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ABOUT
                                Our Core Values
                    Our Core Attributes
                    Mission
                    Our Heritage
                    LEADERSHIP
                                Secretary of the Navy
                    Chief of Naval Operations
                                America's Warfighting Navy
                    Vice Chief of Naval Operations
                    Master Chief Petty Officer of the Navy
                    Chief of Naval Personnel
                    Senior Executives
                    Flag Officer Biographies
                    PRESS OFFICE
                                Press Briefings
                    Press Releases
                    Testimony
                    Speeches
                    Statements
                    News Stories
                    ALL HANDS
                    PAY & PERSONNEL
                                MyNavy HR
                    Contact MyNavy Career Center
                    Military Careers
                    Civilian Careers
                    RESOURCES
                                Photo Gallery
                    Videos
                    Graphics Gallery
                    Social Media Directory & Guidance
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                    Plan of the Month
                    CNO Professional Reading Program
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                    Contact Us
                    TRANSLATE  CNO Speaks at the McAleese 14th Annual FY 2024 Defense Programs Conference

                    
                    by Chief of Naval Operations Public Affairs

                    17 March 2023
                    Chief of Naval Operations Adm. Mike Gilday speaks at the McAleese 14th Annual Defense Programs Conference in Washington, D.C., March 15, 2023.

                    
                    Official Seal of the Department of the Navy
                                
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                        ANNOUNCER:  Our next speaker is well-known for his focus on preparing for the potential China fight.  He has been laser-focused on manning, training, readiness, and magazine depth.  Please welcome Admiral Michael Gilday.

ADMIRAL MICHAEL M. GILDAY:  Good morning.

JIM MCALEESE:  Good morning, sir!

ADM. GILDAY:  Mic’s working OK?  Good.

MR. MCALEESE:  Yes, sir.

ADM. GILDAY:  It’s good to be back.  Jim, thanks for having me back and for all the invisible hands that have put this conference together.  [Want to] thank them as well.

I wanted to briefly touch on four areas this morning, and then hopefully get into some good dialogue back and forth.  Just coming back from the west coast and the historic AUKUS agreement that was signed by the three heads of state.  Probably the most significant multilateral defense agreement in a generation -- that puts us on quite a path for the next twenty, thirty, forty years with two key allies.

President’s Budget (PB)24.  So budget rollout was Monday.  I’ll talk a little bit about PB24.  And what I’d like to do is just give a little bit of background on really what drove the investments that we made and how we’re trying to draw that consistency across the next couple or three FYDPs, so that we end up in the late 2040s with the hybrid fleet that we envision, in the air would be 60% unmanned and 40% manned, and on the sea 40% unmanned and 60% manned.

So we did very – the Navy – did very well in the budget this year in terms of inside the Pentagon competing for money across a number of areas.  And so in our accounts, from personnel to procurement, to operations and maintenance to Research and Development (R&D), we’ve seen increases anywhere from 2.5-6.5%.  Notably, I think, for shipbuilding, which is always a high interest area, nearly $33 billion, which is the largest shipbuilding budget – or, proposed budget – ever.  In aircraft procurement we dropped just slightly to 17.3 billion [dollars] from 19 [billion dollars].  So about an 8% drop, I think.  But we’re still procuring some 15 F-35s.

Installations, where we’re putting some focus right now, where we have taken a dip in the past over a long period of time and have not invested in bases and places as significantly as we think we should have.  We are trying to get back on step to maintain some level funding there with an increase in installation funding of nearly 20%.

So, taking a look at the friction between near-term readiness and being able to fight tonight, and the pressure that we have to be able to field a force that can prevail, and I believe would prevail if we did have to fight tonight, balancing that against long-term competition and the investments we need to make over the long term.  So in my Navigation Plan I talk about six attributes.  And those attributes not only influence how we think about prioritizing the investments that we make today, but also, as we take a look at the long term and the transitions that we have to make, to maintain that kind of consistency because we think that these attributes, which include distance (so think long-range fires), deception (counter-C5ISRT, the ability to maneuver the force), defense (new investments that we’re making in high-power microwave and directed energy, as an example), delivery (investments we’re making in resupply – so think our new John Lewis oiler class, which we have one of those in this budget, as well as taking a look at unmanned possibility with respect to combat logistics), and then distribution (so coming at any potential adversary across many vectors – both in the virtual and the physical – from seabed to space, heavily leveraging everything that Gen. Saltzman talked about, as well as everything that Cyber Command brings to bear), and then lastly, decision advantage (so that’s putting us in a position, we think, to not only decide, but act faster than any adversary).

So central to that effort, of course, is the investments we’re making in Project Overmatch, which we believe is going to deliver not only the Navy’s next-generation operational architecture, we believe that that will be the bedrock of the Joint Tactical Network of the future. That allows us to take any data, to push it over any network, in a software-defined environment, where the software decides what the prioritized information is and how that data’s going to flow to the endpoint – whether that’s a decisionmaker or whether that’s a weapon system.  As you’re probably aware, as many of you are aware, right now we have scaled Overmatch to a carrier strike group that’s operating off the coast of California now.  And then we’re looking to scale that fleet-wide after that, and to scale even further across the Navy.

If I look at the Navy’s progress with respect to funding over the last three budget cycles, if I take a look at PB’21 to PB’24 – actually, four budget cycles – we have seen a 37% increase, some $55 billion across that period of time.  Much of that has been from Congress.  All of it is appreciated.  But that kind of substantial growth is not going to last.  The Navy has found $207 billion in savings ourselves over the past decade.  In this decade, out running through the FYDP, we’ve identified more than $75 billion worth of savings.  That kind of work must continue.  I think Senator Ernst (R-Iowa) this morning talked about a DOD that needs to be able to deliver smarter, faster, and there was one other adjective that she used, lethal.  Lethal.  I’m onboard.

But we have work to do ourselves to find more efficiencies and to take that money and to invest it in those areas that we need most.  Now, if you take a look at that 55 billion [dollars] and you think about that 37% increase, what probably ought to come to your mind is that, well, I’m not seeing the size of the Navy grow.  And that’s very true.  So we’ve said up front that we’re not going to have a force that we can’t sustain, and we are not going to field a hollow force.

And so our priorities remain readiness, modernization of the current force – 70% of which we’ll have in a decade.  So it’s got to be able to keep pace or outpace the threat.  And then capacity.  Numbers matter.  They absolutely matter, particularly if we’re going to fight in a distributed way.  But, again, I go back to the tension between having a force that’s ready to fight tonight and a force that needs to be competitive for the future.  We want to make sure that we can prevail.

So kind of laying out where we are with the budget, the investments that we’ve made, our thinking with respect to how that’ll carry us forward.  We’re doing a lot of work – if I could talk about the third area real quick, which is driving adaptability and then effecting change.  And, in some cases, you can go right to effecting change very quickly.  And effecting change would be taking a look at the way you’re doing things and taking a look at new ways to do them.  I think of Project Overmatch as an example of that, that accelerates that kind of change.

I think that most of what we do, though, is we’ve become more adaptive, right?  You see us leveraging unmanned in the Middle East.  You see us learning and leveraging artificial intelligence (AI) in the Middle East.  Not only in terms of commanding and controlling unmanned platforms – we’ll have 100 unmanned platforms that are providing maritime domain awareness in the Middle East by this July – but it’s also taking a look at that data lake of information that we’re collecting not only through unmanned platforms, but also that we get through all of our intelligence sources. And then making sense of the environment – being more predictive about patterns of life with ships, with arms that are flowing, with terrorists that are flowing, with routes that potential bad actors might take advantage of.

And so it allows us to put us in a position of advantage with respect to being more predictive and putting us in a place where we can make an intercept in a much more impactful way than we have been able to do in the past, rather than trying to, you know, find a needle in a stack of needles.  Doing so in a much more informed kind of way.  So there are other ways that we are also taking a look at how we can leverage new technologies.  I think microprocessing, whether we’re using applications in our manpower efforts or whether we’re putting them in the hands of warfighters to make decisions faster and to be able to launch – to take kinetic action quicker – we’re seeing a lot of progress here.

We’re learning from what the Ukrainians are doing.  One of the things I found remarkable in Ukraine is the fact that they’ve taken many of their citizens from industry, people like you, who are now on the front lines.  They are bringing all of that innovative drive to the battlefield.  And they are changing the way – the Ukrainians are learning war as they’re fighting war.  And for the United States Navy, and I think for the other services as well, it’s one of the most important lessons that we can extoll as we talk to our sailors and our junior officers about their biggest takeaways from that conflict, and how they can make a difference as critical thinkers.

The last thing that I wanted to mention before we go to Q&A is the “arsenal of democracy.”  And that is – that is a title that this country has earned.  It is one of our hallmarks.  It goes back to one of Franklin D. Roosevelt’s (FDR) fireside chats in the early – probably around December 1940, I think.  It is the benchmark for the world.  As I have met with over 40 heads of navy in the past year, discussion about the U.S. defense industrial base is central to all of those discussions.  What are we doing with them to be more interoperable?  In some cases, AUKUS would be an example to be more interchangeable.  And I talk about industry, all you’re doing for us, and they appreciate all you’re doing for them.

But just as the Navy has plenty of work to do under Get Real, Get Better to improve ourselves – I talked about finding additional savings that we can repurpose to make ourselves more capable and more lethal.  I admire some of the efforts that are ongoing in industry.  As an example, and I’ll just talk about the submarine industrial base for a moment, right now they’re producing between 1.2 and 1.4 attack boats a year.  They absolutely need to be at two or above two.  And so part of what they’re doing is strategic outsourcing, where they’re sending a lot of their work – beginning to send more of their work to smaller firms around the country.  And we think that that is going to end up giving us a significant lift, perhaps as much as 0.5 submarines a year here, as we make those kinds of investments.

As all of you are aware, U.S. government subsidizing the shipbuilding industry went away during the Reagan administration.  You’re now beginning to see those subsidies come back.  Some nearly 2.5 billion [dollars] over the FYDP for the submarine industry alone.  A shipbuilder down in the Gulf Coast, taking advantage of the Defense Production Act, to shift their production lines from aluminum to steel.  Some very innovative – now, you know, a shift like that is not inconsequential for a company that size.  And so imagine the board, those are some tense discussions as they made those decisions.  But I think the United States government putting that money in was really important, and probably very much – at least from my view – very much appreciated.

That kind of lift for the industrial base is long overdue.  But what I’d ask of the industrial base, I go back to that moniker of “arsenal of democracy.”  And I appeal to your patriotism, that when you go back to the field to reiterate to your folks, those skilled laborers, just how important their work is.  Whether they’re repairing ships and aircraft or whether they’re building them, how absolutely critical that work is, in a critical decade.  And I would ask all of you to take a stronger look at how you can increase productivity.

I know, I listen to – I read some of your reports quarterly.  I know that the free flow of cash is important.  I know paying down debts is important.  Delivery of product is my number one ask of you, that that become your number-one priority.  And I know that, you know, if you deliver quicker, you know, you get that final payment when you bring something over the line.  But I would ask that that be – for the country – that that be your top priority.

OK.  With that, let’s take it to questions.  And I’m happy to field anything that you have.

MR. MCALEESE:  Sir, we’ve got plenty of time.

ADM. GILDAY:  Oh, good.  Well, nobody’s ever told me, hey, I wish you’d talk longer, so.

(Laughter)

MR. MCALEESE:  Sure.  Yes, sir.  We did – we did schedule an extra three hours just for you, sir.

ADM. GILDAY:  Yeah.  I think that probably sets the table.  I could go – you know, I figured we’d go deeper during Q&A to wherever the audience wants to go.

AUDIENCE:  Admiral?

ADM. GILDAY:  Yes.

AUDIENCE:  Yes, thank you, Admiral.  Oh, sorry.  My name is Heberto Limas.  I’m a consultant at Bain & Company.

I have a quick question on SIOP.  Right now the GAO has estimated that SIOP will be going over budget and under schedule.  What is the Department of the Navy’s plans to ensure that SIOP goes back on track and back on the budget eventually?

ADM. GILDAY:  Yeah, so I’d tell you, we’re on track up at Portsmouth.  So Portsmouth, New Hampshire, the shipyard there is our first major investment in terms of drydocks, a drydock that’s about 100 years old.  So, as you can imagine, like a version of “This Old House,” there were some things to learn.  What we did and what we learned in Portsmouth is we took those lessons learned from industry and we applied them in Hawaii, which was a more complex – which will be a more complex drydock project.  So in the same manner by which the Navy has the lead but we’re levering shipbuilders in the design of DDG(X) and SSN(X), we’re doing the same thing in the SIOP project.

We are bringing industry in to help us make much better-informed decisions on how we’re going to approach these not once in a generation, once in a century investment projects.  So we are applying lessons learned.  We’re already in the water doing work in Hawaii for drydock three.  And that should go under contract by the end of this month.  So it’s not perfect.  We are trying to be a learning organization and to improve ourselves with every single project in SIOP.

Yes.

AUDIENCE:  Adm. Gilday, my name is Harry Kelso.  I’m a lawyer in private practice.  I used to be a lawyer there at the Pentagon.

And I was struck by one thing in terms of the comparison of the number of ships that the Navy had in the ’80s, when we were fighting – going up against the USSR.  And now we have less – even fewer ships, and we got a much larger adversary with China.  Is there any concern that we don’t have enough ships to take care of the security in the seas?

ADM. GILDAY:  Every study that’s been done since 2016, whether it’s been inside the Pentagon, in industry, academia, has concluded that we need a larger Navy.  Every single one of them.  The law says 355.  The latest studies that we’ve conducted have been 355 manned plus another 150 unmanned.  In the middle of another assessment right now that we will deliver to Congress in June.  Those are not perpetual end states.  We are learning from war games.  We’re learning from exercises.  We’re learning from fleet battle problems, from analysis that’s being done both inside the Pentagon and outside the Pentagon.

So we are not satisfied with the trajectory that we’re on.  We think that it needs to be a steeper climb to 355, to answer your question directly.  If you take a look at the alternatives in the shipbuilding plan, specifically in the last plan that was submitted in 2022, alternative three shows a path to 355 that’s informed by the capacity of industry.  And it makes the assumption that in order to make 355 by, let’s say, the mid-to-late 2030s, you need an injection of 3-5% of resources above our top line.  So we’ve got a ways to go.

ADM. GILDAY:  Yes.

AUDIENCE:  Actually, on subsidies, very interesting point.  And then, you know, in the ’80s, when Reagan disestablished the subsidies, commercial shipbuilding in this country went away.  And the impact on the industrial base and the necessity for the SCN account to carry the whole shipbuilding infrastructure in the country has just driven prices to the moon.  So are you seeing – when you comment on that, and you talk about subsidies – are you seeing that as a sort of Band-Aids, and bits and pieces?  Or are you seeing an appetite at the higher levels and at the secretariat to really bring that capability back, fund it to the level necessary to really get some commercial shipbuilding so we can help offset the humps and valleys of Navy shipbuilding?  Thank you.

ADM. GILDAY:  Yeah, that’s a good point.  So probably the best example would be the submarine industrial base, submarines being our most lethal, stealthy platform that we have with overmatch against any other adversary that we would face right now.  We want to maintain that overmatch.  So our cadence of production for submarines, as far as the eye can see, is two attack boats, plus Columbia, a year.  Columbia is the priority.  So Congress – well, Congress has not yet passed the budget that we just submitted, but in that budget is I think 2.4 billion [dollars] in investment in the submarine industrial base.

That won’t just go to the two big shipbuilders, which are HII Newport News and Electric Boat up in Groton, but those other companies that I talked about, that we’re doing that strategic outsourcing with, they need to get some of that money.  They need to make the investments in their infrastructure, in their workforce, so that we can sustain that 2.0 cadence, which, by the way, needs to go above 2.0 attack boats a year if we’re going to be in a position to sell any to the Australians.

So there’s a lot of support.  To directly answer your question, there’s a lot of support and a recognition in the Pentagon that that’s important.  What we owe – what the Navy owes – is rigorous oversight in terms of how that funding’s applied.  And we need to see a return on investment for it.  It can’t just be spending for spending’s sake.  So we are really – and, in fact, we’re putting together an organization now that would include a substantial institutionalized organization to oversee AUKUS.

And those – in the submarine world, there are four big pillars that are tied together.  There’s investments we’re making in undersea domain awareness.  You have your SSBN line.  You have your SSN line.  And then you have AUKUS.  And so there are dependencies across all of those lines.  And they need to be tied together.

Anyway, I hope I answered your question.  But there’s other – there’s other companies, many represented in this room, that have also been getting injections of capex from the DOD through Navy accounts.

AUDIENCE:  Hi.  This is Brandi Vincent.  I’m a reporter with DefenseScoop.  Thank you.  Over here.

ADM. GILDAY:  Oh, sorry, ma’am.

AUDIENCE:  Thank you so much, Admiral, for doing this.  I’m Brandi Vincent, a reporter with DefenseScoop.

You spoke a little bit about plans to really scale Project Overmatch going forward, but can you dig a little deeper for us about plans for fiscal year 2024 with Project Overmatch?  What are you expecting and what would you really like to see accomplished?

ADM. GILDAY:  Yeah.  I want to see a successful instantiation in the [Carl] Vinson [Carrier] Strike Group as they deploy.  So we are – when we’re doing experimentation now – and you see the same thing in [U.S.] 5th Fleet with unmanned – it’s not experimentation for experimentation’s sake.  I am trying – we are trying – to experiment and deliver capability within the FYDP against real-world problems.  So Overmatch gives us the ability, right, to sense, to make sense of, to make decisions, and then to act quicker than the adversary, in a way that is resilient and adaptable.  And so I’m expecting big things out of Vinson [Carrier] Strike Group this year.  We can make a decision on where we put – you know, what elements do we accelerate, what elements do we sundown and pivot from, what have we learned?  And so I’m learning – I want to use the Vinson to accelerate the scaling.

Yes, sir. Good morning, how are you?

AUDIENCE:  Good morning.  J.C. with NetApp.

How’s the morale, particularly with going, you know, 40% unmanned?  You know, how do you see, one, morale and, two, what kind of recruiting and workforce do you need in the future to run all those unmanned vessels, going from 60/40 split, particularly with our air wings?

ADM. GILDAY:  Thanks, admiral.  A lot of excitement.  A lot of excitement.  In fact, we are opening up a new robotics rating.  You see elements of the Navy that do a lot of work with AI and robotics.  Explosive ordnances demolition would be an example.  And so we are leveraging what we’ve learned in communities like that to take the aviation community as we work manned/unmanned teaming with the MQ-25 and the current air wing.  The same thing with the undersea, as one of the vendors here in the crowd delivers our XLUUV this year, four more next year, and we deploy those forward.

So we are – I will say, our approach with unmanned is very deliberate.  So we have plenty of lessons learned in the past where we’ve moved too quickly and we’ve made mistakes.  I’m trying to make sure, particularly as we do this experimentation with unmanned, and AI, and manned-unmanned teaming in the Middle East, we’re learning a ton.  But the next place I scale at is not going to be to the South China Sea.  We have more work to do in terms of learning how we bring those technologies together with people that are in standardized ratings today in the Navy, skillsets in the Navy today.

So I think we’re going to, again, learn a lot as we move forward, and gradually make changes in our manpower system.  I think recruiting people – they already see – we already see the value of unmanned that it’s having in our recruiting efforts.

[CROSS TALK]

AUDIENCE: Bill Conley, chief technology officer at Mercury Systems.

I love the “arsenal of democracy.”  Arthur Herman wrote “Freedom’s Forge,” phenomenal book, looking at that.  During kind of the World War II/Cold War era, the government out-invested in R&D industry.  Today there’s three dollars coming from industry for every dollar on the federal side.  As we think about that “arsenal of democracy” in the modern world, what do we need, in particular not for the platforms but for the payloads, to bring that innovation that you want access to, to make sure we keep that tradition alive?

ADM. GILDAY:  Yeah, so as I take a look at unmanned, payloads is not a problem.  There are plenty of companies that build payloads, and we are taking those payloads.  The real magic with unmanned is the integration with AI.  The software integration is what really brings those platforms alive.  What I like about leveraging commercial technology in the area of unmanned is that most of that technical risk is already driven down.  That’s where we’ve had most of the problems, most of the challenges in our major procurement – our major acquisition lines, have been driving down risk, and not driving it down early enough.

And these commercial applications, particularly with unmanned platforms, most of these platforms are already being used in the commercial industry in some fashion.  And so we’re just – we’re just taking that truck and we’re giving it – you know, we’re taking that Tesla-like vehicle and we are taking AI to shape – to give it – to bring it alive, to get after the problems that we need solved.  The other thing is we’ve learned is we’ve seen benefit in having the coders for the AI capability and the platform be separate and distinct vendors.  We’ve seen – we think there’s a level of competition there that we’ve kind of liked.  We’ve seen small companies come in really hungry and committed.  And so we are learning a lot in the AI space in terms of what’s going on in Taskforce 59.  I hope that’s helpful.

MR. MCALEESE:  Admiral?

ADM. GILDAY:  Sir.

Ma’am.

AUDIENCE:  Hi.  Crystal T. with BAE Systems, and I also do a lot of work with National Defense Industrial Association.

And, first off, I didn’t think I was going to be commenting on commerciality, but thank you.  I love you.  I appreciate that.  Secondly, you know, as I’m sure you know, Navy is associated with the origins of the Cost Accounting Standards Board.  And I’m wondering if that’s the direction that your brain was headed when you mentioned cost control, or did you have something else in mind?  It sounded like you were thinking something very specific.

ADM. GILDAY:  So I think that we have a lot of money in our procurement accounts that I can’t necessarily see as CNO because they are behind technical authorities or acquisition authorities that are grounded in the law, that fall underneath the secretary of the Navy.  And I’m not laying blame anywhere, except to say procurement accounts are 31% of our budget.  And there’s a lot of dough there.  You all know that.  That’s why you’re here.  And so there are ways to look for more efficiencies and then to shift those savings to somewhere else.  I’m interested in doing more of that.  I’m interested in taking a deeper look at where and how we spend our money, and where we might be able to make smarter choices.

As I said, you know, this 37% increases, 55 billion [dollars] ain’t going to last.  I just met with all the flag officers in the Navy last week.  That was part of my pitch.  You know, wipe those smiles off your faces.  We got some work to do.  Thanks.

AUDIENCE:  If I can, I will close with one last question.  And this gets – and this may be too long a question and too hard to answer in the time we have.  But in my last tour in the Pentagon, I watched platforms continue to go way beyond their expected end of life date.  When we look at the first Columbia coming in, the Ohio that it replaces will be the longest-serving active submarine.  Do we have to start thinking about either replenishing more quickly or changing the way we architect our new platforms?  Is that a challenge to industry?

ADM. GILDAY:  So one of the things we have to get real about, instead of talking about estimated service lives, talking about actual service lives.  So we got a ship in a shipyard right now down in Norfolk.  It’s an old amphibious ship.  It’s 34 or 35 years old.  As I take a look at what eats up our accounts, right, I take a look – in a repair yard – I take a look at new work and growth work.  On average, our new work is about 5% and our growth work is at about 16% across ships in the Navy shipyards.  With that particular old amphibious ship, new work’s at 68%.  So she is four years behind out of the shipyards.  She’s costing us millions more than we need.

We have to make tough decisions here.  That’s money that we could pivot somewhere else.  Then we need to be more innovative with ships that we have in the inventory and how we can use them differently.  The Navy’s requirement for expeditionary fast transports that were built down on the Gulf Coast was 10 of those ships.  Congress has blessed us with 16 of those ships.  So I am looking for ways that we might be able to use them more innovatively.  As a leader in the Marine Corps said in December, it’s not always about numbers.  Ships need to be workable and they need to be usable.

So those ships that aren’t either usable or workable, I might be able to replace those with something that’s a little bit more agile.  We may have to act a little – may have to use it a little bit differently.  I get back to driving adaptability, effecting change.  That’s how we need to think as well in the Navy, and can’t be so wedded to the way we’ve always done things.

Looking pretty serious there, Jim.

MR. MCALEESE:  Can I throw out the very last one?  We got one minute to go.

ADM. GILDAY:  It’s your conference.

(Laughter)

MR. MCALEESE:  You mentioned the 3-5%, right?

ADM. GILDAY:  Yeah.

MR. MCALEESE:  And I think you touched on two themes.

Number one is, could you provide a little more insight into, hey, you know, the eight ships, why those can no longer see the fight, why they have to go?  Number one.

And then, number two, there was obviously a shortfall in the resourcing in terms of the sea services together.  Some insight into that would be incredibly helpful as we look to Congress for a final resolution.

ADM. GILDAY:  Yeah.  I’ll take the last one first.  You asked me about amphibious ships.  Is that the code that you’re asking me about?

MR. MCALEESE:  Yes, sir.  Amphibious ships.  That is the code, the gator, sir.

ADM. GILDAY:  OK.  So it’s been said publicly that, a year ago, the Office of the Secretary of Defense made a decision to take a pause and to do a study on LPDs, and whether or not we would continue with the current hull or whether or not we would shift to some variant of the current hull.  The driving issue there that drove that decision had to do with cost.  So the cost of that ship has gone from 1.47 billion [dollars] to the second ship at 1.5 [billion dollars].  The third one that we’re contracting for right now is probably going to be between 1.9 and 2 billion [dollars].  So that increase will be somewhere between 21% and 25%.  The FY35 ship, unless we did a bundled buy, would like be at 2 billion [dollars] or above, at least a 25% increase.  We’re moving in the wrong direction.

So it’s an FY25 ship. [The] Marine Corps leader said recently that he is supportive of two-year centers for those ships.  In other words, you begin building one every two years.  We’re just – I just mentioned – we haven’t put the ’23 ship on contract yet.  The line is already running behind.  So, as a taxpayer, if you want to give the vendor money next year for a ship that they can’t bend metal on, okay.  So I think that we have time here to take a look.  And it goes back to the fact that we’re not going to be swimming in money forever and we got to start making some hard decisions.  So a ship in the ’25 line, right, this the FY25 budget, it’s akin to – let me just say this – Congress has given us the authorities in the latest NDAA to do a bundled buy.  And we all agree that that’s the way that we ought to go after those ships.

But to go after a single ship in ’25 and put that in the budget now, based on where we are with all this churn on cost and so forth and this concern about the cost of those ships, it’s like telling a car dealer:  Hey, I really want to buy that minivan.  I’m going to buy that minivan.  Now, let’s roll up our sleeves and talk about price.  You know?  It’s just not going to– it’s not going to drive down the price of that ship.  It needs to be competitive.  Actually, with that production line on that ship, it’s not competitive.  One company builds it.  Okay, anything else on – anything else on the LPD line?  I’m sure that’ll open up some –

MR. MCALEESE:  Going once.  Going twice.

ADM. GILDAY:  Yeah, go ahead.

MR. MCALEESE:  Oh, my God. Saved by the bell...

AUDIENCE:  Hi.  Caitlin Kenney with Defense One.

On that, for the divestment, again, the earlier question, I’m just interested, what would be the cost to get the ships that you’re – the three LSD ships that you want to divest – to get them to a state where you’d keep them?

ADM. GILDAY:  Yeah, that’s a really good question.  So it’s almost like a rolling average.  Every year there’s a new check that, you know, we got to write on a ship, you know, one of them that should have been out of the yards in 2019 that we’re still, you know, have been forced to keep and are still writing checks on.  I’ll have to just – I’ll have to take that one for the record, if you will, and come back to you with the amount.  I don’t know it off the top of my head for those three ships.  But we’ll get you that information.  It’s substantial.

You know, when we take a look at divestments – I’ll just say real quick, Jim, and I’ll walk

[CROSS TALK]

The entering argument for us is our top line.  And so I said earlier, we’re only going to have a Navy as big as we can afford.  And so then what we do is we stratify all of our platforms in terms of lethality.  And that’s also informed by sustainability, what it’s going to cost us to keep those ships, as well as reliability.  For cruisers, as an example, I’m pulling them into Souda Bay, Crete, or we’re pulling them into Djibouti during deployment to fix holes in the ship below the water line.  I got water going into berthing compartments.  So those are considerations as well.

But lethality is the driver for us, right, given where we are with the pacing challenge.  Stratify those platforms, and then making decisions that those that are the least lethal are going to be on the table to propose to Congress that we decommission.  The friction with Congress is capacity in the repair yards.  And I get that.  But, you know, just having visited a repair yard with a cruiser that’s undergoing modernization, as well as an older amphib, they are not making money on those ships – and they are not lethal.  We’re not going to get them underway for the fight.  So my proposal is, like, let’s reinvest in something that is going to be lethal and it is going to put us in a position of advantage against the pacing threat.

That’s not always met well but, you know, I have other ships waiting to go into maintenance.  We are – our operations and maintenance account is increasing next year to buy even more availabilities for our ships.  Why?  Because readiness is the number-one priority.  I hope that answers your question, Jim.

Thanks, everybody.  I appreciate your time.

                
                


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