```

[Senate Hearing 111-100, Part 2]
[From the U.S. Government Publishing Office]

                                                 S. Hrg. 111-100, Pt. 2
 
DEPARTMENT OF DEFENSE AUTHORIZATION FOR APPROPRIATIONS FOR FISCAL YEAR 
                                  2010

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

                                HEARING

                               before the

                      COMMITTEE ON ARMED SERVICES
                          UNITED STATES SENATE

                     ONE HUNDRED ELEVENTH CONGRESS

                             FIRST SESSION

                                   ON

                                S. 1390

     TO AUTHORIZE APPROPRIATIONS FOR FISCAL YEAR 2010 FOR MILITARY 
ACTIVITIES OF THE DEPARTMENT OF DEFENSE, FOR MILITARY CONSTRUCTION, AND 
   FOR DEFENSE ACTIVITIES OF THE DEPARTMENT OF ENERGY, TO PRESCRIBE 
    PERSONNEL STRENGTHS FOR SUCH FISCAL YEAR, AND FOR OTHER PURPOSES

                               ----------                              

                                 PART 2

                                SEAPOWER

                               ----------                              

                             JUNE 16, 2009

         Printed for the use of the Committee on Armed Services
DEPARTMENT OF DEFENSE AUTHORIZATION FOR APPROPRIATIONS FOR FISCAL YEAR 
                         2010--Part 2  SEAPOWER

                                                  S. Hrg. 111-100 Pt. 2

DEPARTMENT OF DEFENSE AUTHORIZATION FOR APPROPRIATIONS FOR FISCAL YEAR 
                                  2010

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

                                HEARING

                               before the

                      COMMITTEE ON ARMED SERVICES
                          UNITED STATES SENATE

                     ONE HUNDRED ELEVENTH CONGRESS

                             FIRST SESSION

                                   ON

                                S. 1390

     TO AUTHORIZE APPROPRIATIONS FOR FISCAL YEAR 2010 FOR MILITARY 
ACTIVITIES OF THE DEPARTMENT OF DEFENSE, FOR MILITARY CONSTRUCTION, AND 
   FOR DEFENSE ACTIVITIES OF THE DEPARTMENT OF ENERGY, TO PRESCRIBE 
    PERSONNEL STRENGTHS FOR SUCH FISCAL YEAR, AND FOR OTHER PURPOSES

                               __________

                                 PART 2

                                SEAPOWER

                               __________

                             JUNE 16, 2009

         Printed for the use of the Committee on Armed Services

                  U.S. GOVERNMENT PRINTING OFFICE
52-621                    WASHINGTON : 2009
-----------------------------------------------------------------------
For Sale by the Superintendent of Documents, U.S. Government Printing Office
Internet: bookstore.gpo.gov  Phone: toll free (866) 512-1800; (202) 512�091800  
Fax: (202) 512�092104 Mail: Stop IDCC, Washington, DC 20402�090001

  

                      COMMITTEE ON ARMED SERVICES

                     CARL LEVIN, Michigan, Chairman

EDWARD M. KENNEDY, Massachusetts     JOHN McCAIN, Arizona
ROBERT C. BYRD, West Virginia        JAMES M. INHOFE, Oklahoma
JOSEPH I. LIEBERMAN, Connecticut     JEFF SESSIONS, Alabama
JACK REED, Rhode Island              SAXBY CHAMBLISS, Georgia
DANIEL K. AKAKA, Hawaii              LINDSEY GRAHAM, South Carolina
BILL NELSON, Florida                 JOHN THUNE, South Dakota
E. BENJAMIN NELSON, Nebraska         MEL MARTINEZ, Florida
EVAN BAYH, Indiana                   ROGER F. WICKER, Mississippi
JIM WEBB, Virginia                   RICHARD BURR, North Carolina
CLAIRE McCASKILL, Missouri           DAVID VITTER, Louisiana
MARK UDALL, Colorado                 SUSAN M. COLLINS, Maine
KAY R. HAGAN, North Carolina
MARK BEGICH, Alaska
ROLAND W. BURRIS, Illinois

                   Richard D. DeBobes, Staff Director

               Joseph W. Bowab, Republican Staff Director

                                 ______

                        Subcommittee on Seapower

               EDWARD M. KENNEDY, Massachusetts, Chairman

JOSEPH I. LIEBERMAN, Connecticut     MEL MARTINEZ, Florida
JACK REED, Rhode Island              JEFF SESSIONS, Alabama
DANIEL K. AKAKA, Hawaii              ROGER F. WICKER, Mississippi
BILL NELSON, Florida                 DAVID VITTER, Louisiana
JIM WEBB, Virginia                   SUSAN M. COLLINS, Maine
KAY R. HAGAN, North Carolina

                                  (ii)
?

                            C O N T E N T S

                              ----------                              

                    CHRONOLOGICAL LIST OF WITNESSES
                       Navy Shipbuilding Programs
                             june 16, 2009

                                                                   Page

Stackley, Hon. Sean J., Assistant Secretary Of The Navy 
  (Research, Development, and Acquisition).......................     4
McCullough, VADM Bernard J., III, USN, Deputy Chief of Naval 
  Operations for Integration of Capabilities and Resources.......    15

                                 (iii)

DEPARTMENT OF DEFENSE AUTHORIZATION FOR APPROPRIATIONS FOR FISCAL YEAR 
                                  2010

                              ----------                              

                         TUESDAY, JUNE 16, 2009

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

                       NAVY SHIPBUILDING PROGRAMS

    The subcommittee met, pursuant to notice, at 2:33 p.m. in 
room SR-232A, Russell Senate Office Building, Senator Carl 
Levin, presiding.
    Committee members present: Senators Levin, Reed, Sessions, 
Martinez, Wicker, and Collins.
    Committee staff member present: Richard D. DeBobes, staff 
director.
    Majority staff member present: Creighton Greene, 
professional staff member.
    Minority staff members present: Pablo E. Carrillo, minority 
investigative counsel; Richard H. Fontaine, Jr., deputy 
Republican staff director; and Christopher J. Paul, 
professional staff member.
    Staff assistants present: Kevin A. Cronin and Christine G. 
Lang.
    Committee members' assistants present: Jay Maroney, 
assistant to Senator Kennedy; Carolyn A. Chuhta, assistant to 
Senator Reed; Gordon I. Peterson, assistant to Senator Webb; 
Brian W. Walsh, assistant to Senator Martinez; Erskine W. Wells 
III, assistant to Senator Wicker; and Rob Epplin, assistant to 
Senator Collins.

       OPENING STATEMENT OF SENATOR CARL LEVIN, CHAIRMAN

    Senator Levin. Good afternoon, everybody.
    I want to welcome Secretary Stackley and Admiral McCullough 
to the subcommittee this afternoon. We're grateful to you for 
your service to the Nation, for the truly professional men and 
women in the whole Navy and Marine Corps team, for their 
valorous service.
    Mr. Secretary, I think this may be your first appearance 
before the committee since your confirmation hearing, so a 
special welcome to you.
    Mr. Stackley. Thank you, sir.
    Senator Levin. I'm in a somewhat unusual situation here 
today, trying to substitute for Senator Kennedy at a Seapower 
Subcommittee hearing. We keep Senator Kennedy very much in our 
thoughts and in our prayers. We wish him a complete recovery 
and his prepared statement follows. We miss him and wish him a 
speedy return to the Senate. I know I speak for all the members 
of the committee, much less the subcommittee, in saying that.
    You are faced, in the Navy, with a number of critical 
issues in balancing your modernization needs against the cost 
of supporting ongoing operations. We have a number of specific 
concerns. One of those is in the prospects for meeting future 
force-structure requirements. We're facing the prospect that 
the current Department of the Navy program will lead to 
potentially large gaps between the forces that the Chief of 
Naval Operations (CNO) and the Commandant of the Marine Corps 
have said that they need, and the forces that will be available 
to their successors.
    In overall terms, the Navy leadership has consistently said 
that the Navy needs 313 ships in the fleet. The fleet today 
stands at roughly 287 ships, well below the stated requirement, 
and with little or no prospect in sight to achieve that goal.
    The story is potentially even worse when it comes to naval 
aviation. The CNO has said that the Navy and Marine Corps could 
be facing a shortfall of tactical aircraft forces as high as 
250 tactical fighters in the middle of the next decade, 
compared to the number needed to outfit our active air wings; 
10 aircraft carrier air wings and 3 Marine Corps air wings. 
With shortfalls that large, we would be faced or, could be 
faced with drastically reducing the number of aircraft 
available on short notice to the combatant commanders, either 
because we have deployed understrength air wings or because we 
did not deploy the carrier at all because of these aircraft 
shortages.
    I mentioned the aviation situation, not because we will 
deal with it in detail at this subcommittee, but to point out 
that there is no magic billpayer in that area of the Navy 
budget.
    Other challenges face the Navy, centering on acquisition 
programs. We've had special concerns about the Littoral Combat 
Ship (LCS) program. This was intended to be a ship that the 
Navy could acquire relatively inexpensively and relatively 
quickly. It started out supposedly costing $220 million per 
ship, and now there are serious questions about whether the 
Navy and contractor team will be able to buy the fiscal year 
2010 ships that are priced at the cost-cap level, $460 million 
per copy. We'd be interested in hearing from Secretary Stackley 
about what actions the Department is taking to strengthen 
acquisition oversight and to restore confidence in the Navy's 
ability to manage major acquisition programs.
    We've also witnessed some other major changes in 
shipbuilding--after 15 years of support for the fire-support 
requirement that the DDG-1000 is intended to meet--the gunfire 
support for Marine Corps or Army forces ashore--and the Navy, 
in the middle of last year, decided to stop the DDG-1000 
program and buy DDG-51 destroyers, which don't have as much 
fire-support capability.
    This change of heart on the DDG-1000 program is at odds 
with the Navy's own consistent testimony that stability in 
these shipbuilding programs is fundamental to controlling costs 
and protecting the industrial base.
    The military services should always have the ability to 
change course as long-term solutions require. However, since 
we're talking about the long term and hundreds of billions of 
dollars of development and production costs for major defense 
acquisition programs, the Department of Defense needs to 
exercise great care in ensuring that such course corrections 
are made with full understanding of the implications of such 
decisions.
    Another area where the Department of the Navy has had 
trouble defining the requirements has been a problem in the 
Maritime Prepositioning Force (Future) (MPF(F)) program. While, 
the subcommittee has heard for several years about the 
contribution that such a force could make to Marine Corps and 
Navy operations, we have seen the procurement of certain ships 
within that objective being delayed each year as the resolution 
of questions about the requirements and capabilities keep being 
deferred.
    Those are some of the concerns that we have. We look 
forward to hearing from our witnesses this afternoon on other 
issues facing the Department of the Navy.
    Now let me call on Senator Martinez.

               STATEMENT OF SENATOR MEL MARTINEZ

    Senator Martinez. Mr. Chairman, thank you very, very much.
    I, too, want to welcome Secretary Stackley to our first 
hearing together, and commend you for your service in the past 
and going forward, as well. Admiral McCullough, it's also a 
pleasure to have you here, sir.
    Admiral McCullough. Thank you, sir.
    Senator Martinez. I also want to acknowledge the absence of 
Senator Kennedy. It doesn't seem quite right not to have him 
here, but I do appreciate, Mr. Chairman, your being here today, 
and certainly our prayers continue to be with him and his 
family as he recovers.
    Our witnesses are here today to discuss the Navy's 
shipbuilding programs and the President's budget request for 
fiscal year 2010.
    First, let me say that I'm pleased by the budget, in one 
important respect; it is clear emphasis on stabilizing this 
shipbuilding portfolio. Over the past decade, the Navy has 
introduced 11 new ship designs and significantly modified 
several ship classes. By requesting ships that are already in 
serial production, this budget focuses on getting those 
platforms on track. In light of longstanding concerns about the 
Navy's shipbuilding plan, this is a move in the right 
direction.
    On the other hand, I continue to be concerned about the 
lack of a 30-year shipbuilding plan. Without a 30-year plan, it 
is difficult for Congress to judge the sufficiency of the 
Navy's shipbuilding proposal or afford the proper level of 
oversight. Failing to include the plan in this budget is a 
missed opportunity.
    I'm also concerned about how the Navy's budget addresses 
its standing requirement for a 313-ship fleet. In January of 
last year, CNO Admiral Gary Roughead told this committee, ``The 
Navy must build more ships this year and deliver a balanced 
fleet of at least 313 ships. At some point, quantity becomes 
capability.''
    My concern with President Obama's request to fund only 
eight new ships and you can see this budget moves us in the 
wrong direction. To meet the Navy's requirement for a 313-ship 
it will require more than simply buying and building more 
ships, it will require, as Admiral Roughead recently pointed 
out, retaining existing assets.
    For too long, the Navy has been decommissioning ships 
faster than it can replace them, retiring ships early to avoid 
costly upgrades and repairs. That practice puts us in a bad 
position, and it needs to stop. We need a more robust service-
life extension and maintenance program for our ships. We need 
programs to ensure we extract the maximum life from our 
existing ships and reduce the number of ships decommissioned 
each year.
    I also support the Navy's efforts to design new weapon 
systems in a way that will help manage operations and support 
costs more effectively downstream. These efforts include the 
reduction of total ownership cost programs the Navy is using on 
all of its Navy Sea Systems Command and Program Executive 
Office (PEO) submarine initiatives.
    Other questions I have about the budget address 
shipbuilding programs, including the Navy's power projection 
role commissioned by its legislative proposals to lower the 
number of aircraft carriers to 10 from the Navy's current 
posture of 11, which would be the lowest number since 1942. 
Will the Navy be able to buy 55 LCSs within the cost cap and on 
a schedule to meet evolving threats? Are we seeing a systemic 
problem with the readiness of the Navy's ships? Readiness 
accounts are not fully funded, and the Navy has requested $400 
million for depot maintenance.
    Serious engineering problems on Landing Platform Dock 
(LPD)-17 class ships and electrical malfunctions on the USS 
Ronald Reagan give rise to concerns about broader readiness 
problems.
    Finally, are we seeing a systemic decline in seamanship in 
the Navy, as evidenced by a recent Navy Inspector General 
report completed this past March? Some of this decline is an 
outcome of recent ship casualties, including the grounding of a 
Pearl Harbor-based cruiser in February and a recent collision 
between a submarine and an amphibious ship in the Straits of 
Hormuz.
    I look forward to our witnesses' testimony today on these 
and other shipbuilding challenges that our Navy faces today.
    Mr. Chairman, I thank you.
    Senator Levin. Thank you so much, Senator Martinez, and I 
apologize for that telephone. It was supposed to be turned off.
    Senator Martinez. That's okay. I'm glad it wasn't me.
    Senator Levin. Mr. Secretary, welcome.

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

    Mr. Stackley. Thank you, sir.
    Mr. Chairman, Senator Martinez, and distinguished members 
of the subcommittee, thank you for this opportunity, and indeed 
this honor, to appear before you today to address Navy 
shipbuilding.
    If it's acceptable to the subcommittee, I would propose to 
keep my opening remarks brief and submit a formal statement for 
the record.
    Senator Levin. That would be fine. It will be part of the 
record.
    Mr. Stackley. Yes, sir.
    Today's Navy is, as you say, a fleet of 287 battle force 
ships. As many as half of these may be underway on any given 
day, supporting combat operations, building global 
partnerships, providing international security, performing 
humanitarian assistance, prosecuting piracy, testing future 
capabilities, and training for future operations. Beyond 
numbers, the quality of the force, our ships, aircraft, and 
weapon systems, and, most importantly, our sailors and marines, 
are unmatched at sea. So, it would be easy to take comfort in 
knowing that, for the next decade, and certainly beyond, the 
Navy and Marine Corps stand ready to respond to major conflict 
with the most capable naval warfare systems in the world today.
    The events of this century point towards a future that must 
increasingly contend with irregular and asymmetric threats. We 
must pace the capability of rogue states and emerging naval 
powers that would intend to challenge our influence and the 
regional security of friends and allies.
    In the face of these growing challenges, the CNO has 
outlined requirements for the future force, better known today 
as the 313-ship Navy. The fiscal year 2010 budget requests 
funds for eight ships, a modest step towards, but short of, the 
rate required to meet that requirement. Beyond numbers, the 
Navy is seeking to close gaps in our capabilities.
    To this end, the shipbuilding program requests funds to 
restart DDG-51 construction in fiscal year 2010 to meet the 
demand signal from combatant commanders for increased air and 
missile defense. The success of the Aegis system against 
ballistic missiles demonstrated through at-sea testing and, 
through performance against an earthbound satellite, provides a 
solid foundation for this mission.
    As well, and as part of the fiscal year 2009 Virginia-class 
multi-year procurement, we're requesting funding for the 12th 
Virginia fast-attack submarine with advance procurement to 
increase production to two submarines per year, starting in 
fiscal year 2011.
    At the other end of the warfare spectrum, we're seeking 
your support to increase production of the LCS to deliver this 
needed capability to the fleet. We know there are many 
challenges ahead as we ramp up construction, tackle 
affordability, and learn how to best operate and support this 
new class. The Navy is confident that the utility and 
flexibility of this ship will prove its worth in future naval 
operations.
    This year's request also includes two T-AKE dry cargo and 
ammunition ships, a program that has performed strongly since 
reaching steady production. Then, the eighth ship in our 
request is one Joint High Speed Vessel. In fact, two of these 
vessels will be procured this year, one each for the Navy and 
the Army.
    Further, the budget request includes advance procurement 
for seven future ships and funds the balance of LPD-26 and DDG-
1002.
    Regarding the DDG-1000 and DDG-51 programs, as noted by the 
Secretary of Defense, the Department has worked with the 
Nation's two major shipbuilders to arrive at a plan which 
provides critical stability to the industrial base in order to 
most affordably build the three DDG-1000s in the program while 
restarting the DDG-51 production.
    Inarguably, the underlying challenge, indeed the pressing 
requirement, before us today in shipbuilding is affordability. 
It's not a new challenge, but it's taken on new dimensions. The 
fact is that ship costs are rising faster than our top line. 
Per-ship costs have risen, due to such factors as low-rate 
production, reduced competition, increased system complexity, 
build-rate volatility, instability in ship class size, and 
challenges with introducing new technologies in new platforms.
    Perhaps most significantly over the past decade, we have 
introduced 11 new designs. That's 11 lead ships, each a highly 
complex prototype bringing its own unique challenges.
    Compounding these issues, particularly in the case of lead 
ships, where there is greater risk and uncertainty, we have 
fallen short on our ship cost estimates or, in certain cases, 
on our willingness and ability to fully fund to the estimate. 
All of these factors lead to inefficient ship production and 
cost growth.
    We have learned, or, in certain cases, relearned, the 
lessons of this experience. Accordingly, the Navy understands 
and agrees with the objectives of the Weapon Systems 
Acquisition Reform Act, and we strive to meet its spirit and 
intent in our ongoing initiatives to raise the standards, to 
improve the processes, to instill necessary discipline, and to 
strengthen the professional core that manages our major defense 
programs.
    To this end, the fiscal year 2010 Navy shipbuilding plan 
strives to provide stability, building on ship programs which 
are currently in serial production. There is renewed emphasis 
on ensuring design is mature prior to starting production, on 
minimizing changes to requirements and minimizing change to 
design, and improving our estimates for follow-ship costs, all 
of which should lead to improving industry performance, 
reducing risk, and expanding the use of fixed-price-type 
contracts.
    We're working to increase competition from the prime down 
through the subcontractors. We're implementing affordability 
initiatives, including relaxing excessive requirements, 
pursuing producibility, commonality, and reuse in designs, 
while providing incentives for special selected capital 
improvements to improve shipyard performances.
    We are pursuing open architecture, which promises to arm us 
with a powerful cost-avoidance tool, as well as a process for 
improving warfighting capability. The challenge before us is 
great, but so is the need. In meeting the need, the 
subcommittee has been steadfast and unwavering in support for a 
strong Navy and Marine Corps, and, of course, we thank you for 
that.
    Again, I thank you for your time today and look forward to 
answering your questions.
    [The joint prepared statement of Mr. Stackley and Vice 
Admiral McCullough follows:]

  Joint Prepared Statement by Hon. Sean J. Stackley and Vice Admiral 
                               McCullough

    Mr. Chairman, Senator Martinez, and distinguished members of the 
subcommittee, thank you for the opportunity to appear before you today 
to address Navy shipbuilding. The Department is committed to the effort 
to build an affordable fleet tailored to support the National Defense 
Strategy, the Maritime Strategy, and the 2006 Quadrennial Defense 
Review. The Department's fiscal year 2010 budget will provide platforms 
that are multi-capable, agile, and able to respond to the dynamic 
nature of current and future threats. The fiscal year 2010 shipbuilding 
budget funds eight ships, including the 12th Virginia-class fast attack 
submarine, three Littoral Combat Ships (LCS), two T-AKE Dry Cargo and 
Ammunition Ships, and the  second  Joint  High  Speed  Vessel  (JHSV)  
for  the  Navy.  The  eighth  ship,  a  DDG-51 class, restarts the DDG-
51 program. The budget also funds the balance of LPD-26 and DDG-1002.
    Since the 1800s, the United States Navy has been permanently 
deployed far from American shores, and our Nation's first responder to 
crisis and upheaval throughout the world. The Navy's continuous 
presence assures our friends and allies that the United States remains 
ready to help deter aggression, maintain access to the seas, and assist 
in the event of humanitarian crisis or natural disaster. Forward 
presence uniquely provides our country's leadership the ability to act 
with understanding, speed, and flexibility to contain issues or 
conflicts before they escalate. The Navy's forward presence has been 
called upon for more than 75-percent of our Nation's combat operations 
and shows of force, and 90-percent of long-duration humanitarian 
assistance or disaster response missions since 1970. The cost of 
perpetual presence requires us to continually maintain, upgrade and 
recapitalize our ships and submarines.
    Inherent to the Navy's ability to perform these critical national 
security missions are our ships and our ship force structure. Ships 
define the Navy and underpin virtually all of our naval warfighting 
capabilities. Today, we have a balanced fleet capable of meeting most 
combatant commander critical demands, from presence to counter-piracy 
to ballistic missile defense. However, as we look ahead, in the balance 
of capability and capacity, we see emerging warfighting requirements 
not only in the littorals, but in open ocean anti-submarine warfare, 
anti-ship cruise missile, and theater ballistic missile defense. Gaps 
in these warfare areas pose increased risk to our forces. These factors 
drive our future force structure requirements for 313 ships.
    Beyond addressing capability requirements, the Navy needs to have 
the right capacity to meet combatant commander warfighting requirements 
and remain a global deterrent. Combatant Commanders continue to request 
more surface ships and increased naval presence to expand cooperation 
with new partners in Africa, the Black Sea, the Baltic Region, and the 
Indian Ocean. This is in addition to the presence required to maintain 
our relationships with current allies and partners. Therefore, the Navy 
must increase surface combatant capacity to meet combatant commander 
demands today for ballistic missile defense, theater security 
cooperation, and steady state security posture; simultaneously 
developing our fleet to meet future demands.
    Your Navy remains committed to building the fleet of the future and 
modernizing our current fleet to meet increasingly complex threats. The 
continual challenge the Navy faces is the availability of resources to 
fully populate the necessary force structure. As a result, the Navy 
will assume risk in some capability areas in order to achieve a balance 
across all of its mission sets. While there will be some areas that 
have risks, the aggregate force will retain its basic warfighting 
capability to ensure the Nation does not lose its ability to deter, 
dissuade and win in armed conflict, while at the same time provide 
security and stability through Theater Security Cooperation. In the 
past decade, the average age of the Navy's ships has risen from about 
15 to over 20 years old as platforms built in the 1980s approach the 
end of their service lives. Replacement ships have been delayed, are 
more expensive, and are fewer in number than planned, shrinking the 
Fleet from 344 total active ships in 1998 to 284 today. The 
shipbuilding industrial base has followed suit, downsizing aggressively 
in response to the Navy's reductions in ship procurement, leaving just 
two major shipbuilding companies operating across six locations. These 
individual shipyards are substantially smaller than they were just a 
decade ago. We are at a minimum sustaining rate for affordable 
shipbuilding; further reductions in ship procurements will exacerbate 
existing shortages, and we risk losing the core talent and industrial 
tools necessary to build future naval platforms. Mindful of this, Navy 
force structure planners are increasingly constrained by, and 
consequently focused on, the ability of the private shipbuilding 
industry to respond to our production requirements. With the advent of 
the LCS and the JHSV, the Navy is also dealing with second tier 
shipyards (in the case of the LCS program these yards are 
subcontractors.) The advantages of dealing with second tier shipyards 
are typically reduced labor rates and their reliance on commercial 
shipbuilding. The concerns with second tier shipyards are their ability 
to construct complex warships and the concern of dependency on Navy 
contracts in future workload projections.
    The Navy has examined the rising cost of ship acquisition. Per-ship 
costs are rising due to such factors as reduced competition, increased 
system complexity, build rate volatility, low rate production, 
instability in ship class size, and challenges with introducing new 
technologies into new platforms. All of these factors lead to 
inefficient ship production. The Department is working aggressively to 
control costs. We are ensuring that new ship designs are mature enough 
to commence production. We are working to fully leverage competition at 
every level of our shipbuilding programs, at the first and second tier 
vendors if not with prime contractors. Lack of competition adds costs 
throughout the shipbuilding supply chain. In addition, within our 
shipbuilding contracts, we are continuing to implement proven cost-
reduction tools and methods like multi-year procurements, cost 
reduction incentives, affordability programs, re-use of existing 
designs, and incentives for selected industrial capital improvement 
projects. Open architecture, both for hardware and software, promises 
to be a powerful cost avoidance tool as well as a process for improving 
warfighting capability.
    In 2008, the Navy instituted a more stringent acquisition 
governance process which improves reporting, reviewing, and oversight 
processes that provide specific criteria for areas such as 
requirements, funding, and technical performance. This process ensures 
that stakeholders from the resources, requirements, acquisition, and 
operational communities are apprised of, address, and revisit at 
defined intervals, issues associated with technical maturity, 
affordability and program health. In addition to the review process, 
every major defense acquisition program conducts an annual 
Configuration Steering Board, which provides a means to identify 
further opportunities to reduce costs. In response to issues regarding 
shortcomings in cost estimating, the Navy has a new, highly-focused 
cost estimating tiger team as a result of insights accumulated through 
our initial experience with the acquisition governance process. The 
team is investigating the factors that contribute to improved cost 
estimates and developing plans of action which will then be implemented 
by the Navy cost estimating organizations.
    Working with the Office of the Secretary of Defense (Acquisition, 
Technology, and Logistics), the Department of the Navy (DoN) is taking 
specific measures to grow its acquisition workforce, which will ensure 
our ability to properly staff and manage programs. These measures 
include assigning a Principal Civilian Deputy (Senior Executive) to the 
Assistant Secretary of the Navy (Research, Development and Acquisition) 
with responsibilities for all DoN acquisition workforce; rebalancing 
the workforce by reversing the over-reliance on contractor-support 
executing core Navy acquisition functions (e.g., systems engineering, 
cost estimating, and earned value); more deliberate management of the 
program manager pipeline (experience and training); and leveraging the 
recent National Defense Authorization Act Sections 219 and 852 to 
restore capability and capacity in the DoN acquisition workforce. 
Specific to shipbuilding, the Navy focused on strengthening our 
Supervisor of Shipbuilding workforce to provide onsite presence in the 
private shipyards executing shipbuilding contracts.
    Further, we are working regularly with our international allies to 
exchange best practices and lessons learned on shipbuilding efforts. A 
Shipbuilding Quadrilateral forum, comprised of government officials 
from the United States, United Kingdom, Canada and Australia, meets 
quarterly to discuss systematic trends that are emerging in 
shipbuilding programs. In May, the United States hosted the forum, 
which focused on cross-country system commonality and cost estimating 
challenges and opportunities.
    The fiscal year 2010 Navy shipbuilding plan provides stability for 
our industry partners. Over the past decade we have introduced eleven 
new designs or significantly modified ship classes. The President's 
budget for fiscal year 2010 shipbuilding plan does not introduce any 
new design ships. Instead, the President's budget for fiscal year 2010 
requests ships which are currently in serial production. Stability in 
the Navy's plan is reflected in controlling requirements, minimizing 
changes in design, and providing predictable cost for a follow-on ship. 
Risk of the shipyards' ability to execute follow-on vessels is reduced, 
and the Navy can enter into fixed-price type contracts, or exercise 
existing fixed-price type contract options.
    Serial production should benefit the shipyards and suppliers. 
Continuation of ship classes allows the shipbuilders to optimize their 
shipyard(s) for that particular product line. In the case of the 
Virginia-class Block in multi-year procurement, the shipbuilder can 
enter into long-term relationships with suppliers for the next eight 
submarines. The Navy will continue to explore use block buys and multi-
year procurements for other ship classes as programs mature.
    The Navy has learned a great deal from a protracted period of lead 
ships. These lessons will be applied as we move forward on any future 
new designs:

         Ship designs must be appreciably complete before start 
        of fabrication to avoid concurrency and rework. Through the 
        acquisition governance process, the Navy reviews a program's 
        ability to enter into construction based on design completion. 
        These results are documented in reports to Congress.
         Adequate staffing is key to lead ship design and 
        production success. Staffing includes government (including 
        onsite) and industry. Skill sets required must be carefully 
        considered.
         Competitive prototyping of high risk components is 
        valuable in the identification of technical challenges and 
        helps to retire this risk.
         The private sector shipbuilding design base must be 
        carefully managed. Too many new designs/significant 
        modifications can stress the industry.
         The flow down of requirements can drive unintended 
        costs. Technical authority must be carefully weighed against 
        overarching requirements (key performance parameters). 
        Development and review of system design specifications is now 
        required as part of the acquisition governance process.
         Capital investment in shipyards needs to be considered 
        during a ship's design phase so investments for efficient 
        production can be made in advance of construction. This only 
        applies in sole source arrangements, but once a competitive 
        downselect is made, opportunity for facilities investments can 
        be considered.
         Life cycle costs must be understood early in a ship's 
        development. Reduced manning may transfer maintenance to 
        shoreside, so end-to-end costs must be understood. Use of 
        common parts should be considered for life cycle savings.

    The Navy is procuring capability and modernizing current ships to 
create our future fleet. A discussion regarding the requirement for 
each element of our force structure and the status of construction and 
modernization for the platforms that comprise the Navy's Fleet follows.

                           AIRCRAFT CARRIERS

    Aircraft carriers are the foundation of our Carrier Strike Groups 
and continue to ensure dominance of and presence from the sea. The Navy 
remains committed to an 11-carrier force for the next several decades, 
which is necessary to ensure that we can respond to national crises 
within the current prescribed timeframe. Our carrier force provides the 
Nation the unique ability to overcome political and geographic barriers 
to access critical areas and project power ashore without the need for 
host nation ports and airfields.
    The 11-carrier requirement is based on a combination of world-wide 
presence requirements, surge availability, training and exercises, and 
maintenance. During the 33-month period between the planned 2012 
decommissioning of USS Enterprise (CVN-65) and the 2015 delivery of 
Gerald R. Ford (CVN-78), however, legislative relief is requested to 
temporarily reduce the carrier force to 10. Extending USS Enterprise to 
2015 involves significant technical risk, challenges manpower and 
industrial bases, and requires expenditures in excess of $2 billion. 
Extending USS Enterprise would result in only a minor gain in carrier 
operational availability and adversely impact carrier maintenance 
periods and operational availability in future years. The temporary 
reduction to 10 carriers is possible during a limited time period, 
mitigated by careful preplanning of personnel rotations and capacity 
and maintenance availabilities prior to and following the window.

                             CVN-21 PROGRAM

    Gerald R. Ford (CVN-78), the lead ship of the CVN-78 Class is the 
designated numerical replacement for CVN-65. CVN-78 warfighting 
capability improvements include: 25 percent increase in sortie 
generation rate; a significant reduction in ship's force, as well as 
the air wing and embarked staff manning level; nearly three-fold 
increase in electrical generating capacity; restoration of service life 
allowances; and enhanced Integrated Warfare System to pace future 
threats. These improvements will ensure that CVNs remain the 
centerpiece of our Carrier Strike Groups, and will continue to lead the 
Navy throughout their 50-year expected service lives. The detail design 
and construction contract between the Navy and Northrop Grumman 
Shipbuilding-Newport News (NGSB-NN) was signed in September 2008. Keel 
laying is planned for this fall. The CVN-79 Construction Preparation 
(CP) contract covering fiscal year 2009 and fiscal year 2010 was 
awarded in January 2009. The President's budget request for fiscal year 
2010 includes $740 million in full funding for the CVN-78 and $484 
million in Advance Procurement for CVN-79.

                              CVN-68 CLASS

    USS George H.W. Bush (CVN-77), the 10th and final Nimitz-class 
carrier, is the numerical replacement for USS Kitty Hawk (CV-63). CVN-
77 was commissioned in January 2009 and delivered in May; she will soon 
enter a post-shakedown availability. delivery of CVN-77 maintains the 
force structure at the required 11-carrier level.

                CVN-68 CLASS REFUELING COMPLEX OVERHAUL

    For each CVN-68 Refueling Complex Overhaul (RCOH), 35-percent of a 
carrier's total service life maintenance plan is performed, as well as 
depot level mid-life recapitalization which extends the service life of 
the ship to approximately 50 years. Nuclear reactor refueling, 
warfighting modernization, and ship systems and infrastructure repair 
will help meet future missions. These combined upgrades support a 
reduction in operating costs, achieve expected service life, and allow 
the Nimitz class to retain combat relevance to deter projected threats 
well into the 21st century. This program is critical for the class to 
achieve its service life and retain combat relevance. USS Carl Vinson 
(CVN-70) is currently in the final months of her RCOH and will complete 
this summer. USS Theodore Roosevelt (CVN-71) is scheduled to begin her 
RCOH in September 2009. The President's budget request for fiscal year 
2010 includes $1.8 billion for the CVN-68 class RCOH program.

                          THE SUBMARINE FLEET

    It is our intent that the Navy's submarine force remains the 
world's preeminent submarine force. We are aggressively incorporating 
new and innovative technologies to maintain dominance throughout the 
maritime battle space. We are promoting the multiple capabilities of 
submarines and developing tactics to support national objectives 
through battlespace preparation, sea control, supporting the land 
battle and strategic deterrence. To these goals, the Department has 
continued a pattern of timely  delivery  of  Virginia-class  submarines 
 while  ensuring  the  overhaul  of  the  Ohio-class submarines 
supports their continued ability throughout their full anticipated 
lifetime. The Department has also begun looking at alternatives to 
replace the Ohio-class submarines when they reach the end of their 
service life in 2027.

                             VIRGINIA-CLASS

    The Virginia-class submarine is a multi-mission platform that fully 
supports the Maritime Strategy. Virginia was designed and constructed 
to dominate the undersea domain in the littorals as well as open ocean 
in today's challenging international environment and is replacing our 
aging Los Angeles-class submarines as they reach over 30 year service 
lives. Now in its 10th year of construction, the Virginia program is 
demonstrating that this critical undersea capability can be delivered 
affordably and on time.
    Five Virginia-class submarines have delivered and six more are 
under construction. In 2008, the Navy commissioned USS North Carolina 
(SSN-777) in May and USS New Hampshire (SSN-778) in October. The sixth 
ship, New Mexico (SSN-779), will be commissioned in November 2009.
    General Dynamics Electric Boat and NGSB-NN continue to jointly 
produce Virginia-class submarines and are working with the program 
office to reduce the construction time and cost of these ships. An 
eight-ship, multi-year procurement contract for the fiscal years 2009-
2013 ships was signed in December 2008. The contract achieves the cost 
reduction goal of $2 billion (fiscal year 2005 dollars) with the fiscal 
year 2012 ships as well as the two per year build rate starting in 
fiscal year 2011. The fiscal year 2010 President's budget request 
includes $3,970 billion for construction of the fiscal year 2010 ship 
as well as advance procurement and economic order quantity funds for 
materials for the fiscal year 2011-2013 ships contained in the multi-
year contract.

                  SSBN ENGINEERED REFUELING OVERHAULS

    The Ohio-class SSBN Engineered Refueling Overhaul (ERO) Program 
continues. USS Alaska (SSBN-732) completed her overhaul in March 2009; 
USS Nevada (SSBN-733) will complete her overhaul in 2010; and USS 
Tennessee (SSBN-734) will complete her overhaul in 2011. These EROs are 
a one-time depot maintenance period, near the mid-point of the SSBN 
service life, during which the nuclear reactor is refueled, major 
equipment is refurbished, class alterations are installed, and SUBSAFE 
unrestricted operations maintenance is accomplished. In the fiscal year 
2010 President's budget, the Department has budgeted for SSBN EROs in 
O&MN and OPN appropriations vice SCN. ERO work is repair and 
maintenance work needed to fulfill the ship's design service life. 
Funding the overhaul with O&MN and OPN better aligns work and budget 
responsibilities to the fleet, the primary Navy Shipyard customer. The 
fiscal year 2010 President's budget requests $201 million for ERO of 
USS Pennsylvania (SSBN-735).

                     SEA BASED STRATEGIC DETERRENT

    The Ohio-class ballistic missile submarine, originally designed for 
a 30-year service life, will start retiring in 2027 after over 40 years 
of service life. The Department of Defense initiated an analysis of 
alternatives in fiscal year 2008 for a replacement SSBN. Early research 
and development will set the stage for the first ship authorized in 
fiscal year 2019. As long as our potential adversaries possess nuclear 
weapons, the United States will need a reliable and survivable sea-
based strategic deterrent. To ensure there is no gap in our Nation's 
sea-based strategic nuclear forces, the fiscal year 2010 President's 
budget request includes $495 million. These funds will ensure that 
design and technology development can begin to support technology 
readiness levels, prototyping and design maturity when the lead ship is 
authorized. The United States will achieve significant program benefits 
by aligning our efforts with those of the United Kingdom (U.K.) as they 
move forward with their Vanguard SSBN replacement program. The U.S. and 
U.K. are working towards finalizing a cost-sharing agreement.

                           SURFACE COMBATANTS

    Today's Navy is operating in an increasingly complex and 
challenging environment. Demand from combatant commanders for 
traditional Navy core capabilities, forward presence, deterrence, sea 
control, and power projection by surface combatants operating both 
independently and with strike groups is increasing. The new Maritime 
Strategy also calls for expanding capabilities in integrated air and 
missile defense to include ballistic missile defense, maritime 
security, disaster relief and humanitarian assistance.
    The Navy, after extensive discussions with General Dynamics 
Corporation Bath Iron Works (BIW) and Northrop Grumman Shipbuilding, 
Inc. (NGSB) arrived at a plan that most affordably meets the 
requirements for Navy surface combatants, commences the transition to 
improved missile defense capability in new construction DDG-51, and 
provides significant stability for the industrial base. Under a 
memorandum of agreement (MOA) signed in April 2009, BIW will be 
responsible for design, construction, integration, testing and delivery 
of DDG-1000, DDG-1001, and DDG-1002. NGSB will retain responsibility 
for design, engineering and fabrication of the composite superstructure 
and composite hangar, and fabrication of aft peripheral vertical launch 
system for DDG-1000 ships. In addition, the Navy will award contracts 
for construction of the first two ships of the DDG-51 restart program 
(DDG-113 and DDG-114) to NGSB, and will award a contract for 
construction of the third ship of the DDG-51 restart program (DDG-115) 
to BIW.

                          CG-47 MODERNIZATION
 
   Twenty-two Aegis cruisers remain in service and are planned to 
receive modernization upgrades. A comprehensive Mission Life Extension 
is critical to achieving the ship's expected service life and includes 
the all-electric modification; SMARTSHIP; hull, mechanical, and 
electrical (HM&E) system upgrades; and a series of alterations designed 
to restore displacement and stability margins, correct hull and deck 
house cracking, and improve quality of life and service onboard. 
Cruiser Modernization bridges the gap to future surface combatants and 
facilitates a more rapid and affordable combat capability insertion 
process. The first full modernization availability was completed on USS 
Bunkerhill (CG-52) in February 2009 and included Advanced Capability 
Build 2008 (ACB08). ACB08 brings upgraded warfighting capability to CG-
52-CG-58 including cooperative engagement capability (CEC) and upgraded 
weapon systems. The President's budget request for fiscal year 2010 
includes $495 million which will modernize two cruisers.

                          DDG-51 MODERNIZATION

    The DDG-51 modernization program is a comprehensive effort to 
modernize the Arleigh Burke-class ships' combat and HM&E systems. As 
ships are modernized halfway through their 35-year estimated service 
life, each ship will be enabled to achieve an additional 10-15 years of 
life that historically has been reduced by early decommission due to 
both the inability to pace the threat and to high operating costs. This 
program is modeled on the successful CG Modernization program and will 
occur in two phases. The first phase is the HM&E phase. These upgrades 
support workload reduction, operating costs minimization, expected 
service life achievement and projected threat pacing well into the 21st 
century. The second phase, expected to commence in fiscal year 2010, 
will consist of a full combat systems computing plant and Combat 
Information Center replacement, known as Advanced Capability Build-12 
(ACB-12). ACB-12 will allow the class to field substantial capability 
against ballistic missiles, new generation advanced anti-ship cruise 
missiles and new, quieter submarines now in the hands of potential 
adversaries.
    The first DDG to be modernized will be USS Arleigh Burke (DDG-51), 
planned for fiscal year 2010. The President's budget request for fiscal 
year 2010 includes $329 million which supports two ship modernizations 
in fiscal year 2010.

                     DDG-1000 AND DDG-51 DESTROYERS

    DDG-1000, with its dual band radar and sonar suite design, is 
optimized for the littoral environment. DDG-1000's advanced gun system 
provides enhanced naval fires support capability in the littorals with 
increased survivability.
    The Navy began construction of DDG-1000 in February 2009. A 
rigorous systems engineering approach has been employed to mitigate the 
risk involved with building a complex lead ship surface combatant. This 
approach included successful building and testing of the 10 critical 
technologies via engineering development models. Naval Vessel Rules 
were fully accommodated in detail design. Mission systems design is 
nearly complete. Detail design was also near completion prior to the 
start of fabrication--more complete than any other previous surface 
warship.
    However, in the current program of record, the DDG-1000 is 
incapable of conducting ballistic missile defense, and less capable 
than the DDG-51 class for providing Air Defense. As well, although 
superior in littoral ASW, the DDG-1000's lower power active sonar 
design is less effective in the blue water than DDG-51 capability. In 
view of increasing demand by combatant commanders for air and missile 
defense capability, the budget request truncates the DDG-1000 program 
at three ships and restarts construction of DDG-51 class ships.
    The fiscal year 2010 President's budget request of $1.084 billion 
provides the balance of split funding for the third ship of the class 
authorized in 2009. In addition, $2.241 billion is requested to restart 
the DDG-51 program.
    The research, development, test, and evaluation efforts for the 
DDG-1000 program ($539 million in fiscal year 2010), which include 
software development and other critical efforts, must continue in order 
to deliver the necessary technology to complete DDG-1000 class ships 
and support the CVN-78 class.
    The April 2009 MOA will align construction responsibilities for 
fiscal year 2009 and prior DDG-1000 class ships and selected DDG-51 
class ships between BIW and NGSB through the order of the next three 
planned DDG-51s in order to ensure shipyard workload stability at both 
yards, leverage learning, stabilize and minimize cost risk for the DDG-
1000 program, efficiently restart DDG-51 construction, facilitate 
performance improvement opportunities at both shipyards, and maintain 
two sources of supply for future surface combatants.

                     NEXT GENERATION CRUISER CG(X)

    CG(X) is envisioned to be a joint air and missile defense and joint 
air control operations battlespace dominance ship. CG(X) will provide 
air and missile defense to Joint Forces ashore and afloat. The Maritime 
Air and Missile Defense of Joint Forces Initial Capabilities Document 
was validated by the Joint Requirements Oversight Council in May 2006.
    The results of the Navy's analysis of alternatives for the maritime 
air and missile defense of Joint Forces capability are currently within 
the Navy staffing process. Resulting requirements definition and 
acquisition plans, including schedule options and associated risks, are 
being evaluated in preparation for CG(X) Milestone A. This process 
includes recognition of the requirement of the National Defense 
Authorization Act for Fiscal Year 2008, that all major combatant 
vessels of the United States Navy strike forces be constructed with an 
integrated nuclear power plant, unless the Secretary of Defense 
determines this not to be in the best interest of the United States.
    Vital research and development efforts are in progress for the air 
and missile defense radar which paces the ship platform development. 
Engineering development and integration efforts include systems 
engineering, analysis, computer program development, interface design, 
engineering development models, technical documentation, and system 
testing are in process to ensure a fully functional CG(X) system 
design. The fiscal year 2010 President's budget requests $190 million 
for the air and missile defense radar development and $150 million to 
continue maturation of the CG(X) design based on the preferred 
alternative selected.

                          LITTORAL COMBAT SHIP

    The Navy remains committed to procuring 55 LCSs. LCS expands the 
battle space by complementing our inherent blue water capability. LCS 
fills warfighting gaps in support of maintaining dominance in the 
littorals and strategic choke points around the world. The LCS program 
capabilities address specific and validated capability gaps in mine 
countermeasures, surface warfare, and anti-submarine warfare. The 
concept of operations and design specifications for LCS were developed 
to meet these gaps with focused mission packages that deploy manned and 
unmanned vehicles to execute a variety of missions. LCS' design 
characteristics (speed, agility, shallow draft, payload capacity, 
reconfigurable mission spaces, air/watercraft capabilities) combined 
with its core command, control, communications, computers and 
intelligence, sensors, and weapons systems, make it an ideal platform 
for engaging in irregular warfare and maritime security operations.
    The Navy is aggressively pursuing cost reduction measures to ensure 
delivery of future ships on a schedule that affordably paces evolving 
threats. This will be accomplished by matching required capabilities, 
to a recurring review of warfighting requirements through applying 
lessons learned from the construction and test and evaluation periods 
of sea frames and mission packages. USS Freedom (LCS-1) was delivered 
to the fleet in September 2008 and was commissioned in November 2008. 
Independence (LCS-2) was christened in Mobile, AL, on October 4, 2008. 
In 2009, the Navy will accept delivery of the second ship, which is a 
completely different design.
    In October 2008, the Under Secretary of Defense for Acquisition, 
Technology, and Logistics approved a revised acquisition strategy for 
procurement of the fiscal year 2009 and fiscal year 2010 LCS. The 
updated strategy combines the fiscal year 2009 procurement and fiscal 
year 2010 options to maximize competitive pressure on pricing as a key 
element of cost control. Increasing the quantity solicited by adding 
the fiscal year 2010 ships to the fiscal year 2009 solicitation as 
options enables industry to better establish longer term supplier 
relationships and offer the potential for discounting to the prime 
contractors and subcontractors. The fiscal year 2009 ships and fiscal 
year 2010 ship options are fixed-price type contracts.
    The fiscal year 2010 President's budget request includes $1.38 
billion for three additional LCS seaframes.
    Acquisition strategies for fiscal year 2011 and outyear ships are 
under development. OSD will conduct a Milestone B prior to fiscal year 
2011 procurement. The Navy's strategy will be guided by cost and 
performance of the respective designs, as well as options for 
sustaining competition throughout the life of the program. Combat 
systems and HM&E Design will be evaluated throughout the test and trial 
periods and we are already looking for opportunities to reduce total 
ownership costs.

                            AMPHIBIOUS SHIPS

    These ships provide distributed forward presence to support a wide 
range of missions from forcible entry to conventional deterrence, 
Theater Security Cooperation, and humanitarian assistance. In major 
combat operation, DON requires sufficient amphibious ships to support 
two Marine Expeditionary Brigades (MEB). As an organization principle, 
this requires the Navy to maintain a minimum of 38 amphibious ships. 
Understanding this requirement and in light of the fiscal challenges 
with which the Navy is faced, the DoN plans to sustain a minimum of 33 
amphibious ships in the assault echelon.

               WASP (LHD-1)-CLASS AMPHIBIOUS ASSAULT SHIP

    The Wasp (LHD-1)-class comprises multi-purpose amphibious assault 
ships whose primary mission is to provide embarked commanders with 
command and control capabilities for sea-based maneuver and assault 
operations as well as employing elements of a landing force through a 
combination of helicopters and amphibious vehicles. Makin Island (LHD-
8), the last of the Wasp-class, completed successful Acceptance Trials 
in March 2009 and was delivered in April 2009. Although a modified 
repeat of the previous seven ships, this ship introduced a gas turbine 
propulsion system with all electric auxiliary systems and eliminated 
the steam plant and steam systems.

      LHA(R) GENERAL PURPOSE AMPHIBIOUS ASSAULT SHIP (REPLACEMENT)

    The LHA(R) assault echelon (AE) ships will provide flexible, multi-
mission platforms with capabilities that span the range of military 
operations-from forward deployed crisis response to forcible entry 
operations. LHA(R) is a modified LHD-8 design with increased aviation 
capacity in lieu of a well deck to better accommodate aircraft in the 
future USMC Aviation Combat Element (ACE) including JSF/MV-22. LHA(R) 
is the functional replacement for the aging Tarawa (LHA-1)-class ships 
that will reach the end of their extended service life in 2011-2015. 
The Navy's study to assess the impact of Maritime Prepositioning Force 
(Future) (MPF(F)) without LHA(R) ships has determined that this change 
is feasible but may result in slightly longer time to complete mission 
and may require modifications to remaining MPF(F) ships.

                  LPD-17-CLASS AMPHIBIOUS WARFARE SHIP

    The LPD-17 class of amphibious warfare ships represents the Navy's 
commitment to a modern expeditionary power projection fleet that will 
enable our naval force to operate across the spectrum of warfare. San 
Antonio-class ships will play a key role in supporting the ongoing 
Overseas Contingency Operations by forward deploying marines and their 
equipment to respond to crises abroad. USS Greenbay (LPD-20) was 
commissioned in January 2009 and USS New Orleans (LPD-18) deployed the 
same month. New York (LPD-21) is planned to deliver this summer. LPDs-
21-25 are in various stages of construction phase. The fiscal year 2010 
President's budget requests $872 million for the balance of the funding 
for LPD-26 which was authorized in 2009. Further, $185 million of 
advance procurement is requested for LPD-27, in accordance with the 
April 2009 MOA, to leverage production efficiencies of the existing 
LPD-17 class production line.

               AUXILIARY AND INTRA-THEATER LIFT PLATFORMS

    Combat logistics force ships are critical for forward deployed 
forces. The vital role of underway replenishment of such items as fuel, 
food, repair parts, and ammunition enable Navy ships to operate for 
extended periods at sea. The extended operating demands for vessels 
such as JHSVs and LCS for intra-theater lift, Theater Security 
Cooperation, or engagement missions will place a high demand for 
support on existing logistics shipping and increase the operating tempo 
of the Combat Logistics Force ships. Intra-theater lift is key to 
enabling the United States to rapidly project, maneuver, and sustain 
military forces in distant, anti-access or area-denial environments.

                 MARITIME PREPOSITIONING FORCE (FUTURE)

    MPF(F) provides a scalable joint sea-based capability for the 
closure, arrival, assembly and employment, sustainment and 
reconstitution of up to a baseline MEB-sized force in support of the 
assault echelon of the amphibious assault force. MPF(F) will provide 
the Nation a rapid reinforcing capability and significant utility in 
response to humanitarian assistance/disaster relief (HA/DR), 
noncombatant evacuation operations (NEO), and Theater Security 
Cooperation Program. The MPF(F) squadron composition will be acquired 
in three increments, with the first increment consisting of the Lewis 
and Clark-class Dry Cargo/Ammunition Ship (T-AKE) and the mobile 
landing platform (MLP).

                     MOBILE LANDING PLATFORM (MLP)

    The Navy awarded a preliminary design contract to General Dynamics 
NASSCO for the mobile landing platform--one of the MPF(F) vessels in 
February 2009. The fiscal year 2010 President's budget request includes 
$120 million of advance procurement funding for the MLP and $52 million 
of research, development, testing, and evaluattion for the MPF(F) 
program, including MLP risk reduction and technology development.

        LEWIS AND CLARK-CLASS DRY CARGO/AMMUNITION SHIP (T-AKE)

    T-AKE replaced the Navy's combat stores (T-AFS) and ammunition (T-
AE) shuttle ships. Working with an oiler (T-AO), the team can perform a 
``substitute'' station ship mission which will provide necessary depth 
in combat logistics. Fourteen T-AKE ships are covered under a fixed-
price incentive contract with NASSCO. Three of the T-AKEs are to 
support MPF(F) program requirements. Major accomplishments for 2008 
include delivery of USNS Robert E. Peary (T-AKE-5) in June 2008 and 
USNS Amelia Earhart (T-AKE-6) in October 2008. USNS Carl Brashear (T-
AKE-7) delivered in March 2009 and Wally Schirra (T-AKE-8) will deliver 
later this year. The construction contract option for the T-AKE-11 and 
-12 and long lead time material for the T-AKE-13 and -14 were exercised 
in December 2008. The fiscal year 2010 President's budget requests $940 
million for construction of two T-AKEs (T-AKE-13 and -14) in the 
National Defense Sealift Fund in support of MPF(F) requirements.

                        JOINT HIGH SPEED VESSEL

    The JHSV program is for the acquisition of high-speed vessels for 
the Army and the Navy. JHSV will be a high-speed, shallow draft surface 
vessel able to rapidly transport medium payloads of cargo and personnel 
over intra-theater distances to austere ports, and load/offload without 
reliance on port infrastructure. The detail design and lead ship 
construction contract was awarded to Austal, USA in November 2008, and 
includes contract options for nine additional ships for the Army and 
Navy. Delivery of the first vessel will be to the Army and is expected 
in 2011. The fiscal year 2010 President's budget request includes $178 
million for the construction of the Navy's second JHSV and $178 million 
for the second Army funded vessel.

                                SUMMARY

    The Navy has come through many difficulties associated with lead 
ships and sustained production is proceeding. The fiscal year 2010 
budget request, which focuses on improving performance in the 
production of follow ships of each class, reflects the Navy's emphasis 
on stabilizing the shipbuilding plan. We understand the impact long 
term attrition and downsizing has had on the acquisition workforce, and 
are taking necessary steps to restore our core competencies. We have 
instituted the acquisition governance process to improve requirements/
acquisition decision making. We are committed to meeting the force 
structure required to meet the Maritime Strategy.

    Senator Levin. Thank you, Mr. Secretary.
    Admiral McCullough?

STATEMENT OF VADM BERNARD J. McCULLOUGH III, USN, DEPUTY CHIEF 
    OF NAVAL OPERATIONS FOR INTEGRATION OF CAPABILITIES AND 
                           RESOURCES

    Admiral McCullough. Yes, sir.
    Mr. Chairman, Senator Martinez, distinguished members of 
the subcommittee, I'm honored to appear before you with Mr. 
Stackley today to discuss Navy shipbuilding.
    Before I begin, I'd like to mention, in addition to our 
role in seapower, the Navy currently has over 14,000 sailors 
serving on the ground in Iraq and Afghanistan. They serve in 
traditional roles with the Marine Corps, but also in land-
service combat support and combat service support, missions to 
support the joint commander in the Army. We provide these 
sailors, in addition to fulfilling our commitments to our 
country and our allies, to provide persistent forward presence, 
incredible combat power, and support of the maritime strategy.
    Today, we have a balanced fleet capable of meeting most 
combatant commander demands, from persistent presence to 
counterpiracy to ballistic missile defense (BMD). However, as 
we look ahead in the balance of capability and capacity, we see 
emerging warfighting requirements in open-ocean anti-submarine 
warfare, antiship cruise-missile, and theater BMD. Gaps in 
these warfare areas pose increased risk to our forces.
    State and non-state actors who, in the past, have only 
posed limited threats in the littoral are expanding their reach 
beyond their shores with improved warfighting capabilities. A 
number of countries, who historically have only possessed 
regional military capabilities, are investing in their navy to 
extend their reach and influence as they compete in global 
markets. Our Navy will need to outpace other navies' 
capabilities as they extend their reach. The Navy must be able 
to assure access in undeveloped theaters. We have routinely had 
access to forward staging bases in the past; this may not 
always be the case in the future. In order to align our surface 
combatant investment strategy to meet evolving warfighting 
gaps, the Navy plans to truncate the DDG-1000 program and 
reopen the DDG-51 production line, as I testified to Congress 
last summer. This plan best aligns our surface combatant 
investment strategy to meet Navy and combatant commander 
demands and warfighting needs.
    The reason for the change to the Navy's DDG plan is to 
prioritize relevant combat capability. Modernizing the fleet's 
cruisers and destroyers, and executing an affordable 
shipbuilding plan, are crucial to constructing and maintaining 
a 313-ship Navy with the capacity and capability to meet our 
country's global maritime needs.
    The Navy must have the right capacity to meet combatant 
commander warfighting requirements and remain a global 
deterrent. Combatant commanders continue to request more ships 
and increased presence to expand cooperation with new partners 
in Africa, the Black Sea, the Baltic region, and the Indian 
Ocean. This is in addition to the presence required to maintain 
our relationships with current allies and partners. Therefore, 
the Navy must increase capacity to meet combatant commander 
demands today for BMD, theater security cooperation, and 
steady-state security posture, simultaneously developing our 
fleet to meet future demands.
    While the Navy can always be present persistently in areas 
of our choosing, we lack the capacity to be persistently 
present globally. This creates a presence deficit, if you will, 
where we are unable to meet combatant commander demands. Africa 
Command capacity demands will not mitigate the growing European 
Command requirement. Southern Command's (SOUTHCOM) capacity has 
consistently required more presence that largely goes unfilled.
    The Navy remains committed to 55 LCSs. The LCS program will 
deliver capabilities to close validated warfighting gaps. LCS's 
inherent speed, agility, shallow draft, payload capacity, and 
reconfigurable mission spaces provides an ideal platform for 
conducting additional missions in support of the maritime 
strategy, to include irregular warfare and maritime security 
operations, such as counterpiracy operations.
    The Navy remains committed to an 11-carrier force for the 
next several decades, which is necessary to ensure that we can 
respond to national crises within the currently prescribed 
timelines. Our carrier force provides the Nation the unique 
ability to overcome political and geographical barriers to 
access for all missions and project power ashore without the 
need for host-nation ports and airfields.
    The Ohio-class ballistic missile submarine, originally 
designed for 30-year service life, will start retiring in 2027, 
after nearly 40 years of life. The Navy commenced an analysis 
of alternatives (AOA) in fiscal year 2008 for a replacement 
ballistic missile submarine. Early research and development 
(R&D) will set the stage for this first ship to begin 
construction in fiscal year 2019.
    The Virginia-class submarine is a multi-mission platform 
that fulfills full-spectrum requirements. Virginia was designed 
to dominate the undersea domain in the littorals, as well as in 
the open ocean, in today's challenging international 
environment, and is replacing our aging 688 class submarines. 
Now in its 10th year of construction, the Virginia program is 
demonstrating that this critical capability can be delivered 
affordably and on time.
    The Commandant of the Marine Corps has determined that a 
minimum 33 assault echelon amphibious-ship capacity is 
necessary to support their lift requirements, and has 
specifically requested a force of 11 aviation-capable ships, 11 
LPD-17s, and 11 dock landing ships (LSDs). The CNO supports 
this determination.
    The Navy must maintain its carrier, submarine, and 
amphibious forces. In addition, we need to increase our surface 
combatant capacity through additional destroyers and LCS to 
meet combatant commander demands today for BMD, theater 
security cooperation, and the steady-state security posture.
    I thank you for this opportunity to discuss the Navy's 
shipbuilding program and for this subcommittee's support of our 
Navy. I look forward to answering your questions.
    Thank you very much.
    Senator Levin. Thank you, Admiral.
    Let's try an 8-minute first round.
    Mr. Secretary, proceeding with the LCS program, we ignored 
many lessons on how to buy, and how not to buy, major weapon 
systems. For example, we picked the ship platform without 
having conducted adequate analysis to see whether there were 
other more capable or less expensive solutions to the problem 
we face. We changed requirements after we signed the contract. 
We didn't have an adequate number of people with the right 
acquisition experience in the program office or at the 
shipyards to oversee that work.
    Mr. Secretary, give us some more specifics. You made 
reference to this in your opening statement, but give us some 
specifics on what steps you have taken, or you're planning to 
take, to improve the Navy's ability to acquire major systems on 
time and on cost.
    Mr. Stackley. Yes, sir. Let me start with requirements. As 
simple as it seems, the first step was to freeze the 
requirements. There's always a push and pull to bring a new 
capability, particularly to a new class of ships. So, step one, 
working with the Office of the CNO, the Navy has frozen 
requirements on that ship so we don't suffer growth and 
instability that it will bring.
    Step two was, now that we've frozen requirements, let's 
take a look at requirements and specifications and see if we 
have over-spec'd the ship, and see if there are some 
requirements that we could back off that would lead to reducing 
the cost for the platform, going forward.
    But, perhaps most importantly was cleaning up design. So, 
as you described, the program got off to a very rapid start. 
Shortly after signing contracts, there was a significant change 
to the specifications associated with naval vessel rules, and 
the shipyards were playing catchup from that day forward. With 
any lead ship, there is a lot of design activity associated 
with going from paper to steel, and a lot of drawing 
deficiencies and things of that nature that need to be cleaned 
up. So, we have put a very concerted effort to ensuring that, 
as we go into follow-ship production, that we're getting the 
drawings cleaned up to support stable production, going 
forward. As simple as it seems, those are perhaps the two most 
fundamental tools that we can do across shipbuilding to ensure 
stable performance.
    The third and fourth tools, frankly, are items that, in 
shipbuilding, we grab as soon as we can get our hands on. One 
is competition. A number of our shipbuilding programs, as 
you're aware, have very limited competition. So, in this very 
unique program, in terms of two different versions, we are 
still able to provide competition between the two prime 
contractors. That's, frankly, critical to driving cost control 
into the program and keeping them focused. In terms of the 2009 
and 2010 ships, we've done something rather unique, which is 
combine the 2009 and 2010 ships into a single competition for 
quantity between the contractors. On top of that, we've 
overlaid fixed-price-type contracts.
    So, earlier on in the program, the first six ships were 
steering towards cost-plus. As you're aware, ships three and 
four were terminated. Ships five and six were never put under 
contract. Now, the 2009 ships, which now represent ships three 
and four, are, in fact, fixed-price competed; and 10 and out 
will continue down that pattern.
    You also mentioned, correctly, that the Navy was 
undersized, in terms of program office and onsite oversight. 
We've tackled both of those, going into the program office and 
basically beefing up the organization, as well as putting 
stronger onsite presence both on the Gulf Coast and at 
Marinette, up on the Great Lakes, to provide a supervisory 
function, if you will.
    When we look longer term, we look beyond buying ships 1 
year at a time. We're going to start looking towards, working 
with Congress, trying to couple longer procurements so we can 
start to get the benefits that you like to see in a production 
run associated with, not just stability, but volume, so that 
the prime contractors have greater ability to work with their 
vendors to get economic breaks, in ordering material. We're 
also pushing them to drive competition down at that lower 
level, which is going to be key for moving towards the cost 
cap.
    These are some of the fundamental things I touched on, the 
producibility aspect regarding design, separate from what the 
government is doing. Namely, working with the contractor is his 
own investment, both contractors' shipyards are pursuing 
facility investments which will help their performance on this 
contract. Both at Austal and Marinette, they have plans laid 
out for significant increase, not just in capacity, but also in 
tooling, layout, and production planning, that will lead to a 
more efficient construction for LCS, going forward.
    Senator Levin. Okay, thank you, Mr. Secretary.
    Admiral, we don't have a Future Years Defense Program 
(FYDP) before us, but the Navy is going to be buying some ships 
after 2011 that are referred to as future surface combatants. 
Now, can you describe the process which the uniformed Navy is 
going to be following to define the requirements for this 
program?
    Admiral McCullough. Yes, sir, I can. Future surface 
combatant was an agreement the Navy reached with the Office of 
the Secretary of Defense (OSD) as we restarted the DDG-51 
program, and it was to look at ships, fiscal year 2012 and out, 
to look at the applicability of improved combat systems and 
which hull forms they best fit in, whether that be a DDG-51 
hull form or a DDG-1000 hull form, and what size radar capacity 
that we could put in those ships. Along with the Secretary and 
OSD, we've embarked on a study that's being led by Johns 
Hopkins University that's addressing that right now. From that 
study, we will see what capability is achievable to get us at 
the heart of the threat with limited technical risk, and where 
that best fits with respect to hull form, and then what the 
best path for the replacement cruiser is to come out of that 
study, sir.
    Senator Levin. Admiral, relative to the LCS, Admiral Clark, 
who was then the CNO, said it was supposed to be a relatively 
inexpensive ship, in a hurry, to meet the projected threat in 
the littorals. Now, we find that we're not going to get these 
ships in a hurry, and they're not going to be as inexpensive as 
we had expected. What is the Navy doing to meet the urgent need 
or the urgent threat that the LCS was intended to address since 
the program has been delayed?
    Admiral McCullough. Yes, sir. There are three mission 
modules that go with the LCS program; an anti-submarine warfare 
module, an anti-surface module, and a mine countermeasures 
mission module. We currently have dedicated mine ships that 
provide mine warfare capability in the mine countermeasures 
arena. The LCS is to come on to replace those ships as they 
phase out, as well as the airborne mine countermeasures that 
are provided by the MH-53 helicopters. So, we have capability 
in that arena now.
    In the area of anti-submarine warfare in the littoral, we 
have capability, not to the degree that we'd like to have with 
the LCS, but we do have some systems, both compartmented and 
U.S. Government General Security Policy, that the Navy's 
working on to address that threat, to include sonobuoys, non-
acoustic prosecutions, and other such assets.
    In the area of swarming small boats or anti-surface 
warfare, the Navy's taken great strides to upgrade the 
capability of its current surface combatant fleet with the 
addition of Mark 38 Mod 2 stabilized 25 millimeter chain guns 
that are resident on most of our surface combatants. I think we 
make the 100th install next month. We've also modified the 
ammunition that our 5-inch guns shoot to have more of a 
disperse-type ammunition that can take out swarming small 
boats, and we can mitigate the risk that is posed by those 
threats. We'd like to have those ships to pursue other 
activities. That's what we need the LCS for. But, we can 
mitigate the threat for the near term, sir.
    Senator Levin. Admiral, thank you.
    Senator Martinez.
    Senator Martinez. Admiral, if I might follow up on that 
very line, I am equally concerned, as the Chairman is, about 
not having the LCS able to meet our mission and the current 
threat situation, which continues to be more diverse, 
particularly in the littoral area. What would be the role of 
the frigates as a replacement to the LCS until they could come 
into service? In other words, extending the life of the 
frigates. We have seen a pattern where we've been 
decommissioning ships before their full service life, we're 
decommissioning faster than we are commissioning.
    Admiral McCullough. Sure.
    Senator Martinez. So, the 313-ship goal becomes more 
elusive every year. It seems to me that one way that we could 
overcome this problem, and also fill the gap of the LCS would 
be by extending the life of the frigates. What's the view from 
your perspective?
    Admiral McCullough. Thanks for the question, sir.
    Currently, the decommissioning plan for the frigates takes 
those ships out at the end of their estimated service lives, at 
about 30 years. We have modernized those ships, with the 
addition of reverse osmosis water distillation units, single-
arm boat davits, and improvements or replacements of the 
diesel-electric generators. So, we did mid-life those ships to 
fit them with capability to the end of their service lives.
    They currently perform missions in SOUTHCOM's area of 
responsibility in counternarcoterrorism, and they're doing a 
good job.
    As we look at the older ships as we get ready to take them 
out of service, those ships are experiencing hull thinning that 
we haven't anticipated. Additionally, all but three of the 
ships we currently have are critically weight limited, so we'd 
be unable to add any additional capability to those ships, from 
a displacement standpoint. The very few that are not critically 
weight limited are high-addition weight limited, so they're 
center-of-gravity limited. Our ability to put other things high 
in the ship is very limited.
    We took the missile systems off of the ship, because they 
were unique with the Standard Missile-1 MR missile, and didn't 
adequately address the threat, so we removed that.
    Also, the SH-60 Bravo helicopters are sundowning in 2016 or 
2017, and the ships are not currently planned to be upgraded to 
take the MH-60 Romeo helicopters.
    I've looked at what the Australians have tried to do with 
modernization of their frigates, and it's to get them to their 
estimated service lives, which is about 30 years. The last of 
their ships was commissioned in 1983. The last of ours was 
commissioned in 1989. The Australian program is currently 
estimated at about $300 million U.S. per unit, and that depends 
on the conversion of the Australian dollar at a given time. 
Their program is currently 4 years behind schedule.
    So, in summation, sir, I'd tell you those ships have been 
great ships; they've served a useful purpose, but they are at 
the end of their service lives when we take them out. To 
upgrade them, I believe, would be very little return on 
investment to extend them until we get the LCSs onboard.
    Senator Martinez. Mr. Secretary, would you care to comment 
on that?
    Mr. Stackley. Admiral McCullough mentioned some of the 
maintenance challenges that we have right now with keeping that 
platform going forward, approaching their 30-year life. In 
fact, earlier in the FFG-7 class life, they did go through a 
major upgrade to take care of cracking issues that were 
identified earlier on in the life of the class. As we get 
towards the 30-year point, beyond the hull strengthening, you 
do start to run into some corrosion issues, tankage, we 
identified hull-thinning, where you start to get into some 
pretty heavy depot maintenance in order to extend that service 
life. So, the return on investment is the issue that starts to 
come into view when you take a 30-year-old platform and look to 
extend it for an additional 10 years.
    I don't believe the Navy has taken a hard look at the 
details associated with that type of service-life extension, 
but we'd be leveraging off of experience from other ship 
classes of a similar age. We'd have to go into a far more 
extensive look to give you refined numbers.
    Senator Martinez. Mr. Secretary, do you still subscribe to 
the goal of a 313-ship Navy? Assuming so, how are we going to 
get there, budgetwise?
    Mr. Stackley. Yes, sir, CNO Mullen, back in 2006, 
identified a 313-ship Navy and laid out what the mix of ships 
are that comprise that. CNO Roughead has further endorsed it. 
In fact, he's come out and stated, flat out, that that's the 
floor. When he makes that statement, he's looking at the range 
of missions, not today, but looking ahead at 2020 and beyond.
    The challenges that that brings, that the committee is well 
aware of, are the funding and affordability to support the 313-
ship Navy. While we did not submit a 30-year plan this year, 
you can go back to the 2009 30-year plan and take a look at the 
funding requirements, and you can see it becomes pretty 
significant, in terms of percent of total obligational 
authority that goes to shipbuilding. While we wrestle with 
affordability, and we have to do everything we can to get the 
per-ship costs down, we still have a significant budgeting 
challenge to hit the 313-ship goal.
    The decision to not submit a 30-year plan this year 
reflects the Secretary of Defense's determination that we're 
going to come to grips through the Quadrennial Defense Review 
(QDR) process over the full range of requirements. When we get 
back with the completion of the QDR, which should be timed with 
the 2011 budget coming forward, we'll have had the opportunity 
to really wrestle with the trades between budget requirements, 
affordability, and the mix of ships.
    I think you're well familiar with the pressure that that 
requirement is under when you take a look at the funding 
requirements and match that against the budget.
    Senator Martinez. On a more parochial note, I suppose, the 
House Armed Services Committee, in their markup this week, 
proposed removing from the budget funding for the dredging of 
Mayport's channel, as requested in the President's budget, and 
I was just wondering, Admiral and Mr. Secretary, if you could 
comment on the importance of that dredging operation as it 
relates to our east coast carrier fleet being able to find 
alternate homeporting or if not permanent homeporting, 
certainly, in an emergency, to be able to go into an east coast 
port.
    Admiral McCullough. Yes, sir. As we looked at this, if you 
look to the west coast, there are several ports where you can 
put a nuclear-powered aircraft carrier--San Diego, Bremerton, 
Everett--you can put a carrier into Pearl Harbor. The USS 
George Washington homeports at Bremerton and Everett. When you 
come to the east coast, currently our only carrier homeport or 
facility to put a nuclear-powered carrier is Norfolk, VA. We 
believe it's in the Navy's and the Nation's best interests to 
have an alternate carrier facility on the east coast. We looked 
at several alternatives, and Mayport is clearly the best 
alternative.
    Having been homeported in Mayport as a group commander for 
Kennedy Carrier Strike Group, to be able to adequately put a 
Nimitz-class carrier into Mayport for any length of time 
requires dredging, and not only the channel, but the entire 
turning basin, and that's to provide adequate bottom clearance 
for the intakes for various components in the propulsion plant. 
So, the mark on the dredging will impact our ability to put a 
Nimitz-class carrier in that basin, and constrain our ability 
to maneuver that ship inside of the basin. That was the piece 
that was in the fiscal year 2010 request.
    There's also some money in the fiscal year 2010 request for 
pier work in Mayport, but that was not associated with the 
carrier homeport. If you choose, and we believe it's in the 
Nation's interest to choose, to have Mayport as an alternate 
carrier facility, you also need to upgrade the pier facilities 
and provide some maintenance infrastructure for both the ship, 
as a whole, and the nuclear power plant, in particular. That's 
significantly more money than the money for the dredging, which 
is about $46.3 million.
    Now, people have asked us why we think we need to do this. 
If anything would happen to preclude a returning carrier from 
returning to Norfolk--natural disaster, manmade disaster, what 
have you--and having been homeported in Norfolk for a majority 
of my career, the channel going from the ocean into the base, 
Thimble Shoals, is about 30,000 yards long, so it's about 15 
miles long, and it's barely wide enough for a large container 
ship and an aircraft carrier to pass each other in the channel. 
The carrier has to cross over the Chesapeake Bay Bridge-Tunnel 
and then over to Hampton Roads Bridge-Tunnel. We have had a 
carrier go aground in the turn that goes from Thimble Shoals 
into Norfolk Spit, and we've also had a minor collision.
    If Norfolk was closed, you'd have to send a carrier to the 
west coast for any maintenance that was required to be 
performed on that carrier when she came home. Carriers are not 
Panama Canal-capable, and they'd have to go around South 
America to get to a facility on the west coast. We just think 
it's wise, from our perspective, to have that alternative 
capability on the east coast.
    Senator Martinez. Thank you, Admiral.
    Admiral McCullough. Yes, sir.
    Senator Levin. Thank you, Senator Martinez.
    Senator Reed.
    Senator Reed. Thank you very much, Mr. Chairman.
    Thank you, gentlemen.
    Admiral, I understand that the Joint Requirements Oversight 
Council (JROC) validated a requirement for the Ohio ballistic 
missile submarine going forward. Could you give us an udpate on 
where it is? I know there's some R&D money. Also, I understand 
it's coordinated with the British efforts, also.
    Admiral McCullough. Yes, sir. I believe it's $495 million 
in the fiscal year 2010 budget request for R&D for Ohio-class 
replacement. The JROC did validate the initial capabilities 
document for a replacement sea-based strategic deterrent. We 
are currently going through the AOA process to look at what 
type of submarine is necessary for a strategic deterrent for 
the Nation. It revolves on what size hull, how many missile 
tubes, et cetera. So, that process is ongoing, and we just 
received and updated on it last week.
    We are in a bilateral agreement with the British for 
development of a common missile compartment, and they have a 
significant monetary outlay to help us develop the submarine.
    We're in a different environment. Usually, the United 
States is the lead in this type of arrangement, all the way 
back to the signing of the initial Polaris agreement with the 
U.K. In this particular instance, the British's Vanguard-class 
is going to go out of service before the Ohios. So, in 
designing a common missile compartment with the British at this 
time, we're taking advantage of their investment, where, in 
other cases, they usually take advantage of our investment. So, 
this design effort is on a very similar timeline for what we 
did when we designed the Ohio as the replacement of the ``41 
for Freedom.'' So, we think we're on the right path, and we 
appreciate Congress' support for the research, development, 
testing, and evaluation for that submarine that's in the 
President's budget request.
    Senator Reed. Thank you very much, Admiral.
    Mr. Secretary or Admiral or both, the DDG-1000 has been 
terminated, three ships, but there was a great deal of research 
and effort, in terms of systems software, and indeed, this was 
suggested to Congress that this would be a transition to the 
next surface combatant, the cruiser class principally.
    So, Mr. Secretary, can you comment on how we're going to 
retain some of the investment we've already made in DDG-1000, 
even though we are going to terminate the hulls at three?
    Mr. Stackley. Yes, sir. Admiral McCullough mentioned a 
study that we have kicked off. The study starts with the 
threat, the requirement to meet the threat in terms of missile 
defense, and it moves from there to the capabilities and the 
systems that are required to meet the threat. That study will 
include the work that's been done on DDG-1000, as well as the 
S-band radar capabilities from the Aegis program. It is in the 
foundation of that study, as we look at pulling those 
capabilities forward, and how they would potentially apply for 
that future capability.
    Beyond that, we are scrubbing the requirements, in terms of 
software development for DDG-1000, open system requirements, 
and so, we do look to leverage some of that development where 
the opportunity arises in the future.
    You're probably quite familiar, there are 10 different 
engineering development models that were launched for the 
program. Some of those are very specific and unique to the DDG-
1000, and some of them will have other applicability. If you 
were to go to Wallops Island today, for instance, the dual-band 
radar is up and operating, both X and S bands, and that radar 
system will, in fact, first be installed on the CVN-78 before 
it gets to the DDG-1000. That's, again, another example of 
technology reuse.
    I think we're looking at every opportunity to reuse these 
types of developments applied to the threat and applied to the 
requirements.
    The study that Admiral McCullough referred to is not simply 
the topside capability. We would include the platform as well, 
because we have to look at how much radar needs to go onto a 
platform to support the mission. After you determine how much 
radar, then you have to figure out what the best platform is to 
support that capability.
    Then, of course, on top of all of that, we have to put 
affordability, because we have to temper our appetite when it 
comes to the amount of capability that we design upfront, if we 
can't afford it downstream.
    Senator Reed. Any comments, Admiral?
    Admiral McCullough. As the Secretary said, we're looking at 
every way we can to take advantage of the R&D effort that was 
put into the DDG-1000. There's a multitude of things that we 
not only need to figure out how to take forward but how to 
backfit. When you look at fire suppression systems 
specifically, the fire suppression system inside the ship, as 
well as the flight-deck fire suppression system, I think can be 
put in other ship classes we have.
    As you go forward, how do we leverage the volume search 
radar, the S-band radar that the Secretary referred to, and 
where do we put that in future ships, and what capability do we 
gather to put there? So, I think there's ample opportunity to 
take advantage of the R&D money and effort that we put into 
DDG-1000, both in backfit and as we go forward.
    Senator Reed. Thank you.
    There is a growing recognition of the value of unmanned 
aerial vehicles (UAVs), unmanned undersea vehicles. I wonder if 
there's a concerted effort to see how the UAVs can be launched 
and deployed by submarines which have the advantage of stealth 
approaching the coast and operating in places other ships can't 
go. I don't know if there is anything on tap, Mr. Secretary or 
Admiral?
    Mr. Stackley. I'm going to probably end up passing to the 
Admiral, but let me just talk about unmanned vehicles.
    First, Secretary Mabus has come onboard, and he's set a few 
top priorities, if you will. One of them is to take the lead in 
unmanned vehicles. By that, I mean there are a lot of 
initiatives, but the Navy needs to focus initiatives and good 
ideas into a concerted program to make some progress in an area 
where that's just ripe.
    Inside of acquisition, I have three different PEOs that are 
developing and implementing in some form or fashion of unmanned 
vehicle under, on, or over the sea. From a procurement side 
and, as well the CNO from his side, we're looking to bring 
together these initiatives, leverage technologies, but focus 
them so that we're not simply developing capability, but we're 
actually delivering capability to the force.
    Thus far, I can honestly say I haven't been approached with 
an initiative to launch a UAV from a submarine, but I'd welcome 
that to join the fold, if you will.
    Senator Reed. Admiral, any comments?
    Admiral McCullough. I'll second the Secretary's statement, 
I've heard of no initiative or program to launch a UAV from a 
submarine. We have, as you all well know, the vertical takeoff 
UAV, Fire Scout, that's being operationally-tested on the USS 
McInerney. We have money in broad-area maritime surveillance 
unmanned aircraft. We have money in Navy unmanned combat aerial 
system. That's a development effort to both fly and recover 
that vehicle from an aircraft carrier, as well as demonstrate 
in-flight refueling capability.
    We have several variants of unmanned surface craft and 
several variants of unmanned undersea vehicles that we're 
looking at in a roadmap that the CNO calls his ``unmanned 
vehicle roadmap,'' and that's managed by a one-star that works 
in my organization.
    But, I'll take for the record launching a UAV from a 
submarine, sir.
    [The information referred to follows:]

    The Navy has been experimenting with three variants of submarine-
launched unmanned aerial vehicles (UAVs) over the past few years.
    The first variant of UAV is hand-launched from the bridge (top of 
the sail). The launch procedure requires the submarine to surface and 
send personnel to the bridge. After launch, the UAV is controlled from 
the submarine submerged at periscope depth (only the periscope and/or 
other antennas are out of the water).
    Another variant of UAV is encapsulated and launched from inside of 
the submarine's hull while the submarine is submerged. Earlier this 
year, one of these UAVs successfully launched, transitioned to flight, 
and established communications with a range craft. The Navy plans to 
continue development of this technology over the next year.
    A third variant of UAV could be stored and launched from an SSGN 
missile tube, external to the submarine's hull. Although still 
requiring the submarine to surface, this method permits the storage and 
launch of a larger, higher endurance, and more capable UAV. This year's 
budget request provides money to integrate external stow, launch, and 
recovery of one of those types of UAVs, Scan Eagle, onboard an SSGN.
    In the future, we plan to leverage our UAV operating experience to 
develop a UAV that can be launched and/or recovered from a submerged 
submarine.

    Senator Reed. Yes, I guess I'll take credit for 
imagination. [Laughter.]
    Senator Levin. Can't wait to see that record either as a 
matter of fact. [Laughter.]
    Senator Wicker is nice enough to yield to Senator Collins.
    Senator Collins.
    Senator Collins. Thank you. Thank you so much, Mr. 
Chairman.
    I want to thank my colleague from Mississippi for his 
thoughtfulness, given my schedule.
    Secretary Stackley, speaking of Maine-Mississippi 
cooperation, my first question to you has to do with an 
agreement that you were instrumental in helping to bring about 
that involved an April agreement with the Navy, with Northrop 
Grumman, and with Bath Iron Works. Essentially you arrived at a 
plan that is intended to help ensure stability in the workload 
of the shipyards to minimize the cost risk for the DDG-1000 
program, efficiently restart the DDG-51 construction, and 
maintain two sources of supply for future surface combatants. 
Now, this plan, which I think was very well thought out, is 
obviously dependent on congressional support for the funding 
elements. Could you comment on the importance of both the 
authorizing and appropriations committees fulfilling the 
funding parts of this plan in order for its promise to be 
realized?
    Mr. Stackley. Yes, ma'am. Let me start with the three DDG-
1000s. With the decision that the Navy would stop at three DDG-
1000s and restart the DDG-51, the first thing that emerges is 
that you cannot efficiently build two lead ships and one follow 
ship at two different yards, if you will, and that if we're 
going to build three, that the only way to affordably build 
them would be at one shipyard.
    Similarly, you don't want to restart construction of the 
DDG-51, where you're introducing a new combat system baseline, 
at the same yard that you are building those three DDG-1000s.
    The Navy, working with OSD and with industry, took a look 
at alternatives and proposed, and reached an agreement, where 
Bath Iron Works would build the three DDG-1000s and Northrop 
Grumman would take the lead on the DDG-51 restart. That way, 
you can leverage learning for those three ships. Frankly, Bath 
Iron Works had been focused on the lead ship, and had done 
significant investment to retire risk and to improve their 
facilities to support the DDG-1000 construction. We look today 
at a program where they have done a very, very good job at 
ensuring the design is complete and of high quality before 
starting construction, and they have prepared themselves for an 
efficient start. Thus far, in fact, we're off to a good start.
    We're looking to continue to ride that for the three DDG-
1000s, and then, separately, have Northrop Grumman focus on the 
DDG-51 restart, while Northrop Grumman also continues to play a 
role with the composite deckhouse on the DDG-1000 program. 
We'll have both yards building surface combatants, both yards 
have a hand in both programs, but you get single production 
line, if you will, at both yards, one for each of the programs.
    Senator Collins. The funding's essential, correct, to bring 
this about?
    Mr. Stackley. Yes, ma'am, to get to the punch line, yes, 
ma'am. [Laughter.]
    Secretary Gates was point blank on this.
    Senator Collins. Right.
    Mr. Stackley. Absent this agreement, we cannot afford to 
build three DDG-1000s at two yards, and then we cannot afford 
to build two DDG-1000s at two yards, and we will go down to a 
one-ship demonstrator and suffer a gap, in terms of surface 
combatant shipbuilding, and we'd suffer a gap in the industrial 
base, and we'd lose that capability and capacity in our surface 
force.
    Senator Collins. Thank you.
    Admiral, speaking of affordability, I'm concerned about the 
congressional mandate that large future combatants be nuclear 
powered. That obviously has an impact on affordability; the 
upfront cost is considerably more, the hull has to be larger, 
as I understand it. Shouldn't we be leaving the decision on the 
appropriate power source for a future surface combatant, or for 
anything that is being built, any ship or sub--shouldn't we be 
leaving that up to the Navy, rather than having Congress 
establish it?
    Admiral McCullough. Thank you for the question, Senator.
    As you indicate, upfront acquisition cost for a nuclear 
power plant in any type vessel has a significant upfront cost, 
$600 to $800 million, depending on the power plant and what you 
try to do with it. There are currently no designed nuclear 
power plants that would adequately fit in any surface combatant 
ship hulls that we have.
    Now, that said, when you look at whether a ship should or 
should not be nuclear powered, absent what was written in the 
National Defense Authorization Act for Fiscal Year 2008, I 
would tell you it comes down to power density. So, what power 
demand do you need to both propel the ship and essentially run 
the combat system? When you get to very large radars or very 
high-powered electric weapons--lasers, rail guns, et cetera, 
and you want to run the ship at relatively high speed, then 
there may be an adequate tradeoff between a nuclear power plant 
and a conventional power plant. But, I believe, absent what's 
written in the law, that it should be left up to the 
shipbuilder and the Navy to decide what type power plant to put 
in a ship to best suit our needs. Now, I understand what the 
law says, and we'll comply with the law.
    Senator Collins. Thank you.
    Admiral McCullough. Yes, ma'am.
    Senator Collins. I think that's a real affordability issue 
that we should take another look at.
    Finally, Mr. Chairman, I just want to point out, since 
there's been so much discussion of the cost growth in the LCS 
program, and that cost growth has been disturbing to all of us, 
that it's instructive to read the Defense Science Board's 
report on the causes of the cost growth. It's astonishing to 
know that, after the design had been completed for the LCS and 
building had been initiated, that the number of technical 
requirements nearly doubled from 15,261 to 29,435. It goes back 
to Secretary Stackley's point about the importance of freezing 
the requirements. There's certainly fault by the contractors as 
well, but this is a case where the Navy had a very hard time 
deciding what it wanted, and when the changes were added, that 
upped the cost. I think we have to remember that in the 
discussions. The Navy, the contractors, and Congress have all 
learned from that experience. But, that is just extraordinary, 
when you look at the number of technical requirements that 
changed after the design was supposedly completed.
    Thank you, Mr. Chairman.
    Senator Levin. It's a good example of why we attempted in 
the reform bill to try to freeze those requirements.
    Senator Collins. Exactly.
    Senator Levin. Senator Wicker.
    Senator Wicker. Thank you.
    I appreciate the testimony. Let's talk about Landing 
Helicopter Docks (LHDs) and Landing Helicopter Assaults (LHAs), 
Mr. Secretary. I recently visited a shipyard in Pascagoula, 
Northrop Grumman, and the last LHD-8, the USS Macon Island, 
looked pretty good to me. I think they're very proud of it down 
there. We're impressed with the capabilities and with the 
flexibility. Now, the replacement for that will be the LHA, and 
Northrop Grumman is in the early stages of the LHA-6.
    Let me ask you first, the fiscal year 2009 defense 
authorization and appropriation bills provided $178 million for 
advance procurement of LHA-7. That money is not under contract, 
and word is that it will not be until December of this year at 
the earliest. Can you tell us what's going on there? Why are we 
not going ahead with the advance procurement which had been 
provided by Congress and by the appropriations process?
    Mr. Stackley. Yes, sir. Let me start with LHA-6, if I 
could.
    Senator Wicker. Okay.
    Mr. Stackley. LHA-6, basically, has just started 
construction, and, prior to starting construction, we held a 
production readiness review to ensure everything met the 
standard for design completion, material on hand, production 
planning products complete, so they can go into production and 
continue uninterrupted. I'll call this part of the lessons 
learned from the LCS program, was that we don't rush into 
production; we ensure everything's ready to go. In fact, the 
production readiness review reported out to me in December, and 
I put them on hold. I basically sent the team back and said, 
``We need to complete these following planning products to 
ensure that we're ready to proceed uninterrupted.'' Those were 
lessons learned from the LHA and the LHD-8 that was just 
completing. That go-round on the production readiness review 
has wrapped up, and we're putting together a report to come to 
Congress to describe those results.
    The LHA-7 advance procurement, in an ideal world, in a 
steady run of production, you'd be able to couple procurement 
so that you leverage some economic order quantity, if you will, 
from a steady production run. The big-deck amphibs are spread 
too far apart to be able to do that. When you look at trying to 
leverage savings from quantity, et cetera, we don't have that 
opportunity on the big decks. So, then we look towards 
commonality, where we can buy material that's common to other 
programs. For Northrop Grumman, they're pretty good at doing 
this, particularly when it comes to commodities. We also look 
at long-lead-time material, ensuring that the long-lead 
material supports the start of construction. Then lastly, we'll 
use advance procurement for planning products.
    We work with Northrop Grumman, first looking for material 
that provides some savings, looking at long-lead-time material, 
and then planning products. Based on their proposal to us, 
after we've had an opportunity to review the proposal, we'd be 
putting that under contract.
    I can tell you that I've worked directly with Northrop 
Grumman in terms of submitting proposals for the advanced 
procurement (AP), and when they're ready, we're ready.
    I should add on to that for long-lead material, when the AP 
was authorized in 2009, there was a big deck in 2010 associated 
with the MPF(F), and Admiral McCullough will probably take over 
at some point here. But, in terms of reviewing the requirements 
and going back to the discussion with the Commandant and his 
requirement for 11-11-11 big decks, LPDs and LSDs, in order to 
meet the 11 big-deck requirements the big deck in the MPF(F) is 
being redesignated to be a part of the assault echelon, which 
does involve some requirement changes, warship versus 
prepositioning ship, but with that move, the big deck was moved 
to 2011, so, in fact, all of the AP provided in 2009 is early 
to need, in terms of long-lead-time material.
    Senator Wicker. Does the debate about well decks have 
anything to do with this timing, Mr. Secretary?
    Mr. Stackley. I will give you my position, and--understand 
that this is a requirements issue. But, for LHA-6, it was a 
significant shift from well deck to no well deck to provide 
increased aviation capability for the LHA replacement program. 
When the discussion and debate opened back up, in terms of LHA-
7, whether it would have a well deck or whether it would be 
aviation-centric, the reality is that we cannot make that shift 
onto LHA-7 in any reasonable fashion. From a procurement/
aquisition standpoint, I'm driving the argument towards 
stability.
    Senator Wicker. Pardon me for interrupting--the reality is 
that you cannot make the shift back to a well deck on number 7?
    Mr. Stackley. In the timeframe that she's scheduled, we'd 
basically have to go in and do significant redesign of the LHA 
replacement, and we don't have time to do that to support the 
procurement schedule. It would also bring increased cost for 
construction at this point in the big-deck program.
    Senator Wicker. Would you like to weigh in, Admiral?
    Admiral McCullough. Yes, sir. As the Secretary said, when 
we went from LHD-8 to LHA-6, and LHA-6 was envisioned to be 
part of the MPF(F), the Marine Corps wanted to concentrate on 
aviation capability and capacity in that ship, both associated 
specifically with the V-22 Osprey.
    To put that additional aviation capability in that ship 
resulted in a compromise in removal of the well deck, and that 
was understood as we went forward.
    Now, as the Marine Corps looks at their surface transport 
capability, I would tell you that the Commandant would like to 
get back to a well-deck capability in the big-deck amphibs. 
But, as the Secretary said, to do it in LHA-7, I think, if you 
had a Marine Corps general sitting here with me, he'd tell you 
that he believes in consideration of cost, schedule, and design 
disruption that that's nearly impossible to do for LHA-7.
    Senator Wicker. Would you agree with that?
    Admiral McCullough. Yes, sir, I would.
    Senator Wicker. So, is there any debate?
    Admiral McCullough. Yes, sir. They would like, as we go 
forward with the next LHA-D, that we review putting the well 
deck back in that ship. In the discussions I've had with 
Lieutenant General Flynn, who's commanding general of Marine 
Corps Concept Development Command, he'd like to do that as soon 
as possible, and we believe it's in the next LH, if you will--
--
    Senator Wicker. Perhaps an LHA-8.
    Admiral McCullough. Yes, sir.
    Senator Wicker. So, Mr. Chairman, what I think I'm hearing 
is that the decision is past us, in the opinion of these two 
witnesses, as to adding back in a well deck on LHA-7.
    Admiral McCullough. Yes, sir.
    Senator Wicker. That decision, in your opinion, is over 
with, and we're beyond that.
    Mr. Stackley. Yes, sir.
    Admiral McCullough. Yes, sir.
    Senator Wicker. Do you know of any discussions ongoing 
there, regardless of your opinion? Even though your opinion is 
very emphatic, are there still discussions about that issue, or 
is it settled? Would the Marine Corps agree that this is 
settled?
    Admiral McCullough. I believe yes, they would. I'm sure 
they'd tell you they'd like to get a well deck back in a large-
deck aviation-capable ship as soon as they could. But, I 
believe the discussion on the LHA-7 is concluded, yes, sir.
    Senator Wicker. Okay. That's very interesting.
    Thank you, Mr. Chairman.
    Senator Levin. I just have a couple of additional 
questions, just on the well deck. If you have one, then you 
don't have one, and now you're looking at it again, what does 
that say about stable requirements?
    Mr. Stackley. Sir,  this  is  why  I  go  back  to  the  
position  on  LHA-7, that we shifted the requirement towards 
greater aviation capability for the big decks, and we have to 
be careful in going back to increasing the well decks that we 
don't change so quickly that we disrupt the procurement of the 
big deck amphibs.
    Senator Levin. Secretary Gates has announced that the long-
term carrier force structure is going to be 10 carriers. Have 
the combatant commanders' requirements changed? Have they gone 
down? Is that the reason for the long-term drop from 11 to 10, 
Admiral?
    Admiral McCullough. Currently, the combatant commanders' 
desire for carriers is filled by the 11-carrier force. We have 
made mitigations in the near term, with respect to Enterprise 
going out of commission and when Ford comes in commission, to 
be able to live within a 10-carrier force constraint and meet 
the operational commitments we have to the combatant 
commanders.
    The Secretary of Defense recommended that we put the 
carriers on 5-year centers, and that's what he said we were 
going to do, and that's what we do. I would tell you that we go 
to a 10-carrier force in about 2040. So, based on that, sir, I 
think we have adequate capability and capacity in the Navy to 
meet the combatant commanders' demands in the next 3 decades.
    Senator Levin. Okay, thank you.
    Senator Martinez.
    Senator Martinez. Quickly, moving to the area of 
modernizing the fleet and fleet readiness.
    Admiral McCullough. Yes, sir.
    Senator Martinez. Admiral, in order to get out to our 313-
ship Navy, it looks like maintaining and preserving what we 
have is a big priority. So, does the 2010 budget request fully 
fund the ship depot and other maintenance accounts? What 
percentage of the total requirements are you seeking funding 
for and are we taking on any risk there?
    Admiral McCullough. Yes, sir. In the submittal for fiscal 
year 2010, which includes the Overseas Contingency Operation 
fund, formerly known as the supplemental, we requested in the 
President's budget about 96 percent of our surface ship 
maintenance requirement. Given the fiscal constraints that the 
country and the Department are under, we thought that was 
adequate risk in the surface ship maintenance account when we 
looked at balance and procurement, personnel, and operations 
and maintenance. So, when the Department submitted its unfunded 
requirements list, the CNO said if he had another dollar to 
spend, he'd spend it in ship and aircraft maintenance. So, we 
have about $200 million in the unfunded requirements for ship 
depot maintenance, and about $185 million in the unfunded 
requests for aviation depot maintenance. But, we believe, given 
that--our top line and the balance between the competing 
accounts, that that was acceptable risk in surface ship 
maintenance.
    Senator Martinez. Mr. Secretary, any comment on that?
    Mr. Stackley. Yes, sir. We looked at the number of 
availabilities that are going to be potentially impacted and 
there would be a need during execution in 2010 to manage that 
impact in terms of either rescheduling work that's in 2010 or 
reprioritizing funding in 2010 to either accomplish the 
availabilities or the work intended for those availabilities.
    Senator Martinez. Thank you, Mr. Chairman. That's all I 
have.
    Senator Levin. Thank you, Senator Martinez.
    Senator Wicker.
    Senator Wicker. Yes. Gentlemen, on the 313-ship fleet, 
we're really just giving lipservice to that, aren't we? There's 
been no proposal to achieve a rate that would get us there. As 
a matter of fact, it seems that we're actually falling away 
from that, based on the rate of ships being decommissioned 
outpacing the rate of production. I believe your testimony was 
that the 313-ship Navy is a minimum. How do we have any 
credibility in actually continuing to say that, in light of the 
proposed rate of production and rate of decommissioning?
    Mr. Stackley. Yes, sir. The term ``the floor'' is the 
description that the CNO uses for the 313. In deriving the 
requirement, dating back, again, to CNO Mullen, but endorsed by 
CNO Roughead, the requirement was derived without budget 
constraints. We factually laid out what capability, in terms of 
numbers and mix of ships, are required to meet both presence 
and major combat operations.
    Senator Wicker. Required?
    Mr. Stackley. Yes, sir. The full range of missions that the 
Navy is called upon to meet. When you go to the years since, 
and you just generically say that a 313-ship Navy, you would be 
needing to procure at least 10 ships per year, and you can see 
that we've fallen short on a pretty consistent basis. When you 
look ahead, and you look at the challenges, in terms of the 
budget required to hit the numbers, then, in fact, we have some 
difficult decisions to make in the QDR regarding the mix of the 
force, what we can afford and where the trades may need to be 
made. But, going into that discussion, you start with what your 
requirements are. So, CNO Roughead has been consistent in 
identifying the requirements entering that discussion. On the 
procurement side, figure out, how do we support that, in terms 
of buying ships more affordably? Within the mix of ships, how 
do we, again, temper the requirements so that we don't allow 
cost per ship to escape us? Then understand what's the delta 
between what that 313-ship Navy would cost and budget available 
to drive prioritized trades.
    Senator Wicker. It would be interesting to see a plan 
unfold as to how we're going--not so much when we're going to 
actually get to 313, but when the rate is going to change that 
might get us there.
    Let me just say one last thing, Mr. Chairman. I do want to 
congratulate the Navy on the decision to stick with the 
electromagnetic aircraft launch systems (EMALS) on the new 
Gerald R. Ford. My State of Mississippi will have a great deal 
to do with the manufacture of this technology and we're excited 
about it. I know there are three advanced technologies involved 
in this new Gerald R. Ford and one of the things that might 
have caused us cost and schedule problems, the EMALS were only 
one of them. It seems to me, as someone who's not an expert, 
but understands that we need to move away from the old 
technology there and into the electromagnets. It seems to me 
that, long range, that is the correct decision and I want to 
congratulate you on that.
    Do you have any comment, Mr. Secretary, on the 
considerations as far as the cost?
    Mr. Stackley. Yes, sir.
    Senator Wicker. Sticker shock with regard to the EMALS.
    Mr. Stackley. Let me start with the steam catapults. Steam 
catapults are the number one maintenance issues for carriers on 
deployment today. So, that's a known issue. One of the benefits 
that EMALS tries to improve upon is improving reliability of 
the system. We're going through testing to demonstrate that. 
Second is manpower. EMALS is designed to reduce manpower on the 
carriers. We look at reducing 39 sailors from a CVN-78, and you 
look out over the CVN-78 class and the life cycle, and, in 
fact, it's estimated that there's a $250 million opportunity 
there to avoid cost, going from steam to EMALS.
    That's the benefit side. You get improved performance of 
the system, you get some improved reliability, and you get 
lifecycle cost savings.
    On the upfront side, what we've run into is cost growth in 
development and cost growth in procurement. So, we took a hard 
look. Basically, it's not its own program, but we treated it as 
though it were its own program and ran it through a Nunn-
McCurdy-like type of an assessment, where we took a hard look 
at the requirement, we took a look at the costs, made sure that 
we had them properly estimated, and then took a look at the 
management structure that we had in place to make sure it is 
adequate to ensure that we don't see further cost growth, and 
that the system is delivered to the ship on schedule.
    In reality, EMALS, even though it's late in its 
development, there is sufficient margin between development and 
production that today it is not driving delays to the CVN-78 
program. Our challenge is to ensure that that does not occur.
    We, in fact, have a very robust test program going on up at 
Lakehurst, where this summer sometime, if you have the time, 
I'd like to take you up there and walk you through; you'll see 
one entire catapult system being laid into the ground where 
this time next year we hope to be launching aircraft.
    A lot of technical challenges. We're putting a team 
together to attack the technical challenges.
    Through all this discussion, we have moved from a cost-plus 
contract with a contractor to a fixed-price contract that is 
under negotiation today. Part of the decision to go forward, in 
terms of tackling the management issues, was, we're not going 
to go forward on a cost-plus contract, where we, the 
government, own the cost risk, but we're going to a fixed-price 
contract, where the contractor is effectively warranting his 
development efforts in the production of the shipboard sets.
    I think we've taken a pretty thorough look at this. There 
have been difficulties and issues associated with cost growth. 
We will be coming back to request funding for that cost growth 
at the right point in time, but, when we look at the net, and 
when we look at the capability that EMALS brings to the table, 
and we look at its importance to future naval aviation, we've 
decided to press on with the system.
    Senator Wicker. Thank you.
    Senator Levin. Thank you very much, Senator Wicker and 
Senator Martinez.
    We're all set. Thank you both. Terrific hearing, great 
testimony. We appreciate it.
    We'll stand adjourned.
    [Questions for the record with answers supplied follow:]

               Questions Submitted by Senator Carl Levin

                          ACQUISITION REFORMS

    1. Senator Levin. Admiral McCullough, what steps are you taking to 
ensure that the uniformed side of the Department of the Navy in charge 
of the requirements process is doing its part to reform itself to 
improve the acquisition system?
    Admiral McCullough. The Secretary of the Navy established the two-
pass/six-gate process in January 2008 and incorporated the process in 
Secretary of the Navy Instruction 5000.2D in October 2008.
    The purpose of the two-pass/six-gate review process is to improve 
governance and insight into the development, establishment, and 
execution of acquisition programs within the Department. The goal of 
the review process is to ensure alignment between Service-generated 
capability requirements and acquisition, as well as improving senior 
leadership decisionmaking through a better understanding of risks and 
costs throughout a program's entire development cycle.
    The review process ensures programs are ready to proceed to the 
next phase of acquisition and to rebaseline or restructure those which 
breach the program's cost, schedule, technical or performance 
requirements. The process is designed to improve insight into and 
governance of the Navy's acquisition programs by ensuring regular, 
periodic reviews at each gate to meet the above-stated goals.
    The Gate 1 (Initial Capabilities Document), Gate 2 (Alternatives 
Selection), and Gate 3 (Capabilities Development Document (CDD) and 
Concept of Operations) reviews are chaired by Chief of Naval Operations 
(CNO) and Commandant of the Marine Corps as the requirements and 
sponsor advocates. The Assistant Secretary of the Navy for Research, 
Development, and Acquisition (ASN(RDA)) has responsibility for chairing 
reviews for Gate 4 (System Design Specifications Approval), Gate 5 
(Request For Proposal Approval) and Gate 6 (Sufficiency Reviews). 
Annual Gate 6 reviews assess overall program health including readiness 
for production, cost, schedule, performance risks, the earned value 
management system (EVMS), program management baseline, and the 
integrated baseline review. They serve as the Navy forum for a 
Configuration Steering Board which specifically manages any 
requirements changes or tradeoffs. In addition, the CNO chairs the Gate 
6 Capabilities Production Document review prior to Milestone C.

                              COST CONTROL

    2. Senator Levin. Secretary Stackley, we all know that the Navy 
will have difficulty affording the shipbuilding procurement programs 
that will meet our requirements and maintain the 313-ship fleet that 
Admiral Mullen and Admiral Roughead have identified as the requirement. 
Given this cost concern, why has the Navy chosen again this year to not 
provide any funding for the National Shipbuilding Research Program 
(NSRP), the one program where the Navy was providing matching funding 
for industry to help make itself more efficient?
    Mr. Stackley. The NSRP was put in place with the goal of reducing 
the cost of shipbuilding and repair, with a focus on cross-shipyard 
collaboration to implement initiatives that were applicable industry 
wide. The program has proven effective in providing return on 
investment to the extent that industry and Navy program officials have 
vested interests in targeted results.
    To this end, the Navy and industry collaboratively have decided to 
transform NSRP from its previous structure to a mechanism that will 
address ship-specific initiatives. Accordingly, Navy has transferred 
funding responsibility for NSRP from a `corporate' line item to a 
broader base supported by funding from respective shipbuilding 
programs. The Navy remains committed to this important program.
                                 ______
                                 
            Questions Submitted by Senator Edward M. Kennedy

                              COST CONTROL

    3. Senator Kennedy. Secretary Stackley, it is important for this 
committee to understand the costs of the proposed surface combatant 
production. Can you please describe the current performance of the DDG-
1000 program regarding cost and schedule?
    Mr. Stackley. At this early stage of the construction program, 
contractor cost and schedule performance for the DDG-1000 program, as 
measured by the EVMS, demonstrate very good performance, low variances, 
and stable trends on all contracts. Contracts are currently executing 
near target for both cost and schedule. Of greater significance, design 
quality and completion to support production significantly exceed 
performance levels of prior first-of-class ship programs.

    4. Senator Kennedy. Secretary Stackley, what confidence do you have 
that the program will deliver these ships on cost and on schedule?
    Mr. Stackley. The long history of cost and schedule growth on 
first-of-class ships attests to the risk and uncertainty associated 
with the design, construction, and testing of complex weapon systems. 
The DDG-1000 program has taken prudent steps to mitigate these inherent 
risks and, as described below, has measures in place to ensure costs 
are properly measured and controlled. Ultimately, however, success in 
delivering these ships on cost and on schedule will require aggressive 
management by Navy and industry to resolve the numerous issues which 
will emerge through the course of building and testing these ships and 
their associated systems. The DDG-1000 management team and tools in 
place today instill confidence in successful program execution. As 
always, we will keep Congress informed of our progress and any actions 
necessary to ensure success.
    Regarding the basis for our current cost estimates, the Navy uses 
vendor quotes, return cost data, historical learning curves, shipyard 
labor and overhead rates based on existing union agreements, and sector 
workload projections. Labor man-hour estimates are based on historical 
DDG-51 cost estimating relationships and learning curves. Much of the 
material pricing is based on vendor quotes or fixed-price type 
contracts.
    The Navy receives monthly cost performance reports from industry 
and provides a comprehensive metrics package to the Office of the 
Secretary of Defense (OSD) each quarter. These are monitored closely 
and used to update cost estimates as needed.
    The Navy also held a successful Production Readiness Review in 
October 2008 prior to the start of construction to ensure the design is 
mature and the build plan is executable. These findings are documented 
in the Navy's Assessment Required Prior to start of construction on 
First Ship of a Shipbuilding Program Report to Congress submitted in 
February 2009.
    Further, in view of the program's cost risk, a concerted cost 
reduction effort has been initiated to create margin for the program 
manager to offset unknown, yet anticipated, cost excursions in 
execution.

    5. Senator Kennedy. Secretary Stackley, as we consider restarting 
the DDG-51 line, a lot of numbers have been put out regarding the costs 
of these ships. Can you please state for the record what configuration 
of DDG-51 the Navy would plan to procure and how much it will cost?
    Mr. Stackley. The fiscal year 2010 President's budget requests 
$2,240.3 million for DDG-113, the first ship of the DDG-51 program 
restart. This budget request includes  nonrecurring  costs  associated  
with  updating  the  current  production  DDG-112 to the Advanced 
Capability Baseline-12 configuration, which includes the open ocean 
anti-submarine warfare (ASW) processing suite and the integrated air 
and missile defense (IAMD) capability currently planned for backfit 
installation class-wide. Otherwise, the configuration of DDG-113-115 
will adhere to DDG-112 design as closely as possible, with exception of 
fact of life changes associated with vendor obsolescence, safety, or 
reduced cost initiatives approved for the program. The fiscal year 2010 
budget request also includes anticipated costs associated with 
restarting production by key manufacturers supporting the DDG-51 
program.
    DDG-114 and DDG-115 will be built to the DDG-113 baseline, which 
will leverage significant benefit from the nonrecurring design and 
production learning from DDG-113, as well as cost benefit from multiple 
ship-set buys of government- and contractor-furnished material and 
equipment. DDG-113 and DDG-114 will have an identical configuration.

    6. Senator Kennedy. Secretary Stackley, what confidence do you have 
in the cost?
    Mr. Stackley. The fiscal year 2010 budget request of $2,240.3 
million is sufficient to procure DDG-113. The estimate to restart this 
program was based on historical DDG-51 return cost data, adjusted for 
quantity, a 4-year production gap, restart and  escalation  costs.  The 
 Navy  continues  to  review  all  costs  associated  with  DDG-113 
design, production, and testing--shipbuilder, vendor, and government--
to identify opportunities to improve efficiencies in the restart effort 
and ultimately provide best value to the taxpayer.

    7. Senator Kennedy. Secretary Stackley, are your estimates based on 
quotations from contractors?
    Mr. Stackley. The DDG-113 budget estimate was derived from 
shipbuilder and government-furnished equipment (GFE) manufacturers' 
actual return costs from fiscal year 2005 and prior year ships adjusted 
for quantity, a 4-year production gap, restart costs and escalation. In 
addition, the program has received proposed contractor-furnished 
equipment prices for major components from the lead shipbuilder as well 
as contract options from several GFE suppliers. These were utilized in 
preparing the fiscal year 2010 budget request.

    8. Senator Kennedy. Secretary Stackley, will the Navy be employing 
a fixed-price contract?
    Mr. Stackley. If authorized by law and appropriated by Congress, 
subject to the negotiation of a fair and reasonable price, the Navy 
intends to award fixed-price incentive contracts for DDGs-113-115.

                                PROCESS

    9. Senator Kennedy. Admiral McCullough, the CNO has stated that the 
Navy has implemented a more comprehensive acquisition governance 
process to better link requirements and costs throughout the 
procurement process. I fail to see the application of this rigor in 
your 2010 shipbuilding request, and certainly not during the fiscal 
year 2009 budget deliberations. In the midst of the budget process last 
year, you disclaimed several previous 30-year shipbuilding plans and 
advocated a new plan, but have as yet failed to provide to this 
committee the rigor of any fact-based analysis in support of this plan. 
Where are the documented requirements and cost tradeoffs for continuing 
the LCS, for restarting the DDG-51, for truncating the DDG-1000, and 
for delaying the CG(X)?
    Admiral McCullough. The President's budget submission for fiscal 
year 2010 represents the best overall balance between procurement for 
future ship capability with the resources necessary to meet operational 
requirements and affordability.
    The current requirements document for the Littoral Combat Ship 
(LCS) CDD was validated by the Joint Requirement Oversight Council 
(JROC) of the Joint Staff on June 17, 2008. LCS remains a program of 
critical importance to Navy, and continues to be monitored closely. LCS 
fills compelling and consistent warfighting capability gaps that exist 
today in littoral mine countermeasures, surface warfare, and ASW. The 
requirement to gain, sustain, and exploit littoral maritime superiority 
to ensure access and enhance the success of future joint operations 
remains unchanged.  LCS  will  replace  and  improve  upon  the  
capabilities  provided  by  the  MCM-1 and FFG-7 classes. The Navy is 
accepting greater risk by addressing littoral threats with current 
force structure of mine countermeasures ships and multi-mission ships. 
However, there will be capability gaps until LCS delivers in quantity. 
The Navy continues to view LCS as a vital element of the long-range 
shipbuilding program. The 55-ship LCS program is an essential component 
of the Navy force structure objective of at least 313 ships.
    Navy is actively engaged with industry to implement cost reductions 
with the intent to procure the fiscal year 2010 ships within the $460 
million cost cap. Legislative relief may be required regarding the LCS 
cost-cap until manufacturing efficiencies can be achieved.
    Navy has formalized a LCS program affordability and cost reduction 
process. This process primarily targets cost drivers in shipbuilder 
design, Navy specifications, and program management costs. Cost 
reduction opportunities that have potential to impact warfighting 
requirements are evaluated by operational Navy.
    The Navy's decision last summer to restart the DDG-51 program in 
lieu of continuing the DDG-1000 program was not reached lightly or 
without due consideration of the ramifications of such a dramatic 
change in our shipbuilding program. The Vice Chairman of the Joint 
Chiefs of Staff reviewed and validated surface combatant requirements 
in September 2008. Navy is fully committed to Ballistic Missile Defense 
(BMD) as a core mission both now and in the future. Navy's challenge 
was to find a solution that reduced risk and cost, while providing more 
ships with better capability to address evolving threats. After 
extensive discussions with General Dynamics Corporation Bath Iron Works 
and Northrop Grumman Shipbuilding, the Navy will build three DDG-1000 
class ships and one DDG-51 restart at Bath Iron Works  and  the  first  
two  DDG-51  class  ships  under  the  restarted  program  at  Northrop 
 Grumman  Shipbuilding.  This  agreement  will  ensure  workload  
stability  at  both  shipyards,  leverage  learning,  stabilize  and  
minimize  cost  risk  for  the  DDG-1000 program, efficiently restart 
DDG-51 construction, facilitate performance improvement opportunities 
at both shipyards, and maintain two sources of supply for future Navy 
surface combatant shipbuilding programs. This plan most affordably 
meets the requirements for surface combatants, commences the transition 
to improved missile defense capability in new construction, and 
provides significant stability for the industrial base. A CNO letter to 
Senator Edward Kennedy dated May 8, 2009, addressed cost trade-offs for 
DDG-51 and DDG-1000.
    The Navy is currently working on a study for air and missile 
defense radar capabilities,  cost  and  technical  feasibility  of  a  
range  of  radar  systems  installed  on  DDG-51 and DDG-1000 hulls. 
This study, being conducted with technical experts across radar, combat 
systems, and ship design experts led by Johns Hopkins University 
Applied Physics Laboratory as the integrator, will inform the path for 
the Future Surface Combatant (FSC) design and the development of the 
capabilities document for FSCs. Secretary Gates announced on April 6, 
2009, that, ``we will delay the Navy CG(X) Next Generation Cruiser 
program to revisit both the requirements and acquisition strategy.'' 
The Navy's Analysis of Alternatives (AoA) for the Maritime Air and 
Missile Defense of Joint Forces (MAMDJF) capability is currently within 
the Navy staffing process.
    The National Security Strategy and Quadrennial Defense Reviews 
(QDRs), currently in progress, will drive the Future Years Defense 
Program and the Annual Long-Range Plan for Construction of Naval 
Vessels.

    10. Senator Kennedy. Admiral McCullough, the Navy in previous 
budget cycles laid out a comprehensive 30-year shipbuilding plan to 
achieve a 313-ship Navy. Why is the 2010 short-term plan any better 
than the 30-year plan you submitted in 2009?
    Admiral McCullough. Due to the ongoing development of the Nuclear 
Posture Review and QDR, DOD considered it prudent to defer its Fiscal 
Year 2010 Annual Long-Range Plan for the Construction of Naval Vessels 
and submit its next report concurrent with the President's fiscal year 
2011 budget. The aforementioned efforts are presumed to have an impact 
on Navy's force structure requirements and the fiscal year 2011 report 
will integrate their guidance and provide a more useful and 
comprehensive shipbuilding plan. Navy's short-term fiscal year 2010 
President's budget submission is in step with the administration's 
guidance and Secretary of Defense's direction to ensure the Navy is 
meeting emergent requirements, providing stability in shipbuilding, and 
the capacity to easily flex to the shape of final force requirements 
based on pending reviews and studies.
    In keeping with the Secretary of Defense's April 2009 budget 
recommendation, the Navy is reviewing many of its recapitalization 
programs and force structure requirements to ensure that the 313-ship 
force still meets the expectations for future force capability. As a 
result of the ongoing QDR and changes in defense priorities, there is 
the distinct possibility that either the total number of ships or the 
mix of ships within that total will change.

                         ANTI-SUBMARINE WARFARE

    11. Senator Kennedy. Admiral McCullough, I'm sure you can't comment 
on the specifics of the recent incident between the USS John S. McCain 
and a Chinese submarine. However, I'd like to understand how the Navy 
would describe the location of this incident, whether it was in the 
littorals, or whether it was in the open ocean. CNO Roughead and you 
have stated since last summer that the Navy needs to increase its blue 
water ASW capability.
    Admiral McCullough. This is considered an open ocean encounter, 
occurring approximately 120 nautical miles from Subic Bay, Philippines.

    12. Senator Kennedy. Admiral McCullough, if this was an open ocean 
engagement, and the USS John S. McCain, an Arleigh Burke-class 
destroyer, demonstrates the type of ASW capability the Navy seeks more 
of, why were our ship operators unable to avoid the incident with the 
Chinese submarine?
    Admiral McCullough. An investigation charged with getting to the 
root cause is being conducted by our experts in this type of operation. 
Comment on any specifics is premature pending completion of the 
investigation and until the findings have been reviewed.

                       BALLISTIC MISSILE DEFENSE

    13. Senator Kennedy. Admiral McCullough, the Navy stated last year 
that the decision to truncate the DDG-1000 and restart DDG-51 
production due to capabilities was not a decision based on cost. I 
understand that the Navy views BMD as a capability that is in high 
demand. I also understand that integrated BMD is a spiral for DDG-51s 
that is expected to be mature in the 2012-2013 timeframe, and that the 
Navy and Missile Defense Agency (MDA) are spending billions on the 
development of this capability, along with the Aegis modernization 
(AMOD) effort called advanced capability build (ACB)-12/AMOD.
    What is unclear to me is whether BMD can be added to the DDG-1000s, 
so we don't underutilize the capability developed in the DDG-1000 at a 
cost to the taxpayer of $11 billion in research and development alone. 
I understand that the Navy received estimates from the contractors for 
adding BMD capability to Zumwalt, and that the estimate was relatively 
affordable. Can you please explain why we are not pursuing the 
possibility of adding BMD capability to DDG-1000?
    Admiral McCullough. The addition of BMD capability to the DDG-1000 
would be a dramatic change in the requirements for the ship. Such a 
change necessitates a revision to the existing DDG-1000 combat system 
computer program in order to employ the Standard Missile-3 for BMD. 
This development would impose cost and schedule risk to engineer BMD 
capability into the overall system. Based on a independent review of 
government technical experts, the contractor's estimate for adding BMD 
capability to DDG-1000 did not include additional costs associated 
with, in part, research, development, test, and evaluation, combat 
systems integration, GFE, training, and maintenance. The restarted DDG-
51's commencing with DDG-113 will be built with the ACB-12 combat 
system, leveraging the AMOD program and minimizing cost and schedule 
risks, while providing the needed capability. Navy's investment to add 
BMD capability and capacity resides within the AMOD program. All (62 
plus) DDG-51 destroyers are currently planned to receive BMD 
capability.

    14. Senator Kennedy. Admiral McCullough, is this solely a resource 
consideration?
    Admiral McCullough. No, the decision is not completely a resource 
consideration. The addition of BMD necessitates a revision to the 
existing DDG-1000 combat system computer program in order to employ the 
Standard Missile-3 for BMD. This development would impose cost and 
schedule risk to engineer BMD capability into the overall system. At 
this stage of production, adding additional design changes increases 
the cost and risk of building and testing the ship on schedule to an 
unacceptable level. The Aegis fleet provides the most cost effective 
and least technical risk path to add BMD capability and capacity to our 
fleet.

    15. Senator Kennedy. Admiral McCullough, if BMD is in such high 
demand, why has the Navy not choosen to leverage both platforms to meet 
this compelling 21st century need? In short, when it comes to BMD, has 
the Navy decided to invest exclusively in a platform designed in the 
1980s when another one exists, capable of performing the same mission 
that was built from the keel up for the 21st century?
    Admiral McCullough. The demand signal from the combatant commanders 
for BMD ships is already beyond Navy's current capacity and continues 
to increase. To mitigate the near-term increase in demand, the 
President's budget request added funding through MDA for six additional 
Aegis ships with BMD capability. Working closely with MDA, the Navy has 
purchased three additional ship sets that will be available by the end 
of calendar year 2010. Navy's long-term strategy to add BMD capability 
and capacity resides within the AMOD. All destroyers are currently 
planned to receive BMD in conjunction with their AMOD availabilities 
beginning in 2012. Six of 22 cruisers are programmed for BMD as part of 
AMOD, and Navy is reviewing a strategy to add 9 more for a total of 15 
cruisers with BMD capability.
    The seven oldest Aegis cruisers, hull numbers 52 through 58, have 
an early version of the SPY radar as the centerpiece of their combat 
system. Providing BMD in those seven cruisers does not offer sufficient 
return on investment, and Navy does not plan to add BMD engagement 
capability in those ships.
    AMOD will provide the ACB-12 combat system, which will be the most 
capable and technologically advanced and open combat system that the 
Navy has deployed to date. Navy has chosen to leverage off of an 
existing development effort to meet its BMD capability and capacity 
requirements, whereas DDG-1000 would require a new engineering and 
development effort adding technical, schedule, and cost risk.
    If these plans are realized, Navy will have 15 Aegis cruisers and 
all Aegis destroyers (62 plus) with IAMD capability to negate both air 
breathing (cruise missile and aircraft) and ballistic missile threats. 
Navy and MDA are currently collaborating to develop a strategy to 
achieve this end state in the most effective manner possible.

    16. Senator Kennedy. Admiral McCullough, what opportunities and 
synergies might we be losing in shutting out consideration of the 
Zumwalt-class from the BMD mission?
    Admiral McCullough. The Navy is considering every option to achieve 
success with the BMD mission. DDG-1000 may offer future opportunities, 
but at this stage of DDG-1000 production, adding additional warfighting 
requirements to the design will be expensive and delay construction of 
the ships. The addition of BMD capability to the DDG-1000 would be a 
dramatic change in the requirements for the ship. Such a change 
necessitates a revision to the existing DDG-1000 combat system computer 
program in order to employ the Standard Missile-3 for BMD. This 
development would impose cost and schedule risk to engineer BMD 
capability into the overall system. The Aegis fleet provides the most 
cost effective and least technical risk path to greater BMD capability 
and capacity in our fleet.

                            ANTI-AIR WARFARE

    17. Senator Kennedy. Admiral McCullough, in a hearing before the 
House Armed Services Committee's Seapower Subcommittee on July 31, 
2008, you stated that the DDG-1000 does not provide area air defense. 
Navy program documentation, starting with the ship's requirements 
document, has always listed firing the Standard Missile (SM), 
specifically SM-2 an air defense weapon, as one of its primary 
capabilities. In addition, for the third consecutive year, the Navy 
requested, and Congress appropriated, funds in fiscal year 2009 to 
modify the SM to allow the combat system on the Zumwalt to fire that 
missile. In a hearing last month, you stated before the Defense 
Subcommittee of the House Appropriations Committee that ``we're doing 
some work to modify the missiles so they can communicate with the ship 
and some modifications to the ship so it can communicate with the 
missiles to give it a limited area anti-warfare capability.''
    Which missile is this and how does this missile/combat system 
combination's area air defense capability compare to the capability 
currently provided by DDG-51 destroyers?
    Admiral McCullough. The missiles planned for DDG-1000 are the 
Evolved Sea Sparrow Missile (ESSM) and the Standard Missile-2 Block 
IIIB (SM-2 Blk IIIB). The capability of the missiles is unchanged from 
fleet rounds, but changes are necessary for DDG-1000 to communicate 
with the missiles through the Multi-Function Radar (MFR), X-Band radar 
as opposed to the SPY-1, S-Band radar. Changes are also necessary for 
the missile to be able to communicate with DDG-1000 X-Band MFR. Even 
with these modifications, the air-defense capability of DDG-1000 will 
be significantly less than a modernized DDG-51 because it will lack SM-
6 and Navy Integrated Fire Control-Counter Air capability. These 
changes will result in a ``DDG-1000 use only'' pool of missiles in the 
fleet.
    Both ships' performance and capabilities are dependent on the 
threat characteristics, threat density, threat axis, and operating 
environment.

    18. Senator Kennedy. Admiral McCullough, if this is not the same 
missile, with comparable or superior capability, please explain how 
such a basic and critical capability was deleted from the DDG-1000 
without Congress being officially notified of the change. If this is 
the case, please offer an accounting for the funds described above.
    Admiral McCullough. The requirements document, which remains 
unchanged, specifies the Standard Missile family of surface-to-air 
missiles, and the area defense missile program of record, specifically 
the ESSM. Both the ESSM and Standard Missile planned for DDG-1000 are 
modified from existing variants. The funds appropriated have been 
expended, to date, on missile modifications and the DDG-1000 Combat 
System. Testing will begin in 2013.

                       NAVAL SURFACE FIRE SUPPORT

    19. Senator Kennedy. Admiral McCullough, in the July 31, 2008, 
hearing before the House Armed Services Committee's Seapower 
Subcommittee, you stated that the Navy had an ``excess capacity in 
naval surface fires'' and that tactical Tomahawk would help to overcome 
the loss of the Zumwalt's advanced gun system. However, in a March 2006 
Report to Congress on naval surface fire support (NSFS), then-Secretary 
of the Navy Winters stated that the Navy had a shortfall in this 
important capability even prior to the Navy cancelling another fire 
support program and truncating the Zumwalt. That same report further 
stated that ``the use of tactical Tomahawk is not feasible.'' How is it 
then that the Navy could go from a capability shortfall in surface fire 
support to a surplus while truncating its two key surface fire support 
programs, including the Zumwalt-class destroyer?
    Admiral McCullough. The Navy provides fire support to forces 
operating ashore through the `joint triad of fires' which is composed 
of NSFS weapons, aircraft-launched weapons, and organic ground fires. 
The two DDG-1000s under contract and third in the President's budget 
request will enhance our capability in surface fires. Navy has 
sufficient capacity to support NSFS out to 13 nautical miles and was 
developing the Extended Range Guided Munition (ERGM), which was 
terminated in 2008, to satisfy the requirement to support marines 
ashore out to a range of at least 41 nautical miles from the ship. We 
are currently working with OSD developing a Joint Expeditionary Fires 
AoAs that evaluates alternatives that will meet the 41 nautical miles 
requirement. Tactical Tomahawk can be used to support certain types of 
NSFS missions, although not all missions. As such, it can be used to 
mitigate the loss of the Zumwalt's gun system.

    20. Senator Kennedy. Admiral McCullough, I also understand that the 
Navy and Marine Corps are studying this shortfall to identify possible 
future solutions. Where do we stand with regard to providing fire 
support to our marines ashore, and how would the impending fighter gap, 
a subject in numerous hearings recently, affect these ongoing joint 
fires considerations?
    Admiral McCullough. The Navy has sufficient capability to support 
NSFS ashore with the 5-inch gun onboard DDGs and CGs, effective to 13 
nautical miles. We are currently working with OSD developing a Joint 
Expeditionary Fires AoAs that evaluates alternatives that will provide 
NSFS out to a range of 41 nautical miles. Our joint fires capability is 
augmented through the use of tactical aviation (TACAIR), organic ground 
fire capabilities, and the two DDG-1000s under contract and third in 
the President's budget. Advancements in the capability and capacity of 
individual aircraft to service multiple targets with precision weapons 
in an amphibious campaign has reduced the numbers of TACAIR required to 
fulfill demand for surface fires and mitigated the potential impact of 
a fighter gap.

                        FUTURE SURFACE COMBATANT

    21. Senator Kennedy. Secretary Stackley, the fiscal year 2010 
budget envisions the first FSC to be procured after fiscal year 2011. 
At this point, an FSC program seems to contradict the basic tenets of 
major program acquisition principles. We do not have a validated 
requirement and we do not have any idea about the technological 
maturity of systems to meet the requirement. In fact, we appear to have 
little more information on FSC than it would some kind of surface 
combatant. How does the Navy plan to procure the FCS on budget and on 
time?
    Mr. Stackley. Navy intends to procure future guided missile 
destroyers with improved IAMD capability by limiting technical risk and 
using an evolutionary approach. This will enable Navy to build guided 
missile destroyers on budget and on time with the best available IAMD 
capability to incrementally fill the JROC approved IAMD capability gaps 
identified in the MAMDJF Initial Capability Document (ICD).
    Navy, along with OSD, has embarked on a study to analyze the 
capabilities required for future guided missile destroyers to close 
IAMD gaps. The study will assess both the DDG-51 and DDG-1000 hulls, 
and identify the best solution for increasing IAMD based on capability, 
cost, and schedule for destroyers procured after fiscal year 2011.
    The study will complete in time to inform the President's budget 
for 2011.

    22. Senator Kennedy. Secretary Stackley, when can we expect to 
receive data from the Navy on projected cost and schedule for the FSC?
    Mr. Stackley. The FSC will be a modified repeat of an existing 
guided missile destroyer production design. The Navy is currently 
working on a study for air and missile defense capabilities, cost, and 
technical feasibility of a range of radar systems installed on DDG-51 
and DDG-1000 hulls. This study is a key enabler to determine the path 
for the FSC design and will inform the requirements for the FSC. This 
study will complete in time to develop the President's budget for 2011. 
Until this study has completed, it would be premature to project a 
detailed cost and schedule for the FSC, however, cost will be a 
critical factor in the Navy's strategy for fielding the FSC.

    23. Senator Kennedy. Admiral McCullough, can you assure us that the 
generalities which currently surround the FSC will be replaced with a 
disciplined regimen of validated requirements?
    Admiral McCullough. Navy is following a disciplined process to 
address combatant commander demands for the FSC with a particular 
emphasis on IAMD requirements to incrementally fill JROC validated IAMD 
capability gaps as well as meet other warfare area requirements.
    When the Navy submitted a plan to the Office of the Secretary of 
Defense to truncate DDG-1000 at three ships and restart the DDG-51 
line, Navy labeled all the ships in the restart profile DDG-51s. The 
plan is to restart the DDG-51 line in fiscal year 2010 and continue to 
study what future capability and technologies are required for fiscal 
year 2012 and beyond. The results of the analysis will influence the 
decision to determine the design and capabilities of those out year 
ships.
    The restart of the DDG-51 line will help fill increasing combatant 
commander demand for IAMD capability and capacity. Navy plans to 
continue to modernize and build guided missile destroyers with the best 
available IAMD capability to incrementally fill the JROC approved IAMD 
capability gaps identified in the MAMDJF ICD. The plan includes the 
introduction of advanced radar which will have increased capability 
over the current SPY-1 radar. This will enable Navy to better address 
IAMD capability gaps well into the 21st century.
    Navy has embarked on a study to analyze the capabilities required 
for future guided missile destroyers to close IAMD gaps. The study will 
assess both the DDG-51 and DDG-1000 hulls, and identify the best 
solution for increasing IAMD based on capability, cost, and schedule 
for destroyers procured after fiscal year 2011.
    The study will complete in time to inform the President's budget 
for 2011.

    24. Senator Kennedy. Secretary Stackley, can you assure us that the 
Navy will develop detailed design specifics, and will have a firm 
commitment to leverage existing and promising technologies all procured 
through the use of full and open competition? If so, when?
    Mr. Stackley. The FSC will be a modification of an existing guided 
missile destroyer, DDG-51, or DDG-1000 production design. As documented 
in the DDG-51/DDG-1000 Swap Memorandum of Agreement signed by the Navy, 
``It is in the Government's best interest to competitively award 
shipbuilding contracts for all Navy surface combatant ships in fiscal 
year 2012 and beyond, including, but not limited to, DDG-1000s, CG(X), 
DDG-51s, or any variations thereof that the Navy may select as its FSC 
design.''
    The Navy, in the interim, has allocated construction 
responsibilities for fiscal year 2009 and prior DDG-1000 class ships 
and all three fiscal year 2010 and fiscal year 2011 DDG-51 class ships 
between Bath Iron Works and Northrop Grumman Shipbuilding to ensure 
shipyard workload stability at both yards in the near term.
    The Navy is examining existing and promising technologies for 
backfit into existing ships and integration into future combatant 
designs. The Navy plans to leverage an open architecture approach in 
order to create further opportunities for competition in all ship and 
combat systems.

                             DDG-51 RESTART

    25. Senator Kennedy. Secretary Stackley, what is the most current 
estimate for the cost of the DDG-51s planned for fiscal year 2010 and 
fiscal year 2011?
    Secretary Stackley. The fiscal year 2010 President's budget 
requests $2,240.3 million for DDG-113, the first ship of the DDG-51 
program continuation. The DDG-113 is planned to be awarded to Northrop 
Grumman Shipbuilding in early calendar year 2010.
    The DDG-51 program intends to award two additional ships (DDG-114 
and DDG-115) in fiscal year 2011 in accordance with the memorandum of 
agreement signed by the Navy and the shipbuilders. The DDG-114 will be 
awarded to Northrop Grumman Shipbuilding and DDG-115 will be awarded to 
Bath Iron Works. The price for DDG-114 and DDG-115 will benefit from 
reduced nonrecurring costs and the potential for multiple ship-set buys 
of GFE and material. The DDG-114 will further benefit from production 
learning as it will be the second ship awarded to Northrop Grumman 
Shipbuilding as part of the DDG-51 program continuation efforts. In 
addition, DDG-114 and DDG-115 will benefit from design stability by 
maintaining the same configuration baseline as DDG-113.

    26. Senator Kennedy. Admiral McCullough, is there a validated 
requirement for the DDG-51s to be bought in fiscal year 2010 and fiscal 
year 2011?
    Admiral McCullough. The requirement for DDG-51 is delineated in the 
DDG-51 Operational Requirements Document dated April 26, 1994. That 
requirement was reviewed by the JROC in September 2008 and no changes 
were made.
                                 ______
                                 
                Questions Submitted by Senator Jim Webb

                    NUCLEAR-POWERED AIRCRAFT CARRIER

    27. Senator Webb. Secretary Stackley, according to the Secretary of 
Defense, the proposal to extend the time to build nuclear-powered 
aircraft carriers from 4 to 5 years will lead to a force of 10 
operational aircraft carriers by 2040. This proposal violates section 
126 of the National Defense Authorization Act for Fiscal Year 2006, as 
amended by section 1011 of the National Defense Authorization Act for 
Fiscal Year 2007, which established a requirement in title 10 U.S.C. 
(section 5062) for the Navy to maintain a force of 11 operational 
aircraft carriers. The title 10 statutory requirement for the Navy to 
maintain a carrier force of this size is open ended--it does not 
specify a time limit. In light of the provisions of title 10 U.S.C., 
section 5062, by what authority does the Navy assert a prerogative to 
revise its construction plan for nuclear-powered aircraft carriers in a 
way that will lead to a force level less than 11?
    Mr. Stackley. The Navy is currently committed to an 11-carrier 
force structure for the next several decades, and this commitment was 
supported by Secretary Gates during his April budget announcement. 
However, Secretary Gates stated ``We will shift the Navy aircraft 
carrier program to a 5-year build cycle placing it on a more fiscally 
sustainable path. This will result in 10 carriers after 2040.''
    The carrier force structure, along with the entire battleforce, is 
being considered in the QDR. Until the results of these carrier 
analyses and deliberations are finalized, it is premature to identify 
what legislative relief may be necessary regarding 10 U.S.C. 5062 for 
the post-2040 period. The Navy will require legislative relief if, at 
any time, its planning drops below the 11-carrier requirement.
    Until then, in the near term, the Navy requires temporary 
legislation to operate with 10 carriers during the period between 
inactivation of USS Enterprise (CVN-65) and the delivery of Gerald R. 
Ford (CVN-78). Navy assesses it can meet operational commitments during 
this gap by adjusting both carrier and air wing maintenance and 
operational schedules. The Navy has been working with Congress for 
temporary legislative relief during this relatively short period and 
looks forward to working with this Congress on this important 
legislative proposal.

                     AIRCRAFT CARRIER CONSTRUCTION

    28. Senator Webb. Admiral McCullough, regarding the Navy's proposal 
to put nuclear-powered aircraft carriers on a 5-year construction 
cycle, you stated in your testimony that the Secretary said to put 
carrier construction on 5-year centers, ``so that's what we did.'' Was 
this direction provided by the Secretary of the Navy or the Secretary 
of Defense?
    Admiral McCullough. The direction was provided by the Secretary of 
Defense in his April 6, 2009, Defense budget recommendation statement. 
Secretary Gates stated ``We will shift the Navy aircraft carrier 
program to a 5-year build cycle placing it on a more fiscally 
sustainable path. This will result in 10 carriers after 2040.''

    29. Senator Webb. Admiral McCullough, Secretary of Defense Gates 
has testified that a 5-year build cycle will place the carrier program 
on a more fiscally sustainable path. Why is this?
    Admiral McCullough. There are two principal concerns that we must 
address in determining the build-rate for our carriers. The primary 
issue is the balance of build-rate and inventory. The nuclear-powered 
carriers in the Navy's inventory have service lives of about 50 years. 
Building the ships on a 4-year build cycle would be cheaper 
individually for each ship procured, it would also result in a higher 
than needed inventory. For instance, building on 4-year centers would 
ultimately lead to an end-inventory of slightly more than 12 CVNs. In 
order to sustain the desired inventory, we would have to either retire 
these national assets earlier in their service lives (approximately 40 
years, to maintain current capability) or put a gap in the production 
line of a little over a decade after we completed the final ship in a 
production run and before we would need to start building their 
replacements. Retiring these ships 10 years ahead of schedule or 
financing the shutdown and restart costs after a decade or longer gap 
in production present significantly greater costs than are the case for 
individual ship cost increases. The second issue of concern in the 
shipbuilding account is the impact a carrier has on the funding 
remaining for procurement of the ships, submarines, support, and 
amphibious ship recapitalization plans that must compete for these 
scarce funds. Given the relatively high cost of these capital assets, 
reducing the overall inventory and the related building rate reduces 
the year-to-year demand for recapitalization funds in the carrier 
program and enables a better overall balance of resources between the 
carrier programs and those competing programs that are necessary to 
support and defend our carrier force.

    30. Senator Webb. Admiral McCullough, industry representatives have 
claimed that a 5-year carrier build cycle will increase the cost of 
both CVN-79 and Virginia-class submarines under construction by $7 
million and $28 million, respectively. Did the Navy assess the effects 
the new build cycle will have on the cost of ship construction and 
other factors (e.g., industry labor base, training, et cetera)? If not, 
why not? If so, what is the Navy's assessment?
    Admiral McCullough. Navy supports the Secretary of Defense's plan 
to change the CVN build rate to one every 5 years. Since the delivery 
of USS Harry S. Truman (CVN-75) in 1998, the interval between new 
construction starts has averaged slightly over 5 years. Most recently, 
the Gerald R. Ford (CVN-78), the first of the new class aircraft 
carrier, was started approximately 7 years after USS George H.W. Bush 
(CVN-77). The 5-year build cycle announced by the Secretary of Defense 
is consistent with recent carrier procurement practices. The Navy has 
assessed the impact of adding a year to the carrier's build cycle on 
the future carrier program, the refueling complex overhaul for carriers 
and the Virginia-class ship construction program. In general, the cost 
per ship for each individual program would increase due to inflation, 
inefficiencies, and overhead allocation. The actual increase of each 
ship varies based on the award and delivery schedule of the ship. The 
increased cost per ship includes impacts to the shipbuilder's cost 
(labor and material) as well as the cost impact on GFE.

    31. Senator Webb. Admiral McCullough, industry representatives have 
said that adding a year to the carrier's build cycle would have a large 
impact on the shipbuilder's supplier base resulting in a loss of jobs 
and driving cost increases of 5 percent to 10 percent, or higher in 
some cases, above normal escalation. This would likely lead to supplier 
cost growth in other Navy programs and increase the risk that some 
equipment suppliers will exit the market. Did the Navy assess the 
impact of the 5-year build cycle on the shipbuilder's supplier base of 
approximately 4,000 companies? If not, why not? If so, what is the Navy 
assessment of this impact?
    Admiral McCullough. Navy supports the Secretary of Defense's plan 
to change the CVN build rate to one every 5 years. Since the delivery 
of USS Harry S. Truman (CVN-75) in 1998, the interval between new 
construction starts has averaged slightly over 5 years. Most recently, 
the Gerald R. Ford (CVN-78), the first of the new class aircraft 
carrier, was started approximately 7 years after USS George H.W. Bush 
(CVN-77). The 5-year build cycle announced by the Secretary of Defense 
is consistent with recent carrier procurement practices. While the Navy 
has not individually consulted with each of the suppliers to the 
shipbuilder, the Navy has assessed the overall cost impact to programs 
due to the 5-year carrier build cycle. The major contributors to the 
cost impact are inflation, yard inefficiencies, and overhead 
allocation. This assessment includes the shipbuilder's cost as well as 
the cost impact on GFE.

      MILITARY CONSTRUCTION AND DREDGING AT NAVAL STATION MAYPORT

    32. Senator Webb. Admiral McCullough, you justified dredging the 
channel leading to Naval Station Mayport and its turning basin to a 
depth sufficient to accommodate a nuclear-powered aircraft carrier in 
terms of the Navy's intention to provide an alternative homeport or 
available site for a port visit on the east coast. You described a 
number of scenarios to justify this proposal, including the possibility 
of a ship collision in the channel leading to Naval Station Norfolk. 
The Navy's public record is clear, however, in stating that the risk of 
a catastrophic event closing Hampton Roads is small. The Navy also has 
stated that a comparison of Naval Station Norfolk with Naval Station 
Mayport reveals, ``No clear, credible threat distinguishes one homeport 
from the other.'' Are you aware of any new information that would lead 
you to differ with the Navy's previously stated assessment that the 
risk of Hampton Roads being closed is small?
    Admiral McCullough. There are new documents concerning the Hampton 
Roads area:

          (1) CNO Integrated Vulnerability Assessment for Norfolk, VA, 
        dated May 11, 2009, classified; and
          (2) Southeast Virginia threat assessment produced by Naval 
        Criminal Investigative Service dated June 17, 2009, concerning 
        the terrorist threat in the Southeast Virginia area, 
        classified.

    The information in these reports does not significantly differ from 
previous reports, nor does it change the strategic impact to naval 
forces if the Hampton Roads area were closed by a catastrophic event.

    33. Senator Webb. Admiral McCullough, the Navy's military 
construction request for Wharf Charlie at Naval Station Mayport goes 
well beyond basic repairs to the pier with its inclusion of the 
construction of a $7.1 million elevated second deck. How many other 
two-level, general-purpose piers (i.e., one not specifically designed 
to support a nuclear-powered aircraft carrier) exist in the Navy's 
shore infrastructure?
    Admiral McCullough. The Navy currently has general-purpose double 
deck piers at the following locations:

          Piers 2, 6, and 7, Norfolk, VA
          Ammunition Pier, Earle, NJ

    The Navy had double deck piers closed by the Defense Base 
Realignment and Closure Commission at the following locations:

          Zulu Pier, Charleston, SC
          Berthing Pier, Pascagoula, MS
          Berthing Pier, Mobile, AL
          Berthing Pier, Ingleside, TX

    34. Senator Webb. Admiral McCullough, the DD Form 1391 documenting 
this construction project speaks to a ship-freeboard concern noting 
that the current single-deck wharf places the deck of a modern 
combatant ship and the elevator height of an aircraft carrier more than 
12 feet above the wharf deck. Does a similar condition exist with other 
single-deck wharves in the Navy's shore infrastructure? If so, is the 
Navy planning additional military construction projects to build an 
additional level on these piers?
    Admiral McCullough. Similar conditions exist with other single-deck 
wharves in the Navy's shore infrastructure. Utility supplies and 
connections at single deck wharves hamper ship-to-shore operations and 
pose safety concerns that second deck construction helps mitigate and/
or eliminate. These issues are compounded with single deck wharves 
during high tide and in cases where services must be provided to nested 
ships (for example, cross-decking missile loads). The Navy continues to 
evaluate second deck construction options for new and replacement 
wharves and piers wherever feasible (i.e., depending on use and tidal 
area).

    35. Senator Webb. Admiral McCullough, when was the requirement for 
a second level on Wharf Charlie at Naval Station Mayport first 
identified, and what was its justification?
    Admiral McCullough. Wharf Charlie is a general berthing wharf and 
Mayport's primary weapons loading wharf. In the start of project 
development in 2005, a second deck was determined to be the optimal 
deck configuration to meet required wharf's functions, operational and 
safety efficiencies, and to enable proper support to nested ships.

    36. Senator Webb. Admiral McCullough, during your testimony before 
the House Armed Services Committee on shipbuilding in May, you said 
that the pier work in Mayport is not particularly associated with an 
alternate carrier facility. You stated that the money in the fiscal 
year 2010 budget for pier work in Mayport is to support the ships that 
are currently assigned there. The DD Form 1391 documenting the Wharf 
Charlie project states, however, that: ``Construction of a second deck 
would place the wharf deck . . . and carrier elevators level, which 
would allow for the elimination of towers and full access to supply 
elevators and cranes.'' How do you account for this discrepancy in your 
prior testimony?
    Admiral McCullough. Charlie Wharf is Mayport's primary weapons 
loading wharf. It is also the primary wharf for berthing visiting big 
decks (including amphibs and ammo ships). The DD Form 1391 was 
developed when a conventional CV was homeported at Mayport. Due to the 
frequent big deck visits and associated support requirements, the DD 
Form 1391 was not revised. Mayport has 21 homeported ships and 
regularly supports 10 or more visiting ships, which requires all the 
berthing areas available. Charlie Wharf has an old and deteriorating 
bulkhead, which in places has lost 75 percent of its thickness and 
makes repairs critical. Load limits are in place on certain areas which 
impact the ability to perform missions.

    [Whereupon, at 3:57 p.m., the subcommittee adjourned.]

                                 

```