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i 

73–799 2012

[H.A.S.C. No. 112–127] 

HEARING 

ON

NATIONAL DEFENSE AUTHORIZATION ACT 

FOR FISCAL YEAR 2013 

AND

OVERSIGHT OF PREVIOUSLY AUTHORIZED 

PROGRAMS 

BEFORE THE

COMMITTEE ON ARMED SERVICES 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TWELFTH CONGRESS 

SECOND SESSION 

SUBCOMMITTEE ON SEAPOWER AND 

PROJECTION FORCES HEARING 

ON

OVERSIGHT OF U.S. NAVAL VESSEL 

ACQUISITION PROGRAMS AND FORCE 

STRUCTURE OF THE DEPARTMENT OF 

THE NAVY IN THE FISCAL YEAR 2013 

NATIONAL DEFENSE AUTHORIZATION 

BUDGET REQUEST 

HEARING HELD 

MARCH 29, 2012 
(II) 

SUBCOMMITTEE ON SEAPOWER AND PROJECTION FORCES 

W. TODD AKIN, Missouri, Chairman 

DUNCAN HUNTER, California 

MIKE COFFMAN, Colorado 

SCOTT RIGELL, Virginia 

TIM GRIFFIN, Arkansas 

STEVEN PALAZZO, Mississippi 

TODD YOUNG, Indiana 

ROSCOE G. BARTLETT, Maryland 

J. RANDY FORBES, Virginia 

ROB WITTMAN, Virginia 

TODD RUSSELL PLATTS, Pennsylvania 

MIKE MCINTYRE, North Carolina 

SUSAN A. DAVIS, California 

JAMES R. LANGEVIN, Rhode Island 

RICK LARSEN, Washington 

JOE COURTNEY, Connecticut 

CHELLIE PINGREE, Maine 

MARK S. CRITZ, Pennsylvania 

HANK JOHNSON, Georgia 

BETTY SUTTON, Ohio 

TOM MACKENZIE, Professional Staff Member 

PHIL MACNAUGHTON, Professional Staff Member 

EMILY WATERLANDER, Staff Assistant 
(III) 

C O N T E N T S 

CHRONOLOGICAL LIST OF HEARINGS 

2012 

Page 

HEARING: 

Thursday, March 29, 2012, Oversight of U.S. Naval Vessel Acquisition Programs and Force Structure of the Department of the Navy in the Fiscal 

Year 2013 National Defense Authorization Budget Request ........................... 1 

APPENDIX: 

Thursday, March 29, 2012 ...................................................................................... 39 

THURSDAY, MARCH 29, 2012 

OVERSIGHT OF U.S. NAVAL VESSEL ACQUISITION PROGRAMS AND 

FORCE STRUCTURE OF THE DEPARTMENT OF THE NAVY IN THE 

FISCAL YEAR 2013 NATIONAL DEFENSE AUTHORIZATION BUDGET 

REQUEST 

STATEMENTS PRESENTED BY MEMBERS OF CONGRESS 

Akin, Hon. W. Todd, a Representative from Missouri, Chairman, Subcommittee on Seapower and Projection Forces .................................................. 1 

WITNESSES 

Mulherin, Matthew J., President, Newport News Shipbuilding, and Corporate 

Vice President, Huntington Ingalls Industries .................................................. 29 

Novakovic, Phebe N., Executive Vice President, Marine Group, General Dynamics Corporation .............................................................................................. 26 

Stackley, Hon. Sean J., Assistant Secretary of the Navy for Research, Development, and Acquisition; VADM John Terence Blake, USN, Deputy Chief 

of Naval Operations for Integration of Capabilities and Resources (N–8); 

and LtGen Richard P. Mills, USMC, Deputy Commandant for Combat 

Development and Integration and Commanding General, Marine Corps 

Combat Development Command ......................................................................... 2 

APPENDIX 

PREPARED STATEMENTS: 

Akin, Hon. W. Todd .......................................................................................... 43 

Davis, Hon. Susan A. ....................................................................................... 45 

Mulherin, Matthew J. ...................................................................................... 91 

Novakovic, Phebe N. ......................................................................................... 65 

Stackley, Hon. Sean J., joint with VADM John Terence Blake and LtGen 

Richard P. Mills ............................................................................................ 47 

DOCUMENTS SUBMITTED FOR THE RECORD: 

[There were no Documents submitted.] 

WITNESS RESPONSES TO QUESTIONS ASKED DURING THE HEARING: 

Mr. Coffman ...................................................................................................... 113 

Mr. Courtney ..................................................................................................... 113 
Page

IV 

QUESTIONS SUBMITTED BY MEMBERS POST HEARING: 

Mr. Langevin ..................................................................................................... 117 

Mr. Wittman ..................................................................................................... 120 
(1) 

OVERSIGHT OF U.S. NAVAL VESSEL ACQUISITION PROGRAMS AND FORCE STRUCTURE OF THE DEPARTMENT OF THE NAVY IN THE FISCAL YEAR 2013 NATIONAL DEFENSE AUTHORIZATION BUDGET REQUEST 

HOUSE OF REPRESENTATIVES, 

COMMITTEE ON ARMED SERVICES, 

SUBCOMMITTEE ON SEAPOWER AND PROJECTION FORCES, 

Washington, DC, Thursday, March 29, 2012. 

The subcommittee met, pursuant to call, at 10:04 a.m. in room 

2118, Rayburn House Office Building, Hon. W. Todd Akin (chairman of the subcommittee) presiding. 

OPENING STATEMENT OF HON. W. TODD AKIN, A REPRESENTATIVE FROM MISSOURI, CHAIRMAN, SUBCOMMITTEE ON 

SEAPOWER AND PROJECTION FORCES 

Mr. AKIN. The hearing will come to order. 

Heavenly Father, we just thank you again for the freedom we 

enjoy and for the people who have sacrificed for that. We ask your 

blessing on our deliberations. Help us to be wise, help us to be good 

planners, and good stewards. And we pray that you help us with 

the somewhat busy schedule this morning, and the votes and all. 

And I pray in Jesus’ name. Amen. 

Gentlemen, we have got a little bit of a curveball that has been 

handed to us because they have got votes on kind of 1-hour bases 

all through the morning. So I have talked to Assistant Chairwoman 

Davis, and we have agreed that we are going to just postpone making our comments and just leave those for the record and go directly to our witnesses and—is that the call for votes? We have already got votes on? Okay. 

I think what we will do is run for about 7 minutes or so, or 

maybe 10 minutes, then we will be running to vote—time for a cup 

of coffee if you haven’t had one—and then we will probably be back 

I am guessing roughly 20, 25 minutes, but I don’t know the exact 

number of votes. So let’s just go ahead and proceed. 

Is it just one vote? Okay. We may be back quicker than that. 

[The prepared statement of Mr. Akin can be found in the Appendix on page 43.] 

Mr. AKIN. So, Admiral Blake, do you want to go first, any—or— 

okay. 

Secretary STACKLEY. Yes, sir. 

Mr. AKIN. Sean, fire away. 
2 

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

ACQUISITION; VADM JOHN TERENCE BLAKE, USN, DEPUTY 

CHIEF OF NAVAL OPERATIONS FOR INTEGRATION OF CAPABILITIES AND RESOURCES (N–8); AND LTGEN RICHARD P. 

MILLS, USMC, DEPUTY COMMANDANT FOR COMBAT DEVELOPMENT AND INTEGRATION AND COMMANDING GENERAL, 

MARINE CORPS COMBAT DEVELOPMENT COMMAND 

Secretary STACKLEY. Yes, sir. Mr. Chairman, distinguished members of the subcommittee, thank you for the opportunity to appear 

before you today with Vice Admiral Blake, and Lieutenant General 

Mills to discuss Navy shipbuilding. And thank you, of course, for 

your steadfast support in support of our Navy, Marine Corps, sailors, and marines who are meeting the Nation’s commitments 

around the world. 

And with the permission of the committee I would like to make 

a brief opening statement and provide a more formal opening statement for the record. 

Today we are a battle force of 282 ships, nearly half of which on 

any given day are under way performing missions around the 

globe: supporting operations in Afghanistan; providing maritime security along the world’s vital sea lanes of communication; missile 

defense in the Mediterranean and Sea of Japan; intelligence, surveillance, and reconnaissance where needed, as needed; global presence at sea; and with embarked Marine expeditionary forces ready 

to move ashore, conducting antipiracy patrols, global partnership 

stations, humanitarian assistance, training to ensure constant 

readiness in preparation for the next deployment, next operation, 

and all the while quietly, reliably on patrol providing strategic deterrence. 

In support of the defense strategic guidance we are building towards a battle force of 300 warships, platforms that will provide 

our sailors and marines the capability and, two, the capacity needed to maintain our maritime superiority today and for the foreseeable future. This objective is cast alongside the fiscal realities that 

come with the Budget Control Act of 2011, and so in reshaping our 

shipbuilding plan of a year ago to reflect the priorities of the new 

defense strategy and the new budget top line this year’s shipbuilding plan strikes a balance between capacity, capability, affordability, and the industrial base. 

We have important work to do as we continue to assess, plan, 

and execute in order to close out-year gaps and risks identified by 

the long-range shipbuilding plan. In doing so, we need to drive the 

equation to deliver the full capability our warfighters need at the 

lowest possible cost. 

The Secretary of the Navy remains strongly committed to investing in shipbuilding and we have put that commitment to work over 

the last year. Since this time last year two destroyers, a submarine, a dry cargo ammunition ship have joined the fleet and the 

LPD [Landing Platform Dock Ship] San Diego and submarine Mississippi will commission this spring. Another half-dozen ships are 

being christened while keels have been laid for the lead ship of the 

DDG 1000 class [USS Zumwalt Class Destroyer], the next littoral 
3 

combat ship, the next Virginia, and the next T–AKE ship [Dry 

Cargo/Ammunition Ship]. 

In total, since December 2010 we have awarded contracts to procure 38 ships, including options—most competitively awarded, all 

fixed-price contracts, and we are on track to increase that number 

to 40 this spring with the anticipated awards of the next Amphibious Assault Ship, LHA 7, and the 11th and final ship of the LPD 

17 [USS San Antonio] class. Stable production and mature designs 

represented in these fixed-price contracts provide an important degree of certainty to our industrial base in an otherwise uncertain 

period in defense spending. 

We recognize, however, that we must remain focused relentlessly 

on improving affordability in shipbuilding programs, but we must 

sustain our planned investment in modernizing the current force. 

To this end, our fiscal year 2013 budget request includes funding 

for 10 ships and asks for multiyear procurement authority for the 

Virginia class and the DDG 51 Arleigh Burke class. 

The shipbuilding program includes 41 ships to be procured over 

the 5 years of the 2013 Future Years Defense Program, a reduction 

in ship count compared to the 2012 Future Years Defense Program, 

reflecting the fact of life top-line reductions consistent with the 

Budget Control Act of 2011. However, within these controls we 

have been careful to maintain priority on the capabilities called for 

in the new defense strategy. 

The strength of our shipbuilding plan is closely coupled with the 

strength of our shipbuilding industrial base. The critical skills, capabilities, and capacities inherent to our new construction shipyards and weapon systems developers inarguably underpin the 

U.S. Navy’s dominant maritime position. Accordingly, in the course 

of balancing resources and requirements in the formulation of the 

shipbuilding plan, the effect of program decisions on the industrial 

base must be closely weighed. 

Over the past several years the Navy has placed a priority on increasing shipbuilding rates and providing stability for the shipbuilding industrial base. Stability translates into retention of 

skilled labor, improved material purchasing and workforce planning, strong learning curve performance, and the ability for industry to invest in facility improvements; all resulting in more efficient 

ship construction and a more affordable shipbuilding program. 

The strategy going forward must continue to center upon improving affordability. One of the greatest challenges to our future shipbuilding program, and therefore to elements of our industrial base, 

is the rapidly increasing cost of our ship programs. To this end, in 

addition to the emphasis on stability discussed above the Navy is 

establishing affordability requirements and investing in design for 

affordability for future ship programs; mandating use of open system design; leveraging competition where it exists in shipbuilding; 

employing fixed-price contracts to control cost for ships and weapon 

systems in production; imposing strict criteria limiting disruptive 

changes to contracts; investing in industry-wide manufacturing 

process improvements through the National Shipbuilding Research 

Program; and incentivizing capital investment in facilities where 

warranted. 
4 

Ultimately, we recognize that as we balance requirements, affordability, and industrial base considerations it is ever more important that our shipbuilding plan closely align with the priorities 

outlined in the new defense strategy. And it is equally important 

that we—Navy and industry—continue to improve the affordability 

within our programs in order to build the Navy that our sailors 

and marines need for future force. 

Mr. Chairman, thank you for the opportunity to appear before 

you today. We look forward to answering your questions. 

[The joint prepared statement of Secretary Stackley, Admiral 

Blake, and General Mills can be found in the Appendix on page 

47.] 

Mr. AKIN. Well, thank you for your comments. And I think because of the fact we have got 7 minutes left on the vote we are 

going to scoot and then come back for the testimony. 

And, Mr. Stackley, appreciate your comments. I will have a question or two on the Virginia class here, but we will take a break and 

get back to you. I am hoping maybe it is in as short as, oh, 10 or 

15 minutes now maybe. 

Thank you. 

[Recess.] 

Mr. AKIN. Subcommittee will come to order again and we will 

continue with the testimony. 

Mr. Stackley, I believe you were finished with your opening comments. You had some things for the record which we will accept for 

the record. 

And then, who is going to go next? 

Admiral, you want to be next, and then General? Okay. 

Admiral BLAKE. Sir, I don’t have an opening statement. We were 

all on Mr. Stackley’s statement. 

Mr. AKIN. You were all on Mr.—so we are ready for questions, 

then? 

Admiral BLAKE. Yes, sir. 

Mr. AKIN. Well, you guys get things done in a hurry. That is 

good. 

Okay. I guess first off the question I have is I understand for 

purposes of budgeting and trying to make the numbers fit, which 

we all have to do—we live within those constraints to a degree, 

perhaps those of us in Congress less so even than yourselves—but 

somehow or other just the logic of the Virginia class—we have got 

those things building on, you know, two-a-year kind of cycle and all 

of a sudden what we are going to do is to break that, not build one 

for 1 year, and somehow, then, we go back to the two-a-year cycle 

in the years that follow. 

It seems to me that there are some costs for making that kind 

of a decision in the sense it interrupts the supply chain and the 

labor force. And ultimately, we are—it seems like from a need 

point of view the—those ships, there is a very high demand on 

them. So could you comment on what is the kind of hidden cost of 

doing this and is there some way, perhaps, that we could try to 

move that up so we stay on that two-a-year build cycle? 

Secretary STACKLEY. Yes, sir. Let me start with the build cycle. 

As you are—the committee is well familiar, the Virginia class program was at a one-per-year rate for an extended period of time and 
5 

then set the target to get to two boats per year by 2012. And in 

fact, the program achieved that in 2011 by driving down program 

cost. 

So the goal of what was referred to as ‘‘2 for 4’’—which is $4 billion—‘‘in 2012’’—this is all old-year dollars—became ‘‘2 for 4 in 11.’’ 

So the program didn’t just drive costs down but actually tuned production for two boats per year through the vendor base, through 

the shipyards. And it is important not just for affordability reasons 

but also for the force structure. 

The Navy’s requirements for 48 boats near-term and long-term 

is in jeopardy as we look out ahead to the decade of late 2020s and 

2030s. Because of that extended period of one boat per year that 

creates a force structure valley out in the 2030s. So everything we 

can do to sustain two boat per year procurement and production 

rate is critical for affordability and for national security. 

Mr. AKIN. The affordability is—first of all, the national security 

is farther out, a little bit longer term, or is it all the way along the 

line? 

Secretary STACKLEY. It is farther out. It is in the late 2020s and 

2030s is when we see the force structure numbers start to draw 

down—— 

Mr. AKIN. Okay. 

Secretary STACKLEY [continuing]. But the concern is you have to 

address that now. 

Mr. AKIN. Right. 

Secretary STACKLEY. You can’t wait until then to prop your numbers back up. So the one boat that you are looking at in the 2014 

year is of concern from both cost and force structure. 

Now, the way we end up there, this goes back to the impact of 

the Budget Control Act. Two boats per year was a priority and remains a priority for the Navy as it built the budget, but when the 

top line came down the impact was felt greatest in the 2014 year 

and we lost the second Virginia in 2014 along with a second destroyer in 2014 in that regard. 

Now, we are using the multiyear—the 5-year multiyear to try to 

mitigate the impact in terms of the industrial base, in terms of the 

cost impact, but in fact, there is an unavoidable impact through 

every element of cost, whether it is material procurement and economic order quantities, whether it is learning across both of the 

shipyards that are involved in producing the Virginia, whether it 

is the business base rates impact at both yards, impact to the second-tier suppliers. So there is a cost impact that—while we retain 

nine boats across the multiyear there is a cost impact by having 

that single boat in 2014. 

Mr. AKIN. So part of what is going on here, you could maybe 

make a parallel to we were talking about building some ships out 

in San Diego and you had a place where you have a demand for 

a whole lot of welders, then there is a year where you don’t need 

any welders, then you need a whole lot more welders. And the fact 

is it is hard to, you know, turn things on and off. 

And from a logic point of view you would say you want to try to 

smooth that demand and we have got the same problem. We have 

got to burp financially 2014 and because of the numbers you had 

to plane off two ships. Which, from a more practical point of view, 
6 

if you weren’t just exactly to the line of the numbers, would make 

a whole lot of sense to keep them in the budget and under different 

budget circumstances would be a priority. Is that correct? 

Secretary STACKLEY. Yes, sir. And along those lines, the reality 

is that if you take the nine-boat Virginia multiyear, and if we had 

the top line to add that 10th boat in 2014 that would not just save 

the cost of that 10th boat but throughout the follow ships all their 

costs would come down. So what we stare at is an upfront investment cost to get the boat but downstream savings that offset the 

upfront investment. 

Mr. AKIN. So in a way, if you could build the boat the first thing 

you get an extra submarine—— 

Secretary STACKLEY. Yes, sir. 

Mr. AKIN [continuing]. Which is desirable, particularly in the 

2020s. The second thing is it keeps the cost of additional boats 

somewhat lower as well, because you have smoothed the demand 

over that time period. 

Secretary STACKLEY. Yes, sir. 

Mr. AKIN. I am at least open-minded to looking at this, see if 

there is something that we can do that perhaps DOD [Department 

of Defense] can’t do to take a look at that problem. Unless you have 

a strong or rigorous objection I am going to ask our staff people to 

take a look at that. 

Anybody want to jump in on this particular point or subject? 

Would you like to—— 

Mr. COURTNEY. Sure, Mr. Chairman. 

Again, just as Mr. Stackley said, the two-a-year was pulled up 

from 2012 to 2011, which was partly because of, again, the great 

work in terms of bringing costs down; but it was also because Congress intervened. Again, we, in fact, pushed the advanced procurement add-on in the 2007–2008 budget cycle, which provided that 

opportunity to get to two in 2011. 

And as you said, Mr. Chairman, you know, hopefully we can facilitate a solution to this problem that we just discussed here 

today, again, using, hopefully, this subcommittee as sort of the tip 

of the plane, which is, again, exactly what happened in 2007. 

And I guess, you know, the—well, I am sure your office would 

be able to give us information in terms of, you know, what the 

costs would be in—for 2013 in terms of trying to fix this problem 

as well as maybe other strategies to, again, get to that 10 in the 

Block IV contract. 

Secretary STACKLEY. Yes, sir. As you well know, the submarine 

is procured over multiple years, so 2013 would be an advance procurement year for a second boat in 2014. 

Now, one of the challenges that the Department needs to guard 

against is basically getting partial funding for an additional boat 

and leaving the Department with a significant bill in 2014, recognizing that that is the difficult year for us. So we will provide additional information to your staff so you can see what we see across 

the FYDP for the Virginia multiyear—the nine-boat versus the 10- 

boat and the challenges that we faced with the budget. 

Mr. COURTNEY. And just one other quick follow up, is this—you 

will also give us the impact in terms of the fleet size over the next 

couple decades, which should, I think, show some pretty dramatic 
7 

benefit if we are able to really fill that hole. The ripple effect lasts 

for years, and I know you have already worked on some of 

those—— 

Secretary STACKLEY. Yes, sir. 

Mr. COURTNEY [continuing]. Metrics. 

Secretary STACKLEY. Yes, sir. In fact, that information is included in our long-range shipbuilding report, but we can lay it out 

graphically for you, as well. 

[The information referred to can be found in the Appendix on 

page 113.] 

Mr. AKIN. Thank you. I think I have used up my time all fair 

and square. 

Let’s see. Who is going to be next? Is it Mr. Courtney, or—— 

Mr. MACKENZIE. It was going to be Mr. Courtney. 

Mr. AKIN. Okay, so you are okay? Okay. 

Somebody has got to have a question here. 

Mr. Hunter. 

Mr. HUNTER. Thanks, Mr. Chairman. 

Gentlemen, thank you all for your service. Of course, you guys 

get that a lot. I think you are serving in a very tough position right 

now due to what is happening—not a fun time to be doing what 

you are doing. There have probably been better times where you 

like to be in the position that you are in. So thanks for doing what 

you are doing. 

First question, General Mills, on amphibs [Amphibious Assault 

Ship]—you probably saw this one coming—what is the Marine 

Corps’ bottom line number on amphibs? 

General MILLS. Sir, we have been I think clear and consistent on 

our requirement, which is the assault echelons for two MEBs [Marine Expeditionary Brigade] to be delivered by amphibious warships to the point where they are needed. Over the years we have 

accepted more and more risk to the number of ships who actually 

deliver that force. And in partnership with the Navy we have arrived at a figure of 30 operationally ready ships at the time that 

we need them at the place that we need them ready to sail. 

Mr. HUNTER. So to have 30 operational ships how many total 

ships is that? How many ships would you have being in dock and 

getting fixed up? Four or five? 

General MILLS. Sir, the plan that we have right now calls for, I 

believe, 32 over the course of the 30-year shipbuilding plan. It 

chases a slightly larger number in the out years. But again, our requirement has been 30 operational ships at the point of need. 

Mr. HUNTER. With that, I would just—I am just curious—they 

are not getting 30 operational ships. The strategy shifted, you can 

argue that there is more need for amphibs now than there was 

even—unless we think there aren’t going to be anymore humanitarian crises or bad people in places that we would have to ship 

marines to. So I am just curious about that, because we are below 

that by two ships at some points, one in—right now, I believe, 

so—— 

Admiral BLAKE. So let me sort of widen the aperture on that and 

as we looked at it, the Navy and the Marine Corps sat down and 

we came to the conclusion that it was 38 ships fiscally constrained 

to 33. Currently in the inventory we have 29 ships and we are 
8 

going to build to 31 by 2013, and then that number will drop back 

down to 30. 

When we had to apply the strategy and we had to understand 

for the two MCO [Major Contingency Operation] requirement, we 

looked at it and we said what do we need in order to hit the requirement? And the position taken was that we needed to have 30 

operationally available. 

So what you are looking at is if, in fact, you need to address it 

from that perspective then what we want to do is we want to say, 

all right, we know we are going to have to build to that number. 

We want to get to that number and that is our goal. And so what 

we ended up having to, if you will, look at was how were we going 

to mitigate that? 

So when we are at 31 ships we are—we would have to, if you 

will, push out the door 30 in order to hit the number—operationally ready. So we have taken risk and we recognize we have taken 

risk, but our eventual goal is to get us back to around 33 ships in 

order to be able to push out 30 operationally ready. 

Mr. HUNTER. Let me ask you this: Do you agree with the two 

MEB requirement and the—do you—would you validate the process by which the Marine Corps came up with their numbers? 

Admiral BLAKE. You mean the two MCO requirement? That is a 

valid requirement. 

Mr. HUNTER. No, the two MEB requirement. 

Secretary STACKLEY. No. Two MEB—he—— 

Mr. HUNTER. The way that he got to his numbers—the way that 

General Mills got to his numbers—would you validate the process 

that the Marine Corps used to analyze what they need and the risk 

assessment that they did to say, here is the number of ships that 

we need, or did the Navy do a different type of analysis? 

Admiral BLAKE. No. The Navy and Marine Corps sat down and 

it was not done separately; it was done—we did it in conjunction 

with each other. 

Mr. HUNTER. If you were to build the amphibs where would you 

prioritize? I mean, where would you take money out of to be able 

to get the Marine Corps to where they need to be? 

Admiral BLAKE. Here is the issue we deal with: I don’t have the 

luxury of dealing with any single issue in isolation; I have to deal 

with it across the entire—— 

Mr. HUNTER. Well, we can. That is why I am asking. 

Admiral BLAKE. Well, we have to deal with it, though, across the 

entire portfolio. 

Mr. HUNTER. Sure. 

Admiral BLAKE. And so what we have to do is we have to balance 

the requirement for amphibs, the requirement for surface combatants, the requirement for the carriers, the submarines—every category of ships that we have. And so when we do that we then have 

to say, all right, as we balance across that where are we going to 

be able to assume more risk? And that is how we—that is how we 

end up where we are. 

Mr. HUNTER. So you are saying there is less risk but still risk 

in the Marine Corps being short on amphibs than there are in the 

other—the rest of the picture? 
9 

Admiral BLAKE. No. I am saying that we have assumed risk in 

all areas. The best example I can give you: It was only a short time 

ago, if we tried to fill all the COCOM [Combatant Command] needs 

we said the number was around 400 ships we would need in the 

fleet. Today—and we see no abatement in that commitment or 

the—— 

Mr. HUNTER. No—signal. 

Admiral BLAKE. Today we look at it and we see that we would— 

if we wanted to hit 100 percent of all the COCOM requirements we 

would need in excess of 500 ships. So what we end up having to 

do is we go through the global management process and we look 

at it and we say, here are our highest priorities, these are how we 

are going to address them, and then we have those units available 

and we push that—— 

Mr. HUNTER. I understand. 

I am going to yield back in just 1 second. 

So I would take from your statement, then, that you did go 

through a prioritization process and the amphibs are not at the top 

of that list. And second, when you say that you assume risk all the 

way around I would argue that when you do your risk assessment 

and you prioritize your needs the fact that the COCOMs wanted 

more ships and needed more ships due to the international environment and where we find ourselves with the world today, going 

down is probably—it is going the wrong way. 

We all know that, but I would argue that your prioritization— 

I would like to see that, if you don’t mind, the way that you analyzed this and the way that you said, hey, we are going to keep 

them there to make sure that we have this over here. That is all 

I am asking for. 

Admiral BLAKE. Okay. When we put it together we do it across 

the entire spectrum; we don’t—and by that I mean, as we look at 

the entire requirement we say, this is what we need to do in order 

to be able to meet the COCOM demand signal. 

And, for example, we not only took out, as you are aware, for decommissioning, looked at two amphibs, we also looked at seven 

cruisers additionally. As Mr. Stackley just mentioned, we knew 

2014 was our hardest year and we had to go in there and, if you 

will, rephase or shift to the right a destroyer and a submarine. So 

in addition to that we had to look at our small surface combatants 

and we had to mitigate those numbers. 

So we have to do it across the entire portfolio. We can’t just go 

and focus on one single area. We have to balance it across the entire system for ourselves. 

Mr. HUNTER. Thank you. 

I yield back. 

Mr. AKIN. Yes, I am going to allow a little piggybacking here. 

Originally, General, what you needed in the MEB was 18 ships. 

Is that correct? A couple years ago that is what we thought was 

the right number. 

General MILLS. Sir, I believe it was 17 was—— 

Mr. AKIN. Seventeen? 

General MILLS [continuing]. For MEB—— 

Mr. AKIN. Okay, and that left, what is it, about four for getting 

repaired or whatever it is? 
10 

General MILLS. Yes, sir. 

Mr. AKIN. Okay. And so we have gone from 17 down to what is 

it now—not quite 15? You are going to be 14 or 15, somewhere in 

there? 

General MILLS. Sir, it is 15. It is 15. And that is an assumption 

of more risk, obviously, and an understanding that the MAGTF 

[Marine Air-Ground Task Force] commander would have to scrub 

his equipment list prior to embarkation, but we feel that 15 is acceptable at this point. 

Mr. AKIN. What would be scrubbed from that list? 

General MILLS. Sir, that would depend, I think, on the—where 

he was going, what his mission was. He would take a look at his 

entire equipment list, decide what was specifically needed forward 

initially for what his mission was, and then he would reduce those 

things—perhaps logistics, maybe some of his heavy armor, for instance. Again, depending on what that mission set was going to be 

when he arrived, what he actually needed on the ground. 

It is not unusual to do that. MAGTF commanders who go forward routinely leave things back that they can call forward if they 

need them. So I would say it would depend on what his mission 

was, where he was going, what the threat was when he arrived. 

Mr. AKIN. Thank you. 

Okay, Mr. Langevin. 

Mr. LANGEVIN. Thank you, Mr. Chairman. 

Gentlemen, thank you for being here this morning and for your 

great service to our country. I would like to turn back, if I could, 

to talking about the Virginia class submarine and the possibility of 

adding the second boat—one of the—one boat that is left outside 

the FYDP and talking about alternative funding. 

So obviously we have previously seen alternative funding mechanisms in ship programs such as the LHDs, LHAs, the Nimitz class 

carriers, and the DDG 1000, as well as the USS Jimmy Carter. 

And I know we have talked a little bit about the alternative funding this morning, but with a little more specificity with that in 

mind, and knowing that the most unmet demand signal from our 

combatant commanders is for submarines, what alternative funding options have you considered for procuring the fiscal year 2014 

boat? 

Secretary STACKLEY. Yes, sir. The principal alternative funding 

mechanism that we took a look at was incremental funding. And 

so we do use incremental funding today for aircraft carriers, largedeck amphibs, and when we looked at the funding constraint we 

had with the top line and moved the 2014 boat out of the FYDP, 

that is a constraint in the near term that gives away savings in 

the longer term, okay, so not only did we move the boat out and 

we moved the funding for that boat out, but we also lost the savings or the efficiencies that we would have been able to hold on to 

through continuous learning, through EOQ [Economic Order Quantity] material, et cetera. 

So that is a top line constraint. The reality is in shipbuilding 

your—what we refer to as your outlay rates are stretched out over 

time. So in a full funding policy, where you put all the money up 

front in the year of procurement, a lot of that money sits idle waiting for the expenditures in the course of building submarine over 
11 

5 to 6 years. So if you unlock full funding then all of a sudden— 

and you get closer to cash flows, which is more in tune with incremental funding, what it says is there is asset in the budget that 

we submitted for nine boats to fund that second boat in 2014 on 

a cash flow basis, and then there are savings downstream that you 

get by adding that 10th boat that offsets the upfront cost that we 

would have incurred—— 

Mr. LANGEVIN. And that goes to the heart of my second question. 

Yesterday the subcommittee was told that should a fiscal year 2014 

boat be added into the block buy it would effectively 25 percent 

self-fund through efficiencies gained in the future year of boats. So 

how does the Navy weigh these efficiencies in the budgeting process? 

Secretary STACKLEY. Yes, sir. Now this goes back to the funding 

policy. So in a full funding policy we have to put 100 percent of 

that boat up across the fiscal year 2013 year, which is the advance 

procurement year, and the fiscal year 2014 year, which is the full 

funding year. So while we have those potential savings by adding 

that boat we didn’t have the top line to make room for that boat 

within full funding so we could not—complying with full funding 

policy, we did not have adequate top line to get to that second boat 

in fiscal year 2014. 

Mr. LANGEVIN. So did you complete your answer on the alternative funding? 

Secretary STACKLEY. I think I covered that. The way the math 

works, if you were relieved from full funding policy, in fact, we 

would not be requesting additional funding across 2013 and 2014; 

we would have downstream savings and that would make the boat 

affordable. But within the constraints of full funding it is not affordable in 2013 and 2014. 

Mr. LANGEVIN. Well, I know that we are all anxious to work with 

you to see what we can do to get that fiscal year 2014 boat added 

within the FYDP if possible. 

Last question I had is, I am following with great interest the ongoing development of the AMDR [Air and Missile Defense Radar]. 

Can you share with us how development is going and how you plan 

to integrate this capability into the existing naval force structure? 

Secretary STACKLEY. Yes, sir. The development is going great. 

We have got three industry competitors that are working on the development. They have each been able to leverage other systems 

that have been developed using the technology associated with the 

AMDR radar, and so when we kicked off the competition they were 

well out in front in terms of level of maturity of the technology. 

We are going through—I will call it a small scale prototype development to demonstrate, you know, proficiency of the respective 

designs that will be leading to a downselect. I am very upbeat on 

the progress we are making on AMDR and I am highly confident 

that that program is right on step to support introduction on 2016 

DDG 51. 

Mr. LANGEVIN. Very good. 

Thank you, gentleman. 

And I yield back, Mr. Chairman. 

Mr. AKIN. Thank you. 

Mr. Wittman. 
12 

Mr. WITTMAN. Thank you, Mr. Chairman. 

Admiral Blake, Secretary Stackley, General Mills, thank you so 

much for joining us. We appreciate the opportunity. 

Secretary Stackley, I want to begin with you. In reviewing the 

long-range plan for construction for naval vessels for fiscal year 

2013 it seems like to me we continue to push the difficult decisions, 

the more expensive decisions outside of the FYDP. And in looking 

at the FYDP from 2013 to 2017 we are going to construct 41 ships, 

16 of which—that is 39 percent—are the relatively inexpensive 

LCS [Littoral Combat Ships] ships. Also within that, there is no 

funding for the weapons modules, which we know in order for there 

to be capable warships we have to have those weapons modules onboard. 

In the next 5 years, from 2018 to 2022, we are building 52 ships, 

15 of which—that is 29 percent—are also LCSs. Additionally, those 

52 ships include the Ohio class replacement and we are going from 

building 9 SSNs [Nuclear Propulsion Attack Submarine] to building 12 SSNs in addition to some large-deck amphibs. So as you can 

see, we are still constructing a relatively large number of the less 

expensive LCS ships. 

In short, from 2013 to 2017 we buy 11 fewer warships than from 

2018 to 2022 and we also buy a much higher percentage of the less 

expensive warships in the immediate years, and then in the out 

years we are buying the more expensive ships. I understand this 

makes the math looks better; I understand the budget restraints 

that we are in right now. 

But I think we have to be asking ourselves the broader perspective picture, and that is this: Is this in the best interest of national 

security, not just based on today’s needs but what we project out 

into the future? Is it right for the Navy? And is it right for the industrial base? I am concerned at all those different levels—our capabilities both on the defensive side and our industrial base capabilities. 

So I would like to get your reflection on this trend that we are 

seeing in the shipbuilding plan. 

Secretary STACKLEY. Yes, sir. I am going to share this response 

with Admiral Blake, but let me first start by describing balanced 

force. It is a combination of what your force structure requirement 

is driven by several factors. One is the capability, another is the 

capacity, it is global presence requirements, it is response to major 

combat operations, as well as lesser scale operations. And a balanced force is necessary to meet that full range of missions that are 

called for within affordability top line, you know, constraints. 

So today, in fact, what we have are we have DDG 51s, for example, performing operations and responding to issues and concerns 

that an LCS in theater would be quite suited for if not better suited for. So we have a high-end, 300-plus—roughly 300-man crew on 

a $1.5 billion warship responding to an issue that we would really 

prefer a $500 million ship with a 75-man embarked crew taking 

care of. 

We can’t go all high-end when we look forward in terms of the 

force structure we need across the full range of missions. So that 

is one of the reasons why LCS is firmly placed in terms of our longterm shipbuilding plan. 
13 

The concern regarding pushing the difficult decisions outside the 

FYDP, that is—there are some tough decisions that we made. We 

talked about the Virginia; we talked about the movement of the destroyer, which stays inside the FYDP but we moved it outside of 

the budget year. 

Two key decisions that I didn’t touch on directly but I think are 

on point: One is the decision to delay the introduction of the Ohio 

replacement, which was in 2019; we have moved that to 2021. That 

was a tough decision. There were trades that were associated with 

that. 

In making that decision, what we did was we moved $8.5 billion 

of investment beyond this next decade. 

Mr. WITTMAN. Right. 

Secretary STACKLEY. That goes towards investment in other 

areas of shipbuilding or other priorities within the Department of 

the Navy. In doing that and in moving that boat 2 years to the 

right we can’t simply mark time; we have got to take advantage 

of the additional time to work on technology development, design 

maturity, retiring risk so when the time comes we award that boat. 

We are staring at a much more mature, more complete design so 

we can execute on schedule. 

The downside is, what we just did was we pushed out the introduction of the Ohio replacement by 2 years and that introduces a 

degree of operational risk out into the 2030s when the Ohio replacement is replacing the Ohio strategic deterrent. And so we 

have got to manage that operationally. 

When we look across the balance and we say to ourselves, we 

have got $8.5 billion worth of asset we can create, we have 2 years 

of additional time to manage the risk for the introduction of the 

Ohio replacement, and we have got operational risk we have got to 

manage on the back end in the 2030s, we concluded that that operational risk was manageable and that upfront time and investment 

opportunity was important to take advantage of. And that drove 

that specific decision. 

Similarly, when you march program by program looking at the 

trades that were being forced by the top line, we did our best to 

strike that balance looking at what is the capability we need? What 

is the capacity we need? How do we stay within affordability limits 

and not create undue risk? 

Mr. WITTMAN. Okay. Very good. 

Let me ask—go ahead. 

Admiral BLAKE. If I can just add, sir, as we looked at this, I 

mean, we all knew, if you will, the elephant in the room was the 

2011 Budget Act. It came in and what it essentially did is, for the 

Department we had to address a bill of $58 billion—approximately 

$58 billion inside the FYDP. And as Mr. Stackley already mentioned, 2014 was our hardest year; 2013 was our next hardest year. 

And then what we had to do is we had to look at, as you referred 

to, the high-end low-end mix, if you will. So when we looked at it 

we said—we went down, if you will, the list, and we said, all right, 

we are going to take out 11 JHSVs [Joint High Speed Vessel], we 

are going to take out one T–AGOS [Tactical Auxiliary General 

Ocean Surveillance], we are going to take out one DDG, we are 
14 

going to take out one SSN, and we are going to take out—or we 

are going to take out, if you will, inside the FYDP, two LCSs. 

So as you look at that you can see our focus was the recognition 

that there is a high-end issue that we have to deal with, so we, as 

best we could, had to stay—tried to stay away from going against 

that high-end requirement. However, because 2014 was our hardest year we looked at it and said, there is no other way we can do 

this and still hit the numbers that we had to hit in each of the 

years, and we had to hit our numbers in each year. 

We couldn’t have that give and take to give back—you know, we 

couldn’t move between years. We had to hit the numbers in every 

one of them. So that drove us to what we did. So our approach was 

to mitigate as much as possible and apply it as best we could to 

the strategy that we were given. 

Mr. WITTMAN. That is very good. 

Secretary Stackley, and following up on that I want to ask, looking back historically, in 1983 and 1988 the Nimitz class carriers 

were purchased in block—two in 1983 in a block buy, two in 1988 

in a block buy. Understanding that CVN [Ford Class Supercarrier] 

79 [USS John F. Kennedy] is partially paid for, is there the possibility that CVN 79 and CVN 80 could be done in a partial block 

buy? It looks like to me there would be a significant amount of savings there, upwards of $500 million. 

With our challenges elsewhere in shipbuilding it seems like those 

resources could go into trying to plug some of these gaps, whether 

it is the SSN build in 2014 or some of the other areas where we 

know we are struggling to try to fix those gaps. So I would like to 

get your perspective on the historical elements of block buys and 

savings that can occur with CVNs. 

Secretary STACKLEY. Yes, sir. Let me focus on affordability of the 

CVN 78 class. We are right now about 40 percent complete construction of the CVN 78 [USS Gerald R. Ford] and we are running 

into some very difficult cost growth issues across the full span—design, material procurement, and production—material procurement 

on both contractor and government side. 

So our first focus right now is to stabilize the lead ship. Let’s get 

cost under control so we can complete this ship as close to schedule 

at the lowest cost possible. 

But in parallel, the Navy is working very closely with the shipbuilder to take a step back and say, one, what are all the lessons 

we just learned on CVN 78? Two, CVN 78 is a very different ship 

from the Nimitz; we cannot expect to build the 78 the way we built 

the 68 [CVN 68 USS Nimitz] and get to an affordable ship construction plan. So we are pressing on the way the carrier is built— 

the build plan for the carrier—to arrive at a more affordable CVN 

79. 

Now, in the process of doing that we will take a hard look at 

what opportunity there is across 79 and 80, recognizing that we are 

going to be limited, again, by top line. But there are going to be 

some opportunities that jump out at us. We don’t want to have to 

re-plan each carrier. We have a vendor base that is stretched out 

with the carrier build cycle that for some components that are carrier-unique, that vendor base is just struggling to hold on between 

the 5-year gaps. 
15 

So we have to take a hard look at where does it make sense after 

we have gotten to what I am calling an optimal build plan for CVN 

79 and then be able to come back and say, okay, here—on CVN 79 

here are some opportunities that if we could, in fact, reach out to 

CVN 80 we can either avoid a gap in a production line or avoid unnecessary cost growth on that follow ship. 

Mr. WITTMAN. Thank you, Mr. Chairman. I yield back. 

Ms. PINGREE. Thank you, Mr. Chair. 

Secretary Stackley, Vice Admiral Blake, and Lieutenant General 

Mills, thank you very much for being here this morning and for 

your service to our country. I am going to continue on a little bit 

about scheduling and the shipbuilding. 

In highlighting the Navy’s shipbuilding plans, particularly about 

the importance of maintaining the stability for the future and the 

Navy’s capability and capacity, I really appreciate your previous 

testimony. As you discussed, a budget includes a request for two 

Arleigh Burke destroyers for fiscal year 2013 in addition to reauthorizing a 5-year multiyear procurement through 2017. 

It is great for us to hear that this 9-year ship procurement will 

help support the need to provide BMD [Ballistic Missile Defense] 

capabilities to the fleet and is also projected to save $1.5 billion. 

That is wonderful. 

However, previous multiyear procurements of DDG 51s have occurred at an average rate of three ships a year instead of two. 

Given that the steps need to be taken to mitigate the significant 

projected shortfall in cruisers and destroyers do you believe a sustained annual procurement rate of more than two DDG 51s annually is required long-term to fully provide for our sea-based BMD 

missions? 

And let me just ask one other part of that question: Additionally, 

the FYDP shifted the second DDG 51 in fiscal year 2014 to fiscal 

year 2016. Won’t reducing the procurement rate by half, from two 

to one, in fiscal year 2014 disrupt the supply chain and potentially 

increase the cost? 

Admiral BLAKE. So I think, ma’am, what you are asking about 

is you are looking at the requirements saying, these are the requirements. How are you going to address them as you are dealing 

with, if you will, the current fiscal environment we are in? 

Ms. PINGREE. Yes. 

Admiral BLAKE. As we look at it, I am required to balance across 

the entire portfolio, and I have to look at the top line I am given 

in each year and then apply those dollars as efficiently as possible 

within it. So if someone were to say to me, we want you to buy, 

say, a third DDG, I understand the investment there and taken in 

isolation I can do that. The question becomes, where do you want 

me to divest, all right? Do you want me to build one less submarine? Do you want me to build one less amphibious ship? Do you 

want me to build one less aircraft carrier? 

Well, no one ever tells me to build one less of anything, and so 

that is—what I end up having to do, as we work through SCN 

[Ship Construction, Navy] plan I say these are—this is how I am 

going to balance within the top line that I am given and these, I 

think, are the most efficient ways I can get there. And it is simple 

math. 
16 

Ms. PINGREE. And I understand. I just want to interject a little 

bit. Since Mr. Courtney is not sitting here I can certainly say, well, 

if you have to build one less submarine that is the way things go. 

But also I would say, just sort of the supply chain economics, I 

mean, one of the things that we have consistently seen is that the 

more ships that are being built the more consistently we plan. You 

know, we talk a lot in here about our industrial base, of the economies of scale. I understand the big numbers and I certainly understand the constraints you are under, but looking at it from the 

other side, those are some of the concerns I am looking at. 

Admiral BLAKE. Let me just focus for a second on the industrial 

base, because that is an excellent question. When we are determining what and how we are going to build and where we are 

going to build we have to take a look at the industrial base, and 

one of the concerns we have is if we make a decision can that— 

and it adversely affects a piece of the industrial base, does that decision allow us to, if you will, at some future date, reconstitute that 

capability? 

If the answer is yes then we would say, all right, we will go down 

that path. If the answer is no then we have to present to our leadership the fact that this may be an irreversible decision. You may 

go down this path and if you do, you may not be able to recover 

in the future. 

And that is the dialogue we have with the leadership when we 

bring those forward and we propose the plan. I can assure you, 

they are lively meetings when we sit in there and we put this forward to them because when they realize the—not only the effect— 

the primary effect, but then the second and third order ramifications to the industrial base and the fact that we may not be able 

to reconstitute that at some future date then the question takes on 

an even more serious tone. 

Secretary STACKLEY. I would like to address the question regarding the second destroyer in 2014. A couple of important facts: First, 

the—we restarted DDG 51 construction in 2010 and we have got 

four ships under contract, and a result of the four ships that we 

have placed under contract is we have prior year savings in this 

program that are—work in our favor when we consider future procurement for the 51s. 

We also have a unique situation where we have got competition 

on this program—two builders building the 51s, and the competition has been healthy with both builders. We also have a very significant cost associated with government-furnished equipment, so 

not only did we restart construction at the shipyards; we also restarted manufacturing lines at our weapon systems providers. 

So in this process we were able to restart 51s virtually without 

skipping a beat and we are seeing the continued learning curve 

that we left off on back with the 2005 procurement. So when we 

march into this third multiyear for the 51s we are looking to capitalize on the same types of savings that we saw prior, and our top 

line, again, allowed for 9 ships to be budgeted, but when we go out 

with this procurement we are going to go out with a procurement 

that enables the procurement of 10 ships, where that 10th ship 

would be the second—potentially the second ship in 2014 if we are 

able to achieve the savings that we are targeting across this 
17 

multiyear between the shipbuilders in competition as well as the 

combat systems providers as well as all of the other support and 

engineering associated with this program. 

So we want to leverage the strong learning, we want to leverage 

the strong industrial base, we want to leverage the competition to 

get to what we need in terms of both affordability and force structure, and I think we have a pretty good shot at it. 

Ms. PINGREE. That is good—— 

Mr. AKIN. Thank you. We are out of time. 

I think if we do it just right we may be able to get all the questions in. If you can keep it—if you could keep it shorter that is good 

because we have got votes coming in about 10 minutes, or so. 

Mr. Palazzo is next. 

Mr. PALAZZO. Thank you, Mr. Chairman. 

And I would like to thank our distinguished guests for being here 

and the services that you provide to our country. Thank you very 

much. 

I will keep my questions kind of short. I mean, it is always good 

to talk about, you know, the things, the decades of financial mismanagement that have actually led us here today to talk about our 

30-year shipbuilding plan and that we are actually taking ships out 

of it and we are not going to be able to meet our targets, which 

does—I think is going to impair us to be able to meet our emerging 

threats in the future. So I will keep my question kind of short. 

You know, the Navy has made some wonderful progress in controlling costs in their shipbuilding programs over the years, and it 

is a shame that we have gotten so far to the edge of the financial 

cliff in this country that those successes aren’t able to be touted in 

the increase in our shipbuilding targets. And, you know, such 

things as the use of multiyear procurements, keeping the production lines hot, keeping costs down while producing a better product 

for the Navy at a better cost to the taxpayer,extremely—two things 

that are extremely important. 

So, Secretary Stackley, my question for you is the next amphib, 

the LHA 8, is scheduled to have a well deck, which is a big change 

from both the LHA 6 and the LHA 7. Obviously a major change 

like this requires a great deal of planning and pre-engineering. 

Can you give us any insight about the best ways to save money 

on this ship, and especially the savings that could be seen if we 

dedicate funds to begin the engineering process ahead of schedule? 

Secretary STACKLEY. Yes, sir. Let me start with the decision to 

go back to a well deck was made in the course of the last 1 to 2 

years. But once you have made the decision now you have to—what 

is the best material way to get there, and so we conducted what 

I would call a mini analysis of alternatives, looking at different alternatives to not just restore the well deck to LHA 8 but then look 

at all the new capabilities that that ship was going to be—basically 

have to handle with regards to introduction on Joint Strike Fighter, the horizontal lift capabilities, and do that all within an affordability target. 

So the AOA [Analyses of Alternatives] is wrapping up, and in 

this year’s budget request we have some funding to start the R&D 

[Research and Development] side of LHA 8 design, and that continues through the FYDP. We did move the LHA 9 to the right 1 
18 

year—that ties in with all the previous discussion regarding the effects of the Budget Control Act. But that remains a very high priority inside of our shipbuilding program, and what is critical to ensure that when we go back to a well deck we keep a handle on affordability, and that means getting that design matured so when 

we go into procurement we are dealing with a very high level of 

completion of design and not a high level of risk in construction. 

Admiral BLAKE. Sir, if I can just add to that, it was about 2 

years ago when the Commandant and the CNO [Chief of Naval Operations] sat down and had a discussion about adding a well deck 

into that particular ship, and then I sat down with General Mills’ 

predecessor, General Flynn, and we looked at where—how we were 

going to deal with the issue because we needed to consider cost and 

we also needed to consider tradeoffs. So because of the fact that 

you are going to put a well deck back in as well as a reduced island 

on this ship there has to be some level of tradeoff, and that is what 

we are currently looking at right now—where do we make the 

tradeoffs, because the requirement is going to be that the Marine 

Corps needs a well deck? 

And the CNO was attuned to that. He said, I understand; we will 

do it, but we have to also look at the cost and keeping it within 

the constraints we have, so where do we make the tradeoffs? And 

that is what we are dealing with right now. 

Mr. PALAZZO. Well, I agree, and that is why I think, you know, 

making those funds available for pre-engineering is extremely important because it is going to provide the product that the Navy 

and the Marine Corps wants and needs and it is going to be at the 

best cost to the taxpayer. 

Thank you all for your time. 

Chairman, I yield back. 

Mr. AKIN. Thank you. You redeemed a minute-and-a-half. You 

get the prize for the morning. 

Okay. Mrs. Davis. 

Mrs. DAVIS. Okay, I will try and do the same. 

Admiral Blake, I wanted to ask you about the early retirement 

of ships, because there is some confusion about that. I think a 

statement was made yesterday that in the 30-year plan that there 

would be a commitment not to retire them early, and yet we know 

that in the plan now there is a plan to do that, and—before their 

service life is completed. 

So what can you tell us about that? What confidence can you give 

us that when we make that upfront investment in new ships that 

the Navy will continue to maintain them and modernize them in 

order to make their expected—— 

Admiral BLAKE. Ma’am, we would have preferred not to have decommissioned any ships at all, but given the current fiscal environment we had to make some very hard decisions, and they—we arrived at those decisions after a number of deliberations. So in the 

case of the cruisers, we had to, if you will, look at each one of those 

and say, where can we recoup the greatest savings as we are going 

forward? So we looked at the seven cruisers in particular. One of 

them has had significant issues because of a grounding that occurred earlier in its career. 
19 

And then we looked at the others and we said we have a requirement for ballistic missile defense. We have not updated these other 

six units with the ballistic missile defense. We have also not given 

them the significant HM&E [Hull, Mechanical, and Electrical] upgrades that are required. And so when we chose those seven units 

we said, this is what we are going to have to do in order to be able 

to get it. 

I will tell you, to give you an idea of the magnitude, just for those cruisers alone it would require in excess of $4.1 billion if we 

were to put them back in the system, if you will, so—and that just 

is not possible in the current fiscal environment. And I think if you 

decided that—if we were directed to put those back in I can only 

go to so many, if you will, pots of money. I would have to go and 

find something that would probably be equally egregious as I went 

forward in order to hit the balanced numbers, or in order to balance my numbers. 

Mrs. DAVIS. It might be helpful to really be able to look at that 

issue in the whole context. If we can do that, and perhaps you have 

been trying to provide that information, because I do think there 

is a lot of concern about that. I mean, we have obviously spent a 

lot in that development and I think—would you suggest that the— 

on balance—I understand what you are saying, but what else could 

we do? What else would be—if people are uncomfortable with that 

decision? 

Admiral BLAKE. Well, actually, I would—— 

Mrs. DAVIS. Where do we go from there? 

Admiral BLAKE [continuing]. I would open the aperture even 

wider because I think it is not only the cruisers; it is the amphibs 

we had to take; it is the fact that we are not going to be able to 

build that SSN in 2014 and the DDG in 2014 that we have already 

put in. And you look, there is little to no wiggle room. We are 

where we are. There is little to no wiggle room at this point if you 

want to hit those—if you are expected to hit those numbers. And 

we were told we would hit those numbers and we did. 

Mrs. DAVIS. Could you address, as well, I know the concerns 

when we spread out the construction we obviously are unable to 

reap some savings that would be done if ships were built closer together or in some other fashion, you know, grouping. What kind of 

dollars are we really losing because we are having to spread those 

out? I understand the budgetary constraints, but I think just in 

terms of, again, that larger picture and where those costs are going 

to be lost. 

Admiral BLAKE. Well, I may be wrong but I think you are referring to, like, doing multiyears, for example. That is an efficiency. 

Whenever we do a multiyear it is a double-edged sword, and by 

that I mean we do recoup savings but at the same time, when— 

given the current fiscal environment, it limits me in what I am 

able to do because once you put a multiyear in place if you want 

to go back and break that multiyear the penalty is going to be so 

egregious that it is going to be unacceptable. 

So while I do want to achieve multiyears and I want to get them 

there, I also have to look at it and say, okay, because of that I then 

have to go to a limited number of accounts in order to come up 

with those assets to pay a bill. 
20 

Secretary STACKLEY. Let me join in, if I could. We, in fact, have 

come across with three multiyear requests with this budget—the 

51s, the Virginias, as well as a multiyear request for MV 22s [Osprey Tiltrotor Aircraft], and we place a lot of care and consideration into looking at, is it a firm, solid requirement? Are there, in 

fact, substantial savings? Do we know we are going to buy this 

thing? 

Then let’s buy it with a multiyear because that is the best way 

to achieve savings and provide stability that the industrial base 

needs. So we do leverage multiyears where we can. 

The other side, though, what you are describing is, well, how 

about those programs where, in fact, you have got a sawtooth effect, or peaks and valleys, that impacts not just the prime contractor but also the vendor base below them? We are struggling in 

a couple of areas, and frankly, none more so than the auxiliary 

shipbuilding sector today. 

And today the last of our auxiliary ships under construction, T– 

AKE, followed by the four-ship MLP [Mobile Landing Platform] 

class, where we have got three authorized and appropriated and we 

are coming forward with a request for the fourth. We are fighting 

that sawtooth effect in the auxiliary sector, and that is near the top 

of our list of concerns because of the impact that is associated with 

the industrial base, both at the prime contractor and the sublevel. 

So on PB13 [President’s Budget FY 2013] what you are seeing 

is a first line of defense against that. We do not have a long-term 

solution in that particular case at this point in time. 

Admiral BLAKE. Yes, ma’am. The only thing I would add is, while 

we are—we have our eye firmly focused on the requirements we 

also have our focus on that industrial base because of the concerns 

we have that it is fragile and we don’t want to, if you will, go back 

to a position that we can’t recover from. 

Mrs. DAVIS. No. I agree. I think, obviously, coming from an area 

like San Diego, we know how critical those issues are, and so if, 

as you say, you don’t have a solution we—I think we would love 

to work with you to try and find one. 

Secretary STACKLEY. Well in fact, if we can talk San Diego for 

a second, okay, so the shipbuilder NASSCO has a history of commercial and military shipbuilding, and at no point in time can we 

suggest that we are going to be able to carry NASSCO’s future on 

the back of Navy ship construction. Their success has been the 

combination of commercial and military. 

So what we have tried to do over the last couple of budget 

subnets is address our requirements for auxiliary shipbuilding, 

keep in mind their requirements to be a viable shipbuilder, and try 

to build a base that allows them to be more competitive for commercial shipbuilding as well as fill our need for auxiliary shipbuilding on a program-by-program basis. So we can’t provide the 

whole solution but we do look to try to provide a base, just like we 

would for our other shipbuilders, but in this case so they can also 

be competitive in commercial. 

Mrs. DAVIS. Right. Thank you, sir. 

Thank you, Mr. Chairman. 

Mr. AKIN. Thank you. 

And, Mr. Platts. 
21 

Mr. PLATTS. Thank you, Mr. Chairman. I will try to be quick. 

Certainly thank each of you for your testimony and most importantly for your service. We are grateful for what you have done for 

all of us fellow citizens. 

Mr. Secretary, a really quick follow-up on Mr. Wittman’s questions about the CVN 79 and the carrier plans: It is my understanding that you are extending CVN 79 by a year, what the rationale is there, and won’t that have a negative impact on cost, and 

what, if any, impact on the vendor and the industrial base would 

you anticipate? 

Secretary STACKLEY. Yes, sir. First, we held the year procurement into 2013, so the 78 was a 2008 ship; the 79—we are requesting the 79 to be authorized and appropriated in 2013. This is in 

addition to the years of advanced procurement. 

In the case of CVN 79, she is the replacement for the CVN 68, 

which does not retire today until—the long-range shipbuilding plan 

describes that CVN 68 goes out of service in 2023. So what that 

means is there is an extra 2 years of I will call it margin for the 

build span for CVN 79. 

Now, in regards to what does that mean for cost, discussing earlier that first focus on carrier construction is to get CVN 78 right. 

We have got to right that ship. And in the course of doing so we 

are working closely with the shipbuilder to come up with a better 

build plan for CVN 79, and in doing that we have got to get the 

front end fixed. 

A lot of the issues that we are dealing with on CVN 78 are front 

end issues associated with design planning and material—not just 

the procurement of the material but the arrival of the material to 

support the production and build plan. We have got to get that 

front end fixed, so that is going to be our first focus. 

And when we are done that build plan then we get to take a look 

at what is the proper build span for CVN 79 to arrive at the best 

cost? It does not necessarily mean—more time does not necessarily 

mean more cost. If you set out with a build plan that is not proper 

then you are going to end up using that additional time just doing 

more work later when it is more costly in the construction process. 

That is what happened on CVN 77; that is what we are fighting 

against on CVN 78; and that is the plan I want to correct for CVN 

79. 

When we are done, if that arrives at a different delivery date 

than what is projected today then the Department of the Navy will 

have a discussion about, okay, what is the optimal now, in terms 

of introducing that ship, because there is more than just the ship 

construction costs that are—that come into play. We have all the 

costs associated with the crew, the operations, and support costs 

when the ship enters service. So we have to look at total cost, both 

construction, operating, and support; recognizing that we have the 

added flexibility associated with the CVN 68s—— 

Mr. PLATTS. So the year extension, though, is more uncertain at 

this point, until you get 78 right? Am I understanding that correctly? 

Secretary STACKLEY. I would say that the year extension is not 

on the books. In terms of planning, we plan on CVN 79 to deliver 

on time, in time to support CVN 68’s decommissioning. I am look-
22 

ing to work with the shipbuilder to—let’s relieve ourselves of a 

scheduled delivery date. Let’s look at how we can best build that 

carrier reliably—— 

Mr. PLATTS. Based on what you are learning from 78 and going 

forward? 

Secretary STACKLEY. Yes, sir. And that I expect to occur in the— 

we will go through this in the course of the next year and then I 

will be able to bring that information back to POM–14 [Program 

Objective Memorandum]. It may or may not affect our planning 

dates today, but at least in making that decision it will be better 

informed than it is today. Because today the only information we 

have to go on is CVN 78 experience and that does not drive any 

decision to deliver 79 earlier. 

Mr. PLATTS. Thank you, Mr. Secretary. 

Yield back, Mr. Chairman. 

Mr. AKIN. Thank you. 

Unfortunately, we have just got 8 minutes left in the vote. We 

have two 15-minute votes. I would assume we could resume sort 

of in the 12 o’clock range, so we are going to call an adjournment 

here for just a moment. 

[Recess.] 

Mr. AKIN. I believe Mr. Larsen is going to be next, but I am taking the chairman’s prerogative in asking one simple question, Admiral, and a cup of coffee is riding on the answer to your question, 

okay, so just make sure you answer it the right way, okay? I am 

going to read it just the way the question is written. 

Admiral BLAKE. Is it with cream and sugar, sir, or black? 

Mr. AKIN. If I win I will get it the way I want it. 

I don’t envy the task you had in trying to balance requirements 

and resources. Knowing it is your job to protect the President’s 

Budget, what is the one or two things that you would have preferred to see stay in the budget request if you had more resources—one or two things? 

Admiral BLAKE. If I had to choose one or two things I would 

probably choose the DDG and the SSN that we had to give up in 

2014. 

Mr. AKIN. Go to the head of the class. I just won my coffee. The 

bet was you wouldn’t answer the question, so I came out okay. 

I thought you were going to do it. Thanks. I owe you half a cup 

of coffee. 

Mr. Larsen. 

Mr. LARSEN. Thank you, Mr. Chairman. 

Based on what the value of the prize was—coffee for getting a— 

I was concerned that you had to answer a question and you were 

going to be the winner. You are very fortunate, based on the coffee 

that we have here, that—— 

[Laughter.] 

That you only had to provide an answer but was not—were not 

tied to the prize. 

Question for Mr. Stackley, regarding the SSBNs, and the tears 

slip on this—in your written testimony it is not quite clear to me 

so if you can be more clear in response to this question—was—did 

you make the decision on SSBN 2-year delay in conjunction with 

STRATCOM [U.S. Strategic Command]? 
23 

Secretary STACKLEY. STRATCOM was fully involved in the decision to come forward with the 2-year delay. We all recognize the 

STRATCOM requirements and that by going down from today’s 

force structure down to a 10-boat force structure for a period of 

time it places greater stress on meeting their requirements, but 

given that, if you take a look at the 12-boat plan for the Ohio replacement, in fact, in the 2050s, when that class is going through 

its extended refit period, we are back to 10 boats again. 

We believe that operating—meeting their requirements does increase the risk, but at the front end of a new ship class unplanned 

maintenance and overhauls and extended refits that aren’t a part 

of that schedule, that it is acceptable risk. So they were party to 

the discussion; they understand the decision process that went forward. 

Admiral BLAKE. Sir, if I can just—— 

Mr. LARSEN. Yes, sure, Admiral. 

Admiral BLAKE. So when we looked—when we looked at the 

SSBN(X) [Ohio Replacement Ballistic Missile Submarine] and the 

2-year delay, what we did was we sat down with all the parties involved and we went to the 2030 to 2040 timeframe and we—and 

that is the period when you would drop down to 10 boats. But one 

of the ways you are able to mitigate that is because as you are 

bringing those 10 boats online they are all new we don’t have to 

start their refit periods until later on in the period, around the 

2040 timeframe. 

So to answer your question, yes, we think we can take on that 

risk in that timeframe, but we still think, given the current state 

of the criteria for the requirement, that we would eventually we 

would have to go back to the 12 boats, because when those 10 boats 

start going through their refit periods that is when we need them 

to go—the number has to go back up to 12 in order to maintain 

the requirement for the continuous number of boats at sea. 

Mr. LARSEN. That is fine. I understand that. If that is the case 

then why wasn’t this the plan in the first place, if it is a risk you 

can take now? Maybe it is sort of revisiting that question. 

Admiral BLAKE. Well, I think it was based on the economic or 

the fiscal realities that we faced as we had to, if you will—we were 

concerned with how many—what areas were we going to be able 

to take additional risk in and still meet our requirements? That is 

what it came down to. It was just the overall fiscal situation that 

we ended up in. 

Mr. LARSEN. All right. I would imagine that—we also have a 

Strategic Forces Subcommittee and this might be a question we are 

going to explore there, as well. Does this have any impact on— 

thanks for starting the clock; I am going to have to speak quickly— 

does this have any impact on the 16-tube versus 20-tube discussion 

that we are having on the design? 

Secretary STACKLEY. We did take a look at—in doing the analysis of alternatives for the Ohio replacement we looked at 24-, 20- 

, and 16-tube, and STRATCOM was very central to those discussions—— 

Mr. LARSEN. Right. 

Secretary STACKLEY [continuing]. And that decision, as well. And 

the other alternative that, frankly, we looked at was can we afford 
24 

to go down to a 10-boat class for the long term? Concluded that we 

needed 12 boats for the long term—16 tubes with 12 boats meets— 

meets 85 percent of the New START [Strategic Arms Reduction] 

Treaty warhead allowance. 

Mr. LARSEN. Right. 

Secretary STACKLEY. What we give up in going from 20 down to 

16 is some flexibility on loadouts. So we give up some flexibility, 

we get the affordability that comes with a 16-tube boat, and we 

maintain the total force structure 12 boats for operational availability, and that seems to be the sweet spot in terms of balancing—— 

Mr. LARSEN. But with this period of time where you are at 10 

boats, is that a problem? 

Secretary STACKLEY. No, sir. No, sir. 

Mr. LARSEN. Why not? 

Secretary STACKLEY. Why not? 

Mr. LARSEN. Yes. Because if 12 boats and 16 tubes is, you know, 

great flexibility at some point for a period of time—— 

Secretary STACKLEY. You don’t have the missile inventory to load 

out 12 boats, so your missile inventory doesn’t go to that point. 

Mr. LARSEN. Okay. 

Finally, we had some discussion about this question with regard 

to CVNs and trying to find a way to squeeze some costs out and 

one of the ideas was to do some—do block buy of certain components of CVN components. And have you considered that, and what 

is your thought on that on block buy on components from 79 to 80, 

or whatever, 79, 79 to 80, and so on? 

Secretary STACKLEY. Yes, sir. At this point in time the Navy and 

the shipbuilder are sitting side by side putting together a build 

plan for CVN 79. We are 40 percent complete construction of the 

78; we have got a lot that we have got to, I will say, do different 

on the 79 and follow from the lead ship. It is a very different ship 

class. 

So we are taking a hard look at the build plan. We need to get 

that locked down. And associated with that is the complete bill of 

materials for the Ford class. 

At that point in time we will be able to take a look at—— 

On this, call it bill of materials, what does it make sense—what 

makes sense in terms of looking long term, beyond the immediate 

ship? 

Mr. LARSEN. Right. 

Secretary STACKLEY. Are there areas of the industrial base that 

are stressed to the point that it does make sense to look at coupling 

the CVN 79 and CVN 80 buy? 

We are not at that point yet. I described earlier that I think after 

we get through this build plan review then we will be able to come 

back in 2014 and identify potential critical items that warrant a 

block buy approach. 

Mr. LARSEN. Yes. Okay. Thank you. 

Thank you, Mr. Chairman. 

Mr. HUNTER. [Presiding.] Mr. Coffman. 

Mr. COFFMAN. Thank you, Mr. Chairman. 

First, thank you all for your service. 
25 

Lieutenant General Mills, would you say that it is—that the 

forced—forcible entry requirement is—to satisfy that requirement 

is two Marine Expeditionary Brigades? 

General MILLS. Yes, sir. That is the requirement that we are 

planning to. 

Mr. COFFMAN. Okay. And then ideally, would you say for that requirement that we would have 38 ships out with 4 probably down 

for maintenance, so ideally the requirement would be 42 amphibs? 

General MILLS. Sir, we would assume risk to take 15 amphibious 

warships—15 per MEB in the assault echelon, that is—for a total 

of 30 operationally ready ships to deliver that—those two MEBs to 

the right place at the right time. That is the number that we are 

currently—is acceptable to us. 

Regarding the inventory, we—you know, we support the—what 

the Navy is looking at, which is 32 ships under the current plan 

to deliver to us 30 operational ships at the time and place in which 

we need them. 

Mr. COFFMAN. Now, how much risk would that take? I guess you 

would have noncombatants for—on the follow-on carrying equipment, marines? 

General MILLS. Yes, sir, that is correct. And, you know, the follow-on echelons could—would be made up of the MPS [Maritime 

Prepositioning Ships] ships that we have. We have 14 ships in 

those two squadrons that carrying equipment designed to support 

two additional MEBs as they would flow in after the assault echelon has made its entry. 

There is risk in what would go out with the initial assault force. 

Again, it is the MAGTF Commander who would have to make some 

decisions as to what he loaded out depending on what the mission 

was, what the threat was. That would be made at the time, I think, 

and place of his assignment. 

Mr. COFFMAN. Okay. So if now we have revised and revised that 

number down we are accepting greater risk. 

But what is the—Mr. Stackley, what is the date, then, that we 

will be actually at 32 ships? 

Secretary STACKLEY. Sir, I am not going to do this all from memory, but basically, at the end of this decade we basically start to 

build back up. Today we are at 29. We will be delivering—we have 

five LPD 17 class ships that are in some stage of construction that 

we will be delivering serially over the course of this decade, as well 

as the LHA 6. So somewhere towards the end of this decade we get 

up to the 32, 33 ship level. And then the long-term plan has us sustaining that level with the introduction of the LSD [Landing Ship, 

Dock] 41 class replacement, the LSD(X), and continued construction of the big-deck amphibs. 

Mr. COFFMAN. So then out of the 29 ships that are currently in 

service how many of those ships are in service life extension programs? 

Secretary STACKLEY. LSD 41/49 class is the only ongoing service 

life extension program for the amphibs. The LPD 17 class obviously 

is a new ship class, and the big decks don’t have a specific midlife 

extension but they do go through, in their class maintenance plan, 

continued series of modernization as well as maintenance and repair through their overhaul cycle. 
26 

Mr. COFFMAN. So out of the 29 ships how many of them are 

deployable right now? 

Admiral BLAKE. Sir, I would have to take that question for the 

record and get back to you. I don’t have that number right in front 

of me. 

[The information referred to can be found in the Appendix on 

page 113.] 

Admiral BLAKE. But I would tell you that as we look at the delivery of ships, such as America, we go back and we say, all right, if 

the delivery is delayed then we look at the large-deck amphibs we 

have in order to—and extend them beyond what we were going to 

do for their initial decom date and push them out. So we recognize 

that we want to keep that capacity around. 

Mr. COFFMAN. Okay. 

Thank you, Mr. Chairman. I yield back. 

Mr. HUNTER. Does anybody have any secondary questions? If you 

do now is the time. 

Otherwise, thank you all very much for your service and time 

and we are going to change out panels. 

Okay. We are going to restart the hearing here, and some other 

folks are going to come in. I don’t have an opening statement, so— 

nor do I have your introductions, I don’t think. Let’s see, biographies. I will tell you what, why don’t you introduce yourselves in 

your opening statements? 

STATEMENT OF PHEBE N. NOVAKOVIC, EXECUTIVE VICE 

PRESIDENT, MARINE GROUP, GENERAL DYNAMICS CORPORATION 

Ms. NOVAKOVIC. —executive V.P. at General Dynamics for marine systems—that is all of our shipyards. And I appreciate the 

committee’s invitation to testify. In the interest of time I have some 

very short oral remarks. My written statement further amplifies 

these themes. 

First, our shipyards: We have got four shipyards with approximately 21,000 employees. Bath Iron Works, in Maine, designs and 

builds destroyers. Electric Boat, in Groton, Connecticut, and 

Quonset Point, Rhode Island, designs, builds and repairs nuclear 

submarines. And NASSCO, in San Diego, designs, builds, and repairs Navy auxiliary ships and ships for the Jones-Act market. 

NASSCO also has a repair yard in Norfolk. 

I would like to extend an invitation to each of you to come visit 

our yards and see firsthand the kinds of ships we build and the capabilities of our workers, of whom we are very proud. 

You asked for our view of the Navy’s long-range shipbuilding 

plan. Let me answer that by focusing on the fiscal year 2013 FYDP 

programs that affect our businesses. 

First, the Navy’s destroyer plan: We strongly support the Navy’s 

plan to execute a multiyear procurement for nine more DDG 51 

submarines. We are grateful for the committee’s support of prior 

DDG 51 multiyears. Your support on this one will ensure that Bath 

can continue to reduce costs of these ships. 

We also appreciate the increased clarity and stability of the 

Navy’s plan. A stable plan provides the predictability necessary for 
27 

us to manage our workforce and make informed decisions about future facilities investments. 

That said, as we have talked about this morning at some length, 

the FYDP shifts the second DDG 51 from fiscal year 2014 to 2016. 

We intend to work closely with you and the Navy to ensure that 

any risk from this disruption is mitigated. 

While not part of the 2013 plan, I want to thank this committee 

for your support of the DDG 1000. Construction on the first ship 

is 60 percent complete and going very well. Construction on the 

second ship is more than 25 percent complete. And Bath begins 

work on the third and final ship in April. 

Next I will address the Virginia class submarine program. For 

years these boats have been under multiyear contracts, which allowed Electric Boat to reduce costs and reduce production cycle 

times. These successes would have been impossible in the absence 

of multiyear authority, which provides greater predictability and 

stability, and we thank this committee for your constant support. 

The Navy has requested your approval to contract for at least 

nine more submarines in Block IV in a multiyear. We urge the 

committee to continue supporting multiyears for this program. 

I am sure that I speak for our teammate, Newport News, when 

I congratulate this committee for accelerating the Virginia class 

procurement from one to two submarines a year. This increased 

rate ensures that we can do our part to build these ships faster and 

at a significantly reduced cost to the Navy. 

As we talked about earlier today, the budget shifts the second 

Virginia class in fiscal year 2014 to fiscal year 2018. While we are 

pleased that the Navy remains committed to Block IV, the delay 

of the second fiscal year 2014 submarine is not without consequence. The shift interrupts the two-a-year production plan, impacting the costs of Block IV and the stability of the supplier base. 

We will work hard to support all efforts to find cost effective solutions to address this delay. 

Turning to the Ohio replacement program, over the last two decades Electric Boat has made great strides in designing ships to optimize construction and reduce costs; and I believe, can design, 

build, and construct the new ballistic missile submarines on time 

and on cost. Imperative to this, however, are two factors: first, stability in design and construction funding; and second, clear, costsensitive requirements that, once established, do not change. Regarding the recently revised Ohio replacement plan, we ask that 

the Navy and the Congress provide predictable, level loaded R&D 

funding to support the most efficient design profile. 

Finally, I will address the Navy’s auxiliary ship program. We appreciate the acceleration of the final T–AKEs and mobile landing 

platform ships, enabling NASSCO to provide significant cost savings to the Navy. MLP is a capable, flexible platform and the President’s Budget seeks a fourth MLP ship in fiscal year 2014. We 

would also ask your support for that platform. 

In the interest of time—you had asked about shipyards—preserving shipyard critical skills—I would refer to you my written 

testimony that has a quite extensive section on that. I do, however, 

want to talk about cost efficiency and risk reduction. 
28 

You had asked about initiatives to drive low-cost and lower-risk 

Navy ships. Cost efficiency and risk reduction are central to General Dynamics. We have a culture of continuous improvement, 

which means that every process is subject to rigorous cost analysis 

and process improvement. 

In addition, we believe in investing in our proven businesses 

when there is sufficient volume and stability to justify the deployment of shareholders’ capital. These investments help our businesses reduce costs and improve quality. 

At E.B. [Electric Boat] we use a disciplined, cost-driven approach, called design for affordability, that optimizes the Virginia 

design for production. As a result, we eliminated 3 million hours 

of E.B. labor and contributed to a unit cost reduction of about $400 

million per ship. 

On Ohio replacement, Electric Boat is attacking design, construction, and lifecycle costs concurrently in the outset of the program. 

Already our engineers have instituted 510 cost reduction initiatives 

and we are reviewing another 1,200 for implementation. 

At Bath we are cutting overhead through initiatives such as consolidating leased facilities and dramatically reducing our energy 

and water consumptions. Thousands of lower-level process improvements using lean manufacturing principles and Lean Six Sigma resulted in $58 million in savings in the last 2 years alone. 

At NASSCO the T–AKE, the last of the class, will deliver for 38 

percent of the hours on the lead ship, and rework is less than 1 

percent. This was achieved through comprehensive process improvements. We modified the design to make it more producible, increased throughput, and focused the entire organization on changes 

that improve efficiency. 

In short, the unit cost of all of our platforms that we build are 

lower, not higher, from each unit to the next. 

Finally—and we have talked about it quite a bit this morning, 

but let me address the health of the shipbuilding industrial base. 

As prime contractors each of our shipyards is healthy, highly productive, and well facilitized. As primes, however, we have a responsibility to our suppliers. 

Our submarine industrial base consists of highly specialized suppliers with unique skills and capabilities, which, if allowed to atrophy or disappear, cannot be reconstituted quickly or affordably. 

The base is stable but it is limited. Multiyear procurements with 

economic order buys and advanced procurement allow suppliers to 

invest in human capital and facilities. However, we have a number 

of one-of-a-kind suppliers who possess designs, facilities, and people 

not replicated elsewhere. 

The recent revisions to the Virginia and Ohio replacement programs have troubled the community. Many suppliers had accelerated production based on expectations of higher workload. They 

now face a workload valley with the attendant loss of learning. 

At BIW [Bath Iron Works] we have roughly 3,000 suppliers in 47 

states, most of whom remain healthy. However, the supply chain 

is increasingly consolidated. Today, roughly 29 percent of the value 

of materials and components is committed to single or sole-source 

suppliers. 
29 

The auxiliary ships delivered by NASSCO are built to commercial standards, which allow for a more diverse supplier base. That 

said, the auxiliary ship markets require stability to ensure lower 

cost solutions. 

This concludes my oral remarks, and thank you for the opportunity to testify, and I look forward to answering any of your questions. 

[The prepared statement of Ms. Novakovic can be found in the 

Appendix on page 65.] 

Mr. COFFMAN. [Presiding.] Mr. Mulherin. 

STATEMENT OF MATTHEW J. MULHERIN, PRESIDENT, NEWPORT NEWS SHIPBUILDING, AND CORPORATE VICE PRESIDENT, HUNTINGTON INGALLS INDUSTRIES 

Mr. MULHERIN. My name is Matt Mulherin. I am corporate vice 

president of Huntington Ingalls Industries and the President of 

Newport News Shipbuilding. 

Distinguished members of the Seapower and Projection Forces 

Subcommittee, thank you for this opportunity to share what we at 

Huntington Ingalls Industries believes are the issues facing our 

U.S. military shipbuilding. I want to limit my oral remarks to a 

brief summary of my written testimony, which I respectfully request be submitted for the record. 

Today I would like to discuss the health of the industry, the cost 

of ships, and what we believe are obstacles to more affordable 

ships. I would characterize shipbuilding and its associated industrial base as healthy but fragile, and one critical to our Nation and 

economic security. 

We live in an era where freedom of global commerce on the seas 

is taken for—as a given. We have been and still remain a maritime 

nation and the sea is our conduit to the rest of the world. 

Our Navy is the only force capable of maintaining that conduit. 

Clearly, then, it is essential for the Nation to maintain a healthy 

shipbuilding and industrial base. 

At Huntington Ingalls Industries we defined a healthy industry 

as one that attracts talent, capital, and the technologies necessary 

to meet its commitments to maintain and grow the business. We 

compete with other industries for critical skills and we must make 

a career in shipbuilding attractive to the next-generation workforce. 

We must also have the access to capital by demonstrating the viability and return on investments while offering an acceptable balance of both risk and reward. But building America’s most complex 

ships reaches far beyond our shipyard’s gates. We have a highly 

skilled industrial base made up of 4,000 suppliers across all 50 

states. 

Some of our suppliers have chosen to leave shipbuilding to focus 

on more steady business. As they leave we lose critical manufacturing skills across our Nation. 

A stable shipbuilding plan is crucial. We are sizing ourselves 

today to support the Navy’s plan, but the potential for sequestration could have a devastating impact to our healthy but fragile industrial base. 
30 

Much has been said and published concerning the rising cost of 

military ships. The reasons for these increases are quite complex 

with many variables, and I will try to discuss specifically how the 

estimating and budgeting process impacts cost. 

The current methods do not factor in the increased complexity of 

warships or how new technologies have altered the way we build 

them. For example, new ship designs incorporate many more miles 

of cable to monitor ship conditions and to operate systems. 

From an operational standpoint, these innovations provide great 

benefit and cost savings over the life of the ship. From a design 

and construction standpoint, it makes today’s ships vastly more 

complex to construct, integrate, test, and deliver. 

The current estimating and budgeting processes do not reflect 

these factors. Until they do we will significantly underestimate and 

incorrectly budget for today’s complex ships. 

I would also like to mention ‘‘should cost’’ analysis. These estimates differ from traditional evaluation methods because they do 

not assume that a contractor’s historical cost reflects efficient and 

economical operation. 

‘‘Should cost’’ estimates do provide value and may identify areas 

for improvements that can yield real savings. The difficulty of such 

analysis is that it may also quantify a theoretically possible yet realistically improbably outcome, potentially resulting in unrealistic 

estimates, budgets, and ultimately, unachievable targets. 

There are two other significant factors that affect cost and I 

would like to discuss each briefly. They are changes to the current 

ship programs, and procurement strategies. 

Currently we are facing a build-rate reduction on Virginia class 

submarines and DDG 51 class destroyers in fiscal year 2014. While 

delaying construction starts or changing the quantity of vessels in 

a class may result in decreased funding demands for any given fiscal year, overall they will have detrimental impacts to a shipbuilder and the industrial base. The realities of budgeting and 

funding to an optimal plan may not always be achievable, but the 

effects of stretching or gapping programs are also realities that 

cannot be ignored in assessing cost growth. 

Regarding procurement strategies, in recent years we have seen 

greater use of multiyear procurements for submarines and destroyers, and most recently, the block buy contracts for the Littoral 

Combat Ship. These types of contracts enable greater economic efficiency to provide the shipbuilder and industrial base with a stable, 

relatively long-term business base that helps us justify process investment and infrastructure improvements. We encourage the Congress to make broadest use of multiyear contracts and block buy 

contracts, and we believe they result in overall lower cost to the 

taxpayer. 

In closing, I would like to report that today American manufacturing is alive and well in our shipyards and in our supplier companies across the Nation. Together we are building the finest ships 

the Navy has every sailed. 

Thank you, and I look forward to answering any questions you 

may have. 

[The prepared statement of Mr. Mulherin can be found in the Appendix on page 91.] 
31 

Mr. COFFMAN. Let me ask a couple. 

First of all, I think to both of you, as you look to the future, what 

is your biggest concern for the shipbuilding industrial base, if you 

were to identify one as being your top concern? 

Ms. NOVAKOVIC. For us it is stability and predictability of funding. We can adjust to lower volumes of new ship constructions— 

construction, to a point. I mean, there becomes a critical mass that 

you need. But the single largest thing that we have to have is consistency and stability, because that allows us, then, to work with 

the industrial base and our suppliers to craft their support of us 

and our—and frankly, our entire build strategy and our entire 

shipyard, to meet the requirements of the Navy. 

So right now would we all wish that we had more volume? Sure. 

But within today’s volume I think it is manageable as long as these 

plans stay in place and they get funding that we can rely on. 

There is nothing that perturbs the work plan of a shipyard more 

than changes in a longstanding program. It is costly and ultimately 

ends up costing—we have learning issues, but ultimately it ends up 

costing the Navy a considerable amount of money. 

Mr. COFFMAN. Mr. Mulherin. 

Mr. MULHERIN. I would have to agree that says that stability is 

a very big issue. Big issues facing Huntington Ingalls Industries 

have to do with amphibious ships, both the timing of LHD 8 and 

the timing of LSD(X) that drives workload valleys at Ingalls 

Shipbuild, and that we—that would be—that drive costs in the programs. 

Mr. COFFMAN. Let me just ask you one—given this shipbuilding 

plan that is being presented by the Administration, by the Department of Defense, is it such that it is inefficient to keep—is it 

enough to sustain the number of shipbuilding yards that we have 

in the United States today, or do we—given the workflow from— 

the reduced workflow from this plan, what is the net effect in 

terms of being able to keep alive the number of shipbuilding yards 

that we have? 

Mr. MULHERIN. As you may be aware, at—within H.—Huntington Ingalls Industries we are right-sizing our footprint in the 

shipbuilding business, so we are in the process of winding down 

military ship construction at Avondale Industries, in New Orleans, 

and that shipyard will cease being part of that military shipbuilding industrial base after delivery of the second LPD that we 

are building there. So I think at least within our realm that that 

will size the industry will have about the right footprint. 

Ms. NOVAKOVIC. I think that, again, thinking about our three 

major shipyards, the FYDP adequately supports the capital footprint that we have got at each of those shipyards. I think it is contractors’ responsibilities to size their business to meet the demand. 

So when the demand slows we have got to take costs out of our 

business and out of programs in order to effectively and efficiently 

meet those lower volumes. 

That said, the movement of the—and the delay on Virginia in 

2014 and of the DDG 51 is troubling, not so much for the footprint 

of the—or the capital structure of the shipyards, but because of the 

efficiency of which we can build these ships. It is just going to cost 

more. 
32 

Mr. COFFMAN. Mr. Larsen. 

Mr. LARSEN. Mr. Chairman, I will yield my time to Mr. 

Courtney. 

Mr. COFFMAN. Okay. 

Mr. Courtney. 

Mr. COURTNEY. Thank you, Mr. Chairman. 

You know, obviously you have out very well sort of a challenge 

we have got in terms of maintaining the momentum in your programs that you have been working on. And again, looking back, 

when we—when this subcommittee actually sort of put a bet down 

in 2007 that advanced procurement above what the administration 

gave was hopefully going to pan out in terms of, you know, getting 

all that momentum in terms of a more efficient, cost effective program. 

I mean, clearly the numbers speak for themselves. I mean, that 

was a bet that did pay off. A fixed-price approach also sort of challenged both yards to sort of hit, again, budget constraints from the 

government. 

So in terms of trying to look at what we can do as a subcommittee to try and avoid the damage that you have laid out 

here—again, there are other ideas that are floating around about 

possibly using some form of flexibility in the contracting process to, 

again, avoid the problems that you have described. And I guess the 

question is, you know, are we at a point in both programs—the 

DDG and the Virginia class—where we should feel confidence that 

if that opportunity was given that it is something that, you know, 

within even the budget constraints that we are all dealing with 

would really work? And I just wonder if you could comment on 

that. 

Ms. NOVAKOVIC. As a predicate to what I am going to say, I 

wanted to share with the committee that I used to run the national 

security division at OMB [Office of Management and Budget] so I 

understand the catechism around the bad words of incremental 

funding. But that said, it is, in my view, appropriate with longterm national security programs that have been performing well. 

We are well into 15 years of excellent performance on Virginia 

class. If there was a program that met the test of incremental funding I think this is it. 

And frankly, we have crossed that Rubicon already, and while 

precedence isn’t in some people’s mind as positive, it is in mine. It 

is a way—it is, frankly, the only way to get the velocity into that— 

those shipyards, because you are putting more work on a yearly 

basis just funded in a more rational profile. 

We haven’t talked about it, but I suspect that if the sequencing 

of the money is right this can be a very effective tool to buy more 

submarines for the amount of appropriated dollars that we have 

over that period. So that is on the Virginia class. 

With respect to the 51s, I think Sean mentioned that we are 

looking to work with the Navy and then we will ultimately need 

this committee’s help. Because of the savings that were accrued to 

the Navy—to the Navy’s benefit from the competition that Ingalls 

and Bath participated in, those funds may be available to again resequence the available monies and appropriated dollars over the 

period that we—and perhaps even throw in another ship. 
33 

So I think we are premature in that. I have yet—and I don’t 

know if you all have, but I have yet to see what that sequencing 

would look like, what funds are available. I think the Navy is beginning to look at that but that is something that—be all back up 

here once we have got some clarity to talk to you about. 

Mr. MULHERIN. I would agree. I think split funding that kind of 

aligns how the Navy outlays funds with what my obligations are 

in any year does make sense. 

Obviously you have to look at it and make sure that it doesn’t 

impede the program as you go through the years of that construction. So as long as it doesn’t, I think it makes sense. 

Mr. COURTNEY. Well, it sure seems like we are—again, we are 

not talking about programs that are in their infancy. We are talking about mature programs that are well along, again, and that 

have really, I think, should give the Government a lot more confidence that, you know, stepping outside the catechism may be, you 

know really justified, because clearly with the Budget Control Act 

caps minus sequestration, I mean, we are all going to have to put 

our thinking caps on to come up with creative ways to stretch the 

dollars out farther, and really under almost any scenario. 

So we look forward to working with you if, again, there are some 

ideas in terms of accomplishing that goal. 

The other sort of question—quick question I just wanted to ask 

was that, you know, you sort of talked a little bit about sort of the 

carryover from Virginia to the Ohio replacement program. I mean, 

that is sort of another dividend to sort of, you know, getting—keeping that momentum going, because clearly there are going to be 

lessons learned as far as getting the cost of the Ohio replacement 

down from what you have done in the Virginia class. And just 

thought maybe you could just sort of underline that point. 

Ms. NOVAKOVIC. Yes, in two respects. We are using the lessons 

learned in the design of Virginia on—in the design of Ohio. And 

we have a new tool in place, so between our lessons learned and 

the design tool that we are very, very familiar with, we are getting 

some astounding efficiencies on the design side. 

We also, though, to test the design and our ability to accurately 

use all of the tools and the lessons learned we have built some prototypes. And they have been perfect. 

So this early into a program we are retiring construction risk 

years before construction starts. I consider that a major accomplishment. And we will continue to do that iteration throughout the 

design and engineering of the Ohio, but it is why we appeal for— 

we need that funding level loaded. It is pushing that ship out 2 

years, if we don’t get that design done and all the risks retired in 

the design and all—and do considerably more of this kind of prototyping we are talking about—all bets can be off on the construction. 

Mr. COFFMAN. Mr. Wittman. 

Mr. WITTMAN. Thank you, Mr. Chairman. 

Mr. Mulherin, Ms. Novakovic, thank you so much for joining us 

today. 

Mr. Mulherin, I want to begin with you and follow up on a question that I asked with our previous panel, and that is with the current state of CVN—we heard Secretary Stackley talk about the cost 
34 

with 78—I would like to ask you your thoughts about the idea of 

a block buy. We have seen historically where block buys create 

some certainty, they create some cost assurance, they also create 

some significant cost savings, which these days we are all looking 

at ways to attain. 

Give me your thoughts on a block buy scenario for the remaining 

portion of purchase on CVN 79 and CVN 80 and then subsequent 

scenarios for block buys. 

Mr. MULHERIN. Yes, sir. You know, historically you go back, you 

were exactly right, if you look at the contracts that bought the 

CVN 72 and 73 there was huge savings that flowed to the second 

ship, both in the ability to go buy materials, a block buy and get 

discounts there, but also that you did the engineering up front the 

first time for both hulls so the second ship you really just had the 

answer, problem, paper and some of those kind of things the—kind 

of the normal course of business to support the waterfront. 

So I wouldn’t see any different. I think if we were able to do it 

both for material, for the engineering to be able to go pump out 

drawings that had two-ship applicability—plus, I think it brings 

the—CVN—if we were to do a two-ship buy for 79 and 80 it would 

ensure CVN 80 was a copy of CVN 79, no change into the contract 

or very minimal, you are not having a—on the material side you 

get economic order savings, you don’t have to deal with obsolescence. 

So absolutely. I think there is huge opportunity to go do that. 

You know, you talk to the vendor base. They would love to see it. 

It gives them the ability to go look at what investments they need, 

what work is out in front of them, and go invest in training and 

tools to be able to go support that. 

Mr. WITTMAN. Well, thank you. I know as I have heard from suppliers, their big concern is in the 79 and 80 build structure to look 

at spreading those build cycles out, spreading those centers out. 

For them, many times spreading that out takes them out of the 

availability of being able to survive those longer periods of time as 

suppliers, and we all know that our supplier base is absolutely critical. 

I want to ask both of you a question about DDG 51. As you 

know, the—I want to ask this: Do we know the estimated cost per 

unit on the DDG 51 Flight IIIs? And I understand that there are 

going to be 33 ships in this class as they are being developed, and 

I understand, too, as we are making decisions about how to, again, 

block buy those ships there is also the air missile defense radar upgrades there. 

We are looking at, you know, what the cost structure are associated with them. And how much will that cost be integrated into 

this future cost structure for the Flight III DDG 51? And how will 

efficiencies in Flight IIA be utilized to streamline construction on 

Flight III? 

And do you see this—as we get into Flight III do you see this 

developing into an entirely new class of ship? Because as you know, 

we are doing the three DDG 1000s. The decision has been made 

to stick with it, at least for the time being, and at least with the 

next bid for the next nine ships to be DDG 51. 
35 

But the question is, with Flight III, you know, where are we 

going with modernized systems, with the hull type itself? Is all of 

that going to integrate as the years go down the road? 

So I would like to hear both of your comments about that. 

Ms. NOVAKOVIC. We are approaching this multiyear, should we 

get that authority, and certainly this block of ships in the same 

way that we have approached each competition that we are in. I 

don’t see any particular additional uncertainty as we think about 

these ships. 

We do not understand that radar. We are going to have to understand it better and its interfaces with the ship. We have got a long 

way to go until we are at that point where we need to go bid and 

size. That we work with the Navy customer and, frankly, the other 

industry partners who have been very, very helpful. 

I will give you an example. We are doing the combat systems integration with Raytheon. We have a tiger team with Raytheon because we are not electronics guys, right? So the extent—they have 

been very useful in teaching us a lot about how their systems work 

so we could optimize the integration of that system into the ship 

hull. 

It is that kind of process that we will apply to a—whatever the 

changes are in the—and even if they are substantial changes—in 

the configuration of the 51s. So we can bid as long as we understand we can—and understand that—the risk areas and that you 

are properly protected around those risk areas, and everybody is 

reasonable about understanding what they are I think is—— 

Mr. COFFMAN. Thank you, Mr. Wittman. 

Mr. WITTMAN. Thank you, Mr. Chairman. 

Mr. COFFMAN. Ms. Pingree. 

Ms. PINGREE. Thank you very much. 

Thank you two for both—for testifying today and really for doing 

a good job of talking about the efficiencies that both yards are 

working on and the importance of a healthy shipbuilding base. I 

know my colleagues are going to want to go vote so I will try to 

be brief here. 

I am very fortunate to represent the 1st Congressional District 

of Maine, which has Bath Iron Works, and the 5,500 wonderful 

workers and the great shipbuilders at that yard and the long tradition of producing incredible ships under budget and on time. 

And I appreciate your testimony, Ms. Novakovic. It is great to 

hear you talk more about the efficiencies that have been achieved 

and how the multiyear funding really can be helpful, and I know 

my colleagues are thinking a lot about that. 

But I just wanted to give you an opportunity to talk for a minute 

or two about the DDG 1000. It is nice to know that it is 60 percent 

complete, and I know we have two more along the way, and if you 

want to just talk a little bit about the progress of them and 

how—— 

Ms. NOVAKOVIC. Yes. For those of you who haven’t visited the 

shipyard I would recommend it, and in particular, Bath, because 

while we all can intellectually understand the constructs of these— 

and sizing of this ship it is really quite remarkable when you see 

it. It is a large ship with enormous capacity to carry very sophisticated equipment. This is going to be quite a warfighting ship. I am 
36 

outside my lane to talk about, you know, what the Navy is going 

to love and not love, but I have a feeling, in fact, betting a cup of 

coffee, that this is going to be a game-changer for the Navy once 

we get it delivered to them. 

So we are 60 percent complete. The deckhouse that Ingalls is 

building, is on track. We have got the—BAE is providing the magazines; we have installed several of those. We have yet to hit any 

design-construction discontinuity. 

And we have these fully outfitted, as well. When we say complete 

they are complete with full outfitting. 

So we are very pleased with where we are at this juncture. Now, 

the risk in shipbuilding, and as we—those of us who have lived and 

watched this—tends to be at the back end of the ships, and we are 

very mindful of that. So we have risk mitigation plans A through 

Z to address whichever one of these variables can affect us. 

The work on the second DDG 1000 is progressing extremely well 

and I believe it is, I think, next week that we start on the third. 

So they are on schedule. We are on cost. 

The first ship, by the way, is a cost-plus; the second two are 

fixed-price. I personally am an advocate of fixed price, assuming 

that you can get the risk properly identified and fenced off and understood. 

So I think that there is a real possibility that these ships are 

going to be done exactly the way the Navy wants them in a very 

affordable price. So we are actually excited about this program. 

Thank you. 

Ms. PINGREE. Well, thank you very much for your testimony. 

I wanted to just thank Mr. Wittman for coming to visit the yard, 

and I know he was impressed, as everyone is, to see the incredible 

systems that have been developed for shipbuilding today. It is really a phenomenal use of technology and great workers’ skills. So 

thank you very much. 

Mr. COFFMAN. Thank you. 

With that, the committee hearing is—oh, I am sorry. 

Mr. Palazzo? Mr. Palazzo. 

Mr. PALAZZO. Sorry about that. Thank you, Mr. Chairman. 

And thank our guests for being here today. It is great to actually 

get an industry perspective. I was particularly impressed with Mr. 

Mulherin’s, you know, comments about the efficiencies of multiship 

buys. 

Is there anything else you or Ms. Novakovic would like to add 

to help us do our job—help us understand what you, the industry, 

is doing to provide the customer and the taxpayer with the best 

ships and the best possible price for America? 

Mr. MULHERIN. I guess I will just go real quick. I want to tell 

you, in building ships it is a full-contact sport. There is no stone 

not turned over looking for ways to take out cost. The Navy has 

stood up a—under Admiral Eccles’ review team that looks at ship 

specifications for how can we change those ship specifications to 

make them more producible and still maintain the warfighting capabilities of the ship? That has been helpful. 

Our supply base leans into it. You know, we have just spent yesterday and today with our aircraft carrier industrial base council, 

and part of that was a panel to ask suppliers for their ideas on how 
37 

we can take out costs. So we are trying to lean on everybody and 

we have got a great bunch of shipbuilders who spend every day trying to figure out how do they go, you know, work safer, work with 

higher quality, take out costs, and meet schedule. 

So I think we are doing all that we can and I think—but again, 

we need to do more. So I have nothing more to add. 

Ms. NOVAKOVIC. I just quickly, to your point about multiyears, 

two subset examples: At the shipyard it allows us to level load the 

workforce, and that preserves—improves their efficiency and preserves their skill sets. So that is critical for us, and then we have 

some predictability that we can man at that level, and that is the 

best way to build ships efficiently. 

Looking from the—at the supplier base, the block material buys 

that can be done in sufficient economic order quantities give you 

an enormous leverage in driving down the price of your suppliers. 

You cannot do that on one-off ships; you can do it in block buys 

of many ships—classes of material. 

It just is the basic law of economics. Volume reduces their cost, 

just as it does in our—for us. So that is really the beauty of—those 

are two—if I think about it, those are the two simplest metrics. 

Mr. PALAZZO. Well, thank you all both so much, again, for what 

you all are bringing, helping the Navy and helping the taxpayers 

understand that you are out there trying to control costs. And congratulations. I think you all are participants in the last great 

American industry in our country and we need to do everything we 

can to preserve it, promote it, and protect it. 

Thank you. 

Mr. COFFMAN. Thank you. 

[Whereupon, at 1:03 p.m., the subcommittee was adjourned.] 

A P P E N D I X 

MARCH 29, 2012 

PREPARED STATEMENTS SUBMITTED FOR THE RECORD 

MARCH 29, 2012 

(43) 

Statement of Hon. W. Todd Akin 

Chairman, House Subcommittee on Seapower and 

Projection Forces 

Hearing on 

Oversight of U.S. Naval Vessel Acquisition Programs and 

Force Structure of the Department of the Navy in the 

Fiscal Year 2013 National Defense Authorization 

Budget Request 

March 29, 2012 

This morning the Seapower and Projection Forces Subcommittee 

meets to discuss naval shipbuilding as presented in the fiscal year 

2013 budget request and the force structure it supports. The Constitution states that Congress shall ‘‘maintain a Navy.’’ To do this 

we must ensure the Navy has the resources required to build ships 

that will sail in harm’s way, operated by America’s sons and 

daughters. Today’s Navy is by far the most capable in the world. 

Our job is to make sure it stays that way. 

There are some worrisome indicators in the fiscal year 2013 

budget request delivered to Congress last month. There are significant changes in this request from that anticipated for the same period just last year. The Shipbuilding and Conversion Account is 

20% lower, at $13.7 billion, with the procurement of 10 ships instead of 13. The account is 8% lower in the next 5 years than it 

was in the last 5 years, with 16 fewer ships, going from 57 to 41. 

In many ways, it makes little sense to be shrinking our Navy just 

months after the announcement of a strategy that would shift emphasis to Asia, the Pacific, and the Mideast—areas where a strong 

naval presence is an imperative. 

To address these and other issues we have two panels. I want 

to thank all of our witnesses today for taking valuable time out of 

their schedules to be here with us. The first panel represents the 

acquisition and requirements leadership in the Department of the 

Navy, and for the second panel we have two executives from some 

of our largest shipyards to discuss impacts of the budget on their 

industrial base, and particularly on their talented and unique 

workforce. They are: 

Panel 1 

• Hon. Sean Stackley, Assistant Secretary of the Navy for Research, Development and Acquisition; 
44 

• Vice Admiral Terry Blake, USN, Deputy Chief of Naval Operations for Integration of Capabilities and Resources (N–8); 

and 

• Lieutenant General Richard Mills, USMC, Deputy Commandant for Combat Development and Integration and Commanding General, Marine Corps Combat Development Command. 

Panel 2 

• Ms. Phebe Novakovic, Executive Vice President, Marine 

Group, General Dynamics Corporation, and 

• Mr. Matt Mulherin, President, Newport News Shipbuilding, 

and Corporate Vice President, Huntington Ingalls Industries. 

Thank you again and we look forward to your testimony. 
45 

Statement of Hon. Susan A. Davis 

House Subcommittee on Seapower and Projection Forces 

Hearing on 

Oversight of U.S. Naval Vessel Acquisition Programs and 

Force Structure of the Department of the Navy in the 

Fiscal Year 2013 National Defense Authorization 

Budget Request 

March 29, 2012 

I would like to thank all of the witnesses for appearing here 

today and for their service to the country. 

Both the Department of the Navy’s FY13 budget and the recently 

received 30-year shipbuilding plan highlight the challenges the 

Navy and Marine Corps team are currently facing and will continue to face long-term. 

The short-term implications of the budget constraints imposed by 

the Budget Control Act, forced the Navy to make difficult choices 

such as moving a Virginia class submarine from FY14 to FY18. 

This single move only further exacerbates the capability gap the 

Navy will be facing beginning in the mid-2020’s with regard to fast 

attack submarines. Other difficult choices included the early retirement of cruisers and amphibious ships and the move of one DDG51 from FY14 to FY16. I look forward to hearing from the witnesses about any potential ways we as Congress can help mitigate 

any shortfalls those moves have caused. 

I am concerned about the cost growth with regard to the USS 

Gerald R. Ford (CVN 78). I understand that this is the lead ship 

in a new class of aircraft carriers and several systems that had 

been planned to be incrementally fielded were pulled forward causing additional challenges. I would appreciate hearing from our witnesses about what lessons learned we have gained from CVN 78 

and how they can be applied to the follow-on CVN 79. 

As I review the 30-year shipbuilding plan, I see that the challenges continue as we move into the out-years. Today, the FY13 

new ship construction budget stands at $13.7 billion. The 30-year 

plan clearly points out that the budget required to meet future demands is simply not attainable under current budget levels. The 

plan states that the required average annual spending on new ship 

construction in the near-term planning period will be $15.1 billion 

per year and during the mid-term planning period between FY2023 

and FY2032, average yearly spending will climb to $19.5 billion per 

year. This growth is due in large part to the recapitalization of its 

Fleet Ballistic Missile Submarine (SSBN) force. In order to meet 

this plan, added resources in the Navy shipbuilding account will be 

necessary. I hope the Department of the Navy will continue to 

work with Congress and try to find a solution given the tight budget environments we are facing. 

Recent world events have further proven why it is necessary to 

have a Navy and Marine Corps that is capable of quickly respond-
46 

ing when needed. Whether that means reacting to flashes of 

unpredicted violence, as we saw in Libya, or responding to a natural disaster and the subsequent humanitarian crisis like the situation that occurred in Japan after the earthquake. 

This subcommittee remains committed to ensuring our Navy and 

Marine Corps are prepared to meet the challenges of today and the 

future. I want to thank the witnesses again for being here today 

and their service to our country. 

I also want to thank the industrial base panel witnesses for 

being here today. I look forward to hearing your estimates on how 

the FY13 budget and future budgets will impact not only your industrial base but the second- and third-tier suppliers you depend 

on. 
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WITNESS RESPONSES TO QUESTIONS ASKED DURING 

THE HEARING 

MARCH 29, 2012 

(113) 

RESPONSE TO QUESTION SUBMITTED BY MR. COFFMAN 

Admiral BLAKE. Of the 29 amphibious ships, 19 are deployable right now. Of the 

ten ships that are non-deployable, two are finishing their year-long LSD Mid-Life 

availabilities, seven are in scheduled maintenance availabilities, and one LPD has 

been redesignated to an AFSB (I). [See page 26.] 

RESPONSE TO QUESTION SUBMITTED BY MR. COURTNEY 

Secretary STACKLEY. The Navy briefed Professional Staff Members Mr. Tom MacKenzie and Mr. Phil MacNaughton of the House Armed Services Committee on 

April 5, 2012, concerning the VIRGINIA Class multiyear procurement, specifically, 

the nine-boat verses ten-boat, and the challenges the Navy faced with the budget. 

The FY 2013 President’s Budget Submarine Force Structure is attached on page 

114. [See page 7.] 
114 
QUESTIONS SUBMITTED BY MEMBERS POST HEARING 

MARCH 29, 2012 

(117) 

QUESTIONS SUBMITTED BY MR. LANGEVIN 

Mr. LANGEVIN. Could you both please comment on the impact of the potential Virginia class boat shift from FY14 to FY18 on the efficiencies that we have gained 

by shifting to a two-per-year procurement rate? 

Ms. NOVAKOVIC. A critical component to achieving the $2B (FY05$) unit cost goal 

for the Virginia class submarine involved increasing the production rate to two 

ships per year and maintaining that rate. Navy studies completed in the 2005–2006 

timeframe concluded the combination of maintaining the two-ships-per-year production rate along with multiyear procurement provided a unit cost reduction to subsequent procurements of about $200M per ship (FY05$). This increased production 

rate provides increased efficiencies by allowing fixed cost to be spread over a greater 

volume of work and enables a more stable and efficient drumbeat for manufacturing, assembly and delivery of ships from each builder. Removing the second ship 

in FY14 and adding it to FY18 interrupts the cadence of the production plan and 

program learning curve and decreases the efficiencies gained through the greater 

production volume. Continued stable and predictable two-ships-per-year procurement is the most efficient way to improve production and manufacturing efficiencies 

at the shipyards and across the industrial base. 

Mr. LANGEVIN. What effect might such a move have on both your workforces and 

your supplier base, particularly lower-tier suppliers? Conversely, could you describe 

for this subcommittee why such great efficiencies are gained from a steady two-peryear procurement rate? 

Ms. NOVAKOVIC. Moving the second FY14 ship to FY18 impacts the workforces at 

the shipyards and in the industrial base as follows: 

—Reduces staffing levels at shipbuilders in Connecticut, Rhode Island and Virginia over the period 2014 to 2018 by 800 to 1,000 jobs. This work would 

be accomplished later in Block IV (i.e., 2018–2022). 

—In a similar fashion, it reduces staffing levels at other major suppliers in 

Virginia, Ohio, Indiana, New York and Rhode Island by approximately 350 

jobs. This work would be accomplished later in the block as well. 

—In addition, highly skilled manufacturing jobs from the direct suppliers to 

the prime contractors, as well as their suppliers (i.e., sub-tier suppliers), and 

the associated economic impact to local economies where material is bought, 

will be moved out by 5 years. Virginia class submarine material is bought 

from suppliers in all 50 states, therefore the economic impact is felt across 

the entire country to varying degrees. 

Efficiencies are generated from a steady state two-ships-per-year procurement 

rate in four key areas: 

—Production efficiency 

—Cost efficiency 

—Supplier efficiency 

—Critical skills retention 

Production efficiency 

A steady state procurement rate of two ships per year continues, in an uninterrupted fashion, the series production plan that has been optimized for efficient production (i.e., shortened cycle time and build plan). Steady production rates provide 

the steady demand that allows the shipyards and industrial base to better plan and 

execute the work and to match the work to the required resources (skilled workforce, shipyard facilities and industrial base capacity). The ability to maintain a 

steady plan avoids costly peaks and valleys associated with the cycles in workload 

levels. Learning curve efficiencies are also realized as production units are built in 

a repeatable fashion on subsequent units and budgets and cost targets are more easily understood and flowed down to the shop floor. It is estimated that removing a 

ship from FY14 will insert a 6-month production gap into the series production plan 

which will incur a penalty of more than one million labor hours on Block IV submarines due to interrupted learning and lost efficiencies. 
118 

Cost efficiency 

Continued efficient multiyear procurement of Virginia class submarines provides 

economic order quantity savings and improved material availability that support 

more efficient production plans and reduced construction spans. Efficiencies are derived though volume and earlier procurement of material avoiding escalation costs 

that would result from the later procurement of hardware. The volume afforded by 

the two-ships-per-year production rate allows the shipyard and suppliers to spread 

fixed costs more efficiently over a larger business base providing further economic 

benefit. The shipbuilders are able to achieve labor savings due to the ability to execute the build plan as conceived and to drive down labor hours on subsequent units. 

Supplier efficiency 

The production and cost efficiencies discussed above for the shipyards are also realized by the suppliers for the equipment they directly provide. Continued twoships-per-year procurement encourages suppliers’ sub-tier supply chains and local 

economies to grow by providing a stable and predictable workload to meet increased 

production demands. This stability bolsters the supply chain with steady production, 

to keep suppliers competitive and reduce costs, and provides the supplier base with 

the confidence it needs to make capital investments in equipment and their workforce. 

Critical skill retention 

The ability of the United States to efficiently manufacture and deliver nuclear 

submarines is directly related to our ability to retain the people who possess the 

experience and unique skills that are exercised only during the submarine building 

process. In order to retain the current competency, as well as advance the production process, it is imperative that we keep submarine production at a stable and efficient rate. This stability allows the shipbuilders to execute viable workload plans, 

provide long-term employment opportunities, and preserve the critical skills needed 

for production. The production break caused by the shifting of the second FY14 ship 

to FY18 adds risk to the Nation’s ability to efficiently and effectively manage the 

submarine production workforce that possesses these critical skills. 

Mr. LANGEVIN. How does the 2-year push of the Ohio Replacement program affect 

your engineering and design workforce? 

Ms. NOVAKOVIC. In February 2012, PEO Submarines (PMS397) informed Electric 

Boat that the start of construction on the lead ship in the Ohio Replacement Program would slip 2 years, to FY21. This delay will extend the design effort by 2 

years, adding roughly one million labor hours to the overall design effort. The design reschedule will assure that the Missile Compartment effort supports the needs 

of the United Kingdom, while attempting to maintain concurrency of the design evolution with the rest of the Ohio Replacement design effort. This shift poses risk to 

the resource and infrastructure planning within the industrial base that supports 

technology and new component development during the design phase. The acquisition cost will also escalate due to the 2-year delay across the 12-ship construction 

plan. As a result of this stretch in the design effort, Electric Boat employment increases planned in FY13 through FY14 will be delayed. Engineering and Design employment on Ohio Replacement will remain essentially constant in FY13 and FY14. 

While the Ohio Replacement represents a significant portion of the engineering and 

design work across the company, the introduction of new work on Virginia class and 

other projects mitigates the impact of the Ohio Replacement program delay such 

that the overall engineering and design workforce remains stable through FY13 and 

future years. 

Mr. LANGEVIN. Could you both please comment on the impact of the potential Virginia class boat shift from FY14 to FY18 on the efficiencies that we have gained 

by shifting to a two-per-year procurement rate? 

Mr. MULHERIN. Maintaining a stable and predictable two-per-year procurement 

and subsequent production rate is the most efficient way to gain production and 

manufacturing efficiencies at the shipyards and across the industrial base. Increasing the procurement rate to two ships per year, and maintaining that rate, was a 

critical component to achieving the two for $4 billion (FY05$) cost goal for the Virginia class submarines. Newport News Shipbuilding and Electric Boat began twoper-year production in FY11, with the volume of work peaking in 2015. This rate 

provides efficiencies in both workforce and facilities utilization for both companies 

and allows fixed costs to be spread over a greater volume of work. Repetitive work 

teams can move from one module or unit to the next ship’s module/unit on 6-month 

intervals verses 12 months at the one-per-year rate. This allows for continuous 

learning and improved skill retention during the manufacturing, outfitting and delivery phases of construction. Shifting the second ship from FY14 to FY18 will re-
119 

duce these efficiencies, increase non-value-added costs such as escalation, and significantly increase overall program cost by as much as $600 million based on joint 

NNS/EB estimates. The shift of the FY14–2 boat to FY18 will also result in a submarine workforce reduction. This reduction follows significant investment we have 

already made in our workforce as we ramp up to the two-per-year production rate, 

and will require us to rehire, retrain and reinvest in a new workforce as production 

returns to the two-per-year rate. 

Mr. LANGEVIN. What effect might such a move have on both your workforces and 

your supplier base, particularly lower-tier suppliers? Conversely, could you describe 

for this subcommittee why such great efficiencies are gained from a steady two-peryear procurement rate? 

Mr. MULHERIN. A break in the Virginia class submarine series production plan 

results in an estimated loss of 800–1,000 jobs at the shipyards and 350 jobs at our 

prime suppliers during FY14 through FY18. This immediately follows the completion of the manning ramp-up to support earlier two-per-year construction. At NNS, 

an average of 500 submarine construction jobs will move from FY14 through FY18 

to FY19 through FY23, creating a workforce gap that will be difficult to recover in 

certain critical skills. An estimated average of 350 prime contractor jobs that supply 

equipment for the Government (VA, OH, IN, NY, RI) will also move from FY14 

through FY18 to FY19 through FY23. Although an exact number cannot be determined, based on previous industrial base studies, the impact to all Virginia class 

suppliers is expected to be at least within the same order of magnitude as the impact to the shipyards, with the potential to be even 3 to 5 times higher given that 

material is bought from thousands of suppliers in 46 states. Reconstitution following 

job losses at the shipyards and supplier companies will be problematic, adding risk 

and cost associated with rehiring and retraining personnel. 

Two-per-year production provides benefits in efficiencies and economies of scale, 

including opportunities to lock-in lower material costs for multiple ships. It also provides opportunities to move work teams from one module or ship to the next on 6- 

month intervals verses 12 months at the one-per-year rate. A steady two-per-year 

procurement rate provides gains in production and cost efficiency for the shipbuilders and suppliers (both Contractor Furnished Equipment and Government Furnished Equipment) as well as improved retention of critically-skilled workers. The 

following provides a brief description of the efficiencies associated with steady twoper-year procurement. 

Production efficiency 

A steady state procurement rate of two-per-year, in an uninterrupted fashion, 

supports the series production plan in place today, which has been optimized for efficient production (i.e., shortened cycle time and build plan). The ability to maintain 

a steady plan avoids costly peaks and valleys associated with the cycles in workload 

levels. Learning curve efficiencies are also realized as production units are built in 

a repeatable fashion on subsequent units. 

Cost efficiency 

Continued multiyear procurement of Virginia class submarines provides economic 

order quantity savings and improved material availability. Both of which support 

more efficient production plans and reduced construction spans. Efficiencies are derived through volume and earlier procurement of material, avoiding escalation costs 

that would result from the later procurement of hardware. The volume afforded by 

the two-per-year production rate allows the shipyard and suppliers to spread fixed 

costs more efficiently over a larger business base providing further economic benefit. 

Supplier efficiency 

The production and cost efficiencies discussed above for the shipyards are also realized by the suppliers for the equipment they directly provide. Continued two-peryear procurement encourages our suppliers’ sub-tier supply chains to grow by providing a stable and predictable workload to meet increased production demands. 

This stability bolsters the supply chain with steady production to keep suppliers 

competitive and reduce costs. It also provides the supplier base with the confidence 

it needs to make capital investments in equipment and in their workforce. 

Critical skill retention 

The ability of the United States to manufacture and deliver nuclear submarines 

is directly related to the shipbuilders’ ability to retain a few thousand people who 

possess the experience and unique skills that are exercised only during the submarine building process. In order to retain the current competency, as well as advance the production process, it is imperative that we keep submarine production 

at a stable and efficient rate. This stability allows the shipbuilders to execute viable 

workload plans, provide long-term employment opportunities, and preserve the crit-
120 

ical skills needed for production. The production break caused by shifting the FY14– 

2 ship adds risk to the Nation’s ability to efficiently and effectively manage the submarine production workforce who possesses these critical skills. 

Mr. LANGEVIN. How does the 2-year push of the Ohio Replacement program affect 

your engineering and design workforce? 

Mr. MULHERIN. Current projections are that our existing Ohio Replacement Program (ORP) engineering and design workforce is expected to remain essentially flat 

through FY13, as opposed to a slight increase in demand during this period. However, the ORP subcontracted effort represents less than 10 percent of the overall design and engineering workforce at our shipyard. From a volume perspective, we do 

not expect any adverse effect to our engineering and design workforce as a result 

of the two-year shift. From a critical skills perspective, the shift does place additional pressure on retention of a number of critical engineering and design capabilities that will require mitigating actions to avoid. 

QUESTIONS SUBMITTED BY MR. WITTMAN 

Mr. WITTMAN. Mr. Stackley, I would like to focus on the near-term planning period of the Long-Range Naval Vessel Construction Plan and the Naval Battle Force 

Inventory. In the next 5 years we are decommissioning 22 Oliver Hazard Perry class 

frigates, essentially ending that class’s active service to the Navy. During this same 

time period the Navy is procuring 16 LCS. My question is how many LCS will be 

delivered to the Navy and be fully mission capable and deployable between FY13– 

FY17? 

Secretary STACKLEY. The Navy will take delivery of 17 Littoral Combat Ships 

(LCS) and 21 Mission Packages by the end of Fiscal Year (FY) 2017. The Navy currently has two LCS available for Fleet tasking. USS FREEDOM (LCS 1) is scheduled to deploy for a second time in 2013, this time to Singapore, and USS INDEPENDENCE (LCS 2) is currently sailing to her homeport of San Diego, Calif. FORT 

WORTH (LCS 3) will deliver to the Navy in June 2012. CORONADO (LCS 4) will 

deliver to the Navy in FY 2013. The ships of the block buy contracts will begin to 

deliver in FY 2014 starting with MILWAUKEE (LCS 5) and JACKSON (LCS 6). Deliveries then ramp up with DETROIT (LCS 7), MONTGOMERY (LCS 8), and LITTLE ROCK (LCS 9) in FY 2015 and GABRIELLE GIFFORDS (LCS 10), SIOUX 

CITY (LCS 11), OMAHA (LCS 12) and LCS 13 in FY 2016. LCS 14, LCS 15, LCS 

16 and LCS 17 are scheduled to deliver in FY 2017. Currently, the Navy plans for 

each ship to undergo approximately 12 months of post delivery tests and trials. 

The LCS Mission Package program is on track to deliver a mix of Mine Countermeasures (MCM), Surface Warfare (SUW) and Anti-Submarine Warfare (ASW) Mission Packages to support the Fleet’s warfighting missions for the Littoral Combat 

Ship. LCS employment will be in response to the global demand signals of the combatant commanders to support timely joint force access to critical littoral regions. 

LCS will be configured with the mission package required by the operational commander. LCS also has inherent characteristics and capabilities to enable missions 

such as Maritime Law Enforcement operations, Maritime Anti-Terrorism/Force Protection, Search and Rescue, and Freedom of Navigation (FON) operations. The table 

below shows the cumulative number of LCS and Mission Packages that are planned 

to deliver to the Navy by the end of FY 2017. 

Mr. WITTMAN. Mr. Stackley and VADM Blake, in reviewing the Long Range Plan 

for Construction for Naval Vessels for FY2013, it seems to me that we continue to 

push hard decisions outside the Future Years Defense Program (FYDP). 

a. Within this FYDP, from 2013 to 2017, we are planning to construct 41 ships, 

16 of which (39%) are the relatively inexpensive LCS small combatants. Additionally, the LCS cost from shipbuilding budget does not even include the LCS Mission 

Modules, which are required for these ships to be viable warships. 

b. In the following 5 years, 2018 to 2022, we are building 52 ships, 15 of which 

(29%) are LCSs. Additionally, the 52 ships include a first in class Ohio Replacement, 

a total of 12 Virginia class SSNs vice the 9 Virginia class SSNs within the current 

FYDP, and some large deck amphibs. Obviously, these will be relatively expensive 

ships to construct; especially relative to the LCS. 

c. From 2013 to 2017, we buy 11 fewer warships than from 2018 to 2022; and 

we also buy a higher percentage of less expensive ships in the FYDP than the next 

5 years. 

d. I understand this makes the math look better, but is this right for the National 

Security of this country, is this right for the Navy, is this right for the Industrial 

Base? Is it realistic to believe that we will have the required funding from 2018 to 

2022 to support this dramatic ramp-up in shipbuilding? 
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Secretary STACKLEY. The Department of the Navy shipbuilding plans are based 

on three central principles: (1) maintain required battle force capability to meet the 

national defense strategy; (2) balance needs against expected resources; and (3) 

maintain an adequate shipbuilding industrial base. 

After accounting for the funding limits of the 2011 Budget Control Act (BCA) and 

the specific resourcing decisions made in the recently completed strategic review, 

and considering the full range of supporting capabilities, capacities, and enablers 

found in the combined Navy-Marine Corps Team, going forward the 21st Century 

Battle Force will have about 300 warships. This battle force is fully capable of meeting the strategic guidance found in Sustaining U.S. Global Leadership: Priorities for 

21st Century Defense, and as importantly, the construction plan that builds it sustains the national shipbuilding design and industrial base. The Navy’s Long Range 

Plan for Construction of Naval Vessels carefully balances construction of all classes 

of ships including small surface combatants such as Littoral Combat Ships. 

The FY2013 President’s Budget and the Future Years Defense Plan fully funds 

the construction of naval vessels in the plan through FY2017. Beyond the FYDP, 

however, the need to recapitalize our Fleet Ballistic Missile Submarine force will 

put pressure on the Navy’s overall shipbuilding plan. Annual spending on Navy 

shipbuilding must increase during this 10-year period, before returning to historical 

averages in the last decade. 

To procure the needed ships during the middle decade, yearly shipbuilding expenditures will need to average about $19.5B/year. This is greater than $4B more 

per year than in the first decade, and nearly $3B more per year than the steadystate, 30-year average requirement of $16.8B/year. The Department is taking strong 

measures to try to reduce projected yearly shipbuilding costs during this period, 

such as trying to reduce the recurring and non-recurring costs for OHIO Replacement and other ship programs. 

If the DON is unable to sustain average annual shipbuilding budgets of $19.5B 

during the second decade, plans to recapitalize the Nation’s secure second-strike nuclear deterrent and the Navy’s conventional battle force will have to be re-examined. 

The overall size of the battle force will drop below the levels needed to meet all 

naval presence and warfighting requirements. 

The Department recognizes that its 30-year shipbuilding plan represents a significant demand on fiscal resources, and is committed to maintaining stability in 

planned requirements, funding and shipbuilding profiles in order to tightly control 

the demands on these precious resources. 

Mr. WITTMAN. Mr. Stackley, the industrial base has routinely and consistently 

stressed the importance to maintain a steady ship construction rate vice ebbs and 

flows in construction to help to drive down unit costs. The current plan does not 

appear to stress this consistently. Does this plan, in an effort to make the FYDP 

look good, actually open up taxpayers to paying more in the long run for the same 

number of ships? 

a. A specific example of this is the shifting of one Virginia class submarine from 

FY 2014 to FY 2018. This move effectively increases the total cost to the American 

taxpayer for 10 Block IV Virginia class submarines by approximately $600 million. 

Why would we pay an additional $600 million dollars to have the same number of 

submarines delivered? 

Secretary STACKLEY. The Navy recognizes that shifting one ship from FY2014 to 

FY2018 is not the most cost efficient way of procuring the 9 Block IV VIRGINIA 

class submarines; however, this is one of many difficult choices that the Navy had 

to make in developing the PB13 budget in order to reduce spending in FY2013 and 

FY2014 in compliance with the Budget Control Act. However, with an eye on providing much-needed stability to the shipbuilding industrial base, the Navy has 

maintained the total number of submarines planned for the Block IV multi-year 

(nine) and plans to leverage advance procurement and economic order quantity buys 

to mitigate the impact of this shift. 

Mr. WITTMAN. Mr. Stackley and VADM Blake, in 1983 and 1988 the U.S. Navy 

entered into block buys for Nimitz class carriers, buying 2 in ’83 and 2 in ’88. Understanding that some of CVN 79 has already been paid for, are there benefits to 

the taxpayer to enter into a partial block buy for CVN 79 and CVN 80? It is my 

understanding that some experts estimate this could save the Navy and the taxpayer close to $500 million? That is a decent amount of money to put towards an 

SSN, DDG, Amphib, or LCS. 

Secretary STACKLEY. The Department recognizes that building the required force 

structure depends on controlling shipbuilding costs. In the case of aircraft carriers, 

the Navy is focused on stabilizing the lead ship (CVN 78), getting cost under control 

and completing the ship as close to schedule at the lowest cost possible. The Navy 
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is experiencing cost growth in the design, material procurement, and production associated with CVN 78. 

CVN 78 is a very different ship from the Nimitz-class and the Navy cannot expect 

to build the CVN 78 the way it built the CVN 68 and get to an affordable ship construction plan. The Navy is working closely with the shipbuilder to incorporate lessons learned from CVN 78 construction which will result in a more affordable build 

plan for CVN 79. 

It is too late to implement a complete block buy on CVN 79 and CVN 80, as some 

of CVN 79, particularly its propulsion plant, has already been purchased. Pending 

results of the ongoing Navy-Industry ‘optimal build plan’ review, the Navy would 

have an option to implement a partial block buy for CVN 79 and CVN 80 to the 

extent substantial savings are generated. 

Mr. WITTMAN. Mr. Stackley, do we know the estimated per-unit cost of the DDG– 

51 Flight III? I understand from the plan that there will be 33 of these ships and 

they will replace the capabilities and mission set of the CG–47 cruisers and improve 

integrated air and missile defense for the battle forces. Do we know the estimated 

cost of the Air and Missile Defense Radar (AMDR) and how much the integration 

on to a DDG–51 hull will cost? What efficiencies from DDG–51 Flight IIA will be 

utilized to streamline this construction? Do you see this developing in to a completely new class of ship? 

Secretary STACKLEY. The unit cost for DDG 51 FLT III ships as submitted in PB13 is approximately $2,151M (TY$). This represents the first three FLT III ships 

(one ship in FY 2016 and two ships in FY 2017) and includes installation/integration 

of AMDR onto the DDG 51 hull, associated ship changes, and non-recurring design 

costs. This estimate will continue to be refined as the AMDR technology matures 

and the AMDR down select occurs. AMDR is currently in a competitive Technology 

Demonstration phase. A draft Engineering Manufacturing Development Request for 

Proposal was recently released for industry comment. The Navy’s estimate for the 

AMDR is included in the total ship price presented above. Releasing the estimate 

for the radar alone at this time would adversely impact the ongoing competition. 

The estimate for all 33 ships has not yet been finalized. 

The Navy intends to compete the FY 2013 through FY 2017 DDG 51 MYP using 

Profit Related to Offer, similar to previous DDG 51 competitions. As with previous 

DDG 51 MYPs, these contracts will be fixed price incentive contracts. The shipbuilders will compete to the stable DDG 51 Flight IIA baseline (nominal configuration of the DDG 113–116 restart ships) for all nine ships planned for procurement 

between FYs 2013–2017. In addition, the Navy will use MYP authority to contract 

for the Vertical Launch Systems, AEGIS Weapon Systems, and Commercial 

Broadband Satellite Systems to support these ships. 

Independent of the MYP contract action, the Navy’s Air and Missile Defense 

Radar (AMDR) program is in development to address gaps in Ballistic Missile Defense. Currently, this S-band radar program has demonstrated prototype technology 

in a relevant environment. As noted above, the Navy’s current plan calls for the 

final three ships of the DDG 51 MYP to be modified via an Engineering Change 

Proposal (ECP) to the Flight III configuration which incorporates the AMDR–S band 

radar in place of SPY–1D(V). This ECP approach provides the Navy the ability to 

field a critical advancement in Ballistic Missile Defense, the AMDR–S radar, at the 

earliest opportunity, while preserving the increased savings that a 5 year DDG 51 

MYP provides to the Navy’s shipbuilding program. But the proposed MYP contracting strategy provides the flexibility to continue to procure Flight IIA DDGs if 

the technology critical to Flight III does not mature on schedule. It should be noted 

that the Navy has successfully used ECPs to enhance DDG 51’s during previous 

MYPs. Examples of technology incorporated during MYPs via ECPs include: SPY– 

1D(V); NULKA; CIWS Block 1B; Cooperative Engagement Capability (CEC); and 

enhanced 3000kW (vice 2500kW) Gas Turbine Generators. 

Mr. WITTMAN. Mr. Stackley, per this plan it seems that the Navy is being realistic 

in understanding that we have some pretty expensive ships being procured, especially once we get in to FY18–FY32. My question is with 33 DDG Flt IIIs planned, 

24 SSNs that cost around $2.6B a copy, 12 SSBNs that will cost $5–6B a copy, and 

multiple amphibious ships in the ‘‘out-years.’’ I would argue that it is safe to say 

that we need to see a robust SCN account that should hover around $20B a year 

sooner, rather than later. The luxury we have here is that it is highly unlikely that 

any of us in this room will be authorizing, appropriating, or executing this plan in 

2032. My argument is why wait, there is nothing like building ships for a fleet that 

needs them to ignite the industrial base and the creative spirit of our engineers and 

shipbuilders. 

Secretary STACKLEY. The FY2013–FY2017 Future Years Defense Program (FYDP) 

reflects the budgetary constraints associated with the 2011 Budget Control Act 
123 

(BCA). The Plan’s long-range projections focus first on battle force inventory requirements, and then outline the resources necessary to build to and maintain those 

requirements. Your assessment of the SCN investment required to support the longrange shipbuilding plan is exactly correct. 

Over the next 30 years, the DON plans to procure a total of 268 ships of all types, 

for an average of about nine ships per year. However, executing even this relatively 

modest build plan within expected future resource limitations will present a stiff 

planning and resource challenge. 

The Department recognizes that its 30-year shipbuilding plan represents an enormous demand on national resources. Our ability to maintain stability in planned requirements, funding and shipbuilding profiles is critical in order to control the demands on these resources. The Department will work closely with Congress and the 

shipbuilding and combat systems industries with each successive year of implementation as we move forward with the plan and proceed from projected funding to programmed funding. 

With specific regards to increasing the funding ‘sooner, rather than later’, two 

principles are in action; (i) we must preserve wholeness of the current force, i.e., we 

need to first fully fund our readiness accounts to ensure the force ‘in being’ readiness is not diminished as a result of the reduced topline, and (ii) we must drive affordability into our programs to the extent possible within our SCN budget to ensure we are acquiring these new construction ships at the best possible price to the 

taxpayer. To this end, our efforts to procure an additional DDG 51 and an additional 

VIRGINIA SSN within the requested multi-year procurements are solid examples 

reflecting the right balance between requirements, budget, affordability, and the industrial base. 

We will continue to work with Congress and industry to pursue these and further 

initiatives to address the Navy’s critical shipbuilding needs. 

Mr. WITTMAN. Mr. Stackley, is it no longer the goal of the U.S. Navy to attain 

a 313-ship Navy? 

Secretary STACKLEY. After accounting for the funding limits of the 2011 Budget 

Control Act (BCA) and the specific resourcing decisions made in the recently completed strategic review, and considering the full range of supporting capabilities, capacities, and enablers found in the combined Navy-Marine Corps Team, the Department of the Navy’s most current shipbuilding plan assumes the 21st Century Battle 

Force will have about 300 warships. 

This battle force is fully capable of meeting the strategic guidance found in Sustaining U.S. Global Leadership: Priorities for 21st Century Defense, and as importantly, the construction plan that builds it sustains the national shipbuilding design 

and industrial base. 

This projection will be informed by the completion of a formal Force Structure Assessment (FSA) and the ongoing Department of Defense review of its operational 

plans for potential regional contingencies. 

Mr. WITTMAN. VADM Blake, Arleigh Burke class destroyers will start decommissioning in the mid-late 2020s. In the plan it states that Flight IIA DDG 51s (starting with DDG 79) service lives will be extended to 40 years in an effort to reduce 

the impact of the DDG 51 retirement schedule on overall LSC force structure. We 

have a documented history of retiring surface combatants early. 

• In the last 14 years we have seen an entire destroyer class, 31 ships, decommissioned in the Spruance class. 

• Their average service life was 23.5 years (per the Naval Vessel Register website 

http://www.nvr.navy.mil/nvrships/S_TYPE.HTM). 

• The Spruance, DD 963 served the longest at 29.5 years. 

• We decommissioned 7 of these ships prior to their 20 years of service point. 

• In the last 8 years we have already decommissioned 5 CG–47 class ships well 

before their end of service life instead of upgrading them and modernizing 

them. 

• Of the prior DDG class ships, the Farragut class had an average service of 

roughly 30 years, with the USS Mahan (DDG 42) serving the longest at 32.8 

years. 

• The USS Arleigh Burke (DDG 51) is now almost 21 years old. 

• The USS Oscar Austin (DDG 79) the first of the Flt IIA DDGs is now 12 years 

old and per this plan she will serve until 2040? 

Admiral, you are a career surface warfare officer, you have served on multiple 

large surface combatants. My question is when you factor in operation and maintenance shortfalls and the fact that over the last 10 years we have punted on numerous routine maintenance issues. Coupled with the fact these ships are the workhorses of the surface fleet and they have conducted cyclic deployments since 9/11, 
124 

along with the fact that these ships will be on a rotation to deploy for 7 months 

and be home for 14 months; can we logically assume that 32 Flight IIA DDGs will 

be serving for 40 years? 

Admiral BLAKE. The 30-year shipbuilding plan is based on several key assumptions including: All battle force ships—particularly Large Surface Combatants—will 

serve to the end of their planned or extended service lives. The total FY 2013 President’s Budget request for Ship Maintenance fully funds the FY2013 ship maintenance requirement for our remaining ships and submarines to reach their expected 

service life. On average, ships and submarines are reaching their expected service 

life, and the Navy is working to reverse the negative trend in Surface Ship readiness by investing in mid-life availabilities to work off the identified surface ship 

maintenance backlog. 

The Navy has implemented a DDG Modernization Program to upgrade each ship’s 

systems and extend service life to 40 years. The Navy will closely monitor the material condition of these ships during the various maintenance and modernization periods as they progress through their service lives to enable them to reach a 40 year 

ESL. The Navy will also utilize spiral upgrades to existing ships to maximize ship 

operational availability, enable learning curve efficiencies, and perform continuous 

and emergent maintenance. Lessons learned from the other ship classes have already been incorporated into ship design, such as using all-steel construction vice 

aluminum. The Navy will endeavor to operate every ship procured to the very end 

of its expected service life. 

All of these measures will help maintain the size of the battle force inventory during the heavy ship retirement period expected in the 2020s and 2030s. However, 

even after all of these measures are taken, executing even the relatively modest 

build plan within expected future resource limitations will present a significant 

planning and resource challenge. 

Mr. WITTMAN. Mr. Stackley and VADM Blake, in 1983 and 1988 the U.S. Navy 

entered into block buys for Nimitz class carriers, buying 2 in ’83 and 2 in ’88. Understanding that some of CVN 79 has already been paid for, are there benefits to 

the taxpayer to enter into a partial block buy for CVN 79 and CVN 80? It is my 

understanding that some experts estimate this could save the Navy and the taxpayer close to $500 million? That is a decent amount of money to put towards an 

SSN, DDG, Amphib, or LCS. 

Admiral BLAKE. The Department recognizes that building the required force 

structure depends on controlling shipbuilding costs. In the case of aircraft carriers, 

the Navy is focused on stabilizing the lead ship (CVN 78), getting cost under control 

and completing the ship as close to schedule at the lowest cost possible. The Navy 

is experiencing cost growth in the design, material procurement, and production associated with CVN 78. 

CVN 78 is a very different ship from the Nimitz-class and the Navy cannot expect 

to build the CVN 78 the way it built the CVN 68 and get to an affordable ship construction plan. The Navy is working closely with the shipbuilder to incorporate lessons learned from CVN 78 construction which will result in a more affordable build 

plan for CVN 79. 

It is too late to implement a complete block buy on CVN 79 and CVN 80, as some 

of CVN 79, particularly its propulsion plant, has already been purchased. Pending 

results of the ongoing Navy-Industry ‘optimal build plan’ review, the Navy would 

have an option to implement a partial block buy for CVN 79 and CVN 80 to the 

extent substantial savings are generated. 

Mr. WITTMAN. Admiral Blake, over the FYDP we are decommissioning five amphibious ships, and I am including the reclassified USS Ponce, because for all intents and purposes, that is still an L-class ship. We are procuring 1 amphibious ship 

in the FYDP and only 3 between FY18–FY22. What is the service life plan for LSD 

41 and LSD 49 class? I have been told the ballpark figure per-unit cost of the LPD– 

17 is $2B . . . What do you expect LSD(X) to cost and when do you see this ship 

being delivered? Is there a plan in place to utilize the hull design of the LPD to 

make this a more efficient and affordable design and procurement process? 

Admiral BLAKE. The estimated service life (ESL) for the LSD 41/49 class is 40 

years. 

The cost of the LSD 41/49 replacement will be informed during the Analysis of 

Alternatives (AoA) phase that will complete in late fiscal year 2013. Cost will be 

an important consideration in the construction of this ship class. The Navy plans 

for the lead ship delivery in FY 2026, in time to support the end of service life decommissioning of LSD 42. 

Use of the LPD 17 design will be studied as part of the AoA. 

Mr. WITTMAN. Admiral Blake, you’re one of the most experienced surface warfare 

officers in the Navy, if not the most experienced. You have served and commanded 
125 

at every level at sea . . . In your 37 years of service have you ever seen more capable and combat ready surface combatants that we have in the fleet today? Some up 

here like to argue that we have the smallest Navy since WWI. In reality we now 

have highly trained, all-volunteer crews that operate the most technologically advanced ships in the world . . . multi-mission capable platforms that can operate in 

a variety of environments. Can we get your professional opinion on this? You served 

and sailed through the Cold War, the 600-ship Navy plan, the Gulf War, and the 

combat operations since 9/11. You have seen every threat out there for the past 37 

years. Based on the threat and the risks at sea and our desire to project power and 

answer the call to execute the core missions of the Navy, is this the fleet that we 

want, the fleet that we need, or the fleet we can afford? What risks are we assuming 

by not having a larger fleet that multiplies capabilities that we have now? Is this 

the most capable fleet we could have at this point in time? 

Admiral BLAKE. The Navy would need in excess of 500 ships to meet all validated 

Combatant Commander (COCOM) requirements. Although the near-term force 

structure does not fulfill all those demands, it is sufficient to meet warfighting 

needs—including Major Combat Operations and execution of COCOM’s Theater 

Campaign Plans—while still meeting high-priority presence and partnership requirements, with some level of acceptable risk. Today’s battle force numbers 282 

warships of all types. After accounting for the funding limits of the 2011 Budget 

Control Act (BCA) and the specific resourcing decisions made in the recently completed strategic review, and considering the full range of supporting capabilities, capacities, and enablers found in the combined Navy-Marine Corps Team, going forward the 21st Century Battle Force will have about 300 warships. 

This battle force is fully capable of meeting the strategic guidance found in Sustaining U.S. Global Leadership: Priorities for 21st Century Defense, and as importantly, the construction plan that builds it sustains the national shipbuilding design 

and industrial base. 

Since every naval force or platform should be able to draw from the combined capabilities, capacities, and enablers found in the wider Navy-Marine Corps Team, 

counting platforms and forces gives only a partial picture of the aggregate combat 

power of the combined Team. Indeed, a more thoroughly inter-connected Navy and 

Marine Corps allows a smaller naval force to achieve greater awareness in all operating domains—space, air, sea, undersea, land, and cyberspace—and to effectively 

and efficiently execute integrated, coordinated actions even when the force is conducting widely distributed naval maneuver within and across theaters, or when in 

disaggregated, geographically fixed sea, air, and land control missions. 

The current shipbuilding program builds and maintains a battle force inventory 

of approximately 300 ships, which will be refined with the completion of an ongoing 

Force Structure Assessment. This battle force is part of a broader Navy-Marine 

Corps Team that is built and ready for war, and operated forward to preserve the 

peace. The battle force represents an integrated and balanced fleet with the necessary capabilities and capacities to meet anticipated future demands for forward 

presence, deterrence, and war-fighting missions. 

The major risk beyond the Fiscal Year Defense Plan (FYDP) is the need to recapitalize our Fleet Ballistic Missile Submarine force which will cause noteworthy risks 

to the Navy’s overall shipbuilding plan. If the DON is unable to sustain average annual shipbuilding budgets of $19.5B over the course of the mid-term planning period, plans to recapitalize the Nation’s secure second-strike nuclear deterrent and 

the Navy’s conventional battle force will have to be dramatically changed, and the 

overall size of the battle force could drop below the levels needed to meet all naval 

presence and warfighting requirements. 

Mr. WITTMAN. General Mills, how does decommissioning 5 L-class ships over the 

FYDP while only procuring 1 affect the USMC’s ability to man, train, and equip the 

2 MEB requirement? 

General MILLS. One Marine Expeditionary Brigade (MEB) assault echelon requires 17 operationally available amphibious warships. In working with the Navy 

to balance operational risk with fiscal challenges we have agreed to a minimum of 

15 ships to support a MEB/Amphibious Task Force. Combatant commanders require 

a minimum of two MEBs to meet Operation Plan requirements. Amphibious warships, along with the requisite number of ship-to-shore connectors, represent an 

operational capability with the minimum number of vessels required to provide the 

Nation with a flexible, persistent, sea-based, power projection capability that is capable of full spectrum amphibious operations in an anti access area denial environment. Fiscal constraints have reduced operational availability below 30 ships, requiring the assumption of additional risk, not only in terms of capacity and operational capabilities, but also the speed with which we can respond. More impor-
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tantly, it is becoming more common for forces to deploy without the benefit of training as a complete Amphibious Ready Group with a Marine Expeditionary Unit. As 

of May 2012, there were 28 ships in the Navy’s amphibious fleet, with three scheduled for decommissioning in FY14 and one ship decommissioning in FY15. Four new 

ships are under construction in the yards and scheduled for delivery between FY14 

and 15. Within the coming FYDP, the inventory will decline in FY14 before rising 

to an average of 31.9 amphibious warships over the next 30 years. The key to meeting amphibious operational requirements with acceptable risk is maintaining a fleet 

which provides 30 operationally available warships. 

An amphibious warship inventory that does not maintain 30 operationally available ships adversely affects our ability to conduct day-to-day deployments, meet necessary training standards and surge forward in response to crises with a balanced 

combat capability. Shortfalls in amphibious lift remain a concern as we work with 

the Chief of Naval Operations and his staff to mitigate risk in meeting the amphibious lift requirement. We are aggressively reviewing our amphibious concepts, doctrine, and plans; and recently stood up the Ellis Group, which is partnered with the 

Navy to develop innovative solutions to overcome these challenges and look for new 

methods to operate given amphibious ship shortfalls. 

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