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[H.A.S.C. No. 108–8]



FOR FISCAL YEAR 2004—H.R. 1588






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(H.R. 1588)

MARCH 27, 2003




ROSCOE G. BARTLETT, Maryland, Chairman
ROB SIMMONS, Connecticut
JO ANN DAVIS, Virginia
ED SCHROCK, Virginia
JIM SAXTON, New Jersey
KEN CALVERT, California
JEB BRADLEY, New Hampshire
JOHN KLINE, Minnesota
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GENE TAYLOR, Mississippi

Jean D. Reed, Professional Staff Member
Kate Gordon, Staff Assistant




    Wednesday, March 27, 2003, Fiscal Year 2004 National Defense Authorization Act—Navy's Projection Forces Program


    Wednesday, March 27, 2003
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    Bartlett, Hon. Roscoe, a Representative from Maryland, Chairman, Projection Forces Subcommittee

    Taylor, Hon. Gene, a Representative from Mississippi, Ranking Member, Projection Forces Subcommittee

    Mullen, Michael G., Deputy Chief of Naval Operations for Resources, Requirements and Assessments

    Nathman, Vice Adm. John B., U.S. Navy, Deputy Chief of Naval Operations for Warfare Requirements and Programs

    Young, Hon. John J., Assistant Secretary of the Navy (Research, Development and Acquisition)

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[The Prepared Statements can be viewed in the hard copy.]
Bartlett, Hon. Roscoe
Mullen, Michael G.
Nathman, Vice Adm. John B.
Taylor, Hon. Gene
Young, Hon. John J.

[The Documents submitted can be viewed in the hard copy.]

[The Questions and Answers can be viewed in the hard copy.]
Mr. Bartlett
Mr. Taylor


House of Representatives,
Committee on Armed Services,
Projection Forces Subcommittee,
Washington, DC, Wednesday, March 27, 2003.

    The subcommittee met, pursuant to call, at 1:53 p.m., in room 2212, Rayburn House Office Building, Hon. Roscoe Bartlett (chairman of the subcommittee) presiding.

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    Mr. BARTLETT. The subcommittee will come to order.

    This afternoon we will receive testimony from Department of the Navy witnesses, on the president's fiscal year 2004 budget request for the Navy's projection forces.

    Before we proceed, I want to commend our men and women serving in all of our military services, coalition personnel and those supporting them, for their dedication and professionalism in the ongoing war on terrorism and elimination of weapons of mass destruction.

    The security challenges confronting our nation, whether in Iraq, Afghanistan or here at home, will require the careful balancing of international law, constitutional guarantees for all Americans and the security of Americans wherever they might serve. We wish all of those responsible for satisfactorily achieving these critical balances and those on the front lines, ''God-speed.''

    Our purpose today is to ensure that, for fiscal year 2004 and beyond, the Navy and Marine Corps continue to be provided the proper resources to achieve the right balance of force structure and capabilities to meet new challenges that surely lay ahead.

    Having been a member of this committee for 11 years, I have been familiar with Navy ship force structure issues. But now, having the privilege of serving as the chairman of this newly created subcommittee has given me the opportunity to talk to a number of civilian and military experts to address a range of strategy, force structure, requirements and other issues.
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    Secretary Young, I am very pleased that you have agreed to be with us today to continue this dialogue. If there is nothing else we accomplish in our hearing today, I want to gain a sense of the rigor that I am confident exists in the evolution of Navy strategy, force structure requirements and program management. I would like to gain a sense that the Navy's emerging force structure results from valid, realistic requirements and new concepts of operation rather than inertia, personalities and trends of the day.

    I have a number of concerns. To mention a few: In my view, given the state-of-the-art technology available, we have too many people on our ships. There is too much business as usual and leftover cultural baggage of us doing things the way we do them because we have always done them that way.

    Further, we seem to have a new plan every year for how many and what type of ships we want to build. Examples include recent changes in the DD–21 to DDX program and the emergence of the littoral combat ship last year.

    Finally, costs seem to be an independent variable. Ship costs seem to grow dramatically with each year's budget submission.

    Secretary Young, I look forward to your testimony and comments and those of the other witnesses on the details of the process that gets us to the mix of ships—numbers, size, missions and so forth—that are assumed in this budget.

    I should note that the subcommittee plans a subsequent hearing on April 3rd, which will examine naval transformation, with emphasis on development of the littoral combat ship, anti-submarine warfare, mine warfare, future fire support and future naval capabilities. Today, we will focus on procurement and force structure issues.
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    As we begin this hearing today, the U. S. Navy now operates a combat fleet of 305 surface ships and submarines, although the recent Quadrennial Defense Review recommended a force structure that equates to approximately 310 ships. The budget request includes a forecast of only 292 combat ships by the end of fiscal year 2004, decreasing to a low of 290 in fiscal year 2006, before rising to 305 by fiscal year 2009.

    While some argue that the end of the Cold War and the improved combat capabilities of today's modern warships permit a much smaller Navy than would have been required only a decade ago, it is important to note that the Navy's peacetime forward presence requirements have not changed significantly since the end of the Cold War. Indeed, in some respects, those presence requirements for today's smaller Navy have increased as illustrated by continuing large-scale presence missions in the Mediterranean, the Western Pacific, the Indian Ocean and, most recently, in the Persian Gulf region during Operations Enduring Freedom and Iraqi Freedom.

    Moreover, the current defense planning guidance sets a rather ambitious goal for the future Navy and Marine Corps of being equipped with the force structure to deter aggression in four theaters, the capability to conduct combat operations in two of those theaters and to win quickly and decisively in one of those two combat areas. Additionally, the Navy must be prepared to conduct Homeland defense missions, as necessary.

    For fiscal year 2004, the Navy's shipbuilding budget request is $12.2 billion, an increase of about 34 percent compared to last year's request of $9.1 billion. Last year, the budget planned for fiscal year 2004 projected only five new construction ships. This year, the budget request instead includes seven new ships. From fiscal years 2004 through 2009, 52 new construction ships are planned.
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    If the numerical targets that have been set are valid, the fiscal year 2004 shipbuilding budget request is a good start. But we need to continue to improve our rate of new ship construction to meet our future requirements. To accomplish this objective, we will need to overcome challenges to the increased costs of new construction such as those in the Virginia Class submarine and LPD–17 programs.

    To address these and other important Navy force projection issues, I would like to welcome today's witnesses: first, the Honorable John J. Young, Jr., Assistant Secretary of the Navy for Research, Development and Acquisition; second, Vice Admiral John P. Nathman, U.S. Navy Deputy Chief of Naval Operations for Warfare Requirements and Programs; and finally, Vice Admiral Michael G. Mullen, Deputy Chief of Naval Operations for Resources, Requirements and Assessments.

    Before we begin, let me call on my friend, the gentleman from Mississippi, the ranking member of the subcommittee, Gene Taylor, for any remarks he would care to make.

    [The prepared statement of Mr. Bartlett can be viewed in the hard copy.]


    Mr. TAYLOR. Thank you, Mr. Chairman. And like the chairman, I want to thank all of you gentlemen and the people that you represent for the wonderful job you are doing under some very difficult times.
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    There is a couple of things I would hope that, during the course of your testimony, that you could address: one would be a proposal to slow down the shrinkage of the Navy fleet. And that proposal would be to slow it down by taking some of the earliest Aegis cruisers and spending some money to upgrade them and keep them in the fleet.

    I have been told—and I would like your thoughts—about a proposal that, for the cost of one DDG, we could actually convert five Aegis cruisers and extend their lives for anywhere from 10 to 15 years per ship, which would keep us from getting too far down before we start working our way back up on the fleet size.

    The second thing I would very much like to hear your thoughts on is the proposal for the LHA(R), which is the follow on to the LPD Class, whether or not the possibility of converting an LHD would fulfill that need or whether we need to go to another class. And of course, I am very interested in hearing your thoughts on the littoral combat ship and how soon we can make that a reality, how soon the Navy will be coming to a decision as to what they want that ship to look like, how soon we can start building them for the fleet.

    But thank you again for what you and all the sailors that you represent do.

    Mr. BARTLETT. Thank you. We appreciate the other members of the subcommittee being here. Do you have any opening statements to make?

    Mr. SAXTON. Just to say congratulations on your first working hearing, Mr. Chairman.
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    Mr. BARTLETT. Thank you. Thank you very much.

    Secretary Young and the other witnesses know that your complete statement, without objections, will become a part of the permanent record. And we would encourage you to summarize your presentation, with the assurance that the question and answer period will offer more than ample opportunity to expand on anything you wish to expand on.

    Thank you very much. And Secretary Young, the floor is yours.


    Secretary YOUNG. Mr. Chairman, distinguished members of the subcommittee, thank you very much for the opportunity to testify today on the shipbuilding programs for fiscal year 2004. I recently visited our sailors and Marines in the Persian Gulf area. And I am very proud to report to you that the commitment we made and the Congress supported in 2003, to focus taxpayer dollars toward readiness, has yielded strong dividends.

    Today, we have six carrier battle groups, 70 ships and more than 60,000 Marines in theater who are trained, equipped and carrying out the nation's will. And our prayers are with them.

    In my testimony to Congress last year, I emphasized that we were focused on building a foundation of solid, stable funding for our shipbuilding programs, while working hard to control costs and take a more businesslike approach in these programs. While we still have work to do, I am pleased to tell you that this year, we have made significant progress in all of these areas.
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    In June, the Navy and two of our principal shipbuilders successfully negotiated an unprecedented workload swap arrangement, in which General Dynamics transferred its force ship LPD–17 construction program to Northrup Grumman Ship Systems, in exchange for additional DDG–51 destroyer work transferred from Northrup Grumman. This swap avoided a second lead ship challenge for the LPD program, improved the production learning curve and provided production efficiency for the LPD–17 Class.

    We estimate the swap will improve—provide savings and cost avoidance of at least $473 million for the program. The agreement also allows General Dynamics to focus on DDG construction and look ahead to DDX opportunities.

    The deal made good business sense for everyone. And I must recognize the courage and willingness to explore innovative ideas demonstrated by General Dynamics, Northrup Grumman, the Navy and OSD leadership that was key to making this happen, as well as the essential support of the Congress.

    The swap, in conjunction with the DDG multi-year contract has stabilized both DDG and LPD production. The fiscal year 2004 budget requests authority to enter into a multi-year procurement on the Virginia Class submarine. The combination of the swap, the DDG multi-year, the Virginia Class multi-year and the funding that this budget contains for CVN–21, T–AKE and LHD–8 provide a stable, low-rate new ship construction program.

    The Navy and the nation can build upon this stable foundation in the future. We have also worked hard to control costs and avoid prior year completion bills.
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    Our focused efforts to reduce change orders, to strictly manage ship configuration and to properly fund to realistic cost estimates is paying dividends. The fiscal year 2004 to 2009 budget recognizes new prior year completion bills of approximately $225 million, as compared to $487 million in fiscal year 2003 and $2.2 billion in fiscal year 2002.

    A good example of our resolve in this area was the decision to install the current and very capable combat systems suite on CVN 77 within the budget, rather than the developmental system that was clearly going to generate additional prior year bills and possibly force late delivery of CVN 77. We will install the new radars when they are ready in a more spiral modernization program.

    In the next five years, we will deliver or design the lead ship of eight new classes. This clearly shows our commitment to providing the most modern and capable warships to our fleet, sailors and Marines. Along with improved warfighting capability, these new designs allow us to implement fundamental changes in the way we man, operate and maintain our ships.

    DDX is the centerpiece of this leap forward. DDX is being designed to provide our sailors the survivability and flexibility of stealth, automation and electric propulsion. In addition to its land attack capability, DDX's dual helo spots and stern boat launch will provide new mission response options.

    I am pleased to report that the program is well underway. The Navy has worked with our industry partners to forge a national team of our country's most capable ship designers and combat systems experts dedicated to its success. The DDX hull and combat systems also provide a clear path to the CGX cruiser, which must be capable against the air, surface and missile defense threats out into the 2050 timeframe.
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    We have also embarked on an exciting new initiative called the littoral combat ship and approached it in an entirely new way. With your help last year, we were able to get at least a one-year jump on our original schedule.

    We are currently evaluating the potential hull forms to use as our sea frame for LCS. The LCS sea frame will be designed to accommodate different mission modules, allowing us to tailor the capability for the fleet's task. We plan to develop and purchase the mission modules for LCS on a timeline that ensures the most current technology is installed and mated to the sea frame.

    Your support of this innovative approach to shipbuilding has been instrumental in our ability to move forward so quickly with this ship.

    We have combined several of the advances planned for CVNX–1 and CVNX–2 in the new CVN–21 program, while maintaining the original CVNX–1 development schedule. This is the first new carrier design since 1967 and will introduce such new capabilities as the electromagnetic aircraft launching system, the pit stop concept for improved sortie generation and enhanced survivability, while again focusing on reducing manning and maintenance requirements.

    We will continue to advance the current and future combat value of our ships as we shift to open architecture designs, which serve as powerful tools for reducing our software sustainment costs and increasing commonality across our fleet. An open combat system architecture allows us to more easily upgrade specific functions by developing discrete software modules. And these modules can more easily be tested and then quickly adapted across the fleet.
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    Our commitment to developing field network centric systems are enhanced by this approach and our work on CEC Block 2 and the Joint Fires Network to empower our forces by providing real time awareness of the combat situation. To enhance our ability to deliver these systems, I have reorganized our program executive office structure to bring all integrated warfare systems across surface combatants, submarines and aircraft carriers and amphibious ships under a single PEO.

    We have done the same thing for our C41 systems. And finally, we have consolidated all non-nuclear shipbuilding and modernizations under a single PEO to ensure we maximize our advantages of scale with all the shipbuilders and ensure that lessons learned from one program are implemented across our shipbuilding programs.

    The fiscal year 2004 budget sustains the enormous strides made in personnel and readiness while also requesting $11.4 billion for shipbuilding and modernization. We have increased the number of ships from five, indicated in the FY 2003 budget request, to seven, as you noted, in the fiscal year 2004 request. This includes construction of three Arleigh Burke destroyers, two Lewis and Clark auxiliary cargo and ammunition ships, one Virginia Class submarine and one San Antonio Class amphibious transport. The result will be 34 ships under contract.

    Our budget also includes funds for a Ticonderoga Class cruiser conversion, incremental funding for LHD–8, surface life extension for three LCACs and two SSBN to SSGN conversions. Additionally, it requests $1.5 billion in R&D funds for CVN–21, DDX and the LCS programs.

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    I believe we have crafted a balanced and properly focused budget request that ensures our nation will have a stable and healthy shipbuilding industrial base and an efficient and appropriately sized infrastructure to support that force structure.

    The Navy and Marine Corps team, as you well know sir, is the most professional and capable in the world. With your assistance, we will continue to provide maximum combat capability for our sailors and Marines and maximum security for America.

    I thank you again for letting me testify. And I look forward to the questions.

    [The prepared statement of Secretary Young can be viewed in the hard copy.]

    Mr. BARTLETT. Thank you very much.

    Admiral Nathman, nice to see you again. And please proceed with your testimony.


    Admiral NATHMAN. Yes, sir. Mr. Chairman, thank you very much, sir. Appreciate the opportunity to address you and the distinguished members of the subcommittee.
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    I think what I would like to do in my opening statement is to take the opportunity maybe to agree strongly with you that we need to make sure that our Navy of the future, the force that we build, is a capability-based force that goes to what our future threat is going to be, that we ought to have the intended and inherent goals of reduced manning on those ships and those aircraft and that we can bring about a resurgence in the numbers of the ships that we can build based on the type of ships that we need for that future force.

    And so I think what I would like to do is spend just a few minutes talking about a family of ships and the views that we have on those family of ships, starting with the littoral combat ship. The littoral combat ship really goes to our trend.

    Our trend is that we are becoming—have become—a near-land Navy. And we need to be able to answer those anti-access and access denial threats in the littoral maritime environment. And so the LCS—the littoral combat ship—is missionized to go after the access trends that we see increasing in the future. And those are submarine warfare, mine warfare and surface maritime superiority in this water space.

    And we are going to do it by missionizing modules that can be tailored to the specific area of operations' needs or the risk in those particular areas. So you can missionize LCS and you can use it as a sea craft that can be tailored to the particular problem, in terms of establishing and sustaining maritime superiority or supremacy in the Navy's water space to do its mission, which is to influence events ashore.

    Finally, you will see a strong integration effort in unmanned vehicles, both undersea, on the sea and in the air. Aerial vehicles that do a couple of things, for instance, in mine warfare, we clearly intend to take the man out of that particular problem as much as we can. And so one of the ways of doing it is moving to these unmanned vehicles.
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    We recognize the need for persistence in terms of surveillance for the water space. An unmanned aerial vehicle, a tactical vertical lift UAV is what we are seeing right now as a potential module that will support the warfighting capability of the littoral combat ship.

    Now this then allows us to establish in a phasing way a maritime superiority that we need to close an expeditionary striking force of Marine Naval forces and to enable the closure of the joint force. And what comes right behind that then is the decision to build future destroyer DDX.

    Now DDX—the clear focus of DDX is to provide the right level of lethality in support of either joint or Marine maneuver ashore. And that is going to be done primarily through the development of the proper size ship with an advanced gun system and a large enough round—a 155 round—for commonality and, because of its characteristics of weight of throw, so that you get the right lethality when it strikes a particular target. So you can cover large target sets for the Marine Corps or for the joint forces.

    It is interesting to me that right now, we have a horrific maneuver scheme around Basra. And I am convinced right now, if we had two DDXs right now on the north Arabian Gulf, they would be doing great work in supporting the British forces that were trying to control the Iraqi forces that are loyal to the regime right now in Basra, because of the reach and the lethality of that particular ship.

    Now what is interesting about DDX to me is that it comes with inherent capabilities and qualities that are important for the Navy. The importance part is that you can—we are putting in an integrated power system. We are putting in electrical power. That is to give us the survivability and reliability that we need with that future ship.
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    We are going to an integrated combat system. We are going to a total ship computation or computer system on the ship.

    And both those ships—the littoral combat ship and DDX come with very strict reduced manning goals and rely upon—in this case, DDX, you will see, will have UUVs and unmanned aerial vehicles that will support its mission of naval fires ashore, that will probably fly from the deck of the DDX to support the Marine and joint maneuver scheme.

    Finally, those inherent qualities of DDX will spiral into the next future cruiser, CGX, which will be important to another mission growth need for the United States Navy and the nation in missile defense, total dominance in air defense and improved striking capability, in terms of its carriage of Tactical Tomahawk.

    Finally, I would add that I think if you looked at the performance of our aircraft carriers in Operation Iraqi Freedom, you would see they are just doing great. I believe and I am confident we have not dropped a single non-precision weapon yet from our flight decks, a complete change from what we did just 10 years ago in Desert Storm. And we are having great effect as a result of the reach of the Super Hornet on Lincoln, soon to be joined with two more squadrons of the Super Hornet on Nimitz.

    And this ship, CVN–21, matches in my view the coherence of the capabilities of sortie generation rate, lethality and reach that then can be optimized on a flight deck because we are going to design CVN–21 to optimize those sortie generation rates, to optimize the movement of weapons, to optimize the computation capability, in terms of a flagship for a naval task force when we close the littoral.
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    So I see these as key ships for us in the future. Those capabilities are clearly matched to where the Navy's needs are going to be and the nation's needs are going to be in the future for enabling a joint force. And they have the inherent quality of reduced manning and, in the case of LCS, the opportunity to rapidly grow the force structure of our Navy because of the investment level to buy that particular ship.

    I look forward to your questions, sir.

    [The prepared statement of Admiral Nathman can be viewed in the hard copy.]

    Mr. BARTLETT. Thank you very much.

    Admiral Mullen, please proceed with your testimony.


    Admiral MULLEN. Mr. Chairman, distinguished members of the committee, thank you for the opportunity to appear before this committee today to discuss our United States Navy. I want to express my great appreciation for your longstanding support, which continues to be vital and is at the foundation of our ability to project our Naval forces to the four corners of the globe.
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    Since last year, as you know, we have been extremely busy. Your Navy has been a continuing participant in the global war on terrorism and Operation Enduring Freedom, where we deployed nine of our 12 carriers and six of our amphibious ready groups.

    In recent weeks and months, in the build up and execution of Operation Iraqi Freedom, in which six of our carriers and nine of our 12 big deck amphibious ships are deployed. Many of our naval forces deployed to fight in Operation Enduring Freedom are now re-deployed to fight in Operation Iraqi Freedom in less than 18 months.

    Your Navy now and in the future is a joint, sea-based, interoperable, network centric power projection force and continues to provide a terrific return on the taxpayers' investment. In the last few years, our CNO, Admiral Clark, has made improving our readiness accounts a top priority. And with your support, we have achieved the highest level of sustained readiness during my almost 35-year career.

    I believe the president's 2004 budget is transforming our Navy. Admiral Clark's comprehensive vision of Sea Power 21 provides a strong framework upon which to build for the future.

    We have had healthy debates in the Pentagon, which have centered on the urgency of moving forward and the requirement to be able to fight today, as well as transform for the future. I believe Secretary Rumsfeld has created a positive atmosphere in which these debates take place. And the result has been a better program for the Navy and for the nation.

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    We are transforming much more than the equipment we buy. This budget supports our ability to continue to transform our most important resource—our people.

    We have adopted a new global concept of operations as well. And we are looking to reorganize our operational structure from the old way of 19 independent striking groups to a new way of 37 independent striking groups, which include carrier striking groups, expeditionary striking groups, surface strike and TBMD groups and SSGNs.

    In conjunction with the Missile Defense Agency, we expect to field a sea-based missile defense capability in 2004. These changes are exciting and meet head on the challenges of the 21st century, in which widely dispersed and netted forces with combat capability will become the norm.

    At the heart of this change is the sea base and the concept of sea basing, which is evolving and notionally is a scalable collection of joint warfighting capabilities, distributed across interoperable platforms, netted together and sustained from the sea, without reliance on shore facilities within the joint operations area.

    I also believe we are currently at an important inflection point. And decisions this year and in the near years to come will determine the capabilities we will have in our Navy and Marine Corps for the next three or four decades.

    In our current program, our eight new classes of ships, including our future carrier, CVN–21, our transformational destroyer, DDX, our littoral combat ship, the LPD–17, our SSGNs, just to name a few. We have changed the trend on the recapitalization of our Navy. And we are compelled to do so to get to the future Navy of about 375 ships.
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    To get to our goal, we need to sustain a shipbuilding account of 10 to 12 ships per year and about $12 billion to $14 billion per year in constant 2003 dollars. We are also asking for funds this year to buy the EA–18G to replace our aging EA–6–Bs, funds for Joint Strike Fighter and for the advanced E–2, all of which are critical as we move forward.

    In order to recapitalize, we took some near term risk to garner resources for future investment in both ships and airplanes. These were particularly tough decisions, but on balance, calculated to take a low to moderate risk now in order to avoid high risk in the future.

    In both ships and airplanes, we rely heavily on the private sector, especially the national treasures of our industrial base. I truly believe we have turned the corner on recapitalization. And we must continue the trend in future budgets.

    Our priorities to continue to be to sustain the readiness necessary to fight the global war on terrorism, to recapitalize and transform our Navy, to invest in our sailors, to improve our networks, both in an operational sense and in a business sense, and to provide quality training, both individually and on our training ranges.

    Again, Mr. Chairman, thank you for your continued support. And I look forward to answering your questions.

    Mr. BARTLETT. Thank you very much. Thank all the witnesses for their testimony.
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    Let me turn now to our ranking member, Mr. Taylor, for his comments and questions.

    Mr. TAYLOR. Again, thank you gentlemen for being here.

    Mr. Secretary, I was wondering if you could elaborate on your statement, on page 10, on the LHA(R). At what point do you anticipate awarding the money for the design? It is talking about construction in, I believe, 2007. But what would the $65 million this year actually buy us?

    Secretary YOUNG. I think we are in the process of working to award that money, if it is not awarded. And it begins the work on making the decision to—I hesitate here because I think the decision has been made that the first ship will be more like an LDH–9, a so-called Plug Plus will extend the ship. And so those funds are going to make the design changes to enable that ship to be built.

    We will follow through on decisions about whether that ship is LHA(R) or additional design funds are needed for a substantially different ship. But the near term funds are going to go for the Plug Plus design of—I guess I would call it LHA(R) number one or LHD–9, take your pick.

    Mr. TAYLOR. So that $65 million in this year's authorization will be for the design of that?

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    Secretary YOUNG. Yes, sir.

    Mr. TAYLOR. Okay. And you are still looking at anticipating a budget request to build this ship in 2007?

    Secretary YOUNG. Yes, sir. That is the current FYDP.

    Mr. TAYLOR. You think it is going to take three years to design it, given the need? I think—aren't almost all of your LHDs at sea right now?

    Secretary YOUNG. Yes, I think Admiral Mullen noted nine of 12——

    Admiral MULLEN. Nine of 12.

    Secretary YOUNG [continuing]. Have been at sea. Do I—well, we are completing the design of LHD–8. As you know, that was a substantial change to put the gas turbines in. We would certainly like to get that design in hand, because that will be the basis from which we then make the changes for the Plug Plus.

    It is not an extremely complex design change. But it is a substantial design change because, as you know, in the past we have plugged items and not gotten the structural calculations just right.

    So do need some amount of time and some resources to do that. The other piece of that, which is obviously true too, is: could we do it a little faster? The answer is it could be possible, but it would be both a resource issue and a risk issue.
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    The budget seems to try to take the right stance amongst both of those, both resources and risk.

    Mr. TAYLOR. Shifting gears to the littoral combat ship, I think your testimony on that is on page nine. One of the things you mentioned in there is a high priority—or the highest priority—is the stealth. The ship that we have leased or chartered from the Australians is one of the two contending designs, I am told, the twin hull version.

    I am told by friends in the Navy that twin hull is about as far from stealthy as you can possibly get. It is almost like a radar reflector.

    My question is—my concern is, obviously one team has a demo model out there. The single hull, possibly composite competitor, there is no demo model out there. How are we going to get a real idea of each one's capabilities, each one's pluses, each one's downfalls, with only having one team out there?

    Secretary YOUNG. Well, we are always faced with those different sets of issues. I think I need to be careful in a source selection environment. But that is part of what we are trying to accomplish here by making six awards is to see what the whole universe can be.

    And you are exactly right, sir, in some cases, the universe will be paper and in some cases, it will be a more confident design, based on some—coming from a derivative ship or even a comparable, an identical ship. We are going to evaluate all those characteristics and neck down to three and continue to inform ourselves about the capabilities.
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    Each design so far has strengths and weaknesses, as you might guess. We are particularly interested. And I would not yet trade any set of capabilities. One thing is in a smaller ship. That ship has got to provide reasonable stability in a littoral environment so that the ship force, if you will, can fight that ship and live on it with reasonable comfort and good fighting combat capability for extended periods of time.

    So the ship has stability and handling, the ability to network that ship, build it flexibly, but also have some survivability, as you pointed out, is important. There are several candidates out there that seem to be good—have interesting ideas. And we are looking to take a different approach to it.

    And I am not ready to yet weight all the different factors until we see what the industry can provide us.

    Mr. TAYLOR. Skipping over to cruiser conversion, I am pleased that you have budgeted money for one. And I would very much welcome either your thoughts or the admiral's thoughts on: is that a realistic figure that has been told to me, that you could convert five of them for the cost of one DDG?

    Second thought is, you mentioned in there—and I would very much welcome a follow-on briefing—that—and this is a quote; in return, MDA will pay for and upgrade up to 20 Aegis-equipped ships, with as many as 90 standard missile 3 weapons to be installed for missile designs.

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    Having been one of the people who thought that Star Wars was sucking the conventional force dry, I kind of like hearing this. And I am just curious if you have been in negotiations with General Kadish to see that as a possible source of upgrading some of those earlier Aegis cruisers, keeping them in the fleet and possibly using them for platforms such as this.

    Secretary YOUNG. I really appreciate the chance to talk about the subject for a minute. I think this is one of the more innovative things that has been done in the Department of Defense for a period of time. All three of us were involved in it.

    One day, if I could take a couple of steps back, there were discussions—that I am sure you are quite well aware of, sir—about MDA possibly converting the baseline 1 cruisers and using them for missile defense purposes. And it looked like the cost of that was, for all five ships, was going to be about $2 billion.

    And to be—well, I will not speak for MDA. But there was anxiety about that. And so it was in the out years of their budget.

    The really exciting proposal that tries to do what I think you were talking about is get capability now for the dollars we are spending, was we would take the Lake Erie, which is already serving as the test ship, make it General Kadish's test ship and propose that the same mods that have been performed on the Lake Erie be made, as you quoted, on as many as 20 Aegis baseline 538 ships. MDA would buy missiles that have been successful in three test shots. And we would try to get some capability out there at a high leverage ratio.

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    Every dollar spent would be putting capability and missiles on ships. And that package—that all three of us briefed to Admiral Clark first, General Kadish, Secretary Aldridge and the rest of the DOD team—was accepted and embraced.

    And then part of that, again to further point out what a teamwork effort this was, some of the funds MDA had hoped to spend on test ships were moved to the Department of the Navy to deal with some of our bills and challenges in our program in the out years.

    That leaves still the discussion to be held about the baseline 1 cruisers. We are going to work through fairly aggressively with baseline 4, three and two. And the decision I think is still out there to be made about the baseline 1s. It is a force structure issue.

    It is also a cost issue, if I could offer the acquisition piece. And that is the other ships, as you know, have to go through more substantial modifications, including the addition of a vertical launch system, to become, I guess, combat capability comparable to the other Aegis destroyers and cruisers we have today.

    And maybe the admiral will expand.

    Admiral NATHMAN. I would just add, sir, talk a little bit about our relationship with MDA. I think we have a very strong relationship with MDA. And recently, General Kadish actually reorganized his internal organization, the MDA, to reflect the Navy's contribution to missile defense.

    And the Navy feels like it has a very strong role to play in missile defense for the nation. So we have a strong relationship that we meet monthly, formally to discuss issues.
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    We have a strong technical collaboration with the Missile Defense Agency to look at opportunities for technical spirals that could help the Navy develop it future terminal missile defense that we will need for near land challenges which, when you look at the threat, to go back to the chairman's point about capabilities in the future, we see trends in the future that lead us to that sort of risk. And we need to develop a Navy system that gives us the capability to operate in water spaces that are near land, in terms of missile defense challenges.

    So I think we have the strongest sort of the collaborative relationship, what you would expect us to do, to make the best value of the taxpayers' money in terms of that technical relationship, so we can see clear paths in either the missile side, in the target acquisition side or in the tracking and killing side. And that collaborative relationship is paying big dividends not only for MDA for missile defense, but for the Navy for its future needs and I believe for the nation.

    So I feel very strongly about that, to the point that the CNO has offered the Lake Erie as our test ship right now, has offered basically the full collaborative use of that ship for missile defense. And we are in the process of developing a memorandum of understanding between the fleet, PAC fleet, that owns the ship and MDA to make sure that we fully support MDA's needs in terms of sea-based missile defense.

    Mr. TAYLOR. The last point I would like to ask you gentlemen to consider is a couple of weeks ago, CNO Clark had the opportunity to speak with us. He was talking about shrinking the number of sailors.

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    I would hope that you gentlemen would think long and hard before you do that. It took several Congresses and several CNOs and a cooperative effort to get us to where we finally have eliminated the problem of cross decking, where the letters are not coming from the spouses saying, ''My husband just did a six-month deployment, was grabbed to do another six-month deployment.''

    Before we start pulling cruisers out of the fleet and the sailors that would man those cruisers, I would certainly hope you would think long and hard that, now that we have solved this problem, I do not want to be sitting in this room four years from now, receiving letters again that sailors are on their second and third consecutive deployments because we do not have enough people to man the ships.

    Admiral MULLEN. Sir, if I could respond to that? John and I both grew up at a time where extended deployments and gaps and cross decking and long times at sea, on the order of deployments that went nine, 10, 11, 12 months. We know—we are very much aware that does not work for a sustained period of time.

    And we are—all of us, right up to the CNO—are extremely sensitive to avoiding the results of that kind of activity, although it is very difficult to predict the future for us. And I understand that.

    One of the things that has happened in the last several years, as you said, is we are out of the cross decking business. All of our ships are manned almost at 100 percent and much earlier in the training cycle than it used to be, as opposed to—as much as six months ahead of time, as opposed to many times in the recent past where we sent a lot of people to a ship or a squadron just before they deployed.
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    There is no intent at all to have reduced manning, if you will, create any kind of gaps in those areas that we need it. We recognize we have got to fully man the fleet, keep it fully manned in the long term.

    And at the same time ensure—and this is a balanced—continues to be something we have to balance, which is the ability to meet the global requirements and create investment opportunities for the future specifically.

    And if I could just hook back one second, Representative Taylor, on the baseline 1s? In my previous life, I was the director of surface warfare. This is something that has been a concern of mine for many years. In fact, I had the good fortune a few years ago to command one of those ships.

    And so that has made this decision challenging, in and of itself, to put these ships in a position where we will decommission them over the next three years. This is tied to the risk we are willing to take now versus the risk we take later.

    It is also tied very specifically, in the first five ships that we are talking about, to capability that they have specifically or capability that they do not have that the other Aegis cruisers have. And in converting them both at a time in their life now where it would take several years, the tradeoff was made that, from an investment standpoint, it was a better investment to not do that at this particular point in time.

    The other piece about the missile defense, which I think is also very important for our nation—and it is very important for the Navy in the 2004 budget—that the Lake Erie represents $1 billion worth of investment right now in the missile defense world for the Navy, which heretofore we have not placed that kind of money on the table. And it is a very strong—it signals a very strong commitment to this critical requirement of sea-based missile defense in the future.
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    Mr. TAYLOR. The last thing—and I know you are not going to have the answer now, but I would very much like it for the record. General Wesley Clark spoke to this committee last fall and anticipated that we would have American troops in a post-war Iraq for at least 10 years. General Shinseki—and I am very much in agreement with General Clark and General Shinseki—thinks it is going to be anywhere from 100,000 to 200,000 troopers in the beginning.

    I am curious if your office has budgeted for additional naval assets in that theater of the world and to what extent. If you do not have the answer now, I would very much welcome it for the record.

    Secretary YOUNG. We will take that one for the record.

    Mr. TAYLOR. Thank you, Mr. Chairman.

    Mr. BARTLETT. Thank you very much. We will recognize our members in the order of their appearance on the committee.

    Mr. Langevin, you are next.

    Mr. LANGEVIN. Thank you, Mr. Chairman.

    Gentlemen, I want to thank you for being here today and for your testimony. I hope you will carry back to our sailors—and I know I speak for my colleagues—how proud we are of them, particularly now in the mission that they are being asked to perform. And I hope you carry that back from the top on down.
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    Since General Dynamics is in the heart of my district, you will not be surprised that I am a little concerned about submarines. And I would like to ask you some questions about that, if I could.

    I am particularly interested in the Navy's commitment to the multi-year procurement process as a cost reduction strategy. And in particular, I would like to know if the Navy would consider increasing annual submarine production targets in FY 2005 and beyond as a method of reducing the per unit costs and getting us closer to attaining the 310 ship Navy that is called for in the Quadrennial Defense Review.

    And second question deals with the SSGN. And if you could talk a little bit more about describing the role of the SSGN conversion as part of the Navy's overall transformation efforts. And could you talk about the capabilities SSGN will provide overall for our military?

    Mr. YOUNG. I will start for a minute on Virginia Class. I am really pleased that the FY 2004 budget includes a request for a Virginia Class multi-year authority. As you know, the submarine—there are clear requirements for the quantity of submarines we are buying. There are probably requirements beyond the quantity we are buying—one.

    Two, the industrial base, though, with the two yard strategy is fairly thin at one a year. And so I believe the department has come to a very valid decision. And that is, the best way to proceed with these submarines is under a multi-year buy.
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    It gives us a chance to buy the submarines with stability, with cost control and a number of features that let us sufficiently build out those submarines. We also have reached a point in the program where a multi-year is merited. The design is complete. The first submarine is well underway. I think it is in the—if I could take a look? It is 82 percent complete on the Virginia.

    So I think we have good confidence. We have the design. We have good confidence in the build. It is an appropriate time in the multi-year.

    And then I use this last, but for industrial base reasons, we really need to buy at least one submarine a year. And not choosing to buy that with a multi-year will incur some significant price penalties where we negotiate each individual submarine and we are subject to the uncertainties and the premiums we pay because the companies cannot plan.

    So it is critical, I believe, to put Virginia under a multi-year authority, at least at one a year, so we can get good price control on the program.

    We have taken some similar steps—and I will let the admirals speak as to requirements—but on SSGN, we laid in place a strategy that gives us, in my view, a good chance to manage costs and yet, deliver this program as quickly as possible. This program has had the support of the president and the secretary of defense.

    And so we have laid in a program that has about six months of stagger between each conversion. We have got an acquisition strategy that will use General Dynamics personnel to kind of be the integrating contractors of the conversions, if you will, and move people between each so we try to get some learning benefit.
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    The first submarine, the Ohio, has been inducted and is beginning the refueling process at Puget. And then you well know—and I can let the admirals speak to it—but the submarine will bring 154 cells of Tomahawk, the ability to deploy special operations forces and do so with all the benefits that submarines bring to the table; and that is virtual undetectability through stealth and quietness.

    So it is an excellent capability. We have focused very hard on an acquisition strategy to let us deliver as quick as possible, but manage it in a cost control approach.

    Admiral NATHMAN. Sir, if you do not mind, I will add just a few comments on what we see in the future capabilities of SSGN and why you are seeing it shaped the way it is. First of all, it is an opportunity to take an existing structure with lots of life in it, make an investment by the American taxpayer and convert it to something that is then functional for where the threat is going to go and the capabilities we need.

    And so SSGN, first off, delivers almost a revolutionary change, an order of magnitude change almost, in the striking capability of a single submarine. So you can move—you look right now in the Red Sea—actually I do not know the number. It is under 10, but not much, the number of submarines that we have right now in the Red Sea.

    Probably most of the number are near empty in terms of their Tomahawk cells because of the number of Tomahawks that we have been launching. There are few left in that particular force.
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    So right now, if you had an SSGN there, you would basically come close to doubling the number of Tomahawks that you could have in that particular region. So it brings about a significant warfighting change in terms of a projection of striking power from the sea for the U.S. Navy.

    Now the volume of SSGN brings the attributes of more room for special mission. So it is also being tailored for special mission needs. And this goes to the secretary's comments about its stealthiness, its ability to close the littoral, its ability then to support—with unmanned vehicles—to support the habitation of special forces to move ashore to carry out those types of special force missions that you would specifically train to, that would be very covert, very low posture that you would want and then is provided because you have the volume and you have the habitation capability that you have in SSGN.

    You may be familiar with the recent Giant Shadow exercise, as it were, a simulation in many ways of the inherent qualities and capabilities of the SSGN force. And that experimentation is there for exactly that reason, to go look at the opportunities we have.

    The chairman asked the discussion about going to potential unmanned vehicles. One of the areas that we really see in the value of SSGN, sir, is the volume that we get out of those tubes that used to have missiles in them—intercontinental ballistic missiles. Now we can use that volume for things like unmanned vehicles, underwater vehicles to provide, in some cases, a power for a source for anti-submarine warfare.

    We can use it for the reach for long-range mine warfare detection. We can use it for the ability to see the undersea typography, as it were, to make sure that if—we have got to make sure that we understand that battle space potentially for anti-access problems with other submarines.
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    So there is a lot that we are going to leverage off of SSGN, that volume and that size and the capacity to bring a real warfighting change as a result of the SSGNs that you see in the current budget.

    Mr. LANGEVIN. Thank you. Just one thing. I just want to follow up on Mr. Taylor's question about force size and express his similar concerns about being cautious about not downsizing personnel.

    And in addition, I just have a question for you. I am going to have the honor of being with the chairman in my district of General Dynamics on Monday. Any concerns or issues we should be raising at General Dynamics while we are there, or any messages you want me to bring back to the folks?

    Admiral MULLEN. Actually, I have got one and it is one I try to deliver and remember to deliver—and I talked about the national treasure of our industrial base. And I would ask you, sir, to relay from us our gratitude for the work that they do.

    It is very rare when I travel and visit contractors who do our work for us, that basically create the kind of capability we need, that the American citizens who are doing that work are every bit as proud of their participation in our national defense as anybody that is wearing a uniform.

    And so I would ask you just to extend that to them, if you would, from us. It is a target of opportunity today, but since you asked, it really does mean a lot because they do high quality work and they are a key part of everything that we do. And we appreciate their support and patriotism.
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    Mr. LANGEVIN. Thank you very much.

    Mr. BARTLETT. Thank you.

    Mr. Saxon.

    Mr. SAXTON. Thank you very much, Mr. Chairman. And again, it is a pleasure to serve on this committee with you, sir. And I look forward to being a productive part of the team with you in the lead.

    If I may just observe—and I think, Mr. Secretary, you and I have probably had this conversation before, but just for the record—as we all know, the capabilities of the United States Navy have emerged to a great level of capability. One of the systems that I happen to be quite familiar with, as many others are, is the Aegis system, which is housed in the DDG–51s.

    And I kind of grew up politically in the shadow of that system back in Morristown. And John, you have been up to visit. And we appreciate that.

    And as you know, the Aegis system is a system that has evolved through a variety of stages. An old company, RCA, developed the initial system. It was much different than the capability than the system that we have today. And that is a good thing because the threat has changed over those years.

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    Now we expect the DDGs to be on the water for many years—many decades to come. And we also can anticipate that the threat that those ships will face will change in that period of time.

    So my question goes to the continued evolution of the system, keeping in mind that DDX is going to be there to take a lot of our resources. How are we planning to continue to evolve the DDG system to meet the threats of the future?

    Secretary YOUNG. Congressman, I appreciate the chance to talk to you about that because I think there are pieces of this that are recent news, though I am sure you are aware of. The Navy—the department has to take advantage of all the resources we have to get to that future that you are talking about.

    DDX is an important opportunity to develop a new hull, but also work on a new combat system. We also have challenges in Aegis and some resources. There are something on the order of 14 Aegis baselines out there. And that is a cost for us to maintain and update. And we need to neck that down.

    So the merge of those opportunities is something I talked about in the beginning; and that is, we need to open the architecture on our combat systems so we have a combat system that runs on something that is more like a commercial off the shelf or your laptop computing environment has a common system. It clearly will not be Windows, but of that mind.

    And then we can load software packages on to do the track function and the navigation function and other functions. We are going to use the DDX resources and the DDG resources to try to move our combat systems to that open architecture and do so across the fleet to include the amphibious ships and others.
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    So those combined resources are critical to being able to do that. We need to do that as fast as we possibly can. And that is why the negotiation to forge the national team, with the critical skills that the Aegis team can bring to bear on the DDX architecture were vital to us.

    And so I am proud and pleased to report—and I thank the companies as well as this board of members here—that we have all delicately brought that team together. Now we are going to use the resources of DDX and DDG to get an open systems architecture that will do all the things I believe you talked about—allow us to move to the future and move there affordably.

    Mr. SAXTON. Thank you. And Mr. Chairman, I do not know if you have covered this territory or not, but may I just ask a quick question about seaborne missile defense capabilities and how you see us progressing along those lines?

    Secretary YOUNG. We had a chance to discuss it briefly. And, as you may be aware, I think one of the most significant developments in the current president's budget—and the president talked about this before the budget came out—is the step forward in sea-based missile defense, where we will have a little bit of capability by 2004 and substantial capability by 2006.

    And the key components of that are the Lake Erie becoming the Missile Defense Agency's test ship immediately, through Admiral Clark's decision to do that, and then the decision to leverage the investment in developments we have made by taking the Lake Erie software and hardware packages, replicating them on as many as 20 other Aegis baseline 538 ships, working with MDA to purchase hopefully as many missiles as possible, upwards of 100 or more, based on the successful SM–3 that is hit three times, and putting those capabilities in the fleet and to sea as fast as possible, again on those 2004, 2006 timeframes. And then we will continue to work to that.
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    And this strategy does some of the things that you have heard Secretary Rumsfeld talk about. We will buy an initial lot of SM–3s. MDA is working with us to continue to evolve SM–3's capability so the next lot of 100 missiles may be an even enhanced capability. We have a very focused and determined process to expand that capability. As Admiral Nathman commented, this is an important missions base for the Department of the Navy and for the Department of Defense.

    Mr. SAXTON. Thank you, Mr. Chairman.

    Mr. BARTLETT. Thank you very much.

    Mr. Kline.

    Mr. KLINE. Thank you, Mr. Chairman.

    Thank you, gentlemen, for being here today. I have several questions, one of them I am burning to ask, but I have decided, upon sitting here thinking about it, that perhaps we ought to do it at another venue having to do with the gun for DDX.

    I want to express some of the concerns that my colleague, Mr. Taylor, was addressing with the amphibious fleet. It seems like all my life, I have been worrying about the size and number and condition of a fleet that is—every time I look at it, is old and dwindling and sort of vulnerable. So I am a little bit concerned about the procurement of the LPD–17 and the new LHA(R).
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    I do not intend to get into a debate about it today. I just, on the record, I am concerned about that procurement profile.

    But I will ask about is mine counter measures. We are seeing, in the current operation, use of helicopters in that endeavor. Those helicopters are virtually restricted to a benign environment.

    It is a situation we have dealt with for at least 30 years that I know about. And I think in this budget, you have some more helicopters programmed for procurement. Maybe 860s, I am not sure. I am not sure if I remember that exactly.

    My question is do you see the light at the end of the tunnel? When are we going to get out of this business and be able to really clear mines?

    You are doing some great work with the new littoral ship and moving into that shallow regime. But if we cannot solve this problem, we are not going to get there. Can you address that, please?

    Admiral NATHMAN. Yes, sir. I would like to take a shot at that one because part of the problem is mine warfare is very challenging because of the medium you deal in. And you know that. And it is interesting to me what they are doing in the port of Umm Qasar right now. I mean, we are using 53Es and we are sweeping with our 53Es in a water that is appropriate to sweep in.

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    After that, the water gets very shallow. And then you get into the pier face. I actually asked about, you know, the water quality at the pier face. And it is the worst kind of water quality you would expect.

    The sand storms, when they drain and through obviously the rain and stuff, when that drains, it runs off rapidly, floods. And basically, you can see just a couple of inches at best—maybe a foot into that water space.

    So we are using an unmanned system right now, an unmanned underwater system that is out there detecting systems. But because of a technology process about clear identification, we are getting down to mine-like objects. And when you get down to mine-like objects, then you can make a choice. If you want to do it rapidly, you go down there and you put something explosive on that.

    We are doing that with mammals and we are doing that with divers. And that is a little bit time consuming.

    But what I want you to hear is the transformation we are trying to make in mine warfare. And it is going to start with the volume again on SSGN for this long-term mine reconnaissance system. Because if you think about closing your water space from closing the littorals, as it were, and you are concerned about mines, you can use this long-range, long-term mine reconnaissance system to basically not go clear mines, but to tell the force where they can go, where the water is safe. And so it is really an avoidance system.

    But that in itself allows for a very covert and rapid knowledge of what the mine challenge is going to be. So if you are going to close a water space, I think that will be part of our transformational theme.
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    Now there are some areas where a helicopter is very effective. And I acknowledge a risk in the very near land conditions or challenges with a threat-based surface radar system or guns, then you would not want to put your helicopters in there. And that is why the Navy is looking at clear opportunities in the unmanned and surface vehicle, the remote mine hunting system that can go on initially in our DDGs, but we see as a module going on to LCS.

    The next attempt there is to look at these underwater vehicles that are in development now with a significant S&T investment that allows you to look at the surf zone in that water space to not only detect these mines, classify them as mines and then bring a system that brings destructive power to it once you have identified that as a mine system. And that varies from this assault reaching investment we have right now for the Marine Corps in the surf zone, to work backwards.

    So the transformation we are trying to bring about is a transformation in the technologies, particularly in laser and in sonar technology that gives you very clear classification and identification that they are mines, rapid clearance systems because you know where the mines are precisely so that you can go in and precisely either destroy or avoid those particular mine systems.

    But there is a compelling case—and there always will be a compelling case—for the speed and the organic capability that we will have in our helicopters, particularly the 60. And there is significant investment in the 60 because in some of the water spaces we are in, we believe that we can provide the maritime superiority for those helicopters to operate safely in that water space.
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    So the intent is not to put the helicopters right up against the shore line where they are at great risk, unless it is benign. But when you back out on that water space where you have to operate aircraft carriers, you have to operate DDXs for naval fires ashore, there is a clear lane, a clear role for a helicopter to operate in those conditions safely. And the helicopter then has the inherent quality of bringing the speed to the sweeper clearing support that we need for the potential mine threat.

    Mr. KLINE. I can see the potential for a great debate here. And I probably do not want to go down that road right now. But I would love the chance to talk to you about it later.

    I am far from persuaded that there is a long-term use for helicopters in clearing mines. It is slow. I hear you talking about speed, but it is not all that fast.

    It is extremely dangerous, whether you are being shot at or not. And if there is any chance you are going to be shot at, they are just extremely, extremely vulnerable.

    So I love the movement to unmanned vehicles. And another, again, we have limited time for a hearing like this, so I will not engage the debate.

    And I know Mr. Langevin talked about the multi-year procurement for the Virginia Class submarine. Can you, here for the record, tell us the difference—the dollar difference—between the multi-year procurement, which is what you have in the budget now and if we went to a year by year procurement?
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    Do you have that number handy? And if so, I would like it. If not, we will put it in the record.

    Secretary YOUNG. Can I take a couple of attacks at that? You know, we are in negotiation with them right now on a contract. So I am hoping we get every dollar we can, in fairness, in working with the companies. I want to provide them an opportunity to get a return.

    But we need a cost that they can deliver to. And then I want to provide incentives to not exceed those numbers.

    So we are working to that. Several months ago, we worked with the companies in a very, very positive way to try to negotiate a settlement to the 12-year old A–12 litigation. And that settlement included the potential on a near handshake agreement to sign for a five-ship, one ship a year multi-year, at a savings of $115 million per submarine. That is what the companies were prepared to offer as part of an effort to settle the A–12 litigation.

    So we are now in negotiations with them on a block buy. And then if the Congress approves it, we will try to negotiate a multi-year in FY 2004 or convert that block buy to a multi-year. And that is the subject of very detailed negotiations right now on appropriate prices and how much savings we can achieve. And as you would guess, I am trying, from my side of the equation, to get the best return for the tax dollars.

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    Mr. KLINE. Thank you.

    Mr. Chairman, I yield back.

    Mr. BARTLETT. Thank you very much. We are very pleased that Mr. Allen has joined our subcommittee.

    Mr. Allen.

    Mr. ALLEN. Thank you, Mr. Chairman. And I am pleased to be back. I want to thank you for allowing me to participate today and Ranking Member Taylor as well.

    I miss being on the committee. And if I were still on the committee, this would, of course, have been my first choice for a subcommittee. And I want to say to all of you I greatly appreciate the fact that there are three DDGs, both in the 2004 and 2005 budgets. That means a great deal.

    And Secretary Young, I also appreciate all you did last year to help pull off that swap of DDGs and LPDs, which really made a positive difference, both to Ingalls and to Bath Iron Works. But it is no surprise.

    My concern is really in the soft spot in the budget, between fiscal year 2006, 2007, 2008, that period of time. DDG procurement is scheduled to end in 2005. And when you look at the multi-ship production of the DDX and the LCS, that is not until fiscal year 2008. And that in between there, I think we have a huge problem.
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    There are five LPDs and an LHA scheduled for 2005. But those now are exclusively Ingalls programs.

    So one of the things that I have learned in my six years on this committee is that new starts slip to the right. And you look at 2006 and 2007 and you have got the DDX and the LCS. They are two new start programs. And I think back to the LPD–17 contract. That was awarded a month after my first election in 1996. And the first ship is not yet complete.

    So you can see why I am profoundly concerned for the industrial base at Bath Iron Works. I think it is a major, major problem.

    And I guess the other—let's see, your program—DDG procurement, as I said, goes through fiscal year 2005. The 2001 FYDP planned for only three ships combined in 2004 and 2005. Your budget plans for six ships total in those years now.

    And so my question is because the DDG–51 program has been extended in the past to deal with industrial base problems and just the evolving fleet requirements, there is precedent. So the question really is: how open is the Navy to continuing DDG construction after fiscal year 2005 to sustain what the QDR validates as an appropriate surface force level? And also just to maintain the industrial base?

    Secretary YOUNG. Can I start for a minute? Because I think elements of this are best answered by Admiral Nathman and Admiral Mullen.

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    But we will do—intend to do—our absolute best to keep DDX on schedule. And we have learned the lessons of the past. That is why I would make two statements.

    DDX is structured now in a way that is totally different from how OPD was structured, where we were asking for adequate R&D funds. We have 10 engineering development models where we are going to demonstrate the computing environment, the radar, the gun, the electric power or integrated power system. And at this stage of the program, keeping that schedule makes the funds we have asked for in these early years, the R&D request that is before the committee this year, truly critical.

    Those funds will let the EDMs be developed and, in turn, give us the confidence to award the ship in 2005. So DDX is a totally different structured program from LPDs and the other programs that slipped to the right. You know, no one can guarantee it will not. But we have a chance if we can get the DDX program fully funded and resourced to hold that schedule. And that is critical to us.

    Admiral MULLEN. Sir, if I can just comment on a couple things. I really—and Secretary Young has it in his statement and I know you have spoken to him about it. But it is a vastly different environment now compared to when LPD–17 was birthed, if you will. That does not mean it is perfect.

    But I think we have put in place many, many processes, which would allow us to proceed on a program like that, as Secretary Young has described. And he has been the author of a great deal of that, which has been a very positive move for our Navy and our nation.

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    And in particular in that program—and that program has its own challenges in its profile as well—we are still very much committed to fielding that, fielding the 12 LPDs from a requirements standpoint that we have because of the affordability and trying to just balance the books, spread that profile to the right throughout the planning FYDP, if you will. And we recognize that is a challenge that we need to get at in the future.

    Specifically with respect to DDGs, and I have dealt with them for a few years, one of the challenges as we moved into DDX—and I think it is important to realize that there are differences in every program. One of the great pluses in the DDX program that we have now is we now have a technology base from the research and development and S&T standpoint in the ship, in the surface ship community, which heretofore has been significantly less than it is right now.

    And its relationship to both LCS and CGS has been previously discussed today. But that technology base is vital for being able to feed the capabilities that we have in the future, including the significant reduction of sailors aboard that ship, on the order of about 90, compared to the well over 300 sailors that we have typically on a DDG.

    And I want to make it very clear that DDGs are incredibly capable ships. We are still fielding them as we speak. Each one is better. And to commend both Bath and Ingalls for the great work that they have done over a long period of time.

    The challenge has always been: when do you transition? How do you transition from one class of ship to another? And that is really what you pride.

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    There was, as I am sure you are aware, a DDG in the 2006 column last year. And we have actually taken that DDG out. And that was—it was an affordability issue. Because it was a single DDG, it was a very expensive DDG. And we did not want to pay on the order of $1.5 billion—$1.6 billion, I think, is what we had at least programmed it at, at that particular point in time.

    And yet, I think we all recognize the tension and the conflicted tension, if you will, to how to sustain this industrial base. What is the right answer? And how to move forward? And that is really what you have described in your concern.

    And I do not think there are any clear answers as exactly what to do. I think the missile defense—the sea-based missile defense piece down the road also clearly is going to potentially put some pressure on force structure allocation, et cetera. And we just have not—we have just really started to deal with those issues and try to sort them out.

    Mr. ALLEN. I do not have them with me, of course, today, but I have looked at the charts for what would happen to Bath under this scenario. And it is an ugly picture.

    Admiral MULLEN. Yes, sir.

    Mr. ALLEN. It is a very ugly picture. And the reason is that if you look, we have got three DDGs in 2004, three DDGs in 2005. This is chart 10 in the Navy budget.

    And then when you go to 2006, you have one DDX. You have got two yards, but one DDX. And 2007 is, again, two yards and one DDX. And the LCS really is not likely to be enough to make a difference.
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    So I just urge you to think about that particular issue as you go forward.

    The only other comment I have is that there is an opportunity, it seems to me, to take some of the automation, some of the processes and some of the technologies that are being developed for DDX and try to see if there is a way to move some of those processes and technologies into at least the DDGs that are scheduled for 2005. And we will be making some requests for help there. But I do not know if you have any comments.

    It seems to me that these companies are well down the road in figuring out how to reduce the costs by reducing the size of the—reducing the number of sailors we need, but also simply in automation and improved processes. And a little investment now could be, I think, a significant help to improving the life cycle costs of the DDXs that are scheduled to go in 2005.

    Any comments or thoughts?

    Secretary YOUNG. I think there are some really, as you said, very good ideas out there of things that can be done. I have even seen them at Bath in terms of test equipment, wearable test equipment and other things. And so we need to look into those very carefully and see if we can find a way to progress those ideas because of the payoff.

    Other things that would change the ship hull and configuration need a little more careful thought, because as I mentioned in the beginning, you know, we are trying hard not create prior year completion bills. And so we want to insert change in a planned and budgeted way or on a business case basis, where good ideas buy their way into programs.
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    So we are happy to look very hard at some of those ideas. And I agree with you, several of them do make a great deal of sense.

    Mr. ALLEN. This idea, apart from having the potential to save the Navy some significant dollars and produce an improved return, is also in itself an industrial base issue with respect to the engineering. I just wanted to leave you with that.

    Mr. Chairman, thank you very much. I do—it is good to be back.

    Mr. BARTLETT. Thank you very much for joining us.

    Gentlemen, I have a series of questions that I would like to ask. If upon reflection, after the hearing, you would like to expand on the answer you gave during the hearing for the record, would you please do that?

    Admiral Nathman, we have seen a number of changes in the configuration requirements and schedule for the future destroyer, now called DDX. Also, the LCS, a completely new type of ship, was introduced in fiscal year 2003.

    Can you give me a sense that the Navy's emerging force structure is driven by requirements and new concepts of operation, rather than by inertia and momentum generated by existing types and classes of ships?

    Admiral NATHMAN. Yes, sir. I think I can. I guess I should.
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    It is interesting to me. If we were going to be driven by inertia and by our culture, I do not think we would be delivering littoral combat ship. I think that is a clear case of where we see the threat going. It kind of goes back to our trends. Our trends have been the Navy. And naval forces are now near land littoral forces.

    And we go near land, we become littoral because of either a Marine maneuver scheme or because we are supporting the joint force or we are trying to provide some contribution to the joint decisive power that we bring to the battle space.

    And so it became very clear, I think, particularly to CNO Clark, that one of the challenges we have is that our enemies and our potential competitors out there see that if they make investments in asymmetries—and those asymmetries are sometimes a low investment for them: mines, maybe a small diesel submarine force and you can think of several nations that have that capability—or a build rate in small, fast boats that are not by themselves necessarily capable, but if you have several of them, you complicate the problem for a large, blue water Navy.

    And so I believe the littoral combat ship is exactly the result of the other kind of thinking that seems to be implied in your question, that the Navy ought to be looking at where the threat is going to go, what are those capabilities and effects that we want in that particular water space? And so the littoral combat ship is to, in fact, bring about the ability to put forward a forward-based capability with littoral combat ship, to tailor it for its anti-access missions, but understand in that tailoring, you can put, say, more mine capability in all four or five littoral combat ships that might be there because that might be the problem.

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    Or the problem might be it is an anti-submarine problem in terms of your phasing, so you would put those modules on that seacraft, called littoral combat ship, and provide that capability. And once you were able to control and bring those effects about, you could re-tailor those particular ships to do something else.

    They are going to have an inherent capability to move, I believe, very rapidly logistics and transformation—transportation for special forces and Marine forces ashore once they complete their particular mission. Because if you establish a certain superiority by defeating that particular anti-access threat, you have a capacity now, in terms of that seacraft, to bring it to do something else.

    And so you could take those modules off and look at the capability to put maybe SOF on there or run Marine support ashore, rapidly put it ashore. So these are the inherent capabilities that we see in the littoral combat ship. And I do believe that is driven by the anti-access trends that we see in our potential enemies out there and the threat that they could bring to our water space.

    That is a clear answer for us. DDX, I believe, is an example of us really answering a compelling need for the Marine Corps. And the compelling need for the Marine Corps has been that they have a certain target set that requires a volume and rate of fires that can be answered in a number of ways.

    It can be answered by buying airplanes—Joint Strike Fighter, F–18s, you name it—to provide an aircraft combat close air support capability. You can do it by buying artillery tubes and mortars for the Marine Corps as part of their built-in maneuver scheme.
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    But one of the things that is clear, as you close that sea space and you close the littoral for the Marines, is they are going to need that battle space shaped rapidly for where they want to go. They are buying rapid capability in their triple AV and MV–22. So we feel strongly that if you are going to shape that battle space, you need the reach and lethality.

    And so that is what we see in DDX, is a way of answering those needs. Now there is things we have to improve, I believe, in the future on DDX in terms of that lethality and reach for naval fires for the Marine Corps. But you have to start with a relatively large gun, advance gun system, with a relatively large round, lethal enough to make a difference. And that is a 155.

    What is interesting about that, it is very consistent where our NATO allies are and where the Marine Corps is, in terms of the size and shape of a particular artillery round. So it is got that potential commonality in that sense, but it goes a lot to the coverage.

    It means in the future, though, we should look at trying to answer other needs there in terms of the rate. And that is why you are seeing S&T investment in a rail gun system that gets away from a propellant for those rounds. It goes to now your magazines can be filled up with projectiles that are all there—the weight that is there is all killing power. It is not consumed—the volume in weight is not consumed in that chip for propellant power. That is pretty important.

    The other part then is to go for some sort of terminal capability on those rounds to make them very—go from accurate to precise. So DDX is another example, I believe, of the Navy and the Marine Corps coming to grips with a concept of forcible entry, a concept of supporting Marine ship to objective maneuver and providing them not only some agility in the capabilities that we would bring from the sea for specifically for them until they get their tubes ashore or their maneuver scheme outgrows the reach of that particular ship.
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    But for many of the missions that the Marine Corps will be assigned in the future, particularly under their ship to objective maneuver concept, many of those missions—in fact, the vast majority of those missions—would find themselves ranged by the capability of the DDX as we plan it.

    Now to complete my answer, I think it is important for you, sir, to understand that I feel the Navy has organized specifically—CNO Clark structured a new staff inside of his organization. I happen to lead that staff, called N–7, which is about future warfare requirements.

    And our whole—we do two things, I believe, that the Navy and the Marine Corps need. And that is, we try and build our requirements on true analytic rigor, based on a campaign analysis, the capability of our current forces. As we test them in that campaign analysis, we try and make hundreds of what I call analytic runs to look at how those capabilities play out so we can identify gaps, so it results in a near-term investment that you are seeing in the current FYDM and an outyear gap that looks at aligned S&T investment around those particular gaps.

    And I think that is the kind of rigor—the last time we discussed this, I told you my confidence in that fidelity was still relatively low because we are only into one or two rounds of this particular process. But the process is fundamentally important to developing the rigor and the analytic basis to provide you the confidence that we are going—we are making those changes for all the right reasons.

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    That is where the threat is going to go. That is why the capability has to be purchased in a certain way.

    And then that is rounded off, I believe, in the other part that N–7 does, and that looks at the integrated capabilities of the total force that the Navy provides, integrated with the Marine Corps, to say, ''If we have this capability here, why would we double invest in it? Why does everybody have to have a little bit of everything? Why do not we distribute those capabilities where they bring best effect?''

    So the integrated part of our work inside of the OPNAV staff for CNO is meant to bring about an integrated look and then a better distribution of those capabilities in a platform or in a weapon where they more properly belong in terms of the capability and effects that we want. So I am convinced—I am convinced, sir—that we are on the absolute right path to deliver the type of analytic rigor that you would want. And we are on the right path to look at the risk trends and the risk that we have in the future, so that we buy the effects and the capabilities we need in program.

    Secretary YOUNG. Mr. Chairman, could I add a few points to that? Because there are also acquisition requirements, if you will, on this. And Admiral Nathman has talked very precisely about what DDX could do for fire support right now.

    We also, in the Aegis destroyers, have what people describe as a somewhat dense and complex ship to build that is evolved over time. And we have worked in LPD–17 in Virginia Class to design the class to be built so you can build it efficiently, have higher degrees of outfitting in modules and have so-called super blocks where the ship comes together.
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    DDGs have progressed here. But we need a chance to design a ship from scratch so that we can design it for some of the things you had talked about—and that is reduced manning, reduced maintenance—and design it with the automation that will allow you to achieve those goals. And you really have to think about designing the ship from scratch to do that.

    You also have to design a ship from scratch to get the survivability and signature that you are going to need for a ship that is going to be in the inventory until 2050. And then last, this ship, DDX, creates the path to CGX, which is a cruiser we will need for the complex air defense and missile defense environment that is likely to be out there in the 2050 timeframe.

    Likewise, LCS—just to make a point from my trip to the Persian Gulf—without getting too sensitive here, there have been well over—well over—10,000 queries and boardings in that area. And our allies work with us to accomplish those. And so it is been very effective.

    But in some cases, we are using DDGs and cruisers to accomplish boardings. And that is a use, but maybe not the best use of a very precious and powerful warfighting asset.

    So I think the littoral combat ship can help address that mission space, as well as provide a smaller and cheaper and faster ship to handle the range of missions that Admiral Nathman has talked about, in terms of mine warfare and others in that and also give us a chance to build a ship that is a sea frame where we bring and tailor the mission modules to the need.
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    So in both these classes, I think there is a clear requirements piece, as well as an opportunity to really take steps forward in our technology, the technology we give warfighters and the technology—the way we acquire that technology.

    Mr. BARTLETT. Thank you both very much. Let me just share with you for a moment some of the questions that I ask myself that gives me some pause. And then I am going to yield to Mr. Simmons for his questions and comments and ask him to take the chair for a couple of moments and I will be right back.

    For a number of years right now, ever since the collapse of the Soviet Union, we have not been faced with the prospect of an enemy who is anywhere near our peer. And for the kinds of enemies that we now face and we expect to face I the near future, I think the transformation that you are now doing is exactly right.

    But there are some asymmetric threats out there. And there is the possibility of a reconstituted Russia and a China in a decade or two from now that may present a very different kind of threat.

    I am concerned about the survivability of some of our major assets. And we had a threat briefing a few days ago. I think that threats like the wave top supersonic cruise missiles (that come at you not just by ones and twos but by dozens from a really sophisticated, well-equipped enemy.

    I am concerned by a really low technology threat, that is swarming, of small, fast boats with pilots on suicide missions. I am concerned about the increasing prevalence of diesel subs and the emergence of unmanned subs and their threat to our assets.
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    And I have a nagging concern that in a premeditated confrontation with a really sophisticated, equal opponent—or near-equal opponent; I hope we never have an equal one—near-equal opponent, that we might be wise to not count on the assurance that these large assets will be there, mission ready, after the start of that conflict.

    I am not sure what kind of a Navy we need in the future. Maybe rather than a 300 ship Navy, we need a 3,000 ship Navy that will cost us no more than the 375 ship Navy that we are anticipating.

    But when you look to the future with the kinds of technologies, and you mentioned that the weapons that we are using now are very different than the ones we used just 12 years ago, just a bit over a decade ago. And if you look another decade down the road, what will be there? What will our enemy be?

    And I am just concerned that we—you know, these major assets that we have are enormously valuable to, as political diplomatic expressions. When you put a carrier task force group offshore, that makes a powerful diplomatic statement. And I am not in any way suggesting that we need less of our present assets. We certainly need all of our present assets. But I have some nagging concerns about a future that might hold not just the kind of enemy that we face today, but an enemy like we faced for a great many years after World War II and may again face with a China or a resurgent Russia.

    But let me yield the floor now for his questions and comments to Mr. Simmons. And then he will take the chair. And I will return in just a few moments.
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    Mr. SIMMONS. [presiding.] I thank the chairman and the ranking member for extending to me the courtesy of the gavel and the chair, even if it is only for a moment or two. Very little damage can be done, I guess, in the next two minutes.

    I apologize to the panel for being late. I was actually chairing the Veterans Health Subcommittee today on the bioterrorism medical threat, which is certainly one of the concerns that we have.

    And it is my understanding that my colleague from Rhode Island, Jim Langevin, has asked a series of multi-year procurement questions. We are of one mind on that issue, and so I will not take the time of the panel to respond on that subject, other than to say that I believe that this is the right way to go to save dollars on what is promising to be one of the best—if not the best—submarine we have ever produced for the U.S. Navy and one that has design features, through the computerized design systems that are used, that we can adjust and change the outyear vessels in most extraordinary ways and yet, through multi-year, still save substantial dollars.

    My questions are twofold. First, I will go to Admiral Nathman and say that, on page 10 of your testimony, you refer to Giant Shadow exercise. I have been briefed on that. It involved unmanned, underwater vehicles. And I believe that there is a great future in those systems.

    And yet, except for that reference, I see no further testimony. There is mention of unmanned air vehicles on page 17. A recent addition, after I received my classified briefing, I was going through the BWI airport and I saw on a magazine rack, ''Popular Science'' magazine, which this month is featuring an extensive article on UUVs, which filled in some of the blanks that I did not get during the classified brief. [Laughter.]
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    What is your vision for unmanned underwater vehicles? Is it a vision that has them coming through torpedo tubes? Is it a vision that has them molded into the external skin of our maybe fast attacks or converted Tridents? Is it a full vision? And do we have the R&D dollars to accomplish that vision?

    And I will ask that question and let you think about it. And I will pose my second question to Mr. Young while perhaps you are thinking about that.

    My question to Mr. Young goes to his testimony, page nine. We have been talking about the LCS. And you refer to it as ''networked, agile and stealthy''—a networked, agile, stealthy surface combatant, designed to do certain things.

    You refer to it in the Gulf in terms of boarding ships. I tend to think of an LCS as having much more of a combat-oriented role than simply boarding ships. I think that is something that the Coast Guard is very good at. And maybe we need to send a few of those over there.

    But my real question goes to the issue of stealth. How stealthy is this LCS? And how would we compare it, let's say, to a converted Trident, also equipped with many of these systems, but operating underwater? And I would be interested in the answers to both of those questions.

    Admiral MULLEN. Sir, can I take a crack——

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    Mr. SIMMONS. Oh, sure.

    Admiral MULLEN [continuing]. At the Giant Shadow question. And we spoke of it briefly before. SSGN has come forward in its inception to focus on the unwarned strike capability that the 154 Tomahawks bring, as well as the ability to put special forces ashore and support those kinds of missions, our special force kinds of missions.

    What is emerging though—and I will use Giant Shadow as an example—what is clearly emerging is that there appears to be tremendous opportunity in the volume of SSGN, when combined just in the sheer volume, first of all, and then when you combine that with the stealth, there appears to be enormous potential there. And so what we would hope in the unmanned world, whether it is aerial, surface or under the sea, to be able to take advantage of that volume in terms of the kinds of sensors.

    Couple things: one is the sensors; two would be the ability to put unmanned vehicles in each of those mediums that persist and stay for a long time, that we can then link up with to determine what kind of battle space we are in and what needs to be the next step.

    So that is coming out. That was a significant lesson learned in the Giant Shadow exercise that was held recently. And we actually think there is great future warfighting capability there that we clearly want to take advantage of in the long run.

    Tying that to your second question—and I would ask my colleague, Admiral Nathman, to also weigh in here, about LCS is how stealthy? I do not think we know the answer to that yet. But when you look at the LCS as we see it now, in particular with the kinds of missions that it really is focused on—Chairman Bartlett talked about it earlier. Whether it is the swarming tactics, the diesel submarines. And we had an earlier discussion about the mine warfare piece.
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    All of those are very, very tough access kinds of issues. And we think that the LCS addition to the battle forces, if you will, is a critical step to be able to meet those missions in the future.

    What the LCS will bring, in my view, is an ability. And we do not know how stealthy it would be. I think those are the kinds of trades that are clearly going to be made in the future. But it will bring the kind of speed, we feel, the kind of speed that is required, the kind of modularity, if you will, the kind of—and the ability to change out that capability very quickly, on the order of hours or maybe a day, as opposed to have to take off from a theater and then return with some other kind of capability.

    CNO talks about the diesel submarine threat, to be very specific, about the ability to light up the undersea warfare battle space and essentially turn them into coffins. That is the vision that sort of drives—not sort of, that drives us. That takes an R&D and S&T investment in sensors, an ability to put them there to have them persist where we need to and to, not unlike the mining piece, tell us where we can go and where we cannot go. Or, if we have to go, what we have to do to get there.

    That is why, in the context of about 375 ships as we turn the corner, we are looking at in the mid 50s to 60s, so we are not really sure how many LCSs will be required that we both think we can afford at the current kinds of $400 million, $500 million full package LCS, if you will, that we can afford, and then to generate that kind of capability, given the budget that we have.

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    So that is the vision of that piece in particular. And the SSGNs, while—again, it is the volume piece that they bring. And certainly, the numbers we would not anticipate to have that many.

    Admiral NATHMAN. Sir, I would add—I think Admiral Mullen has answered it just great. But one of the things we—just last week, we were up at an applied physics laboratory in Penn State. Penn State does a significant amount of anti-submarine work for the U.S. Navy. And we were just up looking at a very large UUV that had been used in Giant Shadow, as part of the demonstration.

    It actually was not inside one of the tubes. But it does not take much to dream to figure out how you could use that UUV.

    And so we are already into this because a lot of our investment is in the thinking side, the science side, the S&T side, about what are those opportunities with unmanned, underwater vehicles? And the conceptual parts that we were looking at, at that time, was it goes to this—how do you go after submarines in the future?

    One of the things we will be going after submarines in the future, look at where your threat is. A lot of them are buying these submarines because they are available. Some of the navies that are buying those submarines do not exactly have a great history of submarine warfare under their belt, but they are buying a capability. So we ought to respect that particular capability.

    But they will tend to operate many of them in a water mass that they find very comfortable, based on kind of their culture and their understanding of how they use the submarine. So we are looking at the underwater vehicles and the unmanned vehicles as a potential, as an example, as an enormous source that you could put out there for multi-multi statics for ASW.
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    And it goes back into some of these concepts about how you build what that underwater topology would look like—I cannot find the right word for it—hydrography, or whatever it is, of the bottom. So that you can understand your battle space to the point that you know what has changed in it.

    And so if an enemy goes out there and puts a diesel submarine out there, you are going to see it because you are going to see the change. And so one of the values of that is it lets us think about the opportunity to use that volume and that size to do a couple things.

    When you put things underwater, most of them tend to be powered by electrical power, for obvious reasons. Typically, unless you find out with some unique generation systems, they often get into elaborate battery schemes.

    And so if you look at that, you often have a half-life of the persistence of that particular system. So if you build small ones, you have to queue them or you have to recede frequently. So part of the value of going to very large underwater unmanned vehicles is that you might change the propulsion system or the power system. And there are several opportunities there.

    Or you may get enough battery life and you may queue them independently based on your needs. So you may have sources going off at different time to really confuse. Because if you take a potential diesel submarine out there in the future and he gets into a water space that is sonified with a source, that is like a guy flying blind. And that is one of the ideas is we want to take that battle space away from that particular diesel submarine.
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    So I want to tell you that I think a lot of our path on this one is kind of an S&T transition side, particularly for ASW. And the other part is a very, I think, earnest view about what unmanned, underwater vehicles could do for us in terms of mine warfare.

    Now then these things have the opportunity to be placed in the volume of an SSGN or on the seacraft called LCS. And the stealth qualities of LCS are more than just a radar cross section, I believe. I believe, if you look at it, because of its size, we have the opportunity to make it relatively low planned form. And because of its speed, these all, I think, contribute to its stealthiness, as it were, instead of treating it maybe more classically in terms of radar or IR cross section.

    So I think that is what we mean when we talk about the stealthy qualities of LCS, as we see it, with its speed, with its planned form, with its mobility that is brought about by that speed, and then purposeful shaping of its signature in certain areas that you can get to a platform that has very good stealthy qualities. And we are still on the discovery phase.

    We have got the program manager looking at these requirements and then trying to show us what those trades are in a process called carpet plants, which look at the trades you would make in size, fuel metric, speed, all those kinds of things. And then that drives us to decisions about, to Congressman Taylor's question, about what the hull form should look like and those kinds of things.

    So I think it is going to be very strongly analytically driven, based on the core warfighting requirements that we want to put on LCS.
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    Secretary YOUNG. To your question about and note of the littoral combat ship issues, I would talk through it for just a second and say, you know, surface combatants and submarines have some very specific warfighting mission, including collecting information, that will become part of the data on the network, which LCS will rely on for its situation awareness because it will not have an Aegis Class radar to help sense out the air space around it and other things.

    So LCS will be very dependent on those large platforms. But it will go in, as Admiral Nathman said, into the littoral and face some of those threats, particularly that Chairman Bartlett talked about—the swarm, the near land threats, as well as some of the undersea threats in the littoral, and have lethal capability against those threats, leveraging the network for its situation awareness, leveraging an appropriate amount of signature reduction so that it is survivable in conjunction with the sea clutter it is going to operate in and the fact that it is a smaller ship anyway, and then agility because of its speed. We plan to set a faster metric on speed on this ship.

    That combination together gives it unique abilities. And I think many of these LCS missions will not easily be adapted to a submarine. And they are better performed by LCS than some of our bigger class ships that have air defense missions or land attack missions.

    Mr. SIMMONS. I thank you for those responses. And I think, you know, this is an area where we will continue to probe.

    Let me just conclude with a short anecdote. Last week, I went over to the Pentagon for the Army brief. I think it was Thursday morning, deep in the bowels of the building. And members of the Army Caucus were invited to go over there.
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    And as they went through the brief, they plotted the surface ships in the Persian Gulf and in the Mediterranean. They plotted our Army ground forces with little arrows as to where they were.

    And then over on the left hand side of the briefing chart was a box. And in the box were listed, as I recall, 12 SSNs. And I asked the question of one of the Army folks near me, I said, ''Why do we box the submarines? Why don't we point out where they are?'' And the answer was, ''We do not know where they are.''

    I thought it was interesting. [Laughter.]

    Admiral NATHMAN. It was an Army guy. [Laughter.]

    Mr. SIMMONS. Well, just remember, the first guy to test the turtle, which is the first submarine we ever built in the United States, happened to be an Army sergeant. Now either he was courageous or stupid, I am not sure which. But as an Army guy, I will choose that he was courageous.

    I guess the point I am trying to make is that stealth in a future environment, especially against a sophisticated foe, which is what the chairman has pointed out to be his concern, a more sophisticated foe than what we have had perhaps over the last few years, is an important value and something that we have to think about because of the developing technologies and the transformation and the transfer of technology.

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    And so it is something that is important to me. Thank you.

    Mr. BARTLETT. [presiding.] Thank you very much. Let me return to my line of questioning. And for some, I will ask for an answer for the record because of the press of time. We need to get some of these answers on the record.

    Secretary Young, last year in your testimony before the committee, you mentioned that you were undertaking a series of initiatives to address prior year shipbuilding costs and to prevent cost estimate increases in future programs. Now for the record, because I am sure that we could spend a long time in discussing this and I am sure that you probably have a point paper that does this very well for the record, would you please review your initiatives and provide your views about the effectiveness of these actions, for the record?

    Thank you very much.

    Again, secretary, recent press reports suggest that the Virginia Class submarine program has incurred additional cost increases. I met this morning with Admiral Bowman who explained to me that some of those cost increases were the result of regulations we have for computing costs. When you are looking down the road for inflation, inflation is whatever inflation is. When you are looking back, he tells me to compute costs on a constant dollar basis. Our regulations require that we use a two percent deflation rate in looking back.

    Is that true? And how much of these so-called cost overruns are the result of that policy?

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    Secretary YOUNG. This one takes probably a little time. I will give you a brief answer and maybe follow up.

    Mr. BARTLETT. Yeah, give us a brief answer here. And if we need more detail for the record so that we can probe that, please do that.

    Secretary YOUNG. My direct answer to you would be that there was a base for Virginia Class in 2000. And that base set a price of the submarine as we thought we knew it. And then I believe that price was inflated using OMB indices, which was the current policy at that time. And then it really did not have an effect because it was then deflated by OMB indices or the consumer price indices. And that put the price here.

    And I would tell you that submarines, ships, no programs experience consumer price index levels of inflation. They have specialty materials. They are software intense. They have some unique workforce skills, such as specialty welding for nuclear and other things.

    So I would say the price we set in 2000 and inflated at consumer price index numbers was too low. Now we are setting a new baseline and putting appropriate levels of inflation that are more like four, 4.5 percent for labor and material and other things.

    Then we are deflating that price, that realistic price, again using the consistent procedures, by OMB indices. Those two processes are giving the Virginia Class a substantial cost increase.

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    So I would tell you the cost increase on Virginia that is soon to be reported to the Congress is the result of two factors: one, the 2000 baseline was too low. The price was not properly—the assumption that we would experience consumer price index inflation on building those submarines in the out years was an understatement of the price. So there is growth to what would have been a realistic level of pricing in the 2000 baseline.

    Then there is additional growth that we have seen over time because of low rate production and specialty materials that we are properly accounting for. And that is essentially new growth.

    The combination of the previously unpriced growth and the new growth are going to result in a baseline increase that has been reported to be on the order of 24 percent. And I believe that is going to be accurate and reported to you in the near term.

    Mr. BARTLETT. Thank you.

    Again, secretary, for FY 2004, the chief of naval operations has identified a $60 million shortfall for general purpose bombs and a $6 million shortfall for procurement of five inch BB rounds for protection against small boat threats. Also the commandant of the Marine Corps has identified a $100 million shortfall for conventional weapons.

    Are there any other ammunition shortfalls that you have identified as a result of expenditures in both Operations Iraqi Freedom and Enduring Freedom? And will you please make these available to us for the record?

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    Admiral Nathman, current expenditures for the ship and submarine launched Tomahawk cruise missiles have been leading the headlines for the past week. Can you discuss your strategy for the replenishment of Tomahawk missiles? And do you think that we should increase the planned production rate above the 450 per year maximum?

    Admiral NATHMAN. I will elect to defer to Admiral Mullen. We just had a—we have been working this problem for the last three or four days strongly. And Admiral Mullen——

    Mr. BARTLETT. Okay, Admiral Mullen.

    Admiral NATHMAN. So I will let Admiral Mullen go ahead and take this.

    Admiral MULLEN. We have been—actually, Secretary Young, we have worked—we are looking at this as a huge concern as well. And where we find ourselves, in a very delicate time, because of the procurement strategy, which I will not speak to, the acquisition strategy as we transition from the Block 3 to the Block 4 program Tomahawk.

    And in large part, at the high level, what we would like to do is get Tactical Tomahawk tested and out there as quickly as possible, sustain what we need to do from a standpoint of staying within the guidelines and the law, with respect to testing a new weapons system and then increase the capacity as quickly as we can.

    And Secretary Young has spent a lot of time on this and has the details. But the overall concern is we are at a very delicate time right now because we are transitioning.
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    At the same time, where we are using a substantial part of our existing inventory worldwide, these are also weapons you cannot produce overnight. They take many months to produce. And so we need to take that into consideration as well.

    And Secretary Young, I am sure, has some comments.

    Secretary YOUNG. What we have done, because exactly—Admiral Mullen characterized it right—the urgency is there. I think we can, because of the success of Tactical Tomahawk, take some prudent risks within the acquisition system, probably push the edges of the rules to some degree, but look at increasing our low rate procurement, our quantities or our rates under the low rate procurement. Every month, try to build as many more as we can.

    And so if supplemental funds become available for that purpose, we are going to try to do that. We also need to keep that full rate decision, which looms in June 2004 timeframe and is tied to the current budget request for 267 missiles, because that decision point and those missiles are tied to a price agreement we have with Raytheon. It is a very attractive price that locks in a multi-year procurement for Tactical Tomahawk.

    But the company has agreed to work with us each month to try to raise their procurement quantity if funds become available. We also have the opportunity, if funds become available, to facilitize to 50 per month instead of the 38 per month that we were anticipating.

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    So in the near term, I think people are going to look at opportunities to make available supplemental funds, accelerate the bill rate each individual month and accelerate to a higher rate than currently planned so we can replenish the inventories as fast as we can, recognizing exactly, as Admiral Mullen said it, it takes roughly 18 months once we seriously proceed here, to build a Tactical Tomahawk and get it out the back end.

    Mr. BARTLETT. Thank you very much.

    Admirals Nathman and Mullen, in your written statement, you discuss the need to consider the procurement of a float forward staging base in addition to hospital ships and a joint command ship. And again, I think that it would be better if you provide this for the record, because we could spend a very long time on this.

    The question is: can you describe the vision, requirement and operational employment concept for such a fleet of ships? And we will anticipate with some eagerness your written response.

    Secretary Young, while the Navy has made progress in increasing the number of new construction ships, compared to last year, the sustainment of a force to 310 ships still relies on an increased rate of construction beyond that which is currently budgeted. Do you believe that the Navy will be able to budget for the larger number of ships required to maintain current force structure in the future years defense program and beyond?

    Secretary YOUNG. Sir, I think that is an excellent question. As you know, the back end of the FYDP shows going to 14, 16 ships. And that means the ship procurement Navy account—ship construction Navy, SCN—has to grow to be on the order of $14 billion to $16 billion in those years.
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    That is going to require several steps. We have to continue to reduce our maintenance costs, which means new ships coming into the fleet that are lower maintenance, lower manning. We also have to take steps to ensure that other efficiencies are sought, including making sure those ships, I think as you mentioned earlier, are affordable.

    We are making moves in all those areas from multi-year procurements to restructuring contracts with incentives to reduce price. Within a fixed resource environment, though, it is still going to take substantial cost control and substantial will in every element of the Navy—operations, maintenance, R&D, procurement and even military personnel—to grow that SCN account to the level that recapitalizes the fleet, as you said. So I think you have highlighted a serious challenge, a challenge that is before this group and on the minds of the secretary and Admiral Clark.

    Mr. BARTLETT. Thank you.

    Admiral Nathman, do you believe that a force structure of 310 surface ships—and I would like you to think more in terms of capability than number of ships because I know at least some of the people in the Pentagon are thinking about a larger number of smaller ships, which would still have the same capability as the present force structure.

    Do you believe that a force structure of 310 surface accurately reflects the current requirements? Or, as many in Congress believe, do we need a fleet size of 375, including the two additional carrier battle groups?

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    Admiral NATHMAN. Sir, I believe the intent of our look at specifically our global concept of operations was to bring about, I think, the inherent qualities of a Navy that is forward. A Navy that is forward is already there. It is already immediately employable.

    And if you are going to make a difference in the very near term, you want that immediate employability, along with more decisive capability in the ships that are out there. So the global CONOPS was an intent to provide the right number of ships. And it is around 375, about 375. That number was there specifically to look at bringing about more decisive striking capability into our carrier striking groups and our expeditionary striking groups.

    Now that also meant that we brought into this concept of operations a missile defense structure potentially, the littoral combat ship as a way of providing, as we have talked about already at length about the anti-access capability when you close that maritime space close to the beach, and other attendant capabilities like SSGN. So I think our number is there because we see the reason to be more naval or more sea-based is because of those anti-access trends out there.

    So that is why I believe we feel strongly about the way we constructed our global CONOPS and the numbers behind it.

    Admiral MULLEN. Mr. Chairman, and I know time is—I will not say much on this, except to say that that global CONOPS that Admiral Nathman talks about is—and this is back to your inertia question versus forward looking and analytically based. We spent a lot of time putting an analytical rigor to that number and the dispersion of those groups, the creation and the dispersion . . .
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    Mr. BARTLETT. When you say that number, you are speaking about what number?

    Admiral MULLEN. About 375, about moving in that direction.

    Mr. BARTLETT. Okay.

    Admiral MULLEN. And clearly, we are not at 310 right now. We need to move through that. But it has the capabilities that exist are resident in that, based principally on 12 carrier strike groups, 12 expeditionary strike groups, what we currently call our amphibious ready groups, in order to meet the challenges of the future, which have been laid out by Secretary Rumsfeld in this one-four-two-one construct. And it is analytically based. And from a warfighting capabilities standpoint, we think it is the right direction to deliver the kind of capability that we need to win in the future.

    Mr. BARTLETT. Consistent with those answers, let me ask a question relative to retirement of surface combatants. Beginning in fiscal 2003, the Navy proposes retiring 27 surface combatants by fiscal year 2006. These retirements will take the surface combatant force structure to a low of 100 ships in 2005.

    The most recent QDR cited a force level of 116 ships as a moderate risk. How would you characterize the risk that we will sustain if we really go down to this lower number?

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    Admiral MULLEN. Sir, I was—obviously, we were all involved in this. And think moderate risk is probably fair. And I think it stays at that.

    I would also call it near-term risk to retire—give us an ability to mitigate some of the future high risk that we have, in particular. And Secretary Young pointed out that these are expensive ships to operate now. And when you combine that with the capability that they deliver and actually that we need in the future, it was based on that and the risk that is associated with that that we made the decision to retire these ships.

    We think it is prudent, near term, moderate risk in the program. And it was made with malice aforethought, as I am sure you can understand. Decisions like this are not done easily. And it was made at the highest levels of the Navy.

    Mr. BARTLETT. So your judgment was that a near term, slightly higher risk——

    Admiral MULLEN. Yes, sir.

    Mr. BARTLETT [continuing]. Was a benefit because we would then be able to save money to——

    Admiral MULLEN. To recapitalize.

    Mr. BARTLETT [continuing]. secure——

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    Admiral MULLEN. And that is exactly what we did.

    Mr. BARTLETT [continuing]. Assets later on.

    Admiral MULLEN. Yes, sir. As the individual who handles the money, I can tell you that those dollars went to recapitalization of airplanes and ships.

    Mr. BARTLETT. This is a judgment call, of course.

    Admiral MULLEN. Yes, sir.

    Mr. BARTLETT. Gentlemen, I have several additional questions. There is another subcommittee waiting to use this room—just about 30 seconds ago, as a matter of fact. And what I would like to do, with your permission, is to give you these questions to have you provide the answers for the record.

    Apologies that we started late because of a series of five votes. Thank you very much for your patience and your testimony. And we stand in adjournment.

    [Whereupon, at 4:01 p.m., the subcommittee was adjourned.]