[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]
[H.A.S.C. No. 113-64]
AN INDEPENDENT ASSESSMENT OF THE
NAVY'S 30-YEAR SHIPBUILDING PLAN
__________
HEARING
BEFORE THE
SUBCOMMITTEE ON SEAPOWER AND PROJECTION FORCES
OF THE
COMMITTEE ON ARMED SERVICES
HOUSE OF REPRESENTATIVES
ONE HUNDRED THIRTEENTH CONGRESS
FIRST SESSION
__________
HEARING HELD
OCTOBER 23, 2013
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SUBCOMMITTEE ON SEAPOWER AND PROJECTION FORCES
J. RANDY FORBES, Virginia, Chairman
K. MICHAEL CONAWAY, Texas MIKE McINTYRE, North Carolina
DUNCAN HUNTER, California JOE COURTNEY, Connecticut
E. SCOTT RIGELL, Virginia JAMES R. LANGEVIN, Rhode Island
STEVEN M. PALAZZO, Mississippi RICK LARSEN, Washington
ROBERT J. WITTMAN, Virginia HENRY C. ``HANK'' JOHNSON, Jr.,
MIKE COFFMAN, Colorado Georgia
JON RUNYAN, New Jersey COLLEEN W. HANABUSA, Hawaii
KRISTI L. NOEM, South Dakota DEREK KILMER, Washington
PAUL COOK, California SCOTT H. PETERS, California
David Sienicki, Professional Staff Member
Douglas Bush, Professional Staff Member
Nicholas Rodman, Clerk
C O N T E N T S
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CHRONOLOGICAL LIST OF HEARINGS
2013
Page
Hearing:
Wednesday, October 23, 2013, An Independent Assessment of the
Navy's 30-Year Shipbuilding Plan............................... 1
Appendix:
Wednesday, October 23, 2013...................................... 27
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WEDNESDAY, OCTOBER 23, 2013
AN INDEPENDENT ASSESSMENT OF THE NAVY'S 30-YEAR SHIPBUILDING PLAN
STATEMENTS PRESENTED BY MEMBERS OF CONGRESS
Forbes, Hon. J. Randy, a Representative from Virginia, Chairman,
Subcommittee on Seapower and Projection Forces................. 1
McIntyre, Hon. Mike, a Representative from North Carolina,
Ranking Member, Subcommittee on Seapower and Projection Forces. 2
WITNESSES
Labs, Dr. Eric J., Senior Analyst for Naval Weapons and Forces,
Congressional Budget Office.................................... 4
O'Rourke, Ronald, Specialist in Naval Affairs, Congressional
Research Service............................................... 5
APPENDIX
Prepared Statements:
Forbes, Hon. J. Randy........................................ 31
Labs, Dr. Eric J............................................. 33
O'Rourke, Ronald............................................. 69
Documents Submitted for the Record:
[There were no Documents submitted.]
Witness Responses to Questions Asked During the Hearing:
Mr. Hunter................................................... 91
Questions Submitted by Members Post Hearing:
Mr. Forbes................................................... 95
Mr. Langevin................................................. 102
AN INDEPENDENT ASSESSMENT OF THE NAVY'S
30-YEAR SHIPBUILDING PLAN
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House of Representatives,
Committee on Armed Services,
Subcommittee on Seapower and Projection Forces,
Washington, DC, Wednesday, October 23, 2013.
The subcommittee met, pursuant to call, at 2:30 p.m., in
room 2212, Rayburn House Office Building, Hon. J. Randy Forbes
(chairman of the subcommittee) presiding.
OPENING STATEMENT OF HON. J. RANDY FORBES, A REPRESENTATIVE
FROM VIRGINIA, CHAIRMAN, SUBCOMMITTEE ON SEAPOWER AND
PROJECTION FORCES
Mr. Forbes. I want to welcome our members and our
distinguished panel of experts to today's hearing that will
focus on the Navy's 30-year shipbuilding plan. Before we begin
this hearing today I want to briefly discuss the future of our
naval forces. There are a multitude of thoughts as to the
correct size and shape of our United States Navy. The Navy has
advocated for a force structure plan and has proposed a 306-
ship Navy to meet the national strategy. The 2010 Quadrennial
Defense Review Independent Panel proposed a Navy of 346 ships
to meet our Nation's requirements.
I have no reason to doubt the size offered by our Nation's
preeminent leaders as to the desired direction of our naval
forces, but this desired force structure is in sharp contrast
to our 285-ship Navy of today, and especially at odds to a
projected force structure posed by the Congressional Budget
Office of 243 ships.
I believe that our Nation's military strategy should be
directly linked to the vitality of our Nation's economy. Our
forces should be positioned at locations that will best
maintain a stable global commons. Our naval strategy should be
prepared to assure our allies and deter potential aggressors.
As I look forward, I believe that our Nation should
concentrate our military's efforts on areas deemed important to
the United States and to the vitality of our Nation's economy.
The lessons of history teach us that we cannot build a Navy
that is intended just to protect Norfolk and San Diego.
Instead, we need a global-postured Navy that can uphold our
interests across the international maritime highways that
connect our economy to the world.
Leading the charge to support the Asia-Pacific rebalance is
our United States Navy. Unfortunately, institutional inertia
continues to impede the ability of the Navy to make smart force
structure decisions to support this vital region. The old adage
that supports an equal budget share between the Army, Navy, and
Air Force is quickly becoming a relic, an obstacle to
effectively shaping our forces. It is time to provide the
correct force structure to support our economic and security
interests.
As to our hearing today I was disheartened to read the
Congressional Budget Office's assessment of the direction of
our United States Navy. Using a historic funding model, Dr.
Labs projected that the Navy will possess 246 ships in 30
years. Dr. Labs further projected that the Navy will need to
increase their overall shipbuilding budget by 34 percent to
meet our national military strategy.
We are quickly approaching a fork in the road with two
stark alternatives. Our current path puts us on a direction
that will increase global instability, encourages our
adversaries, and increasingly leads to an isolated United
States. But this is not the only alternative. We can also
choose to reverse this decline, eliminate defense
sequestration, and achieve the force structure that will deter
future aggressors.
I have no doubt as to my choice, and I hope that our Nation
will review the facts in our current trend line and with steely
eyed resolve choose the path that not only maintains our
national security, but will also seek to enhance the security
of successor generations. It is simply wrong to fail our
Nation's greatest generation and drift into global mediocrity.
It is time that we reverse the devastating defense cuts
under sequestration and place our national security on a
positive trend line. It is time that we assess our direction
and apply our precious treasure toward the services that best
secure our future. It is time that we properly resource the
United States Navy and provide them with the direction that
ensures our collective security.
Today we are honored to have as our witnesses a senior
analyst for naval weapons and forces at the Congressional
Budget Office, Dr. Eric Labs.
Dr. Labs, thank you for being here with us today.
And a specialist in national defense at the Congressional
Research Service, Mr. Ron O'Rourke.
And Ron, thank for your hard work in preparing for this
hearing during a difficult time as we were all shut down. We
know the hard work that you put in. And we thank you both for
being here.
And now it is with great pleasure that I recognize my
friend, the ranking member, Mr. McIntyre from North Carolina,
for any remarks he may have.
[The prepared statement of Mr. Forbes can be found in the
Appendix on page 31.]
STATEMENT OF HON. MIKE MCINTYRE, A REPRESENTATIVE FROM NORTH
CAROLINA, RANKING MEMBER, SUBCOMMITTEE ON SEAPOWER AND
PROJECTION FORCES
Mr. McIntyre. Thank you. Thank you, Mr. Chairman, thank you
for holding this hearing.
And to our witnesses, thank you for being here.
As you can tell with the room being at capacity, there are
many, many people interested in what you have to say. This is
an important hearing because we know the future of American
naval power is an issue that should concern all Americans.
Despite the wonders of satellite and other communications
technology, we realize the world's economy truly does run on
and arguably also beneath the surface of the oceans. The vast
majority of trade still moves by ship, and most people in the
world live within 100 miles of a coastline.
Since World War II, the U.S. and our allies have guaranteed
freedom of movement and security in the world's oceans. We know
that providing this security is expensive, but that the U.S.
gets back far more through the global economic benefits of
stable, secure ocean trade routes. And that investment is well
worth it and multiplied many times over.
We realize, therefore, we can't take the security of our
world's oceans for granted. To maintain American dominance of
the oceans we must invest in a Navy that is of the right size
and capability, an issue that brings us to the topic of today's
hearing. The question I believe that is important for today is
how realistic is the Navy's current shipbuilding plan. We know
the Navy contends it has a valid plan. We would like to hear
your testimony as why those assumptions should be carefully
reviewed.
For instance, even if the Navy stays on its current path
with the Virginia-class attack submarine program, it appears
the Navy will fall short of the number of submarines that it
says it needs in the 2020s and 2030s.
Second, even if the Littoral Combat Ship [LCS] stays on
budget and does deliver on time, we will be replacing far more
capable cruisers and destroyers with a very small, much less
capable ship. While a large number of LCS ships may make the
Navy's overall ship numbers look better, it doesn't mean the
Navy will retain the combat capability that it has today.
Third and finally, we want to learn about the health of our
shipbuilding industry and whether it is capable, indeed, of
delivering all the ships the Navy needs, even if the funding is
available. In World War II we had a large amount of excess
shipbuilding capacity that we could draw on for our wartime
needs. We know that doesn't exist today. And with budgets
coming down I am concerned about losing more shipyards. And we
know if that happens the Navy's current plan will become even
riskier than it is today.
Thank you again for your time, and we look forward to, Mr.
Chairman, hearing the answers to these and other questions that
our colleagues raise during this panel.
Mr. Forbes. Thank you, Mike.
And, Dr. Labs, Mr. O'Rourke, we thank you both again for
being here. And at the end of this hearing, when everyone has
asked their questions, I am going to give both of you time to
wrap up on anything you want to add that we haven't asked or
you feel that you need to correct that you put in the record.
And, Dr. Labs, it is my understanding that you are going to be
leading off, so we once again thank you for being here and look
forward to your comments.
STATEMENT OF DR. ERIC J. LABS, SENIOR ANALYST FOR NAVAL WEAPONS
AND FORCES, CONGRESSIONAL BUDGET OFFICE
Dr. Labs. Thank you very much, Mr. Chairman. Chairman
Forbes, Representative McIntyre, members of subcommittee, it is
a pleasure to be here today to discuss the Navy's 2014----
Mr. Forbes. Eric, can you pull that microphone up just a
little bit closer. Sometime it is a little funny.
Dr. Labs. Yes, sir. Does that work? Good.
My written testimony focuses on the costs and force
structure implications of that plan and is based on the
recently released CBO [Congressional Budget Office] report
entitled ``An Analysis of the Navy's Fiscal Year 2014
Shipbuilding Plan,'' which is required under section 1011 of
the 2012 National Defense Authorization Act. In my prepared
remarks today I will focus on key points and highlights of that
report.
First, if the Navy received the same amount of funding for
ship construction in the next 30 years that it has over the
last 30 years, which is about $16 billion for all activities
related to ship construction, it will not be able to afford all
266 ships in its plan.
Second, the Navy estimates that it will cost an average of
$16.8 billion per year over 30 years to implement its plan. But
I want to stress that that amount is for new construction only.
The Navy must fund a number of other activities from its
shipbuilding accounts. CBO estimates that those other
activities, such as the refueling of nuclear-powered aircraft
carriers, outfitting of all new warships, and other smaller
items, would add an additional $1.9 billion per year to the
Navy's estimate. Thus, the Navy's estimate is actually closer
to $19 billion a year or more than 20 percent higher than what
the service has received historically.
In contrast, CBO's estimates of the Navy's shipbuilding
plan are $2.5 billion per year or 13 percent higher than the
Navy's. Using its own methods and assumptions, CBO estimates
that it would cost about $19 billion per year for new ship
construction alone and about $21 billion for everything the
Navy needs to fund in its ship accounts. That amount is one-
third higher than the historical average.
Now I would like to discuss some implication of those
points. The Navy shipbuilding plan is a statement of resources
required to buy the fleet the Navy says it needs. As a result,
the Budget Control Act [BCA] of 2011 did not affect the
composition of the Navy's report. However, if the BCA remains
in place, funding for ship construction will be well below the
amounts required for the 2014 plan, unless such funding is
protected at the expense of our military activities.
Specifically, if the Navy receives the same percentage of
the DOD's [Department of Defense] budget during the coming
decade and devotes the same 10 percent of its budget to
shipbuilding as it has historically, then the shipbuilding
accounts will be 30 percent lower than CBO's estimate of the
plan or about a billion dollars less than the historical
average.
The Navy shipbuilding report rightly emphasizes the funding
challenge the service will face as it replaces the Ohio-class
ballistic missile submarines in the second decade of its plan.
The Navy says that the money it will need must increase by
about 30 percent to pay for the Ohio replacement program.
However, the Navy's funding challenge is in fact looming much
sooner than that. In the second half of the first decade the
average new ship construction budget will need to increase by
over 40 percent compared to the next 5 years, the period
covered by the Future Years Defense Program. Thus, in the
absence of a steady and sustained increase in the Navy's
shipbuilding budget, the service will inevitably build fewer
ships than envisioned in its plan.
Furthermore, CBO estimates that even if an alternative
means for funding the Ohio replacement program were found, the
remaining ships in its shipbuilding program will still cost
about $2 billion per year more or about 13 percent more than
the historical average.
In its report CBO included for the first time what the Navy
might look like if its shipbuilding accounts are limited to the
historical average of $16 billion per year. If ship
construction were reduced in rough proportion, such that the
composition of the fleet at the end of the plan was similar to
the composition of the fleet in 2043 under the Navy's plan,
then the Navy would purchase only 193 ships versus 266 and the
fleet inventory in 2043 would number 243 ships, not 306, or
about 20 percent less.
Finally, Mr. Chairman, I would like to highlight one final
observation from the CBO report. The Navy shipbuilding plan,
even if implemented in its entirety, projects shortfalls in the
critical areas of ballistic missile submarines, attack
submarines, surface combatants, and amphibious ships.
The issue of the surface combatants is particularly
notable. The Navy assumes that all DDG-51 Flight IIA, Flight
III, and next-generation destroyers would serve in the fleet
for 40 years, a time period considerably longer than previous
classes of surface combatant have served. If the Navy is unable
to keep those ships for that long and modernize them
accordingly, then the shortfall on destroyers will be much
larger, last longer, and be very expensive to fix down the
road.
Thank you, Mr. Chairman. And I will be happy to respond to
any questions the subcommittee would have.
[The prepared statement of Dr. Labs can be found in the
Appendix on page 33.]
Mr. Forbes. Thank you, Dr. Labs.
Mr. O'Rourke.
STATEMENT OF RONALD O'ROURKE, SPECIALIST IN NAVAL AFFAIRS,
CONGRESSIONAL RESEARCH SERVICE
Mr. O'Rourke. Chairman Forbes, Ranking Member McIntyre,
distinguished members of the subcommittee, thank you for the
opportunity to testify today on the Navy's 30-year shipbuilding
plan. Chairman Forbes, with your permission I would like to
submit my statement for the record and summarize it here in a
few brief remarks.
Mr. Forbes. Without objection, it will be admitted.
Mr. O'Rourke. In discussing the 30-year plan it is possible
to focus on ship numbers and procurement costs so much that one
can lose track of what is at stake strategically. Strategic
considerations that helped form the context for the 30-year
plan include the strategic rebalancing toward the Asia-Pacific,
China's naval modernization effort, and requests from regional
combatant commanders for forward-deployed U.S. naval forces
that would require a Navy of more than 500 ships to fully meet.
In a situation of reduced levels of defense spending such
as what would occur if defense spending were to remain
constrained to the revised cap levels in the Budget Control
Act, the affordability challenge posed by the 30-year
shipbuilding plan would be intensified. Even then, however, the
current 30-year shipbuilding plan would not necessarily become
unaffordable. The required increase of the shipbuilding account
equates to 1.5 percent or less of DOD's budget. Some observers,
noting the strategic rebalancing toward the Asia-Pacific, have
advocated shifting a greater share of the DOD budget to the
Navy and the Air Force.
In discussing this idea, some of these observers refer to
breaking the so-called one-third, one-third, one-third division
of resources among the three military departments. In a context
of breaking one-third, one-third, one-third with an aim of
better aligning defense spending with strategic rebalancing,
shifting 1.5 percent or less of DOD's budget into the Navy
shipbuilding account would appear to be quite feasible.
More broadly, if defense spending were to remain
constrained to the revised cap levels in the Budget Control
Act, then fully funding the Navy's total budget would require
shifting 4 or 5 percent of the DOD budget to the Department of
the Navy. While doing that would be more ambitious than
shifting 1.5 percent of the budget to the Navy shipbuilding
account, similarly large reallocations have occurred in the
past.
The point here is not to argue whether it would be right or
wrong to shift more of the DOD budget to the Navy shipbuilding
account or to the Department of the Navy's budget generally. It
is rather to note that the allocation of DOD resources is not
written in stone, that aligning DOD spending with U.S. strategy
in coming years could involve changing the allocation by more
than a very marginal amount, and that such a changed allocation
could provide the funding needed to implement the current 30-
year shipbuilding plan.
The alternative of assuming that there is no potential for
making anything more than very marginal shifts in the
allocation of DOD resources could unnecessarily constrain
options available to policymakers and prevent the allocation of
DOD resources from being aligned optimally with U.S. strategy.
In my past work I have suggested options for making Navy
shipbuilding more affordable, such as adding EOQ [economic
order quantity] authority to the LCS block buy contracts and
using a block buy contract to procure CVN-79 and CVN-80.
Thinking more expansively about block buy contracting, some
observers have raised the possibility of procuring both
Virginia-class attack submarines and Ohio replacement ballistic
missile submarines under a joint block buy contract covering
both classes of ships. Such a contract might generate savings
greater than what would be possible under separate multiyear
contracts for each class.
Extending this thinking even further, a potential
additional option in implementing a joint cross-class block buy
contract would be to modify as needed the current division of
work for building Virginia-class boats to ensure an optimal
joint strategy for building both classes. Given the long
history of the Navy encountering and addressing challenges in
Navy shipbuilding programs, another option that might be of
value in implementing the 30-year shipbuilding plan would be to
establish a Navy shipbuilding lessons-learned center roughly
analogous to the combat operations lessons-learned centers
operated by the military services.
As a final point, the 30-year plan leaves the Navy without
a clear road map in the cruiser-destroyer force for restoring
ship growth margin, for introducing integrated electric drive
technology to a large number of ships, particularly for
supporting future high-power electrical weapons, and for
substantially reducing ship lifecycle O&S [operations and
support] costs by, among other things, reducing crew size.
Accordingly, a final option for the subcommittee would be to
ask the Navy for a road map that shows how the Navy plans to
eventually accomplish these things in the cruiser-destroyer
force.
Mr. Chairman, this concludes my statement. Thank you again
for the opportunity to testify. And I look forward to the
subcommittee's questions.
[The prepared statement of Mr. O'Rourke can be found in the
Appendix on page 69.]
Mr. Forbes. Thank you, Ron.
As we go forth, until we get our mikes back on, if our
reporters need us to speak up, raise your hand. I will defer my
questions so members can get their questions in.
But just to start us off, Dr. Labs, if you can help us with
this. As I understand it, the independent panel that reviewed
the QDR [Quadrennial Defense Review] basically thought we need
about 346 ships. In addition to that, we have the Navy saying
306 ships in their shipbuilding plan. It is my understanding
that your assessment is, if we keep the funding historically
the way it has been, that we would be at 243, but that has a
proportionate reduction across all the lines, and the CNO
[Chief of Naval Operations] has indicated that he plans to keep
the Ohio-class replacement going forward.
If the CNO keeps the Ohio-class replacement as he has
indicated, what would that do to our total ship count? And then
also, if you layer sequestration on that, where would that put
our bottom-line ship count in your best estimate?
Dr. Labs. Mr. Chairman, the Navy decided and indicated that
its first priority is going to be the Ohio replacement program.
So, therefore, if you kept to a historical level of funding of
$16 billion and you kept all 12 Ohio replacements in the plan,
that would lead to a reduction in the projected inventory by
the end of the plan of an additional 10 ships. So, say, about
233 or so, give or take one or two.
If you are then talking about a further reduction to the
sequestration levels--and let's assume for a minute that it
would maybe just be for the first 10 years of the plan and it
wouldn't continue throughout the 30-year period unless that is
what you are preferring to assume--you are talking about
removing another 9 or so billion dollars from the Navy
shipbuilding plan, and so that is going to cost you another 5
or so ships. So you are talking about a 230 or so, late 220s
size fleet under those two different scenarios, doing a kind of
a back-of-the-envelope calculation here.
Mr. Forbes. So basically, as I understand, independent
panel recommended 346 that they feel we needed for ships, Navy
shipbuilding plan 306. If we stay on the historical funding the
way we have been we would be at about 243. If the CNO moved
forward as he said he would with the Ohio class at the
historical funding levels, we would be down to about 233. And
if we had sequestration according to what it is in the law now
the next 10 years we would be down to 228. Is that a fair
assessment?
Dr. Labs. Yes, Mr. Chairman, roughly. If I were sitting at
my computer with a spreadsheet, it might look a little bit
different, but it is going to be in those ballparks.
Mr. Forbes. Congressman McIntyre, I would like to recognize
you.
Mr. McIntyre. Just two or three questions, Mr. Chairman.
Mr. O'Rourke, if the Navy cannot fund all the ships it has
in the 2014 shipbuilding plan based on our current defense
strategic guidance, where is the Navy's money best spent? If
tough choices have to be made, what platforms do you believe
should be the priorities?
Mr. O'Rourke. Great question. And I can only kick that
question back to you. If I were to state a preference it would
amount to a recommendation. And we do have to avoid making
recommendations in our work for CRS [Congressional Research
Service]. So it is going to be a $64,000 question for
policymakers to decide.
Mr. McIntyre. Let me ask you about the F-35 program. We
know the tests have continued. We have now in excess of 10,000
flight test hours for the F-35. Recent estimates based on
actual flight hour testing revealed that lifecycle cost
estimates are 20 percent lower than originally thought. The
U.S. Marine Corps detailed analysis shows that the cost per
flying hour of the F-35B model is 16.6 percent lower than
earlier Pentagon estimates, achieving a savings of $12.3
billion over the next five decades. Do you believe that we
indeed are on a path to lowering the long-term cost of
operating the F-35?
Mr. O'Rourke. That is a little bit outside my lane. That
issue is covered by our aviation analysts at CRS. But to give
you an answer right here, what I do want to tell you is that if
we are in a scenario of moving to a smaller fleet then the
question will become, do you want to take down the F-35 numbers
along with the size of the fleet, which would imply a smaller
F-35 buy, or conversely do you actually want to enrich the
proportion of the air wing that is made up by F-35s because you
are going to have fewer carrier air wings?
So as a naval analyst who focuses on ships and the
structure of the fleet, the question that that tends to pose
for me is, which direction do you then want to take the F-35
program if the fleet is getting smaller? It is not obvious to
me that there is only one choice in that matter. I think many
people who look at a smaller fleet might be inclined to assume
that you would get fewer F-35s, but it is also possible that
you might actually enrich the number of F-35s per air wing
precisely because you are going to have fewer air wings. What
that would mean in terms of net numbers of F-35s you would then
have to calculate because there would be fewer air wings.
But I do think that that is an important consideration for
this subcommittee and the full committee generally as we move
forward. The composition of the carrier air wing itself is not
fixed in a situation of a debate over what the future fleet
size is and the answers to what that air wing should look like
are not obvious in one direction or the other.
Mr. McIntyre. Okay. Thank you.
Thank you, Mr. Chairman.
Mr. Forbes. The gentleman from California, Mr. Hunter, is
recognized for 5 minutes.
Mr. Hunter. Thank you, Mr. Chairman.
Okay, so a couple of basic questions then. Why are the
costs for the ships so much higher than the historical average?
Is that just the overall cost of commodities and steel and
labor and everything or is there something else?
Dr. Labs. Congressman, there are several factors that go
into that. You are exactly right, the commodities for labor and
steel are higher than it was, and historically inflation in the
naval shipbuilding industry has been several points higher than
inflation in the economy as a whole. And that probably
represents about half of what you can account for in the
increase in average Navy ship costs.
The other half would be the increasing capabilities that
the Navy has put into its ships over the years, into what they
design into the ships. So the ships are more capable. The
things that we buy today by and large are more capable than
what we bought of the same type historically.
Mr. O'Rourke. If I could just add very quickly to what Eric
said. Eric was speaking about the increase in per-ship costs,
but part of what we are talking about here today is the
required increase in the size of the shipbuilding budget
compared to its historical average in past years. And a big
part of the reason why that number would need to go up in the
future is simply the number of ships that we would need to
procure in the future to meet the force level plan. And that is
something that is revealed in the 30-year shipbuilding plan.
Mr. Hunter. Let me tie this in then, let me ask you this.
And use whatever numbers you have because I don't know. If you
look back 10 or 15 years or 20 years, however you guys look
back on this, and the amount of money that the Navy had going
forward to now, can you look back 15 years ago and say they had
this much money, they said they were going to have a fleet of
330 ships and they don't, and we lost this many ships due to
the lack of funding, can you do that? Going back and looking
until now, does that make sense? Meaning we are talking about
this now, and so let's say 10 years from now we have a fleet of
240 and we can look back and say the reason we have a fleet of
240 is because of what we are talking about in this hearing.
Can you look back 10 years and say, look, this is where the
Navy messed up here in what they projected?
Mr. O'Rourke. I think there is one example of that that is
fairly clear cut, and that was the near hiatus in attack
submarine procurement that lasted for much of the 1990s. There
were plenty of warnings issued at the time by myself and others
dating back to 1995 that if you spent a lot of that decade not
getting too many attack submarines that we would eventually be
in a situation of having to get a lot more just to get back to
the plan size that we are looking at. And we are now, 18 or 19
years into my testimony on this point, approaching the time
when we will live with the consequences of these decisions.
Mr. Hunter. Of having to buy more submarines and therefore
having fewer ships.
Mr. O'Rourke. That is right. I mean, part of the reason you
need more money in the shipbuilding plan starting 5 years from
now and extending for the next 15 years after that is the
reduced rates of shipbuilding that took place from the end of
the Cold War, from the early 1990s, until really just a few
years ago. And if you build ships at a rate much lower than the
steady state replacement rate for that long a period of time,
then to get back to your required force levels you will have to
eventually spend other years where you are building ships at
something higher than the steady state replacement rate. And
that is the situation that is revealed in the middle years of
the 30-year shipbuilding plan today.
Dr. Labs. During the 1990s and most of the 2000s we were
buying ships at about an average rate of six or so per year. So
to maintain a fleet of 306 ships or 313 or whatever you need,
you need numbers that are closer to 9 per year. So if
historically you have been buying under your steady state
replacement rate, as Ron indicated, then going forward you are
going to need to buy above your steady state replacement rate
and therefore that is going to account for some of the
increased average annual cost of your shipbuilding budget.
Mr. Hunter. Two more quick questions. You said they spend
about 10 percent of their budget on shipbuilding. When you add
in modernization and repair and everything else that has to do
with making the current fleet last long enough to make the new
ships that are coming online add to them, what is that
percentage?
Dr. Labs. Sir, I don't know that percentage off the top of
my head. I can take that for the record if you would like.
Mr. Hunter. Yeah, please.
[The information referred to can be found in the Appendix
on page 91.]
Mr. Hunter. Ron, do you know, any idea?
Mr. O'Rourke. I calculated it at the level of the total
Department of the Navy [DON] budget, and that was the figure I
gave you in my opening statement, that if you wanted to fully
fund the DON budget, which includes the Marine Corps as well as
the Navy, and you wanted to keep that at the level shown in the
fiscal year 2014 budget submission, then even if the rest of
the defense budget went down to the revised cap level in the
Budget Control Act and stayed there, you could do that as long
as you were willing to shift 4 or 5 percentage points of the
DOD budget into the Department of the Navy budget. That is the
broadest measure of what it would take to run the Navy, even
broader than what you indicated in your question, but it is at
that level that I was able to do the calculation.
Mr. Hunter. Let me try to get one last question in. What
did the Navy do wrong in their calculations that made it so
that their answer is wrong? I mean, there is a big disparity
between you and they. What did they do wrong in their
calculations?
Thank you, Mr. Chairman. And I yield after this.
Dr. Labs. I wouldn't necessarily say that the Navy has done
something wrong. We have made some different assumptions than
what the Navy has made in sort of conducting this analysis. One
of the assumptions is sort of how you treat long-run historical
cost growth in the Navy shipbuilding plan. When the Navy does
its report it assumes that the higher inflation that occurs in
the shipbuilding industry and when they calculate their
constant dollar estimates, they wash that back out, all that
additional growth.
But what CBO does is that we take an assumption between the
difference between GDP [Gross Domestic Product] price inflation
and the Navy shipbuilding inflation and we incorporate that
into the constant dollar estimates, because that represents a
real cost that has to be borne by the American taxpayer. If,
for example, the American taxpayer only wants to give the
Department of Defense increases each year equivalent to general
inflation in the economy and ships are costing you more than
that each and every year, then that is a real cost growth
factor that you have to factor into the analysis.
In some other places I have made some different assumptions
about what ships are going to cost and that is going to drive
the subsequent costs of an entire class. For example, the Navy
assumes that its next-generation destroyer, the one beyond the
Flight III, is going to look not too different from the Flight
III. But I made the assumption that it was not realistic to use
the DDG-51 hull form for yet a Flight IV, and I made an
assumption that they are going to have to design a new
destroyer by that time, if not sooner, and therefore that is
going to cost more than what the Navy assumed.
Mr. Hunter. Thank you.
Mr. Forbes. And just to clarify, too, Dr. Labs and Mr.
O'Rourke, I think what Mr. Hunter was asking is, it is not an
enormous difference between what the Navy is actually
estimating as cost and what you are estimating. The big gap is
between what has historically been available to the Navy and
what it would cost to do their shipbuilding plan, because when
the Navy actually submits their 30-year shipbuilding plan they
don't submit the dollars necessary to go along with it. They
say this is the 30-year shipbuilding plan.
But even based on the Navy's cost, we would have to find
where that money is coming from, because it would take a
substantial amount more than has historically been allocated
for shipbuilding in order to meet the Navy's figures. Am I
correct on that?
Dr. Labs. Yes, sir, Mr. Chairman. I agree with that
completely.
Mr. Forbes. The gentleman from Connecticut, Mr. Courtney,
is recognized for 5 minutes.
Mr. Courtney. Thank you, Mr. Chairman.
Ron, your report mentioned the possible benefit of having
cross-class block contracts as a way of trying to generate more
savings. Has that ever been done before?
Mr. O'Rourke. To my knowledge it has not. We would be
breaking new ground. But one of the points that I wanted to
make in my testimony, and it is in my prepared statement, is
that the Navy in effect for years now has been breaking new
ground in terms of the scope with which it has made use of
multiyear procurement contracting authority. That authority has
been on the books for many years, and the Navy through MYP and
also now through block buy contracting authority, is making a
lot more use of multiyear contracting than was the case in the
past. And arguably, as I pointed out in my statement, it
amounts to a quiet revolution in Navy ship acquisition, one
that is very significant in my mind looking at it, but perhaps
unheralded in terms of the amount of attention it has received.
But if you are breaking new ground doing that, it does
raise the question of whether you could break further new
ground in the future moving into a situation where we have to
be very careful about how we are spending our defense dollars.
Mr. Courtney. Right. Well, there is clearly going to be
overlap between the Virginia and the Ohio replacement. So I
actually think it is an interesting idea.
Dr. Labs, I mean, your report didn't really I think have
any kind of assumptions about using that approach, but, I mean,
if you have any comment, I mean, in terms of whether you think
it has potential.
Dr. Labs. Mr. Courtney, I do think that is certainly
something worth exploring. The Navy should look, frankly, in
every nook, cranny, and crevice to see what it can do to reduce
costs in the shipbuilding program.
The CBO report did not assume cross-class multiyear
procurement contracts in terms of the cost estimates, and if
such a thing were feasible, even if they aren't quite as
efficient as some of the within-class multiyear contracts, it
is still something that could generate savings.
The CBO report did, however, include an assumption that in
the same years that you are buying, which is pretty much every
year in the plan you are buying an attack submarine and you are
buying a ballistic missile submarine, you do gain overhead
efficiencies in the submarine yard. So there are cost savings
built into the CBO analysis for that aspect of the overlap.
Mr. Courtney. Right. Again, I think Mr. Forbes' basic point
is correct, which is that we are sort of paying for the sins of
the past here in terms of these gaps in the cost of the
shipbuilding plan to get to an adequate fleet size. But there
definitely is a delta between what the Navy is projecting for
the Ohio replacement and what you projected. And I have to say,
looking at the six sort of changes that were made in the Ohio
replacement, which you itemize on page 23 of your report, in
terms of reducing the number of missile tubes, reducing their
diameter, again, getting the benefit of Virginia class, you
know, modifications in terms of savings, it doesn't seem like
you really kind of give them much credit for that. And to me it
seems awfully substantial in terms of the changes that they
made.
Dr. Labs. Actually, Mr. Courtney, we actually have given
them credit for those changes. If you had looked at the
estimates that both the Navy and CBO put out, say, 2 or 3 years
ago, both estimates were considerably higher. When the Navy
submitted its 2011 shipbuilding plan it had a price estimate
for the boomers [ballistic missile submarines] around $7
billion, CBO was like $8 billion, and that was in 2011 dollars,
2010 dollars, I can't remember precisely.
Both numbers are come down over time. CBO's do actually
remain larger, and one of the reasons for that is that when I
look at the submarine industry historically on a cost-and-
weight relationship there hasn't been a lot of difference
between attack submarines and ballistic missile submarines. I
have a chart here I could show you and you could sort of see
what I am talking about historically.
So the Navy is assuming, and they may be correct, I mean,
these are just sort of projections going forward, but the Navy
is assuming that on a cost-weight relationship basis ballistic
missile submarines are going to be a lot less expensive than
attack submarines. And I don't see a lot of historical evidence
for that, so I am inclined to think that that may be optimistic
planning at this point. I hope the Navy is correct, I hope all
of my numbers are wrong and their numbers are correct.
Mr. Courtney. And, again, I don't think their point of view
is really pie in the sky. I mean, again, looking at the
progress that has been made in terms of savings on each
succeeding Virginia class. And, again, I mean, they are going
to use a lot of same systems in terms of photonics, you know,
their modular construction, which has been real, I think, all-
star in term of savings.
So, again, the thrust of your report I completely agree
with and the need to look at whether we shift DOD's overall pie
in terms of orienting it more to shipbuilding, I completely
agree with it. But I also kind of think they deserve a little
bit more credit in terms of the fact that they have really
sharpened the pencil program on the Ohio program over the last
couple of years and I think have made some real progress.
Dr. Labs. Mr. Courtney, I completely agree. That is why I
enumerated actually all the changes the Navy did make to its
original design of a few years ago in the Ohio replacement and
that they have driven the cost down. Certainly if you would
compare year to year what the Navy has estimated for that
program, the costs have come down on the Navy side and
correspondingly the CBO costs have also come down as well.
Mr. Forbes. Thank you, Joe.
The gentleman from New Jersey, Mr. Runyan, is recognized
for 5 minutes.
Mr. Runyan. Thank you, Mr. Chairman.
The first question is for Mr. O'Rourke. In your sense, is
the size of the current fleet adequate and do you think the mix
of ships is adequate?
Mr. O'Rourke. If you adopt as a metric for measuring
adequacy a fleet that can meet its commitments in a sustainable
way without overstressing both the ships and the people, I
think the Navy would tell you that the levels of presence that
they are maintaining right now are requiring lengths of
deployments that are placing a strain on both the ships and to
some degree the people as well and that in the Navy's view that
situation, although it is something they can maintain for a
while, is not sustainable over the long run. And consequently I
think the Navy would tell you that that size fleet that we have
today is not enough over the long run to meet the Navy's
commitments in a sustainable manner.
Mr. Runyan. What about the mix of the ships?
Mr. O'Rourke. The mix is a matter of constant study and
occasional readjustment by the Navy. And they come forward with
a new force structure mix every few years. They did so about a
year ago and before that about 5 years before that.
What is interesting to me observing this as a naval analyst
is that there is a debate underway right now between people who
support the current fleet architecture, which is more or less
the mix that we have today and that we are planning going
forward, on the one hand, and a different school of thought
that says we should think about moving toward a more
distributed, a more highly distributed force structure that had
fewer larger ships and a greater number of smaller ships.
I am watching that debate right now. I am struck at how the
people in those two schools of thought at times almost seem to
be talking past one another in terms of their assumptions and
conclusions. I don't know what to make of that debate right
now, but I am watching it carefully, and I think it is
something that the subcommittee may also consider tracking
carefully. Because if the alternative school of thought does
begin to gain more traction it could increase the possibility
of larger-scale changes coming forward from the Navy in terms
of the fleet mix that they are proposing for the future.
Mr. Runyan. And in your infinite knowledge, if you will,
has there been any major, major changes? As you say, there are
a lot of people floating that out there.
Mr. O'Rourke. The idea for a more highly distributed naval
force structure has been out there in various specific
proposals for a number of years now. That debate has continued
during that time. The Navy, in terms of its proposed force
structure, has been more or less constant since the end of the
Cold War. There have been puts and takes in the Navy's proposed
force structure, but the basic fleet architecture has remained
more or less the same. The larger-scale changes in that have
been the appearance and disappearance of the Maritime
Prepositioning Force of the Future squadron and then the advent
of the Littoral Combat Ship. I guess those would be the two
larger-scale changes that have come into the plan over the last
10 or 15 years.
Mr. Runyan. Next question is probably for both of you, but
I will start with Dr. Labs. Now kind of turning to the new
Ford-class carrier and talking about, are you confident that it
will stay within the cost projection? And really what is the
greatest risk to keeping it under and in that budget?
Dr. Labs. Congressman, right now the CBO does estimate a
somewhat higher price for the lead ship of the Ford-class
program as well as the follow-on ships. And right now a lot of
the potential cost growth that could still occur in that ship
is if they encounter problems in final stages construction; the
ship is about 60, 65 percent complete I believe at this stage.
When they get to sort of the test program, if they uncover a
serious problem in sort of the testing of the ship that is
going to be expensive to fix, that is where you would find
potential cost growth above what the Navy is currently
projecting. Such problems like that would cause it, I think, to
exceed its current cost cap that Congress has imposed and would
bring it even closer to the CBO estimate.
If there are no problems with the final stages of
construction and the test programs only reveal some minor
things--test programs always reveal some problems. The question
is whether they are expensive, as in one, two, or tens of
millions or hundreds of millions. If it is on the low end of
that then the lead ship will come under what the CBO estimate
will be most likely.
But then subsequent ships of the class, the Navy has
currently priced the CVN-79, in my opinion, aggressively. But
in the Navy's opinion aggressively. They have called it an
aggressive but achievable target. The CBO estimate is about a
billion dollars more than what the Navy's is. And I expect to
see that as that ship gets built it will end up costing more
than what the Navy projects. But the Navy is well aware of the
situation and they are keeping a sharp eye on it and they are
going to work very aggressively to see that that does not
happen.
Mr. Runyan. Thank you.
Chairman, I yield back.
Mr. Forbes. Thank you. And, Jon, I think your questions
about the mix, something the subcommittee is going to have to
look at and continue to get more information on because we are
going to have to weigh in on that. And on that carrier one of
the interesting things, regardless of the cost, one of the
things that is kind of frightening to many of us is the current
carrier 29 percent of the vendors are sole source, but the next
carrier are going to be 85 percent of them are going to be sole
source. It shows what we are doing to our industrial base.
And Ms. Hanabusa is now recognized for 5 minutes.
Ms. Hanabusa. Thank you, Mr. Chairman.
Mr. O'Rourke, the discussion that you were just having
about basically the architecture of the fleet is probably the
definitive question, the threshold that we all got to get to,
but that is going to be determined by what we think the needs
are going to be. So, for example, if we go to, because of the
pivot to Asia-Pacific or the rebalance, whatever word you want
to use, and if you look at the concepts of the A2/AD [anti-
access/area denial] and where we are going to be and under
basically what circumstances are we going to need, have the
need, wouldn't that then determine which fleet architecture we
would look at? And then would that not then determine the cost
that we are talking about?
Mr. O'Rourke. I think that is absolutely right, and in fact
the connection you make between fleet architecture and the
strategic rebalancing to the Asia-Pacific I think is very much
on point, because the advocates of the more highly distributed
fleet architecture are making their arguments in favor of that
new architecture precisely in connection with countering A2/AD
forces, from China in particular, in the western Pacific. And
so when you get into the debate between those two camps about
what the future fleet architecture might be, it is very much in
connection with what each side thinks will be appropriate in
that part of the world more than any other, although there is
also some discussion of structuring the fleet for scenarios in
the Persian Gulf region as well.
But I think that is absolutely on target, because very
frequently the debates over future fleet architecture are
occasioned or eventually get into a discussion of the western
Pacific and the situation that we will have there at some point
in the future.
Ms. Hanabusa. We have had discussions with, I believe,
former Secretary of Navy John Lehman was here, as well as
former Admiral Roughead had testified before this committee,
and they were, like, I think one ship off, one was 325, 326,
and the other one was 327 or something around there. And when
asked to explain the difference, they all said, well, it
depended on what we needed and where we were going to be.
So I guess the problem I have always had with the 30-year
shipbuilding plan is that it is almost like we don't know what
the demands are going to be 30 years from now and yet we are
planning what that fleet is going to be. So it is almost like
to a certain extent we are setting policy by our acquisition
structure, so that what we decide to acquire in terms of the
fleet, whether it is distributive or the current fleet
architecture or distributive architecture, it seems to me we
are almost deciding where we believe we are going to be and
what we are going to need versus having where we have to be and
what we are going to need make the determining factor.
But given the nature of shipbuilding is that something that
we can do? Because it seems to me it is just going to be
continually reactionary for the next 30 years. So why then
would we have a 30-year shipbuilding plan?
Mr. O'Rourke. I understand the question. It is a very fair
question to put out there in connection with reviewing the 30-
year shipbuilding plan.
I guess what I would say in reaction to that is that if it
is decided to move to a different architecture and to a
different mix of ships that you will then begin to reflect that
in next year's 30-year plan and the 30-year plan after that. So
there is time for the 30-year plan to accommodate changes in
the planned fleet mix and the corresponding mix of shipbuilding
programs that support it.
For me the greatest value perhaps of the 30-year
shipbuilding plan is giving policymakers a look ahead to the
general investment burden that we might face in future years if
we are to continue with the plan for putting out a certain kind
of fleet. And it is worth knowing what that investment burden
might be so that it doesn't take you by surprise when you get
there and so that you can begin to take actions if you want to
years ahead of time to head those off, or to mitigate them, or
to respond to them in some other way.
And so for me it is not so much the precision of the
outyears of the 30-year plan or the fine details of it that are
important, it is the general picture that it paints about the
future investment burden and what, if anything, we might want
or need to do about it today to better prepare ourselves for
that situation 5 and 10 and 20 years from now.
Dr. Labs. I would actually take that even one step further,
that if the decision gets made that a different fleet
architecture is required, then looking at what that investment
burden is going to be for that alternative fleet architecture
would be very important to know, because if it is going to be
considerably more expensive than what the current fleet
architecture is, policymakers such as Congress need to be
prepared and be aware of that going forward since appropriation
decisions are made on an annual basis.
Ms. Hanabusa. Thank you, Mr. Chair.
Mr. Forbes. Thank you, Ms. Hanabusa.
I think one of the things, too, is the 30-year plan gives
us kind of a projected curve line that we can look at not just
for us, but also how our peer competitors line up with us. And
the Navy does need to give us a new one every year, so they can
modify that any time they want to and change those projected
curve lines.
Mr. Wittman is recognized for 5 minutes.
Mr. Wittman. Thank you, Mr. Chairman.
Before I begin questioning I would like to take a moment to
honor the 241 marines, sailors, and soldiers of the 24th Marine
Amphibious Unit who 30 years ago today were killed in a
terrorist attack in Beirut, Lebanon. And we should never forget
their sacrifice or those who have served before and after who
gave the last full measure of devotion to this country. We are
blessed today to have great men and women that serve in uniform
around the world deployed in the most dangerous places
defending this Nation's freedom, and we are eternally grateful
for that.
Gentlemen, thank you so much, too, for your service to our
Nation.
I want to dig a little bit deeper into the aspects of the
architecture of our fleet and talk specifically about our
amphibious ships and where we are today with amphibious ships,
especially with the redirection of our strategy to the Asia-
Pacific and what the need is there to make sure that we are
able to project force and to meet the needs in the Asia-
Pacific.
I wanted to get your perspective on where you see the gaps
in our amphibious fleet, both today and where the gaps may be
with a shipbuilding plan going into the future. And then will
we have the requisite number of ships to maintain operational
capability within that theater and in other areas in the world
based on the current plan and where we may be with the number
of amphibious ships.
Mr. O'Rourke. Just very briefly to make three opening
points on that and then Eric can add further if he likes. We
are going to have a shortfall on amphibious ships relative to
the stated goal during the earlier years of the 30-year plan,
basically now and for the next several years for about the
first decade of the 30-year period until we get up to that
number.
In looking at the shortfall against the 33-ship goal, it is
important to bear in mind that the 33-ship goal itself
represents a reduction from a less fiscally constrained number
of 38, which itself represented a reduction from an
unconstrained fiscal goal for 2.0 MEB [Marine Expeditionary
Brigade] lift of about 42 or 43 ships. So the requirement
itself got knocked down a couple times from 42, 43 to 38.
Thirty-eight is a number that I think many people on this
subcommittee have heard, and then that got knocked down to 33.
So every time you knock it down you are putting a little
bit more operational risk into your plans, and when you have a
shortfall against that final number then you add to your
operational risk. So there is a gap there in terms of sheer
numbers.
There are two other things that I wanted to mention. One is
that we are building a couple of large deck amphibious assault
ships that because of the nature of our shipbuilding plan
several years ago will not have a well deck in them. And
consequently we are looking at the possibility of operating
amphibious ready groups, ARGs, built around each of those two
large deck ships, even though those large deck ships don't have
well decks. And I think the Navy and the Marine Corps face a
challenge right now in figuring out what the operational
concept will be for ARGs that are built around large deck
amphibious ships that themselves do not have well decks in
them.
And then the third issue moving forward is the cost and
capabilities and design of the new LXR amphibious ship, which
is several years out, but there is already an AOA [analysis of
alternatives] underway to examine what that ship should be. And
I think a key potential issue for this subcommittee moving
forward is to keep track of the Navy's cost goal for that ship
and how that cost goal relates to the potential capabilities of
that ship relative to what the Marine Corps might desire to
have in that ship for operating future ARGs and future
amphibious forces generally.
Mr. Wittman. Mr. O'Rourke, let me follow on the question
that you talked about with the LXR. Are there ways that we can
decrease costs on that future ship class? In other words, can
we look at existing hull forms? Are there ways that we can
actually try to reduce cost there so we can possibly build more
ships within that class? Do you have any thoughts on that?
Mr. O'Rourke. Yeah. There are three broad categories of
cost for the LXR; one is design cost, one is construction, and
one is lifecycle O&S [operations and oupport]. One way to
reduce the design cost of the class is to use a common hull,
such as has been proposed in terms of using a variant of the
LPD-17 design. That path would definitely reduce your design
costs. You would then want to examine what implications it
would have for construction and for lifecycle O&S costs. The
other way to reduce the cost for the class offhand would be to
build the ships using a block buy contract for the initial
ships moving into a multiyear procurement contract in the later
years of the program.
Mr. Wittman. Dr. Labs.
Dr. Labs. I would really quite just agree with everything
that Ron said there on that front. The only two things I would
add is that when I look at the shortfalls for amphibious ships,
those shortfalls are relatively smaller compared to the
potential shortfalls in attack submarines and large surface
combatants. Those kinds of shortfalls, particularly when you
think about the pivot to the East Asia region, the Pacific
region, give me more of a pause than they do for amphibious
ships.
And then what Ron said is very correct about the LXR. Right
now the Navy has got a cost goal on that ship that is
potentially quite ambitious for them to be able to put
everything onto the ship that the Marine Corps said that they
want to need. So watching that debate evolve, go forward, and
looking at the AOA carefully and what the options the Navy
considers, whether it is an existing design, a new design, or a
foreign design of some sort, I think will be a critical part of
the oversight process that the subcommittee will need to be
doing.
Mr. Wittman. Very good.
Thank you, Mr. Chairman. I yield back.
Mr. Forbes. Thank you, Mr. Wittman.
Mr. Langevin is recognized for 5 minutes.
Mr. Langevin. Thank you, Mr. Chairman. And I would like to
thank our witnesses for their very informative testimony here
today as always.
As you both have noted in your written testimony, the
decisions obviously that we make in the near term ripple out
for the complete lifespan of these systems 30, 40, or even 50
years, and obviously we have to make sure that we get this
right. So I would like to briefly touch on Ohio replacement
funding.
Mr. O'Rourke, I appreciate your making the point that
service spending shares and the allocation to shipbuilding
don't happen in a vacuum, and that funding ships are entirely
feasible based on past practice. And one idea that has been
floated in the past, though, is a separate pot of money
external to the Navy shipbuilding budget that would pay for the
Ohio replacement boats, since they are national platforms.
Could you speak about the possible drawbacks or advantages,
particularly with regard to project oversight and management of
such a funding arrangement?
Mr. O'Rourke. The first thing I would want to point out is
that in a way there are precedents that one might be able to
cite for having such an arrangement. One would be our treatment
of spending for missile defense programs, which has been put
into its own part of the defense budget that is handled through
the defense-wide part of the budget rather than through the
service-specific budgets.
The other precedent would be the National Defense Sealift
Fund, which was established in the early 1990s, originally for
the procurement of DOD sealift ships, and which is now also
used for the procurement of Navy auxiliary ships.
So there are at least two instances in which separate pots
of money, if you will, for pursuing specific defense programs
have been established. So it would not be the first time that
we would have done something like.
In terms of advantages and disadvantages, one potential
advantage would be to insulate that money from the competition
that would otherwise take place against other Navy shipbuilding
priorities inside the shipbuilding account. Some people might
say that is not really an advantage if you take the program out
of the shipbuilding account but you also move the money along
with it.
One thing that the Navy has testified is that wherever the
ship is funded, whether it is funded inside or outside the Navy
shipbuilding account, the Navy has expressed a desire to retain
control over those resources so that they can continue to act
as the agency in charge of executing the program because they
know how to build ships. And so there really are two questions
here. One is where in the DOD budget should that money reside?
And secondly, regardless of how that question is answered, who
has control over the resources? And the Navy has expressed a
view on the second of those questions, which is that even if
the money is outside the Navy shipbuilding account, they would
strongly prefer to retain control over it so that they can be
the people to execute the money in the construction of the
ships.
Mr. Langevin. Thank you.
As was touched on in testimony, there are concerns with
regard to the growth margin of the DDG-51 Flight III ships,
similar to the Perry-class frigates and very unlike the
Spruance-class destroyers. Given that we are now asking these
ships to last 40 years, and these ships likely would have to be
able to support next-generation energy-intensive weapons, how
do we ensure that we are not building ourselves into a corner
in terms of large service combatant capabilities? And when will
we have to start looking at a DD(X)-type program in order to
roll out additional capabilities out to the fleet?
Mr. O'Rourke. Putting more growth margin back into the
cruiser-destroyer force is one of the issues that I highlighted
in my prepared statement and also in my opening remarks for the
hearing. There are two basic options for doing that. One would
be a further modification of the DDG-51 hull, and here we would
be looking quite possibly at the lengthening of the hull so as
to accommodate more equipment or more growth margin. And the
other would be to undertake the design of a new-design
destroyer. And whether you do one option or the other, that is
something we could initiate at some point. It could perhaps be
at a point after which we procured some number of DDG Flight
IIIs. It would be a matter for policymakers to decide whether
to initiate that project sooner or later.
Dr. Labs. I would like to add one point on that. All of the
options that Ron mentioned as being able to put growth margin
back into the destroyer force are absolutely correct, but all
of them would likely lead to costs above and beyond what has
already been projected in either the Navy's or the CBO
estimates for the 30-year plan. Those are all going to be more
expensive ships most likely.
Mr. Langevin. Similar in cost to the 1000s?
Dr. Labs. Not necessarily that large. They don't
necessarily have to be that large. But certainly if you put a
plug in the 51, you are not going to have a $1.5 billion ship
anymore or $1.7 billion ship, you are going to have something
above that. If you design an all-new destroyer, that will
depend very much on what the dimensions and the size and
displacement of that ship are going to be.
You could design maybe even a smaller destroyer, maybe it
wouldn't be as expensive, that within that design has a lot of
growth margin, but it might not have as much capability because
it is going to be physically more limited. But it doesn't
necessarily have to be as expensive as the 1000 currently is.
Mr. O'Rourke. A new-design ship would also probably give
you more latitude than the option of a further modification of
the DDG-51 would for putting features into the ship for
substantially reducing the ship's lifecycle O&S costs. That
could include among other things features for substantially
reducing the ship's crew size.
There is a limit to what you can accomplish in that regard
probably working with the basic DDG-51 hull, but if you were to
do a clean sheet design for a new ship you might be able to
accomplish more in that regard, and over the long run if you
were to then put those ships into service, it would reduce the
O&S costs of supporting the cruiser-destroyer fleet and free
money up for other Navy priorities, including, for example,
building ships.
Mr. Langevin. Very good. Thank you, gentlemen, for your
testimony and your service to our Nation.
And I yield back.
Mr. Forbes. Thank you, Jim.
Mr. Conaway is recognized for 5 minutes.
Mr. Conaway. Thank you, Mr. Chairman.
Gentlemen, thank you.
It seems to me inherent in the 30-year projection is
getting the useful life correct on any one ship and how long
that lasts across there.
Dr. Labs, you in your report, I think, indicate that the
Navy has not been particularly successful in getting the full
service life out of any one particular vessel. Can you talk to
us about why that is happening? I have got some thoughts, but
give us yours.
Dr. Labs. There are a variety of reasons that come up as to
why the Navy might not get as much service life out of the
ships as it originally projected or originally intended. One
could be that insufficient maintenance was done on the ships
over the course of their operational life. That usually tends
to be one of the higher, more important reasons as to why the
ships don't last as long as the Navy would like.
A second reason related to that one would be that if the
Navy does not invest the necessary resources to modernize the
combat capabilities of a ship, at a certain point in time,
historically at least, the Navy has made the determination,
well, a given ship is no longer relevant for the potential
threat environment it might face, therefore they don't want to
continue operating it, they don't want to take the risk to the
crew, they don't want to take the risk to the ship, and they
don't want to pay the expense for continuing to operate the
ship.
So maintenance and modernization are usually the two
reasons why ships don't last as long as the Navy would like
them to last.
Mr. Conaway. Yeah. Well, you mentioned, though, that
assumes that the first number is correct. So it would seem to
me that that first number as to what the expected useful life
is going to be would take into account that, given our history
of deferred maintenance on every ship we have got, and the fact
that over a 50-year lifespan or a 40-year lifespan the
obsolescence issue, which is what the second issue you are
talking about, the boat becomes obsolete and you can't retrofit
it or it no longer makes sense to do that. Are those issues
already factored into the front end as to what they think the
boat or each ship, how long it will last?
Dr. Labs. Well, sir, I am not a ship architect, but my
understanding of sort of the way ship design works is that when
the designer comes up with a particular expected service life
for a ship, they factor in the fact that they assume that
maintenance is done correctly and properly and that a certain
amount of modernization does take place over the course of the
life of ship. So if that fails to happen, then clearly it would
not meet the initial design expectations.
But that doesn't necessarily mean that even if that happens
the threat might far exceed what the initial design or
modernization expectations would be. So, I mean, there is
certainly a possibility that could occur above and beyond.
Mr. Conaway. Those kind of things I think are just risks of
building a long-life asset.
You mentioned earlier when you talked to Mr. Runyan about
the cost of the Ford-class carrier and you said if some of the
component pieces don't come in on budget then that could push
it past the expected number. I read recently an article about
the catapult system for the ship and that it is new design and
the folks that were in charge had some very seeming to be rosy
pictures as to fixing all of the issues that might be
associated with it. Can you talk to us about that detail at
this stage?
Dr. Labs. I can't talk to you in detail about that. I would
say that that is the type of issue that is going to come up
when the Ford itself is fairly complete and they have to go
through the test program. How well the integration of the
catapult system went into the ship and how well that it
operates after the fact is going to be one of the potential
cost risks that are still outstanding for that particular ship
program.
Maybe Mr. O'Rourke might have more details on it at his
fingertips than I do.
Mr. O'Rourke. The EMALS system that you are referring to,
the Electromagnetic Aircraft Launch System, has been a subject
of oversight for a few years now in part because of the risk it
could pose to the ship's construction schedule. My impression
is that the period of maximum concern and risk in connection
with EMALS was 2 or 3 years ago, and that while we are not out
of the forest yet, we appear to be in a better situation today
than we were 2 or 3 years ago when the Navy had to focus a lot
of time and attention on making sure that they were getting
that effort stabilized. The advanced arresting gear is another
issue and GAO [Government Accountability Office] has
highlighted the dual-band radar as a third. So there are
technical issues out there that remain on the ship.
Mr. Conaway. You mentioned that that always happens with a
new ship. You put those into the relatively--I mean, still big
numbers. Are we at the point where we are now talking tens of
millions and it can still work, or you are beyond the point
that it would be a catastrophic wreck if it didn't work?
Mr. O'Rourke. I think Eric is the best person for that.
Dr. Labs. I do think we are, certainly in the case of the
EMALS and the arresting gear, that we are past the point where
it is going to be a catastrophic wreck. I do not believe that
you are going to end up with a very large helicopter carrier.
But at the same time that doesn't mean that there aren't going
to be risks associated with the final installation,
integration, and testing of the catapult system, and any
potential problems that may erupt from that could range
anywhere from just a few million dollars to fix to maybe
something substantially more than that, into, you know, $100
million or something like that. But I don't consider it a
catastrophic potential risk at this point.
Mr. Conaway. Thank you, gentlemen.
Mr. Chairman, thank you.
Mr. Forbes. Thank you, Mr. Conaway.
Just two last questions for you and then any comments that
you might have. It is my understanding as we started out, and
Mr. Hunter basically began this line of questioning, but if we
assume that we are going to have a similar funding stream for
ship construction as to what we have had for the last 30 years,
if we assume that the CNO means what he says about how he plans
to fund the Ohio class, and if we assume that sequestration,
which is currently the law, remains the law, then, Dr. Labs, it
is your projection that we will be in 30 years at approximately
228 ships in the United States Navy. Is that a fair assessment?
Dr. Labs. Approximately, yes, Mr. Chairman.
Mr. Forbes. Approximately.
The second question, we had testimony by at least one of
our admirals that talked about some of our peer competitors,
particularly the Russians, that when they set out a projected
number of submarines, for example, that they are going to
produce, you can pretty much set your watch based on the fact
that they are going to be produced in that number. We have a
little bit of a difficult time in our projections on our 30-
year shipbuilding plan.
If we have a stable funding stream, can both of you share
with us what is the greatest source of risk associated with
projecting the Navy's force structure under our 30-year
shipbuilding plan?
Dr. Labs. When you say a stable funding stream, that is at
the historical level, or a stable funding stream that is
somewhere closer to what the Navy estimates or what CBO
estimates needs for the 30-year plan?
Mr. Forbes. You can pick at either one, because if you have
the stable funding source you are still going to at least know
what amount of money you have. But still whatever projections
you make there are other factors that can play other than just
the dollars that you have that could impact on the number of
ships we ultimately produce. What would you say the major other
risk would be?
Dr. Labs. I would say that in my view there would be two
other potential risks to the shipbuilding plan or the potential
cost growth that could occur as a result of it. One would be
that even with a stable funding source you are still going to
want to have a stable plan to sort of minimize cost growth, to
the extent that you can for at least 4- or 5-year periods that
the number of ships of particular types and particular
quantities does not radically shift around a lot, give the
industry an opportunity to plan, to optimize their workforce,
optimize their shipbuilding processes.
The other potential risk that would be out there would be
some sort of change in the threat environment such that some
components of the plan, more than one perhaps, are no longer
considered to be as viable to deal with the threat, an emerging
threat, as the Navy had thought, and therefore a substantial
change is required, a change that could lead to design of
different types of ships, purchases of particular kinds, more
of one kind over another. All of that would definitely then
cause perturbations inside a stable funding stream.
Mr. Forbes. Both of those coming back of course to what
Mrs. Hanabusa raised in terms of the fluid nature really of
that 30-year shipbuilding plan.
Dr. Labs. Yes, sir.
Mr. Forbes. Mr. O'Rourke, any comment on that?
Mr. O'Rourke. My answer was going to be the same as the
final part of Eric's. I think the largest risk would be a shift
in the international security environment that might require a
larger scale change in the plan, one that would take years to
implement, and we might be in a situation of trying to catch up
for a while before we were back on an even keel.
Mr. Forbes. We thank you both for being here. I want to end
up with the promise that I made at the beginning. Do either of
you have any wrap-up comments that you want to get on the
record, things that we did not ask that you think were
important that we should have had on the record in looking and
assessing this 30-year plan?
And, Dr. Labs, I would like to start with you with any
final wrap-up comments you might have.
Dr. Labs. Well, Mr. Chairman, I don't believe I really have
too many in terms of the final comments. I guess the one
clarification I would like to make is that on the potential for
a 228-ship plan there, you said assuming that sequestration
remains in place. I would interpret that to be quite literally
that sequestration would actually be having that effect.
Because clearly under the BCA policymakers could choose to fund
different parts of the Department of Defense differently, so
they could fully fund the shipbuilding program at the expense
of other programs. So it would simply assume that proportionate
reduction that I was referring to early on.
But beyond that, I would say that one of the things that
concerns me the most, and it is not that I haven't stated it, I
would just like to emphasize it, is the assumptions that go
into service lives of these ships. The 40-year assumptions for
cruisers and destroyers when we are already looking at a
shortfall is something that needs to keep an eye on very
closely, that the Navy is properly funding, modernizing, and
operating and maintaining those ships so that they can last
even what the designers have suggested that they would last.
Because if you end up getting where the ships aren't going to
last as long as the Navy had expected you are just going to be
increasing your shortfall substantially or you are going to
require substantially additional resources in a relatively
short period of time to be able to compensate for that
potential.
Mr. Forbes. Which is what Mr. Conaway was addressing in his
questions, I believe.
Mr. O'Rourke.
Mr. O'Rourke. Three points. I want to return to the point I
spoke about earlier about air wing composition in connection
with Ranking Member McIntyre's question. If we go to a smaller
fleet that has fewer carriers, there are in broad form three
options for what you might want to do concerning the richness
or the composition of the mix of that air wing.
One would be to say that if you are in an environment where
you are cutting costs you might also want to think about
reducing proportionately the cost of each air wing, and that
might involve under some people's calculations an air wing that
would have a greater number of Super Hornets and fewer F-35s.
A second way of responding to that situation is to say
that, although you are going to have a fewer number of air
wings to correspond to your smaller number of carriers, you
keep the air wing composition the same as currently planned.
And the third option is the one that I spoke about at the
beginning, which is to say that, well, if we are going to have
a fewer number of air wings we might want to have each air wing
be enriched in terms of its use of the newest technologies,
which might argue in favor of having each air wing have a
greater number of F-35s and perhaps a smaller number of Super
Hornets than currently planned.
So there are three broad options out there for how you
might want to respond to a situation of reduced spending for
the Navy as a whole and therefore a smaller number of carriers
and carrier air wings.
The second point I want to make is to emphasize what Eric
has said about the risk of service lives, and I think there is
a considerable risk in that regard right now with the DDG-51
fleet. They are being used quite intensively, and it is not
clear to me that the Navy's maintenance of these ships is what
the Navy would prefer it to be for a ship that actually is
intended to remain in service for 35 years.
We might already be behind the curve in terms of the amount
of maintenance we have put into those ships already, and we
might already be in a situation of having to play catchup to
make sure that those ships can last to 35 years, or even to 30
years in the view of some observers. So I think the service
life of the DDG-51 fleet and the maintenance we are putting
into that fleet and the intensity with which we are using it
today bears watching.
And the third final comment I wanted to make is something I
didn't have a chance to mention in my opening remarks, and that
is how we look at technology in this overall situation. One of
the points I make in my prepared statement is that the
discussion of technology in defense acquisition in recent years
in my view has become very heavily weighted toward looking at
technology as a source of program risk for schedule and
technical and cost risk. And it seems to me that what is in
danger of being lost by focusing so much on technology as a
source of risk is the idea that technology also represents an
opportunity for reducing costs, for reducing both procurement
costs and lifecycle O&S costs.
And my hope is that as we go ahead in the evaluation of
technology, that we continue to look at it not only in terms of
its implications for program risk, but also in terms of
opportunity for reducing costs and therefore improving the
affordability situation regarding the 30-year shipbuilding
plan. If we don't, we could begin to drift toward a situation
where we take programs in a direction that might be
technologically safer, but in the end, even though they might
be safer and less controversial, they might wind up being more
expensive than necessary, in which case we have made the
situation of the affordability of the 30-year shipbuilding plan
more challenging than it needed to be.
Mr. Forbes. Gentlemen, thank you both for your service to
our country, to Congress, and thanks for sharing your research
with us today. And with that, we are adjourned.
[Whereupon, at 3:45 p.m., the subcommittee was adjourned.]
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A P P E N D I X
October 23, 2013
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PREPARED STATEMENTS SUBMITTED FOR THE RECORD
October 23, 2013
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[GRAPHIC] [TIFF OMITTED] =======================================================================
WITNESS RESPONSES TO QUESTIONS ASKED DURING
THE HEARING
October 23, 2013
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RESPONSE TO QUESTION SUBMITTED BY MR. HUNTER
Dr. Labs. Mr. Hunter asked what percentage of the Navy's budget is
spent on shipbuilding, modernization, repair, and everything else that
is needed to ensure that the current fleet lasts long enough to meet
the Navy's service life goals.
Unfortunately, CBO does not have sufficient resources to analyze
the Navy's budget line by line to determine all of the funding that
provides for ship construction, modernization, and repair. [See page
10.]
?
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QUESTIONS SUBMITTED BY MEMBERS POST HEARING
October 23, 2013
=======================================================================
QUESTIONS SUBMITTED BY MR. FORBES
Mr. Forbes. Using an historical average as a method to project the
30-year shipbuilding plan forward, can you provide an assessment as to
your projection of number of ships that we should anticipate at the end
of the 30-year shipbuilding plan?
Dr. Labs. If, over the next 30 years, the Navy receives the same
amount of funding in its shipbuilding accounts that it received over
the last 30 years after adjusting for inflation--which is about $16
billion per year in 2013 dollars--then the service would end up with a
fleet in 2043 of 243 ships. That number assumes that the Navy would buy
the same types of ships that it plans to buy in its 2014 shipbuilding
plan but would buy proportionately fewer numbers of each type, and it
incorporates CBO's estimates of the cost of building each type of ship.
For the next 30 years as a whole, that amount of funding would be $160
billion less than CBO's estimate of the cost of the Navy's shipbuilding
plan.
Mr. Forbes. Assuming a full sequester and your budget projections,
how will the overall Navy force structure and 30-year shipbuilding plan
be impacted?
Dr. Labs. Senior Navy officials have stated that sequestration of
the Navy's shipbuilding accounts in fiscal year 2014 would result in
the Navy's not buying an attack submarine, a littoral combat ship, and
an afloat forward staging base. In addition, sequestration in 2014
would likely make it impossible for the Navy to complete the purchase
of a third DDG-51 destroyer authorized by Congress in 2013.
Beyond 2014, the effect of the Budget Control Act of 2011 on the
Navy's shipbuilding depends on choices made by lawmakers. During the
past 15 years, the Department of the Navy has received about 30 percent
of the Department of Defense's base budget and has devoted about 10
percent of its funding to shipbuilding. Going forward, if lawmakers
chose to protect shipbuilding and ship maintenance at the expense of
other defense programs, then any further effect on the Navy's force
structure would be minimal. Alternatively, if lawmakers provided the
Navy with the same percentage of DOD's budget during the coming decade
as it has received in the past 15 years and the same percentage of the
Navy's overall budget was devoted to ship construction as has been the
case in the past 15 years, then the shipbuilding budget would be a
little less than $13 billion per year from 2014 through 2021. That
amount would be about $5 billion per year--or roughly 30 percent--below
CBO's estimate of the amount required to carry out the Navy's latest
shipbuilding plan. (According to CBO's estimates, the Navy's 2014
shipbuilding plan would cost about $140 billion between 2014 and 2021,
while complying with the BCA's lower caps on defense funding with the
historical allocation of funding would give the Navy about $102 billion
for ship construction.) With that funding, if the Navy bought the same
types of ships that it plans to buy in its 2014 shipbuilding plan but
bought proportionately fewer numbers of each type, the Navy would buy
44 ships between 2014 and 2021, rather than 61 ships under the Navy's
plan.
Mr. Forbes. In your report, you indicated that the Navy has
traditionally been unsuccessful in obtaining the full service life of
the surface combatants. How will the 30-year shipbuilding plan be
impacted if the Navy cannot obtain the full service life of its ships?
In your estimation, what is the greatest threat to the Navy that will
impede the Navy from obtaining the full service life?
Dr. Labs. The Navy's 2014 shipbuilding plan, consistent with the
plans the Navy has submitted to Congress over the last few years,
assumes a 50-year service life for carriers; a 40-year service life for
most surface combatants, amphibious ships, and logistics ships; a 42-
year service life for ballistic missile submarines, a 33-year service
life for attack submarines, and a 25-year service life for littoral
combat ships. If the Navy cannot meet those goals for service life for
large numbers of ships, then the result will either be a smaller fleet
than the Navy is planning or a greater need for funding to buy more
ships sooner than expected. The greatest risk to the intended service
lives is probably with large surface combatants. The Navy has
demonstrated, through the long service of the USS Enterprise, that it
can operate nuclear-powered aircraft carriers for more than 50 years.
Similarly, the Navy has successfully operated and retired a few
amphibious ships at 40 years and Los Angeles class attack submarines at
33 years. However, the Navy is inexperienced at operating surface
combatants for more than 30 years. The most likely reason why the Navy
might not achieve its service life goal for surface combatants would be
insufficient investment in maintaining and modernizing those ships. The
history of ship operations in the U.S. Navy and in other navies
suggests that surface ships can operate for decades and their combat
systems can be continually upgraded to respond to changes in the threat
environment--if policymakers choose to do so and allocate the resources
to do so.
Mr. Forbes. Given a stable funding stream, what is the greatest
source of risk associated with projecting the Navy's force structure
and 30-year shipbuilding plan?
Dr. Labs. 1If the Navy's funding stream for shipbuilding was
relatively stable over time, there are still at least four significant
risks involved in projecting the Navy's force structure and 30-year
shipbuilding plan--and it is unclear which risk is the greatest.
First, the Navy might make significant changes in the
number or types of ships that it plans to buy. Such instability in the
Navy's shipbuilding, particularly in the near term, would also make it
difficult for the shipbuilding industry to optimize their workforce and
their shipbuilding processes to build ships in the most efficient and
cost-effective manner.
Second, and related to the first risk, unexpected cost
growth for ships could result in fewer ships being purchased than what
the Navy proposes in its shipbuilding plan.
Third, a change in the projected future threat
environment such that major components of the Navy's shipbuilding plan
would no longer be considered viable would make it difficult to project
the Navy's future force structure. Such a change in the security
environment could lead to decisions to design and purchase different
types of ships in different quantities than what the Navy has
previously expected.
Fourth, the Navy's 30-year shipbuilding plan is not just
a shipbuilding plan but also a ship retirement plan. If the Navy does
not invest sufficiently in the existing fleet so that ships are not
maintained properly and modernized as needed, then ships may be retired
sooner than the Navy planned.
Mr. Forbes. The Navy has proposed retiring the four SSGN boats and
replacing their strike capability with the Virginia Payload Module. The
Navy has also forecast a reduced cost associated with this capability.
In your estimate, what capability is provided by the Virginia Payload
Module and what is the program and cost risk associated with developing
this capability?
Dr. Labs. The Virginia Payload Module (VPM) provides a substantial
increase in the capability of Virginia class attack submarines to
conduct strike and special operations missions. The VPM inserts a new
section in the Virginia class submarines that is composed of four
multiple all-up round canisters (MACs), each of which can carry seven
missiles, such as Tomahawk land-attack weapons. Alternatively, the
canisters could carry other payloads associated with special operations
or reconnaissance if the Navy chose to configure them for those
missions. The 28 additional missiles provided by a VPM increases the
number of weapons positions (missiles and torpedoes) on a Virginia
class submarine from 39 to 67.
In light of the Navy's experience with modifying submarines to
perform different missions than originally intended (such as changing
the USS Jimmy Carter from an ordinary Seawolf attack submarine to one
specialized for special operations, and converting ballistic missile
submarines into cruise missile-carrying submarines), the technical
challenges of designing VPM into the Virginia class seem relatively
limited. CBO has not produced an independent cost estimate of VPM-
modified submarines because the Navy has not incorporated that change
in the class into its 30-year shipbuilding plan. However, the Navy has
stated in briefings to CBO and the Congressional Research Service that
designing the VPM into the Virginia class would increase the unit cost
of those ships by 13 to 15 percent.
Mr. Forbes. How confident are you in the cost projection associated
with the Ford class aircraft carrier that Navy has proposed? What
elements cause the greatest risk to obtaining a Ford class aircraft
carrier within the proposed budget?
Dr. Labs. The Navy currently estimates that the CVN-78 will cost
$12.8 billion in nominal dollars, whereas CBO estimates that it will
cost $13.5 billion in nominal dollars. The Navy's current estimate is
22 percent higher, after adjusting for inflation, than the service's
estimate first published as part of the 2008 budget submission. The
additional cost that CBO has built into its own estimate could come
from at least three sources: contractor performance, the integration of
major component systems as the ship enters the final 30 percent of
construction, and problems that arise from the testing regime that will
occur once the ship is completed. If contractor performance does not
deteriorate from where it is today, if integration of the major systems
on the ship runs smoothly, and if the test program reveals only minor
problems, then the final cost of the CVN-78 will likely be less than
CBO's estimate (but not less than the Navy's current estimate).
Conversely, if any one of those issues proves problematic in the final
two years of construction, then the final cost of the CVN-78 will
likely be higher than the Navy's estimate and higher than the
Congressional cost cap for the ship of $12.9 billion in nominal
dollars.
The next carrier to be built, the CVN-79, which was ordered in
2013, may also experience cost growth. The Navy estimates the cost of
that ship at $11.3 billion in nominal dollars, and CBO estimates the
cost at $12.0 billion. The Navy itself describes its estimate as an
``aggressive but achievable target.'' Both the Navy and CBO assume that
the contractor will improve its performance on the second ship of the
class, as customarily occurs in ship construction program. But CBO does
not expect that construction performance will improve as much as the
Navy is expecting.
Mr. Forbes. During recent testimony, the Chief of Naval Operations
indicated his intent to maintain the Ohio class replacement program as
a priority acquisition. Navy projects that this program is expected to
cost more than $80 billion. Considering your projections associated
with 30-year shipbuilding plan and assuming an historical funding
model, how will the overall fleet size be impacted if the Navy retains
the current program of record associated with the Ohio class
replacement?
Dr. Labs. During the past 30 years, the Department of the Navy has
received about $16 billion, after adjusting for inflation, to fund all
of the activities in its shipbuilding accounts. If lawmakers provided
the Navy with those same (inflation-adjusted) resources in the future,
and if the Navy bought the same types of ships that it plans to buy in
its 2014 shipbuilding plan but bought proportionately fewer numbers of
each type, the Navy would purchase 193 ships during the next 30 years
and would finish that period with an inventory of 243 ships. (For
comparison, the Navy's 30-year shipbuilding plan calls for the purchase
of 266 ships and an inventory in 30-years' time of 306 ships. Under
that scenario, nine ballistic missile submarines would be part of the
243-ship fleet. If, however, the Navy purchased the 12 ballistic
missile submarines that are included in its latest plan and made
further proportional reductions in its purchases of other ships, then
it would purchase seven fewer ships of other types and have a fleet in
30 years that numbered 235 ships.
Mr. Forbes. Assuming a full sequester and your budget projections,
how will the overall Navy force structure and 30-year shipbuilding plan
be impacted?
Mr. O'Rourke. Overall Navy force structure and the 30-year
shipbuilding plan will be affected in coming years not only by the
future DOD budget top line as influenced by the Budget Control Act or
other legislation, but also by additional factors, such as the
allocation of the DOD budget top line among the military departments
and by the portion of the DOD budget top line that is used for other
expenses, including military pay and benefits and DOD's so-called
overhead and back-office costs. Presentations from the Navy, CBO, GAO,
or other sources on future Navy force structure and the 30-year
shipbuilding plan sometimes appear to assume little or no change in
these additional factors, perhaps because there is no specific basis
that can be cited for assuming a particular change. The fact that other
organizations choose to assume little or no change in these additional
factors does not prevent Congress from considering such possibilities.
The alternative of assuming at the outset that there is no potential
for making anything more than very marginal changes in these additional
factors could unnecessarily constrain options available to policymakers
and prevent the allocation of DOD resources from being aligned
optimally with U.S. strategy.
In a situation of reduced levels of defense spending, such as what
would occur if defense spending were to remain constrained to the
revised cap levels in the Budget Control Act, the affordability
challenge posed by the 30-year shipbuilding plan would be intensified.
Even then, however, the current 30-year shipbuilding plan would not
necessarily become unaffordable.
The Navy estimates that, in constant FY2013 dollars, fully
implementing the current 30-year shipbuilding plan would require an
average of $16.8 billion in annual funding for new-construction ships,
compared to an historic average of $12 billion to $14 billion provided
for this purpose.\1\ The required increase in average annual funding of
$2.8 billion to $4.8 billion per year equates to less than 1% of DOD's
annual budget under the revised caps of the Budget Control Act. The
Congressional Budget Office estimates that, in constant FY2013 dollars,
fully implementing the current 30-year shipbuilding plan would require
an average of $19.3 billion in annual funding for new-construction
ships, or $2.5 billion per year more than the Navy estimates.\2\ This
would make the required increase in average annual funding $5.3 billion
to $7.3 billion per year, which equates to roughly 1.1% to 1.5% of
DOD's annual budget under the revised caps of the Budget Control Act.
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\1\ See Report to Congress on the Annual Long-Range Plan for
Construction of Naval Vessels for FY2014, May 2013, p. 18.
\2\ Congressional Budget Office, An Analysis of the Navy's Fiscal
Year 2014 Shipbuilding Plan, October 2013, Table 3 (page 13).
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Some observers, noting the U.S. strategic rebalancing toward the
Asia-Pacific region, have advocated shifting a greater share of the DOD
budget to the Navy and Air Force, on the grounds that the Asia-Pacific
region is primarily a maritime and aerospace theater for DOD. In
discussing the idea of shifting a greater share of the DOD budget to
the Navy and Air Force, some of these observers refer to breaking the
so-called ``one-third, one-third, one-third'' division of resources
among the three military departments--a shorthand term sometimes used
to refer to the more-or-less stable division of resources between the
three military departments that existed for the three decades between
the end of U.S. participation in the Vietnam War in 1973 and the start
of the Iraq War in 2003.\3\ In a context of breaking the ``one-third,
one-third, one-third'' allocation with an aim of better aligning
defense spending with the strategic rebalancing, shifting 1.5% or less
of DOD's budget into the Navy's shipbuilding account would appear to be
quite feasible.
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\3\ The ``one-third, one-third, one-third'' terminology, though
convenient, is not entirely accurate--the military departments' shares
of the DOD budget, while more or less stable during this period, were
not exactly one-third each: the average share for the Department of the
Army was about 26%, the average share for the Department of the Navy
(which includes both the Navy and Marine Corps) was about 32%, the
average share for the Department of the Air Force was about 30%, and
the average share for Defense-Wide (the fourth major category of DOD
spending) was about 12%. Excluding the Defense-Wide category, which has
grown over time, the shares for the three military departments of the
remainder of DOD's budget during this period become about 29% for the
Department of the Army, about 37% for the Department of the Navy, and
about 34% for the Department of the Air Force.
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More broadly, if defense spending were to remain constrained to the
revised cap levels in the Budget Control Act, then fully funding the
Department of the Navy's total budget at the levels shown in the
current Future Years Defense Plan (FYDP) would require increasing the
Department of the Navy's share of the non-Defense-Wide part of the DOD
budget to about 41%, compared to about 36% in the FY2014 budget and an
average of about 37% for the three-decade period between the Vietnam
and Iraq wars.\4\ While shifting 4% or 5% of DOD's budget to the
Department of the Navy would be a more ambitious reallocation than
shifting 1.5% or less of the DOD budget to the Navy's shipbuilding
account, similarly large reallocations have occurred in the past:
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\4\ Since the Defense-Wide portion of the budget has grown from
just a few percent in the 1950s and 1960s to about 15% in more recent
years, including the Defense-Wide category of spending in the
calculation can lead to military department shares of the budget in the
1950s and 1960s that are somewhat more elevated compared to those in
more recent years, making it more complex to compare the military
departments' shares across the entire period of time since the end of
the World War II. For this reason, military department shares of the
DOD budget cited in this statement are calculated after excluding the
Defense-Wide category. The points made in this statement, however, can
still made on the basis of a calculation that includes the Defense-Wide
category.
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From the mid-1950s to the mid-1960s, reflecting a U.S.
defense strategy at the time that placed a strong reliance on the
deterrent value of nuclear weapons, the Department of the Air Force's
share of the non-Defense-Wide DOD budget increased by several
percentage points. The Department of the Air Force's share averaged
about 45% for the 10-year period FY1956-FY1965, and peaked at more than
47% in FY1957-FY1959.
For the 11-year period FY2003-FY2013, as a consequence of
combat operations in Iraq and Afghanistan, the Department of the Army's
share of the non-Defense-Wide DOD budget increased by roughly ten
percentage points. The Department of the Army's share during this
period averaged about 39%, and peaked at more than 43% in FY2008. U.S.
combat operations in Iraq and Afghanistan during this period reflected
the implementation of U.S. national strategy as interpreted by
policymakers during those years.
The point here is not to argue whether it would be right or wrong
to shift more of the DOD budget to the Navy's shipbuilding account or
to the Department of the Navy's budget generally. Doing that would
require reducing funding for other DOD programs, and policymakers would
need to weigh the resulting net impact on overall DOD capabilities. The
point, rather, is to note that the allocation of DOD resources is not
written in stone, that aligning DOD spending with U.S. strategy in
coming years could involve changing the allocation by more than a very
marginal amount, and that such a changed allocation could provide the
funding needed to implement the current 30-year shipbuilding plan.
As an alternative or supplement to the option of altering the
allocation of DOD resources among the military departments, the 30-year
shipbuilding plan could also become more affordable by taking actions
beyond those now being implemented by DOD to control military personnel
pay and benefits and reduce what some observers refer to as DOD's
overhead or back-office costs. Multiple organizations have made
recommendations for such actions in recent years. The Defense Business
Board, for example, estimated that at least $200 billion of DOD's
enacted budget for FY2010 constituted overhead costs. The board stated
that ``There has been an explosion of overhead work because the
Department has failed to establish adequate controls to keep it in line
relative to the size of the warfight,'' and that ``In order to
accomplish that work, the Department has applied ever more personnel to
those tasks which has added immensely to costs.'' The board stated
further that ``Whether it's improving the tooth-to-tail ratio;
increasing the `bang for the buck', or converting overhead to combat,
Congress and DOD must significantly change their approach,'' and that
DOD ``Must use the numerous world-class business practices and proven
business operations that are applicable to DOD's overhead.''\5\
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\5\ Defense Business Board briefing, ``Reducing Overhead and
Improving Business Operations, Initial Observations,'' July 22, 2010,
slides 15, 5, and 6, posted online at: http://www.
govexec.com/pdfs/072210rb1.pdf. See also Defense Business Board,
Modernizing the Military Retirement System, Report to the Secretary of
Defense, Report FY11-05, posted online at:
http://dbb.defense.gov/Portals/35/Documents/Reports/2011/FY11-
5_Modernizing_The_Military_
Retirement_System_2011-7.pdf; and Defense Business Board, Corporate
Downsizing Applications for DOD, Report to the Secretary of Defense,
Report FY11-08, posted online at: http://dbb.defense.gov/Portals/35/
Documents/Reports/2011/FY11-8_Corporate_Downsizing_Applications
_for_DoD_2011-7.pdf.
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One potential way to interpret the affordability challenge posed by
the Navy's 30-year shipbuilding plan is to view it as an invitation by
the Navy for policymakers to consider matters such as the alignment
between U.S. strategy and the division of DOD resources among the
military departments, and the potential for taking actions beyond those
now being implemented by DOD to control military personnel pay and
benefits and reduce DOD overhead and back-office costs. The Navy's
prepared statement for the September 18 hearing before the full
committee on planning for sequestration in FY2014 and the perspectives
of the military services on the Strategic Choices and Management Review
(SCMR) provides a number of details about reductions in Navy force
structure and acquisition programs that could result from constraining
DOD's budget to the revised cap levels in the Budget Control Act.\6\
These potential reductions do not appear to reflect any substantial
shift in the allocation of DOD resources among the military
departments, or the taking of actions beyond those already being
implemented by DOD to control DOD personnel pay and benefits and reduce
DOD overhead and back-office costs.
---------------------------------------------------------------------------
\6\ Statement of Admiral Jonathan Greenert, U.S. Navy, Chief of
Naval Operations, Before the House Armed Services Committee on Planning
for Sequestration in FY 2014 and Perspectives of the Military Services
on the Strategic Choices and Management Review, September 18, 2013, pp.
6-10.
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Mr. Forbes. What is your sense as to the adequacy of the size of
the current Navy fleet? Do you think the current ``mix'' of ships is
correct?
Mr. O'Rourke. The adequacy of the size of the Navy is best judged
against U.S. strategic goals and the Navy's consequent assigned
missions, including missions that the Navy performs on a day-to-day
basis with forward-deployed Navy ships. Some press reports suggest that
the extended forward deployments now being made by certain Navy ships
may be taking a toll on Navy personnel and ships, and may not be
sustainable over the long run.\7\ If that is the case, the situation
could be addressed by doing one or more of the following: reducing the
Navy's assigned missions, making greater use of measures for maximizing
forward-deployed presence (such as forward homeporting, forward
stationing with crew rotation, and multiple crewing), and increasing
fleet size.
---------------------------------------------------------------------------
\7\ See, for example, Dan Taylor, ``Blake: Long Ship Deployments
`Unsustainable,' Prioritization Necessary,'' Inside the Navy, December
3, 2012; Sam Fellman, ``CNO: High Op Tempo Straining Fleet,'' Navy
Times, October 8, 2012: 19; Sam Fellman, ``Pushing The Fleet Too Far?''
Navy Times, March 12, 2012: 18; Mike McCarthy, ``Admiral Warns Of
`Burning' Out Ships, Aircraft,'' Defense Daily, March 1, 2012: 4;
William H. McMichael, ``The New Norm: Longer Tours,'' Navy Times,
December 5, 2011: 22-24; Sam Fellman and Joshua Stewart, ``Torrid
Operational Pace Taxes U.S. Navy,'' Defense News, April 11, 2011: 23.
---------------------------------------------------------------------------
Regarding the Navy's mix of ships, there is a debate currently
underway within the broader U.S. community of those who study naval
forces about whether the U.S. Navy should shift from its current fleet
architecture to a more-distributed architecture that would include
fewer large ships (such as aircraft carriers and large surface
combatants) and greater numbers of smaller ships (such as smaller
aircraft carriers and small surface combatants). Advocates of a more-
distributed fleet architecture--who appear to include, among others,
analysts working at the Naval Postgraduate School--argue that a more-
distributed architecture would offer benefits in terms of fleet
affordability and effectiveness in countering adversaries who field
capable maritime anti-access/area-denial (A2/AD) systems.\8\ The Navy
and other supporters of the Navy's current fleet architecture disagree
on both of these points.
---------------------------------------------------------------------------
\8\ See, for example, Wayne P. Hughes, Jr., The New Navy Fighting
Machine: A Study of the Connections Between Contemporary Policy,
Strategy, Sea Power, Naval Operations, and the Composition of the
United States Fleet, Monterey (CA), Naval Postgraduate School, August
2009, 68 pp.; Timothy C. Hanifen, ``At the Point of Inflection,'' U.S.
Naval Institute Proceedings, December 2011: 24-31; David C. Gompert,
Sea Power and American Interests in the Western Pacific, RAND, Santa
Monica (CA), 2013, 193 pp. (RR-151-OSD); and John Harvey Jr., Wayne
Hughes Jr., Jeffrey Kline, and Zachary Schwartz, ``Sustaining American
Maritime Influence,'' U.S. Naval Institute Proceedings, September 13,
2013: 46-51.
---------------------------------------------------------------------------
Participants on the two sides of this debate appear to proceed from
differing or even contradictory views on underlying factors such as the
likely effectiveness of adversary A2/AD weapons, the likely
effectiveness of U.S. Navy systems for countering them, the resulting
likely survivability of Navy surface ships to attack from such weapons,
and how the survivability of a ship changes as a function of ship size.
Due to differences on matters such as these, it can sometimes appear as
if the two groups are almost talking past one another.
One option for the subcommittee would be to attempt to understand
why the two groups have come to such differing views on these
underlying issues. More generally, the subcommittee may wish to monitor
(and perhaps participate in) this debate, because its outcome could
have significant implications for Navy proposals to Congress regarding
the planned size and structure of the fleet, and for the types and
numbers of ships included in the 30-year shipbuilding plan.
Mr. Forbes. The Navy has proposed retiring the four SSGN boats and
replacing their strike capability with the Virginia Payload Module. The
Navy has also forecast a reduced cost associated with this capability.
In your estimate, what capability is provided by the Virginia Payload
Module and what is the program and cost risk associated with developing
this capability?
Mr. O'Rourke. Although the Navy often characterizes the Virginia
Payload Module (VPM) in terms of the additional capacity it would
provide for Tomahawk cruise missiles, the large-diameter launch tubes
in the VPM could also be used for other payloads, including other types
of missiles or large-diameter unmanned underwater vehicles (UUVs). The
VPM would enhance the mission capability and capacity of the Virginia-
class design by adding substantial payload volume and four flexible,
large-diameter ocean interfaces.
Altering the Virginia-class design to accommodate the VPM would add
technical and cost risk to the Virginia-class program. The Navy has
already changed the Virginia-class design in various ways, perhaps most
significantly in the bow area, where the design was changed to replace
twelve smaller-diameter vertical launch tubes with two large-diameter
vertical launch tubes. The Navy executed this and other design changes
as part of a strategy for reducing the time and cost of building
Virginia-class boats. The idea of lengthening the Virginia-class design
to accommodate the VPM is broadly comparable to the Navy's earlier
project to lengthen the Jimmy Carter (SSN-23), the third and final
Seawolf (SSN-21) class submarine, to accommodate an additional section
roughly 100 feet in length that provides that ship with additional
mission capability. A review of the SSN-23 project might provide some
perspective on the Navy's ability to manage the lengthening of the
Virginia-class design to accommodate the VPM. The Navy reportedly
examined several design concepts for the VPM and selected a concept
that the Navy believes represents the lowest-cost approach.\9\ The Navy
states that among the concepts studied, the selected concept would
require the ``least amount of baseline ship disruption.''\10\
---------------------------------------------------------------------------
\9\ ``Navy Selects Virginia Payload Module Design Concept,'' USNI
News (http://news.usni.org), November 4, 2013.
\10\ Briefing to Naval Submarine League Symposium, Rear Admiral
David Johnson, Program Executive Officer, Submarines, 24 October 24,
2013, slide 6, entitled ``VIRGINIA Payload Modules Under Review.''
---------------------------------------------------------------------------
Mr. Forbes. How confident are you in the cost projection associated
with the Ford class aircraft carrier that Navy has proposed? What
elements cause the greatest risk to obtaining a Ford class aircraft
carrier within the proposed budget?
Mr. O'Rourke. The Navy indicated in a briefing on the CVN-78 class
program to CRS and CBO in May that there is a risk of further cost
growth on the CVN-78 related to schedule and ``unknowns'' associated
with the ship's shipboard test program. Potential sources of cost risk
for CVN-79 include the impact of any changes that are incorporated into
the ship's design; the ability to achieve the efficiencies targeted in
the CVN-79 build plan, including efficiencies associated with improved
material purchasing and for achieving learning-curve effects ``inside
the ship'' (i.e., learning that can occur in heel-to-toe production of
CVN-79 modules that are similar to one another); material costs; and
shipyard productivity. If the general pattern of past Navy shipbuilding
programs holds in the CVN-78 class program, there may be less overall
cost risk for CVN-79 than for CVN-78. The procurement cost of CVN-79
could be reduced by incorporating it into a block buy contract with
either CVN-78 or CVN-80.
Mr. Forbes. The original capability development document (CDD),
which defines requirements for the Littoral Combat Ship, states that
LCS would be developed primarily for employment in major combat
operations. It would address vital warfighting gaps, replacing the
capabilities of decommissioning Frigates, Mine-Warfare ships, and
Patrol Class ships. As stated in the original LCS Required Operational
Capability/Projected Operational Environment (ROC/POE), ``the LCS's
mission is to operate offensively in a high density, multi-threat
littoral environment independently or as an integral member of a
Carrier-Strike Group, Expeditionary Strike Group, or Surface Action
Group. However, at a National Press Club breakfast on April 12, 2013,
Navy officials stated that ``these are not large surface combatants
that are going to sail into the South China Sea and challenge the
Chinese military; that's not what they're made for'' and that ``I don't
worry per se about its survivability where I would intend to send it,
[because] you won't send it into an anti-access area.'' Will LCS ever
be able to meet its original combat requirements of being able to
operate offensively in a high-density, multi-threat littoral
environment independently?
Mr. O'Rourke. As a matter of parsing the ROC/POE language, it can
be observed that ``a high density, multi-threat littoral environment''
might not necessarily be the same as a high-threat environment. High
density can mean that the environment includes many other contacts,
including civilian craft that may pose no threat to the ship. Multi-
threat means more than one threat, or perhaps more than one type of
threat. Those two factors can add up to a complex operating
environment, but they need not necessarily add up to a high-threat
environment. If the authors of ROC/POE had meant a high-threat
environment, they might have simply used that term, rather than the
more complex term ``high density, multi-threat littoral environment.''
The LCS program was initiated to address identified gaps in the
Navy's littoral warfighting capabilities for countering mines, small
boats, and diesel submarines. Accordingly, the three core missions of
the LCS are to counter mines, small boats, and diesel submarines,
particularly in littoral waters. In performing these three core
missions, the LCS can contribute to the Navy's overall ability for
countering littoral anti-access/area denial (A2/AD) capabilities of
various kinds that have been fielded by countries such as Iran. The LCS
was not designed to act as a primary platform for the Navy for
performing other kinds of warfighting missions in littoral waters, such
as area anti-air warfare (AAW), ballistic missile defense, or naval
surface fire support. Missions such as these are to be performed in
littoral waters primarily by other Navy platforms. If the operating
environment does not pose threats other than the three kinds of threats
the LCS is designed to counter, then the LCS might be able to operate
independently. If the operating environment poses threats other than
the three kinds of threats that the LCS is designed to counter, then
the LCS would need to operate in conjunction with other Navy platforms.
For example, in an environment where there is a significant threat
posed by anti-ship cruise missiles, the LCS might operate in
conjunction with Aegis cruisers or destroyers, which have an area AAW
capability. Other types of Navy combatants, such as aircraft carriers,
cruisers/destroyers, and frigates, might also need to operate in
conjunction with other Navy platforms in certain operating
environments.
If the Navy can successfully address LCS sea frame design issues
and bring the LCS's mine countermeasures (MCM), surface warfare (SUW),
and antisubmarine warfare (ASW) mission packages to IOC, the LCS would
be in a position to perform its three core missions. In assessing the
cost effectiveness of the LCS program and how many LCS sea frames and
mission packages to procure, central questions include the following:
Are the LCS's three core missions of countering mines,
small boats, and diesel submarines, particularly in littoral waters,
still valid?
If the LCS's three core missions are still valid, does
the LCS represent the most cost effective way for performing these
three missions? (And if not, what other way would be more cost
effective?)
If the LCS represents the most cost effective way to
perform these three missions, how many LCSs and LCS mission packages
are needed to provide a sufficient capacity for performing them?
In a situation of constrained defense resources, where
does having capability and capacity for performing the LCS's three core
missions stand in comparison to other defense spending priorities?
______
QUESTIONS SUBMITTED BY MR. LANGEVIN
Mr. Langevin. The DDG-1000 class includes a number of key enabling
technologies, such as advanced propulsion and power generation and
distribution, increased ship automation, changes in shipbuilding
processes, and large ship margins. These are very capable ships, and
the Navy and the shipbuilders have invested a lot of time and resources
into researching and developing the technologies they carry. What are
the prospects for harvesting these investments across programs beyond
the existing 3-ship buy?
Dr. Labs. Prior to the Navy's decision in 2010 to restart the DDG-
51 program, the Navy had a clear plan to incorporate the new
technologies of the DDG-1000 program into its surface combatant force.
The Navy had planned to purchase 7 or more DDG-1000s, and then the main
systems and hull form of that ship were intended to be the foundation
on which the Navy would develop a new cruiser, designated at the time
as the CG(X), that would ultimately replace the Ticonderoga class
ships. With the restart of the DDG-51 program and the plan to develop
an upgraded version of that ship, designated the DDG-51 Flight III, the
Navy has not articulated a path for incorporating key technologies from
the DDG-1000 program into the Navy's future surface combatant force.
The new Flight III will have new, much more powerful radar and combat
system as well as improved systems to support them, but the ship will
not have an integrated power system and electric drive, an advanced gun
system, or other new systems, nor will it incorporate technologies to
reduce ship manning and operating costs. In addition, the Navy's 30-
year shipbuilding plan describes the follow-on surface combatant to the
Flight III as a DDG-51 Flight IV, with only a modest increase in the
average cost per ship over the DDG-51 Flight III. That suggests that
the Navy is not planning major changes to the follow-on design that
would allow for incorporating the DDG-1000's technologies. However,
this does not mean that the Navy could not develop a new design for a
surface combatant that would include technologies from the DDG-1000
program. Alterations of this sort in the Navy's 30-year shipbuilding
plans have occurred numerous times in the past.
Mr. Langevin. Mr. Labs, you mention the Virginia Payload Module
effort and that it will require additional as-yet-unbudgeted resources
in order to offset the capability gap brought on by SSGN retirement. I
and many of my colleagues believe that this investment is absolutely
key in terms of enabling our Navy in future years--not just through
land-attack capability, but also through the flexibility those tubes
offer in terms of mission space. If those capabilities are not provided
by VPM in the Block 5 and beyond Virginias, where else could that
capability come from and what might the costs be?
Dr. Labs. The only alternative to incorporating the Virginia
Payload Module (VPM) into the Virginia class submarine that would gain
the capability provided by the Navy's existing SSGNs would be to
develop an SSGN replacement. CBO expects that the most cost-effective
way to develop such a replacement would be to modify the Ohio
Replacement class submarines to have VPM-like capabilities. To acquire
the equivalent capability of the four in-service SSGNs or 20 Virginia
class attack submarines with VPMs would require six modified Ohio
Replacement class submarines. (Six new SSGNs would be required to
replace the four existing SSGNs because the Ohio Replacement class
submarines are expected to carry 16 launch tubes, whereas the existing
Ohio class submarines carry 24 launch tubes.) The cost of designing and
building those submarines would likely range from $30 billion to $35
billion in fiscal year 2013 dollars, based on CBO's latest estimate of
the cost of building new SSBNs.
Mr. Langevin. The DDG-1000 class includes a number of key enabling
technologies, such as advanced propulsion and power generation and
distribution, increased ship automation, changes in shipbuilding
processes, and large ship margins. These are very capable ships, and
the Navy and the shipbuilders have invested a lot of time and resources
into researching and developing the technologies they carry. What are
the prospects for harvesting these investments across programs beyond
the existing 3-ship buy?
Mr. O'Rourke. Prospects for implementing such technologies in the
cruiser-destroyer force beyond the three DDG-1000 class ships are
currently uncertain. The replacement of the CG(X) and DDG-100 programs
with resumed DDG-51 procurement leaves the Navy without a clear roadmap
in the 30-year shipbuilding plan for accomplishing certain things for
the cruiser-destroyer force that were to have been accomplished by the
CG(X) and DDG-1000 programs, including but not limited to the
following:
restoring ship growth margin for accommodating future
capabilities;
introducing integrated electric drive technology into a
large number of ships, particularly for supporting future high-power
electrical weapons such as high-power lasers; and
substantially reducing ship life-cycle O&S costs by,
among other things, reducing crew size.
Accomplishing the above three items will depend to a large degree
on when procurement of large surface combatants shifts from Flight III
DDG-51s to some follow-on design, and on the features of that followon
design. Options for the next large surface combatant after the Flight
III DDG-51 include a further modification of the DDG-51 design (i.e., a
Flight IV design, which might include a lengthening of the hull to
accommodate new systems and restore growth margin), the current DDG-
1000 design or a modified version of the DDG-1000 design, and a clean-
sheet design that might be intermediate in size between the DDG-51 and
DDG-1000 designs.