended to provide
    increased lethality, survivability, and affordability in an era of
    great power competition. However, the Secretary of the Navy's (SECNAV)
    shipbuilding review highlighted challenges with design maturity, first-
    of-class production delays, and cost overruns. These issues raise
    concerns about whether the program will meet its delivery timelines and
    intended operational effectiveness. The Constellation-class frigate is
    based on a parent design, yet the program has encountered unexpected
    design integration challenges. What are the primary factors
    contributing to these difficulties?
        Dr. Seidle and Vice Admiral Downey. The difficulties are driven
    primarily by two challenges: one, adapting the parent design to U.S.
    Navy survivability and lethality standards; and two, workforce
    challenges consistent with industry-wide trends. This includes
    difficulties in hiring and retaining white collar workers, which
    includes design engineers, thereby impacting design completion and
    production schedule. The Constellation-class Frigate is projected to
    meet all operational requirements, including those for lethality and
    survivability, and to reach full operational effectiveness.
        Ms. Oakley. The Navy sought to build the Constellation-class
    frigate based on the Bergamini-class European Multi-Mission Frigate.
    This approach sought to leverage the approach that leading shipbuilders
    take of using existing ship designs to speed design maturity and reduce
    technical risk when building new ships. However, as the Navy and its
    shipbuilder embarked on Constellation-class design development, their
    implementation of this leading practice was quickly sidelined by
    differing interpretations of Navy technical standards established in
    the contract--including the time-consuming process for implementing
    those standards, use of flawed design completion metrics, and decisions
    to begin lead ship construction prior to attaining a stable design.
        First, the Navy underestimated the technical complexity of adapting
    a foreign design to meet Navy requirements. This underestimation caused
    the Navy to substantially modify the frigate design from the parent
    design that was selected during the 16-month conceptual design phase.
    As a result, the Navy and shipbuilder continue to grapple with
    implementing the technical standards set in the contract, which has
    delayed the program at least 3 years from initial estimates. The
    frigate now bears little resemblance to the parent design that the Navy
    touted as a built-in, risk reduction measure for the program in 2020.
        Second, as we reported in May 2024, the Navy used metrics for
    measuring design progress that obscured its visibility into the actual
    basic and functional design progress. \1\ We recommended that the Navy
    restructure its functional design review practices to better reflect
    actual design progress completed, which the Navy has since implemented.
    This has resulted in the Navy reporting the basic and functional design
    was just 70 percent complete, as of December 2024, over 2 years after
    the Navy certified the design was 88 percent complete and authorized
    lead ship construction start.
    ---------------------------------------------------------------------------
        \1\ Basic and function design include the following tasks:
    designing the ship steel structure and setting hydrodynamics; designing
    safety systems; routing all major distributive systems throughout the
    ship; gathering information on position of piping, ventilation,
    equipment, and other outfitting in each block; and 3D modeling the ship
    structure and major systems; among other details.
    ---------------------------------------------------------------------------
        Last, the Navy approved the shipbuilder to begin construction with
    a largely unstable design, including incomplete design knowledge of
    structural, piping, and other critical components. The Navy's approach
    is inconsistent with leading ship design practices, which calls for
    functional design to be complete before beginning construction. As a
    result, the lead ship is now delayed 3 years, and construction has
    effectively stalled as the Navy and its shipbuilder continue to
    negotiate crucial technical requirements associated with the ship
    design. A silver lining to the current situation is the Navy limited
    its financial liability by using a fixed-price incentive contract,
    which limits its cost risk to the combined total of ceiling prices for
    the six frigates currently under contract.

        6. Senator Hirono. Dr. Seidle, Vice Admiral Downey, and Ms. Oakley,
    has the Navy fully assessed the lessons learned from previous first-of-
    class shipbuilding programs, such as the Littoral Combat Ship (LCS) and
    Zumwalt-class destroyers, to avoid similar cost and schedule overruns?
        Dr. Seidle and Vice Admiral Downey. The Navy, in partnership with
    our shipbuilders, have assessed the performance of recent programs to
    improve shipbuilding on current and future shipbuilding programs.
    Examples of improvement efforts include the early engagement of
    shipbuilders on our Future Destroyer (DDG(X)) Program to ensure the
    ship is designed for producibility. In addition to this, the Navy and
    our partners are working to determine the best timing for authorization
    of lead DDG(X) ships in order to bring DDG(X) construction online at a
    time that coincides with ceasing production of DDG 51 Class ships,
    thereby mitigating a gap in construction activity at those shipyards.
    Further, as a lesson learned from the LCS Program, the Navy and
    Fincantieri have partnered in certain facility improvements to improve
    construction efficiency for the FFG Program. Finally, expansion and
    diversification of the vendor base has proven a valuable lesson as we
    seek to strengthen the supply chain, improving resiliency.
        Ms. Oakley. The Navy has testified numerous times that it learned
    its lessons from prior programs, including the Littoral Combat Ship
    (LCS) and Zumwalt-class Destroyer (DDG 1000) programs. However, the
    Navy's recent performance on the Constellation-class Frigate and Medium
    Landing Ship programs are too similar to its prior performance in the
    LCS and DDG 1000 programs to presume that the Navy has learned the
    lessons from its prior shipbuilding efforts and has implemented
    corrective fixes. For example, both programs' performance to date
    reflect that decisions were made based on a weak business case--the
    balance of technologies, design knowledge, funding, and time needed to
    deliver a product. These programs have experienced significant schedule
    delays and cost increases during the early stages of program
    development or production resulting from several factors, including a
    weak business case.

        7. Senator Hirono. Dr. Seidle, Vice Admiral Downey, and Ms. Oakley,
    given that modifying an existing parent design has proven more
    difficult than expected, would the Navy have been better off pursuing a
    clean-sheet design instead?
        Dr. Seidle and Vice Admiral Downey. Modifying a parent ship design
    to meet US Navy survivability and lethality requirements comes with
    challenges. There is, therefore, some benefit in starting out with a
    clean-sheet design. One benefit is that the Navy can land on a design
    that is in accordance with requirements without the need for
    modifications, which could have a cascading effect throughout the
    system of systems. That said, clean-sheet design comes with challenges
    that make it cost or schedule prohibitive in some instances. Knowing
    this, the acquisition strategy supported the concept of adapting a
    parent design for the benefits of cost and schedule expedience. An
    important lesson learned is that the Navy and its shipbuilding partners
    must work together in open and transparent fashion in order to
    facilitate an acceptable design as efficiently as possible. It is
    through communications, relationships, and pragmatic decisionmaking
    that we have seen the recent progress in FFG design efforts.
        Ms. Oakley. While the Navy has faced challenges modifying an
    existing design to meet Navy requirements, it is difficult to ascertain
    whether pursuing a clean-sheet design would have yielded better program
    performance. Reliance on a parent design--and the finite scope of
    tailoring that it afforded--helped the Navy constrain its appetite for
    the new technologies that the frigate could introduce to the fleet.
    While the Navy's execution of the parent design approach may have been
    flawed in this case, in pursuing a clean-sheet design, the Navy could
    have made similar high-risk acquisition decisions based on a weak
    business case, as evidenced by prior ship designs that started with
    clean sheets. Instead, it is important to understand the missteps the
    Navy took once it selected the parent design for the new frigate. For
    example, our May 2024 report on the Navy's frigate program highlighted
    that the Navy significantly modified the parent design after it had
    awarded a detail, design and construction contract, which undercut its
    approach to leverage an existing design to minimize technical risk.
    This approach contrasts with how commercial shipbuilders design and
    build ships. Commercial shipbuilders isolate changes when building a
    new ship design to maximize the value of using an existing design as
    their foundation for new ship designs. This approach helps preserve
    design maturity and reduces total work required for new ship designs.

        8. Senator Hirono. Dr. Seidle, Vice Admiral Downey, and Ms. Oakley,
    the lead ship, FFG-62, was originally scheduled for delivery in 2026,
    but delays suggest it may not enter service on time. What are the
    current projected delivery dates for the lead ship and follow-on hulls?
        Dr. Seidle and Vice Admiral Downey. Projected delivery dates for
    the awarded Constellation-class Frigates are as follows:

        USS Constellation (FFG 62) - April 2029

        USS Congress (FFG 63) - January 2030

        USS Chesapeake (FFG 64) - January 2031

        USS LaFayette (FFG 65) - January 2032

        USS Hamilton (FFG 66) - January 2033

        USS Galvez (FFG 67) - September 2033

        Ms. Oakley. The Navy now projects to deliver the lead frigate in
    April 2029 and has yet to set delivery dates for follow-on ships.
    However, achieving this date relies on the Navy and shipbuilder
    stabilizing the design in the near term. The program office expects to
    achieve a stable basic and functional design by late spring 2025.
    However, the program has yet to achieve its planned rate of design
    progress to meet this goal. Last, the shipbuilder must ensure it has an
    adequate workforce to support planned production schedules once
    production ramps up in order to achieve planned delivery dates for the
    lead and follow-on ships.

        9. Senator Hirono. Dr. Seidle, Vice Admiral Downey, and Ms. Oakley,
    the original per-unit cost estimate for the Constellation-class was
    approximately $1 billion per hull, but the recent congressional
    Research Service (CRS) report and Navy assessments indicate potential
    cost growth. What are the updated cost projections for the lead ship
    and future frigates?
        Dr. Seidle and Vice Admiral Downey. The cost of each ship is
    constrained by the ceiling price of the contract, representing the
    Government's cost risk. The current constrained estimated cost of the
    lead ship (FFG 62), along with the Government-furnished combat system,
    is approximately $1.4 billion, compared to the Navy's original estimate
    of $1.2 billion. The current constrained estimated cost of the second
    ship (FFG 63) is approximately $1.1 billion.
        Ms. Oakley. Our current estimate, which is based on December 2023
    data, reflects a per-unit cost of $1.15 billion per hull. However,
    based on current contractor performance, estimated costs for delivering
    the lead frigate has risen above the contract ceiling price; $310
    million in cost growth across multiple ships on key government
    furnished equipment that was funded in 2023; and five requests for
    equitable adjustment under review between the Navy and shipbuilder, as
    of November 2024, it is likely that the Navy will exceed the original
    per-unit cost estimate. Any future cost increases will likely be
    reflected in Cost to Complete funding requests in future budget
    submissions. Further, the Navy is unlikely to accurately estimate new
    per-unit costs until it completes the lead ship design and stabilizes
    the ship's ongoing weight growth.
                       strategic approach to shipbuilding
        10. Senator Hirono. Ms. Oakley, the Government Acquisition Office
    (GAO) report titled ``Shipbuilding and Repair: Navy Needs a Strategic
    Approach for Private Sector Industrial Base Investments'' highlights
    the Navy's struggle to meet its shipbuilding goals due to limitations
    in the private sector industrial base. Specifically, challenges like
    inadequate infrastructure and workforce shortages continue to hinder
    progress. A long-term strategic approach is needed to address these
    gaps and improve effectiveness in shipbuilding and maintenance. What
    specific measures is the Navy taking to address the infrastructure
    limitations in the private sector industrial base and ensure it can
    meet current and future shipbuilding demands?
        Ms. Oakley. DOD has spent over $5.8 billion since fiscal year 2014
    on support for the shipbuilding industrial base, which includes funding
    for shipbuilder and supplier infrastructure investments. For example,
    this funding includes $1.83 billion in Navy contract incentives for
    private investment that shipbuilding companies earned between fiscal
    years 2014 and 2023. These incentives were primarily in Special Capital
    Expenditures and Construction Readiness Incentives, which are
    investment incentives that are typically used to encourage the
    shipbuilders to make corporate investments in infrastructure and
    facilities. Funds under these incentives are available to the
    shipbuilder only if it agrees to make a Navy-approved shipyard
    investment.
        The Navy plans to provide additional support to shipbuilder
    infrastructure in the coming years. In addition to at least $1.5
    billion in additional investment incentives already on contract that
    the shipbuilder could earn, the Navy's fiscal year 2025 budget request
    included $733 million for shipbuilder infrastructure as part of its
    submarine industrial base funding request. In addition, the proposed
    reconciliation bill could provide additional industrial base funding.
        In addition to funding shipbuilder infrastructure investments, the
    Navy has also supported investments in the supplier base. Since 2018,
    the Navy reported receiving more than $2.6 billion to invest in the
    submarine supplier base and help achieve Columbia-class construction
    goals. Some of this supplier funding has been used to purchase new
    equipment--like cranes--and improve supplier facilities, among other
    things. As of December 2023, the Columbia-class submarine program
    reported that 193 suppliers had received supplier development funding
    awards.
        DOD also provides funding that supports shipbuilding and supplier
    infrastructure, such as through Defense Production Act Title III
    funding.

        11. Senator Hirono. Dr. Seidle, how does the Navy plan to align its
    investments in the private shipbuilding sector with its long-term goals
    to increase fleet size and improve the readiness of its ships?
        Dr. Seidle. The Navy is continually assessing private sector
    capacity and capability with its forecasted requirements and ensuring
    alignment of investments and initiatives to support future shipbuilding
    and maintenance requirements. The Navy is leveraging its Maritime
    Industrial Base (MIB) Program, which is leading enterprise efforts to
    help restore America's shipbuilding capacity, executing significant
    Navy investment to strengthen and expand the shipbuilding industrial
    base required to meet a generational increase in demand for
    shipbuilding. The MIB Program's efforts are focused on six key areas:
    growing capability and capacity in the supply chain; modernizing
    shipbuilder infrastructure; expanding capacity of key suppliers to take
    on work traditionally executed by shipbuilders; developing the critical
    maritime manufacturing workforce; operationalizing advanced
    manufacturing technology; and improving government oversight.

        12. Senator Hirono. Dr. Seidle, what steps is the Department of
    Defense taking to evaluate and improve the effectiveness of its funding
    in supporting the industrial base, especially in terms of long-term
    sustainability and workforce development?
        Dr. Seidle. The Navy has implemented a data-driven and data-
    informed process to ensure our investments and initiatives are
    targeting the primary enablers of shipbuilding and ship sustainment
    schedules. As part of this process, we assess and track impacts of Navy
    industrial base investment at multiple levels across our key lines of
    effort: supplier development; shipbuilder infrastructure; strategic
    outsourcing; workforce development; and advanced manufacturing
    technology.
        At the individual project level, the Navy implements discrete,
    measurable return on investment metrics for each project with a
    mandated feedback loop to measure progress. At the aggregate level, we
    assess multiple individual projects with shared objectives. For
    example, we assess how numerous individual initiatives focused on
    workforce training and placement contribute to overall workforce
    objectives. Finally, at the portfolio level, we assess projects and
    aggregate-level impacts relative to production schedule drivers, such
    as on-time and in-full delivery of submarine components.
        The Navy's data-based assessment and decisionmaking process for
    industrial base investment enables a standard approach to assessing
    impact and identifying challenges and opportunities, improving
    coordination, and integrating perspectives among a range of
    stakeholders. This approach enables us to assess performance against
    current shipbuilding demand, in addition to projected future demand as
    the industrial base scales to meet that growing demand, to ensure we
    are working to achieve gains that are sustainable. Collectively, these
    efforts support flexible decisionmaking to meet a dynamic supply chain
    environment.
                 future fleet design and acquisition strategies
        13. Senator Hirono. Dr. Seidle, the Navy's current fleet
    acquisition strategy is not optimized for long-term efficiency, and
    alternative approaches, such as modular construction, increased
    automation, and different fleet compositions, could help address cost
    and schedule risks. What alternative shipbuilding strategies is the
    Navy exploring to improve efficiency, such as modular construction or
    changes to fleet composition?
        Dr. Seidle. The Navy is working with other agencies across the
    Government to review shipbuilding strategies as a whole, as part of the
    efforts associated with the recent Executive Order, ``Restoring
    America's Maritime Dominance.'' These efforts are ongoing, and we look
    forward to opportunities to improve our shipbuilding program
    performance.
        Additionally, the Navy is continuing to support shipbuilder efforts
    to pursue strategic outsourcing by shifting some workload to other
    shipbuilders and key suppliers to enable long-term sustainable growth
    in capacity. This approach supports delivery of the ships and
    submarines we must have, while leveraging existing capacity throughout
    the country. These efforts include the innovative partnership with
    private capital and industry to create the United Submarine Alliance
    Fund and its subsequent purchase of shipbuilding industry land in
    Mobile, Alabama.

        14. Senator Hirono. Dr. Seidle, how is the Navy incorporating new
    technologies and best practices to reduce shipbuilding time and cost
    while maintaining capabilities?
        Dr. Seidle. To remain competitive and ensure our Nation has the
    capacity to build ships at scale, our industrial base must quickly
    adopt advanced manufacturing technologies such as automation, robotics,
    additive manufacturing, artificial intelligence, and generative
    scheduling to maximize productivity and efficiency.
        Driving advanced manufacturing at scale into the supply base and
    operationalizing technologies like additive manufacturing (AM) as an
    interchangeable manufacturing process are critical focus areas for the
    Navy to reduce maintenance delays and new construction schedules,
    alleviate chokepoints in key marketspaces, and help mitigate the demand
    for manufacturing workforce.
        The Navy's investments in advanced technology, such as the AM
    Center of Excellence (CoE), are already helping get our ships back to
    sea, with more than 15 examples where the AM CoE has printed parts for
    ships and submarines in response to emergent needs. For example, the AM
    CoE printed a replacement for a damaged helicopter hanger door bracket
    for USS Halsey (DDG 97) in just 19 days, while acquiring the part via
    the stock system would take 40 weeks.
        Similarly, the Navy is investing in efforts to implement and scale
    advanced technologies like robotics, automation, artificial
    intelligence, and machine learning to streamline production workflows,
    improve efficiency, and support the next generation workforce.
                      addressing navy cost estimation gaps
        15. Senator Hirono. Ms. Oakley, persistent underestimation of
    shipbuilding costs often leads to major budget overruns once
    construction begins. These miscalculations have impacted multiple
    programs over the past decade. How is the Navy working to improve its
    cost estimation process to provide more accurate projections for
    Congress?
        Ms. Oakley. We have not been requested to conduct the work
    necessary to answer this question. However, our work has highlighted
    the importance of the Navy addressing this challenge to be able to
    realistically achieve the fleet growth that it wants. We have found
    that the Navy historically sets extensive and detailed requirements for
    new vessels many years before these vessels are fielded. It locks in
    major commitments to construct ships before design stability is
    achieved. These actions have led to unrealistic cost and schedule
    expectations. In turn, these unmet expectations disturb the Navy's
    funding plans, driving the department to redirect resources intended to
    pay for other needs and resulting in unfunded capabilities.

        16. Senator Hirono. Ms. Oakley, is the Navy considering independent
    cost assessments for major programs to ensure greater transparency and
    accountability?
        Ms. Oakley. The Navy used to have its own independent cost
    assessment office. However, this group was disbanded over 5 years ago.
    Navy program offices use a centralized resource to conduct cost
    estimates, but they use assumptions as approved by the program office.
    To the best of our knowledge, the Navy is not considering reinstating
    this office.
        We have consistently found that the Navy's cost estimates are
    optimistic. Navy practices for estimating costs and for contracting and
    budgeting for ships have resulted in unrealistic funding of programs
    and when unexpected events occur, tracking mechanisms are slow to pick
    them up. Tools exist to manage the challenges inherent in shipbuilding,
    including measuring the probability of cost growth when estimating
    costs; making full use of design knowledge to inform realistic cost,
    schedule, and performance attributes; and tracking and providing timely
    reporting on program costs to alert managers to potential problems.
    However, we have repeatedly found for 20 years that the Navy does not
    effectively employ tools to mitigate cost risk.
        For example, in 2019 we found that the Navy's $115 billion
    procurement cost estimate for the Columbia Class program is not
    reliable partly because it is based on overly optimistic assumptions
    about the labor hours needed to construct the submarines. While the
    Navy analyzed cost risks, it did not include margin in its estimate for
    likely cost overruns. The Navy told us it would continue to update its
    lead submarine cost estimate. As we reported in 2019, an independent
    assessment of the estimate would not be complete in time to inform the
    Navy's 2021 budget request to Congress to purchase the lead submarine.
    Without these reviews, we determined the cost estimate--and,
    consequently, the budget--were likely unrealistic. A reliable cost
    estimate is especially important for a program of this size and
    complexity to help ensure that its budget is sufficient to execute the
    program as planned.
                         addressing workforce shortages
        17. Senator Hirono. Vice Admiral Downey, several reports highlight
    significant workforce shortages across the U.S. shipbuilding industrial
    base, particularly in skilled labor necessary for both new ship
    construction and maintenance of existing fleets. Without addressing
    this issue, we risk continued delays and increased costs in delivering
    much-needed vessels. What specific actions is the Navy taking to
    recruit, train, and retain a skilled workforce to support shipbuilding
    and maintenance efforts?
        Vice Admiral Downey. Encouraging young Americans to seek careers in
    the skilled trades requires the collective efforts of Federal, State,
    and local governments, as well as our industry partners. Next-
    generation workforce members must see a viable career path that is
    adequately compensated, has clear purpose, and provides opportunities
    to advance. We must fundamentally change how we view skilled trades--
    they must be seen as a critical component of our national security, and
    the Navy team is actively working to elevate those conversations at a
    national level through messaging and partnership.
        The Navy has made significant investment to attract, recruit,
    train, and retain the maritime industrial-base workforce. Our
    attraction and recruitment campaigns are raising awareness of career
    opportunities in the maritime sector, and inspiring the next-generation
    of ``new collar'' workers. Since September 2023, nearly 19 million
    people have visited Buildsubmarines.com, 2.8 million applications have
    been submitted via the career portal, and our K-12 engagement efforts
    have reached more than 25,000 students.
        The Navy's six regional talent pipeline programs have placed more
    than 6,700 workers in maritime industrial base careers, while
    partnering with small and medium suppliers to implement best practices
    to improve retention. In January 2025, the Accelerated Training in
    Defense Manufacturing (ATDM) program in Danville, Virginia, opened its
    National Training Center, which will graduate 1,000 students per year
    in key maritime trades like welding, additive manufacturing, advanced
    machining, quality assurance, and non-destructive testing.
        Navy funding is also supporting ``Quality of Life'' improvements at
    the shipyards, such as a new childcare facility at Bath Iron Works.
    What we know is that all these areas must be addressed--K-12, career
    and technical education/university, incumbent workforce, and the
    ecosystem improvements to ensure people want to stay.

        18. Senator Hirono. Vice Admiral Downey, how does the Navy plan to
    work with Congress, industry, and educational institutions to develop a
    pipeline of trained workers, particularly in critical fields like
    welding and engineering?
        Vice Admiral Downey. The Navy has made significant investment to
    attract, recruit, train, and retain the maritime industrial-base
    workforce. We have partnered with government and private organizations
    across key regions in an ``all hands on deck'' effort, launching more
    than 150 workforce-development initiatives since fiscal year (FY) 2023.
        The Navy has established six regional Talent Pipeline
    Programstalent pipelines, which forge connections between small and
    medium suppliers, trade schools and training programs, and workforce
    candidates, to meet the hiring demand for the maritime industrial base.
    The pipelines have placed more than 6,700 trade workers in the maritime
    sector and partnered with nearly 400 suppliers. In January 2025, the
    ATDM program in Danville, Virginia, opened its National Training
    Center, which will graduate 1,000 students per year in key maritime
    trades like welding, additive manufacturing, advanced machining,
    quality assurance, and non-destructive testing. The Navy is also
    partnering with universities across the country to support demand for
    engineering workforce.
        With the Navy's investments and strong participation from partners
    across the country, the submarine industrial base hired 12,600 new
    workers in 2024, nearly a 200-percent increase since 2021 and
    approaching the 14,500 annual demand for submarine construction.
                   managing cost overruns and schedule delays
        19. Senator Hirono. Dr. Seidle, inflation, design maturity
    challenges, and contracting inefficiencies have led to cost overruns
    and schedule delays across key Navy programs, including the
    Constellation-class frigate. These delays directly impact our fleet
    readiness and long-term force structure planning. What lessons has the
    Navy learned from past programs to improve cost estimation and avoid
    the recurring issue of unrealistic procurement estimates?
        Dr. Seidle. The Navy's cost estimation methods involve models that
    are ever evolving as more is learned. Variables within the model
    include shipbuilder past performance, lessons learned, inflation, and
    ship requirements such as size and complexity. Some factors that may
    have significant impact to ship cost are difficult to predict, such as
    a natural disaster, pandemic, or certain macroeconomic events. The Navy
    continues to refine cost estimating models and methods and perform
    uncertainty analysis to better predict, or account for, the uncertain
    cost drivers, continually improving cost estimates.

        20. Senator Hirono. Dr. Seidle, how does the Navy plan to increase
    accountability within shipbuilding contracts to ensure on-time and on-
    budget deliveries?
        Dr. Seidle. The Navy fully agrees with the need to be responsible
    stewards of the taxpayer's money as we ensure we build the Navy we
    need. This is critical to fielding our fleet. I am aware of the acute
    focus by both the Secretary of Defense and the Secretary of the Navy on
    the acquisition process and, specifically, holding both ourselves and
    our industry partners accountable to the American people in equipping
    our Navy to perform its mission set.
        To ensure we can hold private companies accountable for failure to
    perform, we must commit to establishing clear requirements and
    minimizing post award requirements changes. After contract award, we
    must continue to utilize all available mechanisms at our disposal such
    as critical, but honest feedback in the Contractor Performance
    Assessment Reporting System (CPARS), awarding follow-on contracts and
    exercising options only when the Government has sufficient confidence
    in contractor performance, withholding of financing when appropriate,
    and, if necessary, termination of the contract to ensure we are holding
    the industrial base accountable for timely and affordable delivery of
    goods and services.
                 strengthening the shipbuilding industrial base
        21. Senator Hirono. Dr. Seidle, the shipbuilding industrial base is
    struggling with capacity constraints. Strengthening the industrial base
    is essential to meeting national security objectives. What targeted
    investments does the Navy plan to make to expand the capacity of both
    private and public shipyards?
        Dr. Seidle. Since 2018, more than $10 billion has been appropriated
    to address submarine industrial base capability, capacity, and
    workforce with an additional $1.3 billion appropriated to support
    surface ship industrial base efforts. The Navy Maritime Industrial Base
    (MIB) Program Office is leading enterprise wide efforts to help restore
    America's shipbuilding capacity in a strategy focused on six key lines
    of effort: growing capability and capacity in the supply chain,
    modernizing shipbuilder infrastructure, expanding capacity of key
    suppliers to take on work traditionally executed by shipbuilders,
    developing the critical maritime manufacturing workforce,
    operationalizing advanced manufacturing technology, and improving
    government oversight.
        Navy investments have helped to grow submarine industrial base
    capacity by 250 percent, with investments underway expected to add an
    additional 40 percent. We are making targeted investments to address
    chokepoints in the supply chain, with more than $1 billion invested to
    date to improve on-time delivery of components that are build sequence-
    critical for nuclear shipbuilding programs. Navy investments are also
    helping improve capacity and modernize infrastructure of new-
    construction private shipyards, as well as address supply chain
    capacity constraints by leveraging advanced manufacturing technology.
        At our public shipyards, the Navy is currently investing in the
    Shipyard Infrastructure Optimization Program (SIOP) to provide the
    modernized facilities needed to maintain the current and future fleet.
    SIOP is delivering infrastructure and industrial plant equipment,
    expanding shipyard capacity, and optimizing shipyard configuration to
    meet the Navy's nuclear-powered aircraft carrier and submarine
    maintenance requirements and return these critical platforms to sea
    faster.

        22. Senator Hirono. Dr. Seidle, how is the Navy leveraging
    partnerships with allied shipbuilders and best practices from foreign
    shipbuilding industries to improve efficiency and productivity in U.S.
    shipyards?
        Dr. Seidle. The Navy is closely engaged with our allies to
    understand their approaches to shipbuilding and how we can leverage
    best practices to improve efficiency and productivity. For example, the
    Navy is working to identify opportunities to leverage some of the
    approaches that Japan and South Korea use in their shipbuilding sector,
    such as standardized ship design, modular production techniques,
    advanced manufacturing technology, and strong public-private
    partnerships.
        Additionally, opportunities for targeted strategic foreign
    investment into the domestic shipbuilding industrial base offers
    opportunities for leveraging successful practices, lessons learned, and
    technological advances that could positively impact Government
    shipbuilding program outcomes and help to rebuild the domestic
    commercial shipbuilding industrial base. Any investments are carefully
    reviewed and well understood in advance of approval given the strategic
    importance of the domestic shipbuilding industrial base.
        The Navy continues to review opportunities to strategically partner
    further with its allies and partners to improve shipbuilding outcomes,
    meet Navy battle force requirements, and identify opportunities to
    redefine the Nation's approach to military shipbuilding.
                supply chain disruptions and material shortages
        23. Senator Hirono. Vice Admiral Downey, former SECNAV Del Toro's
    review and CRS report on shipbuilding highlight supply chain
    vulnerabilities, particularly in securing key components like
    propulsion systems and combat systems. These disruptions are further
    exacerbating shipbuilding delays and increasing costs. What actions is
    the Navy taking to stabilize the shipbuilding supply chain and ensure
    timely access to critical materials?
        Vice Admiral Downey. The Navy is focused on improving the
    capability, capacity, and resiliency of our supply chain. Since fiscal
    year 2018, the Navy has funded over 725 supplier development projects
    to add capability, capacity, and resiliency to the supply chain,
    including development of alternate suppliers for critical submarine
    components. This includes investments with more than 50 single/sole-
    source suppliers to address supply chain fragility, including
    establishing and qualifying alternate sources of supply in key areas
    like castings, raw materials, valves and fittings, and mechanical
    components. In addition, the Navy has invested $1 billion to date to
    improve on-time delivery of components that are build sequence-critical
    for nuclear shipbuilding programs.
        The Navy is also addressing supply chain vulnerability by
    leveraging advanced manufacturing technology such as automation,
    robotics, additive manufacturing (AM), artificial intelligence, and
    generative scheduling. Driving advanced manufacturing at scale into the
    supply base and operationalizing technologies like AM as an
    interchangeable manufacturing process is a critical focus area for the
    Navy to reduce maintenance delays and new construction schedules,
    alleviate chokepoints in key market spaces such as castings and
    forgings, and help mitigate the demand for manufacturing workforce.

        24. Senator Hirono. Vice Admiral Downey, what can be done to help
    mitigate supply chain risks and improve resiliency in ship component
    production?
        Vice Admiral Downey. The Navy is focused on improving the
    capability, capacity, and resiliency of our supply chain. Since fiscal
    year 2018, the Navy has funded over 725 supplier development projects
    to add capability, capacity, and resiliency to the supply chain,
    including development of alternate suppliers for critical submarine
    components. This includes investments with more than 50 single/sole-
    source suppliers to address supply chain fragility, including
    establishing and qualifying alternate sources of supply in key areas
    like castings, raw materials, valves and fittings, and mechanical
    components. In addition, the Navy has invested $1 billion to date to
    improve on-time delivery of components that are build sequence-critical
    for nuclear shipbuilding programs.
        The Navy is also addressing supply chain vulnerability by
    leveraging advanced manufacturing technology such as automation,
    robotics, additive manufacturing (AM), artificial intelligence, and
    generative scheduling. Driving advanced manufacturing at scale into the
    supply base and operationalizing technologies like AM as an
    interchangeable manufacturing process is a critical focus area for the
    Navy to reduce maintenance delays and new construction schedules,
    alleviate chokepoints in key market spaces such as castings and
    forgings, and help mitigate the demand for manufacturing workforce.
                      multiyear procurement and block buys
        25. Senator Hirono. Dr. Seidle, multiyear procurement (MYP) and
    block-buy contracting could help stabilize shipbuilding programs, lower
    costs, and provide greater predictability for the industrial base. What
    programs are currently being considered for MYP or block-buy
    contracting, and what are the expected cost savings from these
    approaches?
        Dr. Seidle. The Navy actively utilizes MYP and block-buy
    contracting strategies to enhance program stability, reduce costs, and
    provide greater predictability for both the industrial base and the
    workforce. These strategies also support the retention of a skilled
    workforce and ensure necessary investments in the supply chain by
    providing a longer-term planning horizon.
        Currently, the following shipbuilding programs are either utilizing
    or are being considered for MYP or block-buy contracting strategies:
    Virginia-class submarines, Columbia-class submarines, DDG-51 Arleigh
    Burke-class destroyers, John Lewis-class (TAO-205) fleet replenishment
    oilers, Amphibious Multi-Ship Procurement (one America-class amphibious
    assault ship (LHA) and three San Antonio-class amphibious transport
    dock (LPD) ships).
        In addition to shipbuilding, the Navy also applies MYP and block-
    buy contracting strategies to aviation and other programs, including
    the CH-53K heavy lift helicopter and various munition programs. MYP and
    block buys remain instrumental to meeting force structure goals
    affordably while ensuring the readiness and timely delivery of critical
    platforms. The Navy appreciates continued congressional support for
    these authorities.

        26. Senator Hirono. Dr. Seidle, how can Congress better support
    these long-term procurement strategies to enhance fleet sustainment and
    shipbuilding efficiency?
        Dr. Seidle. Compared to the standard approach of annual
    contracting, multiyear procurement (MYP) and block buy contracting
    (BBC) have the potential for lowering procurement costs and providing
    higher level of stability for the industrial base. MYP and BBC are
    special contracting mechanisms that Congress permits the Department of
    Defense (DoD) to use for a limited number of defense acquisition
    programs. The Navy encourages Congress to continue to authorize the DOD
    to utilize these special contracting mechanisms. The firm prospect of
    future business results in cost reductions by allowing the contractor
    to optimize its workforce and production facilities and make economic
    ordering quantity purchases of long-lead components.
                          federal workforce reduction
        27. Senator Hirono. Ms. Oakley, the Department of Government
    Efficiency (DOGE) has initiated significant reductions in the Federal
    workforce. These cuts are poised to impact various Federal agencies,
    including those overseeing shipyards crucial to our national defense
    infrastructure. Notably, Pearl Harbor Naval Shipyard (PHNSY) serves as
    a cornerstone of Hawaii's defense infrastructure and economy. As the
    State's largest industrial employer, it provides substantial economic
    benefits to the region. Union leaders across several public shipyards
    have expressed concerns that these workforce reductions could severely
    hinder their shipyard's capacity to meet Navy project demands. How does
    the Navy anticipate that reductions in the Federal workforce,
    particularly within agencies overseeing shipyards, will affect national
    security and the timely execution of defense projects?
        Ms. Oakley. We have reported extensively on defense maintenance
    taking months or years longer than expected, in part, due to shortages
    in skilled personnel. For example:

          In August 2020, we reported that workforce factors, such
    as having enough people to perform the work, was one of the main
    factors causing maintenance delays for aircraft carriers and
    submarines. The workforce factor contributed to more than 4,000 days of
    maintenance delay on aircraft carriers and submarines during fiscal
    years 2015 through 2019. In response to our recommendations, the Navy
    has taken action to update workforce planning requirements.

          In December 2018, we reported that, because it takes 5
    years or more to become proficient in some occupations, DOD must
    systematically plan and prepare to hire, train and retain the workforce
    it needs to support its vital maintenance and repair mission. When this
    does not happen, maintenance for weapons systems could be delayed by
    shortages in skilled personnel. For example, at Pearl Harbor Naval
    Shipyard, two submarines were delayed approximately 23 and 20 months
    past their scheduled maintenance dates, in part, as a result of
    shortages in ship fitters and welders, among others. We recommended
    that the Navy assess the effectiveness of the Navy's shipyards' and
    fleet readiness centers' hiring, training, and retention programs,
    which the Navy implemented.

          In November 2018, we reported that the Navy had started
    to address workforce shortages and facilities needs at the public
    shipyards. These efforts to address the Navy's maintenance challenges
    are important steps, but they will require several years of sustained
    management attention to reach fruition. The number of civilian full-
    time employees at the shipyards increased from 25,087 in 2007 to 34,160
    in 2017, with a goal to reach 36,100 by 2020.

        To meet requirements for maintaining its ships in the fleet, the
    Navy is undertaking an effort to re-capitalize its public shipyards. We
    have ongoing work related to the Navy's Shipyard Infrastructure
    Optimization Program (SIOP) at the four public Naval shipyards. This
    will address, among other things, the extent to which Navy oversight of
    SIOP includes processes for identifying, mitigating, and communicating
    program risks--including workforce challenges--to inform
    decisionmaking. We expect to issue a report early in 2026.

        28. Senator Hirono. Ms. Oakley, while certain shipyard employees
    have been exempted from hiring freezes, what criteria are used to
    determine these exemptions, and how does the Navy plan to ensure that
    essential positions remain filled to support shipyard operations?
        Ms. Oakley. We have not been requested to conduct the work
    necessary to answer this question. While we are aware of the current
    hiring freeze, we do not have information regarding the Navy's plans
    for staffing positions. However, we are aware that in a February 28,
    2025, the Secretary of Defense exempted public shipyard employees from
    the hiring freeze. The memo further stated that DOD will only hire
    mission-essential employees into positions that directly contribute to
    warfighting readiness.
                                amphibious ships
        29. Senator Hirono. Vice Admiral Downey, amphibious warships, such
    as the San Antonio-class (LPD), America-class (LHA), and older Whidbey
    Island/Harpers Ferry-class (LSD) vessels, are critical for Marine Corps
    expeditionary operations, humanitarian missions, and power projection.
    What are the primary challenges facing the construction of new
    amphibious ships, such as the LPD Flight II and LHA-class vessels?
        Vice Admiral Downey. The primary challenges facing construction of
    new amphibious ships at Huntington Ingalls Industries are a downward
    shift of average labor experience (i.e. increased ``green labor'') and
    challenges in hiring-and-retention to meet manning level targets. The
    single source nature of amphibious ships to one shipyard in one
    geographical location increase the difficulty in mitigating these
    challenges.

        30. Senator Hirono. Vice Admiral Downey, how does the Navy plan to
    address shipyard capacity limitations and supply chain shortages that
    are delaying amphibious ship production?
        Vice Admiral Downey. The Navy is continually assessing private
    sector capacity and capability with its forecast requirements and
    ensuring alignment of investments and initiatives to support future
    shipbuilding and maintenance requirements. The Navy is also supporting
    shipbuilder pursuit of strategic outsourcing by shifting some workload
    to other shipbuilders, including small shipyards and key suppliers,
    leveraging existing capacity throughout the country to enable long-term
    sustainable growth in capacity to deliver the ships and submarines the
    Navy requires. The Navy and Gulf Coast shipbuilders are actively
    investing in workforce retention programs, including mentorship
    initiatives and enhanced training, to improve stability and reduce
    production delays. These efforts aim to create a more skilled and
    engaged workforce that will improve shipyard productivity and reduce
    delays. The Navy will continue to make critical investments to grow the
    capability, capacity and workforce of key suppliers around the country
    to enable shipbuilding.

        31. Senator Hirono. Vice Admiral Downey, given cost overruns and
    schedule delays across multiple shipbuilding programs, what measures is
    the Navy taking to control costs in the amphibious ship fleet?
        Vice Admiral Downey. The Navy has taken the following actions to
    control costs for amphibious ships: (1) using fixed-price incentive
    fees and firm-target contracts for ship construction, where the Navy
    and shipbuilder share the risk of cost overruns, (2) using common
    configuration baselines for sequential ship awards by minimizing change
    between flight upgrades, and (3) awarding a multi-ship (LPD 33-35 & LHA
    10) amphibious procurement contract to enable proven cost-avoidance
    tools, such as economic order of quantity, for component sourcing and
    stabilization of demand for our shipbuilder and industrial supply base.

        32. Senator Hirono. Vice Admiral Downey, how does the Navy's long-
    term shipbuilding plan align with the Marine Corps' requirements for
    amphibious warfare and littoral operations?
        Vice Admiral Downey. The Navy's long-term shipbuilding plan is
    aligned with the Marine Corps' requirements for amphibious warfare and
    littoral operations, focusing on enhancing mobility, flexibility and
    readiness in contested environments. Central to this alignment is the
    commitment to maintain a minimum of 31 amphibious warships--comprising
    of 10 Landing Helicopter Assaults and 21 Landing Platform Docks--as
    mandated by Congress, ensuring the Marine Corps has the necessary
    platforms for rapid deployment and sustained operations. Additionally,
    the Navy plans to procure Medium Landing ships to support the Marine
    Corps' vision for distributed operations and littoral maneuver,
    particularly in the Indo-Pacific theater. These efforts are
    complemented by multi-ship procurement strategies aimed at cost savings
    and industrial base stability, as well as initiatives to address
    maintenance backlogs and improve the material condition of the existing
    amphibious fleet, thereby enhancing overall operational readiness.
        To further strengthen our commitment, the Navy is placing
    significant emphasis on maintenance to ensure that the existing
    amphibious fleet remains fully capable of meeting the Marine Corps'
    requirements for rapid deployment and sustained operations. This
    includes addressing maintenance backlogs, modernizing older platforms,
    and improving the overall material condition of amphibious warships. By
    enhancing the fleet's readiness and extending the life of these vital
    assets, we are ensuring that the Navy and Marine Corps are well-
    equipped to operate in the challenging and dynamic environments of
    amphibious warfare and littoral operations.
                             china and shipbuilding
        33. Senator Hirono. Dr. Seidle, Vice Admiral Downey, and Ms.
    Oakley, in April 2024, The Office of the U.S. Trade Representative
    (USTR) initiated an investigation into efforts by China to dominate in
    the maritime, logistics, and shipbuilding sectors. Following its
    report, it determined in January 2025 that China's targeting of the
    maritime, logistics, and shipbuilding sectors for dominance displaces
    foreign firms, deprives market-oriented businesses and their workers of
    commercial opportunities, and lessens competition efforts thus creating
    a ``burden or restrict[ing]'' United States commerce, and are therefore
    ``actionable'' under Title III of the Trade Act, which is one of the
    principal statutory means by which the United States enforces U.S.
    rights under trade agreements and addresses ``unfair'' foreign barriers
    to U.S. exports. How does China's dominance in global shipbuilding
    impact the United States Navy's ability to maintain and expand its
    fleet?
        Dr. Seidle and Vice Admiral Downey. China's dominance in global
    shipbuilding, while not directly impacting the Navy's domestic
    shipbuilding and maintenance, presents potential risks to future
    expansion and competitiveness. At face value, China's cost and
    production advantages have no direct impacts on these companies'
    support to the Navy. However, China's massive production scale fuels
    rapid technological advancement, potentially surpassing United States
    capabilities in maritime areas. More critically, China's influence
    extends to crucial supply chains that provide raw materials and
    minerals required for sustainment and production of Navy capabilities.
    The domestic industrial base and the ability to rapidly procure
    critical components are undermined by Beijing's efforts to halt, delay,
    or degrade access to critical minerals. By addressing and discouraging
    predatory trade practices that threaten the long-term competitiveness
    of domestic maritime activities, the U.S. Trade Representative's report
    and potential actions under Title III of the Trade Act could indirectly
    contribute to a more robust U.S. maritime ecosystem.
        Ms. Oakley. We have not been requested to conduct the work
    necessary to answer this question.

        34. Senator Hirono. Dr. Seidle, Vice Admiral Downey, and Ms.
    Oakley, what vulnerabilities does the U.S. face due to its reliance on
    foreign-built commercial vessels for sealift and logistics support?
        Dr. Seidle and Vice Admiral Downey. The U.S. reliance on foreign-
    built commercial vessels is currently limited to the Ready Reserve
    Force (RRF) recapitalization program. Under the RRF recapitalization
    program, RRF sealift vessels are recapitalized through procurement of
    existing vessels in the commercial marketplace. The vessels procured to
    date under the RRF recapitalization program include seven foreign-built
    vessels, which were eligible for procurement due to lack of available
    U.S.-built vessels. Vulnerabilities associated with the procurement of
    existing vessels, whether foreign or U.S.-built, include:

          Availability of suitable replacements within allocated
    budgets

          Age and material condition of replacements

          Market price and availability fluctuation/instability

          Extent and cost of vessel reflagging, reclassification,
    and modifications necessary to achieve required capability

          Lifecycle maintenance and support challenges associated
    with foreign-sourced suppliers and logistics

          Procurement delays and impacts on RRF readiness
    associated with the above factors.

        Ms. Oakley. We have not been requested to do work to assess DOD's
    reliance on foreign-built commercial vessels for sealift and logistics
    support. However, in 2017, we previously reported that sealift and
    combat logistics fleet readiness decreased since 2012--including
    incidents of degraded or out-of-service equipment had increased over a
    5-year period. At the time, the Navy has started to develop a long-term
    plan to address recapitalization of the aging surge sealift fleet, but
    the plan had not been finalized. We recommended the Navy incorporate
    leading practices for capital planning in a comprehensive sealift
    recapitalization plan and assess the effects of widely distributed
    operations on the combat logistics force. The Navy implemented both
    recommendations.
        In September 2024, we issued a CUI report on DOD's reliance on
    contractors providing fuel delivery and storage in the Indo-Pacific
    Command. We can provide a copy of this report upon request or it is
    available from House security staff.

        35. Senator Hirono. Dr. Seidle, Vice Admiral Downey, and Ms.
    Oakley, what steps is the Navy taking to ensure supply chain security
    for critical ship components that are currently dominated by People's
    Republic of China (PRC) manufacturers, such as propulsion systems and
    ship-to-shore cranes?
        Dr. Seidle and Vice Admiral Downey. China's dominance in global
    commercial shipbuilding presents potential risks to future United
    States expansion and competitiveness. Their investment in maritime
    infrastructure has been extensive and culminated in a virtual monopoly
    on global shipping containers and ship-to-shore cranes as well as
    Chinese ownership stakes at 95 ports in 53 countries--including the
    United States. Fortunately, our most advanced vessels and our nuclear
    fleet rely on US technology and manufacturing for critical propulsion
    systems. While there is some reliance on international markets and
    critical minerals for standard propulsion, we recognize that a strong
    supply chain is the foundation for a strong Navy and we have
    concentrated efforts to illuminate risks, map their impact, and engage
    the industrial base to develop mitigation strategies. The Navy is
    taking and will continue to take action by applying proactive risk
    management strategies and leveraging illumination tools to identify and
    target high-risk Original Equipment Manufacturer (OEM)/market spaces
    for strategic supply chain engagement, performing targeted foreign
    investment screening to ensure our critical technologies remain free
    from adversarial capital practices, and strengthening our relationships
    with critical suppliers. By securing our supply chains, the Navy is
    committed to delivering a steady stream of advanced warfighting
    capabilities to maintain maritime dominance.
        Ms. Oakley. We have not been requested to do work to answer this
    question in whole. However, GAO has an ongoing review assessing the
    country of origin of DOD items and components, including foreign
    dependency and supply chain risks, in response to a mandate included in
    the conference report to the National Defense Authorization Act for
    Fiscal Year 2024 that we expect to issue later this year.

        36. Senator Hirono. Dr. Seidle, Vice Admiral Downey, and Ms.
    Oakley, how is the Navy planning to maintain and sustain unmanned ships
    with conventional surface repair shipyard capacity already constrained
    by today's manned fleet?
        Dr. Seidle and Vice Admiral Downey. Integrating and maintaining a
    growing fleet of unmanned surface vessels (USVs) presents a significant
    challenge for already busy shipyards. The Navy is exploring multiple
    strategies to achieve USV readiness, but success hinges on overcoming
    maintenance and sustainment hurdles. This requires innovative
    solutions, long-term planning, and improved shipyard workflows,
    including streamlined procedures and potential prioritization of USV
    maintenance during less busy periods.
        The Navy plans to procure commercial standard USVs with high levels
    of reliability, automation, and modularity with specific focus on
    reducing the frequency and complexity of maintenance. Modular design
    and commercial standards will support rapid component swapping,
    increase the ability to repair vessels with mobile repair teams, reduce
    load on major shipyards, and allow the Navy to leverage commercial
    shipyards. The Navy plans to partner with private shipyards to
    supplement maintenance capacity; this includes providing training and
    support to private companies to help equip them to handle USV
    maintenance. The Navy recently sourced four prototype MUSV platforms
    that can be maintained in smaller scale facilities that have ship or
    boat repair agreements with the Navy. This augments commercial repair
    capacity for surface combatants.
        Ms. Oakley. The Navy contracts with private companies to repair
    surface ships. In February 2025, we found that the ship repair private
    sector industrial base has struggled to meet the Navy's goals for on-
    time completion of ship repair periods due to key infrastructure and
    workforce challenges. The private sector ship repair industrial base
    generally has enough capacity to support the Navy's planned surface
    ship repair work in the near term. However, this industrial base does
    not always have the capacity to support maintenance plan changes, such
    as growth work, emergency repairs, or wartime needs due to limited
    infrastructure and workforce capacity. For example, the Navy estimates
    that its planned repair workload could exceed ship repair companies'
    workforce capacity in three fleet concentration areas--San Diego,
    California; Mayport, Florida; and Pearl Harbor, Hawaii--at some times
    through fiscal year 2031 if workforce capacity does not change from
    current levels. Adding uncrewed vessels to this workload could further
    exacerbate these challenges.
        We have identified several factors that hindered the Navy's ability
    to address these challenges. For example, the Navy has not developed a
    strategy to guide management of the ship industrial base. Our prior
    work has shown that a consolidated and comprehensive strategy enables
    decisionmakers to better guide program efforts and assess results.
    Without an overall strategy, the Navy has struggled to provide industry
    with a stable workload projection, which has hindered industry efforts
    to invest in needed infrastructure. Developing a ship industrial base
    strategy would help the Navy align and assess its actions to manage the
    industrial base for shipbuilding and repair. We made six
    recommendations in February 2025 to DOD to improve its management of
    investments in the private sector shipbuilding and repair industrial
    base, including that the Navy create a ship industrial base strategy.
    DOD generally agreed with the recommendations.

        37. Senator Hirono. Dr. Seidle, Vice Admiral Downey, and Ms.
    Oakley, what facilities, workforce, and resource allocation will
    surface fleet maintenance need as the fleet changes and the hybrid
    fleet future arrives?
        Dr. Seidle and Vice Admiral Downey. Adding additional unmanned
    ships to the fleet threatens to complicate an already busy shipyard
    industry. However, by ensuring unmanned systems are built to commercial
    standards, with modular and highly reliable designs, the Navy can both
    increase the number of shipyards capable of executing repairs and
    reduce the complexity and duration of those repairs. This offers a
    chance to save the major shipyards for the complex maintenance required
    for manned combatants, while smaller commercial yards can provide the
    agility and capacity needed to support the future force.
        Ms. Oakley. Related to the hybrid fleet, there is a gap in small
    and medium unmanned surface vessels that could be built in non-tier one
    yards but the Navy has not budgeted for these systems in earnest to
    date. The Navy's 30-year shipbuilding plan highlights that these ships
    are essential to augmenting traditional battle force ships. However,
    the Navy has consistently not supported these programs in the budget as
    requirements and costs for battle force ship programs increase and take
    up a large portion of the budget. DOD has tried to address this issue
    by providing funding for Replicator. However, Replicator is focused on
    small attritable systems only. All robotic autonomous systems will
    require sustainment, logistics, training and operators. We have
    previously found that the Navy has poorly planned to sustain its assets
    during the acquisition process, which creates costly and significant
    problems during operations. We further discuss these challenges in a
    recently released SECRET-NOFORN report on Robotic Autonomous Systems
    that is available from House security staff.
                     emerging technology and opportunities
        38. Senator Hirono. Dr. Seidle, Vice Admiral Downey, and Ms.
    Oakley, how is the Navy planning to maintain and sustain unmanned ships
    with conventional surface repair shipyard capacity already constrained
    by today's manned fleet?
        Dr. Seidle and Vice Admiral Downey. Integrating and maintaining a
    growing fleet of unmanned surface vessels (USVs) presents a significant
    challenge for already busy shipyards. The Navy is exploring multiple
    strategies to achieve USV readiness, but success hinges on overcoming
    maintenance and sustainment hurdles. This requires innovative
    solutions, long-term planning, and improved shipyard workflows,
    including streamlined procedures and potential prioritization of USV
    maintenance during less busy periods.
        The Navy plans to procure commercial standard USVs with high levels
    of reliability, automation, and modularity with specific focus on
    reducing the frequency and complexity of maintenance. Modular design
    and commercial standards will support rapid component swapping,
    increase the ability to repair vessels with mobile repair teams, reduce
    load on major shipyards, and allow the Navy to leverage commercial
    shipyards. The Navy plans to partner with private shipyards to
    supplement maintenance capacity; this includes providing training and
    support to private companies to help equip them to handle USV
    maintenance. The Navy recently sourced four prototype MUSV platforms
    that can be maintained in smaller scale facilities that have ship or
    boat repair agreements with the Navy. This augments commercial repair
    capacity for surface combatants.
        Ms. Oakley. The Navy contracts with private companies to repair
    surface ships. In February 2025, we found that the ship repair private
    sector industrial base has struggled to meet the Navy's goals for on-
    time completion of ship repair periods due to key infrastructure and
    workforce challenges. The private sector ship repair industrial base
    generally has enough capacity to support the Navy's planned surface
    ship repair work in the near term. However, this industrial base does
    not always have the capacity to support maintenance plan changes, such
    as growth work, emergency repairs, or wartime needs due to limited
    infrastructure and workforce capacity. For example, the Navy estimates
    that its planned repair workload could exceed ship repair companies'
    workforce capacity in three fleet concentration areas--San Diego,
    California; Mayport, Florida; and Pearl Harbor, Hawaii--at some times
    through fiscal year 2031 if workforce capacity does not change from
    current levels. Adding uncrewed vessels to this workload could further
    exacerbate these challenges.
        We have identified several factors that hindered the Navy's ability
    to address these challenges. For example, the Navy has not developed a
    strategy to guide management of the ship industrial base. Our prior
    work has shown that a consolidated and comprehensive strategy enables
    decisionmakers to better guide program efforts and assess results.
    Without an overall strategy, the Navy has struggled to provide industry
    with a stable workload projection, which has hindered industry efforts
    to invest in needed infrastructure. Developing a ship industrial base
    strategy would help the Navy align and assess its actions to manage the
    industrial base for shipbuilding and repair. We made six
    recommendations in February 2025 to DOD to improve its management of
    investments in the private sector shipbuilding and repair industrial
    base, including that the Navy create a ship industrial base strategy.
    DOD generally agreed with the recommendations.

        39. Senator Hirono. Dr. Seidle, Vice Admiral Downey, and Ms.
    Oakley, what facilities, workforce, and resource allocation will
    surface fleet maintenance need as the fleet changes and the hybrid
    fleet future arrives?
        Dr. Seidle and Vice Admiral Downey. Adding additional unmanned
    ships to the fleet threatens to complicate an already busy shipyard
    industry. However, by ensuring unmanned systems are built to commercial
    standards, with modular and highly reliable designs, the Navy can both
    increase the number of shipyards capable of executing repairs and
    reduce the complexity and duration of those repairs. This offers a
    chance to save the major shipyards for the complex maintenance required
    for manned combatants, while smaller commercial yards can provide the
    agility and capacity needed to support the future force.
        Ms. Oakley. Related to the hybrid fleet, there is a gap in small
    and medium unmanned surface vessels that could be built in non-tier one
    yards but the Navy has not budgeted for these systems in earnest to
    date. The Navy's 30-year shipbuilding plan highlights that these ships
    are essential to augmenting traditional battle force ships. However,
    the Navy has consistently not supported these programs in the budget as
    requirements and costs for battle force ship programs increase and take
    up a large portion of the budget. DOD has tried to address this issue
    by providing funding for Replicator. However, Replicator is focused on
    small attritable systems only. All robotic autonomous systems will
    require sustainment, logistics, training and operators. We have
    previously found that the Navy has poorly planned to sustain its assets
    during the acquisition process, which creates costly and significant
    problems during operations. We further discuss these challenges in a
    recently released SECRET-NOFORN report on Robotic Autonomous Systems
    that is available from House security staff.

        40. Senator Hirono. Dr. Seidle, Vice Admiral Downey, and Ms.
    Oakley, shipbuilding acquisition and research and development dollars
    are tied to legacy, conventional programs like the guided missile
    destroyer (DDG) and guided missile frigate (FFG). These programs are
    critical, but if all money is tied to them, future programs will never
    get attention from Navy personnel and contracts attention they need to
    develop. For example, Navy Manufacturing Tech (MANTECH) dollars today
    can only go to major programs like frigates and aircraft carriers,
    while private companies are building new manufacturing capacity and new
    processes. Processes that the Navy cannot validate and invest in with
    contracts because money is tied to legacy shipbuilding programs. How
    can the Navy invest in shipbuilding for the future surface fleet?
        Dr. Seidle and Vice Admiral Downey. As an example of how RDT&E
    funds are used to invest in our future surface fleet, our Future
    Destroyer Program, DDG(X), is utilizing those funds to mitigate
    technical and design risk through extensive distributed land-based
    testing. This testing supports design and architecture decisions as
    well as serves to mitigate risk by discovering issues and determining
    corrective actions or alternate solutions. Further, these efforts help
    codify partnerships with non-traditional and non-government entities as
    the early design analysis is performed. These partnerships include
    Florida State University, University of Texas at Arlington, as well as
    with the Defense Innovation Unit (DIU). Finally, the Navy is partnered
    with Huntington Ingalls Industries as well as General Dynamics-Bath
    Iron Works as a collaborative design application is being developed,
    allowing two shipbuilding companies to work collaboratively on a single
    ship design, as well as allowing the shipbuilders to influence the
    design for producibility, thereby making future construction of those
    ships more efficient.
        Ms. Oakley. We reported in February 2025 that the Navy has some
    potential options for using additional U.S. shipbuilders to construct
    its battle force ships. For example, representatives from a shipbuilder
    we visited that generally constructs Coast Guard ships and conducts
    other commercial work told us that they would be interested in pursuing
    contracts for larger Navy ships. Other U.S. shipbuilders that construct
    ships for the U.S. Coast Guard, Military Sealift Command, and
    commercial buyers could also pursue Navy work. However, the number of
    additional domestic shipbuilders is limited.
        The Navy's fiscal year 2025 shipbuilding plan states that the
    limited availability of companies to compete for shipbuilding contracts
    has contributed to progressively higher costs to the government,
    greater fragility of the workforce, and reduced incentives for the
    private sector to invest in infrastructure. The plan also describes a
    new initiative in which the Navy plans to attract new market entrants
    and restore competition to the U.S. shipbuilding industry--referred to
    by the Navy as the Maritime Statecraft initiative. The plan describes
    this as a long-term initiative that would enable the Navy to deliver
    more ships on time and at a lower cost. Increasing the number of
    companies that can compete for Navy contracts could aid the Navy's goal
    of quickly increasing the size of the fleet. However, while the Navy
    has an interest in increasing opportunities for competition, it also
    wants to preserve the financial health of its existing shipbuilders so
    that they remain part of the industrial base for future shipbuilding
    programs. As the Navy seeks to provide competitive opportunities for
    future classes of ships, it will need to determine how to navigate
    these competing priorities. As such, we recommended that the Navy
    develop a strategy to guide its approach to the industrial base.
        Smaller shipyards may also have opportunities to take on additional
    work as subcontractors to ongoing shipbuilding programs. Most of the
    shipbuilders that the Navy currently uses for its major shipbuilding
    programs are giving consideration to outsourcing to suppliers to
    alleviate constraints at their shipyards, such as aging infrastructure
    and limited physical space. Such outsourcing could result in work for
    the Navy's ongoing shipbuilding programs being conducted at smaller
    shipyards. However, as we have previously reported, quality assurance
    oversight of outsourced materials will be critical to avoiding delays
    that could be caused by quality problems.
        Last, there is a gap in small and medium unmanned surface vessels
    that could be built in non-tier one yards but the Navy has not funded
    these systems in earnest to date. The Navy's 30-year shipbuilding plan
    highlights that these ships are essential to augmenting traditional
    battle force ships. However, the Navy has consistently not supported
    these programs with funding as requirements and costs for battle force
    ship programs increase and take up a large portion of the budget. DOD
    has tried to address this issue by providing funding for Replicator.
    However, Replicator is focused on small attritable systems only. We
    further discuss these challenges in a recently released SECRET-NOFORN
    report on Robotic Autonomous Systems that is available from House
    security staff.

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