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i 

85–328 2014

[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 
(II) 

SUBCOMMITTEE ON SEAPOWER AND PROJECTION FORCES 

J. RANDY FORBES, Virginia, Chairman 

K. MICHAEL CONAWAY, Texas 

DUNCAN HUNTER, California 

E. SCOTT RIGELL, Virginia 

STEVEN M. PALAZZO, Mississippi 

ROBERT J. WITTMAN, Virginia 

MIKE COFFMAN, Colorado 

JON RUNYAN, New Jersey 

KRISTI L. NOEM, South Dakota 

PAUL COOK, California 

MIKE MCINTYRE, North Carolina 

JOE COURTNEY, Connecticut 

JAMES R. LANGEVIN, Rhode Island 

RICK LARSEN, Washington 

HENRY C. ‘‘HANK’’ JOHNSON, JR., Georgia 

COLLEEN W. HANABUSA, Hawaii 

DEREK KILMER, Washington 

SCOTT H. PETERS, California 

DAVID SIENICKI, Professional Staff Member 

DOUGLAS BUSH, Professional Staff Member 

NICHOLAS RODMAN, Clerk 
(III) 

C O N T E N T S 

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 

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 

(1) 

AN INDEPENDENT ASSESSMENT OF THE NAVY’S 

30–YEAR SHIPBUILDING PLAN 

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 
2 

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 
3 

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. 
4 

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 
5 

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 remain- ing 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 nextgeneration 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 
6 

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. 
7 

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 lessonslearned center roughly analogous to the combat operations lessonslearned 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 highpower 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 prefer-
8 

ring 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 
9 

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? 
10 

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 
11 

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 crossclass block contracts as a way of trying to generate more savings. 

Has that ever been done before? 
12 

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 
13 

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 
14 

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 largerscale 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 
15 

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 
16 

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 
17 

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 
18 

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 
19 

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 
20 

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 allnew 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 
21 

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. 
22 

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. 
23 

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. 
24 

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 
25 

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. 
26 

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.] 
A P P E N D I X 

OCTOBER 23, 2013 

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OCTOBER 23, 2013 

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WITNESS RESPONSES TO QUESTIONS ASKED DURING 

THE HEARING 

OCTOBER 23, 2013 

(91) 

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.] 

QUESTIONS SUBMITTED BY MEMBERS POST HEARING 

OCTOBER 23, 2013 

(95) 

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 
96 

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 
97 

1See Report to Congress on the Annual Long-Range Plan for Construction of Naval Vessels 

for FY2014, May 2013, p. 18. 

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 
98 

2 Congressional Budget Office, An Analysis of the Navy’s Fiscal Year 2014 Shipbuilding Plan, 

October 2013, Table 3 (page 13). 3The ‘‘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. 4Since 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 DefenseWide category. 

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. 

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, onethird, 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. 

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-DefenseWide 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: • 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. 
99 

5Defense 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. 6Statement 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. 7See, 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. 

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

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. 

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. 

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— 
100 

8See, 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. 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.’’ 

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. 

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, largediameter 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

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 
101 

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 antiaccess 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? 
102 

• 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 followon 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 
103 

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 highpower 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. 

Æ